<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 23, 1995
1933 Act Registration No. 33-90984
1940 Act Registration No. 811-9014
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--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 2 /X/
POST-EFFECTIVE AMENDMENT NO. __ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 2 /X/
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
(EXACT NAME OF REGISTRANT)
CIGNA LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
900 Cottage Grove Road, Hartford, Connecticut 06152
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE
(860) 726-6000
<TABLE>
<S> <C>
COPIES TO:
Robert A. Picarello, Esquire George N. Gingold, Esquire
CIGNA Life Insurance Company 197 King Philip Drive
900 Cottage Grove Road West Hartford, CT 06117-1409
Hartford, Connecticut 06152 Michael Berenson, Esq.
(NAME AND ADDRESS OF Margaret Hankard, Esq.
AGENT FOR SERVICE) Jorden Burt & Berenson
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007-0805
</TABLE>
Approximate date of proposed public offering: Continuous
An indefinite amount of the securities offered by this Registration
Statement has been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The initial registration fee of $500 was paid with the
declaration.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
It is proposed that this filing will become effective:
_________ immediately upon filing pursuant to paragraph (b) of Rule 485
_________ on , pursuant to paragraph (b) of Rule 485
_________ 60 days after filing pursuant to paragraph (a) of Rule 485
_________ on , pursuant to paragraph (a) of Rule 485
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495
SHOWING LOCATION IN PART A (PROSPECTUS) AND
PART B (STATEMENT OF ADDITIONAL INFORMATION)
OF REGISTRATION STATEMENT OF INFORMATION REQUIRED BY FORM N-4
PART A
<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
1. Cover Page........................................ Cover Page
2. Definitions....................................... Definitions
3. Synopsis.......................................... Highlights; Fees and Expenses
4. Condensed Financial Information................... Condensed Financial Information
5. General...........................................
(a) Depositor..................................... The Company, the Variable Account and the Fixed Account
(b) Registrant.................................... The Company, the Variable Account and the Fixed Account
(c) Portfolio Company............................. The Funds
(d) Fund Prospectus............................... The Funds
(e) Voting Rights................................. The Funds -- Voting Rights
6. Deductions and Expenses
(a) General....................................... Charges and Deductions
(b) Sales Load %.................................. Charges and Deductions -- Deduction for Contingent
Deferred Sales Charge (Sales Load)
(c) Special Purchase Plan......................... N/A
(d) Commissions................................... Distribution of the Contracts
(e) Fund Expenses................................. Fees and Expenses -- Fund Annual Expenses
(f) Organizational Expenses....................... N/A
7. Contracts
(a) Persons with Rights........................... Other Contract Features (Ownership Assignment,
Beneficiary, Change of Beneficiary, Annuitant,
Surrenders, Death of Contract Owner, Death of
Annuitant); Annuity Provisions; Voting Rights
(b) (i) Allocation of Premium Payments............ Premium Payments and Contract Value -- Allocation of
Premium Payments
(ii) Transfers.................................... Transfer of Contract Values Between Sub-Accounts
(iii) Exchanges................................... N/A
(c) Changes....................................... Modification; Substitution of Securities; Change in
Operation of Variable Account
(d) Inquiries..................................... Cover Page; Highlights
8. Annuity Period.................................... Annuity Provisions
9. Death Benefit..................................... Death of the Contract Owner; Death of the Annuitant;
10. Purchase and Contract Values
(a) Purchases..................................... Premium Payments
(b) Valuation..................................... Contract Value; Accumulation Unit;
(c) Daily Calculation............................. Accumulation Unit; Allocation of Premium Payments
(d) Underwriter................................... Distribution of the Contracts
11. Redemptions
(a) By Owners..................................... Surrenders
By Annuitant...................................... Annuity Provisions -- Variable Options
(b) Texas ORP..................................... N/A
(c) Check Delay................................... Delay of Payments
(d) Lapse......................................... N/A
(e) Free Look..................................... Highlights
12. Taxes............................................. Tax Status
13. Legal Proceedings................................. Legal Proceedings
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
14. Table of Contents for the Statement of Additional
Information...................................... Table of Contents of the Statement of Additional
Information
</TABLE>
PART B
<TABLE>
<CAPTION>
ITEM OF FORM N-4 STATEMENT OF ADDITIONAL INFORMATION CAPTION
------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
15. Cover Page........................................ Cover Page
16. Table of Contents................................. Table of Contents
17. General Information and History................... a) N/A
b) N/A
c) (Prospectus) The Company, The Variable Account, The
Fixed Account
18. Services
(a) Fees and Expenses of Registrant............... N/A
(b) Management Contracts.......................... N/A
(c) Custodian..................................... Custody of Assets
Independent Accountant............................ Experts
(d) Assets of Registrant.......................... N/A
(e) Affiliated Person............................. N/A
(f) Principal Underwriter......................... N/A
19. Purchase of Securities Being Offered.............. Distribution of the Contracts
Offering Sales Load............................... Distribution of the Contracts; (Prospectus) Deductions
and Charges -- Deduction for Contingent Deferred Sales
Charge (Sales Load)
20. Underwriters...................................... Distribution of the Contracts; (Prospectus) Distribution
of the Contracts
21. Calculation of Performance Data................... Investment Experience; Historical Performance Data
22. Annuity Payments.................................. (Prospectus) Annuity Provisions;
23. Financial Statements.............................. Financial Statements
</TABLE>
PART C -- OTHER INFORMATION
<TABLE>
<CAPTION>
ITEM OF FORM N-4 PART C CAPTION
------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
24. Financial Statements and Exhibits................. Financial Statements and Exhibits
(a) Financial Statements.......................... Financial Statements
(b) Exhibits...................................... Exhibits
25. Directors and Officers of the Depositor........... Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control with
the Depositor or Registrant...................... Persons Controlled By or Under Common Control with the
Depositor or Registrant
27. Number of Owners.................................. Number of Owners
28. Indemnification................................... Indemnification
29. Principal Underwriters............................ Principal Underwriter
30. Location of Accounts and Records.................. Location of Accounts and Records
31. Management Services............................... Management Services
32. Undertakings...................................... Undertakings
Signature Page.................................... Signatures
</TABLE>
ii
<PAGE>
PART A. PROSPECTUS
<PAGE>
CIGNA LIFE INSURANCE COMPANY
[LOGO]
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
<TABLE>
<S> <C>
HOME OFFICE LOCATION: MAILING ADDRESS:
900 COTTAGE GROVE ROAD CIGNA INDIVIDUAL INSURANCE
HARTFORD, CT 06152 VARIABLE PRODUCTS SERVICE CENTER: ROUTING S-154
HARTFORD, CT 06152 - 2154
(800) 552-9898
</TABLE>
--------------------------------------------------------------------------------
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS
--------------------------------------------------------------------------------
The Flexible Payment Deferred Variable Annuity Contracts (the "Contracts")
described in this prospectus provide for accumulation of Contract Values and
eventual payment of monthly annuity payments on a fixed or variable basis. The
Contracts are designed to aid individuals in long term planning for retirement
or other long term purposes. The Contracts are available for retirement plans
which do not qualify for the special federal tax advantages available under the
Internal Revenue Code ("Non-Qualified Plans") and for retirement plans which do
qualify for the federal tax advantages available under the Internal Revenue Code
("Qualified Plans"). (See "Tax Status -- Qualified Plans.") Premium payments for
the Contracts will be allocated to a segregated investment account of CIGNA Life
Insurance Company (the "Company"), designated CIGNA Variable Annuity Separate
Account I (the "Variable Account"), or to the Fixed Account, or some combination
of them, as selected by the owner of the Contract.
The following funding options are available under a Contract: Through the
Variable Account, the Company offers seventeen diversified open-end management
investment companies (commonly called mutual funds), each with a different
investment objective: Alger American Fund -- Alger American Small Capitalization
Portfolio, Alger American Leveraged AllCap Portfolio, Alger American MidCap
Growth Portfolio and Alger American Growth Portfolio; Fidelity Variable
Insurance Products Fund -- Equity-Income Portfolio and Money Market Portfolio;
Fidelity Variable Insurance Products Fund II -- Investment Grade Bond Portfolio
and Asset Manager Portfolio; MFS Variable Insurance Trust -- MFS Total Return
Series, MFS Utilities Series and MFS World Governments Series; Neuberger &
Berman Advisers Management Trust -- Balanced Portfolio, Limited Maturity Bond
Portfolio and Partners Portfolio; Quest for Value Accumulation Trust -- Global
Equity Portfolio, Managed Portfolio and Small Cap Portfolio. The fixed interest
option offered under a Contract is the Fixed Account. Premium payments or
transfers allocated to the Fixed Account, and 3% interest per year thereon, are
guaranteed, and additional interest may be credited, with certain withdrawals
subject to a market value adjustment and withdrawal charges. Unless specifically
mentioned, this prospectus only describes the variable investment options.
This entire prospectus, and those of the Funds, should be read carefully
before investing to understand the Contracts being offered. The "Statement of
Additional Information" dated August 31, 1995, available at no charge by calling
or writing the Company's Variable Products Service Center as shown above,
provides further information. Its table of contents is at the end of this
prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES
OF THE MUTUAL FUNDS AVAILABLE AS FUNDING OPTIONS FOR THE CONTRACTS OFFERED BY
THIS PROSPECTUS. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED: AUGUST 31, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
DEFINITIONS.................................... 3
HIGHLIGHTS..................................... 6
FEES AND EXPENSES.............................. 8
CONDENSED FINANCIAL INFORMATION................ 11
THE COMPANY, THE VARIABLE ACCOUNT AND THE FIXED
ACCOUNT....................................... 11
THE FUNDS...................................... 13
General...................................... 15
Substitution of Securities................... 15
Voting Rights................................ 15
PREMIUM PAYMENTS AND
CONTRACT VALUE................................ 16
Premium Payments............................. 16
Allocation of Premium Payments............... 16
Dollar Cost Averaging........................ 18
Contract Value............................... 19
Accumulation Unit............................ 19
CHARGES AND DEDUCTIONS......................... 19
Deduction for Contingent Deferred Sales
Charge (Sales Load)......................... 19
Deduction for Mortality and Expense Risk
Charge...................................... 20
Deduction for Administrative Expense Charge.. 21
Deduction for Annuity Account Fee............ 21
Deduction for Premium Tax Equivalents........ 21
Deduction for Income Taxes................... 21
Deduction for Fund Expenses.................. 22
Deduction for Transfer Fee................... 22
Deduction for Optional Death Benefit......... 22
OTHER CONTRACT FEATURES........................ 24
Ownership.................................... 24
Assignment................................... 24
Beneficiary.................................. 24
Change of Beneficiary........................ 24
Annuitant.................................... 25
Transfer of Contract Values between
Sub-Accounts................................ 25
Procedures for Telephone Transfers........... 26
Surrenders and Partial Withdrawals........... 26
Delay of Payments and Transfers.............. 26
Market Value Adjustment...................... 27
Death of the Contract Owner before the
Annuity Date................................ 28
<CAPTION>
CONTENTS PAGE
<S> <C>
Death of the Annuitant before the Annuity
Date........................................ 28
Death of the Annuitant after the
Annuity Date................................ 28
Change in Operation of Variable Account...... 28
Modification................................. 29
Discontinuance............................... 29
ANNUITY PROVISIONS............................. 29
Annuity Date; Change in Annuity Date and
Annuity Option.............................. 29
Annuity Options.............................. 30
Fixed Options................................ 30
Variable Options............................. 30
Evidence of Survival......................... 31
Endorsement of Annuity Payment............... 31
DISTRIBUTION OF THE CONTRACTS.................. 32
PERFORMANCE DATA............................... 32
Money Market Sub-Account..................... 32
Other Sub-Accounts........................... 32
Performance Ranking or Rating................ 33
TAX STATUS..................................... 33
General...................................... 33
Diversification.............................. 34
Distribution Requirements.................... 35
Multiple Contracts........................... 35
Tax Treatment of Assignments................. 35
Withholding.................................. 35
Section 1035 Exchanges....................... 35
Tax Treatment of Withdrawals -- Non-Qualified
Contracts................................... 36
Qualified Plans.............................. 36
Section 403(b) Plans......................... 37
Individual Retirement Annuities.............. 37
Corporate Pension and Profit-Sharing Plans
and H.R. 10 Plans........................... 37
Deferred Compensation Plans.................. 37
Tax Treatment of Withdrawals -- Qualified
Contracts................................... 38
FINANCIAL STATEMENTS........................... 38
LEGAL PROCEEDINGS.............................. 38
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION........................ 38
</TABLE>
2
<PAGE>
DEFINITIONS
ACCUMULATION PERIOD: The period from the Effective Date to
the Annuity Date, the date on which the Death Benefit
becomes payable or the date on which the Contract is
surrendered or annuitized, whichever is earliest.
ACCUMULATION UNIT: A measuring unit used to calculate the
value of the Owner's interest in each funding option used in
the variable portion of the Contract prior to the Annuity
Date.
ANNUITANT: A person designated by the Owner in writing upon
whose continuation of life any series of payments for a
definite period or involving life contingencies depends. If
the Annuitant dies before the Annuity Date, the Owner
becomes the Annuitant until naming a new Annuitant.
ANNUITY ACCOUNT VALUE: The value of the Contract at any
point in time.
ANNUITY DATE: The date on which annuity payments commence.
ANNUITY OPTION: The arrangement under which annuity payments
are made.
ANNUITY PERIOD: The period starting on the Annuity Date.
ANNUITY UNIT: A measuring unit used to calculate the portion
of annuity payments attributable to each funding option used
in the variable portion of the Contract on and after the
Annuity Date.
BENEFICIARY: The person entitled to the Death Benefit, who
must also be the "Designated Beneficiary", for purposes of
Section 72(s) of the Code, upon the Owner's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: CIGNA Life Insurance Company.
CONTRACT: The Variable Annuity Contract described in this
prospectus.
CONTRACT ANNIVERSARY, CONTRACT YEAR, EFFECTIVE DATE: The
Contract's Effective Date is the date it is issued. It is
also the date on which the first Contract Year, a 12-month
period, begins. Subsequent Contract Years begin on each
Contract Anniversary, which is the anniversary of the
Effective Date.
CONTRACT MONTH: The period from one Monthly Anniversary Date
to the next.
CONTRACT OWNER (OR OWNER): The person(s) initially
designated in the application or otherwise, unless later
changed, as having all ownership rights under the Contract.
FIXED ACCOUNT: The portion of the Contract under which
principal is guaranteed and interest is credited. Fixed
Account Assets are maintained in the Company's General
Account and not allocated to the Variable Account.
FIXED ANNUITY: An annuity with payments which do not vary as
to dollar amount.
FUND(S): One or more of Alger American Fund -- Alger
American Small Capitalization Portfolio, Alger American
Leveraged AllCap Portfolio, Alger American MidCap Growth
Portfolio and Alger American Growth Portfolio; Fidelity
Variable Insurance Products Fund -- VIP Equity-Income
Portfolio and VIP Money Market Portfolio; Fidelity Variable
Insurance Products Fund II -- VIP II Investment Grade Bond
Portfolio and VIP II Asset Manager Portfolio; MFS Variable
Insurance Trust -- MFS Total Return Series, MFS Utilities
Series and MFS World Governments Series; Neuberger & Berman
Advisers Management Trust -- Balanced Portfolio, Limited
Maturity Bond Portfolio and Partners Portfolio; Quest for
Value Accumulation Trust -- Quest Global Equity Portfolio,
Quest
3
<PAGE>
Managed Portfolio and Quest Small Cap Portfolio. Each is an
open-end management investment company (mutual fund) whose
shares are available to fund the benefits provided by the
Contract.
GUARANTEED INTEREST RATE: The rate of interest credited by
the Company on a compound annual basis during a Guaranteed
Period.
GUARANTEED PERIOD: The period for which interest, at either
an initial or subsequent Guaranteed Interest Rate, will be
credited to any amounts which an Owner allocates to a Fixed
Account Sub-Account. In most states in which these Contracts
are issued, this period may be one, three, five, seven or
ten years, as elected by the Owner.
GUARANTEED PERIOD AMOUNT: Any portion of a Purchaser's
Annuity Account Value allocated to a specific Guaranteed
Period with a specified Expiration Date (including credited
interest thereon).
INDEX RATE: An index rate based on the Treasury Constant
Maturity Series published by the Federal Reserve Board.
IN WRITING: In a written form satisfactory to the Company
and received by the Company at its Variable Products Service
Center.
MONTHLY ANNIVERSARY DATE: The monthly anniversary of the
Effective Date, as shown on the specifications page of the
Contract, when the Company makes the monthly calculation of
any charge for the Optional Death Benefit.
NON-QUALIFIED CONTRACTS: A Contract used in connection with
a retirement plan which does not receive favorable federal
income tax treatment under Code Section 401, 403, 408, or
457. The owner of a Non-Qualified Contract must be a natural
person or an agent for a natural person in order for the
Contract to receive favorable income tax treatment as an
annuity.
PAYEE: A recipient of payments under the Contract. The term
includes an Annuitant, a Beneficiary who becomes entitled to
benefits upon the death of the Annuitant, and the Owner's
estate.
PREMIUM PAYMENT: Any amount paid to the Company cleared in
good funds as consideration for the benefits provided by the
Contract. Premium Payment includes the initial Premium
Payment and subsequent Premium Payments.
QUALIFIED CONTRACT: A Contract used in connection with a
retirement plan which receives favorable federal income tax
treatment under Code Section 401, 403, 408 or 457.
