ITT HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II, S-6/A, 1999-02-04

ITT HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II
S-6/A, 1999-02-04

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<PAGE>

As filed with the Securities and Exchange Commission on February 4, 1999.
File No. 333-67373

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2

A. Exact name of trust: Separate Account VL II

B. Name of depositor: Hartford Life and Annuity Insurance Company

C. Complete address of depositor's principal executive offices:

P.O. Box 2999
Hartford, CT 06104-2999

D. Name and complete address of agent for service:

Thomas S. Clark, Esq.
Hartford Life and Annuity Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999

E. Title and amount of securities being registered: Pursuant to Rule
24f-2 under the Investment Company Act of 1940, the Registrant will
register an indefinite amount of securities.

F. Proposed maximum aggregate offering price to the public of the
securities being registered: Not yet determined.

G. Amount of filing fee: Not applicable.

H. Approximate date of proposed public offering: As soon as practicable
after the effective date of this registration statement.

The registrant hereby amends this Registration Statement on such dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

<PAGE>

RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS

<TABLE>
<CAPTION>
Item No. of Form N-8B-2 Caption In Prospectus
- ----------------------- ---------------------
<S> <C>

1. Cover Page
2. Cover Page
3. Not Applicable
4. Statement of Additional Information - Distribution
of the Policies
5. About Us - Separate Account VL II
6. About Us - Separate Account VL II
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. About Us - Separate Account VL II;
The Funds
11. About Us - Separate Account VL II;
The Funds
12. About Us - The Funds
13. Fee Table; Charges and Deductions
14. Premiums
15. Premiums
16. Premiums
17. Making Withdrawals From Your Policy
18. About Us - The Funds; Charges and
Deductions
19. Your Policy - Contract Rights
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. About Us - Hartford Life and Annuity
Insurance Company
26. Not Applicable
27. About Us - Hartford Life and Annuity
Insurance Company
28. Statement of Additional Information -
General Information and History
29. About Us - Hartford Life and Annuity
Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Statement of Additional Information -
Distribution of the Policies
36. Not required by Form S-6
37. Not Applicable
38. Statement of Additional Information -
Distribution of the Policies
39. Statement of Additional Information -
Distribution of the Policies
40. Not Applicable
41. Statement of Additional Information -
Distribution of the Policies
42. Not Applicable
43. Not Applicable

<PAGE>
Item No. of Form N-8B-2 Caption In Prospectus
- ----------------------- ---------------------

44. Premiums
45. Not Applicable
46. Premiums; Making Withdrawals From Your Policy
47. About Us - The Funds
48. Cover Page; About Us - Hartford Life and Annuity
Insurance Company
49. Not Applicable
50. About Us - Separate Account VL II
51. Not Applicable
52. About Us - The Funds
53. Taxes
54. Not Applicable
55. Not Applicable
56. Not Required by Form S-6
57. Not Required by Form S-6
58. Not Required by Form S-6
59. Not Required by Form S-6

</TABLE>

<PAGE>

PART A
<PAGE>

STAG VARIABLE LIFE LAST SURVIVOR II
SEPARATE ACCOUNT VL II
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] TELEPHONE: (800) 231-5453

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

This Prospectus describes information you should know before you purchase the
Stag Variable Life Last Survivor II variable life insurance policy. Please read
it carefully.

Stag Variable Life Last Survivor II is a contract between you and Hartford Life
and Annuity Insurance Company. You agree to make sufficient premium payments to
us, and we agree to pay a death benefit to your beneficiary. The policy is a
last survivor flexible premium variable life insurance policy. It is:

X Last survivor, because we pay a death benefit after the death of the last
surviving insured.

X Flexible premium, because you may add payments to your policy after the first
payment.

X Variable, because the value of your life insurance policy will fluctuate with
the performance of the underlying investment options you select and the
Fixed Account.

The following Sub-Accounts are available under the Policy:

<TABLE>
<CAPTION>
SUB-ACCOUNT PURCHASES SHARES OF:
- -------------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Hartford Advisers Fund Sub-Account -- Class IA of Hartford Advisers HLS Fund, Inc.
Hartford Bond Fund Sub-Account -- Class IA of Hartford Bond HLS Fund, Inc.
Hartford Capital Appreciation Fund -- Class IA of Hartford Capital Appreciation HLS Fund, Inc.
Sub-Account
Hartford Dividend and Growth Fund -- Class IA of Hartford Dividend and Growth HLS Fund, Inc.
Sub-Account
Hartford Growth and Income Fund Sub-Account -- Class IA of Hartford Growth and Income HLS Fund, Inc.
Hartford Index Fund Sub-Account -- Class IA of Hartford Index HLS Fund, Inc.
Hartford International Advisers Fund -- Class IA of Hartford International Advisers HLS Fund, Inc.
Sub-Account
Hartford International Opportunities Fund -- Class IA of Hartford International Opportunities HLS Fund,
Sub-Account Inc.
Hartford MidCap Fund Sub-Account -- Class IA of Hartford MidCap HLS Fund, Inc.
Hartford Mortgage Securities Fund -- Class IA of Hartford Mortgage Securities HLS Fund, Inc.
Sub-Account
Hartford Money Market Fund Sub-Account -- Class IA of Hartford Money Market HLS Fund, Inc.
Hartford Small Company Fund Sub-Account -- Class IA of Hartford Small Company HLS Fund, Inc.
Hartford Stock Fund Sub-Account -- Class IA of Hartford Stock HLS Fund, Inc.
Putnam VT Asia Pacific Growth Fund -- Class IA of Putnam VT Asia Pacific Growth Fund of the
Sub-Account Putnam Variable Trust
Putnam VT Diversified Income Fund -- Class IA of Putnam VT Diversified Income Fund of Putnam
Sub-Account Variable Trust
Putnam VT Global Asset Allocation Fund -- Class IA of Putnam VT Global Asset Allocation Fund of
Sub-Account Putnam Variable Trust
Putnam VT Global Growth Fund Sub-Account -- Class IA of Putnam VT Global Growth Fund of Putnam
Variable Trust
Putnam VT Growth and Income Fund Sub-Account -- Class IA of Putnam VT Growth and Income Fund of Putnam
Variable Trust
Putnam VT Health Sciences Fund Sub-Account -- Class IA of Putnam VT Health Sciences Fund of Putnam
Variable Trust
Putnam VT High Yield Fund Sub-Account -- Class IA of Putnam VT High Yield Fund of Putnam Variable
Trust
Putnam VT International Growth Fund -- Class IA of Putnam VT International Growth Fund of Putnam
Sub-Account Variable Trust
Putnam VT International Growth and Income -- Class IA of Putnam VT International Growth and Income Fund
Fund Sub-Account of Putnam Variable Trust
Putnam VT International New Opportunities -- Class IA of Putnam VT International New Opportunities Fund
Fund Sub-Account of Putnam Variable Trust
Putnam VT Investors Fund Sub-Account -- Class IA of Putnam VT Investors Fund of Putnam Variable
Trust
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SUB-ACCOUNT PURCHASES SHARES OF:
- -------------------------------------------- ----------------------------------------------------------
Putnam VT Money Market Fund Sub-Account -- Class IA of Putnam VT Money Market Fund of Putnam Variable
Trust
<S> <C> <C>
Putnam VT New Opportunities Fund Sub-Account -- Class IA of Putnam VT New Opportunities Fund of Putnam
Variable Trust
Putnam VT New Value Fund Sub-Account -- Class IA of Putnam VT New Value Fund of Putnam Variable
Trust
Putnam VT OTC & Emerging Growth Fund Sub- -- Class IA of Putnam VT OTC & Emerging Growth Fund of Putnam
Account Variable Trust
Putnam VT The George Putnam Fund of Boston -- Class IA of Putnam VT The George Putnam Fund of Boston of
Sub-Account Putnam Variable Trust
Putnam VT U.S. Government and High Quality -- Class IA of Putnam VT U.S. Government and High Quality
Bond Fund Sub-Account Bond Fund of Putnam Variable Trust
Putnam VT Utilities Growth and Income Fund -- Class IA of Putnam VT Utilities Growth and Income Fund of
Sub-Account Putnam Variable Trust
Putnam VT Vista Fund Sub-Account -- Class IA of Putnam VT Vista Fund of Putnam Variable Trust
Putnam VT Voyager Fund Sub-Account -- Class IA of Putnam VT Voyager Fund of Putnam Variable
Trust
Fidelity VIP Equity-Income Portfolio -- Fidelity VIP Equity-Income Portfolio of Variable Insurance
Sub-Account Products Fund
Fidelity VIP Overseas Portfolio Sub-Account -- Fidelity VIP Overseas Portfolio of Variable Insurance
Products Fund
Fidelity VIP II Asset Manager Portfolio -- Fidelity VIP II Asset Manager Portfolio of Variable
Sub-Account Insurance Products Fund II
</TABLE>

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

The policy may not be available for sale in all states.

This Prospectus can also be obtained from the Securities and Exchange
Commission's website (HTTP://WWW.SEC.GOV).

This life insurance policy IS NOT:

- - a bank deposit or obligation

- - federally insured

- - endorsed by any bank or governmental agency
- --------------------------------------------------------------------------------

PROSPECTUS DATED: FEBRUARY 11, 1999

<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF BENEFITS AND RISKS......................................... 4
FEE TABLE............................................................. 5
ABOUT US.............................................................. 7
Hartford Life and Annuity Insurance Company......................... 7
Separate Account VL II.............................................. 7
The Funds........................................................... 7
CHARGES AND DEDUCTIONS................................................ 9
YOUR POLICY........................................................... 11
PREMIUMS.............................................................. 13
DEATH BENEFITS AND POLICY VALUES...................................... 14
MAKING WITHDRAWALS FROM YOUR POLICY................................... 16
LOANS................................................................. 16
LAPSE AND REINSTATEMENT............................................... 17
TAXES................................................................. 18
LEGAL PROCEEDINGS..................................................... 22
OTHER MATTERS......................................................... 22
GLOSSARY OF SPECIAL TERMS............................................. 23
WHERE YOU CAN FIND MORE INFORMATION................................... 24
</TABLE>

<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SUMMARY OF BENEFITS
AND RISKS

BENEFITS OF YOUR POLICY

FLEXIBILITY -- The policy is designed to be flexible to meet your specific
life insurance needs. You have the flexibility to choose death benefit options,
investment options, and premiums you pay.

DEATH BENEFIT -- While the policy is in force and when the last surviving
insured dies, we pay a death benefit to your beneficiary. You select one of
three death benefit options:

X LEVEL OPTION: The death benefit equals the current Face Amount.

X RETURN OF ACCOUNT VALUE OPTION: The death benefit is the current Face Amount
plus the Account Value of your policy.

X RETURN OF PREMIUM OPTION: The death benefit is the current Face Amount plus
the total of your premium payments, however, it will be no more than the
current Face Amount plus $2.5 million.

The death benefit is reduced by any money you owe us, such as outstanding
loans, loan interest, or unpaid charges. You may change your death benefit
option under certain circumstances. You may increase or decrease the Face Amount
on your policy under certain circumstances.

DEATH BENEFIT GUARANTEE -- Generally, your death benefit coverage will last
as long as there is enough value in your policy to pay for the monthly charges
we deduct. Since this is a variable life policy, values of your policy will
fluctuate based on the performance of the underlying investment options you have
chosen. Without the Death Benefit Guarantee your policy will lapse if the value
of your policy is insufficient to pay your monthly charges. However, when the
Death Benefit Guarantee feature is in effect, the policy will not lapse,
regardless of the investment performance of the underlying funds.

When you apply for the policy you choose what percentage of the total face
amount that is covered by the Death Benefit Guarantee. The Death Benefit
Guarantee period is the maximum number of policy years that the Death Benefit
Guarantee is available on the policy. The Death Benefit Guarantee period is
individualized based on the issue ages, sexes and risk classes of the insureds
and is provided in the policy. In order to maintain the Death Benefit Guarantee
feature, the cumulative premiums paid into the policy, less withdrawals and
indebtedness, must exceed the Cumulative Death Benefit Guarantee Premium.

INVESTMENT OPTIONS -- You may invest in up to 9 different investment choices
within your policy, from a choice of 36 investment options and a Fixed Account.
You may transfer money among your investment choices, subject to restrictions.

PREMIUM PAYMENTS -- You have the flexibility to choose how you pay premiums.
You choose a planned premium when you purchase the policy. You may change your
planned premium, or pay additional premium any time, subject to certain
limitations.

RIGHT TO EXAMINE YOUR POLICY -- For 10 days after you receive your policy,
you may cancel it without paying a sales charge. A longer period is provided in
some states.

WITHDRAWALS -- You may take money out of your policy once a month, subject
to certain minimums. (See Risks of Your Policy, below).

LOANS -- You may take a loan on the policy. The policy secures the loan.

SETTLEMENT OPTIONS -- You or your beneficiary may choose to receive the
proceeds of the policy over a period of time by using one of several settlement
options.

OPTIONAL COVERAGE -- You may add other coverages to your policy. See "Your
Policy -- Other Benefits."

WHAT DOES YOUR PREMIUM PAY FOR?

Your premium pays for three things. It pays for insurance coverage, it acts
as an investment in the Sub-Accounts, and it pays for sales loads and other
charges.

RISKS OF YOUR POLICY

INVESTMENT PERFORMANCE -- The value of your policy will fluctuate with the
performance of its underlying investments. Your investment options may decline
in value, or they may not perform to your expectations. Your policy values in
the Sub-Accounts are not guaranteed.

UNSUITABLE FOR SHORT-TERM SAVINGS -- The policy is designed for long term
financial planning. You should not purchase the policy if you will need the
premium payment in a short time period.

RISK OF LAPSE -- Your policy could terminate if the value of the policy
becomes too low to support the policy's monthly charges. If this occurs, we will
notify you in writing. You will then have a 61-day grace period to pay
additional amounts to prevent the policy from terminating.

WITHDRAWAL LIMITATIONS -- You are limited to one withdrawal per month.
Withdrawals will reduce your policy's death benefit, and may be subject to a
surrender charge.

TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers
and remaining balances, and to limit the
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
- --------------------------------------------------------------------------------

number and frequency of transfers among your investment options and the Fixed
Account.

LOANS -- Taking a loan from your policy may increase the risk that your
policy will lapse, will have a permanent effect on the policy's Account Value,
and will reduce the death proceeds.

ADVERSE TAX CONSEQUENCES -- You may be subject to income tax if you receive
any loans, withdrawals or other amounts from the policy, and you may be subject
to a 10% penalty tax. See "Taxes."

FEE TABLE

The following tables describes the MAXIMUM fees and expenses that you will
pay when buying, owning, and surrendering the policy. The first table describes
the maximum fees and expenses that you will pay at the time that you buy the
policy, surrender the policy, or transfer cash value between investment options.

TRANSACTION FEES

<TABLE>
<CAPTION>
POLICIES FROM WHICH CHARGE IS
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED DEDUCTED
---------------------- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C> <C>
Sales Charge When you pay premium. 6% of premium All
Premium Tax Charge When you pay premium. A percent of premium which varies All
by your state and municipality of
residence. The range of premium
tax charge is generally between 0%
and 4%.
This rate will change if your
state or municipality changes its
premium tax charges. It may change
if you change your state or
municipality of residence.
Surrender Charges When you surrender your policy. Surrender charge varies by policy
When you make certain Face Amount year and equals a percentage times
decreases. the sum of two components: the
When you take certain withdrawals. sales surrender charge and the
underwriting surrender charge. The
sales surrender charge equals the
Death Benefit Guarantee Premium.
The underwriting surrender charge
equals $1 per $1,000 of initial
face amount, but is at least $500
and no more than $3,000.
The percentage by policy years is Policies surrendered during the
as follows: first nine policy years.
Policy Policies where the Face Amount is
Year Percentage reduced below the initial Face
1 70% Amount during the first nine
2 70% policy years.
3 70%
4 60%
5 50%
6 40%
7 30%
8 20%
9 10%
10 and after 0%
</TABLE>
<PAGE>

6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

The next table describes the MAXIMUM fees and expenses that you will pay
periodically during the time that you own the policy, not including Fund fees
and expenses.

ANNUAL CHARGES OTHER THAN FUND OPERATING EXPENSES

Mortality and Expense Monthly. Per the Sub-Account accumulated All
Risk Charge value:
- 1/12 of 0.75% per month for
policy years 1-10.
- 1/12 of 0.60% per month after
the 10th policy year.
Per $1,000 of initial Face Amount
during the first 10 policy years:
- individualized based on issue
ages and Death Benefit Guarantee
Amount.

Administrative Charge Monthly. Years 1-5: All
$30
Years 6+:
$10

Rider Charges Monthly. Individualized based on optional Only those policies with benefits
rider selected. provided by rider.
</TABLE>

<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------

The next table describes the Fund fees and expenses that you will pay
periodically during the time that you own the policy. The table shows the
minimum and maximum fees and expenses charged by any of the Funds. More detail
concerning each Fund's fees and expenses is contained in the prospectus for each
Fund.

ANNUAL FUND OPERATING EXPENSES

Other Expenses Daily net asset values of a Fund 0.011% - 0.680% All Policies, but deductions only
reflect Other Expenses already from Sub-Accounts in use.
deducted from the assets of the
Fund.

Total Fund Annual Daily net asset values of a Fund 0.42% - 1.27% All Policies, but deductions only
Expenses reflect Total Fund Annual from Sub-Accounts in use.
Operating Expenses already
deducted from assets of the Fund.
</TABLE>

ABOUT US

HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY

We are Hartford Life and Annuity Insurance Company ("Hartford") located in
Simsbury, Connecticut. We provide health and life insurance in all states,
except New York. We were originally incorporated under the laws of Wisconsin on
January 9, 1956, and we subsequently redomiciled to Connecticut. Our mailing
address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately controlled
by The Hartford Financial Services Group, Inc., one of the largest financial
services providers in the United States.

SEPARATE ACCOUNT VL II

The Sub-Accounts are subdivisions of our separate account, called Separate
Account VL II. The Separate Account exists to keep your life insurance policy
assets separate from our company assets. As such, the investment performance of
the Separate Account is independent from the investment performance of
Hartford's other assets. Hartford's other assets are utilized to pay you
insurance obligations under the policy. Your assets in the Separate Account are
held exclusively for your benefit and may not be used for any other liability of
Hartford. Separate Account VL II was established on September 30, 1994 under the
laws of Connecticut.

THE FUNDS

The Sub-Accounts of the Separate Account purchase shares of mutual funds set
up exclusively for variable annuity and variable life insurance products. These
funds are not the same mutual funds that you buy through your stockbroker or
through a retail mutual fund, but they may have similar investment strategies
and the same portfolio managers as retail mutual funds. You choose the Sub-
Accounts that meet your investment style.

We do not guarantee the investment results of any of the underlying Funds.
Since each underlying Fund has different investment objectives, each is subject
to different risks. These risks and the Fund's expenses are described in the
prospectuses for the Funds, which are attached to this Prospectus, and the
Funds' Statements of Additional Information, which may be ordered from us. You
should read the prospectuses for each of the Funds listed below for detailed
information about each Fund before investing. All Funds may not be available in
all states.

You may also allocate some or all of your premium payments to the "Fixed
Account," which pays a declared interest rate. See "The Fixed Account."

The following Sub-Accounts are available under your policy. Opposite the
name of each Sub-Account is the name of the shares of the underlying fund that
the Sub-Account purchases:

<TABLE>
<CAPTION>
SUB-ACCOUNT PURCHASES SHARES OF:
- ------------------------------------------------------- ---------------------------------------------------------------------------
<S> <C>
Hartford Advisers Fund Sub-Account Class IA of Hartford Advisers HLS Fund, Inc.
Hartford Bond Fund Sub-Account Class IA of Hartford Bond HLS Fund, Inc.
</TABLE>
<PAGE>

8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Hartford Capital Appreciation Fund Class IA of Hartford Capital Appreciation HLS Fund, Inc.
Sub-Account
Hartford Dividend and Growth Fund Class IA of Hartford Dividend and Growth HLS Fund, Inc.
Sub-Account
Hartford Growth and Income Fund Sub-Account Class IA of Hartford Growth and Income HLS Fund, Inc.
Hartford Index Fund Sub-Account Class IA of Hartford Index HLS Fund, Inc.
Hartford International Advisers Fund Class IA of Hartford International Advisers HLS Fund, Inc.
Sub-Account
Hartford International Opportunities Fund Class IA of Hartford International Opportunities HLS Fund, Inc.
Sub-Account
Hartford MidCap Fund Sub-Account Class IA of Hartford MidCap HLS Fund, Inc.
Hartford Mortgage Securities Fund Sub-Account Class IA of Hartford Mortgage Securities HLS Fund, Inc.
Hartford Money Market Fund Sub-Account Class IA of Hartford Money Market HLS Fund, Inc.
Hartford Small Company Fund Sub-Account Class IA of Hartford Small Company HLS Fund, Inc.
Hartford Stock Fund Sub-Account Class IA of Hartford Stock HLS Fund, Inc.
Putnam VT Asia Pacific Growth Fund Class IA of Putnam VT Asia Pacific Growth Fund of the Putnam Variable Trust
Sub-Account
Putnam VT Diversified Income Fund Class IA of Putnam VT Diversified Income Fund of Putnam Variable Trust
Sub-Account
Putnam VT Global Asset Allocation Fund Class IA of Putnam VT Global Asset Allocation Fund of Putnam Variable Trust
Sub-Account
Putnam VT Global Growth Fund Sub-Account Class IA of Putnam VT Global Growth Fund of Putnam Variable Trust
Putnam VT Growth and Income Fund Class IA of Putnam VT Growth and Income Fund of Putnam Variable Trust
Sub-Account
Putnam VT Health Sciences Fund Sub-Account Class IA of Putnam VT Health Sciences Fund of Putnam Variable Trust
Putnam VT High Yield Fund Sub-Account Class IA of Putnam VT High Yield Fund of Putnam Variable Trust
Putnam VT International Growth Fund Class IA of Putnam VT International Growth Fund of Putnam Variable Trust
Sub-Account
Putnam VT International Growth and Income Fund Class IA of Putnam VT International Growth and Income Fund of Putnam
Sub-Account Variable Trust
Putnam VT International New Opportunities Fund Class IA of Putnam VT International New Opportunities Fund of Putnam
Sub-Account Variable Trust
Putnam VT Investors Fund Sub-Account Class IA of Putnam VT Investors Fund of Putnam Variable Trust
Putnam VT Money Market Fund Sub-Account Class IA of Putnam VT Money Market Fund of Putnam Variable Trust
Putnam VT New Opportunities Fund Class IA of Putnam VT New Opportunities Fund of Putnam Variable Trust
Sub-Account
Putnam VT New Value Fund Sub-Account Class IA of Putnam VT New Value Fund of Putnam Variable Trust
Putnam VT OTC & Emerging Growth Fund Sub-Account Class IA of Putnam VT OTC & Emerging Growth Fund of Putnam Variable Trust
Putnam VT The George Putnam Fund of Boston Sub-Account Class IA of Putnam VT The George Putnam Fund of Boston of Putnam Variable
Trust
Putnam VT U.S. Government and High Quality Bond Fund Class IA of Putnam VT U.S. Government and High Quality Bond Fund of Putnam
Sub-Account Variable Trust
Putnam VT Utilities Growth and Income Fund Sub-Account Class IA of Putnam VT Utilities Growth and Income Fund of Putnam Variable
Trust
Putnam VT Vista Fund Sub-Account Class IA of Putnam VT Vista Fund of Putnam Variable Trust
Putnam VT Voyager Fund Sub-Account Class IA of Putnam VT Voyager Fund of Putnam Variable Trust
Fidelity VIP Equity-Income Portfolio Fidelity VIP Equity-Income Portfolio of Variable Insurance Products Fund
Sub-Account
Fidelity VIP Overseas Portfolio Sub-Account Fidelity VIP Overseas Portfolio of Variable Insurance Products Fund
Fidelity VIP II Asset Manager Portfolio Fidelity VIP II Asset Manager Portfolio of Variable Insurance Products Fund
Sub-Account II
</TABLE>

<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------

INVESTMENT ADVISERS -- HL Investment Advisors, Inc. is investment adviser
for the Hartford Funds. Wellington Management Company, LLP is investment
sub-adviser for Hartford Advisers HLS Fund, Inc., Hartford Capital Appreciation
HLS Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc., Hartford Growth and
Income HLS Fund, Inc., Hartford International Advisers HLS Fund, Inc., Hartford
International Opportunities HLS Fund, Inc., Hartford MidCap HLS Fund, Inc.,
Hartford Small Company HLS Fund, Inc., and Hartford Stock HLS Fund, Inc. The
Hartford Investment Management Company, Inc. ("HIMCO") is investment sub-adviser
for Hartford Bond HLS Fund, Inc., Hartford Index HLS Fund, Inc., Hartford
Mortgage Securities HLS Fund, Inc., and Hartford Money Market HLS Fund, Inc.
Each Hartford Fund, except for the Hartford Growth and Income HLS Fund, is a
separate Maryland corporation registered with the Securities and Exchange
Commission as an open-end management investment company. The Hartford Growth and
Income HLS Fund is a diversified series of Hartford Series Fund, Inc., a
Maryland corporation, also registered with the Securities and Exchange
Commission as an open-end management investment company. The shares of each Fund
have been divided into Class IA and Class IB. Only Class IA shares are available
in this Policy.

Putnam Management is investment adviser for the Putnam Funds.

Fidelity Management & Research Company is investment adviser for the
Fidelity VIP Funds.

It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Funds simultaneously. Although neither Hartford nor the Funds
currently foresee any such disadvantages either to variable life insurance
policy owners or to variable annuity policy owners, the Board of Directors for
the Hartford Funds, the Board of Trustees for the Putnam Funds and the Board of
Trustees for the Fidelity VIP Funds (collectively, the "Boards") intend to
monitor events in order to identify any material conflicts between the policy
owners and to determine what action, if any, should be taken in response
thereto. If the Boards were to conclude that separate funds should be
established for variable annuity and variable life insurance separate accounts,
Hartford will bear the attendant expenses.

VOTING RIGHTS -- For Sub-Accounts in which you have invested, we will notify
you of shareholder's meetings of the Funds purchased by those Sub-Accounts. We
will send you proxy materials and instructions for you to vote the shares held
for your benefit by those Sub-Accounts. We will arrange for the handling and
tallying of proxies received from you or other policy owners. If you give no
instructions, we will vote those shares in the same proportion as shares for
which we received instructions.

THE FIXED ACCOUNT

You may allocate amounts to the Fixed Account. The Fixed Account is not a
part of the Separate Account, but is a part of our general assets. As such, the
Fixed Account (and this description of the Fixed Account) is not subject to the
same securities laws as the Separate Account.

The Fixed Account credits at least 3.5% per year. We are not obligated to,
but may, credit more than 3.5% per year. If we do, such rates are determined at
our sole discretion. You assume the risk that, at any time, the Fixed Account
may credit no more than 3.5%.

CHARGES AND DEDUCTIONS

DEDUCTIONS FROM PREMIUM

Before your premium is allocated to the Sub-Accounts and/or the Fixed
Account, we deduct a percentage from your premium for a sales load and a premium
tax charge. The amount allocated after the deductions is called your Net
Premium.

FRONT-END SALES LOAD -- We deduct a sales load from each premium you pay.
The maximum sales load under the policy is 6% of premium.

PREMIUM TAX CHARGE -- We deduct a premium tax charge from each premium you
pay. The premium tax charge covers taxes assessed against us by a state and/or
other governmental entity. The range of such charge generally is between 0% and
4%.

DEDUCTIONS FROM ACCOUNT VALUE

MONTHLY DEDUCTION AMOUNTS -- Each month we will deduct an amount from your
Account Value to pay for the benefits provided by your policy. This amount is
called the Monthly Deduction Amount and equals the sum of:

- - the charge for the cost of insurance;

- - the monthly administrative charge;

- - the mortality and expense risk charge;

- - any Face Amount increase fee;

- - any charges for additional benefits provided by rider.

Each Monthly Deduction Amount will be deducted pro rata from the Fixed
Account and each of the Sub-Accounts. The Monthly Deduction Amount will vary
from month to month.

COST OF INSURANCE CHARGE -- The charge for the cost of insurance equals:
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

(i) the cost of insurance rate per $1,000, multiplied by

(ii) the amount at risk, divided by

(iii) $1,000.

On any Monthly Activity Date, the amount at risk equals the Death Benefit
less the Account Value on that date, prior to assessing the Monthly Deduction
Amount.

Cost of insurance rates will be determined on each policy anniversary based
on our future expectations of such factors as mortality, expenses, interest,
persistency and taxes. The cost of insurance rates will not exceed those based
on the 1980 Commissioners' Standard Ordinary Mortality Table (ALB), Male or
Female, Nonsmoker or Smoker Table, age last birthday (unisex rates may be
required in some states). A table of guaranteed cost of insurance rates per
$1,000 will be included in your policy, however, we reserve the right to use
rates less than those shown in the table. Substandard risks will be charged
higher cost of insurance rates that will not exceed rates based on a multiple of
1980 Commissioners' Standard Ordinary Mortality Table (ALB), Male or Female,
Nonsmoker or Smoker Table, age last birthday (unisex rates may be required in
some states) plus any flat extra amount assessed. The multiple will be based on
the insured's substandard rating.

Any changes in the cost of insurance rates will be made uniformly for all
insureds of the same issue ages, sexes, risk classes and whose coverage has been
in force for the same length of time. No change in insurance class or cost will
occur on account of deterioration of the insureds' health.

Because your Account Value and death benefit may vary from month to month,
the cost of insurance may also vary on each Monthly Activity Date. The cost of
insurance depends on your policy's amount at risk. Items which may affect the
amount at risk include the amount and timing of premium payments, investment
performance, fees and charges assessed, rider charges, policy loans and changes
to the Face Amount.

MONTHLY ADMINISTRATIVE CHARGE -- We deduct a monthly administrative charge
from your Account Value to compensate us for issue and administrative costs of
the policy. During the first 5 years of the policy, the charge is $30 per month.
After 5 years, the charge is $10 per month.

MORTALITY AND EXPENSE RISK CHARGE -- We deduct a mortality and expense risk
charge each month from your Account Value. There are two components to the
mortality and expense risk charge. Part of the charge is assessed according to
your Account Value attributable to the Sub-Accounts, and the other part is
assessed based on the initial Face Amount of your policy. The mortality and
expense risk charge each month is equal to the sum of (a) and (b) where

(a) equals:

(i) the monthly accumulated value mortality and expense risk rate;
multiplied by

(ii) the sum of your accumulated values in the Sub-Accounts on the Monthly
Activity Date, prior to assessing the Monthly Deduction Amount.

and

(b) equals:

(i) the monthly mortality and expense risk rate per $1,000; multiplied by

(ii) the initial Face Amount; divided by

(iii) $1,000.

During the first 10 years, the maximum accumulated value mortality and
expense risk rate is 1/12 of 0.75% per month. Thereafter, the maximum is 1/12 of
0.60% per month.

During the first 10 years, the Face Amount mortality and expense risk rate
per $1,000 of initial Face Amount is individualized based on issue ages and
death benefit guarantee, and is provided in the policy. Thereafter, there is no
charge.

The mortality and expense risk charge compensates us for mortality and
expense risks assumed under the policies. The mortality risk assumed is that the
cost of insurance charges are insufficient to meet actual claims. The expense
risk assumed is that the expense incurred in issuing, distributing and
administering the policies exceed the administrative charges and sales loads
collected. Hartford may keep any difference between cost it incurs and the
charges it collects.

FACE AMOUNT INCREASE FEE -- We deduct a dollar amount from your Account
Value for an unscheduled increase of the Face Amount on your policy. We deduct
the fee each month for twelve months after the increase. The fee is 1/12 of
$1.00 per month per $1,000 of unscheduled increase in the Face Amount. The fee
will not be less than 1/12 of $500 per month, but will not exceed 1/12 of $3,000
per month. This fee compensates us for underwriting and processing costs for
such increases.

RIDER CHARGE -- If your policy includes riders, a charge applicable to the
riders is made from the Account Value each month. The charge applicable to these
riders is to compensate Hartford for the anticipated cost of providing these
benefits and is specified on the applicable rider. For a description of the
riders available, see "Your Policy -- Supplemental Benefits."

SURRENDER CHARGE -- During the first 9 policy years, surrender charges will
be deducted from your Account Value if
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------

- - you surrender your policy;

- - you decrease the Face Amount to an amount lower than it has ever been; or

- - you take a withdrawal that causes the Face Amount to fall below the lowest
previous Face Amount.

The amount of surrender charge is individualized based on your issue ages,
sexes, insurance classes, duration, Face Amount and Death Benefit Guarantee
Amount. The charge compensates us for expenses incurred in issuing the policy
and the recovery of acquisition costs. Hartford may keep any difference between
cost it incurs and the charges it collects. For partial surrender charges
applicable to a decrease in the Face Amount or withdrawal, see "Unscheduled
Increases and Decreases in the Face Amount." The amount of surrender charge
varies by policy year and equals a percentage times the sum of two components:
the sales surrender charge and the underwriting surrender charge. The sales
surrender charge equals the Death Benefit Guarantee Premium. The underwriting
surrender charge equals $1 per $1,000 of initial face amount, but is at least
$500 and no more than $3,000.

The percentage by policy years is as follows:

<TABLE>
<CAPTION>
POLICY YEAR PERCENTAGE
------------ -----
<S> <C>
1 70%
2 70%
3 70%
4 60%
5 50%
6 40%
7 30%
8 20%
9 10%
10 and after 0%
</TABLE>

CHARGES FOR THE FUNDS

The investment performance of each Fund reflects the management fee that the
Fund pays to its investment manager as well as other operating expenses that the
Fund incurs. Investment management fees are generally daily fees computed as a
percentage of a Fund's average daily net assets as an annual rate. Please read
the prospectus for each Fund for complete details.

YOUR POLICY

CONTRACT RIGHTS

POLICY OWNER, OR "YOU" -- As long as your policy is in force, you may
exercise all rights under the policy while either of the insureds is alive and
no beneficiary has been irrevocably named.

BENEFICIARY -- You name the beneficiary in your application for the policy.
You may change the beneficiary (unless irrevocably named) while either of the
insureds is alive by notifying us in writing. If no beneficiary is living when
the last surviving insured dies, the death benefit will be paid to you if
living; or, otherwise, to your estate.

ASSIGNMENT -- You may assign your policy. Until you notify us in writing, no
assignment will be effective against us. We are not responsible for the validity
of any assignment.

STATEMENTS -- We will send you a statement at least once each year, showing:

(a) the current Account Value, Cash Surrender Value and Face Amount;

(b) the premiums paid, monthly deduction amounts and any loans since your last
statement;

(d) any notifications required by the provisions of your policy; and

(e) any other information required by the Insurance Department of the state
where your policy was delivered.

CONTRACT LIMITATIONS

ALLOCATIONS TO SUB-ACCOUNTS AND THE FIXED ACCOUNT -- You may allocate
amounts to a maximum of nine (9) Sub-Accounts, or eight (8) Sub-Accounts and the
Fixed Account.

TRANSFERS OF ACCOUNT VALUE -- You may transfer amounts among the Fixed
Account and the Sub-Accounts subject to a charge described below. You may
request transfers in writing or by calling us at 1-800-231-5453. Transfers by
telephone may be made by your agent of record or by your attorney-in-fact
pursuant to a power of attorney. Telephone transfers may not be permitted in
some states. We will not be responsible for losses that result from acting upon
telephone requests reasonably believed to be genuine. We will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
The procedures we follow for transactions initiated by telephone include
requiring callers to provide certain identifying information. All transfer
instructions communicated to us by telephone are tape recorded.

You may make one transfer per calendar month free of charge, excluding any
transfers made pursuant to your enrollment in the Dollar Cost Averaging Program.
Each subsequent transfer in excess of one per calendar month will be subject to
a transfer charge of up to $25. We reserve the right to limit at a future date
the size of transfers and remaining balances and to limit the number and
frequency of transfers.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

TRANSFERS FROM THE FIXED ACCOUNT -- Unless you are enrolled in the Dollar
Cost Averaging Program, any transfers from the Fixed Account must occur during
the 30-day period following each Policy Anniversary, and, if your accumulated
value in the Fixed Account exceeds $1,000, the amount transferred from the Fixed
Account in any Policy Year may not exceed 25% of the accumulated value in the
Fixed Account on the transfer date.

DEFERRAL OF PAYMENTS -- We may defer payment of any Cash Surrender Values,
withdrawals and loan amounts which are not attributable to the Sub-Accounts for
up to six months from the date of the request. If we defer payment for more than
30 days, we will pay you interest.

CHANGES TO CONTRACT OR SEPARATE ACCOUNT

MODIFICATION OF POLICY -- The only way the policy may be modified is by a
written agreement signed by our President, or one of our Vice Presidents,
Secretaries, or Assistant Secretaries.

SUBSTITUTION OF FUNDS -- We reserve the right to substitute the shares of
any other registered investment company for the shares of any Fund already
purchased or to be purchased in the future by the Separate Account provided that
the substitution has been approved by the Securities and Exchange Commission.

CHANGE IN OPERATION OF THE SEPARATE ACCOUNT -- The operation of the Separate
Account may be modified to the extent permitted by law, including deregistration
under the securities laws.

SEPARATE ACCOUNT TAXES -- Currently, no charge is made to the Separate
Account for federal, state and local taxes that may be allocable to the Separate
Account. A change in the applicable federal, state or local tax laws which
impose tax on Hartford and/or the Separate Account may result in a charge
against the policy in the future. Charges for other taxes, if any, allocable to
the Separate Account may also be made.

OTHER BENEFITS

DOLLAR COST AVERAGING PROGRAM -- You may elect to allocate your Net Premiums
among the Sub-Accounts and the Fixed Account pursuant to the Dollar Cost
Averaging (DCA) program. If you choose the DCA program, your Net Premiums will
be deposited into the Hartford Money Market Sub-Account or the Fixed Account.
Amounts will be transferred monthly to the other investment options in
accordance with your premium allocation instructions. The dollar amount will be
allocated to the investment options that you specify, in the proportions that
you specify. If, on any transfer date, your Account Value allocated to the
Dollar Cost Averaging program is less than the amount you have elected to
transfer, your DCA program will terminate.

You may cancel your DCA election by notice in writing or by calling us at
1-800-231-5453. We reserve the right to change or discontinue the DCA program.

The main objective of a DCA program is to minimize the impact of short-term
price fluctuations. The DCA program allows you to take advantage of market
fluctuations. Since the same dollar amount is transferred to your selected
investment options at set intervals, the DCA program allows you to purchase more
accumulation units when prices are low and fewer accumulation units when prices
are high. Therefore, a lower average cost per accumulation unit may be achieved
over the long term. However, it is important to understand that the DCA program
does not assure a profit or protect against loss in a declining market.

SUPPLEMENTAL BENEFITS -- The following supplemental benefits are among the
options that may be included in a policy by rider, subject to the restrictions
and limitations set forth therein.

- - LAST SURVIVOR EXCHANGE OPTION RIDER. We will exchange your policy for two
individual policies on the life of each insured, subject to the conditions
stated in the rider.

- - ESTATE PROTECTION RIDER. We will pay a term insurance benefit upon receipt of
due proof of the last surviving insured's death while your policy and rider
are in force, subject to the conditions stated in the rider.

- - YEARLY RENEWABLE TERM LIFE INSURANCE RIDER. While the rider is in force, we
will pay the term life insurance amount upon receipt of due proof of death of
the designated insured, subject to the conditions stated in the rider.

