<PAGE>
<TABLE>
<S> <C>
PUTNAM HARTFORD INHERITANCE MANAGER
VARIABLE LIFE
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
TELEPHONE: 1-800-231-5453 [LOGO]
</TABLE>
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This Prospectus describes information you should know before you purchase Putnam
Hartford Inheritance Manager Variable Life. Please read it carefully.
Putnam Hartford Inheritance Manager Variable Life is a modified single premium
variable life insurance policy. It is:
x Modified single premium, because you make one single premium payment, and
under certain limited circumstances, you may make additional premium
payments.
x Variable, because the value of your life insurance policy will fluctuate with
the performance of the underlying funds.
- --------------------------------------------------------------------------------
At purchase, you allocate your payments to "Sub-Accounts" or subdivisions of our
Separate Account, an account that keeps your life insurance policy assets
separate from our company assets. These Sub-Accounts then purchase shares of
mutual funds set up exclusively for variable annuity or variable life insurance
products. These funds are not the same mutual funds that you buy through your
stockbroker or through a retail mutual fund. They may have similar investment
strategies and the same fund managers as retail mutual funds. This life
insurance policy offers you funds with investment strategies ranging from
conservative to aggressive and you may pick those funds that meet your
investment style.
The Sub-Accounts and the Funds are listed below:
<TABLE>
<CAPTION>
<S> <C>
SUB-ACCOUNT PURCHASES SHARES OF:
<CAPTION>
<S> <C>
Putnam Asia Pacific Growth Sub-Account Class IA of Putnam VT Asia Pacific Growth Fund of
Putnam Variable Trust
Putnam Diversified Income Sub-Account Class IA of Putnam VT Diversified Income Fund of
Putnam Variable Trust
Putnam The George Putnam Fund of Boston Sub-Account Class IA of Putnam VT The George Putnam Fund of
Boston of Putnam Variable Trust
Putnam Global Asset Allocation Sub-Account Class IA of Putnam VT Global Asset Allocation Fund
of Putnam Variable Trust
Putnam Global Growth Sub-Account Class IA of Putnam VT Global Growth Fund of Putnam
Variable Trust
Putnam Growth and Income Sub-Account Class IA of Putnam VT Growth and Income Fund of
Putnam Variable Trust
Putnam Health Sciences Sub-Account Class IA of Putnam VT Health Sciences Fund of
Putnam Variable Trust
Putnam High Yield Sub-Account Class IA of Putnam VT High Yield Fund of Putnam
Variable Trust
Putnam Income Sub-Account (formerly Putnam U.S. Government Class IA of Putnam VT Income Fund (formerly Putnam
and High Quality Bond Sub-Account) VT U.S. Government and High Quality Bond Fund) of
Putnam Variable Trust
Putnam International Growth Sub-Account Class IA of Putnam VT International Growth Fund of
Putnam Variable Trust
Putnam International Growth and Income Sub-Account Class IA of Putnam VT International Growth and
Income Fund of Putnam Variable Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUB-ACCOUNT PURCHASES SHARES OF:
<CAPTION>
<S> <C>
Putnam International New Opportunities Sub-Account Class IA of Putnam VT International New
Opportunities Fund of Putnam Variable Trust
Putnam Investors Sub-Account Class IA of Putnam VT Investors Fund of Putnam
Variable Trust
Putnam Money Market Sub-Account Class IA of Putnam VT Money Market Fund of Putnam
Variable Trust
Putnam New Opportunities Sub-Account Class IA of Putnam VT New Opportunities Fund of
Putnam Variable Trust
Putnam New Value Sub-Account Class IA of Putnam VT New Value Fund of Putnam
Variable Trust
Putnam OTC & Emerging Growth Sub-Account Class IA of Putnam VT OTC & Emerging Growth Fund
of Putnam Variable Trust
Putnam Research Sub-Account Class IA of Putnam VT Research Fund of the Putnam
Variable Trust
Putnam Small Cap Value Sub-Account Class IA of Putnam VT Small Cap Value Fund of
Putnam Variable Trust
Putnam Utilities Growth and Income Sub-Account Class IA of Putnam VT Utilities Growth and Income
Fund of Putnam Variable Trust
Putnam Vista Sub-Account Class IA of Putnam VT Vista Fund of Putnam
Variable Trust
Putnam Voyager Sub-Account Class IA of Putnam VT Voyager Fund of Putnam
Variable Trust
</TABLE>
If you decide to buy this life insurance policy, you should keep this prospectus
for your records. Although we file the Prospectus with the Securities and
Exchange Commission, the Commission doesn't approve or disapprove these
securities or determine if the information is truthful or complete. Anyone who
represents that the Securities and Exchange Commission ("SEC") does these things
may be guilty of a criminal offense.
You can call us at 1-800-231-5453 to ask us questions, or to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this life insurance policy and, like this
prospectus, is filed with the Securities and Exchange Commission.
We file other information with the Securities and Exchange Commission. You may
read and copy any document we file at the SEC's public reference room in
Washington, DC 20549-6009. Please call the SEC at 1-800-SEC-0330 for further
information. Our SEC filings, including this prospectus, are also available to
the public at the SEC's web site at http://www.sec.gov.
This life insurance policy IS NOT:
- a bank deposit or obligation
- federally insured
- endorsed by any bank or governmental agency
- available for sale in all states
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PROSPECTUS DATED: MAY 3, 1999
REVISED DATED: OCTOBER 18, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
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SUMMARY OF BENEFITS AND RISKS 4
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FEE TABLE 5
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ABOUT US 7
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Hartford Life Insurance Company 7
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Separate Account Five 7
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The Funds 7
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CHARGES AND DEDUCTIONS 9
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YOUR POLICY 11
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Policy Rights 11
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Policy Limitations 11
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Changes to Policy or Separate Account 12
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PREMIUMS 12
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DEATH BENEFITS AND POLICY VALUES 14
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MAKING WITHDRAWALS FROM YOUR POLICY 15
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LOANS 16
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LAPSE AND REINSTATEMENT 16
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FEDERAL TAX CONSIDERATIONS 17
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LEGAL PROCEEDINGS 19
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OTHER MATTERS 20
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Legal Matters 20
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Year 2000 20
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GLOSSARY OF SPECIAL TERMS 22
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APPENDIX A: SPECIAL INFORMATION FOR POLICIES PURCHASED IN
NEW YORK 23
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STATEMENT OF ADDITIONAL INFORMATION
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</TABLE>
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4 HARTFORD LIFE INSURANCE COMPANY
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SUMMARY OF BENEFITS AND RISKS
BENEFITS OF YOUR POLICY
FLEXIBILITY -- The policy is designed to be flexible to meet your specific life
insurance needs. You have the flexibility to choose your premium payment,
settlement options and investment options.
RIGHT TO EXAMINE -- For a limited time, usually 10 days after you receive your
life insurance policy, you may cancel it without paying a surrender charge. A
longer period maybe provided in certain states.
CASH VALUES -- Your policy has a cash value. The value of your policy will
fluctuate with the performance of the underlying funds.
DEATH BENEFIT -- You designate a beneficiary who will receive the Death Benefit
if you die while the policy is in force. The policy pays a minimum Death
Benefit, called the "Face Amount." The actual Death Benefit may be larger than
the Face Amount if the underlying funds of the policy perform well.
INVESTMENT OPTIONS -- Your policy offers a choice of investment options. You may
transfer money among your investment options, subject to the restrictions
described in this prospectus and the funds' prospectuses.
SURRENDERS -- At any time, you may surrender all or part of your policy. Each
year you may surrender the greater of up to 10% of your premium payments or 100%
of your Account Value minus premiums paid without being charged a surrender
charge. (See "Risks of Your Policy" below)
LOANS -- You can take a loan on the policy. Your policy provides for two types
of cash loans. Your policy secures the loans. Loans may not exceed 90% of the
policy's cash value.
SETTLEMENT OPTIONS -- You may choose to receive surrender or death benefit
proceeds over a period of time by using one of our settlement options.
WHAT DOES YOUR PREMIUM PAYMENT PAY FOR?
Your premium payment pays for insurance coverage, it acts as an investment in
the Sub-Accounts, and it pays for sales charges, premium taxes and
administrative fees.
RISKS OF YOUR POLICY
INVESTMENT PERFORMANCE -- The value of your policy will fluctuate with the
performance of its underlying funds. Your investment options may decline in
value, or they may not perform to your expectations. Your policy values in the
Sub-Accounts are not guaranteed.
UNSUITABLE FOR SHORT-TERM SAVINGS -- The policy is designed for long term
financial planning. You should not purchase the policy if you will need your
premium payment in a short time.
RISK OF LAPSE -- Your policy could terminate if the value of the policy becomes
so low that it cannot support the policy's monthly charges and fees. If this
occurs, we will notify you in writing. You will then have a 61-day grace period
to pay additional amounts to prevent the policy from terminating.
LOANS -- Taking a loan from your policy may increase the risk that your policy
will terminate, may have a permanent effect on the policy's Account Value, and
may reduce the death benefit proceeds.
SURRENDER AND PARTIAL SURRENDERS -- You may have to pay tax on the money you
take out and, if you take money out before you are 59 1/2 you may have to pay a
federal income tax penalty.
TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers and
to limit the number and frequency of transfers among your investment options.
ADVERSE TAX CONSEQUENCES -- Under current tax law, your Beneficiaries will
receive the Death Benefit free of federal income tax. However, you may be
required to pay federal income tax if you receive any loans, surrenders or other
amounts from the policy, and you may also be subject to a 10% federal income
penalty tax if you take money out prior to age 59 1/2.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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FEE TABLE
The following tables describes the MAXIMUM fees and expenses that you will pay
when buying, owning, and surrendering the policy. The first table describes the
maximum fees and expenses that you will pay at the time that you surrender the
policy.
SURRENDER FEES
<TABLE>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
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Surrender Charges When you fully or partially A percentage of the amount
surrender your policy. surrendered, not to exceed the
premium payments, depending on the
Policy Year, in which the premium
payment was made.
The percentage is as follows:
Policy Year Percentage
-- -----
1 7.5%
2 7.5%
3 7.5%
4 6%
5 6%
6 4%
7 4%
8 2%
9 2%
10+ 0%
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Unamortized Tax Charge Upon surrender or partial surrender A percentage of the Account Value
of the policy. depending on the Policy Year the
surrender takes place.
The percentage is as follows:
Policy Year Percentage
-- -----
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
<S> <C>
POLICIES FROM WHICH CHARGE IS
CHARGE DEDUCTED
- ----------------------
Surrender Charges All, if the surrender is subject to a
charge.
- ----------------------
Unamortized Tax Charge Only policies which elect Option 1.
</TABLE>
The next table describes the MAXIMUM fees and expenses that you will pay
periodically during the time that you own the policy, not including Fund fees
and expenses.
ANNUAL CHARGES OTHER THAN FUND OPERATING EXPENSES
<TABLE>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
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Cost of Insurance Monthly. Individualized depending on age,
Charges sex and other factors.
- ------------------------------------------------------------------------------------------------
Mortality and Expense Monthly. - Under Option 1: .90% (annualized)
Risk Charge of Sub-Account Value in Policy
Years 1-10 and .50% (annualized)
for Policy Years 11 and beyond
- Under Option 2: .65% (annualized)
of Sub-Account Value in Policy
Years 1-10 and .50% (annualized)
for Policy Years 11 and beyond
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Tax Expense Charge - Under Option 1: Monthly. - Under Option 1: .40% (annualized)
- Under Option 2: Receipt of of Account Value for Policy Years
Premium Payment. 1-10
- Under Option 2: 4% of each
premium payment in all Policy Years
- ------------------------------------------------------------------------------------------------
Annual Maintenance Fee On Policy Anniversary Date or upon $30.00
surrender of the policy.
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Administrative Charge Monthly. .40% (annualized) of Sub-Account
Value
<S> <C>
POLICIES FROM WHICH CHARGE IS
CHARGE DEDUCTED
- ----------------------
Cost of Insurance All
Charges
- ----------------------
Mortality and Expense All
Risk Charge
- ----------------------
Tax Expense Charge All
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Annual Maintenance Fee Only policies with an Account Value
of less than $50,000 on the Policy
Anniversary Date or date of
surrender.
- ----------------------
Administrative Charge All
</TABLE>
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6 HARTFORD LIFE INSURANCE COMPANY
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The next table describes the Fund fees and expenses that you will pay
periodically during the time that you own the policy. The table shows the
minimum and maximum fees and expenses charged by any of the Funds. More detail
concerning each Fund's fees and expenses is contained in the prospectus for each
Fund.
ANNUAL FUND OPERATING EXPENSES
<TABLE>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED (ANNUALIZED)
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees Daily net asset values of a Fund 0.450% - 1.200%
reflect Management Fees already
deducted from assets of the Fund.
- ------------------------------------------------------------------------------------------------
Other Expenses Daily net asset values of a Fund 0.040% - 0.590%
reflect Other Expenses already
deducted from the assets of the
Fund.
- ------------------------------------------------------------------------------------------------
Total Fund Annual Daily net asset values of a Fund 0.500% - 1.620%
Expenses reflect Total Fund Annual Operating
Expenses already deducted from
assets of the Fund.
<S> <C>
POLICIES FROM WHICH CHARGE IS
CHARGE DEDUCTED
- ----------------------
Management Fees All policies, but deductions only
from underlying Funds selected by
you.
- ----------------------
Other Expenses All policies, but deductions only
from underlying Funds selected by
you.
- ----------------------
Total Fund Annual All policies, but deductions only
Expenses from underlying Funds selected by
you.
</TABLE>
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HARTFORD LIFE INSURANCE COMPANY 7
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ABOUT US
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States and the District of Columbia. We were originally incorporated
under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately
controlled by The Hartford Financial Services Group, Inc., one of the largest
financial service providers in the United States.
HARTFORD'S RATINGS
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<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
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A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
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Standard & Poor's 6/1/98 AA Insurer financial strength
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Duff & Phelps 12/21/98 AA+ Claims paying ability
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</TABLE>
SEPARATE ACCOUNT FIVE
The Sub-Accounts are subdivisions of our separate account, called Separate
Account Five. The Separate Account was established to keep your life insurance
policy assets separate from our company assets. The investment performance of
the Separate Account is independent from the investment performance of
Hartford's other assets. Hartford's other assets are utilized to pay our
insurance obligations under the policy. Your assets in the Separate Account are
held exclusively for your benefit and the benefit of other policy owners and may
not be used for any other liability of Hartford. Separate Account Five was
established on July 25, 1994 under the laws of Connecticut.
THE FUNDS
The Sub-Accounts purchase shares of Putnam Variable Trust, an open-end series
investment company with multiple portfolios ("Funds"). Putnam Investment
Management, Inc. ("Putnam Management") serves as the investment manager for the
Funds. Putnam Management is ultimately controlled by Marsh & McLennan Companies,
Inc., a publicly owned holding company whose principal businesses are
international insurance brokerage and employee benefit consulting.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying prospectus for the Funds, and the Statement of Additional
Information, which may be ordered from us. The Funds' prospectus should be read
in conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
PUTNAM VT ASIA PACIFIC GROWTH FUND -- Seeks capital appreciation by investing
primarily in securities of companies located in Asia and in the Pacific Basin.
The fund's investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks.
PUTNAM VT DIVERSIFIED INCOME FUND -- Seeks high current income consistent with
capital preservation by investing in the following three sectors of the fixed
income securities markets: a U.S. Government and Investment Grade Sector, a High
Yield Sector (which invests primarily in securities commonly known as "junk
bonds"), and an International Sector. See the special considerations for
investments in high yield securities described in the Fund prospectus.
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON -- Seeks to provide a balanced
investment composed of a well-diversified portfolio of stocks and bonds which
will produce both capital growth and current income.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND -- Seeks a high level of long-term total
return consistent with preservation of capital by investing in U.S. equities,
international equities, U.S. fixed income securities, and international fixed
income securities.
PUTNAM VT GLOBAL GROWTH FUND -- Seeks capital appreciation through a globally
diversified portfolio of common stocks.
PUTNAM VT GROWTH AND INCOME FUND -- Seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
PUTNAM VT HEALTH SCIENCES FUND -- Seeks capital appreciation by investing
primarily in common stocks and other securities of companies in the health
sciences industries.
PUTNAM VT HIGH YIELD FUND -- Seeks high current income and, when consistent with
this objective, a secondary objective of capital growth, by investing primarily
in high-yielding, lower-rated fixed income securities, constituting a portfolio
which Putnam Management believes does not involve undue risk to income or
principal. See the special considerations for investments in high yield
securities described in the Fund prospectus.
PUTNAM VT INCOME FUND (FORMERLY PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND
FUND) -- Seeks high current income consistent with what Putnam Management
believes to be prudent risk. The Fund will normally invest mostly in bonds and
other debt securities, and, to a lesser degree, in preferred stocks.
PUTNAM VT INTERNATIONAL GROWTH FUND -- Seeks capital appreciation by investing
primarily in equity securities of companies located in a country other than the
United States.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND -- Seeks capital growth, and a
secondary objective of high current income by investing primarily in common
stocks that Putnam Management believes offer potential for capital growth and
may, when consistent with its investment objectives, invest in common stocks
that Putnam Management believes offer potential for current income. Under normal
market conditions, the fund expects to invest substantially all of its assets in
securities principally traded on markets outside the United States.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND -- Seeks long term capital
appreciation by investing in companies that have above-average growth prospects
due to the fundamental growth of their market sector. Under normal market
conditions, the fund expects to invest substantially all of its total assets,
other than cash or short-term investments held pending investment, in common
stocks, preferred stocks, convertible preferred stocks, convertible bonds and
other equity securities principally traded in securities markets outside the
United States.
PUTNAM VT INVESTORS FUND -- Seeks long-term growth of capital and any increased
income that results from this growth by investing primarily in common stocks
that Putnam Management believes afford the best opportunity for capital growth
over the long term.
PUTNAM VT MONEY MARKET FUND -- Seeks as high a rate of current income as Putnam
Management believes is consistent with preservation of capital and maintenance
of liquidity by investing in high-quality money market instruments.
PUTNAM VT NEW OPPORTUNITIES FUND -- Seeks long-term capital appreciation by
investing principally in common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term growth
potential.
PUTNAM VT NEW VALUE FUND -- Seeks long-term capital appreciation by investing
primarily in common stocks that Putnam Management believes are undervalued at
the time of purchase and have the potential for long-term capital appreciation.
PUTNAM VT OTC & EMERGING GROWTH FUND -- Seeks capital appreciation by investing
primarily in common stocks that Putnam Management believes have potential for
capital appreciation significantly greater than that of market averages.
PUTNAM VT RESEARCH FUND -- Seeks capital appreciation. The fund is not intended
to be a complete investment program, and there is no assurance it will achieve
its objective.
PUTNAM VT SMALL CAP VALUE FUND -- Seeks capital appreciation. The fund will
generally invest in value stocks, which stocks are those that Putnam Management
believes are currently undervalued compared to their true worth.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND -- Seeks capital growth and current
income by concentrating its investments in debt and equity securities issued by
companies in the public utilities industries.
PUTNAM VT VISTA FUND -- Seeks capital appreciation by investing in a diversified
portfolio of common stocks which Putnam Management believes have the potential
for above-average capital appreciation.
PUTNAM VT VOYAGER FUND -- Seeks capital appreciation by investing primarily in
common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.
The Funds are generally managed in styles similar to other open-end investment
companies which are managed by Putnam Management and whose shares are generally
offered to the public. These other Putnam funds may, however, employ different
investment practices and may invest in securities different from those in which
their counterpart Funds invest, and consequently will not have identical
portfolios or experience identical investment results.
Subject to the general oversight of the Trustees of Putnam Variable Trust,
Putnam Management manages the Funds' portfolios in accordance with their stated
investment objectives and policies, makes investment decisions for the Funds,
places orders to purchase and sell securities on behalf of the Funds, and
administers the affairs of the Funds. For its services, the Funds pay Putnam
Management a quarterly fee. See the accompanying Funds prospectus for a more
complete description of Putnam Management and the respective fees of the Funds.
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of policy owners, owners of other
policies or owners of variable annuity contracts with values allocated to one or
more of these other separate accounts investing in any one of the Funds. In the
event of any such material conflicts, we will consider what action may be
appropriate, including removing the Fund from the Separate Account or replacing
the Fund with another underlying fund. There are certain risks associated with
mixed and shared funding, as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To the
extent required by federal securities laws or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
policy may be voted.
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your policy.
- - Arrange for the handling and tallying of proxies received from policy owners.
- - Vote all Fund shares attributable to your policy according to instructions
received from you, and
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your policy may be
voted. After we begin to make annuity payouts to you, the number of votes you
have will decrease.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
The deductions or charges associated with this policy are subtracted, depending
on the type of deduction or charge, from premium payments as they are made, upon
surrender or partial surrender of the policy, on the Policy Anniversary Date or
on a monthly pro rated basis from each Sub-Account ("Deduction Amount").
Deductions are taken from premium payments before allocations to the
Sub-Accounts are made.
Deduction Amounts are subtracted on the Policy Date and on each Monthly Activity
Date after the Policy Date to cover charges and expenses incurred in connection
with a policy.
Each Deduction Amount will be subtracted pro rata from each Sub-Account so that
the proportion of Account Value of the policy attributable to each Sub-Account
remains the same before and after the deduction. The Deduction Amount will vary
from month to month. If the Cash Surrender Value is not sufficient to cover a
Deduction Amount due on any Monthly Activity Date, the policy may lapse. See
"Lapse and Reinstatement."
The deductions and charges associated with your policy are listed below.
COST OF INSURANCE CHARGE -- The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the tenth Policy Year and are based on whether
100%, 90% or 80% of the Guideline Single Premium has been paid. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum cost of insurance rates per $1,000 will be
included in each Policy; however, Hartford reserves the right to use rates less
than those shown in the Table. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CSO Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
table through age 90, grading to 100% of the 1980 CSO Table at age 100.
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the Insured's substandard rating. Unisex rates may be
required in some states.
Your Coverage Amount is first set on the date we issue your policy and then on
each Monthly Activity Date. The Coverage Amount is the Face Amount minus the
Account Value. There is a Minimum Coverage Amount. It is a stated percentage of
the Account Value of the policy determined on each Monthly Activity Date. The
percentages vary according to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $70,000
Insured's attained age = 60
Minimum Coverage Amount percentage for age 60 = 30%
On the Monthly Activity Date, the Coverage Amount is $30,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($70,000) from the
Face Amount ($100,000), subject to a possible Minimum Coverage Amount
adjustment. This Minimum Coverage Amount is determined by taking a percentage of
the Account Value on the Monthly Activity Date. In this case, the Minimum
Coverage Amount is $21,000 (30% of $70,000). Since $21,000 is less than the Face
Amount less the Account Value ($30,000), no adjustment is necessary. Therefore,
the Coverage Amount will be $30,000.
Assume that the Account Value in the above example was $90,000. The Minimum
Coverage Amount would be $27,000 (30% of $90,000). Since this is greater than
the Face Amount less the Account Value ($10,000), the Coverage Amount for the
Policy Month is $27,000. (For an explanation of the Death Benefit, see "Death
Benefit and Policy Values".)
Because the Account Value and, as a result, the Coverage Amount under a policy
may vary from month to month, the cost of insurance charge may also vary on each
Monthly Activity Date.
POLICY OWNER OPTIONS
You, at the time the policy is issued, will elect one of two options described
below to pay charges relating to CERTAIN TAXES AND MORTALITY AND EXPENSE RISK
CHARGES. The option selected by you may affect your Account Value.
OPTION 1 -- ASSET-BASED CHARGES -- Under this payment option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE -- For assuming mortality and expense risks
under the policy, we deduct monthly from Sub-Account Value for Policy Years 1
through 10 a charge equal to an annual rate of 0.90%. In Policy Years 11 and
beyond, the charge drops to an annual rate of 0.50%. The mortality and expense
risk charge is broken into charges for mortality risks and for expense risks:
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that the Death Proceeds will exceed: (1) the Coverage Amount on
the date of death; and (2) your policy's Account Value on the date we receive
written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering your policy will exceed the administrative charges.
We may profit from the mortality and expense risk charge and may use any profits
for any proper purpose, including any difference between the cost we incur in
distributing the policies and the proceeds of the Surrender Charge. The
mortality and expense risk charge is deducted while the policy is in force,
including the duration of a settlement option.