SEVEN YEAR ANNIVERSARY: The seventh Contract Anniversary and
each succeeding Contract Anniversary occurring at any seven
year interval thereafter, for example, the 14th, 21st and
28th Contract Anniversaries.
SHARES: Shares of a Fund.
SUB-ACCOUNT: That portion of the Fixed Account associated
with specific Guaranteed Period(s) and Guaranteed Interest
Rate(s) and that portion of the Variable Account which
invests in shares of a specific Fund.
SURRENDER (OR WITHDRAWAL): When a lump sum amount
representing all or part of the Annuity Account Value (minus
any applicable withdrawal charges, market value adjustment,
contract fees, or premium tax equivalents) is paid to the
Owner. After a full surrender, all of the Owner's rights
under the Contract are terminated. In this prospectus, the
terms "surrender" and "withdrawal" are used interchangeably.
SURRENDER DATE: The date the Company processes the Owner's
election to surrender the Contract.
4
<PAGE>
VALUATION DATE: Every day on which Accumulation Units are
valued, which is each day on which the New York Stock
Exchange ("NYSE") is open for business, except any day on
which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and
Exchange Commission ("Commission"), so that valuation or
disposal of securities is not practicable.
VALUATION PERIOD: The period of time beginning on the day
following the Valuation Date and ending on the next
Valuation Date. A Valuation Period may be more than one day
in length.
VARIABLE ACCOUNT: CIGNA Variable Annuity Separate Account I,
a separate account of the Company under Connecticut law, in
which the assets of the Sub-Account(s) funded through shares
of one or more of the Funds are maintained. Assets of the
Variable Account attributable to the Contracts are not
chargeable with the general liabilities of the Company.
VARIABLE ACCUMULATION UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Accumulation Period.
VARIABLE ANNUITY UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Annuity Period, to
determine the amount of each variable annuity payment.
VARIABLE PRODUCTS SERVICE CENTER: The office of the Company
to which Premium Payments should be sent, notices given and
any customer service requests made. Mailing address: CIGNA
Individual Insurance, Variable Products Service Center,
Routing S-154, Hartford, CT 06152-2154.
5
<PAGE>
HIGHLIGHTS
Premium Payments attributable to the variable portion of the
Contracts will be allocated to a segregated asset account of
CIGNA Life Insurance Company (the "Company") which has been
designated CIGNA Variable Annuity Separate Account I (the
"Variable Account"). The Variable Account invests in shares
of one or more of the Funds available to fund the Contract
as selected by the Owner. Contract Owners bear the
investment risk for all amounts allocated to the Variable
Account. The Contract's provisions may vary in some states.
Inquiries about the Contracts may be made to the Company's
Variable Products Service Center.
The Contract may be returned within 10 days after it is
received. It can be mailed or delivered to either the
Company or the agent who sold it. Return of the Contract by
mail is effective on being postmarked, properly addressed
and postage prepaid. The Company will promptly refund the
Contract Value in states where permitted. This may be more
or less than the Premium Payment. In states where required,
the Company will promptly refund the Premium Payment, less
any partial surrenders. The Company has the right to
allocate initial Premium Payments to the Money Market
Sub-Account until the expiration of the right-to-examine
period. If the Company does so allocate an initial Premium
Payment, it will refund the greater of the Premium Payment,
less any partial surrenders, or the Contract Value. It is
the Company's current practice to directly allocate the
initial Premium Payment to the Fund(s) designated in the
application, unless state law requires a refund of Premium
Payments rather than of Annuity Account Value.
A Contingent Deferred Sales Charge (sales load) may be
deducted in the event of a full surrender or partial
withdrawal. The Contingent Deferred Sales Charge is imposed
on Premium Payments within seven (7) years after their being
made. Contract Owners may, not more frequently than once
each Contract Year, make a withdrawal of up to fifteen
percent (15%) of Premium Payments made, or any remaining
portion thereof, ("the Fifteen Percent Free") without
incurring a Contingent Deferred Sales Charge. The Contingent
Deferred Sales Charge will vary in amount, depending upon
the Contract Year in which the Premium Payment being
surrendered or withdrawn was made. For purposes of
determining the applicability of the Contingent Deferred
Sales Charge, surrenders and withdrawals are deemed to be on
a first-in, first-out basis.
The Contingent Deferred Sales Charge is found in the fee
table. (See also "Charges and Deductions -- Deduction for
Contingent Deferred Sales Charge (Sales Load).") The maximum
Contingent Deferred Sales Charge is 7% of Premium Payments.
There may also be a Market Value Adjustment on the Fixed
Account portion of the Contract.
There is a Mortality and Expense Risk Charge which is equal,
on an annual basis, to 1.20% of the average daily net assets
of the Variable Account. This Charge compensates the Company
for assuming the mortality and expense risks under the
Contract (See "Charges and Deductions -- Deduction for
Mortality and Expense Risk Charge"), other than the Optional
Death Benefit risk. (See "Charges and Deductions --
Deduction for Optional Death Benefit")
There is an Administrative Expense Charge which is equal, on
an annual basis, to 0.10% of the average daily net assets of
the Variable Account. (See "Charges and Deductions --
Deduction for Administrative Expense Charge")
There is an annual Annuity Account Fee of $35 unless the
Annuity Account Value equals or exceeds $100,000 at the end
of the Contract Year. (See "Charges and Deductions --
Deduction for Annuity Account Fee")
There is a charge for any Optional Death Benefit Risk(s)
elected. (See "Charges and Deductions -- Deduction for
Optional Death Benefit")
6
<PAGE>
Premium tax equivalents or other taxes payable to a state or
other governmental entity will be charged against Annuity
Account Value (See "Charges and Deductions -- Deduction for
Premium Taxes").
Under certain circumstances there may be assessed a $10
transfer fee when a Contract Owner transfers Annuity Account
Values from one Sub-Account to another (See "Charges and
Deductions -- Deduction for Transfer Fee").
There is a ten percent (10%) federal income tax penalty
applied to the income portion of any premature distribution
from Non-Qualified Contracts. However, the penalty is not
imposed on amounts distributed:
(a) after the Payee reaches age 59 1/2; (b) after the death
of the Contract Owner (or, if the Contract Owner is not a
natural person, the Annuitant); (c) if the Payee is totally
disabled (for this purpose, disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or for the joint lives (or joint life
expectancies) of the Payee and his or her beneficiary; (e)
under an immediate annuity; or (f) which are allocable to
Premium Payments made prior to August 14, 1982. For federal
income tax purposes, distributions are deemed to be on a
last-in, first-out basis. Different tax withdrawal penalties
and restrictions apply to Qualified Contracts issued
pursuant to plans qualified under Code Section 401, 403(b),
408 or 457. (See "Tax Status -- Tax Treatment of Withdrawals
-- Qualified Contracts.") For a further discussion of the
taxation of the Contracts, see "Tax Status."
MARKET VALUE ADJUSTMENT. In certain situations, a surrender
or transfer of amounts from the Fixed Account will be
subject to a Market Value Adjustment. The Market Value
Adjustment will reflect the relationship between a rate
based on an index published by the Federal Reserve Board as
to current yields on U.S. government securities of various
maturities at the time a surrender or transfer is made
("Index Rate"), and the Index Rate at the time that the
Premium Payments being surrendered or transferred were made.
Generally, if the Index Rate at the time of surrender or
transfer is lower than the Index Rate at the time the
Premium Payment was allocated, then the application of the
Market Value Adjustment will result in a higher payment upon
surrender or transfer. Similarly, if the Index Rate at the
time of surrender or transfer is higher than the Index Rate
at the time the Premium Payment was allocated, the
application of the Market Value Adjustment will generally
result in a lower payment upon surrender or transfer. The
Market Value Adjustment may also apply to Death Benefit
payments but only if it would increase the Death Benefit. It
is not applied against a surrender or transfer taking place
at the end of the Guaranteed Period.
7
<PAGE>
FEES AND EXPENSES
CONTRACT OWNER TRANSACTION FEES
Contingent Deferred Sales Charge (as a percentage of Premium
Payments):
<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
------------- ------
<S> <C> <C> <C>
0-1 7%
1-2 6%
2-3 5% A Contract Owner may, not more frequently than once each
3-4 4% Contract Year, make a withdrawal of up to 15% of Premium
4-5 3% Payments made, or the remaining portion thereof, without
5-6 2% incurring a Contingent Deferred Sales Charge.
6-7 1%
7+ 0
</TABLE>
<TABLE>
<S> <C> <C> <C>
Transfer Fee.......... $10
- Not imposed on the first three transfers during a Contract Year nor, if
the Annuity Account Value is at least $5,000 at the time of a transfer, on
the fourth through twelfth transfers during a Contract Year. Pre-scheduled
automatic dollar cost averaging transfers are not counted.
</TABLE>
<TABLE>
<S> <C> <C>
Annuity Account Fee...... $35 per Contract Year
- Waived if Annuity Account Value at the end of
the Contract Year is $100,000 or more.
</TABLE>
A Contract Owner may also elect the Optional Death Benefit(s) for which there is
a charge, prorated among the Sub-Accounts, which depends on the age and gender
classification (in accordance with state law) of the Owner (or the Annuitant, if
the Owner is a non-natural person) and on the dollar amount which is at risk.
(See "Deductions -- Optional Death Benefit.")
VARIABLE ACCOUNT ANNUAL EXPENSES
<TABLE>
<S> <C> <C>
(as a percentage of average account value)
Mortality and Expense Risk Charge.............. 1.20%
Administrative Expense Charge.................. 0.10%
------
Total Variable Account Annual Expenses......... 1.30%
</TABLE>
8
<PAGE>
FUND ANNUAL EXPENSES (as a percentage of Fund average net
assets).
The management fees for each Fund are based on a percentage
of that Fund's assets under management. The fees below
represent the amounts payable to the investment adviser of
each of the Funds on an annual basis as of the date of this
Prospectus, plus estimated other expenses. See "The Funds"
in this Prospectus and the discussion in each Fund's
prospectus.
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES
---------- -------- -------------
<C> <S> <C> <C> <C>
ALGER AMERICAN Alger American Growth Portfolio............................. 0.75% 0.11% 0.86%
FUNDS Alger American Leveraged AllCap Portfolio................... 0.85% 0.94%(1) 1.79%
Alger American MidCap Growth Portfolio...................... 0.80% 0.17% 0.97%
Alger American Small Capitalization Portfolio............... 0.85% 0.11% 0.96%
FIDELITY FUNDS Asset Manager Portfolio..................................... 0.72% 0.08% 0.80%(2)
Equity-Income Portfolio..................................... 0.52% 0.06% 0.58%(2)
Investment Grade Bond Portfolio............................. 0.46% 0.21% 0.67%
Money Market Portfolio...................................... 0.20% 0.07% 0.27%
MFS FUNDS(3) MFS Total Return Series..................................... 0.75% 0.25%(3) 1.00%(3)
MFS Utilities Series........................................ 0.75% 0.25%(3) 1.00%(3)
MFS World Governments Series................................ 0.75% 0.25%(3) 1.00%(3)
NEUBERGER & BERMAN AMT Balanced Portfolio...................................... 0.80% 0.17% 0.97%
FUNDS(4) AMT Limited Maturity Bond Portfolio......................... 0.60% 0.13% 0.73%
AMT Partners Portfolio(5)................................... 0.80% 0.50% 1.30%
QUEST FOR VALUE Quest Global Equity Portfolio............................... 0.75% 0.50% 1.25%
FUNDS(6) Quest Managed Portfolio..................................... 0.60% 0.06% 0.66%
Quest Small Cap Portfolio................................... 0.60% 0.14% 0.74%
</TABLE>
1 Includes 0.75% estimated interest expense attributable to borrowing.
2 A portion of the brokerage commissions the Portfolio paid was used to reduce
its expenses. Without this reduction, Total Annual Expenses would have been
0.81% for Asset Manager and 0.60% for Equity Income Portfolio.
3 The Funds' Adviser has agreed to bear, subject to reimbursement, expenses
for each of the Total Return Series and Utilities Series, such that each
Series' aggregate operating expense shall not exceed, on an annualized
basis, 1.00% of the average daily net assets of the Series from November 2,
1994 through December 31, 1996, 1.25% of the average daily net assets of the
Series from January 1, 1997 through December 31, 1998, and 1.50% of the
average daily net assets of the Series from January 1, 1999 through December
31, 2004; provided however, that this obligation may be terminated or
revised at any time. Absent this expense arrangement, "Other Expenses" and
"Total Annual Expenses" would be 0.62% and 1.37%, respectively, for the
Total Return Series, and 0.93% and 1.68%, respectively, for the Utilities
Series, based upon estimated expenses for the Series' current fiscal year.
The Adviser has agreed to bear, subject to reimbursement, until December 31,
2004, expenses of the World Governments Series such that the Series'
aggregate operating expenses do not exceed 1.00%, on an annualized basis, of
its average daily net assets. Absent this expense arrangement, "Other
Expenses" and "Total Annual Expenses" for the World Governments Series would
be 0.63% and 1.38%, respectively.
4 Until May 1, 1995, all of these Portfolios had a Distribution Plan ("Plan")
pursuant to Rule 12b-1 which provided for the reimbursement of N&B
Management for certain Trust distribution expenses up to a maximum of 0.25%
on an annual basis of each Portfolio's average daily net assets. The "Total
Annual Expenses" shown here for each AMT Portfolio would be increased by
0.02% if the 12b-1 fees for the months of January through April, 1995 were
taken into account.
5 Other Expenses, and therefore Total Annual Expenses, have been estimated and
are annualized for the Partners Portfolio.
6 The expenses for the Quest Managed, Small Cap and Global Equity Portfolios
will be voluntarily limited by Quest for Value Advisors so that annualized
operating fund expenses do not exceed 0.66%, 0.74%, and 1.25% for the Quest
Managed, Small Cap and Global Equity Portfolios, respectively, through
December 31, 1995. Moreover, absent any future agreement by Quest Advisors
to limit expenses of the portfolios of Quest for Value Accumulation Trust as
delineated above, Quest Advisors will reimburse Quest for Value Accumulation
Trust for the amount, if any, by which the aggregate ordinary operating
expenses of any portfolio incurred by Quest for Value Accumulation Trust in
any calendar year exceed the most restrictive expense limitations (currently
2 1/2% of the first $30 million of assets, 2% of the next $70 million of
assets and 1 1/2% of the remaining average net assets) then in effect under
any state securities law or regulation. Without such expense limitations, it
is estimated that the "Management Fees," "Other Expenses" and "Total
Portfolio Annual Expenses" incurred for the fiscal year ended December 31,
1995 are estimated to be: .60%, .22% and .82%, respectively for the Managed
Portfolio; .60%, .55% and 1.15%, respectively for the Small Cap Portfolio;
and .75%, 6.28% and 7.03%, respectively for the Global Equity Portfolio.
Variations in the actual amount of average assets in any of these Portfolios
during 1995 can cause significant variations in expenses expressed as a
percentage of that Portfolio's average net assets. It is estimated by Quest
management that by the end of 1995, the net assets of each of these
Portfolios will be sufficient such that the total annual expenses of each
Portfolio will, on an annualized basis, be approximately equal to, if not
less than, the voluntary limits.
9
<PAGE>
The purpose of the foregoing Table on page 9 of this
Prospectus is to assist the Contract Owner in understanding
the various costs and expenses that a Contract Owner will
incur, directly or indirectly. For additional information,
see the discussion in each Fund's prospectus. Premium tax
equivalents and charges for the Optional Death Benefit(s),
if elected, are not reflected in the Table, though they may
apply.
EXAMPLES
The Contract Owner would pay the following expenses on a
$1,000 investment, assuming a 5% annual return on assets,
and assuming all Premium Payments are allocated to the
Variable Account:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
1. IF THE CONTRACT IS SURRENDERED AT THE END OF THE APPLICABLE TIME
PERIOD:
Alger Small Capitalization Portfolio....................... $84 $117 $154 $274
Alger Leveraged AllCap Portfolio........................... $92 $142 $194 $353
Alger MidCap Growth Portfolio.............................. $84 $118 $154 $275
Alger Growth Portfolio..................................... $83 $114 $149 $264
Fidelity VIP Equity-Income Portfolio....................... $80 $106 $134 $235
Fidelity VIP Money Market Portfolio........................ $77 $ 96 $118 $202
Fidelity VIP II Investment Grade Bond Portfolio............ $81 $109 $139 $244
Fidelity VIP II Asset Manager Portfolio.................... $82 $113 $145 $257
MFS Total Return Series.................................... $84 $119 $156 $278
MFS Utilities Series....................................... $84 $119 $156 $278
MFS World Governments Series............................... $84 $119 $156 $278
AMT Balanced Portfolio..................................... $84 $118 $154 $275
AMT Limited Maturity Bond Portfolio........................ $82 $110 $142 $250
AMT Partners Portfolio..................................... $87 $128 $170 $307
Quest For Value Global Equity Portfolio.................... $87 $126 $168 $302
Quest For Value Managed Portfolio.......................... $81 $108 $138 $243
Quest For Value Small Cap Portfolio........................ $82 $111 $142 $251
</TABLE>
2. IF THE CONTRACT IS NOT SURRENDERED OR IF IT IS
ANNUITIZED:
<TABLE>
<S> <C> <C> <C> <C>
Alger Small Capitalization Portfolio....................... $24 $ 75 $128 $274
Alger Leveraged AllCap Portfolio........................... $33 $ 99 $169 $353
Alger MidCap Growth Portfolio.............................. $24 $ 75 $129 $275
Alger Growth Portfolio..................................... $23 $ 72 $123 $264
Fidelity VIP Equity-Income Portfolio....................... $21 $ 63 $109 $235
Fidelity VIP Money Market Portfolio........................ $17 $ 54 $ 93 $202
Fidelity VIP II Investment Grade Bond Portfolio............ $21 $ 66 $113 $244
Fidelity VIP II Asset Manager Portfolio.................... $23 $ 70 $120 $257
MFS Total Return Series.................................... $25 $ 76 $130 $278
MFS Utilities Series....................................... $25 $ 76 $130 $278
MFS World Governments Series............................... $25 $ 76 $130 $278
AMT Balanced Portfolio..................................... $24 $ 75 $129 $275
AMT Limited Maturity Bond Portfolio........................ $22 $ 68 $116 $250
AMT Partners Portfolio..................................... $28 $ 85 $145 $307
Quest For Value Global Equity Portfolio.................... $27 $ 84 $142 $302
Quest For Value Managed Portfolio.......................... $21 $ 66 $113 $243
Quest For Value Small Cap Portfolio........................ $22 $ 68 $117 $251
</TABLE>
The preceding tables are intended to assist the Owner in
understanding the costs and expenses borne, directly or
indirectly, by Premium Payments allocated to the Variable
Account. These include the expenses of the Funds, certain of
which are subject to expense reimbursement arrangements
which may be subject to change. See the Funds' Prospectuses.
