<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY--
SEPARATE ACCOUNT SIX
P.O. Box 5085 PEGASUS PATHMAKER VARIABLE ANNUITY
Hartford, Connecticut 06102-5085
Telephone: 1-800-862-6668 (Contract Owners)
1-800-862-7155 (Investment Representatives)
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This Prospectus describes the Pegasus Pathmaker Variable Annuity Contract
("Contract"), a tax deferred variable annuity issued by ITT Hartford Life and
Annuity Insurance Company ("ITT Hartford"). Payments for the Contract will
be held in the Fixed Account and/or a series of ITT Hartford Life and Annuity
Insurance Company Separate Account Six (the "Separate Account").
There are currently nine Sub-Accounts available under the Contract, investing
in shares of the Pegasus Variable Annuity Fund (formerly "The Woodward
Variable Annuity Fund") or Putnam Capital Manager Trust. The underlying
investment portfolios ("Funds") for the Sub-Accounts are the Pegasus Managed
Assets Balanced Fund, Pegasus Growth and Value Fund, Pegasus Mid-Cap
Opportunity Fund, Pegasus Growth Fund and Pegasus Money Market Fund of the
Pegasus Variable Annuity Fund; and PCM Global Growth Fund, PCM Global Asset
Allocation Fund, PCM Diversified Income Fund, and PCM U.S. Government and
High Quality Bond Fund of Putnam Capital Manager Trust.
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account that investors should know before investing. This Prospectus
should be kept for future reference. Additional information about the Separate
Account and the Fixed Account has been filed with the Securities and Exchange
Commission and is available without charge upon request. To obtain the
Statement of Additional Information send a written request to ITT Hartford Life
and Annuity Insurance Company, Attn: Annuity Marketing Services, P.O. Box
5085, Hartford, CT 06102-5085. The Table of Contents for the Statement of
Additional Information may be found on page ____ of this Prospectus. The
Statement of Additional Information is incorporated by reference into this
Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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THIS PROSPECTUS IS ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE PEGASUS VARIABLE
ANNUITY FUND AND PUTNAM CAPITAL MANAGER TRUST AND IS VALID ONLY WHEN SO
ACCOMPANIED.
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Prospectus Dated: May 1, 1996
Revised Effective: October 11, 1996
Statement of Additional Information Dated: May 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE RELATED INFORMATION. . . . . . . . . . . . . . . . . . . . . .
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right to Cancel Period . . . . . . . . . . . . . . . . . . . . . . . .
THE SEPARATE ACCOUNT.. . . . . . . . . . . . . . . . . . . . . . . . . . .
THE FIXED ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATION OF THE CONTRACT/ACCUMULATION/ PERIOD.. . . . . . . . . . . . . .
Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value of Accumulation Units. . . . . . . . . . . . . . . . . . . . . .
Value of the Fixed Account . . . . . . . . . . . . . . . . . . . . . .
Value of the Contract. . . . . . . . . . . . . . . . . . . . . . . . .
Transfers Among Sub-Accounts . . . . . . . . . . . . . . . . . . . . .
Transfers Between the Fixed Account and the Sub-Accounts . . . . . . .
Redemption/Surrender of a Contract . . . . . . . . . . . . . . . . . .
DEATH BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHARGES UNDER THE CONTRACT.. . . . . . . . . . . . . . . . . . . . . . . .
CONTINGENT DEFERRED SALES CHARGES. . . . . . . . . . . . . . . . . . . . .
<PAGE>
During the First Seven Contract Years. . . . . . . . . . . . . . . .
After the Seventh Contract Year. . . . . . . . . . . . . . . . . . . .
Mortality and Expense Risk Charge. . . . . . . . . . . . . . . . . . .
Administration and Maintenance Fees. . . . . . . . . . . . . . . . . .
Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY BENEFITS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation . . . . . . . . . . . . . . . . . . . .
Determination of Payment Amount. . . . . . . . . . . . . . . . . . . .
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of ITT Hartford and the Separate Account. . . . . . . . . . .
Taxation of Annuities -- General Provisions Affecting
Purchasers Other Than Qualified Retirement Plans . . . . . . . . . . .
Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . .
General Provisions Affecting Qualified Retirement Plans. . . . . . . .
Annuity Purchases by Nonresident Aliens and Foreign Corporations . . .
GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delay of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of the Contracts. . . . . . . . . . . . . . . . . . . . .
Other Contracts Offered. . . . . . . . . . . . . . . . . . . . . . . .
Custodian of Separate Account Assets . . . . . . . . . . . . . . . . .
<PAGE>
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION.. . . . . . . . .
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values
before Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract
year without surrender charges.
ANNUITANT: The person or participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
Under a group unallocated Contract, the date for each participant is determined
by the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named within the Plan documents/enrollment
forms by each Participant entitled to receive benefits as per the terms of the
Contract in case of the death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
FIXED ACCOUNT: Part of the General Account of ITT Hartford to which a Contract
Owner may allocate all or a portion of his Premium Payment or Contract Value.
DEATH BENEFIT: The amount payable upon the death of a Contract Owner,
Annuitant, or Participant, in the case of group contracts, prior to age 90 and
before annuity payments have started.
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FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: Currently, the portfolios of the Pegasus Variable Annuity Fund and
Putnam Capital Manager Trust described on page of this Prospectus.
GENERAL ACCOUNT: The General Account of ITT Hartford which consists of all
assets of the ITT Hartford Life and Annuity Insurance Company other than those
allocated to the separate accounts of the ITT Hartford Life and Annuity
Insurance Company.
ITT HARTFORD: ITT Hartford Life and Annuity Insurance Company.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street,
Simsbury, Connecticut. All correspondence concerning the Contract should be
sent to P.O. Box 5085, Hartford, CT 06102-5085, Attn: Individual Annuity
Services.
MAXIMUM ANNIVERSARY VALUE : A value used in determining the death benefit.
It is based on a series of calculations of Contract Values on Contract
Anniversaries, premium payments and partial surrenders, as described on
page .
NON- QUALIFIED CONTRACT: A Contract which is not classified as a tax-qualified
retirement plan using pre-tax dollars under the Internal Revenue Code.
PARTICIPANT: (For Group Unallocated Contracts Only). Any eligible employee of
an employer/Contract Owner participating in the Plan.
PLAN: A voluntary Plan of an Employer which qualifies for special tax treatment
under a section of the Internal Revenue Code.
PREMIUM PAYMENT: A payment made to ITT Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Contract Values.
QUALIFIED CONTRACT: A Contract which qualifies as a tax-qualified retirement
plan using pre-tax dollars under the Internal Revenue Code, such as an
employer-sponsored Section 401(k) plan or an Individual Retirement Annuity
(IRA).
SEPARATE ACCOUNT: The ITT Hartford separate account entitled "ITT Hartford Life
and Annuity Insurance Company - Separate Account Six."
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
UNALLOCATED CONTRACTS - Contracts issued to employers or such other entities as
Contract Owners with no allocation to a specific Participant, as defined herein.
The Plans will be responsible for
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the individual allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
FEE TABLE
SUMMARY
CONTRACT OWNER TRANSACTION EXPENSES
(ALL SUB-ACCOUNTS)
Sales Load Imposed on Purchases
(as a percentage of premium payments). . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0
Deferred Sales Load (as a percentage of amounts withdrawn)
First Year (1) . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Second Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fifth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Sixth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Seventh Year . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Eighth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Contract Fee (2). . . . . . . . . . . . . . . . . . . . . . . $30(2)
Annual Expenses-Separate Account
(as percentage of average account value)
Mortality and Expense Risk . . . . . . . . . . . . . . . . . . . 1.250%
Administration Fees . . . . . . . . . . . . . . . . . . . . . . 0.150%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.400%
ANNUAL FUND OPERATING EXPENSES
(AS PERCENTAGE OF NET ASSETS)
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
-------------------------------------
Pegasus Managed Assets Balanced Fund 0.650% 0.200% 0.850%
Pegasus Growth and Value Fund 0.600% 0.250% 0.850%
Pegasus Mid-Cap Opportunity Fund 0.600% 0.250% 0.850%
Pegasus Growth Fund 0.600% 0.250% 0.850%
Pegasus Money Market Fund 0.300% 0.200% 0.500%
PCM Global Growth Fund 0.650% 0.100% 0.750%
PCM Global Asset Allocation Fund 0.700% 0.140% 0.840%
PCM Diversified Income Fund 0.700% 0.150% 0.850%
PCM U.S. Government and High Quality 0.610% 0.090% 0.700%
Bond Fund
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33-86330
(1) Length of time from premium payment.
<PAGE>
(2) The Annual Contract Fee is a single $30 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of
the charge. Pursuant to requirements of the 1940 Act, the Annual Contract
Fee has been reflected in the Examples by a method intended to show the
"average" impact of the Annual Contract Fee on an investment in the
Separate Account. The Annual Contract Fee is deducted only when the
accumulated value is $50,000 or less. In the Example, the Annual Contract
Fee is approximated as a 0.08% annual asset charge based on the experience
of the Contracts.
(3) Operating expenses of the Pegasus Funds reflect the newly adopted
management fee schedule that will be in effect for future periods combined
with the historic expense levels for the fund. These expenses assume that
the funds' advisor will waive portions of the management fee in order to
keep total fund operating expenses at the level shown in the table.
<PAGE>
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your contract at the If you annuitize at the end of the
end of the applicable time period: You applicable time period: You would
would pay the following expenses on a pay the following expenses on a
$1,000 investment, assuming a 5% $1,000 investment assuming a 5%
annual return on assets: annual return on assets:
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sub-Account 1 3 5 10 1 3 5 10
----------- yr. yrs. yrs. yrs. yr. yrs. yrs. yrs.
Pegasus Managed Assets Balanced --- ---- ---- ---- --- ---- ---- ----
Fund $82 $119 $158 $253 $22 $68 $117 $252
Pegasus Growth and Value Fund 82 119 158 253 22 68 117 252
Pegasus Mid-Cap Opportunity Fund 82 119 158 253 22 68 117 252
Pegasus Growth Fund 82 119 158 253 22 68 117 252
Pegasus Money Market Fund 79 108 140 216 18 57 99 215
PCM Global Growth Fund 81 116 153 243 21 65 112 242
PCM Global Asset Allocation Fund 82 119 158 252 21 68 117 251
PCM Diversified Income Fund 82 119 158 253 22 68 117 252
PCM U.S. Government and High
Quality Bond Fund 81 114 150 238 20 63 109 237
</TABLE>
If you do not surrender your
contract: You would pay the
following expenses on a $1,000
investment, assuming a 5% annual
return on assets:
Sub-Account 1 3 5 10
----------- yr. yrs. yrs. yrs.
