<PAGE>
Hartford Life Insurance Company -
Select Dimensions Life
Modified Single Premium
Variable Life Insurance Contracts
P.O. Box 2999
Hartford, CT 06104-2999
Telephone: (800) 231-5453 (Contract Owner)
(800) 862-4397 (Account Executive)
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This Prospectus describes Select Dimensions Life, a modified single premium
variable life insurance contract ("Contract" or "Contracts") offered by Hartford
Life Insurance Company ("Hartford") 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 18. A
LOAN, DISTRIBUTION OR OTHER AMOUNT RECEIVED FROM A MODIFIED ENDOWMENT CONTRACT
DURING THE LIFE OF THE INSURED WILL BE TAXED TO THE EXTENT OF ANY ACCUMULATED
INCOME IN THE CONTRACT. ANY AMOUNTS THAT ARE TAXABLE WITHDRAWALS WILL BE SUBJECT
TO A 10% ADDITIONAL TAX, WITH CERTAIN EXCEPTIONS.
Generally, the minimum initial premium Hartford will accept is $10,000. The
initial premium will be allocated to the Money Market Portfolio. After the Right
to Cancel Period has expired, the amount so allocated will be transferred to the
Portfolios specified in the 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 Growth Portfolio, the Utilities Portfolio, the
Dividend Growth Portfolio, the Value-Added Market Portfolio, the Growth
Portfolio, the American Value Portfolio, the Mid-Cap Growth Portfolio, the
Global Equity Portfolio, the Developing Growth Portfolio, and the Emerging
Markets Portfolio.
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, Hartford will pay the death proceeds
("Death Proceeds") to the beneficiary. The Death Proceeds equal the Death
Benefit less any Indebtedness under the Contract.
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.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE ELIGIBLE PORTFOLIOS WHICH CONTAIN A FULL DESCRIPTION OF THOSE
PORTFOLIOS. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY ANY BANK,
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPLE AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1997, revised February 27, 1998.
1 - PROSPECTUS
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Table of Contents
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<TABLE>
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Page
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Special Terms 3
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Summary 4
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The Company 6
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The Separate Account 6
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General 6
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Portfolios 7
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Investment Adviser 8
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The Contract 9
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Application for a Contract 9
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Premiums 9
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Allocation of Premiums 9
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Accumulation Unit Values 10
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Deductions and Charges 10
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Monthly Deductions 10
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Annual Maintenance Fee 11
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Taxes Charged Against the Separate Account 11
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Charges Against the Portfolios 11
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Contingent Deferred Sales Charge 11
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Premium Tax Charge 11
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Contract Benefits and Rights 12
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Death Benefit 12
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Account Value 12
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Transfer of Account Value 12
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Contract Loans 13
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Amount Payable on Surrender of the Contract 13
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Partial Withdrawals 13
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Benefits at Maturity 14
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Lapse and Reinstatement 14
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Cancellation and Exchange Rights 14
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Suspension of Valuation, Payments and Transfers 14
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Last Survivor Contracts 14
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Other Matters 14
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Voting Rights 14
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Page
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Statements to Contract Owners 15
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Limit on Right to Contest 15
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Misstatement as to Age and Sex 15
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Payment Options 15
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Beneficiary 16
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Assignment 16
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Dividends 16
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Executive Officers and Directors 17
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Distribution of the Contracts 18
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Safekeeping of the Separate Account's Assets 18
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Federal Tax Considerations 19
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General 19
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Taxation of Hartford and the Separate Account 19
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Income Taxation of Contract Benefits 19
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Last Survivor Contracts 19
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Modified Endowment Contracts 19
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Estate and Generation Skipping Taxes 20
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Diversification Requirements 20
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Ownership of the Assets in the Separate Account 20
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Life Insurance Purchased for Use in Split Dollar Arrangements 21
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Federal Income Tax Withholding 21
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Non-Individual Ownership of Contracts 21
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Other 21
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Life Insurance Purchases by Nonresident Aliens and Foreign
Corporation 21
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Legal Proceedings 21
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Legal Matters 21
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Experts 21
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Registration Statement 21
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Appendix A -- Special Information for Contracts Purchased in New
York 22
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Appendix B -- Illustration of Benefits 24
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</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.
2 - PROSPECTUS
<PAGE>
Special Terms
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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'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 Hartford 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 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'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 7 of this Prospectus.
PREFERRED LOAN: The amount of the Loan Account that equals the difference
between the Account Value and the total of all premiums paid under the Contract.
SEPARATE ACCOUNT: Separate Account Five, an account established by Hartford to
separate the assets funding the Contracts from other assets of Hartford.
SUB-ACCOUNT: The subdivisions of the Separate Account used to allocate a
Contract Owner's Account Value, less Indebtedness, among the Portfolios.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
3 - PROSPECTUS
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Summary
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THE CONTRACTS
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 14.
THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
Separate Account Five ("Separate Account") funds the variable life insurance
Contracts offered by this Prospectus. Hartford 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 13 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'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 9.
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 Growth Portfolio, the Utilities Portfolio, the Dividend Growth
Portfolio, the Value-Added Market Portfolio, the Growth Portfolio, the American
Value Portfolio, the Mid-Cap Growth Portfolio, the Global Equity Portfolio, the
Developing Growth Portfolio, and the Emerging Markets Portfolio. 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 6.
The following table shows Total Annual Operating Expenses of the Portfolios:
ANNUAL FUND OPERATING EXPENSES (1)
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
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<S> <C> <C> <C>
The Money Market Portfolio...................... 0.500% 0.090% 0.590%
The North American Government Securities
Portfolio..................................... 0.650% 0.800% 1.450%
The Diversified Income Portfolio................ 0.400% 0.310% 0.710%
The Balanced Growth Portfolio................... 0.600% 0.150% 0.750%
The Utilities Portfolio......................... 0.650% 0.150% 0.800%
The Dividend Growth Portfolio................... 0.625% 0.045% 0.670%
The Value-Added Market Portfolio................ 0.500% 0.140% 0.640%
The Growth Portfolio............................ 0.800% 0.370% 1.170%
The American Value Portfolio.................... 0.625% 0.085% 0.710%
The Mid-Cap Growth Portfolio (2)................ 0.750% 0.060% 0.810%
The Global Equity
Portfolio..................................... 1.000% 0.250% 1.250%
The Developing Growth Portfolio................. 0.500% 0.180% 0.680%
The Emerging Markets Portfolio.................. 1.250% 0.770% 2.020%
</TABLE>
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(1) For the period January 1, 1996 through December 31, 1996, or the attainment
by the respective Portfolio of $50 million of net assets, whichever occurred
first, the Investment Adviser waived the management fee and reimbursed the
operating expenses to the extent they exceeded 0.50% of daily net assets of
the Portfolio.
(2) The Investment Manager has undertaken to assume all expenses of the Mid-Cap
Growth Portfolio and waive the compensation provided for that Portfolio in
its Management Agreement with the Fund until such time as the Portfolio has
$50 million of net assets or until July 31, 1998, whichever occurs first.
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 6.
4 - PROSPECTUS
<PAGE>
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 may require evidence
of insurability for any additional premiums which increase the Coverage Amount.
Generally, the minimum initial premium Hartford will accept is $10,000. Hartford
may accept less than $10,000 under certain circumstances. No premium will be
accepted which does not meet the tax qualification guidelines for life insurance
under the Code.
DEDUCTIONS AND CHARGES
On the Contract Date and on each Monthly Activity Date, Hartford will deduct a
Deduction Amount from the Account Value. The Deduction Amount will be made pro
rata respecting each Sub-Account attributable to the 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's anticipated mortality costs. In addition, Hartford
will deduct monthly from the Account Value a tax expense charge equal to an
annual rate of 0.40% for the first ten Contract Years. This charge compensates
Hartford 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 will deduct from the Account Value attributable to the Separate
Account a monthly administrative charge equal to an annual rate of 0.40%. This
charge compensates Hartford for administrative expenses incurred in the
administration of the Separate Account and the Contracts. Hartford will also
deduct from the Account Value attributable to the Separate Account a monthly
charge equal to an annual rate of 0.90% for the mortality risks and expense
risks Hartford assumes in relation to the variable portion of the 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 10 and "Contract Benefits and Rights -- Lapse and
Reinstatement," page 14.
The following table shows the monthly deductions discussed above:
<TABLE>
<CAPTION>
MONTHLY DEDUCTION AMOUNT
(as an annual percentage of Account Value)
<S> <C>
Cost of Insurance
Not to exceed the guaranteed cost of
insurance charge, see "Deductions and
Charges -- Monthly Deductions," page 10.
Tax Expense Charge........................ 0.40%
Administrative Charge..................... 0.40%
Mortality and Expense Risk Charge......... 0.90%
</TABLE>
If the Account Value on a Contract Anniversary is less than $50,000, Hartford
will deduct on such date an Annual Maintenance Fee of $30. This fee will help
reimburse Hartford for administrative and maintenance costs of the Contracts.
See "Deductions and Charges -- Annual Maintenance Fee," page 11.
Hartford may set up a provision for income taxes against the assets of the
Separate Account. See "Deductions and Charges -- Taxes Charged Against the
Separate Account," page 11, and "Federal Tax Considerations," page 19.
Applicants should review the prospectus for the Portfolios which accompanies
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:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(% of Account Value
CONTRACT attributable to
YEAR premiums paid)
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<S> <C>
1 7.5%
2 7.5%
3 7.5%
4 6.0%
5 6.0%
6 4.0%
7 4.0%
8 2.0%
9 2.0%
10+ 0.0%
</TABLE>
The contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by Hartford in distributing the Contracts. This expense
includes agents commissions, advertising and the printing of prospectuses. See
"Deductions and Charges -- Contingent Deferred Sales Charge," page 11.
During the first nine Contract Years, a premium tax charge will be imposed on
surrender or partial withdrawals at a maximum of 2.25%. See "Deductions and
Charges -- Premium Tax Charge," page 11.
5 - PROSPECTUS
<PAGE>
For a discussion of the tax consequences of surrender of the Contract or a
partial withdrawal, see "Federal Tax Considerations," page 19.
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, Hartford 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 12.
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 12.
CONTRACT LOANS
A Contract Owner may obtain cash loans from Hartford. 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 13.
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 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 13, and "Lapse and
Reinstatement," page 14.
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 or
to the agent who sold the Contract, to be cancelled within ten days after
delivery of the Contract to the applicant (in certain cases, this free-look
period is longer), Hartford will return to the applicant within seven 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 or
its agent and (2) any deductions under the 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 14.
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 19.
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
THE COMPANY
Hartford Life Insurance Company ("Hartford") 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.
Hartford was originally incorporated under the laws of Massachusetts on June 5,
1902, and was subsequently redomiciled to Connecticut. Its offices are located
in Simsbury, Connecticut; however, its mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. Hartford is ultimately controlled by The Hartford Financial Services
Group, Inc., a Delaware corporation.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis of
its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the
Sub-Accounts of the Separate Account. The ratings apply to Hartford's ability to
meet its insurance obligations, including those described in this Prospectus.
THE SEPARATE ACCOUNT
GENERAL
Separate Account Five ("Separate Account") is a separate account of Hartford
established on August 17, 1994 pursuant to the insurance laws of the State of
Connecticut and organized as a unit investment trust registered with the
Securities and Exchange Commission under the Investment Company Act of
6 - PROSPECTUS
<PAGE>
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 of the Separate Account are
not chargeable with liabilities arising out of any other business which Hartford
may conduct.
PORTFOLIOS
The underlying investment for the 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 accompanying this Propsectus.
BALANCED GROWTH PORTFOLIO
Seeks to provide capital growth with reasonable current income by investing,
under normal market conditions, at least 60% of its total assets in a
diversified portfolio of common stocks of companies which have a record of
paying dividends and, in the opinion of the Investment Manager, have the
potential for increasing dividends and in securities convertible into common
stock, and at least 25% of its total assets in investment grade fixed-income
(fixed-rate and adjustable-rate) securities such as corporate notes and bonds
and obligations issued or guaranteed by the U.S. government, its agencies and
its instrumentalities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public
utilities industry.
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income and
capital by investing primarily in common stock of companies with a record of
paying dividends and the potential for increasing dividends.
VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
GROWTH PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN VALUE PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be attractively valued given their
above average relative earnings growth potential at that time.
MID-CAP GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in equity securities of
"mid-cap" companies (that is, companies whose equity market capitalization falls
within the range of $250 million to $5 billion).
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth and, to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and
foreign companies, governments and international organizations.
7 - PROSPECTUS
<PAGE>
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 accompanying this 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 or one of its affiliated companies specifically to fund the Contracts
and certain flexible premium deferred variable annuity contracts issued by
Hartford 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 and 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. In addition, Morgan Stanley Asset
Management Inc. ("MSAM") is the Sub-Adviser to the Growth Portfolio. 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, including their investment objectives, policies and restrictions,
risks, 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 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 Fund's Board of Trustees were to conclude that separate
Portfolios should be established for variable life and variable annuity separate
accounts, Hartford will bear the attendant expenses.
All investment income of and other distributions to each Sub-Account of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Sub-Account of the Separate Account are, therefore,
separate and are credited to or charged against the Sub-Account, without regard
to income, gains or losses from any other Sub-Account or from any other business
of Hartford. Hartford will purchase shares in the Portfolios in connection with
premiums allocated to the applicable Sub-Account in accordance with 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 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's management, further investment in shares of any Portfolio should
become inappropriate in view of the purposes of the Contracts, Hartford 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
also reserves the right to end the registration under the Investment Company Act
of 1940 of the Separate Account or any other separate accounts of which it is
the depositor and which may fund the 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 Fund
prospectus accompanying this Prospectus.
INVESTMENT ADVISER
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"), a
Delaware corporation whose address is Two World Trade Center, New York, NY
10048, is the Fund's Investment Manager. The Investment Manager, which was
incorporated in July 1992, is a wholly-owned subsidiary of Morgan Stanley, Dean
Witter, Discover & Co.
8 - PROSPECTUS
<PAGE>
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, and the
Emerging Markets Portfolio, under a Sub-Advisory Agreement between TCW
Management, Inc. ("TCW") and the Investment Manager, TCW provides these
Portfolios with investment advice and portfolio management, in each case subject
to the overall supervision of the Investment Manager. TCW's address is 865 South
Figueroa Street, Suite 1800, Los Angeles, CA 90017.
With respect to the Growth Portfolio, under a Sub-Advisory Agreement between the
Investment Manager and MSAM, MSAM provides the Growth Portfolio with investment
advice and portfolio management, subject to the overall supervision of the
Investment Manager. MSAM is an affiliate of the Investment Manager. MSAM's
address is 1221 Avenue of the Americas, New York, New York 10020.