In addition to the expenses listed above, charges for
premium tax equivalents and charges for any Optional Death
Benefit(s) selected may be applicable.
10
<PAGE>
These examples reflect the annual $35 Annuity Account Fee as
an annual charge of .14% of assets, based upon an
anticipated average Annuity Account Value of $25,000.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
CONDENSED FINANCIAL INFORMATION
At the date of this Prospectus, the Variable Account had not
yet commenced operations. The starting Accumulation Unit
value for each Sub-Account will be $10.00.
THE COMPANY, THE VARIABLE ACCOUNT AND THE FIXED ACCOUNT
THE COMPANY. The Company is a stock life insurance company
incorporated under the laws of Connecticut in 1981. Its Home
Office mailing address is Hartford, Connecticut 06152,
Telephone (860) 726-6000. It has obtained authorization to
do business in the District of Columbia and all states
except Alabama, California, Illinois, New York and North
Carolina. The Company issues group and individual life
insurance policies and annuities. The Company is a
wholly-owned subsidiary of Connecticut General Life
Insurance Company which is a wholly-owned subsidiary of
Connecticut General Corporation, Bloomfield, Connecticut.
Connecticut General Corporation is wholly-owned by CIGNA
Holdings Inc., Philadelphia, Pennsylvania which is in turn
wholly-owned by CIGNA Corporation, Philadelphia,
Pennsylvania. Connecticut General Corporation is the holding
company of various insurance companies, one of which is
CIGNA Life Insurance Company.
THE VARIABLE ACCOUNT. The Variable Account was established
by the Company as a separate account on October 11, 1994
pursuant to a resolution of its Board of Directors. Under
Connecticut insurance law, the income, gains or losses of
the Variable Account are credited to or charged against the
assets of the Variable Account without regard to the other
income, gains, or losses of the Company. Although that
portion of the assets maintained in the Variable Account
equal to the reserves and other contract liabilities with
respect to the Variable Account will not be charged with any
liabilities arising out of any other business conducted by
the Company, all obligations arising under the Contracts,
including the promise to make annuity payments, are general
corporate obligations of the Company.
The Variable Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment
trust under the Investment Company Act of 1940, as amended
("the 1940 Act") and meets the definition of a separate
account under the federal securities laws. Registration with
the Commission does not involve supervision of the
management or investment practices or policies of the
Variable Account or of the Company by the Commission.
The assets of the Variable Account are divided into
Sub-Accounts. Each Sub-Account invests exclusively in shares
of a specific Fund. All amounts allocated to the Variable
Account will be used to purchase Fund shares as designated
by the Owner at their net asset value. Any and all
distributions made by the Fund with respect to the shares
held by the Variable Account will be reinvested to purchase
additional shares at their net asset value. Deductions from
the Variable Account for cash withdrawals, annuity payments,
death benefits, annuity account fees, mortality and expense
risk charges, administrative expense charges, the cost of
any Optional Death Benefit(s) and any applicable taxes will,
in effect, be made by redeeming the number of Fund shares at
their net asset value equal in total value to the amount to
be deducted. The Variable Account will purchase and redeem
Fund shares on an aggregate basis and will be fully invested
in Fund shares at all times.
THE FIXED ACCOUNT._THE FIXED ACCOUNT IS MADE UP OF THE
GENERAL ASSETS OF THE COMPANY OTHER THAN THOSE ALLOCATED TO
ANY SEPARATE ACCOUNT. THE FIXED ACCOUNT IS PART OF THE
COMPANY'S GENERAL ACCOUNT. BECAUSE OF APPLICABLE EXEMPTIVE
AND EXCLUSIONARY
11
<PAGE>
PROVISIONS, INTERESTS IN THE FIXED ACCOUNT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933
ACT"), AND NEITHER THE FIXED ACCOUNT NOR THE COMPANY'S
GENERAL ACCOUNT HAS BEEN REGISTERED UNDER THE 1940 ACT.
THEREFORE, NEITHER THE FIXED ACCOUNT NOR ANY INTEREST
THEREIN IS GENERALLY SUBJECT TO REGULATION UNDER THE
PROVISIONS OF THE 1933 ACT OR THE 1940 ACT. ACCORDINGLY, THE
COMPANY HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES
AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN
THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.
The initial Premium Payment and any subsequent Premium
Payment(s) will be allocated to Sub-Accounts available in
connection with the Fixed Account to the extent elected by
the Owner at the time such payment is made. In addition, all
or part of the Owner's Annuity Account Value may be
transferred among Sub-Accounts available under the Contract
as described under "Transfer of Contract Values between
Sub-Accounts." Instead of the Owner's assuming all of the
investment risk as is the case for Premium Payments
allocated to the Variable Account, the Company guarantees it
will credit interest of at least 3% per year to amounts
allocated to the Fixed Account.
Assets supporting amounts allocated to Sub-Accounts within
the Fixed Account become part of the Company's general
account assets and are available to fund the claims of all
creditors of the Company. All of the Company's general
account assets will be available to fund benefits under the
Contracts. The Owner does not participate in the investment
performance of the assets of the Fixed Account or the
Company's general account.
The Company will invest the assets of the general account in
those assets chosen by the Company and allowed by applicable
state laws regarding the nature and quality of investments
that may be made by life insurance companies and the
percentage of their assets that may be committed to any
particular type of investment. In general, these laws permit
investments, within specified limits and subject to certain
qualifications, in federal, state and municipal obligations,
corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
If the Account Value within a Fixed Account Sub-Account is
maintained for the duration of the Sub-Account's Guaranteed
Period, the Company guarantees that it will credit interest
to that amount at the guaranteed rate specified for the
Sub-Account which may but need not be more than 3% per year.
Any amount withdrawn from the Sub-Account prior to the
expiration of the Sub-Account's Guaranteed Period is subject
to a Market Value Adjustment (see "Market Value Adjustment")
and a Deferred Sales Charge, if applicable. The Company
guarantees, however, that a Contract will be credited with
interest at a rate of not less than 3% per year, compounded
annually, on amounts allocated to any Fixed Account
Sub-Account, regardless of any application of the Market
Value Adjustment (that is, the Market Value Adjustment will
not reduce the amount available for surrender, withdrawal or
transfer to an amount less than the initial amount allocated
or transferred to the Fixed Account Sub-Account plus
interest of 3% per year). The Company reserves the right to
defer the payment or transfer of amounts withdrawn from the
Fixed Account for a period not to exceed six (6) months from
the date a proper request for surrender, withdrawal or
transfer is received by the Company.
12
<PAGE>
THE FUNDS
Each of the seventeen Sub-Accounts of the Variable Account
is invested solely in shares of one of the seventeen Funds
available as funding vehicles under the Contracts. Each of
the Funds is a series of one of six Massachusetts or
Delaware business trusts, collectively referred to herein as
the "Trusts", each of which is registered as an open-end,
diversified management investment company under the 1940
Act.
The Trusts and their investment advisers and distributors
are:
Alger American Fund ("Alger Trust"), managed by Fred
Alger Management, Inc., 75 Maiden Lane, New York, NY
10038; and distributed by Fred Alger & Company,
Incorporated, 30 Montgomery Street, Jersey City, NJ
07302;
Variable Insurance Products Fund I ("Fidelity Trust I"),
and Variable Insurance Products Fund II ("Fidelity Trust
II"), managed by Fidelity Management & Research Company
and distributed by Fidelity Distribution Corporation, 82
Devonshire Street, Boston, MA 02103;
MFS Variable Insurance Trust ("MFS Trust"), managed by
Massachusetts Financial Services Company and distributed
by MFS Investor Services, Inc., 500 Boylston Street,
Boston, MA 02116;
Neuberger & Berman Advisers Management Trust ("Neuberger
& Berman AMT Trust"), managed and distributed by
Neuberger & Berman Management Incorporated, 605 Third
Avenue, New York, NY 10158-0006;
Quest for Value Accumulation Trust ("Quest for Value
Trust"), managed by Quest for Value Advisors and
distributed by Quest for Value Distributors, One World
Financial Center, New York, NY 10281.
Four Funds of ALGER Trust are available under the Contracts:
Alger American Growth Portfolio;
Alger American Leveraged AllCap Portfolio;
Alger American MidCap Growth Portfolio;
Alger American Small Capitalization Portfolio.
Two Funds of FIDELITY Trust I are available under the
Contracts:
Equity-Income Portfolio ("Fidelity Equity-Income
Portfolio").
Money Market Portfolio ("Fidelity Money Market Fund").
Two Funds of FIDELITY Trust II are available under the
Contracts:
Asset Manager Portfolio ("Fidelity Asset Manager
Portfolio");
Investment Grade Bond Portfolio ("Fidelity Bond
Portfolio").
Three Funds of MFS Trust are available under the Contracts:
MFS Total Return Series;
MFS Utilities Series;
MFS World Governments Series.
Three Funds of NEUBERGER & BERMAN AMT Trust are available
under the Contracts:
AMT Balanced Portfolio;
AMT Limited Maturity Bond Portfolio;
AMT Partners Portfolio.
Three Funds of QUEST FOR VALUE Trust are available under the
Contracts:
Quest Global Equity Portfolio;
Quest Managed Portfolio;
Quest Small Cap Portfolio.
13
<PAGE>
The investment advisory fees charged the Funds by their
advisers are shown in the Fee Table at page 9 of this
Prospectus.
There follows a brief description of the investment
objective of each Fund. There can be no assurance that any
of the stated investment objectives will be achieved.
ALGER AMERICAN GROWTH PORTFOLIO: Seeks long-term capital
appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with
total market capitalization of $1 billion or greater.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO: Seeks long-term
capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, with the ability to
engage in leveraging (up to one-third of assets) and options
and futures transactions.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO: Seeks long-term
capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of
companies with total market capitalization between $750
million and $3.5 billion.
ALGER AMERICAN SMALL CAP PORTFOLIO: Seeks long-term capital
appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with
total market capitalization of less than $1 billion.
FIDELITY ASSET MANAGER PORTFOLIO: Seeks high total return
with reduced risk over the long-term by allocating its
assets among domestic and foreign stocks, bonds and short-
term fixed-income instruments.
FIDELITY BOND PORTFOLIO: Seeks as high a level of current
income as is consistent with the preservation of capital by
investing in a broad range of investment-grade fixed-income
securities, with a dollar-weighted average portfolio
maturity of ten years or less.
FIDELITY EQUITY-INCOME PORTFOLIO: Seeks reasonable income by
investing primarily in income-producing equity securities,
with some potential for capital appreciation, seeking to
exceed the composite yield on the securities comprising the
Standard and Poor's 500 Composite Stock Price Index.
FIDELITY MONEY MARKET FUND: Seeks as high a level of current
income as is consistent with preserving capital and
providing liquidity, through investment in high quality U.S.
dollar denominated money market securities of domestic and
foreign issuers.
MFS TOTAL RETURN SERIES: Seeks primarily to obtain
above-average income, (compared to a portfolio entirely
invested in equity securities) consistent with the prudent
employment of capital, and secondarily to provide a
reasonable opportunity for growth of capital and income.
MFS UTILITIES SERIES: Seeks capital growth and current
income (income above that obtainable from a portfolio
invested entirely in equity securities) by investing, under
normal circumstances, at least 65% of its assets in equity
and debt securities of utility companies.
MFS WORLD GOVERNMENTS SERIES: Seeks not only preservation,
but also growth, of capital together with moderate current
income through a professionally managed, internationally
diversified portfolio consisting primarily of debt
securities and to a lesser extent equity securities.
AMT BALANCED PORTFOLIO: Seeks long-term capital growth and
reasonable current income without undue risk to principal.
AMT LIMITED MATURITY BOND PORTFOLIO: Seeks the highest
current income consistent with low risk to principal and
liquidity; and secondarily, enhanced total return through
capital appreciation when market factors, such as falling
interest rates and rising bond prices, indicate that capital
appreciation may be available without significant risk to
principal.
AMT PARTNERS PORTFOLIO: Seeks capital growth. Invests
primarily in common stocks of established companies, using
the value-oriented investment approach. The Portfolio
14
<PAGE>
seeks capital growth through an investment approach that is
designed to increase capital with reasonable risk. Its
investment program seeks securities believed to be
undervalued based on strong fundamentals such as low
price-to-earnings ratios, consistent cash flow, and support
from asset values.
QUEST GLOBAL EQUITY PORTFOLIO: Seeks long-term capital
appreciation through a global investment strategy primarily
involving equity securities.
QUEST MANAGED PORTFOLIO: Seeks growth of capital over time
through investment in a portfolio of common stocks, bonds
and cash equivalents, the percentage of which will vary
based on management's assessments of relative investment
values.
QUEST SMALL CAP PORTFOLIO: Seeks capital appreciation
through investments in a diversified portfolio of equity
securities of companies with market capitalizations of under
$1 billion.
The AMT Partners Portfolio, Fidelity Equity-Income
Portfolio, Fidelity Asset Manager Portfolio, MFS Total
Return Series, MFS Utilities Series, MFS World Governments
Series, Quest for Value Global Equity Portfolio, Quest for
Value Managed Portfolio, and the Quest for Value Small Cap
Portfolio funds may invest in non-investment grade, high
yield, high-risk debt securities (commonly referred to as
"junk bonds"), as detailed in the individual fund
prospectuses.
GENERAL
There is no assurance that the investment objective of any
of the Funds will be met. Contract Owners bear the complete
investment risk for Annuity Account Values allocated to a
Variable Account Sub-Account. Each such Sub-Account involves
inherent investment risk, and such risk varies significantly
among the Sub-Accounts. Contract Owners should read each
Fund's prospectus carefully and understand the Funds'
relative degrees of risk before making or changing
investment choices. Additional Funds may, from time to time,
be made available as investments to underlie the Contracts.
However, the right to make such selections will be limited
by the terms and conditions imposed on such transactions by
the Company (See "Purchase Payments and Contract Value --
Allocation of Purchase Payments").
SUBSTITUTION OF SECURITIES
If the shares of any Fund should no longer be available for
investment by the Variable Account or if, in the judgment of
the Company, further investment in such shares should become
inappropriate in view of the purpose of the Contracts, the
Company may substitute shares of another Fund. No
substitution of securities in any Sub-Account may take place
without prior approval of the Commission and under such
requirements as it may impose.
VOTING RIGHTS
In accordance with its view of present applicable law, the
Company will vote the shares of each Fund held in the
Variable Account at special meetings of the shareholders of
the particular Trust in accordance with written instructions
received from persons having the voting interest in the
Variable Account. The Company will vote shares for which it
has not received instructions, as well as shares
attributable to it, in the same proportion as it votes
shares for which it has received instructions. The Trusts do
not hold regular meetings of shareholders. Shareholder votes
take place whenever state law or the 1940 Act so require,
for example on certain elections of Boards of Trustees, the
initial approval of investment advisory contracts and
changes in investment objectives and fundamental investment
policies.
15
<PAGE>
The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the Company not
more than sixty (60) days prior to the meeting of the
particular Trust. Voting instructions will be solicited by
written communication at least fourteen (14) days prior to
the meeting.
The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of the Company and
other life insurance companies. The Trusts do not foresee
any disadvantage to Contract Owners arising out of the fact
that shares may be made available to separate accounts which
are used in connection with both variable annuity and
variable life insurance products. Nevertheless, the Trusts'
Boards intend to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise
and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of
the separate accounts might withdraw its investment in a
Fund. This might force a Fund to sell portfolio securities
at disadvantageous prices.
PREMIUM PAYMENTS AND CONTRACT VALUE
PREMIUM PAYMENTS
The Contracts may be purchased under a flexible premium
payment plan. Premium Payments are payable in the frequency
and in the amount selected by the Contract Owner. The
initial Premium Payment is due on the Effective Date. It
must be at least $2,500 ($2,000 for an Individual Retirement
Annuity under Section 408 of the Code). Subsequent Premium
Payments must be at least $100. These minimum amounts are
not waived for Qualified Plans. The Company reserves the
right to decline any application or Premium Payment. A
Premium Payment in excess of $1 million requires preapproval
by the Company.
The Company may, at its sole discretion, waive the minimum
payment requirements.
