<PAGE>
<TABLE>
<S> <C>
SELECT DIMENSIONS LIFE
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
TELEPHONE: 1-800-231-5453 [LOGO]
</TABLE>
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This Prospectus describes information you should know before you purchase Select
Dimensions Life. Please read it carefully.
Select Dimensions Life is a modified single premium variable life insurance
policy. It is:
x Modified single premium, because you make one single premium payment, and
under certain limited circumstances, you may make additional premium
payments.
x Variable, because the value of your life insurance policy will fluctuate with
the performance of the underlying 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 (effective September 7, 1999,
closed to new investments or transfer of existing Contract Values)
- - 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 (FORMERLY NAMED AMERICAN VALUE SUB-ACCOUNT)
which purchases shares of American Opportunities Portfolio (formerly known as
American Value Portfolio) of the Morgan Stanley Dean Witter Select Dimensions
Investment Series
- - MID-CAP EQUITY SUB-ACCOUNT (FORMERLY NAMED MID-CAP GROWTH SUB-ACCOUNT) which
purchases shares of Mid-Cap Equity Portfolio (formerly named 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
- - EMERGING MARKETS SUB-ACCOUNT which purchases shares of Emerging Markets
Portfolio of the Morgan Stanley Dean Witter Select Dimensions Investment
Series (effective September 7, 1999, closed to new investments or transfers of
existing Contract Value)
<PAGE>
- - HIGH YIELD SUB-ACCOUNT which purchases shares of High Yield Portfolio of the
The Universal Institutional Funds, Inc.
- - MID-CAP VALUE SUB-ACCOUNT which purchases shares of Mid-Cap Value Portfolio of
the The Universal Institutional Funds, Inc.
- - EMERGING MARKETS DEBT SUB-ACCOUNT which purchases shares of Emerging Markets
Debt Portfolio of the The Universal Institutional Funds, Inc.
- - EMERGING MARKETS EQUITY SUB-ACCOUNT which purchases shares of Emerging Markets
Equity Portfolio of the The Universal Institutional Funds, Inc.
- - FIXED INCOME SUB-ACCOUNT which purchases shares of Fixed Income Portfolio of
the The Universal Institutional Funds, Inc.
- - ACTIVE INTERNATIONAL ALLOCATION SUB-ACCOUNT which purchases shares of Active
International Allocation Portfolio of the The Universal Institutional
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. 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 website at (HTTP://WWW.SEC.GOV).
This life insurance policy IS NOT:
- a bank deposit or obligation
- federally insured
- endorsed by any bank or governmental agency
- available for sale in all states
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PROSPECTUS DATED: MAY 1, 2000
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY OF BENEFITS AND RISKS 4
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FEE TABLE 5
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ABOUT US 8
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Hartford Life Insurance Company 8
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Separate Account Five 8
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The Funds 8
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CHARGES AND DEDUCTIONS 11
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YOUR POLICY 12
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PREMIUMS 13
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DEATH BENEFITS AND POLICY VALUES 15
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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 20
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OTHER MATTERS 20
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GLOSSARY OF SPECIAL TERMS 21
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APPENDIX A -- SPECIAL INFORMATION FOR POLICIES PURCHASED IN
NEW YORK 22
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<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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SUMMARY OF BENEFITS AND RISKS
BENEFITS OF YOUR POLICY
FLEXIBILITY -- The policy is designed to be flexible to meet your specific life
insurance needs. You have the flexibility to choose your premium payment,
settlement options and investment options.
RIGHT TO EXAMINE -- For a limited time, usually 10 days after you receive your
life insurance policy, you may cancel it without paying a surrender charge. A
longer period may be 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 PAYMENT PAY FOR?
Your premium payment pays for insurance coverage, it acts as an investment in
the Sub-Accounts, and it pays for sales charges, premium taxes and
administrative fees.
RISKS OF YOUR POLICY
INVESTMENT PERFORMANCE -- The value of your policy will fluctuate with the
performance of its underlying 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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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FEE TABLE
The following tables describes the MAXIMUM fees and expenses that you will pay
when buying, owning, and surrendering the policy. The first table describes the
maximum fees and expenses that you will pay at the time that you surrender the
policy.
SURRENDER FEES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
<S> <C> <C> <C>
Surrender Charges When you fully or partially A percentage of the amount
surrender your policy. surrendered, not to exceed the
premium payments, depending on the
Policy Year, in which the premium
payment was made.
The percentage is as follows:
Policy Year Percentage
-- -----
1 7.5%
2 7.5%
3 7.5%
4 6%
5 6%
6 4%
7 4%
8 2%
9 2%
10+ 0%
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Unamortized Tax Charge Upon surrender or partial surrender A percentage of the Account Value
of the policy. depending on the Policy Year the
surrender takes place.
The percentage is as follows:
Policy Year Percentage
-- -----
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
<CAPTION>
CHARGE POLICIES FROM WHICH CHARGE IS DEDUCTED
<S> <C>
Surrender Charges All, if the surrender is subject to a
charge.
- ----------------------
Unamortized Tax Charge All
</TABLE>
The next table describes the MAXIMUM fees and expenses that you will pay
periodically during the time that you own the policy, not including Portfolio
fees and expenses.
ANNUAL CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
<S> <C> <C>
Cost of Insurance Monthly. Individualized depending on age,
Charges sex and other factors.
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Mortality and Expense Monthly. .90% (annualized) of Sub-Account
Risk Charge Value
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Tax Expense Charge Monthly. .40% (annualized) of Account Value
for Policy Years 1-10
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Annual Maintenance Fee On Policy Anniversary Date or upon $30.00
surrender of the policy.
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Administrative Charge Monthly. .40% (annualized) of Sub-Account
Value
<CAPTION>
CHARGE POLICIES FROM WHICH CHARGE IS DEDUCTED
<S> <C>
Cost of Insurance All
Charges
- ----------------------
Mortality and Expense All
Risk Charge
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Tax Expense Charge All
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Annual Maintenance Fee Only policies with an Account Value of
less than $50,000 on the Policy
Anniversary Date or date of surrender.
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Administrative Charge All
</TABLE>
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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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. More detail concerning
each Portfolio's fees and expenses is contained in the prospectus for each
Portfolio.
ANNUAL FUND OPERATING EXPENSES
AS OF THE FUND'S YEAR END
(As a percentage of average net assets)
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING EXPENSES
OTHER EXPENSES INCLUDING ANY
MANAGEMENT FEES INCLUDING ANY WAIVERS OR
INCLUDING ANY WAIVERS REIMBURSEMENTS REIMBURSEMENTS
<S> <C> <C> <C>
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MORGAN STANLEY DEAN WITTER SELECT DIMENSIONS INVESTMENT
SERIES:
Money Market Portfolio 0.50% 0.04% 0.54%
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North American Government Securities Portfolio (1) 0.65% 0.36% 1.01%
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Diversified Income Portfolio 0.40% 0.08% 0.48%
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Balanced Growth Portfolio 0.60% 0.04% 0.64%
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Utilities Portfolio 0.65% 0.05% 0.70%
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Dividend Growth Portfolio 0.58% 0.02% 0.60%
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Value-Added Market Portfolio 0.50% 0.05% 0.55%
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Growth Portfolio 0.80% 0.10% 0.90%
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American Opportunities Portfolio 0.62% 0.04% 0.66%
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Mid-Cap Equity Portfolio (formerly Mid-Cap Growth) (2) 0.75% 0.17% 0.92%
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Global Equity Portfolio 1.00% 0.08% 1.08%
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Developing Growth Portfolio 0.50% 0.08% 0.58%
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Emerging Markets Portfolio (1) 1.25% 0.59% 1.84%
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THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
High Yield Portfolio (3) 0.50% 0.61% 1.11%
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Mid-Cap Value Portfolio (3) 0.75% 0.62% 1.37%
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Emerging Markets Debt Portfolio (3) 0.80% 0.98% 1.78%
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Emerging Markets Equity Portfolio (3) 1.25% 1.37% 2.62%
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Fixed Income Portfolio (3) 0.40% 0.56% 0.96%
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Active International Allocation Portfolio (3) 0.80% 1.83% 2.63%
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VAN KAMPEN LIFE INVESTMENT TRUST:
Strategic Stock Portfolio (4) 0.50% 0.41% 0.91%
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Enterprise Portfolio (4) 0.50% 0.12% 0.62%
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</TABLE>
(1) Closed to new investments or transfers of existing Contract Values.
(2) With respect to the Mid-Cap Equity Portfolio, the expense information shown
in the table above has been restated to reflect the current fees. Prior to
December 31, 1999, the investment adviser, Morgan Stanley Dean Witter
Advisors Inc., assumed all expenses of the Portfolio and waived the
compensation provided for the Portfolio in its management agreement with the
Fund.
(3) With respect to the High Yield, Mid-Cap Value, Emerging Markets Debt,
Emerging Markets Equity, Active International Allocation and Fixed Income
Portfolios, the investment advisers have voluntarily agreed to waive their
investment advisory fees and to reimburse certain expenses of the Portfolios
if such fees would cause their respective "Total Fund Operating Expense" to
exceed certain limits. The annual expense ratios for the Active
International Allocation Portfolio are annualized estimates. Including these
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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reductions, it is estimated that "Management Fees", Other Expenses and
"Total Fund Operating Expenses" for the Portfolios would have been as
follows:
<TABLE>
<CAPTION>
TOTAL FUND
PORTFOLIO MANAGEMENT FEES OTHER EXPENSES OPERATING EXPENSES
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
High Yield 0.19% 0.61% 0.80%
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Mid-Cap Value 0.43% 0.62% 1.05%
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Emerging Markets Debt 0.45% 0.98% 1.43%
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Emerging Markets Equity 0.42% 1.37% 1.79%
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Fixed Income 0.14% 0.56% 0.70%
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Active International Allocation 0.00% 1.15% 1.15%
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</TABLE>
(4) With respect to the Strategic Stock Portfolio and the Enterprise Portfolio,
the investment adviser, Van Kampen Asset Management Inc. has voluntarily
agreed to waive its investment advisory fees and to reimburse the Portfolios
if such fees would cause their respective "Total Fund Operating Expenses" to
exceed those set forth in the table above. Including the aforementioned
reductions, it is estimated that "Management Fees", "Other Expenses" and
"Total Fund Operating Expenses" for the Portfolios would be:
<TABLE>
<CAPTION>
TOTAL FUND
PORTFOLIO MANAGEMENT FEES OTHER EXPENSES OPERATING EXPENSES
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Strategic Stock 0.24% 0.41% 0.65%
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Enterprise 0.47% 0.13% 0.60%
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</TABLE>
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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ABOUT US
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States and the District of Columbia. We were originally incorporated
under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately
controlled by The Hartford Financial Services Group, Inc., one of the largest
financial service providers in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
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A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
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Standard & Poor's 8/1/99 AA Insurer financial strength
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Duff & Phelps 7/1/99 AA+ Claims paying ability
- --------------------------------------------------------------------------------
</TABLE>
SEPARATE ACCOUNT FIVE
The Sub-Accounts are subdivisions of our separate account, called Separate
Account Five. The Separate Account was established to keep your life insurance
policy assets separate from our company assets. The investment performance of
the Separate Account is independent from the investment performance of
Hartford's other assets. Hartford's other assets are utilized to pay our
insurance obligations under the policy. Your assets in the Separate Account are
held exclusively for your benefit and the benefit of other policy owners and may
not be used for any other liability of Hartford. Separate Account Five was
established on July 25, 1994 under the laws of Connecticut.
THE FUNDS
The underlying investment for the Contracts are shares of the portfolios of
Morgan Stanley Dean Witter Select Dimensions Investment Series, The Universal
Institutional 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), repurchase agreements and high grade corporate debt obligations
maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO -- (EFFECTIVE SEPTEMBER 7, 1999,
CLOSED TO NEW INVESTMENTS OR TRANSFERS OF EXISTING CONTRACT VALUES). 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 25% of its total assets in investment grade fixed-income
(fixed-rate and adjustable-rate) securities such as corporate notes and bonds
and obligations issued or guaranteed by the U.S. Government, its agencies and
its instrumentalities.
UTILITIES PORTFOLIO -- Seeks to provide both capital appreciation and current
income.
DIVIDEND GROWTH PORTFOLIO -- Seeks to provide reasonable current income and
long-term growth of income and capital by investing primarily in common stock of
companies with a record of paying dividends and the potential for increasing
dividends.
VALUE-ADDED MARKET PORTFOLIO -- Seeks to achieve a high level of total return on
its assets through a combination of capital appreciation and current income, by
investing, on an equally-weighted basis, in a diversified portfolio of common
stocks of the companies which are represented in the Standard & Poor's 500
Composite Stock Price Index.
GROWTH PORTFOLIO -- Seeks long-term growth of capital by investing primarily in
common stocks and securities convertible into common stocks issued by domestic
and foreign companies.
AMERICAN OPPORTUNITIES PORTFOLIO -- (FORMERLY NAMED AMERICAN VALUE PORTFOLIO)
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be attractively valued given their
above average relative earnings growth potential at that time.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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MID-CAP EQUITY PORTFOLIO -- (FORMERLY NAMED MID-CAP GROWTH PORTFOLIO) Seeks
long-term capital growth by investing primarily in equity securities of medium
sized companies (that is, companies whose equity market capitalization falls
within the range of companies comprising the S&P 400 Index).
GLOBAL EQUITY PORTFOLIO -- Seeks to obtain 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 -- (EFFECTIVE SEPTEMBER 7, 1999, CLOSED TO NEW
INVESTMENTS OR TRANSFERS OF EXISTING CONTRACT VALUES). 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.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
HIGH YIELD PORTFOLIO -- Seeks above-average total return over a market cycle of
three to five years by investing primarily in high yield securities (commonly
referred to as "junk bonds"). The Portfolio also may invest in investment grade
fixed income securities, including U.S. Government securities, corporate bonds
and mortgage securities. The Portfolio may invest to a limited extent in foreign
fixed income securities, including emerging market securities. The Investment
Adviser may use futures, swaps and other types of derivatives in managing the
Portfolio.
MID CAP VALUE PORTFOLIO -- Seeks above-average total return over a market cycle
of three to five years by investing in common stocks of companies with
capitalizations in the range of companies included in the S&P MidCap 400 Index
(currently $500 million to $6 billion). The Portfolio purchases stocks that
typically do not pay dividends. The Investment Adviser analyzes securities to
identify stocks that are undervalued, and measures the relative attractiveness
of the Portfolio's current holdings against potential purchases.
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. The Investment Adviser seeks high total return by investing in a
portfolio of emerging market debt that offers low correlation to many other
asset classes. Using macroeconomic and fundamental analysis, the Investment
Adviser seeks to identify developing countries that are undervalued and have
attractive or improving fundamentals. After the country allocation is
determined, the sector and security selection is made within each county.