--- ---- ---- ----
Pegasus Managed Assets Balanced $22 $69 $118 $253
Fund
22 69 118 253
Pegasus Growth and Value Fund
22 69 118 253
Pegasus Mid-Cap Opportunity Fund
22 69 118 253
Pegasus Growth Fund
19 58 100 216
Pegasus Money Market Fund
21 66 113 243
PCM Global Growth Fund
22 69 118 252
PCM Global Asset Allocation Fund
22 69 118 253
PCM Diversified Income Fund
PCM U.S. Government and High 21 64 110 238
Quality Bond Fund
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The purpose of this table is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and Funds.
Premium taxes may also be applicable.
This Example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
<PAGE>
ACCUMULATION UNIT VALUES
(For an accumulation unit outstanding throughout the period)
The following information, insofar as it relates to the period ended December
31, 1995, has been examined by Arthur Andersen LLP, independent public
accountants, whose report thereon is included in the Statement of Additional
information, which is incorporated by reference to this Prospectus.
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1995
----
PEGASUS MANAGED ASSETS BALANCED FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000
Accumulation unit value at end of period $11.422
Number accumulation units outstanding at
end of period (in thousands) 678,687
PEGASUS GROWTH AND VALUE FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000
Accumulation unit value at end of period $11.700
Number accumulation units outstanding at
end of period (in thousands) 270,551
PEGASUS MID-CAP OPPORTUNITY FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000
Accumulation unit value at end of period $10.983
Number accumulation units outstanding at
end of period (in thousands) 402,309
PEGASUS GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000
Accumulation unit value at end of period $11.430
Number accumulation units outstanding at
end of period (in thousands) 512,959
PEGASUS MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000
Accumulation unit value at end of period $1.030
Number accumulation units outstanding at
end of period (in thousands) 637,117
PCM GLOBAL GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000(a)
Accumulation unit value at end of period $11.773
Number accumulation units outstanding at
end of period (in thousands) 21,336
PCM GLOBAL ASSET ALLOCATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000(a)
Accumulation unit value at end of period $11.692
Number accumulation units outstanding at
end of period (in thousands) 332,770
PCM DIVERSIFIED INCOME FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000(a)
Accumulation unit value at end of period $11.184
Number accumulation units outstanding at
end of period (in thousands) 91,387
PCM U.S. GOVERNMENT AND HIGH QUALITY
<PAGE>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period $10.000 (a)
Accumulation unit value at end of period $11.341
Number accumulation units outstanding at
end of period (in thousands) 115,951
<PAGE>
SUMMARY
WHAT IS THE CONTRACT AND HOW MAY I PURCHASE ONE?
The Contract offered is a tax deferred Variable Annuity Contract (see
"Taxation of Annuities in General," page ). Generally, the Contract is
purchased by completing an application or an order to purchase a Contract and
submitting it, along with the initial Premium Payments, to ITT Hartford for
its approval. The minimum initial Premium Payment is $1,000 with a minimum
allocation to any Fund of $500. Certain plans may make smaller initial and
subsequent periodic premium payments. Subsequent Premium Payments, if made,
must be a minimum of $500. Generally, a Contract Owner may exercise his right
to cancel the Contract within 10 days of delivery of the Contract by
returning the Contract to ITT Hartford at its Home Office. If the Contract
Owner exercises his right to cancel, ITT Hartford will return either the
Contract Value or the original Premium Payments to the Contract Owner. The
duration of the right to cancel period and ITT Hartford's obligation to
either return the Contract Value or the original Premium will depend on state
law (see "Right to Cancel Period, page ").
WHO MAY PURCHASE THE CONTRACT?
Any individual or group may purchase the Contracts, including any trustee or
custodian for a retirement plan which qualifies for special Federal tax
treatment under the Internal Revenue Code ("Qualified Contracts"). These
Contracts are also available for IRA's. (See "Federal Tax Considerations"
commencing on page and Appendix I commencing on page ).
WHAT TYPES OF INVESTMENTS ARE AVAILABLE UNDER THE CONTRACT?
The underlying investments for the Contract are shares of the Pegasus
Variable Annuity Fund and Putnam Capital Manager Trust, open-end diversified
series investment companies with multiple portfolios ("Funds") as follows:
Pegasus Managed Assets Balanced Fund, Pegasus Growth and Value Fund, Pegasus
Mid-Cap Opportunity Fund, Pegasus Growth Fund and Pegasus Money Market Fund
of the Pegasus Variable Annuity Fund; PCM Global Growth Fund, PCM Global
Asset Allocation Fund, PCM Diversified Income Fund and PCM U.S. Government
and High Quality Bond Fund of Putnam Capital Manager Trust; and such other
Funds as shall be offered from time to time, and the Fixed Account, or a
combination of the Funds and the Fixed Account. (See "The Funds" commencing
on page and "The Fixed Account" commencing on page ).
WHAT ARE THE CHARGES UNDER THE CONTRACTS?
SALES EXPENSES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. (See "Contingent Deferred Sales Charges"
commencing on page ).
<PAGE>
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. For this purpose, Premium
Payments will be deemed to be surrendered in the order in which they are
received and all surrenders will be first from Premium Payments and then from
other Contract values. The charge is a percentage of the amount withdrawn
(not to exceed the aggregate amount of the Premium Payments made). The
charge is as follows:
LENGTH OF TIME
CHARGE FROM PREMIUM PAYMENT
------ --------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
No contingent deferred sales charge will be assessed in the event of death of
the Annuitant or Contract Owner, or upon the exercise of the withdrawal
privilege or if Contract Values are applied to an Annuity option provided for
under the Contract (except that a surrender out of Annuity Option Four will
be subject to a contingent deferred sales charge where applicable). (See
"Contingent Deferred Sales Charges" commencing on page _______.)
FREE WITHDRAWAL PRIVILEGE. Withdrawals of up to 10% per Contract Year, on a
noncumulative basis, of the Premium Payments made to a Contract may be made
without the imposition of the contingent deferred sales charge during the
first seven contract years. (See "Contingent Deferred Sales Charges"
commencing on page _____). Certain plans or programs may have different
withdrawal privileges.
MORTALITY AND EXPENSE RISKS
For assuming the mortality and expense risks under the Contract, ITT Hartford
will impose a 1.25% per annum charge against all Contract Values held in the
Sub-Accounts, (see "Mortality and Expense Risk Charge," page ).
ANNUAL ADMINISTRATION AND MAINTENANCE FEE
The Contract provides for administration and Contract maintenance charges.
For administration, the charge is 0.15% per annum against all Contract Values
held in the Separate Account. For Contract maintenance, the charge is $30
annually. (See "Administration and Maintenance Fees," page ______).
Contracts with a Contract Value of $50,000 or more at time of Contract
Anniversary will not be assessed this charge.
<PAGE>
PREMIUM TAXES
A deduction will be made for Premium Taxes for Contracts sold in certain
states. (See "Premium Taxes," page ____.)
CHARGES BY THE FUNDS
The Funds are subject to certain fees, charges and expenses. (See the
Prospectuses for the Pegasus Variable Annuity Fund and Putnam Capital Manager
Trust accompanying this Prospectus.)
CAN I GET MY MONEY IF I NEED IT?
Subject to any applicable charges, the Contract may be surrendered, or
portions of the value of such Contract may be withdrawn, at any time prior to
the Annuity Commencement Date. However, if less than $500 remains in a
Contract as a result of a withdrawal, ITT Hartford may terminate the Contract
in its entirety. (See "Redemption/Surrender of a Contract," page ____; see
also "Federal Tax Considerations," page ____, for a discussion of federal tax
consequences, including a 10% penalty tax that may apply upon surrender or
withdrawal.)
DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Death Benefit is provided in the event of death of the Annuitant or
Contract Owner or Joint Contract Owner before Annuity payments have
commenced. (See "Death Benefit," page _____.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are four available Annuity options under the Contract which are
described on page ______. The Annuity Commencement Date may not be deferred
beyond the Annuitant's 90th birthday except in certain states where the
Annuity Commencement Date may not be deferred beyond the Annuitant's 85th
birthday. If a Contract Owner does not elect otherwise, the Contract Value
less applicable premium taxes will be applied on the Annuity Commencement
Date under the second option to provide a life annuity with 120 monthly
payments certain.
DOES THE CONTRACT OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Contract Owners will have the right to vote on matters affecting an
underlying Fund to the extent that proxies are solicited by such Fund. If a
Contract Owner does not vote, ITT Hartford shall vote such interests in the
same proportion as shares of the Fund for which instructions have been
received by ITT Hartford. (See "Voting Rights," page _____.)
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its
<PAGE>
Sub-Accounts. Performance information about a Sub-Account is based on the
Sub-Account's past performance only and is no indication of future
performance.
Each Fund may include total return in advertisements or other sales material.
When a Sub-Account advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant periods if the
Sub-Account has not been in existence for at least ten years. Total return
is measured by comparing the value of an investment in the Sub-Account at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming the deduction of any contingent deferred sales charge
which would be payable if the investment were redeemed at the end of the
period).
PCM Diversified Income Fund, PCM Global Asset Allocation Fund, and PCM U.S.
Government and High Quality Bond Fund Sub-Accounts may advertise yield in
addition to total return. The yield will be computed in the following
manner: The net investment income per unit earned during a recent one month
period is divided by the unit value on the last day of the period. This
figure reflects the recurring charges at the Separate Account level including
the Contract Maintenance Fee.
The Pegasus Money Market Fund Sub-Account may advertise yield and effective
yield. The yield of a Sub-Account is based upon the income earned by the
Sub-Account over a seven-day period and then annualized, i.e. the income
earned in the period is assumed to be earned every seven days over a 52-week
period and stated as a percentage of the investment. Effective yield is
calculated similarly but when annualized, the income earned by the investment
is assumed to be reinvested in Sub-Account units and thus compounded in the
course of a 52-week period. Yield reflects the recurring charges at the
Separate Account level including the Contract Maintenance Fee.
Total return at the Separate Account level includes all Contract charges:
sales charges, mortality and expense risk charges, and the Contract
maintenance fee, and is therefore lower than total return at the Fund level,
with no comparable charges. Likewise, yield at the Separate Account level
includes all recurring charges (except sales charges), and is therefore lower
than yield at the Fund level, with no comparable charges.