CLASS OF PURCHASERS

REDUCED CHARGES FOR ELIGIBLE GROUPS -- Certain of the charges and deductions
described above may be reduced for policies issued in connection with a specific
plan, in accordance with our rules in effect as of the date the application for
a policy is approved. To qualify for such a reduction, a plan must satisfy
certain criteria, e.g., as to size of the plan, expected number of participants
and anticipated premium payment from the plan. Generally, the sales contacts and
effort, administrative costs and mortality cost per policy vary, based on such
factors as the size of the plan, the purposes for which policies are purchased
and certain characteristics of the plan's members. The amount of reduction and
the criteria for qualification will be reflected in the reduced sales effort and
administrative costs resulting from, and the different mortality experience
expected as a result of, sales to qualifying plans. We may modify, from time to
time on a uniform basis, both the amounts of reductions and the criteria for
qualification. Reductions in these charges will not be unfairly discriminatory
against any person, including the affected policy owners invested in Separate
Account VL II.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------

PREMIUMS

APPLICATION FOR A POLICY -- To purchase a policy you must submit an
application to us. Within limits, you may choose the initial Face Amount.
Policies generally will be issued only on the lives of insureds between the ages
of 20 and 85 who supply evidence of insurability satisfactory to us. Acceptance
is subject to our underwriting rules and we reserve the right to reject an
application for any reason. No change in the terms or conditions of a policy
will be made without your consent. The minimum initial premium is the amount
required to keep the policy in force for one month, but not less than $50.

Your Policy will be effective on the Policy Date only after we receive all
outstanding delivery requirements and the initial premium payment. The Policy
Date is the date used to determine all future cyclical transactions on the
Policy, such as Monthly Activity Date and Policy Years.

PREMIUM PAYMENT FLEXIBILITY -- You have considerable flexibility as to when
and in what amounts you pay premiums under your policy.

Prior to policy issue, you choose a planned premium, within a range
determined by us. We will send you premium notices for planned premiums. Such
notices may be sent on an annual, semi-annual or quarterly basis. You may also
have premiums automatically deducted monthly from your checking account. The
planned premiums and payment mode you select are shown on your policy's
specifications page. You may change the planned premiums, subject to our minimum
amount rules then in effect.

After the first premium has been paid, your subsequent premium payments are
flexible. The actual amount and frequency of payment will affect the Account
Value and could affect the amount and duration of insurance provided by the
policy. Your policy may lapse if the value of your policy becomes insufficient
to cover the Monthly Deduction Amounts. In such case you may be required to pay
additional premiums in order to prevent the policy from terminating. For details
see, "Lapse and Reinstatement."

You may pay additional premiums at any time prior to the scheduled maturity
date, subject to the following limitations:

- - The minimum premium that we will accept is $50 or the amount required to keep
the policy in force.

- - We reserve the right to refund any excess premiums that would cause the policy
to fail to meet the definition of life insurance under the Internal Revenue
Code.

- - We reserve the right to require evidence of insurability for any premium
payment that results in an increase in the death benefit greater than the
amount of the premium.

- - Any premium payment in excess of $1,000,000 is subject to our approval.

ALLOCATION OF PREMIUM PAYMENTS -- The initial Net Premium (and any
additional Net Premiums received by us before the end of the right to examine
period) will be allocated to the Hartford Money Market Sub-Account on the later
of the Policy Date or the date we receive your premium payment.

We will then allocate the Account Value in the Hartford Money Market
Sub-Account to the Fixed Account and the Sub-Accounts according to the premium
allocation specified in the your policy application upon the expiration of the
right to examine policy period, or the date we receive the final requirement to
put the policy in force, whichever is later.

You may change your premium allocation upon request in writing. Subsequent
Net Premiums will be allocated to the Fixed Account and the Sub-Accounts
according to your most recent written instructions as long as the number of
investment choices you are allocated to does not exceed nine (9), and the
percentage you allocate to each Sub-Account and/or the Fixed Account is in whole
percentages. If we receive a premium payment with a premium allocation
instruction that does not comply with the above rules, we will allocate the Net
Premium pro rata based on the values of your existing investment choices.

A Policy Owner receives several different types of notifications as to what
his or her current premium allocation is. Each transaction confirmation received
after a premium payment is received by Hartford will show how a Net Premium has
been allocated. Additionally, each quarterly statement summarizes the current
premium allocation in effect for such Policy.

ACCUMULATION UNITS -- Net Premiums allocated to the Sub-Accounts are used to
credit accumulation units to such Sub-Accounts.

The number of accumulation units in each Sub-Account to be credited to a
policy (including the initial allocation to the Hartford Money Market
Sub-Account) and the amount to be credited to the Fixed Account will be
determined, first, by multiplying the Net Premium by the appropriate allocation
percentage in order to determine the portion of Net Premiums or transferred
Account Value to be invested in the Fixed Account or the Sub-Account. Each
portion of the Net Premium or transferred Account Value to be invested in a
Sub-Account is then divided by the accumulation unit value in a particular
Sub-Account next computed following its receipt. The resulting figure is the
number of accumulation units to be credited to each Sub-Account.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

ACCUMULATION UNIT VALUES -- 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 the 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 dividend or capital gain distributions paid by
that Fund 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.

All valuations in connection with a policy, e.g., with respect to
determining Account Value, in connection with policy loans, or in calculation of
death benefits, or with respect to determining the number of accumulation units
to be credited to a policy with each premium payment other than the initial
premium payment will be made on the date the request or payment is received by
us at the National Service Center, provided such date is a Valuation Day;
otherwise such determination will be made on the next succeeding date which is a
Valuation Day.

ACCOUNT VALUES -- Each policy will have an Account Value. There is no
minimum guaranteed Account Value.

The Account Value of a policy changes on a daily basis and will be computed
on each Valuation Day. The Account Value will vary to reflect the investment
experience of the Sub-Accounts, the interest credited to the Fixed Account and
the Loan Account, and the Monthly Deduction Amounts, Net Premiums paid, and any
withdrawals taken.

A policy's Account Value is related to the net asset value of the Funds
associated with the Sub-Accounts, if any, to which Net Premiums on the policy
have been allocated. The Account Value in the Sub-Accounts on any Valuation Day
is calculated by, first, multiplying the number of accumulation units in each
Sub-Account as of the Valuation Day by the then current value of the
accumulation units in that Sub-Account and then totaling the result for all of
the Sub-Accounts. A policy's Account Value equals the policy's value in all of
the Sub-Accounts, the Fixed Account, and the Loan Account. A policy's Cash Value
is equal to the Account Value less any applicable surrender charges. A policy's
Cash Surrender Value, which is the net amount available upon surrender of the
policy, is the Cash Value less any Indebtedness. See "Accumulation Unit Values,"
above.

We will pay death proceeds, Cash Surrender Values, partial withdrawals, and
loan amounts allocable to the Sub-Accounts within seven days after we receive
all the information needed to process the payment, unless the New York Stock
Exchange is closed for other than a regular holiday or weekend, trading is
restricted by the Commission or the Commission declares that an emergency
exists.

DEATH BENEFITS AND
POLICY VALUES

DEATH BENEFIT -- Your policy provides for the payment of the death proceeds
to the named beneficiary upon receipt of due proof of the death of the last
surviving insured. Your policy will be effective on the Policy Date only after
we receive all outstanding delivery requirements and the initial premium
payment. You must notify us in writing as soon as possible after the death of
either insured. The death proceeds payable to the beneficiary equal the death
benefit less any Indebtedness and less any due and unpaid Monthly Deduction
Amount occurring during a grace period. The death benefit depends on the death
benefit option you select, the minimum death benefit provision, and whether or
not the Death Benefit Guarantee is in effect.

DEATH BENEFIT OPTIONS -- There are three death benefit options: the Level
Death Benefit Option ("Option A"), the Return of Account Value Death Benefit
Option ("Option B") and the Return of Premium Death Benefit Option ("Option C").
Subject to the minimum death benefit described below, the death benefit under
each option is as follows:

1. Under Option A, the current Face Amount.

2. Under Option B, the current Face Amount plus the Account Value on the date
we receive due proof of the last surviving insured's death.

3. Under Option C, the current Face Amount plus the lesser of: (a) the sum of
the premiums paid; or (b) $2.5 million.

DEATH BENEFIT OPTION CHANGES -- You may change your death benefit option.
You must notify us of the change in writing. You may change Option C or Option B
to Option A. If you do, the Face Amount will become that amount available as a
death benefit immediately prior to the option change. You may change Option A to
Option B. If you do, the Face Amount will become that amount available as a
death benefit immediately prior to the option change, reduced by the
then-current Account Value. Any resulting decrease in the Face Amount may be
subject to a partial surrender charge.

SETTLEMENT OPTIONS -- Proceeds under your policy may be paid in a lump sum
or may be applied to one of our four settlement options. The minimum amount that
may be placed under a settlement option is $5,000 (unless we consent to a lesser
amount), subject to our then-current rules. Once payments under the Second
Option, the Third Option or the Fourth Option begin, no surrender may be made
for a lump sum settlement in lieu of the life insurance
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------

payments. The following payment options are available to you or your
beneficiary. If a payment option is not selected, proceeds will be paid in a
lump sum. Your beneficiary may choose a settlement.

FIRST OPTION -- Interest Income

Payments of interest at the rate we declare (but not less than 3 1/2% per
year) on the amount applied under this option.

SECOND OPTION -- Income of Fixed Amount

Equal payments of the amount chosen until the amount applied under this
option (with interest of not less than 3 1/2% per year) is exhausted. The final
payment will be for the balance remaining.

THIRD OPTION -- Payments for a Fixed Period

An amount payable monthly for the number of years selected, which may be
from one to 30 years.

FOURTH OPTION -- Life Income

Life Annuity -- An annuity payable monthly during the lifetime of the
annuitant and terminating with the last monthly payment due preceding the
death of the annuitant.

Life Annuity with 120 Monthly Payments Certain -- An annuity providing monthly
income to the annuitant for a fixed period of 120 months and for as long
thereafter as the annuitant shall live.

The policy provides for guaranteed dollar amounts of monthly payments for
each $1,000 applied under the four payment options. Under the Fourth Option, the
amount of each payment will depend upon the age of the Annuitant at the time the
first payment is due. If any periodic payment due any payee is less than $200,
we may make payments less often.

The table for the Fourth Option is based on the 1983a Individual Annuity
Mortality Table, set back one year and with a net investment rate of 3.5% per
annum. The tables for the First, Second and Third Options are based on a net
investment rate of 3.5% per annum. We may, however, from time to time, at our
discretion if mortality appears more favorable and interest rates justify, apply
other tables which will result in higher monthly payments for each $1,000
applied under one or more of the four payment options.

Other arrangements for income payments may be agreed upon.

MINIMUM DEATH BENEFIT -- Your policy has a minimum death benefit. We will
automatically increase the death benefit so that it will never be less than the
Account Value multiplied by the minimum death benefit percentage for the then
current year. This percentage varies according to the policy year and each
insured's issue age, sex (where unisex rates are not used) and insurance class.

EXAMPLES OF MINIMUM DEATH BENEFIT:

<TABLE>
<CAPTION>
A B
---------- ----------
<S> <C> <C>
Face Amount............................ $ 100,000 $ 100,000
Account Value.......................... 46,500 34,000
Specified Percentage................... 250% 250%
Death Benefit Option................... Level Level
</TABLE>

In Example A, the death benefit equals $116,250, i.e., the greater of
$100,000 (the Face Amount) or $116,250 (the Account Value at the date of death
of $46,500, multiplied by the specified percentage of 250%). This amount, less
any outstanding Indebtedness, constitutes the death proceeds payable to the
beneficiary.

In Example B, the death benefit is $100,000, i.e., the greater of $100,000
(the Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).

UNSCHEDULED INCREASES AND DECREASES IN FACE AMOUNT -- At any time after the
first policy year, you may request in writing to change the Face Amount. The
minimum amount by which the Face Amount can be increased or decreased is based
on our rules then in effect.

We reserve the right to limit the number of increases or decreases made
under a policy to no more than one in any 12 month period.

All requests to increase the Face Amount must be applied for on a new
application and accompanied by your policy. All requests will be subject to
evidence of insurability satisfactory to us. Any increase approved by us will be
effective on the Monthly Activity Date shown on the new policy specifications
page, provided that the Monthly Deduction Amount for the first month after the
effective date of the increase is made. Each unscheduled increase in Face Amount
is subject to an increase fee of 1/12 of $1 per $1,000 of each increase per
month for the first twelve months from the effective date of each increase. This
amount will not be less than 1/12 of $500 but not greater than 1/12 of $3,000.

A decrease in the Face Amount will be effective on the Monthly Activity Date
following the date we receive your request in writing. The remaining Face Amount
must not be less than that specified in our minimum rules then in effect. If
during the surrender charge period, you decrease your Face Amount to an amount
lower than it has ever been, a partial surrender charge will be assessed.

The surrender charge assessed will be:

(a) the surrender charge applicable to the then current policy year, if any;
multiplied by

(b) the percentage described below.

The percentage will be determined by:
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

(i) subtracting the new Face Amount from the lowest previous Face Amount; and

(ii) dividing that difference by the lowest previous Face Amount.

The surrender charge assessed will be deducted from your Account Value on
the Monthly Activity Date on which the decrease becomes effective. We will also
reduce the surrender charges applicable to future policy years and provide you a
revised schedule of surrender charges.

BENEFITS AT MATURITY -- The scheduled maturity date is the last date on
which you may elect to make premium payments. Unless you elect to continue the
policy beyond this date, the policy will terminate and any Cash Surrender Value
will be paid to you.

If elected, the policy may continue in force after the scheduled maturity
date if (a) the policy was in force on the scheduled maturity date; and (b) the
owner of the policy (including any assignee of record) agrees in writing to this
continuation.

At the scheduled maturity date:

- - the death benefit will be reduced to the Account Value;

- - the Account Value, if any, will continue to fluctuate with investment
performance

- - any loans will continue to accrue interest and become part of Indebtedness

- - no future Monthly Deduction Amounts will be deducted

- - no further premium payments will be accepted.

All additional benefits provided by rider will deem to have terminated at
the scheduled maturity date.

Otherwise, the policy will terminate on the scheduled maturity date.

CHARGES AND CONTRACT VALUES -- Your contract values decrease due to the
deduction of policy charges. Contract values may increase or decrease depending
on investment performance; investment expenses and fees reduce the investment
performance of the Sub-Accounts. Fluctuations in your account value may have an
effect on your death benefit. If you contract lapses, the contract terminates
and no death benefit will be paid.

MAKING WITHDRAWALS FROM
YOUR POLICY

SURRENDER -- Provided your policy has a Cash Surrender Value, you may
surrender your policy to us. In such case you may be subject to a surrender
charge, see "Surrender Charge." We will pay you the Cash Surrender Value. Our
liability under the policy will cease as of the date of your request for
surrender, or the date you request to have your policy surrendered, if later.

WITHDRAWALS -- One withdrawal is allowed per calendar month. Withdrawals may
be subject to a surrender charge, see "Surrender Charge." You may request a
withdrawal in writing. The minimum withdrawal allowed is $500. The maximum
partial withdrawal is the Cash Surrender Value, minus $1,000. If the death
benefit option then in effect is Option A or Option C, the Face Amount will be
reduced by the amount of any partial withdrawal. Unless specified, the
withdrawal will be deducted on a pro rata basis from the Fixed Account and the
Sub-Accounts. You may be assessed a charge of up to $10 for each partial
withdrawal.

RIGHT TO EXAMINE A POLICY -- You have a limited right to return your policy
for cancellation. You may deliver or mail the policy to us or to the agent from
whom it was purchased any time during your free look period. Your free look
period begins on the day you get your policy and ends ten days after you get it
(or longer in some states). In such event, the policy will be rescinded and we
will pay an amount equal to the greater of the premiums paid for the policy less
any Indebtedness or the sum of: i) the Account Value less any Indebtedness, on
the date the returned policy is received by us or the agent from whom it was
purchased; and, ii) any deductions under the policy or charges associated with
the Separate Account. If your policy is replacing another policy, your free look
period and the amount paid to you upon the return of your policy vary by state.

LOANS

AVAILABILITY OF LOANS -- At any time while the policy is in force, you may
borrow against the policy by assigning it as sole security to us. Any new loan
taken together with any existing Indebtedness may not exceed the Cash Surrender
Value on the date we grant a loan. The minimum loan amount that we will allow is
$500.

Unless you specify otherwise, all loan amounts will be transferred on a pro
rata basis from the Fixed Account and each of the Sub-Accounts to the Loan
Account.

If total Indebtedness equals or exceeds the Cash Value on any Monthly
Activity Date, the policy will then go into default. See "Lapse and
Reinstatement."

PREFERRED INDEBTEDNESS -- If, at any time after the tenth (10th) policy
anniversary, your Account Value exceeds the total of all premiums paid since
issue, a portion of your Indebtedness may qualify as preferred. Preferred
Indebtedness is charged a lower interest rate than non-preferred Indebtedness,
if any. The maximum amount of preferred Indebtedness is the amount by which the
Account Value exceeds the total premiums paid and is determined on each Monthly
Activity Date.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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LOAN REPAYMENTS -- You can repay all or any part of a loan at any time while
your policy is in force and either of the insureds' is alive. The amount of your
policy loan repayment will be deducted from the Loan Account. It will be
allocated among the Fixed Account and Sub-Accounts in the same percentage as
premiums are allocated.

EFFECT OF LOANS ON ACCOUNT VALUE -- A loan, whether or not repaid, will have
a permanent effect on your Account Value. This effect occurs because the
investment results of each Sub-Account will apply only to the amount remaining
in such Sub-Accounts. In addition, the rate of interest credited to the Fixed
Account will usually be different than the rate credited to the Loan Account.
The longer a loan is outstanding, the greater the effect on your Account Value
is likely to be. Such effect could be favorable or unfavorable. If the Fixed
Account and the Sub-Accounts earn more than the annual interest rate for funds
held in the Loan Account, your Account Value will not increase as rapidly as it
would have had no loan been made. If the Fixed Account and the Sub-Accounts earn
less than the Loan Account, then your Account Value will be greater than it
would have been had no loan been made. Additionally, if not repaid, the
aggregate amount of the outstanding Indebtedness will reduce the death proceeds
and the Cash Surrender Value otherwise payable.

CREDITED INTEREST -- Any amounts in the Loan Account will be credited with
interest at an annual rate of 3.5%.

INTEREST CHARGED ON INDEBTEDNESS -- Interest will accrue daily on the
Indebtedness at the policy loan rate. Because the interest charged on
Indebtedness may exceed the rate credited to the Loan Account, the Indebtedness
may grow faster than the Loan Account. If this happens, any difference between
the value of the Loan Account and the Indebtedness will be transferred on each
Monthly Activity Date from the Fixed Account and Sub-Accounts to the Loan
Account on a pro rata basis.

POLICY LOAN RATES -- The table below shows the interest rates we will charge
on your Indebtedness.

<TABLE>
<CAPTION>
INTEREST RATE
DURING POLICY PORTION OF CHARGED
YEARS INDEBTEDNESS EQUALS 3.5% PLUS:
- ------------------ ---------------------- --------------------
<S> <C> <C>
1-10 All 2%
11 and later Preferred 0%
Non-Preferred 1%
</TABLE>

LAPSE AND REINSTATEMENT

During the first policy year, the policy will go into default on any Monthly
Activity Date on which the Account Value less Indebtedness is not sufficient to
cover the Monthly Deduction Amount.

During the second policy year, the policy will go into default on any
Monthly Activity Date on which the Account Value less Indebtedness less 1/2 of
the surrender charge for the second policy year is not sufficient to cover the
Monthly Deduction Amount.

During the third policy year and thereafter, the policy will go into default
on any Monthly Activity Date if the Cash Surrender Value is not sufficient to
cover the Monthly Deduction Amount.

If the policy goes into default, we will send you a lapse notice warning you
that the policy is in danger of terminating. That lapse notice will tell you the
minimum premium required to keep the policy from terminating. This minimum
premium equals the amount to pay three Monthly Deduction Amounts as of the day
the policy grace period began. That notice will be mailed both to you on the
first day the policy goes into default, at your last know address, and to any
assignee of record.

GRACE PERIOD -- We will keep your policy in force for the 61 day period
following the date your policy goes into default. We call that period the policy
Grace Period. However, if we have not received the required premiums (specified
in your lapse notice) by the end of the policy Grace Period, the policy will
terminate unless the Death Benefit Guarantee is in effect. If the last surviving
insured dies during the Grace Period, we will pay the death benefit.

DEATH BENEFIT GUARANTEE -- The policy will remain in force at the end of the
Policy Grace Period as long as the Death Benefit Guarantee is available, as
described below.

The Death Benefit Guarantee is available so long as:

(a) the Policy is in the Death Benefit Guarantee Period; and

(b) on each Monthly Activity Date during that period, the cumulative premiums
paid into the Policy, less Indebtedness and less withdrawals from the
policy, equal or exceed an amount known as the Cumulative Death Benefit
Guarantee Premium.

The Death Benefit Guarantee Period is determined at issue, based on each
insured's age, sex and risk classification. Some states may limit the maximum
length of the Death Benefit Guarantee Period. The Cumulative Death Benefit
Guarantee Premium is the premium required to maintain the Death Benefit
Guarantee.

If the Death Benefit Guarantee is available and you fail to pay the required
premium as defined in your lapse notice by the end of the policy grace period,
the Death Benefit Guarantee will then go into effect. The policy will remain in
force, however:

(a) all riders will terminate;

(b) the Death Benefit Option becomes Level;
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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(d) Any future scheduled Increases in the Face Amount will be canceled.

The Death Benefit Guarantee Amount is the amount selected by you at the time
you apply for the policy. It is the death benefit while the Death Benefit
Guarantee is in effect.

As long as the Policy remains in default and the Death Benefit Guarantee is
available, the Death Benefit Guarantee will remain in effect on each subsequent
Monthly Activity Dates. You may be required to make premium payments to keep the
Death Benefit Guarantee available, as described above.

If during the Death Benefit Guarantee Period, the Face Amount is decreased
below the current Death Benefit Guarantee Amount, the Death Benefit Guarantee
Amount will become the new Face Amount. A new monthly Death Benefit Guarantee
Premium will be calculated. We will send you a notice of the new Monthly Death
Benefit Guarantee Premium, which will be used in calculating the Cumulative
Death Benefit Guarantee Premium in subsequent months.

DEATH BENEFIT GUARANTEE GRACE PERIOD -- If, on each Monthly Activity Date
during the Death Benefit Guarantee Period, the cumulative premiums paid into the
policy, less Indebtedness and less withdrawals from the policy, do not equal or
exceed the Cumulative Death Benefit Guarantee Premium on that date, a Death
Benefit Guarantee Grace Period of 61 days will begin. We will mail to you and
any assignee a notice. That notice will warn you that you are in danger of
losing the Death Benefit Guarantee and will tell you the amount of premium you
need to pay to continue the Death Benefit Guarantee.

The Death Benefit Guarantee will be removed from the policy if the required
premium is not paid by the end of the Death Benefit Guarantee Grace Period. You
will receive a written notification of the change and the Death Benefit
Guarantee will never again be available or in effect on the policy. If the Death
Benefit Guarantee was in effect, the policy will terminate at the end of the
Death Benefit Guarantee Grace Period.

REINSTATEMENT -- Unless the policy has been surrendered for its Cash
Surrender Value, the policy may be reinstated prior to the maturity date,
provided:

(a) the insureds alive at the end of the grace period are also alive on the date
of reinstatement;

(b) You make your request in writing within five years from the date the policy
lapsed;

(d) any policy Indebtedness is repaid or carried over to the reinstated policy;
and

(e) You pay sufficient premium to (1) cover all Monthly Deduction Amounts that
are due and unpaid during the Grace Period and (2) keep your policy in force
for three months after the date of reinstatement.

The Account Value on the reinstatement date will reflect:

(a) the Cash Value at the time of termination; plus

(b) Net Premiums derived from premiums paid at the time of reinstatement; minus

(d) the Surrender Charge at the time of reinstatement.

The surrender charge will be based on the duration from the original policy
date as though the policy had never lapsed.

TAXES

GENERAL

SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE, OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A POLICY DESCRIBED
HEREIN.

It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Policies cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion of federal tax
considerations is based upon Hartford's understanding of existing federal income
tax laws as they are currently interpreted.

TAXATION OF HARTFORD
AND THE SEPARATE ACCOUNT

The Separate Account is taxed as a part of the Hartford which is taxed as a
life insurance company under Subchapter L of the Code. Accordingly, the Separate
Account will not be taxed as a "regulated investment company" under Subchapter M
of the Code. Investment income and realized capital gains on the assets of the
Separate Account (the underlying Funds) are reinvested and are
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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taken into account in determining the value of the Accumulation Units. (See
"Accumulation Unit Values.") As a result, such investment income and realized
capital gains are automatically applied to increase reserves under the Policy.

Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.

INCOME TAXATION OF POLICY BENEFITS -- GENERALLY

For federal income tax purposes, the Policies should be treated as life
insurance policies under Section 7702 of the Code. The death benefit under a
life insurance policy is generally excluded from the gross income of the
Beneficiary. Also, a life insurance policy owner is generally not taxed on
increments in the policy value until the policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.

Although Hartford believes that the Last Survivor Policies are in compliance
with Section 7702 of the Code, the manner in which Section 7702 should be
applied to certain features of a joint survivorship life insurance contract is
not directly addressed by Section 7702. In the absence of final regulations or
other guidance issued under Section 7702, there is necessarily some uncertainty
whether a last survivor life insurance policy will meet the Section 7702
definition of a life insurance contract. Hartford also believes that any loan
received under a Policy will be treated as Indebtedness of the Policy Owner
provided the Policy is not a Modified Endowment Contract, and that no part of
any loan under a Policy will constitute income to the Policy Owner. A surrender
or assignment of the Policy may have tax consequences depending upon the
circumstances. Policy Owners should consult a qualified tax adviser concerning
the effect of such changes.

During the first fifteen Policy Years, an "income first" rule generally
applies to distributions of cash required to be made under Code Section 7702
because of a reduction in benefits under the Policy.

The Last Survivor Exchange Option Rider permits, under limited
circumstances, a Policy to be split into two individual policies on the life of
each of the Insureds. A Policy split may have adverse tax consequences. It is
not clear whether a Policy split will be treated as a nontaxable exchange or
transfer under the Code. Unless a Policy split is so treated, among other
things, the split or transfer will result in the recognition of taxable income
on the gain in the Policy. In addition, it is not clear whether, in all
circumstances, the individual policies that result from a Policy split would be
treated as life insurance policies under Section 7702 of the Code or would be
classified as modified endowment contracts. The Policy Owner should consult a
qualified tax adviser regarding the possible adverse tax consequences of a
Policy split.

The Maturity Date Extension Provision allows a Policy Owner to extend the
Scheduled Maturity Date to the date of the death of the last surviving insured.
If the Scheduled Maturity Date of the Policy is extended, Hartford believes the
Policy will continue to be treated as a life insurance contract for Federal
income tax purposes after the Scheduled Maturity Date. However, due to the lack
of specific guidance on this issue, the result is not certain. If the Policy is
not treated as a life insurance contract for federal income tax purposes after
the Scheduled Maturity Date, among other things, the Death Proceeds may be
taxable to the recipient. The Policy Owner should consult a qualified tax
adviser regarding the possible adverse tax consequences resulting from an
extension of the Scheduled Maturity Date.

DIVERSIFICATION REQUIREMENTS

Section 817 of the Code provides that a variable life insurance contract
(other than a pension plan policy) will not be treated as a life insurance
contract for any period during which the investments made by the separate
account or underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury Department. If a Policy is not treated as
a life insurance contract, the Policy 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 policy income on an ongoing basis. However, either the company or
the Policy
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.

Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.

OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT

In certain circumstances, variable life insurance contract owners may be
considered the owners, for federal income tax purposes, of the assets of a
segregated asset account, such as the Separate Account, used to support their
contracts. In those circumstances, income and gains from the segregated asset
account would be includible in the contract owners' gross income. The Internal
Revenue Service (the "IRS") has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses certain incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. In addition,
the Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those 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." This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts [of a segregated asset account] without
being treated as owners of the underlying assets." As of the date of this
Prospectus, no such guidance has been issued.

The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of the assets of a segregated
asset account. For example, a Policy Owner of this Policy has the choice of more
investment options to which to allocate premium payments and Separate Account
Values, and may be able to transfer among investment options more frequently,
than in such rulings. These differences could result in the Owner being treated
as the owner of a portion of the assets of the Separate Account. In addition,
Hartford does not know what standards will be set forth in the regulations or
rulings that the Treasury Department has stated it expects to issue. Hartford
therefore reserves the right to modify the contract as necessary to attempt to
prevent Policy Owners from being considered the owners of the assets of the
Separate Account. However, there is no assurance that such efforts would be
successful.

TAX DEFERRAL DURING ACCUMULATION PERIOD

Under existing provisions of the Code, except as described below, any
increase in a Policy Owner's contract value is generally not taxable to the
Policy Owner unless amounts are received (or are deemed to be received) under
the contract prior to the Insured's death. If there is a total withdrawal from
the contract, then the surrender value will be includible in the Policy Owner's
income to the extent that the amount received exceeds the "investment in the
contract." (If there is any debt at the time of a total withdrawal, then such
debt will be treated as an amount distributed to the Policy Owner.) The
"investment in the contract" is the aggregate amount of premium payments and
other consideration paid for the contract, less the aggregate amount received
under the contract previously to the extent such amounts received were
excludable from gross income. Whether partial withdrawals (or such other amounts
deemed to be distributed) from the contract constitute income to the Policy
Owner depends, in part, upon whether the contract is considered a modified
endowment contract for federal income tax purposes.

MODIFIED ENDOWMENT CONTRACTS

Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance contracts. The seven-pay test provides that premiums cannot be paid at
a rate more rapidly than that allowed by the payment of seven annual premiums
using specified computational rules described in Section 7702A(c). A modified
endowment contract ("MEC") is a life insurance policy that either: (i) satisfies
the Section 7702 definition of life insurance, but fails the seven-pay test of
Section 7702A or (ii) is exchanged for a MEC. A policy fails the seven-pay test
if the accumulated amount paid into the Policy at any time during the first
seven Policy Years exceeds the sum of the net level premiums that would have
been paid up to that point if the Policy provided for paid-up future benefits
after the payment of seven level annual premiums. Computational rules for the
seven-pay test are described in Section 7702A(c).

If the Policy satisfies the seven-pay test at issuance, distributions,
withdrawals and loans made thereafter will not be subject to the MEC rules,
unless the Policy is changed materially. The seven-pay test will be applied anew
at any time the Policy undergoes a material change, which includes an increase
in the Face Amount. In addition, if there is a reduction in benefits under the
Policy, all previous seven-pay test periods need to be retested as if the Policy
had initially been issued at the reduced benefit level. Any reduction in
benefits attributable to the nonpayment of premiums will not be taken into
account for purposes of the seven-pay test if the benefits are reinstated within
90 days after the reduction.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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A policy that is classified as a MEC is eligible for certain aspects of the
beneficial tax treatment accorded to life insurance. That is, the death benefit
is excluded from income and increments in value are not subject to current
taxation. However, if the Policy is classified as a MEC, then withdrawals from
the Policy will be considered first as distribution of income and then as a
recovery of premium payments. Thus, distributions will be includible in income
to the extent the contract value exceeds the investment in the contract. The
amount of any loan (including unpaid interest thereon) under the policy will be
treated as a distribution from the contract for tax purposes. In addition, if
the Policy Owner assigns or pledges any portion of the value of a contract (or
agrees to assign or pledge any portion), then such portion will be treated as a
withdrawal from the contract for tax purposes. Taxable withdrawals are subject
to an additional 10% tax, with certain exceptions. The Policy Owner's investment
in the contract is increased by the amount includible in income with respect to
such assignment, pledge, or loan, though it is not affected by any other aspect
of the assignment, pledge, or loan (including its release or repayment).

Generally, only distributions and loans made in the first year in which a
Policy becomes a MEC, and in subsequent years, are taxable. However,
distributions and loans made in the two years prior to a policy's failing the
seven-pay test are deemed to be in anticipation of failure and are subject to
tax.

Before assigning, pledging, or requesting a distribution under a contract
that is a MEC, a Policy Owner should consult a qualified tax adviser.

All MEC policies that are issued within any calendar year to the same policy
owner by one company or its affiliates are treated as one MEC policy for the
purpose of determining the taxable portion of any distribution.

Hartford has instituted procedures to monitor whether a Policy may become
classified as a MEC after issue.

ESTATE AND GENERATION SKIPPING TAXES

When the last surviving Insured dies, the Death Proceeds will generally be
includible in the Policy Owner's estate for purposes of federal estate tax if
the last surviving Insured owned the Policy. If the Policy Owner was not the
last surviving Insured, the fair market value of the Policy would be included in
the Policy Owner's estate upon the Policy Owner's death. The Policy would not be
includible in the last surviving Insured's estate if he or she neither retained
incidents of ownership at death nor had given up ownership within three years
before death.

The federal estate tax is integrated with the federal gift tax under a
unified rate schedule and unified credit which shelters up to $650,000 (1999)
from the estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises
the credit over the next seven years to $1,000,000. In addition, an unlimited
marital deduction may be available for federal estate and gift tax purposes. The
unlimited marital deduction permits the deferral of taxes until the death of the
surviving spouse.

If the Policy Owner (whether or not he or she is an Insured) transfers
ownership of the Policy to someone two or more generations younger, the transfer
may be subject to the generation skipping transfer tax, the taxable amount being
the value of the Policy. The generation-skipping transfer tax provisions
generally apply to transfers which would be subject to the gift and estate tax
rules. Individuals are generally allowed an aggregate generation skipping
transfer exemption of $1 million as adjusted for inflation. Because these rules
are complex, the Policy Owner should consult with a qualified tax adviser for
specific information if ownership is passing to younger generations.

LIFE INSURANCE PURCHASED FOR USE
IN SPLIT DOLLAR ARRANGEMENTS

On January 26, 1996, the IRS released a technical advice memorandum ("TAM")
on the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the Cash Surrender Value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.

FEDERAL INCOME TAX WITHHOLDING

If any amounts are deemed to be current taxable income to the Policy Owner,
such amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.

NON-INDIVIDUAL OWNERSHIP OF POLICIES

In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance contracts. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.

OTHER

Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Policy proceeds depend on the circumstances of each Policy Owner or beneficiary.
A qualified tax adviser should be consulted to determine the impact of these
taxes.

LIFE INSURANCE PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS

The discussion above provides general information regarding U.S. federal
income tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to a life insurance
policy purchase.

LEGAL PROCEEDINGS

There are no pending material legal proceedings to which the Separate
Account is a party.

OTHER MATTERS

YEAR 2000

The Year 2000 issue relates to the ability or inability of computer systems
to properly process information and data containing or related to dates
beginning with the year 2000 and beyond. The Year 2000 issue exists because,
historically, many computer systems that are in use today were developed years
ago when a year was identified using a two-digit field rather than a four-digit
field. As information and data containing or related to the century date are
introduced to computer hardware, software and other systems, date sensitive
systems may recognize the year 2000 as 1900, or not at all, which may result in
computer systems processing information incorrectly. This, in turn, may
significantly and adversely affect the integrity and reliability of information
databases and may result in a wide variety of adverse consequences to a company.
In addition, Year 2000 problems that occur with third parties with which a
company does business, such as suppliers, computer vendors and others, may also
adversely affect any given company.

As an insurance and financial services company, Hartford has thousands of
individuals and business customers that have purchased or invested in insurance
policies, annuities, mutual funds and other financial products. Nearly all of
these policies and products contain date sensitive data, such as policy
expiration dates, birth dates, premium payment dates and the like. In addition,
Hartford has business relationships with numerous third parties that affect
virtually all aspects of its business, including, without limitation, suppliers,
computer hardware and software vendors, insurance agents and brokers, securities
broker-dealers and other distributors of financial products.

Beginning in 1990, Hartford began working on the making its computer systems
Year 2000 ready, either by installing new programs or by replacing systems. In
January 1998, Hartford commenced a company-wide program to further identify,
assess and remediate the impact of Year 2000 problems in all of Hartford's
business segments. Hartford currently anticipates that this internal program
will be substantially completed by the end of 1998, and testing of computer
systems will continue through 1999.

In addition, as part of its Year 2000 program, Hartford is identifying third
parties with which it has significant business relations in order to attempt to
assess any potential impact on Hartford as a result of such third-party Year
2000 issues and remediation plans. Hartford currently anticipates that it will
substantially complete this evaluation by the end of 1998, and will conduct
systems testing with certain third parties through 1999. Hartford does not have
control over these third parties and, as a result, Hartford cannot currently
determine to what extent future operating results may be adversely affected by
the failure of these third parties to successfully address their Year 2000
issues. Hartford will continue to assess Year 2000 risk exposures related to its
own operations and its third party relationships and is in the process of
developing contingency plans.

The costs of addressing the Year 2000 issue that have been incurred through
the nine months ended September 30, 1998 have not been material to Hartford's
financial condition or results of operations. Hartford will continue to incur
costs related to its Year 2000 efforts and does not anticipate that the costs to
be incurred will be material to its financial condition or results of
operations.

<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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GLOSSARY OF SPECIAL TERMS

ACCOUNT VALUE: the total of all amounts in the Fixed Account, Loan Account and
Sub-Accounts.

CASH SURRENDER VALUE: the Cash Value less all Indebtedness.

CASH VALUE: the Account Value less any applicable Surrender Charges.

DEATH BENEFIT GUARANTEE AMOUNT: a benefit amount selected by you at the time you
apply for the policy. This is the death benefit that will apply to your policy
while the Death Benefit Guarantee is in effect.

FACE AMOUNT: an amount we use to determine the Death Benefit. On the policy
date, the Face Amount equals the initial Face Amount shown in your policy.
Thereafter, it may change under the terms of the policy.

FIXED ACCOUNT: part of our general account to which all or a portion of the
Account Value may be allocated.

FUNDS: the registered open-end management companies in which assets of the
Separate Account may be invested.

INDEBTEDNESS: all loans taken on the policy, plus any interest due or accrued
minus any loan repayments.

LOAN ACCOUNT: an account established for any amounts transferred from the Fixed
Account and Sub-Accounts as a result of loans. The amounts in the Loan Account
are credited with interest and are not subject to the investment experience of
any Sub-Accounts.

MONTHLY ACTIVITY DATE: the policy date and the same date in each succeeding
month as the policy date. However, whenever the Monthly Activity Date falls on a
date other than a Valuation Day, the Monthly Activity Date will be deemed to be
the next Valuation Day.

NET PREMIUM: the amount of premium credited to Account Value. It is premium paid
minus the sales load and premium tax charge.

SEPARATE ACCOUNT: an account which has been established by us to separate the
assets funding the variable benefits for the class of contracts to which the
policy belongs from our other assets.

SUB-ACCOUNT: the subdivisions of the Separate Account.

SURRENDER CHARGE: a charge that may be assessed if you surrender your policy or
the Face Amount is decreased.

VALUATION DAY: the date on which a Sub-Account is valued. This occurs every day
the New York Stock Exchange is open for trading.

WE, US, OUR: Hartford Life and Annuity Insurance Company.

YOU, YOUR: the owner of the policy.
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

WHERE YOU CAN FIND MORE INFORMATION

You can call us at 1-800-231-5453 to ask us questions, or to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this life insurance policy and, like this
prospectus, is filed with the Securities and Exchange Commission. You should
read the Statement of Additional Information because you are bound by the terms
contained in it.

