<PAGE>
HARTFORD LIFE INSURANCE COMPANY
SELECT DIMENSIONS LIFE II
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
P.O. Box 2999
Hartford, Connecticut 06104-2999
Telephone: 1-800-231-5453
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This Prospectus describes information you should know before you purchase Select
Dimensions Life II. Please read it carefully.
Select Dimensions Life II is a modified single premium variable life insurance
policy. It is:
x Modified single premium, because you make one single premium payment, and
under certain limited circumstances, you may make additional premium
payments.
x Variable, because the value of your life insurance policy will fluctuate with
the performance of the underlying portfolios.
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 Portfolios are not the same mutual funds that you buy through
your stockbroker or through a retail mutual fund. They may have similar
investment strategies and the same portfolio managers as retail mutual funds.
This life insurance policy offers you Portfolios with investment strategies
ranging from conservative to aggressive and you may pick those Portfolios that
meet your investment style.
The Sub-Accounts and the Portfolios are listed below:
- - Money Market Sub-Account which purchases shares of Money Market Portfolio of
the Morgan Stanley Dean Witter Select Dimensions Investment Series;
- - North American Government Securities Sub-Account which purchases shares of
North American Government Securities Portfolio of the Morgan Stanley Dean
Witter Select Dimensions Investment Series;
- - Diversified Income Sub-Account which purchases shares of Diversified Income
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series;
- - Balanced Growth Sub-Account which purchases shares of Balanced Growth
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series;
- - Utilities Sub-Account which purchases shares of Utilities Portfolio of the
Morgan Stanley Dean Witter Select Dimensions Investment Series;
- - Dividend Growth Sub-Account which purchases shares of Dividend Growth
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series;
- - Value-added Market Sub-Account which purchases shares of Value-Added Market
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series;
- - Growth Sub-Account which purchases shares of Growth Portfolio of the Morgan
Stanley Dean Witter Select Dimensions Investment Series;
- - American Opportunities Sub-Account which purchases shares of American
Opportunities Portfolio of the Morgan Stanley Dean Witter Select Dimensions
Investment Series (until May 1, 1999 known as the American Value Sub-Account);
- - Mid-Cap Growth Sub-Account which purchases shares of Mid-Cap Growth Portfolio
of the Morgan Stanley Dean Witter Select Dimensions Investment Series;
- - Global Equity Sub-Account which purchases shares of Global Equity Portfolio of
the Morgan Stanley Dean Witter Select Dimensions Investment Series;
- - Developing Growth Sub-Account which purchases shares of Developing Growth
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series;
1 - PROSPECTUS
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- - Emerging Markets Sub-Account which purchases shares of Emerging Markets
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series;
- - High Yield Sub-Account which purchases shares of High Yield Portfolio of the
Morgan Stanley Dean Witter Universal Funds, Inc.;
- - Mid Cap Value Sub-Account which purchases shares of Mid Cap Value Portfolio of
the Morgan Stanley Dean Witter Universal Funds, Inc.;
- - Emerging Markets Debt Sub-Account which purchases shares of Emerging Markets
Debt Portfolio of the Morgan Stanley Dean Witter Universal Funds, Inc.;
- - Strategic Stock Sub-Account which purchases shares of Strategic Stock
Portfolio of the Van Kampen Life Investment Trust;
- - Enterprise Sub-Account which purchases shares of Enterprise Portfolio of the
Van Kampen Life Investment Trust.
If you decide to buy this life insurance policy, you should keep this prospectus
for your records. Although we file the Prospectus with the Securities and
Exchange Commission, the Commission doesn't approve or disapprove these
securities or determine if the information is truthful or complete. Anyone who
represents that the Securities and Exchange Commission ("SEC") does these things
may be guilty of a criminal offense.
You can call us at 1-800-231-5453 to ask us questions, or to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this life insurance policy and, like this
prospectus, is filed with the Securities and Exchange Commission.
We file other information with the Securities and Exchange Commission. You may
read and copy any document we file at the SEC's public reference room in
Washington, DC 20549-6009. Please call the SEC at 1-800-SEC-0330 for further
information. Our SEC filings, including this prospectus, are also available to
the public at the SEC's web site at http://www.sec.gov.
This life insurance policy IS NOT:
- - a bank deposit or obligation
- - federally insured
- - endorsed by any bank or governmental agency
- - available for sale in all states
Prospectus Dated: May 3, 1999
2 - PROSPECTUS
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TABLE OF CONTENTS
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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 Portfolios 7
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Charges and Deductions 10
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Your Policy 12
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Premiums 13
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Death Benefits and Policy Values 14
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Making Withdrawals From Your Policy 16
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Loans 17
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Lapse and Reinstatement 17
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Federal Tax Considerations 18
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Legal Proceedings 21
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Other Matters 21
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Glossary of Special Terms 23
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Appendix A: Special Information for Policies Purchased in New York 24
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3 - PROSPECTUS
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SUMMARY OF BENEFITS AND RISKS
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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 portfolios.
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 portfolios 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 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 portfolios. 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.
4 - PROSPECTUS
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FEE TABLE
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The following tables describes the MAXIMUM fees and expenses that you will pay
when buying, owning, and surrendering the policy. The first table describes the
maximum fees and expenses that you will pay at the time that you surrender the
policy.
SURRENDER FEES
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POLICIES FROM WHICH
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED CHARGE IS DEDUCTED
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Surrender Charges When you fully or A percentage of the amount surrendered, not to exceed All, if the surrender is
partially surrender your the premium payments, depending on the Policy Year, in subject to a charge.
policy. which the premium payment was made.
The percentage is as follows:
Policy Year Percentage
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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 Upon surrender or partial A percentage of the Account Value depending on the Only policies which elect
Charge surrender of the policy. Policy Year the surrender takes place. Option 1.
The percentage is as follows:
Policy Year Percentage
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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%
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5 - PROSPECTUS
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The next table describes the MAXIMUM fees and expenses that you will pay
periodically during the time that you own the policy, not including Portfolio
fees and expenses.
ANNUAL CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
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POLICIES FROM WHICH CHARGE IS
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED DEDUCTED
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Cost of Insurance Monthly. Individualized depending All
Charges on age, sex and other
factors.
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Mortality and Monthly. - Under Option 1: .90% All
Expense Risk (annualized) of
Charge 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 Under Option 1: Monthly. - Under Option 1: .40% All
Charge (annualized) of Account
Value for Policy Years
1-10
Under Option 2: Receipt - Under Option 2: 4% of
of Premium Payment. each premium payment in
all Policy Years
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Annual On Policy Anniversary $30.00 Only policies with an Account
Maintenance Fee Date or upon surrender of Value of less than $50,000 on
the policy. the Policy Anniversary Date
or date of surrender.
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Administrative Monthly. .40% (annualized) of All
Charge Sub-Account Value
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The next table describes the Portfolio 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 Portfolios. More
detail concerning each Portfolio's fees and expenses is contained in the
prospectus for each Portfolio.
ANNUAL PORTFOLIO OPERATING EXPENSES
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AMOUNT DEDUCTED POLICIES FROM WHICH CHARGE IS
CHARGE WHEN CHARGE IS DEDUCTED (ANNUALIZED) DEDUCTED
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Management Fees Daily net asset values 0.400% - 1.250% All policies, but deductions
of a Portfolio reflect only from underlying
Management Fees already Portfolios selected by you.
deducted from assets of
the Portfolio.
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Other Expenses Daily net asset values 0.030% - 2.090% All policies, but deductions
of a Portfolio reflect only from underlying
Other Expenses already Portfolios selected by you.
deducted from the
assets of the
Portfolio.
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Total Portfolio Daily net asset values 0.490% - 2.590% All policies, but deductions
Annual Expenses of a Portfolio reflect only from underlying
Total Portfolio Annual Portfolios selected by you.
Operating Expenses
already deducted from
assets of the
Portfolio.
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6 - PROSPECTUS
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ABOUT US
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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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EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
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A.M. Best and
Company, Inc....................... 1/11/99 A+ Financial performance
Standard & Poor's.................. 6/1/98 AA Insurer financial strength
Duff & Phelps...................... 12/21/98 AA+ Claims paying ability
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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 PORTFOLIOS
The underlying investment for the Policies are shares of the Portfolios of
Morgan Stanley Dean Witter Select Dimensions Investment Series, Morgan Stanley
Dean Witter Universal Funds, Inc., and Van Kampen Life Investment Trust, all
open-ended management investment companies. The underlying Portfolios
corresponding to each Sub-Account and their investment objectives are described
below. Hartford reserves the right, subject to compliance with the law, to offer
additional Portfolios with differing investment objectives. The Portfolios may
not be available in all states.
We do not guarantee the investment results of any of the underlying Portfolios.
Since each underlying Portfolio has different investment objectives, each is
subject to different risks. These risks and the Portfolio's expenses are more
fully described in the accompanying Funds' prospectuses and the Statements of
Additional Information. The Funds' prospectuses should be read in conjunction
with this Prospectus before investing.
MORGAN STANLEY DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:
MONEY MARKET PORTFOLIO
Seeks high current income, preservation of capital and liquidity by investing in
the following money market instruments: U.S. Government securities, obligations
of U.S. regulated banks and savings institutions having total assets of more
than $1 billion, or less than $1 billion if such are fully federally insured as
to principal (the interest may not be insured) and high grade corporate debt
obligations maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO
Seeks to earn a high level of current income while maintaining relatively low
volatility of principal, by investing primarily in investment grade fixed-income
securities issued or guaranteed by the U.S., Canadian or Mexican governments.
DIVERSIFIED INCOME PORTFOLIO
Seeks, as a primary objective, to earn a high level of current income and, as a
secondary objective, to maximize total return, but only to the extent consistent
with its primary objective, by equally allocating its assets among three
separate groupings of fixed-income securities. Up to one-third of the securities
in which the Diversified Income Portfolio may invest will include securities
rated Baa/BBB or lower. See the Special Considerations for investments for high
yield securities disclosed in the Fund's prospectus.
BALANCED GROWTH PORTFOLIO
Seeks to provide capital growth with reasonable current income by investing,
under normal market conditions, at least 60% of its total assets in a
diversified portfolio of common stocks of companies which have a record of
paying dividends and, in the opinion of the Investment Manager, have the
potential for increasing dividends and in securities convertible into common
stock, and at least 20% of its total assets in investment grade fixed-income
(fixed-rate and adjustable-rate) securities such as corporate notes and bonds
and obligations issued or guaranteed by the U.S. Government, its agencies and
its instrumentalities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public
utilities industry.
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income and
capital by investing primarily in common
7 - PROSPECTUS
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stock of companies with a record of paying dividends and the potential for
increasing dividends.
VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
GROWTH PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN OPPORTUNITIES PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be attractively valued given their
above average relative earnings growth potential at that time. (Until May 1,
1999, this Portfolio was known as the American Value Portfolio.)
MID-CAP GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in equity securities of
"mid-cap" companies (that is, companies whose equity market capitalization falls
within the range of $250 million to $5 billion).
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth and, to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and
foreign companies, governments and international organizations.
DEVELOPING GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in common stocks of
smaller and medium-sized companies that, in the opinion of the Investment
Manager, have the potential for growing more rapidly than the economy and which
may benefit from new products or services, technological developments or changes
in management.
EMERGING MARKETS PORTFOLIO
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging market countries. The Emerging Markets Portfolio may
invest up to 35% of its total assets in high risk fixed-income securities that
are rated below investment grade or are unrated (commonly referred to as "junk
bonds"). See the Special Considerations for investments in high yield securities
disclosed in the Fund's prospectus.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
HIGH YIELD PORTFOLIO
Seeks above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of high yield securities,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds". The Portfolio's average weighted maturity will ordinarily
exceed five years. See the special considerations for investments in high yield
securities disclosed in the Fund prospectus.
MID CAP VALUE PORTFOLIO
Seeks above-average total return over a market cycle of three to five years by
investing in common stocks and other equity securities of issuers with equity
capitalizations in the range of the companies represented in the S&P MidCap 400
Index.
EMERGING MARKETS DEBT PORTFOLIO
Seeks high total return by investing primarily in fixed income securities of
government and government related issuers and, to a lesser extent, of corporate
issuers located in emerging market countries.
VAN KAMPEN LIFE INVESTMENT TRUST:
STRATEGIC STOCK PORTFOLIO
Seeks to provide investors with an above average total return through a
combination of potential capital appreciation and dividend income, consistent
with the preservation of invested capital by investing primarily in a portfolio
of dividend paying equity securities included in the Dow Jones Industrial
Average or in the Morgan Stanley Capital International USA Index.
ENTERPRISE PORTFOLIO
Seeks capital appreciation through investments in securities believed by the
investment advisor to have above average potential for capital appreciation.
THE INVESTMENT ADVISERS
Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), a Delaware
Corporation, whose address is Two World Trade Center, New York, New York 10048,
is the Investment Manager for the Money Market Portfolio, the North American
Government Securities Portfolio, the Diversified Income Portfolio, the Balanced
Growth Portfolio, the Utilities Portfolio, the Dividend Growth Portfolio, the
Value-Added Market Portfolio, the Growth Portfolio, the American Opportunities
Portfolio, the Mid-Cap Growth Portfolio, the Global Equity Portfolio, the
Developing
8 - PROSPECTUS
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Growth Portfolio, and the Emerging Markets Portfolio of the Morgan Stanley Dean
Witter Select Dimensions Investment Series (the "Morgan Stanley Dean Witter
Portfolios"). MSDW Advisors was incorporated in July, 1992 and is a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co. ("MSDW")
MSDW Advisors provides administrative services, manages the Morgan Stanley Dean
Witter Portfolios' business affairs and manages the investment of the Morgan
Stanley Dean Witter Portfolios' assets, including the placing of orders for the
purchase and sales of portfolio securities. MSDW Advisors has retained Morgan
Stanley Dean Witter Services Company Inc., its wholly-owned subsidiary, to
perform the aforementioned administrative services for the Morgan Stanley Dean
Witter Portfolios. For its services, the Morgan Stanley Dean Witter Portfolios
pay MSDW Advisors a monthly fee. See the accompanying Fund prospectus for a more
complete description of MSDW Advisors and the respective fees of the Morgan
Stanley Dean Witter Portfolios.
With regard to the North American Government Securities Portfolio and the
Emerging Markets Portfolio, TCW Funds Management ("TCW"), under a Sub-Advisory
Agreement with MSDW Advisors, provides these Portfolios with investment advice
and portfolio management, in each case subject to the overall supervision of the
MSDW Advisors. TCW's address is 865 South Figueroa Street, Suite 1800, Los
Angeles, California 90017.
With regard to the Growth Portfolio, Morgan Stanley Dean Witter Investment
Management Inc. ("MSDW Investment Management"), under a Sub-Advisory Agreement
with MSDW Advisers, provides the Growth Portfolio with investment advice and
portfolio management, subject to the overall supervision of MSDW Advisors. MSDW
Investment Management, like MSDW Advisors, is a wholly-owned subsidiary of MSDW.
MSDW Investment Management's address is 1221 Avenue of the Americas, New York,
New York 10020.