ITT Hartford may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other
materials. These topics may include the relationship between sectors of the
economy and the economy as a whole and its effect on various securities
markets, investment strategies and techniques (such as value investing,
dollar cost averaging and asset allocation), the advantages and disadvantages
of investing in tax-advantaged and taxable instruments, customer profiles and
hypothetical purchase scenarios, financial management and tax and retirement
planning, and other investment alternatives, including comparisons between
the Contracts and the characteristics of and market for such alternatives.
INTRODUCTION
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This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing a tax deferred Variable Annuity
Contract offered by ITT Hartford and funded by the Fixed Account and/or a
series of the Separate Account. Please read the Glossary of Special Terms on
pages ___ and ____ prior to reading this Prospectus to familiarize
yourself with the terms being used.
THE CONTRACT
The Pegasus Pathmaker Variable Annuity is a tax deferred Variable Annuity
Contract. Payments for the Contract will be held in the Fixed Account and/or
a series of the Separate Account. Initially there are no deductions from
your Premium Payments (except for Premium Taxes, if applicable) so your
entire Premium Payment is put to work in the investment Sub-Account(s) of
your choice or the Fixed Account. Each Sub-Account invests in a different
Fund with its own distinct investment objectives. You pick the
Sub-Account(s) with the investment objectives that meet your needs. You may
select one or more Sub-Accounts and/or the Fixed Account and determine the
percentage of your Premium Payment that is put into a Sub-Account or the
Fixed Account. You may also transfer assets among the Sub-Accounts and the
Fixed Account so that your investment program meets your specific needs over
time. There are minimum requirements for investing in each Sub-Account and
the Fixed Account which are described later in this Prospectus. In addition,
there are certain other limitations on withdrawals and transfers of amounts
in the Sub-Accounts and the Fixed Account as described in this Prospectus.
See "Charges Under the Contract" for a description of the charges for
redeeming a Contract and other charges made under the Contract.
Generally, the Contract contains the four optional forms of Annuity described
later in this Prospectus. Options 2 and 4 are available with respect to Tax
Qualified Plans only if the guaranteed payment period is less than the life
expectancy of the Annuitant at the time the option becomes effective. Such
life expectancy shall be computed on the basis of the mortality table
prescribed by the IRS, or if none is prescribed, the mortality table then in
use by ITT Hartford.
The Contract Owner may select an Annuity Commencement Date and an Annuity
option which may be on a fixed or variable basis, or a combination thereof.
The Annuity Commencement Date may not be deferred beyond the Annuitant's 90th
birthday in most states except Pennsylvania where the Annuity Commencement
Date may not be deferred beyond the Annuitant's 85th birthday.
The Annuity Commencement Date and/or the Annuity option may be changed from
time to time, but any such change must be made at least 30 days prior to the
date on which payments are scheduled to begin. If you do not elect
otherwise, payments will begin at the Annuitant's age 90 under Option 2 with
120 monthly payments certain (Option 1 for contracts issued in Texas).
When an Annuity is effected under a Contract, unless otherwise specified,
Contract Values held in the Sub-Accounts will be applied to provide a
Variable Annuity based on the pro rata amount in the various Sub-Accounts.
Fixed Account Contract Values will be applied to provide a Fixed
<PAGE>
Annuity. Variable Annuity payments will vary in accordance with the
investment performance of the Sub-Accounts you have selected. The Contract
allows the Contract Owner to change the Sub-Accounts on which variable
payments are based after payments have commenced once every three (3) months.
Any Fixed Annuity allocation may not be changed.
The Contract offered under this Prospectus may be purchased by any individual
("Non-Qualified Contract") or by an individual, trustee or custodian for a
retirement plan qualified under Sections 401(a) or 403(a) of the Internal
Revenue Code; annuity purchase plans adopted by public school systems and
certain tax-exempt organizations according to Section 403(b) of the Internal
Revenue Code; Individual Retirement Annuities adopted according to Section
408 of the Internal Revenue Code; employee pension plans established for
employees by a state, a political subdivision of a state, or an agency or
instrumentality of either a state or a political subdivision of a state, and
certain eligible deferred compensation plans as defined in Section 457 of the
Internal Revenue Code ("Qualified Contracts").
RIGHT TO CANCEL PERIOD
If you are not satisfied with your purchase you may surrender the Contract by
returning it within ten days (or longer in some states) after you receive it.
A written request for cancellation must accompany the Contract. In such
event, ITT Hartford will, without deduction for any charges normally assessed
thereunder, pay you an amount equal to the sum of (i) the difference between
the Premium Payment and the amounts allocated to the Sub-Account(s) and/or
the Fixed Account under the Contract and (ii) the Contract Value on the date
of surrender attributable to the amounts so allocated. You bear only the
investment risk during the period prior to the Company's receipt of request
for cancellation. ITT Hartford will refund the premium paid only for
individual retirement annuities (if returned within seven days of receipt)
and in those states where required by law.
THE SEPARATE ACCOUNT
The Separate Account was established on October 28, 1994, in accordance with
authorization by the Board of Directors of ITT Hartford. It is the Separate
Account in which ITT Hartford sets aside and invests the assets attributable
to variable annuity contracts, including the contracts sold under this
Prospectus. Although the Separate Account is an integral part of ITT
Hartford, it is registered as a unit investment trust under the Investment
Company Act of 1940. This registration does not, however, involve supervision
by the Commission of the management or the investment practices or policies
of the Separate Account or ITT Hartford. The Separate Account meets the
definition of "separate account" under Federal Securities law.
Under Connecticut law, the assets of the Separate Account attributable to the
Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts.
Income, gains, and losses, whether or not realized, from assets allocated to
the Separate Account, are, in accordance with the Contracts, credited to or
charged against the Separate Account. Also, the assets in the Separate
Account are not chargeable with liabilities arising out of any other business
ITT Hartford may conduct. So Contract Values
<PAGE>
allocated to the Sub-Accounts will not be affected by the rate of return of
ITT Hartford's General Account, nor by the investment performance of any of
ITT Hartford's other separate accounts. However, the obligations arising
under the Contracts are general obligations of ITT Hartford.
Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the shares of one Fund. Net Premium Payments and proceeds of
transfers between Funds are applied to purchase shares in the appropriate
Fund at net asset value determined as of the end of the Valuation Period
during which the payments were received or the transfer made. All
distributions from the Funds are reinvested at net asset value. The value of
your investment will therefore vary in accordance with the net income and the
market value of the portfolios of the Funds. During the Variable Annuity
payout period, both your Annuity payments and reserve values will vary in
accordance with these factors.
ITT Hartford does not guarantee the investment results of the Funds or any of
the underlying investments. There is no assurance that the value of a
Contract during the years prior to retirement or the aggregate amount of the
Variable Annuity payments will equal the total of Premium Payments made under
the Contract. Since each Fund has different investment objectives and
policies, each is subject to different risks. These risks are more fully
described in the accompanying Prospectuses for the Pegasus Variable Annuity
and Putnam Capital Manager Trust.
ITT Hartford reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the
shares of any Fund held by the Separate Account. Substitution may occur only
if shares of the Fund(s) become unavailable or if there are changes in
applicable law or interpretations of law. Current law requires notification
to you of any such substitution and approval of the Commission.
The Separate Account may be subject to liabilities arising from a Series of
the Separate Account whose assets are attributable to other variable annuity
contracts or variable life insurance policies offered by the Separate Account
which are not described in this Prospectus.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE
1940 ACT, AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN
REVIEWED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE
FOLLOWING DISCLOSURE ABOUT THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE
ACCURACY AND COMPLETENESS OF DISCLOSURE.
<PAGE>
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of ITT Hartford. ITT Hartford invests the assets
of the General Account in accordance with applicable laws governing
investments of Insurance Company General Accounts.
Currently, ITT Hartford guarantees that it will credit interest at a rate of
not less than 3% per year, compounded annually, to amounts allocated to the
Fixed Account under the Contracts. However, ITT Hartford reserves the right
to change the rate according to state insurance law. ITT Hartford may credit
interest at a rate in excess of 3% per year; however, ITT Hartford is not
obligated to credit any interest in excess of 3% per year. There is no
specific formula for the determination of excess interest credits. Some of
the factors that the Company may consider in determining whether to credit
excess interest to amounts allocated to the Fixed Account and the amount
thereof, are general economic trends, rates of return currently available and
anticipated on the Company's investments, regulatory and tax requirements and
competitive factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED
ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF
THE COMPANY. THE OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED
ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN
YEAR.
THE COMPANY
ITT Hartford Life and Annuity Insurance Company ("ITT Hartford"), formerly
ITT Life Insurance Corporation, was originally incorporated under the laws of
Wisconsin on January 9, 1956. ITT Hartford was redomiciled to Connecticut on
May 1, 1996. It is a stock life insurance company engaged in the business of
writing both individual and group life insurance and annuities in all states
including the District of Columbia, except New York. The offices of ITT
Hartford are located in Minneapolis, Minnesota; however, its mailing address
is P.O. Box 5085, Hartford, Connecticut 06102-5085.
ITT Hartford is a wholly owned subsidiary of Hartford Life Insurance Company.
ITT Hartford is ultimately 100% owned by Hartford Fire Insurance Company, one
of the largest multiple lines insurance carriers in the United States. On
December 20, 1995, Hartford Fire Insurance Company became an independent,
publicly traded corporation.
ITT Hartford is rated A+ (superior) by A.M. Best and Company, Inc. on the
basis of its financial soundness and operating performance. ITT Hartford is
rated AA by Standard & Poor's and AA+ by Duff and Phelps on the basis of its
claims paying ability.
These ratings do not apply to the performance of the Separate Account.
However, the Contractual obligations under this variable annuity are the
general corporate obligations of ITT Hartford. These ratings do apply to ITT
Hartford's ability to meet its insurance obligations under the Contract.
<PAGE>
THE FUNDS
The underlying investments for the Contracts are shares of the Pegasus
Variable Annuity Fund and Putnam Capital Manager Trust, open-end diversified
series investment companies with multiple portfolios. Each Fund
corresponding to each Sub-Account and its investment objective is described
below. ITT Hartford reserves the right, subject to compliance with the law,
to offer additional portfolios with differing investment objectives. The
Funds may not be available in all states.
PEGASUS MANAGED ASSETS BALANCED FUND (formerly the "Balanced Fund")
Seeks long-term total return through a combination of capital appreciation
and current income. The Managed Assets Balanced Fund follows an asset
allocation strategy by investing in equity securities, debt securities and
cash equivalents.
PEGASUS GROWTH AND VALUE FUND (formerly the "Growth/Value Fund")
Seeks long-term capital growth, with income a secondary consideration.