THE CONTRACT
APPLICATION FOR A CONTRACT
Individuals wishing to purchase a Contract must submit an application to
Hartford. A Contract will be issued only on the lives of insureds age 90 at the
time of application and under who supply evidence of insurability satisfactory
to Hartford. Acceptance is subject to Hartford's underwriting rules and Hartford
reserves the right to reject an application for any reason. IF AN APPLICATION
FOR A 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. 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 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, the
initial payment will not be accepted with the application. In other cases where
Hartford receives the initial payment with the application, Hartford will
provide fixed conditional insurance during underwriting according to the terms
of a conditional receipt. The fixed conditional insurance will be the insurance
applied for, up to a maximum that varies by age. If no fixed conditional
insurance was in effect, on Contract delivery Hartford 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 may require evidence of insurability for any additional
premiums which increase the Coverage Amount. Generally, the minimum initial
premium Hartford will accept is $10,000. Hartford may accept less than $10,000
under certain circumstances. No premium will be accepted which does not meet the
tax qualification guidelines for life insurance under the Code.
ALLOCATION OF PREMIUMS
Within three business days of receipt of a completed application and the initial
premium at Hartford's Home Office, Hartford will allocate the entire premium to
the Money Market Portfolio. After the expiration of the Right To Cancel Period
the Account Value in the Money Market Portfolio will be allocated among the
Portfolios in whole percentages to purchase Accumulation Units in the applicable
Sub-Accounts as the 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.
9 - PROSPECTUS
<PAGE>
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for that
Sub-Account for the Valuation Period then ended. The Net Investment Factor for
each Sub-Account is the net asset value per share of the corresponding Portfolio
at the end of the Valuation Period (plus the per share dividends or capital
gains by that Portfolio if the ex-dividend date occurs in the Valuation Period
then ended) divided by the net asset value per share of the corresponding
Portfolio at the beginning of the Valuation Period. Applicants should refer to
the prospectus for the Portfolios which 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 12.
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 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 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. The Deduction Amount reduces the number of
Accumulation Units credited to the Contract. 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 14. The following is a summary of the monthly deductions
and charges which constitute the Deduction Amount:
COST OF INSURANCE CHARGE: The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the 10th 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 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 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," page 12.)
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 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
10 - PROSPECTUS
<PAGE>
Hartford 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's average
expenses for state and local premium taxes (2.5%). Premium taxes vary, ranging
from zero to more than 4.0%. The premium tax deduction is made whether or not
any premium tax applies. The deduction may be higher or lower than the premium
tax imposed. However, Hartford does not expect to make a profit from this
deduction. The 0.15% federal tax deduction helps reimburse Hartford for
approximate expenses incurred from federal taxes under Section 848 of the Code.
The federal tax deduction is a factor Hartford must use when computing the
maximum sales load chargeable under Securities and Exchange Commission rules.
ADMINISTRATIVE CHARGE: Hartford will deduct monthly from the Account Value
attributable to the Separate Account an administrative charge equal to an annual
rate of 0.40%. This charge compensates Hartford for administrative expenses
incurred in the administration of the Separate Account and the Contracts.
MORTALITY AND EXPENSE RISK CHARGE: Hartford will deduct monthly from the Account
Value attributable to the Separate Account a charge equal to an annual rate of
0.90% for the mortality risks and expense risks Hartford assumes in relation to
the variable portion of the Contracts. The mortality risk assumed is that the
cost of insurance charges specified in the Contract will be insufficient to meet
claims. Hartford also assumes a risk that the Face Amount (the minimum Death
Benefit) will exceed the Coverage Amount on the date of death plus the Account
Value on the date Hartford receives 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 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
will deduct on such date an Annual Maintenance Fee of $30. This fee will help
reimburse Hartford 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 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 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.
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:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(% of Account Value
CONTRACT attributable to
YEAR premiums paid)
- ----------- ---------------------
<S> <C>
1 7.5%
2 7.5%
3 7.5%
4 6.0%
5 6.0%
6 4.0%
7 4.0%
8 2.0%
9 2.0%
10+ 0.0%
</TABLE>
In determining the contingent deferred sales charge and the premium tax charge
discussed below, any surrender or partial withdrawal during the first ten
Contract Years will be deemed first from premiums paid and then from earnings.
If an amount equal to all premiums paid has been withdrawn, no charge will be
assessed on a withdrawal of the remaining Account Value.
The contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by Hartford in distributing the 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 13.
PREMIUM TAX CHARGE
During the first nine Contract Years, a premium tax charge will be imposed on
surrender or partial withdrawals. The premium
11 - PROSPECTUS
<PAGE>
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%
Account Value on Date of Death X
Specified Percentage................... $ 116,250 $ 85,000
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the Date of Death of
$46,500, multiplied by the specified percentage of 250%). This amount less any
outstanding loans constitutes the Death Proceeds which Hartford would pay to the
beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Payment Options," page 15.
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
10.
TRANSFER OF ACCOUNT VALUE
While the Contract remains in effect and subject to Hartford'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
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 and its agents and affiliates is that they will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. Hartford will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine; otherwise, Hartford may
be liable for any losses due to unauthorized or fraudulent instructions. The
procedures Hartford follows for transactions initiated by telephone include
requirements that callers provide certain information for identification
purposes. All transfer instructions by telephone are tape recorded.
Hartford may modify the right to reallocate Account Value among the Sub-Accounts
if Hartford determines, in its sole discretion, that the exercise of that right
by one or more 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
12 - PROSPECTUS
<PAGE>
the transfer right that Hartford 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 receives the transfer request.
The number of Accumulation Units credited to the Sub-Account to which the
transfer is made will be increased by the number obtained by dividing the amount
transferred by the Accumulation Unit Value of that Sub-Account on the Valuation
Day Hartford receives the transfer request.
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 ("Regular
Loans" or "Preferred Loans"). 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.
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 earn interest at a rate
of 4% per annum (6% for "Preferred Loans"). The amount of the Loan Account that
equals the difference between the Account Value and the total of all premiums
paid under the Contract is considered a "Preferred Loan." The loan interest rate
that Hartford will charge on all loans is 6% per annum. The difference between
the value of the Loan Account and the Indebtedness will be transferred on a
pro-rata basis from the Sub-Accounts to the Loan Account on each Monthly
Activity Date.
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 will give written notice to the Contract Owner
that unless Hartford 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 14.
A loan, whether or not repaid, will have a permanent effect on the Account Value
because the Loan Account does not participate in the investment results of the
Sub-Accounts. The longer a 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 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
will pay the Cash Surrender Value of the Contract within seven days of receipt
by Hartford 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 19.
If the Contract Owner chooses to apply the surrender proceeds to a payment
option (see "Other Matters -- Payment Options," page 15), 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'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 in excess of the Annual
13 - PROSPECTUS
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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," page 11. For a discussion of the tax
consequences of partial withdrawals, see "Federal Tax Considerations," page 19.
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,
Hartford will pay to the Contract Owner the Cash Surrender Value. In such case,
the Contract will terminate and Hartford 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," page 19.)
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 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 12.
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 will require
repayment of the loan before permitting reinstatement. In addition, Hartford
reserves the right to require evidence of insurability satisfactory to Hartford.
CANCELLATION AND
EXCHANGE RIGHTS
An applicant has a limited right to return a Contract for cancellation. If the
Contract is returned, by mail or personal delivery to Hartford or to the agent
who sold the Contract, to be cancelled within ten days after delivery of the
Contract to the Contract Owner (a longer free-look period is provided in certain
cases), Hartford will return to the applicant within seven days the greater of
premiums paid for the Contract or the sum of (1) the Account Value on the date
the returned Contract is received by Hartford 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 (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 will suspend all procedures requiring valuation (including transfers,
surrenders and loans) on any day a national stock exchange is closed or trading
is restricted due to an existing emergency as defined by the Securities and
Exchange Commission, or on any day the Securities and Exchange Commission has
ordered that the right of surrender of the Contracts be suspended for the
protection of Contract Owners, until such condition has ended.
LAST SURVIVOR CONTRACTS
The Contracts are offered on both a single life and a "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.
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. See the last survivor illustrations in "Appendix A,"
page 22.
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 19.
OTHER MATTERS
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Hartford will
vote the shares of the Portfolios at regular and special meetings of the
shareholders of the Portfolios in accordance with instructions from 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
14 - PROSPECTUS
<PAGE>
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 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) in the same proportion as it votes
shares for which it has received instructions. However, if the Investment
Company Act of 1940 or any rule promulgated thereunder should be amended, or if
Hartford's present interpretation should change, and as a result, Hartford
determines it is permitted to vote the shares of the Portfolios in its own
right, it may elect to do so.
The voting interests of the 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 13) will not be
considered in determining the voting interests of the Contract Owner. Contract
Owners should review the prospectus for the Portfolios accompanying this
Prospectus to determine matters on which shareholders may vote.
Hartford may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that the shares be voted so as
to cause a change in the sub-classification or investment objective of one or
more of the Portfolios or to approve or disapprove an investment advisory
contract for the Portfolios.
In addition, Hartford 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 reasonably disapproves of such
changes. A change would be disapproved only if the proposed change is contrary
to state law or prohibited by state regulatory authorities. If Hartford does
disregard voting instructions, a summary of that action and the reasons for such
action will be included in the next periodic report to Contract Owners.
STATEMENTS TO CONTRACT OWNERS
Hartford will maintain all records relating to the Separate Account and the
Sub-Accounts. At least once each Contract Year, Hartford 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.
LIMIT ON RIGHT TO CONTEST
Hartford 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 two years from its effective date. In addition, if the Insured
commits suicide in the two-year period, or such period as specified in state
law, the benefit payable will be limited to the Account Value less any
Indebtedness.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit will
be appropriately adjusted as specified in the 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's payment options. The minimum
amount that may be applied under a payment option is $5,000, unless Hartford
consents to a lesser amount. Under Options 2, 3 and 4, no surrender or partial
withdrawals are permitted after payments commence. Full surrender or partial
withdrawals may be made from Option 1 or Option 6, but they are subject to the
contingent deferred sales charge, if applicable. Only a full surrender is
allowed from Option 5. A surrender from Option 5 will also be subject to the
contingent deferred sales charge, if applicable.
Hartford will pay interest of at least 3 1/2% per year on the Death Proceeds
from the date of the Insured's death to the date payment is made or a payment
option is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The following options are available under the Contracts (Hartford may offer
other payment options):
OPTION 1 -- INTEREST INCOME
This option offers payments of interest, at the rate Hartford declares, on the
amount applied under this option. The interest rate will never be less than
3 1/2% per year.
OPTION 2 -- LIFE ANNUITY
A life annuity is an annuity payable during the lifetime of the payee and
terminating with the last payment preceding the death of the payee. This option
offers the largest payment amount of any of the life annuity options since there
is no guarantee of a minimum number of payments nor a provision for a death
benefit payable to a beneficiary.
It would be possible under this option for a payee to receive only one annuity
payment if he died prior to the due date of the second annuity payment, two if
he died before the date of the third annuity payment, etc.
15 - PROSPECTUS
<PAGE>
OPTION 3 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This annuity option is an annuity payable monthly during the lifetime of the
payee with the provision that payments will be made for a minimum of 120, 180 or
240 months, as elected. If, at the death of the payee, payments have been made
for less than the minimum elected number of months, then the present value, as
of the date of the payee's death, of any remaining guaranteed payments will be
paid in one sum to the beneficiary or beneficiaries designated, unless other
provisions have been made and approved by Hartford.
OPTION 4 -- JOINT AND LAST SURVIVOR ANNUITY
An annuity payable monthly during the joint lifetime of the payee and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the payee may elect that the
payment to the survivor be less than the payment made during the joint lifetime
of the payee and a designated second person.
It would be possible under this option for a payee and designated second person
to receive only one payment in the event of the common or simultaneous death of
the parties prior to the due date for the second payment and so on.
OPTION 5 -- PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
five to 30 years. Under this option, you may, at any time, request a full
surrender and receive, within seven days, the termination value of the Contract
as determined by Hartford.
In the event of the payee's death prior to the end of the designated period, the
present value, as of the date of the payee's death, of any remaining guaranteed
payments will be paid in one sum to the beneficiary or beneficiaries designated,
unless other provisions have been made and approved by Hartford.
Option 5 is an option that does not involve life contingencies.
OPTION 6 -- DEATH PROCEEDS REMAINING WITH HARTFORD
Proceeds from the Death Benefit left with Hartford. These proceeds will remain
in the Sub-Accounts to which they were allocated at the time of death, unless
the beneficiary elects to 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 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 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. 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 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.
16 - PROSPECTUS
<PAGE>
Executive Officers and Directors
--------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- ----------------------------- ---------------------------------- ---------------------------------------------------------
<S> <C> <C>
Wendell J. Bossen, 63 Vice President, 1992** Vice President (1992-Present), Hartford Life and Accident
Insurance Company; President (1992-Present),
International Corporate Marketing Group, Inc.;
Executive Vice President (1984-1992), Mutual Benefit.
Gregory A. Boyko, 45 Senior Vice President, Vice President and Controller (1995-1997), Hartford;
Chief Financial Officer & Senior Vice President, Chief Financial Officer &
Treasurer, 1997 Treasurer (1997-Present); Vice President & Controller
Director, 1997 (1995-1997), Hartford Life and Accident Insurance
Company; Senior Vice President, Chief Financial Officer
& Treasurer (1997-Present), Hartford Life, Inc.; Chief
Financial Officer (1994-1995), IMG American Life;
Senior Vice President (1992-1994), Connecticut Mutual
Life Insurance Company.
Peter W. Cummins, 60 Senior Vice President, 1997 Vice President (1989-1997); Director of Broker Dealer
Sales--ILAD (1989-1992), Hartford; Senior Vice
President (1997-Present) Vice President (1989-1997);
Director of Broker Dealer Sales--ILAD (1989-1991);
Hartford Life and Accident Insurance Company.
Ann M. de Raismes, 46 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice President
Director of Human Resources, (1992-1994); Hartford; Senior Vice President
1991 (1997-Present); Director of Human Resources
(1991-Present); Vice President (1994-1997); Assistant
Vice President (1992-1994); Hartford Life and Accident
Insurance Company; Vice President, Human Resources
(1997-Present), Hartford Life, Inc.
Timothy M. Fitch, 44 Vice President, 1995 Assistant Vice President (1992-1995), Hartford; Vice
Actuary, 1994 President (1995-Present); Actuary (1994-Present);
Assistant Vice President (1992-1995), Hartford Life and
Accident Insurance Company.
Bruce D. Gardner, 46 Vice President, 1995 Director (1994-1997); General Counsel & Corporate
Secretary (1991-1995), Hartford; Vice President
(1995-1997); Director (1995-1997); General Counsel &
Corporate Secretary (1991-1995), Hartford Life and
Accident Insurance Company.
J. Richard Garrett, 52 Vice President, 1993 Treasurer (1986-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer (1997-Present);
Treasurer (1983-1997); Hartford Life and Accident
Insurance Company; Treasurer (1977), The Hartford
Financial Services Group.
John P. Ginnetti, 51 Executive Vice President and Senior Vice President -- Individual Life and Annuity
Director, Asset Management Division (1988-1994), Hartford; Director
Services, 1994 (1988-Present); Director (1988-Present); Executive Vice
Director, 1988 President & Director, Asset Management Services
(1994-Present); Senior Vice President -- Individual
Life and Annuity Division (1988-1994), Hartford Life
and Accident Insurance Company; Executive Vice
President, Asset Management, Hartford Life, Inc.
(1997-Present).
