HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT VL II, 497, 1999-05-05

HARTFORD LIFE INSURANCE CO SEPARATE ACCOUNT VL II
497, 1999-05-05

Previous: ITT HARTFORD LIFE & ANNUITY INSURANCE CO SEPARATE ACCT VL II, 497, 1999-05-05

Next: DARDEN RESTAURANTS INC, 8-K, 1999-05-05

<PAGE>

STAG VARIABLE LIFE LAST SURVIVOR
SEPARATE ACCOUNT VL II
HARTFORD LIFE 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 variable life insurance policy. Please read it
carefully.

Stag Variable Life Last Survivor is a contract between you and Hartford Life
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 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 of
Hartford Series 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 Income Fund Sub-Account (formerly -- Class IA of Putnam VT Income Fund of Putnam Variable Trust
known as Putnam VT U.S. Government and
High Quality Bond Fund Sub-Account)
Putnam VT International Growth Fund -- Class IA of Putnam VT International Growth Fund of Putnam
Sub-Account Variable Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUB-ACCOUNT PURCHASES SHARES OF:
- -------------------------------------------- ----------------------------------------------------------
<S> <C> <C>
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
Putnam VT Money Market Fund Sub-Account -- Class IA of Putnam VT Money Market Fund of Putnam Variable
Trust
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 -- Class IA of Putnam VT OTC & Emerging Growth Fund of Putnam
Sub-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 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
Commissions' 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: MAY 3, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF BENEFITS AND RISKS......................................... 4
FEE TABLES............................................................ 5
ABOUT US.............................................................. 7
Hartford Life Insurance Company..................................... 7
Separate Account VL II.............................................. 7
The Funds........................................................... 7
CHARGES AND DEDUCTIONS................................................ 10
YOUR POLICY........................................................... 12
PREMIUMS.............................................................. 14
DEATH BENEFITS AND POLICY VALUES...................................... 16
MAKING WITHDRAWALS FROM YOUR POLICY................................... 17
LOANS................................................................. 18
LAPSE AND REINSTATEMENT............................................... 18
TAXES................................................................. 19
LEGAL PROCEEDINGS..................................................... 22
OTHER MATTERS......................................................... 22
GLOSSARY OF SPECIAL TERMS............................................. 24
WHERE YOU CAN FIND MORE INFORMATION................................... 24
</TABLE>
<PAGE>
4 HARTFORD LIFE 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 inforce 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.

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.

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 -- You have a limited right to return the
policy for cancellation after purchase. See "Making Withdrawals From Your Policy
- -- Right to Examine a Policy."

RIGHT TO EXCHANGE YOUR POLICY -- During the first 24 months after your
policy is issued, you may exchange it, without submitting proof of insurability,
for a non-variable last survivor life insurance policy offered by us on the life
of the insureds.

SURRENDER -- You may surrender your policy at any time prior to the maturity
date for its Cash Surrender Value. You may make a partial surrender once per
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 the investment options you choose. 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 partial surrender per
month. Withdrawals will reduce your policy's death benefit.

TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers
and remaining balances, and to limit the 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. Under certain circumstances (usually if you prefund future
benefits in seven years or less), your policy may become a modified endowment
policy under federal tax law. If these circumstances were to occur, loans and
other pre-death distributions are includable in gross income on an income first
basis, and may be subject to a 10% penalty (unless you have attained age
59 1/2). You should consult with a tax adviser before taking steps that may
affect whether your policy becomes a modified endowment policy. See "Taxes".
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
- --------------------------------------------------------------------------------

FEE TABLES

The following tables describe 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 WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED CHARGE IS DEDUCTED
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Front End Sales Load When you pay premium. Premiums paid up to the Target All
Premium
Policy
Year Percent
1 50%
2-5 15%
6-10 10%
11-20 2%
20+ 2%
----------------------------------------------------------------------------------------------------------------------------------
Premiums paid in excess of the All
Target Premium:
Policy
Year Percent
1 9%
2-10 4%
11-20 2%
20+ 2%
----------------------------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------------------------
Federal Tax Charge When you pay premium. 1.25% of each premium payment. All
----------------------------------------------------------------------------------------------------------------------------------
Premium Processing When you pay premium. 1.25% of each premium payment All
Charge
----------------------------------------------------------------------------------------------------------------------------------
Unscheduled Face Each month for five (5) years $0.05 per $1,000 of unscheduled Policies where the owner has made
Amount Increase Fee beginning on the effective date of face amount increase an unscheduled increase.
any unscheduled increase in Face
Amount you request.
----------------------------------------------------------------------------------------------------------------------------------
Transfer Fees When you make a transfer after the $25 per transfer. Those policies with more than one
first transfer in any month. transfer per month.
----------------------------------------------------------------------------------------------------------------------------------
Withdrawal Charge When you take a withdrawal. $50 per withdrawal. Those policies where the owner has
made a withdrawal.
</TABLE>

<PAGE>
6 HARTFORD LIFE 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.

CHARGES OTHER THAN FUND OPERATING EXPENSES

Mortality and Expense Monthly. Policy Years 1-10: All
Risk Charge 0.80% of the Sub-Account
accumulated value.
Policy Years 11-20
0.50% of the Sub-Account
accumulated value.
Policy Years 21+
0.25% of the Sub-Account
accumulated value.
----------------------------------------------------------------------------------------------------------------------------------

Administrative Charge Monthly. Years 1-5 All
$10 per month plus $0.03 per month
per $1,000 of Face Amount at the
policy issue date.
Years 6+:
$10
----------------------------------------------------------------------------------------------------------------------------------

Issue Charge Monthly. $20 per month for the first five All
policy years plus $0.05 per $1,000
of Face Amount at the date of
policy issue.
----------------------------------------------------------------------------------------------------------------------------------

Special Class Charge Monthly. Individualized based on a special Only those Policies with benefits
insurance class rating. rated for a special class.
----------------------------------------------------------------------------------------------------------------------------------

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

<PAGE>
HARTFORD LIFE 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 0.018% - 0.420% All Policies, for those Sub-
reflect Other Expenses already Accounts selected by you.
deducted from the assets of the
Fund.
----------------------------------------------------------------------------------------------------------------------------------

Total Fund Annual Total of Management Fees and Other 0.401% - 1.620% All Policies, for those Sub-
Expenses Expenses shown above. Daily net Accounts selected by you.
asset values of a Fund reflect
Total Fund Annual Operating
Expenses already deducted from
assets of the Fund.
</TABLE>

ABOUT US

HARTFORD LIFE INSURANCE COMPANY

Hartford Life Insurance Company is a stock life insurance company engaged in
the business of writing life insurance, both individual and group, in all states
of the United States as well as the District of Columbia. We were originally
incorporated under the laws of Massachusetts on June 5, 1902, and subsequently
redomiciled to Connecticut. Our offices are located in Simsbury, Connecticut;
however, our mailing address is P.O. Box 5085, Hartford, CT 06104-5085. We are
ultimately controlled by The Hartford Financial Services Group, Inc., one of the
largest financial service providers in the United States.

HARTFORD'S RATINGS

<TABLE>
<CAPTION>
EFFECTIVE
DATE OF
RATING AGENCY RATING RATING BASIS OF RATING
- -------------------- ------------- ------ -----------------------
<S> <C> <C> <C>
A.M. Best and
Company, Inc........ 1/1/99 A + Financial performance
Insurer financial
Standard & Poor's... 6/1/98 AA strength
Duff & Phelps....... 12/21/98 AA + Claims paying ability
</TABLE>

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 Funds' 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 following investment objectives and 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.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

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."

HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return
by investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.

HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.

HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation. Sub-advised by Wellington Management.

HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current
income consistent with growth of capital by investing primarily in dividend
paying equity securities. Sub-advised by Wellington Management.

HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.

HARTFORD INDEX HLS FUND -- Seeks to provide investment results which
approximate the price and yield performance of publicly-traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index.* Sub-advised by HIMCO.

HARTFORD INTERNATIONAL ADVISERS HLS FUND -- Seeks maximum long-term total
return by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.

HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.

HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth
through capital appreciation by investing primarily in equity securities of
companies with market capitalizations within the range represented by the
Standard & Poor's MidCap 400 Index. Sub-advised by Wellington Management.

HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent
with liquidity and preservation of capital. Sub-advised by HIMCO.

HARTFORD MORTGAGE SECURITIES HLS FUND -- Seeks maximum current income
consistent with safety of principal and maintenance of liquidity by investing
primarily in mortgage-related securities, including securities issued by the
Government National Mortgage Association. Sub-advised by HIMCO.

HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within a range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.

HARTFORD STOCK HLS FUND -- Seeks long-term growth of capital by investing
primarily in equity securities. Sub-advised by Wellington Management.

PUTNAM VT ASIA PACIFIC GROWTH FUND -- Seeks capital appreciation by
investing primarily in securities of companies located in Asia and in the
Pacific Basin. The fund's investments will normally include common stocks,
preferred stocks, securities convertible into common stocks or preferred stocks,
and warrants to purchase common stocks or preferred stocks.

PUTNAM VT DIVERSIFIED INCOME FUND -- Seeks high current income consistent
with capital preservation by investing in the following three sectors of the
fixed income securities markets: a U.S. Government and Investment Grade Sector,
a High Yield Sector (which invests primarily in securities commonly known as
"junk bonds"), and an International Sector. See the special considerations for
investments in high yield securities described in the Fund prospectus.

PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON -- Seeks to provide a balanced
investment composed of a well-diversified portfolio of stocks and bonds which
will produce both capital growth and current income.

* "STANDARD & POOR'S-REGISTERED TRADEMARK-," "S&P-REGISTERED TRADEMARK-," "S&P
500-REGISTERED TRADEMARK-," "STANDARD & POOR'S 500," AND "500" ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD
LIFE INSURANCE COMPANY. THE HARTFORD INDEX FUND, INC. ("INDEX FUND") IS NOT
SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD &
POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE
INDEX FUND.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------

PUTNAM VT GLOBAL ASSET ALLOCATION FUND -- Seeks a high level of long-term
total return consistent with preservation of capital by investing in U.S.
equities, international equities, U.S. fixed income securities, and
international fixed income securities.

PUTNAM VT GLOBAL GROWTH FUND -- Seeks capital appreciation through a
globally diversified portfolio of common stocks.

PUTNAM VT GROWTH AND INCOME FUND -- Seeks capital growth and current income
by investing primarily in common stocks that offer potential for capital growth,
current income, or both.

PUTNAM VT HEALTH SCIENCES FUND -- Seeks capital appreciation by investing
primarily in common stocks and other securities of companies in the health
sciences industries.

PUTNAM VT HIGH YIELD FUND -- Seeks high current income and, when consistent
with this objective, a secondary objective of capital growth, by investing
primarily in high-yielding, lower-rated fixed income securities, constituting a
portfolio which Putnam Management believes does not involve undue risk to income
or principal. See the special considerations for investments in high yield
securities described in the Fund prospectus.

PUTNAM VT INCOME FUND (FORMERLY KNOWN AS PUTNAM VT U.S. GOVERNMENT AND HIGH
QUALITY BOND FUND) -- Seeks high current income consistent with what Putnam
Management believes to be prudent risk. The Fund will normally invest mostly in
bonds and other debt securities, and, to a lesser degree, in preferred stocks.

PUTNAM VT INTERNATIONAL GROWTH FUND -- Seeks capital appreciation by
investing primarily in equity securities of companies located in a country other
than the United States.

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND -- Seeks capital growth, and
a secondary objective of high current income by investing primarily in common
stocks that Putnam Management believes offer potential for capital growth and
may, when consistent with its investment objectives, invest in common stocks
that Putnam Management believes offer potential for current income. Under normal
market conditions, the fund expects to invest substantially all of its assets in
securities principally traded on markets outside the United States.

PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND -- Seeks long term capital
appreciation by investing in companies that have above-average growth prospects
due to the fundamental growth of their market sector. Under normal market
conditions, the fund expects to invest substantially all of its total assets,
other than cash or short-term investments held pending investment, in common
stocks, preferred stocks, convertible preferred stocks, convertible bonds and
other equity securities principally traded in securities markets outside the
United States.

PUTNAM VT INVESTORS FUND -- Seeks long-term growth of capital and any
increased income that results from this growth by investing primarily in common
stocks that Putnam Management believes afford the best opportunity for capital
growth over the long term.

PUTNAM VT MONEY MARKET FUND -- Seeks as high a rate of current income as
Putnam Management believes is consistent with preservation of capital and
maintenance of liquidity by investing in high-quality money market instruments.

PUTNAM VT NEW OPPORTUNITIES FUND -- Seeks long-term capital appreciation by
investing principally in common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term growth
potential.

PUTNAM VT NEW VALUE FUND -- Seeks long-term capital appreciation by
investing primarily in common stocks that Putnam Management believes are
undervalued at the time of purchase and have the potential for long-term capital
appreciation.

PUTNAM VT OTC & EMERGING GROWTH FUND -- Seeks capital appreciation by
investing primarily in common stocks that Putnam Management believes have
potential for capital appreciation significantly greater than that of market
averages.

PUTNAM VT UTILITIES GROWTH AND INCOME FUND -- Seeks capital growth and
current income by concentrating its investments in debt and equity securities
issued by companies in the public utilities industries.

PUTNAM VT VISTA FUND -- Seeks capital appreciation by investing in a
diversified portfolio of common stocks which Putnam Management believes have the
potential for above-average capital appreciation.

PUTNAM VT VOYAGER FUND -- Seeks capital appreciation by investing primarily
in common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.

FIDELITY VIP EQUITY-INCOME PORTFOLIO -- Seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these securities,
the Portfolio Manager will also consider the potential for capital appreciation.
The Portfolio's goal is to achieve a yield which exceeds the composite yield on
the securities comprising the Standard & Poor's Index 500.

In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

bonds") which are subject to greater risk than investments in higher-rated
securities. For a further discussion of lower-rated securities, see "Risks of
Lower-Rated Debt Securities" in the Fidelity prospectus for this Portfolio.

FIDELITY VIP OVERSEAS PORTFOLIO -- Seeks long-term growth of capital
primarily through investments in foreign securities and provides a means for
aggressive investors to diversify their own portfolios by participating in
companies and economies outside of the United States.

International funds have increased economic and political risks as they are
exposed to events and factors in the various world markets. These risks may be
greater for funds that invest in emerging markets.

FIDELITY VIP II ASSET MANAGER PORTFOLIO -- Seeks high total return with
reduced risk over the long-term by allocating its assets among stocks, bonds and
short-term money market instruments.

In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.

INVESTMENT ADVISERS -- HL Investment Advisors, LLC is investment adviser for
the Hartford Funds. Wellington Management Company, LLP ("Wellington Management")
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, 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 Investment Management, Inc. ("Putnam Management") serves as the
investment manager for the Putnam Funds. Putnam Management is ultimately
controlled by Marsh & McLennan Companies, Inc., a publicly owned holding company
whose principal businesses are international insurance brokerage and employee
benefit consulting.

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

MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of policy owners, and of owners of
other contracts whose contract values are allocated to one or more of these
other separate accounts investing in any one of the Funds. In the event of any
such material conflicts, we will consider what action may be appropriate,
including removing the Fund from the Separate Account or replacing the Fund with
another underlying fund. There are certain risks associated with mixed and
shared funding, as disclosed in the prospectuses for the Funds.

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 4% per year. We are not obligated to, but
may, credit more than 4% 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 4%.

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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------

FRONT-END SALES LOAD -- We deduct a front-end sales load from each premium
you pay. The front-end sales load is based on:

(1) the amount of premium paid in relation to the Target Premium; and

(2) the policy year in which the premium is paid.

Both current and maximum front-end sales loads for premiums paid up to the
Target Premium are:

- - 50% in the first policy year;

- - 15% in policy years 2 through 5;

- - 10% in policy years 6 through 10; and

- - 2% in policy years 11 through 20.

Thereafter, the current front-end sales load is 0%, with a maximum of 2%.

Both current and maximum front-end sales loads for premiums paid in excess
of the Target Premium are:

- - 9% in policy year 1;

- - 4% in policy years 2 through 10; and

- - 2% in policy years 11 through 20.

Thereafter, the current front-end sales load is 0%, with a maximum of 2%.

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%.

FEDERAL TAX CHARGE -- We deduct a 1.25% charge from each premium payment to
cover the estimated costs to us of the federal income tax treatment of the
Policies' deferred acquisition costs under Section 848 of the Code. We have
determined that this charge is reasonable in relation to our increased federal
income tax burden resulting from the receipt of premiums.

PREMIUM PROCESSING CHARGE -- We deduct a 1.25% charge from each premium
payment for premium collection costs and premium and policy processing costs.

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 mortality and expense risk charge;

- - the monthly administrative charge;

- - the issue charge;

- - charges for "special" insurance class rating, if any;

- - any charges for additional benefits provided by rider;

- - any Face Amount increase fee;

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:

(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. For standard risks, 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.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

MORTALITY AND EXPENSE RISK CHARGE -- We deduct a mortality and expense risk
charge each month from your Account Value. The current mortality and expense
risk charge for any Monthly Activity Date is equal to:

(i) the current mortality and expense risk rate; multiplied by

(ii) the portion of the Account Value allocated to the Sub-Accounts on the
Monthly Activity Date prior to assessing the Monthly Deduction Amount.

The current and maximum mortality and expense risk rate for the first ten
policy years is 0.80%. For policy years 11 through 20, the current and maximum
rate is 0.50%, which is reduced to 0.25% after policy year 20.

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.

MONTHLY ADMINISTRATIVE CHARGE -- We deduct a monthly administrative charge
from your Account Value to compensate us for issue and administrative costs of
the policy. The current monthly administrative fee is the sum of $7.50 per
month, plus $0.01 per month per $1000 of Face Amount at the policy issue date,
paid in policy years 1 through 10. The charge for all policy years is guaranteed
never to exceed the sum of $10.00 per month, plus $0.03 per month per $1000 of
Face Amount at the policy issue date.

ISSUE CHARGE -- In the first five policy years, we assess a monthly issue
charge to compensate us for the up-front costs to underwrite and issue a policy.
The issue charge is the sum of $20.00 per month for the first five policy years
plus $.05 per $1000 of Face Amount at the date the policy is issued.

FACE AMOUNT INCREASE FEE -- We deduct a dollar amount from your Account
Value for an unscheduled increase of the Face Amount on your policy. The fee is
$.05 per $1,000 of each increase per month for the first five policy years from
the date of each increase. 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."

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-
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------

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.