We file other information with the Securities and Exchange Commission. You
may read and copy any document we file at the SEC's public reference room in
Washington, DC 20549-6009. Please call the SEC at 1-800-SEC-0330 for further
information. Our SEC filings are also available to the public at the SEC's web
site at http://www.sec.gov.
<PAGE>
PART B
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION
SEPARATE ACCOUNT VL II

This Statement of Additional Information is not a prospectus. We will send
you a prospectus if you write us at P.O. Box 2999, Hartford, CT 06104-2999, or
if you call us at 1-800-231-5453.

DATE OF PROSPECTUS: FEBRUARY 11, 1999
DATE OF STATEMENT OF ADDITIONAL INFORMATION: FEBRUARY 11, 1999

<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY....................................... 3
SERVICES.............................................................. 7
DISTRIBUTION OF THE POLICIES.......................................... 7
ADDITIONAL INFORMATION ABOUT CHARGES.................................. 7
ILLUSTRATION OF BENEFITS.............................................. 9
FINANCIAL STATEMENTS.................................................. SA-1
</TABLE>

<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 3
- --------------------------------------------------------------------------------

GENERAL INFORMATION AND HISTORY

Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities in all states except New York. Hartford is located in Simsbury,
Connecticut, but its mailing address is P.O. Box 2999, Hartford, CT 06104-2999.
Hartford was incorporated on January 9, 1956 under the laws of Wisconsin, and
subsequently redomiciled to Connecticut. On January 1, 1998, Hartford's name
changed from ITT Hartford Life and Annuity Insurance Company to Hartford Life
and Annuity Insurance Company.

Hartford Life and Annuity Insurance Company is controlled by Hartford Life
Insurance Company, which is controlled by Hartford Life & Accident Insurance
Company, which is controlled by Hartford Life Inc., which is controlled by
Hartford Accident & Indemnity Company, which is controlled by Hartford Fire
Insurance Company, which is controlled by Nutmeg Insurance Company, which is
controlled by The Hartford Financial Services Group, Inc. Each of these
companies is engaged in the business of insurance and financial services.

The following table shows a brief description of the business experience of
officers and directors of Hartford Life and Annuity Insurance Company:

Boyko, Gregory A., 46 Senior Vice President, Chief Vice President & Controller (1995-1997),
Financial Officer & Treasurer, Hartford; Director (1997-Present); Senior Vice
1997 President, Chief Financial Officer & Treasurer
Director, 1997* (1997-Present); Vice President & Controller
(1995-1997), Hartford Life and Accident
Insurance Company; Director (1997-Present);
Senior Vice President, Chief Financial Officer
& Treasurer (1997-Present); Vice President and
Controller (1995-1997), Hartford Life Insurance
Company; Senior Vice President, Chief Financial
Officer & Treasurer (1997-Present), Hartford
Life, Inc.; Chief Financial Officer
(1994-1995), IMG American Life; Senior Vice
President (1992-1994), Connecticut Mutual Life
Insurance Company.

Cummins, Peter W., 60 Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President
(1989-1997), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1989-1997);
Senior Vice President (1997-Present); Vice
President (1989-1997), Hartford Life Insurance
Company.

de Raismes, Ann M., 47 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice
Director of Human President (1997-Present); Vice President
Resources, 1994 (1994-1997); Assistant Vice President
(1992-1994); Director of Human Resources
(1991-Present), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1994-1997);
Assistant Vice President (1992-1994); Director
of Human Resources (1991-Present), Hartford
Life Insurance Company; Vice President, Human
Resources (1997-Present), Hartford Life, Inc.
</TABLE>

<PAGE>

4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

Fitch, Timothy M., 45 Vice President, 1995 Vice President (1995-Present); Actuary
Actuary, 1997 (1994-Present); Assistant Vice President
(1992-1995), Hartford Life and Accident
Insurance Company; Vice President
(1995-Present); Actuary (1994-Present);
Assistant Vice President (1992-1995), Hartford
Life Insurance Company.

Foy, David T., 31 Vice President, 1998 Assistant Vice President (1995-1998), Hartford;
Vice President (1998-Present), Assistant Vice
President (1995-1998), Hartford Life Insurance
Company.

Garrett, J. Richard, 53 Vice President, 1994 Treasurer (1994-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1984-1997), Hartford
Life and Accident Insurance Company; Vice
President, (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1986-1997), Hartford
Life Insurance Company; Vice President
(1997-Present), Hartford Life, Inc.

Gillette, Donald J., 52 Vice President, 1997 Assistant Vice President (1995-1997), Hartford;
Assistant Vice President (1995-1997), Hartford
Life and Accident Insurance Company; Assistant
Vice President (1995-Present), Hartford Life
Insurance Company.

Godfrey, III, William A., Senior Vice President, 1997 Senior Vice President (1997-Present), Hartford;
41 Senior Vice President (1997-Present), Hartford
Life and Accident Insurance Company; Vice
President Information Technology
(1997-Present), Hartford Life, Inc.

Godkin, Lynda, 44 Senior Vice President, 1997 Assistant General Counsel and Secretary
General Counsel, 1996 (1994-1995), Hartford; Director (1997-Present);
Corporate Secretary, 1996 Senior Vice President (1997-Present); General
Director, 1997* Counsel (1996-Present); Corporate Secretary
(1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and
Secretary (1994-1995); Counsel (1990-1994),
Hartford Life and Accident Insurance Company;
Senior Vice President (1997-Present); General
Counsel (1996-Present); Corporate Secretary
(1995-Present); Director (1997-Present);
Associate General Counsel (1995-1996);
Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life
Insurance Company; Vice President and General
Counsel (1997-Present), Hartford Life, Inc.

Grady, Lois W., 53 Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice
Vice President, 1994 President (1998-Present); Vice President
(1993-1997); Assistant Vice President
(1987-1993), Hartford Life and Accident
Insurance Company; Senior Vice President
(1998-Present); Vice President (1994-1997);
Assistant Vice President (1987-1994), Hartford
Life Insurance Company.

Graham, Christopher, 47 Vice President, 1997
</TABLE>

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION 5
- --------------------------------------------------------------------------------

Joyce, Stephen T., 39 Vice President, 1997 Assistant Vice President 1995-1997), Hartford;
Assistant Vice President (1994-1997), Hartford
Life and Accident Insurance Company; Vice
President (1997-Present); Assistant Vice
President (1994-1997), Hartford Life Insurance
Company.

Keeler, Michael D., 37 Vice President, 1998 Vice President (1998-Present); Hartford Life and
Accident Insurance Company.

Kerzner, Robert A., 46 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice
Vice President, 1997 President (1994-1998), Hartford; Senior Vice
President (1998-Present); Vice President
(1994-1997); Regional Vice President
(1991-1994), Hartford Life Insurance Company.

Levenson, David N., 31 Vice President, 1998 Assistant Vice President (1997-1998), Hartford.

Malchodi, Jr., William B., Vice President, 1994 Vice President (1994-Present); Director of Taxes
50 (1992-1998), Hartford Life and Accident
Insurance Company; Vice President
(1994-Present); Director of Taxes (1991-1998),
Hartford Life Insurance Company.

Marra, Thomas M., 39 Executive Vice President, 1996 Senior Vice President (1993-1996); Director of
Director, Individual Life Individual Annuities (1991-1993), Hartford;
and Annuity Division, 1993 Director (1994-Present); Executive Vice
Director, 1994* President (1995-Present); Director, Individual
Life and Annuity Division (1994-Present);
Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1997),
Hartford Life and Accident Insurance Company;
Director (1994-Present); Executive Vice
President (1995-Present); Director, Individual
Life and Annuity Division (1994-Present);
Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1995),
Hartford Life Insurance Company; Executive Vice
President, Individual Life and Annuities
(1997-Present), Hartford Life, Inc.

Matthieson, Steven L., 53 Vice President, 1984 Director of New Business (1984-1997), Hartford.

O'Halloran, C. Michael, 51 Vice President, 1997 Vice President (1997-Present), Hartford Life and
Accident Insurance Company; Vice President
(1997-Present), Hartford Life Insurance
Company; Corporate Secretary (1997-Present),
Hartford Life, Inc.; Senior Associate General
Counsel (1988-Present), Director of Corporate
Law (1994-Present), The Hartford Financial
Services Group.
</TABLE>

<PAGE>

6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------- ------------------------------ -------------------------------------------------
<S> <C> <C>
Raymond, Craig R., 37 Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice
Chief Actuary, 1994 President (1992-1993); Actuary (1989-1994),
Hartford; Senior Vice President (1997-Present);
Chief Actuary (1995-Present); Vice President
(1993-1997); Actuary (1990-1995), Hartford Life
and Accident Insurance Company; Senior Vice
President (1997-Present); Chief Actuary
(1994-Present); Vice President (1993-1997);
Assistant Vice President (1992-1993); Actuary
(1989-1994), Hartford Life Insurance Company;
Vice President and Chief Actuary
(1997-Present), Hartford Life, Inc.

Schrandt, David T., 50 Vice President, 1987 Treasurer (1987-1997); Controller (1987-1997),
Hartford.

Smith, Lowndes A., 58 President, 1989 Chief Operating Officer (1989-1997), Hartford;
Chief Executive Officer, 1997 Director (1981-Present); President
Director, 1985* (1989-Present); Chief Executive Officer
(1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident
Insurance Company; Director (1981-Present);
President (1989-Present), Chief Executive
Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life Insurance Company;
Chief Executive Officer and President and
Director (1997-Present), Hartford Life, Inc.

Welnicki, Raymond P., 49 Senior Vice President & Vice President (1993-1994), Hartford; Director
Director, Employee (1994-Present); Senior Vice President
Benefit Division, 1994 (1995-Present); Director, Employee Benefit
Director, 1994* Division (1997-Present); Vice President
(1993-1995), Hartford Life and Accident
Insurance Company; Senior Vice President,
Employee Benefits (1997-Present), Hartford
Life, Inc.; Board of Directors, Ethix Corp.

Welsh, Walter C., 51 Senior Vice President, 1997 Senior Vice President 1997-Present); Vice
President (1994-1997); Assistant Vice President
(1992-1995), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1995-1997);
Assistant Vice President (1992-1995), Hartford
Life Insurance Company; Vice President,
Government Affairs (1997-Present), Hartford
Life, Inc.

Zlatkus, Lizabeth H., 39 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice
Director, 1994* President (1992-1994), Hartford; Director
(1994-Present); Senior Vice President
(1997-Present); Vice President (1994-1997);
Assistant Vice President (1992-1994), Hartford
Life and Accident Insurance Company; Vice
President, Group Life and Disability
(1997-Present), Hartford Life, Inc.
</TABLE>

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION 7
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------- ------------------------------ -------------------------------------------------
<S> <C> <C>
Znamierowski, David M., 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, 1998 (1997-Present), Hartford Life and Accident
Insurance Company; Director (1998-Present);
Senior Vice President (1997-Present); Director,
Risk Management Strategy (1996-Present); Vice
President (1997), Hartford Life Insurance
Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy, Aetna
Life and Casualty Company.
</TABLE>

- ---------

* Denotes date of election to Board of Directors of Hartford.

** Affiliated Company of The Hartford Financial Services Group, Inc.

Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.

SEPARATE ACCOUNT VL II -- was established as a separate account under
Connecticut law on September 30, 1994. The Separate Account is classified as a
unit investment trust registered with the Securities and Exchange Commission
under the Investment Company Act of 1940.

SERVICES

SAFEKEEPING OF ASSETS -- Title to the assets of the Separate Account is held
by Hartford. The assets are kept physically segregated and are held separate and
apart from Hartford's general corporate assets. Records are maintained of all
purchases and redemptions of Fund shares held in each of the Sub-Accounts.

INDEPENDENT PUBLIC ACCOUNTANTS -- The audited financial statements included
in this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Reference is made to the report on the statutory
financial statements of Hartford Life and Annuity Insurance Company (formerly
ITT Hartford Life and Annuity Insurance Company) which states the statutory
financial statements are presented in accordance with statutory accounting
practices prescribed or permitted by the National Association of Insurance
Commissioners and the State of Connecticut Insurance Department, and are not
presented in accordance with generally accepted accounting principles. The
principal business address of Arthur Andersen LLP is One Financial Plaza,
Hartford, Connecticut 06103.

DISTRIBUTION OF THE POLICIES

Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the policies and is located at the same address as Hartford. HSD
is controlled by Hartford. HSD offers the policies on a continous basis.

The policies will be sold by salespersons of HSD, who represent Hartford as
insurance agents and who are registered representatives of broker-dealers who
have entered into distribution agreements with HSD.

HSD is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD").

The following table shows officers and directors of HSD:

<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES
- ----------------------- ----------------------------------------
<S> <C>
Lowndes A. Smith President and Chief Executive Officer,
Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
</TABLE>

ADDITIONAL INFORMATION
ABOUT CHARGES

SALES LOAD -- The maximum sales load under the policy is 6% of premium in
order to cover expenses related to the sale and distribution of the Policy.

<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

UNDERWRITING PROCEDURES -- To purchase a policy you must submit an
application to us. Within limits, you may choose the initial Face Amount.
Policies generally will be issued only on the lives of insureds between the ages
of 20 and 85 who supply evidence of insurability satisfactory to us. Acceptance
is subject to our underwriting rules and we reserve the right to reject an
application for any reason. No change in the terms or conditions of a policy
will be made without your consent.

Cost of insurance rates will be determined on each policy anniversary based
on our future expectations of such factors as mortality, expenses, interest,
persistency and taxes. For preferred and standard risks, the cost of insurance
rate will not exceed those based on the 1980 Commissioners' Standard Ordinary
Mortality Table (ALB), Male or Female, Nonsmoker or Smoker Table, age last
birthday (unisex rates may be required in some states). A table of guaranteed
cost of insurance rates per $1,000 will be included in your policy, however, we
reserve the right to use rates less than those shown in the table. Special risk
classes are used when mortality experience in excess of the standard risk
classes is expected. These substandard risks will be charged a higher cost of
insurance rate that will not exceed rates based on a multiple of 1980
Commissioners' Standard Ordinary Mortality Table (ALB), Male or Female,
Nonsmoker or Smoker Table, age last birthday (unisex rates may be required in
some states) plus any flat extra amount assessed. The multiple will be based on
the insured's substandard rating.

INCREASES IN FACE AMOUNT -- At any time after the first policy year, you may
request in writing to change the Face Amount. The minimum amount by which the
Face Amount can be increased is based on our rules then in effect.

We reserve the right to limit the number of increases or decreases made
under a policy to no more than one in any 12 month period.

STATEMENT OF ADDITIONAL INFORMATION 9

- --------------------------------------------------------------------------------

ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES

The following tables illustrate the way in which a Policy operates. They
show how the Death Benefit, Account Values and Cash Surrender Values could vary
over an extended period of time assuming hypothetical gross rates of return
equal to constant after tax annual rates of 0%, 6% and 12%. The illustrations
assume the following: (a) a male, preferred non-nicotine, age 55, and a female,
preferred non-nicotine, age 55, with $1,000,000 of Face Amount, a Death Benefit
Guarantee Amount of $500,000, and a premium of $10,000.00 paid in all years; (b)
a male, preferred non-nicotine, age 55, and a female, preferred non-nicotine,
age 55, with $1,000,000 of Face Amount, a Death Benefit Guarantee Amount of
$1,000,000, and a premium of $20,000.00 paid in all years.

The Death Benefit, Account Value and Cash Surrender Value for a Policy would
be different from those shown if the rates of return averaged 0%, 6% and 12%
over a period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also differ if any Policy loan was made
during the period of time illustrated.

The tables reflect the deductions of current Policy charges and guaranteed
Policy charges for a single gross interest rate. The Death Benefits, Account
Values and Cash Surrender Values would change if current Cost of Insurance
charges change.

The amounts shown for the Death Benefits, Account Values and Cash Surrender
Values as of the end of each Policy Year take into account an average daily
charge equal to an annual charge of 0.70% of the average daily net assets of the
Funds for investment advisory and administrative services fees. The gross annual
investment return rates of 0%, 6% and 12% on the Fund's assets are equal to net
annual investment return rates (net of the 0.70% average daily charge) of -.70%,
5.30% and 11.30%, respectively.

In addition, the Death Benefits, Account Values and Cash Surrender Values as
of the end of each Policy Year take into account the front-end sales load,
premium tax charge (assumed to be 1.75% in these illustrations), Cost of
Insurance charge, monthly administrative fee, and mortality and expense risk
charge.

The hypothetical returns shown in the tables are without any tax charges
that may be allocable to the Separate Account in the future. In order to produce
after-tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0%, 6%, 12%, respectively, to cover any tax
charges.

The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes, of 5% per year, compounded annually.

Hartford will furnish, upon request, a comparable illustration reflecting
the proposed Insured's age and risk classification, Face Amount or initial
premium requested, and reflecting guaranteed Cost of Insurance rates. Hartford
will also furnish an additional similar illustration reflecting current Cost of
Insurance rates which may be less than, but never greater than, the guaranteed
Cost of Insurance rates.

<PAGE>

10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

DEATH BENEFIT OPTION: LEVEL
$1,000,000 FACE AMOUNT
$1,000,000 DEATH BENEFIT GUARANTEE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 55 FEMALE PREFERRED NON-NICOTINE
$20,000 PLANNED PREMIUM

ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)

<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- --------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 21,000 13,274 -- 1,000,000 13,274 -- 1,000,000
2 43,050 26,740 12,242 1,000,000 26,241 11,744 1,000,000
3 66,203 40,004 25,506 1,000,000 38,884 24,387 1,000,000
4 90,513 53,063 40,637 1,000,000 51,181 38,755 1,000,000
5 116,038 65,914 55,558 1,000,000 63,108 52,753 1,000,000

6 142,840 78,799 70,515 1,000,000 74,869 66,585 1,000,000
7 170,982 91,464 85,251 1,000,000 86,180 79,967 1,000,000
8 200,531 103,901 99,758 1,000,000 96,981 92,839 1,000,000
9 231,558 116,100 114,029 1,000,000 107,197 105,126 1,000,000
10 264,136 128,048 128,048 1,000,000 116,742 116,742 1,000,000

11 298,343 144,865 144,865 1,000,000 130,234 130,234 1,000,000
12 334,260 161,436 161,436 1,000,000 142,843 142,843 1,000,000
13 371,973 177,757 177,757 1,000,000 154,474 154,474 1,000,000
14 411,571 193,811 193,811 1,000,000 165,025 165,025 1,000,000
15 453,150 209,590 209,590 1,000,000 174,353 174,353 1,000,000

16 496,807 225,078 225,078 1,000,000 182,263 182,263 1,000,000
17 542,648 240,249 240,249 1,000,000 188,494 188,494 1,000,000
18 590,780 255,079 255,079 1,000,000 192,696 192,696 1,000,000
19 641,319 269,533 269,533 1,000,000 194,448 194,448 1,000,000
20 694,385 283,568 283,568 1,000,000 193,280 193,280 1,000,000

25 1,002,269 344,965 344,965 1,000,000 122,975 122,975 1,000,000
30 1,395,216 375,831 120,993 1,000,000 -- -- --
</TABLE>

<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.

THESE VALUES REFLECT CURRENT FRONT-END SALES LOADS OF 6% IN YEAR 1 AND 4%
THEREAFTER, AND GUARANTEED FRONT-END SALES LOADS OF 6% IN ALL YEARS. THE
SURRENDER CHARGE EFFECTIVE IN ANY YEAR CAN BE DETERMINED BY SUBTRACTING THE
CASH SURRENDER VALUE FROM THE ACCOUNT VALUE.

THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH VALUES WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>

THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION 11

- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)

<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------------ --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- --------------- ---------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 21,000 14,213 -- 1,000,000 14,213 -- 1,000,000
2 43,050 29,471 14,974 1,000,000 28,946 14,448 1,000,000
3 66,203 45,410 30,912 1,000,000 44,202 29,705 1,000,000
4 90,513 62,053 49,627 1,000,000 59,979 47,553 1,000,000
5 116,038 79,426 69,070 1,000,000 76,272 65,917 1,000,000

6 142,840 97,809 89,525 1,000,000 93,314 85,029 1,000,000
7 170,982 116,987 110,773 1,000,000 110,846 104,633 1,000,000
8 200,531 136,985 132,842 1,000,000 128,831 124,689 1,000,000
9 231,558 157,829 155,758 1,000,000 147,215 145,144 1,000,000
10 264,136 179,541 179,541 1,000,000 165,936 165,936 1,000,000

11 298,343 207,574 207,574 1,000,000 189,870 189,870 1,000,000
12 334,260 236,905 236,905 1,000,000 214,289 214,289 1,000,000
13 371,973 267,589 267,589 1,000,000 239,147 239,147 1,000,000
14 411,571 299,678 299,678 1,000,000 264,396 264,396 1,000,000
15 453,150 333,232 333,232 1,000,000 289,962 289,962 1,000,000

16 496,807 368,312 368,312 1,000,000 315,740 315,740 1,000,000
17 542,648 404,973 404,973 1,000,000 341,583 341,583 1,000,000
18 590,780 443,281 443,281 1,000,000 367,294 367,294 1,000,000
19 641,319 483,302 483,302 1,000,000 392,651 392,651 1,000,000
20 694,385 525,103 525,103 1,000,000 417,436 417,436 1,000,000

25 1,002,269 763,873 763,873 1,000,000 526,271 526,271 --
30 1,395,216 1,065,778 1,065,778 1,119,067 582,742 582,742 --
</TABLE>

THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH VALUES WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>

THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

<PAGE>

12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)

<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- --------------- ---------- ------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 21,000 15,155 657 1,000,000 15,155 657 1,000,000
2 43,050 32,325 17,827 1,000,000 31,773 17,275 1,000,000
3 66,203 51,283 36,786 1,000,000 49,985 35,487 1,000,000
4 90,513 72,212 59,785 1,000,000 69,932 57,506 1,000,000
5 116,038 95,309 84,953 1,000,000 91,772 81,416 1,000,000

6 142,840 121,059 112,775 1,000,000 115,921 107,636 1,000,000
7 170,982 149,471 143,258 1,000,000 142,328 136,115 1,000,000
8 200,531 180,815 176,672 1,000,000 171,180 167,038 1,000,000
9 231,558 215,388 213,317 1,000,000 202,674 200,603 1,000,000
10 264,136 253,518 253,518 1,000,000 237,032 237,032 1,000,000

11 298,343 301,352 301,352 1,000,000 279,729 279,729 1,000,000
12 334,260 354,294 354,294 1,000,000 326,485 326,485 1,000,000
13 371,973 412,894 412,894 1,000,000 377,742 377,742 1,000,000
14 411,571 477,755 477,755 1,000,000 434,015 434,015 1,000,000
15 453,150 549,556 549,556 1,000,000 495,900 495,900 1,000,000

16 496,807 629,053 629,053 1,000,000 564,091 564,091 1,000,000
17 542,648 717,088 717,088 1,000,000 639,422 639,422 1,000,000
18 590,780 814,611 814,611 1,000,000 722,918 722,918 1,000,000
19 641,319 922,692 922,692 1,005,735 815,895 815,895 1,000,000
20 694,385 1,042,446 1,042,446 1,115,418 920,075 920,075 1,000,000

25 1,002,269 1,863,248 1,863,248 1,956,410 1,635,688 1,635,688 1,717,472
30 1,395,216 3,221,867 3,221,867 3,382,960 2,782,789 2,782,789 2,921,929
</TABLE>

THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH VALUES WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>

THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION 13

- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

DEATH BENEFIT OPTION: LEVEL
$1,000,000 FACE AMOUNT
$500,000 DEATH BENEFIT GUARANTEE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 55 FEMALE PREFERRED NON-NICOTINE
$10,000 PLANNED PREMIUM

ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.70% NET)

<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 6,409 -- 1,000,000 6,409 -- 1,000,000
2 21,525 12,910 5,234 1,000,000 12,607 4,931 1,000,000
3 33,101 19,308 11,632 1,000,000 18,573 10,897 1,000,000
4 45,256 25,599 19,020 1,000,000 24,282 17,703 1,000,000
5 58,019 31,777 26,294 1,000,000 29,704 24,221 1,000,000

6 71,420 38,083 33,697 1,000,000 35,039 30,652 1,000,000
7 85,491 44,260 40,971 1,000,000 39,994 36,704 1,000,000
8 100,266 50,298 48,105 1,000,000 44,499 42,306 1,000,000
9 115,779 56,184 55,088 1,000,000 48,468 47,372 1,000,000
10 132,068 61,901 61,901 1,000,000 51,802 51,802 1,000,000

11 149,171 70,174 70,174 1,000,000 56,757 56,757 1,000,000
12 167,130 78,296 78,296 1,000,000 60,835 60,835 1,000,000
13 185,986 86,259 86,259 1,000,000 63,913 63,913 1,000,000
14 205,786 94,042 94,042 1,000,000 65,855 65,855 1,000,000
15 226,575 101,631 101,631 1,000,000 66,473 66,473 1,000,000

16 248,404 109,006 109,006 1,000,000 65,518 65,518 1,000,000
17 271,324 116,130 116,130 1,000,000 62,652 62,652 1,000,000
18 295,390 122,970 122,970 1,000,000 57,425 57,425 1,000,000
19 320,660 129,479 129,479 1,000,000 49,287 49,287 1,000,000
20 347,193 135,595 135,595 1,000,000 37,613 37,613 1,000,000

25 501,135 156,772 156,772 1,000,000 -- -- 500,000
30 697,608 139,059 139,059 1,000,000 -- -- --
</TABLE>

THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH VALUES WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>

<PAGE>

14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

DEATH BENEFIT OPTION: LEVEL
$1,000,000 FACE AMOUNT
$500,000 DEATH BENEFIT GUARANTEE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 55 FEMALE PREFERRED NON-NICOTINE
$10,000 PLANNED PREMIUM

ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.30% NET)

<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 6,871 -- 1,000,000 6,871 -- 1,000,000
2 21,525 14,247 6,570 1,000,000 13,928 6,252 1,000,000
3 33,101 21,946 14,270 1,000,000 21,158 13,482 1,000,000
4 45,256 29,977 23,397 1,000,000 28,537 21,958 1,000,000
5 58,019 38,346 32,863 1,000,000 36,040 30,557 1,000,000

6 71,420 47,318 42,932 1,000,000 43,874 39,488 1,000,000
7 85,491 56,655 53,365 1,000,000 51,756 48,466 1,000,000
8 100,266 66,363 64,170 1,000,000 59,612 57,418 1,000,000
9 115,779 76,444 75,347 1,000,000 67,351 66,254 1,000,000
10 132,068 86,896 86,896 1,000,000 74,863 74,863 1,000,000

11 149,171 100,609 100,609 1,000,000 84,510 84,510 1,000,000
12 167,130 114,925 114,925 1,000,000 93,812 93,812 1,000,000
13 185,986 129,865 129,865 1,000,000 102,635 102,635 1,000,000
14 205,786 145,437 145,437 1,000,000 110,822 110,822 1,000,000
15 226,575 161,658 161,658 1,000,000 118,166 118,166 1,000,000

16 248,404 178,540 178,540 1,000,000 124,390 124,390 1,000,000
17 271,324 196,081 196,081 1,000,000 129,126 129,126 1,000,000
18 295,390 214,284 214,284 1,000,000 131,885 131,885 1,000,000
19 320,660 233,141 233,141 1,000,000 132,068 132,068 1,000,000
20 347,193 252,634 252,634 1,000,000 128,981 128,981 1,000,000

25 501,135 358,102 358,102 1,000,000 31,418 31,418 1,000,000
30 697,608 464,468 464,468 1,000,000 -- -- --
</TABLE>

THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH VALUES WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>

THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION 15

- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

DEATH BENEFIT OPTION: LEVEL
$1,000,000 FACE AMOUNT
$500,000 DEATH BENEFIT GUARANTEE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 55 FEMALE PREFERRED NON-NICOTINE
$10,000 PLANNED PREMIUM

ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.30% NET)

<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- --------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- --------------- ---------- ------------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 7,335 -- 1,000,000 7,335 -- 1,000,000
2 21,525 15,644 7,968 1,000,000 15,311 7,634 1,000,000
3 33,101 24,813 17,137 1,000,000 23,971 16,295 1,000,000
4 45,256 34,926 28,347 1,000,000 33,356 26,777 1,000,000
5 58,019 46,074 40,591 1,000,000 43,512 38,029 1,000,000

6 71,420 58,620 54,234 1,000,000 54,727 50,341 1,000,000
7 85,491 72,441 69,151 1,000,000 66,809 63,519 1,000,000
8 100,266 87,657 85,464 1,000,000 79,777 77,584 1,000,000
9 115,779 104,404 69,468 1,000,000 93,638 92,542 1,000,000
10 132,068 122,821 122,821 1,000,000 108,392 108,392 1,000,000

11 149,171 146,144 146,144 1,000,000 126,654 126,654 1,000,000
12 167,130 171,925 171,925 1,000,000 146,117 146,117 1,000,000
13 185,986 200,422 200,422 1,000,000 166,823 166,823 1,000,000
14 205,786 231,910 231,910 1,000,000 188,814 188,814 1,000,000
15 226,575 266,704 266,704 1,000,000 212,114 212,114 1,000,000

16 248,404 305,148 305,148 1,000,000 236,714 236,714 1,000,000
17 271,324 347,616 347,616 1,000,000 262,564 262,564 1,000,000
18 295,390 394,533 394,533 1,000,000 289,567 289,567 1,000,000
19 320,660 446,366 446,366 1,000,000 317,602 317,602 1,000,000
20 347,193 503,640 503,640 1,000,000 346,565 346,565 1,000,000

25 501,135 895,729 895,729 1,000,000 505,454 505,454 1,000,000
30 697,608 1,550,757 1,550,757 1,628,295 706,558 706,558 1,000,000
</TABLE>

THE DEATH BENEFIT MAY, AND THE ACCOUNT VALUES AND CASH VALUES WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>

THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.

<PAGE>
This page intentionally left blank.
<PAGE>
Financial Statements of Separate Account VL II
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc.
Shares 2,132,205
Cost $ 2,318,402
Market Value.............. $ 2,304,199 --
Hartford Stock HLS Fund,
Inc.
Shares 791,346
Cost $ 4,632,387
Market Value.............. -- $ 5,192,546
Hartford Money Market HLS
Fund, Inc.
Shares 12,981,615
Cost $12,981,615
Market Value.............. -- --
Hartford Advisers HLS Fund,
Inc.
Shares 1,091,175
Cost $ 3,029,766
Market Value.............. -- --
Hartford Capital
Appreciation HLS Fund, Inc.
Shares 729,577
Cost $ 3,165,354
Market Value.............. -- --
Hartford Mortgage Securities
HLS Fund, Inc.
Shares 40,097
Cost $ 44,447
Market Value.............. -- --
Hartford Index HLS Fund,
Inc.
Shares 2,920,622
Cost $ 8,806,337
Market Value.............. -- --
Hartford International
Opportunities HLS Fund,
Inc.
Shares 1,085,187
Cost $ 1,406,135
Market Value.............. -- --
Due from Hartford Life and
Annuity Insurance
Company.................... 37 26,077
Receivable from fund shares
sold....................... -- --
------------- -----------
Total Assets................ 2,304,236 5,218,623
------------- -----------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance
Company.................... -- --
Payable for fund shares
purchased.................. 44 26,052
------------- -----------
Total Liabilities........... 44 26,052
------------- -----------
Net Assets (variable life
contract liabilities)...... $ 2,304,192 $ 5,192,571
------------- -----------
------------- -----------
Units Owned by Participants... 1,551,309 1,654,836
Unit Values................... $ 1.485321 $ 3.137815
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE INTERNATIONAL
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ----------------- --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc.
Shares 2,132,205
Cost $ 2,318,402
Market Value.............. -- -- -- -- -- --
Hartford Stock HLS Fund,
Inc.
Shares 791,346
Cost $ 4,632,387
Market Value.............. -- -- -- -- -- --
Hartford Money Market HLS
Fund, Inc.
Shares 12,981,615
Cost $12,981,615
Market Value.............. $ 12,981,615 -- -- -- -- --
Hartford Advisers HLS Fund,
Inc.
Shares 1,091,175
Cost $ 3,029,766
Market Value.............. -- $3,257,433 -- -- -- --
Hartford Capital
Appreciation HLS Fund, Inc.
Shares 729,577
Cost $ 3,165,354
Market Value.............. -- -- $3,472,117 -- -- --
Hartford Mortgage Securities
HLS Fund, Inc.
Shares 40,097
Cost $ 44,447
Market Value.............. -- -- -- $ 43,487 -- --
Hartford Index HLS Fund,
Inc.
Shares 2,920,622
Cost $ 8,806,337
Market Value.............. -- -- -- -- $10,427,941 --
Hartford International
Opportunities HLS Fund,
Inc.
Shares 1,085,187
Cost $ 1,406,135
Market Value.............. -- -- -- -- -- $1,470,274
Due from Hartford Life and
Annuity Insurance
Company.................... 118,848 20 17,159 -- 14,175 12,605
Receivable from fund shares
sold....................... -- -- -- -- -- --
------------ ------------- ----------------- --------------- ----------- ------------------
Total Assets................ 13,100,463 3,257,453 3,489,276 43,487 10,442,116 1,482,879
------------ ------------- ----------------- --------------- ----------- ------------------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance
Company.................... -- -- -- -- -- --
Payable for fund shares
purchased.................. 118,713 45 17,190 -- 14,242 12,641
------------ ------------- ----------------- --------------- ----------- ------------------
Total Liabilities........... 118,713 45 17,190 -- 14,242 12,641
------------ ------------- ----------------- --------------- ----------- ------------------
Net Assets (variable life
contract liabilities)...... $ 12,981,750 $3,257,408 $3,472,086 $ 43,487 $10,427,874 $1,470,238
------------ ------------- ----------------- --------------- ----------- ------------------
------------ ------------- ----------------- --------------- ----------- ------------------
Units Owned by Participants... 9,956,078 1,342,105 1,407,660 30,198 3,505,476 865,269
Unit Values................... $ 1.303902 $ 2.427089 $ 2.466566 $ 1.440067 $ 2.974738 $ 1.699168
</TABLE>

<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
FIDELITY VIP
DIVIDEND AND EQUITY-INCOME
GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Dividend and Growth
HLS Fund, Inc.
Shares 1,055,565
Cost $2,159,136
Market Value.............. $2,280,532 --
Fidelity VIP Equity-Income
Portfolio
Shares 53,993
Cost $1,298,173
Market Value.............. -- $1,372,514
Fidelity VIP Overseas
Portfolio
Shares 47,654
Cost $ 911,449
Market Value.............. -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 21,404
Cost $ 371,018
Market Value.............. -- --
Hartford Growth and Income
HLS Fund
Shares 36,103
Cost $ 38,125
Market Value.............. -- --
Hartford International
Advisers HLS Fund
Shares 69,593
Cost $ 75,997
Market Value.............. -- --
Hartford Small Company HLS
Fund, Inc.
Shares 64,192
Cost $ 72,344
Market Value.............. -- --
Hartford MidCap HLS Fund,
Inc.
Shares 61,941
Cost $ 80,971
Market Value.............. -- --
Due from Hartford Life and
Annuity Insurance
Company.................... 12,768 --
Receivable from fund shares
sold....................... -- --
------------ ------------
Total Assets................ 2,293,300 1,372,514
------------ ------------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance
Company.................... -- 18
Payable for fund shares
purchased.................. 12,795 --
------------ ------------
Total Liabilities........... 12,795 18
------------ ------------
Net Assets (variable life
contract liabilities)...... $2,280,505 $1,372,496
------------ ------------
------------ ------------
Units Owned by Participants... 980,098 700,553
Unit Values................... $ 2.326815 $ 1.959216
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP II INTERNATIONAL
OVERSEAS ASSET MANAGER GROWTH AND ADVISERS SMALL MIDCAP
PORTFOLIO PORTFOLIO INCOME FUND FUND COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ --------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Dividend and Growth
HLS Fund, Inc.
Shares 1,055,565
Cost $2,159,136
Market Value.............. -- -- -- -- -- --
Fidelity VIP Equity-Income
Portfolio
Shares 53,993
Cost $1,298,173
Market Value.............. -- -- -- -- -- --
Fidelity VIP Overseas
Portfolio
Shares 47,654
Cost $ 911,449
Market Value.............. $ 955,461 -- -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 21,404
Cost $ 371,018
Market Value.............. -- $ 388,704 -- -- -- --
Hartford Growth and Income
HLS Fund
Shares 36,103
Cost $ 38,125
Market Value.............. -- -- $ 42,817 -- -- --
Hartford International
Advisers HLS Fund
Shares 69,593
Cost $ 75,997
Market Value.............. -- -- -- $ 80,358 -- --
Hartford Small Company HLS
Fund, Inc.
Shares 64,192
Cost $ 72,344
Market Value.............. -- -- -- -- $ 84,806 --
Hartford MidCap HLS Fund,
Inc.
Shares 61,941
Cost $ 80,971
Market Value.............. -- -- -- -- -- $ 89,149
Due from Hartford Life and
Annuity Insurance
Company.................... 2,473 2 6,368 -- 1 --
Receivable from fund shares
sold....................... -- -- -- -- -- --
------------ --------------- ------------ ------------- ------------ ------------
Total Assets................ 957,934 388,706 49,185 80,358 84,807 89,149
------------ --------------- ------------ ------------- ------------ ------------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance
Company.................... -- -- -- -- -- --
Payable for fund shares
purchased.................. 2,474 -- 6,367 -- -- --
------------ --------------- ------------ ------------- ------------ ------------
Total Liabilities........... 2,474 -- 6,367 -- -- --
------------ --------------- ------------ ------------- ------------ ------------
Net Assets (variable life
contract liabilities)...... $ 955,460 $ 388,706 $ 42,818 $ 80,358 $ 84,807 $ 89,149
------------ --------------- ------------ ------------- ------------ ------------
------------ --------------- ------------ ------------- ------------ ------------
Units Owned by Participants... 624,827 221,943 37,201 79,762 78,789 80,771
Unit Values................... $ 1.529160 $ 1.751379 $ 1.150984 $ 1.007480 $ 1.076363 $ 1.103726
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... $106,052 $ 38,074
----------- -----------
CAPITAL GAINS INCOME.......... -- 18,418
----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 746 (2,645)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (16,930) 557,352
----------- -----------
Net gain (loss) on
investments.............. (16,184) 554,707
----------- -----------
Net increase (decrease) in
net assets resulting from
operations............... $ 89,868 $611,199
----------- -----------
----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... $178,529 $ 63,199
----------- -------------
CAPITAL GAINS INCOME.......... -- 11,531
----------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... -- 1,768
Net unrealized appreciation
(depreciation) of
investments during the
period..................... -- 224,740
----------- -------------
Net gain (loss) on
investments.............. -- 226,508
----------- -------------
Net increase (decrease) in
net assets resulting from
operations............... $178,529 $301,238
----------- -------------
----------- -------------

<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ --------------- ----------- ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 17,887 $2,575 $ 79,420 $ 18,410
-------- ------ ----------- --------
CAPITAL GAINS INCOME.......... 30,576 -- 12,992 17,744
-------- ------ ----------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... (3,241) (114) 14,698 77
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 308,545 147 1,617,496 73,152
-------- ------ ----------- --------
Net gain (loss) on
investments.............. 305,304 33 1,632,194 73,229
-------- ------ ----------- --------
Net increase (decrease) in
net assets resulting from
operations............... $353,767 $2,608 $ 1,724,606 $109,383
-------- ------ ----------- --------
-------- ------ ----------- --------
</TABLE>