</TABLE>
17 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- ----------------------------- ---------------------------------- ---------------------------------------------------------
<S> <C> <C>
Lynda Godkin, 43 Senior Vice President, 1997 Associate General Counsel (1995-1996); Assistant General
General Counsel, 1996 Counsel and Secretary (1994-1995); Counsel (1990-1994),
Corporate Secretary, 1995 Hartford; Director (1997-Present); Senior Vice
Director, 1997 President (1997-Present); General Counsel
(1996-Present); Corporate Secretary (1995-Present);
Associate General Counsel (1995-1996); Assistant
General Counsel and Secretary (1994-1995); Counsel
(1990-1994), Hartford Life and Accident Company; Vice
President and General Counsel (1997-Present), Hartford
Life, Inc.
Christopher Graham, 46 Vice President, 1997
Lois W. Grady, 52 Vice President, 1993 Assistant Vice President (1987-1993), Hartford; Vice
President (1993-1997); Assistant Vice President
(1987-1993), Hartford Life and Accident Insurance
Company.
Stephen T. Joyce, 38 Vice President, 1997 Assistant Vice President (1994-1997), Hartford; Assistant
Vice President (1994-1997), Hartford Life and Accident
Insurance Company.
Robert A. Kerzner, 45 Vice President, 1995 Regional Vice President (1991-1994), Hartford; Vice
President (1994-1997), Hartford Life and Accident
Insurance Company.
Steven M. Maher, 42 Vice President, 1992 Assistant Vice President (1987-1992), Hartford; Vice
Actuary, 1987 President (1993-Present); Actuary (1987-Present);
Assistant Vice President (1987-1993), Hartford Life and
Accident Insurance Company.
William B. Malchodi, Jr., 50 Vice President, 1994 Director of Taxes (1992-1997), Hartford Life and Accident
Director of Taxes, 1991 Insurance Company.
Thomas M. Marra, 39 Executive Vice President (1995) Senior Vice President (1994-1995); Vice President
Director, Individual Life (1989-1994); Actuary (1987-1995), Hartford; Senior Vice
and Annuity Division, 1994 President (1994-1996); Director, Individual Life and
Director, 1994* Annuity Division (1994-Present); Actuary (1987-1997),
Hartford Life and Accident Insurance Company; Executive
Vice President, Individual Life and Annuities
(1997-Present), Hartford Life, Inc.
Robert F. Nolan, 42 Senior Vice President, 1997 Vice President (1995-1997); Assistant Vice President
(1992-1995), Hartford; Vice President (1995-1997);
Assistant Vice President (1992-1995), Hartford Life and
Accident Insurance Company; Vice President, Corporate
Relations (1997-Present), Hartford Life, Inc.; Manager,
Public Relations (1986), Aetna Life and Casualty
Insurance Company.
Joseph J. Noto, 45 Vice President, 1989 Executive Vice President & Chief Operating Officer
(1997-Present); Director (1994-Present); President
(1994-1997), American Maturity Life Insurance Company;
Vice President (1989-1997), Hartford Life and Accident
Insurance Company.
C. Michael O'Halloran, 50 Vice President, 1994 Senior Associate General Counsel (1988-1997), Hartford;
Vice President (1994-Present); Senior Associate General
Counsel (1988-1997), Hartford Life and Accident
Insurance Company; Corporate Secretary (1997-Present),
Hartford Life, Inc.; Vice President (1994-Present);
Senior Associate General Counsel (1988-Present);
Director of Corporate Law (1994-Present), The Hartford
Financial Services Group.
</TABLE>
18 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- ----------------------------- ---------------------------------- ---------------------------------------------------------
<S> <C> <C>
Craig R. Raymond, 36 Senior Vice President, 1997 Chief Actuary, 1994Vice President (1993-1997); Assistant
Vice President (1992-1993); Actuary (1990-1994),
Hartford; Senior Vice President (1997-Present); Chief
Actuary (1995-Present); Vice President (1993-1997);
Actuary (1990-1995), Hartford Life and Accident
Insurance Company; Vice President and Chief Actuary
(1997-Present), Hartford Life, Inc.
Donald A. Salama, 49 Vice President, 1997 Vice President (1997-Present), Hartford Life and Accident
Insurance Company.
Timothy P. Schiltz, 36 Vice President, 1997 Assistant Vice President (1994-1997), Hartford; Vice
President (1997-Present); Assistant Vice President
(1994-1997), Hartford Life and Accident Insurance
Company; Consulting Actuary (1992-1993), Milliman &
Robertson, Inc.; Consulting Actuary (1988-1992), Chalke
Incorporated.
Lowndes A. Smith, 58 President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief
Director, 1981* Executive Officer (1997-Present); Chief Operating
Officer (1989-1997), Hartford Life and Accident
Insurance Company; Chief Executive Officer and
President and Director (1997-Present), Hartford Life,
Inc.
Edward A. Sweeney, 40 Vice President, 1993 Chicago Regional Manager (1985-1993), Hartford; Vice
President (1993-Present), Hartford Life and Accident
Insurance Company.
Raymond P. Welnicki, 48 Senior Vice President & Director, Vice President (1993-1994), Hartford; Director
Employee Benefit Division, 1994 (1994-Present); Senior Vice President (1995-Present);
Director, 1994* Director, Employee Benefit Division (1997-Present);
Vice President (1993-1995), Hartford Life and Accident
Insurance Company; Senior Vice President, Employee
Benefits (1997-Present), Hartford Life, Inc.; Board of
Directors, Ethix Corp.
Walter C. Welsh, 50 Senior Vice President, 1997 Vice President (1995-1997); Assistant Vice President
(1992-1995), Hartford; Senior Vice President
(1997-Present); Vice President (1995-1997); Assistant
Vice President (1992-1995), Hartford Life and Accident
Insurance Company; Vice President, Government Affairs
(1997-Present), Hartford Life, Inc.
Lizabeth H. Zlatkus, 38 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice President
Director, 1994* (1992-1994), Hartford; Director (1994-Present); Senior
Vice President (1997-Present); Vice President
(1994-1997); Assistant Vice President (1992-1994),
Hartford Life and Accident Insurance Company; Vice
President, Group Life and Disability (1997-Present),
Hartford Life, Inc.
David Znamierowski, 37 Senior Vice President, 1997 Vice President (1997), Hartford; Senior Vice President
Director, Risk Management (1997-Present), Hartford Life and Accident Insurance
Strategy, 1996 Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice President,
Investment Strategy & Policy, Aetna Life and Casualty.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors.
** The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
19 - PROSPECTUS
<PAGE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
DISTRIBUTION OF THE CONTRACTS
Hartford 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 and who are registered representatives of
Dean Witter Reynolds, Inc. ("Dean Witter"). Any sales representative will have
been qualified to sell variable life insurance contracts under applicable
federal and state laws. Dean Witter is registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is a wholly-owned subsidiary of Hartford. The principal business address of HSD
is the same as that of Hartford.
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers, and other registered broker-dealers is 7.0% of initial and
subsequent premiums. From time to time, Hartford may pay or permit other
promotional incentives, in cash or credit or other compensation.
Hartford 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.
SAFEKEEPING OF THE
SEPARATE ACCOUNT'S ASSETS
The assets of the Separate Account are held by Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the General Account of Hartford. Hartford maintains records of all purchases and
redemptions of shares of the Portfolio. Additional protection for the assets of
the Separate Account is afforded by Hartford's blanket fidelity bond issued by
Aetna Casualty and Surety Company, in the aggregate of $50 million, covering all
of the officers and employees of Hartford.
Federal Tax Considerations
--------------------------------------------------------------------
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE 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 the 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's understanding of existing federal income
tax laws as they are currently interpreted.
TAXATION OF HARTFORD
AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Funds) are reinvested and are taken into account in determining the value of the
Accumulation Units (see "Contract Benefits and Rights -- Account Value," page
12). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
INCOME TAXATION OF
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
20 - PROSPECTUS
<PAGE>
may be invested in a contract that is treated as life insurance. Hartford
intends to monitor premium levels with respect to the Contracts to assure
compliance with the Section 7702 requirements.
During the first 15 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 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 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 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, loans, distributions or other amounts
received from a modified endowment contract during the life of the Insured will
be taxed to the extent of any accumulated income in the 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.
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
21 - PROSPECTUS
<PAGE>
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 monitors the diversification of investments in its separate accounts,
including the Separate Account, and tests for diversification as required by the
Code. Hartford 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 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 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
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
22 - PROSPECTUS
<PAGE>
applies. In addition, purchasers may be subject to state and/or municipal taxes
and taxes that may be imposed by the purchaser's country of citizenship or
residence. Prospective purchasers are advised to consult with a qualified tax
adviser regarding U.S., state and foreign taxation with respect to a life
insurance policy purchase.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate Account is
a party.
LEGAL MATTERS
Legal matters in connection with the issue and sale of modified single premium
variable life insurance contracts described in this Prospectus and the
organization of Hartford, 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 Harford Life Insurance Companies.
EXPERTS
The audited consolidated financial statements and financial statement schedules
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 giving said report.
Reference is made to said report on the consolidated financial statements of
Hartford Life Insurance Company (the Depositor), which includes an explanatory
paragraph with respect to the change in method of accounting for debt and equity
securities as of January 1, 1994, as discussed in Note 2 of Notes to
Consolidated Financial Statements. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
The hypothetical Contract illustrations included in this Prospectus and the
registration statement with respect to the Separate Account have been approved
by Michael Winterfield, FSA, MAAA, Director, Individual Annuity Inforce
Management, for Hartford, and are included in reliance upon his opinion as to
their reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning the Separate Account, the Portfolios, Hartford, and the Contracts.
23 - PROSPECTUS
<PAGE>
Appendix A
--------------------------------------------------------------------
SPECIAL INFORMATION FOR CONTRACTS PURCHASED IN NEW YORK
If the Contract is purchased in the State of New York, the following provisions
of the Prospectus are amended as follows:
In the Special Terms subsection of the Prospectus, the definition of Account
Value is deleted and the following definition is substituted:
ACCOUNT VALUE: The current value of Accumulation Units plus the value of the
Loan Account under the Contract. In the case of a Contract Owner who purchases
the Contract in the State of New York (the "New York Contract Owner") and who
elects to transfer into the Fixed Account, Account Value is the current value of
the Fixed Account plus the value of the Loan Account under the Contract.
The following definition is added:
FIXED ACCOUNT: Part of the General Account of Hartford to which a New York
Contract Owner may allocate the entire Account Value.
The definition of Loan Account is deleted and the following definition is
substituted:
LOAN ACCOUNT: An account in Hartford's General Account, established for any
amounts transferred from the Sub-Accounts or, if a New York Contract Owner, from
the Fixed Account 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.
The following is added to the Prospectus as a separate section following the
section entitled "The Separate Account":
THE FIXED ACCOUNT
THAT PORTION OF THE POLICY RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED UNDER
THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT REGISTERED
AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT").
ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN ARE SUBJECT TO
THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE
DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT THE FIXED
ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL
SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
Under the circumstances described under the heading "Transfer of Entire Account
Value to the Fixed Account," below, New York Contract Owners may transfer no
less than the entire Account Value to the Fixed Account. Account Value
transferred to the Fixed Account becomes part of the general assets of Hartford.
Hartford invests the assets of the General Account in accordance with applicable
laws governing the investment of insurance company general accounts.
Hartford currently credits interest to the Account Value transferred to the
Fixed Account under the Contract at the Minimum Credited Rate of 3% per year,
compounded annually. Hartford reserves the right to credit a lower minimum
interest rate according to state law. Hartford may also credit interest at rates
greater than the minimum Fixed Account interest rate. There is no specific
formula for determining the interest credited to the Account Value in the Fixed
Account.
The following language is added to the section of the Prospectus entitled
"Deductions and Charges -- Administrative Charges," page 11:
No Administrative Charge is deducted from Account Value in the Fixed Account.
The following language is added to the section of the Prospectus entitled
"Deductions and Charges -- Mortality and Expense Risk Charge," page 11:
No Mortality and Expense Risk Charge is deducted from Account Value in the Fixed
Account.
The following separate sections are added to the section of the Prospectus
entitled "Contract Benefits," page 12:
TRANSFER OF ENTIRE ACCOUNT VALUE TO THE FIXED ACCOUNT
New York Contract Owners may transfer no less than the entire Account Value into
the Fixed Account under the following circumstances: (i) during the first 18
months following the Date of Issue, (ii) within 30 days following a Contract
Anniversary, or (iii) within 60 days following the effective date of a material
change in the investment policy of the Separate Account which the New York
Contract Owner objects to.
A TRANSFER TO THE FIXED ACCOUNT MUST BE FOR THE ENTIRE ACCOUNT VALUE AND ONCE
THE ACCOUNT VALUE HAS BEEN TRANSFERRED TO THE FIXED ACCOUNT, IT MAY NOT, UNDER
ANY CIRCUMSTANCES, BE TRANSFERRED BACK TO THE SEPARATE ACCOUNT.
22 - PROSPECTUS
<PAGE>
For New York Contract Owners who elect to invest in the Fixed Account, Hartford
will transfer the entire Account Value from the Separate Account to the Fixed
Account on the Monthly Activity Date next following the date on which Hartford
received the transfer request. The Account Value in the Fixed Account on the
date of transfer equals the entire Account Value; plus the value of the Loan
Account; minus the Monthly Deduction Amount applicable to the Fixed Account and
minus the Annual Maintenance Fee, if applicable. On each subsequent Monthly
Activity Date, the Account Value in the Fixed Account equals the Account Value
on the previous Monthly Activity Date; plus any premiums received since the last
Monthly Activity Date; plus interest credited since the last Monthly Activity
Date; minus the Monthly Deduction Amount applicable to the Fixed Account; minus
any partial surrenders taken since the last Monthly Activity Date and minus any
Surrender Charges deducted since the last Monthly Deduction Date. On each
Valuation Date (other than a Monthly Activity Date), the Account Value of the
Fixed Account equals the Account Value on the previous Monthly Activity Date;
plus any premiums received since the last Monthly Activity Date; plus any
interest credited since the last Monthly Activity Date; minus any partial
surrenders taken since the last Monthly Activity Date and minus any surrender
charges deducted since the last Monthly Activity Date.
DEFERRED PAYMENTS
Hartford reserves the right to defer payment of any Cash Surrender Values and
loan amounts which are attributable to the Fixed Account for up to six months
from the date of request. If payment is deferred for more than ten days,
Hartford will pay interest at the Fixed Account Minimum Credited Interest Rate.
23 - PROSPECTUS
<PAGE>
Appendix B
--------------------------------------------------------------------
ILLUSTRATIONS OF BENEFITS
The tables in Appendix A illustrate the way in which a Contract operates. They
show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The tables are based on an initial
premium of $10,000. A male age 45, a female age 55 and a male age 65 with Face
Amounts of $40,161, $33,334 and $19,380, respectively, are illustrated for the
single life Contract. The illustrations for the last survivor Contract assume
male and female of equal ages, including age 55 and 65 for Face Amounts of
$44,053 and $27,778.