EMERGING MARKETS EQUITY PORTFOLIO -- Seeks long-term capital appreciation by
investing primarily in equity securities of issuers in emerging market
countries. The Investment Adviser seeks to maximize returns by investing in
growth-oriented equity securities in emerging markets. The Investment Adviser's
investment approach combines top-down country allocation with bottom-up stock
selection. Investment selection criteria include attractive growth
characteristics, reasonable valuations and managements with a strong shareholder
value orientation.
FIXED INCOME PORTFOLIO -- Seeks above-average total return over a market cycle
of three to five years by investing primarily in a diversified mix of dollar
denominated investment grade fixed income securities, particularly U.S.
Government, corporate and mortgage securities. The Portfolio ordinarily will
maintain an average weighted maturity in excess of five years. The Portfolio may
invest opportunistically in non-dollar denominated securities and below
investment grade securities; and it may use futures, swaps and other types of
derivatives in managing the Portfolio.
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO -- Seeks long-term capital
appreciation by investing primarily in accordance with country and sector
weightings determined by the investment adviser in equity securities of non-U.S.
issuers which, in the aggregate, replicate broad-market indices. The Investment
Adviser seeks to maintain a diversified portfolio of international equity
securities based on a top-down approach that emphasizes country and sector
selection and weighting rather than individual stock selection. The Investment
Adviser capitalizes on the significance of country and sector selection in
international equity portfolio returns by over and underweighting countries
based on three factors: (i) valuation; (ii) fundamental change; and
(iii) short-term market momentum/technicals.
VAN KAMPEN LIFE INVESTMENT TRUST:
STRATEGIC STOCK PORTFOLIO -- Seeks an above average total return through a
combination of potential capital appreciation and dividend income, consistent
with the preservation of invested capital. Under normal market conditions, the
Portfolio's investment adviser seeks to achieve the investment objectives by
investing in a portfolio of high dividend yielding equity securities of
companies 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 Portfolio's investment adviser 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 Value
Portfolio, the Mid-Cap Equity Portfolio, the Global Equity Portfolio, the
Developing
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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, the Mid-Cap
Equity Portfolio and the Emerging Markets Portfolio, TCW Investment Management
Company ("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 Advisors, 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
Universal Institutional Funds, Inc., is the investment adviser for the Emerging
Markets Debt Portfolio, Emerging Markets Equity Portfolio and Active
International Allocation Portfolio. As the investment adviser, MSDW Investment
Management, provides investment advice and portfolio management services for the
Emerging Markets Debt, Emerging Markets Equity and Active International
Allocation Portfolios, subject to the supervision of The Universal Institutional
Fund's Board of Directors.
The investment adviser for the High Yield Portfolio, Fixed Income 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 $90 billion under management or supervision as of December 31, 1999. Van
Kampen Investments Inc.'s more than 50 open-end and 39 closed-end funds and more
than 2,700 unit investment trusts are professionally distributed by leading
authorized dealers 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 we begin to make annuity payouts to you, the number of votes you
have will decrease.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These agreements may be different for each Fund
or each Fund family.
* On December 1, 1998, Morgan Stanley Asset Management Inc. changed its name to
Morgan Stanley Dean Witter Investment Management Inc. but continues to do
business in certain instances using the name Morgan Stanley Asset Management.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
CHARGES AND DEDUCTIONS
The deductions or charges associated with this policy are subtracted, depending
on the type of deduction or charge, from premium payments as they are made, upon
surrender or partial surrender of the policy, on the Policy Anniversary Date or
on a monthly pro rated basis from each Sub-Account ("Deduction Amount").
Deductions are taken from premium payments before allocations to the
Sub-Accounts are made.
Deduction Amounts are subtracted on the Policy Date and on each Monthly Activity
Date after the Policy Date to cover charges and expenses incurred in connection
with a policy.
Each Deduction Amount will be subtracted pro rata from each Sub-Account so that
the proportion of Account Value of the policy attributable to each Sub-Account
remains the same before and after the deduction. The Deduction Amount will vary
from month to month. If the Cash Surrender Value is not sufficient to cover a
Deduction Amount due on any Monthly Activity Date, the policy may lapse. See
"Lapse and Reinstatement."
The deductions and charges associated with your policy are listed below.
COST OF INSURANCE CHARGE -- The cost of insurance charge covers Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the tenth Policy Year and are based on whether
100%, 90% or 80% of the Guideline Single Premium has been paid. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum cost of insurance rates per $1,000 will be
included in each Policy; however, Hartford reserves the right to use rates less
than those shown in the Table. For standard risks, the guaranteed maximum cost
of insurance rate is 100% of the 1980 Commissioner's Standard Ordinary
Unismoker, Sex Distinct Age Last Birthday Mortality Table (1980 CSO Table).
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 Death Benefit 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 = $30,000
Insured's attained age = 40
Minimum Coverage Amount percentage for age 40 = 150%
On the Monthly Activity Date, the Coverage Amount is $70,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($30,000) from the
Face Amount ($100,000), subject to a possible Minimum Coverage Amount
adjustment. This Minimum Coverage Amount is determined by taking a percentage of
the Account Value on the Monthly Activity Date. In this case, the Minimum
Coverage Amount is $45,000 (150% of $30,000). Since $45,000 is less than the
Face Amount less the Account Value ($70,000), no adjustment is necessary.
Therefore, the Coverage Amount will be $70,000.
Assume that the Account Value in the above example was $50,000. The Minimum
Coverage Amount would be $25,000 (150% of $50,000). Since this is greater than
the Face Amount less the Account Value ($50,000), the Coverage Amount for the
Policy Month is $75,000. (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.
MORTALITY AND EXPENSE RISK CHARGE -- For assuming mortality and expense risks
under the policy, we deduct monthly from Sub-Account Value a charge equal to an
annual rate of 0.90%. The mortality and expense risk charge is broken into
charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that the Death Proceeds will exceed: (1) the Coverage Amount on
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 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:
- - 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
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
deduction may be higher or lower than the premium tax imposed. However, we do
not expect to make a profit from this deduction.
- - The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
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 -- 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> <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.
ANNUAL MAINTENANCE FEE -- The annual maintenance fee is a flat fee that is
deducted from your Account Value to reimburse us for expenses relating to the
maintenance of the policy. The annual $30 charge is deducted on a Policy
Anniversary or when the policy is fully surrendered if the Account Value at
either of those times is less than $50,000. We reserve the right to waive the
annual maintenance fee under other conditions.
ADMINISTRATIVE CHARGE -- We will deduct a monthly administrative charge from
Sub-Account Value equal to an annual rate of 0.40%. This charge compensates us
for expenses incurred in the administration of the Separate Account and the
policy.
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
- --------------------------------------------------------------------------------
POLICY RIGHTS
POLICY OWNER, OR "YOU" -- As long as your policy is in force, you may exercise
all rights under the policy while the Insured is alive and a beneficiary has not
been irrevocably named.
BENEFICIARY -- You name the beneficiary in the application for the policy. You
may change the beneficiary (unless irrevocably named) during the Insured's
lifetime by written request to us. If no beneficiary is living when the Insured
dies, the Death Proceeds will be paid to the policy owner if living; otherwise
to the policy owner's estate.
ASSIGNMENT -- You may assign your policy as collateral for a loan or other
obligation. Until you notify us in writing, we are not responsible for any
payment made or action taken. We are not responsible for the validity of any
assignment.
STATEMENTS TO POLICY OWNERS -- We will send you a statement at least once each
year, showing:
- - the current Account Value, Cash Surrender Value and Face Amount;
- - the premiums paid, monthly deduction amounts and any loans since your last
statement;
- - the amount of any Indebtedness;
- - any notifications required by the provisions of your policy; and
- - any other information required by the Insurance Department of the state where
your policy was delivered.
LIMIT ON RIGHT TO CONTEST -- During the Insured's lifetime, we may not contest
the validity of the policy after it has been in force for two years from 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
two years from the date we issue the policy, or such period as specified in
state law, the benefit payable will be limited to the Account Value minus any
Indebtedness.
MISSTATEMENT AS TO AGE AND SEX -- If the age or sex of the Insured is
incorrectly stated, the Death Benefit will be appropriately adjusted as
specified in the policy.
POLICY LIMITATIONS
DIVIDENDS -- No dividends will be paid under the policy.
TRANSFERS OF ACCOUNT VALUE -- While the policy remains in force, and subject to
our transfer rules then in effect, you may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
We reserve the right to restrict the number of these transfers to no more than
12 per Policy Year, with no two transfers being made on consecutive Valuation
Days. However, there are no restrictions on the number of transfers at the
present time.
Transfers may be made by written request or by calling us toll free
1-800-231-5453. Transfers by telephone may be made by the agent of record or by
an attorney-in-fact pursuant to a power of attorney. Telephone transfers may not
be permitted in some states. Hartford, its agents or affiliates will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The procedures we follow for
transactions initiated by telephone include requirements that callers provide
certain information for identification purposes. All transfer instructions
received by telephone are tape-recorded. We will send you a confirmation of the
transfer within five days from the date of any transfer.
It is your responsibility to verify the accuracy of all confirmations and to
promptly advise us of any inaccuracies within 30 days of receipt.
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.
- - 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."
- - To qualify for simplified underwriting under a last survivor policy, both
Insureds must meet the simplified underwriting standards.
- - For a last survivor policy to be reinstated, both Insureds must be alive on
the date of reinstatement.
- - The policy provisions regarding misstatement of age or sex, suicide and
incontestability apply to either Insured.
- - 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.
- - 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
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
$10,000. We may accept less than $10,000 under certain circumstances.
Your policy is effective after we receive all outstanding delivery requirements
and receive your initial premium. The date your policy becomes effective is
called the Policy Date. This date is the date used to determine all future
cyclical transactions on your policy. The Policy Date may be prior to, or the
same as, the date your policy is issued ("Issue Date").
If your Coverage Amount is over then current limits established by us, we will
not accept your initial premium payment with your application. In other cases
where we receive the initial payment with the application, we will provide fixed
conditional insurance during underwriting according to the terms of conditional
receipt established by us. The fixed conditional insurance will be the insurance
applied for, up to a maximum that varies by age. If no fixed conditional
insurance was in effect, then on policy delivery we will require a sufficient
payment to place the insurance in force.
PREMIUM PAYMENTS -- You pay a single premium and, subject to restrictions,
additional premiums. You may choose a minimum initial premium of 80%, 90% or
100% of the Guideline Single Premium (based on the Face Amount).
UNDERWRITING RULES OF YOUR POLICY
- - Under current underwriting rules, which are subject to change, if you are
between ages 35 and 80, you may be eligible for simplified underwriting
without a medical examination if you meet simplified underwriting standards.
- - If you are below age 35 or above age 80, or do not meet simplified
underwriting eligibility, full underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines.
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 Funds' 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:
- - the New York Stock Exchange is closed;
- - trading on the New York Stock Exchange is restricted by the SEC;
- - the SEC permits and orders postponement; or
- - the SEC determines that an emergency exists to restrict valuation.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
DEATH BENEFITS AND POLICY VALUES
DEATH BENEFIT -- While in force, your policy provides for the payment of the
Death Proceeds to the beneficiary when the Insured under the policy dies. You
must notify us in writing as soon as possible after the death of the Insured.
The Death Proceeds payable to the beneficiary equal the Death Benefit less any
loans outstanding.
We will pay interest of at least 3 1/2% per year on the Death Proceeds from the
date of the Insured's death to the date payment is made or a settlement option
is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The Death Benefit equals the greater of:
- - the Face Amount; or
- - 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> <C>
- --------------------------------------------------------
Face Amount $100,000 $100,000
- --------------------------------------------------------
Insured's Age 40 40
- --------------------------------------------------------
Account Value on Date of Death $ 46,500 $ 34,000
- --------------------------------------------------------
Specified Percentage 250% 250%
- --------------------------------------------------------
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the Date of Death of
$46,500, multiplied by the specified percentage of 250%). This amount less any
outstanding loans constitutes the Death Proceeds which we would pay to the
beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
DEATH BENEFIT POLICY PROCEEDS -- Proceeds from the Death Benefit left with us
remain in the Sub-Accounts to which they were allocated at the time of death,
unless the beneficiary elects to reallocate them. Full or partial surrenders may
be made at any time.
All or part of the Death Proceeds may be paid in cash or applied under a
Settlement Option.
SETTLEMENT OPTIONS -- The surrender proceeds or Death Proceeds under your policy
may be paid in a lump sum or may be applied to one of our settlement options.
The minimum amount that may be applied under a settlement option is $5,000,
unless we consent to a lesser amount. UNDER SETTLEMENT 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.
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.
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16 HARTFORD LIFE INSURANCE COMPANY
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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."
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.
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HARTFORD LIFE INSURANCE COMPANY 17
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RIGHT TO EXCHANGE -- Once the policy is in effect, it may be exchanged, during
the first 24 months after its issuance, for a non-variable flexible premium
adjustable life insurance policy offered by us (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
policy will have, at your election, either the same Coverage Amount as under the
exchanged policy on the date of exchange or the same Death Benefit. The
effective date, issue date and issue age will be the same as existed under the
exchanged policy. If a policy loan was outstanding, the entire loan must be
repaid. The exchange is subject to adjustments in payments and Account Values to
reflect variances, if any, in the payments and Account Values under this policy
and the new policy.
LOANS
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AVAILABILITY OF LOANS -- At any time while the policy is in force, you, without
the consent of the beneficiary, (provided the designation of beneficiary is not
irrevocable) may borrow against the policy by assigning it as sole security to
us. Two types of cash loans are available. Any new loan taken together with any
existing Indebtedness may not exceed 90% of the Cash Value. The minimum loan
amount that we will allow is $25.00.
The proceeds of a loan will be delivered to you within seven business days of
our receipt of the loan request.
Unless you specify otherwise, all loan amounts will be transferred pro rata
basis from each Sub-Account to the Loan Account. The difference between the
value of the Loan Account and the Indebtedness will be transferred on a pro-rata
basis from the Sub-Accounts to the Loan Account on each Monthly Activity Date.
If total Indebtedness equals or exceeds the Account Value of the policy on any
Monthly Activity Date, we will give you written notice that, unless we receive
an additional payment within 61 days to reduce the aggregate outstanding loan(s)
secured by the policy, the policy may lapse. See "Lapse and Reinstatement."
PREFERRED LOANS -- The amount of the Loan Account that equals the difference
between the Cash Value and the total of all premiums paid under the policy is
considered a "Preferred Loan."
LOAN REPAYMENTS -- You can repay all or any part of a loan at any time while
your policy is in force. The amount of your policy loan repayment will be
deducted from the Loan Account. It will be allocated among the Sub-Accounts in
the same percentage as premiums are allocated. Any outstanding loan at the end
of a grace period must be repaid before the policy will be reinstated.