TRANSFERS FROM THE FIXED ACCOUNT -- Except for transfers made under 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 from 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.

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 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
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

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.

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.

- - BENEFITS AT MATURITY. If either insured is living on the "maturity date," we
will pay the Cash Surrender Value to you upon surrender of the policy to us.
On the maturity date, your policy will terminate and Hartford will have no
further obligations under the policy.

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.

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 80 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------

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 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.

You will receive several different types of notifications as to what your
current premium allocation is. Each transaction confirmation received after we
receive a premium payment will show how a Net Premium has been allocated.
Additionally, each quarterly statement summarizes the current premium allocation
in effect for your 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.

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.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

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 sum of the premiums paid.

DEATH BENEFIT OPTION CHANGES -- You may change your death benefit option to
Option A or Option B without evidence of insurability. If you change to Option
A, the Face Amount will become that amount available as a death benefit
immediately prior to the option change. If you change to Option B, 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. Changing your
death benefit option does not result in any fees or charges against your policy.
However, you should consult a tax adviser regarding the possible adverse tax
consequences resulting from a change in your death benefit option.

DEATH BENEFIT GUARANTEE -- The death benefit guarantee is a feature for all
policies at issue. If the premiums paid during policy year 1 are less than the
Annual Death Benefit Guarantee Premium, the death benefit guarantee will be
removed from the policy.

After policy year 1, the death benefit guarantee will be in effect as long
as the cumulative premiums paid into the policy, less any withdrawals, equal or
exceed the Cumulative Death Benefit Guarantee Premium. The death benefit
guarantee period will expire at the end of policy year five.

If the death benefit guarantee is in effect, payment of the Face Amount upon
the death of the last surviving insured will be guaranteed, regardless of your
policy's investment performance. The death benefit guarantee is in effect if:

(a) the death benefit guarantee period has not expired; and

(b) on each Monthly Activity Date, the cumulative premiums paid into your
policy, less withdrawals, equal or exceed the Cumulative Death Benefit
Guarantee Premium.

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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
- --------------------------------------------------------------------------------

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 a change in the Face Amount by writing to us.

The minimum amount by which the Face Amount can be increased or decreased is
based on our rules then in effect.

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 date shown on the new policy specifications page, provided that
the deduction for the cost of insurance for the first month is made.

Each unscheduled increase in Face Amount is subject to an increase fee of
$.05 per $1,000 of each increase per month for the first five policy years from
the date of each increase.

An unscheduled decrease in the Face Amount will be effective on the Monthly
Activity Date following the date we receive the request in writing. The
remaining Face Amount must not be less than that specified by our minimum rules
then in effect.

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

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 your 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. 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.

AMOUNT PAYABLE ON SURRENDER OF THE POLICY -- You may elect to fully
surrender your policy as long as your policy is in effect. Upon surrender, you
will receive the Cash Surrender Value determined as of the later of (a) the date
on which we receive your request for surrender in writing (b) the date you
request. The policy will terminate on the later of (x) the date we receive your
request in writing or (y) the date you request the surrender to be effective.

PARTIAL WITHDRAWALS -- One partial withdrawal is allowed per month (between
any successive Monthly Activity Dates). The minimum partial withdrawal allowed
is $500. The maximum partial withdrawal is the Cash Surrender Value, less
$1,000. If the death benefit option then in effect is Option A or Option C, the
Face Amount is reduced by the amount of the partial withdrawal. The minimum Face
Amount required after a partial withdrawal is subject to our rules then in
effect. Unless specified otherwise, the partial withdrawal will be deducted pro
rata from the Fixed Account and the Sub-Accounts. Currently, we do not impose a
partial withdrawal charge. However, we reserve the right to impose in the future
a partial withdrawal charge of up to $50.

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 ends the later of 10 days after you receive your policy, 10 days after we
deliver to you a Notice of Right to Withdraw, or 45 days after you sign the
application for your policy (or longer in some states). In such event, the
policy will be rescinded and we will pay an amount equal to the greater of the
premiums paid for the policy less any Indebtedness or the sum of: i) the Account
Value less any Indebtedness, on the date the returned policy is received by us
or the agent from whom it was purchased; and, ii) any deductions under the
policy or charges associated with the Separate Account. If your policy is
replacing another policy, your free look period and the amount paid to you upon
the return of your policy vary by state.

RIGHT TO EXCHANGE A POLICY -- During the first 24 months after its issuance,
you may exchange your policy for a non-variable life insurance policy on the
life of the insured offered by us or an affiliate. No evidence of insurability
will be required. The new policy will have an amount at risk
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

which equals or is less than the amount at risk in effect on the date of
exchange. Premiums under the new policy will be based on the same risk
classifications as the policy for which the new policy was exchanged. An
exchange of a policy under such circumstances should be a tax-free transaction
under Section 1035 of the Code.
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 90% of Account
Value on the date we grant a loan.

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 Account 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.

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 4% during the first ten policy years. Thereafter,
the rate will be 5%. For preferred loans, the rate is 6%.

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 are shown in the policy.

LAPSE AND REINSTATEMENT

A policy will be in default on any Monthly Activity Date on which its Cash
Surrender Value is not sufficient to cover the Monthly Deduction Amount. A
61-day period, called the "grace period," will begin from the date of default.
We will mail the you and any assignee written notice of the amount of premium
that will be required to continue the defaulting policy in force at least 30
days before the end of the grace period. The premiums required will be no
greater than the amount required to pay three Monthly Deduction Amounts as of
the day the grace period began. Unless the Death Benefit Guarantee is in effect,
such policy will terminate without value if the required premium is not paid by
the end of the grace period. If the Death Benefit Guarantee is in effect and
sufficient premium has not been paid by the end of the grace period, the death
benefit will be reduced to the Face Amount and any riders will no longer be in
force. If the last surviving insured dies during the grace period, we will pay
the death proceeds.

DEATH BENEFIT GUARANTEE DEFAULT AND GRACE PERIOD -- If the cumulative
premiums, less withdrawals, are not sufficient to maintain the Death Benefit
Guarantee in effect, the lapse and grace period provisions for the Death Benefit
guarantee will apply as follows:

On every Monthly Activity Date during the Death Benefit Guarantee period, we
will compare the cumulative premiums received, less withdrawals, to the
Cumulative Death Benefit Guarantee Premium for the Death Benefit guarantee
period in effect.

If the cumulative premiums received, less withdrawals, are less than the
Cumulative Death Benefit Guarantee Premium, the Death Benefit Guarantee will be
deemed to be in default as of that Monthly Activity Date. A grace period of 61
days from the date of default will begin. We will mail to you and any assignee
written notice of the amount of premium required to continue the Death Benefit
Guarantee.

At the end of the grace period, the Death Benefit Guarantee will be removed
from the policy if we have not received the amount of the required premium. You
will receive a written notification of the change.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
- --------------------------------------------------------------------------------

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 Account Value at the time of termination; plus

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

Upon reinstatement, any Indebtedness at the time of termination must be
repaid or carried over to the reinstated policy.

TAXES

GENERAL

Since federal tax law is complex, the tax consequences of purchasing this
policy will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this policy is right for you.

Our general discussion of the tax treatment of this policy is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this policy cannot be made in the prospectus. We also do not discuss
state, municipal or other tax laws that may apply to this policy. For detailed
information, you should consult with a qualified tax adviser familiar with your
situation.

TAXATION OF HARTFORD
AND THE SEPARATE ACCOUNT

The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Funds) are reinvested and are taken into account in determining the value of the
Accumulation Units. (See "Detailed Description of Policy Benefits and Provisions
- -- 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 contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
Beneficiary. Also, a life insurance policy owner is generally not taxed on
increments in the contract value until the policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.

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, 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
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

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 Rider allows a policy owner to extend the
Maturity Date to the date of the death of the last surviving insured. If the
Maturity Date of the policy is extended by rider, 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

The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a contract is not treated as a life insurance contract, the
policy owner will be subject to income tax on annual increases in cash value.

The Treasury Department's diversification regulations require, among other
things, that:

- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,

- - no more than 70% is represented by any two investments,

- - no more than 80% is represented by any three investments and

- - no more than 90% is represented by any four investments.

In determining whether the diversification standards are met, all securities
of the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.

A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the policy owner must agree to pay the tax due for the period during which
the diversification requirements were not met.

We monitor the diversification of investments in the separate accounts and
test for diversification as required by the Code. We intend to administer all
policies subject to the diversification requirements in a manner that will
maintain adequate diversification.

OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT

In order for a variable life insurance contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.

The IRS has issued several rulings discussing investor control. These
rulings say that certain incidents of ownership by the policy owner, such as the
ability to select and control investments in a separate account, will cause the
policy owner to be treated as the owner of the assets for tax purposes.

In its explanation of the diversification regulations, the Treasury
Department recognized that the temporary regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the insurance
company, to be treated as the owner of the assets in the account." The
explanation further indicates that "the temporary regulations provide that in
appropriate cases a segregated asset account may include multiple sub-accounts,
but do not specify the extent to which policyholders may direct their
investments to particular sub-accounts without being treated as the owners of
the underlying assets. Guidance on this and other issues will be provided in
regulations or revenue rulings under Section 817(d), relating to the definition
of variable contract."

The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
- --------------------------------------------------------------------------------

Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.

TAX DEFERRAL DURING ACCUMULATION PERIOD

Under existing provisions of the Code, except as described below, any
increase in an owner's contract value is generally not taxable to the owner
unless amounts are received (or are deemed to be received) under the policy
prior to the Insured's death. If there is a total withdrawal from the policy,
then the surrender value will be includible in the 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 owner.) The "investment in the contract" is the
aggregate amount of premium payments and other consideration paid for the
policy, less the aggregate amount received under the policy 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 policy
constitute income to the owner depends, in part, upon whether the policy 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 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 within
the first seven years, the seven-pay test is applied 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.

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 contract is classified as a MEC, then withdrawals from
the contract will be considered first as withdrawals of income and then as a
recovery of premium payments. Thus, withdrawals 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 contract will be
treated as a withdrawal from the contract for tax purposes. In addition, if the
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 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 loan under a policy that is a
MEC, an 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 loan or 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
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

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 (for
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 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

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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------

company. In addition, Year 2000 problems that occur with third parties with
which a company does business, such as suppliers, computer vendors, distributors
and others, may also adversely affect any given company.

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

INTERNAL YEAR 2000 EFFORTS AND TIMETABLE -- Beginning in 1990, Hartford
began working on making its IT systems Year 2000 ready, either through
installing new programs or replacing systems. Since January 1998, Hartford's
Year 2000 efforts have focused on the remaining Year 2000 issues related to IT
and non-IT systems in all of Hartford's business segments. These Year 2000
efforts include the following five main initiatives: (1) identifying and
assessing Year 2000 issues; (2) taking actions to remediate IT and non-IT
systems so that they are Year 2000 ready; (3) testing IT and non-IT systems for
Year 2000 readiness; (4) deploying such remediated and tested systems back into
their respective production environments; and (5) conducting internal and
external integrated testing of such systems. As of December 31, 1998, Hartford
substantially completed initiatives (1) through (4) of its internal Year 2000
efforts. Hartford has begun initiative (5) and management currently anticipates
that such activity will continue into the fourth quarter of 1999.

THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE -- Hartford's Year 2000 efforts
include assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.

YEAR 2000 COSTS -- The costs of Hartford's Year 2000 program that were
incurred through the year ended December 31, 1997 were not material to
Hartford's financial condition or results of operations. The after-tax costs of
Hartford's Year 2000 efforts for the year ended December 31, 1998 were
approximately $3 million. Management currently estimates that after-tax costs
related to the Year 2000 program to be incurred in 1999 will be less than $10
million. These costs are being expensed as incurred.

RISKS AND CONTINGENCY PLANS -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its business and Hartford may be exposed to the risk that
issuers of investments held by it will be adversely impacted by Year 2000
issues. Given the uncertain nature of Year 2000 problems that may arise,
especially those related to the readiness of third parties discussed above,
management cannot determine at this time whether the consequences of Year 2000
related problems that could arise will have a material impact on Hartford's
financial condition or results of operations.

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

GLOSSARY OF SPECIAL TERMS

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

ANNUAL DEATH BENEFIT GUARANTEE PREMIUM: An annual amount of premium shown in a
policy's specifications page required to keep the Death Benefit guarantee in
effect and used to calculate the Cumulative Death Benefit Guarantee Premium.

CASH SURRENDER VALUE: the Account Value less all Indebtedness.

CUMULATIVE DEATH BENEFIT GUARANTEE PREMIUM: The sum of the number of completed
policy years plus the completed portion of the current policy year (expressed as
the number of completed months divided by 12), multiplied by the Annual Death
Benefit Guarantee Premium.

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.

TARGET PREMIUM: The amount of level premium required to support a whole life
insurance policy with a net interest rate of 5% and a Face Amount equal to the
initial Face Amount. The policy charges used in determining the level premium
amount are maximum guaranteed cost of insurance rates for standard risks, actual
premium tax rates, a 1.25% premium charge for processing, a 1.25% premium charge
for federal tax and other maximum policy deductions or charges, exclusive of any
additional rider charges.

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 Insurance Company sometimes referred to as
"Hartford."

YOU, YOUR: the owner of the policy.

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 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: MAY 3, 1999
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 3, 1999
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY....................................... 3
SERVICES.............................................................. 5
DISTRIBUTION OF THE POLICIES.......................................... 5
ADDITIONAL INFORMATION ABOUT CHARGES.................................. 6
ILLUSTRATION OF BENEFITS.............................................. 8
FINANCIAL STATEMENTS.................................................. SA-1
</TABLE>

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

GENERAL INFORMATION
AND HISTORY

HARTFORD LIFE INSURANCE COMPANY ("HARTFORD") -- Hartford Life Insurance
Company is a stock life insurance company engaged in the business of writing
life insurance, both individual and group, in all states of the United States
and the District of Columbia. We were originally incorporated under the laws of
Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Our
offices are located in Simsbury, Connecticut; however, our mailing address is
P.O. Box 2999, Hartford, CT 06104-2999.

Hartford Life Insurance Company 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.

<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- --------------------------- ------------------------------------- ----------------------------------------------------------------
<S> <C> <C>
Wendell J. Bossen Vice President, 1992** Vice President (1992-Present), Hartford Life and Accident
Insurance Company; President (1992-Present), International
Corporate Marketing Group, Inc.; Executive Vice President
(1984-1992), Mutual Benefit.

Gregory A. Boyko Senior Vice President, Vice President and Controller (1995-1997), Hartford Life
Director 1997 Insurance Company; Director (1997-Present); Senior Vice
President (1997-Present), Chief Financial Officer & Treasurer
(1997-1998); Vice President & Controller (1995-1997), Hartford
Life and Accident Insurance Company; Senior Vice President,
Chief Financial Officer & Treasurer (1997-Present), Hartford
Life, Inc.; Chief Financial Officer (1994-1995), IMG American
Life; Senior Vice President (1992-1994), Connecticut Mutual
Life Insurance Company.

Peter W. Cummins Senior Vice President, 1997 Vice President (1989-1997); Director of Broker Dealer Sales-ILAD
(1989-1992), Hartford; Senior Vice President (1997-Present)
Vice President (1989-1997); Director of Broker Dealer
Sales-ILAD (1989-1991), Hartford Life and Accident Insurance
Company.

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

Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Officer, (1998-Present),
Accounting Officer, 1998 Hartford Life & Annuity Insurance Company; Vice President &
Chief Accounting Officer, (1998-Present), Royal Life Insurance
Company of America; Vice President & Chief Accounting Officer
(1998-Present) Alpine Life Insurance Company; Chief Accounting
Officer (1997-Present), Hartford Life, Inc.; Director, Finance
(1995-1997), Value Health, Inc.; Senior Manager (1993-1995),
Coopers and Lybrand; Audit Manager (1993-1996) Arthur Andersen
& Co.
</TABLE>
<PAGE>

4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- --------------------------- ------------------------------------- ----------------------------------------------------------------
<S> <C> <C>
David T. Foy Senior Vice President and Senior Vice President (1998-Present), Vice President (1998),
Treasurer, 1998 Assistant Vice President (1995-1998), Hartford; Senior Vice
President (1998-Present), Hartford Life and Accident Insurance
Company; Director, Strategic Planning Corporate Finance
(1995-1996), IA Product Development (1994-1995), Hartford;
Various Actuarial Roles (1989-1993), Milliman & Robertson.

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

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

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

Michael D. Keeler Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company; Vice President (1995-1997), Providian
Insurance; Supervisor/ Manager (1985-1995), U.S. West
Communications.

Robert A. Kerzner Senior Vice President, 1998 Vice President, (1995-1998); Regional Vice President
(1991-1994), Hartford; Vice President (1994-1997), Hartford
Life and Accident Insurance Company.

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

Joseph J. Noto Vice President, 1989 Executive Vice President & Chief Operating Officer
(1997-Present); Director (1994-Present); President
(1994-1997), American Maturity Life Insurance Company; Vice
President (1989-1997), Hartford Life and Accident Insurance
Company.
</TABLE>
<PAGE>

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

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

Donald A. Salama Vice President, 1997 Vice President (1997-Present), Hartford Life and Accident
Insurance Company; Principal and Director Institutional Sales
(1995-1998), The Vanguard Group; Senior Vice President
(1994-1995), Mercantile Ban-corporation; Vice President
(1988-1994), Bankers Trust Company.

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

David M. Znamierowski Senior Vice President, 1997 Vice President (1997), Hartford; Director (1998-Present); Senior
Director, 1998* Vice President (1997-Present); Hartford Life and Accident
Insurance Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice President,
Investment Strategy & Policy (1991-1996), Aetna Life and
Casualty.
</TABLE>

- ---------

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

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

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

SEPARATE ACCOUNT 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.

EXPERTS

INDEPENDENT PUBLIC ACCOUNTANTS -- The audited financial statements and
financial statement schedules included in this registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.

ACTUARIAL EXPERT -- The hypothetical Policy illustrations included in this
Statement of Additional Information and the registration statement with respect
to the Separate Account have been approved by Kenneth A. McCullum, FSA, MAAA,
Assistant Vice President and Director, Individual Life Product Development, for
Hartford, and are included in reliance upon his opinion as to their
reasonableness.

DISTRIBUTION OF POLICIES

Hartford Equity Sales Company, Inc. ("HESCO") serves as principal
underwriter for the policies and will offer the policies on a continuous basis.
HESCO is controlled by
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

Hartford and is located at the same address as Hartford. HESCO 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 policies will be sold by salespersons who represent Hartford as
insurance agents and who are registered representatives of HESCO or certain
other registered broker-dealers who have entered into distribution agreements
with HESCO.