The death benefit and surrender value for a Contract would be different from
those shown if the rates of return averaged 0%, 6% and 12% over a period of
years, but also fluctuated above or below those averages for individual Contract
Years. They would also differ if any Contract loan were made during the period
of time illustrated.
The tables reflect the deductions of current Contract charges and guaranteed
Contract charges for a single gross interest rate. The death benefits and
surrender values would change if the current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Contract Year take into account an average daily charge equal to an annual
charge of 0.75% of the average daily net assets of the Portfolios for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Portfolio's assets are equal to net annual
investment return rates (net of the 0.75% average daily charge) of -0.75%, 5.25%
and 11.25%, respectively.
In addition the death benefit and surrender value as of the end of each Contract
Year take into account the (1) tax expense charge equal to an annual rate of
0.40% of Account Value for the first ten Contract Years; (2) administrative
charge equal to an annual rate of 0.40% of Account Value attributable to the
Separate Account; (3) mortality and expense risk charge equal to an annual rate
of 0.90% of Account Value attributable to the Separate Account; and (4) any
Contingent Deferred Sales Charge and Premium Tax Charge which may be applicable
in the first nine Contract Years.
The hypothetical returns shown in the tables are without any tax charges that
may be attributable to the Separate Account in the future. In order to produce
after tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12% to cover any tax charges (see
"Deductions and Charges -- Taxes Charged Against the Separate Account," page
11).
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Hartford will furnish upon request, a comparable illustration reflecting the
proposed insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. Hartford will also
furnish an additional similar illustration reflecting current cost of insurance
rates which may be less than, but never greater than, the guaranteed cost of
insurance rates.
24 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 40,161 10,756 9,764 40,161
2 11,025 11,740 10,755 40,161 11,575 10,593 40,161
3 11,576 12,724 11,751 40,161 12,463 11,495 40,161
4 12,155 13,794 12,987 40,161 13,427 12,626 40,161
5 12,763 14,956 14,169 40,161 14,474 13,693 40,161
6 13,401 16,219 15,657 40,161 15,613 15,057 40,161
7 14,071 17,592 17,060 40,161 16,851 16,324 40,161
8 14,775 19,083 18,788 40,161 18,198 17,907 40,161
9 15,513 20,704 20,452 40,161 19,666 19,417 40,161
10 16,289 22,465 22,465 40,161 21,268 21,268 40,161
11 17,103 24,501 24,501 40,161 23,113 23,113 40,161
12 17,959 26,724 26,724 40,161 25,145 25,145 40,161
13 18,856 29,153 29,153 41,398 27,386 27,386 40,161
14 19,799 31,808 31,808 43,896 29,864 29,864 41,213
15 20,789 34,714 34,714 46,517 32,590 32,590 43,670
16 21,829 37,895 37,895 49,264 35,574 35,574 46,247
17 22,920 41,367 41,367 52,951 38,832 38,832 49,705
18 24,066 45,156 45,156 56,897 42,386 42,386 53,407
19 25,270 49,292 49,292 61,122 46,266 46,266 57,371
20 26,533 53,807 53,807 65,645 50,502 50,502 61,613
25 33,864 83,601 83,601 96,978 78,372 78,372 90,912
35 55,160 201,997 201,997 214,118 180,092 189,092 200,438
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
25 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 40,161 10,171 9,192 40,161
2 11,025 10,506 9,546 40,161 10,337 9,380 40,161
3 11,576 10,769 9,831 40,161 10,497 9,564 40,161
4 12,155 11,040 10,275 40,161 10,651 9,891 40,161
5 12,763 11,319 10,577 40,161 10,796 10,061 40,161
6 13,401 11,605 11,089 40,161 10,930 10,421 40,161
7 14,071 11,900 11,411 40,161 11,052 10,569 40,161
8 14,775 12,202 11,941 40,161 11,158 10,902 40,161
9 15,513 12,514 12,282 40,161 11,244 11,016 40,161
10 16,289 12,833 12,833 40,161 11,309 11,309 40,161
11 17,103 13,228 13,228 40,161 11,394 11,394 40,161
12 17,959 13,636 13,636 40,161 11,455 11,455 40,161
13 18,856 14,058 14,058 40,161 11,486 11,486 40,161
14 19,799 14,494 14,494 40,161 11,486 11,486 40,161
15 20,789 14,944 14,944 40,161 11,450 11,450 40,161
16 21,829 15,409 15,409 40,161 11,370 11,370 40,161
17 22,920 15,889 15,889 40,161 11,239 11,239 40,161
18 24,066 16,385 16,385 40,161 11,048 11,048 40,161
19 25,270 16,898 16,898 40,161 10,787 10,787 40,161
20 26,533 17,428 17,428 40,161 10,442 10,442 40,161
25 33,864 20,353 20,353 40,161 6,987 6,987 40,161
35 55,160 27,852 27,852 40,161 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
26 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 40,161 9,586 8,649 40,161
2 11,025 9,340 8,404 40,161 9,169 8,291 40,161
3 11,576 9,026 8,118 40,161 8,747 7,925 40,161
4 12,155 8,721 7,990 40,161 8,319 7,699 40,161
5 12,763 8,425 7,720 40,161 7,883 7,312 40,161
6 13,401 8,138 7,657 40,161 7,438 7,113 40,161
7 14,071 7,860 7,401 40,161 6,980 6,696 40,161
8 14,775 7,591 7,353 40,161 6,506 6,461 40,161
9 15,513 7,330 7,111 40,161 6,013 6,002 40,161
10 16,289 7,076 7,076 40,161 5,498 5,717 40,161
11 17,103 6,865 6,865 40,161 4,978 5,211 40,161
12 17,959 6,659 6,659 40,161 4,427 4,673 40,161
13 18,856 6,459 6,459 40,161 3,843 4,100 40,161
14 19,799 6,264 6,264 40,161 3,221 3,488 40,161
15 20,789 6,073 6,073 40,161 2,558 2,833 40,161
16 21,829 5,888 5,888 40,161 1,845 2,127 40,161
17 22,920 5,707 5,707 40,161 1,075 1,361 40,161
18 24,066 5,531 5,531 40,161 237 526 40,161
19 25,270 5,360 5,360 40,161 -- -- --
20 26,533 5,193 5,193 40,161 -- -- --
25 33,864 4,420 4,420 40,161 -- -- --
35 55,160 3,145 3,145 40,161 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
27 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 33,334 10,727 9,736 33,334
2 11,025 11,740 10,755 33,334 11,517 10,537 33,334
3 11,576 12,724 11,751 33,334 12,378 11,411 33,334
4 12,155 13,794 12,987 33,334 13,317 12,517 33,334
5 12,763 14,956 14,169 33,334 14,343 13,564 33,334
6 13,401 16,219 15,657 33,334 15,464 14,909 33,334
7 14,071 17,592 17,060 33,334 16,688 16,163 33,334
8 14,775 19,083 18,788 33,334 18,025 17,735 33,334
9 15,513 20,704 20,452 33,334 19,487 19,238 33,334
10 16,289 22,465 22,465 33,334 21,088 21,088 33,334
11 17,103 24,501 24,501 33,334 22,940 22,940 33,334
12 17,959 26,736 26,736 33,334 24,991 24,991 33,334
13 18,856 29,218 29,218 34,478 27,270 27,270 33,334
14 19,799 31,946 31,946 37,377 29,804 29,804 34,891
15 20,789 34,928 34,928 40,517 32,585 32,585 37,799
16 21,829 38,190 38,190 43,919 35,625 35,625 40,969
17 22,920 41,765 41,765 47,195 38,958 38,958 44,023
18 24,066 45,686 45,686 50,712 42,614 42,614 47,301
19 25,270 49,992 49,992 54,492 46,627 46,627 50,824
20 26,533 54,687 54,687 59,609 51,004 51,004 55,594
25 33,864 85,841 85,841 90,992 80,060 80,060 84,864
35 55,160 208,273 208,273 218,687 192,260 192,260 201,873
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
28 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 33,334 10,142 9,164 33,334
2 11,025 10,506 9,546 33,334 10,279 9,324 33,334
3 11,576 10,769 9,831 33,334 10,412 9,480 33,334
4 12,155 11,040 10,275 33,334 10,539 9,781 33,334
5 12,763 11,319 10,577 33,334 10,661 9,928 33,334
6 13,401 11,605 11,089 33,334 10,774 10,266 33,334
7 14,071 11,900 11,411 33,334 10,875 10,394 33,334
8 14,775 12,202 11,941 33,334 10,959 10,704 33,334
9 15,513 12,514 12,282 33,334 11,021 10,793 33,334
10 16,289 12,833 12,833 33,334 11,055 11,055 33,334
11 17,103 13,228 13,228 33,334 11,106 11,106 33,334
12 17,959 13,636 13,636 33,334 11,127 11,127 33,334
13 18,856 14,058 14,058 33,334 11,117 11,117 33,334
14 19,799 14,494 14,494 33,334 11,073 11,073 33,334
15 20,789 14,944 14,944 33,334 10,988 10,988 33,334
16 21,829 15,409 15,409 33,334 10,854 10,854 33,334
17 22,920 15,889 15,889 33,334 10,656 10,656 33,334
18 24,066 16,385 16,385 33,334 10,375 10,375 33,334
19 25,270 16,898 16,898 33,334 9,991 9,991 33,334
20 26,533 17,428 17,428 33,334 9,479 9,479 33,334
25 33,864 20,353 20,353 33,334 3,955 3,955 33,334
35 55,160 27,852 27,852 33,334 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
29 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75 NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 33,334 9,558 8,593 33,334
2 11,025 9,340 8,404 33,334 9,112 8,179 33,334
3 11,576 9,026 8,118 33,334 8,662 7,761 33,334
4 12,155 8,721 7,990 33,334 8,209 7,486 33,334
5 12,763 8,425 7,720 33,334 7,750 7,053 33,334
6 13,401 8,138 7,657 33,334 7,283 6,810 33,334
7 14,071 7,860 7,401 33,334 6,803 6,352 33,334
8 14,775 7,591 7,353 33,334 6,305 6,073 33,334
9 15,513 7,330 7,111 33,334 5,782 5,568 33,334
10 16,289 7,076 7,076 33,334 5,230 5,230 33,334
11 17,103 6,865 6,865 33,334 4,665 4,665 33,334
12 17,959 6,659 6,659 33,334 4,061 4,061 33,334
13 18,856 6,459 6,459 33,334 3,419 3,419 33,334
14 19,799 6,264 6,264 33,334 2,733 2,733 33,334
15 20,789 6,073 6,073 33,334 1,997 1,997 33,334
16 21,829 5,888 5,888 33,334 1,200 1,200 33,334
17 22,920 5,707 5,707 33,334 324 324 33,334
18 24,066 5,531 5,531 33,334 -- -- --
19 25,270 5,360 5,360 33,334 -- -- --
20 26,533 5,193 5,193 33,334 -- -- --
25 33,864 4,420 4,420 33,334 -- -- --
35 55,160 3,145 3,145 33,334 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
30 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 19,380 10,650 9,660 19,380
2 11,025 11,740 10,755 19,380 11,357 10,380 19,380
3 11,576 12,724 11,751 19,380 12,131 11,169 19,380
4 12,155 13,794 12,987 19,380 12,984 12,190 19,380
5 12,763 14,956 14,169 19,380 13,930 13,156 19,380
6 13,401 16,219 15,657 19,380 14,986 14,436 19,380
7 14,071 17,595 17,063 19,883 16,172 15,650 19,380
8 14,775 19,106 18,810 21,208 17,516 17,228 19,443
9 15,513 20,760 20,508 22,629 19,027 18,780 20,740
10 16,289 22,549 22,549 24,578 20,664 20,664 22,524
11 17,103 24,595 24,595 26,563 22,536 22,536 24,340
12 17,959 26,837 26,837 28,716 24,587 24,587 26,309
13 18,856 29,275 29,275 31,325 26,816 26,816 28,693
14 19,799 31,947 31,947 33,864 29,260 29,260 31,016
15 20,789 34,856 34,856 36,948 31,916 31,916 33,831
16 21,829 38,046 38,046 39,949 34,834 34,834 36,576
17 22,920 41,517 41,517 43,594 38,005 38,005 39,906
18 24,066 45,308 45,308 47,574 41,447 41,447 43,520
19 25,270 49,448 49,448 51,921 45,177 45,177 47,436
20 26,533 53,969 53,969 56,667 49,215 49,215 51,677
25 33,864 83,837 83,837 88,030 74,965 74,965 78,714
35 55,160 202,335 202,335 204,358 175,528 175,528 177,284
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
31 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 19,380 10,062 9,086 19,380
2 11,025 10,506 9,546 19,380 10,104 9,152 19,380
3 11,576 10,769 9,831 19,380 10,123 9,196 19,380
4 12,155 11,040 10,275 19,380 10,116 9,364 19,380
5 12,763 11,319 10,577 19,380 10,077 9,351 19,380
6 13,401 11,605 11,089 19,380 10,002 9,502 19,380
7 14,071 11,900 11,411 19,380 9,880 9,406 19,380
8 14,775 12,202 11,941 19,380 9,703 9,454 19,380
9 15,513 12,514 12,282 19,380 9,455 9,232 19,380
10 16,289 12,833 12,833 19,380 9,124 9,124 19,380
11 17,103 13,228 13,228 19,380 8,730 8,730 19,380
12 17,959 13,636 13,636 19,380 8,217 8,217 19,380
13 18,856 14,058 14,058 19,380 7,564 7,564 19,380
14 19,799 14,494 14,494 19,380 6,738 6,738 19,380
15 20,789 14,944 14,944 19,380 5,699 5,699 19,380
16 21,829 15,409 15,409 19,380 4,387 4,387 19,380
17 22,920 15,889 15,889 19,380 2,723 2,723 19,380
18 24,066 16,385 16,385 19,380 595 595 19,380
19 25,270 16,898 16,898 19,380 -- -- --
20 26,533 17,428 17,428 19,380 -- -- --
25 33,864 20,353 20,353 21,371 -- -- --
35 55,160 27,854 27,854 28,133 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
32 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 19,380 9,475 8,512 19,380
2 11,025 9,340 8,404 19,380 8,923 7,994 19,380
3 11,576 9,026 8,118 19,380 8,340 7,444 19,380
4 12,155 8,721 7,990 19,380 7,720 7,004 19,380
5 12,763 8,425 7,720 19,380 7,056 6,368 19,380
6 13,401 8,138 7,657 19,380 6,338 5,875 19,380
7 14,071 7,869 7,401 19,380 5,553 5,111 19,380
8 14,775 7,591 7,353 19,380 4,684 4,461 19,380
9 15,513 7,330 7,111 19,380 3,712 3,503 19,380
10 16,289 7,076 7,076 19,380 2,616 2,616 19,380
11 17,103 6,865 6,865 19,380 1,379 1,379 19,380
12 17,959 6,659 6,659 19,380 -- -- --
13 18,856 6,459 6,459 19,380 -- -- --
14 19,799 6,264 6,264 19,380 -- -- --
15 20,789 6,073 6,073 19,380 -- -- --
16 21,829 5,888 5,888 19,380 -- -- --
17 22,920 5,707 5,707 19,380 -- -- --
18 24,066 5,531 5,531 19,380 -- -- --
19 25,270 5,360 5,360 19,380 -- -- --
20 26,533 5,193 5,193 19,380 -- -- --
25 33,864 4,420 4,420 19,380 -- -- --
35 55,160 3,145 3,145 19,380 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE 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.