Pegasus Growth and Value Fund seeks to achieve this objective by investing
primarily in equity securities of larger companies that are attractively
priced relative to their growth potential.
PEGASUS MID-CAP OPPORTUNITY FUND (formerly the "Opportunity Fund")
Seeks long-term capital appreciation. Pegasus Mid-Cap Opportunity Fund seeks
to achieve this objective by investing primarily in equity securities of
companies with intermediate market capitalizations.
PEGASUS GROWTH FUND (formerly the "Capital Growth Fund")
Seeks long-term capital appreciation. Pegasus Growth Fund seeks to achieve
this objective by investing primarily in equity securities of domestic
issuers believed by its investment adviser to have above-average growth
characteristics
PEGASUS MONEY MARKET FUND
Seeks to provide a high level of current income consistent with the
preservation of capital and liquidity. Pegasus Money Market Fund seeks to
achieve this objective by investing in high quality money market instruments.
PCM DIVERSIFIED INCOME FUND
Seeks high current income consistent with capital preservation by investing
in the following three sectors of the fixed income securities markets: U.S.
Government Sector, High Yield Sector (which invests primarily in what are
commonly referred to as "junk bonds"), and International Sector. See the
special considerations for investments in high yield securities described in
the
<PAGE>
Fund prospectus.
PCM GLOBAL ASSET ALLOCATION FUND
Seeks a high level of long-term total return consistent with preservation of
capital by investing in U.S. equities, international equities, U.S. fixed
income securities, and international fixed income securities.
PCM GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified common stock
portfolio.
PCM U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
Seeks current income consistent with preservation of capital by investing
primarily in securities issued or guaranteed as to principal and interest by
the U.S. Government or by its agencies or instrumentalities and in other debt
obligations rated at least A by Standard & Poor's or Moody's or, if not
rated, determined by Putnam Investment Management, Inc. ("Putnam Management")
to be of comparable quality.
The Funds are available only to serve as the underlying investment for
variable annuity contracts. A full description of the Funds, their
investment objectives, policies and restrictions, risks, charges and expenses
and other aspects of their operation is contained in the accompanying
Prospectuses for the Pegasus Variable Annuity Fund and Putnam Capital Manager
Trust, which should be read in conjunction with this Prospectus before
investing. Statements of Additional Information may also be ordered without
charge from the Pegasus Variable Annuity Fund and Putnam Capital Manager
Trust.
The Funds are generally managed in styles similar to other open-end
investment companies which are managed by the same investment advisers and
whose shares are generally offered to the public. These other funds may,
however, employ different investment practices and may invest in securities
different from those in which their counterpart Funds invest, and
consequently will not have identical portfolios or experience identical
investment results.
First Chicago NBD Investment Management Company ("FCNIMCO"), located at Three
First National Plaza, Chicago, Illinois 60670, is the investment adviser to
Pegasus Variable Annuity Fund. FCNIMCO is a wholly-owned subsidiary of The
First National Bank of Chicago, which, in turn, is a wholly-owned subsidiary
of First Chicago NBD Corporation, a registered bank holding company.
Including among FCNIMCO's accounts are pension and profit-sharing funds for
major corporations and state and local governments, commingled trust funds
and a variety of institutional and personal advisory accounts, estates and
trusts. FCNIMCO also acts as investment adviser for other registered
investment companies and investment company portfolios.
Putnam Management, One Post Office Square, Boston, Massachusetts, 02109,
serves as the
<PAGE>
investment manager for the Funds of Putnam Capital Manager Trust. An
affiliate, The Putnam Advisory Company, Inc., manages domestic and foreign
institutional accounts and mutual funds. Another affiliate, Putnam Fiduciary
Trust Company, provides investment advice to institutional clients under its
banking and fiduciary policies. Putnam Management and its affiliates are
wholly-owned subsidiaries of Marsh & McLennan Companies, Inc., a publicly
owned holding company whose principal businesses are international insurance
brokerage and employee benefit consulting.
Subject to the general oversight of the Trustees of Putnam Capital Manager
Trust, Putnam Management manages the Funds of Putnam Capital Manager Trust in
accordance with their stated investment objectives and policies, makes
investment decisions for the Funds, places orders to purchase and sell
securities on behalf of the Funds, and administers the affairs of the Funds.
For its services, the Funds of Putnam Capital Manager Trust pay Putnam
Management a quarterly fee. See the accompanying Putnam Capital Manager
Trust Prospectus for a more complete description of Putnam Management and the
respective fees of the Putnam Funds.
OPERATION OF THE CONTRACT/ACCUMULATION PERIOD
PREMIUM PAYMENTS
The balance of each initial Premium Payment remaining after the deduction of
any applicable Premium Tax is credited to your Contract within two business
days of receipt of a properly completed application or an order to purchase a
Contract and the initial Premium Payment by ITT Hartford at its Home Office,
P.O. Box 5085, Hartford, CT 06102-5085. It will be credited to the
Sub-Account(s) and/or the Fixed Account in accordance with your election. If
the application or other information is incomplete when received, the balance
of each initial Premium Payment, after deduction of any applicable Premium
Tax, will be credited to the Sub-Account(s) or the Fixed Account within five
business days of receipt or the entire Premium Payment will be immediately
returned unless you have been informed of the delay and request that the
Premium Payment not be returned.
Subsequent Premium Payments are priced on the Valuation Day received by ITT
Hartford in its Home Office or other designated administrative office.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment
being credited to each Sub-Account by the value of an Accumulation Unit in
that Sub-Account on that date.
The minimum initial Premium Payment is $1,000. Subsequent Premium Payments,
if made, must be a minimum of $500. Certain plans may make smaller initial
and subsequent periodic payments. Each Premium Payment may be split among
the various Sub-Accounts and the Fixed Account subject to minimum amounts
then in effect.
VALUE OF ACCUMULATION UNITS
<PAGE>
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for
that Sub-Account for the Valuation Period then ended. The "Net Investment
Factor" for each of the Sub-Accounts is equal to the net asset value per
share of the corresponding Fund at the end of the Valuation Period (plus the
per share amount of any dividends or capital gains distributed by that Fund
if the ex-dividend date occurs in the Valuation Period then ended) divided by
the net asset value per share of the corresponding Fund at the beginning of
the Valuation Period and subtracting from that amount the amount of any
mortality and expense risk and administration charges assessed during the
Valuation Period then ending. You should refer to the Fund Prospectus which
accompanies this Prospectus for a description of how the assets of each Fund
are valued since each determination has a direct bearing on the Accumulation
Unit value of the Sub-Account and therefore the value of a Contract. The
Accumulation Unit value is affected by the performance of the Fund(s),
expenses and deduction of the charges described in this Prospectus.
The shares of the Fund are valued at net asset value on each Valuation Day.
A description of the valuation methods used in valuing Fund shares may be
found in the accompanying Prospectus of the Fund.
VALUE OF THE FIXED ACCOUNT
ITT Hartford will determine the value of the Fixed Account by crediting
interest to amounts allocated to the Fixed Account. The minimum Fixed
Account interest rate is 3%, compounded annually. ITT Hartford may credit a
lower minimum interest rate according to state law. ITT Hartford also may
credit interest at rates greater than the minimum Fixed Account interest rate.
VALUE OF THE CONTRACT
The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by
multiplying the total number of Accumulation Units credited to your Contract
in each Sub-Account by the then current Accumulation Unit values for the
applicable Sub-Account. The value of the Fixed Account under your Contract
will be the amount allocated to the Fixed Account plus interest credited.
You will be advised at least semi-annually of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values, the
Fixed Account Value, and the total value of your Contract.
TRANSFERS AMONG SUB-ACCOUNTS
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. However, ITT Hartford reserves the
right to limit the number of transfers to twelve (12) per Contract Year, with
no two (2) transfers occurring on consecutive Valuation Days. Transfers by
telephone may be made by a Contract Owner or by the attorney-in-fact pursuant
to a power of attorney by calling (800) 862-6668 or by the agent of
<PAGE>
record by calling (800) 862-7155. Telephone transfers may not be permitted
by some states for their residents who purchase variable annuities.
The policy of ITT Hartford and its agents and affiliates is that they will
not be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. ITT Hartford will employ reasonable
procedures to confirm that instructions communicated by telephone are
genuine; otherwise, ITT Hartford may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures ITT Hartford follows
for transactions initiated by telephone include requirements that callers
provide certain information for identification purposes. All transfer
instructions by telephone are tape recorded.
ITT Hartford may permit the Contract Owner to preauthorize transfers between
the Sub-Accounts and the Fixed Account under certain circumstances.
Transfers between the Sub-Accounts may be made both before and after Annuity
payments commence (limited to once a quarter) provided that the minimum
allocation to any Sub-Account may not be less than $500. No minimum balance
is presently required in any Sub-Account.
The right to reallocate Contract Values between the Sub-Accounts is subject
to modification if ITT Hartford determines, in its sole discretion, that the
exercise of that right by one or more Contract Owners is, or would be, to the
disadvantage of other Contract Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and could include, but
not be limited to, the requirement of a minimum time period between each
transfer, not accepting transfer requests of an agent acting under a power of
attorney on behalf of more than one Contract Owner, or limiting the dollar
amount that may be transferred between the Sub-Accounts and the Fixed Account
by a Contract Owner at any one time. Such restrictions may be applied in any
manner reasonably designed to prevent any use of the transfer right which is
considered by ITT Hartford to be to the disadvantage of other Contract Owners.
TRANSFERS BETWEEN THE FIXED ACCOUNT AND THE SUB-ACCOUNTS
Subject to the restrictions set forth above, transfers from the Fixed Account
into a Sub-Account may be made at any time during the Contract Year. The
maximum amount which may be transferred from the Fixed Account during any
Contract Year is the greater of 30% of the Fixed Account balance as of the
last Contract Anniversary or the greatest amount of any prior transfer from
the Fixed Account. If ITT Hartford permits preauthorized transfers from the
Fixed Account to the Sub-Accounts, this restriction is inapplicable.
However, if any interest rate is renewed at a rate at least one percentage
point less than the previous rate, the Contract Owner may elect to transfer
up to 100% of the Funds receiving the reduced rate within sixty days of
notification of the interest rate decrease. Generally, transfers may not be
made from any Sub-Account into the Fixed Account for the six-month period
following any transfer from the Fixed Account into one or more of the
Sub-Accounts. ITT Hartford reserves the right to defer transfers from the
Fixed Account for up to six months from the date of request.