TAX EXPENSE CHARGE -- During the first ten years of your policy, we deduct a
monthly charge equal to an annual rate of 0.40% from your Account Value. This
tax expense charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 0.25% of the Account Value is deducted over ten
Policy Years and approximates our average expenses for state and local premium
taxes. Premium taxes vary, ranging from zero to more than 4.0%. The premium tax
deduction is made whether or not any premium tax applies. The deduction may be
higher or lower than the premium tax imposed. However, we do not expect to make
a profit from this deduction. The cost of the capitalization of certain policy
acquisition expenses under Section 848 of the Internal Revenue Code.
(2) During your first ten Policy Years, we deduct a charge of 0.15% of Account
Value. This charge helps reimburse us for the approximate expenses we incur
from federal taxes we pay under Section 848 of the Internal Revenue Code.
UNAMORTIZED TAX CHARGE -- Under Option 1, during the first nine Policy Years, an
Unamortized Tax charge is imposed on surrender or partial surrenders. The
Unamortized Tax charge is shown below, as a percentage of amount surrendered,
during each Policy Year:
<TABLE>
<CAPTION>
POLICY YEAR RATE
<S> <C>
- ---------------------
1 2.25%
- ---------------------
2 2.00%
- ---------------------
3 1.75%
- ---------------------
4 1.50%
- ---------------------
5 1.25%
- ---------------------
6 1.00%
- ---------------------
7 0.75%
- ---------------------
8 0.50%
- ---------------------
9 0.25%
- ---------------------
10+ 0.00%
- ---------------------
</TABLE>
After the ninth Policy Year, no Unamortized Tax charge will be imposed.
OPTION 2 -- FRONTED CHARGES -- Under this option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE -- For assuming mortality and expense risks
under the policy, we will deduct monthly from Sub-Account Value for Policy Years
1 through 10 a charge equal to an annual rate of 0.65%. In Policy Years 11 and
beyond, the charge drops to an annual rate of 0.50%. The mortality and expense
risk charge is broken into charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that your policy's Death Benefit will exceed: (1) the Coverage
Amount on the date of death; and (2) your policy's Account Value on the date we
receive written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering the Policies will exceed the administrative charges set in the
policy.
TAX EXPENSE CHARGE -- We deduct a charge equal to 4.0% from all premium
payments. This charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 2.5% of premium approximates our average expenses for
state and local premium taxes. Premium taxes vary, ranging from zero to more
than 4.0%. The premium tax deduction is made whether or not any premium tax
applies. The deduction may be higher or lower than the premium tax imposed.
However, we do not expect to make a profit from this deduction.
(2) The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
The charge of 1.5% of premium payments helps reimburse us for the approximate
expenses we incur from federal taxes we pay under Section 848 of the Internal
Revenue Code.
This Option may not be available in all states.
OTHER CHARGES
ANNUAL MAINTENANCE FEE -- The annual maintenance fee is a flat fee that is
deducted from your Account Value to reimburse us for expenses relating to the
maintenance of the policy. The annual $30 charge is deducted on a Policy
Anniversary or when the policy is fully surrendered if the Account Value at
either of those times is less than $50,000. We reserve the right to waive the
annual maintenance fee under other conditions.
ADMINISTRATIVE CHARGE -- We will deduct a monthly administrative charge from
Sub-Account Value equal to an annual rate of 0.40%. This charge compensates us
for expenses incurred in the administration of the Separate Account and the
policy.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
SURRENDER CHARGE -- We may charge you a Surrender Charge when you surrender
amounts invested in your policy. We assess a Surrender Charge on amounts
surrendered in any Policy Year that exceed the greater of 10% of the premiums
you have paid into your policy or 100% of your Account Value minus premiums
paid. If the amount you paid has been in your policy:
x For Policy Years 1, 2 and 3, the charge is 7.5%.
x For Policy Years 4 and 5, the charge is 6%.
x For Policy Years 6 and 7, the charge is 4%.
x For Policy Years 8 and 9, the charge is 2%.
x For Policy Years 10 and beyond, the charge is 0%.
In determining the Surrender Charge, any surrender or partial surrender during
the first ten Policy Years will first come from premiums paid and then from
earnings. If an amount equal to all premiums paid has been withdrawn, no
Surrender Charge will be assessed on the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense incurred
by us in distributing the Policies. This expense includes commissions,
advertising and the printing of prospectuses.
CHARGES AGAINST THE FUNDS -- The Separate Account purchases shares of the Funds
at net asset value. The net asset value of the Fund shares reflects investment
advisory fees and administrative expenses already deducted from the assets of
the Funds. These charges are described in the Funds' prospectuses accompanying
this Prospectus.
YOUR POLICY
- --------------------------------------------------------------------------------
POLICY RIGHTS
POLICY OWNER, OR "YOU" -- As long as your policy is in force, you may exercise
all rights under the policy while the Insured is alive and a beneficiary has not
been irrevocably named.
BENEFICIARY -- You name the beneficiary in the application for the policy. You
may change the beneficiary (unless irrevocably named) during the Insured's
lifetime by written request to us. If no beneficiary is living when the Insured
dies, the Death Proceeds will be paid to the policy owner if living; otherwise
to the policy owner's estate.
ASSIGNMENT -- You may assign your policy as collateral for a loan or other
obligation. Until you notify us in writing, we are not responsible for any
payment made or action taken. We are not responsible for the validity of any
assignment.
STATEMENTS TO POLICY OWNERS -- We will send you a statement at least once each
year, showing:
- - the current Account Value, Cash Surrender Value and Face Amount;
- - the premiums paid, monthly deduction amounts and any loans since your last
statement;
- - the amount of any Indebtedness;
- - any notifications required by the provisions of your policy; and
- - any other information required by the Insurance Department of the state where
your policy was delivered.
LIMIT ON RIGHT TO CONTEST -- During the Insured's lifetime, we may not contest
the validity of the policy after it has been in force for two years from the
date we issue the policy. If the policy is reinstated, the two-year period is
measured from the date of reinstatement. Any increase in the Coverage Amount as
a result of a premium payment is contestable for two years from its effective
date. In addition, if the Insured commits suicide within two years from the date
we issue the policy, or such period as specified in state law, the benefit
payable will be limited to the Account Value minus any Indebtedness.
MISSTATEMENT AS TO AGE AND SEX -- If the age or sex of the Insured is
incorrectly stated, the Death Benefit will be appropriately adjusted as
specified in the policy.
POLICY LIMITATIONS
DIVIDENDS -- No dividends will be paid under the policy.
TRANSFERS OF ACCOUNT VALUE -- While the policy remains in force, and subject to
our transfer rules then in effect, you may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
We reserve the right to restrict the number of these transfers to no more than
12 per Policy Year, with no two transfers being made on consecutive Valuation
Days. However, there are no restrictions on the number of transfers at the
present time.
Transfers may be made by written request or by calling us toll free
1-800-231-5453. Transfers by telephone may be made by the agent of record or by
an attorney-in-fact pursuant to a power of attorney. Telephone transfers may not
be permitted in some states. Hartford, its agents or affiliates will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The procedures we follow for
transactions initiated by telephone include requirements that callers provide
certain information for identification purposes. All transfer instructions
received by telephone are tape-recorded. We will send you a confirmation of the
transfer within five days from the date of any transfer.
It is your responsibility to verify the accuracy of all confirmations and to
promptly advise us of any inaccuracies within 30 days of receipt.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CHANGES TO POLICY OR SEPARATE ACCOUNT
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right, subject
to any applicable law, to make certain changes to the Funds offered under your
policy. We may, in our sole discretion, establish new Funds. New Funds will be
will be made available to existing policyholders as we determine appropriate. We
may also close one or more Funds to additional payments or transfers from
existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the Investment Company Act of 1940 (the "1940
Act"), substitutions of shares attributable to your interest in a Fund will not
be made until we have the approval of the Commission and we have notified you of
the change.
In the event of any change, we may, by appropriate endorsement, make any changes
in the policy necessary or appropriate to reflect the modification. If we decide
that it is in the best interest contracts owners, the Separate Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under the 1940 Act in the event such registration
is no longer required, or may be combined with one or more other Separate
Accounts.
SEPARATE ACCOUNT TAXES -- Currently, there is no charge for federal income taxes
that may be attributable to the Separate Account. However, we reserve the right
to make such a charge in the future. Charges for other taxes, if any,
attributable to the Separate Account may also be made.
OTHER BENEFITS OF YOUR POLICY
LAST SURVIVOR POLICIES -- The Policies are offered on both a single life and a
"last survivor" basis. Policies sold on a last survivor basis operate in a
manner almost identical to the single life version. The most important
difference is that the last survivor policy involves two Insureds and the Death
Proceeds are paid on the death of the last surviving Insured. The other
significant differences between the last survivor and single life versions are
listed below.
1. The cost of insurance charges under the last survivor policies are
determined in a manner that reflects the anticipated mortality of the two
Insureds and the fact that the Death Benefit is not payable until the death
of the second Insured. See the last survivor illustrations in "Statement of
Additional Information."
2. To qualify for simplified underwriting under a last survivor policy, both
Insureds must meet the simplified underwriting standards.
3. For a last survivor policy to be reinstated, both Insureds must be alive on
the date of reinstatement.
4. The policy provisions regarding misstatement of age or sex, suicide and
incontestability apply to either Insured.
5. The younger Insured's attained age is used to calculate the Minimum Death
Benefit to ensure that the policy continues to qualify as life insurance.
6. Additional tax disclosures applicable to last survivor policies are provided
in "Federal Tax Considerations."
PREMIUMS
- --------------------------------------------------------------------------------
APPLICATION FOR A POLICY -- To purchase a policy you must submit an application
to us. A policy will be issued only on the lives of Insureds age 90 and under
who supply evidence of insurability satisfactory to us. Acceptance is subject to
our underwriting rules and we reserve the right to reject an application for any
reason. If your application for a policy is rejected, then your initial premium
payment will be returned along with an additional amount for interest, based on
the current rate being credited by us. Other than those described in this
prospectus, no change in the terms or conditions of a policy will be made
without your consent. Generally, the minimum initial premium we accept is
$10,000. We may accept less than $10,000 under certain circumstances.
Your policy is effective after we receive all outstanding delivery requirements
and receive your initial premium. The date your policy becomes effective is
called the Policy Date. This date is the date used to determine all future
cyclical transactions on your policy. The Policy Date may be prior to, or the
same as, the date your policy is issued ("Issue Date").
If your Coverage Amount is over then current limits established by us, we will
not accept your initial premium payment with your application. In other cases
where we receive the initial payment with the application, we will provide fixed
conditional insurance during underwriting according to the terms of conditional
receipt established by us. The fixed conditional insurance will be the insurance
applied for, up to a maximum that varies by age. If no fixed conditional
insurance was in effect, then on policy delivery we will require a sufficient
payment to place the insurance in force.
PREMIUM PAYMENTS -- You pay a single premium and, subject to restrictions,
additional premiums. You may choose a minimum initial premium of 80%, 90% or
100% of the Guideline Single Premium (based on the Face Amount).
UNDERWRITING RULES OF YOUR POLICY
- - Under current underwriting rules, which are subject to change, if you are
between ages 35 and 80, you may be eligible for simplified underwriting
without a medical examination if you meet simplified underwriting standards.
- - If you are below age 35 or above age 80, or do not meet simplified
underwriting eligibility, full underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
Your policy allows for additional premium payments so long as the additional
premiums do not cause the policy to fail to meet the definition of a life
insurance policy under Section 7702 of the Code. The amount and frequency of
additional premium payments will affect the Cash Value and the amount and
duration of insurance. We may require evidence of insurability for any
additional premiums that increase the Coverage Amount. Premiums, which do not
meet the tax qualification guidelines for life insurance under the Internal
Revenue Code, will not be applied to your policy.
ALLOCATION OF PREMIUMS -- Within three business days of receipt of your
completed application and your initial premium payment at our Home Office, we
allocate your entire premium payment to the Putnam Money Market Sub-Account.
We will then allocate the Account Value in the Putnam Money Market Sub-Account
to the Sub-Accounts according to the premium allocations you specify in your
policy application. The allocation is made upon the expiration of the right to
examine policy period, or the date we receive the final requirement to put the
policy in force, whichever is later.
ACCUMULATION UNITS -- The premiums you allocate to the Sub-Accounts are used to
purchase Accumulation Units in such Sub-Accounts. We determine the number of
Accumulation Units of each Sub-Account by dividing the amount of premium you
have allocated to the Sub-Account by the accumulation unit value of that
particular Sub-Account.
ACCUMULATION UNIT VALUES -- The accumulation unit value for each Sub-Account
varies to reflect the investment experience of the applicable underlying Fund.
To determine the current accumulation unit value, we take the prior Valuation
Day's accumulation unit value and multiply it by the Net Investment Factor for
the Valuation Period then ended.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Period; divided by
- - The net asset value per share of each Fund held in the Sub-Account at the
beginning of the Valuation Period.
You should refer to the Funds' prospectuses accompanying this Prospectus for a
description of how the assets of each Fund are valued, since these
determinations have a direct bearing on the Accumulation Unit Value of the
Sub-Account and therefore the Account Value of a policy.
All valuations in connection with a policy, will be made on the date your
request or payment is received by us before the close of the New York Stock
Exchange on any Valuation Day at our Home Office. Otherwise a valuation will be
made on the next date which is a Valuation Day.
ACCOUNT VALUE -- Each policy has an Account Value. There is no minimum
guaranteed Account Value. A policy's Account Value equals the policy's value in
all of the Sub-Accounts and any amounts in the Loan Account.
The Account Value of your policy is related to the net asset value of the Funds
to which your have allocated your premiums. The Account Value on any Valuation
Day is calculated by multiplying the number of Accumulation Units by the
Accumulation Unit Value and then totaling the results for all the Sub-Accounts.
The Account Value of a policy changes on a daily basis and is computed on each
Valuation Day. Therefore, your Account Value varies to reflect the investment
performance of the underlying Funds, the value of the Loan Account and the
monthly Deduction Amounts.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS -- We will suspend all
procedures requiring valuation (including transfers, surrenders and loans) when:
(a) the New York Stock Exchange is closed;
(b) trading on the New York Stock Exchange is restricted by the SEC;
(c) the SEC permits and orders postponement; or
(d) the SEC determines that an emergency exists to restrict valuation.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
DEATH BENEFITS AND POLICY VALUES
DEATH BENEFIT -- While in force, your policy provides for the payment of the
Death Proceeds to the beneficiary when the Insured under the policy dies. You
must notify us in writing as soon as possible after the death of the Insured.
The Death Proceeds payable to the beneficiary equal the Death Benefit less any
loans outstanding.
We will pay interest of at least 3 1/2% per year on the Death Proceeds from the
date of the Insured's death to the date payment is made or a settlement option
is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The Death Benefit equals the greater of:
(1) the Face Amount; or
(2) the Account Value multiplied by a specified percentage.
The percentage varies according to the attained age of the Insured and is
specified in the policy. Therefore, an increase in Account Value may increase
the Death Benefit. However, because the Death Benefit will never be less than
the Face Amount, a decrease in Account Value may decrease the Death Benefit but
never below the Face Amount. This is illustrated in the following examples:
EXAMPLES:
<TABLE>
<CAPTION>
A B
<S> <C> <C>
- -----------------------------------------------------
Face Amount: $100,000 $100,000
- -----------------------------------------------------
Insured's Age: 40 40
- -----------------------------------------------------
Account Value on Date of Death: $ 46,500 $ 34,000
- -----------------------------------------------------
Specified Percentage 250% 250%
- -----------------------------------------------------
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the Date of Death of
$46,500, multiplied by the specified percentage of 250%). This amount less any
outstanding loans constitutes the Death Proceeds which we would pay to the
beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
DEATH BENEFIT POLICY PROCEEDS -- Proceeds from the Death Benefit left with us
remain in the Sub-Accounts to which they were allocated at the time of death,
unless the beneficiary elects to reallocate them. Full or partial surrenders may
be made at any time.
All or part of the Death Proceeds may be paid in cash or applied under a
Settlement Option.
SETTLEMENT OPTIONS -- The surrender proceeds or Death Proceeds under your policy
may be paid in a lump sum or may be applied to one of our settlement options.
The minimum amount that may be applied under a settlement option is $5,000,
unless we consent to a lesser amount. UNDER SETTLEMENTS OPTIONS LIFE ANNUITY,
LIFE ANNUITY WITH 120,180, OR 240 MONTHLY PAYMENTS CERTAIN AND JOINT AND LAST
SURVIVOR ANNUITY, NO SURRENDER OR PARTIAL SURRENDERS ARE PERMITTED AFTER
PAYMENTS START. FULL SURRENDER OR PARTIAL SURRENDERS MAY BE MADE FROM THE
INTEREST INCOME SETTLEMENT OPTION, PAYMENTS FOR A DESIGNATED PERIOD SETTLEMENT
OPTION OR THE DEATH BENEFIT POLICY PROCEEDS, BUT THEY ARE SUBJECT TO THE
SURRENDER CHARGE, IF APPLICABLE. THERE MAY BE ADVERSE TAX CONSEQUENCES FOR
PARTIAL SURRENDERS FROM PAYMENTS FOR A DESIGNATED PERIOD SETTLEMENT OPTION.
PLEASE CHECK WITH YOUR TAX ADVISOR BEFORE REQUESTING A PARTIAL SURRENDER.
The following settlement options are available under your policy:
OPTION 1 -- INTEREST INCOME -- This option offers payments of interest, at the
rate we declare, on the amount applied under this settlement option. The
interest rate will never be less than 3 1/2% per year.
OPTION 2 -- LIFE ANNUITY -- Death Proceeds are used to purchase a variable
annuity where we make annuity payments as long as the annuitant is living. When
the annuitant dies, we stop making annuity payments. A payee would receive only
one annuity payment if the annuitant dies after the first payment, two annuity
payments if the annuitant dies after the second payment, and so forth.
OPTION 3 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN -- We
make monthly annuity payments during the lifetime of the annuitant but annuity
payments are at least guaranteed for a minimum of 120, 180 or 240 months, as you
elect. If, at the death of the annuitant, annuity payments have been made for
less than the minimum elected number of months, then the beneficiary can either
receive the present value (as of the date of the annuitant's death) of the
remaining payments in one sum or continue annuity payments for the remaining
period certain.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make annuity
payments as long as the annuitant and joint annuitant are living. When one
annuitant dies, we continue to make annuity payments until that second annuitant
dies. The annuitant may elect that the payment be less than the payment made
during the joint lifetime of the annuitants. When choosing this option, you must
decide what will happen to the annuity payments after the first annuitant dies.
Under this option, it is possible for an annuitant and joint annuitant to
receive only one payment in the event of the common or simultaneous death of the
annuitants prior to the date of the second payment.
OPTION 5 -- PAYMENTS FOR A DESIGNATED PERIOD -- We will make annuity payments
for the number of years that you select. You can select between 5 years and 30
years. Under this option, you may, at any time, request a full surrender and
receive the Cash Surrender Value of your policy.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
VARIABLE AND FIXED ANNUITY PAYMENTS -- When the settlement option you select
involves an annuity, unless you specify otherwise, the surrender proceeds or
Death Proceeds provide a variable annuity. Fixed annuity options are also
available.
VARIABLE ANNUITY -- Your policy contains tables indicating the minimum dollar
amount of the first monthly payment under a variable annuity for each $1,000 of
value of a Sub-Account. Your first monthly payment varies with the annuity
option chosen and specific parameters chosen by you. The policy contains
variable payment annuity tables derived from the 1983(a) Individual Annuity
Mortality Table, with ages set back one year and with an assumed investment rate
("A.I.R.") of 5% per annum. The assumed investment rate is the investment return
used to calculate subsequent variable annuity payments.
We determine the total first monthly variable annuity payment by multiplying the
Death Proceeds (expressed in thousands of dollars) in a Sub-Account by the
amount of the first monthly payment per $1,000 of value obtained from the tables
in the policy.
The amount of your first monthly variable annuity payment is divided by the
value of an annuity unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due. This determines the number of annuity units represented by the
first payment. This number of annuity units remains fixed during the annuity
payment period and in each subsequent month the dollar amount of the variable
annuity payment is determined by multiplying this fixed number of annuity units
by the current annuity unit value.
Level variable annuity payments would be produced if the investment rate
remained constant and equal to the assumed investment rate. Payments will vary
up or down as the investment rate varies up or down relative to the assumed
investment rate.
FIXED ANNUITY PAYMENTS -- You will receive equal fixed annuity payments
throughout the annuity payment period. We determine fixed annuity payment
amounts by multiplying the amount applied to the annuity by an annuity rate. The
annuity rate is set by us and is not less than the rate specified in the fixed
payment annuity tables in your policy.
Hartford will make any other arrangements for income payments as may be agreed
on.
BENEFITS AT MATURITY -- If the Insured is living on the "Maturity Date" (the
anniversary of the Policy Date on which the Insured is age 100), on surrender of
the policy to us, we will pay you the Cash Surrender Value. In such case, the
policy will terminate and we will have no further obligations under the policy.
The Maturity Date may be extended by rider where approved, but see "Federal Tax
Considerations -- Income Taxation of Policy Benefits."
CHARGES AND POLICY VALUES -- Your policy value decreases due to the deduction of
policy charges. Policy value may increase or decrease depending on investment
performance. Fluctuations in your Account Value may have an effect on your Death
Benefit. If your policy lapses, your policy terminates and no Death Benefit will
be paid.
MAKING WITHDRAWALS FROM YOUR POLICY
- --------------------------------------------------------------------------------
SURRENDERS -- While your policy is in force, you may, without the consent of the
beneficiary (provided the designation of beneficiary is not irrevocable), fully
surrender your policy. Upon surrender, you receive the Cash Surrender Value
determined as of the day we receive your request or the date requested by you,
whichever is later. The Cash Surrender Value equals the Account Value less any
Surrender Charges and any Unamortized Tax charge and all Indebtedness. We pay
the Cash Surrender Value of the policy within seven days of our receipt of your
written request or on the effective surrender date requested by you, whichever
is later. Your policy will terminate on the date of our receipt of the written
request, or the date you request the surrender to be effective, whichever is
later. For a discussion of the tax consequences of surrendering your policy, see
"Federal Tax Considerations."
If you choose to apply the surrender proceeds to a settlement option, the
Surrender Charge will not be imposed to the surrender proceeds applied to the
option. In other words, the surrender proceeds will equal the Cash Surrender
Value without reduction for the Surrender Charge. However, any Unamortized Tax
charge, if applicable, will be deducted from the surrender proceeds to be
applied. In addition, amounts you withdraw from the Interest Income settlement
option, the Payments for a Designated Period settlement option or the Death
Benefit Policy Proceeds are subject to any applicable Surrender Charge.
PARTIAL SURRENDERS -- While your policy is in force, you may elect, by written
request, to make partial surrenders from the Cash Surrender Value. The Cash
Surrender Value, after partial surrender, must at least equal our minimum amount
rules then in effect; otherwise, the request will be treated as a request for
full surrender. The partial surrenders will be deducted pro rata from each
Sub-Account, unless the you instruct otherwise. The Face Amount will be reduced
proportionate to the reduction in the Account Value due to the partial
surrender. Partial surrenders in excess of the greater of 10% of premiums or
100% of Account Value less premiums paid will be subject to the Surrender Charge
and any Unamortized Tax charges. For a discussion of the tax consequences of
partial surrenders, see "Federal Tax Considerations."
RIGHT TO EXAMINE -- You have a limited right to return your policy for
cancellation. You may deliver or mail the policy to us or to the agent from whom
it was purchased any time during your free look period. Your free look period
begins on the day you get your policy and ends ten days after you get it (or
longer in some
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
states). In such event, the policy will be rescinded and we will pay an amount
equal to the greater of the premiums paid for the policy less any Indebtedness
or the sum of: i) the Account Value less any Indebtedness, on the date the
returned policy is received by us or the agent from whom it was purchased; and,
ii) any deductions under the policy or charges associated with the Separate
Account. If your policy is replacing another policy, your free look period and
the amount paid to you upon the return of your policy vary by state.