33 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE \ 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,902 9,906 44,053 10,902 9,906 44,053
2 11,025 11,882 10,894 44,053 11,882 10,894 44,053
3 11,576 12,946 11,970 44,053 12,946 11,970 44,053
4 12,155 14,103 13,292 44,053 14,103 13,292 44,053
5 12,763 15,360 14,568 44,053 15,360 14,568 44,053
6 13,401 16,726 16,159 44,053 16,726 16,159 44,053
7 14,071 18,210 17,674 44,053 18,210 17,674 44,053
8 14,775 19,825 19,526 44,053 19,822 19,523 44,053
9 15,513 21,585 21,331 44,053 21,574 21,320 44,053
10 16,289 23,505 23,505 44,053 23,477 23,477 44,053
11 17,103 25,727 25,727 44,053 25,652 25,652 44,053
12 17,959 28,162 28,162 44,053 28,031 28,031 44,053
13 18,856 30,830 30,830 44,053 30,640 30,640 44,053
14 19,799 33,755 33,755 44,053 33,507 33,507 44,053
15 20,789 36,960 36,960 44,053 36,667 36,667 44,053
16 21,829 40,479 40,479 46,551 40,154 40,154 46,177
17 22,920 44,337 44,337 50,102 43,981 43,981 49,699
18 24,066 48,565 48,565 53,908 48,175 48,175 53,475
19 25,270 53,202 53,202 57,991 52,774 52,774 57,524
20 26,533 58,305 58,305 63,553 57,828 57,828 63,033
25 33,864 92,176 92,176 97,707 91,132 91,132 96,600
35 55,160 230,373 230,373 241,893 219,404 219,404 230,374
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
34 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE \ 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------- -----------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ------------ ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,314 9,332 44,053 10,314 9,332 44,053
2 11,025 10,632 9,669 44,053 10,632 9,669 44,053
3 11,576 10,954 10,012 44,053 10,954 10,012 44,053
4 12,155 11,279 10,509 44,053 11,279 10,509 44,053
5 12,763 11,605 10,860 44,053 11,605 10,860 44,053
6 13,401 11,941 11,422 44,053 11,931 11,412 44,053
7 14,071 12,288 11,796 44,053 12,255 11,763 44,053
8 14,775 12,646 12,383 44,053 12,574 12,311 44,053
9 15,513 13,015 12,782 44,053 12,885 12,652 44,053
10 16,289 13,396 13,396 44,053 13,182 13,182 44,053
11 17,103 13,858 13,858 44,053 13,517 13,517 44,053
12 17,959 14,337 14,337 44,053 13,834 13,834 44,053
13 18,856 14,834 14,834 44,053 14,127 14,127 44,053
14 19,799 15,349 15,349 44,053 14,393 14,393 44,053
15 20,789 15,883 15,883 44,053 14,624 14,624 44,053
16 21,829 16,436 16,436 44,053 14,809 14,809 44,053
17 22,920 17,010 17,010 44,053 14,938 14,938 44,053
18 24,066 17,606 17,606 44,053 14,991 14,991 44,053
19 25,270 18,223 18,223 44,053 14,949 14,949 44,053
20 26,533 18,863 18,863 44,053 14,787 14,787 44,053
25 33,864 22,433 22,433 44,053 11,078 11,078 44,053
35 55,160 31,836 31,836 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
35 - PROSPECTUS
<PAGE>
Modified Single Premium Variable Life Insurance
--------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE \ 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 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 -- -- --
35 55,160 3,633 3,633 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 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 - PROSPECTUS
<PAGE>
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
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
37 - PROSPECTUS
<PAGE>
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 -- -- --
35 55,160 31,696 31,696 32,014 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
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 - PROSPECTUS
<PAGE>
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 -- -- --
17 22,920 6,088 6,088 27,778 -- -- --
18 24,066 5,923 5,923 27,778 -- -- --
19 25,270 5,762 5,762 27,778 -- -- --
20 26,533 5,604 5,604 27,778 -- -- --
25 33,864 4,866 4,866 27,778 -- -- --
35 55,160 3,619 3,619 27,778 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
39 - PROSPECTUS
<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, 1996 and 1995, 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, 1996. 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 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, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
As discussed in Note 2 of Notes to Consolidated Financial Statements, Hartford
Life Insurance Company adopted a new accounting standard promulgated by the
Financial Accounting Standards Board, changing its method 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.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 10, 1997
40 - PROSPECTUS
<PAGE>
Consolidated Statements of Income
--------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1996 1995 1994
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $1,705 $1,487 $1,100
Net investment income........................... 1,397 1,328 1,292
Net realized capital (losses) gains............. (213) (11) 7
------ ------ ------
Total Revenues................................ 2,889 2,804 2,399
------ ------ ------
Benefits, Claims and Expenses
Benefits, claims and claim adjustment
expenses....................................... 1,535 1,422 1,405
Amortization of deferred policy acquisition
costs.......................................... 234 199 145
Dividends to policyholders...................... 635 675 419
Other insurance expenses........................ 427 317 227
------ ------ ------
Total Benefits, Claims and Expenses........... 2,831 2,613 2,196
------ ------ ------
Income before income tax expense................ 58 191 203
Income tax expense.............................. 20 62 65
------ ------ ------
Net income........................................ $ 38 $ 129 $ 138
------ ------ ------
------ ------ ------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
41 - PROSPECTUS
<PAGE>
Consolidated Balance Sheets
--------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1996 1995
------- -------
<S> <C> <C>
(IN MILLIONS
EXCEPT SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost $13,579 and $14,440)..... $13,624 $14,400
Equity securities, available for sale, at fair
value.......................................... 119 63
Policy loans, at outstanding balance............ 3,836 3,381
Mortgage loans, at outstanding balance.......... 2 265
Other investments, at cost...................... 54 156
------- -------
Total investments............................. 17,635 18,265
Cash............................................ 43 46
Premiums and amounts receivable................. 137 165
Accrued investment income....................... 407 394
Reinsurance recoverable......................... 6,066 6,221
Deferred policy acquisition costs............... 2,760 2,188
Deferred income tax............................. 474 420
Other assets.................................... 357 234
Separate account assets......................... 49,690 36,264
------- -------
Total assets.................................. $77,569 $64,197
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 2,281 $ 2,373
Other policyholder funds........................ 22,134 22,598
Other liabilities............................... 1,572 1,233
Separate account liabilities.................... 49,690 36,264
------- -------
Total liabilities............................. 75,677 62,468
------- -------
Stockholder's Equity
Common stock, $5,690 par value, 1,000 shares
authorized, issued and outstanding............. 6 6
Capital surplus................................. 1,045 1,007
Net unrealized capital gain (loss) on
investments, net of tax........................ 30 (57)
Retained earnings............................... 811 773
------- -------
Total stockholder's equity.................... 1,892 1,729
------- -------
Total liabilities and stockholder's equity...... $77,569 $64,197
------- -------
------- -------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
42 - PROSPECTUS
<PAGE>
Consolidated Statements of Stockholder's Equity
--------------------------------------------------------------------
<TABLE>
<CAPTION>
NET UNREALIZED
CAPITAL GAIN
(LOSS) ON TOTAL
COMMON CAPITAL INVESTMENTS, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ -------------- -------------- -------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Balance, December 31, 1993.............. $6 $ 676 $ (5) $516 $1,193
Net income............................ -- -- -- 138 138
Dividends declared on common stock.... -- -- -- (10) (10)
Capital contribution.................. -- 150 -- -- 150
Change in net unrealized capital loss
on investments, net of tax(1)........ -- -- (649) -- (649)
--
------ ----- -------- ------
Balance, December 31, 1994.............. 6 826 (654) 644 822
Net income............................ -- -- -- 129 129
Capital contribution.................. -- 181 -- -- 181
Change in net unrealized capital gain
on investments, net of tax........... -- -- 597 -- 597
--
------ ----- -------- ------
Balance, December 31, 1995.............. 6 1,007 (57) 773 1,729
Net income............................ -- -- -- 38 38
Capital contribution.................. -- 38 -- -- 38
Change in net unrealized capital gain
on investments, net of tax........... -- -- 87 -- 87
--
------ ----- -------- ------
Balance, December 31, 1996.............. $6 $1,045 $ 30 $811 $1,892
--
--
------ ----- -------- ------
------ ----- -------- ------
</TABLE>
- ------------------------
(1) The 1994 change in net unrealized capital loss on investments, net of tax,
includes a gain of $91 due to the adoption of SFAS No. 115 as discussed in
Note 2(b) of Notes to Consolidated Financial Statements.
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
43 - PROSPECTUS
<PAGE>
Consolidated Statements of Cash Flows
--------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
(IN MILLIONS)
Operating Activities
Net income............................ $ 38 $ 129 $ 138
Adjustments to net income:
Net realized capital losses (gains) on
sale of investments.................. 213 11 (7)
Net amortization of premium on fixed
maturities........................... 14 21 41
Increase in deferred income taxes..... (102) (172) (128)
Increase in deferred policy
acquisition costs.................... (572) (379) (441)
Decrease (increase) in premiums and
amounts receivable................... 10 (81) 10
Increase in accrued investment
income............................... (13) (16) (106)
(Increase) decrease in other assets... (132) (177) 101
Decrease (increase) in reinsurance
recoverable.......................... 179 (35) 75
(Decrease) increase in liability for
future policy benefits............... (92) 483 224
Increase in other liabilities......... 477 281 191
-------- -------- --------
Cash provided by operating
activities......................... 20 65 98
-------- -------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (5,747) (6,228) (9,127)
Sales of fixed maturity investments... 3,459 4,845 5,713
Maturities and principal paydowns of
fixed maturity investments........... 2,693 1,741 1,931
Net purchase of other investments..... (107) (871) (1,338)
Net sales (purchases) of short-term
investments.......................... 84 (24) 135
-------- -------- --------
Cash provided by (used for)
investing activities............... 382 (537) (2,686)
-------- -------- --------
Financing Activities
Capital contribution.................. 38 -- 150
Dividends paid........................ -- -- (10)
Net (disbursements for) receipts from
investment and universal life-type
contracts (charged from) credited to
policyholder accounts................ (443) 498 2,467
-------- -------- --------
Cash (used for) provided by
financing activities............... (405) 498 2,607
-------- -------- --------
Net (decrease) increase in cash....... (3) 26 19
Cash--beginning of year............... 46 20 1
-------- -------- --------
Cash--end of year....................... $ 43 $ 46 $ 20
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
44 - PROSPECTUS
<PAGE>
Notes to Consolidated Financial Statements
December 31, 1996
(In millions)
--------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These consolidated financial statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries (the "Company"), ITT Hartford Life
and Annuity Insurance Company ("ILA") and ITT Hartford International Life
Reassurance Corporation ("HLRe"), formerly American Skandia Life Reinsurance
Corporation. The Company is a wholly-owned subsidiary of Hartford Life and
Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford
Life, Inc. ("Hartford Life"), a direct subsidiary of Hartford Accident and
Indemnity Company, an indirect subsidiary of ITT Hartford Group, Inc. ("The
Hartford"). Hartford Life was formed on December 13, 1996 and capitalized on
December 16, 1996 with the contribution of all the outstanding common stock
of HLA. On February 10, 1997, The Hartford, the ultimate parent of Hartford
Life, announced its intention to sell up to 20% of Hartford Life during the
second quarter of 1997. Management believes that this transaction will not
have a material impact on the operations of the Company (See Note 11).
On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation) ("ITT")
distributed all the outstanding shares of capital stock of The Hartford to ITT
stockholders of record on such date (the transactions relating to such
distribution are referred to herein as the "ITT Spin-off"). As a result of the
ITT Spin-off, The Hartford became an independent, publicly traded company.
The Company is a leading insurance and financial services company which
provides: (a) investment products such as individual variable annuities and
fixed market value adjusted annuities, deferred compensation plan services and
mutual funds for savings and retirement needs; (b) life insurance for income
protection and estate planning; and (c) employee benefits products such as
corporate owned life insurance.
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These financial statements present the financial position, results of operations
and cash flows of the Company, and all material intercompany transactions and
balances between Hartford Life Insurance Company and its subsidiaries have been
eliminated. The consolidated financial statements are prepared on a basis of
generally accepted accounting principles which differ materially from the
statutory accounting prescribed by various insurance regulatory authorities.
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.
(B) CHANGES IN ACCOUNTING PRINCIPLES
On November 14, 1996, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 96-12, "Recognition of Interest Income and Balance Sheet
Classification of Structured Notes". This Issue requires companies to record
income on certain structured securities on a retrospective interest method. The
Company adopted EITF No. 96-12 for structured securities acquired after November
14, 1996. Adoption of EITF No. 96-12 did not have a material effect on the
Company's financial condition or results of operations.
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities". This
statement established criteria for determining whether transferred assets should
be accounted for as sales or secured borrowings. Subsequently, in December 1996,
the FASB issued SFAS No. 127, "Deferral of Effective Date of Certain Provisions
of FASB Statement No. 125", which defers the effective date of certain
provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is not
expected to have a material effect on the Company's financial condition or
results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective in 1996. As permitted by SFAS No. 123, the
Company continues to measure compensation costs of employee stock option plans
(relating to options on common stock of The Hartford) using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25. As of February
10, 1997, the Company had not adopted an employee stock compensation plan.
Certain officers of the Company participate in The Hartford's stock option plan.
Compensation costs allocated by The Hartford to the Company, as well as pro
forma compensation costs as determined under SFAS No. 123, were immaterial to
the results of operations for 1996 and 1995.
Effective January 1, 1994, the Company adopted 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 the Company's intentions with respect
to
45 - PROSPECTUS
<PAGE>
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
fair value difference from cost, net of tax, 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 after-tax impact included in stockholder's equity.
Under SFAS No. 115, the Company's fixed maturity investments 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 "Net unrealized capital gain (loss) on investments, net of
tax." As with the underlying investment security, unrealized capital 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 million. The Company'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 and are recognized in the period in which
services are provided. Premiums for traditional life insurance policies are
recognized as revenues when they are due from policyholders.
(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 and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.
(E) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, including commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, generally 20 years. Generally, acquisition
costs are deferred and amortized using the retrospective deposit method. Under
the retrospective deposit method, acquisition costs are amortized in proportion
to the present value of expected gross profits from surrender charges,
investment, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
reestimated and readjusted by a cumulative charge or credit to income.
(F) POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES
Realized capital gains and losses on security transactions associated with the
Company's immediate participation guaranteed contracts are excluded from
revenues and deferred, 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.
(G) FOREIGN CURRENCY TRANSLATION
Foreign currency translation gains and losses are reflected in stockholder's
equity. Balance sheet accounts are translated at the exchange rates in effect at
each year end and income statement accounts are translated at the average rates
of exchange prevailing during the year. The national currencies of international
operations are generally their functional currencies.