During the first Policy Year, the maximum sales commission payable to
Hartford agents, independent registered insurance brokers, and other registered
broker-dealers, is 45% of the premium paid up to a Target Premium, and 5% of any
excess. In Policy Years 2 through 10, such sales commission will not exceed 5.5%
of premiums paid. For Policy Years 11 and later, agent commissions will not
exceed 2% of premiums paid. Additionally, expense allowances may be paid. A
sales representative may be required to return all or a portion of the
commissions paid if the Policy terminates prior to the Policy's second Policy
Anniversary.

Broker-dealers or financial institutions are compensated according to a
schedule set forth by HESCO and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments.
This compensation is usually paid from the sales charges described in the
Prospectus.

In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HESCO, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or other financial institutions based
on total sales by the broker-dealer or financial institution of insurance
products. These payments, which may be different for broker-dealers or financial
institutions, will be made by HESCO, its affiliates or Hartford out of their
assets and will not affect the amounts paid by the policy owner to purchase,
hold or surrender variable insurance products.

The following table shows officers and directors of HESCO:

<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

FRONT-END SALES LOAD -- The front-end sales load is a charge deducted from
each premium payment based on the amount of premium paid in relation to the
Target Premium and the Policy Year in which the premium is paid.

Both current and maximum front-end sales loads for premiums paid up to the
Target Premium is 50% in the first Policy Year, 15% in Policy Years 2 through 5,
10% in Policy Years 6 through 10, and 2% in Policy Years 11 through 20.
Thereafter, the current front-end sales load is 0%.

Both current and maximum front-end sales loads for premiums paid in excess
of the Target Premium is 9% in Policy Year 1, 4% in Policy Years 2 through 10
and 2% in Policy Years 11 through 20. Thereafter, the current front-end sales
load is 0%.

The front-end load under the policies may be used to cover expenses related
to the sale and distribution of the policies.

UNDERWRITING PROCEDURES -- To purchase a policy you must submit an
application to us. Within limits, you may choose the Scheduled Premiums and the
initial Face Amount and the Guarantee Period in the policy application. Policies
generally will be issued only on the lives of insureds the ages of 20 and 80 who
supply evidence of insurability satisfactory to us. (We may extend the age 80
limit to higher ages for the older Insured, in which case certain age and risk
classification restrictions on the younger Insured will apply). Acceptance is
subject to our underwriting rules and we reserve the right to reject an
application for any reason.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 7
- --------------------------------------------------------------------------------

No change in the terms or conditions of a policy will be made without your
consent.

The Cost of Insurance charge is to cover our anticipated mortality costs and
other expenses. For standard risks, the Cost of Insurance rates will not exceed
those based on the 1980 Commissioners' Standard Ordinary Mortality Smoker or
Nonsmoker Table, age last birthday. A table of guaranteed Cost of Insurance
rates per $1,000 will be included in each Policy; however, we reserve the right
to use rates less than those shown in the table. Substandard risks will be
charged a higher Cost of Insurance rate which will not exceed rates based on a
multiple of the 1980 Commissioners' Standard Ordinary Mortality Smoker or
Nonsmoker Table, age last birthday. The multiple will be based on the Insured's
risk class. We will determine the Cost of Insurance rate at the start of each
Policy Year. Any changes in the Cost of Insurance rate will be made uniformly
for all Insureds of the same issue age, sex and risk class 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 Insured's health.

Because the Account Value and the Death Benefit may vary from month to
month, the Cost of Insurance charge may also vary on each Monthly Activity Date.

INCREASES IN FACE AMOUNT -- At any time after the first Policy Year, You may
request In Writing a change in the Face Amount.

The minimum amount by which the Face Amount can be increased is based on Our
rules then in effect.

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
effective on the date shown on the new policy specifications page, provided that
the deduction for the Cost of Insurance for the first month is made.

Each unscheduled increase in Face Amount is subject to an increase fee of
$.05 per $1,000 of each increase per month for the first five Policy Years from
the date of each increase.

We reserve the right to limit the number of increases made under a Policy to
no more than one in any 12 month period.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

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 and Account 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%. They assume the following: (a) a male,
preferred, age 55, and a female, preferred, age 50, with $1,000,000 of Face
Amount and a premium of $15,500.00 paid in all years and (b) a male, preferred,
age 65, and a female, preferred, age 65, with $1,000,000 of Basic Face Amount
and a premium of $27,000.00 paid in all years.

The Death Benefit and Account 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 and Account
Values would change if current Cost of Insurance charges change.

The amounts shown for the Death Benefit and Account Values as of the end of
each Policy Year take into account an average daily charge equal to an annual
charge of 0.71% 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 0.71% average daily charge) of -0.71%, 5.29% and
11.29%, respectively.

In addition, the Death Benefit and Account Values as of the end of each
Policy Year take into account the front-end sales load, premium processing
charge, federal tax charge, premium tax charge (assumed to be 2.0% in the
illustrations), Cost of Insurance charge, monthly administrative fee, issue
charge, and mortality and expense risk charge.

The hypothetical returns shown in the illustrations 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 "Premiums Accumulated at 5% Interest Per Year" column of each
illustration 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, a Policy's proposed 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>
STATEMENT OF ADDITIONAL INFORMATION 9
- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$1,000,000 FACE AMOUNT
ISSUE AGE 55 MALE PREFERRED
ISSUE AGE 50 FEMALE PREFERRED
$15,500 PLANNED PREMIUM

ASSUMING THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURNS SHOWN
AND GUARANTEED CHARGES

<TABLE>
<CAPTION>
PREMIUMS 12% (11.29% NET) 6% (5.29% NET) 0% (-0.71% NET)
END OF ACCUMULATED ------------------------- ------------------------ ------------------------
POLICY AT 5% INTEREST ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 16,275 6,397 1,000,000 6,018 1,000,000 5,639 1,000,000
2 33,364 19,364 1,000,000 17,887 1,000,000 16,457 1,000,000
3 51,307 33,574 1,000,000 30,182 1,000,000 27,013 1,000,000
4 70,147 49,137 1,000,000 42,901 1,000,000 37,290 1,000,000
5 89,930 66,168 1,000,000 56,038 1,000,000 47,267 1,000,000

6 110,701 86,539 1,000,000 71,254 1,000,000 58,517 1,000,000
7 132,511 108,824 1,000,000 86,942 1,000,000 69,393 1,000,000
8 155,412 133,198 1,000,000 103,090 1,000,000 79,864 1,000,000
9 179,457 159,849 1,000,000 119,683 1,000,000 89,898 1,000,000
10 204,705 188,979 1,000,000 136,695 1,000,000 99,448 1,000,000

11 231,215 222,859 1,000,000 155,865 1,000,000 110,021 1,000,000
12 259,051 260,021 1,000,000 175,522 1,000,000 120,005 1,000,000
13 288,279 300,782 1,000,000 195,616 1,000,000 129,313 1,000,000
14 318,968 345,500 1,000,000 216,081 1,000,000 137,843 1,000,000
15 351,191 394,590 1,000,000 236,843 1,000,000 145,476 1,000,000

16 385,026 448,538 1,000,000 257,820 1,000,000 152,080 1,000,000
17 420,552 507,924 1,000,000 278,927 1,000,000 157,511 1,000,000
18 457,855 573,351 1,047,761 300,070 1,000,000 161,605 1,000,000
19 497,022 644,811 1,141,715 321,152 1,000,000 164,181 1,000,000
20 538,148 722,602 1,240,708 342,055 1,000,000 165,017 1,000,000

25 724,270 1,238,417 1,849,067 445,663 1,000,000 134,331 1,000,000
30 1,014,302 1,995,331 2,664,200 516,010 1,000,000 -- --
</TABLE>

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

THE DEATH BENEFIT MAY, AND THE ACCOUNT 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 AND ACCOUNT VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED THE RATE SHOWN OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND ACCOUNT
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 THE RATE SHOWN, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR THE
SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$1,000,000 FACE AMOUNT
ISSUE AGE 65 MALE PREFERRED
ISSUE AGE 65 FEMALE PREFERRED
$27,000 PLANNED PREMIUM

ASSUMING THE HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURNS SHOWN
AND GUARANTEED CHARGES

<TABLE>
<CAPTION>
PREMIUMS 12% (11.29% NET) 6% (5.29% NET) 0% (-0.71% NET)
END OF ACCUMULATED ------------------------- ------------------------ ------------------------
POLICY AT 5% INTEREST ACCOUNT DEATH ACCOUNT DEATH ACCOUNT DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 28,350 12,715 1,000,000 11,988 1,000,000 11,262 1,000,000
2 58,118 35,875 1,000,000 33,121 1,000,000 30,455 1,000,000
3 89,373 60,564 1,000,000 54,332 1,000,000 48,518 1,000,000
4 122,192 86,810 1,000,000 75,489 1,000,000 65,327 1,000,000
5 156,652 114,633 1,000,000 96,431 1,000,000 80,733 1,000,000

6 192,834 146,339 1,000,000 119,158 1,000,000 96,642 1,000,000
7 230,826 179,839 1,000,000 141,312 1,000,000 110,681 1,000,000
8 270,717 215,085 1,000,000 162,550 1,000,000 122,516 1,000,000
9 312,603 252,008 1,000,000 182,457 1,000,000 131,731 1,000,000
10 356,583 290,569 1,000,000 200,569 1,000,000 137,859 1,000,000

11 402,762 334,135 1,000,000 219,256 1,000,000 142,905 1,000,000
12 451,251 380,104 1,000,000 235,393 1,000,000 143,848 1,000,000
13 502,163 428,882 1,000,000 248,453 1,000,000 140,091 1,000,000
14 555,621 481,057 1,000,000 257,814 1,000,000 130,913 1,000,000
15 611,752 537,422 1,000,000 262,658 1,000,000 115,351 1,000,000

16 670,690 599,041 1,000,000 261,867 1,000,000 92,077 1,000,000
17 732,574 667,403 1,000,000 253,919 1,000,000 59,277 1,000,000
18 797,553 744,652 1,000,000 236,746 1,000,000 14,486 1,000,000
19 865,781 832,594 1,053,919 207,643 1,000,000 -- --
20 937,420 926,983 1,153,097 163,083 1,000,000 -- --

25 1,261,632 1,524,627 1,769,315 -- -- -- --
30 1,766,849 2,384,389 2,613,005 -- -- -- --
</TABLE>

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

THE DEATH BENEFIT MAY, AND THE ACCOUNT 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 AND ACCOUNT VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY
AVERAGED THE RATE SHOWN OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT AND ACCOUNT
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 THE RATE SHOWN, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR THE
SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
Hartford Life Insurance Company SA-1
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Variable Life Two (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, Fidelity VIP Equity-Income Fund, Fidelity VIP Overseas Fund,
Fidelity VIP II Asset Manager Fund, Growth and Income Fund, International
Advisers Fund, Small Company Fund, and MidCap Fund) (collectively, the Account)
as of December 31, 1998, and the related statements of operations and the
statements of changes in net assets for the periods presented. These financial
statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 16, 1999
<PAGE>
SA-2 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- --------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 3,283,908
Cost $3,475,321
Market Value....... $ 3,548,804 --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 2,372,983
Cost $11,800,445
Market Value....... -- $ 15,570,723
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 5,819,959
Cost $5,819,959
Market Value....... -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 2,708,124
Cost $6,682,965
Market Value....... -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 3,092,534
Cost $12,782,349
Market Value....... -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 214,290
Cost $229,086
Market Value....... -- --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 3,757,796
Cost $10,402,891
Market Value....... -- --
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 3,968,001
Cost $5,260,082
Market Value....... -- --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 3,926,588
Cost $7,345,244
Market Value....... -- --
Due from Hartford Life
Insurance Company..... 4,028 6,960
Receivable from fund
shares sold........... -- --
-------------- --------------
Total Assets........... 3,552,832 15,577,683
-------------- --------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. 4,058 7,984
-------------- --------------
Total Liabilities...... 4,058 7,984
-------------- --------------
Net Assets (variable
life contract
liabilities).......... $ 3,548,774 $ 15,569,699
-------------- --------------
-------------- --------------
Units Owned by
Participants.......... 2,389,231 4,961,955
Unit Values............ $ 1.485321 $ 3.137815
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND 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. - Class
IA
Shares 3,283,908
Cost $3,475,321
Market Value....... -- -- -- -- -- --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 2,372,983
Cost $11,800,445
Market Value....... -- -- -- -- -- --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 5,819,959
Cost $5,819,959
Market Value....... $5,819,959 -- -- -- -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 2,708,124
Cost $6,682,965
Market Value....... -- $ 8,084,434 -- -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 3,092,534
Cost $12,782,349
Market Value....... -- -- $ 14,717,621 -- -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 214,290
Cost $229,086
Market Value....... -- -- -- $ 232,408 -- --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 3,757,796
Cost $10,402,891
Market Value....... -- -- -- -- $ 13,417,031 --
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 3,968,001
Cost $5,260,082
Market Value....... -- -- -- -- -- $5,376,073
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 3,926,588
Cost $7,345,244
Market Value....... -- -- -- -- -- --
Due from Hartford Life
Insurance Company..... 130,362 2,690 11,574 202 13,834 4,351
Receivable from fund
shares sold........... -- -- -- -- -- --
--------------- -------------- --------------- -------------- -------------- ----------------
Total Assets........... 5,950,321 8,087,124 14,729,195 232,610 13,430,865 5,380,424
--------------- -------------- --------------- -------------- -------------- ----------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- -- --
Payable for fund shares
purchased............. 130,254 2,726 11,272 201 17,956 4,416
--------------- -------------- --------------- -------------- -------------- ----------------
Total Liabilities...... 130,254 2,726 11,272 201 17,956 4,416
--------------- -------------- --------------- -------------- -------------- ----------------
Net Assets (variable
life contract
liabilities).......... $5,820,067 $ 8,084,398 $ 14,717,923 $ 232,409 $ 13,412,909 $5,376,008
--------------- -------------- --------------- -------------- -------------- ----------------
--------------- -------------- --------------- -------------- -------------- ----------------
Units Owned by
Participants.......... 4,463,577 3,330,903 5,966,969 161,388 4,508,938 3,163,907
Unit Values............ $ 1.303902 $ 2.427089 $ 2.466566 $ 1.440067 $ 2.974738 $ 1.699168

<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
--------------
<S> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 3,283,908
Cost $3,475,321
Market Value....... --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 2,372,983
Cost $11,800,445
Market Value....... --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 5,819,959
Cost $5,819,959
Market Value....... --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 2,708,124
Cost $6,682,965
Market Value....... --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 3,092,534
Cost $12,782,349
Market Value....... --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 214,290
Cost $229,086
Market Value....... --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 3,757,796
Cost $10,402,891
Market Value....... --
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 3,968,001
Cost $5,260,082
Market Value....... --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 3,926,588
Cost $7,345,244
Market Value....... $ 8,483,339
Due from Hartford Life
Insurance Company..... 10,166
Receivable from fund
shares sold........... --
--------------
Total Assets........... 8,493,505
--------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... --
Payable for fund shares
purchased............. 10,325
--------------
Total Liabilities...... 10,325
--------------
Net Assets (variable
life contract
liabilities).......... $ 8,483,180
--------------
--------------
Units Owned by
Participants.......... 3,645,833
Unit Values............ $ 2.326815
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1998

<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP
EQUITY-INCOME OVERSEAS
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------------- --------------
<S> <C> <C>
ASSETS:
Investments:
Fidelity VIP
Equity-Income
Portfolio
Shares 350,918
Cost $7,982,323
Market Value....... $8,920,347 --
Fidelity VIP Overseas
Portfolio
Shares 187,541
Cost $3,672,034
Market Value....... -- $ 3,760,204
Fidelity VIP II Asset
Manager Portfolio
Shares 81,462
Cost $1,364,740
Market Value....... -- --
Hartford Growth and
Income HLS Fund -
Class IA
Shares 1,355
Cost $1,456
Market Value....... -- --
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 873
Cost $1,000
Market Value....... -- --
Hartford Small
Company HLS Fund,
Inc. - Class IA
Shares 43,112
Cost $42,608
Market Value....... -- --
Hartford MidCap HLS
Fund, Inc. - Class
IA
Shares 767
Cost $1,000
Market Value....... -- --
Due from Hartford Life
Insurance Company..... -- --
Receivable from fund
shares sold........... 9,664 2,981
---------------- --------------
Total Assets........... 8,930,011 3,763,185
---------------- --------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. 11,458 1,777
---------------- --------------
Total Liabilities...... 11,458 1,777
---------------- --------------
Net Assets (variable
life contract
liabilities).......... $8,918,553 $ 3,761,408
---------------- --------------
---------------- --------------
Units Owned by
Participants.......... 4,552,103 2,459,787
Unit Values............ $ 1.959216 $ 1.529160
</TABLE>