<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
FIDELITY VIP
DIVIDEND AND EQUITY-INCOME
GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 33,160 $ 1,864
------------ -------
CAPITAL GAINS INCOME.......... 8,141 6,635
------------ -------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 63 (1,856)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 117,405 70,207
------------ -------
Net gain (loss) on
investments.............. 117,468 68,351
------------ -------
Net increase (decrease) in
net assets resulting from
operations............... $158,769 $76,850
------------ -------
------------ -------
*From inception, August 3,
1998, to December 31, 1998
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FIDELITY VIP
FIDELITY II
VIP ASSET INTERNATIONAL
OVERSEAS MANAGER GROWTH AND ADVISERS SMALL MIDCAP
PORTFOLIO PORTFOLIO INCOME FUND FUND COMPANY FUND FUND
SUB- ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 540 $ 5,839 $ 138 $-- $-- $--
----------- ------------ ------ ------ ------------ ------
CAPITAL GAINS INCOME.......... 1,592 17,517 -- -- -- --
----------- ------------ ------ ------ ------------ ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 89 (16) 21 308 (148) 19
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 44,647 15,814 4,692 4,361 12,462 8,178
----------- ------------ ------ ------ ------------ ------
Net gain (loss) on
investments.............. 44,736 15,798 4,713 4,669 12,314 8,197
----------- ------------ ------ ------ ------------ ------
Net increase (decrease) in
net assets resulting from
operations............... $46,868 $39,154 $4,851 $4,669 $12,314 $8,197
----------- ------------ ------ ------ ------------ ------
----------- ------------ ------ ------ ------------ ------
*From inception, August 3,
1998, to December 31, 1998
</TABLE>
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 106,052 $ 38,074
Capital gains income........ -- 18,418
Net realized gain (loss) on
security transactions...... 746 (2,645)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (16,930) 557,352
------------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 89,868 611,199
------------- -----------
UNIT TRANSACTIONS:
Purchases................... 219,212 486,207
Net transfers............... 1,873,633 4,031,316
Surrenders.................. (22,489) (93,425)
Loan withdrawals............ (63,707) (57)
Cost of insurance........... (39,274) (74,817)
------------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,967,375 4,349,224
------------- -----------
Total increase (decrease) in
net assets................. 2,057,243 4,960,423
NET ASSETS:
Beginning of period......... 246,949 232,148
------------- -----------
End of period............... $ 2,304,192 $ 5,192,571
------------- -----------
------------- -----------

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
OPERATIONS:
Net investment income $ 10,020 $ 1,517
Capital gains income........ -- 113
Net realized gain (loss) on
security transactions...... 281 287
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 3,212 2,743
------------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 13,513 4,660
------------- -----------
UNIT TRANSACTIONS:
Purchases................... 16,326 9,295
Net transfers............... 161,664 224,575
Surrenders.................. (4,558) (6,421)
Cost of insurance........... (4,584) (1,028)
------------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 168,848 226,421
------------- -----------
Total increase (decrease) in
net assets................. 182,361 231,081
NET ASSETS:
Beginning of period......... 64,588 1,067
------------- -----------
End of period............... $ 246,949 $ 232,148
------------- -----------
------------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 178,529 $ 63,199 $ 17,887 $ 2,575 $ 79,420
Capital gains income........ -- 11,531 30,576 -- 12,992
Net realized gain (loss) on
security transactions...... -- 1,768 (3,241) (114) 14,698
Net unrealized appreciation
(depreciation) of
investments during the
period..................... -- 224,740 308,545 147 1,617,496
------------ ------------- ----------------- --------------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 178,529 301,238 353,767 2,608 1,724,606
------------ ------------- ----------------- --------------- -----------
UNIT TRANSACTIONS:
Purchases................... 44,552,053 332,157 483,397 7,687 443,474
Net transfers............... (32,394,672) 2,418,661 2,506,371 (37,994) 8,055,206
Surrenders.................. (423,409) (40,763) (79,406) (1,565) (110,057)
Loan withdrawals............ (6,910) (23,103) -- -- --
Cost of insurance........... (362,173) (28,973) (51,821) (4,367) (60,585)
------------ ------------- ----------------- --------------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 11,364,889 2,657,979 2,858,541 (36,239) 8,328,038
------------ ------------- ----------------- --------------- -----------
Total increase (decrease) in
net assets................. 11,543,418 2,959,217 3,212,308 (33,631) 10,052,644
NET ASSETS:
Beginning of period......... 1,438,332 298,191 259,778 77,118 375,230
------------ ------------- ----------------- --------------- -----------
End of period............... $ 12,981,750 $3,257,408 $3,472,086 $ 43,487 $10,427,874
------------ ------------- ----------------- --------------- -----------
------------ ------------- ----------------- --------------- -----------

MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ----------------- --------------- -----------
OPERATIONS:
Net investment income $ 22,397 $ 4,523 $ 817 $ 2,894 $ 3,998
Capital gains income........ -- 1,075 385 -- 574
Net realized gain (loss) on
security transactions...... -- (3) 2,118 25 911
Net unrealized appreciation
(depreciation) of
investments during the
period..................... -- 3,056 (1,824) (1,118) 4,041
------------ ------------- ----------------- --------------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 22,397 8,651 1,496 1,801 9,524
------------ ------------- ----------------- --------------- -----------
UNIT TRANSACTIONS:
Purchases................... 4,374,149 16,165 16,079 1,604 28,684
Net transfers............... (2,888,312) 256,828 253,669 76,343 352,567
Surrenders.................. (61,718) (2,671) (7,630) (883) (9,226)
Cost of insurance........... (55,698) (811) (4,880) (2,772) (7,390)
------------ ------------- ----------------- --------------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,368,421 269,511 257,238 74,292 364,635
------------ ------------- ----------------- --------------- -----------
Total increase (decrease) in
net assets................. 1,390,818 278,162 258,734 76,093 374,159
NET ASSETS:
Beginning of period......... 47,514 20,029 1,044 1,025 1,071
------------ ------------- ----------------- --------------- -----------
End of period............... $ 1,438,332 $ 298,191 $ 259,778 $ 77,118 $ 375,230
------------ ------------- ----------------- --------------- -----------
------------ ------------- ----------------- --------------- -----------

<CAPTION>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
------------------
<S> <C>
OPERATIONS:
Net investment income $ 18,410
Capital gains income........ 17,744
Net realized gain (loss) on
security transactions...... 77
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 73,152
------------------
Net increase (decrease) in
net assets resulting from
operations................. 109,383
------------------
UNIT TRANSACTIONS:
Purchases................... 286,640
Net transfers............... 1,011,184
Surrenders.................. (27,008)
Loan withdrawals............ (17,916)
Cost of insurance........... (39,292)
------------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,213,608
------------------
Total increase (decrease) in
net assets................. 1,322,991
NET ASSETS:
Beginning of period......... 147,247
------------------
End of period............... $1,470,238
------------------
------------------
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
------------------
OPERATIONS:
Net investment income $ 1,213
Capital gains income........ 2,408
Net realized gain (loss) on
security transactions...... 1,535
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (9,304)
------------------
Net increase (decrease) in
net assets resulting from
operations................. (4,148)
------------------
UNIT TRANSACTIONS:
Purchases................... 16,294
Net transfers............... 125,494
Surrenders.................. (6,183)
Cost of insurance........... (4,631)
------------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 130,974
------------------
Total increase (decrease) in
net assets................. 126,826
NET ASSETS:
Beginning of period......... 20,421
------------------
End of period............... $ 147,247
------------------
------------------
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
FIDELITY VIP
DIVIDEND AND EQUITY-INCOME
GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income....... $ 33,160 $ 1,864
Capital gains income........ 8,141 6,635
Net realized gain (loss) on
security transactions...... 63 (1,856)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 117,405 70,207
------------ ------------
Net increase (decrease) in
net assets resulting from
operations................. 158,769 76,850
------------ ------------
UNIT TRANSACTIONS:
Purchases................... 250,584 213,483
Net transfers............... 1,838,934 1,066,683
Surrenders.................. (49,049) (28,144)
Loan withdrawals............ -- --
Cost of insurance........... (41,259) (15,372)
------------ ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,999,210 1,236,650
------------ ------------
Total increase (decrease) in
net assets................. 2,157,979 1,313,500
NET ASSETS:
Beginning of period......... 122,526 58,996
------------ ------------
End of period............... $2,280,505 $1,372,496
------------ ------------
------------ ------------
*From inception, August 3, 1998, to December 31, 1998

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

FIDELITY VIP
DIVIDEND AND EQUITY-INCOME
GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
OPERATIONS:
Net investment income $ 1,121 $ 18
Capital gains income........ 30 91
Net realized gain (loss) on
security transactions...... 12 782
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 3,930 4,077
------------ ------------
Net increase (decrease) in
net assets resulting from
operations................. 5,093 4,968
------------ ------------
UNIT TRANSACTIONS:
Purchases................... 11,377 2,252
Net transfers............... 109,235 54,175
Surrenders.................. (2,933) (2,747)
Cost of insurance........... (1,314) (708)
------------ ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 116,365 52,972
------------ ------------
Total increase (decrease) in
net assets................. 121,458 57,940
NET ASSETS:
Beginning of period......... 1,068 1,056
------------ ------------
End of period............... $ 122,526 $ 58,996
------------ ------------
------------ ------------
*From inception, August 3,
1998, to December 31, 1998
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FIDELITY VIP
FIDELITY VIP II INTERNATIONAL
OVERSEAS ASSET MANAGER GROWTH AND ADVISERS SMALL MIDCAP
PORTFOLIO PORTFOLIO INCOME FUND FUND COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------ ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 540 $ 5,839 $ 138 $-- $-- $--
Capital gains income........ 1,592 17,517 -- -- -- --
Net realized gain (loss) on
security transactions...... 89 (16) 21 308 (148) 19
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 44,647 15,814 4,692 4,361 12,462 8,178
------------ ------------- ------------- ------------ ------------- -------------
Net increase (decrease) in
net assets resulting from
operations................. 46,868 39,154 4,851 4,669 12,314 8,197
------------ ------------- ------------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases................... 152,670 54,314 1,000 1,000 10,618 1,000
Net transfers............... 770,437 134,602 37,221 75,134 62,509 80,559
Surrenders.................. (16,660) (10,808) (181) (356) (439) (361)
Loan withdrawals............ -- -- -- -- -- --
Cost of insurance........... (19,327) (5,833) (73) (89) (195) (246)
------------ ------------- ------------- ------------ ------------- -------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 887,120 172,275 37,967 75,689 72,493 80,952
------------ ------------- ------------- ------------ ------------- -------------
Total increase (decrease) in
net assets................. 933,988 211,429 42,818 80,358 84,807 89,149
NET ASSETS:
Beginning of period......... 21,472 177,277 -- -- -- --
------------ ------------- ------------- ------------ ------------- -------------
End of period............... $955,460 $388,706 $42,818 $80,358 $84,807 $89,149
------------ ------------- ------------- ------------ ------------- -------------
------------ ------------- ------------- ------------ ------------- -------------
*From inception, August 3, 1998, to December 31, 1998

FIDELITY VIP
FIDELITY VIP II
OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ -------------
OPERATIONS:
Net investment income $ 38 $ 37
Capital gains income........ 150 92
Net realized gain (loss) on
security transactions...... (6) --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (679) 1,822
------------ -------------
Net increase (decrease) in
net assets resulting from
operations................. (497) 1,951
------------ -------------
UNIT TRANSACTIONS:
Purchases................... 1,594 10,283
Net transfers............... 22,728 165,107
Surrenders.................. (1,120) (735)
Cost of insurance........... (2,277) (379)
------------ -------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 20,925 174,276
------------ -------------
Total increase (decrease) in
net assets................. 20,428 176,227
NET ASSETS:
Beginning of period......... 1,044 1,050
------------ -------------
End of period............... $ 21,472 $177,277
------------ -------------
------------ -------------
*From inception, August 3,
1998, to December 31, 1998
</TABLE>
<PAGE>
SA-14 Hartford Life and Annuity Insurance Company
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. ORGANIZATION:

Separate Account Variable Life Two (the Account) is a separate investment
account with Hartford Life and Annuity Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty two sub-accounts. These financial statements include
twelve sub-accounts which invest solely in the Hartford and Fidelity Mutual
Funds (the Funds). The other ten sub-accounts, which invest in the Putnam VT
Funds, are presented in separate financial statements. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the Company in the Funds as directed by the
contractholders.

2. SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:

a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under tax
regulations.

b) SECURITY VALUATION -- The investment in shares of the funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1998.

c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.

d) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.

3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:

In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contract owners' accounts.
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
SA-16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
GLOBAL ASSET
ASIA PACIFIC DIVERSIFIED ALLOCATION GLOBAL
GROWTH FUND INCOME FUND FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 1,029
Cost $ 8,238
Market Value.............. $8,569 -- -- --
Putnam VT Diversified Income
Fund
Shares 21,396
Cost $ 230,976
Market Value.............. -- $224,439 -- --
Putnam VT Global Asset
Allocation Fund
Shares 17,534
Cost $ 315,568
Market Value................ -- -- $332,260 --
Putnam VT Global Growth Fund
Shares 95,116
Cost $1,708,011
Market Value.............. -- -- -- $1,928,949
Putnam VT Growth and Income
Fund
Shares 97,389
Cost $2,636,312
Market Value.............. -- -- -- --
Putnam VT High Yield Fund
Shares 64,253
Cost $ 803,539
Market Value.............. -- -- -- --
Putnam VT International
Growth and Income Fund
Shares 1,786
Cost $ 21,063
Market Value.............. -- -- -- --
Putnam VT International
Growth Fund
Shares 1,526
Cost $ 18,730
Market Value.............. -- -- -- --
Putnam VT International New
Opportunities Fund
Shares 319
Cost $ 3,423
Market Value.............. -- -- -- --
Putnam VT Money Market Fund
Shares 141,680
Cost $ 141,680
Market Value.............. -- -- -- --
Due From Hartford Life &
Annuity Insurance
Company.................... -- -- 13 4,736
Receivable from fund shares
sold....................... -- -- -- --
------ ----------- ------------ ------------
Total Assets................ 8,569 224,439 332,273 1,933,685
------ ----------- ------------ ------------
LIABILITIES
Due to Hartford Life &
Annuity Insurance
Company.................... -- -- -- --
Payable for fund shares
purchased.................. -- -- -- 4,853
------ ----------- ------------ ------------
Total Liabilities........... -- -- -- 4,853
------ ----------- ------------ ------------
Net Assets (variable life
contract liabilities)...... $8,569 $224,439 $332,273 $1,928,832
------ ----------- ------------ ------------
------ ----------- ------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-17
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GROWTH INTERNATIONAL INTERNATIONAL
AND INCOME HIGH YIELD GROWTH AND INTERNATIONAL NEW OPPORTUNITIES MONEY MARKET
FUND FUND INCOME FUND GROWTH FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 1,029
Cost $ 8,238
Market Value.............. -- -- -- -- -- --
Putnam VT Diversified Income
Fund
Shares 21,396
Cost $ 230,976
Market Value.............. -- -- -- -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 17,534
Cost $ 315,568
Market Value................ -- -- -- -- --
Putnam VT Global Growth Fund
Shares 95,116
Cost $1,708,011
Market Value.............. -- -- -- -- --
Putnam VT Growth and Income
Fund
Shares 97,389
Cost $2,636,312
Market Value.............. $2,801,893 -- -- -- -- --
Putnam VT High Yield Fund
Shares 64,253
Cost $ 803,539
Market Value.............. -- $751,761 -- -- -- --
Putnam VT International
Growth and Income Fund
Shares 1,786
Cost $ 21,063
Market Value.............. -- -- $ 21,859 -- -- --
Putnam VT International
Growth Fund
Shares 1,526
Cost $ 18,730
Market Value.............. -- -- -- $ 20,639 -- --
Putnam VT International New
Opportunities Fund
Shares 319
Cost $ 3,423
Market Value.............. -- -- -- -- $3,662 --
Putnam VT Money Market Fund
Shares 141,680
Cost $ 141,680
Market Value.............. -- -- -- -- -- $141,680
Due From Hartford Life &
Annuity Insurance
Company.................... 2,545 4 -- -- -- --
Receivable from fund shares
sold....................... -- -- -- -- -- 1
----------- ------------ ------------- ------------- ------ -------------
Total Assets................ 2,804,438 751,765 21,859 20,639 3,662 141,681
----------- ------------ ------------- ------------- ------ -------------
LIABILITIES
Due to Hartford Life &
Annuity Insurance
Company.................... -- -- -- 1 -- 1
Payable for fund shares
purchased.................. 2,584 -- -- -- -- --
----------- ------------ ------------- ------------- ------ -------------
Total Liabilities........... 2,584 -- -- 1 -- 1
----------- ------------ ------------- ------------- ------ -------------
Net Assets (variable life
contract liabilities)...... $2,801,854 $751,765 $ 21,859 $ 20,638 $3,662 $141,680
----------- ------------ ------------- ------------- ------ -------------
----------- ------------ ------------- ------------- ------ -------------
</TABLE>

<PAGE>
SA-18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES -- CONTINUED
DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
THE
NEW OPPORTUNITIES NEW VALUE GEORGE PUTNAM HEALTH
FUND FUND FUND OF BOSTON SCIENCES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT New Opportunities
Fund
Shares 46,981
Cost $1,029,532
Market Value.............. $1,224,320 -- -- --
Putnam VT New Value Fund
Shares 793
Cost $ 8,608
Market Value.............. -- $9,542 -- --
Putnam VT George Putnam Fund
of Boston
Shares 9,650
Cost $ 97,179
Market Value.............. -- -- $99,197 --
Putnam VT Health Sciences
Fund
Shares 4,102
Cost $ 39,919
Market Value.............. -- -- -- $44,876
Putnam VT Investors Fund
Shares 8,158
Cost $ 85,802
Market Value.............. -- -- -- --
Putnam VT OTC & Emerging
Growth Fund
Shares 2,721
Cost $ 19,976
Market Value.............. -- -- -- --
Putnam VT U.S. Government
and High Quality Bond Fund
Shares 59,215
Cost $ 797,359
Market Value.............. -- -- -- --
Putnam VT Utilities Growth
and Income Fund
Shares 24,324
Cost $ 407,151
Market Value.............. -- -- -- --
Putnam VT Vista Fund
Shares 506
Cost $ 6,431
Market Value.............. -- -- -- --
Putnam VT Voyager Fund
Shares 59,192
Cost $2,354,731
Market Value.............. -- -- -- --
Due From Hartford Life &
Annuity Insurance
Company.................... 12,557 -- -- --
Receivable from fund shares
sold....................... -- -- -- --
----------------- ----------- ------- -------------
Total Assets................ 1,236,877 9,542 99,197 44,876
----------------- ----------- ------- -------------
LIABILITIES
Due to Hartford Life &
Annuity Insurance
Company.................... -- -- -- --
Payable for fund shares
purchased.................. 12,606 -- -- --
----------------- ----------- ------- -------------
Total Liabilities........... 12,606 -- -- --
----------------- ----------- ------- -------------
Net Assets (variable life
contract liabilities)...... $1,224,271 $9,542 $99,197 $44,876
----------------- ----------- ------- -------------
----------------- ----------- ------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-19
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
U.S. GOVERNMENT
INVESTORS OTC & EMERGING & HIGH QUALITY UTILITIES GROWTH VISTA VOYAGER
FUND GROWTH FUND BOND FUND AND INCOME FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- --------------- ---------------- ----------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT New Opportunities
Fund
Shares 46,981
Cost $1,029,532
Market Value.............. -- -- -- -- -- --
Putnam VT New Value Fund
Shares 793
Cost $ 8,608
Market Value.............. -- -- -- -- -- --
Putnam VT George Putnam Fund
of Boston
Shares 9,650
Cost $ 97,179
Market Value.............. -- -- -- -- -- --
Putnam VT Health Sciences
Fund
Shares 4,102
Cost $ 39,919
Market Value.............. -- -- -- -- -- --
Putnam VT Investors Fund
Shares 8,158
Cost $ 85,802
Market Value.............. $ 95,043 -- -- -- -- --
Putnam VT OTC & Emerging
Growth Fund
Shares 2,721
Cost $ 19,976
Market Value.............. -- $ 27,453 -- -- -- --
Putnam VT U.S. Government
and High Quality Bond Fund
Shares 59,215
Cost $ 797,359
Market Value.............. -- -- $820,125 -- -- --
Putnam VT Utilities Growth
and Income Fund
Shares 24,324
Cost $ 407,151
Market Value.............. -- -- -- $442,450 -- --
Putnam VT Vista Fund
Shares 506
Cost $ 6,431
Market Value.............. -- -- -- -- $7,451 --
Putnam VT Voyager Fund
Shares 59,192
Cost $2,354,731
Market Value.............. -- -- -- -- -- $2,713,936
Due From Hartford Life &
Annuity Insurance
Company.................... 9 -- -- 2 -- 19,965
Receivable from fund shares
sold....................... -- -- -- -- -- --
----------- ------- -------- -------- ------ -----------
Total Assets................ 95,052 27,453 820,125 442,452 7,451 2,733,901
----------- ------- -------- -------- ------ -----------
LIABILITIES
Due to Hartford Life &
Annuity Insurance
Company.................... -- -- 1 -- -- --
Payable for fund shares
purchased.................. -- -- -- -- -- 19,835
----------- ------- -------- -------- ------ -----------
Total Liabilities........... -- -- 1 -- -- 19,835
----------- ------- -------- -------- ------ -----------
Net Assets (variable life
contract liabilities)...... $ 95,052 $ 27,453 $820,124 $442,452 $7,451 $2,714,066
----------- ------- -------- -------- ------ -----------
----------- ------- -------- -------- ------ -----------
</TABLE>
<PAGE>
SA-20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
ASIA PACIFIC DIVERSIFIED
GROWTH INCOME
FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT
------------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... -$- $ 3,629
----- ----------
CAPITAL GAINS INCOME.......... -- 1,541
----- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 1 21
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 331 (6,773)
----- ----------
Net gain (loss) on
investments.............. 332 (6,752)
----- ----------
Net increase (decrease) in
net assets resulting from
operations............... $ 332 $(1,582)
----- ----------
----- ----------
</TABLE>

* From inception, August 3, 1998, to December 31, 1998

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-21
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET GLOBAL GROWTH INTERNATIONAL INTERNATIONAL
ALLOCATION GROWTH AND INCOME HIGH YIELD GROWTH AND GROWTH
FUND FUND FUND FUND INCOME FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
------------ ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 2,857 $ 10,284 $ 6,912 $ 10,447 $ 206 $ 66
------------ ----------- ----------- ----------- ------ ------
CAPITAL GAINS INCOME.......... 12,271 51,418 45,119 1,639 496 --
------------ ----------- ----------- ----------- ------ ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 16 2,284 (64) 5,348 8 11
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 15,297 222,508 157,616 (52,560) 796 1,909
------------ ----------- ----------- ----------- ------ ------
Net gain (loss) on
investments.............. 15,313 224,792 157,552 (47,212) 804 1,920
------------ ----------- ----------- ----------- ------ ------
Net increase (decrease) in
net assets resulting from
operations............... $ 30,441 $286,494 $209,583 $(35,126) $1,506 $1,986
------------ ----------- ----------- ----------- ------ ------
------------ ----------- ----------- ----------- ------ ------

<CAPTION>
INTERNATIONAL
NEW OPPORTUNITIES MONEY MARKET
FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT
----------------- ------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... --$ $1,123
----- ------
CAPITAL GAINS INCOME.......... -- --
----- ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 5 --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 239 --
----- ------
Net gain (loss) on
investments.............. 244 --
----- ------
Net increase (decrease) in
net assets resulting from
operations............... $244 $1,123
----- ------
----- ------
</TABLE>

<PAGE>
SA-22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
NEW
OPPORTUNITIES NEW VALUE
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT*
------------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... $ -- $ 98
------------- ----------
CAPITAL GAINS INCOME.......... 4,296 19
------------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... (21,117) 15
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 190,762 934
------------- ----------
Net gain (loss) on
investments.............. 169,645 949
------------- ----------
Net increase (decrease) in
net assets resulting from
operations............... $173,941 $1,066
------------- ----------
------------- ----------
</TABLE>

* From inception, August 3, 1998, to December 31, 1998

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-23
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE GEORGE HEALTH OTC & U.S. GOVERNMENT UTILITIES GROWTH
PUTNAM FUND SCIENCES INVESTORS EMERGING & HIGH QUALITY AND INCOME
OF BOSTON FUND FUND GROWTH FUND BOND FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------ ------------- --------- ------------ ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 778 $ 38 $ 112 $ 10 $10,911 $ 1,849
------ ------ --------- ------ ------- -------
CAPITAL GAINS INCOME.......... -- -- -- -- 284 3,187
------ ------ --------- ------ ------- -------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 2 (1) 14 21 (1,150) 58
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 2,018 4,957 9,241 7,477 19,160 31,421
------ ------ --------- ------ ------- -------
Net gain (loss) on
investments.............. 2,020 4,956 9,255 7,498 18,010 31,479
------ ------ --------- ------ ------- -------
Net increase (decrease) in
net assets resulting from
operations............... $2,798 $4,994 $9,367 $7,508 $29,205 $36,515
------ ------ --------- ------ ------- -------
------ ------ --------- ------ ------- -------

VISTA VOYAGER
FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................... $-- $ 896
----------- -----------
CAPITAL GAINS INCOME.......... -- 21,866
----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 11 (5,975)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 1,020 350,909
----------- -----------
Net gain (loss) on
investments.............. 1,031 344,934
----------- -----------
Net increase (decrease) in
net assets resulting from
operations............... $1,031 $367,696
----------- -----------
----------- -----------
</TABLE>
<PAGE>
SA-24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
ASIA PACIFIC DIVERSIFIED
GROWTH INCOME
FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT
------------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income....... $ -- $ 3,629
Capital gains income........ -- 1,541
Net realized gain (loss) on
security transactions...... 1 21
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 331 (6,773)
------------- ----------
Net increase (decrease) in
net assets resulting from
operations................. 332 (1,582)
------------- ----------
UNIT TRANSACTIONS:
Purchases................... 1,000 18,359
Net transfers............... 7,366 130,020
Surrenders.................. (106) (3,807)
Loan Withdrawals............ -- --
Cost of insurance........... (23) (3,546)
------------- ----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 8,237 141,026
------------- ----------
Total increase (decrease) in
net assets................. 8,569 139,444
NET ASSETS:
Beginning of period......... -- 84,995
------------- ----------
End of period............... $ 8,569 $224,439
------------- ----------
------------- ----------
* From inception, August 3,
1998, to December 31, 1998

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

GLOBAL
DIVERSIFIED ASSET
INCOME ALLOCATION
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ----------
OPERATIONS:
Net investment income....... $ 57 $ 88
Capital gains income........ 9 150
Net realized gain (loss) on
security transactions...... 3 109
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 207 1,348
------------- ----------
Net increase (decrease) in
net assets resulting from
operations................. 276 1,695
------------- ----------
UNIT TRANSACTIONS:
Purchases................... 4,114 3,230
Net transfers............... 80,535 35,538
Surrenders.................. (505) (1,812)
Cost of insurance........... (455) (890)
------------- ----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 83,689 36,066
------------- ----------
Total increase (decrease) in
net assets................. 83,965 37,761
NET ASSETS:
Beginning of period......... 1,030 1,047
------------- ----------
End of period............... $ 84,995 $ 38,808
------------- ----------
------------- ----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
ASSET GLOBAL GROWTH INTERNATIONAL
ALLOCATION GROWTH AND INCOME HIGH YIELD GROWTH AND
FUND FUND FUND FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 2,857 $ 10,284 $ 6,912 $ 10,447 $ 206
Capital gains income........ 12,271 51,418 45,119 1,639 496
Net realized gain (loss) on
security transactions...... 16 2,284 (64) 5,348 8
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 15,297 222,508 157,616 (52,560) 796
----------- ------------ ------------ ----------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 30,441 286,494 209,583 (35,126) 1,506
----------- ------------ ------------ ----------- ------------
UNIT TRANSACTIONS:
Purchases................... 15,068 322,831 341,341 295,001 5,809
Net transfers............... 264,595 1,095,109 2,215,815 484,563 14,788
Surrenders.................. (10,473 ) (47,555) (56,927) (33,428) (143)
Loan Withdrawals............ -- -- (28,073) -- --
Cost of insurance........... (6,166 ) (30,391) (35,272) (6,247) (101)
----------- ------------ ------------ ----------- ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 263,024 1,339,994 2,436,884 739,889 20,353
----------- ------------ ------------ ----------- ------------
Total increase (decrease) in
net assets................. 293,465 1,626,488 2,646,467 704,763 21,859
NET ASSETS:
Beginning of period......... 38,808 302,344 155,387 47,002 --
----------- ------------ ------------ ----------- ------------
End of period............... $332,273 $ 1,928,832 $ 2,801,854 $751,765 $21,859
----------- ------------ ------------ ----------- ------------
----------- ------------ ------------ ----------- ------------
* From inception, August 3,
1998, to December 31, 1998

GLOBAL GROWTH MONEY
GROWTH AND INCOME HIGH YIELD MARKET
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -----------
OPERATIONS:
Net investment income....... $ 420 $ 622 $ 154 $ 424
Capital gains income........ 452 1,514 18 --
Net realized gain (loss) on
security transactions...... 1,118 314 5 --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (1,615 ) 7,951 757 --
----------- ------------ ------------ -----------
Net increase (decrease) in
net assets resulting from
operations................. 375 10,401 934 424
----------- ------------ ------------ -----------
UNIT TRANSACTIONS:
Purchases................... 13,967 7,475 1,594 --
Net transfers............... 302,978 119,617 44,780 10,765
Surrenders.................. (10,646 ) (6,077) (1,070) (2,441)
Cost of insurance........... (5,376 ) (2,516) (261) (1,430)
----------- ------------ ------------ -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 300,923 118,499 45,043 6,894
----------- ------------ ------------ -----------
Total increase (decrease) in
net assets................. 301,298 128,900 45,977 7,318
NET ASSETS:
Beginning of period......... 1,046 26,487 1,025 1,012
----------- ------------ ------------ -----------
End of period............... $302,344 $ 155,387 $ 47,002 $ 8,330
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------

<CAPTION>
INTERNATIONAL
INTERNATIONAL NEW
GROWTH OPPORTUNITIES MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT
------------- --------------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 66 $-- $ 1,123
Capital gains income........ -- -- --
Net realized gain (loss) on
security transactions...... 11 5 --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 1,909 239 --
------------- ------ ------------
Net increase (decrease) in
net assets resulting from
operations................. 1,986 244 1,123
------------- ------ ------------
UNIT TRANSACTIONS:
Purchases................... 1,018 1,000 49,306
Net transfers............... 18,763 2,548 88,070
Surrenders.................. (618) (104) (3,369)
Loan Withdrawals............ -- (26) --
Cost of insurance........... (511) -- (1,780)
------------- ------ ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 18,652 3,418 132,227
------------- ------ ------------
Total increase (decrease) in
net assets................. 20,638 3,662 133,350
NET ASSETS:
Beginning of period......... -- -- 8,330
------------- ------ ------------
End of period............... $20,638 $ 3,662 $141,680
------------- ------ ------------
------------- ------ ------------
* From inception, August 3,
1998, to December 31, 1998
OPERATIONS:
Net investment income.......
Capital gains income........
Net realized gain (loss) on
security transactions......
Net unrealized appreciation
(depreciation) of
investments during the
period.....................
Net increase (decrease) in
net assets resulting from
operations.................
UNIT TRANSACTIONS:
Purchases...................
Net transfers...............
Surrenders..................
Cost of insurance...........
Net increase (decrease) in
net assets resulting from
unit transactions..........
Total increase (decrease) in
net assets.................
NET ASSETS:
Beginning of period.........
End of period...............
</TABLE>

<PAGE>
SA-26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
NEW
OPPORTUNITIES NEW VALUE
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT*
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income....... $ -- $ 98
Capital gains income........ 4,296 19
Net realized gain (loss) on
security transactions...... (21,117) 15
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 190,762 934
-------------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 173,941 1,066
-------------- ------------
UNIT TRANSACTIONS:
Purchases................... 258,118 1,525
Net transfers............... 690,830 7,543
Surrenders.................. (36,267) (191)
Loan Withdrawals............ -- --
Cost of insurance........... (34,620) (401)
-------------- ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 878,061 8,476
-------------- ------------
Total increase (decrease) in
net assets................. 1,052,002 9,542
NET ASSETS:
Beginning of period......... 172,269 --
-------------- ------------
End of period............... $1,224,271 $ 9,542
-------------- ------------
-------------- ------------
*From inception, August 3,
1998, to December 31, 1998

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

U.S.
GOVERNMENT
NEW AND HIGH
OPPORTUNITIES QUALITY
FUND BOND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------
OPERATIONS:
Net investment income....... $ -- $ 756
Capital gains income........ -- --
Net realized gain (loss) on
security transactions...... (1,905) 387
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 4,088 3,578
-------------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 2,183 4,721
-------------- ------------
UNIT TRANSACTIONS:
Purchases................... 13,204 10,535
Net transfers............... 164,787 214,693
Surrenders.................. (4,674) (4,108)
Cost of insurance........... (4,168) (3,779)
-------------- ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 169,149 217,341
-------------- ------------
Total increase (decrease) in
net assets................. 171,332 222,062
NET ASSETS:
Beginning of period......... 937 1,029
-------------- ------------
End of period............... $ 172,269 $223,091
-------------- ------------
-------------- ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-27
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE GEORGE OTC & U.S. GOVERNMENT
PUTNAM FUND HEALTH SCIENCES INVESTORS EMERGING & HIGH QUALITY
OF BOSTON FUND FUND GROWTH FUND BOND FUND
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
-------------- --------------- ---------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 778 $ 38 $ 112 $ 10 $ 10,911
Capital gains income........ -- -- -- -- 284
Net realized gain (loss) on
security transactions...... 2 (1) 14 21 (1,150)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 2,018 4,957 9,241 7,477 19,160
-------------- --------------- ---------- ------------- --------
Net increase (decrease) in
net assets resulting from
operations................. 2,798 4,994 9,367 7,508 29,205
-------------- --------------- ---------- ------------- --------
UNIT TRANSACTIONS:
Purchases................... 1,018 1,000 7,115 3,676 11,794
Net transfers............... 95,712 39,704 78,489 17,238 574,461
Surrenders.................. 42 (308) 427 (314) (10,223)
Loan Withdrawals............ -- -- -- -- --
Cost of insurance........... (373) (514) (356) (655) (8,204)
-------------- --------------- ---------- ------------- --------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 96,399 39,882 85,675 19,945 567,828
-------------- --------------- ---------- ------------- --------
Total increase (decrease) in
net assets................. 99,197 44,876 95,042 27,453 597,033
NET ASSETS:
Beginning of period......... -- -- -- -- 223,091
-------------- --------------- ---------- ------------- --------
End of period............... $ 99,197 $ 44,876 $95,042 $27,453 $820,124
-------------- --------------- ---------- ------------- --------
-------------- --------------- ---------- ------------- --------
*From inception, August 3,
1998, to December 31, 1998

UTILITIES
GROWTH
AND INCOME VOYAGER
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- ---------------
OPERATIONS:
Net investment income....... $ 40 $ 16
Capital gains income........ 54 355
Net realized gain (loss) on
security transactions...... 25 3,074
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 3,805 8,319
-------------- ---------------
Net increase (decrease) in
net assets resulting from
operations................. 3,924 11,764
-------------- ---------------
UNIT TRANSACTIONS:
Purchases................... 1,604 10,861
Net transfers............... 20,012 92,223
Surrenders.................. (711) (4,146)
Cost of insurance........... (71) (2,805)
-------------- ---------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 20,834 96,133
-------------- ---------------
Total increase (decrease) in
net assets................. 24,758 107,897
NET ASSETS:
Beginning of period......... 1,073 977
-------------- ---------------
End of period............... $ 25,831 $108,874
-------------- ---------------
-------------- ---------------

<CAPTION>
UTILITIES GROWTH
AND INCOME VISTA VOYAGER
FUND FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT
------------------ ----------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 1,849 $-- $ 896
Capital gains income........ 3,187 -- 21,866
Net realized gain (loss) on
security transactions...... 58 11 (5,975)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 31,421 1,020 350,909
-------- ----------- -------------
Net increase (decrease) in
net assets resulting from
operations................. 36,515 1,031 367,696
-------- ----------- -------------
UNIT TRANSACTIONS:
Purchases................... 12,990 1,000 364,335
Net transfers............... 379,093 5,651 1,952,698
Surrenders.................. (5,423) (223) (51,533)
Loan Withdrawals............ -- -- --
Cost of insurance........... (6,554) (8) (28,004)
-------- ----------- -------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 380,106 6,420 2,237,496
-------- ----------- -------------
Total increase (decrease) in
net assets................. 416,621 7,451 2,605,192
NET ASSETS:
Beginning of period......... 25,831 -- 108,874
-------- ----------- -------------
End of period............... $442,452 $7,451 $ 2,714,066
-------- ----------- -------------
-------- ----------- -------------
*From inception, August 3,
1998, to December 31, 1998
OPERATIONS:
Net investment income.......
Capital gains income........
Net realized gain (loss) on
security transactions......
Net unrealized appreciation
(depreciation) of
investments during the
period.....................
Net increase (decrease) in
net assets resulting from
operations.................
UNIT TRANSACTIONS:
Purchases...................
Net transfers...............
Surrenders..................
Cost of insurance...........
Net increase (decrease) in
net assets resulting from
unit transactions..........
Total increase (decrease) in
net assets.................
NET ASSETS:
Beginning of period.........
End of period...............
</TABLE>

<PAGE>
SA-28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. ORGANIZATION:

Separate Account Variable Life Two (the Account) is a separate investment
account within Hartford Life and Annuity Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of thirty two subaccounts. These financial statements include
twenty sub-accounts which invest solely in the Putnam Capital Manager Trust
funds (the Funds). The other twelve sub-accounts, which invest in the Hartford
and Fidelity Mutual Funds, are presented in separate financial statements. Both
the Company and the Account are subject to supervision and regulation by the
Department of Insurance of the State of Connecticut and the SEC. The Account
invests deposits by variable life contractholders of the Company in the various
mutual funds as directed by the contractholders.

2. SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:

b) SECURITY VALUATION -- The investments in shares of the Funds are valued
at the closing net asset value per share as determined by the appropriate Fund
as of December 31, 1998

3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:

In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contract owners' accounts.
<PAGE>
Hartford Life and Annuity Insurance Company SA-29
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ITT Hartford Life and Annuity Insurance Company
Separate Account Variable Life Two and to the
Owners of Units of Interest Therein:

We have audited the accompanying statement of assets and liabilities of the Bond
Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International Opportunities
Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity
Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and
Fidelity VIP II Asset Manager Portfolio Sub-Account (constituting ITT Hartford
Life and Annuity Insurance Company Separate Account Variable Life Two) (the
Accounts) as of December 31, 1997, the related statements of operations for the
year then ended and statements of changes in net assets for the year ended
December 31, 1997 and the period from inception, October 3, 1996, to December
31, 1996. These financial statements are the responsibility of the Accounts'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund
Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund
Sub-Account, Index Fund Sub-Account, International Opportunities Fund
Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager Portfolio Sub-Account (constituting ITT Hartford Life and
Annuity Insurance Company Separate Account Variable Life Two) as of December 31,
1997, the results of its operations for the year then ended, and the changes in
its net assets for the year ended December 31, 1997 the period from inception,
October 3, 1996, to December 31, 1996, in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 16, 1998
<PAGE>
SA-30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 235,252
Cost $ 244,230
Market Value.............. $ 246,957 -- -- --
Hartford Stock Fund, Inc.
Shares 45,309
Cost $ 229,324
Market Value.............. -- $ 232,131 -- --
HVA Money Market Fund, Inc.
Shares 1,438,143
Cost $1,438,143
Market Value.............. -- -- $ 1,438,143 --
Hartford Advisers Fund, Inc.
Shares 118,014
Cost $ 295,264
Market Value.............. -- -- -- $ 298,191
Hartford Capital
Appreciation Fund, Inc.
Shares 58,913
Cost $ 261,570
Market Value.............. -- -- -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 71,157
Cost $ 78,225
Market Value.............. -- -- -- --
Hartford Index Fund, Inc.
Shares 130,521
Cost $ 371,495
Market Value.............. -- -- -- --
Hartford International
Opportunities Fund, Inc.
Shares 113,752
Cost $ 156,261
Market Value.............. -- -- -- --
Hartford Dividend and Growth
Fund, Inc.
Shares 62,762
Cost $ 118,541
Market Value.............. -- -- -- --
Fidelity VIP Equity Income
Fund
Shares 2,430
Cost $ 54,864
Market Value.............. -- -- -- --
Fidelity VIP Overseas Fund
Shares 1,118
Cost $ 22,108
Market Value.............. -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 9,843
Cost $ 175,403
Market Value.............. -- -- -- --
Due from ITT Hartford Life
and Annuity Insurance
Company.................... 11,107 17 54,523 --
Receivable from shares
sold....................... -- -- -- --
----------- ------------ ------------ -------------
Total Assets................ 258,064 232,148 1,492,666 298,191
----------- ------------ ------------ -------------
LIABILITIES:
Due to ITT Hartford Life and
Annuity Insurance
Company.................... -- -- -- --
Payable for fund shares
purchased.................. 11,115 -- 54,334 --
----------- ------------ ------------ -------------
Total Liabilities........... 11,115 -- 54,334 --
----------- ------------ ------------ -------------
Net Assets (variable life
contract liabilities)...... $ 246,949 $ 232,148 $ 1,438,332 $ 298,191
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------

Units Owned by
Participants............... 179,809 98,743 1,161,238 153,147
Unit Values................. $ 1.373400 $ 2.351023 $ 1.238620 $ 1.947093
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 235,252
Cost $ 244,230
Market Value.............. -- -- -- -- --
Hartford Stock Fund, Inc.
Shares 45,309
Cost $ 229,324
Market Value.............. -- -- -- -- --
HVA Money Market Fund, Inc.
Shares 1,438,143
Cost $1,438,143
Market Value.............. -- -- -- -- --
Hartford Advisers Fund, Inc.
Shares 118,014
Cost $ 295,264
Market Value.............. -- -- -- -- --
Hartford Capital
Appreciation Fund, Inc.
Shares 58,913
Cost $ 261,570
Market Value.............. $ 259,788 -- -- -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 71,157
Cost $ 78,225
Market Value.............. -- $ 77,118 -- -- --
Hartford Index Fund, Inc.
Shares 130,521
Cost $ 371,495
Market Value.............. -- -- $ 375,602 -- --
Hartford International
Opportunities Fund, Inc.
Shares 113,752
Cost $ 156,261
Market Value.............. -- -- -- $ 147,248 --
Hartford Dividend and Growth
Fund, Inc.
Shares 62,762
Cost $ 118,541
Market Value.............. -- -- -- -- $ 122,532
Fidelity VIP Equity Income
Fund
Shares 2,430
Cost $ 54,864
Market Value.............. -- -- -- -- --
Fidelity VIP Overseas Fund
Shares 1,118
Cost $ 22,108
Market Value.............. -- -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 9,843
Cost $ 175,403
Market Value.............. -- -- -- -- --
Due from ITT Hartford Life
and Annuity Insurance
Company.................... 11,210 -- -- 5,595 11,186
Receivable from shares
sold....................... -- -- 115,954 -- --
----------------- --------------- ----------- ---------- ------------
Total Assets................ 270,998 77,118 491,556 152,843 133,718
----------------- --------------- ----------- ---------- ------------
LIABILITIES:
Due to ITT Hartford Life and
Annuity Insurance
Company.................... -- -- 116,326 -- --
Payable for fund shares
purchased.................. 11,220 -- -- 5,596 11,192
----------------- --------------- ----------- ---------- ------------
Total Liabilities........... 11,220 -- 116,326 5,596 11,192
----------------- --------------- ----------- ---------- ------------
Net Assets (variable life
contract liabilities)...... $ 259,778 $ 77,118 $ 375,230 $ 147,247 $ 122,526
----------------- --------------- ----------- ---------- ------------
----------------- --------------- ----------- ---------- ------------

Units Owned by
Participants............... 121,620 57,150 161,530 98,062 61,304
Unit Values................. $ 2.135978 $ 1.349414 $ 2.322979 $ 1.501562 $ 1.998682

<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 235,252
Cost $ 244,230
Market Value.............. -- -- --
Hartford Stock Fund, Inc.
Shares 45,309
Cost $ 229,324
Market Value.............. -- -- --
HVA Money Market Fund, Inc.
Shares 1,438,143
Cost $1,438,143
Market Value.............. -- -- --
Hartford Advisers Fund, Inc.
Shares 118,014
Cost $ 295,264
Market Value.............. -- -- --
Hartford Capital
Appreciation Fund, Inc.
Shares 58,913
Cost $ 261,570
Market Value.............. -- -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 71,157
Cost $ 78,225
Market Value.............. -- -- --
Hartford Index Fund, Inc.
Shares 130,521
Cost $ 371,495
Market Value.............. -- -- --
Hartford International
Opportunities Fund, Inc.
Shares 113,752
Cost $ 156,261
Market Value.............. -- -- --
Hartford Dividend and Growth
Fund, Inc.
Shares 62,762
Cost $ 118,541
Market Value.............. -- -- --
Fidelity VIP Equity Income
Fund
Shares 2,430
Cost $ 54,864
Market Value.............. $ 58,998 -- --
Fidelity VIP Overseas Fund
Shares 1,118
Cost $ 22,108
Market Value.............. -- $ 21,473 --
Fidelity VIP II Asset
Manager Fund
Shares 9,843
Cost $ 175,403
Market Value.............. -- -- $ 177,276
Due from ITT Hartford Life
and Annuity Insurance
Company.................... -- -- 1
Receivable from shares
sold....................... -- -- --
---------- ------------- ----------
Total Assets................ 58,998 21,473 177,277
---------- ------------- ----------
LIABILITIES:
Due to ITT Hartford Life and
Annuity Insurance
Company.................... 2 1 --
Payable for fund shares
purchased.................. -- -- --
---------- ------------- ----------
Total Liabilities........... 2 1 --
---------- ------------- ----------
Net Assets (variable life
contract liabilities)...... $ 58,996 $ 21,472 $ 177,277
---------- ------------- ----------
---------- ------------- ----------
Units Owned by
Participants............... 33,612 15,833 116,456
Unit Values................. $ 1.755189 $1.356104 $1.522265
</TABLE>

<PAGE>
SA-32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $10,020 $1,517 $22,397 $4,523
----------- ----------- ----------- ------
Net investment income..... 10,020 1,517 22,397 4,523
----------- ----------- ----------- ------
CAPITAL GAINS INCOME.......... -- 113 -- 1,075
----------- ----------- ----------- ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 281 287 -- (3)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 3,212 2,743 -- 3,056
Net gain (loss) on
investments.............. 3,493 3,030 -- 3,053
----------- ----------- ----------- ------
Net increase (decrease) in
net assets resulting from
operations............... $13,513 $4,660 $22,397 $8,651
----------- ----------- ----------- ------
----------- ----------- ----------- ------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-33
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 817 $ 2,894 $3,998 $ 1,213 $1,121
------- ------- ----------- ------- ------
Net investment income..... 817 2,894 3,998 1,213 1,121
------- ------- ----------- ------- ------
CAPITAL GAINS INCOME.......... 385 -- 574 2,408 30
------- ------- ----------- ------- ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 2,118 25 911 1,535 12
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (1,824) (1,118) 4,041 (9,304) 3,930
Net gain (loss) on
investments.............. 294 (1,093) 4,952 (7,769) 3,942
------- ------- ----------- ------- ------
Net increase (decrease) in
net assets resulting from
operations............... $ 1,496 $ 1,801 $9,524 $(4,148) $5,093
------- ------- ----------- ------- ------
------- ------- ----------- ------- ------

<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 18 $ 38 $ 37
------ ------ ------
Net investment income..... 18 38 37
------ ------ ------
CAPITAL GAINS INCOME.......... 91 150 92
------ ------ ------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 782 (6) --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 4,077 (679) 1,822
Net gain (loss) on
investments.............. 4,859 (685) 1,822
------ ------ ------
Net increase (decrease) in
net assets resulting from
operations............... $4,968 $(497) $1,951
------ ------ ------
------ ------ ------
</TABLE>
<PAGE>
SA-34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 10,020 $ 1,517 $ 22,397 $ 4,523
Capital gains income........ -- 113 -- 1,075
Net realized gain (loss) on
security transactions...... 281 287 -- (3)
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 3,212 2,743 -- 3,056
----------- ----------- ----------- -------------
Net increase (decrease) in
net assets resulting from
operations................. 13,513 4,660 22,397 8,651
----------- ----------- ----------- -------------
UNIT TRANSACTIONS:
Purchases................... 16,326 9,295 4,374,149 16,165
Net transfers............... 161,664 224,575 (2,888,312) 256,828
Surrenders.................. (4,558) (6,421) (61,718) (2,671)
Cost of insurance........... (4,584) (1,028) (55,698) (811)
----------- ----------- ----------- -------------
Total increase in net assets
resulting from unit
transactions............... 168,848 226,421 1,368,421 269,511
----------- ----------- ----------- -------------
Total increase in net
assets..................... 182,361 231,081 1,390,818 278,162
NET ASSETS:
Beginning of period......... 64,588 1,067 47,514 20,029
----------- ----------- ----------- -------------
End of period............... $246,949 $232,148 $ 1,438,332 $298,191
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------

STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996 TO DECEMBER 31, 1996

MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
OPERATIONS:
Net investment income....... $ 389 $ 3 $ 286 $ 53
Net unrealized
(depreciation) appreciation
of investments during the
period..................... (484) 64 -- (129)
----------- ----------- ----------- -------------
Net increase (decrease) in
net assets resulting from
operations................. (95) 67 286 (76)
----------- ----------- ----------- -------------
UNIT TRANSACTIONS:
Purchases................... 1,000 1,000 176,110 1,000
Net transfers............... 63,683 -- (127,365) 19,105
Surrenders.................. -- -- (1,225) --
Cost of insurance........... -- -- (292) --
----------- ----------- ----------- -------------
Net increase in net assets
resulting from unit
transactions............... 64,683 1,000 47,228 20,105
----------- ----------- ----------- -------------
Total increase in net
assets..................... 64,588 1,067 47,514 20,029
NET ASSETS:
Beginning of period......... -- -- -- --
----------- ----------- ----------- -------------
End of period............... $ 64,588 $ 1,067 $ 47,514 $ 20,029
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-35
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPTIAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 817 $ 2,894 $ 3,998 $ 1,213 $ 1,121
Capital gains income........ 385 -- 574 2,408 30
Net realized gain (loss) on
security transactions...... 2,118 25 911 1,535 12
Net unrealized appreciation
(depreciation) of
investments during the
period..................... (1,824) (1,118) 4,041 (9,304) 3,930
-------- ------- ----------- -------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 1,496 1,801 9,524 (4,148) 5,093
-------- ------- ----------- -------- ------------
UNIT TRANSACTIONS:
Purchases................... 16,079 1,604 28,684 16,294 11,377
Net transfers............... 253,669 76,343 352,567 125,494 109,235
Surrenders.................. (7,630) (883) (9,226) (6,183) (2,933)
Cost of insurance........... (4,880) (2,772) (7,390) (4,631) (1,314)
-------- ------- ----------- -------- ------------
Total increase in net assets
resulting from unit
transactions............... 257,238 74,292 364,635 130,974 116,365
-------- ------- ----------- -------- ------------
Total increase in net
assets..................... 258,734 76,093 374,159 126,826 121,458
NET ASSETS:
Beginning of period......... 1,044 1,025 1,071 20,421 1,068
-------- ------- ----------- -------- ------------
End of period............... $259,778 $77,118 $375,230 $147,247 $122,526
-------- ------- ----------- -------- ------------
-------- ------- ----------- -------- ------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996 TO DECEMBER 31, 1996
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
OPERATIONS:
Net investment income....... $ 2 $ 14 $ 5 $ 25 $ 6
Net unrealized
(depreciation) appreciation
of investments during the
period..................... 42 11 66 291 62
-------- ------- ----------- -------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 44 25 71 316 68
-------- ------- ----------- -------- ------------
UNIT TRANSACTIONS:
Purchases................... 1,000 1,000 1,000 1,000 1,000
Net transfers............... -- -- -- 19,105 --
Surrenders.................. -- -- -- -- --
Cost of insurance........... -- -- -- -- --
-------- ------- ----------- -------- ------------
Net increase in net assets
resulting from unit
transactions............... 1,000 1,000 1,000 20,105 1,000
-------- ------- ----------- -------- ------------
Total increase in net
assets..................... 1,044 1,025 1,071 20,421 1,068
NET ASSETS:
Beginning of period......... -- -- -- -- --
-------- ------- ----------- -------- ------------
End of period............... $ 1,044 $ 1,025 $ 1,071 $ 20,421 $ 1,068
-------- ------- ----------- -------- ------------
-------- ------- ----------- -------- ------------

<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 18 $ 38 $ 37
Capital gains income........ 91 150 92
Net realized gain (loss) on
security transactions...... 782 (6) --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 4,077 (679) 1,822
------- ------------- --------
Net increase (decrease) in
net assets resulting from
operations................. 4,968 (497) 1,951
------- ------------- --------
UNIT TRANSACTIONS:
Purchases................... 2,252 1,594 10,283
Net transfers............... 54,175 22,728 165,107
Surrenders.................. (2,747) (1,120) (735)
Cost of insurance........... (708) (2,277) (379)
------- ------------- --------
Total increase in net assets
resulting from unit
transactions............... 52,972 20,925 174,276
------- ------------- --------
Total increase in net
assets..................... 57,940 20,428 176,227
NET ASSETS:
Beginning of period......... 1,056 1,044 1,050
------- ------------- --------
End of period............... $58,996 $21,472 $177,277
------- ------------- --------
------- ------------- --------
STATEMENT OF CHANGES IN NET AS
FOR THE PERIOD FROM INCEPTION,
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
OPERATIONS:
Net investment income....... $-- $-- $--
Net unrealized
(depreciation) appreciation
of investments during the
period..................... 56 44 50
------- ------------- --------
Net increase (decrease) in
net assets resulting from
operations................. 56 44 50
------- ------------- --------
UNIT TRANSACTIONS:
Purchases................... 1,000 1,000 1,000
Net transfers............... -- -- --
Surrenders.................. -- -- --
Cost of insurance........... -- -- --
------- ------------- --------
Net increase in net assets
resulting from unit
transactions............... 1,000 1,000 1,000
------- ------------- --------
Total increase in net
assets..................... 1,056 1,044 1,050
NET ASSETS:
Beginning of period......... -- -- --
------- ------------- --------
End of period............... $ 1,056 $ 1,044 $ 1,050
------- ------------- --------
------- ------------- --------
</TABLE>

<PAGE>
SA-36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. ORGANIZATION:
Separate Account Variable Life Two (the Account) is a separate investment
account within ITT Hartford Life and Annuity Insurance Company (the Company) and
is registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty two sub-accounts. These financial statements include
twelve sub-accounts which invest solely in the Hartford and Fidelity Mutual
Funds (the Funds). The other ten sub-accounts, which invest in the Putnam VT
Funds, are presented in separate financial statements. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the Company in the Funds as directed by the
contractholders.

2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:

b) SECURITY VALUATION -- The investment in shares of the funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1997.

3. ADMINISTRATION OF THE ACCOUNT
AND RELATED CHARGES:

In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contract owners' accounts.
<PAGE>
Hartford Life and Annuity Insurance Company SA-37
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ITT Hartford Life and Annuity Insurance Company
Putnam Capital Manager Trust Separate Account Variable Life Two and to
the Owners of Units of Interest therein:

We have audited the accompanying statement of assets and liabilities of
Diversified Income Fund Sub-Account, Global Asset Allocation Fund Sub-Account,
Global Growth Fund Sub-Account, Growth and Income Fund Sub-Account, High Yield
Fund Sub-Account, Money Market Fund Sub-Account, New Opportunities Fund
Sub-Account, U.S. Government and High Quality Bond Fund Sub-Account, Utilities
Growth and Income Fund Sub-Account and Voyager Fund Sub-Account (constituting
ITT Hartford Life and Annuity Insurance Company Putnam Capital Manager Trust
Separate Account Variable Life Two) (the Account) as of December 31, 1997, and
the related statements of operations for the years then ended and statements of
changes in net assets for the year ended December 31, 1997 and the period from
inception, October 3, 1996, to December 31, 1996. These financial statements are
the responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Diversified Income Fund
Sub-Account, Global Asset Allocation Fund Sub-Account, Global Growth Fund
Sub-Account, Growth and Income Fund Sub-Account, High Yield Fund Sub-Account,
Money Market Fund Sub-Account, New Opportunities Fund Sub-Account, U.S.
Government and High Quality Bond Fund Sub-Account, Utilities Growth and Income
Fund Sub-Account and Voyager Fund Sub-Account (constituting ITT Hartford Life
and Annuity Insurance Company Putnam Capital Manager Trust Separate Account
Variable Life Two) as of December 31, 1997, the results of its operations for
the years then ended and the changes in its net assets for the year ended
December 31, 1997 and the period from inception, October 3, 1996, to December
31, 1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 16, 1998
<PAGE>
SA-38 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>
<CAPTION>
GLOBAL
ASSET
DIVERSIFIED ALLOCATION GLOBAL GROWTH AND
INCOME FUND FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Diversified Income
Fund
Shares 7,515
Cost $84,758
Market Value.............. $ 84,995 -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 2,068
Cost $37,404
Market Value.............. -- $ 38,799 -- --
Putnam VT Global Growth Fund
Shares 16,488
Cost $303,958
Market Value.............. -- -- $ 302,389 --
Putnam VT Growth and Income
Fund
Shares 5,487
Cost $147,425
Market Value.............. -- -- -- $ 155,390
Putnam VT High Yield Fund
Shares 3,451
Cost $46,220
Market Value.............. -- -- -- --
Putnam VT Money Market Fund
Shares 8,329
Cost $8,329
Market Value.............. -- -- -- --
Putnam VT New Opportunities
Fund
Shares 8,115
Cost $168,253
Market Value.............. -- -- -- --
Putnam VT U.S. Government
and High Quality Bond Fund
Shares 16,624
Cost $219,484
Market Value.............. -- -- -- --
Putnam VT Utilities Growth
and Income Fund
Shares 1,507
Cost $21,952
Market Value.............. -- -- -- --
Putnam VT Voyager Fund
Shares 2,790
Cost $100,737
Market Value.............. -- -- -- --
Due from ITT Hartford Life &
Annuity Insurance
Company.................... -- 9 16,628 --
Receivable from fund shares
sold....................... -- -- -- --
------------- ----------- ----------- -------------
Total Assets................ 84,995 38,808 319,017 155,390
------------- ----------- ----------- -------------
LIABILITIES:
Due to ITT Hartford Life &
Annuity Insurance
Company.................... -- -- -- 3
Payable for fund shares
purchased.................. -- -- 16,673 --
------------- ----------- ----------- -------------
Total Liabilities........... -- -- 16,673 3
------------- ----------- ----------- -------------
Net Assets (variable life
contract liabilities)...... $ 84,995 $ 38,808 $ 302,344 $ 155,387
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Variable life contracts
Individual Sub-Accounts:
Units Owned by
Participants............... 6,561 2,119 16,635 7,028
Unit Price.................. $12.954542 $18.314650 $18.175599 $22.109731
Contract Liability.......... $ 84,995 $ 38,808 $ 302,344 $ 155,387
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-39
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
U.S. GOVERNMENT
NEW AND UTILITIES
HIGH MONEY OPPORTUNITIES HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND FUND BOND FUND INCOME FUND VOYAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Diversified Income
Fund
Shares 7,515
Cost $84,758
Market Value.............. -- -- -- -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 2,068
Cost $37,404
Market Value.............. -- -- -- -- -- --
Putnam VT Global Growth Fund
Shares 16,488
Cost $303,958
Market Value.............. -- -- -- -- -- --
Putnam VT Growth and Income
Fund
Shares 5,487
Cost $147,425
Market Value.............. -- -- -- -- -- --
Putnam VT High Yield Fund
Shares 3,451
Cost $46,220
Market Value.............. $ 47,002 -- -- -- -- --
Putnam VT Money Market Fund
Shares 8,329
Cost $8,329
Market Value.............. -- $ 8,329 -- -- -- --
Putnam VT New Opportunities
Fund
Shares 8,115
Cost $168,253
Market Value.............. -- -- $ 172,278 -- -- --
Putnam VT U.S. Government
and High Quality Bond Fund
Shares 16,624
Cost $219,484
Market Value.............. -- -- -- $ 223,091 -- --
Putnam VT Utilities Growth
and Income Fund
Shares 1,507
Cost $21,952
Market Value.............. -- -- -- -- $ 25,830 --
Putnam VT Voyager Fund
Shares 2,790
Cost $100,737
Market Value.............. -- -- -- -- -- $ 109,033
Due from ITT Hartford Life &
Annuity Insurance
Company.................... -- -- -- 22,231 1 --
Receivable from fund shares
sold....................... -- 1 -- -- -- 10,359
----------------- --------------- ----------- ------------------ ------------ ------------
Total Assets................ 47,002 8,330 172,278 245,322 25,831 119,392
----------------- --------------- ----------- ------------------ ------------ ------------
LIABILITIES:
Due to ITT Hartford Life &
Annuity Insurance
Company.................... -- -- 9 -- -- 10,518
Payable for fund shares
purchased.................. -- -- -- 22,231 -- --
----------------- --------------- ----------- ------------------ ------------ ------------
Total Liabilities........... -- -- 9 22,231 -- 10,518
----------------- --------------- ----------- ------------------ ------------ ------------
Net Assets (variable life
contract liabilities)...... $ 47,002 $ 8,330 $ 172,269 $ 223,091 $ 25,831 $ 108,874
----------------- --------------- ----------- ------------------ ------------ ------------
----------------- --------------- ----------- ------------------ ------------ ------------
Variable life contracts
Individual Sub-Accounts:
Units Owned by
Participants............... 2,841 6,765 9,421 16,422 1,372 4,695
Unit Price.................. $16.545266 $ 1.231375 $18.284859 $13.584990 $18.827631 $23.187025
Contract Liability.......... $ 47,002 $ 8,330 $ 172,269 $ 223,091 $ 25,831 $ 108,874
</TABLE>
<PAGE>
SA-40 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Statement of Operations
For the Year Ended December 31, 1997

<TABLE>
<CAPTION>
DIVERSIFIED GLOBAL ASSET GLOBAL GROWTH AND
INCOME FUND ALLOCATION FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................... $ 57 $ 88 $ 420 $ 622
----- ------ ----------- -----------
CAPITAL GAINS INCOME.......... 9 150 452 1,514
----- ------ ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions...... 3 109 1,118 314
Net unrealized appreciation
(depreciation) of
investments
during the period.......... 207 1,348 (1,615) 7,951
----- ------ ----------- -----------
Net gain (loss) on
investments.............. 210 1,457 (497) 8,265
----- ------ ----------- -----------
Net increase (decrease) in
net assets resulting from
operations............... $276 $1,695 $ 375 $10,401
----- ------ ----------- -----------
----- ------ ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-41
- --------------------------------------------------------------------------------

<PAGE>
SA-42 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
DIVERSIFIED GLOBAL ASSET GLOBAL GROWTH AND
INCOME FUND ALLOCATION FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 57 $ 88 $ 420 $ 622
Capital gains income........ 9 150 452 1,514
Net realized gain (loss) on
security transactions...... 3 109 1,118 314
Net unrealized appreciation
(depreciation) of
investments
during the period......... 207 1,348 (1,615) 7,951
----------- --------------- ----------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 276 1,695 375 10,401
----------- --------------- ----------- -----------
UNIT TRANSACTIONS:
Purchases................... 4,114 3,230 13,967 7,475
Net transfers............... 80,535 35,538 302,978 119,617
Surrenders.................. (505) (1,812) (10,646) (6,077)
Cost of insurance........... (455) (890) (5,376) (2,516)
----------- --------------- ----------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 83,689 36,066 300,923 118,499
----------- --------------- ----------- -----------
Total increase (decrease) in
net assets................. 83,965 37,761 301,298 128,900
NET ASSETS:
Beginning of period......... 1,030 1,047 1,046 26,487
----------- --------------- ----------- -----------
End of period............... $84,995 $38,808 $302,344 $155,387
----------- --------------- ----------- -----------
----------- --------------- ----------- -----------

STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996 TO DECEMBER 31, 1996

DIVERSIFIED GLOBAL ASSET GLOBAL GROWTH AND
INCOME FUND ALLOCATION FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- --------------- ----------- -----------
OPERATIONS:
Net investment income....... $-- $-- $ -- $ --
Capital gains income........ -- -- -- --
Net realized gain (loss) on
security transactions...... -- -- -- --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 30 47 46 14
----------- --------------- ----------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 30 47 46 14
----------- --------------- ----------- -----------
UNIT TRANSACTIONS:
Purchases................... 1,000 1,000 1,000 1,000
Net transfers............... -- -- -- 25,473
Surrenders.................. -- -- -- --
Cost of insurance........... -- -- -- --
----------- --------------- ----------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,000 1,000 1,000 26,473
----------- --------------- ----------- -----------
Total increase (decrease) in
net assets................. 1,030 1,047 1,046 26,487
NET ASSETS:
Beginning of period......... -- -- -- --
----------- --------------- ----------- -----------
End of period............... $ 1,030 $ 1,047 $ 1,046 $ 26,487
----------- --------------- ----------- -----------
----------- --------------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-43
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
U.S. GOVERNMENT AND UTILITIES
HIGH MONEY NEW HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND OPPORTUNITIES FUND BOND FUND INCOME FUND VOYAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------------ ------------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 154 $ 424 $-- $ 756 $ 40 $ 16
Capital gains income........ 18 -- -- -- 54 355
Net realized gain (loss) on
security transactions...... 5 -- (1,905) 387 25 3,074
Net unrealized appreciation
(depreciation) of
investments
during the period......... 757 -- 4,088 3,578 3,805 8,319
----------- ----------- ---------- ---------- ----------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 934 424 2,183 4,721 3,924 11,764
----------- ----------- ---------- ---------- ----------- ------------
UNIT TRANSACTIONS:
Purchases................... 1,594 -- 13,204 10,535 1,604 10,861
Net transfers............... 44,780 10,765 164,787 214,693 20,012 92,223
Surrenders.................. (1,070) (2,441) (4,674) (4,108) (711) (4,146)
Cost of insurance........... (261) (1,430) (4,168) (3,779) (71) (2,805)
----------- ----------- ---------- ---------- ----------- ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 45,043 6,894 169,149 217,341 20,834 96,133
----------- ----------- ---------- ---------- ----------- ------------
Total increase (decrease) in
net assets................. 45,977 7,318 171,332 222,062 24,758 107,897
NET ASSETS:
Beginning of period......... 1,025 1,012 937 1,029 1,073 977
----------- ----------- ---------- ---------- ----------- ------------
End of period............... $47,002 $8,330 $172,269 $223,091 $25,831 $108,874
----------- ----------- ---------- ---------- ----------- ------------
----------- ----------- ---------- ---------- ----------- ------------

STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996 TO DECEMBER 31, 1996

U.S. GOVERNMENT AND UTILITIES
HIGH MONEY NEW HIGH QUALITY GROWTH AND
YIELD FUND MARKET FUND OPPORTUNITIES FUND BOND FUND INCOME FUND VOYAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------------ ------------------- ----------- ------------
OPERATIONS:
Net investment income....... $-- $ 12 $-- $-- $-- $ --
Capital gains income........ -- -- -- -- -- --
Net realized gain (loss) on
security transactions...... -- -- -- -- -- --
Net unrealized appreciation
(depreciation) of
investments during the
period..................... 25 -- (63) 29 73 (23)
----------- ----------- ---------- ---------- ----------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 25 12 (63) 29 73 (23)
----------- ----------- ---------- ---------- ----------- ------------
UNIT TRANSACTIONS:
Purchases................... 1,000 1,000 1,000 1,000 1,000 1,000
Net transfers............... -- -- -- -- -- --
Surrenders.................. -- -- -- -- -- --
Cost of insurance........... -- -- -- -- -- --
----------- ----------- ---------- ---------- ----------- ------------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,000 1,000 1,000 1,000 1,000 1,000
----------- ----------- ---------- ---------- ----------- ------------
Total increase (decrease) in
net assets................. 1,025 1,012 937 1,029 1,073 977
NET ASSETS:
Beginning of period......... -- -- -- -- -- --
----------- ----------- ---------- ---------- ----------- ------------
End of period............... $ 1,025 $1,012 $ 937 $ 1,029 $ 1,073 $ 977
----------- ----------- ---------- ---------- ----------- ------------
----------- ----------- ---------- ---------- ----------- ------------
</TABLE>

<PAGE>
SA-44 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. ORGANIZATION:
Separate Account Variable Life Two (the Account) is a separate investment
account within ITT Hartford Life and Annuity Insurance Company (the Company) and
is registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty two sub-accounts. These financial statements include
ten sub-accounts which invest solely in the Putnam VT funds (the Funds). The
other twelve subaccounts, which invest in the Hartford and Fidelity Mutual
Funds, are presented in separate financial statements. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the Company in the Funds as directed by the
contract-holders.

b) SECURITY VALUATION -- The investments in shares of the Funds are valued
at the closing net asset value per share as determined by the appropriate Fund
as of December 31, 1997.

3. ADMINISTRATION OF THE ACCOUNT
AND RELATED CHARGES:

In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative fees,
and state premium taxes. These charges are deducted through termination of units
of interest from applicable contract owners' accounts, in accordance with the
terms of the contracts.
<PAGE>

Financial Statements of Hartford Life Insurance Company

<PAGE>
F-2
- --------------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES

<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- ---------------
1998 1997 1998 1997
----- ----- ------ ------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premiums and other considerations............... $ 484 $ 360 $1,430 $ 993
Net investment income........................... 339 319 1,035 978
Net realized capital (losses) gains............. 3 -- (3) 4
----- ----- ------ ------
Total revenues................................ 826 679 2,462 1,975
----- ----- ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 353 318 1,100 970
Amortization of deferred policy acquisition
costs.......................................... 119 80 328 252
Dividends to policyholders...................... 61 47 177 119
Other insurance expenses........................ 155 105 461 295
----- ----- ------ ------
Total benefits, claims and expenses........... 688 550 2,066 1,636
----- ----- ------ ------
Income before income tax expense................ 138 129 396 339
Income tax expense.............................. 49 48 139 121
----- ----- ------ ------
Net income...................................... $ 89 $ 81 $ 257 $ 218
----- ----- ------ ------
----- ----- ------ ------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.
<PAGE>
F-3
- --------------------------------------------------------------------------------

CONDENSED CONSOLIDATED BALANCE SHEETS
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -------------
(IN MILLIONS, EXCEPT
FOR SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $13,771 and
$13,885)....................................... $14,214 $14,176
Equity securities, at fair value................ 114 180
Policy loans, at outstanding balance............ 3,742 3,756
Other investments, at cost...................... 275 47
------------- -------------
Total investments............................. 18,345 18,159
Cash............................................ 86 54
Premiums and amounts receivable................. 22 18
Accrued investment income....................... 330 330
Reinsurance recoverables........................ 5,903 6,114
Deferred policy acquisition costs............... 3,674 3,315
Deferred income tax............................. 376 348
Other assets.................................... 332 352
Separate account assets......................... 76,725 69,055
------------- -------------
Total assets.................................. $105,793 $97,745
------------- -------------
------------- -------------
Liabilities
Future policy benefits.......................... $ 3,341 $ 3,059
Other policyholder funds........................ 20,684 21,034
Other liabilities............................... 2,331 2,254
Separate account liabilities.................... 76,725 69,055
------------- -------------
Total liabilities............................. 103,081 95,402
Stockholder's Equity
Common stock -- authorized, issued and
outstanding 1,000, par value $5,690............ 6 6
Capital surplus................................. 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital gains on securities, net
of tax......................................... 291 179
Total accumulated other comprehensive income... 291 179
Retained earnings.............................. 1,370 1,113
------------- -------------
Total stockholder's equity.................... 2,712 2,343
------------- -------------
Total liabilities and stockholder's equity...... $105,793 $97,745
------------- -------------
------------- -------------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.
<PAGE>
F-4
- --------------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDER'S EQUITY
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES

NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME
-----------------------------------------------------------------------------
NET UNREALIZED
CAPITAL GAINS ON TOTAL
COMMON SECURITIES, NET OF RETAINED STOCKHOLDER'S
STOCK CAPITAL SURPLUS TAX EARNINGS EQUITY
------ --------------- --------------------- ---------- -------------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997................... $6 $1,045 $ 179 $1,113 $2,343
Comprehensive income
Net income................................. -- -- -- 257 257
Other comprehensive income, net of tax (1):
Changes in net unrealized capital gains
on securities (2)........................ -- -- 112 -- 112
Total other comprehensive income........... 112
Total comprehensive income................... 369
--
------ ----- ---------- ------
Balance, September 30, 1998.................. $6 $1,045 $ 291 $1,370 $2,712
--
--
------ ----- ---------- ------
------ ----- ---------- ------

NINE MONTHS ENDED SEPTEMBER 30, 1997

<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME
-----------------------------------------------------------------------------
NET UNREALIZED
CAPITAL GAINS ON TOTAL
COMMON SECURITIES, NET OF RETAINED STOCKHOLDER'S
STOCK CAPITAL SURPLUS TAX EARNINGS EQUITY
------ --------------- --------------------- ---------- -------------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996................... $6 $1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income................................. -- -- -- 218 218
Other comprehensive income, net of tax (1):
Changes in net unrealized capital gains
on securities (2)........................ -- -- 105 -- 105
Total other comprehensive income........... 105
Total comprehensive income 323
--
------ ----- ---------- ------
Balance, September 30, 1997.................. $6 $1,045 $ 135 $1,029 $2,215
--
--
------ ----- ---------- ------
------ ----- ---------- ------
</TABLE>

- ---------

(1) Net unrealized gain on securities is reflected net of tax of $60 and $57 as
of September 30, 1998 and 1997, respectively.

(2) Net of reclassification adjustment for (losses) gains realized in net income
of $(2) and $3 for the nine months ended September 30, 1998 and 1997,
respectively.

See Notes to Condensed Consolidated Financial Statements.
<PAGE>
F-5
- --------------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1998 1997
-------- --------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Operating Activities
Net income............................ $ 257 $ 218
Adjustments to net income:
Depreciation and amortization......... (15) 5
Net realized capital losses (gains)... 3 (4)
Increase in deferred income taxes..... (90) (14)
Increase in deferred policy
acquisition costs.................... (359) (396)
(Increase) decrease in premiums and
amounts receivable................... (4) 3
Decrease in accrued investment
income............................... -- 48
Decrease in other assets.............. 65 169
Decrease (increase) in reinsurance
recoverables......................... 39 (310)
Increase in liability for future
policy benefits...................... 282 650
(Decrease) increase in other
liabilities.......................... (55) 131
-------- --------
Cash provided by operating
activities......................... 123 500
-------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (4,530) (4,628)
Sales of fixed maturity investments... 2,848 3,039
Maturities and principal paydowns of
fixed maturity investments........... 1,387 1,643
Net (purchases) sales of other
investments.......................... (89) 32
Net sales (purchases) of short-term
investments.......................... 492 (70)
-------- --------
Cash provided by investing
activities......................... 108 16
-------- --------
Financing Activities
Net disbursements for investment and
universal life-type contracts charged
against policyholder accounts........ (199) (506)
-------- --------
Cash used for financing activities.... (199) (506)
-------- --------
Increase in cash...................... 32 10
Cash -- beginning of period........... 54 43
-------- --------
Cash -- end of period................. $ 86 $ 53
-------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash paid during the period for:
Income taxes.......................... $ 241 $ 31
-------- --------
-------- --------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.
<PAGE>
F-6
- --------------------------------------------------------------------------------

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT FOR SHARE DATA UNLESS OTHERWISE STATED)
(UNAUDITED)

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of
Hartford Life Insurance Company and subsidiaries (the "Company") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures which are normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading. In the opinion of
management, these statements include all adjustments which were normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. For a description of
significant accounting policies, see Note 2 of Notes to Consolidated Financial
Statements in the Company's 1997 Form 10-K Annual Report.

(B) CHANGES IN ACCOUNTING PRINCIPLES

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income", which establishes
standards for reporting and display of comprehensive income and its components
in a full set of general purpose financial statements. The objective of this
statement is to report a measure of all changes in equity of an enterprise that
result from transactions and other economic events of the period other than
transactions with owners. Comprehensive income is the total of net income and
all other nonowner changes in equity. Accordingly, the Company has reported
comprehensive income in the Condensed Consolidated Statement of Changes in
Stockholder's Equity.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". The SOP provides guidance on
accounting for the costs of internal use software and in determining whether the
software is for internal use. The SOP defines internal use software as software
that is acquired, internally developed, or modified solely to meet internal
needs and identifies stages of software development and accounting for the
related costs incurred during the stages. This statement is effective for fiscal
years beginning after December 15, 1998 and is not expected to have a material
impact on the Company's financial condition or results of operations.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The new standard
establishes accounting and reporting guidance for derivative instruments,
including certain derivative instruments embedded in other contracts. The
standard requires, among other things, that all derivatives be carried on the
balance sheet at fair value. The standard also specifies hedge accounting
criteria under which a derivative can qualify for special accounting. In order
to receive special accounting, the derivative instrument must qualify as either
a hedge of the fair value or the variability of the cash flow of a qualified
asset or liability. Special accounting for qualifying hedges provides for
matching the timing of gain or loss recognition on the hedging instrument with
the recognition of the corresponding changes in value of the hedged item. SFAS
No. 133 will be effective for fiscal years beginning after June 15, 1999.
Initial application for the Company will begin for the first quarter of the year
2000. The Company is currently in the process of quantifying the impact of SFAS
No. 133.

In September 1998, the Securities and Exchange Commission stated that until
the Emerging Issues Task Force (EITF) concludes its discussion regarding the
accounting for combined structured notes, affected companies that entered into
these notes prior to September 25, 1998 are required to either restate prior
period financial statements to conform with the recently prescribed unit
accounting model or disclose the related impact on earnings for all periods
presented and cumulatively over the life of the instruments had the registrant
accounted for the structure as a unit. Included in net income for the nine
months ended September 30, 1998 was $32 of after-tax net realized capital losses
and approximately $2 of after-tax net investment income related to a combined
structured note transaction, which was accounted for in accordance with then
current generally accepted accounting principles (GAAP). Had the transaction
been accounted for as a unit, based upon recently prescribed GAAP for such types
of transactions entered into after September 24, 1998, net income would have
been approximately $2 lower for the third quarter and $30 higher for the nine
months ended September 30, 1998.