(H) INVESTMENTS
The Company'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 fair value with the
after-tax difference from cost reflected as a component of stockholder's equity
designated as "Net unrealized capital gain (loss) on investments, net of tax".
Equity securities, which include common and non-redeemable preferred stocks, are
carried at fair value with the after-tax difference from cost reflected in
stockholder's equity. Policy and mortgage loans are each carried at their
outstanding balance which approximates fair value. Investments in partnerships
and trusts are carried at cost. Net realized capital gains (losses), after
deducting the policyholders' share, are reported as a component of revenue and
are determined on a specific identification basis.
The Company's accounting policy for impairment recognition requires recognition
of 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, the Company 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 fair value below amortized cost, which will not materially fluctuate as a
result of future interest rate changes, then an other than temporary impairment
condition has been determined to have occurred. Each individual security within
that portfolio is evaluated to determine whether or not it is impaired. Once an
impairment charge has been recorded, the Company then continues to review the
individual impaired securities for appropriate valuation on an ongoing basis.
During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's closed block of guaranteed rate
contracts ("Closed Book GRC") were impaired. With the initiation of certain
hedge transactions,
46 - PROSPECTUS
<PAGE>
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 $88 after tax was determined to have occurred and
was recorded.
(I) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses a variety of derivative financial instruments including swaps,
caps, floors, forwards and exchange traded financial futures and options 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
anticipated investment purchases or existing assets and liabilities. The Company
does not hold or issue derivative financial instruments for trading purposes.
The Company'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 EITF pronouncements. Written options are,
in all cases, used in conjunction with other assets and derivatives as part of
the Company's asset/liability management strategies. 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 must be designated at inception as a hedge and measured for
effectiveness both at inception and on an ongoing basis. The Company'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. Interest rate swaps are the primary type of derivatives used
to convert London interbank offered quotations for U.S. dollar deposits
("LIBOR") based variable rate instruments to fixed rate instruments. 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 an adjustment to the cost basis of the purchased
asset. Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the cost basis of the hedged asset when the futures
contracts are closed, except for futures used in duration hedging which are
deferred and are adjusted into the cost basis on a quarterly basis. The
adjustments to the cost basis are amortized into investment income over the
remaining asset life.
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 purchased options and/or premiums received on covered written
options, entered into as part of an asset/liability management strategy, is/are
adjusted into the cost basis of the underlying asset or liability and amortized
over the remaining life of the hedge. Gains or losses on expiration or
termination of the hedge are adjusted into the basis of the underlying asset or
liability and amortized over the remaining asset life. The Company had no
written options as of December 31, 1996 and 1995.
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 (an
"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.
(J) RELATED PARTY TRANSACTIONS
Transactions of the Company with HLA and its affiliates relate principally to
tax settlements, reinsurance, insurance coverage, rental and service fees and
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to
47 - PROSPECTUS
<PAGE>
fund pension costs and claim annuities to settle casualty claims. Substantially
all general insurance expenses related to the Company, including rent and
employee benefit plan expenses, are initially paid by Hartford Fire Insurance
Company, an indirect subsidiary of The Hartford ("Hartford Fire"). Direct
expenses are allocated to the Company using specific identification, and
indirect expenses are allocated using other applicable methods. Indirect
expenses include those for corporate areas which, depending on the type, are
allocated based on either a percentage of direct expenses or on utilization.
Indirect expenses allocated to the Company by Hartford Fire were $40, $45 and
$41 in 1996, 1995 and 1994, respectively. Management of the Company believes
that the methods used are reasonable. In addition, the Company was charged its
share of costs allocated to The Hartford by ITT prior to the ITT Spin-off, which
were immaterial in 1995 and 1994. The Company had a receivable from The Hartford
of $1 and a payable to The Hartford of $2 at December 31, 1996 and 1995,
respectively.
In 1996, the Company ceded approximately $33.3 billion of group life insurance
in force and $318 million of disability premium to HLA and assumed $8.5 billion
of individual life insurance in force from HLA.
On June 30, 1995, the ownership of ITT Lyndon Insurance Company was transferred
to the Company via a capital contribution of $181 million, representing the net
assets of the company. Also, in 1996, the Company received a capital
contribution of $37.5 million from its parent HLA.
(K) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that enable
the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
44%, 41%, and 43% in 1996, 1995, and 1994, respectively, of total life insurance
in force.
3. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income.............. $ 1,452 $ 1,338 $ 1,247
(Losses) income from other
investments................. (42) 1 54
--------- --------- ---------
Gross investment income...... 1,410 1,339 1,301
Less: Investment expenses.... 13 11 9
--------- --------- ---------
Net investment income........ $ 1,397 $ 1,328 $ 1,292
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
--------- ----- -----
<S> <C> <C> <C>
Fixed maturities............ $ (201) $ 23 $ (34)
Equity securities........... 2 (6) (11)
Real estate and other....... (4) (25) 47
Less: (Increase) decrease in
liability to policyholders
for realized capital gains
(losses)................... (10) (3) 5
--------- --- ---
Net realized capital
(losses) gains............. $ (213) $ (11) $ 7
--------- --- ---
--------- --- ---
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Gross unrealized gains....... $ 13 $ 4 $ 2
Gross unrealized losses...... (1) (2) (11)
-- --
---
Net unrealized capital gains
(losses).................... 12 2 (9)
Deferred income tax liability
(asset)..................... 4 1 (3)
-- --
---
Net unrealized capital gains
(losses), after tax......... 8 1 (6)
Balance beginning of year.... 1 (6) (5)
-- --
---
Change in net unrealized
capital gains (losses) on
investments................. $ 7 $ 7 $ (1)
-- --
-- --
---
---
</TABLE>
48 - PROSPECTUS
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Gross unrealized gains............................................................................... $ 386 $ 529
Gross unrealized losses.............................................................................. (341) (569)
Unrealized (gains) losses credited to policyholders.................................................. (11) (52)
--------- ---------
Net unrealized capital gains (losses)................................................................ 34 (92)
Deferred income tax liability (asset)................................................................ 12 (34)
--------- ---------
Net unrealized capital gains (losses), after tax..................................................... 22 (58)
Balance beginning of year............................................................................ (58) (648)
--------- ---------
Change in net unrealized capital gains (losses) on investments....................................... $ 80 $ 590
--------- ---------
--------- ---------
<CAPTION>
1994
---------
<S> <C>
Gross unrealized gains............................................................................... $ 150
Gross unrealized losses.............................................................................. (1,185)
Unrealized (gains) losses credited to policyholders.................................................. 37
---------
Net unrealized capital gains (losses)................................................................ (998)
Deferred income tax liability (asset)................................................................ (350)
---------
Net unrealized capital gains (losses), after tax..................................................... (648)
Balance beginning of year............................................................................ 161
---------
Change in net unrealized capital gains (losses) on investments....................................... $ (809)
---------
---------
</TABLE>
(E) COMPONENTS OF FIXED MATURITIES INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
----------- --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)...... $ 166 $ 12 $ (3)
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed............................................................... 1,970 161 (128)
States, municipalities and political subdivisions....................................... 373 6 (11)
International governments............................................................... 281 12 (4)
Public utilities........................................................................ 877 12 (8)
All other corporate including international............................................. 4,656 120 (107)
All other corporate--asset-backed....................................................... 3,601 49 (59)
Short-term investments.................................................................. 1,655 14 (21)
----------- --------- ---------
Total fixed maturities.............................................................. $ 13,579 $ 386 $ (341)
----------- --------- ---------
----------- --------- ---------
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
----------- --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)...... $ 502 $ 4 $ (9)
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed............................................................... 3,568 210 (387)
States, municipalities and political subdivisions....................................... 201 4 (3)
International governments............................................................... 291 19 (4)
Public utilities........................................................................ 949 29 (2)
All other corporate including international............................................. 3,065 76 (55)
All other corporate--asset-backed....................................................... 5,056 187 (109)
Short-term investments.................................................................. 808 -- --
----------- --------- ---------
Total fixed maturities.............................................................. $ 14,440 $ 529 $ (569)
----------- --------- ---------
----------- --------- ---------
<CAPTION>
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)...... $ 175
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed............................................................... 2,003
States, municipalities and political subdivisions....................................... 368
International governments............................................................... 289
Public utilities........................................................................ 881
All other corporate including international............................................. 4,669
All other corporate--asset-backed....................................................... 3,591
Short-term investments.................................................................. 1,648
---------
Total fixed maturities.............................................................. $ 13,624
---------
---------
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)...... $ 497
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed............................................................... 3,391
States, municipalities and political subdivisions....................................... 202
International governments............................................................... 306
Public utilities........................................................................ 976
All other corporate including international............................................. 3,086
All other corporate--asset-backed....................................................... 5,134
Short-term investments.................................................................. 808
---------
Total fixed maturities.............................................................. $ 14,400
---------
---------
</TABLE>
49 - PROSPECTUS
<PAGE>
The amortized cost and fair value of fixed maturities at December 31, 1996, by
maturity, are shown below. Asset-backed securities, including mortgage-backed
securities and collateralized mortgage obligations, are distributed to maturity
year based on the Company's estimates of the rate of future prepayments of
principal over the remaining lives of such securities. These estimates are
developed using prepayment speeds reported in broker consensus data and can be
expected to vary from actual experience. Expected maturities differ from
contractual maturities due to call or prepayment provisions.
<TABLE>
<CAPTION>
MATURITY AMORTIZED COST FAIR VALUE
- ------------------------ -------------- -----------
<S> <C> <C>
One year or less........ $ 2,632 $ 2,642
Over one year through
five years............. 5,871 5,928
Over five years through
ten years.............. 3,320 3,311
Over ten years.......... 1,756 1,743
------- -----------
Total............... $ 13,579 $ 13,624
------- -----------
------- -----------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for the years
ended December 31, 1996, 1995 and 1994 resulted in proceeds of $3,459, $4,848
and $5,708, respectively, resulting in gross realized capital gains of $87, $91
and $71, respectively, and gross realized capital losses (including investment
writedowns) of $298, $72 and $100, respectively, not including policyholder
gains and losses. Sales of equity securities for the years ended December 31,
1996, 1995 and 1994 resulted in proceeds of $74, $64 and $159, respectively,
resulting in gross realized capital gains of $2, $28 and $3, respectively, and
gross realized capital losses of $0, $59 and $14, respectively, not including
policyholder gains and losses.
(F) CONCENTRATION OF CREDIT RISK
As of December 31, 1996, the Company had a reinsurance recoverable of $3.8
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $3.8 billion (including policy loans
of $3.3 billion). 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 the Company as sole beneficiary. Excluding investments in U.S.
government and agencies, the Company has no other significant concentrations of
credit risk in fixed maturities.
(G) DERIVATIVE INVESTMENTS
Derivatives play an important role in facilitating the management of interest
rate risk, creating opportunities to fund product obligations hedging against
indexation risks that affect the value of certain liabilities and adjusting
broad investment risk characteristics when dictated by significant changes in
market risks. As an end user of derivatives, the Company uses a variety of
derivative financial instruments, including swaps, caps, floors, forwards and
exchange traded financial futures and options in order to hedge exposure to
price, foreign currency and/or interest rate risk on anticipated investment
purchases or existing assets and liabilities. The notional amounts of derivative
contracts represent the basis upon which pay and receive amounts are calculated
and are not reflective of credit risk for derivative contracts. Credit risk for
derivative contracts is limited to the amounts calculated to be due to the
Company on such contracts. The Company believes it maintains prudent policies
regarding the financial stability and credit standing of its major
counterparties and typically requires credit enhancement provisions to further
limit its credit risk. Many of these derivative contracts are bilateral
agreements that are not assignable without the consent of the relevant
counterparty. Notional amounts pertaining to derivative financial instruments
totaled $9.9 billion and $8.8 billion at December 31, 1996 and 1995,
respectively ($7.4 billion and $7.1 billion related to life insurance
investments and $2.5 billion and $1.7 billion related to life insurance
liabilities at December 31, 1996 and 1995, respectively).
50 - PROSPECTUS
<PAGE>
The following table summarizes the Company's derivatives, segregated by major
categories, as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING LIABILITY HEDGES)
---------------------------------------------------------------
PURCHASED
TOTAL ISSUED CAPS OPTIONS, INTEREST
CARRYING & CAPS & RATE
1996 VALUE FLOORS(C) FLOORS(D) FUTURES(E) SWAPS(H)
- ----------------------------------------------------------------- --------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and
anticipatory)................................................... $ 5,242 $ 500 $ 2,454 $ -- $ 941
Inverse floaters(a).............................................. 352 98 856 -- 346
Anticipatory(g).................................................. -- -- -- 132 --
Other bonds and notes............................................ 7,369 425 440 5 1,079
Short-term investments........................................... 661 -- -- -- --
--------- ----------- ----------- ----- -----------
Total fixed maturities....................................... 13,624 1,023 3,750 137 2,366
Equity securities, policy loans and other investments............ 4,011 -- -- -- 19
--------- ----------- ----------- ----- -----------
Total investments............................................ $ 17,635 $ 1,023 $ 3,750 $ 137 $ 2,385
--------- ----------- ----------- ----- -----------
--------- ----------- ----------- ----- -----------
Total derivatives-fair value(b).............................. $ (10) $ 35 $ -- $ (25)
----------- ----------- ----- -----------
----------- ----------- ----- -----------
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING LIABILITY HEDGES)
---------------------------------------------------------------
PURCHASED
TOTAL ISSUED CAPS OPTIONS, INTEREST
CARRYING & CAPS & RATE
1995 VALUE FLOORS(C) FLOORS(D) FUTURES(E) SWAPS(H)
- ----------------------------------------------------------------- --------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and
anticipatory)................................................... $ 5,764 $ 118 $ 3,133 $ 322 $ 290
Inverse floaters(a).............................................. 711 560 354 6 681
Anticipatory(g).................................................. -- -- -- 213 25
Other bonds and notes............................................ 7,118 33 66 322 757
Short-term investments........................................... 807 -- -- -- --
--------- ----------- ----------- ----- -----------
Total fixed maturities....................................... 14,400 711 3,553 863 1,753
Equity securities, policy loans and other investments............ 3,865 -- -- -- 18
--------- ----------- ----------- ----- -----------
Total investments............................................ $ 18,265 $ 711 $ 3,553 $ 863 $ 1,771
--------- ----------- ----------- ----- -----------
--------- ----------- ----------- ----- -----------
Total derivatives-fair value(b).............................. $ (32) $ 46 $ -- $ (108)
----------- ----------- ----- -----------
----------- ----------- ----- -----------
<CAPTION>
FOREIGN TOTAL
CURRENCY NOTIONAL
1996 SWAPS(F) AMOUNT
- ----------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Asset-backed securities (excluding inverse floaters and
anticipatory)................................................... $ -- $ 3,895
Inverse floaters(a).............................................. -- 1,300
Anticipatory(g).................................................. -- 132
Other bonds and notes............................................ 125 2,074
Short-term investments........................................... -- --
----- -----------
Total fixed maturities....................................... 125 7,401
Equity securities, policy loans and other investments............ -- 19
----- -----------
Total investments............................................ $ 125 $ 7,420
----- -----------
----- -----------
Total derivatives-fair value(b).............................. $ (9) $ (9)
----- -----------
----- -----------
FOREIGN TOTAL
CURRENCY NOTIONAL
1995 SWAPS(F) AMOUNT
- ----------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Asset-backed securities (excluding inverse floaters and
anticipatory)................................................... $ -- $ 3,863
Inverse floaters(a).............................................. -- 1,601
Anticipatory(g).................................................. -- 238
Other bonds and notes............................................ 187 1,365
Short-term investments........................................... -- --
----- -----------
Total fixed maturities....................................... 187 7,067
Equity securities, policy loans and other investments............ -- 18
----- -----------
Total investments............................................ $ 187 $ 7,085
----- -----------
----- -----------
Total derivatives-fair value(b).............................. $ (24) $ (118)
----- -----------
----- -----------
</TABLE>
- ------------------------
(a) Inverse floaters are variations of collateralized mortgage obligations
("CMOs") for which the coupon rates move inversely with an index rate such
as 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,
the Company uses a variety of derivative instruments, primarily interest
rate swaps and purchased caps and floors.