EFFECT OF LOANS ON ACCOUNT VALUE -- A loan, whether or not repaid, has a
permanent effect on your Account Value. This effect occurs because the
investment result of each Sub-Account applies only to the amount remaining in
such Sub-Accounts. The longer a loan is outstanding, the greater the effect on
your Account Value is likely to be. The effect could be favorable or
unfavorable. If the Sub-Accounts earn more than the annual interest rate for
amounts held in the Loan Account, your Account Value will not increase as
rapidly as it would have had no loan been made. If the Sub-Accounts earn less
than the Loan Account, then your Account Value will be greater than it would
have been had no loan been made. If not repaid, the aggregate amount of the
outstanding Indebtedness will reduce the Death Proceeds and the Cash Surrender
Value otherwise payable. For a discussion of the consequences of obtaining a
loan against the policy see "Federal Tax Considerations."
CREDITED INTEREST -- Any amounts in the Loan Account will be credited with
interest at an annual rate of 4.0%. The annual rate for Preferred Loans is 6%.
POLICY LOAN RATES -- The loan interest rate that we will charge on all loans is
6% per annum.
LAPSE AND REINSTATEMENT
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LAPSE -- Your policy will remain in force until the Cash Surrender Value is
insufficient to cover the Deduction Amount due on a Monthly Activity Date. We
will notify you of the default in writing, warning you that your policy is in
danger of terminating.
GRACE PERIOD -- Your policy provides a 61-day grace period to pay an amount
sufficient to cover the Deduction Amounts due. The notice will indicate the
amount that must be paid.
The policy will continue through the grace period, but if no additional premium
payment is made, it will terminate at the end of the grace period. If the person
Insured under the policy dies during the grace period, the Death Proceeds
payable under the policy will be reduced by the Deduction Amount(s) due and
unpaid. See "Death Benefits and Policy Values."
REINSTATEMENT -- If your policy lapses, you may apply for reinstatement of the
policy by payment of the reinstatement premium shown in the policy and any
applicable charges. A 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:
- - the Cash Value at the time of termination; plus
- - Net Premiums derived from premiums paid at the time of reinstatement; minus
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18 HARTFORD LIFE INSURANCE COMPANY
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- - the Monthly Deduction Amounts that were due and unpaid during the Policy Grace
Period; plus
- - 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 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 policy 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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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 includable 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 includable 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 $675,000 (for 2000) from
the estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the
credit over the next six 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.
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."
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20 HARTFORD LIFE INSURANCE COMPANY
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The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an Owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Since this Policy is a modified
endowment contract, partial withdrawals (or other such amounts deemed to be
distributed) from the Policy constitute income to the Policy Owner for Federal
income tax purposes.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Policy Owner, such
amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF POLICIES
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance contracts. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or beneficiary. A tax adviser should be
consulted to determine the impact of these taxes.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
LEGAL PROCEEDINGS
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There are no material legal proceedings pending to which the Separate Account is
a party.
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.
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HARTFORD LIFE INSURANCE COMPANY 21
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GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of the Sub-Accounts plus the value of the Loan
Account under the policy.
ACCUMULATION UNIT: A unit of measure we use to calculate the value of a
Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial surrender that is
not subject to the Surrender Charge. This amount in any Policy Year is the
greater of 10% of premiums or 100% of your Account Value minus premiums paid.
ANNUITY UNIT: A unit of measure we use to calculate the amount of annuity
payments.
CASH SURRENDER VALUE: The policy's Cash Value minus all Indebtedness.
CASH VALUE: The policy's Account Value minus any Surrender Charge and any
Unamortized Tax charge due upon surrender.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the policy or
(2) the Account Value on the date of death multiplied by a stated percentage as
specified in the policy.
DEATH PROCEEDS: The amount that we will pay on the death of the Insured. This
equals the Death Benefit minus any Indebtedness.
DEDUCTION AMOUNT: A charge on the Policy Date and on each Monthly Activity Date
for the cost of insurance, Tax Expense charges, 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.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
APPENDIX A -- SPECIAL INFORMATION FOR POLICIES
PURCHASED IN NEW YORK
If the Policy is purchased in the State of New York, the following provisions of
the Prospectus are amended as follows:
In the 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 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
SEPARATE ACCOUNT FIVE
This Statement of Additional Information is not a prospectus. To obtain a
prospectus, write to us at P.O. Box 2999, Hartford, CT 06104-2999, or call us at
1-800-231-5453.
DATE OF PROSPECTUS: MAY 1, 2000
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 1, 2000
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY 3
- ----------------------------------------------------------------------
SERVICES 5
- ----------------------------------------------------------------------
EXPERTS 5
- ----------------------------------------------------------------------
DISTRIBUTION OF THE POLICIES 5
- ----------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT CHARGES 6
- ----------------------------------------------------------------------
ILLUSTRATION OF DEATH BENEFITS 7
- ----------------------------------------------------------------------
FINANCIAL STATEMENTS SA-1
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 3
- --------------------------------------------------------------------------------
GENERAL INFORMATION AND HISTORY
HARTFORD LIFE INSURANCE COMPANY -- Hartford Life Insurance Company is a stock
life insurance company engaged in the business of writing life insurance, both
individual and group, in all states of the United States and the District of
Columbia. We were originally incorporated under the laws of Massachusetts on
June 5, 1902, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
The following table shows a brief description of the business experience of
officers and directors of Hartford Life Insurance Company:
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
David A. Carlson Vice President, 1999 Assistant Vice President and Director of Taxes
(1998-1999), Hartford; CIGNA Corporation (1975-1998).
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, Chief Senior Vice President (1998-present); Vice President
Financial Officer & (1998); Assistant Vice President (1995-1998), Hartford;
Treasurer, 1998 Senior Vice President (1998-Present), Hartford Life and
Director, 1999* Accident Insurance Company; Director, Strategic Planning
Corporate Finance (1995-1996); IA Product Development
(1994-1995), Hartford; Various Actuarial Roles
(1989-1993), Milliman & Robertson.
Lynda Godkin Senior Vice President, 1997 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 Senior Vice President, 1999 Vice President (1997-1999), Assistant Vice President
(1994-1997), Hartford; Assistant Vice President
(1994-1997), Hartford Life and Accident Insurance Company;
Vice President (1997-1999), Assistant Vice President
(1994-1997), Hartford Life and Annuity Insurance Company.
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
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 Director of Individual Life, Senior Vice President,
(1998-Present); Vice President, (1995-1998); Regional Vice
President (1991-1994), Hartford; Vice President
(1994-1997), Hartford Life and Accident Insurance Company.
Thomas M. Marra President, 2000 Executive Vice President (1995-2000), Senior Vice
Director, 1994* President (1994-1995); Vice President (1989-1994); Actuary
(1987-1995), Hartford; Director (1994-Present); Executive
Vice President (1995-Present); Senior Vice President
(1994-1995); Vice President (1989-1994), Actuary
(1987-1997), Hartford Life and Accident Insurance Company;
President (2000-present), Executive Vice President
(1996-2000), Director (1994-present), Senior Vice
President (1993-1996), Hartford Life and Annuity Insurance
Company; Chief Operating Officer (2000-present), Executive
Vice President, Individual Life and Annuities (1997-2000),
Hartford Life, Inc.
Craig R. Raymond Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice President
Chief 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
Bancorporation; Vice President (1988-1994), Bankers Trust
Company.
Lowndes A. Smith Chief Executive Officer, 1997 President (1989-2000), Chief Operating Officer
Director, 1981* (1989-1997), Hartford; Chief Executive Officer
(1997-present), President (1989-2000), Chief Operating
Officer (1989-1997), Director (1985-present); Hartford
Life and Annuity Insurance Company; Director
(1981-Present); President (1989-Present); Chief Executive
Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident Insurance Company;
Chief Executive Officer and President and Director
(1997-Present), Hartford Life, Inc.
David M. Znamierowski Senior Vice President & Chief Vice President (1997), Hartford; Director (1998-Present);
Investment Officer, 1997 Senior Vice President (1997-Present), Hartford Life and
Director, 1998* Accident Insurance Company; Vice President, Investment
Strategy (1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy (1991-1996), Aetna
Life and Casualty.
</TABLE>
- ---------
* Denotes date of election to Board of Directors of Hartford.
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.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 5
- --------------------------------------------------------------------------------
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 Deanne Osgood, FSA, MAAA, Vice
President & Director of Individual Annuity Product Management, for Hartford, and
are included in reliance upon her opinion as to their reasonableness.
DISTRIBUTION OF THE POLICIES
- --------------------------------------------------------------------------------
Hartford intends to sell the Policies in all jurisdictions where it is licensed
to do business. The Policies will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Hartford Equity Sales Company, Inc. ("HESCO") or certain other independent,
registered broker-dealers. Any sales representative or employee will have been
qualified to sell variable life insurance Policies under applicable federal and
state laws. Each broker-dealer is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and all are members of the
National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. Both
HESCO and HSD are affiliates of Hartford. The principal business address of
HESCO and HSD is the same as that of Hartford.
The following table shows officers and directors of HSD:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES
<S> <C>
- -----------------------------------------------------------------
David A. Carlson Vice President
- -----------------------------------------------------------------
Peter W. Cummins Senior Vice President
- -----------------------------------------------------------------
David T. Foy Director
- -----------------------------------------------------------------
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary
- -----------------------------------------------------------------
George R. Jay Controller
- -----------------------------------------------------------------
Robert A. Kerzner Executive Vice President
- -----------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director
- -----------------------------------------------------------------
Paul E. Olson Supervising Registered Principal
- -----------------------------------------------------------------
Lowndes A. Smith President and Chief Executive
Officer, Director
- -----------------------------------------------------------------
</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.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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, the guaranteed maximum cost
of insurance rate is 100% of the 1980 Commissioner's Standard Ordinary
Unismoker, Sex Distinct Age Last Birthday Mortality Table (1980 CSO Table).
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the insured's substandard rating. Unisex rates may be
required in some states.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 7
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND
CASH SURRENDER VALUES
The tables illustrate the way in which a Policy operates. They show how the
death benefit and surrender value could vary over an extended period of time
assuming hypothetical gross rates of return equal to constant after tax annual
rates of 0%, 6% and 12%. The tables are based on an initial premium of $10,000.
A male age 45, a female age 55 and a male age 65 with Face Amounts of $40,161,
$33,334 and $19,380, respectively, are illustrated for the single life preferred
Policy. The illustrations for the last survivor preferred Policy assume male and
female of equal ages, including age 55 and 65 for Face Amounts of $44,053 and
$27,778.
The death benefit and surrender value for a 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 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 0.92% 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 0.92% described above) of -0.92%,
5.08% and 11.08%, respectively.
The hypothetical returns shown in the tables are without any tax charges that
may be attributable to the Separate Account in the future. In order to produce
after tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12% to cover any tax charges (see
"Changes to Policy or Separate Account -- Separate Account Taxes").