<TABLE>
<CAPTION>
FIDELITY VIP II
ASSET MANAGER GROWTH AND INTERNATIONAL SMALL COMPANY MIDCAP
PORTFOLIO INCOME FUND ADVISERS FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- -------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Fidelity VIP
Equity-Income
Portfolio
Shares 350,918
Cost $7,982,323
Market Value....... -- -- -- -- --
Fidelity VIP Overseas
Portfolio
Shares 187,541
Cost $3,672,034
Market Value....... -- -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 81,462
Cost $1,364,740
Market Value....... $1,479,344 -- -- -- --
Hartford Growth and
Income HLS Fund -
Class IA
Shares 1,355
Cost $1,456
Market Value....... -- $ 1,606 -- -- --
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 873
Cost $1,000
Market Value....... -- -- $ 1,007 -- --
Hartford Small
Company HLS Fund,
Inc. - Class IA
Shares 43,112
Cost $42,608
Market Value....... -- -- -- $ 56,956 --
Hartford MidCap HLS
Fund, Inc. - Class
IA
Shares 767
Cost $1,000
Market Value....... -- -- -- -- $ 1,104
Due from Hartford Life
Insurance Company..... -- -- -- -- --
Receivable from fund
shares sold........... -- -- -- -- --
---------------- -------------- ---------------- ---------------- --------------
Total Assets........... 1,479,344 1,606 1,007 56,956 1,104
---------------- -------------- ---------------- ---------------- --------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... 6,312 -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- --
---------------- -------------- ---------------- ---------------- --------------
Total Liabilities...... 6,312 -- -- -- --
---------------- -------------- ---------------- ---------------- --------------
Net Assets (variable
life contract
liabilities).......... $1,473,032 $ 1,606 $ 1,007 $ 56,956 $ 1,104
---------------- -------------- ---------------- ---------------- --------------
---------------- -------------- ---------------- ---------------- --------------
Units Owned by
Participants.......... 841,070 1,396 1,000 52,916 1,000
Unit Values............ $ 1.751379 $ 1.150984 $1.007480 $1.076363 $ 1.103726
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $166,560 $ 116,844
-------------- --------------
Net investment income
(loss).............. 166,560 116,844
-------------- --------------
CAPITAL GAINS INCOME..... -- 289,691
-------------- --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 20,736 (19,525)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 48,115 2,840,198
-------------- --------------
Net gain (loss) on
investments......... 68,851 2,820,673
-------------- --------------
Net increase
(decrease) in net
assets resulting
from operations..... $235,411 $ 3,227,208
-------------- --------------
-------------- --------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- -------------- --------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $524,273 $ 158,735 $ 77,525 $14,559 $ 107,603 $ 69,373
--------------- -------------- --------------- ------- -------------- --------
Net investment income
(loss).............. 524,273 158,735 77,525 14,559 107,603 69,373
--------------- -------------- --------------- ------- -------------- --------
CAPITAL GAINS INCOME..... -- 148,349 573,895 -- 176,994 235,374
--------------- -------------- --------------- ------- -------------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 3,423 (40,897) (1) 41,466 (12,897)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 925,117 1,053,772 632 2,102,732 226,926
--------------- -------------- --------------- ------- -------------- --------
Net gain (loss) on
investments......... -- 928,540 1,012,875 631 2,144,198 214,029
--------------- -------------- --------------- ------- -------------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $524,273 $ 1,235,624 $ 1,664,295 $15,190 $ 2,428,795 518,776
--------------- -------------- --------------- ------- -------------- --------
--------------- -------------- --------------- ------- -------------- --------

<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
--------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $132,007
--------------
Net investment income
(loss).............. 132,007
--------------
CAPITAL GAINS INCOME..... 182,157
--------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (22,437)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 652,784
--------------
Net gain (loss) on
investments......... 630,347
--------------
Net increase
(decrease) in net
assets resulting
from operations..... $944,511
--------------
--------------
</TABLE>
<PAGE>
SA-8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP
EQUITY-INCOME OVERSEAS
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
---------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 64,760 $ 22,698
-------- --------------
Net investment income
(loss).............. 64,760 22,698
-------- --------------
CAPITAL GAINS INCOME..... 230,469 66,900
-------- --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 16 (12,367)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 303,166 80,752
-------- --------------
Net gain (loss) on
investments......... 303,182 68,385
-------- --------------
Net increase
(decrease) in net
assets resulting
from operations..... $598,411 $157,983
-------- --------------
-------- --------------
</TABLE>

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

<TABLE>
<CAPTION>
FIDELITY VIP II
ASSET MANAGER GROWTH AND INTERNATIONAL SMALL COMPANY MIDCAP
PORTFOLIO INCOME FUND ADVISERS FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
---------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 29,183 $ 6 --$ $-- --$
-------- ----- ----- ------- -----
Net investment income
(loss).............. 29,183 6 -- -- --
-------- ----- ----- ------- -----
CAPITAL GAINS INCOME..... 87,549 -- -- -- --
-------- ----- ----- ------- -----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (943) -- -- 41 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 48,191 150 7 14,348 104
-------- ----- ----- ------- -----
Net gain (loss) on
investments......... 47,248 150 7 14,389 104
-------- ----- ----- ------- -----
Net increase
(decrease) in net
assets resulting
from operations..... $163,980 $156 $ 7 $14,389 $104
-------- ----- ----- ------- -----
-------- ----- ----- ------- -----
</TABLE>

* From inception, August 3, 1998, to December 31, 1998
<PAGE>
SA-10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 166,560 $ 116,844
Capital gains income... -- 289,691
Net realized gain
(loss) on security
transactions.......... 20,736 (19,525)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 48,115 2,840,198
-------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ 235,411 3,227,208
-------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 408,130 2,041,519
Net transfers.......... 1,509,453 4,810,627
Surrenders for benefit
payments and fees..... (69,652) (576,595)
Net loan activity...... (519) (125,205)
Cost of insurance...... (87,306) (456,787)
-------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,760,106 5,693,559
-------------- --------------
Net increase (decrease)
in net assets......... 1,995,517 8,920,767
NET ASSETS:
Beginning of period.... 1,553,257 6,648,932
-------------- --------------
End of period.......... $3,548,774 $ 15,569,699
-------------- --------------
-------------- --------------
</TABLE>

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

<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 60,722 $ 50,976
Capital gains income... -- 103,392
Net realized gain
(loss) on security
transactions.......... 344 4,792
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 23,137 785,883
-------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ 84,203 945,043
-------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 224,575 691,357
Net transfers.......... 1,114,603 3,645,966
Surrenders for benefit
payments and fees..... (20,975) (141,324)
Net loan activity...... (25,999) (85,662)
Cost of insurance...... (33,000) (141,765)
-------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,259,204 3,968,572
-------------- --------------
Net increase (decrease)
in net assets......... 1,343,407 4,913,615
NET ASSETS:
Beginning of period.... 209,850 1,735,317
-------------- --------------
End of period.......... $1,553,257 $ 6,648,932
-------------- --------------
-------------- --------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND 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
(loss)................ $ 524,273 $ 158,735 $ 77,525 $ 14,559 $ 107,603 $ 69,373
Capital gains income... -- 148,349 573,895 -- 176,994 235,374
Net realized gain
(loss) on security
transactions.......... -- 3,423 (40,897) (1) 41,466 (12,897)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 925,117 1,053,772 632 2,102,732 226,926
--------------- -------------- --------------- -------------- -------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations............ 524,273 1,235,624 1,664,295 15,190 2,428,795 518,776
--------------- -------------- --------------- -------------- -------------- ----------------
UNIT TRANSACTIONS:
Purchases.............. 27,722,133 1,892,134 2,473,509 56,332 1,752,558 707,600
Net transfers.......... (33,879,254) 1,620,594 3,402,616 (58,529) 3,270,849 1,517,699
Surrenders for benefit
payments and fees..... (1,840,672) (400,056) (595,743) (8,870) (264,762) (221,694)
Net loan activity...... (66,865) 20,293 35,831 -- (56,810) (97,052)
Cost of insurance...... (501,588) (299,823) (540,583) (20,595) (313,799) (144,802)
--------------- -------------- --------------- -------------- -------------- ----------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (8,566,246) 2,833,142 4,775,630 (31,662) 4,388,036 1,761,751
--------------- -------------- --------------- -------------- -------------- ----------------
Net increase (decrease)
in net assets......... (8,041,973) 4,068,766 6,439,925 (16,472) 6,816,831 2,280,527
NET ASSETS:
Beginning of period.... 13,862,040 4,015,632 8,277,998 248,881 6,596,078 3,095,481
--------------- -------------- --------------- -------------- -------------- ----------------
End of period.......... $ 5,820,067 $8,084,398 $ 14,717,923 $232,409 $ 13,412,909 $5,376,008
--------------- -------------- --------------- -------------- -------------- ----------------
--------------- -------------- --------------- -------------- -------------- ----------------

<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
--------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 132,007
Capital gains income... 182,157
Net realized gain
(loss) on security
transactions.......... (22,437)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 652,784
--------------
Net increase (decrease)
in net assets
resulting from
operations............ 944,511
--------------
UNIT TRANSACTIONS:
Purchases.............. 1,129,533
Net transfers.......... 2,842,341
Surrenders for benefit
payments and fees..... (358,785)
Net loan activity...... (33,764)
Cost of insurance...... (302,161)
--------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,277,164
--------------
Net increase (decrease)
in net assets......... 4,221,675
NET ASSETS:
Beginning of period.... 4,261,505
--------------
End of period.......... $8,483,180
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND 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
(loss)................ $ 380,235 $ 72,777 $ 34,129 $ 10,759 $ 61,758 $ 27,817
Capital gains income... -- 75,982 219,489 -- 128,080 128,065
Net realized gain
(loss) on security
transactions.......... -- 2,197 2,152 288 (284) 2,089
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 382,569 705,479 2,161 799,655 (168,332)
--------------- -------------- --------------- -------------- -------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations............ 380,235 533,525 961,249 13,208 989,209 (10,361)
--------------- -------------- --------------- -------------- -------------- ----------------
UNIT TRANSACTIONS:
Purchases.............. 43,540,050 899,022 1,340,476 41,748 1,525,193 948,086
Net transfers.......... (32,385,194) 1,480,789 4,197,271 159,978 3,225,273 1,088,413
Surrenders for benefit
payments and fees..... (504,402) (123,087) (203,529) (4,181) (120,518) (78,919)
Net loan activity...... (685,736) (78,047) (112,292) -- (84,328) (61,840)
Cost of insurance...... (494,906) (108,782) (225,833) (5,854) (138,997) (77,690)
--------------- -------------- --------------- -------------- -------------- ----------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 9,469,812 2,069,895 4,996,093 191,691 4,406,623 1,818,050
--------------- -------------- --------------- -------------- -------------- ----------------
Net increase (decrease)
in net assets......... 9,850,047 2,603,420 5,957,342 204,899 5,395,832 1,807,689
NET ASSETS:
Beginning of period.... 4,011,993 1,412,212 2,320,656 43,982 1,200,246 1,287,792
--------------- -------------- --------------- -------------- -------------- ----------------
End of period.......... $13,862,040 $4,015,632 $ 8,277,998 $248,881 $ 6,596,078 $3,095,481
--------------- -------------- --------------- -------------- -------------- ----------------
--------------- -------------- --------------- -------------- -------------- ----------------

<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
--------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 50,755
Capital gains income... 33,614
Net realized gain
(loss) on security
transactions.......... (751)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 446,847
--------------
Net increase (decrease)
in net assets
resulting from
operations............ 530,465
--------------
UNIT TRANSACTIONS:
Purchases.............. 360,484
Net transfers.......... 3,059,353
Surrenders for benefit
payments and fees..... (71,909)
Net loan activity...... (74,405)
Cost of insurance...... (91,491)
--------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,182,032
--------------
Net increase (decrease)
in net assets......... 3,712,497
NET ASSETS:
Beginning of period.... 549,008
--------------
End of period.......... $4,261,505
--------------
--------------
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
FIDELITY VIP
EQUITY-INCOME
PORTFOLIO
SUB-ACCOUNT
----------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 64,760
Capital gains income... 230,469
Net realized gain
(loss) on security
transactions.......... 16
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 303,166
----------------
Net increase (decrease)
in net assets
resulting from
operations............ 598,411
----------------
UNIT TRANSACTIONS:
Purchases.............. 1,148,707
Net transfers.......... 3,213,980
Surrenders for benefit
payments and fees..... (198,212)
Net loan activity...... (929)
Cost of insurance...... (201,357)
----------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,962,189
----------------
Net increase (decrease)
in net assets......... 4,560,600
NET ASSETS:
Beginning of period.... 4,357,953
----------------
End of period.......... $8,918,553
----------------
----------------
</TABLE>

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

STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
FIDELITY VIP
EQUITY-INCOME
PORTFOLIO
SUB-ACCOUNT
----------------
<S> <C>
OPERATIONS:
Net investment income (loss)..... $ 28,391
Capital gains income............. 142,745
Net realized gain (loss) on
security transactions........... 2,925
Net unrealized appreciation
(depreciation) of investments
during the period............... 514,150
----------------
Net increase (decrease) in net
assets resulting from
operations...................... 688,211
----------------
UNIT TRANSACTIONS:
Purchases........................ 626,240
Net transfers.................... 1,691,959
Surrenders for benefit payments
and fees........................ (115,305)
Net loan activity................ (620)
Cost of insurance................ (98,277)
----------------
Net increase (decrease) in net
assets resulting from unit
transactions.................... 2,103,997
----------------
Net increase (decrease) in net
assets.......................... 2,792,208
NET ASSETS:
Beginning of period.............. 1,565,745
----------------
End of period.................... $4,357,953
----------------
----------------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP II
OVERSEAS ASSET MANAGER GROWTH AND INTERNATIONAL SMALL COMPANY
PORTFOLIO PORTFOLIO INCOME FUND ADVISERS FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
-------------- ---------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 22,698 $ 29,183 $ 6 -$- $--
Capital gains income... 66,900 87,549 -- -- --
Net realized gain
(loss) on security
transactions.......... (12,367) (943) -- -- 41
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 80,752 48,191 150 7 14,348
-------------- ---------------- ------ ------ -------
Net increase (decrease)
in net assets
resulting from
operations............ 157,983 163,980 156 7 14,389
-------------- ---------------- ------ ------ -------
UNIT TRANSACTIONS:
Purchases.............. 296,446 276,627 1,000 1,000 1,344
Net transfers.......... 2,455,676 218,464 450 -- 41,605
Surrenders for benefit
payments and fees..... (66,416) (46,101) -- -- (271)
Net loan activity...... (1,217) -- -- -- --
Cost of insurance...... (50,423) (44,434) -- -- (111)
-------------- ---------------- ------ ------ -------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,634,066 404,556 1,450 1,000 42,567
-------------- ---------------- ------ ------ -------
Net increase (decrease)
in net assets......... 2,792,049 568,536 1,606 1,007 56,956
NET ASSETS:
Beginning of period.... 969,359 904,496 -- -- --
-------------- ---------------- ------ ------ -------
End of period.......... $3,761,408 $1,473,032 $1,606 $1,007 $56,956
-------------- ---------------- ------ ------ -------
-------------- ---------------- ------ ------ -------

MIDCAP
FUND
SUB-ACCOUNT*
---------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ -$-
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 104
------
Net increase (decrease)
in net assets
resulting from
operations............ 104
------
UNIT TRANSACTIONS:
Purchases.............. 1,000
Net transfers.......... --
Surrenders for benefit
payments and fees..... --
Net loan activity...... --
Cost of insurance...... --
------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,000
------
Net increase (decrease)
in net assets......... 1,104
NET ASSETS:
Beginning of period.... --
------
End of period.......... $1,104
------
------
</TABLE>

<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP II
OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
-------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 3,585 $ 12,026
Capital gains income............. 14,231 30,166
Net realized gain (loss) on
security transactions........... (2,477) 4,849
Net unrealized appreciation
(depreciation) of investments
during the period............... (1,284) 45,529
-------------- ----------------
Net increase (decrease) in net
assets resulting from
operations...................... 14,055 92,570
-------------- ----------------
UNIT TRANSACTIONS:
Purchases........................ 80,330 187,210
Net transfers.................... 754,893 350,249
Surrenders for benefit payments
and fees........................ (17,526) (19,442)
Net loan activity................ (18,863) --
Cost of insurance................ (10,590) (18,932)
-------------- ----------------
Net increase (decrease) in net
assets resulting from unit
transactions.................... 788,244 499,085
-------------- ----------------
Net increase (decrease) in net
assets.......................... 802,299 591,655
NET ASSETS:
Beginning of period.............. 167,060 312,841
-------------- ----------------
End of period.................... $ 969,359 $ 904,496
-------------- ----------------
-------------- ----------------
</TABLE>
<PAGE>
SA-14 Hartford Life Insurance Company
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT VARIABLE LIFE TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. ORGANIZATION:

Separate Account Variable Life Two (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the company in various mutual funds (the Funds)
as directed by the contractholders.

2. SIGNIFICANT ACCOUNTING POLICIES:

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

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

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

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

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

3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:

a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE -- On the policy date and
on each subsequent monthly activity date, the Company will deduct from the
Account an amount to cover mortality and expense risk charges, cost of
insurance, administrative charges and any other benefits provided by the rider.
These charges, which may vary from month to month in accordance with the terms
of the Contracts, are deducted through termination of units of interest from
applicable contract owners' accounts.
<PAGE>
SA-1 Hartford Life Insurance Company
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hartford Life 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 statements of assets and liabilities of
Hartford Life Insurance Company Putnam Capital Manager Trust Separate Account
Variable Life Two (Asia Pacific Growth, Diversified Income, The George Putnam
Fund of Boston, Global Asset Allocation, Global Growth, Growth and Income,
Health Sciences, High Yield, International Growth, International Growth and
Income, International New Opportunities, Investors, Money Market, New
Opportunities, New Value, OTC & Emerging Growth, U.S. Government and High
Quality Bond, Utilities Growth and Income, Vista, and Voyager), (collectively,
the Account) as of December 31, 1998, and the related statements of operations
and the statements of changes in net assets for the periods presented. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 15, 1999
<PAGE>
SA-2 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1998

<TABLE>
<CAPTION>
ASIA THE GEORGE
PACIFIC DIVERSIFIED PUTNAM FUND
GROWTH INCOME OF BOSTON
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 128
Cost $ 1,000
Market Value......... $1,069 $ -- $--
Putnam VT Diversified
Income Fund
Shares 30,973
Cost $ 336,330
Market Value......... -- 324,909 --
Putnam VT The George
Putnam Fund of Boston
Shares 1,386
Cost $ 13,574
Market Value......... -- -- 14,244
Putnam VT Global Asset
Allocation Fund
Shares 189,534
Cost $ 3,456,974
Market Value......... -- -- --
Putnam VT Global Growth
Fund
Shares 338,746
Cost $ 5,966,864
Market Value......... -- -- --
Putnam VT Growth and
Income Fund
Shares 394,067
Cost $10,410,756
Market Value......... -- -- --
Putnam VT Health
Sciences Fund
Shares 6,893
Cost $ 68,375
Market Value......... -- -- --
Putnam VT High Yield
Fund
Shares 178,699
Cost $ 2,308,364
Market Value......... -- -- --
Putnam VT International
Growth Fund
Shares 396
Cost $ 5,073
Market Value......... -- -- --
Putnam VT International
Growth and Income Fund
Shares 2,103
Cost $ 22,885
Market Value......... -- -- --
Due from Hartford Life
Insurance Company..... -- 2 --
Receivable from fund
shares sold........... -- -- --
----------- ----------- -----------
Total Assets........... 1,069 324,911 14,244
----------- ----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- --
Payable for fund shares
purchased............. -- -- --
----------- ----------- -----------
Total Liabilities...... -- -- --
----------- ----------- -----------
Net Assets (variable
life contract
liabilities).......... $1,069 $324,911 $14,244
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
ASSET GLOBAL
ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 128
Cost $ 1,000
Market Value......... $ -- $ --
Putnam VT Diversified
Income Fund
Shares 30,973
Cost $ 336,330
Market Value......... -- --
Putnam VT The George
Putnam Fund of Boston
Shares 1,386
Cost $ 13,574
Market Value......... -- --
Putnam VT Global Asset
Allocation Fund
Shares 189,534
Cost $ 3,456,974
Market Value......... 3,591,673 --
Putnam VT Global Growth
Fund
Shares 338,746
Cost $ 5,966,864
Market Value......... -- 6,869,766
Putnam VT Growth and
Income Fund
Shares 394,067
Cost $10,410,756
Market Value......... -- --
Putnam VT Health
Sciences Fund
Shares 6,893
Cost $ 68,375
Market Value......... -- --
Putnam VT High Yield
Fund
Shares 178,699
Cost $ 2,308,364
Market Value......... -- --
Putnam VT International
Growth Fund
Shares 396
Cost $ 5,073
Market Value......... -- --
Putnam VT International
Growth and Income Fund
Shares 2,103
Cost $ 22,885
Market Value......... -- --
Due from Hartford Life
Insurance Company..... 232 20,057
Receivable from fund
shares sold........... -- --
----------- -----------
Total Assets........... 3,591,905 6,889,823
----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. -- 19,661
----------- -----------
Total Liabilities...... -- 19,661
----------- -----------
Net Assets (variable
life contract
liabilities).......... $3,591,905 $6,870,162
----------- -----------
----------- -----------