In addition to acting as the Sub-Adviser for the Growth Portfolio, MSDW
Investment Management, pursuant to an Investment Advisory Agreement with the
Morgan Stanley Dean Witter Universal Funds, Inc., is the investment adviser for
the Emerging Markets Debt Portfolio. As the investment adviser, MSDW Investment
Management, provides investment advice and portfolio management services for the
Emerging Markets Debt Portfolio, subject to the supervision of the Morgan
Stanley Dean Witter Universal Fund's Board of Directors.
The investment adviser for the High Yield Portfolio and the Mid Cap Value
Portfolio is Miller Anderson & Sherrerd, LLP ("MAS"). MAS is a Pennsylvania
limited liability partnership founded in 1969 with its principal offices at One
Tower Bridge, West Conshohocken, Pennsylvania 19428. MAS provides investment
advisory services to employee benefit plans, endowment portfolios, foundations
and other institutional investors and has served as an investment adviser to
several open-end investment companies. MAS is an indirect wholly-owned
subsidiary of MSDW.
The Investment Adviser with respect to the Strategic Stock Portfolio and the
Enterprise Portfolio is Van Kampen Asset Management Inc., a wholly-owned
subsidiary of Van Kampen Investments Inc. Van Kampen Investments Inc. is an
indirect wholly-owned subsidiary of MSDW. Van Kampen Investments Inc. is a
diversified asset management company with more than two million retail investor
accounts, extensive capabilities for managing institutional portfolios, and more
than $75 billion under management or supervision. Van Kampen Investments Inc.'s
more than 50 open-end and 39 closed end portfolios and more than 2,500 unit
investment trusts are professionally distributed by leading financial advisers
nationwide.
MIXED AND SHARED FUNDING -- Shares of the Portfolios 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 Portfolios. In
the event of any such material conflicts, we will consider what action may be
appropriate, including removing the Portfolios from the Separate Account or
replacing the Portfolio with another underlying Portfolio. 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 Portfolio shares held in the
Separate Account and we have the right to vote at the Portfolio's shareholder
meetings. To the extent required by federal securities laws or regulations, we
will:
- - Notify you of any Portfolio 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 Portfolio shares held for your policy.
- - Arrange for the handling and tallying of proxies received from policy owners.
- - Vote all Portfolio shares attributable to your policy according to
instructions received from you, and
- - Vote all Portfolio 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 Portfolio 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
9 - PROSPECTUS
<PAGE>
we begin to make annuity payouts to you, the number of votes you have will
decrease.
CHARGES AND DEDUCTIONS
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The deductions or charges associated with this policy are subtracted, depending
on the type of deduction or charge, from premium payments as they are made, upon
surrender or partial surrender of the policy, on the Policy Anniversary Date or
on a monthly pro rated basis from each Sub-Account ("Deduction Amount").
Deductions are taken from premium payments before allocations to the
Sub-Accounts are made.
Deduction Amounts are subtracted on the Policy Date and on each Monthly Activity
Date after the Policy Date to cover charges and expenses incurred in connection
with a policy.
Each Deduction Amount will be subtracted pro rata from each Sub-Account so that
the proportion of Account Value of the policy attributable to each Sub-Account
remains the same before and after the deduction. The Deduction Amount will vary
from month to month. If the Cash Surrender Value is not sufficient to cover a
Deduction Amount due on any Monthly Activity Date, the policy may lapse. See
"Lapse and Reinstatement".
The deductions and charges associated with your policy are listed below.
COST OF INSURANCE CHARGE -- The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the tenth Policy Year and are based on whether
100%, 90% or 80% of the Guideline Single Premium has been paid. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum cost of insurance rates per $1,000 will be
included in each Policy; however, Hartford reserves the right to use rates less
than those shown in the Table. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CS0 Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
table through age 90, grading to 100% of the 1980 CSO Table at age 100.
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the Insured's substandard rating. Unisex rates may be
required in some states.
Your Coverage Amount is first set on the date we issue your policy and then on
each Monthly Activity Date. The Coverage Amount is the Face Amount minus the
Account Value. There is a Minimum Coverage Amount. It is a stated percentage of
the Account Value of the policy determined on each Monthly Activity Date. The
percentages vary according to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $70,000
Insured's attained age = 60
Minimum Coverage Amount percentage for age 60 = 30%
On the Monthly Activity Date, the Coverage Amount is $30,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($70,000) from the
Face Amount ($100,000), subject to a possible Minimum Coverage Amount
adjustment. This Minimum Coverage Amount is determined by taking a percentage of
the Account Value on the Monthly Activity Date. In this case, the Minimum
Coverage Amount is $21,000 (30% of $70,000). Since $21,000 is less than the Face
Amount less the Account Value ($30,000), no adjustment is necessary. Therefore,
the Coverage Amount will be $30,000.
Assume that the Account Value in the above example was $90,000. The Minimum
Coverage Amount would be $27,000 (30% of $90,000). Since this is greater than
the Face Amount less the Account Value ($10,000), the Coverage Amount for the
Policy Month is $27,000. (For an explanation of the Death Benefit, see "Death
Benefit and Policy Values".)
Because the Account Value and, as a result, the Coverage Amount under a policy
may vary from month to month, the cost of insurance charge may also vary on each
Monthly Activity Date.
POLICY OWNER OPTIONS
You, at the time the policy is issued, will elect one of two options described
below to pay charges relating to CERTAIN TAXES AND MORTALITY AND EXPENSE RISK
CHARGES. The option selected by you may affect your Account Value.
OPTION 1: ASSET-BASED CHARGES: Under this payment option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE: For assuming mortality and expense risks
under the policy, we deduct monthly from Sub-Account Value for Policy Years 1
through 10 a charge equal to an annual rate of 0.90%. In Policy Years 11 and
beyond, the charge drops to an annual rate of 0.50%. The mortality and expense
risk charge is broken into charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient
10 - PROSPECTUS
<PAGE>
to pay claims. We also assume a risk that the Death Proceeds will exceed: (1)
the Coverage Amount on the date of death; and (2) your policy's Account Value on
the date we receive written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering your policy will exceed the administrative charges.
We may profit from the mortality and expense risk charge and may use any profits
for any proper purpose, including any difference between the cost we incur in
distributing the policies and the proceeds of the Surrender Charge. The
mortality and expense risk charge is deducted while the policy is in force,
including the duration of a settlement option.
TAX EXPENSE CHARGE: During the first ten years of your policy, we deduct a
monthly charge equal to an annual rate of 0.40% from your Account Value. This
tax expense charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 0.25% of the Account Value is deducted over ten
Policy Years and approximates our average expenses for state and local premium
taxes. Premium taxes vary, ranging from zero to more than 4.0%. The premium tax
deduction is made whether or not any premium tax applies. The deduction may be
higher or lower than the premium tax imposed. However, we do not expect to make
a profit from this deduction.
(2) The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
During your first ten Policy Years, we deduct a charge of 0.15% of Account
Value. This charge helps reimburse us for the approximate expenses we incur from
federal taxes we pay under Section 848 of the Internal Revenue Code.
UNAMORTIZED TAX CHARGE: Under Option 1, during the first nine Policy Years, an
Unamortized Tax charge is imposed on surrender or partial surrenders. The
Unamortized Tax charge is shown below, as a percentage of amount surrendered,
during each Policy Year:
<TABLE>
<CAPTION>
POLICY YEAR RATE
- -------------- ---------
<S> <C>
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
</TABLE>
After the ninth Policy Year, no Unamortized Tax charge will be imposed.
OPTION 2: FRONTED CHARGES: Under this option, you will pay:
MORTALITY AND EXPENSE RISK CHARGE: For assuming mortality and expense risks
under the policy, we will deduct monthly from Sub-Account Value for Policy Years
1 through 10 a charge equal to an annual rate of 0.65%. In Policy Years 11 and
beyond, the charge drops to an annual rate of 0.50%. The mortality and expense
risk charge is broken into charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that your policy's Death Benefit will exceed: (1) the Coverage
Amount on the date of death; and (2) your policy's Account Value on the date we
receive written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering the Policies will exceed the administrative charges set in the
policy.
TAX EXPENSE CHARGE: We deduct a charge equal to 4.0% from all premium payments.
This charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 2.5% of premium approximates our average expenses for
state and local premium taxes. Premium taxes vary, ranging from zero to more
than 4.0%. The premium tax deduction is made whether or not any premium tax
applies. The deduction may be higher or lower than the premium tax imposed.
However, we do not expect to make a profit from this deduction.
(2) The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
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
11 - PROSPECTUS
<PAGE>
0.40%. This charge compensates us for expenses incurred in the administration of
the Separate Account and the policy.
SURRENDER CHARGE -- We may charge you a Surrender Charge when you surrender
amounts invested in your policy. We assess a Surrender Charge on amounts
surrendered in any Policy Year that exceed the greater of 10% of the premiums
you have paid into your policy or 100% of your Account Value minus premiums
paid. If the amount you paid has been in your policy:
X For Policy Years 1, 2 and 3, the charge is 7.5%.
X For Policy Years 4 and 5, the charge is 6%.
X For Policy Years 6 and 7, the charge is 4%.
X For Policy Years 8 and 9, the charge is 2%.
X For Policy Years 10 and beyond, the charge is 0%.
In determining the Surrender Charge, any surrender or partial surrender during
the first ten Policy Years will first come from premiums paid and then from
earnings. If an amount equal to all premiums paid has been withdrawn, no
Surrender Charge will be assessed on the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense incurred
by us in distributing the Policies. This expense includes commissions,
advertising and the printing of prospectuses.
CHARGES AGAINST THE PORTFOLIOS -- The Separate Account purchases shares of the
Portfolios at net asset value. The net asset value of the Portfolio shares
reflects investment advisory fees and administrative expenses already deducted
from the assets of the Portfolios. These charges are described in the Funds'
prospectuses accompanying this Prospectus.
YOUR POLICY
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POLICY RIGHTS
POLICY OWNER, OR "YOU" -- As long as your policy is in force, you may exercise
all rights under the policy while the Insured is alive and a beneficiary has not
been irrevocably named.
BENEFICIARY -- You name the beneficiary in the application for the policy. You
may change the beneficiary (unless irrevocably named) during the Insured's
lifetime by written request to us. If no beneficiary is living when the Insured
dies, the Death Proceeds will be paid to the policy owner if living; otherwise
to the policy owner's estate.
ASSIGNMENT -- You may assign your policy as collateral for a loan or other
obligation. Until you notify us in writing, we are not responsible for any
payment made or action taken. We are not responsible for the validity of any
assignment.
STATEMENTS TO POLICY OWNERS -- We will send you a statement at least once each
year, showing:
(a) the current Account Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, monthly deduction amounts and any loans since your last
statement;
(c) the amount of any Indebtedness;
(d) any notifications required by the provisions of your policy; and
(e) any other information required by the Insurance Department of the state
where your policy was delivered.
LIMIT ON RIGHT TO CONTEST -- During the Insured's lifetime, we may not contest
the validity of the policy after it has been in force for two years from the
date we issue the policy. If the policy is reinstated, the two-year period is
measured from the date of reinstatement. Any increase in the Coverage Amount as
a result of a premium payment is contestable for two years from its effective
date. In addition, if the Insured commits suicide within two years from the date
we issue the policy, or such period as specified in state law, the benefit
payable will be limited to the Account Value minus any Indebtedness.
MISSTATEMENT AS TO AGE AND SEX -- If the age or sex of the Insured is
incorrectly stated, the Death Benefit will be appropriately adjusted as
specified in the policy.
POLICY LIMITATIONS
DIVIDENDS -- No dividends will be paid under the policy.
TRANSFERS OF ACCOUNT VALUE -- While the policy remains in force, and subject to
our transfer rules then in effect, you may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
We reserve the right to restrict the number of these transfers to no more than
12 per Policy Year, with no two transfers being made on consecutive Valuation
Days. However, there are no restrictions on the number of transfers at the
present time.
Transfers may be made by written request or by calling us toll free
1-800-231-5453. Transfers by telephone may be made by the agent of record or by
an attorney-in-fact pursuant to a power of attorney. Telephone transfers may not
be permitted in some states. Hartford, its agents or affiliates will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be 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.
12 - PROSPECTUS
<PAGE>
It is your responsibility to verify the accuracy of all confirmations and to
promptly advise us of any inaccuracies within 30 days of receipt.
CHANGES TO POLICY OR SEPARATE ACCOUNT
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF PORTFOLIOS -- We reserve the right,
subject to any applicable law, to make certain changes to the Portfolios offered
under your policy. We may, in our sole discretion, establish new Portfolios. New
Portfolios will be will be made available to existing policyholders as we
determine appropriate. We may also close one or more Portfolios to additional
payments or transfers from existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Portfolios for any
reason and to substitute shares of another registered investment company for the
shares of any Portfolio 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 Portfolio 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).
13 - PROSPECTUS
<PAGE>
UNDERWRITING RULES OF YOUR POLICY --
- - Under current underwriting rules, which are subject to change, if you are
between ages 35 and 80, you may be eligible for simplified underwriting
without a medical examination if you meet simplified underwriting standards.
- - If you are below age 35 or above age 80, or do not meet simplified
underwriting eligibility, full underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines.
Your policy allows for additional premium payments so long as the additional
premiums do not cause the policy to fail to meet the definition of a life
insurance policy under Section 7702 of the Code. The amount and frequency of
additional premium payments will affect the Cash Value and the amount and
duration of insurance. We may require evidence of insurability for any
additional premiums that increase the Coverage Amount. Premiums, which do not
meet the tax qualification guidelines for life insurance under the Internal
Revenue Code, will not be applied to your policy.
ALLOCATION OF PREMIUMS -- Within three business days of receipt of your
completed application and your initial premium payment at our Home Office, we
allocate your entire premium payment to the Money Market Sub-Account.
We will then allocate the Account Value in the Money Market Sub-Account to the
Sub-Accounts according to the premium allocations you specify in your policy
application. The allocation is made upon the expiration of the right to examine
policy period, or the date we receive the final requirement to put the policy in
force, whichever is later.
ACCUMULATION UNITS -- The premiums you allocate to the Sub-Accounts are used to
purchase Accumulation Units in such Sub-Accounts. We determine the number of
Accumulation Units of each Sub-Account by dividing the amount of premium you
have allocated to the Sub-Account by the accumulation unit value of that
particular Sub-Account.
ACCUMULATION UNIT VALUES -- The accumulation unit value for each Sub-Account
varies to reflect the investment experience of the applicable underlying
Portfolio. 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 Portfolio held in the Sub-Account at the
end of the current Valuation Period; divided by
- - The net asset value per share of each Portfolio held in the Sub-Account at the
beginning of the Valuation Period.
You should refer to the Fund's prospectuses accompanying this Prospectus for a
description of how the assets of each Portfolio 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
Portfolios 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 Portfolios, 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.
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,
14 - PROSPECTUS
<PAGE>
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
Account Value........................ 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.
15 - PROSPECTUS
<PAGE>
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
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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".