The Contract Owner may elect to increase, decrease or change
the frequency of Premium Payments.
ALLOCATION OF PREMIUM PAYMENTS
Premium Payments are allocated to one or more of the
appropriate Sub-Accounts within the Variable Account and
Fixed Account as selected by the Contract Owner. For each
Variable Account Sub-Account, the Premium Payments are
converted into Accumulation Units. The number of
Accumulation Units credited to the Contract is determined by
dividing the Premium Payment allocated to the Sub-Account by
the value of the Accumulation Unit for the Sub-Account.
The Company will allocate the initial Premium Payment
directly to the Sub-Account(s) selected by the Owner unless
state law requires, during the right-to-examine period, a
refund of Premium Payments rather than Annuity Account
Value.
Transfers do not necessarily affect the allocation
instructions for payments. Subsequent payments will be
allocated as directed by the Owner; if no direction is
given, the allocation will be that which has been most
recently directed for payments by the Owner. The Owner may
change the allocation of future payments without fee,
penalty or other charge upon written notice to the Variable
Products Service Center. A change will be effective for
payments received on or after receipt of the written notice
of change.
Not less than 10% of any Premium Payment at the time of any
allocation may be allocated to a single Sub-Account, and no
allocation can be made which would result in a Sub-Account
value of less than $500.
For initial Premium Payments, if the application for a
Contract is in good order, the Company will apply the
Premium Payment to the Variable Account and credit the
16
<PAGE>
Contract with Accumulation Units within two business days of
receipt at the Accumulation Unit Value for the Valuation
Period during which the Premium Payment is accepted unless
state law requires, during the right-to-examine period, a
refund of Premium Payments rather than Annuity Account
Value.
If the application for a Contract is not in good order, the
Company will attempt to get it in good order or the Company
will return the application and the Premium Payment within
five business days. The Company will not retain a Premium
Payment for more than five business days while processing an
incomplete application unless it has been so authorized by
the purchaser.
For each subsequent Premium Payment, the Company will apply
such payment to the Variable Account and credit the Contract
with Accumulation Units at the Accumulation Unit Value for
the Valuation Period during which each such payment was
received in good order.
FIXED ACCUMULATION VALUE. The fixed accumulation value of an
Annuity Account, if any, for any Valuation Period is equal
to the sum of the values of all Fixed Account Sub-Accounts
which are part of the Annuity Account for such Valuation
Period.
GUARANTEED PERIODS. The Owner may elect to allocate Premium
Payments to one or more Sub-Accounts within the Fixed
Account. Each Sub-Account will maintain a Guaranteed Period
with a duration of one, three, five, seven or ten years.
Every Premium Payment allocated to a Fixed Account
Sub-Account starts a new Sub-Account with its own duration
and Guaranteed Interest Rate. The duration of the Guaranteed
Period will affect the Guaranteed Interest Rate of the
Sub-Account. Initial Premium Payments and subsequent Premium
Payments, or portions thereof, and transferred amounts
allocated to a Fixed Account Sub-Account, less any amounts
subsequently withdrawn, will earn interest at the Guaranteed
Interest Rate during the particular Sub-Account's Guaranteed
Period unless prematurely withdrawn prior to the end of the
Guaranteed Period. Initial Sub-Account Guaranteed Periods
begin on the date a Premium Payment is accepted or, in the
case of a transfer, on the effective date of the transfer,
and end on the date after the number of calendar years in
the Sub-Account's Guaranteed Period elected from the date on
which the amount was allocated to the Sub-Account (the
"Expiration Date"). Any portion of Annuity Account Value
allocated to a specific Sub-Account with a specified
Expiration Date (including interest earned thereon) will be
referred to herein as a "Guaranteed Period Amount." Interest
will be credited daily at a rate equivalent to the compound
annual rate. As a result of renewals and transfers of
portions of the Annuity Account Value described under
"Transfer of Contract Values between Sub-Accounts" below,
which will begin new Sub-Account Guaranteed Periods, amounts
allocated to Sub-Accounts of the same duration may have
different Expiration Dates. Thus each Guaranteed Period
Amount will be treated separately for purposes of
determining any applicable Market Value Adjustment (see
"Market Value Adjustment").
The Company will notify the Owner in writing at least 60
days prior to the Expiration Date for any Guaranteed Period
Amount. A new Sub-Account Guaranteed Period of the same
duration as the previous Sub-Account Guaranteed Period will
commence automatically at the end of the previous Guaranteed
Period unless the Company receives, following such
notification but prior to the end of such Guaranteed Period,
a written election by the Owner to transfer the Guaranteed
Period Amount to a different Fixed Account Sub-Account or to
a Variable Account Sub-Account from among those being
offered by the Company at such time. Transfers of any
Guaranteed Period Amount which become effective upon the
expiration of the applicable Guaranteed Period are not
subject to the twelve (or three) transfers per Contract Year
limitations or the additional Fixed Sub-Account transfer
restrictions (see "Transfer of Contract Values between Sub-
Accounts").
17
<PAGE>
GUARANTEED INTEREST RATES. The Company periodically will
establish an applicable Guaranteed Interest Rate for each of
the Sub-Account Guaranteed Periods within the Fixed Account.
Current Guaranteed Interest Rates may be changed by the
Company frequently or infrequently depending on interest
rates on investments available to the Company and other
factors as described below, but once established, rates will
be guaranteed for the entire duration of the respective
Sub-Account's Guaranteed Period. However, any amount
withdrawn from the Sub-Account may be subject to any
applicable withdrawal charges, Annuity Account Fees, Market
Value Adjustment, premium taxes or other fees. Amounts
transferred out of a Fixed Account Sub-Account prior to the
end of the Guaranteed Period will be subject to the Market
Value Adjustment.
The Guaranteed Interest Rate will not be less than 3% per
year compounded annually, regardless of any application of
the Market Value Adjustment. The Company has no specific
formula for determining the rate of interest that it will
declare as a Guaranteed Interest Rate, as these rates will
be reflective of interest rates available on the types of
debt instruments in which the Company intends to invest
amounts allocated to the Fixed Account (see "The Fixed
Account"). In addition, the Company's management may
consider other factors in determining Guaranteed Interest
Rates for a particular Sub-Account including: regulatory and
tax requirements; sales commissions and administrative
expenses borne by the Company; general economic trends; and
competitive factors. THERE IS NO OBLIGATION TO DECLARE A
RATE IN EXCESS OF 3% PER YEAR; THE OWNER ASSUMES THE RISK
THAT DECLARED RATES WILL NOT EXCEED 3% PER YEAR. THE COMPANY
HAS COMPLETE DISCRETION TO DECLARE ANY RATE, SO LONG AS THAT
RATE IS AT LEAST 3% PER YEAR.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a program which, if elected,
enables a Contract Owner to systematically allocate
specified dollar amounts from the Money Market Sub-Account
to the Contract's other Sub-Accounts at regular intervals.
By allocating on a regularly scheduled basis as opposed to
allocating the total amount at one particular time, a
Contract Owner may be less susceptible to the impact of
market fluctuations.
Dollar Cost Averaging may be selected by establishing a
Money Market Sub-Account value of at least $12,000. The
minimum amount per month to allocate is $1,000. All Dollar
Cost Averaging transfers will be made effective the
twentieth of the month (or the next Valuation Date if the
twentieth of the month is not a Valuation Date). Election
into this program may occur at any time by properly
completing the Dollar Cost Averaging election form,
returning it to the Company so it is received by the tenth
of the month, to be effective that month, and insuring that
sufficient value is in the Money Market Sub-Account.
Transfers to or from the Fixed Account are not permitted
under Dollar Cost Averaging.
Dollar Cost Averaging will terminate when any of the
following occurs: (1) the number of designated transfers has
been completed; (2) the value of the Money Market Sub-
Account is insufficient to complete the next transfer; (3)
the Owner requests termination in writing and such writing
is received by the tenth of the month in order to cancel the
transfer scheduled to take effect that month; or (4) the
Contract is surrendered.
The Dollar Cost Averaging program may not be active
following the Annuity Date. There is no current charge for
Dollar Cost Averaging but the Company reserves the right to
charge for this program. In the event there are additional
transfers, the transfer fee may be charged. The Company does
not intend to profit from any such charge.
18
<PAGE>
CONTRACT VALUE
The value of the Contract is the sum of the values
attributable to the Contract for each
Fixed and Variable Sub-Account. The value of each Variable
Sub-Account is determined by multiplying the number of
Accumulation Units attributable to the Contract in the Sub-
Account by the value of an Accumulation Unit for the
Sub-Account.
ACCUMULATION UNIT
Premium Payments allocated to the Variable Account are
converted into Accumulation Units. This is done by dividing
each Premium Payment by the value of an Accumulation Unit
for the Valuation Period during which the Premium Payment is
allocated to the Variable Account. The Accumulation Unit
value for each Sub-Account will be set initially at $10. It
may increase or decrease from Valuation Period to Valuation
Period. The Accumulation Unit value for any later Valuation
Period is determined by multiplying the Accumulation Unit
Value for that Sub-Account for the preceding Valuation
Period by the Net Investment Factor for the current
Valuation Period. The Net Investment Factor is calculated as
follows:
The Net Investment Factor for any Variable Account
Sub-Account for any Valuation Period is determined by
dividing (a) by (b) and then subtracting (c) from the
result, where:
(a) Is the net result of:
(1)the net asset value (as described in the prospectus
for the Fund) of a Fund share held in the Variable
Account Sub-Account determined as of the end of the
Valuation Period, plus
(2)the per share amount of any dividend or other
distribution declared by the Fund on the shares held
in the Variable Account Sub-Account if the
"ex-dividend" date occurs during the Valuation Period,
plus or minus
(3)a per share credit or charge with respect to any taxes
paid or reserved for by the Company during the
Valuation Period which are determined by the Company
to be attributable to the operation of the Variable
Account Sub-Account;
(b) is the net asset value of a Fund share held in the
Variable Account Sub-Account determined as of the end of
the preceding Valuation Period; and
(c) is the asset charge factor determined by the Company for
the Valuation Period to reflect the charges for assuming
the mortality and expense risks and for administrative
expenses.
The asset charge factor for any Valuation Period is equal to
the daily asset charge factor multiplied by the number of
24-hour periods in the Valuation Period.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from Annuity Account
Values and the Variable Account. These charges and
deductions are:
DEDUCTION FOR CONTINGENT DEFERRED SALES CHARGE (SALES LOAD)
Upon a partial withdrawal or full surrender, a Contingent
Deferred Sales Charge (sales load) will be calculated and
will be deducted from the Annuity Account Value. This Charge
reimburses the Company for expenses incurred in connection
with the promotion, sale and distribution of the Contracts.
The Contingent Deferred Sales Charge applies only to those
Premium Payments received within seven (7) years of the date
of partial withdrawal or full surrender. In calculating the
Contingent Deferred Sales Charge, Premium Payments are
allocated to the amount surrendered or withdrawn on a
first-in, first-out basis. The amount of the Contingent
Deferred Sales Charge is calculated by:
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<PAGE>
(a) allocating Premium Payments to the amount surrendered;
(b) multiplying each allocated Premium Payment that has been
held under the Contract for the period shown below by the
charge shown below:
<TABLE>
<CAPTION>
YEARS SINCE PAYMENT CHARGE
------------------- -------
<S> <C>
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0
</TABLE>
and (c) adding the products of each multiplication in (b)
above. The charge will not exceed 7% of the Premium
Payments. Any applicable negative Market Value Adjustment
and Annuity Account Fee will be deducted before application
of the Contingent Deferred Sales Charge. The charge is not
imposed on any death benefit paid or upon amounts applied to
an annuity option.
A Contract Owner may, not more frequently than once each
Contract Year, make a withdrawal of up to fifteen percent
(15%) of Premium Payments, or any remaining portion thereof,
without incurring a Contingent Deferred Sales Charge. The
earliest Premium Payments remaining in the Contract will be
deemed withdrawn first under this Fifteen Percent Free, even
if no Contingent Deferred Sales Charge would have been
assessed on such a withdrawal. No Contingent Deferred Sales
Charge will be deducted from Premium Payments which have
been held under the Contract for more than seven (7)
Contract Years or as annuity payments. The Company may also
eliminate or reduce the Contingent Deferred Sales Charge
under the Company procedures then in effect.
For a partial withdrawal, unless the Owner designates
otherwise, the Contingent Deferred Sales Charge will be
deducted proportionately from the Sub-Account(s) from which
the withdrawal is to be made by cancelling Accumulation
Units from each applicable Sub-Account in the ratio that the
value of each Sub-Account bears to the total of the values
of the Sub-Accounts from which the partial withdrawal is
made. If the value(s) of such Sub-Account(s) are
insufficient, the amount payable on the withdrawal will be
net of any remaining Contingent Deferred Sales Charges
unless the Owner and the Company agree otherwise.
Commissions will be paid to broker-dealers who sell the
Contracts. Broker-dealers will be paid commissions, up to an
amount equal to 6.50% of Premium Payments, for promotional
or distribution expenses associated with the marketing of
the Contracts. To the extent that the Contingent Deferred
Sales Charge is insufficient to cover the actual cost of
distribution, the Company may use any of its corporate
assets, including potential profit which may arise from the
Mortality and Expense Risk Charge, to make up any
difference.
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
The Company deducts on each Valuation Date a Mortality and
Expense Risk Charge which is equal, on an annual basis, to
1.20% of the average daily net assets of the Variable
Account (consisting of approximately .70% for mortality
risks and approximately .50% for expense risks). The
mortality risks assumed by the Company arise from its
contractual obligation to make annuity payments after the
Annuity Date for the life of the Annuitant in accordance
with annuity rates guaranteed in the Contracts. The expense
risk assumed by the Company is that all actual expenses
involved in administering the Contracts, including Contract
maintenance costs, administrative costs, mailing costs,
20
<PAGE>
data processing costs, legal fees, accounting fees, filing
fees, and the costs of other services may exceed the amount
recovered from the Annuity Account Fee and the
Administrative Expense Charge.
If the Mortality and Expense Risk Charge is insufficient to
cover the actual costs, the loss will be borne by the
Company. Conversely, if the amount deducted proves more than
sufficient, the excess will be a profit to the Company. The
Company expects to profit from this charge.
The Mortality and Expense Risk Charge is guaranteed by the
Company and cannot be increased.
DEDUCTION FOR ADMINISTRATIVE EXPENSE CHARGE
The Company deducts on each Valuation Date an Administrative
Expense Charge which is equal, on an annual basis, to 0.10%
of the average daily net assets of the Variable Account.
This charge is to reimburse the Company for a portion of its
expenses in administering the Contracts. This charge is
guaranteed by the Company and cannot be increased, and the
Company will not derive a profit from this charge.
DEDUCTION FOR ANNUITY ACCOUNT FEE
The Company deducts an annual Annuity Account Fee of $35
from the Annuity Account Value on the last Valuation Date of
each Contract Year. This charge is to reimburse the Company
for a portion of its administrative expenses (see above).
Prior to the Annuity Date, this charge is deducted by
cancelling Accumulation Units from each applicable
Sub-Account in the ratio that the value of each Sub-Account
bears to the total Annuity Account Value. When the Contract
is annuitized or surrendered for its full Surrender Value on
other than a Contract Anniversary, the Annuity Account Fee
will be prorated at the time of surrender. On and after the
Annuity Date, the Annuity Account Fee will be collected
proportionately from the Sub-Account(s) on which the
Variable Annuity payment is based, prorated on a monthly
basis and will result in a reduction of the annuity
payments. The Annuity Account Fee will be waived for any
Contract Year in which the Annuity Account Value equals or
exceeds $100,000 as of the last Valuation Date of the
Contract Year.
DEDUCTION FOR PREMIUM TAX EQUIVALENTS
Premium tax equivalents or other taxes payable to a state,
municipality or other governmental entity will be charged
against Annuity Account Value. Premium taxes currently
imposed by certain states on the Contracts offered hereby
range from 0% to 3.5% of Premiums paid. Some states assess
premium taxes at the time Premium Payments are made; others
assess premium taxes at the time annuity payments begin. The
Company will, in its sole discretion, determine when taxes
have resulted from: the investment experience of the
Variable Account; receipt by the Company of the Premium
Payment(s); or commencement of annuity payments. The Company
may, at its sole discretion, pay taxes when due and deduct
an equivalent amount reflecting investment experience from
the Annuity Account Value at a later date. Payment at an
earlier date does not waive any right the Company may have
to deduct amounts at a later date.
DEDUCTION FOR INCOME TAXES
While the Company is not currently maintaining a provision
for federal income taxes, the Company has reserved the right
to establish a provision for income taxes if it determines,
in its sole discretion, that it will incur a tax as a result
of the operation of
21
<PAGE>
the Variable Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the
Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient.
DEDUCTION FOR FUND EXPENSES
There are other deductions from, and expenses paid out of,
the assets of the Funds which are described in the
accompanying Funds' prospectuses.
DEDUCTION FOR TRANSFER FEE
Prior to the Annuity Date, a Contract Owner may transfer all
or a part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any transfer
fee or charge if there have been no more than three
transfers made in the Contract Year (twelve if the Annuity
Account Value is at least $5000 at the time of a transfer.)
For additional transfers, the Company reserves the right to
deduct a transfer fee of up to $10 per transfer.
Prescheduled automatic dollar cost averaging transfers are
not counted toward the twelve (or three) transfer limit. The
Company reserves the right to charge a fee of up to $10 for
each transfer after the Annuity Date. The transfer fee at
any given time is guaranteed not to exceed $10, will not be
set at a level greater than its cost and will contain no
element of profit.