<CAPTION>
INTERNATIONAL
GROWTH HEALTH INTERNATIONAL GROWTH AND
AND INCOME SCIENCES HIGH YIELD GROWTH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 128
Cost $ 1,000
Market Value......... $ -- $-- $ -- $-- $--
Putnam VT Diversified
Income Fund
Shares 30,973
Cost $ 336,330
Market Value......... -- -- -- -- --
Putnam VT The George
Putnam Fund of Boston
Shares 1,386
Cost $ 13,574
Market Value......... -- -- -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 189,534
Cost $ 3,456,974
Market Value......... -- -- -- -- --
Putnam VT Global Growth
Fund
Shares 338,746
Cost $ 5,966,864
Market Value......... -- -- -- -- --
Putnam VT Growth and
Income Fund
Shares 394,067
Cost $10,410,756
Market Value......... 11,337,302 -- -- -- --
Putnam VT Health
Sciences Fund
Shares 6,893
Cost $ 68,375
Market Value......... -- 75,411 -- -- --
Putnam VT High Yield
Fund
Shares 178,699
Cost $ 2,308,364
Market Value......... -- -- 2,090,779 -- --
Putnam VT International
Growth Fund
Shares 396
Cost $ 5,073
Market Value......... -- -- -- 5,351 --
Putnam VT International
Growth and Income Fund
Shares 2,103
Cost $ 22,885
Market Value......... -- -- -- -- 25,735
Due from Hartford Life
Insurance Company..... 12,360 -- 4,930 -- --
Receivable from fund
shares sold........... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Assets........... 11,349,662 75,411 2,095,709 5,351 25,735
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- --
Payable for fund shares
purchased............. 13,653 -- 4,919 -- --
----------- ----------- ----------- ----------- -----------
Total Liabilities...... 13,653 -- 4,919 -- --
----------- ----------- ----------- ----------- -----------
Net Assets (variable
life contract
liabilities).......... $11,336,009 $75,411 $2,090,790 $5,351 $25,735
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

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

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
DECEMBER 31, 1998

<TABLE>
<CAPTION>
INTERNATIONAL
NEW MONEY
OPPORTUNITIES INVESTORS MARKET
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments:
Putnam VT International
New Opportunities Fund
Shares 311
Cost $ 3,336
Market Value......... $3,576 $ -- $ --
Putnam VT Investors
Fund
Shares 10,542
Cost $ 102,726
Market Value......... -- 122,817 --
Putnam VT Money Market
Fund
Shares 388,157
Cost $ 388,157
Market Value......... -- -- 388,157
Putnam VT New
Opportunities Fund
Shares 340,951
Cost $ 6,841,099
Market Value......... -- -- --
Putnam VT New Value
Fund
Shares 243
Cost $ 2,555
Market Value......... -- -- --
Putnam VT OTC &
Emerging Growth Fund
Shares 1,533
Cost $ 11,408
Market Value......... -- -- --
Putnam VT U.S.
Government and High
Quality Bond Fund
Shares 182,826
Cost $ 2,323,262
Market Value......... -- -- --
Putnam VT Utilities
Growth & Income Fund
Shares 56,675
Cost $ 896,135
Market Value......... -- -- --
Putnam VT Vista Fund
Shares 364
Cost $ 4,332
Market Value......... -- -- --
Putnam VT Voyager Fund
Shares 315,146
Cost $11,418,171
Market Value......... -- -- --
Due from Hartford Life
Insurance Company..... -- 2 --
Receivable from fund
shares sold........... -- -- --
----------- ----------- -----------
Total Assets........... 3,576 122,819 388,157
----------- ----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- 2
Payable for fund shares
purchased............. -- -- --
----------- ----------- -----------
Total Liabilities...... -- -- 2
----------- ----------- -----------
Net Assets (variable
life contract
liabilities).......... $3,576 $122,819 $388,155
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW NEW
OPPORTUNITIES VALUE
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments:
Putnam VT International
New Opportunities Fund
Shares 311
Cost $ 3,336
Market Value......... $ -- $--
Putnam VT Investors
Fund
Shares 10,542
Cost $ 102,726
Market Value......... -- --
Putnam VT Money Market
Fund
Shares 388,157
Cost $ 388,157
Market Value......... -- --
Putnam VT New
Opportunities Fund
Shares 340,951
Cost $ 6,841,099
Market Value......... 8,885,177 --
Putnam VT New Value
Fund
Shares 243
Cost $ 2,555
Market Value......... -- 2,926
Putnam VT OTC &
Emerging Growth Fund
Shares 1,533
Cost $ 11,408
Market Value......... -- --
Putnam VT U.S.
Government and High
Quality Bond Fund
Shares 182,826
Cost $ 2,323,262
Market Value......... -- --
Putnam VT Utilities
Growth & Income Fund
Shares 56,675
Cost $ 896,135
Market Value......... -- --
Putnam VT Vista Fund
Shares 364
Cost $ 4,332
Market Value......... -- --
Putnam VT Voyager Fund
Shares 315,146
Cost $11,418,171
Market Value......... -- --
Due from Hartford Life
Insurance Company..... 32,368 --
Receivable from fund
shares sold........... -- --
----------- -----------
Total Assets........... 8,917,545 2,926
----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. 31,617 --
----------- -----------
Total Liabilities...... 31,617 --
----------- -----------
Net Assets (variable
life contract
liabilities).......... $8,885,928 $2,926
----------- -----------
----------- -----------

<CAPTION>
U.S.
GOVERNMENT
AND HIGH UTILITIES
OTC & QUALITY GROWTH
EMERGING BOND AND INCOME VISTA VOYAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT International
New Opportunities Fund
Shares 311
Cost $ 3,336
Market Value......... $-- $ -- $ -- $-- $ --
Putnam VT Investors
Fund
Shares 10,542
Cost $ 102,726
Market Value......... -- -- -- -- --
Putnam VT Money Market
Fund
Shares 388,157
Cost $ 388,157
Market Value......... -- -- -- -- --
Putnam VT New
Opportunities Fund
Shares 340,951
Cost $ 6,841,099
Market Value......... -- -- -- -- --
Putnam VT New Value
Fund
Shares 243
Cost $ 2,555
Market Value......... -- -- -- -- --
Putnam VT OTC &
Emerging Growth Fund
Shares 1,533
Cost $ 11,408
Market Value......... 15,470 -- -- -- --
Putnam VT U.S.
Government and High
Quality Bond Fund
Shares 182,826
Cost $ 2,323,262
Market Value......... -- 2,510,200 -- -- --
Putnam VT Utilities
Growth & Income Fund
Shares 56,675
Cost $ 896,135
Market Value......... -- -- 1,030,923 -- --
Putnam VT Vista Fund
Shares 364
Cost $ 4,332
Market Value......... -- -- -- 5,360 --
Putnam VT Voyager Fund
Shares 315,146
Cost $11,418,171
Market Value......... -- -- -- -- 14,449,447
Due from Hartford Life
Insurance Company..... -- -- 411 -- 27,122
Receivable from fund
shares sold........... -- 37,676 -- -- --
----------- ----------- ----------- ----------- -----------
Total Assets........... 15,470 2,547,876 1,031,334 5,360 14,476,569
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 38,338 -- -- --
Payable for fund shares
purchased............. -- -- 358 -- 25,807
----------- ----------- ----------- ----------- -----------
Total Liabilities...... -- 38,338 358 -- 25,807
----------- ----------- ----------- ----------- -----------
Net Assets (variable
life contract
liabilities).......... $15,470 $2,509,538 $1,030,976 $5,360 $14,450,762
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

<PAGE>
SA-6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998

<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
-------- ---------- ----------
Variable life contracts:
<S> <C> <C> <C>
Asia Pacific Growth Fund................. 100 $10.693257 $ 1,069
Diversified Income Fund.................. 25,429 12.777025 324,911
George Putnam Fund....................... 1,343 10.602638 14,244
Global Asset Allocation Fund............. 172,752 20.792218 3,591,905
Global Growth Fund....................... 291,406 23.575913 6,870,162
Growth and Income Fund................... 444,238 25.517876 11,336,009
Health Sciences Fund..................... 6,707 11.242853 75,411
High Yield Fund.......................... 134,229 15.576256 2,090,790
International Growth Fund................ 547 9.785387 5,351
International Growth and Income Fund..... 2,635 9.768076 25,735
International New Opportunties Fund...... 367 9.753782 3,576
Investors Fund........................... 10,981 11.185169 122,819
Money Market Fund........................ 299,633 1.295432 388,155
New Opportunities Fund................... 390,723 22.742256 8,885,928
New Value Fund........................... 276 10.611164 2,926
OTC & Emerging Growth Fund............... 1,436 10.773294 15,470
U.S. Government and High Quality Bond
Fund.................................... 170,651 14.705728 2,509,538
Utilities Growth and Income Fund......... 47,650 21.636249 1,030,976
Vista Fund............................... 505 10.612377 5,360
Voyager Fund............................. 501,126 28.836584 14,450,762
----------
Grand Total................................ $51,751,097
----------
----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
This page intentionally left blank.
<PAGE>
SA-8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
THE GEORGE
ASIA PACIFIC DIVERSIFIED PUTNAM FUND
GROWTH INCOME OF BOSTON
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT*
------------ ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. --$ $ 8,975 $122
--- ----------- -----
CAPITAL GAINS INCOME..... -- 3,812 --
--- ----------- -----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 181 11
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 69 (17,009) 670
--- ----------- -----
Net gain (loss) on
investments......... 69 (16,828) 681
--- ----------- -----
Net increase
(decrease) in net
assets resulting
from operations..... $69 $ (4,041) $803
--- ----------- -----
--- ----------- -----
</TABLE>

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

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
ASSET GLOBAL
ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 51,115 $ 127,435
----------- -----------
CAPITAL GAINS INCOME..... 219,555 637,175
----------- -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 68 (12,611)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 37,408 623,542
----------- -----------
Net gain (loss) on
investments......... 37,476 610,931
----------- -----------
Net increase
(decrease) in net
assets resulting
from operations..... $308,146 $ 1,375,541
----------- -----------
----------- -----------

<PAGE>
SA-10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED
DECEMBER 31, 1998

<TABLE>
<CAPTION>
INTERNATIONAL
NEW MONEY
OPPORTUNITIES INVESTORS MARKET
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT
------------ ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. -$- $ 158 $17,549
----- ------------ -----------
CAPITAL GAINS INCOME..... -- -- --
----- ------------ -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 7 18 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 240 20,091 --
----- ------------ -----------
Net gain (loss) on
investments......... 247 20,109 --
----- ------------ -----------
Net increase
(decrease) in net
assets resulting
from operations..... $247 $20,267 $17,549
----- ------------ -----------
----- ------------ -----------
</TABLE>

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

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW NEW
OPPORTUNITIES VALUE
SUB-ACCOUNT SUB-ACCOUNT*
----------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 32
----------- -----
CAPITAL GAINS INCOME..... 79,622 6
----------- -----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 5 18
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,351,153 371
----------- -----
Net gain (loss) on
investments......... 1,351,158 389
----------- -----
Net increase
(decrease) in net
assets resulting
from operations..... $1,430,780 $427
----------- -----
----------- -----

<CAPTION>
U.S.
GOVERNMENT
OTC & AND HIGH UTILITIES
EMERGING QUALITY GROWTH
GROWTH BOND AND INCOME VISTA VOYAGER
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 6 $159,132 $ 19,667 $-- $ 23,145
------ ----------- ----------- ------ -----------
CAPITAL GAINS INCOME..... -- 4,142 33,897 -- 564,740
------ ----------- ----------- ------ -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 8 3,345 (421) 25 4,061
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 4,062 47,564 66,049 1,028 1,898,310
------ ----------- ----------- ------ -----------
Net gain (loss) on
investments......... 4,070 50,909 65,628 1,053 1,902,371
------ ----------- ----------- ------ -----------
Net increase
(decrease) in net
assets resulting
from operations..... $4,076 $214,183 $119,192 $1,053 $ 2,490,256
------ ----------- ----------- ------ -----------
------ ----------- ----------- ------ -----------
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
THE GEORGE
ASIA PACIFIC DIVERSIFIED PUTNAM FUND
GROWTH INCOME OF BOSTON
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT*
------------ ----------- ------------
<S> <C> <C> <C>
Operations:
Net investment income
(loss)................ $-- $ 8,975 $ 122
Capital gains income... -- 3,812 --
Net realized gain
(loss) on security
transactions.......... -- 181 11
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 69 (17,009) 670
------ ----------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ 69 (4,041) 803
------ ----------- ------------
UNIT TRANSACTIONS:
Purchases.............. 1,000 128,587 1,000
Net transfers.......... -- 47,983 12,809
Surrenders............. -- (17,974) (356)
Net loan activity...... -- -- --
Cost of insurance...... -- (18,831) (12)
------ ----------- ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,000 139,765 13,441
------ ----------- ------------
Total increase
(decrease) in net
assets................ 1,069 135,724 14,244
NET ASSETS:
Beginning of period.... -- 189,187 --
------ ----------- ------------
End of period.......... $1,069 $324,911 $14,244
------ ----------- ------------
------ ----------- ------------
</TABLE>

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

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
ASSET GLOBAL
ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
Operations:
Net investment income
(loss)................ $ 51,115 $ 127,435
Capital gains income... 219,555 637,175
Net realized gain
(loss) on security
transactions.......... 68 (12,611)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 37,408 623,542
----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 308,146 1,375,541
----------- -----------
UNIT TRANSACTIONS:
Purchases.............. 369,681 1,390,116
Net transfers.......... 1,442,896 472,175
Surrenders............. (73,960) (229,540)
Net loan activity...... 23,838 13,683
Cost of insurance...... (73,651) (210,154)
----------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,688,804 1,436,280
----------- -----------
Total increase
(decrease) in net
assets................ 1,996,950 2,811,821
NET ASSETS:
Beginning of period.... 1,594,955 4,058,341
----------- -----------
End of period.......... $ 3,591,905 $ 6,870,162
----------- -----------
----------- -----------

<CAPTION>
INTERNATIONAL
GROWTH HEALTH INTERNATIONAL GROWTH AND
AND INCOME SCIENCES HIGH YIELD GROWTH INCOME
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income
(loss)................ $ 129,504 $ 69 $ 114,613 $ 15 $ 320
Capital gains income... 845,402 -- 17,985 -- 770
Net realized gain
(loss) on security
transactions.......... 15,246 11 (6,169) 4 5
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 249,632 7,036 (280,696) 278 2,850
----------- ------------ ----------- ------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,239,784 7,116 (154,267) 297 3,945
----------- ------------ ----------- ------ ------------
UNIT TRANSACTIONS:
Purchases.............. 2,372,295 1,000 451,806 1,000 1,172
Net transfers.......... 2,636,000 67,576 938,222 4,157 20,802
Surrenders............. (394,619) (213) (78,942) (102) (132)
Net loan activity...... (74,317) -- (19) -- --
Cost of insurance...... (418,260) (68) (68,646) (1) (52)
----------- ------------ ----------- ------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 4,121,099 68,295 1,242,421 5,054 21,790
----------- ------------ ----------- ------ ------------
Total increase
(decrease) in net
assets................ 5,360,883 75,411 1,088,154 5,351 25,735
NET ASSETS:
Beginning of period.... 5,975,126 -- 1,002,636 -- --
----------- ------------ ----------- ------ ------------
End of period.......... $11,336,009 $75,411 $ 2,090,790 $5,351 $25,735
----------- ------------ ----------- ------ ------------
----------- ------------ ----------- ------ ------------
</TABLE>

<PAGE>
SA-14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
INTERNATIONAL
NEW MONEY
OPPORTUNITIES INVESTORS MARKET
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT
------------ ------------ -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $-- $ 158 $ 17,549
Capital gains income... -- -- --
Net realized gain
(loss) on security
transactions.......... 7 18 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 240 20,091 --
------ ------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ 247 20,267 17,549
------ ------------ -----------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,207 376,321
Net transfers.......... 2,431 101,790 (222,386)
Surrenders............. (101) (298) (14,326)
Net loan activity...... -- -- --
Cost of insurance...... (1) (147) (4,514)
------ ------------ -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,329 102,552 135,095
------ ------------ -----------
Total increase
(decrease) in net
assets................ 3,576 122,819 152,644
NET ASSETS:
Beginning of period.... -- -- 235,511
------ ------------ -----------
End of period.......... $3,576 $122,819 $388,155
------ ------------ -----------
------ ------------ -----------
</TABLE>

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

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW NEW
OPPORTUNITIES VALUE
SUB-ACCOUNT SUB-ACCOUNT*
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ -- $ 32
Capital gains income... 79,622 6
Net realized gain
(loss) on security
transactions.......... 5 18
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,351,153 371
------------- ------
Net increase (decrease)
in net assets
resulting from
operations............ 1,430,780 427
------------- ------
UNIT TRANSACTIONS:
Purchases.............. 1,645,046 1,000
Net transfers.......... 1,581,473 1,668
Surrenders............. (286,756) (168)
Net loan activity...... (61,049) --
Cost of insurance...... (251,400) (1)
------------- ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,627,314 2,499
------------- ------
Total increase
(decrease) in net
assets................ 4,058,094 2,926
NET ASSETS:
Beginning of period.... 4,827,834 --
------------- ------
End of period.......... $8,885,928 $2,926
------------- ------
------------- ------