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RIGHT TO EXAMINE -- You have a limited right to return your policy for
cancellation. You may deliver or mail the policy to us or to the agent from whom
it was purchased any time during your free look period. Your free look period
begins on the day you get your policy and ends ten days after you get it (or
longer in some states). In such event, the policy will be rescinded and we will
pay an amount equal to the greater of the premiums paid for the policy less any
Indebtedness or the sum of: i) the Account Value less any Indebtedness, on the
date the returned policy is received by us or the agent from whom it was
purchased; and, ii)any deductions under the policy or charges associated with
the Separate Account. If your policy is replacing another policy, your free look
period and the amount paid to you upon the return of your policy vary by state.
RIGHT TO EXCHANGE -- Once the policy is in effect, it may be exchanged, during
the first 24 months after its issuance, for a non-variable flexible premium
adjustable life insurance policy offered by us (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
policy will have, at your election, either the same Coverage Amount as under the
exchanged policy on the date of exchange or the same Death Benefit. The
effective date, issue date and issue age will be the same as existed under the
exchanged policy. If a policy loan was outstanding, the entire loan must be
repaid. The exchange is subject to adjustments in payments and Account Values to
reflect variances, if any, in the payments and Account Values under this policy
and the new policy.
LOANS
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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
17 - PROSPECTUS
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dies during the grace period, the Death Proceeds payable under the policy will
be reduced by the Deduction Amount(s) due and unpaid. See "Death Benefits and
Policy Values."
REINSTATEMENT -- If your policy lapses, you may apply for reinstatement of the
policy by payment of the reinstatement premium shown in the policy and any
applicable charges. A request for reinstatement may be made within five years of
lapse. If a loan is outstanding at the time of lapse, we require repayment of
the loan before permitting reinstatement. In addition, we reserve the right to
require evidence of insurability satisfactory to Hartford.
The Account Value on the reinstatement date will reflect:
(a) the Cash Value at the time of termination; plus
(b) Net Premiums derived from premiums paid at the time of reinstatement; minus
(c) the Monthly Deduction Amounts that were due and unpaid during the Policy
Grace Period; plus
(d) the Surrender Charge at the time of reinstatement.
The surrender charge is based on the duration from the original policy date as
through the policy has never lapsed.
FEDERAL TAX CONSIDERATIONS
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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
Portfolios) 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
18 - PROSPECTUS
<PAGE>
definition of life insurance in Section 7702 but fails the "seven-pay" test of
Section 7702A. The seven-pay test provides that premiums cannot be paid at a
rate more rapidly than that allowed by the payment of seven annual premiums
using specified computational rules provided in Section 7702A(c). The large
single premium permitted under the Policy does not meet the specified
computational rules for the "seven-pay test" under Section 7702A(c). Therefore,
the Policy will generally be treated as a modified endowment contract for
federal income tax purposes. However, an exchange under Section 1035 of the Code
of a life insurance contract issued before June 21, 1988 will not cause the new
Policy to be treated as a modified endowment contract if no additional premiums
are paid.
A contract that is classified as modified endowment contract is eligible for
certain aspects of the beneficial tax treatment accorded to life insurance. That
is, the death benefit is excluded from income and increments in value are not
subject to current taxation. However, loans, distributions or other amounts
received from a modified endowment contract during the life of the Insured will
be taxed to the extent of any accumulated income in the policy (generally, the
excess of account value over premiums paid). Amounts that are taxable
withdrawals will be subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to the
same Policy Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in the
Policy Owner's estate for purposes of federal estate tax if the last surviving
Insured owned the Policy. If the Policy Owner was not the last surviving
Insured, the fair market value of the Policy would be included in the Policy
Owner's estate upon the Policy Owner's death. Nothing would be includible in the
last surviving Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $650,000 (1999) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next seven years to $1,000,000. In addition, an unlimited marital
deduction may be available for federal estate and gift tax purposes. The
unlimited marital deduction permits the deferral of taxes until the death of the
surviving spouse (when the Death Proceeds would be available to pay taxes due
and other expenses incurred).
If the Policy Owner (whether or not he or she is an Insured) transfers ownership
of the Policy to someone two or more generations younger, the transfer may be
subject to the generation-skipping transfer tax, the taxable amount being the
value of the Policy. The generation-skipping transfer tax provisions generally
apply to transfers which would be subject to the gift and estate tax rules.
Individuals are generally allowed an aggregate generation skipping transfer
exemption of $1 million, as adjusted for inflation. Because these rules are
complex, the Policy Owner should consult with a qualified tax adviser for
specific information if ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying Portfolio 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.
19 - PROSPECTUS
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OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable life insurance contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the policy owner, such as the ability
to select and control investments in a separate account, will cause the policy
owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an Owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Since this Policy is a modified
endowment contract, partial withdrawals (or other such amounts deemed to be
distributed) from the Policy constitute income to the Policy Owner for Federal
income tax purposes.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
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
20 - PROSPECTUS
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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.
OTHER MATTERS
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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
21 - PROSPECTUS
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anticipates that it will continue to do so through the end of 1999. However,
notwithstanding these third party Year 2000 efforts, Hartford does not have
control over these third parties and, as a result, Hartford cannot currently
determine to what extent future operating results may be adversely affected by
the failure of these third parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS -- The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
RISKS AND CONTINGENCY PLANS -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its business and Hartford may be exposed to the risk that
issuers of investments held by it will be adversely impacted by Year 2000
issues. Given the uncertain nature of Year 2000 problems that may arise,
especially those related to the readiness of third parties discussed above,
management cannot determine at this time whether the consequences of Year 2000
related problems that could arise will have a material impact on Hartford's
financial condition or results of operations.
Hartford is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the impact
of such problems may be avoided or minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
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GLOSSARY OF SPECIAL TERMS
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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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APPENDIX A - SPECIAL INFORMATION FOR POLICIES PURCHASED IN NEW YORK
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If the Policy is purchased in the State of New York, the following provisions of
the Prospectus are amended as follows:
In the Special Terms subsection of the Prospectus, the definition of Account
Value is deleted and the following definition is substituted:
ACCOUNT VALUE -- The current value of Accumulation Units plus the value of the
Loan Account under the 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 Account, Account Value is the current value of the Fixed
Account plus the value of the Loan Account under the Policy.
The following definition is added:
FIXED ACCOUNT -- 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 Account for requested loans. The Loan Account credits a fixed rate of
interest of 4% per annum that is not based on the investment experience of the
Separate Account.
The following is added to the Prospectus as a separate section following the
section entitled "Separate Account Five":
THE FIXED ACCOUNT
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT
IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF
1940 ("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED
BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE
ABOUT THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND
COMPLETENESS OF DISCLOSURE.
Under the circumstances described under the heading "Transfer of Entire Account
Value to the Fixed Account", New York Policy Owners may transfer no less than
the entire Account Value to the Fixed Account. Account Value transferred to the
Fixed Account becomes part of the general assets of Hartford. Hartford invests
the assets of the General Account in accordance with applicable laws governing
the investment of insurance company general accounts.
Hartford currently credits interest to the Account Value transferred to the
Fixed Account under the 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 Account interest rate. There is no specific
formula for determining the interest credited to the Account Value in the Fixed
Account.
The following language is added to the section of the Prospectus entitled
"Charges and Deductions -- Administrative Charge":
No Administrative Charge is deducted from Sub-Account Value in the Fixed
Account.
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 Account.
The following separate sections are added to the section of the Prospectus
entitled "Your Policy":
TRANSFER OF ENTIRE ACCOUNT VALUE TO THE FIXED ACCOUNT
New York Policy Owners may transfer no less than the entire Account Value into
the Fixed Account under the following circumstances: (i) during the first 18
months following the Date of Issue, (ii) within 30 days following a 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 ACCOUNT MUST BE FOR THE ENTIRE ACCOUNT VALUE AND ONCE
THE ACCOUNT VALUE HAS BEEN TRANSFERRED TO THE FIXED ACCOUNT, IT MAY NOT, UNDER
ANY CIRCUMSTANCES, BE TRANSFERRED BACK TO THE SEPARATE ACCOUNT.
For New York Policy Owners who elect to invest in the Fixed Account, Hartford
will transfer the entire Account Value from the Separate Account to the Fixed
Account on the Monthly Activity Date next following the date on which Hartford
received the transfer request. The Account Value in the Fixed Account on
24 - PROSPECTUS
<PAGE>
the date of transfer equals the entire Account Value; plus the value of the Loan
Account; minus the Monthly Deduction Amount applicable to the Fixed Account and
minus the Annual Maintenance Fee, if applicable. On each subsequent Monthly
Activity Date, the Account Value in the Fixed Account equals the Account Value
on the previous Monthly Activity Date; plus any premiums received since the last
Monthly Activity Date; plus interest credited since the last Monthly Activity
Date; minus the Monthly Deduction Amount applicable to the Fixed Account; minus
any partial surrenders taken since the last Monthly Activity Date and minus any
Surrender Charges deducted since the last Monthly Deduction Date. On each
Valuation Date (other than a Monthly Activity Date), the Account Value of the
Fixed Account equals the Account Value on the previous Monthly Activity Date;
plus any premiums received since the last Monthly Activity Date; plus any
interest credited since the last Monthly Activity Date; minus any partial
surrenders taken since the last Monthly Activity Date and minus any Surrender
Charges deducted since the last Monthly Activity Date.
DEFERRED PAYMENTS
Hartford reserves the right to defer payment of any Cash Surrender Values and
loan amounts which are attributable to the Fixed Account for up to six months
from the date of request. If payment is deferred for more than ten days,
Hartford will pay interest at the Fixed Account Minimum Credited Interest Rate.
25 - PROSPECTUS
<PAGE>
PART B
<PAGE>
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
Date of Statement of Additional Information: May 3, 1999
<PAGE>
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
----------------------------------------------------------------------------
Illustration of Benefits 7
----------------------------------------------------------------------------
Financial Statements SA-1
----------------------------------------------------------------------------
</TABLE>
2 - PROSPECTUS
<PAGE>
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>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST FIVE YEARS;
NAME YEAR OF ELECTION 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, 1997 Vice President (1989-1997); Director of Broker Dealer Sales-
ILAD (1989-1992), Hartford; Senior Vice President
(1997-Present) Vice President (1989-1997); Director of
Broker Dealer Sales-ILAD (1989-1991), Hartford Life and
Accident Insurance Company.
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, 1998 Hartford Life & Annuity Insurance Company; Vice President &
Chief Accounting Officer, (1998-Present), Royal Life
Insurance Company of America; Vice President & Chief
Accounting Officer (1998-Present) Alpine Life Insurance
Company; Chief Accounting Officer (1997-Present), Hartford
Life, Inc.; Director, Finance (1995-1997), Value Health,
Inc.; Senior Manager (1993-1995), Coopers and Lybrand; Audit
Manager (1993-1996) Arthur Andersen & Co.
David T. Foy Senior Vice President and Senior Vice President (1998-Present), Vice President (1998),
Treasurer, 1998 Assistant Vice President (1995-1998), Hartford; Senior Vice
President (1998-Present), Hartford Life and Accident
Insurance Company; Director, Strategic Planning Corporate
Finance (1995-1996), IA Product Development (1994-1995),
Hartford; Various Actuarial Roles (1989-1993), Milliman &
Robertson.
</TABLE>
3 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST FIVE YEARS;
NAME YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------ ---------------------------------- --------------------------------------------------------------
<S> <C> <C>
Lynda Godkin Senior Vice President, 1997 Associate General Counsel (1995-1996); Assistant General
General Counsel, 1996 Counsel and Secretary (1994-1995); Counsel (1990-1994),
Corporate Secretary, 1995 Hartford; Director (1997-Present); Senior Vice President
Director, 1997 (1997-Present); General Counsel (1996-Present); Corporate
Secretary (1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life and Accident
Insurance Company; Vice President and General Counsel
(1997-Present), Hartford Life, Inc.
Lois W. Grady Senior Vice President, 1998 Vice President (1993-1998); Assistant Vice President
(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, 1998 Vice President, (1995-1998); Regional Vice President
(1991-1994), Hartford; Vice President (1994-1997), Hartford
Life and Accident Insurance Company.
Thomas M. Marra Executive Vice President, 1995 Senior Vice President (1994-1995); Vice President (1989-1994);
Director, 1994* Actuary (1987-1995), Hartford; Director (1994-Present);
Executive Vice President (1995-Present); 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, 1997 Chief Vice President (1993-1997); Assistant Vice President
Actuary, 1994 (1992-1993); Actuary (1990-1994), Hartford; Senior Vice
President (1997-Present); Chief Actuary (1995-Present); Vice
President (1993-1997); Actuary (1990-1995), Hartford Life
and Accident Insurance Company; Vice President and Chief
Actuary (1997-Present), Hartford Life, Inc.
Donald A. Salama 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.
</TABLE>
4 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD; FOR PAST FIVE YEARS;
NAME YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------ ---------------------------------- --------------------------------------------------------------
<S> <C> <C>
Lowndes A. Smith President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief Executive
Director, 1981* Officer (1997-Present); Chief Operating Officer (1989-1997),
Hartford Life and Accident Insurance Company; Chief
Executive Officer and President and Director (1997-Present),
Hartford Life, Inc.
David M. Znamierowski Senior Vice President, 1997 Vice President (1997), Hartford; Director (1998-Present);
Director, 1998* Senior Vice President (1997-Present); Hartford Life and
Accident Insurance Company; Vice President, Investment
Strategy (1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy (1991-1996), Aetna
Life and Casualty.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
SEPARATE ACCOUNT FIVE was established as a separate account under Connecticut
law on 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
5 - PROSPECTUS
<PAGE>
Hartford. The principal business address of HESCO and HSD is the same as that of
Hartford.
The following table shows officers and directors of HSD:
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL BUSINESS
ADDRESS POSITIONS AND OFFICES
- ------------------------ -----------------------------------
<S> <C>
Lowndes A. Smith President and Chief Executive
Officer, Director
Thomas M. Marra Executive Vice President, Director
Robert A. Kerzner Executive Vice President
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary,
Director
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
George R. Jay Controller
</TABLE>
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers, and other registered broker-dealers is 7.0% of initial and
subsequent premiums.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on premium payments made by
policyholders or contract owners. This compensation is usually paid from the
sales charges described in the Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
Hartford may provide information on various topics to Policy Owners and
prospective Policy Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in
tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
variable annuities and other investment alternatives, including comparisons
between the Policies and the characteristics of, and market for, such
alternatives.
ADDITIONAL INFORMATION ABOUT CHARGES
--------------------------------------------------------------------
UNDERWRITING PROCEDURES. To purchase a policy you must submit an application to
us. Generally, the minimum initial premium we accept is $10,000. A policy will
be issued only on the lives of insureds age 90 and under who supply evidence of
insurability satisfactory to us. Acceptance is subject to our underwriting rules
and we reserve the right to reject an application for any reason. No change in
the terms or conditions of a policy will be made without your consent.
COST OF INSURANCE CHARGE. The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the tenth Policy Year and are based on whether
100%, 90% or 80% of the Guideline Single Premium has been paid. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum cost of insurance rates per $1,000 will be
included in each Policy; however, Hartford reserves the right to use rates less
than those shown in the Table. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CSO Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
table through age 90, grading to 100% of the 1980 CSO Table at age 100.