DEDUCTION FOR OPTIONAL DEATH BENEFIT
If no Optional Death Benefit is selected, the death benefit
under the Contract will be the Annuity Account Value as of
the date of payment of the death benefit. No additional
charge is imposed for that death benefit.
For an additional charge, as described below, an Optional
Death Benefit can be selected at the time the Contract is
applied for. Under each form of Optional Death Benefit, the
death benefit payable will be the greater of the Annuity
Account Value or some other amount as of the date of payment
of the death benefit. That other amount can be one or more
of
Option A. Premium Payments made, less partial withdrawals.
Option B. Premium Payments made, less partial withdrawals,
with interest compounded daily at a rate equivalent to 5%
per year during the first seven Contract Years. As of the
beginning of the eighth Contract Year, the amount of death
benefit will decrease and thereafter be equal to total
Premium Payments made, less partial withdrawals. Only
available if the Owner (or the Annuitant, if the Owner is a
non-natural person) has not reached his or her 72nd birthday
at the Effective Date.
Option C. The Annuity Account Value on the seven-year
Contract Anniversary immediately preceding the date the
death benefit election is effective or is deemed to become
effective, adjusted for any subsequent Premium Payments and
partial withdrawals and charges made between the immediate
preceding seven-year Contract Anniversary and the date and
death benefit election is effective or is deemed to become
effective (as referenced herein, seven-year Contract
Anniversary means the seventh Contract Anniversary and each
succeeding Contract Anniversary occurring at any seven-year
interval thereafter, for example, the 14th and 21st Contract
Anniversaries).
Option D. The highest Annuity Account Value ever attained on
a Contract Anniversary date, with adjustments for any
subsequent Premium Payments and partial withdrawals made
since the last determination of such highest value.
Once an election of one or more of these Optional Death
Benefits has been made, it will remain in effect for the
life of the Contract, unless the Owner chooses, by written
notice
22
<PAGE>
to the Variable Products Service Center, to discontinue such
election. The Owner can only give one notice of
discontinuance; such notice must address the discontinuance
of one or more of the Optional Death Benefit(s) previously
chosen. If no Optional Death Benefit(s) are selected
initially, they cannot be added later, nor can the Owner
change an initial selection to add Optional Death Benefit(s)
after the Contract is issued.
At each Contract Anniversary, a charge will be made against
Annuity Account Value (prorated among the Sub-Accounts used
in the Contract, if more than one be used) for any Optional
Death Benefit in effect for all or a portion of the Contract
Year then ended. Such charge will be computed in the
following manner, assuming for the sake of illustration that
the Optional Death Benefit is in effect for the entire
Contract Year.
On the last business day of each Contract Month during the
Contract Year, the Company will calculate whether the amount
payable under any of the Optional Death Benefits in effect
on that date would exceed the Annuity Account Value on that
date. If it would not exceed the Annuity Account Value on
that date, then no charge for the Optional Death Benefit is
accrued as of that date. If it would exceed the Annuity
Account Value on that date, then a charge for the Optional
Death Benefit is accrued as of that date. That charge is
computed in accordance with mortality tables which are made
a part of the Contract reflecting the Owner's age and gender
classification (in accordance with state law) is computed on
the Amount at Risk, which is the excess of the Optional
Death Benefit over the Annuity Account Value on the last
business day of the Contract Month. If the Owner is a
corporation, partnership or other non-natural person, the
measuring life will be the Annuitant's. No deduction is
actually made from Annuity Account Value for the Optional
Death Benefit until the Contract Anniversary except upon a
full surrender or Annuitization of the Contract or upon the
payment of a Death Benefit, when the sum of any charges
accrued at the end of each Contract Month during the
Contract Year is deducted.
The annual rate per $1,000 of Amount at Risk charged for the
Optional Death Benefit(s) is set forth in the following
table:
<TABLE>
<CAPTION>
COST OF OPTIONAL DEATH
BENEFIT(S)
ANNUAL RATE PER $1,000
OF AMOUNT AT RISK
-------------------------
ATTAINED AGE MALE FEMALE UNISEX
-------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
less than 40................. $ 2.40 $ 1.99 $ 2.20
40-45........................ 3.02 2.54 2.78
46-50........................ 4.92 4.02 4.47
51-55........................ 7.30 5.70 6.50
56-60........................ 11.46 8.34 9.90
61-65........................ 17.54 11.55 14.55
66-70........................ 27.85 18.19 23.02
71-75........................ 43.30 27.57 35.44
76-80........................ 70.53 47.33 58.93
81-85........................ 117.25 87.04 102.15
86-90........................ 179.55 147.37 163.46
</TABLE>
If, for example, at the end of a Contract Month the Optional
Death Benefit (assuming payment of a death benefit on that
date) were $40,000 and the Annuity Account Value were
$30,000, the Amount at Risk would be $10,000. Suppose the
Owner (or, if applicable, the Annuitant) were a female age
60. The charge accrued for the Optional Death Benefit that
month would be 10 X $8.34, divided by 12 (reflecting
one-twelfth of a year), or $6.95. If that proved to be the
only Contract Month end during the Contract Year at which
there were an Amount at Risk, that would be the only
Optional Death Benefit charge accrued during the Contract
Year. There is no daily deduction of a percentage of
Contract Values for any Optional Death Benefit.
23
<PAGE>
OTHER CONTRACT FEATURES
OWNERSHIP
The Contract Owner has all rights and may receive all
benefits under the Contract. The Contract Owner may change
the Contract Owner at any time. If the Contract Owner dies,
a death benefit will be paid to the Beneficiary upon proof
of the Contract Owner's death. If the Owner is a
corporation, partnership or other non-natural person, the
death benefit is paid upon receipt of due proof of the
Annuitant's death. A change of Contract Owner will
automatically revoke any prior designation of Contract
Owner. A request for change must be: (1) made in writing;
and (2) received by the Company at its Variable Products
Service Center. The change will become effective as of the
date the written request is signed. A new designation of
Contract Owner will not apply to any payment made or action
taken by the Company prior to the time it was received. Any
Optional Death Benefit in effect at the time of a change of
ownership will remain in effect. The cost of the Optional
Death Benefit(s) will be based on the attained age of the
new Owner (or the Annuitant, if the new Owner is a
non-natural person).
For non-qualified contracts, in accordance with Code Section
72(u), a deferred annuity contract held by a corporation or
other entity that is not a natural person is not treated as
an annuity contract for tax purposes. Income on the contract
is treated as ordinary income received by the owner during
the taxable year. But in accordance with Code Section 72(u),
an annuity contract held by a trust or other entity as agent
for a natural person is considered held by a natural person.
ASSIGNMENT
The Contract Owner may assign the Contract at any time
during his or her lifetime. Unless provided otherwise, an
assignment will not affect the interest of any previously
indicated Beneficiary. The Company will not be bound by any
assignment until written notice is received by the Company
at its Variable Products Service Center. The Company is not
responsible for the validity of any assignment. The Company
will not be liable as to any payment or other settlement
made by the Company before such assignment has been recorded
at the Company's Variable Products Service Center.
If the Contract is issued pursuant to a Qualified Plan, it
may not be assigned, pledged or otherwise transferred except
as may be allowed under applicable law.
BENEFICIARY
The Beneficiary is named when the Contract is applied for
and, unless changed, is entitled to receive any death
benefits to be paid. Prior to the Annuity Date, death
benefits are paid to the Beneficiary on the death of the
Owner.
CHANGE OF BENEFICIARY
The Contract Owner may change a Beneficiary by filing a
written request with the Company at its Variable Products
Service Center unless an irrevocable Beneficiary designation
was previously filed. After the change is recorded, it will
take effect as of the date the request was signed. If the
request reaches the Variable Products Service Center after
the Annuitant or Contract Owner, as applicable, dies but
before any payment is made, the change will be valid. The
Company will not be liable for any payment made or action
taken before it records the change.
24
<PAGE>
ANNUITANT
The Annuitant must be a natural person. The maximum age of
the Annuitant on the Effective Date is 85 years old. The
Annuitant may be changed at any time prior to the Annuity
Date. Joint Annuitants are allowed at the time of
annuitization only, if the Company chooses to make a joint
and survivor annuity payment option available in addition to
the options provided in the Contract. The Annuitant has no
rights or privileges prior to the Annuity Date. When an
Annuity Option is elected, the amount payable as of the
Annuity Date is based on the age and gender classification
(in accordance with state law) of the Annuitant, as well as
the Option selected and the Annuity Account Value.
TRANSFER OF CONTRACT VALUES BETWEEN SUB-ACCOUNTS
Prior to the Annuity Date, the Contract Owner may transfer
all or part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any fee or
charge if there have been no more than three transfers made
in the Contract Year (twelve if the Contract Value is at
least $5000 at the time of transfer). For additional
transfers, the Company reserves the right to deduct a
transfer fee of up to $10. (See "Charges and Deductions --
Deductions for Transfer Fee") This Contract is not designed
for professional market timing organizations or other
entities using programmed and frequent transfers.
After the Annuity Date, provided a variable annuity option
was selected, the Contract Owner may make up to three
transfers between Variable Sub-Accounts in any Contract
Year.
All transfers are subject to the following:
A. The deduction of any transfer fee that may be imposed.
The transfer fee will be deducted from the amount which
is transferred if the entire amount in the Sub-Account
is being transferred, otherwise from the Sub-Account
from which the transfer is made.
B. The minimum amount which may be transferred is the
lesser of (i) $2,500 per Fixed Account Sub-Account or
$500 per Variable Account Sub-Account; or (ii) the
Contract Owner's entire interest in the Sub-Account.
C. No partial transfer will be made if the Contract Owner's
remaining Contract Value in the Sub-Account will be less
than $500.
D. Transfers will be effected during the Valuation Period
next following receipt by the Company of a written
transfer request (or by telephone, if authorized)
containing all required information. However, no
transfer may be made effective within seven calendar
days of the date on which the first annuity payment is
due. Transfers may not be permitted during the
right-to-examine period.
E. Any transfer request must clearly specify the amount
which is to be transferred and the Sub-Accounts which
are to be affected.
F. Transfers of all or a portion of any Fixed Account
Sub-Account values are subject to any applicable Market
Value Adjustment;
G. The Company reserves the right to defer transfers from
any Fixed Account Sub-Account for up to six months after
date of receipt of the transfer request;
H. Transfers involving the Variable Account Sub-Accounts
are subject to such restrictions as may be imposed by
the Funds;
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<PAGE>
I. The Company reserves the right at any time and without
prior notice to any party to terminate, suspend or
modify the transfer privileges described above.
J. After the Annuity Date, transfers may not take place
between a Fixed Annuity Option and a Variable Annuity
Option.
PROCEDURES FOR TELEPHONE TRANSFERS
Owners may effect telephone transfers in two ways. All
Owners may directly contact a service representative. Owners
may in the future also request access to an electronic
service known as a Voice Response Unit (VRU). The VRU will
permit the transfer of monies among the Sub-Accounts and
changes in the allocation of future payments. All Owners who
do not wish to have the right to conduct telephone transfers
must so indicate on the Contract application by checking the
appropriate box.
The Company will undertake reasonable procedures to confirm
that instructions communicated by telephone are genuine.
Before a service representative accepts any request, the
caller will be asked for his or her social security number
and Contract number. All calls will be recorded. A Personal
Identification Number (PIN) will be assigned to all Owners
who select VRU access. The PIN is selected by and known only
to the Owner. Proper entry of the PIN is required before any
transactions will be allowed through the VRU. Furthermore,
all transactions performed over the VRU, as well as with a
service representative, will be confirmed by the Company
through a written letter. Moreover, all VRU transactions
will be assigned a unique confirmation number which will
become part of the Contract's history. The Company is not
liable for any loss, cost or expense for action on telephone
instructions which are believed to be genuine in accordance
with these procedures.
SURRENDERS AND PARTIAL WITHDRAWALS
While the Contract is in force and before the Annuity Date,
the Company will, upon written request to the Company by the
Contract Owner, allow the surrender or Partial Withdrawal of
all or a portion of the Contract for its Surrender Value.
Such request may also be made by telephone if telephone
transfers have been previously authorized in writing.
Surrenders or Partial Withdrawals will result in the
cancellation of Accumulation Units from each applicable
Sub-Account in the ratio that the value of each Sub-Account
bears to the total Annuity Account Value, unless the
Contract Owner specifies in writing in advance which units
are to be cancelled. The Company will pay the amount of any
surrender or Partial Withdrawal within seven (7) days of
receipt of a valid request, unless the "Delay of Payments"
provision is in effect. (See "Delay of Payments and
Transfers")
Certain tax withdrawal penalties and restrictions may apply
to surrenders and partial withdrawal from Contracts. (See
"Tax Status.") Contract Owners should consult their own tax
counsel or other tax adviser regarding any surrenders and
partial withdrawals.
The Surrender Value is the Annuity Account Value for the
Valuation Period next following the Valuation Period during
which the written request to the Company for surrender is
received, reduced, in the case of full surrender, by the sum
of:
a. any applicable premium tax equivalents not previously
deducted;
b. any applicable Annuity Account Fee;
c. any applicable Contingent Deferred Sales Charge; and
d. any applicable accrued charges for the Optional Death
Benefit(s) risk
and for partial withdrawals by A and C above.
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DELAY OF PAYMENTS AND TRANSFERS
The Company reserves the right to suspend or postpone
payments or transfers for any period when:
1. the New York Stock Exchange is closed (other than
customary weekend and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of
securities held in the Variable Account is not
reasonably practicable or it is not reasonably
practicable to determine the value of the Variable
Account's net assets; or
4. during any other period when the Commission, by order,
so permits for the protection of Contract Owners.
The applicable rules and regulations of the Commission will
govern as to whether the conditions described in 2. and 3.
exist.
The Company reserves the right to defer the payment or
transfer of amounts withdrawn from any Fixed Account
Sub-Account for a period not to exceed six months from the
date written request for such withdrawal or transfer is
received by the Company. If payment or transfer is deferred
beyond thirty (30) days, the Company will pay interest of
not less than 3% per year on amounts so deferred.
In addition, payment of the amount of any withdrawal
derived, all or in part, from any Premium Payment paid to
the Company by check or draft may be postponed until the
Company determines the check or draft has been honored.
MARKET VALUE ADJUSTMENT
Any surrender or transfer of a Fixed Account Guaranteed
Period Amount, other than a surrender or transfer pursuant
to an election which becomes effective upon the Expiration
Date of the Guaranteed Period, will be subject to a Market
Value Adjustment ("MVA"). The MVA will be applied to the
amount being surrendered or transferred after deduction of
any applicable Annuity Account Fee and before deduction of
any applicable surrender charge.
The MVA generally reflects the relationship between the
Index Rate (based upon the Treasury Constant Maturity Series
published by the Federal Reserve) in effect at the time a
Premium Payment is allocated to a Sub-Account's Guaranteed
Period under the Contract and the Index Rate in effect at
the time of the Premium Payment's surrender or transfer. It
also reflects the time remaining in the Sub-Account's
Guaranteed Period. Generally, if the Index Rate at the time
of surrender or transfer is lower than the Index Rate at the
time the Premium Payment was allocated, then the application
of the MVA will result in a higher payment upon surrender or
transfer. Similarly, if the Index Rate at the time of
surrender or transfer is higher than the Index Rate at the
time the Premium Payment was allocated, the application of
the MVA will generally result in a lower payment upon
surrender or transfer.
The MVA is computed by applying the following formula:
(1+A)N
--------------------------
(1+B)N
where:
A = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the beginning of the Guaranteed
Period.
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B = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the time of surrender or transfer,
plus a 0.50% adjustment (unless otherwise limited by
applicable state law). If Index Rates "A" and "B" are within
.25% of each other when the index rate factor is determined,
no such percentage adjustment to "B" will be made, unless
otherwise required by state law. This adjustment builds into
the formula a factor representing direct and indirect costs
to the Company associated with liquidating general account
assets in order to satisfy surrender requests. This
adjustment of 0.50% has been added to the denominator of the
formula because it is anticipated that a substantial portion
of applicable general account portfolio assets will be in
relatively illiquid securities. Thus, in addition to direct
transaction costs, if such securities must be sold (E.G.,
because of surrenders), the market price may be lower.
Accordingly, even if interest rates decline, there will not
be a positive adjustment until this factor is overcome, and
then any adjustment will be lower than otherwise, to
compensate for this factor. Similarly, if interest rates
rise, any negative adjustment will be greater than
otherwise, to compensate for this factor. If interest rates
stay the same, this factor will result in a small but
negative Market Value Adjustment.
N = The number of years remaining in the Guaranteed Period
(E.G. 1 year and 73 days = 1 + (73 divided by 365) = 1.2
years)
See the Statement of Additional information for examples of
the application of the Market Value Adjustment.
DEATH OF THE CONTRACT OWNER BEFORE THE ANNUITY DATE
In the event of death of the Contract Owner (or the
Annuitant, if the Owner is a non-natural person) prior to
the Annuity Date, a death benefit is payable to the
Beneficiary designated by the Owner. The value of the death
benefit will be determined as of the Valuation Period next
following the date both due proof of death (a certified copy
of the Death Certificate) and a payment election are
received by the Company. Unless the Optional Death Benefit
is selected, the value of the death benefit is equal to the
Annuity Account Value. The Beneficiary may, at any time
before the end of the sixty (60) day period immediately
following receipt of due proof of death by the Company,
elect the death benefit to be paid as follows:
1. the payment of the entire death benefit within five
years of the date of the death of the Owner or
Annuitant, whichever is applicable; or
2. payment over the lifetime of the designated Beneficiary
or over a period not extending beyond the life
expectancy of the Beneficiary, with distribution
beginning within one year of the date of death of the
Owner or Annuitant, whichever is applicable (see
"Annuity Provisions -- Annuity Options"); or
3. payment in accordance with one of the settlement
options under the Contract (see "Annuity Provisions --
Annuity Options"); or
4. if the designated Beneficiary is the Owner's spouse,
he/she can continue the Contract in his/her own name.