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
Hartford will furnish upon request, a comparable illustration reflecting the
proposed Insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. Hartford will also
furnish an additional similar illustration reflecting current cost of insurance
rates which may be less than, but never greater than, the guaranteed cost of
insurance rates.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE
INITIAL FACE: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,817 9,824 40,161 10,739 9,748 40,161
2 11,025 11,704 10,720 40,161 11,539 10,558 40,161
3 11,576 12,666 11,694 40,161 12,404 11,437 40,161
4 12,155 13,709 12,904 40,161 13,342 12,542 40,161
5 12,763 14,842 14,056 40,161 14,358 13,579 40,161
6 13,401 16,070 15,510 40,161 15,461 14,906 40,161
7 14,071 17,403 16,873 40,161 16,658 16,133 40,161
8 14,775 18,850 18,555 40,161 17,958 17,668 40,161
9 15,513 20,419 20,168 40,161 19,371 19,123 40,161
10 16,289 22,121 22,121 40,161 20,910 20,910 40,161
11 17,103 24,089 24,089 40,161 22,680 22,680 40,161
12 17,959 26,234 26,234 40,161 24,625 24,625 40,161
13 18,856 28,574 28,574 40,575 26,767 26,767 40,161
14 19,799 31,127 31,127 42,956 29,131 29,131 40,201
15 20,789 33,918 33,918 45,450 31,737 31,737 42,527
16 21,829 36,969 36,969 48,060 34,589 34,589 44,967
17 22,920 40,294 40,294 51,576 37,698 37,698 48,254
18 24,066 43,916 43,916 55,335 41,085 41,085 51,768
19 25,270 47,864 47,864 59,352 44,776 44,776 55,523
20 26,533 52,168 52,168 63,645 48,800 48,800 59,537
25 33,864 80,437 80,437 93,307 75,108 75,108 87,126
35 55,160 191,402 191,402 202,887 178,465 178,465 189,174
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 9
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE
INITIAL FACE: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,233 9,253 40,161 10,155 9,176 40,161
2 11,025 10,472 9,512 40,161 10,303 9,347 40,161
3 11,576 10,717 9,780 40,161 10,445 9,512 40,161
4 12,155 10,969 10,204 40,161 10,579 9,820 40,161
5 12,763 11,227 10,487 40,161 10,703 9,969 40,161
6 13,401 11,493 10,978 40,161 10,816 10,308 40,161
7 14,071 11,765 11,277 40,161 10,915 10,433 40,161
8 14,775 12,044 11,784 40,161 10,997 10,742 40,161
9 15,513 12,331 12,100 40,161 11,058 10,831 40,161
10 16,289 12,625 12,625 40,161 11,096 11,096 40,161
11 17,103 12,992 12,992 40,161 11,153 11,153 40,161
12 17,959 13,371 13,371 40,161 11,182 11,182 40,161
13 18,856 13,761 13,761 40,161 11,181 11,181 40,161
14 19,799 14,164 14,164 40,161 11,146 11,146 40,161
15 20,789 14,580 14,580 40,161 11,072 11,072 40,161
16 21,829 15,008 15,008 40,161 10,953 10,953 40,161
17 22,920 15,450 15,450 40,161 10,780 10,780 40,161
18 24,066 15,906 15,906 40,161 10,544 10,544 40,161
19 25,270 16,377 16,377 40,161 10,234 10,234 40,161
20 26,533 16,862 16,862 40,161 9,837 9,837 40,161
25 33,864 19,528 19,528 40,161 6,047 6,047 40,161
35 55,160 26,277 26,277 40,161 0 0 40,161
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE
INITIAL FACE: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.92%) NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 9,649 8,681 40,161 9,570 8,604 40,161
2 11,025 9,308 8,372 40,161 9,137 8,204 40,161
3 11,576 8,979 8,072 40,161 8,700 7,798 40,161
4 12,155 8,661 7,931 40,161 8,259 7,535 40,161
5 12,763 8,353 7,648 40,161 7,811 7,113 40,161
6 13,401 8,054 7,574 40,161 7,354 6,880 40,161
7 14,071 7,766 7,307 40,161 6,885 6,433 40,161
8 14,775 7,486 7,249 40,161 6,402 6,170 40,161
9 15,513 7,216 6,998 40,161 5,900 5,685 40,161
10 16,289 6,954 6,954 40,161 5,377 5,377 40,161
11 17,103 6,734 6,734 40,161 4,849 4,849 40,161
12 17,959 6,521 6,521 40,161 4,292 4,292 40,161
13 18,856 6,313 6,313 40,161 3,702 3,702 40,161
14 19,799 6,111 6,111 40,161 3,075 3,075 40,161
15 20,789 5,914 5,914 40,161 2,408 2,408 40,161
16 21,829 5,723 5,723 40,161 1,692 1,692 40,161
17 22,920 5,537 5,537 40,161 920 920 40,161
18 24,066 5,357 5,357 40,161 82 82 40,161
19 25,270 5,181 5,181 40,161 0 0 40,161
20 26,533 5,010 5,010 40,161 0 0 40,161
25 33,864 4,222 4,222 40,161 0 0 40,161
35 55,160 2,940 2,940 40,161 0 0 40,161
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 11
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE
INITIAL FACE: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,817 9,824 33,334 10,710 9,719 33,334
2 11,025 11,704 10,720 33,334 11,481 10,501 33,334
3 11,576 12,666 11,694 33,334 12,319 11,353 33,334
4 12,155 13,709 12,904 33,334 13,232 12,433 33,334
5 12,763 14,842 14,056 33,334 14,227 13,449 33,334
6 13,401 16,070 15,510 33,334 15,312 14,759 33,334
7 14,071 17,403 16,873 33,334 16,495 15,971 33,334
8 14,775 18,850 18,555 33,334 17,784 17,495 33,334
9 15,513 20,419 20,168 33,334 19,190 18,942 33,334
10 16,289 22,121 22,121 33,334 20,727 20,727 33,334
11 17,103 24,089 24,089 33,334 22,502 22,502 33,334
12 17,959 26,240 26,240 33,334 24,464 24,464 33,334
13 18,856 28,622 28,622 33,774 26,640 26,640 33,334
14 19,799 31,245 31,245 36,557 29,059 29,059 33,999
15 20,789 34,109 34,109 39,567 31,720 31,720 36,796
16 21,829 37,236 37,236 42,822 34,626 34,626 39,820
17 22,920 40,659 40,659 45,945 37,807 37,807 42,722
18 24,066 44,408 44,408 49,294 41,290 41,290 45,833
19 25,270 48,518 48,518 52,885 45,109 45,109 49,170
20 26,533 52,992 52,992 57,762 49,267 49,267 53,701
25 33,864 82,548 82,548 87,501 76,698 76,698 81,301
35 55,160 197,243 197,243 207,105 181,390 181,390 190,460
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE
INITIAL FACE: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,233 9,253 33,334 10,126 9,148 33,334
2 11,025 10,472 9,512 33,334 10,245 9,290 33,334
3 11,576 10,717 9,780 33,334 10,359 9,428 33,334
4 12,155 10,969 10,204 33,334 10,468 9,711 33,334
5 12,763 11,227 10,487 33,334 10,569 9,836 33,334
6 13,401 11,493 10,978 33,334 10,660 10,153 33,334
7 14,071 11,765 11,277 33,334 10,738 10,258 33,334
8 14,775 12,044 11,784 33,334 10,798 10,544 33,334
9 15,513 12,331 12,100 33,334 10,834 10,607 33,334
10 16,289 12,625 12,625 33,334 10,842 10,842 33,334
11 17,103 12,992 12,992 33,334 10,863 10,863 33,334
12 17,959 13,371 13,371 33,334 10,852 10,852 33,334
13 18,856 13,761 13,761 33,334 10,808 10,808 33,334
14 19,799 14,164 14,164 33,334 10,728 10,728 33,334
15 20,789 14,580 14,580 33,334 10,604 10,604 33,334
16 21,829 15,008 15,008 33,334 10,428 10,428 33,334
17 22,920 15,450 15,450 33,334 10,185 10,185 33,334
18 24,066 15,906 15,906 33,334 9,855 9,855 33,334
19 25,270 16,377 16,377 33,334 9,417 9,417 33,334
20 26,533 16,862 16,862 33,334 8,846 8,846 33,334
25 33,864 19,528 19,528 33,334 2,898 2,898 33,334
35 55,160 26,277 26,277 33,334 0 0 33,334
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 13
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE
INITIAL FACE: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.92%) NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 9,649 8,681 33,334 9,541 8,576 33,334
2 11,025 9,308 8,372 33,334 9,080 8,148 33,334
3 11,576 8,979 8,072 33,334 8,616 7,715 33,334
4 12,155 8,661 7,931 33,334 8,149 7,427 33,334
5 12,763 8,353 7,648 33,334 7,678 6,982 33,334
6 13,401 8,054 7,574 33,334 7,199 6,727 33,334
7 14,071 7,766 7,307 33,334 6,709 6,258 33,334
8 14,775 7,486 7,249 33,334 6,201 5,970 33,334
9 15,513 7,216 6,998 33,334 5,669 5,455 33,334
10 16,289 6,954 6,954 33,334 5,109 5,109 33,334
11 17,103 6,734 6,734 33,334 4,536 4,536 33,334
12 17,959 6,521 6,521 33,334 3,926 3,926 33,334
13 18,856 6,313 6,313 33,334 3,277 3,277 33,334
14 19,799 6,111 6,111 33,334 2,587 2,587 33,334
15 20,789 5,914 5,914 33,334 1,848 1,848 33,334
16 21,829 5,723 5,723 33,334 1,048 1,048 33,334
17 22,920 5,537 5,537 33,334 169 169 33,334
18 24,066 5,357 5,357 33,334 0 0 33,334
19 25,270 5,181 5,181 33,334 0 0 33,334
20 26,533 5,010 5,010 33,334 0 0 33,334
25 33,864 4,222 4,222 33,334 0 0 33,334
35 55,160 2,940 2,940 33,334 0 0 33,334
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE
INITIAL FACE: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,817 9,824 19,380 10,633 9,644 19,380
2 11,025 11,704 10,720 19,380 11,320 10,344 19,380
3 11,576 12,666 11,694 19,380 12,071 11,110 19,380
4 12,155 13,709 12,904 19,380 12,896 12,103 19,380
5 12,763 14,842 14,056 19,380 13,808 13,036 19,380
6 13,401 16,070 15,510 19,380 14,823 14,275 19,380
7 14,071 17,405 16,875 19,669 15,961 15,441 19,380
8 14,775 18,870 18,576 20,947 17,247 16,961 19,380
9 15,513 20,472 20,221 22,315 18,699 18,453 20,383
10 16,289 22,202 22,202 24,200 20,276 20,276 22,101
11 17,103 24,179 24,179 26,114 22,079 22,079 23,846
12 17,959 26,342 26,342 28,186 24,051 24,051 25,735
13 18,856 28,691 28,691 30,700 26,190 26,190 28,024
14 19,799 31,261 31,261 33,137 28,533 28,533 30,245
15 20,789 34,055 34,055 36,098 31,074 31,074 32,939
16 21,829 37,114 37,114 38,971 33,863 33,863 35,557
17 22,920 40,438 40,438 42,460 36,889 36,889 38,734
18 24,066 44,061 44,061 46,265 40,166 40,166 42,175
19 25,270 48,013 48,013 50,414 43,713 43,713 45,900
20 26,533 52,322 52,322 54,938 47,547 47,547 49,925
25 33,864 80,660 80,660 84,693 71,871 71,871 75,465
35 55,160 191,711 191,711 193,629 165,729 165,729 167,387
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 15
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE
INITIAL FACE: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,233 9,253 19,380 10,045 9,069 19,380
2 11,025 10,472 9,512 19,380 10,069 9,118 19,380
3 11,576 10,717 9,780 19,380 10,069 9,143 19,380
4 12,155 10,969 10,204 19,380 10,041 9,291 19,380
5 12,763 11,227 10,487 19,380 9,981 9,256 19,380
6 13,401 11,493 10,978 19,380 9,881 9,382 19,380
7 14,071 11,765 11,277 19,380 9,733 9,260 19,380
8 14,775 12,044 11,784 19,380 9,526 9,279 19,380
9 15,513 12,331 12,100 19,380 9,247 9,024 19,380
10 16,289 12,625 12,625 19,380 8,879 8,879 19,380
11 17,103 12,992 12,992 19,380 8,443 8,443 19,380
12 17,959 13,371 13,371 19,380 7,884 7,884 19,380
13 18,856 13,761 13,761 19,380 7,175 7,175 19,380
14 19,799 14,164 14,164 19,380 6,286 6,286 19,380
15 20,789 14,580 14,580 19,380 5,173 5,173 19,380
16 21,829 15,008 15,008 19,380 3,774 3,774 19,380
17 22,920 15,450 15,450 19,380 2,006 2,006 19,380
18 24,066 15,906 15,906 19,380 0 0 19,380
19 25,270 16,377 16,377 19,380 0 0 19,380
20 26,533 16,862 16,862 19,380 0 0 19,380
25 33,864 19,528 19,528 20,505 0 0 19,380
35 55,160 26,279 26,279 26,542 0 0 19,380
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE
INITIAL FACE: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.92%) NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 9,649 8,681 19,380 9,458 8,495 19,380
2 11,025 9,308 8,372 19,380 8,891 7,963 19,380
3 11,576 8,979 8,072 19,380 8,293 7,397 19,380
4 12,155 8,661 7,931 19,380 7,659 6,944 19,380
5 12,763 8,353 7,648 19,380 6,981 6,294 19,380
6 13,401 8,054 7,574 19,380 6,250 5,788 19,380
7 14,071 7,766 7,307 19,380 5,453 5,012 19,380
8 14,775 7,486 7,249 19,380 4,574 4,351 19,380
9 15,513 7,216 6,998 19,380 3,591 3,383 19,380
10 16,289 6,954 6,954 19,380 2,485 2,485 19,380
11 17,103 6,734 6,734 19,380 1,239 1,239 19,380
12 17,959 6,521 6,521 19,380 0 0 19,380
13 18,856 6,313 6,313 19,380 0 0 19,380
14 19,799 6,111 6,111 19,380 0 0 19,380
15 20,789 5,914 5,914 19,380 0 0 19,380
16 21,829 5,723 5,723 19,380 0 0 19,380
17 22,920 5,537 5,537 19,380 0 0 19,380
18 24,066 5,357 5,357 19,380 0 0 19,380
19 25,270 5,181 5,181 19,380 0 0 19,380
20 26,533 5,010 5,010 19,380 0 0 19,380
25 33,864 4,222 4,222 19,380 0 0 19,380
35 55,160 2,940 2,940 19,380 0 0 19,380
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 17
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,885 9,890 44,053 10,885 9,890 44,053
2 11,025 11,845 10,858 44,053 11,845 10,858 44,053
3 11,576 12,887 11,911 44,053 12,887 11,911 44,053
4 12,155 14,017 13,207 44,053 14,017 13,207 44,053
5 12,763 15,242 14,452 44,053 15,242 14,452 44,053
6 13,401 16,572 16,006 44,053 16,571 16,006 44,053
7 14,071 18,013 17,478 44,053 18,013 17,478 44,053
8 14,775 19,580 19,282 44,053 19,576 19,278 44,053
9 15,513 21,285 21,032 44,053 21,271 21,018 44,053
10 16,289 23,143 23,143 44,053 23,110 23,110 44,053
11 17,103 25,291 25,291 44,053 25,207 25,207 44,053
12 17,959 27,642 27,642 44,053 27,498 27,498 44,053
13 18,856 30,214 30,214 44,053 30,004 30,004 44,053
14 19,799 33,029 33,029 44,053 32,753 32,753 44,053
15 20,789 36,109 36,109 44,053 35,775 35,775 44,053
16 21,829 39,484 39,484 45,407 39,108 39,108 44,975
17 22,920 43,180 43,180 48,794 42,769 42,769 48,329
18 24,066 47,225 47,225 52,420 46,775 46,775 51,921
19 25,270 51,654 51,654 56,303 51,161 51,161 55,766
20 26,533 56,522 56,522 61,610 55,975 55,975 61,013
25 33,864 88,676 88,676 93,997 87,540 87,540 92,793
35 55,160 218,263 218,263 229,177 207,558 207,558 217,936
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,297 9,315 44,053 10,297 9,315 44,053
2 11,025 10,597 9,635 44,053 10,597 9,635 44,053
3 11,576 10,901 9,960 44,053 10,901 9,960 44,053
4 12,155 11,205 10,437 44,053 11,205 10,437 44,053
5 12,763 11,510 10,767 44,053 11,510 10,766 44,053
6 13,401 11,824 11,306 44,053 11,814 11,296 44,053
7 14,071 12,148 11,657 44,053 12,114 11,623 44,053
8 14,775 12,481 12,219 44,053 12,408 12,146 44,053
9 15,513 12,824 12,592 44,053 12,691 12,459 44,053
10 16,289 13,178 13,178 44,053 12,960 12,960 44,053
11 17,103 13,610 13,610 44,053 13,264 13,264 44,053
12 17,959 14,057 14,057 44,053 13,547 13,547 44,053
13 18,856 14,520 14,520 44,053 13,805 13,805 44,053
14 19,799 14,999 14,999 44,053 14,032 14,032 44,053
15 20,789 15,495 15,495 44,053 14,222 14,222 44,053
16 21,829 16,009 16,009 44,053 14,363 14,363 44,053
17 22,920 16,540 16,540 44,053 14,444 14,444 44,053
18 24,066 17,091 17,091 44,053 14,445 14,445 44,053
19 25,270 17,660 17,660 44,053 14,347 14,347 44,053
20 26,533 18,250 18,250 44,053 14,123 14,123 44,053
25 33,864 21,524 21,524 44,053 9,973 9,973 44,053
35 55,160 30,039 30,039 44,053 0 0 44,053
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 19
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.92%) NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 9,709 8,740 44,053 9,709 8,740 44,053
2 11,025 9,419 8,481 44,053 9,419 8,481 44,053
3 11,576 9,129 8,219 44,053 9,129 8,219 44,053
4 12,155 8,838 8,105 44,053 8,838 8,105 44,053
5 12,763 8,554 7,847 44,053 8,543 7,837 44,053
6 13,401 8,278 7,795 44,053 8,244 7,761 44,053
7 14,071 8,010 7,550 44,053 7,936 7,477 44,053
8 14,775 7,750 7,511 44,053 7,617 7,379 44,053
9 15,513 7,497 7,279 44,053 7,283 7,065 44,053
10 16,289 7,252 7,252 44,053 6,928 6,928 44,053
11 17,103 7,049 7,049 44,053 6,574 6,574 44,053
12 17,959 6,851 6,851 44,053 6,186 6,186 44,053
13 18,856 6,657 6,657 44,053 5,760 5,760 44,053
14 19,799 6,468 6,468 44,053 5,288 5,288 44,053
15 20,789 6,284 6,284 44,053 4,761 4,761 44,053
16 21,829 6,104 6,104 44,053 4,168 4,168 44,053
17 22,920 5,929 5,929 44,053 3,492 3,492 44,053
18 24,066 5,757 5,757 44,053 2,710 2,710 44,053
19 25,270 5,590 5,590 44,053 1,795 1,795 44,053
20 26,533 5,427 5,427 44,053 717 717 44,053
25 33,864 4,667 4,667 44,053 0 0 44,053
35 55,160 3,399 3,399 44,053 0 0 44,053
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,880 9,886 27,778 10,880 9,886 27,778
2 11,025 11,826 10,840 27,778 11,826 10,840 27,778
3 11,576 12,844 11,869 27,778 12,842 11,867 27,778
4 12,155 13,951 13,142 27,778 13,934 13,125 27,778
5 12,763 15,157 14,368 27,778 15,111 14,322 27,778
6 13,401 16,470 15,906 27,778 16,379 15,815 27,778
7 14,071 17,900 17,366 27,778 17,748 17,215 27,778
8 14,775 19,456 19,159 27,778 19,232 18,936 27,778
9 15,513 21,151 20,898 27,778 20,844 20,592 27,778
10 16,289 22,996 22,996 27,778 22,607 22,607 27,778
11 17,103 25,131 25,131 27,778 24,649 24,649 27,778
12 17,959 27,467 27,467 29,390 26,924 26,924 28,809
13 18,856 30,023 30,023 32,125 29,417 29,417 31,476
14 19,799 32,819 32,819 34,789 32,142 32,142 34,071
15 20,789 35,880 35,880 38,033 35,108 35,108 37,215
16 21,829 39,229 39,229 41,191 38,353 38,353 40,271
17 22,920 42,893 42,893 45,038 41,882 41,882 43,977
18 24,066 46,903 46,903 49,249 45,715 45,715 48,001
19 25,270 51,291 51,291 53,856 49,871 49,871 52,365
20 26,533 56,125 56,125 58,932 54,373 54,373 57,092
25 33,864 88,054 88,054 92,457 83,048 83,048 87,201
35 55,160 216,731 216,731 218,899 192,384 192,384 194,309
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 21
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.08% NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 10,292 9,311 27,778 10,292 9,311 27,778
2 11,025 10,578 9,617 27,778 10,578 9,617 27,778
3 11,576 10,864 9,924 27,778 10,854 9,914 27,778
4 12,155 11,159 10,391 27,778 11,118 10,351 27,778
5 12,763 11,462 10,719 27,778 11,365 10,623 27,778
6 13,401 11,775 11,257 27,778 11,592 11,076 27,778
7 14,071 12,097 11,606 27,778 11,792 11,304 27,778
8 14,775 12,429 12,167 27,778 11,958 11,698 27,778