RIGHT TO EXCHANGE -- Once the policy is in effect, it may be exchanged, during
the first 24 months after its issuance, for a non-variable flexible premium
adjustable life insurance policy offered by us (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
policy will have, at your election, either the same Coverage Amount as under the
exchanged policy on the date of exchange or the same Death Benefit. The
effective date, issue date and issue age will be the same as existed under the
exchanged policy. If a policy loan was outstanding, the entire loan must be
repaid. The exchange is subject to adjustments in payments and Account Values to
reflect variances, if any, in the payments and Account Values under this policy
and the new policy.
LOANS
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AVAILABILITY OF LOANS -- At any time while the policy is in force, you, without
the consent of the beneficiary, (provided the designation of beneficiary is not
irrevocable) may borrow against the policy by assigning it as sole security to
us. Two types of cash loans are available. Any new loan taken together with any
existing Indebtedness may not exceed 90% of the Cash Value. The minimum loan
amount that we will allow is $25.00.
The proceeds of a loan will be delivered to you within seven business days of
our receipt of the loan request.
Unless you specify otherwise, all loan amounts will be transferred pro rata
basis from each Sub-Account to the Loan Account. The difference between the
value of the Loan Account and the Indebtedness will be transferred on a pro-rata
basis from the Sub-Accounts to the Loan Account on each Monthly Activity Date.
If total Indebtedness equals or exceeds the Account Value of the policy on any
Monthly Activity Date, we will give you written notice that, unless we receive
an additional payment within 61 days to reduce the aggregate outstanding loan(s)
secured by the policy, the policy may lapse. See "Lapse and Reinstatement."
PREFERRED LOANS -- The amount of the Loan Account that equals the difference
between the Cash Value and the total of all premiums paid under the policy is
considered a "Preferred Loan."
LOAN REPAYMENTS -- You can repay all or any part of a loan at any time while
your policy is in force. The amount of your policy loan repayment will be
deducted from the Loan Account. It will be allocated among the Sub-Accounts in
the same percentage as premiums are allocated. Any outstanding loan at the end
of a grace period must be repaid before the policy will be reinstated.
EFFECT OF LOANS ON ACCOUNT VALUE -- A loan, whether or not repaid, has a
permanent effect on your Account Value. This effect occurs because the
investment result of each Sub-Account applies only to the amount remaining in
such Sub-Accounts. The longer a loan is outstanding, the greater the effect on
your Account Value is likely to be. The effect could be favorable or
unfavorable. If the Sub-Accounts earn more than the annual interest rate for
amounts held in the Loan Account, your Account Value will not increase as
rapidly as it would have had no loan been made. If the Sub-Accounts earn less
than the Loan Account, then your Account Value will be greater than it would
have been had no loan been made. If not repaid, the aggregate amount of the
outstanding Indebtedness will reduce the Death Proceeds and the Cash Surrender
Value otherwise payable. For a discussion of the consequences of obtaining a
loan against the policy see "Federal Tax Considerations."
CREDITED INTEREST -- Any amounts in the Loan Account will be credited with
interest at an annual rate of 4.0%. The annual rate for Preferred Loans is 6%.
POLICY LOAN RATES -- The loan interest rate that we will charge on all loans is
6% per annum.
LAPSE AND REINSTATEMENT
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LAPSE -- Your policy will remain in force until the Cash Surrender Value is
insufficient to cover the Deduction Amount due on a Monthly Activity Date. We
will notify you of the default in writing, warning you that your policy is in
danger of terminating.
GRACE PERIOD -- Your policy provides a 61-day grace period to pay an amount
sufficient to cover the Deduction Amounts due. The notice will indicate the
amount that must be paid.
The policy will continue through the grace period, but if no additional premium
payment is made, it will terminate at the end of the grace period. If the person
Insured under the policy dies during the grace period, the Death Proceeds
payable under the policy will be reduced by the Deduction Amount(s) due and
unpaid. See "Death Benefits and Policy Values."
REINSTATEMENT -- If your policy lapses, you may apply for reinstatement of the
policy by payment of the reinstatement premium shown in the policy and any
applicable charges. A
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HARTFORD LIFE INSURANCE COMPANY 17
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request for reinstatement may be made within five years of lapse. If a loan is
outstanding at the time of lapse, we require repayment of the loan before
permitting reinstatement. In addition, we reserve the right to require evidence
of insurability satisfactory to Hartford.
The Account Value on the reinstatement date will reflect:
(a) the Cash Value at the time of termination; plus
(b) Net Premiums derived from premiums paid at the time of reinstatement; minus
(c) the Monthly Deduction Amounts that were due and unpaid during the Policy
Grace Period; plus
(d) the Surrender Charge at the time of reinstatement.
The surrender charge is based on the duration from the original policy date as
through the policy has never lapsed.
FEDERAL TAX CONSIDERATIONS
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GENERAL
Since federal tax law is complex, the tax consequences of purchasing this policy
will vary depending on your situation. You may need tax or legal advice to help
you determine whether purchasing this policy is right for you.
Our general discussion of the tax treatment of this policy is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this policy cannot be made in the prospectus. We also do not discuss
state, municipal or other tax laws that may apply to this policy. For detailed
information, you should consult with a qualified tax adviser familiar with your
situation.
TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Funds) are reinvested and are taken into account in determining the value of the
Accumulation Units (see "Premiums -- Account Value"). As a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the Policy.
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
INCOME TAXATION OF POLICY BENEFITS
For federal income tax purposes, the Policies should be treated as life
insurance contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the contract value until the Policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
During the first fifteen Policy Years, an "income first" rule generally applies
to distributions of cash required to be made under Code Section 7702 because of
a reduction in benefits under the Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the Maturity
Date to the date of the Insured's death. If the Maturity Date of the Policy is
extended by rider, Hartford believes that the Policy will continue to be treated
as a life insurance contract for federal income tax purposes after the scheduled
Maturity Date. However, due to the lack of specific guidance on this issue, the
result is not certain. If the Policy is not treated as a life insurance contract
for federal income tax purposes after the scheduled Maturity Date, among other
things, the Death Proceeds may be taxable to the recipient. The Policy Owner
should consult a qualified tax adviser regarding the possible adverse tax
consequences resulting from an extension of the scheduled Maturity Date.
LAST SURVIVOR POLICIES
Although Hartford believes that the last survivor Policies are in compliance
with Section 7702 of the Code, the manner in which Section 7702 should be
applied to certain features of a joint survivorship life insurance contract is
not directly addressed by Section 7702. In the absence of final regulations or
other guidance issued under Section 7702, there is necessarily some uncertainty
whether a last survivor Policy will meet the Section 7702 definition of a life
insurance contract.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premiums cannot be paid at a rate more rapidly than that allowed
by the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
Policy does not meet the specified computational rules for the "seven-pay test"
under Section 7702A(c). Therefore, the Policy will generally be treated
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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as a modified endowment contract for federal income tax purposes. However, an
exchange under Section 1035 of the Code of a life insurance contract issued
before June 21, 1988 will not cause the new Policy to be treated as a modified
endowment contract if no additional premiums are paid.
A contract that is classified as modified endowment contract is eligible for
certain aspects of the beneficial tax treatment accorded to life insurance. That
is, the death benefit is excluded from income and increments in value are not
subject to current taxation. However, loans, distributions or other amounts
received from a modified endowment contract during the life of the Insured will
be taxed to the extent of any accumulated income in the policy (generally, the
excess of account value over premiums paid). Amounts that are taxable
withdrawals will be subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to the
same Policy Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in the
Policy Owner's estate for purposes of federal estate tax if the last surviving
Insured owned the Policy. If the Policy Owner was not the last surviving
Insured, the fair market value of the Policy would be included in the Policy
Owner's estate upon the Policy Owner's death. Nothing would be includible in the
last surviving Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $650,000 (1999) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next seven years to $1,000,000. In addition, an unlimited marital
deduction may be available for federal estate and gift tax purposes. The
unlimited marital deduction permits the deferral of taxes until the death of the
surviving spouse (when the Death Proceeds would be available to pay taxes due
and other expenses incurred).
If the Policy Owner (whether or not he or she is an Insured) transfers ownership
of the Policy to someone two or more generations younger, the transfer may be
subject to the generation-skipping transfer tax, the taxable amount being the
value of the Policy. The generation-skipping transfer tax provisions generally
apply to transfers which would be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping transfer
exemption of $1 million, as adjusted for inflation. Because these rules are
complex, the Policy Owner should consult with a qualified tax adviser for
specific information if ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a contract is not treated as a life insurance contract, the
policy owner will be subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the policy owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
policies subject to the diversification requirements in a manner that will
maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable life insurance contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the
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HARTFORD LIFE INSURANCE COMPANY 19
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policy owner, such as the ability to select and control investments in a
separate account, will cause the policy owner to be treated as the owner of the
assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an Owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Since this Policy is a modified
endowment contract, partial withdrawals (or other such amounts deemed to be
distributed) from the Policy constitute income to the Policy Owner for Federal
income tax purposes.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner, such
amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF POLICIES
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance contracts. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A tax adviser should be
consulted to determine the impact of these taxes.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
LEGAL PROCEEDINGS
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There are no material legal proceedings pending to which the Separate Account is
a party.
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20 HARTFORD LIFE INSURANCE COMPANY
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OTHER MATTERS
LEGAL MATTERS
Legal matters in connection with the issue and sale of modified single premium
variable life insurance Policies described in this Prospectus and the
organization of Hartford, its authority to issue the Policies under Connecticut
law and the validity of the forms of the Policies under Connecticut law and
legal matters relating to the federal securities and income tax laws have been
passed on by Lynda Godkin, Senior Vice President, General Counsel and Corporate
Secretary of Hartford.
YEAR 2000
IN GENERAL -- The Year 2000 issue relates to the ability or inability of
computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments and field offices. Hartford
also has business relationships with numerous third parties that affect
virtually all aspects of Hartford's business, including, without limitation,
suppliers, computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of financial products, many of
which provide date sensitive data to Hartford, and whose operations are
important to Hartford's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE -- Beginning in 1990, Hartford began
working on making its IT systems Year 2000 ready, either through installing new
programs or replacing systems. Since January 1998, Hartford's Year 2000 efforts
have focused on the remaining Year 2000 issues related to IT and non-IT systems
in all of Hartford's business segments. These Year 2000 efforts include the
following five main initiatives: (1) identifying and assessing Year 2000 issues;
(2) taking actions to remediate IT and non-IT systems so that they are Year 2000
ready; (3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying
such remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Hartford substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Hartford has
begun initiative (5) and management currently anticipates that such activity
will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE -- Hartford's Year 2000 efforts
include assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS -- The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
RISKS AND CONTINGENCY PLANS -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its
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HARTFORD LIFE INSURANCE COMPANY 21
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business and Hartford may be exposed to the risk that issuers of investments
held by it will be adversely impacted by Year 2000 issues. Given the uncertain
nature of Year 2000 problems that may arise, especially those related to the
readiness of third parties discussed above, management cannot determine at this
time whether the consequences of Year 2000 related problems that could arise
will have a material impact on Hartford's financial condition or results of
operations.
Hartford is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the impact
of such problems may be avoided or minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
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22 HARTFORD LIFE INSURANCE COMPANY
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GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of the Sub-Accounts plus the value of the Loan
Account under the policy.
ACCUMULATION UNIT: A unit of measure we use to calculate the value of a
Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial surrender that is
not subject to the Surrender Charge. This amount in any Policy Year is the
greater of 10% of premiums or 100% of your Account Value minus premiums paid.
ANNUITY UNIT: A unit of measure we use to calculate the amount of annuity
payments.
CASH SURRENDER VALUE: The policy's Cash Value minus all Indebtedness.
CASH VALUE: The policy's Account Value minus any Surrender Charge and any
Unamortized Tax charge due upon surrender.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the policy or
(2) the Account Value on the date of death multiplied by a stated percentage as
specified in the policy.
DEATH PROCEEDS: The amount that we will pay on the death of the Insured. This
equals the Death Benefit minus any Indebtedness.
DEDUCTION AMOUNT: A charge on the Policy Date and on each Monthly Activity Date
for the cost of insurance, Tax Expense charges under Option 1, an administrative
charge and a mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the Face Amount is the amount shown on the
policy's Specifications page. Thereafter, the Face Amount is reduced in
proportion to any partial surrenders.
HARTFORD, WE OR US: Hartford Life Insurance Company.
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut;
however, the mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999.
INDEBTEDNESS: Monies you owe us, including all outstanding loans on the policy,
any interest due or accrued and any unpaid Deduction Amount or annual
maintenance fee arising during a grace period.
INSURED: The person on whose life the policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on Insured's last birthday.
LOAN ACCOUNT: An account in our general account, established for any amounts
transferred from the Sub-Accounts for requested loans. The Loan Account credits
a fixed rate of interest that is not based on the investment experience of the
Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which any deductions or charges
are subtracted from Account Value of your policy. Monthly Activity Dates occur
on the same day of the month as the Policy Anniversary.
POLICY ANNIVERSARY: The yearly anniversary of the Policy Date.
POLICY DATE: The issue date of the policy.
POLICY LOAN RATE: The interest rate charged on policy loans.
POLICY OWNER OR YOU: The owner of the policy.
POLICY YEAR: The twelve months between Policy Anniversaries.
SUB-ACCOUNT VALUE: The current value of the Sub-Accounts.
SURRENDER CHARGE: A charge which may be assessed upon surrender of the policy or
partial surrenders in excess of the Annual Withdrawal Amount.
VALUATION DAY: The date on which the Sub-Account is valued. The Valuation Day is
every day the New York Stock Exchange is open for trading. The value of the
Separate Account is determined at the close of the New York Stock Exchange
(generally 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
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HARTFORD LIFE INSURANCE COMPANY 23
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APPENDIX A
SPECIAL INFORMATION FOR POLICIES PURCHASED IN NEW YORK
If the policy is purchased in the State of New York, the following provisions of
the Prospectus are amended as follows:
In the Glossary of Special Terms section 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 policy. In the case of a Policy Owner who purchases the
policy in the State of New York (the "New York Policy Owner") and who elects to
transfer into the Fixed Accumulation Feature, Account Value is the current value
of the Fixed Accumulation Feature plus the value of the Loan Account under the
policy.
The following definition is added:
FIXED ACCUMULATION FEATURE: Part of the General Account of Hartford to which a
New York Policy 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 Policy Owner, from
the Fixed Accumulation Feature 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 "Separate Account Five":
THE FIXED ACCUMULATION FEATURE
THAT PORTION OF THE POLICY RELATING TO THE FIXED ACCUMULATION FEATURE IS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED
ACCUMULATION FEATURE IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED
ACCUMULATION FEATURE 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 ACCUMULATION FEATURE HAS NOT BEEN REVIEWED BY THE STAFF OF THE SECURITIES
AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT THE FIXED ACCUMULATION
FEATURE 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 Accumulation Feature." New York Policy Owners may transfer no
less than the entire Account Value to the Fixed Accumulation Feature. Account
Value transferred to the Fixed Accumulation Feature 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 Accumulation Feature under the policy 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 Accumulation Feature interest rate.
There is no specific formula for determining the interest credited to the
Account Value in the Fixed Accumulation Feature.
The following language is added to the section of the Prospectus entitled
"Charges and Deductions -- Administrative Charge":
No Administrative Charge is deducted from Sub-Account Value in the Fixed
Accumulation Feature.
The following language is added to the section of the Prospectus entitled
"Charges and Deductions -- Mortality and Expense Risk Charge":
No Mortality and Expense Risk Charge is deducted from Sub-Account Value in the
Fixed Accumulation Feature.
The following separate sections are added to the section of the Prospectus
entitled "Your Policy":
TRANSFER OF ENTIRE ACCOUNT VALUE TO THE FIXED ACCUMULATION FEATURE
New York Policy Owners may transfer no less than the entire Account Value into
the Fixed Accumulation Feature under the following circumstances: (i) during the
first 18 months following the Date of Issue, (ii) within 30 days following a
Policy 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 Policy Owner objects to.
A TRANSFER TO THE FIXED ACCUMULATION FEATURE MUST BE FOR THE ENTIRE ACCOUNT
VALUE AND ONCE THE ACCOUNT VALUE HAS BEEN TRANSFERRED TO THE FIXED ACCUMULATION
FEATURE, IT MAY NOT, UNDER ANY CIRCUMSTANCES, BE TRANSFERRED BACK TO THE
SEPARATE ACCOUNT.
For New York Policy Owners who elect to invest in the Fixed Accumulation
Feature, Hartford will transfer the entire Account Value from the Separate
Account to the Fixed Accumulation Feature on the Monthly Activity Date next
following the date on which Hartford received the transfer request. The Account
Value in the Fixed Accumulation Feature 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 Accumulation Feature and minus the
Annual Maintenance Fee, if applicable. On each subsequent Monthly Activity
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Date, the Account Value in the Fixed Accumulation Feature 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
Accumulation Feature; 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 Accumulation Feature 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 Accumulation Feature 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 Accumulation Feature Minimum
Credited Interest Rate.
<PAGE>
PART B
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FIVE
This Statement of Additional Information is not a prospectus. We will send you a
prospectus if you write us at P.O. Box 2999, Hartford, CT 06104-2999, or if you
call us at 1-800-231-5453.
DATE OF PROSPECTUS: MAY 3, 1999, REVISED OCTOBER 18, 1999
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 3, 1999, REVISED OCTOBER 18,
1999
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY 3
- ----------------------------------------------------------------------
SERVICES 5
- ----------------------------------------------------------------------
EXPERTS 5
- ----------------------------------------------------------------------
DISTRIBUTION OF THE POLICIES 5
- ----------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT CHARGES 6
- ----------------------------------------------------------------------
LLUSTRATION OF BENEFITS 7
- ----------------------------------------------------------------------
FINANCIAL STATEMENTS SA-1
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
GENERAL INFORMATION AND HISTORY
HARTFORD LIFE INSURANCE COMPANY -- Hartford Life Insurance Company is a stock
life insurance company engaged in the business of writing life insurance, both
individual and group, in all states of the United States and the District of
Columbia. We were originally incorporated under the laws of Massachusetts on
June 5, 1902, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
The following table shows a brief description of the business experience of
officers and directors of Hartford Life Insurance Company:
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
Wendell J. Bossen Vice President, 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 Senior Vice President, Vice President and Controller (1995-1997), Hartford Life
Director 1997 Insurance Company; Director (1997-Present); Senior Vice
President (1997-Present), Chief Financial Officer &
Treasurer (1997-1998); Vice President & Controller
(1995-1997), Hartford Life and Accident Insurance Company;
Senior Vice President, Chief Financial Officer & Treasurer
(1997-Present), Hartford Life, Inc.; Chief Financial Officer
(1994-1995), IMG American Life; Senior Vice President
(1992-1994), Connecticut Mutual Life Insurance Company.
Peter W. Cummins Senior Vice President, Vice President (1989-1997); Director of Broker Dealer Sales-
1997 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.
Timothy M. Fitch Vice President, 1995 Assistant Vice President (1992-1995), Hartford; Vice
President (1995-Present); Actuary (1994-Present); Assistant
Vice President (1992-1995), Hartford Life and Accident
Insurance Company.
Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Officer, (1998-Present),
Accounting Officer, Hartford Life & Annuity Insurance Company; Vice President &
1998 Chief Accounting Officer, (1998-Present), Royal Life
Insurance Company of America; Vice President & Chief
Accounting Officer (1998-Present) Alpine Life Insurance
Company; Chief Accounting Officer (1997-Present), Hartford
Life, Inc.; Director, Finance (1995-1997), Value
Health, Inc.; Senior Manager (1993-1995), Coopers and
Lybrand; Audit Manager (1993-1996) Arthur Andersen & Co.
David T. Foy Senior Vice President Senior Vice President (1998-Present), Vice President (1998),
and Assistant Vice President (1995-1998), Hartford; Senior Vice
Treasurer, 1998 President (1998-Present), Hartford Life and Accident
Insurance Company; Director, Strategic Planning Corporate
Finance (1995-1996), IA Product Development (1994-1995),
Hartford; Various Actuarial Roles (1989-1993), Milliman &
Robertson.
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Lynda Godkin Senior Vice President, Associate General Counsel (1995-1996); Assistant General
1997 Counsel and Secretary (1994-1995); Counsel (1990-1994),
General Counsel, 1996 Hartford; Director (1997-Present); Senior Vice President
Corporate Secretary, (1997-Present); General Counsel (1996-Present); Corporate
1995 Secretary (1995-Present); Associate General Counsel
Director, 1997 (1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life and Accident
Insurance Company; Vice President and General Counsel
(1997-Present), Hartford Life, Inc.
Lois W. Grady Senior Vice President, Vice President (1993-1998); Assistant Vice President
1998 (1987-1993), Hartford; Senior Vice President, 1998); Vice
President (1993-1997); Assistant Vice President (1987-1993),
Hartford Life and Accident Insurance Company.
Stephen T. Joyce Vice President, 1997 Assistant Vice President (1994-1997), Hartford; Assistant
Vice President (1994-1997), Hartford Life and Accident
Insurance Company.
Michael D. Keeler Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company; Vice President (1995-1997), Providian
Insurance; Supervisor/Manager (1985-1995), U.S. West
Communications.
Robert A. Kerzner Senior Vice President, Vice President, (1995-1998); Regional Vice President
1998 (1991-1994), Hartford; Vice President (1994-1997), Hartford
Life and Accident Insurance Company.
Thomas M. Marra Executive Vice Senior Vice President (1994-1995); Vice President
President, (1989-1994); Actuary (1987-1995), Hartford; Director
1995 (1994-Present); Executive Vice President (1995-Present);
Director, 1994* Senior Vice President (1994-1995); Director, Individual Life
and 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.
Joseph J. Noto 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.
Craig R. Raymond Senior Vice President, Vice President (1993-1997); Assistant Vice President
1997 (1992-1993); Actuary (1990-1994), Hartford; Senior Vice
Chief Actuary, 1994 President (1997-Present); Chief Actuary (1995-Present); Vice
President (1993-1997); Actuary (1990-1995), Hartford Life
and Accident Insurance Company; Vice President and Chief
Actuary (1997-Present), Hartford Life, Inc.
Donald A. Salama Vice President, 1997 Vice President (1997-Present), Hartford Life and Accident
Insurance Company; Principal and Director Institutional
Sales (1995-1998), The Vanguard Group; Senior Vice President
(1994-1995), Mercantile Ban-corporation; Vice President
(1988-1994), Bankers Trust Company.
Lowndes A. Smith President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive (1981-Present); President (1989-Present); Chief Executive
Officer, Officer (1997-Present); Chief Operating Officer (1989-1997),
1997 Hartford Life and Accident Insurance Company; Chief
Director, 1981* Executive Officer and President and Director (1997-Present),
Hartford Life, Inc.
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
David M. Znamierowski Senior Vice President, Vice President (1997), Hartford; Director (1998-Present);
1997 Senior Vice President (1997-Present); Hartford Life and
Director, 1998* Accident Insurance Company; Vice President, Investment
Strategy (1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy (1991-1996), Aetna
Life and Casualty.
</TABLE>
- ---------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
SEPARATE ACCOUNT FIVE -- was established as a separate account under Connecticut
law on July 25, 1994. The Separate Account is classified as a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940.
SERVICES
- --------------------------------------------------------------------------------
SAFEKEEPING OF ASSETS -- The assets of the Separate Account are held by
Hartford. The assets of the Separate Account are kept physically segregated and
held separate and apart from the General Account of Hartford. Hartford maintains
records of all purchases and redemptions of shares of the Fund. Additional
protection for the assets of the Separate Account is afforded by Hartford's
blanket fidelity bond, issued by Aetna Casualty and Surety Company, in the
aggregate of $50 million, covering all of the officers and employees of
Hartford.
EXPERTS
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS -- The audited financial statements and
financial statement schedules included in this registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
ACTUARIAL EXPERT -- The hypothetical Policy illustrations included in this
Statement of Additional Information and the registration statement with respect
to the Separate Account have been approved by Michael Winterfield, FSA, MAAA,
Assistant Vice President and Director, Individual Annuity Product Management,
for Hartford, and are included in reliance upon his opinion as to their
reasonableness.
DISTRIBUTION OF THE POLICIES
- --------------------------------------------------------------------------------
Hartford intends to sell the Policies in all jurisdictions where it is licensed
to do business. The Policies will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Hartford Equity Sales Company, Inc. ("HESCO") or certain other independent,
registered broker-dealers. Any sales representative or employee will have been
qualified to sell variable life insurance Policies under applicable federal and
state laws. Each broker-dealer is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and all are members of the
National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account .