Payment amounts may vary with their frequency and duration
(see "Annuity Provisions -- Annuity Options).
If no payment option is elected, a single sum settlement
will be made by the Company within seven (7) days of the end
of the sixty (60) day period following receipt of due proof
of death of the Owner or Annuitant as applicable.
If the Owner is a non-natural person, then for purposes of
the death benefit, the Annuitant shall be treated as the
Owner.
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DEATH OF THE ANNUITANT BEFORE THE ANNUITY DATE
If the Annuitant dies prior to the Annuity Date and the
Annuitant is different from the Contract Owner, the Contract
Owner, if a natural person, may designate a new Annuitant.
Unless and until one is designated, the Contract Owner will
be the Annuitant. If the Contract Owner is not a natural
person, then the death benefit is paid on the Annuitant's
death.
DEATH OF THE ANNUITANT AFTER THE ANNUITY DATE
If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be as specified in the Annuity Option
elected. The Company will require due proof of the
Annuitant's death. Death benefits will be paid at least as
rapidly as under the method of distribution in effect at the
Annuitant's death.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At the Company's election and if deemed in the best
interests of persons having voting rights under the
Contracts, the Variable Account may be operated as a
management company under the 1940 Act or any other form
permitted by law; de-registered under the 1940 Act in the
event registration is no longer required (deregistration of
the Variable Account requires an order by the Commission);
or combined with one or more other separate accounts. To the
extent permitted by applicable law, the Company also may
transfer the assets of the Variable Account associated with
the Contracts to another account or accounts. In the event
of any change in the operation of the Variable Account
pursuant to this provision, the Company may make appropriate
endorsement to the Contracts to reflect the change and take
such other action as may be necessary and appropriate to
effect the change.
MODIFICATION
Upon notice to the Owner (or the Payee(s) during the Annuity
Period), the Contracts may be modified by the Company if
such modification: (i) is necessary to make the Contracts or
the Variable Account comply with, or take advantage of, any
law or regulation issued by a governmental agency to which
the Company or the Variable Account is subject; or (ii) is
necessary to attempt to assure continued qualification of
the Contracts under the Code or other federal or state laws
relating to retirement annuities or annuity contracts; or
(iii) is necessary to reflect a change in the operation of
the Variable Account or its Sub-Account(s) (See "Change in
Operation of Variable Account"); or (iv) provides additional
Variable Account and/or fixed accumulation options. In the
event of any such modification, the Company may make
appropriate endorsement to the Contracts to reflect such
modification.
In addition, upon notice to the Owner, the Contracts may be
modified by the Company to change the withdrawal charges,
Annuity Account Fees, mortality and expense risk charges,
administrative expense charges, the tables used in
determining the amount of the first monthly fixed annuity
payment, and the formula used to calculate the Market Value
Adjustment, provided that such modification shall apply only
to Contracts established after the effective date of such
modification. In order to exercise its modification rights
in these particular instances, the Company must notify the
Owner of such modification in writing. All of the charges
and the annuity tables which are provided in the Contracts
prior to any such modification will remain in effect
permanently, unless improved by the Company, with respect to
Contracts established prior to the effective date of such
modification.
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<PAGE>
DISCONTINUANCE
The Company reserves the right to limit or discontinue the
offer and issuance of new Contracts. Such limitation or
discontinuance shall have no effect on rights or benefits
with respect to any Contracts issued prior to the effective
date of such limitation or discontinuance.
ANNUITY PROVISIONS
ANNUITY DATE; CHANGE IN ANNUITY DATE AND ANNUITY OPTION
The Contract Owner selects an Annuity Date at the time of
application.
The Contract Owner may, upon at least thirty (30) days prior
written notice to the Company, at any time prior to the
Annuity Date, change the Annuity Date. The Annuity Date must
always be the first day of a calendar month. The Annuity
Date may not be later than the month following the
Annuitant's 90th birthday.
The Contract Owner may, upon at least (30) days prior
written notice to the Company, at any time prior to the
Annuity Date, select and/or change the Annuity Option.
ANNUITY OPTIONS
Instead of having the proceeds paid in one sum, the Contract
Owner may select one of the Annuity Options. These may be on
a fixed or variable basis, or a combination thereof. The
Annuity Option must be selected at least 30 days prior to
the Annuity Date. The Company may, at the time of election
of an Annuity Option, offer more favorable rates in lieu of
those guaranteed. The Company also may make available other
settlement options. The Company uses sex distinct or unisex
annuity rate tables when determining appropriate annuity
payments.
FIXED OPTIONS
Under a fixed option, once the selection has been made and
payments have begun, the amount of the payments will not
vary. The fixed options currently available are:
FIRST OPTION -- LIFE ANNUITY. The Company will make equal
monthly payments during the life of the Annuitant, ceasing
with the last payment due prior to the death of the
Annuitant. Under this option, it is possible only one
monthly annuity payment would be made, if the Annuitant died
before the second monthly annuity payment was due.
SECOND OPTION -- LIFE ANNUITY WITH CERTAIN PERIOD. The
Company will make equal monthly payments during the life of
the Annuitant, but at least for the minimum period shown in
the annuity tables contained in the Contract. The amount of
each monthly payment per $1,000 of proceeds is based on the
age and gender classification (in accordance with state law)
of the Annuitant when the first payment is made and on the
minimum period chosen.
THIRD OPTION -- LIFE ANNUITY WITH CASH REFUND. The Company
will make equal monthly payments during the life of the
Annuitant. Upon the death of the Annuitant, after payments
have started, the Company will pay in one sum any excess of
the amount of the proceeds applied under this Option over
the total of all payments made under this Option. The amount
of each monthly payment per $1,000 of proceeds is based on
the age and gender (in accordance with state law) of the
Annuitant when the first payment is made.
FOURTH OPTION -- ANNUITY CERTAIN. The Company will make
equal monthly payments for a number of years selected, not
less than five or more than thirty years.
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VARIABLE OPTIONS
The actual dollar amount of variable annuity payments is
dependent upon (i) the Annuity Account Value at the time of
annuitization, (ii) the annuity table specified in the
Contract, (iii) the Annuity Option selected, and (iv) the
investment performance of the Sub-Account selected. Each
annuity payment will be less if payments are to be made more
frequently or for longer periods of time.
The dollar amount of the first monthly variable annuity
payment is determined by applying the available value (after
deduction of any premium tax equivalents not previously
deducted) to the table using the age and gender (in
accordance with state law) of the Annuitant. The number of
Annuity Units is then determined by dividing this dollar
amount by the then current Annuity Unit value. Thereafter,
the number of Annuity Units remains unchanged during the
period of annuity payments. This determination is made
separately for each Sub-Account of the Variable Account. The
number of Annuity Units is determined for each Sub-Account
and is based upon the available value in each Sub-Account as
of the date annuity payments are to begin.
The dollar amount determined for each Sub-Account will then
be aggregated for purposes of making payments.
The dollar amount of the second and later variable annuity
payments is equal to the number of Annuity Units determined
for each Sub-Account times the Annuity Unit value for that
Sub-Account as of the due date of the payment. This amount
may increase or decrease from month to month.
The annuity tables contained in the Contract are based on a
three percent (3%) assumed net investment rate. If the
actual net investment rate exceeds three percent (3%),
payments will increase. Conversely, if the actual rate is
less than three percent (3%), annuity payments will
decrease.
The Annuitant receives the value of a fixed number of
Annuity Units each month. The value of a fixed number of
Annuity Units will reflect the investment performance of the
Sub-Account selected and the amount of each annuity payment
will vary accordingly.
The Annuity Unit Value for a Sub-Account is determined by
multiplying the Annuity Unit Value for that Sub-Account for
the preceding Valuation Period by the Net Investment Factor
for the current Valuation Period (calculated as described on
pages 18 and 19 of this Prospectus) and multiplying the
result by 0.999919020, the daily factor to neutralize the
assumed net investment rate, discussed above, of 3% per
annum which is built into the annuity rate table. It may
increase or decrease from Valuation Period to Valuation
Period.
The variable options currently available, assuming the
Annuity Account Value is at least $1,000 when variable
annuity payments commence, are:
OPTION I -- VARIABLE LIFE ANNUITY. Monthly annuity payments
are paid during the life of an Annuitant, ceasing with the
last annuity payment due prior to the Annuitant's death.
OPTION II -- VARIABLE LIFE ANNUITY WITH CERTAIN
PERIOD. Monthly annuity payments are paid during the life of
an Annuitant, but at least for the minimum period selected,
which may be five, ten, fifteen or twenty years;
OPTION III -- VARIABLE ANNUITY CERTAIN. Monthly annuity
payments are paid for a number of years selected, not less
than five or more than thirty years. Under this Option III,
the Annuitant may elect at any time during the period that
all or a portion of future payments be commuted and paid in
a lump sum or applied under Option I or Option II, subject
to the Company's rules about minimum payment amounts.
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After the Annuity Date, the payee may, by written request to
the Variable Products Service Center, exchange Annuity Units
of one Variable Sub-Account for Annuity Units of equivalent
value in another Variable Sub-Account up to three times each
Contract Year.
If the Annuity Account Value is less than $1,000 when
annuity payments are to commence, it will be paid in a lump
sum to the Annuitant. A lump sum payment will also be made
to the Annuitant if no Annuity Option is chosen when annuity
payments are to commence.
EVIDENCE OF SURVIVAL
The Company reserves the right to require evidence of the
survival of any Payee at the time any payment payable to
such Payee is due under the following Annuity Options: Life
Annuity (fixed), Life Annuity with Certain Period (fixed),
Cash Refund Life Annuity (fixed), Variable Life Annuity, and
Variable Life Annuity with Certain Period.
ENDORSEMENT OF ANNUITY PAYMENTS
The Company will make each annuity payment at its Home
Office by check. Each check must be personally endorsed by
the Payee or the Company may require that proof of the
Annuitant's survival be furnished.
DISTRIBUTION OF THE CONTRACTS
CIGNA Financial Advisors, Inc. ("CFA"), located at 900
Cottage Grove Road, Hartford, CT 06152, acts as the
principal underwriter and the distributor of the Contracts
as well as of variable life insurance policies and other
variable annuity contracts which are or may be issued by the
Company. CFA, a registered broker-dealer under the
Securities Exchange Act of 1934, is a wholly-owned
subsidiary of Connecticut General Corporation. The Contracts
are offered on a continuous basis. CFA and the Company may
enter into agreements to sell the Contracts through various
broker-dealers whose agents are licensed to sell the
Contracts.
PERFORMANCE DATA
MONEY MARKET SUB-ACCOUNT
From time to time, the Money Market Sub-Account may
advertise its "yield" and "effective yield." Both yield
figures will be based on historical earnings and are not
intended to indicate future performance. The "yield" of the
Money Market Sub-Account refers to the income generated by
Annuity Account Values in the Money Market Sub-Account over
a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is,
the amount of income generated by the investment during that
week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the Annuity Account
Values in the Money Market Sub-Account. The "effective
yield" is calculated similarly but, when annualized, the
income earned by Annuity Account Values in the Money Market
Sub-Account is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of
the compounding effect of this assumed reinvestment. The
computation of the yield calculation includes a deduction
for the Mortality and Expense Risk Charge, the
Administrative Expense Charge, and the Annuity Account Fee.
OTHER SUB-ACCOUNTS
From time to time, the other Sub-Accounts may publish their
current yields and total returns in advertisements and
communications to Contract Owners. The current yield for
each Sub-Account will be calculated by dividing the
annualization of the dividend and
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interest income earned by the underlying Fund during a
recent 30-day period by the maximum Accumulation Unit value
at the end of such period. Total return information will
include the underlying Fund's average annual compounded rate
of return over the most recent four calendar quarters and
the period from the underlying Fund's inception of
operations, based upon the value of the Accumulation Units
acquired through a hypothetical $1,000 investment at the
Accumulation Unit value at the beginning of the specified
period and upon the value of the Accumulation Unit at the
end of such period, assuming reinvestment of all
distributions and the deduction of the Mortality and Expense
Risk Charge, the Administrative Expense Charge and the
Annuity Account Fee. Each Sub-Account may also advertise
aggregate and average total return information over
different periods of time.
In each case, the yield and total return figures will
reflect all recurring charges against the Sub-Account's
income, including the deduction for the Mortality and
Expense Risk Charge, the Administrative Expense Charge and
the Annuity Account Fee for the applicable time period.
Contract Owners should note that the investment results of
each Sub-Account will fluctuate over time, and any
presentation of a Sub-Account's current yield or total
return for any prior period should not be considered as a
representation of what an investment may earn or what a
Contract Owner's yield or total return may be in any future
period. See "Historical Performance Data" in the Statement
of Additional Information.
PERFORMANCE RANKING OR RATING
The performance of each or all of the Sub-Accounts of the
Variable Account may be compared in its advertising and
sales literature to the performance of other variable
annuity issuers in general or to the performance of
particular types of variable annuities investing in mutual
funds, or series of mutual funds with investment objectives
similar to each of the Sub-Accounts of the Variable Account.
Lipper Analytical Services, Inc. ("Lipper") Morningstar
Variable Annuity/Life Performance Report of Morningstar,
Inc. ("Morningstar") and the Variable Annuity Research and
Data Service ("VARDS-Registered Trademark-") are independent
services which monitor and rank or rate the performance of
variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as
variable annuity issuers. VARDS-Registered Trademark-
rankings compare only variable annuity issuers. Morningstar
ratings include mutual funds used by both variable life and
variable annuity issuers. The performance analyses prepared
by Lipper and VARDS-Registered Trademark- rank such issuers
on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges, redemption
fees or certain expense deductions at the separate account
level into consideration. In addition,
VARDS-Registered Trademark- prepares risk adjusted rankings,
which consider the effects of market risk on total return
performance. This type of ranking may address the question
as to which funds provide the highest total return with the
least amount of risk. Morningstar assigns ratings of zero to
five stars to the mutual funds taking into account primarily
historical performance and risk factors.
TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S
UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE
TO ANNUITIES IN GENERAL. THE COMPANY CANNOT PREDICT THE
PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
OWNERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING
THE POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT
GUARANTEE THE TAX STATUS OF THE CONTRACTS. OWNERS BEAR THE
COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.
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GENERAL
Section 72 of the Code governs taxation of annuities in
general. A Contract Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the
form of a lump sum payment or as annuity payments under the
Settlement Option elected. For a lump sum payment received
as a total surrender (total redemption), the recipient is
taxed on the portion of the payment that exceeds the cost
basis of the Contract. For Non-Qualified Contracts, this
cost basis is generally the Premium Payments, while for
Qualified Contracts there may be no cost basis. The taxable
portion of the lump sum payment is taxed at ordinary income
tax rates.
For annuity payments, the taxable portion is determined by a
formula which establishes the ratio that the cost basis of
the Contract bears to the total value of annuity payments
for the term of the Contract. The taxable portion is taxed
at ordinary income rates. For certain types of Qualified
Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners,
Annuitants and Beneficiaries under the Contracts should seek
competent financial advice about the tax consequences of any
distributions.
The Company is taxed as a life insurance company under
Subchapter L of the Code. For federal income tax purposes,
the Variable Account is not a separate entity from the
Company, and its operations form a part of the Company.
Accordingly, the Variable Account will not be taxed
separately as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. The Company does
not expect to incur any federal income tax liability with
respect to investment income and net capital gains arising
from the activities of the Variable Account retained as part
of the reserves under the Contract. Based on this
expectation, it is anticipated that no charges will be made
against the Variable Account for federal income taxes. If,
in future years, any federal income taxes or other economic
burden are incurred by the Company with respect to the
Variable Account or the Contracts, the Company may make a
charge for any such amounts that are attributable to the
Variable Account.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable annuity
contracts. The Code provides that a variable annuity
contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments
are not adequately diversified in accordance with
regulations prescribed by the United States Treasury
Department ("Treasury Department"). Disqualification of the
Contract as an annuity contract would result in imposition
of federal income tax to the Contract Owner with respect to
earnings allocable to the Contract prior to the receipt of
payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the
Contracts meet the diversification requirements if, as of
the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company
and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations
(Treas. Reg. 1.817-5) which established diversification
requirements for the investment portfolios underlying
variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable
contracts set forth in the Code and provide an alternative
to the safe harbor provision described above. Under the
regulations, an investment portfolio will be deemed
adequately diversified if: (1) no more than 55% of the value
of the total assets of the portfolio is represented by any
one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two
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investments; (3) no more than 80% of the value of the total
assets of the portfolio is represented by any three
investments; and (4) no more than 90% of the value of the
total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether
or not the diversification standards imposed on the
underlying assets of variable contracts by Section 817(h) of
the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate
issuer."
The Company intends, and the Trusts have undertaken, that
all Funds underlying the Contracts will be managed in such a
manner as to comply with these diversification requirements.