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the insured's substandard rating. Unisex rates may be
required in some states.
6 - PROSPECTUS
<PAGE>
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 0.86% 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 0.86% described above) of -0.86%,
5.14% and 11.14%, 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.
7 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,856 9,831 44,053 10,774 9,751 44,053
2 11,025 11,752 10,737 44,053 11,578 10,566 44,053
3 11,576 12,725 11,722 44,053 12,448 11,450 44,053
4 12,155 13,781 12,944 44,053 13,389 12,558 44,053
5 12,763 14,927 14,111 44,053 14,410 13,600 44,053
6 13,401 16,172 15,580 44,053 15,515 14,930 44,053
7 14,071 17,523 16,961 44,053 16,714 16,159 44,053
8 14,775 18,990 18,665 44,053 18,014 17,694 44,053
9 15,513 20,582 20,300 44,053 19,424 19,145 44,053
10 16,289 22,310 22,280 44,053 20,956 20,926 44,053
11 17,103 24,381 24,351 44,053 22,807 22,777 44,053
12 17,959 26,647 26,617 44,053 24,845 24,815 44,053
13 18,856 29,127 29,097 44,053 27,093 27,063 44,053
14 19,799 31,853 31,823 44,053 29,579 29,549 44,053
15 20,789 34,867 34,837 46,721 32,335 32,305 44,053
16 21,829 38,180 38,150 49,633 35,394 35,364 46,011
17 22,920 41,804 41,774 53,509 38,751 38,721 49,601
18 24,066 45,769 45,739 57,669 42,424 42,394 53,454
19 25,270 50,106 50,106 62,131 46,442 46,412 57,587
20 26,533 54,885 54,885 66,959 50,838 50,838 62,022
25 33,864 86,308 86,308 100,117 79,936 79,936 92,726
35 55,160 213,073 213,073 225,857 197,212 197,212 209,044
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
8 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,270 9,258 44,053 10,187 9,178 44,053
2 11,025 10,516 9,525 44,053 10,338 9,352 44,053
3 11,576 10,768 9,800 44,053 10,482 9,519 44,053
4 12,155 11,028 10,232 44,053 10,618 9,829 44,053
5 12,763 11,294 10,523 44,053 10,744 9,979 44,053
6 13,401 11,567 11,022 44,053 10,857 10,318 44,053
7 14,071 11,848 11,330 44,053 10,954 10,442 44,053
8 14,775 12,137 11,846 44,053 11,033 10,748 44,053
9 15,513 12,433 12,172 44,053 11,089 10,832 44,053
10 16,289 12,738 12,708 44,053 11,119 11,089 44,053
11 17,103 13,155 13,125 44,053 11,208 11,178 44,053
12 17,959 13,587 13,557 44,053 11,267 11,237 44,053
13 18,856 14,035 14,005 44,053 11,291 11,261 44,053
14 19,799 14,498 14,468 44,053 11,275 11,245 44,053
15 20,789 14,977 14,947 44,053 11,211 11,181 44,053
16 21,829 15,474 15,444 44,053 11,091 11,061 44,053
17 22,920 15,988 15,958 44,053 10,904 10,874 44,053
18 24,066 16,520 16,490 44,053 10,639 10,609 44,053
19 25,270 17,070 17,040 44,053 10,278 10,248 44,053
20 26,533 17,640 17,610 44,053 9,806 9,776 44,053
25 33,864 20,807 20,777 44,053 5,008 4,978 44,053
35 55,160 29,047 29,017 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
9 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,684 8,709 44,053 9,601 8,635 44,053
2 11,025 9,348 8,430 44,053 9,169 8,268 44,053
3 11,576 9,023 8,158 44,053 8,733 7,895 44,053
4 12,155 8,708 8,025 44,053 8,291 7,639 44,053
5 12,763 8,404 7,764 44,053 7,842 7,244 44,053
6 13,401 8,109 7,673 44,053 7,384 6,984 44,053
7 14,071 7,823 7,421 44,053 6,912 6,554 44,053
8 14,775 7,546 7,327 44,053 6,424 6,234 44,053
9 15,513 7,278 7,084 44,053 5,916 5,753 44,053
10 16,289 7,019 6,989 44,053 5,384 5,354 44,053
11 17,103 6,822 6,792 44,053 4,864 4,834 44,053
12 17,959 6,630 6,600 44,053 4,307 4,277 44,053
13 18,856 6,442 6,412 44,053 3,708 3,678 44,053
14 19,799 6,259 6,229 44,053 3,063 3,033 44,053
15 20,789 6,081 6,051 44,053 2,363 2,333 44,053
16 21,829 5,906 5,876 44,053 1,599 1,569 44,053
17 22,920 5,736 5,706 44,053 763 733 44,053
18 24,066 5,570 5,540 44,053 -- -- --
19 25,270 5,408 5,378 44,053 -- -- --
20 26,533 5,249 5,219 44,053 -- -- --
25 33,864 4,513 4,483 44,053 -- -- --
35 55,160 3,281 3,251 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
10 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,489 9,709 44,053 10,403 9,623 44,053
2 11,025 11,429 10,649 44,053 11,244 10,464 44,053
3 11,576 12,455 11,675 44,053 12,161 11,381 44,053
4 12,155 13,576 12,946 44,053 13,161 12,531 44,053
5 12,763 14,801 14,171 44,053 14,252 13,622 44,053
6 13,401 16,139 15,709 44,053 15,443 15,013 44,053
7 14,071 17,602 17,172 44,053 16,744 16,314 44,053
8 14,775 19,200 18,970 44,053 18,166 17,936 44,053
9 15,513 20,946 20,716 44,053 19,721 19,491 44,053
10 16,289 22,854 22,824 44,053 21,424 21,394 44,053
11 17,103 24,976 24,946 44,053 23,328 23,298 44,053
12 17,959 27,298 27,268 44,053 25,425 25,395 44,053
13 18,856 29,841 29,811 44,053 27,739 27,709 44,053
14 19,799 32,647 32,617 45,052 30,301 30,271 44,053
15 20,789 35,741 35,711 47,893 33,143 33,113 44,411
16 21,829 39,138 39,108 50,879 36,287 36,257 47,172
17 22,920 42,854 42,824 54,853 39,730 39,700 50,854
18 24,066 46,920 46,890 59,118 43,496 43,466 54,805
19 25,270 51,367 51,367 63,694 47,617 47,587 59,044
20 26,533 56,266 56,266 68,644 52,125 52,125 63,592
25 33,864 88,479 88,479 102,635 81,960 81,960 95,073
35 55,160 218,433 218,433 231,538 202,204 202,204 214,336
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
11 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,923 9,149 44,053 9,836 9,069 44,053
2 11,025 10,226 9,446 44,053 10,040 9,260 44,053
3 11,576 10,539 9,759 44,053 10,240 9,460 44,053
4 12,155 10,863 10,233 44,053 10,434 9,804 44,053
5 12,763 11,198 10,568 44,053 10,622 9,992 44,053
6 13,401 11,544 11,114 44,053 10,801 10,371 44,053
7 14,071 11,901 11,471 44,053 10,969 10,539 44,053
8 14,775 12,271 12,041 44,053 11,122 10,892 44,053
9 15,513 12,653 12,423 44,053 11,256 11,026 44,053
10 16,289 13,048 13,018 44,053 11,368 11,338 44,053
11 17,103 13,476 13,446 44,053 11,470 11,440 44,053
12 17,959 13,920 13,890 44,053 11,543 11,513 44,053
13 18,856 14,379 14,349 44,053 11,582 11,552 44,053
14 19,799 14,854 14,824 44,053 11,583 11,553 44,053
15 20,789 15,346 15,316 44,053 11,537 11,507 44,053
16 21,829 15,856 15,826 44,053 11,436 11,406 44,053
17 22,920 16,383 16,353 44,053 11,271 11,241 44,053
18 24,066 16,929 16,899 44,053 11,028 10,998 44,053
19 25,270 17,494 17,464 44,053 10,693 10,663 44,053
20 26,533 18,079 18,049 44,053 10,249 10,219 44,053
25 33,864 21,328 21,298 44,053 5,655 5,625 44,053
35 55,160 29,784 29,754 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
12 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $44,053
ISSUE AGE: MALE 45 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,357 8,625 44,053 9,270 8,545 44,053
2 11,025 9,091 8,379 44,053 8,903 8,206 44,053
3 11,576 8,831 8,139 44,053 8,529 7,859 44,053
4 12,155 8,578 8,034 44,053 8,145 7,626 44,053
5 12,763 8,332 7,802 44,053 7,750 7,255 44,053
6 13,401 8,091 7,738 44,053 7,342 7,018 44,053
7 14,071 7,857 7,513 44,053 6,917 6,610 44,053
8 14,775 7,629 7,446 44,053 6,472 6,313 44,053
9 15,513 7,407 7,228 44,053 6,004 5,854 44,053
10 16,289 7,190 7,160 44,053 5,507 5,477 44,053
11 17,103 6,989 6,959 44,053 4,986 4,956 44,053
12 17,959 6,793 6,763 44,053 4,428 4,398 44,053
13 18,856 6,601 6,571 44,053 3,829 3,799 44,053
14 19,799 6,415 6,385 44,053 3,183 3,153 44,053
15 20,789 6,232 6,202 44,053 2,483 2,453 44,053
16 21,829 6,054 6,024 44,053 1,719 1,689 44,053
17 22,920 5,880 5,850 44,053 883 853 44,053
18 24,066 5,711 5,681 44,053 -- -- --
19 25,270 5,545 5,515 44,053 -- -- --
20 26,533 5,384 5,354 44,053 -- -- --
25 33,864 4,632 4,602 44,053 -- -- --
35 55,160 3,374 3,344 44,053 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
13 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,856 9,831 34,014 10,729 9,707 34,014
2 11,025 11,752 10,737 34,014 11,484 10,474 34,014
3 11,576 12,725 11,722 34,014 12,303 11,308 34,014
4 12,155 13,781 12,944 34,014 13,194 12,366 34,014
5 12,763 14,927 14,111 34,014 14,163 13,356 34,014
6 13,401 16,172 15,580 34,014 15,218 14,635 34,014
7 14,071 17,523 16,961 34,014 16,365 15,812 34,014
8 14,775 18,990 18,665 34,014 17,612 17,294 34,014
9 15,513 20,582 20,300 34,014 18,970 18,692 34,014
10 16,289 22,310 22,280 34,014 20,451 20,421 34,014
11 17,103 24,381 24,351 34,014 22,252 22,222 34,014
12 17,959 26,653 26,623 34,014 24,250 24,220 34,014
13 18,856 29,182 29,152 34,434 26,479 26,449 34,014
14 19,799 31,982 31,952 37,418 28,973 28,943 34,014
15 20,789 35,050 35,020 40,658 31,748 31,718 36,827
16 21,829 38,412 38,382 44,173 34,790 34,760 40,008
17 22,920 42,106 42,076 47,579 38,133 38,103 43,089
18 24,066 46,168 46,138 51,246 41,809 41,779 46,407
19 25,270 50,641 50,641 55,198 45,856 45,826 49,982
20 26,533 55,558 55,558 60,557 50,275 50,275 54,799
25 33,864 88,190 88,190 93,481 79,805 79,805 84,593
35 55,160 218,333 218,333 229,249 194,662 194,662 204,395
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
14 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,270 9,258 34,014 10,143 9,134 34,014
2 11,025 10,516 9,525 34,014 10,246 9,261 34,014
3 11,576 10,768 9,800 34,014 10,340 9,379 34,014
4 12,155 11,028 10,232 34,014 10,424 9,638 34,014
5 12,763 11,294 10,523 34,014 10,497 9,735 34,014
6 13,401 11,567 11,022 34,014 10,554 10,019 34,014
7 14,071 11,848 11,330 34,014 10,592 10,083 34,014
8 14,775 12,137 11,846 34,014 10,605 10,322 34,014
9 15,513 12,433 12,172 34,014 10,584 10,327 34,014
10 16,289 12,738 12,708 34,014 10,523 10,493 34,014
11 17,103 13,155 13,125 34,014 10,505 10,475 34,014
12 17,959 13,587 13,557 34,014 10,442 10,412 34,014
13 18,856 14,035 14,005 34,014 10,331 10,301 34,014
14 19,799 14,498 14,468 34,014 10,167 10,137 34,014
15 20,789 14,977 14,947 34,014 9,940 9,910 34,014
16 21,829 15,474 15,444 34,014 9,637 9,607 34,014
17 22,920 15,988 15,958 34,014 9,235 9,205 34,014
18 24,066 16,520 16,490 34,014 8,708 8,678 34,014
19 25,270 17,070 17,040 34,014 8,023 7,993 34,014
20 26,533 17,640 17,610 34,014 7,143 7,113 34,014
25 33,864 20,807 20,777 34,014 -- -- --
35 55,160 29,047 29,017 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
15 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,684 8,709 34,014 9,557 8,595 34,014
2 11,025 9,348 8,430 34,014 9,077 8,185 34,014
3 11,576 9,023 8,158 34,014 8,592 7,768 34,014
4 12,155 8,708 8,025 34,014 8,101 7,463 34,014
5 12,763 8,404 7,764 34,014 7,601 7,020 34,014
6 13,401 8,109 7,673 34,014 7,088 6,704 34,014
7 14,071 7,823 7,421 34,014 6,558 6,217 34,014
8 14,775 7,546 7,327 34,014 6,004 5,824 34,014
9 15,513 7,278 7,084 34,014 5,417 5,265 34,014
10 16,289 7,019 6,989 34,014 4,790 4,760 34,014
11 17,103 6,822 6,792 34,014 4,155 4,125 34,014
12 17,959 6,630 6,600 34,014 3,467 3,437 34,014
13 18,856 6,442 6,412 34,014 2,721 2,691 34,014
14 19,799 6,259 6,229 34,014 1,912 1,882 34,014
15 20,789 6,081 6,051 34,014 1,031 1,001 34,014
16 21,829 5,906 5,876 34,014 61 31 34,014
17 22,920 5,736 5,706 34,014 -- -- --
18 24,066 5,570 5,540 34,014 -- -- --
19 25,270 5,408 5,378 34,014 -- -- --
20 26,533 5,249 5,219 34,014 -- -- --
25 33,864 4,513 4,483 34,014 -- -- --
35 55,160 3,281 3,251 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
16 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,489 9,709 34,014 10,356 9,576 34,014
2 11,025 11,429 10,649 34,014 11,147 10,367 34,014
3 11,576 12,455 11,675 34,014 12,011 11,231 34,014
4 12,155 13,576 12,946 34,014 12,956 12,326 34,014
5 12,763 14,801 14,171 34,014 13,993 13,363 34,014
6 13,401 16,139 15,709 34,014 15,129 14,699 34,014
7 14,071 17,602 17,172 34,014 16,374 15,944 34,014
8 14,775 19,200 18,970 34,014 17,739 17,509 34,014
9 15,513 20,946 20,716 34,014 19,237 19,007 34,014
10 16,289 22,854 22,824 34,014 20,884 20,854 34,014
11 17,103 24,976 24,946 34,014 22,738 22,708 34,014
12 17,959 27,313 27,283 34,014 24,797 24,767 34,014
13 18,856 29,921 29,891 35,306 27,093 27,063 34,014
14 19,799 32,793 32,763 38,367 29,665 29,635 34,708
15 20,789 35,940 35,910 41,689 32,509 32,479 37,710
16 21,829 39,387 39,357 45,295 35,624 35,594 40,967
17 22,920 43,176 43,146 48,789 39,048 39,018 44,124
18 24,066 47,343 47,313 52,550 42,813 42,783 47,522
19 25,270 51,930 51,930 56,603 46,958 46,928 51,184
20 26,533 56,972 56,972 62,099 51,484 51,484 56,117