Both HESCO and HSD are affiliates of Hartford. The principal business address of
HESCO and HSD is the same as that of Hartford.
The following table shows officers and directors of HSD:
<TABLE>
- ------------------------------------------------------------------
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES
<S> <C>
Lowndes A. Smith President and Chief Executive Officer,
Director
- ------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director
- ------------------------------------------------------------------
Robert A. Kerzner Executive Vice President
- ------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary, Director
- ------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------
David T. Foy Treasurer
- ------------------------------------------------------------------
George R. Jay Controller
- ------------------------------------------------------------------
</TABLE>
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers, and other registered broker-dealers is 7.0% of initial and
subsequent premiums.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on premium payments made by
policyholders
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
or contract owners. This compensation is usually paid from the sales charges
described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
Hartford may provide information on various topics to Policy Owners and
prospective Policy Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in
tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
variable annuities and other investment alternatives, including comparisons
between the Policies and the characteristics of, and market for, such
alternatives.
ADDITIONAL INFORMATION ABOUT CHARGES
- --------------------------------------------------------------------------------
UNDERWRITING PROCEDURES -- To purchase a policy you must submit an application
to us. Generally, the minimum initial premium we accept is $10,000. A policy
will be issued only on the lives of insureds age 90 and under who supply
evidence of insurability satisfactory to us. Acceptance is subject to our
underwriting rules and we reserve the right to reject an application for any
reason. No change in the terms or conditions of a policy will be made without
your consent.
COST OF INSURANCE CHARGE -- The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the tenth Policy Year and are based on whether
100%, 90% or 80% of the Guideline Single Premium has been paid. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum cost of insurance rates per $1,000 will be
included in each Policy; however, Hartford reserves the right to use rates less
than those shown in the Table. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CSO Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
table through age 90, grading to 100% of the 1980 CSO Table at age 100.
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the insured's substandard rating. Unisex rates may be
required in some states.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
The tables illustrate the way in which a Policy operates. They show how the
death benefit and surrender value could vary over an extended period of time
assuming hypothetical gross rates of return equal to constant after tax annual
rates of 0%, 6% and 12%. The tables are based on an initial premium of $10,000.
A male age 45, a female age 55 and a male age 65 with Face Amounts of $44,053,
$34,014 and $20,001, respectively, are illustrated for the single life preferred
Policy for both Policy Owner Option 1 and Policy Owner Option 2. The
illustrations for the last survivor preferred Policy assume male and female of
equal ages, including age 55 and 65 for Face Amounts of $45,872 and $28,491.
The death benefit and surrender value for a Policy would be different from those
shown if the rates of return averaged 0%, 6% and 12% over a period of years, but
also fluctuated above or below those averages for individual Policy Years. They
would also differ if any Policy loan were made during the period of time
illustrated.
The tables reflect the deductions of current Policy charges for Policy Owner
Option 1 and Policy Owner Option 2 and guaranteed Policy charges for a single
gross interest rate. The death benefits and surrender values would change if the
current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Policy Year take into account an average daily charge equal to an annual
charge of 0.82% of the average daily net assets of the Funds for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Fund's assets are equal to net annual investment
return rates (net of the annual charge of 0.82% described above) of -0.82%,
5.18% and 11.18%, respectively.
The hypothetical returns shown in the tables are without any tax charges that
may be attributable to the Separate Account in the future. In order to produce
after tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12% to cover any tax charges (see
"Changes to Policy or Separate Account -- Separate Account Taxes").
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Hartford will furnish upon request, a comparable illustration reflecting the
proposed Insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. Hartford will also
furnish an additional similar illustration reflecting current cost of insurance
rates which may be less than, but never greater than, the guaranteed cost of
insurance rates.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,860 9,835 44,053 10,778 9,755 44,053
2 11,025 11,760 10,745 44,053 11,586 10,574 44,053
3 11,576 12,738 11,736 44,053 12,461 11,463 44,053
4 12,155 13,801 12,964 44,053 13,409 12,578 44,053
5 12,763 14,954 14,137 44,053 14,437 13,626 44,053
6 13,401 16,207 15,615 44,053 15,551 14,965 44,053
7 14,071 17,567 17,006 44,053 16,759 16,204 44,053
8 14,775 19,045 18,719 44,053 18,070 17,750 44,053
9 15,513 20,649 20,367 44,053 19,493 19,215 44,053
10 16,289 22,391 22,361 44,053 21,040 21,010 44,053
11 17,103 24,478 24,448 44,053 22,909 22,879 44,053
12 17,959 26,763 26,733 44,053 24,967 24,937 44,053
13 18,856 29,265 29,235 44,053 27,239 27,209 44,053
14 19,799 32,018 31,988 44,185 29,753 29,723 44,053
15 20,789 35,062 35,032 46,982 32,542 32,512 44,053
16 21,829 38,407 38,377 49,929 35,636 35,606 46,326
17 22,920 42,068 42,038 53,847 39,031 39,001 49,959
18 24,066 46,075 46,045 58,054 42,746 42,716 53,859
19 25,270 50,460 50,460 62,569 46,811 46,781 58,045
20 26,533 55,292 55,292 67,456 51,261 51,261 62,538
25 33,864 87,104 87,104 101,040 80,746 80,746 93,665
35 55,160 215,814 215,814 228,762 199,928 199,928 211,924
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,273 9,262 44,053 10,191 9,182 44,053
2 11,025 10,524 9,533 44,053 10,346 9,360 44,053
3 11,576 10,780 9,812 44,053 10,495 9,531 44,053
4 12,155 11,044 10,249 44,053 10,635 9,845 44,053
5 12,763 11,316 10,544 44,053 10,765 10,001 44,053
6 13,401 11,594 11,048 44,053 10,883 10,345 44,053
7 14,071 11,880 11,361 44,053 10,987 10,474 44,053
8 14,775 12,174 11,883 44,053 11,071 10,786 44,053
9 15,513 12,476 12,215 44,053 11,133 10,875 44,053
10 16,289 12,787 12,757 44,053 11,168 11,138 44,053
11 17,103 13,211 13,181 44,053 11,265 11,235 44,053
12 17,959 13,650 13,620 44,053 11,331 11,301 44,053
13 18,856 14,105 14,075 44,053 11,363 11,333 44,053
14 19,799 14,577 14,547 44,053 11,356 11,326 44,053
15 20,789 15,065 15,035 44,053 11,301 11,271 44,053
16 21,829 15,570 15,540 44,053 11,190 11,160 44,053
17 22,920 16,093 16,063 44,053 11,015 10,985 44,053
18 24,066 16,635 16,605 44,053 10,760 10,730 44,053
19 25,270 17,197 17,167 44,053 10,411 10,381 44,053
20 26,533 17,778 17,748 44,053 9,952 9,922 44,053
25 33,864 21,010 20,980 44,053 5,240 5,210 44,053
35 55,160 29,447 29,417 44,053 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,687 8,713 44,053 9,605 8,638 44,053
2 11,025 9,355 8,437 44,053 9,176 8,275 44,053
3 11,576 9,034 8,168 44,053 8,744 7,905 44,053
4 12,155 8,722 8,038 44,053 8,305 7,652 44,053
5 12,763 8,421 7,780 44,053 7,859 7,259 44,053
6 13,401 8,128 7,692 44,053 7,403 7,003 44,053
7 14,071 7,845 7,443 44,053 6,934 6,575 44,053
8 14,775 7,571 7,352 44,053 6,449 6,258 44,053
9 15,513 7,305 7,111 44,053 5,943 5,779 44,053
10 16,289 7,048 7,018 44,053 5,413 5,383 44,053
11 17,103 6,853 6,823 44,053 4,894 4,864 44,053
12 17,959 6,663 6,633 44,053 4,339 4,309 44,053
13 18,856 6,477 6,447 44,053 3,742 3,712 44,053
14 19,799 6,296 6,266 44,053 3,097 3,067 44,053
15 20,789 6,119 6,089 44,053 2,398 2,368 44,053
16 21,829 5,946 5,916 44,053 1,636 1,606 44,053
17 22,920 5,777 5,747 44,053 800 770 44,053
18 24,066 5,612 5,582 44,053 -- -- --
19 25,270 5,451 5,421 44,053 -- -- --
20 26,533 5,294 5,264 44,053 -- -- --
25 33,864 4,561 4,531 44,053 -- -- --
35 55,160 3,333 3,303 44,053 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,493 9,713 44,053 10,407 9,627 44,053
2 11,025 11,437 10,657 44,053 11,253 10,473 44,053
3 11,576 12,468 11,688 44,053 12,175 11,395 44,053
4 12,155 13,595 12,965 44,053 13,181 12,551 44,053
5 12,763 14,827 14,197 44,053 14,279 13,649 44,053
6 13,401 16,174 15,744 44,053 15,479 15,049 44,053
7 14,071 17,646 17,216 44,053 16,789 16,359 44,053
8 14,775 19,255 19,025 44,053 18,223 17,993 44,053
9 15,513 21,014 20,784 44,053 19,791 19,561 44,053
10 16,289 22,937 22,907 44,053 21,510 21,480 44,053
11 17,103 25,076 25,046 44,053 23,432 23,402 44,053
12 17,959 27,417 27,387 44,053 25,550 25,520 44,053
13 18,856 29,984 29,954 44,053 27,889 27,859 44,053
14 19,799 32,817 32,787 45,287 30,479 30,449 44,053
15 20,789 35,941 35,911 48,160 33,354 33,324 44,694
16 21,829 39,371 39,341 51,182 36,533 36,503 47,492
17 22,920 43,125 43,095 55,199 40,014 39,984 51,217
18 24,066 47,233 47,203 59,513 43,823 43,793 55,217
19 25,270 51,729 51,729 64,143 47,992 47,962 59,509
20 26,533 56,682 56,682 69,152 52,555 52,555 64,117
25 33,864 89,295 89,295 103,581 82,785 82,785 96,030
35 55,160 221,241 221,241 234,515 204,975 204,975 217,273
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,927 9,152 44,053 9,840 9,072 44,053
2 11,025 10,234 9,454 44,053 10,048 9,268 44,053
3 11,576 10,551 9,771 44,053 10,252 9,472 44,053
4 12,155 10,880 10,250 44,053 10,451 9,821 44,053
5 12,763 11,219 10,589 44,053 10,644 10,014 44,053
6 13,401 11,570 11,140 44,053 10,828 10,398 44,053
7 14,071 11,933 11,503 44,053 11,001 10,571 44,053
8 14,775 12,309 12,079 44,053 11,160 10,930 44,053
9 15,513 12,697 12,467 44,053 11,300 11,070 44,053
10 16,289 13,098 13,068 44,053 11,419 11,389 44,053
11 17,103 13,533 13,503 44,053 11,528 11,498 44,053
12 17,959 13,984 13,954 44,053 11,609 11,579 44,053
13 18,856 14,451 14,421 44,053 11,656 11,626 44,053
14 19,799 14,935 14,905 44,053 11,665 11,635 44,053
15 20,789 15,436 15,406 44,053 11,629 11,599 44,053
16 21,829 15,954 15,924 44,053 11,538 11,508 44,053
17 22,920 16,491 16,461 44,053 11,383 11,353 44,053
18 24,066 17,047 17,017 44,053 11,152 11,122 44,053
19 25,270 17,623 17,593 44,053 10,830 10,800 44,053
20 26,533 18,220 18,190 44,053 10,399 10,369 44,053
25 33,864 21,537 21,507 44,053 5,893 5,863 44,053
35 55,160 30,194 30,164 44,053 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,361 8,629 44,053 9,274 8,548 44,053
2 11,025 9,098 8,386 44,053 8,911 8,212 44,053
3 11,576 8,842 8,149 44,053 8,540 7,869 44,053
4 12,155 8,592 8,047 44,053 8,159 7,639 44,053
5 12,763 8,349 7,818 44,053 7,767 7,271 44,053
6 13,401 8,111 7,757 44,053 7,361 7,037 44,053
7 14,071 7,880 7,535 44,053 6,939 6,632 44,053
8 14,775 7,654 7,471 44,053 6,497 6,337 44,053
9 15,513 7,434 7,255 44,053 6,031 5,880 44,053
10 16,289 7,219 7,189 44,053 5,536 5,506 44,053
11 17,103 7,021 6,991 44,053 5,017 4,987 44,053
12 17,959 6,827 6,797 44,053 4,461 4,431 44,053
13 18,856 6,637 6,607 44,053 3,863 3,833 44,053
14 19,799 6,452 6,422 44,053 3,218 3,188 44,053
15 20,789 6,271 6,241 44,053 2,519 2,489 44,053
16 21,829 6,095 6,065 44,053 1,756 1,726 44,053
17 22,920 5,922 5,892 44,053 921 891 44,053
18 24,066 5,754 5,724 44,053 -- -- --
19 25,270 5,590 5,560 44,053 -- -- --
20 26,533 5,429 5,399 44,053 -- -- --
25 33,864 4,682 4,652 44,053 -- -- --
35 55,160 3,428 3,398 44,053 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,860 9,835 34,014 10,732 9,711 34,014
2 11,025 11,760 10,745 34,014 11,493 10,483 34,014
3 11,576 12,738 11,736 34,014 12,317 11,322 34,014
4 12,155 13,801 12,964 34,014 13,214 12,386 34,014
5 12,763 14,954 14,137 34,014 14,190 13,383 34,014
6 13,401 16,207 15,615 34,014 15,253 14,671 34,014
7 14,071 17,567 17,006 34,014 16,410 15,857 34,014
8 14,775 19,045 18,719 34,014 17,669 17,351 34,014
9 15,513 20,649 20,367 34,014 19,040 18,762 34,014
10 16,289 22,391 22,361 34,014 20,536 20,506 34,014
11 17,103 24,478 24,448 34,014 22,355 22,325 34,014
12 17,959 26,770 26,740 34,014 24,376 24,346 34,014
13 18,856 29,324 29,294 34,602 26,629 26,599 34,014
14 19,799 32,150 32,120 37,615 29,153 29,123 34,109
15 20,789 35,247 35,217 40,886 31,959 31,929 37,071
16 21,829 38,642 38,612 44,438 35,033 35,003 40,288
17 22,920 42,374 42,344 47,882 38,414 38,384 43,407
18 24,066 46,479 46,449 51,591 42,132 42,102 46,766
19 25,270 51,000 51,000 55,590 46,227 46,197 50,387
20 26,533 55,972 55,972 61,009 50,701 50,701 55,264
25 33,864 89,008 89,008 94,348 80,626 80,626 85,463
35 55,160 221,151 221,151 232,208 197,373 197,373 207,241
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,273 9,262 34,014 10,146 9,138 34,014
2 11,025 10,524 9,533 34,014 10,254 9,269 34,014
3 11,576 10,780 9,812 34,014 10,352 9,391 34,014
4 12,155 11,044 10,249 34,014 10,441 9,654 34,014
5 12,763 11,316 10,544 34,014 10,518 9,757 34,014
6 13,401 11,594 11,048 34,014 10,581 10,045 34,014
7 14,071 11,880 11,361 34,014 10,625 10,115 34,014
8 14,775 12,174 11,883 34,014 10,643 10,359 34,014
9 15,513 12,476 12,215 34,014 10,627 10,371 34,014
10 16,289 12,787 12,757 34,014 10,573 10,543 34,014
11 17,103 13,211 13,181 34,014 10,562 10,532 34,014
12 17,959 13,650 13,620 34,014 10,507 10,477 34,014
13 18,856 14,105 14,075 34,014 10,405 10,375 34,014
14 19,799 14,577 14,547 34,014 10,249 10,219 34,014
15 20,789 15,065 15,035 34,014 10,032 10,002 34,014
16 21,829 15,570 15,540 34,014 9,739 9,709 34,014
17 22,920 16,093 16,063 34,014 9,349 9,319 34,014
18 24,066 16,635 16,605 34,014 8,834 8,804 34,014
19 25,270 17,197 17,167 34,014 8,163 8,133 34,014
20 26,533 17,778 17,748 34,014 7,298 7,268 34,014
25 33,864 21,010 20,980 34,014 -- -- --
35 55,160 29,447 29,417 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,687 8,713 34,014 9,561 8,598 34,014
2 11,025 9,355 8,437 34,014 9,085 8,192 34,014
3 11,576 9,034 8,168 34,014 8,603 7,777 34,014
4 12,155 8,722 8,038 34,014 8,115 7,476 34,014
5 12,763 8,421 7,780 34,014 7,618 7,035 34,014
6 13,401 8,128 7,692 34,014 7,108 6,723 34,014
7 14,071 7,845 7,443 34,014 6,580 6,238 34,014
8 14,775 7,571 7,352 34,014 6,028 5,848 34,014
9 15,513 7,305 7,111 34,014 5,443 5,291 34,014
10 16,289 7,048 7,018 34,014 4,819 4,789 34,014
11 17,103 6,853 6,823 34,014 4,185 4,155 34,014
12 17,959 6,663 6,633 34,014 3,498 3,468 34,014
13 18,856 6,477 6,447 34,014 2,754 2,724 34,014
14 19,799 6,296 6,266 34,014 1,946 1,916 34,014
15 20,789 6,119 6,089 34,014 1,066 1,036 34,014
16 21,829 5,946 5,916 34,014 97 67 34,014
17 22,920 5,777 5,747 34,014 -- -- --
18 24,066 5,612 5,582 34,014 -- -- --
19 25,270 5,451 5,421 34,014 -- -- --
20 26,533 5,294 5,264 34,014 -- -- --
25 33,864 4,561 4,531 34,014 -- -- --
35 55,160 3,333 3,303 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,493 9,713 34,014 10,360 9,580 34,014
2 11,025 11,437 10,657 34,014 11,155 10,375 34,014
3 11,576 12,468 11,688 34,014 12,024 11,244 34,014
4 12,155 13,595 12,965 34,014 12,976 12,346 34,014
5 12,763 14,827 14,197 34,014 14,020 13,390 34,014
6 13,401 16,174 15,744 34,014 15,164 14,734 34,014
7 14,071 17,646 17,216 34,014 16,419 15,989 34,014
8 14,775 19,255 19,025 34,014 17,796 17,566 34,014
9 15,513 21,014 20,784 34,014 19,308 19,078 34,014
10 16,289 22,937 22,907 34,014 20,971 20,941 34,014
11 17,103 25,076 25,046 34,014 22,844 22,814 34,014
12 17,959 27,435 27,405 34,014 24,925 24,895 34,014
13 18,856 30,067 30,037 35,478 27,247 27,217 34,014
14 19,799 32,965 32,935 38,568 29,848 29,818 34,922
15 20,789 36,141 36,111 41,924 32,722 32,692 37,957
16 21,829 39,623 39,593 45,566 35,871 35,841 41,251
17 22,920 43,450 43,420 49,098 39,332 39,302 44,445
18 24,066 47,661 47,631 52,903 43,141 43,111 47,886
19 25,270 52,298 52,298 57,004 47,335 47,305 51,594
20 26,533 57,396 57,396 62,561 51,916 51,916 56,588
25 33,864 91,272 91,272 96,748 82,558 82,558 87,511
35 55,160 226,778 226,778 238,117 202,105 202,105 212,209
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,927 9,152 34,014 9,794 9,029 34,014
2 11,025 10,234 9,454 34,014 9,952 9,175 34,014
3 11,576 10,551 9,771 34,014 10,103 9,323 34,014
4 12,155 10,880 10,250 34,014 10,249 9,619 34,014
5 12,763 11,219 10,589 34,014 10,386 9,756 34,014
6 13,401 11,570 11,140 34,014 10,513 10,083 34,014
7 14,071 11,933 11,503 34,014 10,623 10,193 34,014
8 14,775 12,309 12,079 34,014 10,712 10,482 34,014
9 15,513 12,697 12,467 34,014 10,772 10,542 34,014
10 16,289 13,098 13,068 34,014 10,797 10,767 34,014
11 17,103 13,533 13,503 34,014 10,800 10,770 34,014
12 17,959 13,984 13,954 34,014 10,760 10,730 34,014
13 18,856 14,451 14,421 34,014 10,673 10,643 34,014
14 19,799 14,935 14,905 34,014 10,536 10,506 34,014
15 20,789 15,436 15,406 34,014 10,339 10,309 34,014
16 21,829 15,954 15,924 34,014 10,068 10,038 34,014
17 22,920 16,491 16,461 34,014 9,702 9,672 34,014
18 24,066 17,047 17,017 34,014 9,216 9,186 34,014
19 25,270 17,623 17,593 34,014 8,577 8,547 34,014
20 26,533 18,220 18,190 34,014 7,748 7,718 34,014
25 33,864 21,537 21,507 34,014 -- -- --
35 55,160 30,194 30,164 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,361 8,629 34,014 9,228 8,506 34,014
2 11,025 9,098 8,386 34,014 8,816 8,125 34,014
3 11,576 8,842 8,149 34,014 8,394 7,735 34,014
4 12,155 8,592 8,047 34,014 7,962 7,454 34,014
5 12,763 8,349 7,818 34,014 7,517 7,036 34,014
6 13,401 8,111 7,757 34,014 7,056 6,744 34,014
7 14,071 7,880 7,535 34,014 6,573 6,280 34,014
8 14,775 7,654 7,471 34,014 6,062 5,911 34,014
9 15,513 7,434 7,255 34,014 5,514 5,373 34,014
10 16,289 7,219 7,189 34,014 4,922 4,892 34,014
11 17,103 7,021 6,991 34,014 4,289 4,259 34,014
12 17,959 6,827 6,797 34,014 3,602 3,572 34,014
13 18,856 6,637 6,607 34,014 2,858 2,828 34,014
14 19,799 6,452 6,422 34,014 2,051 2,021 34,014
15 20,789 6,271 6,241 34,014 1,172 1,142 34,014
16 21,829 6,095 6,065 34,014 204 174 34,014
17 22,920 5,922 5,892 34,014 -- -- --
18 24,066 5,754 5,724 34,014 -- -- --
19 25,270 5,590 5,560 34,014 -- -- --
20 26,533 5,429 5,399 34,014 -- -- --
25 33,864 4,682 4,652 34,014 -- -- --
35 55,160 3,428 3,398 34,014 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,860 9,835 20,001 10,646 9,627 20,001
2 11,025 11,760 10,745 20,001 11,311 10,304 20,001
3 11,576 12,738 11,736 20,001 12,031 11,040 20,001
4 12,155 13,801 12,964 20,001 12,817 11,995 20,001
5 12,763 14,954 14,137 20,001 13,681 12,880 20,001
6 13,401 16,207 15,615 20,001 14,638 14,062 20,001
7 14,071 17,567 17,006 20,001 15,707 15,159 20,001
8 14,775 19,049 18,724 21,144 16,913 16,598 20,001
9 15,513 20,671 20,390 22,531 18,289 18,013 20,001
10 16,289 22,421 22,391 24,438 19,832 19,802 21,617
11 17,103 24,518 24,488 26,479 21,684 21,654 23,419
12 17,959 26,821 26,791 28,698 23,717 23,687 25,377
13 18,856 29,328 29,298 31,381 25,929 25,899 27,743
14 19,799 32,084 32,054 34,008 28,361 28,331 30,062
15 20,789 35,089 35,059 37,194 31,007 30,977 32,867
16 21,829 38,393 38,363 40,312 33,923 33,893 35,619
17 22,920 41,996 41,966 44,095 37,095 37,065 38,949
18 24,066 45,940 45,910 48,236 40,540 40,510 42,566
19 25,270 50,257 50,257 52,769 44,275 44,245 46,488
20 26,533 55,015 55,015 57,766 48,319 48,289 50,734
25 33,864 86,484 86,484 90,808 74,047 74,047 77,749
35 55,160 213,896 213,896 216,034 177,563 177,563 179,338
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,273 9,262 20,001 10,058 9,051 20,001
2 11,025 10,524 9,533 20,001 10,057 9,075 20,001