REDEMPTION/SURRENDER OF A CONTRACT
<PAGE>
At any time prior to the Annuity Commencement Date, you have the right,
subject to any IRS provisions applicable thereto, to surrender the value of
the Contract in whole or in part. Surrenders are not permitted after Annuity
payments commence EXCEPT that a full surrender is allowed when payments for a
designated period (Option 4) are selected as the Annuity option.
FULL SURRENDERS. At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Option
4), the Contract Owner has the right to terminate the Contract. In such
event, the Termination Value of the Contract may be taken in the form of a
lump sum cash settlement. The Termination Value of the Contract is equal to
the Contract Value less any applicable Premium Taxes, the Contract
Maintenance Fee, if applicable, and any applicable contingent deferred sales
charges. The Termination Value may be more or less than the amount of the
Premium Payments made to a Contract.
PARTIAL SURRENDERS. The Contract Owner may make a partial surrender of
Contract Values at any time prior to the Annuity Commencement Date so long as
the amount surrendered is at least equal to the minimum amount rules then in
effect. Currently, there is no minimum amount rule in effect. However, ITT
Hartford may institute minimum amount rules at some future time.
Additionally, if the remaining Contract Value following a surrender is less
than $500 (and, for Texas contracts, there were no Premium Payments made
during the preceding two contract years), ITT Hartford may terminate the
Contract and pay the Termination Value.
Certain plans or programs may have different withdrawal privileges. ITT
Hartford may permit the Contract Owner to preauthorize partial surrenders
subject to certain limitations then in effect.
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(B) TAX SHELTERED ANNUITIES. AS
OF DECEMBER 31, 1988, ALL SECTION 403(B) ANNUITIES HAVE LIMITS ON FULL AND
PARTIAL SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31,
1988 AND ANY INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE
DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS A) ATTAINED AGE 59-1/2, B)
TERMINATED EMPLOYMENT, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED
FINANCIAL HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL
BE SUBJECT TO A PENALTY TAX OF 10%.
ITT HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY
1, 1989 ACCOUNT VALUES.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE
<PAGE>
UNDERTAKING ANY SUCH SURRENDER. (SEE "FEDERAL TAX CONSIDERATIONS" COMMENCING
ON PAGE .)
Payment on any request for a full or partial surrender from the Sub-Accounts
and/or the Fixed Account will be made as soon as possible and in any event no
later than seven days after the written request is received by ITT Hartford
at its Home Office, Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085. ITT Hartford may defer payment of any amounts from
the Fixed Account for up to six months from the date of the request for
surrender. If ITT Hartford defers payment for more than 30 days, ITT
Hartford will pay interest of at least 3% per annum on the amount deferred.
In requesting a partial withdrawal you should specify the Fixed Account
and/or the Sub-Account(s) from which the partial withdrawal is to be taken.
Otherwise, such withdrawal and any applicable contingent deferred sales
charges will be effected on a pro rata basis according to the value in the
Fixed Account and each Sub-Account under a Contract. Within this context,
the contingent deferred sales charges are taken from the Premium Payments in
the order in which they were received: from the earliest Premium Payments to
the latest Premium Payments. (See "Contingent Deferred Sales Charges,"
page .)
DEATH BENEFIT
The Contracts provide that in the event the Annuitant dies before the Annuity
Commencement Date, the Contingent Annuitant will become the Annuitant. If
the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant, or the Contingent Annuitant predeceases the
Annuitant, or if any Contract Owner dies before the Annuity Commencement
Date, the Beneficiary as determined under the Contract Control Provisions
will receive the Death Benefit as determined on the date of receipt of due
proof of death by ITT Hartford in its Home Office. With regard to Joint
Contract Owners, after the death of a Joint Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be the surviving Contract
Owner notwithstanding that the beneficiary designation may be different.
GUARANTEED DEATH BENEFIT - If, upon death prior to the Annuity Commencement
Date, the Annuitant or Contract Owner, as applicable, had not attained his
90th birthday, the Beneficiary will receive the greatest of (a) the Contract
Value determined as of the day written proof of death of such person is
received by ITT Hartford, or (b) 100% of the total Premium Payments made to
such Contract, reduced by any prior surrenders, or (c) the Maximum
Anniversary Value immediately preceding the date of death. The Maximum
Anniversary Value is equal to the greatest Anniversary Value attained from
the following:
As of receipt of due proof of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's
attained age 81. The Anniversary Value is equal to the Contract Value on a
Contract Anniversary, increased by the dollar amount of any premium payment
made since that anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary.
If the deceased, the Annuitant or Contract Owner, as applicable, had attained
age 90, then the
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Death Benefit will equal the Contract Value.
PAYMENT OF DEATH BENEFIT - Death Benefit proceeds will remain invested in
the Separate Account in accordance with the allocation instructions given by
the Contract Owner until the proceeds are paid or ITT Hartford receives new
instruction from the Beneficiary. The Death Benefit may be taken in one sum,
payable within 7 days after the date Due Proof of Death is received, or under
any of the settlement options then being offered by the Company provided,
however, that: (a) in the event of the death of any Contract Owner prior to
the Annuity Commencement Date, the entire interest in the Contract will be
distributed within 5 years after the death of the Contract Owner and (b) in
the event of the death of any Contract Owner or Annuitant which occurs on or
after the Annuity Commencement Date, any remaining interest in the Contract
will be paid at least as rapidly as under the method of distribution in
effect at the time of death, or, if the benefit is payable over a period not
extending beyond the life expectancy of the Beneficiary or over the life of
the Beneficiary, such distribution must commence within one year of the date
of death. The proceeds due on the death may be applied to provide variable
payments, fixed payments, or a combination of variable and fixed payments.
However, in the event of the Contract Owner's death where the sole
Beneficiary is the spouse of the Contract Owner and the Annuitant or
Contingent Annuitant is living, such spouse may elect, in lieu of receiving
the death benefit, to be treated as the Contract Owner. The Contract Value
and the Maximum Anniversary Value of the Contract will be unaffected by
treating the spouse as the Contract Owner.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same
settlement options and in the same manner as if an individual Contract Owner
died on the date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; (b) the Securities and Exchange
Commission permits postponement and so orders; or (c) the Securities and
Exchange Commission determines that an emergency exists making valuation of
the amounts or disposal of securities not reasonably practicable.
GROUP UNALLOCATED CONTRACTS - For Group Unallocated Contracts ITT Hartford
requires that detailed accounting of cumulative purchase payments, cumulative
gross surrenders, and current Contract Value attached to each Plan
Participant be submitted on an annual basis by the Contract Owner. Failure
to submit accurate data satisfactory to ITT Hartford will give ITT Hartford
the right to terminate this extension of benefits.
CHARGES UNDER THE CONTRACT
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a
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contingent deferred sales charge may be assessed against Contract Values when
they are surrendered.
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. Premium payments will be
deemed to be surrendered in the order in which they were received.
DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven contract years, all surrenders will be first from
Premium Payments and then from other Contract Values. If an amount equal to
all premium payments has been surrendered, a contingent deferred sales charge
will not be assessed against the surrender of the remaining Contract Value.
AFTER THE SEVENTH CONTRACT YEAR
After the seventh contract year, all surrenders will first be from earnings
and then from premium payments. A contingent deferred sales charge will not
be assessed against the surrender of earnings. If an amount equal to all
earnings has been surrendered, a contingent deferred sales charge will not be
assessed against premium payments received more than seven years prior to
surrender, but will be assessed against premium payments received less than
seven years prior to surrender. The charge is a percentage of the amount
withdrawn (not to exceed the aggregate amount of the Premium Payments made)
and equals:
CHARGE LENGTH OF TIME FROM PREMIUM PAYMENT
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
The contingent deferred sales charges are used to cover expenses relating to
the sale and distribution of the Contracts, including commissions paid to any
distribution organization and its sales personnel, the cost of preparing
sales literature and other promotional activities. To the extent that these
charges do not cover such distribution expenses, the expenses will be borne
by ITT Hartford from its general assets, including surplus. The surplus
might include profits resulting from unused mortality and expense risk
charges.
During the first seven Contract Years, on a non-cumulative basis, a Contract
Owner may make a partial surrender of Contract Values of up to 10% of the
aggregate Premium Payments made to the contract (as determined on the date of
the requested withdrawal) without the application of the contingent deferred
sales charge. After the seventh Contract year, the Contract Owner may
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make a partial surrender of 10% of premium payments made during the seven
years prior to the surrender and 100% of the Contract Value less the premium
payments made during the seven years prior to the surrender. The amounts not
subject to sales charges are known as the Annual Withdrawal Amount. The
Annual Withdrawal Amount is the amount which can be withdrawn in any Contract
Year prior to incurring surrender charges. An Extended Withdrawal Privilege
rider allows an Annuitant who attains age 70 1/2 under a Qualified Plan to
withdraw an amount in excess of the Annual Withdrawal Amount to comply with
IRS minimum distribution rules.
The contingent deferred sales charges which cover expenses relating to the
sale and distribution of the Contracts may be reduced for certain sales of
the Contracts under circumstances which may result in savings of such sales
and distribution expenses. Therefore, the contingent deferred sales charges
may be reduced if the Contracts are sold to certain employee and professional
groups. In addition, there may be other circumstances of which ITT Hartford
is not presently aware which could result in reduced sales or distribution
expenses. Reductions in these charges will not be unfairly discriminatory
against any Contract Owner.
ITT Hartford may offer certain employer sponsored savings plans in its
discretion reduced fees and charges including, but not limited to, the
contingent deferred sales charges, the mortality and expense risk charge and
the maintenance fee for certain sales under circumstances which may result in
savings of certain costs and expenses. Reductions in these fees and charges
will not be unfairly discriminatory against any Contract Owner.
MORTALITY AND EXPENSE RISK CHARGE
Although Variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of the Fund shares held in the
Sub-Account(s), the payments will not be affected by (a) ITT Hartford's
actual mortality experience among Annuitants before or after the Annuity
Commencement Date or (b) ITT Hartford's actual expenses, if greater than the
deductions provided for in the Contracts because of the expense and mortality
undertakings by ITT Hartford.
For assuming these risks under the Contracts, ITT Hartford will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract, including the payout period,
(estimated at .90% for mortality and .35% for expense).
The mortality undertaking provided by ITT Hartford under the Contracts,
assuming the selection of one of the forms of life Annuities, is to make
monthly Annuity payments (determined in accordance with the 1983a Individual
Annuity Mortality Table and other provisions contained in the Contract) to
Annuitants regardless of how long an Annuitant may live, and regardless of
how long all Annuitants as a group may live. ITT Hartford also assumes the
liability for payment of a minimum Death Benefit under the Contract.