9 15,513 12,770 12,539 27,778 12,078 11,848 27,778
10 16,289 13,122 13,122 27,778 12,143 12,143 27,778
11 17,103 13,552 13,552 27,778 12,188 12,188 27,778
12 17,959 13,998 13,998 27,778 12,154 12,154 27,778
13 18,856 14,459 14,459 27,778 12,024 12,024 27,778
14 19,799 14,936 14,936 27,778 11,780 11,780 27,778
15 20,789 15,429 15,429 27,778 11,396 11,396 27,778
16 21,829 15,941 15,941 27,778 10,838 10,838 27,778
17 22,920 16,470 16,470 27,778 10,059 10,059 27,778
18 24,066 17,017 17,017 27,778 8,993 8,993 27,778
19 25,270 17,584 17,584 27,778 7,554 7,554 27,778
20 26,533 18,171 18,171 27,778 5,629 5,629 27,778
25 33,864 21,430 21,430 27,778 0 0 27,778
35 55,160 29,907 29,907 30,207 0 0 27,778
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.92%) NET)
<TABLE>
<CAPTION>
PREMIUM CURRENT CHARGES GUARANTEED CHARGES
END OF ACCUMULATED -------------------------------------------------------------------
POLICY AT 5% INTEREST ACCOUNT CASH DEATH ACCOUNT CASH DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 10,500 9,704 8,736 27,778 9,704 8,736 27,778
2 11,025 9,400 8,462 27,778 9,400 8,462 27,778
3 11,576 9,099 8,190 27,778 9,082 8,173 27,778
4 12,155 8,808 8,076 27,778 8,747 8,016 27,778
5 12,763 8,525 7,818 27,778 8,391 7,686 27,778
6 13,401 8,250 7,767 27,778 8,007 7,527 27,778
7 14,071 7,983 7,523 27,778 7,588 7,131 27,778
8 14,775 7,723 7,485 27,778 7,121 6,886 27,778
9 15,513 7,471 7,253 27,778 6,594 6,378 27,778
10 16,289 7,227 7,227 27,778 5,991 5,991 27,778
11 17,103 7,024 7,024 27,778 5,316 5,316 27,778
12 17,959 6,827 6,827 27,778 4,522 4,522 27,778
13 18,856 6,634 6,634 27,778 3,588 3,588 27,778
14 19,799 6,446 6,446 27,778 2,484 2,484 27,778
15 20,789 6,262 6,262 27,778 1,173 1,173 27,778
16 21,829 6,082 6,082 27,778 0 0 27,778
17 22,920 5,907 5,907 27,778 0 0 27,778
18 24,066 5,737 5,737 27,778 0 0 27,778
19 25,270 5,570 5,570 27,778 0 0 27,778
20 26,533 5,407 5,407 27,778 0 0 27,778
25 33,864 4,650 4,650 27,778 0 0 27,778
35 55,160 3,385 3,385 27,778 0 0 27,778
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
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, North
American Government Securities, Balanced Growth, Utilities, Dividend Growth,
Value-Added Market, Growth, American Opportunities, Global Equity, Developing
Growth, Emerging Markets, Diversified Income, Mid-Cap Equity, High Yield,
Mid-Cap Value, Emerging Markets Debt, Strategic Stock, and Enterprise sub-
accounts), (collectively, the Account) as of December 31, 1999, 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,
1999, and the results of its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
SA-1
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Money North Balanced Utilities Dividend Value-Added Growth
Market American Growth Sub-Account Growth Market Sub-Account
Sub-Account Government Sub-Account Sub-Account Sub-Account
Securities
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS INVESTMENTS IN THE
MORGAN STANLEY DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES:
-------------------------------------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Shares 57,384
Cost $57,384
........................................................................................................................
Market Value $57,384 $ -- $ -- $ -- $ -- $ -- $ --
-------------------------------------------------------------------------------------------------------------------------
NORTH AMERICAN GOVERNMENT
SECURITIES PORTFOLIO
Shares 112
Cost $1,126
........................................................................................................................
Market Value -- 1,124 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH PORTFOLIO
Shares 201
Cost $2,835
........................................................................................................................
Market Value -- -- 2,935 -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
UTILITIES PORTFOLIO
Shares 1,337
Cost $22,583
........................................................................................................................
Market Value -- -- -- 35,102 -- -- --
-------------------------------------------------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO
Shares 5,939
Cost $118,514
........................................................................................................................
Market Value -- -- -- -- 118,311 -- --
-------------------------------------------------------------------------------------------------------------------------
VALUE-ADDED MARKET PORTFOLIO
Shares 1,198
Cost $23,086
........................................................................................................................
Market Value -- -- -- -- -- 24,606 --
-------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO
Shares 78
Cost $1,153
........................................................................................................................
Market Value -- -- -- -- -- -- 1,808
-------------------------------------------------------------------------------------------------------------------------
AMERICAN OPPORTUNITIES PORTFOLIO
Shares 2,313
Cost $48,168
........................................................................................................................
Market Value -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY PORTFOLIO
Shares 2,599
Cost $37,175
........................................................................................................................
Market Value -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- -- -- -- -- -- --
........................................................................................................................
Receivable for fund shares sold -- -- -- -- -- -- --
........................................................................................................................
Total Assets 57,384 1,124 2,935 35,102 118,311 24,606 1,808
........................................................................................................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- -- -- -- -- -- --
........................................................................................................................
Payable for fund shares purchased -- -- -- -- -- -- --
........................................................................................................................
Total Liabilities -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $57,384 $ 1,124 $2,935 $ 35,102 $ 118,311 $ 24,606 $ 1,808
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1999 American Global
Opportunities Equity
Sub-Account Sub-Account
------------------------------------------------------------------------
ASSETS:
INVESTMENTS INVESTMENTS IN THE
MORGAN STANLEY DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES:
-------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Shares 57,384
Cost $57,384
................................
Market Value $ -- $ --
--------------------------------------------------------------------------------------------------
NORTH AMERICAN GOVERNMENT
SECURITIES PORTFOLIO
Shares 112
Cost $1,126
................................
Market Value -- --
---------------------------------------------------------------------------------------------------------------
BALANCED GROWTH PORTFOLIO
Shares 201
Cost $2,835
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
UTILITIES PORTFOLIO
Shares 1,337
Cost $22,583
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO
Shares 5,939
Cost $118,514
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
VALUE-ADDED MARKET PORTFOLIO
Shares 1,198
Cost $23,086
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO
Shares 78
Cost $1,153
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
AMERICAN OPPORTUNITIES PORTFOLIO
Shares 2,313
Cost $48,168
................................
Market Value 75,411 --
-------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY PORTFOLIO
Shares 2,599
Cost $37,175
................................
Market Value -- 51,021
-------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- --
................................
Receivable for fund shares sold -- --
................................
Total Assets 75,411 51,021
................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- 1
................................
Payable for fund shares purchased -- --
................................
Total Liabilities -- 1
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $ 75,411 $ 51,020
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Developing Emerging Diversified Mid-Cap High Yield Mid-Cap Emerging
Growth Markets Income Equity Sub-Account Value Markets
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Debt
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS INVESTMENTS IN THE
MORGAN STANLEY DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES:
-------------------------------------------------------------------------------------------------------------------------
DEVELOPING GROWTH PORTFOLIO
Shares 1,933
Cost $36,861
........................................................................................................................
Market Value $77,410 $ -- $ -- $ -- $ -- $ -- $ --
-------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
Shares 83
Cost $1,016
........................................................................................................................
Market Value -- 1,209 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED INCOME PORTFOLIO
Shares 3,273
Cost $33,365
........................................................................................................................
Market Value -- -- 29,322 -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
MID-CAP EQUITY PORTFOLIO
Shares 403
Cost $4,264
........................................................................................................................
Market Value -- -- -- 9,125 -- -- --
-------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN THE MORGAN STANLEY
DEAN WITTER UNIVERSAL FUNDS INC.:
-------------------------------------------------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
Shares 105
Cost $1,149
........................................................................................................................
Market Value -- -- -- -- 1,077 -- --
-------------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE PORTFOLIO
Shares 78
Cost $1,179
........................................................................................................................
Market Value -- -- -- -- -- 1,213 --
-------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS DEBT PORTFOLIO
Shares 2,576
Cost $23,778
........................................................................................................................
Market Value -- -- -- -- -- -- 17,803
-------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN VAN KAMPEN LIFE
INVESTMENT TRUST:
-------------------------------------------------------------------------------------------------------------------------
STRATEGIC STOCK PORTFOLIO
Shares 88
Cost $1,013
........................................................................................................................
Market Value -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
ENTERPRISE PORTFOLIO
Shares 51
Cost $1,081
........................................................................................................................
Market Value -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- -- -- -- -- -- --
........................................................................................................................
Receivable for fund shares sold -- -- -- -- -- -- --
........................................................................................................................
Total Assets 77,410 1,209 29,322 9,125 1,077 1,213 17,803
........................................................................................................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- -- -- -- -- -- --
........................................................................................................................
Payable for fund shares purchased -- -- -- -- -- -- --
........................................................................................................................
Total Liabilities -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $77,410 $ 1,209 $29,322 $ 9,125 $ 1,077 $ 1,213 $17,803
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1999 Strategic Enterprise
Stock Sub-Account
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
ASSETS:
INVESTMENTS INVESTMENTS IN THE
MORGAN STANLEY DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES:
-------------------------------------------------------------------------------------------------------------------------
DEVELOPING GROWTH PORTFOLIO
Shares 1,933
Cost $36,861
................................
Market Value $ -- $ --
-------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
Shares 83
Cost $1,016
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED INCOME PORTFOLIO
Shares 3,273
Cost $33,365
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
MID-CAP EQUITY PORTFOLIO
Shares 403
Cost $4,264
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN THE MORGAN STANLEY
DEAN WITTER UNIVERSAL FUNDS INC.:
-------------------------------------------------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
Shares 105
Cost $1,149
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE PORTFOLIO
Shares 78
Cost $1,179
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS DEBT PORTFOLIO
Shares 2,576
Cost $23,778
................................
Market Value -- --
-------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN VAN KAMPEN LIFE
INVESTMENT TRUST:
-------------------------------------------------------------------------------------------------------------------------
STRATEGIC STOCK PORTFOLIO
Shares 88
Cost $1,013
................................
Market Value 1,028 --
-------------------------------------------------------------------------------------------------------------------------
ENTERPRISE PORTFOLIO
Shares 51
Cost $1,081
................................
Market Value -- 1,334
-------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- --
................................
Receivable for fund shares sold -- --
................................
Total Assets 1,028 1,334
................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- --
................................
Payable for fund shares purchased -- --
................................
Total Liabilities -- --
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $ 1,028 $ 1,334
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities (continued)
<TABLE>
----------------------------------------------------------------------------------
December 31, 1999 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
----------------------------------------------------------------------------------
Variable Life Contracts:
Money Market Portfolio 50,447 $ 1.137500 $ 57,384
.................................................................................
North American Government Securities
Portfolio 100 11.235263 1,124
.................................................................................
Balanced Growth Portfolio 221 13.268484 2,935
.................................................................................
Utilities Portfolio 1,623 21.631144 35,102
.................................................................................
Dividend Growth Portfolio 8,807 13.433818 118,311
.................................................................................
Value-Added Market Portfolio 1,689 14.569531 24,606
.................................................................................
Growth Portfolio 100 18.084596 1,808
.................................................................................
American Opportunities Portfolio 2,930 25.733152 75,411
.................................................................................
Global Equity Portfolio 3,303 15.446837 51,020
.................................................................................
Developing Growth Portfolio 3,063 25.271683 77,410
.................................................................................
Emerging Markets Portfolio 100 12.088774 1,209
.................................................................................
Diversified Income Portfolio 2,695 10.881692 29,322
.................................................................................