25 33,864 90,435 90,435 95,861 81,724 81,724 86,627
35 55,160 223,890 223,890 235,084 199,344 199,344 209,311
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
17 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,923 9,149 34,014 9,790 9,026 34,014
2 11,025 10,226 9,446 34,014 9,944 9,168 34,014
3 11,576 10,539 9,759 34,014 10,091 9,311 34,014
4 12,155 10,863 10,233 34,014 10,232 9,602 34,014
5 12,763 11,198 10,568 34,014 10,365 9,735 34,014
6 13,401 11,544 11,114 34,014 10,486 10,056 34,014
7 14,071 11,901 11,471 34,014 10,591 10,161 34,014
8 14,775 12,271 12,041 34,014 10,674 10,444 34,014
9 15,513 12,653 12,423 34,014 10,728 10,498 34,014
10 16,289 13,048 13,018 34,014 10,746 10,716 34,014
11 17,103 13,476 13,446 34,014 10,741 10,711 34,014
12 17,959 13,920 13,890 34,014 10,693 10,663 34,014
13 18,856 14,379 14,349 34,014 10,599 10,569 34,014
14 19,799 14,854 14,824 34,014 10,452 10,422 34,014
15 20,789 15,346 15,316 34,014 10,245 10,215 34,014
16 21,829 15,856 15,826 34,014 9,963 9,933 34,014
17 22,920 16,383 16,353 34,014 9,586 9,556 34,014
18 24,066 16,929 16,899 34,014 9,087 9,057 34,014
19 25,270 17,494 17,464 34,014 8,433 8,403 34,014
20 26,533 18,079 18,049 34,014 7,589 7,559 34,014
25 33,864 21,328 21,298 34,014 -- -- --
35 55,160 29,784 29,754 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
18 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $34,014
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,357 8,625 34,014 9,224 8,503 34,014
2 11,025 9,091 8,379 34,014 8,809 8,118 34,014
3 11,576 8,831 8,139 34,014 8,384 7,725 34,014
4 12,155 8,578 8,034 34,014 7,948 7,441 34,014
5 12,763 8,332 7,802 34,014 7,500 7,020 34,014
6 13,401 8,091 7,738 34,014 7,036 6,725 34,014
7 14,071 7,857 7,513 34,014 6,551 6,259 34,014
8 14,775 7,629 7,446 34,014 6,037 5,886 34,014
9 15,513 7,407 7,228 34,014 5,487 5,347 34,014
10 16,289 7,190 7,160 34,014 4,893 4,863 34,014
11 17,103 6,989 6,959 34,014 4,258 4,228 34,014
12 17,959 6,793 6,763 34,014 3,570 3,540 34,014
13 18,856 6,601 6,571 34,014 2,824 2,794 34,014
14 19,799 6,415 6,385 34,014 2,017 1,987 34,014
15 20,789 6,232 6,202 34,014 1,136 1,106 34,014
16 21,829 6,054 6,024 34,014 168 138 34,014
17 22,920 5,880 5,850 34,014 -- -- --
18 24,066 5,711 5,681 34,014 -- -- --
19 25,270 5,545 5,515 34,014 -- -- --
20 26,533 5,384 5,354 34,014 -- -- --
25 33,864 4,632 4,602 34,014 -- -- --
35 55,160 3,374 3,344 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
19 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,856 9,831 20,001 10,642 9,623 20,001
2 11,025 11,752 10,737 20,001 11,302 10,296 20,001
3 11,576 12,725 11,722 20,001 12,017 11,026 20,001
4 12,155 13,781 12,944 20,001 12,796 11,974 20,001
5 12,763 14,927 14,111 20,001 13,653 12,852 20,001
6 13,401 16,172 15,580 20,001 14,600 14,024 20,001
7 14,071 17,523 16,961 20,001 15,657 15,110 20,001
8 14,775 18,993 18,668 21,082 16,849 16,535 20,001
9 15,513 20,604 20,322 22,458 18,208 17,932 20,001
10 16,289 22,339 22,309 24,349 19,736 19,706 21,512
11 17,103 24,420 24,390 26,374 21,571 21,541 23,296
12 17,959 26,704 26,674 28,573 23,585 23,555 25,235
13 18,856 29,190 29,160 31,232 25,775 25,745 27,578
14 19,799 31,921 31,891 33,835 28,182 28,152 29,873
15 20,789 34,898 34,868 36,991 30,800 30,770 32,648
16 21,829 38,170 38,140 40,078 33,685 33,655 35,368
17 22,920 41,737 41,707 43,823 36,821 36,791 38,661
18 24,066 45,639 45,609 47,921 40,225 40,195 42,236
19 25,270 49,910 49,880 52,405 43,915 43,885 46,110
20 26,533 54,583 54,583 57,312 47,909 47,879 50,304
25 33,864 85,651 85,651 89,933 73,287 73,287 76,951
35 55,160 211,074 211,074 213,184 175,108 175,108 176,858
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
20 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,270 9,258 20,001 10,054 9,048 20,001
2 11,025 10,516 9,525 20,001 10,048 9,068 20,001
3 11,576 10,768 9,800 20,001 10,010 9,055 20,001
4 12,155 11,028 10,232 20,001 9,933 9,158 20,001
5 12,763 11,294 10,523 20,001 9,811 9,069 20,001
6 13,401 11,567 11,022 20,001 9,632 9,120 20,001
7 14,071 11,848 11,330 20,001 9,385 8,909 20,001
8 14,775 12,137 11,846 20,001 9,053 8,796 20,001
9 15,513 12,433 12,172 20,001 8,614 8,390 20,001
10 16,289 12,738 12,708 20,001 8,044 8,014 20,001
11 17,103 13,155 13,125 20,001 7,380 7,350 20,001
12 17,959 13,587 13,557 20,001 6,522 6,492 20,001
13 18,856 14,035 14,005 20,001 5,425 5,395 20,001
14 19,799 14,498 14,468 20,001 4,026 3,996 20,001
15 20,789 14,977 14,947 20,001 2,243 2,213 20,001
16 21,829 15,474 15,444 20,001 -- -- --
17 22,920 15,988 15,958 20,001 -- -- --
18 24,066 16,520 16,490 20,001 -- -- --
19 25,270 17,070 17,040 20,001 -- -- --
20 26,533 17,640 17,610 20,001 -- -- --
25 33,864 20,807 20,777 21,846 -- -- --
35 55,160 29,071 29,041 29,361 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
21 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,684 8,709 20,001 9,465 8,512 20,001
2 11,025 9,348 8,430 20,001 8,867 7,995 20,001
3 11,576 9,023 8,158 20,001 8,230 7,439 20,001
4 12,155 8,708 8,025 20,001 7,545 6,949 20,001
5 12,763 8,404 7,764 20,001 6,803 6,280 20,001
6 13,401 8,109 7,673 20,001 5,991 5,661 20,001
7 14,071 7,823 7,421 20,001 5,090 4,818 20,001
8 14,775 7,546 7,327 20,001 4,078 3,946 20,001
9 15,513 7,278 7,084 20,001 2,927 2,831 20,001
10 16,289 7,019 6,989 20,001 1,605 1,575 20,001
11 17,103 6,822 6,792 20,001 84 54 20,001
12 17,959 6,630 6,600 20,001 -- -- --
13 18,856 6,442 6,412 20,001 -- -- --
14 19,799 6,259 6,229 20,001 -- -- --
15 20,789 6,081 6,051 20,001 -- -- --
16 21,829 5,906 5,876 20,001 -- -- --
17 22,920 5,736 5,706 20,001 -- -- --
18 24,066 5,570 5,540 20,001 -- -- --
19 25,270 5,408 5,378 20,001 -- -- --
20 26,533 5,249 5,219 20,001 -- -- --
25 33,864 4,513 4,483 20,001 -- -- --
35 55,160 3,281 3,251 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
22 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,489 9,709 20,001 10,262 9,482 20,001
2 11,025 11,429 10,649 20,001 10,946 10,166 20,001
3 11,576 12,455 11,675 20,001 11,692 10,912 20,001
4 12,155 13,576 12,946 20,001 12,512 11,882 20,001
5 12,763 14,801 14,171 20,001 13,419 12,789 20,001
6 13,401 16,139 15,709 20,001 14,429 13,999 20,001
7 14,071 17,602 17,172 20,001 15,565 15,135 20,001
8 14,775 19,204 18,974 21,316 16,855 16,625 20,001
9 15,513 20,969 20,739 22,855 18,338 18,108 20,001
10 16,289 22,884 22,854 24,943 20,009 19,979 21,809
11 17,103 25,017 24,987 27,018 21,870 21,840 23,619
12 17,959 27,357 27,327 29,272 23,912 23,882 25,585
13 18,856 29,904 29,874 31,997 26,132 26,102 27,961
14 19,799 32,703 32,673 34,664 28,574 28,544 30,288
15 20,789 35,754 35,724 37,898 31,229 31,199 33,102
16 21,829 39,107 39,077 41,062 34,154 34,124 35,861
17 22,920 42,762 42,732 44,900 37,334 37,304 39,200
18 24,066 46,761 46,731 49,099 40,786 40,756 42,825
19 25,270 51,138 51,138 53,694 44,528 44,498 46,754
20 26,533 55,960 55,960 58,757 48,578 48,548 51,006
25 33,864 87,811 87,811 92,201 74,311 74,311 78,026
35 55,160 216,397 216,397 218,560 177,555 177,555 179,330
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
23 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,923 9,149 20,001 9,693 8,936 20,001
2 11,025 10,226 9,446 20,001 9,729 8,970 20,001
3 11,576 10,539 9,759 20,001 9,734 8,974 20,001
4 12,155 10,863 10,233 20,001 9,703 9,091 20,001
5 12,763 11,198 10,568 20,001 9,628 9,020 20,001
6 13,401 11,544 11,114 20,001 9,499 9,089 20,001
7 14,071 11,901 11,471 20,001 9,304 8,902 20,001
8 14,775 12,271 12,041 20,001 9,026 8,816 20,001
9 15,513 12,653 12,423 20,001 8,645 8,442 20,001
10 16,289 13,048 13,018 20,001 8,136 8,106 20,001
11 17,103 13,476 13,446 20,001 7,484 7,454 20,001
12 17,959 13,920 13,890 20,001 6,640 6,610 20,001
13 18,856 14,379 14,349 20,001 5,559 5,529 20,001
14 19,799 14,854 14,824 20,001 4,182 4,152 20,001
15 20,789 15,346 15,316 20,001 2,424 2,394 20,001
16 21,829 15,856 15,826 20,001 167 137 20,001
17 22,920 16,383 16,353 20,001 -- -- --
18 24,066 16,929 16,899 20,001 -- -- --
19 25,270 17,494 17,464 20,001 -- -- --
20 26,533 18,079 18,049 20,001 -- -- --
25 33,864 21,328 21,298 22,394 -- -- --
35 55,160 29,808 29,778 30,106 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
24 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $20,001
ISSUE AGE: MALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,357 8,625 20,001 9,125 8,411 20,001
2 11,025 9,091 8,379 20,001 8,583 7,910 20,001
3 11,576 8,831 8,139 20,001 7,998 7,368 20,001
4 12,155 8,578 8,034 20,001 7,361 6,889 20,001
5 12,763 8,332 7,802 20,001 6,662 6,232 20,001
6 13,401 8,091 7,738 20,001 5,888 5,622 20,001
7 14,071 7,857 7,513 20,001 5,020 4,789 20,001
8 14,775 7,629 7,446 20,001 4,036 3,925 20,001
9 15,513 7,407 7,228 20,001 2,906 2,818 20,001
10 16,289 7,190 7,160 20,001 1,599 1,569 20,001
11 17,103 6,989 6,959 20,001 78 48 20,001
12 17,959 6,793 6,763 20,001 -- -- --
13 18,856 6,601 6,571 20,001 -- -- --
14 19,799 6,415 6,385 20,001 -- -- --
15 20,789 6,232 6,202 20,001 -- -- --
16 21,829 6,054 6,024 20,001 -- -- --
17 22,920 5,880 5,850 20,001 -- -- --
18 24,066 5,711 5,681 20,001 -- -- --
19 25,270 5,545 5,515 20,001 -- -- --
20 26,533 5,384 5,354 20,001 -- -- --
25 33,864 4,632 4,602 20,001 -- -- --
35 55,160 3,374 3,344 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
25 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,923 9,898 45,872 10,923 9,898 45,872
2 11,025 11,893 10,875 45,872 11,893 10,875 45,872
3 11,576 12,944 11,938 45,872 12,944 11,938 45,872
4 12,155 14,084 13,243 45,872 14,084 13,243 45,872
5 12,763 15,320 14,499 45,872 15,320 14,499 45,872
6 13,401 16,659 16,063 45,872 16,659 16,063 45,872
7 14,071 18,110 17,544 45,872 18,110 17,544 45,872
8 14,775 19,680 19,352 45,872 19,680 19,352 45,872
9 15,513 21,381 21,097 45,872 21,381 21,097 45,872
10 16,289 23,221 23,191 45,872 23,221 23,191 45,872
11 17,103 25,421 25,391 45,872 25,420 25,390 45,872
12 17,959 27,832 27,802 45,872 27,827 27,797 45,872
13 18,856 30,477 30,447 45,872 30,470 30,440 45,872
14 19,799 33,387 33,357 45,872 33,378 33,348 45,872
15 20,789 36,600 36,570 45,872 36,591 36,561 45,872
16 21,829 40,162 40,132 46,186 40,152 40,122 46,174
17 22,920 44,102 44,072 49,835 44,091 44,061 49,822
18 24,066 48,431 48,401 53,758 48,419 48,389 53,744
19 25,270 53,190 53,190 57,977 53,176 53,176 57,962
20 26,533 58,426 58,426 63,684 58,411 58,411 63,668
25 33,864 93,127 93,127 98,714 93,103 93,103 98,689
35 55,160 233,177 233,177 244,835 227,324 227,324 238,689
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
26 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,334 9,321 45,872 10,334 9,321 45,872
2 11,025 10,641 9,648 45,872 10,641 9,648 45,872
3 11,576 10,950 9,978 45,872 10,950 9,978 45,872
4 12,155 11,260 10,461 45,872 11,260 10,461 45,872
5 12,763 11,569 10,794 45,872 11,569 10,794 45,872
6 13,401 11,875 11,326 45,872 11,875 11,326 45,872
7 14,071 12,182 11,661 45,872 12,174 11,653 45,872
8 14,775 12,499 12,206 45,872 12,464 12,171 45,872
9 15,513 12,824 12,562 45,872 12,737 12,476 45,872
10 16,289 13,158 13,128 45,872 12,990 12,960 45,872
11 17,103 13,611 13,581 45,872 13,322 13,292 45,872
12 17,959 14,081 14,051 45,872 13,626 13,596 45,872
13 18,856 14,567 14,537 45,872 13,896 13,866 45,872
14 19,799 15,072 15,042 45,872 14,121 14,091 45,872
15 20,789 15,595 15,565 45,872 14,293 14,263 45,872
16 21,829 16,137 16,107 45,872 14,396 14,366 45,872
17 22,920 16,700 16,670 45,872 14,410 14,380 45,872
18 24,066 17,283 17,253 45,872 14,309 14,279 45,872
19 25,270 17,887 17,857 45,872 14,062 14,032 45,872
20 26,533 18,514 18,484 45,872 13,630 13,600 45,872
25 33,864 22,010 21,980 45,872 6,780 6,750 45,872
35 55,160 31,215 31,185 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
27 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,744 8,764 45,872 9,744 8,764 45,872
2 11,025 9,458 8,530 45,872 9,458 8,530 45,872
3 11,576 9,171 8,293 45,872 9,171 8,293 45,872
4 12,155 8,881 8,185 45,872 8,881 8,185 45,872
5 12,763 8,587 7,934 45,872 8,587 7,934 45,872