The mortality undertakings are based on ITT Hartford's determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants during the Annuity payment period deviates from ITT Hartford's
actuarial determination of expected mortality rates among
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Annuitants because, as a group, their longevity is longer than anticipated,
ITT Hartford must provide amounts from its general funds to fulfill its
Contract obligations. ITT Hartford will bear the loss in such a situation.
Also, in the event of the death of an Annuitant or Contract Owner prior to
age 85 or the commencement of Annuity payments, whichever is earlier, ITT
Hartford can, in periods of declining value, experience a loss resulting from
the assumption of the mortality risk relative to the minimum Death Benefit.
In providing an expense undertaking, ITT Hartford assumes the risk that the
contingent deferred sales charges and the Administration and Maintenance Fees
for maintaining the Contracts prior to the Annuity Commencement Date may be
insufficient to cover the actual cost of providing such items.
ADMINISTRATION AND MAINTENANCE FEES
ITT Hartford will deduct certain fees from Contract Values to reimburse it
for expenses relating to the administration and maintenance of the Contract
and the Fixed Account. For Contract maintenance, ITT Hartford will deduct an
annual fee of $30 on each Contract Anniversary on or before the Annuity
Commencement Date. The deduction will be made pro rata according to the value
in each Sub-Account and the Fixed Account under a Contract. If during a
Contract Year the Contract is surrendered for its full value, ITT Hartford
will deduct the Contract Maintenance Fee at the time of such surrender. For
administration, ITT Hartford makes a daily charge at the rate of .15% per
annum against all Contract Values held in the Separate Account during both
the accumulation and annuity phases of the Contract. There is not
necessarily a relationship between the amount of administrative charge
imposed on a given Contract and the amount of expenses that may be
attributable to that Contract; expenses may be more or less than the charge.
The types of expenses incurred by the Separate Account include, but are not
limited to, expenses of issuing the Contract and expenses for confirmations,
Contract quarterly statements, processing of transfers and surrenders,
responding to Contract Holder inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Sub-Account unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Prospectuses for The Pegasus Variable Annuity Fund
and Putnam Capital Manager Trust for a description of deductions and
expenses paid out of the assets of the respective Funds.
PREMIUM TAXES
A deduction is also made for Premium Tax, if applicable, imposed by a state
or other governmental entity. Certain states impose a Premium Tax, currently
ranging up to 3.5%. Some states assess the tax at the time purchase payments
are made; others assess the tax at the time of annuitization. ITT Hartford
will pay Premium Taxes at the time imposed under applicable law. At its sole
discretion, ITT Hartford may deduct Premium Taxes at the time the taxes are
paid, the Contract is surrendered, or the Contract annuitizes.
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ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be on
a fixed or variable basis, or a combination thereof. The Annuity
Commencement Date will not be deferred beyond the Annuitant's 90th birthday
except for certain states where deferral past age 85 is not permitted. The
Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any change must be at least 30 days prior to the date on which
Annuity payments are scheduled to begin. The contract allows the Contract
Owner to change the Sub-Accounts on which variable payments are based after
payments have commenced once every three (3) months. Any Fixed Annuity
allocation may not be changed.
ANNUITY OPTIONS
The contract contains the four optional Annuity forms described below.
Options 2 and 4 are available to Qualified Plans only if the guaranteed
payment period is less than the life expectancy of the Annuitant at the time
the option becomes effective. Such life expectancy shall be computed on the
basis of the mortality table prescribed by the IRS, or if none is prescribed,
the mortality table then in use by ITT Hartford. With respect to
Non-Qualified Contracts, if you do not elect otherwise, payments in most
states will automatically begin at the Annuitant's age 90 (with the exception
of states that do not allow deferral past age 85) under Option 2 with 120
monthly payments certain. For Qualified Contracts and contracts issued in
Texas, if you do not elect otherwise, payments will begin automatically at
the Annuitant's age 90 under Option 1 to provide a life Annuity.
Under any of the Annuity options excluding Options 4 and 5, no surrenders are
permitted after Annuity payments commence. Only full surrenders are allowed
out of Option 4 and any such surrender will be subject to contingent deferred
sales charges, if applicable. Full or partial withdrawals may be made from
Option 5 at any time and contingent deferred sales charges will not be
applied.
Option 1: Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision
for a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity
payment, two if he died before the date of the third Annuity payment, etc.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments
have been made for less than the minimum elected
<PAGE>
number of months, then the present value as of the date of the Annuitant's
death, of any remaining guaranteed payments will be paid in one sum to the
Beneficiary or Beneficiaries designated unless other provisions have been
made and approved by the company. If the Annuitant was also the Contract
Owner, any method of distribution must provide that any amount payable as a
death benefit will be distributed at least as rapidly as under the method of
distribution in effect at the Contract Owner's death.
Option 3: Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by ITT Hartford, the Annuitant may
elect that the payment to the survivor be less than the payment made during
the joint lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
Option 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from
5 to 30 years. Under this option, you may, at any time, surrender the
contract and receive, within seven days, the Termination Value of the
Contract as determined by ITT Hartford.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved
by the Company. If the Annuitant was also the Contract Owner, any method of
distribution must provide that any amount payable as a death benefit will be
distributed at least as rapidly as under the method of distribution in effect
at the Contract Owner's death.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
contracts thus provide no real benefit to a Contract Owner.
Option 5: Death Benefit Remaining with ITT Hartford
Proceeds from the Death Benefit left with ITT Hartford for a period not to
exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s)
to which they were allocated at the time of death unless the Beneficiary
elects to reallocate them. Full or partial withdrawals may be made at any
time. In the event of withdrawals, the remaining value will equal the
Contract Value of the proceeds left with ITT Hartford, minus any withdrawals.
ITT Hartford may offer other annuity options from time to time.
<PAGE>
THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by
the product of (1) the net investment factor (See "Valuation of Accumulation
Units," commencing on page ) for the day for which the Annuity Unit value
is being calculated and (2) a factor to neutralize the assumed investment
rate of 5.00% per annum discussed below.
DETERMINATION OF PAYMENT AMOUNT
When Annuity payments are to commence, the value of the Contract is
determined as the sum of the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus the product of the value of the Accumulation Unit
of each Sub-Account on that same day, and the number of Accumulation Units
credited to each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the
first monthly payment under the optional forms of Annuity for each $1,000 of
value of a Sub-Account under a Contract. The first monthly payment varies
according to the form and type of Annuity selected. The Contract contains
Annuity tables derived from the 1983a Individual Annuity Mortality Table with
ages set back one year and with an assumed investment rate ("A.I.R.") of 3%
per annum for the Fixed Annuity and 5% per annum for the Variable Annuity.
The total first monthly Variable Annuity payment is determined by multiplying
the value (expressed in thousands of dollars) of a Sub-Account (less any
applicable Premium Taxes) by the amount of the first monthly payment per
$1,000 of value obtained from the tables in the Contracts.
Fixed Annuity payments are determined at annuitization by multiplying the
values allocated to the Fixed Account (less applicable Premium Taxes) by a
rate to be determined by ITT Hartford which is no less than the rate
specified in the Annuity tables in the Contract. The Annuity payment will
remain level for the duration of the Annuity.
The amount of the first monthly Variable Annuity payment, determined as
described above, 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 in order to
determine the number of Annuity Units represented by the first payment. This
number of Annuity Units remains fixed during the Annuity payment period, and
in each subsequent month the dollar amount of the Variable Annuity payment is
determined by multiplying this fixed number of Annuity Units by the then
current Annuity Unit value.
THE A.I.R. ASSUMED IN THE MORTALITY TABLES WOULD PRODUCE LEVEL VARIABLE
ANNUITY PAYMENTS IF THE INVESTMENT RATE REMAINED CONSTANT. IN FACT, PAYMENTS
WILL VARY UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
<PAGE>
The Annuity Unit value used in calculating the amount of the Variable Annuity
payments will be based on an Annuity Unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date
of the Annuity payment.
FEDERAL TAX CONSIDERATIONS
What are some of the Federal tax consequences which affect these Contracts?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN
UNDER WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY
A PERSON, TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT
DESCRIBED HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. The
discussion here and in Appendix I, commencing on page , is based on ITT
Hartford's understanding of current Federal income tax laws as they are
currently interpreted.
B. TAXATION OF ITT HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of ITT Hartford which is taxed as a
life insurance company in accordance with the Internal Revenue Code (the
"Code"). Accordingly, the Separate Account will not be taxed as a "regulated
investment company" under subchapter M of Chapter 1 of the Code. Investment
income and any realized capital gains on the assets of the Separate Account
are reinvested and are taken into account in determining the value of the
Accumulation and Annuity Units (See "Value of Accumulation Units" commencing
on page ). As a result, such investment income and realized capital gains
are automatically applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or
Non-Qualified Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Internal Revenue Code governs the taxation of annuities in
general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains
provisions for Contract Owners which are non-natural persons.
Non-natural persons include corporations, trusts, and partnerships.
The annual net increase in the value of the Contract is currently
<PAGE>
includable in the gross income of a non-natural person unless the
non-natural person holds the Contract as an agent for a natural
person. There is an exception from current inclusion for certain
annuities held by structured settlement companies, certain annuities
held by an employer with respect to a terminated qualified retirement
plan and certain immediate annuities. A non-natural person which is
a tax-exempt entity for Federal tax purposes will not be subject to
income tax as a result of this provision.
If the Contract Owner is not an individual, the primary Annuitant
shall be treated as the Contract Owner for purposes of making
distributions which are required to be made upon the death of the
Contract Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not
taxed on increases in the value of the Contract until an amount is
received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased
prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not
includable in gross income equal the "investment in the
contract" under Section 72 of the Code.
ii. To the extent that the value of the Contract (ignoring any
surrender charges except on a full surrender) exceeds the
"investment in the contract," such excess constitutes the
"income on the contract."
iii. Any amount received or deemed received prior to the Annuity
Commencement Date (e.g., upon a partial surrender) is deemed
to come first from any such "income on the contract" and
then from "investment in the contract," and for these
purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c.
below. As a result, any such amount received or deemed
received (1) shall be includable in gross income to the
extent that such amount does not exceed any such "income on
the contract," and (2) shall not be includable in gross
income to the extent that such amount does exceed any such
"income on the contract." If at the time that any amount is
received or deemed received there is no "income on the
contract" (e.g., because the gross value of the Contract
does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or
deemed received will not be includable in gross income, and
will simply reduce the "investment in the contract."