Mid-Cap Equity Portfolio 380 24.040915 9,125
.................................................................................
High Yield Portfolio 100 10.767198 1,077
.................................................................................
Mid-Cap Value Portfolio 100 12.129625 1,213
.................................................................................
Emerging Markets Debt Portfolio 2,028 8.777081 17,803
.................................................................................
Strategic Stock Portfolio 100 10.280613 1,028
.................................................................................
Enterprise Portfolio 100 13.335134 1,334
.................................................................................
GRAND TOTAL $507,222
----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Money North Balanced Utilities Dividend Value-Added Growth
December 31, 1999 Market American Growth Sub-Account Growth Market Sub-Account
Sub-Account Government Sub-Account Sub-Account Sub-Account
Securities
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,496 $ 50 $ 132 $ 484 $ 2,189 $ 276 $ --
........................................................................................................................
Net investment income 1,496 50 132 484 2,189 276 --
........................................................................................................................
Capital gains income -- -- 489 211 10,067 903 112
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized (loss) gain on
security transactions -- -- (31) 729 954 43 --
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period -- (13) (447) 9,952 (13,521) 1,623 395
........................................................................................................................
Net (loss) gain on investments -- (13) (478) 10,681 (12,567) 1,666 395
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 1,496 $ 37 $ 143 $ 11,376 $ (311) $ 2,845 $ 507
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended American Global
December 31, 1999 Opportunities Equity
Sub-Account* Sub-Account
------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 189 $ 115
................................
Net investment income 189 115
................................
Capital gains income 5,387 --
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized (loss) gain on
security transactions 889 311
................................
Net unrealized (depreciation)
appreciation of investments
during the period 21,069 11,619
................................
Net (loss) gain on investments 21,958 11,930
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 27,534 $ 12,045
--------------------------------------------------------------------------------------------------
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the year Ended Developing Emerging Diversified Mid-Cap High Yield Mid-Cap Emerging
December 31, 1999 Growth Markets Income Equity Sub-Account Value Markets
Sub-Account Sub-Account Sub-Account Sub-Account* Sub-Account Debt
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 28 $ 1 $ 2,609 $ 37 $ 81 $ 2 $ 2,275
........................................................................................................................
Net investment income 28 1 2,609 37 81 2 2,275
........................................................................................................................
Capital gains income -- -- -- -- -- 145 --
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized (loss) gain on
security transactions 1,381 -- (27) 1,280 -- -- 51
........................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 37,162 549 (3,155) 4,213 (10) 60 1,949
........................................................................................................................
Net gain (loss) on investments 38,543 549 (3,182) 5,493 (10) 60 2,000
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $38,571 $ 550 $ (573) $ 5,530 $ 71 $ 207 $ 4,275
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the year Ended Strategic Enterprise
December 31, 1999 Stock Sub-Account
Sub-Account
---------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 10 $ 3
................................
Net investment income 10 3
................................
Capital gains income 3 78
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized (loss) gain on
security transactions -- --
................................
Net unrealized appreciation
(depreciation) of investments
during the period (18) 193
................................
Net gain (loss) on investments (18) 193
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ (5) $ 274
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Money North Balanced Utilities Dividend Value-Added Growth
December 31, 1999 Market American Growth Sub-Account Growth Market Sub-Account
Sub-Account Government Sub-Account Sub-Account Sub-Account
Securities
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,496 $ 50 $ 132 $ 484 $ 2,189 $ 276 $ --
........................................................................................................................
Capital gains income -- -- 489 211 10,067 903 112
........................................................................................................................
Net realized (loss) gain on
security transactions -- -- (31) 729 954 43 --
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period -- (13) (447) 9,952 (13,521) 1,623 395
........................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 1,496 37 143 11,376 (311) 2,845 507
........................................................................................................................
UNIT TRANSACTIONS:
Purchases 61,367 -- -- -- -- -- --
........................................................................................................................
Net transfers (26,487) -- -- -- (3,532) -- --
........................................................................................................................
Surrenders for benefit payments
and fees (1,394) -- (1,349) (2,354) (2,344) (1,631) --
........................................................................................................................
Loan withdrawals -- -- -- -- -- -- --
........................................................................................................................
Cost of insurance (574) -- (46) (431) (1,890) (370) --
........................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 32,912 -- (1,395) (2,785) (7,766) (2,001) --
........................................................................................................................
Total increase (decrease) in net
assets 34,408 37 (1,252) 8,591 (8,077) 844 507
........................................................................................................................
NET ASSETS:
Beginning of period 22,976 1,087 4,187 26,511 126,388 23,762 1,301
-------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $57,384 $ 1,124 $2,935 $ 35,102 $ 118,311 $ 24,606 $ 1,808
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended American Global
December 31, 1999 Opportunities Equity
Sub-Account* Sub-Account
------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 189 $ 115
................................
Capital gains income 5,387 --
................................
Net realized (loss) gain on
security transactions 889 311
................................
Net unrealized (depreciation)
appreciation of investments
during the period 21,069 11,619
................................
Net increase (decrease) in net
assets resulting from
operations 27,534 12,045
................................
UNIT TRANSACTIONS:
Purchases -- --
................................
Net transfers 16,776 13,244
................................
Surrenders for benefit payments
and fees (3,044) (1,396)
................................
Loan withdrawals -- --
................................
Cost of insurance (882) (608)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 12,850 11,240
................................
Total increase (decrease) in net
assets 40,384 23,285
................................
NET ASSETS:
Beginning of period 35,027 27,735
-------------------------------------------------------------------------------------
END OF PERIOD $ 75,411 $ 51,020
--------------------------------------------------------------------------------------------------
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Developing Emerging Diversified Mid-Cap High Yield Mid-Cap Emerging
December 31, 1999 Growth Markets Income Equity Sub-Account Value Markets
Sub-Account Sub-Account Sub-Account Sub-Account* Sub-Account Debt
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 28 $ 1 $ 2,609 $ 37 $ 81 $ 2 $ 2,275
........................................................................................................................
Capital gains income -- -- -- -- -- 145 --
........................................................................................................................
Net realized (loss) gain on
security transactions 1,381 -- (27) 1,280 -- -- 51
........................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 37,162 549 (3,155) 4,213 (10) 60 1,949
........................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 38,571 550 (573) 5,530 71 207 4,275
........................................................................................................................
UNIT TRANSACTIONS:
Purchases -- -- -- -- -- -- --
........................................................................................................................
Net transfers -- -- -- -- -- -- --
........................................................................................................................
Surrenders for benefit payments
and fees (2,880) -- (1,336) (2,436) -- -- (998)
........................................................................................................................
Loan withdrawals -- -- -- -- -- -- --
........................................................................................................................
Cost of insurance (767) -- (464) (89) -- -- (239)
........................................................................................................................
Net (decrease) in net assets
resulting from unit
transactions (3,647) -- (1,800) (2,525) -- -- (1,237)
........................................................................................................................
Total increase (decrease) in net
assets 34,924 550 (2,373) 3,005 71 207 3,038
........................................................................................................................
NET ASSETS:
Beginning of period 42,486 659 31,695 6,120 1,006 1,006 14,765
-------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $77,410 $ 1,209 $29,322 $ 9,125 $ 1,077 $ 1,213 $17,803
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Strategic Enterprise
December 31, 1999 Stock Sub-Account
Sub-Account
---------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 10 $ 3
................................
Capital gains income 3 78
................................
Net realized (loss) gain on
security transactions -- --
................................
Net unrealized appreciation
(depreciation) of investments
during the period (18) 193
................................
Net increase (decrease) in net
assets resulting from
operations (5) 274
................................
UNIT TRANSACTIONS:
Purchases -- --
................................
Net transfers -- --
................................
Surrenders for benefit payments
and fees -- --
................................
Loan withdrawals -- --
................................
Cost of insurance -- --
................................
Net (decrease) in net assets
resulting from unit
transactions -- --
................................
Total increase (decrease) in net
assets (5) 274
................................
NET ASSETS:
Beginning of period 1,033 1,060
-------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 1,028 $ 1,334
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Money North Balanced Utilities Dividend Value-Added Growth
December 31, 1998 Market American Growth Sub-Account Growth Market Sub-Account
Sub-Account Government Sub-Account Sub-Account Sub-Account
Securities
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
........................................................................................................................
Net investment income (loss) $ 1,723 $ 47 $ 108 $ 310 $ 1,991 $ 170 $ --
........................................................................................................................
Capital gains income -- -- 86 273 4,319 331 34
........................................................................................................................
Net realized gain (loss) on
security transactions -- -- -- 2 5,289 (3) --
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period -- (2) 338 2,358 9,599 (249) 118
........................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 1,723 45 532 2,943 21,198 249 152
........................................................................................................................
UNIT TRANSACTIONS:
Purchases 164,406 -- -- -- -- -- --
........................................................................................................................
Net transfers (54,386) -- -- 22,647 1,712 22,647 --
........................................................................................................................
Surrenders for benefit payments
and fees (110,832) -- (50) (225) (3,479) (212) --
........................................................................................................................
Loan withdrawals -- -- -- -- 1,673 -- --
........................................................................................................................
Cost of insurance (302) -- (18) (86) (674) (80) --
........................................................................................................................
Net (decrease) increase in net
assets resulting from unit
transactions (1,114) -- (68) 22,336 (768) 22,355 --
........................................................................................................................
Total increase (decrease) in net
assets 609 45 464 25,279 20,430 22,604 152
........................................................................................................................
NET ASSETS:
Beginning of period 22,367 1,042 3,723 1,232 105,958 1,158 1,149
-------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 22,976 $ 1,087 $4,187 $ 26,511 $ 126,388 $ 23,762 $ 1,301
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended American Global
December 31, 1998 Opportunities Equity
Sub-Account* Sub-Account
------------------------------------------------------------------------
OPERATIONS:
................................
Net investment income (loss) $ 167 $ 388
................................
Capital gains income 1,308 96
................................
Net realized gain (loss) on
security transactions 5,367 5,127
................................
Net unrealized (depreciation)
appreciation of investments
during the period 3,491 2,441
................................
Net increase (decrease) in net
assets resulting from
operations 10,333 8,052
................................
UNIT TRANSACTIONS:
Purchases -- --
................................
Net transfers (20,608) (37,288)
................................
Surrenders for benefit payments
and fees (2,132) (2,292)
................................
Loan withdrawals 1,673 1,723
................................
Cost of insurance (164) (222)
................................
Net (decrease) increase in net
assets resulting from unit
transactions (21,231) (38,079)
................................
Total increase (decrease) in net
assets (10,898) (30,027)
................................
NET ASSETS:
Beginning of period 45,925 57,762
-------------------------------------------------------------------------------------
END OF PERIOD $ 35,027 $ 27,735
--------------------------------------------------------------------------------------------------
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Developing Emerging Diversified Mid-Cap High Yield Mid-Cap Emerging
December 31, 1998 Growth Markets Income Equity Sub-Account* Value Markets
Sub-Account Sub-Account Sub-Account Sub-Account** Sub-Account* Debt
Sub-Account*
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 76 $ 9 $ 1,650 $ 39 $ 57 $ 2 $ 1,756
........................................................................................................................
Capital gains income 58 2 42 53 11 29 --
........................................................................................................................
Net realized (loss) on security
transactions (34) (1,107) -- -- -- -- (60)
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period 1,841 (281) (947) 236 (62) (26) (7,924)
........................................................................................................................
Net (decrease) increase in net
assets resulting from
operations 1,941 (1,377) 745 328 6 5 (6,228)
........................................................................................................................
UNIT TRANSACTIONS:
Purchases -- -- -- -- 1,000 1,000 1,000
........................................................................................................................
Net transfers 21,315 1,107 22,647 -- -- -- 20,208
........................................................................................................................
Surrenders for benefit payments
and fees (510) 1 (367) (84) -- 1 (155)
........................................................................................................................
Loan withdrawals -- -- -- -- -- -- --
........................................................................................................................
Cost of insurance (192) -- (137) (30) -- -- (60)
........................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 20,613 1,108 22,143 (114) 1,000 1,001 20,993
........................................................................................................................
Total (decrease) increase in net
assets 22,554 (269) 22,888 214 1,006 1,006 14,765
........................................................................................................................
NET ASSETS:
Beginning of period 19,932 928 8,807 5,906 -- -- --
-------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $42,486 $ 659 $31,695 $ 6,120 $ 1,006 $ 1,006 $14,765
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Year Ended Strategic Enterprise
December 31, 1998 Stock Sub-Account*
Sub-Account*
---------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ -- $ --
................................
Capital gains income -- --
................................
Net realized (loss) on security
transactions -- --
................................
Net unrealized (depreciation)
appreciation of investments
during the period 33 60
................................
Net (decrease) increase 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 (decrease) increase in net
assets 1,033 1,060
................................
NET ASSETS:
Beginning of period -- --
-------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 1,033 $ 1,060
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10
<PAGE>
SEPARATE ACCOUNT FIVE -- HARTFORD LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under the
Investment Company Act of 1940, as amended. Both the Company and the Account are
subject to supervision and regulation by the Department of Insurance of the
State of Connecticut and the SEC. The Account invests deposits by variable life
policyowners of the Company in various mutual funds (the Funds) as directed by
the policyowners.
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). Realized gains and losses on the
sales of securities are computed on the basis of identified cost of the fund
shares sold. 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 investment in shares of the Morgan Stanley Dean
Witter Select Dimensions Investment Series, the Morgan Stanley Dean Witter
Universal Funds, Inc. and Van Kampen Life Investment Trust are valued at the
closing net asset value per share as determined by the appropriate Fund as of
December 31, 1999.
C) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values
calculated at the close of the business day.
D) 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.
E) 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 policies, the
Company assesses deductions for costs of insurance charges to cover the
Company's anticipated mortality costs. Because a policy's account value and
death benefit may vary from month to month, the cost of insurance charge may
also vary.
B) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable life
policies, 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 charges
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 policyowners' accounts,
in accordance with the terms of the policies. These charges 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 charges are reflected in
surrenders for benefit payments and fees on the accompanying statements of
changes in net assets.
SA-11
<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, 1999 and 1998, 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, 1999.