3 11,576 10,780 9,812 20,001 10,023 9,067 20,001
4 12,155 11,044 10,249 20,001 9,951 9,174 20,001
5 12,763 11,316 10,544 20,001 9,833 9,090 20,001
6 13,401 11,594 11,048 20,001 9,660 9,147 20,001
7 14,071 11,880 11,361 20,001 9,420 8,942 20,001
8 14,775 12,174 11,883 20,001 9,094 8,837 20,001
9 15,513 12,476 12,215 20,001 8,663 8,438 20,001
10 16,289 12,787 12,757 20,001 8,102 8,072 20,001
11 17,103 13,211 13,181 20,001 7,448 7,418 20,001
12 17,959 13,650 13,620 20,001 6,602 6,572 20,001
13 18,856 14,105 14,075 20,001 5,519 5,489 20,001
14 19,799 14,577 14,547 20,001 4,137 4,107 20,001
15 20,789 15,065 15,035 20,001 2,373 2,343 20,001
16 21,829 15,570 15,540 20,001 108 78 20,001
17 22,920 16,093 16,063 20,001 -- -- --
18 24,066 16,635 16,605 20,001 -- -- --
19 25,270 17,197 17,167 20,001 -- -- --
20 26,533 17,778 17,748 20,001 -- -- --
25 33,864 21,010 20,980 22,060 -- -- --
35 55,160 29,471 29,441 29,765 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,687 8,713 20,001 9,469 8,516 20,001
2 11,025 9,355 8,437 20,001 8,875 8,002 20,001
3 11,576 9,034 8,168 20,001 8,241 7,449 20,001
4 12,155 8,722 8,038 20,001 7,560 6,963 20,001
5 12,763 8,421 7,780 20,001 6,821 6,296 20,001
6 13,401 8,128 7,692 20,001 6,011 5,681 20,001
7 14,071 7,845 7,443 20,001 5,113 4,840 20,001
8 14,775 7,571 7,352 20,001 4,104 3,971 20,001
9 15,513 7,305 7,111 20,001 2,955 2,858 20,001
10 16,289 7,048 7,018 20,001 1,635 1,605 20,001
11 17,103 6,853 6,823 20,001 116 86 20,001
12 17,959 6,663 6,633 20,001 -- -- --
13 18,856 6,477 6,447 20,001 -- -- --
14 19,799 6,296 6,266 20,001 -- -- --
15 20,789 6,119 6,089 20,001 -- -- --
16 21,829 5,946 5,916 20,001 -- -- --
17 22,920 5,777 5,747 20,001 -- -- --
18 24,066 5,612 5,582 20,001 -- -- --
19 25,270 5,451 5,421 20,001 -- -- --
20 26,533 5,294 5,264 20,001 -- -- --
25 33,864 4,561 4,531 20,001 -- -- --
35 55,160 3,333 3,303 20,001 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,493 9,713 20,001 10,265 9,485 20,001
2 11,025 11,437 10,657 20,001 10,954 10,174 20,001
3 11,576 12,468 11,688 20,001 11,706 10,926 20,001
4 12,155 13,595 12,965 20,001 12,532 11,902 20,001
5 12,763 14,827 14,197 20,001 13,447 12,817 20,001
6 13,401 16,174 15,744 20,001 14,467 14,037 20,001
7 14,071 17,646 17,216 20,001 15,615 15,185 20,001
8 14,775 19,260 19,030 21,378 16,919 16,689 20,001
9 15,513 21,038 20,808 22,930 18,420 18,190 20,078
10 16,289 22,967 22,937 25,034 20,106 20,076 21,915
11 17,103 25,117 25,087 27,126 21,984 21,954 23,742
12 17,959 27,477 27,447 29,400 24,045 24,015 25,728
13 18,856 30,046 30,016 32,149 26,288 26,258 28,128
14 19,799 32,870 32,840 34,842 28,755 28,725 30,479
15 20,789 35,950 35,920 38,106 31,438 31,408 33,324
16 21,829 39,336 39,306 41,302 34,395 34,365 36,114
17 22,920 43,028 42,998 45,178 37,611 37,581 39,491
18 24,066 47,069 47,039 49,422 41,104 41,074 43,159
19 25,270 51,493 51,493 54,067 44,892 44,862 47,136
20 26,533 56,369 56,369 59,187 48,993 48,963 51,442
25 33,864 88,612 88,612 93,042 75,081 75,081 78,834
35 55,160 219,158 219,158 221,349 180,040 180,040 181,840
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,927 9,152 20,001 9,697 8,940 20,001
2 11,025 10,234 9,454 20,001 9,737 8,977 20,001
3 11,576 10,551 9,771 20,001 9,747 8,986 20,001
4 12,155 10,880 10,250 20,001 9,720 9,107 20,001
5 12,763 11,219 10,589 20,001 9,650 9,041 20,001
6 13,401 11,570 11,140 20,001 9,527 9,116 20,001
7 14,071 11,933 11,503 20,001 9,339 8,935 20,001
8 14,775 12,309 12,079 20,001 9,068 8,856 20,001
9 15,513 12,697 12,467 20,001 8,695 8,491 20,001
10 16,289 13,098 13,068 20,001 8,195 8,165 20,001
11 17,103 13,533 13,503 20,001 7,553 7,523 20,001
12 17,959 13,984 13,954 20,001 6,721 6,691 20,001
13 18,856 14,451 14,421 20,001 5,655 5,625 20,001
14 19,799 14,935 14,905 20,001 4,294 4,264 20,001
15 20,789 15,436 15,406 20,001 2,557 2,527 20,001
16 21,829 15,954 15,924 20,001 324 294 20,001
17 22,920 16,491 16,461 20,001 -- -- --
18 24,066 17,047 17,017 20,001 -- -- --
19 25,270 17,623 17,593 20,001 -- -- --
20 26,533 18,220 18,190 20,001 -- -- --
25 33,864 21,537 21,507 22,613 -- -- --
35 55,160 30,219 30,189 30,521 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,001
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,361 8,629 20,001 9,129 8,415 20,001
2 11,025 9,098 8,386 20,001 8,591 7,917 20,001
3 11,576 8,842 8,149 20,001 8,009 7,378 20,001
4 12,155 8,592 8,047 20,001 7,375 6,902 20,001
5 12,763 8,349 7,818 20,001 6,679 6,248 20,001
6 13,401 8,111 7,757 20,001 5,908 5,642 20,001
7 14,071 7,880 7,535 20,001 5,043 4,812 20,001
8 14,775 7,654 7,471 20,001 4,062 3,951 20,001
9 15,513 7,434 7,255 20,001 2,935 2,846 20,001
10 16,289 7,219 7,189 20,001 1,630 1,600 20,001
11 17,103 7,021 6,991 20,001 111 81 20,001
12 17,959 6,827 6,797 20,001 -- -- --
13 18,856 6,637 6,607 20,001 -- -- --
14 19,799 6,452 6,422 20,001 -- -- --
15 20,789 6,271 6,241 20,001 -- -- --
16 21,829 6,095 6,065 20,001 -- -- --
17 22,920 5,922 5,892 20,001 -- -- --
18 24,066 5,754 5,724 20,001 -- -- --
19 25,270 5,590 5,560 20,001 -- -- --
20 26,533 5,429 5,399 20,001 -- -- --
25 33,864 4,682 4,652 20,001 -- -- --
35 55,160 3,428 3,398 20,001 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,927 9,902 45,872 10,927 9,902 45,872
2 11,025 11,901 10,883 45,872 11,901 10,883 45,872
3 11,576 12,958 11,952 45,872 12,958 11,952 45,872
4 12,155 14,105 13,263 45,872 14,105 13,263 45,872
5 12,763 15,348 14,526 45,872 15,348 14,526 45,872
6 13,401 16,696 16,099 45,872 16,696 16,099 45,872
7 14,071 18,156 17,590 45,872 18,156 17,590 45,872
8 14,775 19,738 19,410 45,872 19,738 19,410 45,872
9 15,513 21,452 21,168 45,872 21,452 21,168 45,872
10 16,289 23,308 23,278 45,872 23,308 23,278 45,872
11 17,103 25,526 25,496 45,872 25,525 25,495 45,872
12 17,959 27,958 27,928 45,872 27,954 27,924 45,872
13 18,856 30,627 30,597 45,872 30,622 30,592 45,872
14 19,799 33,566 33,536 45,872 33,560 33,530 45,872
15 20,789 36,813 36,783 45,872 36,806 36,776 45,872
16 21,829 40,415 40,385 46,476 40,407 40,377 46,467
17 22,920 44,396 44,366 50,168 44,388 44,358 50,158
18 24,066 48,772 48,742 54,137 48,763 48,733 54,126
19 25,270 53,584 53,584 58,406 53,574 53,574 58,395
20 26,533 58,880 58,880 64,179 58,869 58,869 64,166
25 33,864 94,020 94,020 99,661 94,002 94,002 99,642
35 55,160 236,261 236,261 248,073 230,345 230,345 241,862
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,338 9,325 45,872 10,338 9,325 45,872
2 11,025 10,649 9,656 45,872 10,649 9,656 45,872
3 11,576 10,963 9,991 45,872 10,963 9,991 45,872
4 12,155 11,277 10,478 45,872 11,277 10,478 45,872
5 12,763 11,591 10,816 45,872 11,591 10,816 45,872
6 13,401 11,902 11,353 45,872 11,902 11,353 45,872
7 14,071 12,215 11,694 45,872 12,208 11,686 45,872
8 14,775 12,537 12,245 45,872 12,503 12,210 45,872
9 15,513 12,869 12,607 45,872 12,783 12,521 45,872
10 16,289 13,210 13,180 45,872 13,042 13,012 45,872
11 17,103 13,669 13,639 45,872 13,382 13,352 45,872
12 17,959 14,146 14,116 45,872 13,695 13,665 45,872
13 18,856 14,641 14,611 45,872 13,973 13,943 45,872
14 19,799 15,154 15,124 45,872 14,208 14,178 45,872
15 20,789 15,686 15,656 45,872 14,390 14,360 45,872
16 21,829 16,238 16,208 45,872 14,504 14,474 45,872
17 22,920 16,810 16,780 45,872 14,530 14,500 45,872
18 24,066 17,404 17,374 45,872 14,443 14,413 45,872
19 25,270 18,020 17,990 45,872 14,210 14,180 45,872
20 26,533 18,658 18,628 45,872 13,795 13,765 45,872
25 33,864 22,226 22,196 45,872 7,069 7,039 45,872
35 55,160 31,646 31,616 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,748 8,767 45,872 9,748 8,767 45,872
2 11,025 9,466 8,537 45,872 9,466 8,537 45,872
3 11,576 9,182 8,303 45,872 9,182 8,303 45,872
4 12,155 8,896 8,199 45,872 8,896 8,199 45,872
5 12,763 8,604 7,950 45,872 8,604 7,950 45,872
6 13,401 8,319 7,873 45,872 8,305 7,859 45,872
7 14,071 8,042 7,630 45,872 7,994 7,584 45,872
8 14,775 7,773 7,548 45,872 7,667 7,445 45,872
9 15,513 7,512 7,313 45,872 7,318 7,124 45,872
10 16,289 7,259 7,229 45,872 6,942 6,912 45,872
11 17,103 7,070 7,040 45,872 6,583 6,553 45,872
12 17,959 6,885 6,855 45,872 6,177 6,147 45,872
13 18,856 6,704 6,674 45,872 5,715 5,685 45,872
14 19,799 6,527 6,497 45,872 5,188 5,158 45,872
15 20,789 6,354 6,324 45,872 4,581 4,551 45,872
16 21,829 6,185 6,155 45,872 3,877 3,847 45,872
17 22,920 6,020 5,990 45,872 3,053 3,023 45,872
18 24,066 5,858 5,828 45,872 2,074 2,044 45,872
19 25,270 5,700 5,670 45,872 902 872 45,872
20 26,533 5,545 5,515 45,872 -- -- --
25 33,864 4,821 4,791 45,872 -- -- --
35 55,160 3,593 3,563 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,559 9,779 45,872 10,559 9,779 45,872
2 11,025 11,573 10,793 45,872 11,573 10,793 45,872
3 11,576 12,682 11,902 45,872 12,682 11,902 45,872
4 12,155 13,893 13,263 45,872 13,893 13,263 45,872
5 12,763 15,215 14,585 45,872 15,215 14,585 45,872
6 13,401 16,658 16,228 45,872 16,658 16,228 45,872
7 14,071 18,234 17,804 45,872 18,234 17,804 45,872
8 14,775 19,953 19,723 45,872 19,953 19,723 45,872
9 15,513 21,830 21,600 45,872 21,830 21,600 45,872
10 16,289 23,878 23,848 45,872 23,878 23,848 45,872
11 17,103 26,157 26,127 45,872 26,157 26,127 45,872
12 17,959 28,655 28,625 45,872 28,655 28,625 45,872
13 18,856 31,401 31,371 45,872 31,400 31,370 45,872
14 19,799 34,426 34,396 45,872 34,426 34,396 45,872
15 20,789 37,773 37,743 45,872 37,772 37,742 45,872
16 21,829 41,483 41,453 47,705 41,483 41,453 47,705
17 22,920 45,571 45,541 51,495 45,571 45,541 51,495
18 24,066 50,064 50,064 55,570 50,063 50,063 55,570
19 25,270 55,037 55,037 59,990 55,037 55,037 59,989
20 26,533 60,477 60,477 65,919 60,476 60,476 65,919
25 33,864 96,569 96,569 102,363 96,569 96,569 102,362
35 55,160 242,667 242,667 254,800 236,635 236,635 248,466
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,989 9,210 45,872 9,989 9,210 45,872
2 11,025 10,355 9,575 45,872 10,355 9,575 45,872
3 11,576 10,728 9,948 45,872 10,728 9,948 45,872
4 12,155 11,107 10,477 45,872 11,107 10,477 45,872
5 12,763 11,490 10,860 45,872 11,490 10,860 45,872
6 13,401 11,875 11,445 45,872 11,875 11,445 45,872
7 14,071 12,267 11,837 45,872 12,259 11,829 45,872
8 14,775 12,672 12,442 45,872 12,638 12,408 45,872
9 15,513 13,092 12,862 45,872 13,008 12,778 45,872
10 16,289 13,528 13,498 45,872 13,364 13,334 45,872
11 17,103 13,999 13,969 45,872 13,719 13,689 45,872
12 17,959 14,488 14,458 45,872 14,048 14,018 45,872
13 18,856 14,996 14,966 45,872 14,344 14,314 45,872
14 19,799 15,522 15,492 45,872 14,599 14,569 45,872
15 20,789 16,068 16,038 45,872 14,803 14,773 45,872
16 21,829 16,634 16,604 45,872 14,940 14,910 45,872
17 22,920 17,221 17,191 45,872 14,993 14,963 45,872
18 24,066 17,830 17,800 45,872 14,936 14,906 45,872
19 25,270 18,461 18,431 45,872 14,737 14,707 45,872
20 26,533 19,117 19,087 45,872 14,361 14,331 45,872
25 33,864 22,776 22,746 45,872 7,966 7,936 45,872
35 55,160 32,438 32,408 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,872
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,419 8,682 45,872 9,419 8,682 45,872
2 11,025 9,205 8,484 45,872 9,205 8,484 45,872
3 11,576 8,986 8,282 45,872 8,986 8,282 45,872
4 12,155 8,761 8,206 45,872 8,761 8,206 45,872
5 12,763 8,528 7,987 45,872 8,528 7,987 45,872
6 13,401 8,299 7,937 45,872 8,284 7,923 45,872
7 14,071 8,075 7,722 45,872 8,026 7,675 45,872
8 14,775 7,856 7,669 45,872 7,749 7,564 45,872
9 15,513 7,642 7,460 45,872 7,448 7,269 45,872
10 16,289 7,434 7,404 45,872 7,115 7,085 45,872
11 17,103 7,241 7,211 45,872 6,755 6,725 45,872
12 17,959 7,052 7,022 45,872 6,347 6,317 45,872
13 18,856 6,868 6,838 45,872 5,884 5,854 45,872
14 19,799 6,687 6,657 45,872 5,355 5,325 45,872
15 20,789 6,511 6,481 45,872 4,747 4,717 45,872
16 21,829 6,338 6,308 45,872 4,043 4,013 45,872
17 22,920 6,169 6,139 45,872 3,219 3,189 45,872
18 24,066 6,004 5,974 45,872 2,241 2,211 45,872
19 25,270 5,843 5,813 45,872 1,070 1,040 45,872
20 26,533 5,685 5,655 45,872 -- -- --
25 33,864 4,946 4,916 45,872 -- -- --
35 55,160 3,693 3,663 45,872 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,921 9,895 28,491 10,921 9,895 28,491
2 11,025 11,875 10,857 28,491 11,875 10,857 28,491
3 11,576 12,895 11,889 28,491 12,895 11,889 28,491
4 12,155 13,992 13,152 28,491 13,987 13,147 28,491
5 12,763 15,185 14,365 28,491 15,158 14,338 28,491
6 13,401 16,482 15,887 28,491 16,414 15,819 28,491
7 14,071 17,893 17,329 28,491 17,764 17,201 28,491
8 14,775 19,427 19,100 28,491 19,221 18,895 28,491
9 15,513 21,096 20,813 28,491 20,799 20,517 28,491
10 16,289 22,911 22,881 28,491 22,521 22,491 28,491
11 17,103 25,087 25,057 28,491 24,618 24,588 28,491
12 17,959 27,511 27,481 29,437 26,979 26,949 28,867
13 18,856 30,185 30,155 32,297 29,600 29,570 31,671
14 19,799 33,120 33,090 35,106 32,477 32,447 34,425
15 20,789 36,323 36,293 38,502 35,617 35,587 37,754
16 21,829 39,843 39,813 41,834 39,068 39,038 41,021
17 22,920 43,681 43,651 45,864 42,831 42,801 44,972
18 24,066 47,859 47,829 50,251 46,927 46,897 49,273
19 25,270 52,436 52,436 55,058 51,379 51,379 53,947
20 26,533 57,488 57,488 60,362 56,241 56,241 59,053
25 33,864 91,052 91,052 95,604 87,126 87,126 91,482
35 55,160 228,413 228,413 230,696 209,893 209,893 211,992
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,331 9,319 28,491 10,331 9,319 28,491
2 11,025 10,622 9,629 28,491 10,622 9,629 28,491
3 11,576 10,898 9,927 28,491 10,897 9,927 28,491
4 12,155 11,182 10,384 28,491 11,154 10,356 28,491
5 12,763 11,474 10,701 28,491 11,385 10,613 28,491
6 13,401 11,775 11,227 28,491 11,585 11,039 28,491
7 14,071 12,084 11,563 28,491 11,744 11,226 28,491
8 14,775 12,402 12,110 28,491 11,850 11,561 28,491
9 15,513 12,730 12,468 28,491 11,890 11,630 28,491
10 16,289 13,066 13,036 28,491 11,844 11,814 28,491
11 17,103 13,521 13,491 28,491 11,791 11,761 28,491
12 17,959 13,992 13,962 28,491 11,617 11,587 28,491
13 18,856 14,481 14,451 28,491 11,295 11,265 28,491
14 19,799 14,988 14,958 28,491 10,792 10,762 28,491
15 20,789 15,514 15,484 28,491 10,063 10,033 28,491
16 21,829 16,060 16,030 28,491 9,045 9,015 28,491
17 22,920 16,626 16,596 28,491 7,649 7,619 28,491
18 24,066 17,212 17,182 28,491 5,750 5,720 28,491
19 25,270 17,821 17,791 28,491 3,173 3,143 28,491
20 26,533 18,452 18,422 28,491 -- -- --
25 33,864 21,978 21,948 28,491 -- -- --
35 55,160 31,289 31,259 31,602 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
34 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,742 8,762 28,491 9,742 8,762 28,491
2 11,025 9,439 8,512 28,491 9,439 8,512 28,491
3 11,576 9,128 8,254 28,491 9,116 8,243 28,491
4 12,155 8,827 8,135 28,491 8,769 8,081 28,491
5 12,763 8,535 7,886 28,491 8,390 7,751 28,491
6 13,401 8,251 7,809 28,491 7,970 7,542 28,491
7 14,071 7,976 7,567 28,491 7,498 7,112 28,491
8 14,775 7,709 7,487 28,491 6,959 6,755 28,491
9 15,513 7,451 7,253 28,491 6,332 6,160 28,491
10 16,289 7,199 7,169 28,491 5,595 5,565 28,491
11 17,103 7,012 6,982 28,491 4,762 4,732 28,491
12 17,959 6,828 6,798 28,491 3,754 3,724 28,491
13 18,856 6,648 6,618 28,491 2,534 2,504 28,491
14 19,799 6,473 6,443 28,491 1,054 1,024 28,491
15 20,789 6,301 6,271 28,491 -- -- --
16 21,829 6,133 6,103 28,491 -- -- --
17 22,920 5,969 5,939 28,491 -- -- --
18 24,066 5,808 5,778 28,491 -- -- --
19 25,270 5,651 5,621 28,491 -- -- --
20 26,533 5,497 5,467 28,491 -- -- --
25 33,864 4,778 4,748 28,491 -- -- --
35 55,160 3,559 3,529 28,491 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 10,552 9,772 28,491 10,552 9,772 28,491
2 11,025 11,546 10,766 28,491 11,546 10,766 28,491
3 11,576 12,617 11,837 28,491 12,617 11,837 28,491
4 12,155 13,778 13,148 28,491 13,771 13,141 28,491
5 12,763 15,050 14,420 28,491 15,018 14,388 28,491
6 13,401 16,442 16,012 28,491 16,367 15,937 28,491
7 14,071 17,966 17,536 28,491 17,829 17,399 28,491
8 14,775 19,635 19,405 28,491 19,420 19,190 28,491
9 15,513 21,461 21,231 28,491 21,161 20,931 28,491
10 16,289 23,460 23,430 28,491 23,078 23,048 28,491
11 17,103 25,697 25,667 28,491 25,250 25,220 28,491
12 17,959 28,196 28,166 30,170 27,696 27,666 29,634
13 18,856 30,937 30,907 33,102 30,387 30,357 32,514
14 19,799 33,946 33,916 35,982 33,342 33,312 35,342
15 20,789 37,230 37,200 39,463 36,567 36,537 38,760
16 21,829 40,838 40,808 42,880 40,110 40,080 42,115
17 22,920 44,773 44,743 47,011 43,974 43,944 46,173
18 24,066 49,057 49,027 51,509 48,181 48,151 50,589
19 25,270 53,750 53,750 56,437 52,752 52,752 55,389
20 26,533 58,928 58,928 61,873 57,745 57,745 60,632
25 33,864 93,333 93,333 97,999 89,455 89,455 93,927
35 55,160 234,133 234,133 236,474 215,506 215,506 217,660
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,982 9,204 28,491 9,982 9,204 28,491
2 11,025 10,327 9,547 28,491 10,327 9,547 28,491
3 11,576 10,664 9,884 28,491 10,662 9,882 28,491
4 12,155 11,013 10,383 28,491 10,980 10,350 28,491
5 12,763 11,374 10,744 28,491 11,278 10,648 28,491
6 13,401 11,748 11,318 28,491 11,549 11,119 28,491
7 14,071 12,135 11,705 28,491 11,784 11,354 28,491
8 14,775 12,536 12,306 28,491 11,972 11,742 28,491
9 15,513 12,952 12,722 28,491 12,098 11,868 28,491
10 16,289 13,382 13,352 28,491 12,146 12,116 28,491
11 17,103 13,848 13,818 28,491 12,116 12,086 28,491
12 17,959 14,331 14,301 28,491 11,968 11,938 28,491
13 18,856 14,833 14,803 28,491 11,678 11,648 28,491
14 19,799 15,353 15,323 28,491 11,213 11,183 28,491
15 20,789 15,893 15,863 28,491 10,531 10,501 28,491
16 21,829 16,452 16,422 28,491 9,569 9,539 28,491
17 22,920 17,033 17,003 28,491 8,244 8,214 28,491
18 24,066 17,634 17,604 28,491 6,434 6,404 28,491
19 25,270 18,259 18,229 28,491 3,972 3,942 28,491
20 26,533 18,906 18,876 28,491 625 595 28,491
25 33,864 22,523 22,493 28,491 -- -- --
35 55,160 32,074 32,044 32,394 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,491
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 10,500 9,412 8,677 28,491 9,412 8,677 28,491
2 11,025 9,177 8,459 28,491 9,177 8,459 28,491
3 11,576 8,932 8,232 28,491 8,919 8,220 28,491
4 12,155 8,693 8,142 28,491 8,632 8,084 28,491
5 12,763 8,460 7,922 28,491 8,309 7,781 28,491
6 13,401 8,232 7,873 28,491 7,943 7,596 28,491
7 14,071 8,010 7,659 28,491 7,522 7,191 28,491
8 14,775 7,792 7,607 28,491 7,029 6,859 28,491
9 15,513 7,580 7,399 28,491 6,446 6,287 28,491
10 16,289 7,373 7,343 28,491 5,749 5,719 28,491
11 17,103 7,182 7,152 28,491 4,918 4,888 28,491
12 17,959 6,994 6,964 28,491 3,913 3,883 28,491
13 18,856 6,811 6,781 28,491 2,697 2,667 28,491
14 19,799 6,632 6,602 28,491 1,223 1,193 28,491
15 20,789 6,457 6,427 28,491 -- -- --
16 21,829 6,285 6,255 28,491 -- -- --
17 22,920 6,117 6,087 28,491 -- -- --
18 24,066 5,954 5,924 28,491 -- -- --
19 25,270 5,793 5,763 28,491 -- -- --
20 26,533 5,636 5,606 28,491 -- -- --
25 33,864 4,903 4,873 28,491 -- -- --
35 55,160 3,659 3,629 28,491 -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company Putnam Capital Manager Trust
Separate Account Five and to the Owners of Units of Interest therein:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Putnam Capital Manager Trust Separate Account
Five (Asia Pacific Growth, Diversified Income, The George Putnam Fund of Boston,
Global Asset Allocation, Global Growth, Growth and Income, Health Sciences, High
Yield, International Growth, International Growth and Income, International New
Opportunities, Investors, Money Market, New Opportunities, New Value, OTC &
Emerging Growth, Research, U.S. Government and High Quality Bond, Utilities
Growth and Income, Vista, and Voyager), (collectively, the Account) as of
December 31, 1998, and the related statements of operations and the statements
of changes in net assets for the periods presented. These financial statements
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 15, 1999 ARTHUR ANDERSEN LLP
SA-1
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1998 Asia Diversified The George Global Global
Pacific Income Putnam Fund Asset Growth
Growth Sub-Account of Boston Allocation Sub-Account
Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH FUND
Shares 67,687
Cost $696,405
................................................................................................................................