6 13,401 8,298 7,853 45,872 8,284 7,840 45,872
7 14,071 8,019 7,608 45,872 7,970 7,562 45,872
8 14,775 7,747 7,524 45,872 7,641 7,420 45,872
9 15,513 7,484 7,286 45,872 7,290 7,096 45,872
10 16,289 7,229 7,199 45,872 6,911 6,881 45,872
11 17,103 7,038 7,008 45,872 6,550 6,520 45,872
12 17,959 6,851 6,821 45,872 6,142 6,112 45,872
13 18,856 6,668 6,638 45,872 5,678 5,648 45,872
14 19,799 6,490 6,460 45,872 5,149 5,119 45,872
15 20,789 6,315 6,285 45,872 4,540 4,510 45,872
16 21,829 6,144 6,114 45,872 3,835 3,805 45,872
17 22,920 5,977 5,947 45,872 3,009 2,979 45,872
18 24,066 5,814 5,784 45,872 2,029 1,999 45,872
19 25,270 5,654 5,624 45,872 856 826 45,872
20 26,533 5,498 5,468 45,872 -- -- --
25 33,864 4,769 4,739 45,872 -- -- --
35 55,160 3,537 3,507 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
28 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,555 9,775 45,872 10,555 9,775 45,872
2 11,025 11,565 10,785 45,872 11,565 10,785 45,872
3 11,576 12,668 11,888 45,872 12,668 11,888 45,872
4 12,155 13,873 13,243 45,872 13,873 13,243 45,872
5 12,763 15,187 14,557 45,872 15,187 14,557 45,872
6 13,401 16,622 16,192 45,872 16,622 16,192 45,872
7 14,071 18,187 17,757 45,872 18,187 17,757 45,872
8 14,775 19,894 19,664 45,872 19,894 19,664 45,872
9 15,513 21,757 21,527 45,872 21,757 21,527 45,872
10 16,289 23,789 23,759 45,872 23,789 23,759 45,872
11 17,103 26,049 26,019 45,872 26,049 26,019 45,872
12 17,959 28,525 28,495 45,872 28,525 28,495 45,872
13 18,856 31,245 31,215 45,872 31,245 31,215 45,872
14 19,799 34,241 34,211 45,872 34,240 34,210 45,872
15 20,789 37,552 37,522 45,872 37,551 37,521 45,872
16 21,829 41,223 41,193 47,406 41,222 41,192 47,405
17 22,920 45,269 45,239 51,154 45,269 45,239 51,153
18 24,066 49,714 49,684 55,182 49,713 49,683 55,181
19 25,270 54,600 54,600 59,513 54,599 54,599 59,512
20 26,533 59,975 59,975 65,372 59,973 59,973 65,371
25 33,864 95,596 95,596 101,331 95,594 95,594 101,329
35 55,160 239,357 239,357 251,324 233,404 233,404 245,074
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
29 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,985 9,206 45,872 9,985 9,206 45,872
2 11,025 10,347 9,567 45,872 10,347 9,567 45,872
3 11,576 10,716 9,936 45,872 10,716 9,936 45,872
4 12,155 11,090 10,460 45,872 11,090 10,460 45,872
5 12,763 11,468 10,838 45,872 11,468 10,838 45,872
6 13,401 11,847 11,417 45,872 11,847 11,417 45,872
7 14,071 12,233 11,803 45,872 12,225 11,795 45,872
8 14,775 12,633 12,403 45,872 12,599 12,369 45,872
9 15,513 13,047 12,817 45,872 12,962 12,732 45,872
10 16,289 13,475 13,445 45,872 13,310 13,280 45,872
11 17,103 13,940 13,910 45,872 13,658 13,628 45,872
12 17,959 14,421 14,391 45,872 13,978 13,948 45,872
13 18,856 14,920 14,890 45,872 14,265 14,235 45,872
14 19,799 15,438 15,408 45,872 14,511 14,481 45,872
15 20,789 15,974 15,944 45,872 14,703 14,673 45,872
16 21,829 16,531 16,501 45,872 14,830 14,800 45,872
17 22,920 17,108 17,078 45,872 14,870 14,840 45,872
18 24,066 17,706 17,676 45,872 14,799 14,769 45,872
19 25,270 18,326 18,296 45,872 14,585 14,555 45,872
20 26,533 18,968 18,938 45,872 14,192 14,162 45,872
25 33,864 22,555 22,525 45,872 7,669 7,639 45,872
35 55,160 31,997 31,967 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
30 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $45,872
ISSUE AGE: MALE 55 PREFERRED
ISSUE AGE: FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,415 8,679 45,872 9,415 8,679 45,872
2 11,025 9,197 8,477 45,872 9,197 8,477 45,872
3 11,576 8,975 8,272 45,872 8,975 8,272 45,872
4 12,155 8,747 8,192 45,872 8,747 8,192 45,872
5 12,763 8,511 7,970 45,872 8,511 7,970 45,872
6 13,401 8,278 7,917 45,872 8,264 7,903 45,872
7 14,071 8,052 7,700 45,872 8,003 7,653 45,872
8 14,775 7,830 7,644 45,872 7,723 7,539 45,872
9 15,513 7,614 7,432 45,872 7,419 7,241 45,872
10 16,289 7,403 7,373 45,872 7,084 7,054 45,872
11 17,103 7,208 7,178 45,872 6,721 6,691 45,872
12 17,959 7,017 6,987 45,872 6,311 6,281 45,872
13 18,856 6,831 6,801 45,872 5,846 5,816 45,872
14 19,799 6,648 6,618 45,872 5,315 5,285 45,872
15 20,789 6,470 6,440 45,872 4,706 4,676 45,872
16 21,829 6,296 6,266 45,872 4,000 3,970 45,872
17 22,920 6,126 6,096 45,872 3,174 3,144 45,872
18 24,066 5,959 5,929 45,872 2,195 2,165 45,872
19 25,270 5,796 5,766 45,872 1,023 993 45,872
20 26,533 5,637 5,607 45,872 -- -- --
25 33,864 4,893 4,863 45,872 -- -- --
35 55,160 3,636 3,606 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
31 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,917 9,891 28,491 10,917 9,891 28,491
2 11,025 11,866 10,849 28,491 11,866 10,849 28,491
3 11,576 12,881 11,876 28,491 12,881 11,876 28,491
4 12,155 13,971 13,132 28,491 13,967 13,127 28,491
5 12,763 15,157 14,338 28,491 15,130 14,310 28,491
6 13,401 16,446 15,851 28,491 16,377 15,783 28,491
7 14,071 17,847 17,283 28,491 17,717 17,154 28,491
8 14,775 19,371 19,044 28,491 19,162 18,836 28,491
9 15,513 21,027 20,745 28,491 20,725 20,444 28,491
10 16,289 22,828 22,798 28,491 22,430 22,400 28,491
11 17,103 24,986 24,956 28,491 24,506 24,476 28,491
12 17,959 27,388 27,358 29,304 26,841 26,811 28,719
13 18,856 30,038 30,008 32,141 29,438 29,408 31,498
14 19,799 32,947 32,917 34,923 32,288 32,258 34,224
15 20,789 36,120 36,090 38,287 35,397 35,367 37,520
16 21,829 39,606 39,576 41,585 38,812 38,782 40,752
17 22,920 43,405 43,375 45,575 42,534 42,504 44,661
18 24,066 47,540 47,510 49,916 46,585 46,555 48,914
19 25,270 52,068 52,068 54,670 50,986 50,986 53,535
20 26,533 57,063 57,063 59,916 55,791 55,791 58,580
25 33,864 90,217 90,217 94,727 86,273 86,273 90,587
35 55,160 225,504 225,504 227,759 207,094 207,094 209,164
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
32 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,327 9,315 28,491 10,327 9,315 28,491
2 11,025 10,614 9,621 28,491 10,614 9,621 28,491
3 11,576 10,885 9,915 28,491 10,885 9,914 28,491
4 12,155 11,165 10,367 28,491 11,136 10,339 28,491
5 12,763 11,452 10,679 28,491 11,363 10,591 28,491
6 13,401 11,748 11,200 28,491 11,557 11,011 28,491
7 14,071 12,051 11,531 28,491 11,710 11,192 28,491
8 14,775 12,364 12,072 28,491 11,811 11,522 28,491
9 15,513 12,685 12,424 28,491 11,843 11,583 28,491
10 16,289 13,016 12,986 28,491 11,790 11,760 28,491
11 17,103 13,464 13,434 28,491 11,728 11,698 28,491
12 17,959 13,928 13,898 28,491 11,544 11,514 28,491
13 18,856 14,409 14,379 28,491 11,211 11,181 28,491
14 19,799 14,907 14,877 28,491 10,696 10,666 28,491
15 20,789 15,424 15,394 28,491 9,952 9,922 28,491
16 21,829 15,961 15,931 28,491 8,917 8,887 28,491
17 22,920 16,516 16,486 28,491 7,501 7,471 28,491
18 24,066 17,093 17,063 28,491 5,576 5,546 28,491
19 25,270 17,690 17,660 28,491 2,969 2,939 28,491
20 26,533 18,309 18,279 28,491 -- -- --
25 33,864 21,765 21,735 28,491 -- -- --
35 55,160 30,864 30,834 31,172 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
33 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,738 8,758 28,491 9,738 8,758 28,491
2 11,025 9,431 8,505 28,491 9,431 8,505 28,491
3 11,576 9,117 8,244 28,491 9,105 8,233 28,491
4 12,155 8,813 8,122 28,491 8,754 8,068 28,491
5 12,763 8,518 7,870 28,491 8,372 7,735 28,491
6 13,401 8,231 7,790 28,491 7,949 7,522 28,491
7 14,071 7,954 7,546 28,491 7,475 7,090 28,491
8 14,775 7,684 7,462 28,491 6,933 6,729 28,491
9 15,513 7,423 7,226 28,491 6,304 6,132 28,491
10 16,289 7,170 7,140 28,491 5,564 5,534 28,491
11 17,103 6,980 6,950 28,491 4,729 4,699 28,491
12 17,959 6,794 6,764 28,491 3,718 3,688 28,491
13 18,856 6,613 6,583 28,491 2,496 2,466 28,491
14 19,799 6,435 6,405 28,491 1,014 984 28,491
15 20,789 6,262 6,232 28,491 -- -- --
16 21,829 6,092 6,062 28,491 -- -- --
17 22,920 5,927 5,897 28,491 -- -- --
18 24,066 5,765 5,735 28,491 -- -- --
19 25,270 5,606 5,576 28,491 -- -- --
20 26,533 5,451 5,421 28,491 -- -- --
25 33,864 4,727 4,697 28,491 -- -- --
35 55,160 3,504 3,474 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
34 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,548 9,768 28,491 10,548 9,768 28,491
2 11,025 11,537 10,757 28,491 11,537 10,757 28,491
3 11,576 12,603 11,823 28,491 12,603 11,823 28,491
4 12,155 13,758 13,128 28,491 13,751 13,121 28,491
5 12,763 15,023 14,393 28,491 14,990 14,360 28,491
6 13,401 16,407 15,977 28,491 16,330 15,900 28,491
7 14,071 17,921 17,491 28,491 17,782 17,352 28,491
8 14,775 19,578 19,348 28,491 19,360 19,130 28,491
9 15,513 21,391 21,161 28,491 21,086 20,856 28,491
10 16,289 23,375 23,345 28,491 22,985 22,955 28,491
11 17,103 25,593 25,563 28,491 25,136 25,106 28,491
12 17,959 28,070 28,040 30,034 27,556 27,526 29,484
13 18,856 30,787 30,757 32,942 30,223 30,193 32,338
14 19,799 33,769 33,739 35,794 33,150 33,120 35,138
15 20,789 37,022 36,992 39,243 36,342 36,312 38,522
16 21,829 40,596 40,566 42,625 39,850 39,820 41,842
17 22,920 44,491 44,461 46,715 43,673 43,643 45,856
18 24,066 48,729 48,699 51,165 47,833 47,803 50,224
19 25,270 53,372 53,372 56,040 52,353 52,353 54,970
20 26,533 58,492 58,492 61,416 57,287 57,287 60,151
25 33,864 92,476 92,476 97,100 88,586 88,586 93,015
35 55,160 231,152 231,152 233,463 212,645 212,645 214,771
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
35 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.14% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,978 9,200 28,491 9,978 9,200 28,491
2 11,025 10,320 9,540 28,491 10,320 9,540 28,491
3 11,576 10,652 9,872 28,491 10,649 9,869 28,491
4 12,155 10,996 10,366 28,491 10,963 10,333 28,491
5 12,763 11,352 10,722 28,491 11,256 10,626 28,491
6 13,401 11,721 11,291 28,491 11,522 11,092 28,491
7 14,071 12,103 11,673 28,491 11,751 11,321 28,491
8 14,775 12,498 12,268 28,491 11,932 11,702 28,491
9 15,513 12,907 12,677 28,491 12,051 11,821 28,491
10 16,289 13,330 13,300 28,491 12,091 12,061 28,491
11 17,103 13,789 13,759 28,491 12,052 12,022 28,491
12 17,959 14,265 14,235 28,491 11,894 11,864 28,491
13 18,856 14,759 14,729 28,491 11,593 11,563 28,491
14 19,799 15,270 15,240 28,491 11,115 11,085 28,491
15 20,789 15,801 15,771 28,491 10,417 10,387 28,491
16 21,829 16,351 16,321 28,491 9,438 9,408 28,491
17 22,920 16,921 16,891 28,491 8,091 8,061 28,491
18 24,066 17,512 17,482 28,491 6,255 6,225 28,491
19 25,270 18,125 18,095 28,491 3,761 3,731 28,491
20 26,533 18,760 18,730 28,491 375 345 28,491
25 33,864 22,305 22,275 28,491 -- -- --
35 55,160 31,639 31,609 31,955 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
36 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
INITIAL PREMIUM: $10,000
INITIAL FACE AMOUNT: $28,491
ISSUE AGE: MALE 65 PREFERRED
ISSUE AGE: FEMALE 65 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.86% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,409 8,673 28,491 9,409 8,673 28,491
2 11,025 9,170 8,452 28,491 9,170 8,452 28,491
3 11,576 8,921 8,222 28,491 8,908 8,210 28,491
4 12,155 8,679 8,129 28,491 8,617 8,070 28,491
5 12,763 8,443 7,906 28,491 8,292 7,764 28,491
6 13,401 8,212 7,854 28,491 7,923 7,576 28,491
7 14,071 7,987 7,637 28,491 7,498 7,168 28,491
8 14,775 7,767 7,582 28,491 7,003 6,833 28,491
9 15,513 7,552 7,371 28,491 6,417 6,259 28,491
10 16,289 7,343 7,313 28,491 5,717 5,687 28,491
11 17,103 7,149 7,119 28,491 4,883 4,853 28,491
12 17,959 6,960 6,930 28,491 3,876 3,846 28,491
13 18,856 6,774 6,744 28,491 2,658 2,628 28,491
14 19,799 6,593 6,563 28,491 1,182 1,152 28,491
15 20,789 6,416 6,386 28,491 -- -- --
16 21,829 6,243 6,213 28,491 -- -- --
17 22,920 6,074 6,044 28,491 -- -- --
18 24,066 5,909 5,879 28,491 -- -- --
19 25,270 5,747 5,717 28,491 -- -- --
20 26,533 5,589 5,559 28,491 -- -- --
25 33,864 4,850 4,820 28,491 -- -- --
35 55,160 3,602 3,572 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
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
37 - PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FIVE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Five (Money Market Portfolio,
North American Government Securities Portfolio, Balanced Portfolio, Utilities
Portfolio, Dividend Growth Portfolio, Value-Added Market Portfolio, Growth