(b) The fair value of derivative instruments including swaps, caps, floors,
futures, options and forward commitments, was determined using a pricing
model which is validated through quarterly comparison to dealer quoted
market prices, for 1996 and dealer quoted prices for 1995.
(c) The 1996 data includes issued caps of $433 with a weighted average strike
rate of 8.21% (ranging from 7.0% to 9.5%) and over 93% maturing in 2000
through 2005. In addition, issued floors totaled $590, had a weighted
average strike rate of 5.17% (ranging from 5.00% to 7.85%) with all of them
maturing by the end of 2005. The 1995 data includes issued caps of $475 with
a weighted average strike rate of 8.5% (ranging from 7.0% to 10.4%) and over
85% maturing in 2000 through 2004. In addition, issued floors totaled $236,
had a weighted average strike rate of 8.1% (ranging from 5.3% to 10.9%) and
mature through 2007, with 76% maturing by 2004.
(d) The 1996 data includes purchased floors of $2.4 billion and purchased caps
of $1.3 billion. The floors had a weighted average strike rate of 5.84%
(ranging from 3.70% to 7.85%) and over 87% mature in 1997 through 1999. The
options mature in 1997. The caps had a weighted average strike rate of 7.59%
(ranging from 4.40% to 10.125%) and over 76% mature in 1997 through 2001.
The 1995 data includes purchased floors of $1.8 billion and purchased caps
of $1.7 billion. The floors had 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 had a weighted average strike price of 7.5% (ranging from 4.5% and
10.1%) and over 82% mature in 1997 through 1999.
(e) As of December 31, 1996 and 1995, over 39% and 95%, respectively, of the
notional futures contracts, expire within one year.
51 - PROSPECTUS
<PAGE>
(f) As of December 31, 1996 and 1995, over 42% and 25%, respectively, of the
Company's foreign currency swaps, expire within one year; the balance mature
over the succeeding 4 to 5 years.
(g) 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, 1996, the Company had $1 million in
net deferred gains for futures, interest rate swaps and purchased options.
The Company expects to basis adjust $1 million of the deferred gains in
1997. At December 31, 1995, the Company had $5.3 million in net deferred
gains for futures, interest rate swaps and purchased options.
(h) The following table summarizes the maturities by notional value of interest
rate swaps outstanding at December 31, 1996 and 1995, and the related
weighted average interest pay rate or receive rate. The variable rates
represent spot rates (primarily 90 day LIBOR), as of December 31, 1996 and
1995. Such variable rates have been calculated assuming that the spot rates
remain unchanged throughout the life of the interest rate swaps.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
- ------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $-- $50 $125 $35 $125
Weighted Average Pay Rate -- 5.7 % 5.9 % 5.5 % 5.5%
Weighted Average Receive Rate -- 3.2 % -- 6.5 % 6.4%
PAY VARIABLE/RECEIVE FIXED
Notional Value $86 $25 $486 $74 $582
Weighted Average Pay Rate 7.5 % -- 6.4 % 6.7 % 7.0%
Weighted Average Receive Rate 5.6 % -- 5.6 % 5.7 % 6.2%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $19 $15 $-- $200 $--
Weighted Average Pay Rate 5.9 % 5.7 % -- 6.4 % --
Weighted Average Receive Rate 3.7 % 5.5 % -- 5.0 % --
Total Interest Rate Swaps $105 $90 $611 $309 $707
Total Weighted Average Pay Rate 7.2 % 5.7 % 6.3 % 6.4 % 6.7%
Total Weighted Average Receive Rate 5.2 % 3.8 % 4.3 % 5.4 % 6.3%
<CAPTION>
1995 1996 1997 1998 1999 2000
- ------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $15 $50 $-- $453 $31
Weighted Average Pay Rate 5.0 % 7.2 % -- 8.1 % 7.1%
Weighted Average Receive Rate 5.8 % 5.9 % -- 5.8 % 5.7%
PAY VARIABLE/RECEIVE FIXED
Notional Value $100 $68 $25 $25 $35
Weighted Average Pay Rate 5.9 % 8.6 % 5.9 % -- 5.9%
Weighted Average Receive Rate 2.4 % 7.9 % 4.0 % -- 6.5%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $50 $18 $36 $12 $200
Weighted Average Pay Rate 5.8 % -- 3.7 % 3.5 % 4.5%
Weighted Average Receive Rate 5.4 % -- 5.6 % 5.2 % 6.8%
Total Interest Rate Swaps $165 $136 $61 $490 $266
Total Weighted Average Pay Rate 5.8 % 7.8 % 4.6 % 7.6 % 5.0%
Total Weighted Average Receive Rate 3.6 % 7.2 % 4.9 % 5.4 % 6.6%
<CAPTION>
LATEST
1996 THEREAFTER TOTAL MATURITY
- ------------------------------------------------------- ------------- ----------- ------------
<S> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $170 $505 2003
Weighted Average Pay Rate 5.7 % 5.7 %
Weighted Average Receive Rate 6.9 % 4.7 %
PAY VARIABLE/RECEIVE FIXED
Notional Value $349 $1,602 2007
Weighted Average Pay Rate 6.9 % 6.8 %
Weighted Average Receive Rate 5.9 % 5.9 %
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $44 $278 2003
Weighted Average Pay Rate 12.9 % 7.4 %
Weighted Average Receive Rate 6.4 % 5.2 %
Total Interest Rate Swaps $563 $2,385 2007
Total Weighted Average Pay Rate 7.0 % 6.6 %
Total Weighted Average Receive Rate 6.3 % 5.5 %
LATEST
1995 THEREAFTER TOTAL MATURITY
- ------------------------------------------------------- ------------- ----------- ------------
<S> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $229 $778 2004
Weighted Average Pay Rate 7.8 % 7.8 %
Weighted Average Receive Rate 5.9 % 5.9 %
PAY VARIABLE/RECEIVE FIXED
Notional Value $190 $443 2007
Weighted Average Pay Rate 5.4 % 5.4 %
Weighted Average Receive Rate 6.9 % 6.9 %
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $234 $550 2004
Weighted Average Pay Rate 16.3 % 5.7 %
Weighted Average Receive Rate 5.9 % 6.4 %
Total Interest Rate Swaps $653 $1,771 2007
Total Weighted Average Pay Rate 7.3 % 6.9 %
Total Weighted Average Receive Rate 6.3 % 5.8 %
</TABLE>
In addition, interest rate sensitivity related to certain Company insurance
liabilities was altered primarily through interest rate swap agreements. The
notional amount of the liability agreements in which the Company generally pays
one variable rate in exchange for another was $2.4 billion and $1.7 billion at
December 31, 1996 and 1995, respectively. As of December 31, 1996, the weighted
average pay rate was 5.6% and the weighted average receive rate was 6.5%. These
agreements mature at various times through 2001.
52 - PROSPECTUS
<PAGE>
A reconciliation between notional amounts at December 31, 1995 and 1996 by
derivative type and strategy is as follows:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
----------------------------------------------------------------
12/31/95 MATURITIES/ 12/31/96
NOTIONAL AMOUNT ADDITIONS TERMINATIONS NOTIONAL AMOUNT
----------------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Caps.............................................................. $ 2,184 $ 1,286 $ 1,715 $ 1,755
Floors............................................................ 2,180 2,053 1,065 3,168
Options........................................................... -- 10 -- 10
Swaps/Forwards.................................................... 3,566 3,989 2,694 4,861
Futures........................................................... 863 2,092 2,818 137
------ ----------- ------ ------
Total......................................................... $ 8,793 $ 9,430 $ 8,292 $ 9,931
------ ----------- ------ ------
------ ----------- ------ ------
<CAPTION>
BY STRATEGY
----------------------------------------------------------------
12/31/95 MATURITIES/ 12/31/96
NOTIONAL AMOUNT ADDITIONS TERMINATIONS NOTIONAL AMOUNT
----------------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Liability......................................................... $ 1,708 $ 1,940 $ 1,137 $ 2,511
Anticipatory...................................................... 238 516 622 132
Asset............................................................. 2,984 1,265 2,137 2,112
Portfolio......................................................... 3,863 5,709 4,396 5,176
------ ----------- ------ ------
Total......................................................... $ 8,793 $ 9,430 $ 8,292 $ 9,931
------ ----------- ------ ------
------ ----------- ------ ------
</TABLE>
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF DECEMBER 31,
1996 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities....................................................... $ 13,624 $ 13,624 $ 14,400 $ 14,400
Equity securities...................................................... 119 119 63 63
Policy loans........................................................... 3,836 3,836 3,381 3,381
Mortgage loans......................................................... 2 2 265 265
Investments in partnerships and trust.................................. 48 48 94 97
Other.................................................................. 6 56 62 62
LIABILITIES
Other policy benefits.................................................. $ 11,707 $ 11,469 $ 12,727 $ 12,767
</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 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 managements; fair value
of derivative instruments, including swaps, caps, floors, futures, and forward
commitments, is determined by using a pricing model which is validated through
quarterly comparison to dealer quoted market prices; and other policy benefits
payable for investment type contracts are determined by estimating future cash
flows discounted at the year end market rate.
4. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement under
which each member, including the Company, in the consolidated U.S. federal
income tax return will make payments between them such that, with respect to any
period, the amount of taxes to be paid by Hartford Life for the Company, subject
to certain adjustments, generally will be determined as though the Company were
to file separate federal, state and local income tax returns.
As long as The Hartford continues to beneficially own, directly or indirectly,
at least 80% of the combined voting power and 80% of the value of the
outstanding capital stock of Hartford Life, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a consolidated federal income tax return. The
Company will continue to remit to (receive from) The Hartford a current income
tax provision (benefit) computed in accordance with such tax sharing agreement.
The Company's effective tax rate was 35%, 32% and 32% in 1996, 1995 and 1994,
respectively.
53 - PROSPECTUS
<PAGE>
Income tax expense was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current............................ $ 122 $ 211 $ 185
Deferred.......................... (102) (149) (120)
--------- --------- ---------
Total........................... $ 20 $ 62 $ 65
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to the
provision for income taxes was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Tax provision at U.S. statutory
rate.............................. $ 20 $ 67 $ 71
Tax-exempt income................. -- (3) (3)
Foreign tax credit................ -- (4) (1)
Other............................. -- 2 (2)
--------- --------- ---------
Total........................... $ 20 $ 62 $ 65
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes paid were $189, $162 and $244 in 1996, 1995 and 1994, respectively.
The current tax refund due from The Hartford to the Company was $72 and $8 as of
December 31, 1996 and 1995, respectively.
Deferred tax assets (liabilities) included the following:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Tax return deferred acquisition costs....... $ 514 $ 410
Financial statement deferred acquisition
costs and reserves......................... (242) 138
Employee benefits........................... 8 8
Unrealized (gain) loss on investments....... (16) 32
Investments and other....................... 210 (168)
--------- ---------
Total................................... $ 474 $ 420
--------- ---------
--------- ---------
</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 such circumstances, 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,
1996 was $37.
5. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve the Company of its primary
liability. The Company also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums.................. $ 1,834 $ 1,545 $ 1,316
Insurance assumed............... 173 591 299
Insurance ceded................. (302) (649) (515)
--------- --------- ---------
Total....................... $ 1,705 $ 1,487 $ 1,100
--------- --------- ---------
--------- --------- ---------
</TABLE>
Life reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1996, 1995 and 1994 approximated $140, $220 and $164,
respectively.
In December 1994, the Company ceded to a third party $1.0 billion in individual
fixed and variable annuities on a modified coinsurance basis. In December 1995,
the Company 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, the Company assumed the life insurance policies and the individual
annuities of Pacific Standard with reserves and account values of approximately
$434 million. The Company received cash and investment grade assets to support
the life insurance and individual annuity contract obligations assumed.
6. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company'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. The Company's funding policy is to contribute annually an amount
between the minimum funding requirements set forth in the Employee Retirement
Income Security Act of 1974, as amended, and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of the Company's group pension contracts. The cost to the
Company was approximately $5, $2 and $2 in 1996, 1995 and 1994, respectively.
The Company also provides, through Hartford Fire, certain health care and life
insurance benefits for eligible retired employees. A substantial portion of the
Company's employees may become eligible for these benefits upon retirement. The
Company'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. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial for 1996, 1995 and 1994, respectively.
54 - PROSPECTUS
<PAGE>
The assumed rate of future increases in the per capita cost of health care (the
health care trend rate) was 9.3% for 1996, 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.
7. BUSINESS SEGMENT INFORMATION
The Company sells financial products such as fixed and variable annuities,
retirement plan services, and life insurance on both an individual and a group
basis. The Company divides its core businesses into three segments: Investment
Products, Individual Life Insurance and Employee Benefits. In addition, the
Company also maintains a corporate operation and also classifies certain of its
business as Runoff operations. The Investment Products segment offers individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services, mutual funds, investment management
services and other financial products. The Individual Life Insurance segment
sells a variety of individual life insurance products, including variable life,
universal life, and interest-sensitive whole life policies. The Employee
Benefits segment sells corporate owned life insurance. Through its corporate
operation, the Company reports net investment income on assets representing
surplus not assigned to any of its business segments and certain other revenues
and expenses not specifically allocable to any of its business segments. The
Company's Runoff operations are comprised of Closed Book GRC. With the exception
of Closed Book GRC, net realized capital gains and losses are recognized in the
period of realization but are allocated to the segments utilizing durations of
the segment portfolios.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Investment Products............. $ 1,013 $ 759 $ 594
Individual Life Insurance....... 440 383 375
Employee Benefits............... 1,366 1,273 919
Corporate Operations............ 81 52 30
Runoff Operations............... (11) 337 481
--------- --------- ---------
Total Revenues................ $ 2,889 $ 2,804 $ 2,399
--------- --------- ---------
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAX EXPENSE
Investment Products............. $ 230 $ 172 $ 127
Individual Life Insurance....... 68 56 39
Employee Benefits............... 43 37 27
Corporate Operations............ 65 16 8
Runoff Operations............... (348) (90) 2
--------- --------- ---------
Income Before Income Tax
Expense...................... $ 58 $ 191 $ 203
--------- --------- ---------
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investment Products............. $ 53,743 $ 40,624 $ 29,115
Individual Life Insurance....... 3,753 3,173 2,808
Employee Benefits............... 14,515 13,494 7,847
Corporate Operations............ 1,891 1,729 822
Runoff Operations............... 3,667 5,177 7,257
--------- --------- ---------
Total Assets.................. $ 77,569 $ 64,197 $ 47,849
--------- --------- ---------
--------- --------- ---------
</TABLE>
8. STATUTORY NET INCOME AND SURPLUS
A significant percentage of the consolidated statutory surplus is permanently
reinvested or is subject to various state regulatory restrictions which limit
the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1997, without prior approval, is estimated to be $121 million.