The Treasury Department has indicated that guidelines may be
forthcoming under which a variable annuity contract will not
be treated as an annuity contract for tax purposes if the
owner of the contract has excessive control over the
investments underlying the contract (i.e., by being able to
transfer values among sub-accounts with only limited
restrictions). The issuance of such guidelines may require
the Company to impose limitations on a Contract Owner's
right to control the investment. It is not known whether any
such guidelines would have a retroactive effect.
DISTRIBUTION REQUIREMENTS
Section 72(s) of the Code requires that in order to be
treated as an annuity contract for Federal income tax
purposes, any Nonqualified Contract must provide that (a) if
any Owner dies on or after the Annuity Date but prior to the
time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of
distribution being used when the Owner died; and (b) if any
Owner dies prior to the Annuity Date, the entire interest in
the Contract will be distributed within five years after
such death. These requirements will be considered satisfied
as to any portion of the Owner's interest which is payable
to or for the benefit of a "designated beneficiary" and
which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life
expectancy of that beneficiary, provided that such
distributions begin within one year of the Owner's death.
The Owner's "designated beneficiary" is the person
designated by such Owner as a Beneficiary and to whom
ownership of the Contract passes by reason of death and must
be a natural person. However, if the Owner's "designated
beneficiary" is the surviving spouse of the Owner, the
Contract may be continued with the surviving spouse as the
new Owner.
The Contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have
yet been issued. The Company intends to review such
provisions and modify them if necessary to try to assure
that they comply with the Section 72(s) requirements when
clarified by regulation or otherwise. Similar rules may
apply to a Qualified Contract.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity
contracts which are issued during a calendar year to the
same contract owner by one company or its affiliates are
treated as one annuity contract for purposes of determining
the tax consequences of any distribution. Such treatment may
result in adverse tax consequences, including more rapid
taxation of the distributed amounts from such combination of
contracts. Contract Owners should consult a tax adviser
prior to purchasing more than one nonqualified annuity
contract in any single calendar year.
35
<PAGE>
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable
event. Contract Owners should
therefore consult competent tax advisers should they wish to
assign their Contracts.
WITHHOLDING
Withholding of federal income taxes on the taxable portion
of all distributions may be required unless the recipient
elects not to have any such amounts withheld and properly
notifies the Company of that election. Different rules may
apply to United States citizens or expatriates living
abroad. Withholding is mandatory for certain distributions
from Qualified Contracts. In addition, some states have
enacted legislation requiring withholding.
SECTION 1035 EXCHANGES
Code Section 1035 generally provides that no gain or loss
shall be recognized on the exchange of one annuity contract
for another. If the surrendered contract was issued prior to
August 14, 1982, the tax rules that formerly provided that
the surrender was taxable only to the extent the amount
received exceeds the owner's investment in the contract will
continue to apply to amounts allocable to investment in the
contract before August 14, 1982. Special rules and
procedures apply to Code Section 1035 transactions.
Prospective purchasers wishing to take advantage of Code
Section 1035 should consult their tax advisers.
TAX TREATMENT OF WITHDRAWALS --
NON-QUALIFIED CONTRACTS
Section 72 of the Code governs the treatment of
distributions from annuity contracts. It provides that if
the Annuity Account Value exceeds the aggregate Premium
Payments made, any amount withdrawn will be treated as
coming first from the earnings and then, only after the
income portion is exhausted, as coming from the principal.
Withdrawn earnings are includable in gross income. It
further provides that a ten percent (10%) penalty will apply
to the income portion of any premature distribution.
However, the penalty is not imposed on amounts received: (a)
after the Payee reaches age 59 1/2; (b) after the death of
the Contract Owner (or, if the Contract Owner is a
non-natural person, the Annuitant); (c) if the Payee is
totally disabled (for this purpose disability is as defined
in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or for the joint lives (or joint life
expectancies) of the Payee and his/her beneficiary; (e)
under an immediate annuity; or (f) which are allocable to
Premium Payments made prior to August 14, 1982.
The above information does not apply, except where noted, to
Qualified Contracts. However, separate tax withdrawal
penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals -- Qualified
Contracts.")
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be
suitable for use under various types of Qualified Plans.
Because of the minimum purchase payment requirements, these
Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified
Plan varies with the type of plan and terms and conditions
of each specific plan. Contract Owners, Annuitants and
Beneficiaries are cautioned that benefits under a Qualified
Plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts
36
<PAGE>
issued pursuant to the plan. Although the Company provides
administration for the Contract, it does not provide
administrative support for Qualified Plans. Following are
general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not
exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and
will have differing applications, depending on individual
facts and circumstances. Each purchaser should obtain
competent tax advice prior to purchasing a Contract issued
in connection with a Qualified Plan.
Special favorable tax treatment may be available for certain
types of contributions and distributions (including special
rules for certain lump sum distributions). Adverse tax
consequences may result from contributions in excess of
specified limits, distributions prior to age 59 1/2 (subject
to certain exceptions), distributions that do not conform to
specified minimum distribution rules, aggregate
distributions in excess of a specified annual amount, and in
certain other circumstances. Therefore, the Company makes no
attempt to provide more than general information about use
of the Contract with the various types of qualified plans.
Purchasers and participants under qualified plans as well as
Annuitants, Payees and Beneficiaries are cautioned that the
rights of any person to any benefits under qualified plans
may be subject to the terms and conditions of the plan
themselves, regardless of the terms and conditions of the
Contract issued in connection therewith.
SECTION 403(B) PLANS
Under Section 403(b) of the Code, payments made by public
school systems and certain tax exempt organizations to
purchase annuity policies for their employees are excludable
from the gross income of the employee, subject to certain
limitations. However, such payments may be subject to FICA
(Social Security) taxes. Additionally, in accordance with
the requirements of the Code, Section 403(b) annuities
generally may not permit distribution of (i) elective
contributions made in years beginning after December 31,
1988, and (ii) earnings on those contributions and (iii)
earnings on amounts attributed to elective contributions
held as of the end of the last year beginning before January
1, 1989. Distributions of such amounts will be allowed only
upon the death of the employee, on or after attainment of
age 59 1/2, separation from service, disability, or
financial hardship, except that income attributable to
elective contributions may not be distributed in the case of
hardship.
INDIVIDUAL RETIREMENT ANNUITIES
Sections 219 and 408 of the Code permit individuals or their
employers to contribute to an individual retirement program
known as an "Individual Retirement Annuity" or an "IRA".
Individual Retirement Annuities are subject to limitation on
the amount which may be contributed and deducted and the
time when distributions may commence. In addition,
distributions from certain other types of qualified plans
may be placed into an Individual Retirement Annuity on a
tax-deferred basis.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Section 401(a) and 403(a) of the Code permit corporate
employers to establish various types of retirement plans for
employees and self-employed individuals to establish
qualified plans for themselves and their employees. Such
retirement plans may permit the purchase of the Contracts to
provide benefits under the plans.
37
<PAGE>
DEFERRED COMPENSATION PLANS
Section 457 of the Code, while not actually providing for a
qualified plan as that term is normally used, provides for
certain deferred compensation plans with respect to service
for state governments, local governments, political
sub-divisions, agencies, instrumentalities and certain
affiliates of such entities and tax exempt organizations
which enjoy special treatment. The Contracts can be used
with such plans. Under such plans a participant may specify
the form of investment in which his or her participation
will be made. All such investments, however, are owned by,
and are subject to, the claims of the general creditors of
the sponsoring employer.
The above description of federal income tax consequences
pertaining to the different types of Qualified Plans that
may be funded by the Contracts is only a brief summary and
is not intended as tax advice. The rules governing the
provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full
compliance with the applicable rules, all of which are
subject to change, may have significant adverse tax
consequences. A prospective purchaser considering the
purchase of a Contract in connection with a Qualified Plan
should first consult a qualified and competent tax adviser
with regard to the suitability of the Contract as an
investment vehicle for the Qualified Plan.
TAX TREATMENT OF WITHDRAWALS --
QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified
retirement plans, including Contracts issued and qualified
under Code Sections 401, 403(b), 408 and 457. To the extent
amounts are not includable in gross income because they have
been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax
penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the
Payee reaches age 59 1/2; (b) distributions following the
death of the Contract Owner or Annuitant (as applicable) or
disability of the Payee (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or the joint lives (or joint life expectancies)
of such Payee and his/her designated beneficiary; (d)
distributions to a Payee who has separated from service
after attaining age 55; (e) distributions made to the extent
such distributions do not exceed the amount allowable as a
deduction under Code Section 213 to the Payee for amounts
paid during the taxable year for medical care: and (f)
distributions made to an alternate payee pursuant to a
qualified domestic relations order.
The exceptions stated in Items (d), (e) and (f) above do not
apply in the case of an Individual Retirement Annuity.
FINANCIAL STATEMENTS
Audited financial statements of the Company as of and for
each of the three years in the period ended December 31,
1994 are included in the Statement of Additional
Information. No financial statements are included for the
Variable Account, which had not yet commenced operations as
of the date of this Prospectus.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable
Account, the Distributor or the Company is a party except
for routine litigation which the Company does not believe is
relevant to the Contracts offered by this Prospectus.
38
<PAGE>
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available (at no cost) which contains
more details concerning some subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS................ 3
The Contracts................................. 3
Loans......................................... 3
Non-Participating Contracts................... 3
Misstatement of Age........................... 3
Variable Accumulation Unit Value and
Variable Accumulation Value.................. 3
Net Investment Factor......................... 4
SAMPLE CALCULATIONS AND TABLES.................. 4
Variable Account Unit Value Calculations...... 4
Withdrawal Charge and Market Value Adjustment
Tables....................................... 5
STATE REGULATION OF THE COMPANY................. 6
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
ADMINISTRATION.................................. 7
PERIODIC REPORTS................................ 7
DISTRIBUTION OF THE CONTRACTS................... 7
CUSTODY OF ASSETS............................... 7
HISTORICAL PERFORMANCE DATA..................... 7
Money Market Sub-Account Yield................ 8
Other Sub-Account Yields...................... 8
Total Returns................................. 9
Other Performance Data........................ 9
LEGAL MATTERS................................... 10
LEGAL PROCEEDINGS............................... 10
EXPERTS......................................... 10
FINANCIAL STATEMENTS............................ 10
</TABLE>
39
<PAGE>
PART B. STATEMENT OF
ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ACCRU-REGISTERED TRADEMARK- VARIABLE ANNUITY CONTRACTS
Issued through
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
Offered by
CIGNA LIFE INSURANCE COMPANY
Home Office Location
900 Cottage Grove Road
Hartford, Connecticut 06152
Mailing Address
CIGNA Individual Insurance
Variable Products Service Center
Routing S-154
Hartford, Connecticut 06152-2154
This Statement of Additional Information ("Statement") expands upon subjects
discussed in the current Prospectus for the Variable Annuity Contracts (the
"Contracts") offered by CIGNA Life Insurance Company through CIGNA Variable
Annuity Separate Account I. You may obtain a copy of the Prospectus dated August
31, 1995, by calling (800) 552-9898, or by writing to Variable Products Service
Center, Routing S-154, CIGNA Life Insurance Company, Hartford, Connecticut
06152-2154. Terms used in the current Prospectus for the Contracts are
incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS AND CIGNA
VARIABLE ANNUITY SEPARATE ACCOUNT I.
Dated: August 31, 1995
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE CONTRACTS -- GENERAL PROVISIONS........................................................................ 3
The Contracts............................................................................................ 3
Loans.................................................................................................... 3
Non-Participating Contracts.............................................................................. 3
Misstatement of Age...................................................................................... 3
CALCULATION OF VARIABLE ACCOUNT VALUES..................................................................... 3
Variable Accumulation Unit Value......................................................................... 3
Net Investment Factor.................................................................................... 4
SAMPLE CALCULATIONS AND TABLES............................................................................. 4
Variable Account Unit Value Calculations................................................................. 4
Withdrawal Charge and Market Value Adjustment Tables..................................................... 5
STATE REGULATION OF THE COMPANY............................................................................ 6
ADMINISTRATION............................................................................................. 7
PERIODIC REPORTS........................................................................................... 7
DISTRIBUTION OF THE CONTRACTS.............................................................................. 7
CUSTODY OF ASSETS.......................................................................................... 7
HISTORICAL PERFORMANCE DATA................................................................................ 7
Money Market Sub-Account Yield........................................................................... 8
Other Sub-Account Yields................................................................................. 8
Total Returns............................................................................................ 9
Other Performance Data................................................................................... 9
LEGAL MATTERS.............................................................................................. 10
LEGAL PROCEEDINGS.......................................................................................... 10
EXPERTS.................................................................................................... 10
FINANCIAL STATEMENTS....................................................................................... 10
</TABLE>
2
<PAGE>
In order to supplement the description in the Prospectus, the following
provides additional information about CIGNA Life Insurance Company (the
"Company") and the Contracts which may be of interest to a Contract Owner. Terms
have the same meaning as in the Prospectus, unless otherwise indicated.
THE CONTRACTS -- GENERAL PROVISIONS
THE CONTRACTS
A Contract, attached riders, amendments and any application, form the entire
contract. Only the President, a Vice President, a Secretary, a Director, or an
Assistant Director of the Company may change or waive any provision in a
Contract. Any changes or waivers must be in writing. The Company may change or
amend the Contracts if such change or amendment is necessary for the Contracts
to comply with or take advantage of any state or federal law, rule or
regulation.
LOANS
Under the Contracts, loans are not permitted.
NON-PARTICIPATING CONTRACTS
The Contracts do not participate or share in the profits or surplus earnings
of the Company.
MISSTATEMENT OF AGE
If the age of the Annuitant is misstated, any amounts payable by the Company
under the Contract will be adjusted to be those amounts which the Premium
Payments would have purchased for the correct age, according to the Company's
rates in effect on the Date of Issue. Any overpayment by the Company, with
interest at the rate of 6% per year, compounded annually, will be charged
against the payments to be made next succeeding the adjustment. Any underpayment
by the Company will be paid in a lump sum.
If the age or sex of the Owner is misstated, the Company will adjust the
charge associated with the Optional Death Benefits elected to the charges that
would have been assessed for the correct age and sex.
CALCULATION OF VARIABLE ACCOUNT VALUES
On any Valuation Date, the Variable Account value is equal to the totals of
the values allocated to the Contracts in each Sub-Account. The portion of an
Owner's Annuity Account Value held in any Variable Account Sub-Account is equal
to the number of Sub-Account units allocated to a Contract multiplied by the
Sub-Account accumulation unit value as described below.
VARIABLE ACCUMULATION UNIT VALUE
Upon receipt of a Premium Payment by the Company at its Variable Products
Service Center, all or that portion, if any, of the Premium Payment to be
allocated to the Variable Account Sub-Accounts will be credited to the Variable
Account in the form of Variable Accumulation Units. The number of particular
Variable Accumulation Units to be credited is determined by dividing the dollar
amount allocated to the particular Variable Account Sub-Account by the Variable
Accumulation Unit Value for the particular Variable Account Sub-Account for the
Valuation Period during which the Premium Payment is received at the Company's
Variable Products Service Center (for the initial Premium Payment, for the
Valuation Period during which the Premium Payment is accepted).
The Variable Accumulation Unit Value for each Variable Account Sub-Account
will be set initially at $10.00 for the first Valuation Period of the particular
Variable Account Sub-Account. The Variable Accumulation Unit Value for the
particular Variable Account Sub-Account for any subsequent Valuation Period is
determined by multiplying the Variable Accumulation Unit Value for the
particular Variable Account Sub-Account for the immediately preceding Valuation
Period by the Net Investment Factor for the particular Variable Account
Sub-Account for such subsequent Valuation Period. The
3
<PAGE>
Variable Accumulation Unit Value for each Variable Account Sub-Account for any
Valuation Period is the value determined as of the end of the particular
Valuation Period and may increase, decrease, or remain constant from Valuation
Period to Valuation Period.
The Variable Account portion of the Annuity Account Value, if any, for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each Variable Account Sub-Account credited to the Contract for such
Valuation Period. The value in a Contract of each Variable Account Sub-Account
is determined by multiplying the number of Variable Accumulation Units, if any,
credited to such Variable Account Sub-Account in a Contract by the Variable
Accumulation Unit Value of the particular Variable Account Sub-Account for such
Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Variable Account Sub-Account from one Valuation Period to the
next. The Net Investment Factor may be greater or less than or equal to 1.0;
therefore, the value of a Variable Accumulation Unit may increase, decrease, or
remain the same.
The Net Investment Factor for any Variable Account Sub-Account for any
Valuation Period is determined by dividing (a) by (b) and then subtracting (c)
from the result where:
(a) is the net result of:
(1) the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution declared
by the Fund on the shares held in the Variable Account Sub-Account if
the "ex-dividend" date occurs during the Valuation Period, plus or
minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account;
(b) is the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the preceding Valuation Period;
and
(c) is the asset charge factor determined by the Company for the valuation
period to reflect the charges for assuming mortality and expense risks
and for the administrative expenses.
SAMPLE CALCULATIONS AND TABLES
VARIABLE ACCOUNT UNIT VALUE CALCULATIONS
VARIABLE ACCUMULATION UNIT VALUE CALCULATION. Assume the net asset value of
a Fund share at the end of the current Valuation Period is $16.50; and its value
at the end of the immediately preceding Valuation Period was $16.46; the
Valuation Period is one day; and no dividends or distributions caused Fund
shares to go "ex-dividend" during the current Valuation Period. $16.50 divided
by $16.46 is 1.002430134. Subtracting the one day risk factor for mortality and
expense risks and the administrative expense charge of .00003584933 (the daily
equivalent of the current charge of 1.30% on an annual basis) gives a net
investment factor of 1.00239428467. If the value of the Variable Accumulation
Unit for the immediately preceding Valuation Period had been $14.703693, the
value for the current Valuation Period would be $14.738898 ($14.703693 X
1.00239428467).