<PAGE>
iv. The receipt of any amount as a loan under the Contract or
the assignment or pledge of any portion of the value of the
Contract shall be treated as an amount received for purposes
of this subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount
received for purposes of this subparagraph a. and the next
subparagraph b. This transfer rule does not apply, however,
to certain transfers of property between spouses or incident
to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments
made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the
amount determined by the application of the ratio of the
"investment in the contract" to the total amount of the payments
to be made after the Annuity Commencement Date (the "exclusion
ratio").
i. When the total of amounts excluded from income by
application of the exclusion ratio is equal to the
investment in the contract as of the Annuity Commencement
Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of
annuity payments excluded from gross income by the exclusion
ratio does not exceed the investment in the contract as of
the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for
the last taxable year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received
after the Annuity Commencement Date are not entitled to any
exclusion ratio and shall be fully includable in gross
income. However, upon a full surrender after such date,
only the excess of the amount received (after any surrender
charge) over the remaining "investment in the contract"
shall be includable in gross income (except to the extent
that the aggregation rule referred to in the next
subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued
after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year
(other than certain contracts held in connection with a
tax-qualified retirement arrangement) will be treated as one
annuity Contract for the purpose of determining the taxation of
distributions prior to the Annuity Commencement Date. An annuity
contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new
Contract for this purpose. ITT Hartford believes that for any
annuity subject to such aggregation, the values under the
Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a.,
above, of
<PAGE>
amounts received or deemed received prior to the Annuity
Commencement Date. Withdrawals will first be treated as
withdrawals of income until all of the income from all such
Contracts is withdrawn. As of the date of this Prospectus, there
are no regulations interpreting this provision.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion of
the amount includable in gross income, unless an exception
applies.
ii. The 10% penalty tax will not apply to the following
distributions (exceptions vary based upon the precise plan
involved):
1. Distributions made on or after the date the recipient
has attained the age of 59 1/2.
2. Distributions made on or after the death of the holder
or where the holder is not an individual, the death of
the primary annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or
life expectancy) of the recipient (or the joint lives
or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts which are allocable to the
"investment in the contract" prior to August 14, 1982
(see next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED
PRIOR TO AUGUST 14, 1982. If the Contract was obtained by a
tax-free exchange of a life insurance or annuity Contract
purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be
deemed to come (1) first from the amount of the "investment in
the contract" prior to August 14, 1982 ("pre-8/14/82 investment")
carried over from the prior Contract, (2) then from the portion
of the "income on the contract" (carried over to, as well as
accumulating in, the successor Contract) that is attributable to
such pre-8/14/82 investment, (3) then from the remaining "income
on the contract" and (4) last from the remaining "investment in
the contract." As a result, to the extent that such amount
received or deemed received does not exceed such pre-8/14/82
investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed
received does not exceed the sum of (a) such pre-8/14/82
investment and (b) the "income on the contract" attributable
thereto, such amount is not subject to
<PAGE>
the 10% penalty tax. In all other respects, amounts received or
deemed received from such post-exchange Contracts are generally
subject to the rules described in this subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary
provisions in ii. or iii. below:
1. If any Contract Owner dies on or after the Annuity
Commencement Date and before the entire interest in the
Contract has been distributed, the remaining portion of
such interest shall be distributed at least as rapidly
as under the method of distribution being used as of
the date of such death;
2. If any Contract Owner dies before the Annuity
Commencement Date, the entire interest in the Contract
will be distributed within 5 years after such death;
and
3. If the Contract Owner is not an individual, then for
purposes of 1. or 2. above, the primary annuitant under
the Contract shall be treated as the Contract Owner,
and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The
primary annuitant is the individual, the events in the
life of whom are of primary importance in affecting the
timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner
described in i. above is payable to or for the benefit of a
designated beneficiary, such beneficiary may elect to have
the portion distributed over a period that does not extend
beyond the life or life expectancy of the beneficiary. The
election and payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is
payable to or for the benefit of his or her spouse, and the
Annuitant or Contingent Annuitant is living, such spouse
shall be treated as the Contract Owner of such portion for
purposes of section i. above.
3. DIVERSIFICATION REQUIREMENTS. Section 817 of the Code provides that a
variable annuity contract will not be treated as an annuity contract
for any period during which the investments made by the separate
account or underlying fund are not adequately diversified in
accordance with regulations prescribed by the Treasury Department. If
a
<PAGE>
Contract is not treated as an annuity contract, the Contract Owner
will be subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the
value of the total assets of the segregated asset account underlying a
variable contract is represented by any one investment, no more than
70% is represented by any two investments, no more than 80% is
represented by any three investments, and no more than 90% is
represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer,
all interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In
addition, in the case of government securities, each government agency
or instrumentality shall be treated as a separate issuer.
A separate account must be in compliance with the diversification
standards on the last day of each calendar quarter or within 30 days
after the quarter ends. If an insurance company inadvertently fails
to meet the diversification requirements, the company may comply
within a reasonable period and avoid the taxation of contract income
on an ongoing basis. However, either the company or the Contract
Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
ITT Hartford monitors the diversification of investments in the
separate accounts and tests for diversification as required by the
Code. ITT Hartford intends to administer all contracts subject to the
diversification requirements in a manner that will maintain adequate
diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT. In order for a
variable annuity contract to qualify for tax deferral, assets in the
segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the
variable contract owner. The Internal Revenue Service ("IRS") has
issued several rulings which discuss investor control. The IRS has
ruled that incidents of ownership by the contract owner, such as the
ability to select and control investments in a separate account, will
cause the contract owner to be treated as the owner of the assets for
tax purposes.
Further, in the explanation to the temporary Section 817
diversification regulations, the Treasury Department noted that the
temporary regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the
insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary
regulations provide that in appropriate cases a segregated asset
account may include multiple sub-accounts, but do not specify the
extent to which policyholders may direct their investments to
particular sub-accounts without being treated as the owners of the
underlying assets. Guidance on this and other issues will be provided
in regulations or revenue rulings under Section 817(d), relating to
the definition of variable contract." The final regulations issued
under Section 817 did not
<PAGE>
provide guidance regarding investor control, and as of the date of this
prospectus, no other such guidance has been issued. Further, ITT
Hartford does not know if or in what form such guidance will be
issued. In addition, although regulations are generally issued with
prospective effect, it is possible that regulations may be issued with
retroactive effect. Due to the lack of specific guidance regarding the
issue of investor control, there is necessarily some uncertainty
regarding whether a Contract Owner could be considered the owner of the
assets for tax purposes. ITT Hartford reserves the right to modify the
contracts, as necessary, to prevent Contract Owners from being
considered the owners of the assets in the separate accounts.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to Federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS. The portion of a non-periodic
distribution which constitutes taxable income will be subject to
Federal income tax withholding unless the recipient elects not to have
taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as Federal
income tax. Election forms will be provided at the time distributions
are requested. If the necessary election forms are not submitted to
ITT Hartford, ITT Hartford will automatically withhold 10% of the
taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER
THAN ONE YEAR). The portion of a periodic distribution which
constitutes taxable income will be subject to Federal income tax
withholding as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld
or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I commencing on page for information
relative to the types of plans for which it may be used and the general
explanation of the tax features of such plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity 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 annuity
distributions at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state premium tax, other state and/or
municipal taxes, and taxes that may be imposed by the purchaser's country of
citizenship or residence. Prospective purchasers are
<PAGE>
advised to consult with a qualified tax advisor regarding U.S., state, and
foreign taxation with respect to an annuity purchase.
GENERAL MATTERS
ASSIGNMENT
Ownership of a Contract described herein is generally assignable. However,
if the Contracts are issued pursuant to some form of Qualified Plan, it is
possible that the ownership of the Contracts may not be transferred or
assigned depending on the type of qualified retirement plan involved. An
assignment of a Non-Qualified Contract may subject the assignment proceeds to
income taxes and certain penalty taxes. (See "Taxation of Annuities in
General - Non-Tax Qualified Purchasers," page .)
MODIFICATION
ITT Hartford reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which
ITT Hartford is subject; or (ii) is necessary to assure continued
qualification of the Contract under the Code or other federal or state laws
relating to retirement annuities or annuity Contracts; or (iii) is necessary
to reflect a change in the operation of the Separate Account or the
Sub-Account(s) or (iv) provides additional Separate Account options or (v)
withdraws Separate Account options. In the event of any such modification
ITT Hartford will provide notice to the Contract Owner or to the payee(s)
during the Annuity period. ITT Hartford may also make appropriate
endorsement in the Contract to reflect such modification.
DELAY OF PAYMENTS
There may be postponement of a surrender payment or death benefit whenever
(a) the New York Stock Exchange is closed, except for holidays or weekends,
or trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation or disposal
of securities not reasonably practicable.
VOTING RIGHTS
ITT Hartford is the legal owner of all Fund shares held in the Separate
Account. As the owner, ITT Hartford has the right to vote at the Funds'
shareholder meetings. However, to the extent required by federal securities
laws or regulations, ITT Hartford will:
1. Vote all Fund shares attributable to a Contract according to
instructions received from the Contract Owner, and
2. Vote shares attributable to a Contract for which no voting
instructions are received in the same proportion as shares for which
instructions are received.
<PAGE>
If any federal securities laws or regulations, or their present
interpretation change to permit ITT Hartford to vote Fund shares in its own
right, ITT Hartford may elect to do so.
ITT Hartford will notify you of any Fund shareholders' meeting if the shares
held for your account may be voted at such meetings. ITT Hartford will also
send proxy materials and a form of instruction by means of which you can
instruct ITT Hartford with respect to the voting of the Fund shares held for
your account.
In connection with the voting of Fund shares held by it, ITT Hartford will
arrange for the handling and tallying of voting instructions received from
Contract Owners. ITT Hartford as such, shall have no right, except as
hereinafter provided, to vote any Fund shares held by it hereunder which may
be registered in its name or the names of its nominees. ITT Hartford will,
however, vote the Fund shares held by it in accordance with the instructions
received from the Contract Owners for whose accounts the Fund shares are
held. If a Contract Owner desires to attend any meeting at which shares held
for the Contract Owner's benefit may be voted, the Contract Owner may
request ITT Hartford to furnish a proxy or otherwise arrange for the exercise
of voting rights with respect to the Fund shares held for such Contract
Owner's account. In the event that the Contract Owner gives no instructions
or leaves the manner of voting discretionary, ITT Hartford will vote such
shares of the appropriate Fund in the same proportion as shares of that Fund
for which instructions have been received. During the Annuity period under a
Contract the number of votes will decrease as the assets held to Fund Annuity
benefits decrease.