Statutory net income and surplus as of and for the years ended December 31
were:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income.... $ 144 $ 112 $ 58
Statutory surplus....... $ 1,207 $ 1,125 $ 941
</TABLE>
The insurance subsidiaries of the Company prepare their statutory financial
statements in accordance with accounting practices prescribed by the State of
Connecticut Insurance Department. Prescribed statutory accounting practices
include publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general administrative rules.
9. SEPARATE ACCOUNTS
The Company maintained separate account assets and liabilities totaling $49.7
billion and $36.3 billion at December 31, 1996 and 1995, 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 $39.4 billion and $25.9 billion at
December 31, 1996 and 1995,
55 - PROSPECTUS
<PAGE>
respectively, wherein the policyholder assumes the investment risk, and
guaranteed separate account assets totaling $10.3 billion at December 31, 1996
and 1995, wherein the Company contractually guarantees either a minimum return
or account value to the policyholder. Included in the non-guaranteed category
are policy loans totaling $2.0 billion and $1.7 billion at December 31, 1996 and
1995, 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 $538, $387 and $256 in 1996, 1995 and
1994, respectively.
The guaranteed separate accounts include modified guaranteed individual annuity
and modified guaranteed life insurance. The average credited interest rate on
these contracts was 6.53% at December 31, 1996. The assets that support these
liabilities were comprised of $10.2 billion in fixed maturities at December 31,
1996. The portfolios are segregated from other investments and are managed so as
to minimize liquidity and interest rate risk. 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 $0.1 billion in carrying value and $2.4
billion in notional amounts at December 31, 1996.
10. COMMITMENTS AND CONTINGENCIES
Under insurance guaranty fund laws existing in each state, the District of
Columbia and Puerto Rico, insurers licensed to do business can be assessed by
state insurance guaranty associations for certain obligations of insolvent
insurance companies to policyholders and claimants. Recent regulatory actions
against certain large life insurers encountering financial difficulty have
prompted various state insurance guaranty associations to begin assessing life
insurance companies for the deemed losses. Most of these laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's solvency and further provide annual limits on such assessments. A
large part of the assessments paid by the Company's insurance subsidiaries
pursuant to these laws may be used as credits for a portion of the Company's
insurance subsidiaries' premium taxes. The Company paid guaranty fund
assessments of approximately $11, $10 and $8 in 1996, 1995 and 1994,
respectively, of which $5, $6 and $4 were estimated to be creditable against
premium taxes.
The Company is a defendant in various lawsuits arising in the ordinary course of
business. In the opinion of management, the resolution of these matters is not
expected to have a material adverse effect on the Company's business, financial
position, or results of operations.
The rent paid to Hartford Fire for the space occupied by the Company was $3 in
1996, 1995, and 1994. The Company expects to pay annual rent of $7 in 1997,
1998, and 1999, respectively, $12 in 2000 and 2001, and $96 thereafter, over the
remaining term of the sublease, which expires on December 31, 2009. Rental
expense is recognized on a level basis over the term of the sublease and
amounted to approximately $8 in 1996, 1995 and 1994.
11. SUBSEQUENT EVENTS
On February 10, 1997, Hartford Life filed a registration statement with the
Securities and Exchange Commission relating to the U.S. and international
offerings of shares of Class A common stock (the "Equity Offerings")
representing up to 20% ownership of Hartford Life. After completion of the
Equity Offerings, The Hartford would own all of the shares of Class B Common
Stock (after reclassification of Hartford Life's common stock into Class B
Common Stock prior to March 31, 1997). Hartford Life intends to use the
estimated net proceeds of the Equity Offerings to make a capital contribution to
its insurance subsidiaries, to reduce its third-party indebtedness and for other
general corporate purposes.
The Hartford has advised the Company that its current intent is to continue to
beneficially own at least 80% of Hartford Life, but it is under no contractual
obligation to do so, except for a limited period. Provided that The Hartford
continues to beneficially own at least 80% of the combined voting power or the
value of the outstanding capital stock of Hartford Life, Hartford Life will be
included for federal income tax purposes in the controlled group of which The
Hartford is the common parent. Each member of a controlled group is jointly and
severally liable for pension funding and pension termination liabilities of each
other member of the controlled group, as well as certain benefit plan taxes.
Accordingly, the Company could be liable for pension funding, pension
termination liabilities and certain other pension related excise taxes as well
as other taxes of another member of The Hartford controlled group in the event
any such liability is incurred, and not discharged, by such other member.
In connection with the proposed Equity Offerings, Hartford Life plans to enter
into formal agreements, including a master intercompany agreement, investment
management agreements and a new tax sharing agreement, with The Hartford
covering such matters as corporate services, approval of certain corporate
activities, registration rights, owned and leased space, allocation of expenses,
taxes and liabilities, investment advisory services, use of trademarks and
certain other corporate matters. As part of the master intercompany agreement,
Hartford Life would agree to remit to The Hartford 30% of any shared liabilities
for which The Hartford is responsible in respect of the ITT Spin-off, 30% of any
taxes which may be assessed to The Hartford relating to the ITT Spin-off and
will indemnify The Hartford for certain other tax liabilities. As of December
31, 1996 there was no known liability associated with the ITT Spin-off. Such
agreements are meant to maintain the relationship between Hartford
56 - PROSPECTUS
<PAGE>
Life and The Hartford in a manner consistent in all material respects with past
practice. As a result, management believes these agreements should not have a
material impact on the results of operations of the Company.
In addition, under insurance company holding laws, agreements between Hartford
Life's insurance subsidiaries and The Hartford must be fair and reasonable and
may be subject to the approval of applicable insurance commissioners. The
agreements will be intended to maintain the relationship between Hartford Life
and The Hartford in a manner generally consistent with past practices. However,
none of these arrangements will result from arm's-length negotiations and,
therefore, the prices charged to Hartford Life and its subsidiaries for services
provided under these arrangements may be higher or lower than prices that may be
charged by third parties.
57 - PROSPECTUS
<PAGE>
Hartford Life Insurance Company and Subsidiaries
--------------------------------------------------------------------
SCHEDULE I -- SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
AS OF DECEMBER 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT AT
ESTIMATED WHICH SHOWN
FAIR ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- ------------------------------------------------------------------------------------------ --------- ----------- -------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U.S. Government and government agencies and authorities
(guaranteed sponsored)................................................................. $ 166 $ 175 $ 175
U.S. Government and government agencies and authorities
(guaranteed sponsored)--asset-backed................................................... 1,970 2,003 2,003
States, municipalities and political subdivisions......................................... 373 368 368
International governments................................................................. 281 289 289
Public utilities.......................................................................... 877 881 881
All other corporate including international............................................... 4,656 4,669 4,669
All other corporate--asset-backed......................................................... 3,601 3,591 3,591
Short-term investments.................................................................... 1,655 1,648 1,648
--------- ----------- -------------
Total Fixed Maturities.................................................................... $ 13,579 $ 13,624 $ 13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other................................... 110 119 119
Total Fixed Maturities and Equity Securities.............................................. $ 13,689 $ 13,743 $ 13,743
Other Investments
Policy Loans.............................................................................. 3,836 3,836 3,836
Mortgage Loans............................................................................ 2 2 2
Investments in partnerships and trusts.................................................... 48 48 48
Futures, options, and miscellaneous....................................................... 6 56 6
Total Other Investments................................................................... 3,892 3,942 3,892
--------- ----------- -------------
Total Investments......................................................................... $ 17,581 $ 17,685 $ 17,635
--------- ----------- -------------
--------- ----------- -------------
</TABLE>
Note: The fair values for short-term investments approximate cost.
58 - PROSPECTUS
<PAGE>
Hartford Life Insurance Company and Subsidiaries
--------------------------------------------------------------------
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE POLICY
BENEFITS, UNPAID OTHER POLICY
CLAIMS AND CLAIMS AND PREMIUMS AND
DEFERRED POLICY CLAIM ADJUSTMENT BENEFITS OTHER
SEGMENT ACQUISITION COSTS EXPENSES PAYABLE CONSIDERATIONS
- ---------------------------------------------------------- ----------------- ------------------- --------------- ---------------
<S> <C> <C> <C> <C>
1996
Investment Products....................................... $ 2,030 $ 1,554 $ 6,599 $ 536
Individual Life Insurance................................. 730 346 2,160 287
Employee Benefits......................................... -- 381 9,834 881
Corporate Operations...................................... -- -- -- --
Runoff Operations......................................... -- -- 3,541 1
------ ------ ------- ------
Consolidated Operations................................... $ 2,760 $ 2,281 $ 22,134 $ 1,705
------ ------ ------- ------
------ ------ ------- ------
1995
Investment Products....................................... $ 1,561 $ 1,314 $ 6,204 $ 319
Individual Life Insurance................................. 615 706 1,932 246
Employee Benefits......................................... 12 325 9,285 922
Corporate Operations...................................... -- -- -- --
Runoff Operations......................................... -- 28 5,177 --
------ ------ ------- ------
Consolidated Operations................................... $ 2,188 $ 2,373 $ 22,598 $ 1,487
------ ------ ------- ------
------ ------ ------- ------
1994
Investment Products....................................... $ 1,244 $ 895 $ 4,617 $ 263
Individual Life Insurance................................. 565 582 2,543 268
Employee Benefits......................................... -- 369 6,911 569
Corporate Operations...................................... -- -- -- --
Runoff Operations......................................... -- 44 7,257 --
------ ------ ------- ------
Consolidated Operations................................... $ 1,809 $ 1,890 $ 21,328 $ 1,100
------ ------ ------- ------
------ ------ ------- ------
<CAPTION>
BENEFITS CLAIMS, AMORTIZATION OF
NET REALIZED AND CLAIM DEFERRED POLICY
CAPITAL (LOSSES) ADJUSTMENT ACQUISITION DIVIDENDS TO
SEGMENT GAINS EXPENSES COSTS POLICYHOLDERS
- ---------------------------------------------------------- ----------------- ------------------- --------------- ---------------
<S> <C> <C> <C> <C>
1996
Investment Products....................................... $ -- $ 451 $ 175 $ --
Individual Life Insurance................................. -- 245 59 --
Employee Benefits......................................... -- 546 -- 635
Corporate Operations...................................... 6 -- -- --
Runoff Operations......................................... (219) 293 -- --
------ ------ ------- ------
Consolidated Operations................................... $ (213) $ 1,535 $ 234 $ 635
------ ------ ------- ------
------ ------ ------- ------
1995
Investment Products....................................... $ -- $ 349 $ 117 $ --
Individual Life Insurance................................. -- 127 70 --
Employee Benefits......................................... -- 496 -- 675
Corporate Operations...................................... (11) 33 -- --
Runoff Operations......................................... -- 417 12 --
------ ------ ------- ------
Consolidated Operations................................... $ (11) $ 1,422 $ 199 $ 675
------ ------ ------- ------
------ ------ ------- ------
1994
Investment Products....................................... $ -- $ 383 $ 90 $ --
Individual Life Insurance................................. -- 179 51 --
Employee Benefits......................................... -- 376 -- 419
Corporate Operations...................................... 7 -- -- --
Runoff Operations......................................... -- 467 4 --
------ ------ ------- ------
Consolidated Operations................................... $ 7 $ 1,405 $ 145 $ 419
------ ------ ------- ------
------ ------ ------- ------
<CAPTION>
NET
INVESTMENT
SEGMENT INCOME
- ---------------------------------------------------------- -------------
<S> <C>
1996
Investment Products....................................... $ 477
Individual Life Insurance................................. 153
Employee Benefits......................................... 485
Corporate Operations...................................... 75
Runoff Operations......................................... 207
------
Consolidated Operations................................... $ 1,397
------
------
1995
Investment Products....................................... $ 436
Individual Life Insurance................................. 137
Employee Benefits......................................... 351
Corporate Operations...................................... 67
Runoff Operations......................................... 337
------
Consolidated Operations................................... $ 1,328
------
------
1994
Investment Products....................................... $ 330
Individual Life Insurance................................. 108
Employee Benefits......................................... 350
Corporate Operations...................................... 23
Runoff Operations......................................... 481
------
Consolidated Operations................................... $ 1,292
------
------
OTHER
SEGMENT EXPENSES
- ---------------------------------------------------------- -------------
<S> <C>
1996
Investment Products....................................... $ 156
Individual Life Insurance................................. 68
Employee Benefits......................................... 143
Corporate Operations...................................... 16
Runoff Operations......................................... 44
------
Consolidated Operations................................... $ 427
------
------
1995
Investment Products....................................... $ 115
Individual Life Insurance................................. 55
Employee Benefits......................................... 138
Corporate Operations...................................... 11
Runoff Operations......................................... (2)
------
Consolidated Operations................................... $ 317
------
------
1994
Investment Products....................................... $ (31)
Individual Life Insurance................................. 107
Employee Benefits......................................... 100
Corporate Operations...................................... 43
Runoff Operations......................................... 8
------
Consolidated Operations................................... $ 227
------
------
</TABLE>
59 - PROSPECTUS
<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
---------- ---------------- ---------------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996
Life Insurance in Force......................... $ 177,094 $ 106,146 $ 31,957 $ 102,905 31.1%
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities.................. $ 1,801 $ 298 $ 169 $ 1,672 10.1%
Accident and Health Insurance................. 33 4 4 33 12.1%
---------- -------- ------- ----------
Total........................................... $ 1,834 $ 302 $ 173 $ 1,705 10.1%
---------- -------- ------- ----------
---------- -------- ------- ----------
For the Year Ended December 31, 1995
Life Insurance in Force......................... $ 182,716 $ 112,774 $ 26,996 $ 96,938 27.8%
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities.................. $ 1,232 $ 325 $ 574 $ 1,481 38.8%
Accident and Health Insurance................. 313 324 17 6 283.3%
---------- -------- ------- ----------
Total........................................... $ 1,545 $ 649 $ 591 $ 1,487 39.7%
---------- -------- ------- ----------
---------- -------- ------- ----------
For the Year Ended December 31, 1994
Life Insurance in Force......................... $ 136,929 $ 87,553 $ 35,016 $ 84,392 41.5%
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities.................. $ 1,008 $ 211 $ 294 $ 1,091 26.9%
Accident and Health Insurance................. 308 304 5 9 55.6%
---------- -------- ------- ----------
Total........................................... $ 1,316 $ 515 $ 299 $ 1,100 27.2%
---------- -------- ------- ----------
---------- -------- ------- ----------
</TABLE>
60 - PROSPECTUS