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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
REVENUES
Premiums and other considerations $2,045 $2,218 $1,637
Net investment income 1,359 1,759 1,368
Net realized capital gains (losses) (4) (2) 4
- ----------------------------------------------------------------------------------------------
TOTAL REVENUES 3,400 3,975 3,009
- ----------------------------------------------------------------------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,574 1,911 1,379
Amortization of deferred policy acquisition costs 539 431 335
Dividends to policyholders 104 329 240
Other expenses 631 766 586
- ----------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,848 3,437 2,540
- ----------------------------------------------------------------------------------------------
Income before income tax expense 552 538 469
Income tax expense 191 188 167
- ----------------------------------------------------------------------------------------------
NET INCOME $ 361 $ 350 $ 302
- ----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
- ------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------
(in millions, except
for share data)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,923 and $14,505) $ 13,499 $ 14,818
Equity securities, at fair value 56 31
Policy loans, at outstanding balance 4,187 6,684
Other investments 342 264
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 18,084 21,797
- ------------------------------------------------------------------------------------------
Cash 55 17
Premiums receivable and agents' balances 29 17
Reinsurance recoverables 1,274 1,257
Deferred policy acquisition costs 4,013 3,754
Deferred income tax 459 464
Other assets 654 695
Separate account assets 110,397 90,262
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $134,965 $118,263
- ------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 4,332 $ 3,595
Other policyholder funds 16,004 19,615
Other liabilities 1,613 2,094
Separate account liabilities 110,397 90,262
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES 132,346 115,566
- ------------------------------------------------------------------------------------------
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 (loss)
Net unrealized capital gains (losses) on securities, net
of tax (255) 184
- ------------------------------------------------------------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (255) 184
- ------------------------------------------------------------------------------------------
Retained earnings 1,823 1,462
- ------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 2,619 2,697
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $134,965 $118,263
- ------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income (Loss)
-----------------
<S> <C> <C> <C> <C> <C>
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
- -------------------------------------------------------------------------------------------------------------
(in millions)
1999
Balance, December 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income
Net income -- -- -- 361 361
Other comprehensive income (loss), net of
tax (1):
Changes in net unrealized capital gains
(losses) on securities (2) -- -- (439) -- (439)
Total other comprehensive income (loss) (439)
Total comprehensive income (loss) (78)
- -------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $6 $1,045 $(255) $1,823 $2,619
- -------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net unrealized capital gain (loss) on securities is reflected net of tax of
$(236), $3 and $80, for the years ended December 31, 1999, 1998 and 1997,
respectively.
(2) Net of reclassification adjustment for after-tax gains (losses) realized in
net income of $(2), $(1) and $2 for the years ended December 31, 1999, 1998
and 1997, respectively.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
OPERATING ACTIVITIES
Net income $ 361 $ 350 $ 302
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization (18) (23) 8
Net realized capital losses (gains) 4 2 (4)
Loss due to commutation of reinsurance 16 -- --
(Increase) decrease in premiums receivable and agents'
balances (18) 1 119
(Decrease) increase in other liabilities (263) (79) 223
Change in receivables, payables, and accruals 125 83 107
(Decrease) increase in accrued taxes (163) 60 126
Decrease (increase) in deferred income tax 241 (118) 40
Increase in deferred policy acquisition costs (358) (439) (555)
Increase in future policy benefits 797 536 585
Increase in reinsurance recoverables (318) (101) (31)
Other, net (81) 99 52
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 325 371 972
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of investments (5,753) (6,061) (6,869)
Sales of investments 6,383 4,901 4,256
Maturity of investments 1,818 1,761 2,329
Purchases of affiliates and other (25) -- --
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2,423 601 (284)
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net disbursements for investment and universal life-type
contracts charged against policyholder accounts (2,710) (1,009) (677)
- --------------------------------------------------------------------------------------------
Net cash used for financing activities (2,710) (1,009) (677)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in cash 38 (37) 11
Cash -- beginning of year 17 54 43
- --------------------------------------------------------------------------------------------
Cash -- end of year $ 55 $ 17 $ 54
- --------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for:
Income taxes $ 111 $ 263 $ 9
Noncash Investing Activities:
In 1999, the Company's parent, Hartford Life and Accident Insurance Company, recaptured an
in force block of individual life insurance previously ceded to the Company. This
commutation resulted in a reduction in the Company's assets of $666, consisting of $556
of invested assets, $99 of deferred policy acquisition costs and $11 of other assets.
Liabilities decreased $650, consisting of $543 of other policyholder funds, $60 of future
policy benefits and $47 of other liabilities. As a result, the Company recognized an
after-tax loss relating to this transaction of $16.
In 1998, due to the recapture of an in force block of business previously ceded to MBL
Life Assurance Co. of New Jersey, reinsurance recoverables of $4,753 were exchanged for
the fair value of assets comprised of $4,310 in policy loans and $443 in other net
assets.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
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 (HLAI) 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). In November 1998,
Hartford Life Insurance Company transferred in the form of a dividend, Hartford
Financial Services, LLC and its subsidiaries to HLA.
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 its
insurance subsidiaries 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.
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, mutual funds and
retirement plan services for savings and retirement needs; (b) life insurance
for income protection and estate planning; (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 are prepared on the basis of accounting
principles generally accepted in the United States, which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities. All material intercompany transactions and balances between
Hartford Life Insurance Company and its subsidiaries have been eliminated.
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, 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) ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1999, Hartford Life Insurance Company adopted Statement of
Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". This 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. Adoption of this SOP did not have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1999, Hartford Life Insurance Company adopted SOP
No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". This SOP addresses accounting by insurance and other enterprises
for assessments related to insurance activities, including recognition,
measurement and disclosure of guaranty fund or other assessments. Adoption of
this SOP did not have a material impact 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) FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133". This statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to defer its effective date for
one year, to fiscal years beginning after June 15, 2000. Initial
F-6
<PAGE>
application for Hartford Life Insurance Company will begin January 1, 2001. SFAS
No. 133 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.
The Company has reviewed its derivative holdings and is in the process of
quantifying the impact of SFAS No. 133. The Company is also assessing what
actions, if any, need to be taken to minimize potential volatility, while at the
same time maintaining the economic protection needed to support the goals of its
business.
In October 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP No. 98-7, "Accounting for Insurance and Reinsurance Contracts That Do
Not Transfer Insurance Risk". This SOP provides guidance on the method of
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. This SOP is effective
for financial statements for fiscal years beginning after June 15, 1999 and is
not expected to have a material impact on the Company's financial condition or
results of operations.
(D) 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 and
disability policies are recognized as revenues ratably over the policy period.
(E) 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 of the life insurance subsidiaries of the Company. The participating
insurance in force accounted for 34%, 35% and 33% in 1999, 1998 and 1997,
respectively, of total insurance in force.
(F) INVESTMENTS
Hartford Life Insurance Company's investments in both fixed maturities, which
include bonds, redeemable preferred stock and commercial paper, and equity
securities, which include common and non-redeemable preferred stocks, are
classified as "available for sale" in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Accordingly, these
securities are carried at fair value with the after-tax difference from cost
reflected in stockholder's equity as a component of accumulated other
comprehensive income. Policy loans are carried at outstanding balance which
approximates fair value. Other invested assets consist primarily of partnership
investments, which are accounted for by the equity method, and mortgage loans,
whereby the carrying value approximates fair value. Realized capital gains and
losses on security transactions associated with the Company's immediate
participation guaranteed contracts are excluded from revenues and deferred over
the expected maturity of the securities, since under the terms of the contracts
the realized gains and losses will be credited to policyholders in future years
as they are entitled to receive them. Net realized capital gains and losses,
excluding those related to immediate participation guaranteed contracts, are
reported as a component of revenue and are determined on a specific
identification basis.
The Company's accounting policy for impairment requires recognition of an other
than temporary impairment charge on a security if it is determined that the
Company is unable to recover all amounts due under the contractual obligations
of the security. In addition, for securities expected to be sold, an other than
temporary impairment charge is recognized if the Company does not expect the
fair value of a security to recover to cost or amortized cost prior to the
expected date of sale. Once an impairment charge has been recorded, the Company
then continues to review the other than temporarily impaired securities for
additional impairment, if necessary.
(G) DERIVATIVE INSTRUMENTS
HEDGE ACCOUNTING -- 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. Hartford Life Insurance 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 No. 86-2, "Accounting for
Options" and various Emerging Issues Task Force 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 (c) Future Adoption of New Accounting Standards.
Derivative instruments must be designated at inception as a hedge and measured
for effectiveness both at inception
F-7
<PAGE>
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
or quarterly 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
they are 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.
FUTURES -- 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.
FORWARD COMMITMENTS -- 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 are recognized immediately in the Consolidated Statements of Income as
a component of net investment income.
OPTIONS -- 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 -- 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 earnings. Interest rate swaps purchased in
anticipation of an asset purchase (anticipatory transaction) are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
INTEREST RATE CAPS AND FLOORS -- Premiums paid on purchased cap or floor
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.
FORWARD EXCHANGE AND CURRENCY SWAPS CONTRACTS -- 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 adjustment
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.
(H) 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 substantially all the investment risk and rewards, and guaranteed
separate accounts, wherein the Company contractually guarantees either a minimum
return or account value to the policyholder.
(I) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain other 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.
F-8
<PAGE>
Acquisition costs and their related deferral are included in the Company's other
expenses as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Commissions $ 887 $1,069 $ 976
Deferred acquisition costs (898) (891) (862)
Other 642 588 472
------------------------------
TOTAL OTHER EXPENSES $ 631 $ 766 $ 586
------------------------------
</TABLE>
(J) FUTURE POLICY BENEFITS
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.
(K) OTHER POLICYHOLDER FUNDS
Other policyholder funds include reserves for investment contracts without life
contingencies, corporate owned life insurance and universal life insurance
contracts. These reserves are based on account values, which represent the
balance that accrues to the benefit of policyholders.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------
Interest income from fixed maturities $ 934 $ 952 $ 932
Interest income from policy loans 391 789 425
Income from other investments 48 32 26
--------------------------------
Gross investment income 1,373 1,773 1,383
Less: Investment expenses 14 14 15
--------------------------------
NET INVESTMENT INCOME $1,359 $1,759 $1,368
--------------------------------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Fixed maturities $(7) $(28) $(7)
Equity securities 2 21 12
Real estate and other 1 5 (1)
--------------------------
NET REALIZED CAPITAL GAINS (LOSSES) $(4) $(2) $ 4
--------------------------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $ 9 $ 2 $14
Gross unrealized capital losses (2) (1) --
--------------------------
Net unrealized capital gains 7 1 14
Deferred income tax expense 2 -- 5
--------------------------
Net unrealized capital gains, net of tax 5 1 9
Balance -- beginning of year 1 9 8
--------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY
SECURITIES $ 4 $(8) $ 1
--------------------------
</TABLE>
F-9
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------------
1999 1998 1997
<S> <C> <C> <C>
----------------------------
Gross unrealized capital gains $ 48 $ 421 $371
Gross unrealized capital losses (472) (108) (80)
Unrealized capital (gains) losses credited to policyholders 24 (32) (30)
----------------------------
Net unrealized capital gains (losses) (400) 281 261
Deferred income tax expense (benefit) (140) 98 91
----------------------------
Net unrealized capital gains (losses), net of tax (260) 183 170
Balance -- beginning of year 183 170 22
----------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED
MATURITIES $(443) $ 13 $148
----------------------------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------------
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) $ 180 $ 5 $ (3) $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 5 (35) 1,064
States, municipalities and political subdivisions 155 2 (1) 156
Foreign governments 289 6 (14) 281
Public utilities 865 7 (39) 833
All other corporate, including international 5,646 18 (244) 5,420
All other corporate -- asset backed 4,103 5 (123) 3,985
Short-term investments 1,156 -- -- 1,156
Certificates of deposit 434 -- (12) 422
Redeemable preferred stock 1 -- (1) --
---------------------------------------------
TOTAL FIXED MATURITIES $13,923 $48 $(472) $13,499
---------------------------------------------
</TABLE>
<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
Foreign 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>
The amortized cost and estimated fair value of fixed maturity investments as of
December 31, 1999 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
F-10
<PAGE>
data. Such estimates are derived from prepayment speeds experienced at the
interest rate levels projected for the applicable underlying collateral and can
be expected to vary from actual experience.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
<S> <C> <C>
----------------------------
MATURITY
One year or less $ 2,454 $ 2,440
Over one year through five years 4,874 4,787
Over five years through ten years 3,072 2,940
Over ten years 3,523 3,332
----------------------------
TOTAL $13,923 $13,499
----------------------------
</TABLE>
(F) SALES OF FIXED MATURITY AND EQUITY SECURITY INVESTMENTS
Sales of fixed maturities, excluding short-term fixed maturities, for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $3.4 billion,
$3.2 billion and $4.2 billion, gross realized capital gains of $153, $103 and
$169, gross realized capital losses (including writedowns) of $160, $131 and
$176, respectively. Sales of equity security investments for the years ended
December 31, 1999, 1998 and 1997 resulted in proceeds of $7, $35 and $132 and
gross realized capital gains of $2, $21 and $12, respectively, and no gross
realized capital losses for all periods.
(G) 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.
(H) 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.
The 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.
The Company's derivative program is monitored by an internal compliance unit and
is reviewed by senior management. 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 $5.5
billion and $6.2 billion ($3.9 billion and $3.9 billion related to the Company's
investments, $1.6 billion and $2.3 billion on the Company's liabilities) as of
December 31, 1999 and 1998, respectively.
The tables below provide a summary of derivative instruments held by Hartford
Life Insurance Company as of December 31, 1999 and 1998, segregated by major
investment and liability category:
F-11
<PAGE>
<TABLE>
<CAPTION>
1999 -- Amount Hedged (Notional Amounts)
----------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps, Floors Swaps & Currency Notional
ASSETS HEDGED Value Floors & Options Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,049 $ -- $ -- $ -- $ 911 $-- $ 911
Anticipatory (3) -- -- -- 5 112 -- 117
Other bonds and notes 7,294 494 611 -- 1,676 80 2,861
Short-term investments 1,156 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 13,499 494 611 5 2,699 80 3,889
Equity securities, policy loans and
other investments 4,585 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL INVESTMENTS $18,084 494 611 5 2,699 80 3,889
----------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $16,004 -- 1,150 -- 430 -- 1,580
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 494 $1,761 $ 5 $3,129 $80 $5,469
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (22) $ 8 $ -- $ (30) $ 2 $ (42)
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998 -- Amount Hedged (Notional Amounts)
-------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps & Swaps & Currency Notional
ASSETS HEDGED Value Floors Floors Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,187 $ 44 $ 243 $ 3 $ 885 $-- $1,175
Anticipatory (3) -- -- -- -- 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 -- 1,150 -- 1,195 -- 2,345
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 505 $1,990 $21 $3,615 $90 $6,221
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (6) $ 19 $-- $ 27 $(7) $ 33
-------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999 and 1998, approximately 100% and 5%,
respectively, of the notional futures contracts expire within one year.
(2) As of December 31, 1999 and 1998, approximately 28% and 11%,
respectively, of foreign currency swaps expire within one year.
(3) 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, 1999, the Company had $1.4 of net
deferred losses on interest rate swaps and futures. The Company expects to basis
adjust the entire loss in 2000. During 1999, $0.2 of new future activity was
basis adjusted. As of December 31, 1998, the Company had no deferred gains for
interest rate swaps.