DISTRIBUTION OF THE CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
HSD is a wholly-owned subsidiary of Hartford Life Insurance Company. HSD is
registered with the Commission under the Securities and Exchange Act of 1934
as a Broker-Dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD").
The securities will be sold by insurance and variable annuity agents of ITT
Hartford who are registered representatives of independent Broker-Dealers who
have entered into distribution agreements with HSD. These Broker-Dealers are
registered with the Commission under the Securities Exchange Act of 1934 as a
Broker-Dealer and are members of NASD.
Commissions will be paid by ITT Hartford and will not be more than 6% of
Premium Payments.
From time to time, ITT Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
OTHER CONTRACTS OFFERED
In addition to the Contracts described in this Prospectus, it is contemplated
that other forms of group or individual Variable Annuities may be sold
providing benefits which vary in accordance with the investment experience of
the Separate Account.
<PAGE>
CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by ITT Hartford under a
safekeeping arrangement.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. ITT Hartford is
engaged in various matters of routine litigation which in its judgment are
not of material importance in relation to its respective total assets.
LEGAL COUNSEL
Counsel with respect to Federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda
Godkin, Esquire, General Counsel and Secretary, ITT Hartford Life Insurance
Companies, P.O. Box 2999, Hartford, Connecticut 06104-2999.
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus and elsewhere in the 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 on the
authority of said firm as experts in accounting and auditing in giving said
report. Reference is made to said report of ITT Hartford Life and Annuity
Insurance Company (the depositor), which includes an explanatory paragraph
with respect to changing the valuation method in determining aggregate
reserves for future benefits. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
ITT Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Investment Representatives)
<PAGE>
APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED PLANS
The tax rules applicable to tax qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions
and tax penalties, vary according to the type of plan as well as the terms
and conditions of the plan itself. Various tax penalties may apply to
contributions in excess of specified limits, to distributions in excess of
specified limits, distributions which do not satisfy certain requirements and
certain other transactions with respect to qualified plans.
Accordingly, this summary provides only general information about the tax
rules associated with use of the Contract by a qualified plan. Contract
owners, plan participants and beneficiaries are cautioned that the rights and
benefits of any person to benefits are controlled by the terms and conditions
of the plan regardless of the terms and conditions of the Contract. Some
qualified plans are subject to distribution and other requirements which are
not incorporated into ITT Hartford's administrative procedures. Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions comply with applicable
law. Because of the complexity of these rules, owners, participants and
beneficiaries are encouraged to consult their own tax advisors as to specific
tax consequences.
A. QUALIFIED PENSION PLANS
Provisions of the Code permit eligible employers to establish pension or
profit sharing plans (described in Section 401(a) and 401(k), if
applicable, and exempt from taxation under Section 501(a) of the Code), and
Simplified Employee Pension Plans (described in Section 408(k)). Such
plans are subject to limitations on the amount that may be contributed, the
persons who may be eligible and the time when distributions must commence.
Corporate employers intending to use these contracts in connection with
such plans should seek competent advice.
B. TAX SHELTERED ANNUITIES UNDER SECTION 403(b)
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts,
and, subject to certain limitations, exclude such contributions from gross
income. Generally, such contributions may not exceed the lesser of $9,500
or 20% of the employees "includable compensation" for his most recent full
year of employment, subject to other adjustments. Special provisions may
allow some employees to elect a different overall limitation.
Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION
<PAGE>
AGREEMENT unless such distribution is made:
(1) after the participating employee attains age 59 1/2;
(2) upon separation from service;
(3) upon death or disability, or
(4) in the case of hardship.
The above restrictions apply to distributions of employee contributions
made after December 31, 1988, earnings on those contributions, and earnings
on amounts attributable to employee contributions held as of December 31,
1988. They do not apply to distributions of any employer or other after-tax
contributions, employee contributions made on or before December 31,
1988, and earnings credited to employee contributions before December 31,
1988.
C. DEFERRED COMPENSATION PLANS UNDER SECTION 457
Employees and independent contractors performing services for such
employers may contribute on a before tax basis to the Deferred Compensation
Plan of their employer in accordance with the employer's plan and Section
457 of the Code. Section 457 places limitations on contributions to
Deferred Compensation Plans maintained by a State ("State" means a State, a
political sub-division of a State, and an agency or instrumentality of a
State or political sub-division of a State) or other tax-exempt
organization. Generally, the limitation is 33 1/3% of includable
compensation (25% of gross compensation) or $7,500, whichever is less. The
plan may also provide for additional "catch-up" deferrals during the three
taxable years ending before a Participant attains normal retirement age.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that
the employer is legal owner of any contract issued with respect to the plan
and that deferred amounts will be subject to the claims of the employer's
creditors. The employer as owner of the contract(s) retains all voting and
redemption rights which may accrue to the contract(s) issued with respect
to the plan. The participating employee should look to the terms of his
plan for any charges in regard to participating therein other than those
disclosed in this Prospectus.
Distributions from a Section 457 Deferred Compensation Plan are prohibited
unless made after the participating employee attains the age specified in
the plan, separates from service, dies, becomes permanently and totally
disabled or suffers an unforeseeable financial emergency. Present federal
tax law does not allow tax-free transfers or rollovers for amounts
accumulated in a Section 457 plan except for transfers to other Section 457
plans in limited cases.
<PAGE>
D. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408
Section 408 of the Code permits eligible individuals to establish
individual retirement programs through the purchase of Individual
Retirement Annuities ("IRAs"). IRAs are subject to limitations on the
amount that may be contributed, the contributions that may be deducted from
taxable income, the persons who may be eligible and the time when
distributions may commence. Also, distributions from certain qualified
plans may be "rolled-over" on a tax-deferred basis into an IRA.
E. TAX PENALTIES
Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be
excludable from income. The excludable amount is the portion of the
distribution which bears the same ratio as the after-tax contributions bear
to the expected return.
1. PREMATURE DISTRIBUTION
Distributions from a qualified plan before the Participant
attains age 59 1/2 are generally subject to an additional tax
equal to 10% of the taxable portion of the distribution. The 10%
penalty does not apply to distributions made after the employee's
death, on account of disability and distributions in the form of
a life annuity and, except in the case of an IRA, certain
distributions after separation from service at or after age 55
and certain distributions for eligible medical expenses. A life
annuity is defined as a scheduled series of substantially equal
periodic payments for the life or life expectancy of the
Participant (or the joint lives or life expectancies of the
Participant and Beneficiary).
2. MINIMUM DISTRIBUTION TAX
If the amount distributed is less than the minimum required
distribution for the year, the Participant is subject to a 50%
tax on the amount that was not properly distributed.
An individual's interest in a retirement plan must generally be
distributed or begin to be distributed not later than April 1 of
the calendar year in which the individual attains age 70 1/2
("required beginning date"). The required beginning date with
respect to certain government plans may be further deferred. The
entire interest of the Participant must be distributed beginning
no later than this required beginning date over a period which
may not extend beyond a maximum of the life expectancy of the
Participant and a designated Beneficiary. Each annual
distribution must equal or exceed a "minimum distribution amount"
which is determined by dividing the account balance by the
applicable life expectancy. This account balance is generally
based upon the account value as of the close of business on the
last day of the previous calendar year. In addition, minimum
distribution incidental benefit rules may require a larger annual
distribution.
<PAGE>
If an individual dies before reaching his or her required
beginning date, the individual's entire interest must generally
be distributed within five years of the individuals' death.
However, this rule will be deemed satisfied, if distributions
begin before the close of the calendar year following the
individual's death to a designated Beneficiary (or over a period
not extending beyond the life expectancy of the beneficiary). If
the Beneficiary is the individual's surviving spouse,
distributions may be delayed until the individual would have
attained age 70 1/2.
If an individual dies after reaching his or her required
beginning date or after distributions have commenced, the
individual's interest must generally be distributed at least as
rapidly as under the method of distribution in effect at the time
of the individual's death.
3. EXCESS DISTRIBUTION TAX
If the aggregate distributions from all IRAs and certain other
qualified plans in a calendar year exceed the greater of (i)
$150,000, or (ii) $112,500 as indexed for inflation ($155,000 as
of January 1, 1996), a penalty tax of 15% is generally imposed on
the excess portion of the distribution.
4. WITHHOLDING
Periodic distributions from a qualified plan lasting for a period
of 10 or more years are generally subject to voluntary income tax
withholding. The recipient of periodic distributions may
generally elect not to have withholding apply or to have income
taxes withheld at a different rate by providing a completed
election form. Otherwise, the amount withheld on such
distributions is determined at the rate applicable to wages as if
the recipient were married claiming three exemptions.
Nonperiodic distributions from an IRA are subject to income tax
withholding at a flat 10% rate. The recipient may elect not to
have withholding apply.
Nonperiodic distributions from other qualified plans are
generally subject to mandatory income tax withholding at the flat
rate of 20% unless such distributions are:
(1) the non-taxable portion of the distribution;
(2) required minimum distributions;
(3) eligible rollover distributions.
Eligible rollover distributions are direct payments to an IRA or
to another qualified employer plan.
<PAGE>
Any distribution from plans described in Section 457 of the Code
is subject to regular wage withholding rules.
<PAGE>
THIS FORM MUST BE COMPLETED FOR ALL TAX SHELTERED ANNUITIES.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford Variable Annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1989 and any increases in
cash value after December 31, 1988 may not be distributed to you unless you
have:
a. attained age 59-1/2
b. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made because of
financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford Variable Annuity. Please refer to your
Plan.
Please complete the following and return to:
ITT Hartford Life and Annuity Insurance Company
Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Name of Contract Owner/Participant
Address
City or Plan/School District
Date:
<PAGE>
TABLE OF CONTENTS TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE NO.
INTRODUCTION ........................................................
DESCRIPTION OF ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY .........................................
SAFEKEEPING OF ASSETS ...............................................
INDEPENDENT PUBLIC ACCOUNTANTS ......................................
DISTRIBUTION OF CONTRACTS ...........................................
ANNUITY/PAYOUT PERIOD ...............................................
Annuity Payments ................................................
The Annuity Unit and Valuation ..................................
Determination of Payment Amount .................................
CALCULATION OF YIELD AND RETURN .....................................
PERFORMANCE COMPARISONS .............................................
FINANCIAL STATEMENTS ................................................
<PAGE>
- - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form
below and mail to:
ITT Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for Separate Account Six to
me at the following address:
- --------------------
Name
- --------------------
Street
- -----------------------------------------------
City/State Zip Code
- - - - - - - - - - - - - - - - - -