<CAPTION>
OTC & U.S. GOVERNMENT UTILITIES
EMERGING AND HIGH GROWTH
GROWTH QUALITY BOND AND INCOME VISTA VOYAGER
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------ --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 6 $ 159,132 $ 19,667 $ -- $ 23,145
Capital gains income... -- 4,142 33,897 -- 564,740
Net realized gain
(loss) on security
transactions.......... 8 3,345 (421) 25 4,061
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 4,062 47,564 66,049 1,028 1,898,310
------------ --------------- ----------- ------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ 4,076 214,183 119,192 1,053 2,490,256
------------ --------------- ----------- ------ -----------
UNIT TRANSACTIONS:
Purchases.............. 1,086 480,043 175,713 1,000 2,546,550
Net transfers.......... 10,401 (975,004) 361,235 3,533 2,515,789
Surrenders............. (66) (62,811) (24,641) (224) (452,353)
Net loan activity...... (66) (15,305) 23,875 (224) 47,899
Cost of insurance...... (27) (137,056) (33,941) (2) (400,770)
------------ --------------- ----------- ------ -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 11,394 (710,133) 502,241 4,307 4,257,115
------------ --------------- ----------- ------ -----------
Total increase
(decrease) in net
assets................ 15,470 (495,950) 621,433 5,360 6,747,371
NET ASSETS:
Beginning of period.... -- 3,005,488 409,543 -- 7,703,391
------------ --------------- ----------- ------ -----------
End of period.......... $15,470 $2,509,538 $ 1,030,976 $ 5,360 $14,450,762
------------ --------------- ----------- ------ -----------
------------ --------------- ----------- ------ -----------
</TABLE>
<PAGE>
SA-16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO

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

<TABLE>
<CAPTION>
GLOBAL
DIVERSIFIED ASSET GLOBAL
INCOME ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 3,548 $ 16,282 $ 54,214
Capital gains income... 559 27,830 58,313
Net realized gain
(loss) on security
transactions.......... 72 1,904 12,818
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 3,772 73,875 185,156
----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 7,951 119,891 310,501
----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases.............. 69,865 216,473 933,794
Net transfers.......... 66,718 951,228 1,576,563
Surrenders............. (7,735) (32,107) (119,126)
Net loan activity...... -- (895) (26,693)
Cost of insurance...... (7,523) (44,664) (123,165)
----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 121,325 1,090,035 2,241,373
----------- ----------- -----------
Total increase
(decrease) in net
assets................ 129,276 1,209,926 2,551,874
NET ASSETS:
Beginning of period.... 59,911 385,029 1,506,467
----------- ----------- -----------
End of period.......... $189,187 $ 1,594,955 $ 4,058,341
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY SA-17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
AND INCOME HIGH YIELD
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 48,364 $ 25,054
Capital gains income... 117,720 2,905
Net realized gain
(loss) on security
transactions.......... 454 2,088
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 549,596 44,616
----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 716,134 74,663
----------- -----------
UNIT TRANSACTIONS:
Purchases.............. 1,047,062 202,481
Net transfers.......... 3,026,454 435,717
Surrenders............. (169,710) (28,512)
Net loan activity...... (83,344) --
Cost of insurance...... (176,607) (30,461)
----------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,643,855 579,225
----------- -----------
Total increase
(decrease) in net
assets................ 4,359,989 653,888
NET ASSETS:
Beginning of period.... 1,615,137 348,748
----------- -----------
End of period.......... $ 5,975,126 $ 1,002,636
----------- -----------
----------- -----------

<CAPTION>
U.S.
GOVERNMENT
AND HIGH UTILITIES
MONEY NEW QUALITY GROWTH
MARKET OPPORTUNITIES BOND AND INCOME VOYAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 8,816 $ -- $ 84,427 $ 6,195 $ 7,934
Capital gains income... -- -- -- 8,447 170,979
Net realized gain
(loss) on security
transactions.......... -- (2,744) 3,412 41 (10,475)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 705,146 105,411 58,141 1,072,966
----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 8,816 702,402 193,250 72,824 1,241,404
----------- ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases.............. 46,630 880,486 905,167 56,076 1,401,137
Net transfers.......... (7,827) 1,743,133 1,214,258 158,063 2,438,213
Surrenders............. (8,065) (141,142) (57,683) (9,042) (228,692)
Net loan activity...... -- (12,422) (69,040) -- (38,108)
Cost of insurance...... (4,477) (114,029) (111,805) (10,227) (203,142)
----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 26,261 2,356,026 1,880,897 194,870 3,369,408
----------- ----------- ----------- ----------- -----------
Total increase
(decrease) in net
assets................ 35,077 3,058,428 2,074,147 267,694 4,610,812
NET ASSETS:
Beginning of period.... 200,434 1,769,406 931,341 141,849 3,092,579
----------- ----------- ----------- ----------- -----------
End of period.......... $235,511 $4,827,834 $3,005,488 $409,543 $ 7,703,391
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
SA-18 Hartford Life Insurance Company
- --------------------------------------------------------------------------------

PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT VARIABLE LIFE TWO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. ORGANIZATION:

Separate Account Variable Life Two (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable life contractholders of the Company in the various mutual funds (the
Funds) as directed by the contractholders.

2. SIGNIFICANT ACCOUNTING POLICIES:

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

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

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

3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:

a) COST OF INSURANCE -- In accordance with terms of the contracts, the
Company makes deductions for costs of insurance to cover the Company's
anticipated mortality costs. Because a policy's account value and death benefit
may vary from month to month, the cost of insurance charges may also vary.

b) MORTALITY AND EXPENSE RISK CHARGE -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 0.80% of the Account's
average daily net assets. These expenses are reflected in surrenders on the
accompanying statements of changes in net assets.

c) ADMINISTRATIVE -- The Company assesses a monthly administrative charge to
compensate the Company for administrative costs in connection with the policies.
This charge covers the average expected cost for these expenses at a maximum of
$25 per month. These expenses are reflected in surrenders on the accompanying
statements of changes in net assets.

d) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are
deducted through termination of units of interest from applicable contract
owners' accounts, in accordance with the terms of the contracts. These expenses
are reflected in surrenders on the accompanying statements of changes in net
assets.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-1
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hartford Life Insurance Company:

We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1998.
These Consolidated Financial Statements and the schedules referred to below are
the responsibility of Hartford Life Insurance Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.

In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998 in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
January 26, 1999
<PAGE>
F-2 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1998 1997 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $2,218 $1,637 $1,705
Net investment income........................... 1,759 1,368 1,397
Net realized capital (losses) gains............. (2) 4 (213)
------ ------ ------
Total revenues................................ 3,975 3,009 2,889
------ ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 1,911 1,379 1,535
Amortization of deferred policy acquisition
costs.......................................... 431 335 234
Dividends to policyholders...................... 329 240 635
Other expenses.................................. 766 586 427
------ ------ ------
Total benefits, claims and expenses........... 3,437 2,540 2,831
------ ------ ------
Income before income tax expense................ 538 469 58
Income tax expense.............................. 188 167 20
------ ------ ------
Net income........................................ $ 350 $ 302 $ 38
------ ------ ------
------ ------ ------
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-3
- --------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1998 1997
------- -------
<S> <C> <C>
(IN MILLIONS,
EXCEPT FOR SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $14,505 and
$13,885)....................................... $14,818 $14,176
Equity securities, at fair value................ 31 180
Policy loans, at outstanding balance............ 6,684 3,756
Other investments, at cost...................... 264 47
------- -------
Total investments............................. 21,797 18,159
Cash............................................ 17 54
Premiums receivable and agents' balances........ 17 18
Reinsurance recoverables........................ 1,257 6,114
Deferred policy acquisition costs............... 3,754 3,315
Deferred income tax............................. 464 348
Other assets.................................... 695 682
Separate account assets......................... 90,262 69,055
------- -------
Total assets.................................. $118,263 $97,745
------- -------
------- -------

Liabilities
Future policy benefits.......................... $ 3,595 $ 3,059
Other policyholder funds........................ 19,615 21,034
Other liabilities............................... 2,094 2,254
Separate account liabilities.................... 90,262 69,055
------- -------
Total liabilities............................. 115,566 95,402
------- -------

Stockholder's Equity
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690.............. 6 6
Capital surplus................................. 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital gains on securities,
net of tax................................... 184 179
------- -------
Total accumulated other comprehensive
income....................................... 184 179
------- -------
Retained earnings............................... 1,462 1,113
------- -------
Total stockholder's equity.................... 2,697 2,343
------- -------
Total liabilities and stockholder's equity...... $118,263 $97,745
------- -------
------- -------
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>
F-4 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
---------------
NET UNREALIZED
CAPITAL GAINS
(LOSSES) ON TOTAL
COMMON CAPITAL SECURITIES, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
1998
Balance, December 31, 1997.............. $6 $ 1,045 $179 $1,113 $2,343
Comprehensive income
Net income............................ -- -- -- 350 350
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 5 -- 5
------
Total other comprehensive income........ 5
------
Total comprehensive income 355
------
Dividends............................... -- -- -- (1) (1)
--
------ ----- ----------- ------
Balance, December 31, 1998.......... $6 $ 1,045 $184 $1,462 $2,697
--
------ ----- ----------- ------
1997
Balance, December 31, 1996.............. $6 $ 1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income............................ -- -- -- 302 302
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 149 -- 149
------
Total other comprehensive income........ 149
------
Total comprehensive income 451
--
------ ----- ----------- ------
Balance, December 31, 1997.......... $6 $ 1,045 $179 $1,113 $2,343
--
------ ----- ----------- ------
1996
Balance, December 31, 1995.............. $6 $ 1,007 $(57) $ 773 $1,729
Comprehensive income
Net income............................ -- -- -- 38 38
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 87 -- 87
------
Total other comprehensive income........ 87
------
Total comprehensive income............ 125
------
Capital contribution.................... -- 38 -- -- 38
--
------ ----- ----------- ------
Balance, December 31, 1996.......... $6 $ 1,045 $ 30 $ 811 $1,892
--
--
------ ----- ----------- ------
------ ----- ----------- ------
</TABLE>

- ---------

(1) Net unrealized capital gain on securities is reflected net of tax of $3,
$80 and $47, as of December 31, 1998, 1997 and 1996, respectively.

(2) There was no reclassification adjustment for after-tax gains (losses)
realized in net income for the years ended December 31, 1998 and 1997. December
31, 1996 is net of a $142 reclassification adjustment for after-tax losses
realized in net income.

See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-5
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Operating Activities
Net income............................ $ 350 $ 302 $ 38
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization......... (23) 8 14
Net realized capital losses (gains)... 2 (4) 213
Decrease in premiums receivable and
agents' balances..................... 1 119 10
(Decrease) increase in other
liabilities.......................... (79) 223 577
Change in receivables, payables, and
accruals............................. 83 107 (22)
Increase (decrease) in accrued
taxes................................ 60 126 (91)
(Increase) decrease in deferred income
taxes................................ (118) 40 (102)
Increase in deferred policy
acquisition costs.................... (439) (555) (572)
Increase in future policy benefits.... 536 585 101
(Increase) decrease in reinsurance
recoverables and other related
assets............................... (2) 21 (146)
-------- -------- --------
Net cash provided by operating
activities......................... 371 972 20
-------- -------- --------
Investing Activities
Purchases of investments.............. (6,061) (6,869) (5,854)
Sales of investments.................. 4,901 4,256 3,543
Maturity of investments............... 1,761 2,329 2,693
-------- -------- --------
Net cash provided by (used for)
investing activities............... 601 (284) 382
-------- -------- --------
Financing Activities
Capital contribution.................. -- -- 38
Net disbursements for investment and
universal life-type contracts charged
against policyholder accounts........ (1,009) (677) (443)
-------- -------- --------
Net cash used for financing
activities......................... (1,009) (677) (405)
-------- -------- --------
Net (decrease) increase in cash....... (37) 11 (3)
Cash -- beginning of year............. 54 43 46
-------- -------- --------
Cash -- end of year................... $ 17 $ 54 $ 43
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes.......................... $ 263 $ 9 $ 189

Noncash Investing Activities:
Due to the recapture of an in force block of business previously ceded
to MBL Life Assurance Co. of New Jersey, reinsurance recoverables of
$4,546 were exchanged for the fair value of assets comprised of
$4,354 in policy loans and $192 in other assets.
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>
F-6 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

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

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

These Consolidated Financial Statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries ("Hartford Life Insurance Company" or
the "Company"), Hartford Life and Annuity Insurance Company (ILA) and Hartford
International Life Reassurance Corporation (HLRe), formerly American Skandia
Life Reinsurance Corporation. The Company is a wholly-owned subsidiary of
Hartford Life and Accident Insurance Company (HLA), a wholly-owned subsidiary of
Hartford Life, Inc. (Hartford Life). Hartford Life is a direct subsidiary of
Hartford Accident and Indemnity Company (HA&I), an indirect subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford). Pursuant to an initial
public offering (the "IPO") on May 22, 1997, Hartford Life sold 26 million
shares of Class A Common Stock at $28.25 per share and received proceeds, net of
offering expenses, of $687. Of the proceeds, $527 was used to retire debt
related to Hartford Life's outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses. Hartford Life became a publicly traded company upon the sale of
26 million shares representing approximately 18.6% of the equity ownership in
Hartford Life. On December 19, 1995, ITT Industries, Inc. (formerly ITT
Corporation) (ITT) distributed all the outstanding shares of capital stock of
The Hartford to ITT stockholders of record on such date. As a result, The
Hartford became an independent, publicly traded company.

Along with its parent, HLA, the Company is a leading financial services and
insurance company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services and mutual funds for savings and
retirement needs; (b) life insurance for income protection and estate planning;
and (c) employee benefits products such as group life and disability insurance
that is directly written by the Company and is substantially ceded to its
parent, HLA, and (d) corporate owned life insurance.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

These Consolidated Financial Statements present the financial position,
results of operations and cash flows of the Company. All material intercompany
transactions and balances between the Company, its subsidiaries and affiliates
have been eliminated. The Consolidated Financial Statements are prepared on the
basis of generally accepted accounting principles which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities.

The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.

Certain reclassifications have been made to prior year financial information
to conform to the current year presentation.

(B) CHANGES IN ACCOUNTING PRINCIPLES

In November 1998, the Emerging Issues Task Force (EITF) reached consensus on
Issue No. 98-15, "Structured Notes Acquired for a Specific Investment Strategy".
This EITF issue requires companies to account for structured notes acquired for
a specific investment strategy, as a unit. Affected companies that entered into
these notes prior to September 25, 1998 are required to either restate prior
period financial statements to conform with the prescribed unit accounting model
or disclose the related impact on earnings for all periods presented and
cumulatively over the life of the instruments had the registrant accounted for
the structure as a unit. Based upon recently prescribed current generally
accepted accounting principles for such types of transactions entered into after
September 24, 1998, there was no additional earnings impact to the Company
related to combined structured note transactions. As of December 31, 1998, the
Company does not hold any combined structured notes.

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The new standard establishes
accounting and reporting guidance for derivative instruments, including certain
derivative instruments embedded in other contracts. The standard requires, among
other things, that all derivatives be carried on the balance sheet at fair
value. The standard also specifies hedge accounting criteria under which a
derivative can qualify for special accounting. In order to receive special
accounting, the derivative instrument must qualify as either
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-7
- --------------------------------------------------------------------------------

a hedge of the fair value or the variability of the cash flow of a qualified
asset or liability. Special accounting for qualifying hedges provides for
matching the timing of gain or loss recognition on the hedging instrument with
the recognition of the corresponding changes in value of the hedged item. SFAS
No. 133 will be effective for fiscal years beginning after June 15, 1999.
Initial application for Hartford Life Insurance Company will begin for the first
quarter of the year 2000. While Hartford Life Insurance Company is currently in
the process of quantifying the impact of SFAS No. 133, the Company is reviewing
its derivative holdings in order to take actions needed to minimize potential
volatility, while at the same time maintaining the economic protection needed to
support the goals of its business.

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

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

In December 1997, the AICPA issued SOP No. 97-3 "Accounting by Insurance and
Other Enterprises for Insurance Related Assessments". This SOP provides guidance
on accounting by insurance and other enterprises for assessments related to
insurance activities. Specifically, the SOP provides guidance on when a guaranty
fund or other assessment should be recognized, how to measure the liability, and
what information should be disclosed. This SOP will be effective for fiscal
years beginning after December 15, 1998. Adoption of SOP 97-3 is not expected to
have a material impact on the Company's financial condition or results of
operations.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". The new standard requires public
business enterprises to disclose certain financial and descriptive information
about reportable operating segments in annual financial statements and in
condensed financial statements of interim periods. Operating segments are
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and assessing performance. SFAS No. 131 also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company adopted SFAS No. 131 in 1998.
For additional information, see Note 13.

On November 14, 1996, the EITF reached a consensus on Issue No. 96-12,
"Recognition of Interest Income and Balance Sheet Classification of Structured
Notes". This EITF issue requires companies to record income on certain
structured securities on a retrospective interest method. The Company adopted
EITF No. 96-12 for structured securities acquired after November 14, 1996.
Adoption of EITF No. 96-12 did not have a material effect on the Company's
financial condition or results of operations.

In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" which is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996. This statement established
criteria for determining whether transferred assets should be accounted for as
sales or secured borrowings. Adoption of SFAS No. 125 did not have a material
effect on the Company's financial condition or results of operations.

Effective January 1, 1996, Hartford Life Insurance Company adopted SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of ". This statement establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed. Adoption of SFAS No. 121
did not have a material effect on the Company's financial condition or results
of operations.

The Company's cash flows were not impacted by these changes in accounting
principles.

Revenues for investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders.
<PAGE>
F-8 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS

Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.

(E) INVESTMENTS

Hartford Life Insurance Company's investments in fixed maturities include
bonds and commercial paper which are considered "available for sale" and
accordingly are carried at fair value with the after-tax difference from cost
reflected as a component of stockholder's equity designated "net unrealized
capital gains on securities, net of tax". Equity securities, which include
common and non-redeemable preferred stocks, are carried at fair values with the
after-tax difference from cost reflected in stockholder's equity. Policy loans
are carried at outstanding balance which approximates fair value. Realized
capital gains and losses on security transactions associated with the Company's
immediate participation guaranteed contracts are excluded from revenues and
deferred over the expected maturity of the securities, since under the terms of
the contracts the realized gains and losses will be credited to policyholders in
future years as they are entitled to receive them. Net realized capital gains
and losses, excluding those related to immediate participation guaranteed
contracts, are reported as a component of revenue and are determined on a
specific identification basis.