Market Value: $563,830 $ -- $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 176,335
Cost $1,915,177
................................................................................................................................
Market Value: -- 1,849,752 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON
Shares 1,399
Cost $14,086
................................................................................................................................
Market Value: -- -- 14,379 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
Shares 100,935
Cost $1,646,624
................................................................................................................................
Market Value: -- -- -- 1,912,715 --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 467,141
Cost $7,293,679
................................................................................................................................
Market Value: -- -- -- -- 9,473,627
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 843,598
Cost $19,296,954
................................................................................................................................
Market Value: -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 10,109
Cost $101,057
................................................................................................................................
Market Value: -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company -- -- 9,386 -- 73
................................................................................................................................
Receivable from fund shares sold -- -- -- -- --
................................................................................................................................
Total Assets 563,830 1,849,752 23,765 1,912,715 9,473,700
................................................................................................................................
LIABILITIES
Due to Hartford Life Insurance Company -- -- -- -- --
................................................................................................................................
Payable for fund shares purchased -- -- 9,265 -- 68
................................................................................................................................
TOTAL LIABILITIES -- -- 9,265 -- 68
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE CONTRACT LIABILITIES) $563,830 $1,849,752 $14,500 $1,912,715 $9,473,632
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1998 Growth Health
and Income Sciences
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------
ASSETS
Investments:
- -------------------------------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH FUND
Shares 67,687
Cost $696,405
...........................................................
Market Value: $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 176,335
Cost $1,915,177
...........................................................
Market Value: -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON
Shares 1,399
Cost $14,086
...........................................................
Market Value: -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
Shares 100,935
Cost $1,646,624
...........................................................
Market Value: -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 467,141
Cost $7,293,679
...........................................................
Market Value: -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 843,598
Cost $19,296,954
...........................................................
Market Value: 24,270,325 --
- ---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 10,109
Cost $101,057
...........................................................
Market Value: -- 110,591
- ---------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company 14,271 --
...........................................................
Receivable from fund shares sold -- --
...........................................................
Total Assets 24,284,596 110,591
...........................................................
LIABILITIES
Due to Hartford Life Insurance Company -- --
...........................................................
Payable for fund shares purchased 14,270 --
...........................................................
TOTAL LIABILITIES 14,270 --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE CONTRACT LIABILITIES) $24,270,326 $110,591
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1998 High Yield International International International Investors
Sub-Account Growth Growth and New Sub-Account
Sub-Account Income Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 406,011
Cost $5,021,064
..................................................................................................................................
Market Value: $4,750,334 $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND
Shares 43,814
Cost $509,728
..................................................................................................................................
Market Value: -- 592,360 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND
Shares 21,432
Cost $255,402
..................................................................................................................................
Market Value: -- -- 262,325 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
Shares 23,649
Cost $254,155
..................................................................................................................................
Market Value: -- -- -- 271,731 --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 70,968
Cost $691,202
..................................................................................................................................
Market Value: -- -- -- -- 826,773
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 3,953,788
Cost $3,953,788
..................................................................................................................................
Market Value: -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 503,756
Cost $8,189,436
..................................................................................................................................
Market Value: -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company -- -- -- -- 2,628
..................................................................................................................................
Receivable from fund shares sold -- -- -- -- --
..................................................................................................................................
Total Assets 4,750,334 592,360 262,325 271,731 829,401
..................................................................................................................................
LIABILITIES
Due to Hartford Life Insurance Company -- -- -- -- --
..................................................................................................................................
Payable for fund shares purchased -- -- -- -- 2,628
..................................................................................................................................
TOTAL LIABILITIES -- -- -- -- 2,628
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE CONTRACT LIABILITIES) $4,750,334 $592,360 $262,325 $271,731 $826,773
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1998 Money New
Market Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments:
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 406,011
Cost $5,021,064
...........................................................
Market Value: $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND
Shares 43,814
Cost $509,728
...........................................................
Market Value: -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND
Shares 21,432
Cost $255,402
...........................................................
Market Value: -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
Shares 23,649
Cost $254,155
...........................................................
Market Value: -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 70,968
Cost $691,202
...........................................................
Market Value: -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 3,953,788
Cost $3,953,788
...........................................................
Market Value: 3,953,788 --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 503,756
Cost $8,189,436
...........................................................
Market Value: -- 13,127,885
- -----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company -- 75
...........................................................
Receivable from fund shares sold 2,483 --
...........................................................
Total Assets 3,956,271 13,127,960
...........................................................
LIABILITIES
Due to Hartford Life Insurance Company 2,465 --
...........................................................
Payable for fund shares purchased -- 68
...........................................................
TOTAL LIABILITIES 2,465 68
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE CONTRACT LIABILITIES) $3,953,806 $13,127,892
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1998 New OTC & Research U.S. Government Utilities
Value Emerging Sub-Account and High Growth
Sub-Account Growth Quality Bond and Income
Sub-Account Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 21,278
Cost $235,938
.................................................................................................................................
Market Value: $255,974 $ -- $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH FUND
Shares 906
Cost $7,908
.................................................................................................................................
Market Value: -- 9,140 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT RESEARCH FUND
Shares 1,480
Cost $16,075
.................................................................................................................................
Market Value: -- -- 17,660 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
Shares 132,026
Cost $1,739,970
.................................................................................................................................
Market Value: -- -- -- 1,812,711 --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH & INCOME FUND
Shares 133,117
Cost $1,832,694
.................................................................................................................................
Market Value: -- -- -- -- 2,421,391
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 24,513
Cost $291,664
.................................................................................................................................
Market Value: -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 359,357
Cost $11,274,718
.................................................................................................................................
Market Value: -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company -- -- -- -- --
.................................................................................................................................
Receivable from fund shares sold -- -- -- -- --
.................................................................................................................................
Total Assets 255,974 9,140 17,660 1,812,711 2,421,391
.................................................................................................................................
LIABILITIES
Due to Hartford Life Insurance Company -- -- -- -- --
.................................................................................................................................
Payable for fund shares purchased -- -- -- -- --
.................................................................................................................................
TOTAL LIABILITIES -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE CONTRACT LIABILITIES) $255,974 $9,140 $17,660 $1,812,711 $2,421,391
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1998 Vista Voyager
Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments:
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 21,278
Cost $235,938
........................................................
Market Value: $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH FUND
Shares 906
Cost $7,908
........................................................
Market Value: -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT RESEARCH FUND
Shares 1,480
Cost $16,075
........................................................
Market Value: -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
Shares 132,026
Cost $1,739,970
........................................................
Market Value: -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH & INCOME FUND
Shares 133,117
Cost $1,832,694
........................................................
Market Value: -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 24,513
Cost $291,664
........................................................
Market Value: 360,831 --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 359,357
Cost $11,274,718
........................................................
Market Value: -- 16,476,508
- ----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company -- 74
........................................................
Receivable from fund shares sold -- --
........................................................
Total Assets 360,831 16,476,582
........................................................
LIABILITIES
Due to Hartford Life Insurance Company -- --
........................................................
Payable for fund shares purchased -- 68
........................................................
TOTAL LIABILITIES -- 68
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE CONTRACT LIABILITIES) $360,831 $16,476,514
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1998 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Variable life contracts:
Asia Pacific Growth Fund 62,626 $ 9.003084 $ 563,830
....................................................................................................
Diversified Income Fund 134,053 13.798650 1,849,752
....................................................................................................
George Putnam Fund 1,403 10.338503 14,500
....................................................................................................
Global Asset Allocation Fund 97,567 19.604138 1,912,715
....................................................................................................
Global Growth Fund 467,015 20.285477 9,473,632
....................................................................................................
Growth and Income Fund 1,023,024 23.724100 24,270,326
....................................................................................................
Health Sciences Fund 10,099 10.950541 110,591
....................................................................................................
High Yield Fund 330,628 14.367617 4,750,334
....................................................................................................
International Growth Fund 42,973 13.784342 592,360
....................................................................................................
International Growth and Income Fund 19,742 13.287617 262,325
....................................................................................................
International New Opportunities Fund 23,536 11.545331 271,731
....................................................................................................
Investors Fund 71,650 11.539064 826,773
....................................................................................................
Money Market Fund 3,224,735 1.226087 3,953,806
....................................................................................................
New Opportunities Fund 533,884 24.589388 13,127,892
....................................................................................................
New Value Fund 20,485 12.495592 255,974
....................................................................................................
OTC & Emerging Fund 907 10.074314 9,140
....................................................................................................
Research Fund 1,408 12.540201 17,660
....................................................................................................
U.S. Government and High Quality Bond Fund 124,856 14.518456 1,812,711
....................................................................................................
Utilities Growth and Income Fund 109,222 22.169452 2,421,391
....................................................................................................
Vista Fund 24,511 14.721186 360,831
....................................................................................................
Voyager Fund 654,796 25.162820 16,476,514
....................................................................................................
GRAND TOTAL: $83,334,788
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Pacific Diversified The George Global Global
December 31, 1998 Growth Income Putnam Fund Asset Growth
Sub-Account Sub-Account of Boston Allocation Sub-Account
Sub-Account* Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 32,285 $ 70,490 $ 43 $ 41,230 $ 214,168
..................................................................................................................................
Capital gains income -- 29,940 -- 177,098 1,070,840
..................................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
..................................................................................................................................
Net realized gain (loss) on security transactions (41,207) 1,671 1 (1,329) (1,364)
..................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period (39,426) (131,240) 293 20,104 920,126
..................................................................................................................................
Net gain (loss) on investments (80,633) (129,569) 294 18,775 918,762
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $(48,348) $(29,139) $337 $237,103 $2,203,770
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Growth Health
December 31, 1998 and Income Sciences
Sub-Account Sub-Account*
- -----------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 360,949 $ 97
...........................................................
Capital gains income 2,356,273 --
...........................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
...........................................................
Net realized gain (loss) on security transactions (18,503) (8,309)
...........................................................
Net unrealized appreciation (depreciation) of investments
during the period 488,209 9,534
...........................................................
Net gain (loss) on investments 469,706 1,225
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $3,186,928 $1,322
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 364,870 $ 1,961 $ 3,220 $ 439
....................................................................................................................
Capital gains income 57,254 -- 8,262 --
....................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
....................................................................................................................
Net realized gain (loss) on security transactions (37,700) (2,248) (13,163) (2,535)
....................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period (723,080) 78,151 9,351 30,988
....................................................................................................................
Net gain (loss) on investments (760,780) 75,903 (3,812) 28,453
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS: $(338,656) $77,864 $ 7,670 $28,892
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1,060 $187,481 $ --
.........................................................
Capital gains income -- -- 159,622
.........................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
.........................................................
Net realized gain (loss) on security transactions (937) -- (29,156)
.........................................................
Net unrealized appreciation (depreciation) of investments
during the period 135,571 -- 2,419,602
.........................................................
Net gain (loss) on investments 134,634 -- 2,390,446
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS: $135,694 $187,481 $2,550,068
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended New OTC & Research U.S. Government Utilities
December 31, 1998 Value Emerging Sub-Account** and High Growth
Sub-Account Growth Quality Bond and Income
Sub-Account* Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 5,037 $ 4 $ 28 $ 80,167 $ 61,115
..................................................................................................................................
Capital gains income 5,627 -- 1 2,087 105,334
..................................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
..................................................................................................................................
Net realized gain (loss) on security transactions 515 1 1 2,683 551
..................................................................................................................................
Net unrealized appreciation (depreciation) of
investments during the period 5,488 1,232 1,585 36,983 134,073
..................................................................................................................................
Net gain (loss) on investments 6,003 1,233 1,586 39,666 134,624
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS: $16,667 $1,237 $1,615 $121,920 $301,073
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Vista Voyager
December 31, 1998 Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ -- $ 33,492
.....................................................
Capital gains income -- 817,198
.....................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
.....................................................
Net realized gain (loss) on security transactions (4,666) (39,065)
.....................................................
Net unrealized appreciation (depreciation) of
investments during the period 48,979 2,366,551
.....................................................
Net gain (loss) on investments 44,313 2,327,486
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS: $44,313 $3,178,176
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Pacific Diversified The George Global Global
December 31, 1998 Growth Income Putnam Fund Asset Growth
Sub-Account Sub-Account of Boston Allocation Sub-Account
Sub-Account* Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 32,285 $ 70,490 $ 43 $ 41,230 $ 214,168
.................................................................................................................................
Capital gains income -- 29,940 -- 177,098 1,070,840
.................................................................................................................................
Net realized gain (loss) on security transactions (41,207) 1,671 1 (1,329) (1,364)
.................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period (39,426) (131,240) 293 20,104 920,126
.................................................................................................................................
Net increase (decrease) in net assets resulting from
operations (48,348) (29,139) 337 237,103 2,203,770
.................................................................................................................................
UNIT TRANSACTIONS:
Purchases -- -- 1,000 -- 68
.................................................................................................................................
Net transfers (26,828) 328,011 3,811 (36,615) 54,962
.................................................................................................................................
Surrenders (92,345) (54,287) 96 (33,858) (301,472)
.................................................................................................................................
Net loan activity (4,990) 442 9,265 (1,979) (15,579)
.................................................................................................................................
Cost of insurance (4,390) (12,619) (9) (12,944) (55,333)
.................................................................................................................................
Net increase (decrease) in net assets resulting from unit
transactions (128,553) 261,547 14,163 (85,396) (317,354)
.................................................................................................................................
Total increase (decrease) in net assets (176,901) 232,408 14,500 151,707 1,886,416
.................................................................................................................................
NET ASSETS:
Beginning of period 740,731 1,617,344 -- 1,761,008 7,587,216
- ----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 563,830 $1,849,752 $14,500 $1,912,715 $9,473,632
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Growth Health
December 31, 1998 and Income Sciences
Sub-Account Sub-Account*
- ----------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 360,949 $ 97
..........................................................
Capital gains income 2,356,273 --
..........................................................
Net realized gain (loss) on security transactions (18,503) (8,309)
..........................................................
Net unrealized appreciation (depreciation) of investments
during the period 488,209 9,534
..........................................................
Net increase (decrease) in net assets resulting from
operations 3,186,928 1,322
..........................................................
UNIT TRANSACTIONS:
Purchases 68 1,000
..........................................................
Net transfers 2,023,631 109,086
..........................................................
Surrenders (1,114,383) (590)
..........................................................
Net loan activity 38,426 --
..........................................................
Cost of insurance (138,157) (227)
..........................................................
Net increase (decrease) in net assets resulting from unit
transactions 809,585 109,269
..........................................................
Total increase (decrease) in net assets 3,996,513 110,591
..........................................................
NET ASSETS:
Beginning of period 20,273,813 --
- ------------------------------------------------------------------------------------------------------------------
END OF PERIOD $24,270,326 $110,591
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield International International International Investors
December 31, 1998 Sub-Account Growth Growth New Sub-Account*
Sub-Account* and Income Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 364,870 $ 1,961 $ 3,220 $ 439 $ 1,060
..................................................................................................................................
Capital gains income 57,254 -- 8,262 -- --
..................................................................................................................................
Net realized gain (loss) on security transactions (37,700) (2,248) (13,163) (2,535) (937)
..................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period (723,080) 78,151 9,351 30,988 135,571
..................................................................................................................................
Net increase (decrease) in net assets resulting from
operations (338,656) 77,864 7,670 28,892 135,694
..................................................................................................................................
UNIT TRANSACTIONS:
Purchases -- -- -- -- 1,000
..................................................................................................................................
Net transfers 904,461 376,363 95,761 56,466 694,266
..................................................................................................................................
Surrenders (153,503) (4,974) (5,988) (6,199) (3,048)
..................................................................................................................................
Net loan activity (28,064) (764) (886) (2,292) --
..................................................................................................................................
Cost of insurance (32,618) (2,123) (1,476) (1,692) (1,139)
..................................................................................................................................
Net increase (decrease) in net assets resulting from unit
transactions 690,276 368,502 87,411 46,283 691,079
..................................................................................................................................
Total increase (decrease) in net assets 351,620 446,366 95,081 75,175 826,773
..................................................................................................................................
NET ASSETS:
Beginning of period 4,398,714 145,994 167,244 196,556 --
- -----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $4,750,334 $592,360 $262,325 $271,731 $826,773
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Money New
December 31, 1998 Market Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 187,481 $ --
.........................................................
Capital gains income -- 159,622
.........................................................
Net realized gain (loss) on security transactions -- (29,156)
.........................................................
Net unrealized appreciation (depreciation) of investments
during the period -- 2,419,602
.........................................................
Net increase (decrease) in net assets resulting from
operations 187,481 2,550,068
.........................................................
UNIT TRANSACTIONS:
Purchases 7,126,691 68
.........................................................
Net transfers (6,976,297) 704,490
.........................................................
Surrenders (92,978) (508,652)
.........................................................
Net loan activity (144,914) (12,156)
.........................................................
Cost of insurance (28,775) (74,421)
.........................................................
Net increase (decrease) in net assets resulting from unit
transactions (116,273) 109,329
.........................................................
Total increase (decrease) in net assets 71,208 2,659,397
.........................................................
NET ASSETS:
Beginning of period 3,882,598 10,468,495
- -----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $3,953,806 $13,127,892
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended New OTC & Research U.S. Government Utilities
December 31, 1998 Value Emerging Sub-Account** and High Growth
Sub-Account Growth Quality Bond and Income
Sub-Account* Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 5,037 $ 4 $ 28 $ 80,167 $ 61,115
.................................................................................................................................
Capital gains income 5,627 -- 1 2,087 105,334
.................................................................................................................................
Net realized gain (loss) on security transactions 515 1 1 2,683 551
.................................................................................................................................
Net unrealized appreciation (depreciation) of
investments during the period 5,488 1,232 1,585 36,983 134,073
.................................................................................................................................
Net increase (decrease) in net assets resulting from
operations 16,667 1,237 1,615 121,920 301,073
.................................................................................................................................
UNIT TRANSACTIONS:
Purchases -- 1,000 1,000 -- --
.................................................................................................................................
Net transfers (40,034) 6,935 15,104 252,563 227,820
.................................................................................................................................
Surrenders (10,026) (22) (42) (52,978) (76,662)
.................................................................................................................................
Net loan activity 222 -- (17) 2,786 6,862
.................................................................................................................................
Cost of insurance (1,702) (10) -- (11,466) (15,317)
.................................................................................................................................
Net increase (decrease) in net assets resulting from
unit transactions (51,540) 7,903 16,045 190,905 142,703
.................................................................................................................................
Total increase (decrease) in net assets (34,873) 9,140 17,660 312,825 443,776
.................................................................................................................................
NET ASSETS:
Beginning of period 290,847 -- -- 1,499,886 1,977,615
- ----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 255,974 $9,140 $17,660 $1,812,711 $2,421,391
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Vista Voyager
December 31, 1998 Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ -- $ 33,492
....................................................
Capital gains income -- 817,198
....................................................
Net realized gain (loss) on security transactions (4,666) (39,065)
....................................................
Net unrealized appreciation (depreciation) of
investments during the period 48,979 2,366,551
....................................................
Net increase (decrease) in net assets resulting from
operations 44,313 3,178,176
....................................................
UNIT TRANSACTIONS:
Purchases -- 68
....................................................
Net transfers 140,107 1,085,936
....................................................
Surrenders (4,900) (619,410)
....................................................
Net loan activity -- (12,339)
....................................................
Cost of insurance (1,419) (92,192)
....................................................
Net increase (decrease) in net assets resulting from
unit transactions 133,788 362,063
....................................................
Total increase (decrease) in net assets 178,101 3,540,239
....................................................
NET ASSETS:
Beginning of period 182,730 12,936,275
- ----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $360,831 $16,476,514
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Diversified Global Global Growth High Yield
December 31, 1997 Pacific Income Asset Growth and Income Sub-Account
Growth Sub-Account Allocation Sub-Account Sub-Account
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 18,881 $ 62,554 $ 45,684 $ 155,488 $ 314,190 $ 246,290
..................................................................................................................................
Capital gains income -- 9,861 78,086 167,244 764,750 28,559
..................................................................................................................................
Net realized gain (loss) on security
transactions (4,716) 208 985 (6,243) (11,346) 2,554
..................................................................................................................................
Net unrealized appreciation (depreciation) of
investments during the period (145,844) 21,960 137,965 601,162 2,573,528 241,895
..................................................................................................................................
Net increase (decrease) in net assets resulting
from operations (131,679) 94,583 262,720 917,651 3,641,122 519,298
..................................................................................................................................
UNIT TRANSACTIONS:
Purchases -- -- -- -- -- --
..................................................................................................................................
Net transfers (5,780) 499,003 345,410 880,302 3,372,228 738,928
..................................................................................................................................
Surrenders (17,461) (27,995) (30,466) (273,522) (399,306) (149,096)
..................................................................................................................................
Net loan activity (7,128) (1,526) (21,786) (43,107) (95,139) 16,923
..................................................................................................................................
Cost of insurance (6,464) (9,419) (10,616) (49,753) (114,975) (26,321)
..................................................................................................................................
Net increase (decrease) in net assets resulting
from unit transactions (36,833) 460,063 282,542 513,920 2,762,808 580,434
..................................................................................................................................
Total increase (decrease) in net assets (168,512) 554,646 545,262 1,431,571 6,403,930 1,099,732
..................................................................................................................................
NET ASSETS:
Beginning of period 909,242 1,062,698 1,215,746 6,155,645 13,869,884 3,298,982
- -----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $740,730 $1,617,344 $1,761,008 $7,587,216 $20,273,814 $4,398,714
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended International International
December 31, 1997 Growth Growth
Sub-Account* and Income
Sub-Account*
- ---------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 2,245 $ 4,968
...............................................
Capital gains income -- --
...............................................
Net realized gain (loss) on security
transactions (952) 261
...............................................
Net unrealized appreciation (depreciation) of
investments during the period 4,480 (2,427)
...............................................
Net increase (decrease) in net assets resulting
from operations 5,773 2,802
...............................................
UNIT TRANSACTIONS:
Purchases 1,000 1,000
...............................................
Net transfers 141,118 164,247
...............................................
Surrenders (1,312) (664)
...............................................
Net loan activity -- --
...............................................
Cost of insurance (585) (141)
...............................................
Net increase (decrease) in net assets resulting
from unit transactions 140,221 164,442
...............................................