Portfolio, American Value Portfolio, Global Equity Portfolio, Developing Growth
Portfolio, Emerging Markets Portfolio, Diversified Income Portfolio, Mid-Cap
Growth Portfolio, High Yield Portfolio, Mid-Cap Portfolio, Emerging Markets Debt
Portfolio, Strategic Stock Portfolio, and Enterprise Portfolio), (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.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1999
SA-1 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statement of Assets and Liabilities
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Funds:
Money Market Portfolio
Shares 22,976
Cost $ 22,976
Market Value........................ $22,976 --
North American Government Securities
Portfolio
Shares 107
Cost $ 1,077
Market Value........................ -- $1,087
Balanced Growth Portfolio
Shares 256
Cost $ 3,641
Market Value........................ -- --
Utilities Portfolio
Shares 1,417
Cost $ 23,944
Market Value........................ -- --
Dividend Growth Portfolio
Shares 5,732
Cost $113,070
Market Value........................ -- --
Value-Added Market Portfolio
Shares 1,238
Cost $ 23,865
Market Value........................ -- --
Growth Portfolio
Shares 71
Cost $ 1,040
Market Value........................ -- --
American Value Portfolio
Shares 1,503
Cost $ 28,854
Market Value........................ -- --
Global Equity Portfolio
Shares 1,888
Cost $ 25,508
Market Value........................ -- --
Developing Growth Portfolio
Shares 2,042
Cost $ 39,099
Market Value........................ -- --
Due from Hartford Life Insurance
Company.............................. -- --
Receivable from fund shares sold...... -- --
------------ ------
Total Assets.......................... 22,976 1,087
------------ ------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- --
Payable for fund shares purchased..... -- --
------------ ------
Total Liabilities..................... -- --
------------ ------
Net Assets (variable life contract
liabilities)......................... $22,976 $1,087
------------ ------
------------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
SA-2 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED AMERICAN
BALANCED UTILITIES GROWTH MARKET GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Funds:
Money Market Portfolio
Shares 22,976
Cost $ 22,976
Market Value........................ -- -- -- -- -- --
North American Government Securities
Portfolio
Shares 107
Cost $ 1,077
Market Value........................ -- -- -- -- -- --
Balanced Growth Portfolio
Shares 256
Cost $ 3,641
Market Value........................ $4,187 -- -- -- -- --
Utilities Portfolio
Shares 1,417
Cost $ 23,944
Market Value........................ -- $26,511 -- -- -- --
Dividend Growth Portfolio
Shares 5,732
Cost $113,070
Market Value........................ -- -- $126,388 -- -- --
Value-Added Market Portfolio
Shares 1,238
Cost $ 23,865
Market Value........................ -- -- -- $23,762 -- --
Growth Portfolio
Shares 71
Cost $ 1,040
Market Value........................ -- -- -- -- $1,301 --
American Value Portfolio
Shares 1,503
Cost $ 28,854
Market Value........................ -- -- -- -- -- $35,027
Global Equity Portfolio
Shares 1,888
Cost $ 25,508
Market Value........................ -- -- -- -- -- --
Developing Growth Portfolio
Shares 2,042
Cost $ 39,099
Market Value........................ -- -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. -- -- -- -- -- --
Receivable from fund shares sold...... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Assets.......................... 4,187 26,511 126,388 23,762 1,301 35,027
----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- -- -- -- --
Payable for fund shares purchased..... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities..................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net Assets (variable life contract
liabilities)......................... $4,187 $26,511 $126,388 $23,762 $1,301 $35,027
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
GLOBAL
EQUITY DEVELOPING
VALUE GROWTH
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Funds:
Money Market Portfolio
Shares 22,976
Cost $ 22,976
Market Value........................ -- --
North American Government Securities
Portfolio
Shares 107
Cost $ 1,077
Market Value........................ -- --
Balanced Growth Portfolio
Shares 256
Cost $ 3,641
Market Value........................ -- --
Utilities Portfolio
Shares 1,417
Cost $ 23,944
Market Value........................ -- --
Dividend Growth Portfolio
Shares 5,732
Cost $113,070
Market Value........................ -- --
Value-Added Market Portfolio
Shares 1,238
Cost $ 23,865
Market Value........................ -- --
Growth Portfolio
Shares 71
Cost $ 1,040
Market Value........................ -- --
American Value Portfolio
Shares 1,503
Cost $ 28,854
Market Value........................ -- --
Global Equity Portfolio
Shares 1,888
Cost $ 25,508
Market Value........................ $27,735 --
Developing Growth Portfolio
Shares 2,042
Cost $ 39,099
Market Value........................ -- $42,486
Due from Hartford Life Insurance
Company.............................. -- --
Receivable from fund shares sold...... -- --
----------- -----------
Total Assets.......................... 27,735 42,486
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- --
Payable for fund shares purchased..... -- --
----------- -----------
Total Liabilities..................... -- --
----------- -----------
Net Assets (variable life contract
liabilities)......................... $27,735 $42,486
----------- -----------
----------- -----------
</TABLE>
SA-3 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statement of Assets and Liabilities -- (continued)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Funds:
Emerging Market Portfolio
Shares 83
Cost $ 1,015
Market Value........................ $659 --
Diversified Income Portfolio
Shares 3,192
Cost $32,583
Market Value........................ -- $31,695
Mid-Cap Growth Portfolio
Shares 516
Cost $ 5,473
Market Value........................ -- --
Investments in Morgan Stanley Universal
Funds:
High Yield Portfolio
Shares 97
Cost $ 1,068
Market Value........................ -- --
Mid-Cap Portfolio
Shares 68
Cost $ 1,032
Market Value........................ -- --
Emerging Markets Debt Fund
Shares 2,420
Cost $22,689
Market Value........................ -- --
Investments in Van Kampen Funds:
Strategic Stock Fund
Shares 87
Cost $ 1,000
Market Value........................ -- --
Enterprise Fund
Shares 47
Cost $ 1,000
Market Value........................ -- --
Due from Hartford Life Insurance
Company.............................. -- --
Receivable from fund shares sold...... -- --
----- -----------
Total Assets.......................... 659 31,695
----- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- --
Payable for fund shares purchased..... -- --
----- -----------
Total Liabilities..................... -- --
----- -----------
Net Assets (variable life contract
liabilities)......................... $659 $31,695
----- -----------
----- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
SA-4 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
GROWTH HIGH YIELD MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Funds:
Emerging Market Portfolio
Shares 83
Cost $ 1,015
Market Value........................ -- -- -- -- -- --
Diversified Income Portfolio
Shares 3,192
Cost $32,583
Market Value........................ -- -- -- -- -- --
Mid-Cap Growth Portfolio
Shares 516
Cost $ 5,473
Market Value........................ $6,120 -- -- -- -- --
Investments in Morgan Stanley Universal
Funds:
High Yield Portfolio
Shares 97
Cost $ 1,068
Market Value........................ -- $1,006 -- -- -- --
Mid-Cap Portfolio
Shares 68
Cost $ 1,032
Market Value........................ -- -- $1,006 -- -- --
Emerging Markets Debt Fund
Shares 2,420
Cost $22,689
Market Value........................ -- -- -- $14,765 -- --
Investments in Van Kampen Funds:
Strategic Stock Fund
Shares 87
Cost $ 1,000
Market Value........................ -- -- -- -- $1,033 --
Enterprise Fund
Shares 47
Cost $ 1,000
Market Value........................ -- -- -- -- -- $1,060
Due from Hartford Life Insurance
Company.............................. -- -- -- -- -- --
Receivable from fund shares sold...... -- -- -- -- -- --
----------- ----------- ----------- ------------ ------ -----------
Total Assets.......................... 6,120 1,006 1,006 14,765 1,033 1,060
----------- ----------- ----------- ------------ ------ -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- -- -- -- --
Payable for fund shares purchased..... -- -- -- -- -- --
----------- ----------- ----------- ------------ ------ -----------
Total Liabilities..................... -- -- -- -- -- --
----------- ----------- ----------- ------------ ------ -----------
Net Assets (variable life contract
liabilities)......................... $6,120 $1,006 $1,006 $14,765 $1,033 $1,060
----------- ----------- ----------- ------------ ------ -----------
----------- ----------- ----------- ------------ ------ -----------
</TABLE>
SA-5 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statement of Assets and Liabilities -- (continued)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNITS
OWNED
BY CONTRACT
PARTICIPANTS UNIT PRICE LIABILITY
------ ---------- --------
<S> <C> <C> <C>
INDIVIDUAL DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Money Market Portfolio............................... 21,164 $ 1.085641 $22,976
North American Government Securities Portfolio....... 100 10.866400 1,087
Balanced Portfolio................................... 327 12.817596 4,187
Utilities Portfolio.................................. 1,761 15.051545 26,511
Dividend Growth Portfolio............................ 9,458 13.363243 126,388
Value-Added Market Portfolio......................... 1,829 12.991413 23,762
Growth Portfolio..................................... 100 13.000700 1,301
American Value Portfolio............................. 2,121 16.515884 35,027
Global Equity Portfolio.............................. 2,408 11.515729 27,735
Developing Growth Portfolio.......................... 3,237 13.126689 42,486
Emerging Markets Portfolio........................... 100 6.586700 659
Diversified Income Portfolio......................... 2,859 11.084591 31,695
Mid-Cap Growth Portfolio............................. 489 12.514755 6,120
--------
SUB-TOTAL............................................ 349,934
--------
GROUP DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION
PERIOD:
High Yield Portfolio................................. 100 10.053100 1,006
Mid-Cap Portfolio.................................... 100 10.058200 1,006
Emerging Markets Debt Portfolio...................... 2,177 6.783341 14,765
Strategic Stock Portfolio............................ 100 10.329000 1,033
Enterprise Portfolio................................. 100 10.596300 1,060
--------
SUB-TOTAL............................................ 18,870
--------
GRAND TOTAL............................................ $368,804
--------
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
SA-6 PROSPECTUS
<PAGE>
This page intentionally left blank.
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statements of Operations
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
Investment income:
Dividends............................. $1,723 $47
----------- ---
Net investment income (loss).......... 1,723 47
----------- ---
Capital gains income.................... -- --
----------- ---
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on security
transactions......................... -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- (2)
----------- ---
Net gain (loss) on investments...... -- (2)
----------- ---
Net increase (decrease) in net
assets resulting from operations... $1,723 $45
----------- ---
----------- ---
</TABLE>
The accompanying notes are an integral part of these financial statements.