The Company's accounting policy for impairment requires recognition of an
other than temporary impairment charge on a security if it is determined that
the Company is unable to recover all amounts due under the contractual
obligations of the security. In addition, for securities expected to be sold, an
other than temporary impairment charge is recognized if the Company does not
expect the fair value of a security to recover to cost or amortized cost prior
to the expected date of sale. Once an impairment charge has been recorded, the
Company then continues to review the other than temporarily impaired securities
for additional impairment, if necessary.

(F) DERIVATIVE INSTRUMENTS

Hartford Life Insurance Company uses a variety of derivative instruments
including swaps, caps, floors, forwards and exchange traded financial futures
and options as part of an overall risk management strategy. These instruments
are used as a means of hedging exposure to price, foreign currency and/or
interest rate risk on planned investment purchases or existing assets and
liabilities. The Company does not hold or issue derivative instruments for
trading purposes. Hartford Life Insurance Company's accounting for derivative
instruments used to manage risk is in accordance with the concepts established
in SFAS No. 80, "Accounting for Futures Contracts", SFAS No. 52, "Foreign
Currency Translation", AICPA SOP 86-2, "Accounting for Options" and various EITF
pronouncements. Written options are used, in all cases in conjunction with other
assets and derivatives, as part of the Company's asset and liability management
strategy. Derivative instruments are carried at values consistent with the asset
or liability being hedged. Derivative instruments used to hedge fixed maturities
or equity securities are carried at fair value with the after-tax difference
from cost reflected in Stockholder's Equity. Derivative instruments used to
hedge other invested assets or liabilities are carried at cost. For a discussion
of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
issued in June 1998, see (b) Changes in Accounting Principles.

Derivative instruments must be designated at inception as a hedge and
measured for effectiveness both at inception and on an ongoing basis. Hartford
Life Insurance Company's correlation threshold for hedge designation is 80% to
120%. If correlation, which is assessed monthly and measured based on a rolling
three month average, falls outside the 80% to 120% range, hedge accounting will
be terminated. Derivative instruments used to create a synthetic asset must meet
synthetic accounting criteria including designation at inception and consistency
of terms between the synthetic and the instrument being replicated. Consistent
with industry practice, synthetic instruments are accounted for like the
financial instrument it is intended to replicate. Derivative instruments which
fail to meet risk management criteria, subsequent to acquisition, are marked to
market with the impact reflected in the Consolidated Statements of Income.

Gains or losses on financial futures contracts entered into in anticipation
of the investment of future receipt of product cash flows are deferred and, at
the time of the ultimate investment purchase, reflected as an adjustment to the
cost basis of the purchased asset. Gains or losses on futures used in invested
asset risk management are deferred and adjusted into the cost basis of the
hedged asset when the contract futures are closed, except for futures used in
duration hedging which are deferred and basis adjusted on a quarterly basis. The
basis adjustments are amortized into net investment income over the remaining
asset life.

Open forward commitment contracts are marked to market through stockholder's
equity. Such contracts are accounted for at settlement by recording the purchase
of the specified securities at the previously committed price. Gains or losses
resulting from the termination of forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.

The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-9
- --------------------------------------------------------------------------------

option. Gains or losses on expiration or termination are adjusted into the basis
of the underlying asset or liability and amortized over the remaining asset
life.

Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to investment income. Should the swap be terminated, the gain or loss is
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase (anticipatory transaction) are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.

Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52. Changes in the spot rate of instruments designated
as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustments component of stockholder's equity. Cash flows
from futures, options, and swaps, accounted for as hedges, are included with the
cash flows of the item being hedged.

(G) SEPARATE ACCOUNTS

Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes the investment risk and rewards, and guaranteed separate account assets,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder.
(H) DEFERRED POLICY ACQUISITION COSTS

Policy acquisition costs, which include commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, usually 20 years. Generally, acquisition costs
are deferred and amortized using the retrospective deposit method. Under the
retrospective deposit method, acquisition costs are amortized in proportion to
the present value of expected gross profits from surrender charges, investment
charges, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
re-estimated and adjusted by a cumulative charge or credit to income.

Acquisition costs and their related deferral are included in the Company's
other expenses as follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Commissions.......................... $ 1,069 $ 976 $ 848
Deferred acquisition costs........... (891) (862) (823)
Other................................ 588 472 402
--------- --------- ---------
Total other expenses............. $ 766 $ 586 $ 427
--------- --------- ---------
--------- --------- ---------
</TABLE>

(I) DIVIDENDS TO POLICYHOLDERS

Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings on that participating
block of business. The participating insurance in force accounted for 71%, 55%
and 44% in 1998, 1997 and 1996, respectively, of total insurance in force.

3. INVESTMENTS AND DERIVATIVE INSTRUMENTS

(A) COMPONENTS OF NET INVESTMENT INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed
maturities......................... $ 952 $ 932 $ 918
Interest income from policy loans... 789 425 477
Income from other investments....... 32 26 15
--------- --------- ---------
Gross investment income............. 1,773 1,383 1,410
Less: Investment expenses........... 14 15 13
--------- --------- ---------
Net investment income............... $ 1,759 $ 1,368 $ 1,397
--------- --------- ---------
--------- --------- ---------
</TABLE>

(B) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- ----- ---------
<S> <C> <C> <C>
Fixed maturities......................... $ (28) $ (7) $ (201)
Equity securities........................ 21 12 2
Real estate and other.................... 5 (1) (4)
Less: Decrease in liability to
policyholders for realized capital
gains................................... -- -- (10)
--------- --- ---------
Net realized capital (losses) gains...... $ (2) $ 4 $ (213)
--------- --- ---------
--------- --- ---------
</TABLE>

<PAGE>
F-10 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains.............. $ 2 $ 14 $ 13
Gross unrealized capital losses............. (1) -- (1)
--- --- ---
Net unrealized capital gains................ 1 14 12
Deferred income tax expense................. -- 5 4
--- --- ---
Net unrealized capital gains, net of tax.... 1 9 8
Balance -- beginning of year................ 9 8 1
--- --- ---
Net change in unrealized capital gains on
equity securities.......................... $ (8) $ 1 $ 7
--- --- ---
--- --- ---
</TABLE>

(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.......... $ 421 $ 371 $ 386
Gross unrealized capital losses......... (108) (80) (341)
Unrealized capital gains credited to
policyholders.......................... (32) (30) (11)
--------- --------- ---------
Net unrealized capital gains............ 281 261 34
Deferred income tax expense............. 98 91 12
--------- --------- ---------
Net unrealized capital gains, net of
tax.................................... 183 170 22
Balance -- beginning of year............ 170 22 (58)
--------- --------- ---------
Net change in unrealized capital gains
(losses) on fixed maturities........... $ 13 $ 148 $ 80
--------- --------- ---------
--------- --------- ---------
</TABLE>

(E) FIXED MATURITY INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U. S. Government and Government agencies and authorities
(guaranteed and sponsored)...................................... $ 121 $ 2 $ -- $ 123
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,001 23 (8) 1,016
States, municipalities and political subdivisions................ 165 8 -- 173
International governments........................................ 393 26 (7) 412
Public utilities................................................. 844 33 (3) 874
All other corporate including international...................... 5,469 260 (42) 5,687
All other corporate -- asset backed.............................. 4,155 58 (42) 4,171
Short-term investments........................................... 1,847 -- -- 1,847
Certificates of deposit.......................................... 510 11 (6) 515
---------- ----- ----------- ----------
Total fixed maturities....................................... $14,505 $421 $(108) $14,818
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U. S. Government and Government agencies and authorities
(guaranteed and sponsored)...................................... $ 217 $ 3 $ (1) $ 219
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,175 64 (35) 1,204
States, municipalities and political subdivisions................ 211 7 (1) 217
International governments........................................ 376 20 (3) 393
Public utilities................................................. 871 26 (3) 894
All other corporate including international...................... 5,033 200 (25) 5,208
All other corporate -- asset backed.............................. 4,091 41 (8) 4,124
Short-term investments........................................... 1,318 -- -- 1,318
Certificates of deposit.......................................... 593 10 (4) 599
---------- ----- ----- ----------
Total fixed maturities....................................... $13,885 $371 $(80) $14,176
---------- ----- ----- ----------
---------- ----- ----- ----------
</TABLE>

The amortized cost and estimated fair value of fixed maturity investments as
of December 31, 1998 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including mortgage backed securities and
collateralized mortgage obligations, are distributed to maturity year based on
the Company's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. These estimates are developed using
prepayment speeds provided in broker
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-11
- --------------------------------------------------------------------------------

consensus data. Such estimates are derived from prepayment speeds experienced at
the interest rate levels projected for the applicable underlying collateral and
can be expected to vary from actual experience.

MATURITY

<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
----------- -----------
<S> <C> <C>
One year or less......................... $ 3,047 $ 3,116
Over one year through five years......... 4,796 4,843
Over five years through ten years........ 3,242 3,318
Over ten years........................... 3,420 3,541
----------- -----------
Total................................ $ 14,505 $ 14,818
----------- -----------
----------- -----------
</TABLE>

Sales of fixed maturities, excluding short-term fixed maturities, for the
years ended December 31, 1998, 1997 and 1996 resulted in proceeds of $3.2
billion, $4.2 billion and $3.5 billion, gross realized capital gains of $103,
$169 and $87, gross realized capital losses (including writedowns) of $131, $176
and $298, respectively. In 1996, gross realized capital losses includes an other
than temporary impairment of $137 related to the Company's block of guaranteed
investment contract business written prior to 1995 which could not recover to
amortized cost prior to sale. Sales of equity security investments for the years
ended December 31, 1998, 1997 and 1996 resulted in proceeds of $35, $132 and $74
and gross realized capital gains of $21, $12 and $2, respectively, and no gross
realized capital losses for all periods.

(F) CONCENTRATION OF CREDIT RISK

The Company is not exposed to any significant concentration of credit risk
in fixed maturities of a single issuer greater than 10% of stockholder's equity.

(G) DERIVATIVE INSTRUMENTS

Hartford Life Insurance Company utilizes a variety of derivative
instruments, including swaps, caps, floors, forwards and exchange traded futures
and options, in accordance with Company policy and in order to achieve one of
three Company approved objectives: to hedge risk arising from interest rate,
price or currency exchange rate volatility; to manage liquidity; or, to control
transactions costs. The Company utilizes derivative instruments to manage market
risk through four principal risk management strategies: hedging anticipated
transactions, hedging liability instruments, hedging invested assets and hedging
portfolios of assets and/or liabilities. The Company does not trade in these
instruments for the express purpose of earning trading profits.

Hartford Life Insurance Company maintains a derivatives counterparty
exposure policy which establishes market-based credit limits, favors long-term
financial stability and creditworthiness, and typically requires credit
enhancement/credit risk reducing agreements. Credit risk is measured as the
amount owed to the Company based on current market conditions and potential
payment obligations between the Company and its counterparties. Credit exposures
are quantified weekly and netted, and collateral is pledged to or held by the
Company to the extent the current value of derivatives exceed exposure policy
thresholds.

Hartford Life Insurance Company's derivative program is monitored by an
internal compliance unit and is reviewed by senior management and Hartford
Life's Finance Committee of the Board of Directors. Notional amounts, which
represent the basis upon which pay or receive amounts are calculated and are not
reflective of credit risk, pertaining to derivative financial instruments
(excluding the Company's guaranteed separate account derivative investments),
totaled $6.2 billion and $6.5 billion ($3.9 billion and $4.6 billion related to
the Company's investments, $2.3 billion and $1.9 billion on the Company's
liabilities) as of December 31, 1998 and 1997, respectively.

The tables below provide a summary of derivative instruments held by
Hartford Life Insurance Company as of December 31, 1998 and 1997, segregated by
major investment and liability category:

<PAGE>
F-12 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
1998 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
----------------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS & FUTURES RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS FLOORS (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- -------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,163 $ -- $ 188 $ 3 $ 885 $-- $ 1,076
Inverse floaters (1)............... 24 44 55 -- -- -- 99
Anticipatory (4)................... -- -- -- -- 235 -- 235
Other bonds and notes.............. 7,683 461 597 18 1,300 90 2,466
Short-term investments............. 1,948 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total fixed maturities......... 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments................. 6,979 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total investments.............. $ 21,797 505 840 21 2,420 90 3,876
Other policyholder funds....... $ 19,615 1,100 50 -- 1,195 -- 2,345
-------- -------- ---------- --- ---------- --- ----------
Total derivative instruments --
notional value................ $ 1,605 $ 890 $ 21 $ 3,615 $90 $ 6,221
-------- -------- ---------- --- ---------- --- ----------
Total derivative instruments --
fair value.................... $ (6) $ 19 $ -- $ 27 $(7) $ 33
-------- -------- ---------- --- ---------- --- ----------
-------- -------- ---------- --- ---------- --- ----------
</TABLE>

<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS & RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS FLOORS FUTURES (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- ------- ------------ ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities
(excluding inverse floaters and
anticipatory)..................... $ 5,253 $ 500 $ 1,404 $ 28 $ 221 $ -- $2,153
Inverse floaters (1)............... 75 47 80 -- 25 -- 152
Anticipatory (4)................... -- -- -- -- -- -- --
Other bonds and notes.............. 7,531 462 460 22 1,258 91 2,293
Short-term investments............. 1,317 -- -- -- -- -- --
-------- ------- ------------ --- --------- --- -------
Total fixed maturities......... 14,176 1,009 1,944 50 1,504 91 4,598
Equity securities, policy loans and
other investments................. 3,983 -- -- -- -- -- --
-------- ------- ------------ --- --------- --- -------
Total investments.............. $ 18,159 1,009 1,944 50 1,504 91 4,598
Other policyholder funds....... $ 21,034 10 150 -- 1,747 -- 1,907
-------- ------- ------------ --- --------- --- -------
Total derivative instruments --
notional value................ $ 1,019 $ 2,094 $ 50 $ 3,251 $ 91 $6,505
-------- ------- ------------ --- --------- --- -------
Total derivative instruments --
fair value.................... $ (8) $ 23 $ -- $ 19 $ (6 ) $ 28
-------- ------- ------------ --- --------- --- -------
-------- ------- ------------ --- --------- --- -------
</TABLE>

- ---------

(1) Inverse floaters are variations of collateralized mortgage obligations
(CMO's) for which the coupon rates move inversely with an index rate such as the
London Interbank Offered Rate (LIBOR). The risk to principal is considered
negligible as the underlying collateral for the securities is guaranteed or
sponsored by government agencies. To address the volatility risk created by the
coupon variability, the Company uses a variety of derivative instruments,
primarily interest rate swaps, caps and floors.

(2) As of December 31, 1998 and 1997, approximately 5% and 44% ,
respectively, of the notional futures contracts expire within one year.

(3) As of December 31, 1998 and 1997, approximately 11% and 16%,
respectively, of foreign currency swaps expire within one year.

(4) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. As of December 31, 1998 and 1997, the Company had no
deferred gains for interest rate swaps. During 1998, $1.5 in deferred gains were
basis adjusted.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-13
- --------------------------------------------------------------------------------

The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1998 and 1997:

<TABLE>
<CAPTION>
DECEMBER 31, 1997 MATURITIES/ DECEMBER 31, 1998
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Caps......................................... $1,239 $1,000 $ 327 $1,912
Floors....................................... 1,864 -- 1,281 583
Swaps/Forwards............................... 3,342 1,838 1,475 3,705
Futures...................................... 50 8 37 21
Options...................................... 10 -- 10 --
------- -------- ------- -------
Total.................................... $6,505 $2,846 $3,130 $6,221
------- -------- ------- -------
BY STRATEGY
Liability.................................... $1,907 $1,099 $ 661 $2,345
Anticipatory................................. -- 242 7 235
Asset........................................ 1,805 1,260 667 2,398
Portfolio.................................... 2,793 245 1,795 1,243
------- -------- ------- -------
Total.................................... $6,505 $2,846 $3,130 $6,221
------- -------- ------- -------
------- -------- ------- -------
</TABLE>

- ---------

(1) During 1998, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107 "Disclosure about Fair Value of Financial Instruments" requires
disclosure of fair value information of financial instruments. For certain
financial instruments where quoted market prices are not available, other
independent valuation techniques and assumptions are used. Because considerable
judgment is used, these estimates are not necessarily indicative of amounts that
could be realized in a current market exchange. SFAS No. 107 excludes certain
financial instruments from disclosure, including insurance contracts. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.

Fair value for fixed maturities and marketable equity securities
approximates those quotations published by applicable stock exchanges or
received from other reliable sources.

For policy loans, carrying amounts approximate fair value.

Fair value for other invested assets primarily consist of partnerships and
trusts that are based on external market valuations from partnership and trust
management as well as mortgage loans where carrying amounts approximate fair
value.

Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.

The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is validated through periodic comparison to dealer quoted prices.

The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- --------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities..................................... $ 14,818 $14,818 $ 14,176 $14,176
Equity securities.................................... 31 31 180 180
Policy loans......................................... 6,684 6,684 3,756 3,756
Other investments.................................... 264 309 47 91
LIABILITIES
Other policyholder funds (1)......................... $ 11,709 $11,726 $ 11,769 $11,755
</TABLE>

- ---------

(1) Excludes corporate owned life insurance and universal life insurance
contracts.

<PAGE>
F-14 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

5. SEPARATE ACCOUNTS

Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $90.3 billion and $69.1 billion as of December 31, 1998 and
1997, respectively, which are reported at fair value. Separate account assets,
which are segregated from other investments, reflect two categories of risk
assumption: non-guaranteed separate accounts totaling $80.6 billion and $58.6
billion as of December 31, 1998 and 1997, respectively, wherein the policyholder
assumes the investment risk, and guaranteed separate accounts totaling $9.7 and
$10.5 billion as of December 31, 1998 and 1997, respectively, wherein Hartford
Life Insurance Company contractually guarantees either a minimum return or
account value to the policyholder. Included in non-guaranteed separate account
assets were policy loans totaling $1.8 billion and $1.9 billion as of December
31, 1998 and 1997, respectively. Net investment income (including net realized
capital gains and losses) and interest credited to policyholders on separate
account assets are not reflected in the Consolidated Statements of Income.