NOTE 2. INITIAL PUBLIC OFFERING (IPO)

On February 10, 1997, the Company's indirect parent, Hartford Life, Inc.
(Hartford Life), filed a registration statement, as amended, with the Securities
and Exchange Commission, relating to the IPO of Hartford Life's Class A Common
Stock. Pursuant to the IPO on May 22, 1997, Hartford Life sold to the public 26
million shares at $28.25
<PAGE>
F-7
- --------------------------------------------------------------------------------

per share and received proceeds, net of offering expenses, of $687. Of the
proceeds, $527 was used to retire debt related to Hartford Life's promissory
notes outstanding and line of credit. The remaining $160 was contributed by
Hartford Life to Hartford Life and Accident Insurance Company, the Company's
direct parent, to support growth in its core businesses.

The 26 million shares sold in the IPO represented approximately 18.6% of the
equity ownership in Hartford Life and approximately 4.4% of the combined voting
power of Hartford Life's Class A and Class B Common Stock. Hartford Financial
Services Group, Inc., an indirect parent of Hartford Life, owns all of the 114
million outstanding shares of Class B Common Stock of Hartford Life,
representing approximately 81.4% of the equity ownership in Hartford Life and
approximately 95.6% of the combined voting power of Hartford Life's Class A and
Class B Common Stock. Holders of Class A Common Stock generally have identical
rights to the holders of Class B Common Stock except that the holders of Class A
Common Stock are entitled to one vote per share while holders of Class B Common
Stock are entitled to five votes per share on all matters submitted to a vote of
Hartford Life's stockholders.

NOTE 3. COMMITMENTS AND CONTINGENCIES

(A) LITIGATION

The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, management, at the present
time, does not anticipate that the ultimate liability arising from such pending
or threatened litigation will have a material effect on the financial condition
or operating results of the Company.

(B) INVESTMENTS

As of September 30, 1998, the Company held $110 of asset-backed securities
securitized and serviced by Commercial Finance Services, Inc. (CFS). In October
1998, the Company became aware of allegations of improper activities at CFS. CFS
has engaged an independent accounting firm and outside legal counsel to
investigate these allegations. Currently, these securities are performing in
line with expectations. Based upon information available at this time, the
Company is presently unable to determine the amount of potential loss, if any,
related to the securities.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS UNLESS OTHERWISE STATED)

Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) addresses the financial condition of the Company as of
September 30, 1998, compared with December 31, 1997, and its results of
operations for the third quarter and nine months ended September 30, 1998
compared with the equivalent 1997 periods. This discussion should be read in
conjunction with the MD&A in the Company's 1997 Form 10-K Annual Report.

Certain statements contained in this discussion, other than statements of
historical fact, are forward-looking statements. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to economic,
competitive and legislative developments. These forward-looking statements are
subject to change and uncertainty which are, in many instances, beyond the
Company's control and have been made based upon management's expectations and
beliefs concerning future developments and their potential effect on Hartford
Life Insurance Company and subsidiaries (the "Company"). There can be no
assurance that future developments will be in accordance with management's
expectations or that the effect of future developments on the Company will be
those anticipated by management. Actual results could differ materially from
those expected by the Company, depending on the outcome of certain factors,
including those described in the forward-looking statements.

INDEX

<TABLE>
<S> <C>
Consolidated Results of
Operations:
Operating Summary............... 9
Annuity......................... 10
Individual Life Insurance....... 11
Employee Benefits............... 11
Guaranteed Investment
Contracts...................... 11
Regulatory Initiatives and
Contingencies.................. 12
Accounting Standards............ 13
Other Matters................... 13
</TABLE>

CONSOLIDATED RESULTS OF OPERATIONS:
OPERATING SUMMARY

<TABLE>
<CAPTION>
THIRD QUARTER ENDED
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues................ $ 826 $ 679 $ 2,462 $ 1,975
Expenses................ 737 598 2,205 1,757
--------- --------- --------- ---------
Net Income............ $ 89 $ 81 $ 257 $ 218
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

The Company's insurance business operates in three principal segments:
Annuity, Individual Life Insurance, and Employee Benefits as well as a
Guaranteed Investments Contracts segment, which is primarily comprised of
business written prior to 1995. The Company also maintains a Corporate operation
through which it reports items that are not directly allocable to any of its
business segments.
<PAGE>
F-8
- --------------------------------------------------------------------------------

The Annuity segment focuses on the savings and retirement needs of the
growing number of individuals who are preparing for retirement or have already
retired. This segment consists of two areas of operation: Individual Annuity and
Group Annuity. The variety of products sold within this segment reflects the
diverse nature of the market. These include, in the Individual Annuity area,
individual variable annuities, fixed market value adjusted (MVA) annuities, and
mutual funds; and in the Group Annuity area, deferred compensation and
retirement plan services for municipal governments and corporations, structured
settlement contracts and other special purpose annuity contracts, and investment
management contracts. The Individual Life Insurance segment, which focuses on
the high end estate and business planning markets, sells a variety of life
insurance products, including variable life and universal life insurance. The
Employee Benefits segment consists of two areas of operation: Group Insurance
and Specialty Insurance. Through Group Insurance, the Company offers products
such as group life insurance, group short- and long-term disability and
accidental death and dismemberment. Substantially all of the Group Insurance
business directly written by the Company is ceded to its direct parent, Hartford
Life and Accident Insurance Company. Specialty Insurance primarily consists of
the Company's corporate owned life insurance (COLI) business. The Guaranteed
Investment Contracts segment consists of guaranteed rate contract (GRC) business
that is supported by assets held in either the Company's general account or a
guaranteed separate account and includes a closed block of guaranteed rate
contracts (Closed Book GRC). The Company decided in 1995, after a thorough
review of its GRC business, that it would significantly de-emphasize general
account GRC, choosing to focus its distribution efforts on other products sold
through other divisions. Management expects no material income or loss from the
Guaranteed Investment Contracts segment in the future.

Revenues increased $147, or 22%, and $487, or 25%, for the third quarter and
nine months ended September 30, 1998, respectively, compared to the equivalent
1997 periods. This increase was driven by higher fee income earned on growth in
separate account assets primarily related to the Annuity and Individual Life
Insurance segments, revenue growth due to new sales and renewals in the Employee
Benefits segment, as well as higher net investment income, partially offset by
decreasing revenues related to the declining block of Closed Book GRC. For a
discussion of combined structured note transactions and investment contingencies
see Notes 1 (b) and 3 (b), respectively, of Notes to Condensed Consolidated
Financial Statements.

Expenses increased $139, or 23%, and $448, or 25%, for the third quarter and
nine months ended September 30, 1998, respectively, compared to the same prior
year periods. This increase was due to higher benefits, claims, and claim
adjustment expenses, increased amortization of deferred policy acquisition costs
and increased operating expenses primarily related to growth in the Company's
principal operating segments.

Net income increased $8, or 10%, and $39, or 18%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
periods in 1997 primarily due to revenue growth in both the Annuity and
Individual Life Insurance segments. These increases were partially offset by a
decrease in Employee Benefits earnings as a result of COLI.

SEGMENT RESULTS

The Company's reporting segments, consist of Annuity, Individual Life Insurance,
Employee Benefits, Guaranteed Investment Contracts and a Corporate Operation.

Below is a summary of net income by segment.

<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------
1998 1997 1998 1997
----- ----- --------- ---------
<S> <C> <C> <C> <C>
Annuity....................... $ 67 $ 56 $ 197 $ 148
Individual Life Insurance..... 16 15 44 38
Employee Benefits............. 6 8 18 23
Guaranteed Investment
Contracts.................... -- -- -- --
Corporate Operation........... -- 2 (2) 9
--- --- --------- ---------
Net Income.................. $89 $81 $ 257 $ 218
--- --- --------- ---------
--- --- --------- ---------
</TABLE>

The sections that follow analyze each segment's results.

ANNUITY

<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.................. $ 410 $ 336 $ 1,208 $ 924
Expenses.................. 343 280 1,011 776
--------- --------- --------- ---------
Net Income.............. $ 67 $ 56 $ 197 $ 148
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

Revenues for the third quarter and nine months ended September 30, 1998
increased $74, or 22%, and $284, or 31%, respectively, compared to the
equivalent prior year periods. This increase was driven by Individual Annuity
revenues which increased $72, or 31%, and $255, or 41%, for the third quarter
and nine months ended September 30, 1998, respectively, as compared to the same
periods in 1997 primarily due to higher fee income earned on growth in
individual variable annuity account values. Despite the fact that the equity
market did not experience significant appreciation during the third quarter of
1998, the segment's assets under management have increased from prior year
levels. Average individual variable annuity account values grew $11.0 billion,
or 29%, to $49.7 billion as of September 30, 1998 from $38.7 billion as of
September 30,
<PAGE>
F-9
- --------------------------------------------------------------------------------

1997. This growth was the result of strong individual variable annuity sales of
$2.4 billion and $7.6 billion for the third quarter and nine months ended
September 30, 1998, respectively, compared to sales of $2.5 billion and $7.2
billion for the third quarter and nine months ended September 30, 1997,
respectively. In addition, Group Annuity revenues increased $2, or 2%, and $29,
or 10%, for the third quarter and nine months ended September 30, 1998,
respectively, over the equivalent prior periods, primarily due to higher fee
income and net investment income resulting from growth in assets under
management. Group Annuity average total account values grew $1.3 billion, or
13%, to $11.1 billion as of September 30, 1998 from $9.8 billion as of September
30, 1997, due to new deposits.

Expenses increased $63, or 23%, and $235, or 30%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
prior year periods. Benefits, claims and claim adjustment expenses increased $6
and $68 for the third quarter and nine months ended September 30, 1998,
respectively, compared to the same periods in 1997 primarily due to increased
interest credited on Individual Annuity general account values. Average
Individual Annuity general account values increased $975, or 31%, to $4.1
billion at September 30, 1998 from $3.1 billion at September 30, 1997.
Amortization of deferred policy acquisition costs increased $26 and $64 for the
third quarter and nine months ended September 30, 1998, respectively, compared
to the same periods in 1997 as prior and current year sales remained strong. In
addition, for the third quarter and nine months ended September 30, 1998, other
business expenses increased $23 and $75, respectively, compared to prior year
periods, as a result of the continued growth in this segment.

Annuity net income increased $11, or 20%, and $49, or 33%, for the third
quarter and nine months ended September 30, 1998, respectively, as compared to
the same prior year periods as a result of revenue growth and continued
operating efficiencies.

INDIVIDUAL LIFE INSURANCE

<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.................... $ 137 $ 122 $ 401 $ 358
Expenses 121 107 357 320
--------- --------- --------- ---------
Net Income................ $ 16 $ 15 $ 44 $ 38
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

Revenues for the third quarter and nine months ended September 30, 1998
increased $15, or 12%, and $43, or 12%, respectively, as compared to the
equivalent periods in 1997. This increase was primarily due to higher cost of
insurance charges and other fee income earned on the Company's growing block of
variable life insurance. Variable life average account values increased $447, or
57%, to $1.2 billion as of September 30, 1998 from $786 as of September 30, 1997
due to strong sales. Variable life product sales constituted $82, or 75%, of
total Individual Life Insurance new sales as of September 30, 1998, an increase
of $21, or 34%, compared to the same period in 1997.

Expenses increased $14, or 13%, and $37, or 12%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the
equivalent period in 1997. This increase was primarily the result of higher
benefits, claims, and claim adjustment expenses and amortization of deferred
acquisition costs associated with the growth in this segment as well as
increased mortality experience during 1998.

Net income increased $1, or 7%, and $6, or 16%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
period in 1997 as a result of strong sales and revenue growth.

EMPLOYEE BENEFITS

<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.................... $ 219 $ 150 $ 697 $ 471
Expenses.................... 213 142 679 448
--------- --------- --------- ---------
Net Income................ $ 6 $ 8 $ 18 $ 23
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

Revenues increased $69, or 46%, and $226, or 48%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
periods in 1997, as a result of an increase in fee income related to new sales
of variable COLI, and renewal premium on leveraged COLI. Expenses increased $71,
or 50%, and $231, or 52%, for the third quarter and nine months ended September
30, 1998, respectively, as compared to the same prior year periods, due to
higher expenses associated with variable COLI sales and leveraged COLI renewal
premium. Net income decreased $2, or 25%, and $5, or 22%, for the third quarter
and nine months ended September 30, 1998, respectively, as compared to the same
prior periods in 1997.

GUARANTEED INVESTMENT CONTRACTS

<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------
1998 1997 1998 1997
----- ----- --------- ---------
<S> <C> <C> <C> <C>
Revenues...................... $ 35 $ 62 $ 125 $ 196
Expenses...................... 35 62 125 196
--- --- --------- ---------
Net Loss.................... $ -- $ -- $ -- $ --
--- --- --------- ---------
--- --- --------- ---------
</TABLE>

<PAGE>
F-10
- --------------------------------------------------------------------------------

This segment reported no net income for the third quarter and nine months
ended September 30, 1998 and 1997 consistent with management's expectations that
net income from Closed Book GRC in the years subsequent to 1996 will be
immaterial based on the Company's current projections for the performance of the
assets and liabilities associated with Closed Book GRC. However, no assurance
can be given that, under certain unanticipated economic circumstances which
result in the Company's assumptions being proven inaccurate, further losses in
respect of Closed Book GRC will not occur in the future.

REGULATORY INITIATIVES AND CONTINGENCIES
NAIC PROPOSALS

The National Association of Insurance Commissioners ("NAIC") adopted the
Codification of Statutory Accounting Principles ("SAP") in March, 1998. The
proposed effective date for the statutory accounting guidance is January 1,
2001. It is expected that the Company's domiciliary state will adopt SAP and the
Company will make the necessary changes required for implementation. These
changes are not anticipated to have a material impact on the statutory financial
statements of the Company.

YEAR 2000
IN GENERAL

The Year 2000 issue relates to the ability or inability of computer hardware,
software and other information technology (IT) systems, as well as non-IT
systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.

The integrity and reliability of the Company's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of the Company's
business. The Company has thousands of individual and business customers that
have insurance policies, annuities, mutual funds and other financial products of
the Company. Nearly all of these policies and products contain date sensitive
data, such as policy expiration dates, birth dates, premium payment dates, and
the like. In addition, various IT systems support communications and other
systems that integrate the Company's various business segments and field
offices. The Company also has business relationships with numerous third parties
that affect virtually all aspects of the Company's business, including, without
limitation, suppliers, computer hardware and software vendors, insurance agents
and brokers, securities broker-dealers and other distributors of financial
products, many of which provide date sensitive data to the Company, and whose
operations are important to the Company's business.

INTERNAL YEAR 2000 EFFORTS AND TIMETABLE

Beginning in 1990, the Company began working on making its IT systems Year 2000
ready, either through installing new programs or replacing systems. Since
January 1998, the Company's Year 2000 efforts have focused on the remaining Year
2000 issues related to IT and non-IT systems in all of the Company's business
segments. These Year 2000 efforts include the following five main initiatives:
(1) identifying and assessing Year 2000 issues; (2) taking actions to remediate
IT and non-IT systems so that they are Year 2000 ready; (3) testing and
certifying IT and non-IT systems as Year 2000 ready; (4) deploying such
remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. The Company currently anticipates that initiatives (1) through (4)
of its internal Year 2000 efforts will be substantially complete by the end of
1998, and that initiative (5) testing will begin in early 1999 and continue
through the end of 1999.

THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE

The Company's Year 2000 efforts include assessing the potential impact on the
Company of third Year 2000 readiness. The Company's third party Year 2000
efforts include the following three main initiatives: (1) identifying third
parties which have significant business relationships with the Company and
inquiring of such third parties regarding their Year 2000 readiness; (2)
evaluating such third parties' responses to the Company's inquiries; and (3)
based on the evaluation of third party responses and the significance of the
business relationship, conducting additional activities with third parties as
determined to be necessary in each case, which activities may include integrated
IT systems testing. The Company has completed the first third party initiative
and is in the process of evaluating third party responses received. The Company
currently anticipates that it will substantially complete the response
evaluation in early 1999 and that it will conduct the additional activities
described in initiative (3) beginning in early 1999 and continue through the end
of 1999 as necessary. However, notwithstanding these third party Year 2000
efforts, the Company does not have control over these third parties and, as a
result, the Company cannot currently determine to what extent future operating
results may be adversely
<PAGE>
F-11
- --------------------------------------------------------------------------------

affected by the failure of these third parties to adequately address their Year
2000 issues.

YEAR 2000 COSTS

The costs of the Company's Year 2000 program that have been incurred through the
year ended December 31, 1997 have not been material to the Company's financial
condition or results of operations. Management estimates that after-tax costs
related to the Year 2000 program to be incurred in 1998 and 1999 will be $4 in
total, of which approximately $2 has been incurred as of September 30, 1998.
These costs are being expensed as incurred and have not had, and are not
currently expected to have, a material impact on Hartford Life's financial
condition or results of operations.

RISKS AND CONTINGENCY PLANS

If significant Year 2000 problems arise, including problems arising with third
parties, failures of IT and non-IT systems could occur, which in turn could
result in substantial interruptions in the Company's business. Given the
uncertain nature of Year 2000 problems that may arise, especially those related
to the readiness of third parties discussed above, the Company cannot determine
at this time whether the consequences of Year 2000 related problems that could
arise will have a material impact on the Company's financial condition or
results of operations.

The Company is in the process of developing certain contingency plans so
that if, despite its Year 2000 efforts, Year 2000 problems ultimately arise, the
impact of such problems may be minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of the Company's business on third parties and
their Year 2000 readiness. The Company currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or then
existing plans may need to be modified as circumstances warrant.

ACCOUNTING STANDARDS

For a discussion of accounting standards, see Note 1 of Notes to Condensed
Consolidated Financial Statements.

OTHER MATTERS

SUBSEQUENT EVENT

On November 10, 1998, Hartford Life, Inc. (Hartford Life), an indirect parent of
the Company, recaptured an in-force block of COLI business from MBL Life
Assurance Co. of New Jersey (MBL Life), as well as purchased the outstanding
interest in International Corporate Marketing Group (ICMG), which was previously
40% owned by MBL Life. The transaction was consummated through the assignment of
a reinsurance arrangement between Hartford Life and MBL Life to a Hartford Life
subsidiary. Hartford Life originally assumed the life insurance block in 1992
from Mutual Benefit Life Insurance Company (Mutual Benefit Life), which was
placed in court-supervised rehabilitation in 1991, and reinsured a portion of
those polices back to MBL Life. MBL Life, previously a Mutual Benefit Life
subsidiary, operates under the Rehabilitation Plan for Mutual Benefit Life.
<PAGE>
F-12
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:

We have audited the accompanying statutory balance sheets of ITT Hartford Life
and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.

The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.

In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory financial statements referred to above do not
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.

However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
January 27, 1998
<PAGE>
F-13
- --------------------------------------------------------------------------------

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
F-14
- --------------------------------------------------------------------------------

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>

The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
F-15
- --------------------------------------------------------------------------------

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)

<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>

The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
F-16
- --------------------------------------------------------------------------------

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
F-17
- --------------------------------------------------------------------------------

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION

ITT Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. On December 19, 1995, ITT Corporation
distributed all the outstanding shares of The Hartford to ITT shareholders of
record in an action known herein as the "Distribution". As a result of the
Distribution, The Hartford became an independent, publicly traded company.
During 1996, ILA re-domesticated from the State of Wisconsin to the State of
Connecticut.

ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.

BASIS OF PRESENTATION

The accompanying ILA statutory financial statements were prepared in conformity
with statutory accounting practices prescribed or permitted by the National
Association of Insurance Commissioners ("NAIC") and the State of Connecticut
Department of Insurance.

The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.

Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:

(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy;

(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally, are only recorded for policy charges for
the cost of insurance, policy administration and surrender charges assessed
to policy account balances. Also, for GAAP purposes, premiums for
traditional life insurance policies are recognized as revenues when they
are due from policyholders and the retrospective deposit method is used in
accounting for universal life and other types of contracts where the
payment pattern is irregular or surrender charges are a significant source
of profit. The prospective deposit method is used for GAAP purposes where
investment margins are the primary source of profit;

(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;

(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;

(5) excluding certain GAAP assets designated as non-admitted assets (e.g., past
due agents' balances and furniture and equipment) from the balance sheet
for statutory purposes by directly charging surplus;

(6) establishing accruals for post-retirement and post-employment health care
benefits on an option basis, using a twenty year phase-in approach, whereas
GAAP liabilities are recorded upon adoption of the applicable standard;
<PAGE>
F-18
- --------------------------------------------------------------------------------

(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;

(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;

(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP
basis as "available-for-sale" and accordingly, those investments and common
stocks were reflected at fair value with the corresponding impact included
as a component of Stockholder's Equity designated as "Net unrealized
capital gains (losses) on securities net of tax". For statutory reporting
purposes, Change in Net Unrealized Capital Gains (Losses) on Common Stocks
and Other Invested Assets includes the change in unrealized gains (losses)
on common stock reported at fair value; and

(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as
a liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.

As of and for the years ended December 31, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------

<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>

AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS

Aggregate reserves for payment of future life, health and annuity benefits were
computed in accordance with actuarial standards. Reserves for life insurance
policies are generally based on the 1958 and 1980 Commissioner's Standard
Ordinary Mortality Tables and various valuation rates ranging from 2.5% to 6%.
Accumulation and on-benefit annuity reserves are based principally on individual
annuity tables at various rates ranging from 2.5% to 8.75% and using CARVM.
Accident and health reserves are established using a two year preliminary term
method and morbidity tables based on Company experience.

ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Statements of
Income.

INVESTMENTS

Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
Common stocks are carried at fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.

The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The reserve increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
F-19
- --------------------------------------------------------------------------------

("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.

OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.

2. INVESTMENTS:

(A) COMPONENTS OF NET INVESTMENT INCOME

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>

(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>

<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>

(D) COMPONENTS OF NET REALIZED CAPITAL GAINS

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>

(E) OFF-BALANCE SHEET INVESTMENTS

The Company had no significant financial instruments with off-balance sheet risk
as of December 31, 1997 and 1996.

(F) CONCENTRATION OF CREDIT RISK

Excluding U.S. government and government agency investments, the Company is not
exposed to any significant concentration of credit risk.
<PAGE>
F-20
- --------------------------------------------------------------------------------

(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 58,761 $ 6 $ (195) $ 58,572
Guaranteed and sponsored -- asset-backed... 78,237 1,477 (609) 79,105
States, municipalities and political
subdivisions................................ 25,958 163 (2) 26,119
International governments.................... 7,447 205 0 7,652
Public utilities............................. 70,116 396 (424) 70,088
All other corporate.......................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed.......... 485,953 2,654 (1,081) 487,526
Short-term investments....................... 148,094 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated................... 35,379 0 (4,160) 31,219
----------- ---------- ---------- -----------
Total common stocks.......................... $ 48,443 $ 713 $(4,160) $ 44,996
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>

The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
F-21
- --------------------------------------------------------------------------------

over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.

<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>

Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.

(H) FAIR VALUE OF FINANCIAL INSTRUMENTS

BALANCE SHEET ITEMS (IN MILLIONS):

<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>

The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts are determined by forecasting
future cash flows and discounting the forecasted cash flows at current market
rates.
3. RELATED PARTY TRANSACTIONS:

Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.

On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in bonds and
short-term investments, common stocks and cash, $28 million in policy reserves,
$187 million of current tax liability, $26 million in IMR, $8 million in AVR
(offset by an aggregate write-in to surplus), and $4 million of other
liabilities. The assets in excess of liabilities of $112 million were recorded
as an increase to paid-in surplus.

For additional information, see Note 5.

4. FEDERAL INCOME TAXES:

The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were to file separate Federal, state and local
income tax returns.

As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of HLI, the Company will be included for Federal
income tax purposes in the consolidated group of which The Hartford is the
common parent. It is the current intention of The Hartford and its subsidiaries
to continue to file a single consolidated Federal income tax return. The Company
will continue to remit (receive from) The Hartford a current income tax
provision (benefit) computed in accordance with such tax sharing agreement.
Federal income taxes (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).

<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</TABLE>

5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS:

The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1997 or
1996. ILA paid dividends of $10 million to its parent, HLIC, in 1995. As a
result of the Distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
<PAGE>
F-22
- --------------------------------------------------------------------------------

exceeded liabilities at the contribution date ($112 million) was included in
paid-in surplus.

6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:

The Company's employees are included in The Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$265, $358, and $1,034 in 1997, 1996 and 1995, respectively. Liabilities for the
plan are held by The Hartford.

The Company also participates in The Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of The Hartford. The cost to ILA was not
material in 1997, 1996 and 1995.

The Company's employees are included in The Hartford's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
The Hartford for post-retirement health care and life insurance benefits expense
(not including provisions for accrual of post-retirement benefit obligations)
are immaterial. The assumed rate of future increases in the per capita cost of
health care (the health care trend rate) was 8.5% for 1997, decreasing ratably
to 6% in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated post-retirement
benefit obligation and the annual expense. The cost to ILA was not material in
1997, 1996 and 1995.

Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long-term disability. Post-employment
benefit expense was not material in 1997, 1996 and 1995.

7. REINSURANCE:

The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.

Life insurance net retained premiums were comprised of the following:

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>

The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.

8. SEPARATE ACCOUNTS:

The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with CARVM, which approximates the market value less
applicable surrender charges. Separate account assets are segregated from other
investments, the policyholder assumes the investment risk, and the investment
income and gains and losses accrue directly to the policyholder. Separate
account management fees, net of minimum guarantees, were $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.

9. COMMITMENTS AND CONTINGENCIES:

As of December 31, 1997 and 1996, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any contingent
liabilities or arrangements. The Company is involved in various legal actions
which have arisen in the normal course of its business. In the opinion of
management, the ultimate liability with respect to such lawsuits as well as
other contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.

Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states. ILA paid guaranty
fund assessments of $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
<PAGE>

PART C

<PAGE>

OTHER INFORMATION

Item 27. Exhibits

(a) Resolution of the Board of Directors of Hartford Life and
Annuity Insurance Company ("Hartford") authorizing the
establishment of the Separate Account.(1)

(b) Not Applicable.

(d) Form of Flexible Premium Variable Life Insurance Policy.(2)

(e) Form of Application for Flexible Premium Variable Life Insurance
Policies.(2)

(f) Certificate of Incorporation of Hartford(3) and Bylaws of
Hartford(1).

(g) Contracts of Reinsurance.

(h) Form of Participation Agreements.

(i) Not Applicable.

(j) Not Applicable.

(k) Opinion and consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary.

(l) Not Applicable.

(m) Not Applicable.

(n) Consent of Arthur Andersen LLP, Independent Public Accountants

(o) No financial statement will be omitted.

(p) Not Applicable.

- ---------------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-6, File No. 33-89988, of Hartford Life
Insurance Company filed with the Securities and Exchange Commission on
May 1, 1996.
(2) Incorporated by reference to the Initial Filing of the Registration
Statement on Form S-6, File No. 333-67373, of Hartford Life and Annuity
Insurance Company filed with the Securities and Exchange Commission on
November 17, 1998.
(3) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form S-6, File No. 33-89988, of Hartford Life
Insurance Company filed with the Securities and Exchange Comission on
July 20, 1998.

<PAGE>

(q) Memorandum describing transfer and redemption procedures.(1)

Item 28. Officers and Directors.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Wendell J. Bossen Vice President
- ------------------------------------------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Director*
- ------------------------------------------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
Ann M. deRaismes Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
James R. Dooley Vice President
- ------------------------------------------------------------------------------------------------------------------
Timothy M. Fitch Vice President
- ------------------------------------------------------------------------------------------------------------------
David T. Foy Vice President
- ------------------------------------------------------------------------------------------------------------------
J. Richard Garrett Vice President and Assistant Treasurer
- ------------------------------------------------------------------------------------------------------------------
Donald J. Gillette Vice President
- ------------------------------------------------------------------------------------------------------------------
William A. Godfrey, III Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and Corporate Secretary,
Director*
- ------------------------------------------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
Christopher Graham Vice President
- ------------------------------------------------------------------------------------------------------------------
Mark E. Hunt Vice President
- ------------------------------------------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- ------------------------------------------------------------------------------------------------------------------
Michael D. Keeler Vice President
- ------------------------------------------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
David N. Levenson Vice President
- ------------------------------------------------------------------------------------------------------------------
William B. Malchodi, Jr. Vice President and Director of Taxes
- ------------------------------------------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President and Director, Individual Life and
Annuity Division, Director*
- ------------------------------------------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
- ------------------------------------------------------------------------------------------------------------------
Michael C. O'Halloran Vice President
- ------------------------------------------------------------------------------------------------------------------
Daniel E. O'Sullivan Vice President
- ------------------------------------------------------------------------------------------------------------------
Craig D. Raymond Senior Vice President and Chief Actuary
- ------------------------------------------------------------------------------------------------------------------
David T. Schrandt Vice President
- ------------------------------------------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer, Director*
- ------------------------------------------------------------------------------------------------------------------
Raymond P. Welnicki Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
Walter C. Welsh Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
Lizabeth H. Zlatkus Senior Vice President
- ------------------------------------------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.

*Denotes date of election to Board of Directors.

<PAGE>

Item 29. Persons Controlled By or Under Common Control with the Depositor
or Registrant

Filed herewith as Exhibit 29.

Item 30: Indemnification

Under Section 33-772 of the Connecticut General Statutes,
unless limited by its certificate of incorporation, the
Registrant must indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses
incurred by him in connection with the proceeding.

The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Registrant, and, with respect to any
criminal proceeding, had no reason to believe his conduct was
unlawful. Conn. Gen. Stat. Section 33-771(a). Additionally,
pursuant to Conn. Gen. Stat. Section 33-776, the Registrant
may indemnify officers and employees or agents for liability
incurred and for any expenses to which they becomes subject by
reason of being or having been an employees or officers of the
Registrant. Connecticut law does not prescribe standards for
the indemnification of officers, employees and agents and
expressly states that their indemnification may be broader
than the right of indemnification granted to directors.

The foregoing statements are specifically made subject to the
detailed provisions of Section 33-770 et seq.

Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify a only a director that was successful
on the merits in a suit, under Article VIII, Section 1 of the
Registrant's bylaws, the Registrant must indemnify both
directors and officers of the Registrant for (1) any claims
and liabilities to which they become subject by reason of
being or having been a directors or officers of the company
and legal and (2) other expenses incurred in defending against
such claims, in each case, to the extent such is consistent
with statutory provisions.

Additionally, the directors and officers of Hartford and
Hartford Securities Distribution Company, Inc. ("HSD") are
covered under a directors and officers liability insurance
policy issued to The Hartford Financial Services Group, Inc.
and its subsidiaries. Such policy will reimburse the
Registrant for any

<PAGE>

payments that it shall make to directors and officers pursuant
to law and will, subject to certain exclusions contained in
the policy, further pay any other costs, charges and expenses
and settlements and judgments arising from any proceeding
involving any director or officer of the Registrant in his
past or present capacity as such, and for which he may be
liable, except as to any liabilities arising from acts that
are deemed to be uninsurable.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

Item 31. Principal Underwriters

(a) HSD acts as principal underwriter for the following
investment companies:

<TABLE>
<S> <C>
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable Account)
Hartford Life Insurance Company - Separate Account Two (Variable Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust Separate
Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust Separate Account Two
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
American Maturity Life Insurance Company - Separate Account AMLVA
</TABLE>

(b) Directors and Officers of HSD

<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ----------------------
<S> <C>
Lowndes A. Smith President and Chief Executive Officer, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
</TABLE>

Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.

Item 32. Location of Accounts and Records

All of the accounts, books, records or other documents
required to be kept by Section 31(a) of the Investment Company
Act of 1940 and rules thereunder, are maintained by Hartford
at 200 Hopmeadow Street, Simsbury, Connecticut 06089.

Item 33. Management Services

All management contracts are discussed in Part A and Part B of this
Registration Statement.

Item 34. Representation of Reasonableness of Fees

Hartford hereby represents that the aggregate fees and charges under the
Policy are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Hartford.

<PAGE>

SIGNATURES
----------

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the Town of Simsbury, and State of Connecticut, on the 3rd
day of February, 1999.

HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY - SEPARATE ACCOUNT VL II (Registrant)

By: Thomas M. Marra
------------------------------------------
Thomas M. Marra, Executive Vice President
& Director

By: /s/ Marianne O'Doherty
------------------------------------------
Marianne O'Doherty
Attorney-in-Fact

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)

By: Thomas M. Marra
- ------------------------------------------
Thomas M. Marra, Executive Vice President
& Director

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.

Gregory A. Boyko, Senior Vice President,
Director *
Lynda Godkin, Senior Vice President
General Counsel and Corporate Secretary, *By: /s/ Marianne O'Doherty
Director * ----------------------
Thomas M. Marra, Executive Vice Marianne O'Doherty
President, Director * Attorney-in-Fact
Lowndes A. Smith, President,
Chief Executive Officer, Director * Dated: February 3, 1999
David M. Znamierowski, Senior Vice President,
Director *

<PAGE>

EXHIBIT INDEX

1.1 Reinsurance Agreement with Swiss RE Life Company of America

1.2 Reinsurance Agreement with The Lincoln National Life Insurance
Company

1.3 Form of Participation Agreement

1.4 Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary

1.5 Consent of Arthur Andersen LLP, Independent Public Accountants

1.6 Organizational Chart

<PAGE>

EXHIBIT 1.1

AUTOMATIC YEARLY RENEWABLE TERM

REINSURANCE AGREEMENT

between

HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
and
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

and

SWISS RE LIFE COMPANY AMERICA

Effective: October 1, 1996

<PAGE>

ARTICLES

I. Parties to the Agreement............................................. 1
II. Reinsurance Coverage................................................. 1
III. Liability............................................................ 3
IV. Reinsurance Premiums................................................. 4
V. Oversights........................................................... 5
VI. Changes, Reductions and Terminations................................. 6
VII. Increase in Retention................................................ 7
VIII. Reinstatement........................................................ 8
IX. Expenses............................................................. 9
X. Claims............................................................... 9
XI. Extra-Contractual Damages............................................11
XII. Inspection of Records................................................12
XIII. DAC Tax - Section 1.848-2 (g)(8) Election............................12
XIV. Insolvency...........................................................13
XV. Offset...............................................................14
XVI. Arbitration..........................................................14
XVII. Termination..........................................................15
XVIII. Entire Agreement and Amendments......................................15
XIX. Effective Date.......................................................16
XX. Execution............................................................17

SCHEDULES

A Specifications
B Basis of Reinsurance

EXHIBITS

I Reinsurance Premiums
II Retention, Binding, and Issue Limits

All Schedules and Exhibits attached will be considered part of this Reinsurance
Agreement.

<PAGE>

ARTICLE I

PARTIES TO THE AGREEMENT

This Agreement is between three Hartford Life Companies, Hartford Life
Insurance Company, Hartford Life and Accident Insurance Company, and ITT
Hartford Life and Annuity Insurance Company (collectively referred to as the
Ceding Company) and Swiss Re Life Company America (referred to as the
Reinsurer). The Reinsurer agrees that the terms and conditions of this
Agreement shall apply to each of the Hartford Life Companies individually,
unless otherwise set forth herein.

ARTICLE II

REINSURANCE COVERAGE

Reinsurance under this Agreement will apply to insurance issued by Ceding
Company on the Plans of Insurance shown in Schedule A. Such Plans of
Insurance shall be reinsured with the Reinsurer on an automatic basis,
subject to the requirements set forth in Section A below or on a facultative
basis, subject to the requirements set forth in Section B below. The
specifications for all reinsurance under this Agreement are provided in
Schedule A.

A. Requirements for Automatic Reinsurance

For risks which meet the requirements for automatic reinsurance as set
forth below, Reinsurer will participate in a reinsurance pool whereby
Reinsurer will automatically reinsure a portion of the insurance risks
as indicated in Schedule A. The requirements for automatic reinsurance
are as follows:

1. Each life must be a resident of the United States or Canada at the
time of application.

2. Each life must be underwritten according to the Ceding Company's
standard underwriting practices and guidelines. Any life falling into
the category of special underwriting programs will be excluded from
this Agreement unless previously agreed to by the Reinsurer via a
written amendment.

3. Any risk offered on a facultative basis by the Ceding Company to the
Reinsurer or any other company will not qualify for automatic
reinsurance under this Agreement for the same risk and same life.

4. The maximum issue age on any risk will be age 85.

<PAGE>

5. The mortality rating on each risk must not exceed Table 16, Table P,
or 500%, or its equivalent, as shown in the Ceding Company's retention
schedule, on a flat extra premium basis. However, one life may be
uninsurable if the other life meets the preceding requirements.

6. The total face amount of insurance for the Plans of Insurance in
Schedule A to be reinsured on an automatic basis must not exceed the
Automatic Issue Limits in Exhibit II.

7. The total amount of insurance issued and applied for in all companies
on each life must not exceed the jumbo limits as stated in Exhibit II.

8. The Ceding Company shall retain its maximum limit of retention for
the age and risk classification of each life, as shown in Exhibit II,
either on previous insurance or insurance currently applied for.

B. Requirements for Facultative Reinsurance

1. If the requirements for automatic reinsurance are met, but the Ceding
Company prefers to apply for facultative reinsurance with the
Reinsurer, or if the requirements for automatic reinsurance are not met
and the Ceding Company applies for facultative reinsurance with the
Reinsurer, then the Ceding Company must submit to the Reinsurer all the
papers relating to the insurability of each life for facultative
reinsurance.

2. For applications for facultative reinsurance, Ceding Company will send
copies of all of the papers relating to the insurability of each life
to the Reinsurer. After the Reinsurer has examined the request, the
Reinsurer will promptly notify the Ceding Company of the underwriting
offer subject to additional requirements or the final underwriting
offer. The final underwriting offer on the risk will automatically
terminate upon the earlier of the withdrawal of the application or 120
days from the date of the final offer, unless accepted earlier.

<PAGE>

shall review the papers to determine if the risk should be
reinsured by the Pool, and, if so, on what basis. The Lead Reinsurer
shall provide Ceding Company with a response within 24 hours of receipt
of the papers. Approval of the Lead Reinsurer shall be binding on all
other Pool members. This process shall be known as Automatic
Processing and subject to the limitations in Exhibit II.

C. Basis of Reinsurance

Reinsurance under this Agreement will be on the basis as stated in
Schedule B.

D. Policy Forms.

When requested, the Ceding Company will furnish the Reinsurer with a copy of
each policy, rider, rate book, and applicable sales or marketing material
which applies to the life insurance reinsured hereunder.

ARTICLE III

LIABILITY

A. The Reinsurer's liability for automatic reinsurance will begin
simultaneously with the Ceding Company's liability except for those
risks which qualify for automatic reinsurance but are submitted on a
facultative basis.

B. The Reinsurer's liability for facultative reinsurance will begin
simultaneously with the Ceding Company's liability once the Reinsurer
has accepted the application for facultative reinsurance and the Ceding
Company has accepted the offer.

C. In no event shall the reinsurance be in force and binding if the
issuance and delivery of such insurance constituted the doing of
business in a jurisdiction in which the ceding company was not properly
licensed.