SA-8 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED AMERICAN
BALANCED UTILITIES GROWTH MARKET GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends............................. $108 $ 310 $ 1,991 $ 170 -$- $ 167
----- ----------- ----------- ----- ----- -----------
Net investment income (loss).......... 108 310 1,991 170 -- 167
----- ----------- ----------- ----- ----- -----------
Capital gains income.................... 86 273 4,319 331 34 1,308
----- ----------- ----------- ----- ----- -----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on security
transactions......................... -- 2 5,289 (3) -- 5,367
Net unrealized appreciation
(depreciation) of investments during
the period........................... 338 2,358 9,599 (249) 118 3,491
----- ----------- ----------- ----- ----- -----------
Net gain (loss) on investments...... 338 2,360 14,888 (252) 118 8,858
----- ----------- ----------- ----- ----- -----------
Net increase (decrease) in net
assets resulting from operations... $532 $2,943 $21,198 $ 249 $152 $10,333
----- ----------- ----------- ----- ----- -----------
----- ----------- ----------- ----- ----- -----------
<CAPTION>
GLOBAL DEVELOPING
EQUITY GROWTH
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
Investment income:
Dividends............................. $ 388 $ 76
----------- -----------
Net investment income (loss).......... 388 76
----------- -----------
Capital gains income.................... 96 58
----------- -----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on security
transactions......................... 5,127 (34)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 2,441 1,841
----------- -----------
Net gain (loss) on investments...... 7,568 1,807
----------- -----------
Net increase (decrease) in net
assets resulting from operations... $8,052 $1,941
----------- -----------
----------- -----------
</TABLE>
SA-9 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statements of Operations -- (continued)
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
Investment income:
Dividends............................. $ 9 $1,650
----------- -----------
Net investment income (loss)........ 9 1,650
----------- -----------
Capital gains income.................... 2 42
----------- -----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on security
transactions......................... (1,107) --
Net unrealized appreciation
(depreciation) of investments during
the period........................... (281) (947)
----------- -----------
Net gain (loss) on investments...... (1,388) (947)
----------- -----------
Net increase (decrease) in net
assets resulting from operations... $(1,377) $ 745
----------- -----------
----------- -----------
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
SA-10 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
GROWTH HIGH YIELD MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
----------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends............................. $ 39 $ 57 $ 2 $ 1,756 $-- $--
----- --- --- ------------ --------------- -----------
Net investment income (loss)........ 39 57 2 1,756 -- --
----- --- --- ------------ --------------- -----------
Capital gains income.................... 53 11 29 -- -- --
----- --- --- ------------ --------------- -----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on security
transactions......................... -- -- -- (60) -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 236 (62) (26) (7,924) 33 60
----- --- --- ------------ --------------- -----------
Net gain (loss) on investments...... 236 (62) (26) (7,984) 33 60
----- --- --- ------------ --------------- -----------
Net increase (decrease) in net
assets resulting from operations... $328 $ 6 $ 5 $(6,228) $33 $60
----- --- --- ------------ --------------- -----------
----- --- --- ------------ --------------- -----------
</TABLE>
SA-11 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
Operations:
Net investment income (loss)................................... $ 1,723 $ 47
Capital gains income........................................... -- --
Net realized gain (loss) on security transactions.............. -- --
Net unrealized appreciation (depreciation) of investments
during the period............................................. -- (2)
------------ ------
Net increase (decrease) in net assets resulting from
operations.................................................... 1,723 45
------------ ------
Unit transactions:
Purchases...................................................... 164,406 --
Net transfers.................................................. (54,386) --
Surrenders for benefit payments and fees....................... (110,832) --
Loan withdrawals............................................... -- --
Cost of insurance.............................................. (302) --
------------ ------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. (1,114) --
------------ ------
Total increase (decrease) in net assets........................ 609 45
Net assets:
Beginning of period............................................ 22,367 1,042
------------ ------
End of period.................................................. $ 22,976 $1,087
------------ ------
------------ ------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
Operations:
Net investment income (loss)................................... $ 950 $ 30
Capital gains income........................................... -- --
Net realized gain (loss) on security transactions.............. -- --
Net unrealized appreciation (depreciation) of investments
during the period............................................. -- 12
------------ ------
Net increase (decrease) in net assets resulting from
operations.................................................... 950 42
------------ ------
Unit transactions:
Purchases...................................................... 259,950 1,000
Net transfers.................................................. (237,803) --
Surrenders for benefit payments and fees....................... (491) --
Loan withdrawals............................................... -- --
Cost of insurance.............................................. (239) --
------------ ------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 21,417 1,000
------------ ------
Total increase (decrease) in net assets........................ 22,367 1,042
Net assets:
Beginning of period............................................ -- --
------------ ------
End of period.................................................. $ 22,367 $1,042
------------ ------
------------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
SA-12 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED
BALANCED UTILITIES GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)................................... $ 108 $ 310 $ 1,991 $ 170
Capital gains income........................................... 86 273 4,319 331
Net realized gain (loss) on security transactions.............. -- 2 5,289 (3)
Net unrealized appreciation (depreciation) of investments
during the period............................................. 338 2,358 9,599 (249)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.................................................... 532 2,943 21,198 249
----------- ----------- ----------- -----------
Unit transactions:
Purchases...................................................... -- -- -- --
Net transfers.................................................. -- 22,647 1,712 22,647
Surrenders for benefit payments and fees....................... (50) (225) (3,479) (212)
Loan withdrawals............................................... -- -- 1,673 --
Cost of insurance.............................................. (18) (86) (674) (80)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. (68) 22,336 (768) 22,355
----------- ----------- ----------- -----------
Total increase (decrease) in net assets........................ 464 25,279 20,430 22,604
Net assets:
Beginning of period............................................ 3,723 1,232 105,958 1,158
----------- ----------- ----------- -----------
End of period.................................................. $4,187 $26,511 $126,388 $23,762
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
DIVIDEND VALUE-ADDED
BALANCED UTILITIES GROWTH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -----------
Operations:
Net investment income (loss)................................... $ 17 $ 18 $ 729 $ 10
Capital gains income........................................... 3 4 37 2
Net realized gain (loss) on security transactions.............. -- -- 49 --
Net unrealized appreciation (depreciation) of investments
during the period............................................. 208 210 3,719 146
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.................................................... 228 232 4,534 158
----------- ----------- ----------- -----------
Unit transactions:
Purchases...................................................... 1,000 1,000 1,000 1,000
Net transfers.................................................. 2,500 -- 102,911 --
Surrenders for benefit payments and fees....................... (4) -- (607) --
Loan withdrawals............................................... -- -- (1,647) --
Cost of insurance.............................................. (1) -- (233) --
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 3,495 1,000 101,424 1,000
----------- ----------- ----------- -----------
Total increase (decrease) in net assets........................ 3,723 1,232 105,958 1,158
Net assets:
Beginning of period............................................ -- -- -- --
----------- ----------- ----------- -----------
End of period.................................................. $3,723 $ 1,232 $105,958 $ 1,158
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
AMERICAN GLOBAL DEVELOPING
GROWTH VALUE EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)................................... $-- $ 167 $ 388 $ 76
Capital gains income........................................... 34 1,308 96 58
Net realized gain (loss) on security transactions.............. -- 5,367 5,127 (34)
Net unrealized appreciation (depreciation) of investments
during the period............................................. 118 3,491 2,441 1,841
------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.................................................... 152 10,333 8,052 1,941
------ ----------- ----------- -----------
Unit transactions:
Purchases...................................................... -- -- -- --
Net transfers.................................................. -- (20,608) (37,288) 21,315
Surrenders for benefit payments and fees....................... -- (2,132) (2,292) (510)
Loan withdrawals............................................... -- 1,673 1,723 --
Cost of insurance.............................................. -- (164) (222) (192)
------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. -- (21,231) (38,079) 20,613
------ ----------- ----------- -----------
Total increase (decrease) in net assets........................ 152 (10,898) (30,027) 22,554
Net assets:
Beginning of period............................................ 1,149 45,925 57,762 19,932
------ ----------- ----------- -----------
End of period.................................................. $1,301 $ 35,027 $ 27,735 $42,486
------ ----------- ----------- -----------
------ ----------- ----------- -----------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
AMERICAN GLOBAL DEVELOPING
GROWTH VALUE EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- -----------
Operations:
Net investment income (loss)................................... $ 1 $ 33 $ 111 $ 7
Capital gains income........................................... 5 22 2 --
Net realized gain (loss) on security transactions.............. -- 64 58 8
Net unrealized appreciation (depreciation) of investments
during the period............................................. 143 2,682 (214) 1,546
------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.................................................... 149 2,801 (43) 1,561
------ ----------- ----------- -----------
Unit transactions:
Purchases...................................................... 1,000 1,000 1,000 1,000
Net transfers.................................................. -- 43,968 58,859 17,580
Surrenders for benefit payments and fees....................... -- (138) (256) (151)
Loan withdrawals............................................... -- (1,653) (1,700) --
Cost of insurance.............................................. -- (53) (98) (58)
------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 1,000 43,124 57,805 18,371
------ ----------- ----------- -----------
Total increase (decrease) in net assets........................ 1,149 45,925 57,762 19,932
Net assets:
Beginning of period............................................ -- -- -- --
------ ----------- ----------- -----------
End of period.................................................. $1,149 $ 45,925 $ 57,762 $19,932
------ ----------- ----------- -----------
------ ----------- ----------- -----------
</TABLE>
SA-13 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets -- (continued)
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------- ------------
<S> <C> <C>
Operations:
Net investment income (loss)................................... $ 9 $ 1,650
Capital gains income........................................... 2 42
Net realized gain (loss) on security transactions.............. (1,107) --
Net unrealized appreciation (depreciation) of investments
during the period............................................. (281) (947)
---------- ------------
Net increase (decrease) in net assets resulting from
operations.................................................... (1,377) 745
---------- ------------
Unit transactions:
Purchases...................................................... -- --
Net transfers.................................................. 1,107 22,647
Surrenders for benefit payments and fees....................... 1 (367)
Loan withdrawals............................................... -- --
Cost of insurance.............................................. -- (137)
---------- ------------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 1,108 22,143
---------- ------------
Total increase (decrease) in net assets........................ (269) 22,888
Net assets:
Beginning of period............................................ 928 8,807
---------- ------------
End of period.................................................. $ 659 $31,695
---------- ------------
---------- ------------
* From inception, April 1, 1998, to December 31, 1998.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------- ------------
Operations:
Net investment income (loss)................................... $ 3 $ 348
Capital gains income........................................... -- 2
Net realized gain (loss) on security transactions.............. -- --
Net unrealized appreciation (depreciation) of investments
during the period............................................. (75) 59
---------- ------------
Net increase (decrease) in net assets resulting from
operations.................................................... (72) 409
---------- ------------
Unit transactions:
Purchases...................................................... 1,000 1,000
Net transfers.................................................. -- 7,487
Surrenders for benefit payments and fees....................... -- --
Loan withdrawals............................................... -- (66)
Cost of insurance.............................................. -- (23)
---------- ------------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 1,000 8,398
---------- ------------
Total increase (decrease) in net assets........................ 928 8,807
Net assets:
Beginning of period............................................ -- --
---------- ------------
End of period.................................................. $ 928 $ 8,807
---------- ------------
---------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
SA-14 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
EMERGING
MID-CAP MARKETS
GROWTH HIGH YIELD MID-CAP DEBT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)................................... $ 39 $ 57 $ 2 $1,756
Capital gains income........................................... 53 11 29 --
Net realized gain (loss) on security transactions.............. -- -- -- (60)
Net unrealized appreciation (depreciation) of investments
during the period............................................. 236 (62) (26) (7,924)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.................................................... 328 6 5 (6,228)
----------- ----------- ----------- -----------
Unit transactions:
Purchases...................................................... -- 1,000 1,000 1,000
Net transfers.................................................. -- -- -- 20,208
Surrenders for benefit payments and fees....................... (84) -- 1 (155)
Loan withdrawals............................................... -- -- -- --
Cost of insurance.............................................. (30) -- -- (60)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. (114) 1,000 1,001 20,993
----------- ----------- ----------- -----------
Total increase (decrease) in net assets........................ 214 1,006 1,006 14,765
Net assets:
Beginning of period............................................ 5,906 -- -- --
----------- ----------- ----------- -----------
End of period.................................................. $6,120 $1,006 $1,006 $14,765
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
* From inception, April 1, 1998, to December 31, 1998.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
MID-CAP
GROWTH
PORTFOLIO
SUB-ACCOUNT
-----------
Operations:
Net investment income (loss)................................... $ 23
Capital gains income........................................... --
Net realized gain (loss) on security transactions.............. --
Net unrealized appreciation (depreciation) of investments
during the period............................................. 411
-----------
Net increase (decrease) in net assets resulting from
operations.................................................... 434
-----------
Unit transactions:
Purchases...................................................... 1,000
Net transfers.................................................. 4,498
Surrenders for benefit payments and fees....................... --
Loan withdrawals............................................... (19)
Cost of insurance.............................................. (7)
-----------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 5,472
-----------
Total increase (decrease) in net assets........................ 5,906
Net assets:
Beginning of period............................................ --
-----------
End of period.................................................. $5,906
-----------
-----------
<CAPTION>
STRATEGIC STOCK ENTERPRISE
PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT*
--------------- -------------
<S> <C> <C>
Operations:
Net investment income (loss)................................... $-- $--
Capital gains income........................................... -- --
Net realized gain (loss) on security transactions.............. -- --
Net unrealized appreciation (depreciation) of investments
during the period............................................. 33 60
------ ------
Net increase (decrease) in net assets resulting from
operations.................................................... 33 60
------ ------
Unit transactions:
Purchases...................................................... 1,000 1,000
Net transfers.................................................. -- --
Surrenders for benefit payments and fees....................... -- --
Loan withdrawals............................................... -- --
Cost of insurance.............................................. -- --
------ ------
Net increase (decrease) in net assets resulting from unit
transactions.................................................. 1,000 1,000
------ ------
Total increase (decrease) in net assets........................ 1,033 1,060
Net assets:
Beginning of period............................................ -- --
------ ------
End of period.................................................. $1,033 $1,060
------ ------
------ ------
* From inception, April 1, 1998, to December 31, 1998.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
Operations:
Net investment income (loss)...................................
Capital gains income...........................................
Net realized gain (loss) on security transactions..............
Net unrealized appreciation (depreciation) of investments
during the period.............................................
Net increase (decrease) in net assets resulting from
operations....................................................
Unit transactions:
Purchases......................................................
Net transfers..................................................
Surrenders for benefit payments and fees.......................
Loan withdrawals...............................................
Cost of insurance..............................................
Net increase (decrease) in net assets resulting from unit
transactions..................................................
Total increase (decrease) in net assets........................
Net assets:
Beginning of period............................................
End of period..................................................
</TABLE>
SA-15 PROSPECTUS
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account with
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 those
dividends from the Funds which are characterized as capital gains under tax
regulations.
b) Security Valuation -- The investments in shares of the Morgan Stanley
Dean Witter Select Dimensions Investment Series, the Morgan Stanley Universal
Funds, Inc. and Van Kampen American Capital Life Investment Trust Mutual Funds
is 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 Charge -- In accordance with terms of the contracts,
the Company makes deductions for costs of insurance to cover the Company's
anticipated mortality cost. Because a policy's account value and death benefit
may vary from month to month, the cost of insurance charge may also vary.
b) Mortality and Expense 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 for benefit payments and fees 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
owner's accounts, in accordance with the terms of the contracts. These expenses
are reflected in Surrenders for benefit payments and fees 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%. These expenses are
reflected in Surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
SA-16 PROSPECTUS
<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.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 26, 1999
F-1 PROSPECTUS
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1998 1997 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
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 PROSPECTUS
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1998 1997
------- -------
<S> <C> <C>
(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 PROSPECTUS
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
---------------
NET UNREALIZED
CAPITAL GAINS
(LOSSES) ON TOTAL
COMMON CAPITAL SECURITIES, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ ------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(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 PROSPECTUS
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
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 PROSPECTUS
<PAGE>
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 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
F-6 PROSPECTUS
<PAGE>
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 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
F-7 PROSPECTUS
<PAGE>
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 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.
F-8 PROSPECTUS
<PAGE>
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,
-------------------------------
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>
(B) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
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,
-------------------------------------
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,
-------------------------------------
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>
F-9 PROSPECTUS
<PAGE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
---------------------------------------------------
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>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
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.
MATURITY
<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
----------- -----------
<S> <C> <C>
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.
F-10 PROSPECTUS
<PAGE>
(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 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)
----------------------------------------------------------------------------------
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>
F-11 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
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 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>
DECEMBER 31, 1997 MATURITIES/ DECEMBER 31, 1998
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
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
F-12 PROSPECTUS
<PAGE>
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.
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>
<CAPTION>
1998 1997
------------------ ------------------
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,
-------------------------------
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
F-13 PROSPECTUS
<PAGE>
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 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.
F-14 PROSPECTUS
<PAGE>
Net premiums and other considerations were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
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>
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,
-------------------------------------
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,
-------------------------------------
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>
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 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.
F-15 PROSPECTUS
<PAGE>
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.
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.
F-16 PROSPECTUS
<PAGE>
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>
14. QUARTERLY RESULTS FOR 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------- -------------------- --------------------
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-17 PROSPECTUS
<PAGE>
SCHEDULE I -- SUMMARY OF INVESTMENTS --
OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1998
(IN MILLIONS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT AT
WHICH
FAIR SHOWN ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- --------------------------------------------- ------- ------- --------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U. S. Government and Government agencies
and authorities (guaranteed 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-18 PROSPECTUS
<PAGE>
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
REALIZED CLAIMS AND OF DEFERRED
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-19 PROSPECTUS
<PAGE>
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-20 PROSPECTUS