F-12
<PAGE>
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Maturities/ December 31, 1999
Notional Amount Additions Terminations (1) Notional Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Caps $1,912 $ -- $ 148 $1,764
Floors 583 -- 178 405
Swaps/Forwards 3,705 991 1,487 3,209
Futures 21 292 308 5
Options -- 86 -- 86
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
- -------------------------------------------------------------------------------------------------------------------------------
BY STRATEGY
- -------------------------------------------------------------------------------------------------------------------------------
Liability $2,345 $ 17 $ 782 $1,580
Anticipatory 235 204 322 117
Asset 2,398 831 427 2,802
Portfolio 1,243 317 590 970
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During 1999, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosure about Fair Value of Financial Instruments" requires
disclosure of fair value information of financial instruments. For certain
financial instruments where quoted market prices are not available, other
independent valuation techniques and assumptions are used. Because considerable
judgment is used, these estimates are not necessarily indicative of amounts that
could be realized in a current market exchange. SFAS No. 107 excludes certain
financial instruments from disclosure, including insurance contracts. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities approximates
those quotations published by applicable stock exchanges or received from other
reliable sources.
For policy loans, carrying amounts approximate fair value.
Other invested assets consist primarily of partnership investments, which are
accounted for by the equity method, and mortgage loans, whereby the carrying
value approximates 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 similar to external valuation models.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
------------------------------------
ASSETS
Fixed maturities $13,499 $13,499 $14,818 $14,818
Equity securities 56 56 31 31
Policy loans 4,187 4,187 6,684 6,684
Other investments 342 348 264 309
LIABILITIES
Other policyholder funds (1) 11,734 11,168 11,709 11,726
------------------------------------
</TABLE>
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
F-13
<PAGE>
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $110.4 billion and $90.3 billion as of December 31, 1999
and 1998, 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 $101.7 billion and
$80.6 billion as of December 31, 1999 and 1998, respectively, wherein the
policyholder assumes substantially all the investment risk, and guaranteed
separate accounts totaling $8.7 and $9.7 billion as of December 31, 1999 and
1998, 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
$860 and $1.8 billion as of December 31, 1999 and 1998, 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 $1.1 billion, $908 and
$699 in 1999, 1998 and 1997, respectively. The guaranteed separate accounts
include fixed market value adjusted (MVA) individual annuities and modified
guaranteed life insurance. The average credited interest rate on these contracts
was 6.5% and 6.6% as of December 31, 1999 and 1998, respectively. The assets
that support these liabilities were comprised of $8.7 billion and $9.5 billion
in fixed maturities as of December 31, 1999 and 1998, respectively, and $0.2
billion of other invested assets as of December 31, 1998. 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 $(96) and $40 in carrying value and $2.0 billion and
$3.5 billion in notional amounts as of December 31, 1999 and 1998, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Statutory net income $ 151 $ 211 $ 214
------------------------------------
Statutory capital and surplus $1,905 $1,676 $1,441
------------------------------------
</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
2000, without prior regulatory approval, is estimated to be $190.
Hartford Life Insurance Company and its domestic insurance subsidiaries prepare
their statutory financial statements in accordance with accounting practices
prescribed by the applicable state of domicile. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules.
The NAIC adopted the Codification of Statutory Accounting Principles (SAP) in
March 1998. The proposed effective date for the statutory accounting guidance is
January 1, 2001. It is expected that Hartford Life Insurance Company's
domiciliary state will adopt the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of Hartford
Life Insurance Company and its insurance subsidiaries.
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, stock appreciation rights, performance shares or
restricted stock, or any combination of the foregoing. 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 and Class B Common Stock
and treasury stock as reported in the Annual Report on Hartford Life's Form 10-K
of the Company 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 awards. Performance shares
awards of common stock granted under the Plan become payable upon the attainment
of specific performance goals achieved over a three year period.
F-14
<PAGE>
All options granted have an exercise price equal to the market price of the
Company's stock on the date of grant and an option's maximum term is ten years.
Certain non-performance 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 non-performance based options
become exercisable over a three year period commencing with the date of grant.
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 120,694, 121,943 and 54,316
shares under the ESPP in 1999, 1998 and 1997, respectively. The weighted average
fair value of the discount under the ESPP was $7.48 per share in 1999, $13.74
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 both 1999 and
1998, and $5 in 1997.
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 1999, 1998 and 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
or decreasing 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 in both 1999 and 1998, and $2 in 1997.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers in order to
limit its maximum losses. Such transfer does not relieve Hartford Life Insurance
Company of its primary liability. Failure of reinsurers to honor their
obligations could result in losses to Hartford Life Insurance Company. Hartford
Life Insurance Company reduces this risk by evaluating the financial condition
of reinsurers, and monitoring for possible concentrations of credit risk.
Hartford Life Insurance Company has no significant reinsurance related
concentrations of credit risk.
The Company records a receivable for the portion of reinsured benefits paid and
insurance liabilities. Reinsurance recoveries on ceded reinsurance contracts
were $397, $300 and $418 for the years ended December 31, 1999, 1998 and 1997,
respectively. Hartford Life Insurance Company also assumes insurance from other
insurers.
The effect of reinsurance on premiums and other considerations is summarized as
follows:
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Direct premiums and other considerations $2,660 $2,722 $2,164
Reinsurance assumed 95 150 159
Reinsurance ceded (710) (654) (686)
------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS $2,045 $2,218 $1,637
------------------------------------
</TABLE>
F-15
<PAGE>
Hartford Life Insurance Company maintains certain reinsurance agreements with
HLA, whereby the Company cedes both group life and group accident and health
risk. Under these treaties, the Company ceded group life premium of $119, $132
and $80 in 1999, 1998 and 1997, respectively, and accident and health premium of
$430, $379, and $335, respectively, to HLA.
Pursuant to a reinsurance agreement dating back to 1992, the Company assumed
100% of certain blocks of individual life insurance from HLA. Under this
reinsurance agreement Hartford Life Insurance Company assumed $9, $13 and $18 of
premium from HLA in 1999, 1998 and 1997, respectively. On December 1, 1999, HLA
recaptured this in force block of individual life insurance previously ceded to
the Company. This commutation resulted in a reduction in the Company's assets of
$666, consisting of $556 of invested assets, $99 of deferred policy acquisition
costs and $11 of other assets. Liabilities decreased $650, consisting of $543 of
other policyholder funds, $60 of future policy benefits and $47 of other
liabilities. As a result, the Company recognized an after-tax loss relating to
this transaction of $16.
In 1998, the Hartford Life recaptured an in force block of Corporate Owned Life
Insurance (COLI) business previously ceded to MBL Assurance Co. of New Jersey
(MBL Life). The transaction was consummated through an assignment of a
reinsurance arrangement between Hartford Life and MBL Life to a Hartford Life
subsidiary. Hartford Life originally assumed the life insurance block in 1992
from Mutual Benefit Life, which was placed in court-supervised rehabilitation in
1991, and reinsured a portion of those policies back to MBL Life. This recapture
was effective January 1, 1998 and resulted in a decrease in ceded premiums and
other considerations of $163 in 1998. Additionally, this transaction resulted in
a decrease in reinsurance recoverables of $4.8 billion, which was exchanged for
the fair value of assets comprised of $4.3 billion in policy loans and $443 in
other net assets.
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 for 1997 and 1998 and intend to file a
separate consolidated federal income tax return for 1999. The Company's
effective tax rate was 35%, 35% and 36% in 1999, 1998 and 1997, respectively.
Income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Current $(50) $307 $162
Deferred 241 (119) 5
------------------------------
INCOME TAX EXPENSE $191 $188 $167
------------------------------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to the
provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Tax provision at the U.S. federal statutory rate $193 $188 $164
Other (2) -- 3
------------------------------
TOTAL $191 $188 $167
------------------------------
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
---------------------
Tax basis deferred policy acquisition costs $ 720 $ 751
Financial statement deferred policy acquisition costs and
reserves 11 103
Employee benefits (3) 4
Net unrealized capital losses (gains) on securities 138 (98)
Investments and other (407) (296)
---------------------
TOTAL $ 459 $ 464
---------------------
</TABLE>
F-16
<PAGE>
Hartford Life Insurance Company had a current tax receivable of $56 as of
December 31, 1999 and a current tax payable of $65 as of December 31, 1998.
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 the
balance in this account, which for tax return purposes was $104 as of December
31, 1999.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with 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 in both 1999 and 1998 and $39 in 1997.
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 alleged economic and
punitive damages have been asserted. Some of these cases have been filed as
purported class actions and some cases have been filed in certain jurisdictions
that permit punitive damage awards disproportionate to the actual damages
incurred. 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 estimated
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 $2, $9 and $15 in 1999, 1998 and 1997,
respectively, of which $1 in 1999 and $4 in both 1998 and 1997 were estimated to
be creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $9 in 1999
and $7 in both 1998 and 1997. Future minimum rental commitments are as follows:
<TABLE>
<S> <C>
2000 $ 14
2001 14
2002 13
2003 12
2004 12
Thereafter 62
--------
TOTAL $ 127
--------
</TABLE>
The principal executive offices of Hartford Life Insurance Company, together
with its parent, are located in Simsbury, Connecticut. Rental expense is
recognized on a level basis over the term of the primary sublease for the
facility located in Simsbury, Connecticut, which expires on December 31, 2009,
and amounted to approximately $9 in each of the years ended December 31, 1999,
1998 and 1997.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the Internal
Revenue Service. Hartford Life's 1996-1997 federal income tax returns are
currently under audit by the Internal Revenue Service. Management believes that
sufficient provision has been made in the financial statements for issues that
may result from tax examinations and other tax related matters for all open tax
years.
F-17
<PAGE>
13. SEGMENT INFORMATION
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 fixed and variable
annuities, mutual funds, retirement plan services other investment products.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments, as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following tables outlines summarized financial
information concerning the Company's segments.
<TABLE>
<CAPTION>
Investment Individual
1999 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,884 $ 574 $ 830 $ 112 $ 3,400
Net investment income 699 169 431 60 1,359
Amortization of deferred policy acquisition costs 411 128 -- -- 539
Income tax expense (benefit) 159 37 15 (20) 191
Net income (loss) 300 68 28 (35) 361
Assets 106,352 5,962 20,198 2,453 134,965
</TABLE>
<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>
14. QUARTERLY RESULTS FOR 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, June 30, September 30, December 31,
------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------
Revenues $838 $915 $853 $721 $846 $826 $863 $1,513
Benefits, claims and expenses 703 787 722 591 695 688 728 1,371
Net income 88 83 85 85 100 89 88 93
</TABLE>
F-18
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
Amount at
Fair which shown
Type of Investment Cost Value on Balance Sheet
<S> <C> <C> <C>
------------------------------------
FIXED MATURITIES
Bonds and Notes
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 182 $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 1,064 1,064
States, municipalities and political subdivisions 155 156 156
Foreign governments 289 281 281
Public utilities 865 833 833
All other corporate, including international 5,646 5,420 5,420
All other corporate -- asset backed 4,103 3,985 3,985
Short-term investments 1,156 1,156 1,156
Certificates of deposit 434 422 422
Redeemable preferred stock 1 -- --
------------------------------------
TOTAL FIXED MATURITIES 13,923 13,499 13,499
------------------------------------
EQUITY SECURITIES
Common Stocks
Industrial and miscellaneous 49 56 56
------------------------------------
TOTAL EQUITY SECURITIES 49 56 56
------------------------------------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 13,972 13,555 13,555
------------------------------------
Policy Loans 4,187 4,187 4,187
------------------------------------
OTHER INVESTMENTS
Mortgage loans on real estate 198 198 198
Other invested assets 127 150 144
------------------------------------
TOTAL OTHER INVESTMENTS 325 348 342
------------------------------------
TOTAL INVESTMENTS $18,484 $18,090 $18,084
------------------------------------
</TABLE>
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
Net Benefits,
Deferred Realized Claims and
Policy Future Other Premiums Net Capital Claim
Acquisition Policy Policyholder and Other Investment Gains Adjustment
Segment Costs Benefits Funds Considerations Income (Losses) Expenses
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
1999
Investment Products $3,099 $2,744 $ 8,859 $1,185 $ 699 $-- $ 660
Individual Life 914 270 1,880 405 169 -- 254
Corporate Owned Life Insurance -- 321 5,244 399 431 -- 621
Other -- 997 21 56 60 (4) 39
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $4,013 $4,332 $16,004 $2,045 $1,359 $(4) $1,574
-------------------------------------------------------------------------------------------
1998
-------------------------------------------------------------------------------------------
Investment Products $2,823 $2,407 $ 9,194 $1,043 $ 736 $-- $ 670
Individual Life 931 466 2,307 363 181 (1) 262
Corporate Owned Life Insurance -- 225 8,097 774 793 -- 924
Other -- 497 17 38 49 (1) 55
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,754 $3,595 $19,615 $2,218 $1,759 $(2) $1,911
-------------------------------------------------------------------------------------------
1997
-------------------------------------------------------------------------------------------
Investment Products $2,478 $2,070 $ 9,620 $ 771 $ 739 $-- $ 677
Individual Life 837 392 2,182 323 164 -- 242
Corporate Owned Life Insurance -- 56 9,259 551 429 -- 439
Other -- 541 (27) (8) 36 4 21
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,315 $3,059 $21,034 $1,637 $1,368 $ 4 $1,379
-------------------------------------------------------------------------------------------
<CAPTION>
Amortization
of Deferred
Policy
Acquisition Dividends to Other
Segment Costs Policyholders Expenses
<S> <C> <C> <C>
---------------------------------------
1999
Investment Products $411 $ -- $354
Individual Life 128 -- 87
Corporate Owned Life Insurance -- 104 62
Other -- -- 128
---------------------------------------
CONSOLIDATED OPERATIONS $539 $104 $631
---------------------------------------
1998
---------------------------------------
Investment Products $326 $ -- $368
Individual Life 105 -- 77
Corporate Owned Life Insurance -- 329 278
Other -- -- 43
---------------------------------------
CONSOLIDATED OPERATIONS $431 $329 $766
---------------------------------------
1997
---------------------------------------
Investment Products $250 $ -- $266
Individual Life 83 -- 77
Corporate Owned Life Insurance -- 240 259
Other 2 -- (16)
---------------------------------------
CONSOLIDATED OPERATIONS $335 $240 $586
---------------------------------------
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
Percentage
Gross Ceded to Assumed From Net of Amount
Amount Other Companies Other Companies Amount Assumed to Net
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1999
Life insurance in force $307,970 $131,162 $11,785 $188,593 6.2%
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,212 $ 275 $ 84 $ 2,021 4.2%
Accident and health insurance 448 435 11 24 45.8%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,660 $ 710 $ 95 $ 2,045 4.6%
------------------------------------------------------------------------
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%
------------------------------------------------------------------------
</TABLE>
S-3