D. The Reinsurer's liability for reinsurance on each risk will
terminate when the Ceding Company's liability terminates.

E. The liability of each pool member shall be separate and not joint
with the other pool members.

F. Payment of reinsurance premiums is a condition precedent to the
Reinsurer's liability.

G. The Reinsurer shall establish reserves on Reinsurer's portion of the
policy on the reserve basis specified in Schedule B.

<PAGE>

ARTICLE IV

REINSURANCE PREMIUMS

A. Computation.

Premiums for reinsurance under this Agreement will be computed as described
in Exhibit I.

B. Premium Accounting.

1. Payment of Reinsurance Premiums.

For automatic and facultative reinsurance, following the close of each
calendar month, the Ceding Company will send the Reinsurer a statement
and a listing of new business, changes and terminations.

If a net reinsurance premium balance is payable to the Reinsurer, the
Ceding Company will forward this balance within (60) sixty days after
the close of each month.

If a net reinsurance premium balance is payable to the Ceding
Company, the balance due will be subtracted from the reinsurance
premium payable by Ceding Company for the current month and any
remaining balance due the Ceding Company shall be paid by the
Reinsurer within (60) sixty days after the Ceding Company submits the
statement.

2. Non-Payment of Premium

If reinsurance premiums are delinquent, the Reinsurer has the right
to terminate the reinsurance risks on those policies listed on the
delinquent monthly statement by giving the Ceding Company ninety
days' advance written notice. If the delinquent premiums have not
been paid as of the close of the ninety-day period, the Reinsurer's
liability will terminate for the risks described in the delinquency
notice.

Regardless of the termination, the Ceding Company will continue to be
liable to the Reinsurer for all unpaid reinsurance premiums earned.

<PAGE>

3. Reinstatement

The Ceding Company may reinstate the risks terminated due to non
payment of reinsurance premium within sixty days after the effective
date of termination by paying the unpaid reinsurance premiums for the
risks in force prior to the termination. However, the Reinsurer will
not be liable for any claim incurred between the date of termination
and reinstatement. The effective date of reinstatement will be the
date the required back premiums are received.

4. Currency

The reinsurance premiums and benefits payable under this Agreement
will be payable in the lawful money of the United States.

5. Detailed Listing

The Ceding Company will send the Reinsurer a detailed listing of all
reinsurance in force as of the close of the immediately preceding
calendar year.

6. Guaranteed Rates

For technical reasons relating to the uncertain status of deficiency
reserve requirements by the various state insurance departments, the
life reinsurance rates cannot be guaranteed for more than one year.
On all reinsurance ceded at these rates, however, the Reinsurer
anticipates continuing to accept premiums on the basis of the rates
shown in Exhibit I.

ARTICLE V

OVERSIGHTS

If there is an unintentional oversight or misunderstanding in the
administration of this Agreement by Ceding Company or Reinsurer, it can be
corrected provided the correction takes place within a reasonable time after
the oversight or misunderstanding is first discovered. Both Ceding Company
and the Reinsurer will be restored to the position they would have occupied
had the oversight or misunderstanding not occurred.

<PAGE>

ARTICLE VI

CHANGES, REDUCTIONS AND TERMINATIONS

A. Replacement or Change

If there is a contractual change or non-contractual replacement of
the insurance reinsured under this Agreement where full underwriting
evidence according to the Ceding Company's regular underwriting rules
is not required, the insurance may continue to be reinsured with the
Reinsurer provided it meets the minimum reinsurance cession amount
stated in Schedule A. If a non-contractual change is requested on a
facultatively reinsured policy, the Reinsurer must consent to the
change.

B. Increases or Decreases

1. If the policy face amount of a risk reinsured automatically under
this Agreement increases and:

a. The increase is subject to new underwriting evidence, then the
provisions of Article Ii, Section A, shall apply to the increase
in reinsurance.

b. The increase is not subject to new underwriting evidence, then
Reinsurer will accept automatically the increase in reinsurance but
not to exceed the automatic binding limit.

2. If the policy face amount increases, the Ceding Company's retention
will be filled first, then any remaining risk of the increase will be
ceded to the Reinsurer as of the effective date of the increase. If
the policy face amount is reduced, the reinsurance will be reduced
first, thereby maintaining the Ceding Company's retention. Reinsurer
will refund to Ceding Company all unearned reinsurance premiums not
including policy fees, less applicable allowances, arising from
reductions, terminations and changes as described in this Article.

3. In the event of a reduction in the face amount of a policy which
was ceded facultatively, the Reinsurer's percentage of the reduced
face amount should be the same percentage of the initial reinsurance
ceded.

4. Increases in face amount of policies reinsured on a facultative
basis, will be submitted to the Reinsurer for acceptance.

<PAGE>

C. Reduction in Retained Coverage

If any portion of the aggregate insurance retained by Ceding Company
on an individual life reduces or terminates, any reinsurance under
this Agreement based on the same life may also be reduced or
terminated. Ceding Company will reduce the reinsurance by applying
the retention limits which were in effect at the time each policy was
issued. Ceding Company will not be required to retain an amount in
excess of its regular retention limit for the age, mortality rating
and risk classification at the time of issue for any policy on which
reinsurance is being reduced.

The reinsurance to be terminated or reduced will be determined by
chronological order in which the reinsurance was first reinsured,
thereby reducing or terminating the oldest risks first.

D. Multiple Reinsurers

If a risk is shared by more than one reinsurer, Reinsurer's
percentage of any increased or reduced reinsurance will be the same
as its initial percentage of the reinsurance for that risk.

E. Termination

If the policy for a risk reinsured under this Agreement is
terminated, the reinsurance for the risk involved will be terminated
on the effective date of termination.

F. Facultative

On facultative reinsurance, if Ceding Company wishes to reduce the
mortality rating, this reduction will be subject to and reinsured
under the facultative provisions of this Agreement.

ARTICLE VII

INCREASE IN RETENTION

A. If the Ceding Company should increase the retention limits as
listed in Exhibit II, prompt written notice of the increase must be
given to the Reinsurer.

B. In the event of an increase in retention, the Ceding Company will
have the option of recapturing the reinsurance under this Agreement
when the retention limit increases. The Ceding Company may exercise
its option to

<PAGE>

recapture by giving written notice to the Reinsurer within ninety
days after the effective date of the increase.

C. If the Ceding Company exercises its option to recapture, then

1. The Ceding Company must reduce the reinsurance on each risk on
which the Ceding Company retained the maximum retention limit that
was in effect at the time the reinsurance was ceded to the Reinsurer.

2. No recapture will be made to reinsurance on a risk if (a) the
Ceding Company retained a special retention limit less than the
maximum retention limit in effect at the time the reinsurance was
ceded to the Reinsurer, or if (b) the Ceding Company did not retain
insurance on the risk.

3. The Ceding Company must increase its total amount of insurance on
the risk up to the new retention limit by reducing the reinsurance.
If a risk is shared by more than one reinsurer, the Reinsurer's
percentage of the reduced reinsurance will be the same as the initial
percentage on the individual risk.

4. Upon increasing the retention limit, the reduction in reinsurance
will become effective on the next annual premium anniversary of
those policies that have been inforce for at least ten (10) years.

ARTICLE VIII

REINSTATEMENT

If an insurance policy lapses for nonpayment of premium and is reinstated under
the Ceding Company's terms and rules, the reinsurance will be reinstated by the
Reinsurer as follows:

A. Automatic Cases:

The Ceding Company must pay the Reinsurer all back reinsurance
premiums in the same manner as the Ceding Company received insurance
premiums under the policy. When the policy is reinstated by the
Ceding Company, the reinsurance will be automatically reinstated.

<PAGE>

B. Facultative Cases:

If the Ceding Company requires reinstatement evidence of
insurability, the Ceding Company will submit it to the Reinsurer for
approval. In such cases, the Reinsurer's approval is required for
the reinsurance to be reinstated. Upon the Reinsurer's approval, the
Ceding Company must pay the Reinsurer all back reinsurance premiums
in the same manner as the Ceding Company received insurance premium
under the policy.

ARTICLE IX

EXPENSES

The Ceding Company must pay the expense of all medical examinations, inspection
fees and other charges in connection with the issuance of the insurance.

ARTICLE X

CLAIMS

A. Liability

The Reinsurer's liability for the insurance benefits reinsured under
this Agreement will be the same as the Ceding Company's liability for
such benefits. All reinsurance claim settlements will be subject to
the terms and conditions of the particular contract under which the
Ceding Company is liable.

B. Notification

When the Ceding Company is advised of a claim, the Reinsurer must be
notified promptly.

C. Claim Payment

1. Automatic Reinsurance on a Risk

If a claim is made on a risk reinsured automatically under this
Agreement and is not contested by the Ceding Company, Reinsurer will
abide by the issue as it is settled by the Ceding Company. Copies of
proofs or other written matters relating to any claim reimbursements
under this Agreement shall be furnished to the Reinsurer upon written
request. The Ceding Company will receive payment of the reinsurance
proceeds from the Reinsurer when the Ceding Company makes the
settlement of the policy proceeds and delivers a copy of the proof of
death, check copy or proof of payment and the claimant's statement to
the Reinsurer.

9
<PAGE>

2. Facultative Reinsurance on a Risk

If a claim is made on a risk reinsured facultatively under this
Agreement, the Ceding Company shall submit to Reinsurer all relevant
and/or requested documents and papers related to the claim along with
Ceding Company's recommendation. Ceding Company shall then wait five
days from the date of mailing during which time Reinsurer shall have
the opportunity to advise Ceding Company of its consent or
disagreement with the recommendation. In the event Reinsurer does
not contact Ceding Company within the five day period, Reinsurer
shall be deemed to have approved the recommendation and Ceding
Company shall be authorized to act accordingly. The Ceding Company
will receive payment of the reinsurance proceeds from Reinsurer when
Ceding Company makes the settlement of the policy proceeds and
delivers proof of payment to the Reinsurer.

3. Payment of Reinsurance Proceeds

Payment of life reinsurance proceeds will be made in a single sum
regardless of the Ceding Company's mode of settlement with the payee.

D. Contested Claims

The Ceding Company must promptly notify the Reinsurer of any intent
to contest a claim reinsured under this Agreement or to assert
defenses. If the Ceding Company's contest of such claim results in
the increase or reduction of liability, the Reinsurer will share in
this increase or reduction. The Reinsurer's share of the increase or
decrease shall be proportional to their share of the met amount at
risk on the date of death of the insured.

If the Reinsurer should decline to participate in the contest or
assertion of defenses, the Reinsurer will then release all of the
liability by paying the Ceding Company the full amount of reinsurance
and not sharing in any subsequent increase or reduction in liability.

E. Misstatement of Age or Sex

If the amount of insurance provided by the policy or policies
reinsured under this Agreement is increased or reduced because of
misstatement of age or sex established after the death of the
insured, the Reinsurer will share with the Ceding Company in this
increase or reduction.

<PAGE>

F. Routine Expenses

The Ceding Company will pay the routine expenses incurred in
connection with settling claims. These expenses may include
compensation of agent and employees and the cost of routine
investigations such as inspection reports.

G. Non-Routine Expenses

The Reinsurer will share with the Ceding Company all expenses that
are not routine. Expenses that are not routine are those directly
incurred in connection with the contest or the possibility of a
contest of a claim or the assertion of defenses, including legal
expenses. The expenses will be shared in proportion to the net
amount at risk for the Ceding Company and Reinsurer. However, if the
Reinsurer has released the liability under Section D of this Article,
the Reinsurer will not share in any expenses incurred after the date
of the Reinsurer's release.

H. Contestable Period

If, during the contestable period, Ceding Company is notified of the
death of the first joint insured, the Ceding Company will investigate
the case.

ARTICLE XI

EXTRA-CONTRACTUAL DAMAGES

In no event will the Reinsurer have any liability for any extra-contractual
damages which are awarded against the Ceding Company as a result of acts,
omissions or course of conduct committed by the Ceding Company in connection
with the insurance reinsured under this Agreement.

The Reinsurer does recognize that circumstances may arise under which the
Reinsurer, in equity, should share, to the extent permitted by law, in paying
certain assessed damages. Such circumstances are difficult to define in
advance, but involve those situations in which the Reinsurer was an active
party in the act, omission or course of conduct which ultimately results in
the assessment of such damages. The extent of such sharing is dependent on
good faith assessment of culpability in each case, but all factors being
equal, the division of any such assessment would be in the proportion of
total risk accepted by each party for the plan of insurance involved.

11
<PAGE>

ARTICLE XII

INSPECTION OF RECORDS

Each party will have the right, at any reasonable time and upon reasonable
notice, to inspect the other party's books and documents which relate to
reinsurance under this Agreement.

ARTICLE XIII

DAC TAX
SECTION 1.848-2(g)(8) ELECTION

A. The Reinsurer and the Ceding Company hereby agree to the
following pursuant to section 1.848-2(g)(8) of the Income Tax
Regulations issued December 1992 under Section 848 of the Internal
Revenue Code of 1986, as amended. This election shall be effective
for 1993 and for all subsequent taxable years for which this
Agreement remains in effect.

B. The terms used in this Article are defined by reference to
Regulation Section 1.848-2 in effect December 1992.

C. The party with net positive consideration for this Agreement for
each taxable year will capitalize specified policy acquisition
expenses with respect to this Agreement without regard to the general
deduction limitation of section 848(c)(1).

D. Both parties agree to exchange information pertaining to the amount
of net consideration under this Agreement each year to ensure
consistency or as otherwise required by the Internal Revenue Service.

E. The Ceding Company will submit to the Reinsurer by May 1 of each
year a schedule of the calculation of the net consideration for the
preceding calendar year. This schedule of calculations will be
accompanied by a statement signed by an officer of the Ceding Company
stating that such net consideration will be reported in the tax
return for the preceding calendar year.

F. The Reinsurer may contest such calculation by providing an
alternative calculation to the Ceding Company in writing within 30
days of receipt of Ceding Company's calculation. If the Reinsurer
does not notify the Ceding Company, Reinsurer will report the net
consideration as determined by the Ceding Company in the tax return
for the preceding calendar year.

G. If the Reinsurer contests the Ceding Company's calculation of the net
consideration, both parties will act in good faith to reach an agreement as

<PAGE>

to the correct amount within thirty (30) days of the date the
Reinsurer submits their alternative calculation. If both parties
reach agreement on an amount of net consideration, both parties shall
report such amount in their respective tax returns for the previous
calendar year.

ARTICLE XIV

INSOLVENCY

A. Insolvency of Reinsurer

If the Reinsurer becomes insolvent as determined by the Department of
Insurance responsible for such determination, amounts due the
Reinsurer will be paid net of the terms of this Agreement and
directly to the liquidator, receiver, or statutory successor without
decrease. All reinsurance ceded under this Agreement may be
recaptured by the Ceding Company without charge or penalty as of the
date Reinsurer fails to meet its obligations under this Agreement.

B. Insolvency of Ceding Company

If Hartford Life Insurance Company, Hartford Life and Accident
Insurance Company or ITT Hartford Life and Annuity Insurance Company
should become insolvent, all reinsurance under this Agreement
covering risks ceded by that particular company will be payable by
Reinsurer directly to that Company's liquidator, receiver or
statutory successor, on the basis of the liability of that Company
under the policy or policies reinsured and without diminution because
of the insolvency of the Company. However, in the event of such
insolvency, the liquidator, receiver or statutory successor will give
written notice of a pending claim against Ceding Company on the
reinsured policy. It will do so within a reasonable time after the
claim is filed in the insolvency proceedings. During the pendency of
such a claim, Reinsurer may investigate the claim and may, at its own
expense, interpose any defense or defenses which it may deem
available to the insolvent Company, its liquidator, receiver or
statutory successor, in the proceedings where the claim is to be
adjudicated.

The expense thus incurred by Reinsurer will be chargeable against the
insolvent Company, subject to court approval, as part of the expense
of liquidation to the extent of a proportionate share of the benefit
which may accrue to the insolvent Company solely as a result of the
defense undertaken by Reinsurer.

Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to the claim, the
expense

<PAGE>

will be apportioned in accord with the terms of the reinsurance
agreement as though the expense had been incurred by the insolvent
Company.

It is agreed that the insolvency of any one of the Hartford Life
Companies shall not affect this Agreement as it applies to the
remaining solvent companies.

ARTICLE XV

OFFSET

Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against either
the Ceding Company or the Reinsurer with respect to this Agreement or with
respect to any other claim of one party against the other are deemed mutual
debts or credits, as the case may be, and shall be set off, and only the
balance shall be allowed or paid. In the event the Ceding Company becomes
insolvent, offsets shall be allowed in accordance with applicable law.

ARTICLE XVI

ARBITRATION

Any disagreement, controversy, or claim arising out of or relating to this
Agreement between the Reinsurer and any one of the Hartford Life Companies
will be settled by arbitration. There will be three arbitrators chosen among
current or retired officers of life insurance companies other than parties
or their affiliates. Each party to the dispute will appoint one of the
arbitrators and these two arbitrators will select the third arbitrator. In
the event that either party should fail to choose an arbitrator within 30
days following a written request by the other party to do so, the requesting
party may choose two arbitrators who shall in turn choose a third arbitrator
before entering upon arbitration. If the two arbitrators fail to agree upon
the selection of a third arbitrator within 30 days following their
appointment, each arbitrator shall nominate three candidates within 10 days
thereafter, two of whom the other shall decline, and the decision shall be
made by drawing lots.

Arbitration will be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association which will be in effect on the
date of delivery of demand for arbitration. The arbitrators will base their
decision on the terms and conditions of this Agreement plus, as necessary, on
the customs and practices of the insurance and reinsurance industry rather
than solely on a strict interpretation of the applicable law. The site of
any arbitration will be determined by a majority vote of the arbitrators.
All expenses and fees of the

<PAGE>

arbitrations will be borne equally by the parties unless otherwise decreed by
the arbitrators.

The award agreed to by a majority of the arbitrators will be final and binding
and there will be no appeal from their decision. Judgment may be entered upon
it in any court having jurisdiction.

ARTICLE XVII

TERMINATION

A. Each Hartford Life Insurance Company and the Reinsurer may
terminate this Agreement as it applies to the business of each by
giving (90) ninety days' written notice of termination. The day the
notice is deposited in the mail addressed to the Home Office, or to
an Officer of each party, will be the first day of the (90)
ninety-day period.

B. During the (90) ninety-day period, this Agreement will continue to be in
force between the terminating parties.

C. After termination, the terminating parties shall remain liable under the
terms of this Agreement for all automatic reinsurance which becomes
effective prior to termination of this Agreement. After termination
the terminating parties shall be liable for all automatic and
facultative reinsurance which has an application date on or before
the effective date of the termination.

D. Termination by one or two of the Hartford Life Companies shall not affect
this Agreement as it relates to the non-terminating Hartford Life
Company(ies).

ARTICLE XVIII

ENTIRE AGREEMENT AND AMENDMENT

A. Entire Contract

This Agreement with any attached Schedules and Exhibits, shall
constitute the entire agreement between the parties with respect to
the business being reinsured hereunder and there are no
understandings between the parties other than as expressed herein.

<PAGE>

B. Modifications

Any modification or change to the provisions of this Agreement shall
be null and void unless set forth in a written amendment to the
Agreement which is signed by all parties to the amendment.

ARTICLE XIX

EFFECTIVE DATE

The provisions of this Agreement shall be effective with respect to policies
issued on or after October 1, 1996.

<PAGE>

ARTICLE XX

EXECUTION

SWISS RE LIFE COMPANY AMERICA

By /s/ James Pilgrim Attest /s/ Robert Gandjean
------------------------------- --------------------------------

Title Vice President Title Assistant Actuary
------------------------------- --------------------------------

------------------------------- --------------------------------

Date July 20, 1998 Date July 20, 1998
------------------------------- --------------------------------

HARTFORD LIFE INSURANCE COMPANY

HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

By /s/ Timothy M. Fitch Attest /s/ Ken A. McCullum
------------------------------- --------------------------------

Timothy M. Fitch, FSA, CLU Ken A. McCullum, FSA, MAAA
Vice President Assistant Vice President
Individual Life Product & Marketing Individual Life Product
Development

Date July 10, 1998 Date July 10, 1998
------------------------------- --------------------------------

<PAGE>

SCHEDULE A

SPECIFICATIONS

TYPE OF BUSINESS Fully underwritten Last Survivor Plans

REINSURANCE POOL SHARE Reinsurer shall automatically reinsure of the
amount at risk on a policy reinsured by the Pool.

PLANS OF INSURANCE

DESCRIPTION GENERAL FORM NO'S.
- ----------- ------------------
Last Survivor Interest Sensitive Whole Life HL-12710, HL-A12966, ILA-1078
Last Survivor Universal Life HL-14393, HL-A14407, ILA-1011
Last Survivor Variable Life HL-14263, ILA-1020
Last Survivor SPVL (fully underwritten) HL-LSPVL94, ILA-LSPVL97,
HL-LSPVL97, ILA-LSPVL97

RIDERS
- ------
Additional Insurance Benefit Rider HL-13514, HL-A13504, ILA-1079
Four Year Term Rider HL-12933, HL-A12989, ILA-1080
Increasing Term Rider HL-12934, HL-A12996, ILA-1081
Estate Protection Rider HL-14627, ILA-1023
Six Month Exchange Rider HL-12936, ILA-1083
Twenty-four Month Exchange Rider HL-12963, ILA-1013
Alternative Requisite Premium Option Rider HL-14201
Maturity Extension Rider HL-14637, ILA-1024
Single Life YRT Life Insurance Rider HL-14626, ILA-1021
First Death Term Life Rider HL-12932

MINIMUM REINSURANCE $50,000 Upon reaching the retention limit
Cession set forth in Exhibit II,
Ceding Company will automatically
cede the excess insurance only if
the total amount to be ceded to
the Pool is $50,000 or more.

LEAD REINSURER Lincoln National Plans of Insurance and Riders
Life produced through ELAR.

Security Life Plans of Insurance and Riders
of Denver produced through All Other
Producers.

<PAGE>

SCHEDULE B

BASIS OF REINSURANCE

LIFE PRODUCTS Life reinsurance will be on the yearly renewable term (YRT)
basis for the amount at risk on the portion of the policy
reinsured by Reinsurer. The amount at risk on a policy
shall be the death benefit of the policy less the amount
retained by the Ceding Company, less the cash value under
the policy. The basis for determining Reinsurer's
liability shall be the amount at risk used for computation
of the reinsurance premium.

EXCHANGES Exchanges from one last survivor plan reinsured under this
agreement to a different last survivor plan, for the
purpose of allowing the policyowner premium flexibility
(UL) or potentially higher investment return (VL), will be
reinsured hereunder as NEW BUSINESS at first year
reinsurance rates if the new plan has been fully
underwritten and has new contestable and suicide exclusion
periods. Otherwise, the reinsurance rates will be
point-in-scale.

RESERVE BASIS Reserves are calculated according to the applicable CRVM
methodology, interest rate and mortality table. The
mortality tables used are male/female, smoker distinct, age
last birthday and ultimate. The mortality rates are
frasierized. There is a 1/2 qx unearned premium reserve
minimum.

<PAGE>

Exhibit 1.2

AUTOMATIC YEARLY RENEWABLE TERM

REINSURANCE AGREEMENT

between

HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
and
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

and

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

Effective: October 1, 1996

<PAGE>

ARTICLES

I. Parties to the Agreement ............................. 1
II. Reinsurance Coverage ................................. 1
III. Liability ............................................ 3
IV. Reinsurance Premiums ................................. 4
V. Oversights ........................................... 5
VI. Changes, Reductions and Terminations ................. 6
VII. Increase in Retention ................................ 7
VIII. Reinstatement ........................................ 8
IX. Expenses ............................................ 9
X. Claims ............................................... 9
XI. Extra-Contractual Damages ............................. 11
XII. Inspection of Records ................................. 12
XIII. DAC Tax - Section 1.848-2 (g)(8) Election ............. 12
XIV. Insolvency ............................................ 13
XV. Offset ............................................... 14
XVI. Arbitration .......................................... 14
XVII. Termination .......................................... 15
XVIII. Entire Agreement and Amendments ...................... 15
XIX. Effective Date ...................................... 16
XX. Execution ............................................ 17

SCHEDULES

A Specifications
B Basis of Reinsurance

EXHIBITS

I Reinsurance Premiums
II Retention, Binding, and Issue Limits

All Schedules and Exhibits attached will be considered part of this
Reinsurance Agreement.

<PAGE>

ARTICLE I

PARTIES TO THE AGREEMENT

This Agreement is between three Hartford Life Companies, Hartford Life
Insurance Company, Hartford Life and Accident Insurance Company, and ITT
Hartford Life and Annuity Insurance Company (collectively referred to as the
Ceding Company) and The Lincoln National Life Insurance Company (referred to
as the Reinsurer). The Reinsurer agrees that the terms and conditions of
this Agreement shall apply to each of the Hartford Life Companies
individually, unless otherwise set forth herein.

ARTICLE II

REINSURANCE COVERAGE

A. Requirements for Automatic Reinsurance

1. Each life must be a resident of the United States or Canada at
the time of application.

3. Any risk offered on a facultative basis by the Ceding Company to the
Reinsurer or any other company will not qualify for automatic
reinsurance under this Agreement for the same risk and same life.

4. The maximum issue age on any risk will be age 85.

<PAGE>

5. The mortality rating on each risk must not exceed Table 16, Table P, or
500%, or its equivalent, as shown in the Ceding Company's retention
schedule, on a flat extra premium basis. However, one life may be
uninsurable if the other life meets the preceding requirements.

6. The total face amount of insurance for the Plans of Insurance
in Schedule A to be reinsured on an automatic basis must not exceed
the Automatic Issue Limits in Exhibit II.

7. The total amount of insurance issued and applied for in all
companies on each life must not exceed the jumbo limits as stated
in Exhibit II.

8. The Ceding Company shall retain its maximum limit of retention
for the age and risk classification of each life, as shown in
Exhibit II, either on previous insurance or insurance currently
applied for.

B. Requirements for Facultative Reinsurance

1. If the requirements for automatic reinsurance are met, but the
Ceding Company prefers to apply for facultative reinsurance with
the Reinsurer, or if the requirements for automatic reinsurance are
not met and the Ceding Company applies for facultative reinsurance
with the Reinsurer, then the Ceding Company must submit to the
Reinsurer all the papers relating to the insurability of each life
for facultative reinsurance.

2. For applications for facultative reinsurance, Ceding Company
will send copies of all of the papers relating to the insurability
of each life to the Reinsurer. After the Reinsurer has examined
the request, the Reinsurer will promptly notify the Ceding Company
of the underwriting offer subject to additional requirements or the
final underwriting offer. The final underwriting offer on the risk
will automatically terminate upon the earlier of the withdrawal of
the application or 120 days from the date of the final offer,
unless accepted earlier.

3. Notwithstanding the above, if the requirements for
automatic reinsurance are met except that the face amount of
insurance applied for is greater than the Automatic Issue Limit,
but does not exceed the Auto Process Limit, then the Ceding Company
will submit to the Lead Reinsurer, (as designated in Schedule A),
all papers relating to the insurability of each life. The Lead
Reinsurer shall review the papers to determine if the risk should
be reinsured by the Pool, and, if so, on what basis. The Lead
Reinsurer shall provide Ceding Company with a response within 24
hours

<PAGE>

of receipt of the papers. Approval of the Lead Reinsurer
shall be binding on all other Pool members. This process shall be
known as Automatic Processing and subject to the limitations in
Exhibit II.

C. Basis of Reinsurance

Reinsurance under this Agreement will be on the basis as
stated in Schedule B.

D. Policy Forms.

When requested, the Ceding Company will furnish the Reinsurer with
a copy of each policy, rider, rate book, and applicable sales or
marketing material which applies to the life insurance reinsured
hereunder.

ARTICLE III

LIABILITY

D. The Reinsurer's liability for reinsurance on each risk will
terminate when the Ceding Company's liability terminates.

E. The liability of each pool member shall be separate and not joint
with the other pool members.

F. Payment of reinsurance premiums is a condition precedent to the
Reinsurer's liability.

G. The Reinsurer shall establish reserves on Reinsurer's portion of
the policy on the reserve basis specified in Schedule B.

<PAGE>

ARTICLE IV

REINSURANCE PREMIUMS

A. Computation.

Premiums for reinsurance under this Agreement will be computed as
described in Exhibit I.

B. Premium Accounting.

1. Payment of Reinsurance Premiums.

For automatic and facultative reinsurance, following the close of
each calendar month, the Ceding Company will send the Reinsurer a
statement and a listing of new business, changes and terminations.

If a net reinsurance premium balance is payable to the Reinsurer,
the Ceding Company will forward this balance within (60) sixty days
after the close of each month.

2. Non-Payment of Premium

Regardless of the termination, the Ceding Company will continue to
be liable to the Reinsurer for all unpaid reinsurance premiums
earned.

3. Reinstatement

The Ceding Company may reinstate the risks terminated due to non
payment of reinsurance premium within sixty days after the
effective date

<PAGE>

of termination by paying the unpaid reinsurance premiums for the
risks in force prior to the termination. However, the Reinsurer
will not be liable for any claim incurred between the date of
termination and reinstatement. The effective date of reinstatement
will be the date the required back premiums are received.

4. Currency

The reinsurance premiums and benefits payable under this Agreement
will be payable in the lawful money of the United States.

5. Detailed Listing

The Ceding Company will send the Reinsurer a detailed listing of
all reinsurance in force as of the close of the immediately
preceding calendar year.

6. Guaranteed Rates

For technical reasons relating to the uncertain status of
deficiency reserve requirements by the various state insurance
departments, the life reinsurance rates cannot be guaranteed for
more than one year. On all reinsurance ceded at these rates,
however, the Reinsurer anticipates continuing to accept premiums on
the basis of the rates shown in Exhibit I.

ARTICLE V

OVERSIGHTS

<PAGE>

ARTICLE VI

CHANGES, REDUCTIONS AND TERMINATIONS

A. Replacement or Change

If there is a contractual change or non-contractual replacement of the
insurance reinsured under this Agreement where full underwriting
evidence according to the Ceding Company's regular underwriting rules
is not required, the insurance may continue to be reinsured with the
Reinsurer provided it meets the minimum reinsurance cession amount
stated in Schedule A. If a non-contractual change is requested on a
facultatively reinsured policy, the Reinsurer must consent to the
change.

B. Increases or Decreases

1. If the policy face amount of a risk reinsured automatically under this
Agreement increases and:

a. The increase is subject to new underwriting evidence, then the
provisions of Article Ii, Section A, shall apply to the increase
in reinsurance.

b. The increase is not subject to new underwriting evidence, then
Reinsurer will accept automatically the increase in reinsurance
but not to exceed the automatic binding limit.

3. In the event of a reduction in the face amount of a policy which was
ceded facultatively, the Reinsurer's percentage of the reduced face
amount should be the same percentage of the initial reinsurance ceded.

4. Increases in face amount of policies reinsured on a facultative basis,
will be submitted to the Reinsurer for acceptance.

<PAGE>

C. Reduction in Retained Coverage

If any portion of the aggregate insurance retained by Ceding Company on
an individual life reduces or terminates, any reinsurance under this
Agreement based on the same life may also be reduced or terminated.
Ceding Company will reduce the reinsurance by applying the retention
limits which were in effect at the time each policy was issued. Ceding
Company will not be required to retain an amount in excess of its
regular retention limit for the age, mortality rating and risk
classification at the time of issue for any policy on which reinsurance
is being reduced.

The reinsurance to be terminated or reduced will be determined by
chronological order in which the reinsurance was first reinsured,
thereby reducing or terminating the oldest risks first.

D. Multiple Reinsurers

If a risk is shared by more than one reinsurer, Reinsurer's percentage
of any increased or reduced reinsurance will be the same as its initial
percentage of the reinsurance for that risk.

E. Termination

If the policy for a risk reinsured under this Agreement is terminated,
the reinsurance for the risk involved will be terminated on the
effective date of termination.

F. Facultative

On facultative reinsurance, if Ceding Company wishes to reduce the
mortality rating, this reduction will be subject to and reinsured under
the facultative provisions of this Agreement.

ARTICLE VII

INCREASE IN RETENTION

A. If the Ceding Company should increase the retention limits as listed in
Exhibit II, prompt written notice of the increase must be given to the
Reinsurer.

B. In the event of an increase in retention, the Ceding Company will have the
option of recapturing the reinsurance under this Agreement when the
retention limit

<PAGE>

increases. The Ceding Company may exercise its option to recapture by
giving written notice to the Reinsurer within ninety days after the
effective date of the increase.

C. If the Ceding Company exercises its option to recapture, then

1. The Ceding Company must reduce the reinsurance on each risk on which
the Ceding Company retained the maximum retention limit that was in
effect at the time the reinsurance was ceded to the Reinsurer.

2. No recapture will be made to reinsurance on a risk if (a)
the Ceding Company retained a special retention limit less than the
maximum retention limit in effect at the time the reinsurance was
ceded to the Reinsurer, or if (b) the Ceding Company did not retain
insurance on the risk.

3. The Ceding Company must increase its total amount of
insurance on the risk up to the new retention limit by reducing the
reinsurance. If a risk is shared by more than one reinsurer, the
Reinsurer's percentage of the reduced reinsurance will be the same
as the initial percentage on the individual risk.

4. Upon increasing the retention limit, the reduction in
reinsurance will become effective on the next annual premium
anniversary of those policies that have been inforce for at least
ten (10) years.

ARTICLE VIII

REINSTATEMENT

If an insurance policy lapses for nonpayment of premium and is reinstated under
the Ceding Company's terms and rules, the reinsurance will be reinstated by the
Reinsurer as follows:

A. Automatic Cases:

The Ceding Company must pay the Reinsurer all back reinsurance premiums
in the same manner as the Ceding Company received insurance premiums
under the policy. When the policy is reinstated by the Ceding Company,
the reinsurance will be automatically reinstated.

<PAGE>

B. Facultative Cases:

If the Ceding Company requires reinstatement evidence of insurability,
the Ceding Company will submit it to the Reinsurer for approval. In
such cases, the Reinsurer's approval is required for the reinsurance to
be reinstated. Upon the Reinsurer's approval, the Ceding Company must
pay the Reinsurer all back reinsurance premiums in the same manner as
the Ceding Company received insurance premium under the policy.

ARTICLE IX

EXPENSES

The Ceding Company must pay the expense of all medical examinations, inspection
fees and other charges in connection with the issuance of the insurance.

ARTICLE X

CLAIMS

A. Liability

The Reinsurer's liability for the insurance benefits reinsured under
this Agreement will be the same as the Ceding Company's liability for
such benefits. All reinsurance claim settlements will be subject to the
terms and conditions of the particular contract under which the Ceding
Company is liable.

B. Notification

When the Ceding Company is advised of a claim, the Reinsurer must be
notified promptly.

C. Claim Payment

1. Automatic Reinsurance on a Risk

<PAGE>

the Reinsurer when the Ceding Company makes the settlement of
the policy proceeds and delivers a copy of the proof of death,
check copy or proof of payment and the claimant's statement to
the Reinsurer.

2. Facultative Reinsurance on a Risk

If a claim is made on a risk reinsured facultatively under this
Agreement, the Ceding Company shall submit to Reinsurer all
relevant and/or requested documents and papers related to the claim
along with Ceding Company's recommendation. Ceding Company shall
then wait five days from the date of mailing during which time
Reinsurer shall have the opportunity to advise Ceding Company of
its consent or disagreement with the recommendation. In the event
Reinsurer does not contact Ceding Company within the five day
period, Reinsurer shall be deemed to have approved the
recommendation and Ceding Company shall be authorized to act
accordingly. The Ceding Company will receive payment of the
reinsurance proceeds from Reinsurer when Ceding Company makes the
settlement of the policy proceeds and delivers proof of payment to
the Reinsurer.

3. Payment of Reinsurance Proceeds

Payment of life reinsurance proceeds will be made in a single sum
regardless of the Ceding Company's mode of settlement with the
payee.

D. Contested Claims

The Ceding Company must promptly notify the Reinsurer of any intent to
contest a claim reinsured under this Agreement or to assert defenses.
If the Ceding Company's contest of such claim results in the increase
or reduction of liability, the Reinsurer will share in this increase or
reduction. The Reinsurer's share of the increase or decrease shall be
proportional to their share of the met amount at risk on the date of
death of the insured.

E. Misstatement of Age or Sex

If the amount of insurance provided by the policy or policies reinsured
under this Agreement is increased or reduced because of misstatement of
age or sex established after the death of the insured, the Reinsurer
will share with the Ceding Company in this increase or reduction.

<PAGE>

F. Routine Expenses

The Ceding Company will pay the routine expenses incurred in connection
with settling claims. These expenses may include compensation of agent
and employees and the cost of routine investigations such as inspection
reports.

G. Non-Routine Expenses

The Reinsurer will share with the Ceding Company all expenses that are
not routine. Expenses that are not routine are those directly incurred
in connection with the contest or the possibility of a contest of a
claim or the assertion of defenses, including legal expenses. The
expenses will be shared in proportion to the net amount at risk for the
Ceding Company and Reinsurer. However, if the Reinsurer has released
the liability under Section D of this Article, the Reinsurer will not
share in any expenses incurred after the date of the Reinsurer's
release.

H. Contestable Period

If, during the contestable period, Ceding Company is notified of the
death of the first joint insured, the Ceding Company will investigate
the case.

ARTICLE XI

EXTRA-CONTRACTUAL DAMAGES

<PAGE>
ARTICLE XII

INSPECTION OF RECORDS

Each party will have the right, at any reasonable time and upon reasonable
notice, to inspect the other party's books and documents which relate to
reinsurance under this Agreement.

ARTICLE XIII

DAC TAX
SECTION 1.848-2(g)(8) ELECTION

A. The Reinsurer and the Ceding Company hereby agree to the following
pursuant to section 1.848-2(g)(8) of the Income Tax Regulations issued
December 1992 under Section 848 of the Internal Revenue Code of 1986,
as amended. This election shall be effective for 1993 and for all
subsequent taxable years for which this Agreement remains in effect.

B. The terms used in this Article are defined by reference to Regulation
Section 1.848-2 in effect December 1992.

C. The party with net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deduction
limitation of section 848(c)(1).

D. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency or
as otherwise required by the Internal Revenue Service.

E. The Ceding Company will submit to the Reinsurer by May 1 of each year a
schedule of the calculation of the net consideration for the preceding
calendar year. This schedule of calculations will be accompanied by a
statement signed by an officer of the Ceding Company stating that such
net consideration will be reported in the tax return for the preceding
calendar year.

F. The Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within 30 days of receipt
of Ceding Company's calculation. If the Reinsurer does not notify the
Ceding Company, Reinsurer will report the net consideration as
determined by the Ceding Company in the tax return for the preceding
calendar year.

<PAGE>

G. If the Reinsurer contests the Ceding Company's calculation of the net
consideration, both parties will act in good faith to reach an
agreement as to the correct amount within thirty (30) days of the date
the Reinsurer submits their alternative calculation. If both parties
reach agreement on an amount of net consideration, both parties shall
report such amount in their respective tax returns for the previous
calendar year.

ARTICLE XIV

INSOLVENCY

A. Insolvency of Reinsurer

If the Reinsurer becomes insolvent as determined by the Department of
Insurance responsible for such determination, amounts due the Reinsurer
will be paid net of the terms of this Agreement and directly to the
liquidator, receiver, or statutory successor without decrease. All
reinsurance ceded under this Agreement may be recaptured by the Ceding
Company without charge or penalty as of the date Reinsurer fails to
meet its obligations under this Agreement.