Total increase (decrease) in net assets 145,994 167,244
...............................................
NET ASSETS:
Beginning of period -- --
- -----------------------------------------------------------------------------------------------------------
END OF PERIOD $145,994 $167,244
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended International Money New New U.S. Government
December 31, 1997 New Market Opportunities Value and High
Opportunities Sub-Account Sub-Account Sub-Account* Quality Bond
Sub-Account* Sub-Account
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 571 $ 187,676 $ -- $ -- $ 83,063
.....................................................................................................................
Capital gains income -- -- -- -- --
.....................................................................................................................
Net realized gain (loss) on security
transactions (583) -- (5,661) (2,943) 1,430
Net unrealized appreciation
(depreciation) of investments during
the period (13,413) -- 1,909,685 14,548 25,565
.....................................................................................................................
Net increase (decrease) in net assets
resulting from operations (13,425) 187,676 1,904,024 11,605 110,058
.....................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,000 9,479,089 -- 1,000 --
.....................................................................................................................
Net transfers 211,827 (9,663,164) 1,158,747 287,299 135,429
.....................................................................................................................
Surrenders (2,118) (119,388) (294,057) (8,127) (24,042)
.....................................................................................................................
Net loan activity (1) (193,526) (72,749) -- (1,568)
.....................................................................................................................
Cost of insurance (727) (31,033) (60,495) (930) (9,754)
.....................................................................................................................
Net increase (decrease) in net assets
resulting from unit transactions 209,981 (528,022) 731,446 279,242 100,065
.....................................................................................................................
Total increase (decrease) in net assets 196,556 (340,346) 2,635,470 290,847 210,123
.....................................................................................................................
NET ASSETS:
Beginning of period -- 4,222,944 7,833,025 -- 1,289,764
- ----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $196,556 $ 3,882,598 $10,468,495 $290,847 $1,499,887
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For the Year Ended Utilities Vista Voyager
December 31, 1997 Growth Sub-Account* Sub-Account
and Income
Sub-Account
- ----------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 56,715 $ 15 $ 20,325
........................................
Capital gains income 77,339 -- 438,026
........................................
Net realized gain (loss) on security
transactions 4,906 (6,610) 1,878
Net unrealized appreciation
(depreciation) of investments during
the period 280,202 20,188 2,144,618
........................................
Net increase (decrease) in net assets
resulting from operations 419,162 13,593 2,604,847
........................................
UNIT TRANSACTIONS:
Purchases -- 1,000 --
........................................
Net transfers 126,503 170,550 1,437,360
........................................
Surrenders (29,456) (1,924) (346,502)
........................................
Net loan activity (10,900) -- (87,887)
........................................
Cost of insurance (12,352) (489) (73,765)
........................................
Net increase (decrease) in net assets
resulting from unit transactions 73,795 169,137 929,206
........................................
Total increase (decrease) in net assets 492,957 182,730 3,534,053
........................................
NET ASSETS:
Beginning of period 1,484,659 -- 9,402,223
- ----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,977,616 $182,730 $12,936,276
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE
COMPANY
Notes to Financial Statements
December 31, 1998
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account Five (the Account) is a separate
investment account within Hartford Life Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. Both the
Company and the Account are subject to supervision and regulation by the
Department of Insurance of the State of Connecticut and the SEC. The Account
invests deposits by variable life contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Account,
which are in accordance with generally accepted accounting principles in the
investment company industry:
A) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade date
(date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents dividends
from the Funds which are characterized as capital gains under tax regulations.
B) SECURITY VALUATION -- The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1998.
C) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and are
taxed with, the total operations of the Company, which is taxed as an insurance
company under the Internal Revenue Code. Under current law, no federal income
taxes are payable with respect to the operations of the Account.
D) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) COST OF INSURANCE -- In accordance with terms of the contracts, the Company
makes deductions for costs of insurance to cover the Company's anticipated
mortality costs. Because a policy's account value and death benefit may vary
from month to month, the cost of insurance charges may also vary.
B) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 0.90% of the Account's
average daily net assets. The Company also provides administrative services and
receives an annual fee of 0.40% of the Account's average daily net assets. These
expenses are reflected in surrenders on the accompanying statements of changes
in net assets.
C) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts. These expenses are
reflected in surrenders on the accompanying statements of changes in net assets.
D) TAX EXPENSE CHARGE -- The Company will deduct monthly from the account value
a tax expense charge equal to an annual rate of 0.40% for the first ten years.
During the first nine policy years, a premium tax charge will be imposed on full
or partial surrenders at a maximum rate of 2.25%.
SA-14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1998.
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 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 financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic 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 financial statements
taken as a whole.
Hartford, Connecticut
January 26, 1999 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
-------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
(in millions)
REVENUES
Premiums and other considerations $2,218 $1,637 $1,705
Net investment income 1,759 1,368 1,397
Net realized capital (losses) gains (2) 4 (213)
-------------------------------
TOTAL REVENUES 3,975 3,009 2,889
-------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,911 1,379 1,535
Amortization of deferred policy acquisition
costs 431 335 234
Dividends to policyholders 329 240 635
Other expenses 766 586 427
-------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 3,437 2,540 2,831
-------------------------------
Income before income tax expense 538 469 58
Income tax expense 188 167 20
-------------------------------
NET INCOME $ 350 $ 302 $ 38
-------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
<S> <C> <C>
------------------------
1998 1997
------------------------
(in millions,
except for share
data)
ASSETS
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $14,505 and $13,885) $14,818 $14,176
Equity securities, at fair value 31 180
Policy loans, at outstanding balance 6,684 3,756
Other investments, at cost 264 47
------------------------
TOTAL INVESTMENTS 21,797 18,159
------------------------
Cash 17 54
Premiums receivable and agents' balances 17 18
Reinsurance recoverables 1,257 6,114
Deferred policy acquisition costs 3,754 3,315
Deferred income tax 464 348
Other assets 695 682
Separate account assets 90,262 69,055
------------------------
TOTAL ASSETS $118,263 $97,745
------------------------
LIABILITIES
Future policy benefits $ 3,595 $ 3,059
Other policyholder funds 19,615 21,034
Other liabilities 2,094 2,254
Separate account liabilities 90,262 69,055
------------------------
TOTAL LIABILITIES 115,566 95,402
------------------------
STOCKHOLDER'S EQUITY
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690 6 6
Capital surplus 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital gains on securities,
net of tax 184 179
------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 184 179
------------------------
Retained earnings 1,462 1,113
------------------------
TOTAL STOCKHOLDER'S EQUITY 2,697 2,343
------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $118,263 $97,745
------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income
---------------
<S> <C> <C> <C> <C> <C>
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
---------------------------------------------------------
(in millions)
1998
Balance, December 31, 1997 $6 $ 1,045 $179 $1,113 $2,343
Comprehensive income
Net income -- -- -- 350 350
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2) -- -- 5 -- 5
Total other comprehensive income 5
Total comprehensive income 355
Dividends -- -- -- (1) (1)
---------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $6 $ 1,045 $184 $1,462 $2,697
---------------------------------------------------------
1997
Balance, December 31, 1996 $6 $ 1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income -- -- -- 302 302
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2) -- -- 149 -- 149
Total other comprehensive income 149
Total comprehensive income 451
---------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $6 $ 1,045 $179 $1,113 $2,343
---------------------------------------------------------
1996
Balance, December 31, 1995 $6 $ 1,007 $(57) $ 773 $1,729
Comprehensive income
Net income -- -- -- 38 38
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2) -- -- 87 -- 87
Total other comprehensive income 87
Total comprehensive income 125
Capital contribution -- 38 -- -- 38
---------------------------------------------------------
BALANCE, DECEMBER 31, 1996 $6 $ 1,045 $ 30 $ 811 $1,892
---------------------------------------------------------
</TABLE>
(1) Net unrealized capital gain on securities is reflected net of tax of $3, $80
and $47, as of December 31, 1998, 1997 and 1996, respectively.
(2) There was no reclassification adjustment for after-tax gains (losses)
realized in net income for the years ended December 31, 1998 and 1997.
December 31, 1996 is net of a $142 reclassification adjustment for after-tax
losses realized in net income.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended December
31,
<S> <C> <C> <C>
-------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------
(in millions)
OPERATING ACTIVITIES
Net income $ 350 $ 302 $ 38
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization (23) 8 14
Net realized capital losses (gains) 2 (4) 213
Decrease in premiums receivable and
agents' balances 1 119 10
(Decrease) increase in other
liabilities (79) 223 577
Change in receivables, payables, and
accruals 83 107 (22)
Increase (decrease) in accrued taxes 60 126 (91)
(Increase) decrease in deferred income
taxes (118) 40 (102)
Increase in deferred policy
acquisition costs (439) (555) (572)
Increase in future policy benefits 536 585 101
(Increase) decrease in reinsurance
recoverables and other related assets (2) 21 (146)
-------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 371 972 20
-------------------------
INVESTING ACTIVITIES
Purchases of investments (6,061) (6,869) (5,854)
Sales of investments 4,901 4,256 3,543
Maturity of investments 1,761 2,329 2,693
-------------------------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES 601 (284) 382
-------------------------
FINANCING ACTIVITIES
Capital contribution -- -- 38
Net disbursements for investment and
universal life-type contracts charged
against policyholder accounts (1,009) (677) (443)
-------------------------
Net cash used for financing
activities (1,009) (677) (405)
-------------------------
Net (decrease) increase in cash (37) 11 (3)
Cash -- beginning of year 54 43 46
-------------------------
Cash -- end of year $ 17 $ 54 $ 43
-------------------------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes $ 263 $ 9 $ 189
Noncash Investing Activities:
Due to the recapture of an in force block of business previously ceded
to MBL Life Assurance Co. of New Jersey, reinsurance recoverables of
$4,546 were exchanged for the fair value of assets comprised of
$4,354 in policy loans and $192 in other assets.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)
-------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These Consolidated Financial Statements include Hartford Life Insurance Company
and its wholly-owned subsidiaries ("Hartford Life Insurance Company" or the
"Company"), Hartford Life and Annuity Insurance Company (ILA) and 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). Hartford Life is a direct subsidiary of
Hartford Accident and Indemnity Company (HA&I), an indirect subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford). Pursuant to an initial
public offering (the "IPO") on May 22, 1997, Hartford Life sold 26 million
shares of Class A Common Stock at $28.25 per share and received proceeds, net of
offering expenses, of $687. Of the proceeds, $527 was used to retire debt
related to Hartford Life's outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses. Hartford Life became a publicly traded company upon the sale of
26 million shares representing approximately 18.6% of the equity ownership in
Hartford Life. 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. As a result, The
Hartford became an independent, publicly traded company.
Along with its parent, HLA, the Company is a leading financial services and
insurance company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement 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 group life and disability insurance
that is directly written by the Company and is substantially ceded to its
parent, HLA, and (d) corporate owned life insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These Consolidated Financial Statements present the financial position, results
of operations and cash flows of the Company. All material intercompany
transactions and balances between the Company, its subsidiaries and affiliates
have been eliminated. The Consolidated Financial Statements are prepared on the
basis of generally accepted accounting principles which differ materially from
the statutory accounting practices 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. The most significant estimates
include those used in determining deferred policy acquisition costs and the
liability for future policy benefits and other policyholder funds. Although some
variability is inherent in these estimates, management believes the amounts
provided are adequate.
Certain reclassifications have been made to prior year financial information to
conform to the current year presentation.
(B) CHANGES IN ACCOUNTING PRINCIPLES
In November 1998, the Emerging Issues Task Force (EITF) reached consensus on
Issue No. 98-15, "Structured Notes Acquired for a Specific Investment Strategy".
This EITF issue requires companies to account for structured notes acquired for
a specific investment strategy, as a unit. Affected companies that entered into
these notes prior to September 25, 1998 are required to either restate prior
period financial statements to conform with the prescribed unit accounting model
or disclose the related impact on earnings for all periods presented and
cumulatively over the life of the instruments had the registrant accounted for
the structure as a unit. Based upon recently prescribed current generally
accepted accounting principles for such types of transactions entered into after
September 24, 1998, there was no additional earnings impact to the Company
related to combined structured note transactions. As of December 31, 1998, the
Company does not hold any combined structured notes.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The new standard establishes accounting and
reporting guidance for derivative instruments, including certain derivative
instruments embedded in other contracts. The standard requires, among other
things, that all derivatives be carried on the balance sheet at fair value. The
standard also specifies hedge accounting criteria under which a derivative can
qualify for special accounting. In order to receive special accounting, the
derivative instrument must qualify as either a hedge of the fair value or the
variability of the cash flow of a qualified asset or liability. Special
accounting for qualifying hedges provides for matching the timing of gain or
loss recognition on the hedging instrument with the recognition of the
corresponding changes in value of the hedged item. SFAS No. 133 will be
effective
F-6
<PAGE>
for fiscal years beginning after June 15, 1999. Initial application for Hartford
Life Insurance Company will begin for the first quarter of the year 2000. While
Hartford Life Insurance Company is currently in the process of quantifying the
impact of SFAS No. 133, the Company is reviewing its derivative holdings in
order to take actions needed to minimize potential volatility, while at the same
time maintaining the economic protection needed to support the goals of its
business.
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". The SOP provides
guidance on accounting for the costs of internal use software and in determining
whether the software is for internal use. The SOP defines internal use software
as software that is acquired, internally developed, or modified solely to meet
internal needs and identifies stages of software development and accounting for
the related costs incurred during the stages. This statement is effective for
fiscal years beginning after December 15, 1998 and is not expected to have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The objective of this statement is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with owners. Comprehensive
income is the total of net income and all other nonowner changes in equity.
Accordingly, the Company has reported comprehensive income in the Consolidated
Statements of Changes in Stockholder's Equity.
In December 1997, the AICPA issued SOP No. 97-3 "Accounting by Insurance and
Other Enterprises for Insurance Related Assessments". This SOP provides guidance
on accounting by insurance and other enterprises for assessments related to
insurance activities. Specifically, the SOP provides guidance on when a guaranty
fund or other assessment should be recognized, how to measure the liability, and
what information should be disclosed. This SOP will be effective for fiscal
years beginning after December 15, 1998. Adoption of SOP 97-3 is not expected to
have a material impact on the Company's financial condition or results of
operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". The new standard requires public business
enterprises to disclose certain financial and descriptive information about
reportable operating segments in annual financial statements and in condensed
financial statements of interim periods. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and assessing performance. SFAS No. 131 also establishes
standards for related disclosures about products and services, geographic areas
and major customers. The Company adopted SFAS No. 131 in 1998. For additional
information, see Note 13.
On November 14, 1996, the EITF reached a consensus on Issue No. 96-12,
"Recognition of Interest Income and Balance Sheet Classification of Structured
Notes". This EITF 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 FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" which is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996. This statement established
criteria for determining whether transferred assets should be accounted for as
sales or secured borrowings. Adoption of SFAS No. 125 did not have a material
effect on the Company's financial condition or results of operations.
Effective January 1, 1996, Hartford Life Insurance Company adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of ". This statement establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed. Adoption of SFAS No. 121 did
not have a material effect on the Company's financial condition or results of
operations.
The Company's cash flows were not impacted by these changes in accounting
principles.
(C) REVENUE RECOGNITION
Revenues for investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance 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) INVESTMENTS
Hartford Life Insurance Company's investments in fixed maturities include bonds
and commercial paper which are considered "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 "net
F-7
<PAGE>
unrealized capital gains on securities, net of tax". Equity securities, which
include common and non-redeemable preferred stocks, are carried at fair values
with the after-tax difference from cost reflected in stockholder's equity.
Policy loans are carried at outstanding balance which approximates fair value.
Realized capital gains and losses on security transactions associated with the
Company's immediate participation guaranteed contracts are excluded from
revenues and deferred over the expected maturity of the securities, 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. Net realized
capital gains and losses, excluding those related to immediate participation
guaranteed contracts, are reported as a component of revenue and are determined
on a specific identification basis.
The Company's accounting policy for impairment 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, for securities expected to be sold, an other than
temporary impairment charge is recognized if the Company does not expect the
fair value of a security to recover to cost or amortized cost prior to the
expected date of sale. Once an impairment charge has been recorded, the Company
then continues to review the other than temporarily impaired securities for
additional impairment, if necessary.
(F) DERIVATIVE INSTRUMENTS
Hartford Life Insurance Company uses a variety of derivative 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 planned investment purchases or existing assets and
liabilities. The Company does not hold or issue derivative instruments for
trading purposes. Hartford Life Insurance Company's accounting for derivative
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", AICPA SOP 86-2, "Accounting for Options" and various EITF
pronouncements. Written options are used, in all cases in conjunction with other
assets and derivatives, as part of the Company's asset and liability management
strategy. Derivative instruments are carried at values consistent with the asset
or liability being hedged. Derivative instruments used to hedge fixed maturities
or equity securities are carried at fair value with the after-tax difference
from cost reflected in Stockholder's Equity. Derivative instruments used to
hedge other invested assets or liabilities are carried at cost. For a discussion
of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
issued in June 1998, see (b) Changes in Accounting Principles.
Derivative instruments must be designated at inception as a hedge and measured
for effectiveness both at inception and on an ongoing basis. Hartford Life
Insurance Company's correlation threshold for hedge designation is 80% to 120%.
If correlation, which is assessed monthly and measured based on a rolling three
month average, falls outside the 80% to 120% range, hedge accounting will be
terminated. Derivative instruments used to create a synthetic asset must meet
synthetic accounting criteria including designation at inception and consistency
of terms between the synthetic and the instrument being replicated. Consistent
with industry practice, synthetic instruments are accounted for like the
financial instrument it is intended to replicate. Derivative instruments which
fail to meet risk management criteria, subsequent to acquisition, 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 investment of future receipt of product cash flows are deferred and, at the
time of the ultimate investment 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 contract futures are closed, except for futures used in duration
hedging which are deferred and basis adjusted on a quarterly basis. The basis
adjustments are amortized into net investment income over the remaining asset
life.
Open forward commitment contracts are marked to market through stockholder's
equity. Such contracts are accounted for at settlement by recording the purchase
of the specified securities at the previously committed price. Gains or losses
resulting from the termination of forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.
The cost of options entered into as part of a risk management strategy are basis
adjusted to the underlying asset or liability and amortized over the remaining
life of the option. Gains or losses on expiration or termination are adjusted
into the basis of the underlying asset or liability and amortized over the
remaining asset life.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to investment 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 net investment income. Interest rate swaps purchased in
anticipation of an asset purchase (anticipatory transaction) are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
Premiums paid on purchased floor or cap agreements and the premium received on
issued cap or floor agreements (used for risk management) are adjusted into the
basis of the applicable asset and amortized over the asset life. Gains or losses
on termination of such positions are adjusted into the
F-8
<PAGE>
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. Changes in the spot rate of instruments designated
as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustments component of stockholder's equity. Cash flows
from futures, options, and swaps, accounted for as hedges, are included with the
cash flows of the item being hedged.
(G) SEPARATE ACCOUNTS
Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes the investment risk and rewards, and guaranteed separate account assets,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder.
(H) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, usually 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
charges, 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
re-estimated and adjusted by a cumulative charge or credit to income.
Acquisition costs and their related deferral are included in the Company's other
expenses as follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Commissions $ 1,069 $ 976 $ 848
Deferred acquisition costs (891) (862) (823)
Other 588 472 402
-------------------------------
TOTAL OTHER EXPENSES $ 766 $ 586 $ 427
-------------------------------
</TABLE>
(I) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that enable
the policyholder to participate in the earnings on that participating block of
business. The participating insurance in force accounted for 71%, 55% and 44% in
1998, 1997 and 1996, respectively, of total insurance in force.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
For the Years Ended December
31,
<S> <C> <C> <C>
-------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Interest income from fixed maturities $ 952 $ 932 $ 918
Interest income from policy loans 789 425 477
Income from other investments 32 26 15
-------------------------------
Gross investment income 1,773 1,383 1,410
Less: Investment expenses 14 15 13
-------------------------------
NET INVESTMENT INCOME $ 1,759 $ 1,368 $ 1,397
-------------------------------
</TABLE>
F-9
<PAGE>
(B) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
For the Years Ended December 31,
<S> <C> <C> <C>
-----------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-----------------------------------
Fixed maturities $ (28) $ (7) $ (201)
Equity securities 21 12 2
Real estate and other 5 (1) (4)
Less: Decrease in liability to policyholders for realized capital gains -- -- (10)
-----------------------------------
NET REALIZED CAPITAL (LOSSES) GAINS $ (2) $ 4 $ (213)
-----------------------------------
</TABLE>
(C) NET UNREALIZED CAPITAL (LOSSES) GAINS ON EQUITY SECURITIES
<TABLE>
<CAPTION>
For the Years Ended December 31,
<S> <C> <C> <C>
-------------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------------
Gross unrealized capital gains $ 2 $ 14 $ 13
Gross unrealized capital losses (1) -- (1)
-------------------------------------
Net unrealized capital gains 1 14 12
Deferred income tax expense -- 5 4
-------------------------------------
Net unrealized capital gains, net of tax 1 9 8
Balance -- beginning of year 9 8 1
-------------------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS ON EQUITY SECURITIES $ (8) $ 1 $ 7
-------------------------------------
</TABLE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
For the Years Ended December
31,
<S> <C> <C> <C>
-------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Gross unrealized capital gains $ 421 $ 371 $ 386
Gross unrealized capital losses (108) (80) (341)
Unrealized capital gains credited to policyholders (32) (30) (11)
-------------------------------
Net unrealized capital gains 281 261 34
Deferred income tax expense 98 91 12
-------------------------------
Net unrealized capital gains, net of tax 183 170 22
Balance -- beginning of year 170 22 (58)
-------------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES $ 13 $ 148 $ 80
-------------------------------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1998
<S> <C> <C> <C> <C>
---------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 121 $ 2 $ -- $ 123
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,001 23 (8) 1,016
States, municipalities and political subdivisions 165 8 -- 173
International governments 393 26 (7) 412
Public utilities 844 33 (3) 874
All other corporate including international 5,469 260 (42) 5,687
All other corporate -- asset backed 4,155 58 (42) 4,171
Short-term investments 1,847 -- -- 1,847
Certificates of deposit 510 11 (6) 515
---------------------------------------------------
TOTAL FIXED MATURITIES $14,505 $421 $(108) $14,818
---------------------------------------------------
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
As of December 31, 1997
<S> <C> <C> <C> <C>
---------------------------------------------------
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------------
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 217 $ 3 $ (1) $ 219
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,175 64 (35) 1,204
States, municipalities and political subdivisions 211 7 (1) 217
International governments 376 20 (3) 393
Public utilities 871 26 (3) 894
All other corporate including international 5,033 200 (25) 5,208
All other corporate -- asset backed 4,091 41 (8) 4,124
Short-term investments 1,318 -- -- 1,318
Certificates of deposit 593 10 (4) 599
---------------------------------------------------
TOTAL FIXED MATURITIES $13,885 $371 $(80) $14,176
---------------------------------------------------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments as of
December 31, 1998 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. 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 the securities. These estimates are developed using
prepayment speeds provided in broker consensus data. Such estimates are derived
from prepayment speeds experienced at the interest rate levels projected for the
applicable underlying collateral and can be expected to vary from actual
experience.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
<S> <C> <C>
------------------------
MATURITY
One year or less $ 3,047 $ 3,116
Over one year through five years 4,796 4,843
Over five years through ten years 3,242 3,318
Over ten years 3,420 3,541
------------------------
TOTAL $ 14,505 $ 14,818
------------------------
</TABLE>
Sales of fixed maturities, excluding short-term fixed maturities, for the years
ended December 31, 1998, 1997 and 1996 resulted in proceeds of $3.2 billion,
$4.2 billion and $3.5 billion, gross realized capital gains of $103, $169 and
$87, gross realized capital losses (including writedowns) of $131, $176 and
$298, respectively. In 1996, gross realized capital losses includes an other
than temporary impairment of $137 related to the Company's block of guaranteed
investment contract business written prior to 1995 which could not recover to
amortized cost prior to sale. Sales of equity security investments for the years
ended December 31, 1998, 1997 and 1996 resulted in proceeds of $35, $132 and $74
and gross realized capital gains of $21, $12 and $2, respectively, and no gross
realized capital losses for all periods.