Separate account management fees and other revenues were $908, $699 and $538
in 1998, 1997 and 1996, respectively. The guaranteed separate accounts include
fixed market value adjusted (MVA) individual annuity and modified guaranteed
life insurance. The average credited interest rate on these contracts was 6.6%
and 6.5% as of December 31, 1998 and 1997, respectively. The assets that support
these liabilities were comprised of $9.5 billion and $10.2 billion in fixed
maturities as of December 31, 1998 and 1997, respectively. The portfolios are
segregated from other investments and are managed to minimize liquidity and
interest rate risk. In order to minimize the risk of disintermediation
associated with early withdrawals, fixed MVA annuity and modified guaranteed
life insurance contracts carry a graded surrender charge as well as a market
value adjustment. Additional investment risk is hedged using a variety of
derivatives which totaled $40 and $119 in carrying value and $3.5 billion and
$3.0 billion in notional amounts as of December 31, 1998 and 1997, respectively.

6. STATUTORY RESULTS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income................ $ 211 $ 214 $ 144
--------- --------- ---------
Statutory surplus................... $ 1,676 $ 1,441 $ 1,207
--------- --------- ---------
--------- --------- ---------
</TABLE>

A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1999 is estimated to be $168.

Hartford Life Insurance Company and its domestic insurance subsidiaries
prepare their statutory financial statements in accordance with accounting
practices prescribed by the State of Connecticut. Prescribed statutory
accounting practices include publications of the National Association of
Insurance Commissioners, as well as state laws, regulations, and general
administrative rules.

7. STOCK COMPENSATION PLANS

Hartford Life Insurance Company's employees are included in the 1997
Hartford Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during
the second quarter of 1997. Under the Plan, options granted may be either
non-qualified options or incentive stock options qualifying under Section 422A
of the Internal Revenue Code. The aggregate number of shares of Class A Common
Stock which may be awarded in any one year shall be subject to an annual limit.
The maximum number of shares of Class A Common Stock which may be granted under
the Plan in each year shall be 1.5% of the total issued and outstanding shares
of Hartford Life Class A Common Stock and treasury stock as reported in the
Annual Report on Hartford Life's Form 10-K for the preceding year plus unused
portions of such limit from prior years. In addition, no more than 5 million
shares of Class A Common Stock shall be cumulatively available for awards of
incentive stock options under the Plan, and no more than 20% of the total number
of shares on a cumulative basis shall be available for restricted stock and
performance shares.

All options granted have an exercise price equal to the market price of
Hartford Life's stock on the date of grant and an option's maximum term is ten
years. Certain nonperformance based options become exercisable upon the
attainment of specified market price appreciation of Hartford Life's common
shares or at seven years after the date of grant, while the remaining
nonperformance based options become exercisable over a three year period
commencing with the date of grant.

Also included in the Plan are long-term performance awards which become
payable upon the attainment of specific performance goals achieved over a three
year period.

During the second quarter of 1997, Hartford Life established the Hartford
Life, Inc. Employee Stock Purchase Plan (ESPP). Under this plan, eligible
employees of Hartford Life and the Company may purchase Class A Common Stock of
Hartford Life at a 15% discount from the lower of the market price at the
beginning or end of the quarterly offering period. Hartford Life may sell up to
2,700,000 shares of stock to eligible employees. Hartford Life sold 121,943 and
54,316 shares under the ESPP in 1998 and 1997, respectively. The weighted
average fair value of the discount under the ESPP was $13.80 per share in 1998
and $9.63 per share in 1997.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-15
- --------------------------------------------------------------------------------

8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS

(A) PENSION PLANS

Hartford Life Insurance Company's employees are included in The Hartford's
noncontributory defined benefit pension plans. These plans provide pension
benefits that are based on years of service and the employee's compensation
during the last ten years of employment. The Company's funding policy is to
contribute annually an amount between the minimum funding requirements set forth
in the Employee Retirement Income Security Act of 1974, as amended, and the
maximum amount that can be deducted for U.S. Federal income tax purposes.
Generally, pension costs are funded through the purchase of the Company's group
pension contracts. The cost to the Company was approximately $6 in 1998 and $5
in both 1997 and 1996.

The Company also provides, through The Hartford, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1998, 1997 and 1996.

The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003.
Increasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.

(B) INVESTMENT AND SAVINGS PLAN

Substantially all employees of the Company are eligible to participate in
The Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 and $2 in 1998 and 1997, respectively.

9. REINSURANCE

Hartford Life Insurance Company cedes insurance to other insurers, including
its parent, HLA, in order to limit its maximum loss. Such transfer does not
relieve the Company of its primary liability. The Company also assumes insurance
from other insurers. Failure of reinsurers to honor their obligations could
result in losses to the Company. The Company evaluates the financial condition
of its reinsurers and monitors concentration of credit risk.

Net premiums and other considerations were comprised of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums...................... $ 2,722 $ 2,164 $ 2,138
Assumed............................. 150 159 190
Ceded............................... (654) (686) (623)
--------- --------- ---------
Net premiums and other
considerations................... $ 2,218 $ 1,637 $ 1,705
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company ceded approximately $128, $76 and $100 of group life premium to
HLA in 1998, 1997 and 1996, respectively, representing $38.4 billion, $33.6
billion and $33.3 billion of insurance in force, respectively. The Company ceded
$383, $339 and $318 of accident and health premium to HLA in 1998, 1997 and
1996, respectively. The Company assumed $82, $89 and $101 of premium in 1998,
1997 and 1996, respectively, representing $7.4 billion, $8.2 billion and $8.5
billion of individual life insurance in force, respectively, from HLA.

Life reinsurance recoveries, which reduce death and other benefits,
approximated $97, $158 and $140 for the years ended December 31, 1998, 1997 and
1996, respectively.

Hartford Life Insurance Company has no significant reinsurance-related
concentrations of credit risk.

10. INCOME TAX

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

As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of Hartford Life,
the Company will be included for Federal income tax purposes in the affiliated
group of which The Hartford is the common parent. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated Federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return. The Company's effective tax rate was
35%, 36% and 35% in 1998, 1997 and 1996, respectively.
<PAGE>
F-16 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

Income tax expense is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Current.................................. $ 307 $ 162 $ 118
Deferred................................. (119) 5 (98)
--------- --------- ---------
Income tax expense..................... $ 188 $ 167 $ 20
--------- --------- ---------
--------- --------- ---------
</TABLE>

A reconciliation of the tax provision at the U.S. Federal statutory rate to
the provision for income taxes is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- -----
<S> <C> <C> <C>
Tax provision at the U.S. Federal
statutory rate........................... $ 188 $ 164 $ 20
Other..................................... -- 3 --
--------- --------- ---
Total................................... $ 188 $ 167 $ 20
--------- --------- ---
--------- --------- ---
</TABLE>

Deferred tax assets (liabilities) include the following as of December 31:

<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Tax basis deferred policy acquisition costs.... $ 751 $ 639
Financial statement deferred policy acquisition
costs and reserves............................ 103 69
Employee benefits.............................. 4 8
Net unrealized capital gains on securities..... (98) (96)
Investments and other.......................... (296) (272)
--------- ---------
Total........................................ $ 464 $ 348
--------- ---------
--------- ---------
</TABLE>

Hartford Life Insurance Company had a current tax payable of $65 and $64 as
of December 31, 1998 and 1997, respectively.

Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and, based on current tax law,
will be taxable in the future only under conditions which management considers
to be remote; therefore, no Federal income taxes have been provided on this
deferred income. The balance for tax return purposes of the Policyholders'
Surplus Account as of December 31, 1998 was $104.

11. RELATED PARTY TRANSACTIONS

Transactions of the Company with HA&I and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees,
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by The Hartford. Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on type, are allocated based on either a
percentage of direct expenses or on utilization. Indirect expenses allocated to
the Company by The Hartford were $47, $34 and $40 in 1998, 1997 and 1996,
respectively. Management believes that the methods used are reasonable.

12. COMMITMENTS AND CONTINGENT LIABILITIES

(A) LITIGATION

Hartford Life Insurance Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary and
punitive damages have been asserted. Although there can be no assurances, at the
present time the Company does not anticipate that the ultimate liability arising
from such pending or threatened litigation, after consideration of provisions
made for potential losses and costs of defense, will have a material adverse
effect on the financial condition or operating results of the Company.

(B) GUARANTY FUNDS

Under insurance guaranty fund laws in each state, the District of Columbia
and Puerto Rico, insurers licensed to do business can be assessed by state
insurance guaranty associations for certain obligations of insolvent insurance
companies to policyholders and claimants. Recent regulatory actions against
certain large life insurers encountering financial difficulty have prompted
various state insurance guaranty associations to begin assessing life insurance
companies for the deemed losses. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's solvency
and further provide annual limits on such assessments. Part of the assessments
paid by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $9, $15 and $11 in 1998, 1997 and 1996,
respectively, of which $4, $4 and $5, respectively, were estimated to be
creditable against premium taxes.

The rent paid to Hartford Fire for space occupied by the Company was $7 in
both 1998 and 1997 and $3 in 1996. Future minimum rental commitments are as
follows:

<TABLE>
<S> <C>
1999............. $ 7
2000............. 12
2001............. 12
2002............. 13
2003............. 13
Thereafter....... 74
---------
Total.......... $ 131
---------
---------
</TABLE>

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-17
- --------------------------------------------------------------------------------

Rental expense is recognized on a level basis over the term of the primary
sublease, which expires on December 31, 2009, and amounted to approximately $9
in both 1998 and 1997 and $8 in 1996.

(D) TAX MATTERS

Hartford Life's federal income tax returns are routinely audited by the
Internal Revenue Service. Hartford Life is currently under audit for the years
1993 through 1995, with the audit for the years 1996 through 1997 expected to
begin during early 1999. Management believes that adequate provision has been
made in the financial statements for items that may result from tax examinations
and other tax related matters.

(E) INVESTMENTS

As of December 31, 1998, Hartford Life Insurance Company held $71 of asset
backed securities securitized and serviced by Commercial Financial Services,
Inc. (CFS) of which $50 were included in the Company's general account and $21
in the Company's guaranteed separate account. In October 1998, the Company
became aware of allegations of improper activities at CFS. On December 11, 1998,
CFS filed for protection under Chapter 11 of the Bankruptcy Code. As of December
31, 1998, CFS continues to service the asset backed securities, which remain
current on payments of principal and interest, however, the Company does not
expect to recover all of its principal investment. Based upon information
available in the fourth quarter 1998, the Company recognized a $25, after-tax,
writedown related to its holdings in CFS of which $18 was related to the
Company's general account assets. The ultimate realizable amount depends on the
outcome of the bankruptcy of CFS and these estimates are therefore subject to
material change as new information becomes available. The Company is presently
unable to determine the amount of further potential loss, if any, related to the
securities.

13. SEGMENT INFORMATION

Hartford Life Insurance Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", during the fourth quarter of
1998. This statement replaces SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", and establishes new standards for reporting information
about operating segments in annual financial statements and in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
This statement requires that the reportable operating segments be based on the
Company's internal operations. On this basis, Hartford Life Insurance Company's
segments represent strategic operations which offer different products and
services as well as serve different markets.

Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual variable annuities,
fixed market value adjusted (MVA) annuities and fixed and variable immediate
annuities, mutual funds, deferred compensation and retirement plan services,
structured settlement contracts and other special purpose annuity contracts.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest-sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.

The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following table outlines summarized financial information
concerning the Company's segments. The information for 1997 and 1996 has been
restated to conform to the 1998 presentation.

<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1998 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income.................................. 736 181 793 49 1,759
Amortization of deferred policy acquisition costs...... 326 105 -- -- 431
Income tax expense (benefit)........................... 145 35 12 (4) 188
Net income (loss)...................................... 270 64 24 (8) 350
Assets................................................. 87,207 5,228 22,631 3,197 118,263
</TABLE>

<PAGE>
F-18 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1997 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income.................................. 739 164 429 36 1,368
Amortization of deferred policy acquisition costs...... 250 83 -- 2 335
Income tax expense..................................... 111 30 15 11 167
Net income............................................. 206 55 27 14 302
Assets................................................. 72,288 4,914 17,800 2,743 97,745
</TABLE>

<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1996 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,002 $ 440 $ 1,360 $ 87 $ 2,889
Net investment income.................................. 684 153 480 80 1,397
Amortization of deferred policy acquisition costs...... 174 60 -- -- 234
Income tax expense (benefit)........................... (42 ) 24 11 27 20
Net income (loss)...................................... (77 ) 44 26 45 38
Assets................................................. 57,410 3,753 14,222 2,377 77,762
</TABLE>

14. QUARTERLY RESULTS FOR 1998 AND 1997 (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 915 $ 651 $ 721 $ 645 $ 826 $ 679 $ 1,513 $ 1,034
Benefits, claims and expenses...... 787 550 591 536 688 550 1,371 904
Net income......................... 83 63 85 74 89 81 93 84
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-19
- --------------------------------------------------------------------------------

SCHEDULE I -- SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1998
(IN MILLIONS)

<TABLE>
<CAPTION>
AMOUNT AT
WHICH
FAIR SHOWN ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- --------------------------------------------- ------- ------- --------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U. S. Government and Government agencies
and authorities (guaranteed and
sponsored)................................ $ 121 $ 123 $ 123
U. S. Government and Government agencies
and authorities (guaranteed and sponsored)
-- asset backed........................... 1,001 1,016 1,016
States, municipalities and political
subdivisions.............................. 165 173 173
Foreign governments........................ 393 412 412
Public utilities........................... 844 874 874
All other corporate including
international............................. 5,469 5,687 5,687
All other corporate -- asset backed........ 4,155 4,171 4,171
Short-term investments..................... 1,847 1,847 1,847
Certificates of deposit...................... 510 515 515
------- ------- -------
Total fixed maturities....................... 14,505 14,818 14,818
------- ------- -------
Equity Securities
Common Stocks
Industrial and miscellaneous............... 30 31 31
------- ------- -------
Total equity securities...................... 30 31 31
------- ------- -------
Total fixed maturities and equity
securities.................................. 14,535 14,849 14,849
------- ------- -------
Policy Loans................................. 6,684 6,684 6,684
------- ------- -------
Other Investments
Mortgage loans on real estate.............. 206 207 206
Other invested assets...................... 58 102 58
------- ------- -------
Total other investments...................... 264 309 264
------- ------- -------
Total investments............................ $21,483 $21,842 $21,797
------- ------- -------
------- ------- -------
</TABLE>

<PAGE>
F-20 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------

SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
DEFERRED
POLICY FUTURE OTHER PREMIUMS NET
ACQUISITION POLICY POLICYHOLDER AND OTHER INVESTMENT
SEGMENT COSTS BENEFITS FUNDS CONSIDERATIONS INCOME
- --------------------------------------------- ----------- --------- ---------- --------------- ---------

<S> <C> <C> <C> <C> <C>
1998
Investment Products.......................... $2,823 $2,407 $ 9,194 $1,043 $ 736
Individual Life.............................. 931 466 2,307 363 181
Corporate Owned Life Insurance............... -- 225 8,097 774 793
Other........................................ -- 497 17 38 49
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,754 $3,595 $19,615 $2,218 $1,759
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------

1997
Investment Products.......................... $2,478 $2,070 $ 9,620 $ 771 $ 739
Individual Life.............................. 837 392 2,182 323 164
Corporate Owned Life Insurance............... -- 56 9,259 551 429
Other........................................ -- 541 (27) (8) 36
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,315 $3,059 $21,034 $1,637 $1,368
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------

1996
Investment Products.......................... $2,030 $1,526 $10,140 $ 537 $ 684
Individual Life.............................. 730 346 2,160 287 153
Corporate Owned Life Insurance............... -- -- 9,823 880 480
Other........................................ -- 602 11 1 80
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,760 $2,474 $22,134 $1,705 $1,397
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------

<CAPTION>
NET BENEFITS, AMORTIZATION
REALIZED CLAIMS AND OF DEFERRED
CAPITAL CLAIM POLICY
GAINS ADJUSTMENT ACQUISITION DIVIDENDS TO OTHER
SEGMENT (LOSSES) EXPENSES COSTS POLICYHOLDERS EXPENSES
- --------------------------------------------- ----------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1998
Investment Products.......................... $ -- $ 670 $326 $ -- $ 368
Individual Life.............................. (1) 262 105 -- 77
Corporate Owned Life Insurance............... -- 924 -- 329 278
Other........................................ (1) 55 -- -- 43
----------- ----------- ----- ----- -----
Consolidated operations...................... $ (2) $1,911 $431 $329 $ 766
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1997
Investment Products.......................... $ -- $ 677 $250 $ -- $ 266
Individual Life.............................. -- 242 83 -- 77
Corporate Owned Life Insurance............... -- 439 -- 240 259
Other........................................ 4 21 2 -- (16)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ 4 $1,379 $335 $240 $ 586
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1996
Investment Products.......................... $(219) $ 744 $175 $ -- $ 203
Individual Life.............................. -- 245 59 -- 68
Corporate Owned Life Insurance............... -- 545 -- 634 144
Other........................................ 6 1 -- 1 12
----------- ----------- ----- ----- -----
Consolidated operations...................... $(213) $1,535 $234 $635 $ 427
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
</TABLE>

<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-21
- --------------------------------------------------------------------------------

SCHEDULE IV -- REINSURANCE
(IN MILLIONS)

<TABLE>
<CAPTION>
CEDED TO ASSUMED FROM PERCENTAGE
GROSS OTHER OTHER NET OF AMOUNT
AMOUNT COMPANIES COMPANIES AMOUNT ASSUMED TO NET
-------- -------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1998
Life insurance in force........................... $326,400 $ 200,782 $ 18,289 $143,907 12.7%
Premiums and other considerations
Life insurance and annuities.................... $ 2,329 $ 271 $ 142 $ 2,200 6.5%
Accident and health insurance................... 393 383 8 18 44.4%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,722 $ 654 $ 150 $ 2,218 6.8%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1997
Life insurance in force......................... $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
Premiums and other considerations
Life insurance and annuities.................... $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance................... 346 346 2 2 100.0%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,164 $ 686 $ 159 $ 1,637 9.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1996
Life insurance in force......................... $177,094 $ 106,146 $ 31,957 $102,905 31.1%
Premiums and other considerations
Life insurance and annuities.................... $ 1,801 $ 298 $ 169 $ 1,672 10.1%
Accident and health insurance................... 337 325 21 33 63.6%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------- -------------- ------- --------
-------- -------------- ------- --------
</TABLE>