B. Insolvency of Ceding Company

If Hartford Life Insurance Company, Hartford Life and Accident
Insurance Company or ITT Hartford Life and Annuity Insurance Company
should become insolvent, all reinsurance under this Agreement covering
risks ceded by that particular company will be payable by Reinsurer
directly to that Company's liquidator, receiver or statutory successor,
on the basis of the liability of that Company under the policy or
policies reinsured and without diminution because of the insolvency of
the Company. However, in the event of such insolvency, the liquidator,
receiver or statutory successor will give written notice of a pending
claim against Ceding Company on the reinsured policy. It will do so
within a reasonable time after the claim is filed in the insolvency
proceedings. During the pendency of such a claim, Reinsurer may
investigate the claim and may, at its own expense, interpose any
defense or defenses which it may deem available to the insolvent
Company, its liquidator, receiver or statutory successor, in the
proceedings where the claim is to be adjudicated.

The expense thus incurred by Reinsurer will be chargeable against the
insolvent Company, subject to court approval, as part of the expense of
liquidation to the extent of a proportionate share of the benefit which
may accrue to the insolvent Company solely as a result of the defense
undertaken by Reinsurer.

<PAGE>

Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to the claim, the
expense will be apportioned in accord with the terms of the reinsurance
agreement as though the expense had been incurred by the insolvent
Company.

It is agreed that the insolvency of any one of the Hartford Life
Companies shall not affect this Agreement as it applies to the
remaining solvent companies.

ARTICLE XV

OFFSET

ARTICLE XVI

ARBITRATION

<PAGE>

applicable law. The site of any arbitration will be determined by a majority
vote of the arbitrators. All expenses and fees of the arbitrations will be
borne equally by the parties unless otherwise decreed by the arbitrators.

The award agreed to by a majority of the arbitrators will be final and
binding and there will be no appeal from their decision. Judgment may be
entered upon it in any court having jurisdiction.

ARTICLE XVII

TERMINATION

A. Each Hartford Life Insurance Company and the Reinsurer may
terminate this Agreement as it applies to the business of each by
giving (90) ninety days' written notice of termination. The day the
notice is deposited in the mail addressed to the Home Office, or to an
Officer of each party, will be the first day of the (90) ninety-day
period.

B. During the (90) ninety-day period, this Agreement will continue to
be in force between the terminating parties.

C. After termination, the terminating parties shall remain liable
under the terms of this Agreement for all automatic reinsurance which
becomes effective prior to termination of this Agreement. After
termination the terminating parties shall be liable for all automatic
and facultative reinsurance which has an application date on or before
the effective date of the termination.

D. Termination by one or two of the Hartford Life Companies shall not
affect this Agreement as it relates to the non-terminating Hartford
Life Company(ies).

ARTICLE XVIII

ENTIRE AGREEMENT AND AMENDMENT

A. Entire Contract

This Agreement with any attached Schedules and Exhibits, shall
constitute the entire agreement between the parties with respect to the
business being reinsured hereunder and there are no understandings
between the parties other than as expressed herein.

<PAGE>

B. Modifications

Any modification or change to the provisions of this Agreement shall be
null and void unless set forth in a written amendment to the Agreement
which is signed by all parties to the amendment.

ARTICLE XIX

EFFECTIVE DATE

The provisions of this Agreement shall be effective with respect to policies
issued on or after October 1, 1996.

<PAGE>

ARTICLE XX

EXECUTION

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By /s/ James B. Keller Attest /s/ J. L. Sperling
----------------------------- --------------------------

Title Vice President Title Assistant Secretary
----------------------------- --------------------------

Chief Actuary
----------------------------- --------------------------

Date November 6, 1998 Date 10/23/98
----------------------------- --------------------------

HARTFORD LIFE INSURANCE COMPANY

HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY

ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

By /s/ Timothy M. Fitch Attest /s/ Ken A. McCullum
------------------------------ --------------------------
Timothy M. Fitch, FSA, CLU Ken A. McCullum, FSA, MAAA
Vice President Assistant Vice President
Individual Life Product & Marketing Individual Life Product
Development

Date 7/10/98 Date 7/10/98
------------------------------ --------------------------

<PAGE>

SCHEDULE A

SPECIFICATIONS

<S> <C>

TYPE OF BUSINESS Fully underwritten Last Survivor Plans

REINSURANCE POOL SHARE Reinsurer shall automatically reinsure of
the amount at risk on a policy reinsured by the Pool.

PLANS OF INSURANCE

DESCRIPTION GENERAL FORM NO'S.
----------- -----------------
Last Survivor Interest Sensitive Whole Life HL-12710, HL-A12966, ILA-1078
Last Survivor Universal Life HL-14393, HL-A14407, ILA-1011
Last Survivor Variable Life HL-14263, ILA-1020
Last Survivor SPVL (fully underwritten) HL-LSPVL94, ILA-LSPVL97, HL-LSPVL97, ILA-LSPVL97

RIDERS
-------
Additional Insurance Benefit Rider HL-13514, HL-A13504, ILA-1079
Four Year Term Rider HL-12933, HL-A12989, ILA-1080
Increasing Term Rider HL-12934, HL-A12996, ILA-1081
Estate Protection Rider HL-14627, ILA-1023
Six Month Exchange Rider HL-12936, ILA-1083
Twenty-four Month Exchange Rider HL-12963, ILA-1013
Alternative Requisite Premium Option Rider HL-14201
Maturity Extension Rider HL-14637, ILA-1024
Single Life YRT Life Insurance Rider HL-14626, ILA-1021
First Death Term Life Rider HL-12932

MINIMUM REINSURANCE $50,000 Upon reaching the retention limit
CESSION set forth in Exhibit II, Ceding
Company will automatically cede
the excess insurance only if the
total amount to be ceded to the
Pool is $50,000 or more.

LEAD REINSURER Lincoln National Plans of Insurance and Riders
Life produced through ELAR.

Security Life Plans of Insurance and Riders
of Denver produced through All Other
Producers.
</TABLE>

<PAGE>

SCHEDULE B

BASIS OF REINSURANCE

LIFE PRODUCTS Life reinsurance will be on the yearly
renewable term (YRT) basis for the amount at
risk on the portion of the policy reinsured
by Reinsurer. The amount at risk on a policy
shall be the death benefit of the policy less
the amount retained by the Ceding Company,
less the cash value under the policy. The
basis for determining Reinsurer's liability
shall be the amount at risk used for
computation of the reinsurance premium.

Exchanges Exchanges from one last survivor plan
reinsured under this agreement to a different
last survivor plan, for the purpose of
allowing the policyowner premium flexibility
(UL) or potentially higher investment return
(VL), will be reinsured hereunder as NEW
BUSINESS at first year reinsurance rates if
the new plan has been fully underwritten and
has new contestable and suicide exclusion
periods. Otherwise, the reinsurance rates
will be point-in-scale.

Reserve Basis Reserves are calculated according to the
applicable CRVM methodology, interest rate
and mortality table. The mortality tables
used are male/female, smoker distinct, age
last birthday and ultimate. The mortality
rates are frasierized. There is a 1/2 qx
unearned premium reserve minimum.

<PAGE>

PARTICIPATION AGREEMENT

Among

______________________________,

and

HARTFORD LIFE INSURANCE COMPANY

<PAGE>

TABLE OF CONTENTS
-----------------

Page

ARTICLE I. Fund Shares 5

ARTICLE II. Representations and 7
Warranties

ARTICLE III. Prospectuses, Reports to 8
Shareholders and Proxy
Statements; Voting

ARTICLE IV. Sales Material and 11
Information

ARTICLE V. Reserved 12

ARTICLE VI. Diversification 12

ARTICLE VII. Potential Conflicts 12

ARTICLE VIII. Indemnification 14

ARTICLE IX. Applicable Law 20

ARTICLE X. Termination 20

ARTICLE XI. Notices 23

ARTICLE XII. Foreign Tax Credits 23

ARTICLE XIII. Miscellaneous 23

SCHEDULE A Separate Accounts and 27
Contracts

SCHEDULE B Participating Life 28
Investment Trust Portfolios

SCHEDULE C Proxy Voting Procedures 29

<PAGE>

PARTICIPATION AGREEMENT
-----------------------

Among

[FUND]
------

[UNDERWRITER]
-------------

[ADVISER]
---------

and

HARTFORD LIFE INSURANCE COMPANY
-------------------------------

THIS AGREEMENT, made and entered into as of the _______ day of__________,
1998 by and among HARTFORD LIFE INSURANCE COMPANY (hereinafter the "Company");
a Connecticut corporation, on its behalf and on behalf of each separate account
of the Company set forth on Schedule A hereto as may be amended from time to
time (each such account hereinafter referred to as the "Account") and
_______________________, a __________ corporation established under the laws of
the state of _________ ("state") (hereinafter the "Fund"); and
______________________, a ___________ corporation (hereinafter the
"Underwriter") and ____________________, a ___________ corporation (hereinafter
the "Adviser").

WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation
and/or pay-out provisions (hereinafter referred to individually and/or
collectively as "Variable Insurance Products"); and

WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Products are required to
enter into participation agreements with the Fund and the Underwriter (the
"Participating Insurance Companies"); and

WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
for Variable Insurance Products of Participating Insurance Companies; and

WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may
be amended from time to time by mutual agreement of the parties hereto, under
this Agreement to the Accounts of the Company; and

3
<PAGE>

WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, granting Participating Insurance Companies and Variable Insurance
Product separate accounts exemptions from the provisions of Sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold
to and held by Variable Annuity Product separate accounts of both affiliated
and unaffiliated life insurance companies (hereinafter the "Shared Funding
Exemptive Order"); and

WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and

WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and

WHEREAS, the Adviser is the investment adviser of the Portfolios of the
Fund; and

WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is
a member in good standing of the National Association of Securities Dealers,
Inc. (hereinafter "NASD") and serves as principal underwriter of the shares of
the Fund; and

WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and

WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Products; and

WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless exempt from such
registration; and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid Variable Insurance
Products and the Underwriter is authorized to sell such shares to each such
Account at net asset value.

NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Underwriter and the Adviser agree as follows:

4
<PAGE>

ARTICLE I. Fund Shares

1.1. The Fund and the Underwriter agree to make available for purchase
by the Company shares of the Portfolios and shall execute orders placed for
each Account on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of such order. For purposes of this
Section 1.1, the Company shall be the designee of the Fund and Underwriter
for receipt of such orders from each Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice
of such order by 10:00 a.m. (local time where the Fund processes orders) on
the next following Business Day. Notwithstanding the foregoing, the Company
shall use its best efforts to provide the Fund with notice of such orders by
9:15 a.m. on the next following Business Day. "Business Day" shall mean any
day on which the New York Stock Exchange is open for trading and on which the
Fund calculates its net asset value pursuant to the rules of the Securities
and Exchange Commission, as set forth in the Fund's prospectus and statement
of additional information. Notwithstanding the foregoing, the Board of
Trustees of the Fund (hereinafter the "Board") may refuse to permit the Fund
to sell shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of
the Board acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of
the shareholders of such Portfolio.

1.2. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies for their Variable
Insurance Products. No shares of any Portfolio will be sold to the general
public.

1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing
provisions which afford the Company substantially the same protections
currently provided by Sections 2.1, 2.4, 2.9, 3.4 and Article VII of this
Agreement is in effect to govern such sales.

1.4. The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Fund held by the
Company, executing such requests on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the request for
redemption. For purposes of this Section 1.4, the Company shall be the
designee of the Fund for receipt of requests for redemption from each Account
and receipt by such designee shall constitute receipt by the Fund; provided
that the Underwriter receives notice of such request for redemption on the
next following Business Day in accordance with the timing rules described in
Section 1.1.

1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Accounts of the
Company, under which amounts may be invested in the Fund are listed on
Schedule A attached hereto and incorporated herein by reference, as such

5
<PAGE>

Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto. The Company will give the Fund and the Underwriter
concurrent written notice of its intention to make available in the future,
as a funding vehicle under the Contracts, any other investment company.

1.6. The Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of shares
and dollar amount of each Portfolio to be purchased or redeemed. In the event
of net purchases, the Company shall pay for Portfolio shares on the next
Business Day after an order to purchase Portfolio shares is made in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire. In the event of net redemptions, the
Portfolio shall pay the redemption proceeds in federal funds transmitted by
wire on the next Business Day after an order to redeem Portfolio shares is
made in accordance with the provisions of Section 1.4 hereof. Notwithstanding
the foregoing, if the payment of redemption proceeds on the next Business Day
would require the Portfolio to dispose of Portfolio securities or otherwise
incur substantial additional costs, and if the Portfolio has determined to
settle redemption transactions for all shareholders on a delayed basis,
proceeds shall be wired to the Company within seven (7) days and the
Portfolio shall notify in writing the person designated by the Company as the
recipient for such notice of such delay by 3:00 p.m. Eastern Time on the same
Business Day that the Company transmits the redemption order to the
Portfolio.

1.7. Issuance and transfer of the Fund's shares will be by book
entry only. Share certificates will not be issued to the Company or any
Account. Shares ordered from the Fund will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.

1.8. The Underwriter shall use its best efforts to furnish same day
notice by 6:00 p.m. in its local time zone (by wire or telephone, followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to
receive all such dividends and capital gain distributions as are payable on
the Portfolio shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and
distributions.

1.9. The Underwriter shall make the net asset value per share of
each Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:00 p.m. Eastern Time. In the event that Underwriter is unable to meet
the 6:00 p.m. time stated immediately above, then Underwriter shall provide
the Company with additional time to notify Underwriter of purchase or
redemption orders pursuant to Sections 1.1 and 1.4, respectively, above. Such
additional time shall be equal to the additional time that Underwriter takes
to make the net asset values available to the Company; provided, however,
that notification

6
<PAGE>

must be made by 11:00 a.m. Eastern Time on the Business Day such order is to
be executed, regardless of when net asset valuer is made available.

1.10. If Underwriter provides materially incorrect share net asset
value information through no fault of the Company, the Company shall be
entitled to an adjustment with respect to the Fund shares purchased or
redeemed to reflect the correct net asset value per share. The determination
of the materiality of any net asset value pricing error shall be based on the
SEC's recommended guidelines regarding such errors. The correction of any
such errors shall be made at the Company level pursuant to the SEC's
recommended guidelines. Any material error in the calculation or reporting of
net asset value per share, dividend or capital gain information shall be
reported promptly upon discovery to the Company.

ARTICLE II. REPRESENTATIONS AND WARRANTIES

2.1. The Company represents and warrants that the interests of the
Accounts which offer the Funds (the "Contracts") are or will be registered
unless exempt and that it will maintain such registration under the 1933 Act
and the regulations thereunder to the extent required by the 1933 Act; that
the Contracts will be issued and sold in compliance with all applicable
federal and state laws and regulations. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under the Connecticut Insurance Code and the regulations thereunder and has
registered or, prior to any issuance or sale of the Contracts, will register
and will maintain the registration of each Account as a unit investment trust
in accordance with and to the extent required by the provisions of the 1940
Act and the regulations thereunder, unless exempt therefrom, to serve as a
segregated investment account for the Contracts. The Company shall amend its
registration statement for its contracts under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its Contracts.

2.2. The Fund and the Underwriter represent and warrant that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act
and the regulations thereunder to the extent required by the 1933 Act, duly
authorized for issuance in accordance with the laws of State and sold in
compliance with all applicable federal and state securities laws and
regulations and that the Fund is and shall remain registered under the 1940
Act and the regulations thereunder to the extent required by the 1940 Act.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and
to the extent deemed advisable by the Fund.

2.3. The Fund and the Adviser represent that the Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") and that each will
make every effort to maintain such qualification (under

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<PAGE>

Subchapter M or any successor or similar provision) and that each will notify
the Company immediately upon having a reasonable basis for believing that the
Fund has ceased to so qualify or that the Fund might not so qualify in the
future.

2.4. The Company represents that each Account is and will continue
to be a "segregated account" under applicable provisions of the Code and that
each Contract is and will be treated as a "variable contract" under
applicable provisions of the Code and that it will make every effort to
maintain such treatment and that it will notify the Fund immediately upon
having a reasonable basis for believing that the Account or Contract has
ceased to be so treated or that they might not be so treated in the future.

2.5. The Fund represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the
Fund undertakes to have a board of directors, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.

2.6. The Fund makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states.

2.7. The Fund and the Adviser represent that the Fund is duly
organized and validly existing under the laws of State and that the Fund does
and will comply in all material respects with the 1940 Act.

2.8. The Underwriter represents and warrants that it is and shall
remain duly registered under all applicable federal and state laws and
regulations and that it will perform its obligations for the Fund and the
Company in compliance with the laws and regulations of its state of domicile
and any applicable state and federal laws and regulations.

2.9. The Company represents and warrants that all of its trustees,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a blanket
fidelity bond or similar coverage, in an amount equal to the greater of $5
million or any amount required by applicable federal or state law or
regulation. The aforesaid includes coverage for larceny and embezzlement is
issued by a reputable bonding company.

ARTICLE III. PROSPECTUSES; REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS;
VOTING

3.1. The Fund shall provide the Company with as many printed copies
of the Fund's current prospectus and statement of additional information as
the Company may reasonably request. If requested by the Company in lieu of
providing printed copies the Fund shall provide camera-ready film or computer
diskettes containing the Fund's prospectus and statement of additional
information, and such other assistance as is reasonably necessary in order
for the

8
<PAGE>

Company once each year (or more frequently if the prospectus and/or statement
of additional information for the Fund is amended during the year) to have
the prospectus for the Contracts and the Fund's prospectus printed together
in one document or separately. The Company may elect to print the Fund's
prospectus and/or its statement of additional information in combination with
other fund companies' prospectuses and statements of additional information.

3.2(a). Except as otherwise provided in this Section 3.2, all
expenses of preparing, setting in type and printing and distributing Fund
prospectuses and statements of additional information shall be the expense of
the Company. For prospectuses and statements of additional information
provided by the Company to its existing owners of Contracts in order to
update disclosure as required by the 1933 Act and/or the 1940 Act, the cost
of setting in type, printing and distributing shall be borne by the Fund. If
the Company chooses to receive camera-ready film or computer diskettes in
lieu of receiving printed copies of the Fund's prospectus and/or statement of
additional information, the Fund shall bear the cost of typesetting to
provide the Fund's prospectus and/or statement of additional information to
the Company in the format in which the Fund is accustomed to formatting
prospectuses and statements of additional information, respectively, and the
Company shall bear the expense of adjusting or changing the format to conform
with any of its prospectuses and/or statements of additional information. In
such event, the Fund will reimburse the Company in an amount equal to the
product of x and y where x is the number of such prospectuses distributed to
owners of the Contracts, and y is the Fund's per unit cost of printing the
Fund's prospectuses. The same procedures shall be followed with respect to
the Fund's statement of additional information. The Fund shall not pay any
costs of typesetting, printing and distributing the Fund's prospectus and/or
statement of additional information to prospective Contract owners.

3.2(b). The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and statements of additional
information, which are covered in Section 3.2(a) above) to shareholders in
such quantity as the Company shall reasonably require for distributing to
Contract owners. The Fund shall not pay any costs of distributing such
proxy-related material, reports to shareholders, and other communications to
prospective Contract owners.

3.2(c). The Company agrees to provide the Fund or its designee with
such information as may be reasonably requested by the Fund to assure that
the Fund's expenses do not include the cost of typesetting, printing or
distributing any of the foregoing documents other than those actually
distributed to existing Contract owners.

3.2(d). The Fund shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter
in writing.

9
<PAGE>

3.2(e) All expenses, including expenses to be borne by the Fund
pursuant to Section 3.2 hereof, incident to performance by the Fund under
this Agreement shall be paid by the Fund. The Fund shall see to it that all
its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares.

3.3. The Fund's statement of additional information shall be obtainable
from the Fund, the Underwriter, the Company or such other person as the Fund
may designate.

3.4. If and to the extent required by law the Company shall distribute
all proxy material furnished by the Fund to Contract Owners to whom voting
privileges are required to be extended and shall:

(i) solicit voting instructions from Contract owners;

(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and

(iii) vote Fund shares for which no instructions have been received
in the same proportion as Fund shares of such Portfolio for
which instructions have been received, so long as and to the
extent that the Securities and Exchange Commission continues
to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law. The
Fund and the Company shall follow the procedures, and shall
have the corresponding responsibilities, for the handling of
proxy and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by
reference. Participating Insurance Companies shall be
responsible for ensuring that each of their separate accounts
participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth on Schedule C,
which standards will also be provided to the other
Participating Insurance Companies.

(iv) For unregistered separate accounts subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") to refrain
from voting shares for which no instructions are received if
such shares are held in an unregistered segregated asset
account subject to ERISA.

3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings (except insofar as the Securities and Exchange
Commission may interpret Section 16 not to require such meetings)

10
<PAGE>

or comply with Section 16(c) of the 1940 Act (although the Fund is not one of
the trusts described in Section 16(c) of that Act) as well as with Sections
16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with respect
thereto.

ARTICLE IV. SALES MATERIAL AND INFORMATION

4.1. The Company shall furnish, or shall cause to be furnished, to
the Fund, the Underwriter or their designee, each piece of sales literature
or other promotional material prepared by the Company or any person
contracting with the Company in which the Fund, the Adviser or the
Underwriter is described, at least ten Business Days prior to its use. No
such material shall be used if the Fund, the Adviser, the Underwriter or
their designee reasonably objects to such use within ten Business Days after
receipt of such material.

4.2. Neither the Company nor any person contracting with the Company
shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or Fund prospectus, as such registration statement or
Fund prospectus may be amended or supplemented from time to time, or in
reports to shareholders or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund or its designee.

4.3. The Fund shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material prepared by the Fund in which the Company or its Accounts, are
described at least ten Business Days prior to its use. No such material shall
be used if the Company or its designee reasonably objects to such use within
ten Business Days after receipt of such material.

4.4. Neither the Fund nor the Underwriter shall give any information
or make any representations on behalf of the Company or concerning the
Company, each Account, or the Contracts, other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement or prospectus may be amended or
supplemented from time to time, or in published reports or solicitations for
voting instruction for each Account which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.

4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such document with the
Securities and Exchange

11
<PAGE>

Commission or other regulatory authorities.

4.6. The Company will provide to the Fund, upon the Fund's request,
at least one complete copy of all registration statements, prospectuses,
statements of additional information, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications
for exemptions, requests for no action letters, and all amendments to any of
the above, that relate to the investment in an Account or Contract,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.

4.7. For purposes of this Article IV, the phrase "sales literature
or other promotional material" includes, but is not limited to, any of the
following: advertisements (such as material published, or designed for use
in, a newspaper, magazine, or other periodical, radio, television, telephone
or tape recording, videotape display, signs or billboards, motion pictures,
or other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.

ARTICLE V. [RESERVED]

ARTICLE VI. DIVERSIFICATION

6.1. The Fund and the Adviser represent and warrant that, at all
times, the Fund will comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event the Fund ceases to
so qualify, it will take all reasonable steps (a) to notify Company of such
event and (b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 817-5.

ARTICLE VII. POTENTIAL CONFLICTS

7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners
of all separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by

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<PAGE>

variable annuity contract owners and variable life insurance contract owners;
or (f) a decision by a Participating Insurance Company to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.

7.2. The Company will report any potential or existing material
irreconcilable conflict of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the Shared
Funding Exemptive Order, by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform the
Board whenever contract owner voting instructions are disregarded.

7.3. If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at
their expense and to the extent reasonably practicable (as determined by a
majority of the disinterested trustees), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and
including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Portfolio and reinvesting such assets
in a different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such segregation
should be implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e., annuity
contract owners, life insurance policy owners, or variable contract owners of
one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account. No charge or penalty will be imposed as
a result of such withdrawal. The Company agrees that it bears the
responsibility to take remedial action in the event of a Board determination
of an irreconcilable material conflict and the cost of such remedial action,
and these responsibilities will be carried out with a view only to the
interests of Contract owners.

7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and
that decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Fund's election, to withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account (at the Company's expense); provided, however that
such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. No charge or penalty will be imposed
as a result of such withdrawal. The Company agrees that it bears the
responsibility to take remedial action in the event of a Board determination
of an irreconcilable material conflict and the cost of such remedial action,
and these responsibilities will be carried out with a view only to the
interests of Contract owners.

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<PAGE>

7.5. For purposes of Sections 7.3 through 7.4 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund be required to establish a new funding medium
for the Contracts. The Company shall not be required by Section 7.3 through
7.4 to establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict.

7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Shared Funding Exemptive Order) on
terms and conditions materially different from those contained in the Shared
Funding Exemptive Order, then the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable.

7.7 Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may
reasonably request so that the Board may fully carry out the obligations
imposed upon them by the provisions hereof and in the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Board. All reports received by the
Board of potential or existing conflicts, and all Board action with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies of a conflict, and determining whether any proposed action
adequately remedies a conflict, shall be properly recorded in the minutes of
the Board or other appropriate records, and such minutes or other records
shall be made available to the Securities and Exchange Commission upon
request.

ARTICLE VIII. INDEMNIFICATION

8.1. INDEMNIFICATION BY THE COMPANY

8.1 (a). The Company agrees to indemnify and hold harmless the Fund,
the Underwriter and each member of their respective Board and officers and
each person, if any, who controls the Fund within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:

(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or

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<PAGE>

prospectus for the Contracts or contained in the Contracts
or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company
by or on behalf of the Fund for use in the registration
statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or

(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Fund or the Underwriter) or unlawful conduct of the Company or
persons under its control, with respect to the sale or
distribution of the Contracts or Fund shares; or

(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature of the
Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the
Company; or

(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or

(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company.

8.1 (b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.

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<PAGE>

8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company
of any such claim shall not relieve the Company from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at as own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses under this
Agreement for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable
costs of investigation.

8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of
the Fund.

8.2. INDEMNIFICATION BY UNDERWRITER

8.2(a). The Underwriter agrees, with respect to each Portfolio that it
distributes, to indemnify and hold harmless the Company and each of as
directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Underwriter) or litigation (including legal
and other expenses) to which the Indemnified Parties may become subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of shares of the Portfolio
that it distributes or the Contracts and:

(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Fund or the Underwriter by or on behalf of
the Company for use in the registration statement or
prospectus for the

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<PAGE>

Fund or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or

(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Contracts not supplied by the Fund, the Underwriter or persons
under their respective control and other than statements or
representations authorized by the Company) or unlawful conduct
of the Fund or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or
Portfolio shares; or

(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Fund or the Underwriter; or

(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement; or

(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of
Section 8.2(b) and 8.2(c) hereof.

8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement.

8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom

17
<PAGE>

such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Underwriter will be entitled to participate, at its own expense,
in the defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Underwriter to such party of the Underwriter's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Underwriter will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.

8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account in which the Funds are made
available.

8.3. INDEMNIFICATION BY THE ADVISER

8.3(a). The Adviser agrees to indemnify and hold harmless the Company
and its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 8.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the
operations of the Adviser or the Fund and:

(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Adviser, the Fund or the Underwriter by or on
behalf of the Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Portfolio shares; or

(ii) arise out of or as a result of statements or representations
(other than

18
<PAGE>

statements or representations contained in the registration
statement, prospectus or sales literature for the Contracts
not supplied by the Fund, the Adviser or persons under its
control and other than statements or representations
authorized by the Company) or unlawful conduct of the Fund,
the Adviser or persons under their control, with respect to
the sale or distribution of the Contracts or Portfolio
shares; or

(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this
Agreement; or

(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Adviser in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Adviser, including without limitation any failure by the Fund
to comply with the conditions of Article VI hereof.

8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an indemnified Party as may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement.

8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Adviser
of any such claim shall not relieve the Adviser from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Adviser will be
entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Adviser
to such party of the Adviser's election to assume the defense thereof, the
Indemnified Party shall bear the

19
<PAGE>

fees and expenses of any additional counsel retained by it, and the Adviser
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other then reasonable costs of investigation.

8.3(d). The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of as
respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of each
Account, or the sale or acquisition of shares of the Adviser.

ARTICLE IX. APPLICABLE LAW

9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Connecticut.

9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.

ARTICLE X. TERMINATION

10.1. This Agreement shall continue in full force and effect until
the first to occur of:

(a) termination by any party for any reason upon six-months advance
written notice delivered to the other parties; or

(b) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such Portfolio
are not reasonably available to meet the requirements of the
Contracts. Reasonable advance notice of election to terminate
shall be furnished by the Company, said termination to be
effective ten (10) days after receipt of notice unless the Fund
makes available a sufficient number of shares to reasonably
meet the requirements of the Account within said ten (10) day
period; or

(c) termination by the Company upon written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio in
the event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the
underlying investment medium of the Contracts issued or to be
issued by the Company. The terminating party shall give prompt
notice

20
<PAGE>

to the other parties of its decision to terminate; or

(d) termination by the Company upon written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio in
the event that such portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision; or

(e) termination by the Company upon written notice to the Fund and
the Underwriter with respect to any Portfolio in the event that
such Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or

(f) termination by either the Fund, the Adviser or the Underwriter
by written notice to the Company, if either one or more of the
Fund, the Adviser or the Underwriter, shall determine, in its
or their sole judgment exercised in good faith, that the
Company and/or their affiliated companies has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity, provided that the
Fund, the Adviser or the Underwriter will give the Company
sixty (60) days' advance written notice of such determination
of as intent to terminate this Agreement, and provided further
that after consideration of the actions taken by the Company
and any other changes in circumstances since the giving of such
notice, the determination of the Fund, the Adviser or the
Underwriter shall continue to apply on the 60th day since
giving of such notice, then such 60th day shall be the
effective date of termination; or

(g) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund, the Adviser or the Underwriter has suffered a material
adverse change in its business, operations, financial condition
or prospects since the date of this Agreement or is the subject
of material adverse publicity, provided that the Company will
give the Fund, the Adviser and the Underwriter sixty (60) days'
advance written notice of such determination of its intent to
terminate this Agreement, and provided further that after
consideration of the actions taken by the Fund, the Adviser or
the Underwriter and any other changes in circumstances since
the giving of such notice, the determination of the Company
shall continue to apply on the 60th day since giving of such
notice, then such 60th day shall be the effective date of
termination; or

(h) termination by the Fund, the Adviser or the Underwriter by
written notice to the Company, if the Company gives the Fund,
the Adviser and the

21
<PAGE>

Underwriter the written notice specified in Section 1.5
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision
of this Agreement; provided, however any termination under
this Section 10.1(h) shall be effective sixty (60) days after
the notice specified in Section 1.5 was given; or

(i) termination by any party upon the other party's breach of any
representation in Section 2 or any material provision of this
Agreement, which breach has not been cured to the satisfaction
of the terminating party within ten (10) days after written
notice of such breach is delivered to the Fund or the Company,
as the case may be; or

(j) termination by the Fund, Adviser or Underwriter by written
notice to the Company in the event an Account or Contract is
not registered (unless exempt from registration) or sold in
accordance with applicable federal or state law or
regulation, or the Company fails to provide pass-through
voting privileges as specified in Section 3.4.

10.2. EFFECT OF TERMINATION. Notwithstanding any termination of
this Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions
of this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts") unless such further sale of Fund shares is proscribed by law,
regulation or applicable regulatory body, or unless the Fund determines that
liquidation of the Fund following termination of this Agreement is in the
best interests of the Fund and its shareholders. Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to direct
reallocation of investments in the Fund, redemption of investments in the
Fund and/or investment in the Fund upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this Section
10.2 shall not apply to any terminations under Article VII and the effect of
such Article Vii terminations shall be governed by Article VII of this
Agreement.

10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption") or
(iii) as permitted by an order of the SEC pursuant to Section 26(b) of the
1940 Act. Upon request, the Company will promptly furnish to the Fund and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that
any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of
the Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Adviser 30 days notice of its intention
to do so.

22
<PAGE>

ARTICLE XI. NOTICES

Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.

If to the Fund:

____________________________

If to the Underwriter:

If to the Adviser:

If to the Company: With a copy to:

Hartford Life Insurance Co. Hartford Life Insurance Co.
200 Hopmeadow Street 200 Hopmeadow Street
Simsbury, Connecticut 06070 Simsbury, Connecticut 06070
Attn: Tom Marra Attn: Lynda Godkin, General Counsel

ARTICLE XII. FOREIGN TAX CREDITS

12.1. The Fund and Adviser agree to consult in advance with the
Company concerning whether any series of the Fund qualifies to provide a
foreign tax credit pursuant to Section 853 of the Code.

ARTICLE XIII. MISCELLANEOUS

13.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or

23
<PAGE>

shareholders assume any personal liability for obligations entered into on
behalf of the Fund. Each of the Company, Adviser and Underwriter acknowledges
and agrees that, as provided by Article 8, Section 8.1, of the Fund's
Agreement and Declaration of Trust, the shareholders, trustees, officers,
employees and other agents of the Fund and as Portfolios shall not personally
be bound by or liable for matters set forth hereunder, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
hereunder. A Certificate of Trust referring to the Fund's Agreement and
Declaration of Trust is on file with the Secretary of State of Connecticut.

13.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent of
the affected party.

13.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.

13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.

13.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13.6. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
(and other parties hereto) reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.

13.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies
and obligations at law or in equity, which the parties hereto are entitled to
under state and federal laws.

13.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Adviser may, with advance written
notice to the other parties hereto, assign this Agreement or any rights or
obligations hereunder to any affiliate of or company under common control
with the Adviser if such assignee is duly licensed and registered to perform
the obligations of the Adviser under this Agreement.

24
<PAGE>

13.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee upon request, copies of the following reports:

(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any),
as soon as practical and in any event within 90 days after
the end of each fiscal year;

(b) the Company's June 30th quarterly statements (statutory), as
soon as practical and in any event within 45 days following
such period;

(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders;

(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as
practical after the filing thereof;

(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in as name and on its behalf by its duly authorized
representative as of the date specified above.

HARTFORD LIFE INSURANCE COMPANY
on behalf of Itself and each of its Accounts named in
Schedule A hereto, as amended from time to time

By: ________________________________________
Peter Cummins
Its Senior Vice President

25
<PAGE>

FUND

By: ________________________________________

Its

UNDERWRITER

By: ________________________________________

Its

ADVISER

By: ________________________________________

Its

26
<PAGE>

SCHEDULE A

SEPARATE ACCOUNTS AND CONTRACTS
-------------------------------

- -------------------------------------------------------------------------------
Name of Separate Account and Date Established Form Numbers
by Board of Directors Funded by Separate Account
- -------------------------------------------------------------------------------
CONTRACT FORM NOS.:
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

27
<PAGE>

SCHEDULE B

PARTICIPATING LIFE INVESTMENT TRUST PORTFOLIOS
----------------------------------------------

28
<PAGE>

SCHEDULE C

PROXY VOTING PROCEDURES
-----------------------

The following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.

1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.

2. Promptly after the Record Date, the Company will perform a "tape run," or
other activity, which will generate the names, address and number of units
which are attributed to each contract owner/policyholder (the "Customer")
as of the Record Date. Allowance should be made for account adjustments
made after this date that could affect the status of the Customers'
accounts as of the Record Date.

Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later
than two weeks after the Record Date.

3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting
instruction solicitation material. The Fund will provide the last Annual
Report to the Company pursuant to the terms of Section 3.3 of the
Agreement to which this Schedule relates.

4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:

a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units (or equivalent shares)
e. individual Card number for use in tracking and verification of votes
(already on

29
<PAGE>

Cards as printed by the Fund).

5. During this time, the Fund will develop, produce, and the Fund will pay
for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for
by the Company). Contents of envelope sent to Customers by the Company
will include:

a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buck slip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly as
possible and that their vote is important. One copy will be supplied
by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund.

6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.

7. Package mailed by the Company at the Fund's expense.

*The Fund must allow at least a 15-day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but not including,) the meeting,
counting backwards.

8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.

Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.

9. Signatures on Card checked against legal name on account registration
which was printed on the Card.

Note: For example, if the account registration is under "John A. Smith,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.

30
<PAGE>

10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g., mutilated,
illegible) of the procedure are "hand verified," (i.e., examined as to
why they did not complete the system). Any questions on those Cards are
usually remedied individually.

11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.

12. The actual tabulation of votes is done in units (or equivalent shares)
which is then converted to shares. (It is very important that the fund
receives the tabulations stated in terms of a percentage and the number
of shares.) The Fund must review and approve tabulation format.

13. Final tabulation in shares is verbally given by the Company to the Fund
on the morning of the meeting not later then 10:00 A.M. Houston time.
The Fund may request an earlier deadline if reasonable and if required
to calculate the vote in time for the meeting.

14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.

15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.

16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.

<PAGE>
EXHIBIT 1.4

[LOGO]
HARTFORD LIFE

February 3, 1999
LYNDA GODKIN, SENIOR VICE PRESIDENT,
GENERAL COUNSEL & CORPORATE SECRETARY

Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089

RE: SEPARATE ACCOUNT VL II
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
PRE-EFFECTIVE AMENDMENT #1
FILE NO. 333-67373

Dear Sir/Madam:

I have acted as General Counsel to Hartford Life and Annuity Insurance Company
(the "Company"), a Connecticut insurance company, and Hartford Life and Annuity
Insurance Company Separate Account VL II (the "Account") in connection with the
registration of an indefinite amount of securities in the form of last survivor
flexible premium variable life insurance policies (the "Policies") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
I have examined such documents (including the Form S-6 Registration Statement)
and reviewed such questions of law as I considered necessary and appropriate,
and on the basis of such examination and review, it is my opinion that:

1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Policies.

2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.

3. To the extent so provided under the Policies, that portion of the assets of
the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.

4. The Policies, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.

I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Policies and the Account.

Sincerely,

/s/ Lynda Godkin

Lynda Godkin

<PAGE>

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-67373 for Hartford Life and Annuity
Insurance Company Separate Account VL II on Form S-6.

/s/ Arthur Andersen LLP

Hartford, Connecticut
January 29, 1999

<PAGE>

EXHIBIT 1.6
Organizational Chart

<S> <C>
THE HARTFORD
The Hartford Financial Services Group, Inc.
(Delaware)
|
- -------------------------------------------------------------------------------------------------------------
Nutmeg Insurance Company The Hartford Investment
(Connecticut) Management Company
| (Delaware)
Hartford Fire Insurance Company |
(Connecticut) Hartford Investment
| Services, Inc.
Hartford Accident and Indemnity Company (Connecticut)
(Connecticut)
|
Hartford Life, Inc.
(Delaware)
|
Hartford Life and Accident Insurance Company
(Connecticut)
|
|
|
- -------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Services Life Insurance Company Life Insurance Holdings, Inc.
Company Insurance Co. (Connecticut) Company (Canada)
(New Jersey) (Connecticut) | (Connecticut) |
| | |
| AML Financial, Inc. |
| (Connecticut) Hartford Life
| Insurance Company
| of Canada
| (Canada)
|
|
- -------------------------------------------------------------------------------------------------------------
Hartford Life and Annuity ITT Hartford International Hartford Financial Services Royal Life
Insurance Company Life Reassurance Corporation Corporation Insurance
(Connecticut) (Connecticut) (Delaware) Company of
| | America
| | (Connecticut)
| |
ITT Hartford Life, Ltd. |
(Bermuda) |
|
|
- -------------------------------------------------------------------------------------------------------------
MS Fund HL Funding HL Investment Hartford Hartford Securities Hartford-Comp. Emp.
America Company, Inc. Advisors, Inc. Equity Sales Distribution Benefit Service
1993-K, Inc. (Connecticut) (Connecticut) Company, Inc. Company, Inc. Company
(Delaware) | (Connecticut) (Connecticut) (Connecticut)
|
Hartford Investment
Financial Services
Company
(Delaware)
</TABLE>