(F) CONCENTRATION OF CREDIT RISK
The Company is not exposed to any significant concentration of credit risk in
fixed maturities of a single issuer greater than 10% of stockholder's equity.
(G) DERIVATIVE INSTRUMENTS
Hartford Life Insurance Company utilizes a variety of derivative instruments,
including swaps, caps, floors, forwards and exchange traded futures and options,
in accordance with Company policy and in order to achieve one of three Company
approved objectives: to hedge risk arising from interest rate, price or currency
exchange rate volatility; to manage liquidity; or, to control transactions
costs. The Company utilizes derivative instruments to manage market risk through
four principal risk management strategies: hedging anticipated transactions,
hedging liability instruments, hedging invested assets and hedging portfolios of
assets and/or liabilities. The Company does not trade in these instruments for
the express purpose of earning trading profits.
Hartford Life Insurance Company maintains a derivatives counterparty exposure
policy which establishes market-based credit limits, favors long-term financial
stability and creditworthiness, and typically requires credit enhancement/credit
risk reducing agreements. Credit risk is measured as the amount owed to the
Company based on current market conditions and potential payment obligations
between the Company and its counterparties. Credit exposures are quantified
weekly and netted, and
F-11
<PAGE>
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.
Hartford Life Insurance Company's derivative program is monitored by an internal
compliance unit and is reviewed by senior management and Hartford Life's Finance
Committee of the Board of Directors. Notional amounts, which represent the basis
upon which pay or receive amounts are calculated and are not reflective of
credit risk, pertaining to derivative financial instruments (excluding the
Company's guaranteed separate account derivative investments), totaled $6.2
billion and $6.5 billion ($3.9 billion and $4.6 billion related to the Company's
investments, $2.3 billion and $1.9 billion on the Company's liabilities) as of
December 31, 1998 and 1997, respectively.
The tables below provide a summary of derivative instruments held by Hartford
Life Insurance Company as of December 31, 1998 and 1997, segregated by major
investment and liability category:
<TABLE>
<CAPTION>
1998 -- Amount Hedged (Notional Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
<CAPTION>
Foreign
Total Issued Purchased Interest Currency Total
Carrying Caps & Caps & Futures Rate Swaps Notional
ASSETS HEDGED Value Floors Floors (2) Swaps (3) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
Asset backed securities (excluding
inverse floaters and anticipatory) $ 5,163 $ -- $ 188 $ 3 $ 885 $-- $ 1,076
Inverse floaters (1) 24 44 55 -- -- -- 99
Anticipatory (4) -- -- -- -- 235 -- 235
Other bonds and notes 7,683 461 597 18 1,300 90 2,466
Short-term investments 1,948 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments 6,979 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 21,797 505 840 21 2,420 90 3,876
----------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $ 19,615 1,100 50 -- 1,195 -- 2,345
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 1,605 $ 890 $ 21 $ 3,615 $90 $ 6,221
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (6) $ 19 $ -- $ 27 $(7) $ 33
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997 -- Amount Hedged (Notional Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
<CAPTION>
Foreign
Total Issued Purchased Interest Currency Total
Carrying Caps & Caps & Rate Swaps Notional
ASSETS HEDGED Value Floors Floors Futures (2) Swaps (3) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
Asset backed securities
(excluding inverse floaters and
anticipatory) $ 5,253 $ 500 $ 1,404 $ 28 $ 221 $ -- $2,153
Inverse floaters (1) 75 47 80 -- 25 -- 152
Anticipatory (4) -- -- -- -- -- -- --
Other bonds and notes 7,531 462 460 22 1,258 91 2,293
Short-term investments 1,317 -- -- -- -- -- --
--------------------------------------------------------------------------
TOTAL FIXED MATURITIES 14,176 1,009 1,944 50 1,504 91 4,598
Equity securities, policy loans and
other investments 3,983 -- -- -- -- -- --
--------------------------------------------------------------------------
TOTAL INVESTMENTS $ 18,159 1,009 1,944 50 1,504 91 4,598
--------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $ 21,034 10 150 -- 1,747 -- 1,907
--------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 1,019 $ 2,094 $ 50 $ 3,251 $ 91 $6,505
--------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (8) $ 23 $ -- $ 19 $ (6 ) $ 28
--------------------------------------------------------------------------
</TABLE>
(1) Inverse floaters are variations of collateralized mortgage obligations
(CMO's) for which the coupon rates move inversely with an index rate such as the
London Interbank Offered Rate (LIBOR). The risk to principal is considered
F-12
<PAGE>
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, caps and floors.
(2) As of December 31, 1998 and 1997, approximately 5% and 44% ,
respectively, of the notional futures contracts expire within one year.
(3) As of December 31, 1998 and 1997, approximately 11% and 16%,
respectively, of foreign currency swaps expire within one year.
(4) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. As of December 31, 1998 and 1997, the Company had no
deferred gains for interest rate swaps. During 1998, $1.5 in deferred gains were
basis adjusted.
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
<S> <C> <C> <C> <C>
----------------------------------------------------------------
<CAPTION>
December 31, 1997 Maturities/ December 31, 1998
Notional Amount Additions Terminations (1) Notional Amount
<S> <C> <C> <C> <C>
----------------------------------------------------------------
Caps $1,239 $1,000 $ 327 $1,912
Floors 1,864 -- 1,281 583
Swaps/Forwards 3,342 1,838 1,475 3,705
Futures 50 8 37 21
Options 10 -- 10 --
----------------------------------------------------------------
TOTAL $6,505 $2,846 $3,130 $6,221
----------------------------------------------------------------
BY STRATEGY
----------------------------------------------------------------
Liability $1,907 $1,099 $ 661 $2,345
Anticipatory -- 242 7 235
Asset 1,805 1,260 667 2,398
Portfolio 2,793 245 1,795 1,243
----------------------------------------------------------------
TOTAL $6,505 $2,846 $3,130 $6,221
----------------------------------------------------------------
</TABLE>
(1) During 1998, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosure about Fair Value of Financial Instruments" requires
disclosure of fair value information of financial instruments. For certain
financial instruments where quoted market prices are not available, other
independent valuation techniques and assumptions are used. Because considerable
judgment is used, these estimates are not necessarily indicative of amounts that
could be realized in a current market exchange. SFAS No. 107 excludes certain
financial instruments from disclosure, including insurance contracts. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities approximates
those quotations published by applicable stock exchanges or received from other
reliable sources.
For policy loans, carrying amounts approximate fair value.
Fair value for other invested assets primarily consist of partnerships and
trusts that are based on external market valuations from partnership and trust
management as well as mortgage loans where carrying amounts approximate fair
value.
Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is validated through periodic comparison to dealer quoted prices.
F-13
<PAGE>
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1998 and 1997 were as follows:
<TABLE>
<S> <C> <C> <C> <C>
1998 1997
--------------------------------------
<CAPTION>
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
--------------------------------------
ASSETS
Fixed maturities $ 14,818 $14,818 $ 14,176 $14,176
Equity securities 31 31 180 180
Policy loans 6,684 6,684 3,756 3,756
Other investments 264 309 47 91
LIABILITIES
Other policyholder funds (1) $ 11,709 $11,726 $ 11,769 $11,755
--------------------------------------
</TABLE>
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $90.3 billion and $69.1 billion as of December 31, 1998 and
1997, respectively, which are reported at fair value. Separate account assets,
which are segregated from other investments, reflect two categories of risk
assumption: non-guaranteed separate accounts totaling $80.6 billion and $58.6
billion as of December 31, 1998 and 1997, respectively, wherein the policyholder
assumes the investment risk, and guaranteed separate accounts totaling $9.7 and
$10.5 billion as of December 31, 1998 and 1997, respectively, wherein Hartford
Life Insurance Company contractually guarantees either a minimum return or
account value to the policyholder. Included in non-guaranteed separate account
assets were policy loans totaling $1.8 billion and $1.9 billion as of December
31, 1998 and 1997, respectively. Net investment income (including net realized
capital 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 and other revenues were $908, $699 and $538 in
1998, 1997 and 1996, respectively. The guaranteed separate accounts include
fixed market value adjusted (MVA) individual annuity and modified guaranteed
life insurance. The average credited interest rate on these contracts was 6.6%
and 6.5% as of December 31, 1998 and 1997, respectively. The assets that support
these liabilities were comprised of $9.5 billion and $10.2 billion in fixed
maturities as of December 31, 1998 and 1997, respectively. The portfolios are
segregated from other investments and are managed to minimize liquidity and
interest rate risk. In order to minimize the risk of disintermediation
associated with early withdrawals, fixed MVA 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 $40 and $119 in carrying value and $3.5 billion and
$3.0 billion in notional amounts as of December 31, 1998 and 1997, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
For the Years Ended December
31,
<S> <C> <C> <C>
-------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Statutory net income $ 211 $ 214 $ 144
-------------------------------
Statutory surplus $ 1,676 $ 1,441 $ 1,207
-------------------------------
</TABLE>
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 1999
is estimated to be $168.
Hartford Life Insurance Company and its domestic insurance subsidiaries prepare
their statutory financial statements in accordance with accounting practices
prescribed by the State of Connecticut. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners, as well as state laws, regulations, and general administrative
rules.
7. STOCK COMPENSATION PLANS
Hartford Life Insurance Company's employees are included in the 1997 Hartford
Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during the
second quarter of 1997. Under the Plan, options granted may be either
non-qualified options or incentive stock options qualifying under Section 422A
of the Internal Revenue Code. The aggregate number of shares of Class A Common
Stock which may be awarded in any one year shall be subject to an annual limit.
The maximum number of shares of Class A Common Stock which may be granted under
the Plan in each year shall be 1.5% of the total issued and outstanding shares
of Hartford Life Class A Common Stock and treasury stock as reported in the
Annual Report on Hartford
F-14
<PAGE>
Life's Form 10-K for the preceding year plus unused portions of such limit from
prior years. In addition, no more than 5 million shares of Class A Common Stock
shall be cumulatively available for awards of incentive stock options under the
Plan, and no more than 20% of the total number of shares on a cumulative basis
shall be available for restricted stock and performance shares.
All options granted have an exercise price equal to the market price of Hartford
Life's stock on the date of grant and an option's maximum term is ten years.
Certain nonperformance based options become exercisable upon the attainment of
specified market price appreciation of Hartford Life's common shares or at seven
years after the date of grant, while the remaining nonperformance based options
become exercisable over a three year period commencing with the date of grant.
Also included in the Plan are long-term performance awards which become payable
upon the attainment of specific performance goals achieved over a three year
period.
During the second quarter of 1997, Hartford Life established the Hartford Life,
Inc. Employee Stock Purchase Plan (ESPP). Under this plan, eligible employees of
Hartford Life and the Company may purchase Class A Common Stock of Hartford Life
at a 15% discount from the lower of the market price at the beginning or end of
the quarterly offering period. Hartford Life may sell up to 2,700,000 shares of
stock to eligible employees. Hartford Life sold 121,943 and 54,316 shares under
the ESPP in 1998 and 1997, respectively. The weighted average fair value of the
discount under the ESPP was $13.80 per share in 1998 and $9.63 per share in
1997.
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
Hartford Life Insurance Company's employees are included in The Hartford'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 U.S. 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 $6 in 1998 and $5
in both 1997 and 1996.
The Company also provides, through The Hartford, 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 to the results of operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003. Increasing
the health care trend rates by one percent per year would have an immaterial
impact on the accumulated postretirement benefit obligation and the annual
expense. To the extent that the actual experience differs from the inherent
assumptions, the effect will be amortized over the average future service of
covered employees.
(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in The
Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 and $2 in 1998 and 1997, respectively.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers, including its
parent, HLA, 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. Failure of reinsurers to honor their obligations could result in
losses to the Company. The Company evaluates the financial condition of its
reinsurers and monitors concentration of credit risk.
Net premiums and other considerations were comprised of the following:
<TABLE>
<CAPTION>
For the Years Ended December
31,
<S> <C> <C> <C>
-------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
-------------------------------
Gross premiums $ 2,722 $ 2,164 $ 2,138
Assumed 150 159 190
Ceded (654) (686) (623)
-------------------------------
NET PREMIUMS AND OTHER CONSIDERATIONS $ 2,218 $ 1,637 $ 1,705
-------------------------------
</TABLE>
F-15
<PAGE>
The Company ceded approximately $128, $76 and $100 of group life premium to HLA
in 1998, 1997 and 1996, respectively, representing $38.4 billion, $33.6 billion
and $33.3 billion of insurance in force, respectively. The Company ceded $383,
$339 and $318 of accident and health premium to HLA in 1998, 1997 and 1996,
respectively. The Company assumed $82, $89 and $101 of premium in 1998, 1997 and
1996, respectively, representing $7.4 billion, $8.2 billion and $8.5 billion of
individual life insurance in force, respectively, from HLA.
Life reinsurance recoveries, which reduce death and other benefits, approximated
$97, $158 and $140 for the years ended December 31, 1998, 1997 and 1996,
respectively.
Hartford Life Insurance Company has no significant reinsurance-related
concentrations of credit risk.
10. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of Hartford Life,
the Company will be included for Federal income tax purposes in the affiliated
group of which The Hartford is the common parent. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated Federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return. The Company's effective tax rate was
35%, 36% and 35% in 1998, 1997 and 1996, respectively.
Income tax expense is as follows:
<TABLE>
<CAPTION>
For the Years Ended December
31,
<S> <C> <C> <C>
-------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Current $ 307 $ 162 $ 118
Deferred (119) 5 (98)
-------------------------------
INCOME TAX EXPENSE $ 188 $ 167 $ 20
-------------------------------
</TABLE>
A reconciliation of the tax provision at the U.S. Federal statutory rate to the
provision for income taxes is as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
<S> <C> <C> <C>
---------------------------------
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
---------------------------------
Tax provision at the U.S. Federal statutory rate $ 188 $ 164 $ 20
Other -- 3 --
---------------------------------
TOTAL $ 188 $ 167 $ 20
---------------------------------
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C> <C>
-------------------------------
Tax basis deferred policy acquisition costs $ 751 $ 639
Financial statement deferred policy acquisition costs and reserves 103 69
Employee benefits 4 8
Net unrealized capital gains on securities (98) (96)
Investments and other (296) (272)
-------------------------------
TOTAL $ 464 $ 348
-------------------------------
</TABLE>
Hartford Life Insurance Company had a current tax payable of $65 and $64 as of
December 31, 1998 and 1997, respectively.
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax Act
of 1959 permitted the deferral from taxation of a portion of statutory income
under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and, based on current tax law,
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, 1998 was $104.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with HA&I and its affiliates relate principally to
tax settlements, reinsurance, insurance coverage, rental and service fees,
payment of dividends and capital contributions. In addition, certain affiliated
insurance
F-16
<PAGE>
companies purchased group annuity contracts from the Company to 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 The Hartford. 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 type, are allocated based on either a
percentage of direct expenses or on utilization. Indirect expenses allocated to
the Company by The Hartford were $47, $34 and $40 in 1998, 1997 and 1996,
respectively. Management believes that the methods used are reasonable.
12. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
Hartford Life Insurance Company is involved in pending and threatened litigation
in the normal course of its business in which claims for monetary and punitive
damages have been asserted. Although there can be no assurances, at the present
time the Company does not anticipate that the ultimate liability arising from
such pending or threatened litigation, after consideration of provisions made
for potential losses and costs of defense, will have a material adverse effect
on the financial condition or operating results of the Company.
(B) GUARANTY FUNDS
Under insurance guaranty fund laws 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. Part of the assessments paid
by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $9, $15 and $11 in 1998, 1997 and 1996,
respectively, of which $4, $4 and $5, respectively, were estimated to be
creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $7 in both
1998 and 1997 and $3 in 1996. Future minimum rental commitments are as follows:
<TABLE>
<S> <C>
1999 $ 7
2000 12
2001 12
2002 13
2003 13
Thereafter 74
---------
TOTAL $ 131
---------
</TABLE>
Rental expense is recognized on a level basis over the term of the primary
sublease, which expires on December 31, 2009, and amounted to approximately $9
in both 1998 and 1997 and $8 in 1996.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the Internal
Revenue Service. Hartford Life is currently under audit for the years 1993
through 1995, with the audit for the years 1996 through 1997 expected to begin
during early 1999. Management believes that adequate provision has been made in
the financial statements for items that may result from tax examinations and
other tax related matters.
(E) INVESTMENTS
As of December 31, 1998, Hartford Life Insurance Company held $71 of asset
backed securities securitized and serviced by Commercial Financial Services,
Inc. (CFS) of which $50 were included in the Company's general account and $21
in the Company's guaranteed separate account. In October 1998, the Company
became aware of allegations of improper activities at CFS. On December 11, 1998,
CFS filed for protection under Chapter 11 of the Bankruptcy Code. As of December
31, 1998, CFS continues to service the asset backed securities, which remain
current on payments of principal and interest, however, the Company does not
expect to recover all of its principal investment. Based upon information
available in the fourth quarter 1998, the Company recognized a $25, after-tax,
writedown related to its holdings in CFS of which $18 was related to the
Company's general account assets. The ultimate realizable amount depends on the
outcome of the bankruptcy of CFS and these estimates are therefore subject to
material change as new information becomes available. The Company is presently
unable to determine the amount of further potential loss, if any, related to the
securities.
F-17
<PAGE>
13. SEGMENT INFORMATION
Hartford Life Insurance Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", during the fourth quarter of
1998. This statement replaces SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", and establishes new standards for reporting information
about operating segments in annual financial statements and in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
This statement requires that the reportable operating segments be based on the
Company's internal operations. On this basis, Hartford Life Insurance Company's
segments represent strategic operations which offer different products and
services as well as serve different markets.
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual variable annuities,
fixed market value adjusted (MVA) annuities and fixed and variable immediate
annuities, mutual funds, deferred compensation and retirement plan services,
structured settlement contracts and other special purpose annuity contracts.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest-sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following table outlines summarized financial information
concerning the Company's segments. The information for 1997 and 1996 has been
restated to conform to the 1998 presentation.
<TABLE>
<CAPTION>
Investment Individual
1998 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
-----------------------------------------------
Total revenues $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income 736 181 793 49 1,759
Amortization of deferred policy acquisition costs 326 105 -- -- 431
Income tax expense (benefit) 145 35 12 (4) 188
Net income (loss) 270 64 24 (8) 350
Assets 87,207 5,228 22,631 3,197 118,263
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1997 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
-----------------------------------------------
Total revenues $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income 739 164 429 36 1,368
Amortization of deferred policy acquisition costs 250 83 -- 2 335
Income tax expense 111 30 15 11 167
Net income 206 55 27 14 302
Assets 72,288 4,914 17,800 2,743 97,745
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1996 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
-----------------------------------------------
Total revenues $ 1,002 $ 440 $ 1,360 $ 87 $ 2,889
Net investment income 684 153 480 80 1,397
Amortization of deferred policy acquisition costs 174 60 -- -- 234
Income tax expense (benefit) (42 ) 24 11 27 20
Net income (loss) (77 ) 44 26 45 38
Assets 57,410 3,753 14,222 2,377 77,762
</TABLE>
F-18
<PAGE>
14. QUARTERLY RESULTS FOR 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------
<CAPTION>
1998 1997 1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
Revenues $ 915 $ 651 $ 721 $ 645 $ 826 $ 679 $ 1,513 $ 1,034
Benefits, claims and expenses 787 550 591 536 688 550 1,371 904
Net income 83 63 85 74 89 81 93 84
</TABLE>
F-19
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1998
(IN MILLIONS)
--------------------------------------------------------
<TABLE>
<CAPTION>
Amount at
which shown
Fair on Balance
Type of Investment Cost Value Sheet
<S> <C> <C> <C>
--------------------------------
FIXED MATURITIES
Bonds and Notes
U. S. Government and Government agencies
and authorities
(guaranteed and sponsored) $ 121 $ 123 $ 123
U. S. Government and Government agencies
and authorities
(guaranteed and sponsored) -- asset backed 1,001 1,016 1,016
States, municipalities and political
subdivisions 165 173 173
Foreign governments 393 412 412
Public utilities 844 874 874
All other corporate including international 5,469 5,687 5,687
All other corporate -- asset backed 4,155 4,171 4,171
Short-term investments 1,847 1,847 1,847
Certificates of deposit 510 515 515
--------------------------------
TOTAL FIXED MATURITIES 14,505 14,818 14,818
--------------------------------
EQUITY SECURITIES
Common Stocks
Industrial and miscellaneous 30 31 31
--------------------------------
TOTAL EQUITY SECURITIES 30 31 31
--------------------------------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 14,535 14,849 14,849
--------------------------------
Policy Loans 6,684 6,684 6,684
--------------------------------
OTHER INVESTMENTS
Mortgage loans on real estate 206 207 206
Other invested assets 58 102 58
--------------------------------
TOTAL OTHER INVESTMENTS 264 309 264
--------------------------------
TOTAL INVESTMENTS $21,483 $21,842 $21,797
--------------------------------
</TABLE>
F-20
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN MILLIONS)
--------------------------------------------------------
<TABLE>
<CAPTION>
Deferred
Policy Future Other Premiums Net
Acquisition Policy Policyholder and Other Investment
Segment Costs Benefits Funds Considerations Income
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------
1998
Investment Products $2,823 $2,407 $ 9,194 $1,043 $ 736
Individual Life 931 466 2,307 363 181
Corporate Owned Life Insurance -- 225 8,097 774 793
Other -- 497 17 38 49
------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,754 $3,595 $19,615 $2,218 $1,759
------------------------------------------------------------------
1997
------------------------------------------------------------------
Investment Products $2,478 $2,070 $ 9,620 $ 771 $ 739
Individual Life 837 392 2,182 323 164
Corporate Owned Life Insurance -- 56 9,259 551 429
Other -- 541 (27) (8) 36
------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,315 $3,059 $21,034 $1,637 $1,368
------------------------------------------------------------------
1996
------------------------------------------------------------------
Investment Products $2,030 $1,526 $10,140 $ 537 $ 684
Individual Life 730 346 2,160 287 153
Corporate Owned Life Insurance -- -- 9,823 880 480
Other -- 602 11 1 80
------------------------------------------------------------------
CONSOLIDATED OPERATIONS $2,760 $2,474 $22,134 $1,705 $1,397
------------------------------------------------------------------
<CAPTION>
Net Benefits, Amortization
Capital Claim Policy
Gains Adjustment Acquisition Dividends to Other
Segment (Losses) Expenses Costs Policyholders Expenses
<S> <C> <C> <C> <C> <C>
1998
Investment Products $ -- $ 670 $326 $ -- $ 368
Individual Life (1) 262 105 -- 77
Corporate Owned Life Insurance -- 924 -- 329 278
Other (1) 55 -- -- 43
CONSOLIDATED OPERATIONS $ (2) $1,911 $431 $329 $ 766
1997
Investment Products $ -- $ 677 $250 $ -- $ 266
Individual Life -- 242 83 -- 77
Corporate Owned Life Insurance -- 439 -- 240 259
Other 4 21 2 -- (16)
CONSOLIDATED OPERATIONS $ 4 $1,379 $335 $240 $ 586
1996
Investment Products $(219) $ 744 $175 $ -- $ 203
Individual Life -- 245 59 -- 68
Corporate Owned Life Insurance -- 545 -- 634 144
Other 6 1 -- 1 12
CONSOLIDATED OPERATIONS $(213) $1,535 $234 $635 $ 427
</TABLE>
F-21
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
--------------------------------------------------------
<TABLE>
<CAPTION>
Ceded to Assumed From Percentage
Gross Other Other Net of Amount
Amount Companies Companies Amount Assumed to Net
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1998
Life insurance in force $326,400 $ 200,782 $ 18,289 $143,907 12.7%
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,329 $ 271 $ 142 $ 2,200 6.5%
Accident and health insurance 393 383 8 18 44.4%
-------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,722 $ 654 $ 150 $ 2,218 6.8%
-------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1997
-------------------------------------------------------------------
Life insurance in force $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
-------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance 346 346 2 2 100.0%
-------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,164 $ 686 $ 159 $ 1,637 9.7%
-------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1996
-------------------------------------------------------------------
Life insurance in force $177,094 $ 106,146 $ 31,957 $102,905 31.1%
-------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 1,801 $ 298 $ 169 $ 1,672 10.1%
Accident and health insurance 337 325 21 33 63.6%
-------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------------------------------------------------------------------
</TABLE>
F-22