VARIABLE ANNUITY UNIT VALUE CALCULATION. The assumptions in the above
example exist. Also assume that the value of an Annuity Unit for the immediately
preceding Valuation Period had been $13.579136. As the first variable annuity
payment is determined by using an assumed interest rate of 3% per year, the
value of the Annuity Unit for the current Valuation Period would be $13.610546
[$13.579136 X 1.00239428467 (the net investment factor) X 0.999919020].
0.999919020 is the factor, for a one day Valuation Period, that neutralizes the
assumed interest rate of three percent (3%) per year used to establish the
Annuity Payment Rates found in the Contract.
4
<PAGE>
VARIABLE ANNUITY PAYMENT CALCULATION. Assume that a Participant's Variable
Annuity Account is credited with 5319.7531 Variable Accumulation Units of a
particular Sub-Account; that the Variable Accumulation Unit value and the
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the Annuity Date are $14.703693 and $13.579136
respectively; that the Annuity Payment Rate for the age and option elected is
$6.52 per $1,000; and that the Annuity Unit Value on the day prior to the second
variable annuity payment date is $13.610170. The first variable annuity payment
would be $509.99 (5319.7531 X $14.703693 X 6.52 divided by 1,000). The number of
Annuity Units credited would be 37.5569 ($509.99 divided by $13.579136) and the
second variable annuity payment would be $511.16 (37.5569 X $13.610170).
WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT TABLES
The following example illustrates the detailed calculations for a $100,000
deposit into the Fixed Account with a guaranteed rate of 8% for a duration of
five years. The intent of the example is to show the effect of the Market Value
Adjustment ("MVA") and the 3% minimum guarantee under various interest rates on
the calculation of the cash surrender (withdrawal) value. Any charges for
optional death benefit risks are not taken into account in the example. The
effect of the MVA is reflected in the index rate factor in column (2) and the
minimum 3% guarantee is shown under column (4) under the "Surrender Value
Calculation". The "Surrender Charge Calculation" assumes there have been no
prior withdrawals and illustrates the operation of the Fifteen Percent Free
provision of the Contract. The "Market Value Adjustment Tables" and "Minimum
Value Calculation" contain the explicit calculation of the index factors and the
3% minimum guarantee respectively. The "Annuity Value Calculation" and "Minimum
Value" calculations assume the imposition of the annual $35 Annuity Account Fee
charge, but that fee is waived if the Annuity Account Value at the end of a
Contract Year is $100,000 or more.
WITHDRAWAL CHARGE TABLES
SAMPLE CALCULATIONS FOR MALE 35 ISSUE
CASH SURRENDER VALUES
<TABLE>
<S> <C>
Single premium................ $100,000
Premium taxes................. 0
Withdrawals................... None
Guaranteed period............. 5 years
Guaranteed interest rate...... 8%
Annuity date.................. Age 70
Index rate A.................. 7.5%
Index rate B.................. 8.00% end of contract year 1
7.75% end of contract year 2
7.00% end of contract year 3
6.50% end of contract year 4
Percentage adjustment to B.... 0.5%
</TABLE>
SURRENDER VALUE CALCULATION
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6) (7)
ANNUITY INDEX RATE ADJUSTED MINIMUM GREATER OF SURRENDER SURRENDER
CONTRACT YEAR VALUE FACTOR ANNUITY VALUE VALUE (3)&(4) CHARGE VALUE
-------------------------------- ----------- ----------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1............................... $ 107,965 0.963640 $ 104,039 $ 102,965 $ 104,039 $ 5,950 $ 98,089
2............................... $ 116,567 0.993056 $ 115,758 $ 106,019 $ 115,758 $ 5,100 $ 110,658
3............................... $ 125,858 1.000000 $ 125,858 $ 109,165 $ 125,858 $ 4,250 $ 121,608
4............................... $ 135,891 1.004673 $ 136,526 $ 112,404 $ 136,526 $ 3,400 $ 133,126
5............................... $ 146,727 1.000000 $ 146,727 $ 115,742 $ 146,727 $ 2,550 $ 144,177
</TABLE>
5
<PAGE>
ANNUITY VALUE CALCULATION
<TABLE>
<CAPTION>
CONTRACT YEAR ANNUITY VALUE
------------------------------ ------------------------------------------
<S> <C>
1............................. $100,000 X 1.08 - $35 = $107,965
2............................. $107,965 X 1.08 - $35 = $116,567
3............................. $116,567 X 1.08 - $35 = $125,858
4............................. $125,858 X 1.08 - $35 = $135,891
5............................. $135,891 X 1.08 - $35 = $146,727
</TABLE>
SURRENDER CHARGE CALCULATION
<TABLE>
<CAPTION>
(2)
(1) SURRENDER CHARGE FACTOR (3)
SURRENDER ADJUSTED SURRENDER
CONTRACT YEAR CHARGE FACTOR FOR FREE PARTIAL WITHDRAWALS CHARGE
------------------------------------------------------ --------------- ------------------------------- -----------
<S> <C> <C> <C>
1..................................................... 0.07 0.0595 $ 5,950
2..................................................... 0.06 0.0510 $ 5,100
3..................................................... 0.05 0.0425 $ 4,250
4..................................................... 0.04 0.0340 $ 3,400
5..................................................... 0.03 0.0255 $ 2,550
</TABLE>
MARKET VALUE ADJUSTMENT TABLES
INTEREST RATE FACTOR CALCULATION
<TABLE>
<CAPTION>
(3) (5)
(1) (2) ADJUSTED (1+A)to the power of n
INDEX INDEX INDEX RATE (4) ------
CONTRACT YEAR RATE A RATE B B N (1+B)to the power of n
------------------------------------------------------- ------ ------ ----------- ----- ------------
<S> <C> <C> <C> <C> <C>
1...................................................... 7.5% 8.00 8.50 4 0.963640
2...................................................... 7.5% 7.75 7.75 3 0.993056
3...................................................... 7.5% 7.00 7.50 2 1.000000
4...................................................... 7.5% 6.50 7.00 1 1.004673
5...................................................... 7.5% NA NA 0 NA
</TABLE>
MINIMUM VALUE CALCULATION
<TABLE>
<CAPTION>
CONTRACT YEAR MINIMUM VALUE
------------------------------ ------------------------------------------
<S> <C>
1............................. $100,000 X 1.03 - $35 = $102,965
2............................. $102,965 X 1.03 - $35 = $106,019
3............................. $106,019 X 1.03 - $35 = $109,165
4............................. $109,165 X 1.03 - $35 = $112,404
5............................. $112,404 X 1.03 - $35 = $115,742
</TABLE>
STATE REGULATION OF THE COMPANY
The Company, a Connecticut corporation, is subject to regulation by the
Connecticut Department of Insurance. An annual statement is filed with the
Connecticut Department of Insurance each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding year. Periodically, the Connecticut Department of Insurance or other
authorities examine the liabilities and reserves of the Company and the Variable
Account, and a full examination of the Company's operations is conducted
periodically by the Connecticut Department of Insurance. In
6
<PAGE>
addition, the Company is subject to the insurance laws and regulations of other
states within which it is licensed to operate. Generally, the Insurance
Department of any other state applies the laws of the state of domicile in
determining permissible investments.
The fixed account values and benefits of each Contract are governed by state
nonforfeiture laws, and separate account values and benefits are governed by
state separate account laws.
ADMINISTRATION
The Company performs certain administrative functions relating to the
Contracts, the individual Annuity Accounts, the Fixed Account, and the Variable
Account. These functions include, among other things, maintaining the books and
records of the Variable Account, the Fixed Account, and the Sub-Accounts, and
maintaining records of the name, address, taxpayer identification number,
contract number, Annuity Account number and type, the status of each Annuity
Account and other pertinent information necessary to the administration and
operation of the Contracts.
PERIODIC REPORTS
At least once during each Calendar Year, the Company will furnish each Owner
with a report showing the Annuity Account Value at the end of the preceding
Calendar Year, all transactions during the Calendar Year, the current Annuity
Account Value, the number of Accumulation Units in each Variable Accumulation
Amount, the applicable Accumulation Unit Value as of the date of the report and
the interest rate credited to the Fixed Account Sub-Account(s). In addition,
each person having voting rights in the Variable Account and a Fund or Funds
will receive each such reports or prospectuses as may be required by the
Investment Company Act of 1940 and the Securities Act of 1933. The Company will
also send each Owner such statements reflecting transactions in the Owner's
Annuity Account as may be required by applicable laws, rules and regulations.
Upon request to the Variable Products Service Center, the Company will
provide an Owner with information regarding fixed and variable accumulation
values.
DISTRIBUTION OF THE CONTRACTS
The principal underwriter for the Contracts, CIGNA Financial Advisors, Inc.
("CFA"), Hartford, Connecticut 06152, which is an affiliate of the Company as
well as of CIGNA Corporation, has not yet received any commissions with respect
to sales of the Contracts as of the date of this Statement of Additional
Information.
Sales charges on and exchange privileges under the Contracts are described
in the Prospectus. There are no variations in the prices at which the Contracts
are offered for certain types of purchasers.
CUSTODY OF ASSETS
The Company is the Custodian of the assets of the Variable Account. The
Company will purchase Fund shares at net asset value in connection with amounts
allocated to the Variable Account Sub-Accounts in accordance with the
instructions of the Purchasers and redeem Fund shares at net asset value for the
purpose of meeting the contractual obligations of the Variable Account, paying
charges relative to the Variable Account or making adjustments for annuity
reserves held in the Variable Account. The assets of the Sub-Accounts of the
Variable Account are held separate and apart from the assets of any other
segregated asset accounts of the Company and separate and apart from the
Company's general account assets. The Company maintains records of all purchases
and redemptions of shares of each Fund held by each of the Sub-Accounts of the
Variable Account. Additional protection for the assets of the Variable Account
is afforded by the Company's fidelity bond covering the acts of officers and
employees of the Company which is presently (as of July 1, 1995) in the amount
of $10,000,000.
7
<PAGE>
HISTORICAL PERFORMANCE DATA
No historical performance data for each of the Sub-Accounts of the Separate
Account, other than the Money Market Sub-Account, is yet available, as the
Separate Account had not commenced operations at the date of this Statement.
MONEY MARKET SUB-ACCOUNT YIELD
From time to time, the Money Market Sub-Account may advertise its "yield"
and "effective yield." Both yield figures will be based on historical earnings
and are not intended to indicate future performance. The "yield" of the Money
Market Sub-Account refers to the income generated by Annuity Account Values in
the Money Market Sub-Account over a seven-day period (which period will be
stated in the advertisement). This income is then "annualized." That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
Annuity Account Values in the Money Market Sub-Account. The "effective yield" is
calculated similarly but, when annualized, the income earned by Annuity Account
Values in the Money Market Sub-Account is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The computation of the yield
calculation includes a deduction for the Mortality and Expense Risk Charge, the
Administrative Expense Charge, and the Annuity Account Fee.
The effective yield is calculated by compounding the unannualized base
period return according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)to the power of 365/7 - 1
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Fund, the types and quality of portfolio securities held by the
Money Market Fund and its operating expenses. The yield figures do not reflect
withdrawal charges or premium taxes or any charges for Optional Death Benefit(s)
selected.
OTHER SUB-ACCOUNT YIELDS
The Company may from time to time advertise or disclose the current
annualized yield of one or more of the Sub-Accounts of the Variable Account
(except the Money Market Sub-Account) for 30-day periods. The annualized yield
of a Sub-Account refers to income generated by the Sub-Account over a specific
30-day period. Because the yield is annualized, the yield generated by a
Sub-Account during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. The yield is computed by: (i) dividing the net
investment income per accumulation unit earned during the period by the maximum
offering price per unit on the last day of the period, according to the
following formula:
Yield = 2 [(a - b + 1)to the power of 6 - 1]
-----
cd
Where: a = Net investment income earned during the period by
the Fund attributable to shares owned by the
Sub-Account.
b = Expenses accrued for the period.
c = The average daily number of accumulation units
outstanding during the period.
d = The maximum offering price per accumulation unit
on the last day of the period.
Because of the charges and deductions imposed by the Variable Account, the
yield for a Sub-Account of the Variable Account will be lower than the yield for
its corresponding Fund. The yield calculations do not reflect the effect of any
premium taxes or deferred sales charges that may be
8
<PAGE>
applicable to a particular Contract. Deferred sales charges range from 7% to 1%
of the amount withdrawn or surrendered on total Premium Payments paid less prior
partial withdrawals, based on the Contract Year in which the withdrawal or
surrender occurs.
The yield on amounts held in the Sub-Accounts of the Variable Account
normally will fluctuate over time. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates of
return. A Sub-Account's actual yield is affected by the types and quality of the
Fund's investments and its operating expenses.
TOTAL RETURNS
The Company may from time to time also advise or disclose annual average
total returns for one or more of the Sub-Accounts of the Variable Account for
various periods of time. When a Sub-Account has been in operation for 1, 5 and
10 years, respectively, the total return for these periods will be provided.
Total returns for other periods of time may from time to time also be disclosed.
Total returns represent the average annual compounded rates of return that would
equate the initial amount invested to the redemption value of that investment as
of the last day of each of the periods.
Total returns will be calculated using Sub-Account Unit Values which the
Company calculates on each Valuation Period based on the performance of the
Sub-Account's underlying Fund, and the deductions for the mortality and expense
risk charge, the administrative expense charge, and the Annuity Account Fee. The
Annuity Account Fee is reflected by dividing the total amount of such charges
collected during the year that are attributable to the Variable Account by the
total average net assets of all the Variable Sub-Accounts. The resulting
percentage is deducted from the return in calculating the ending redeemable
value. These figures will not reflect any premium taxes or any charges for any
Optional Death Benefit selected by the Owner. Total return calculations will
reflect the effect of deferred sales charges that may be applicable to a
particular period. The total return will then be calculated according to the
following formula:
P(1+T)to the power of n = ERV
Where: P = A hypothetical initial Premium Payment of $1,000.
T = Average annual total return.
n = Number of years in the period.
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period, at the end of the one, five or
ten-year period (or fractional portion thereof).
OTHER PERFORMANCE DATA
The Company may from time to time also disclose average annual total returns
in a non-standard format in conjunction with the standard format described
above. The non-standard format will be identical to the standard one except that
the deferred sales charge percentage will be assumed to be 0%.
9
<PAGE>
The Company may from time to time disclose cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the deferred sales
charge percentage will be 0%.
CTR = (ERV/P) - 1
Where: CTR = The cumulative total return net of
Sub-Account recurring charges for the
period.
ERV = The ending redeemable value of the
hypothetical investment made at the
beginning of the one, five or ten-year
period, at the end of the one, five or
ten-year period (or fractional portion
thereof).
P = A hypothetical initial payment of
$10,000
All non-standard performance data will only be advertised if the standard
performance data is also disclosed.
The Company may also from time to time use advertising which includes
hypothetical illustrations to compare the difference between the growth of a
taxable investment and a tax-deferred investment in a variable annuity.
LEGAL MATTERS
Legal advice regarding certain matters relating to the federal securities
laws applicable to the issuance of the Contracts described in the Prospectus and
this Statement has been provided by George N. Gingold, Esq., 197 King Philip
Drive, West Hartford, CT 06117. All matters of Connecticut law pertaining to the
Contracts, including the validity of the Contracts and the Company's right to
issue the Contracts under Connecticut Insurance Law and any other applicable
state insurance or securities laws, have been passed upon by Robert A.
Picarello, Chief Counsel, Individual Insurance, CIGNA Companies.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable Account are subject. The Company is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Variable Account.
EXPERTS
The financial statements of CIGNA Life Insurance Company as of December 31,
1994 and 1993 and for each of the three years in the period ended December 31,
1994 included in this Statement of Additional Information have been so included
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting. Price
Waterhouse LLP's consent to this reference to the firm as an "expert" is filed
as an exhibit to the registration statement of which this Statement of
Additional Information is a part.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this Statement
should be considered only as bearing on the ability of the Company to meet the
obligations under the Contracts. They should not be considered as bearing on the
investment performance of the assets held in the Variable Account, or on the
Guaranteed Interest Rate credited by the Company during a Guaranteed Period. No
financial statements of the Variable Account are included, because as of the
date of this Statement the Variable Account had not yet commenced operations.
10
<PAGE>
NORTHEAST INSURANCE SERVICES Telephone 203 240 2000
One Financial Plaza Facsimile 203 249 0457
Hartford, CT 06103
PRICE WATERHOUSE LLP [LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
February 13, 1995
The Board of Directors and Shareholder of
CIGNA Life Insurance Company
In our opinion, the accompanying balance sheets and the related statements of
income and retained earnings and of cash flows present fairly, in all material
respects, the financial position of CIGNA Life Insurance Company at December 31,
1994 and 1993, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
The Company implemented certain new accounting pronouncements as discussed in
Note 1 to the consolidated financial statements.
[SIG]
11
<PAGE>
CIGNA LIFE INSURANCE COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums and fees................................................. $ 1,327 $ 1,456 $ 1,580
Net investment income............................................. 1,184 1,162 1,112
--------- --------- ---------
Total revenues.................................................. 2,511 2,618 2,692
--------- --------- ---------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses.......................... 1,531 2,047 1,471
Other operating expenses.......................................... 77 67 91
--------- --------- ---------
Total benefits, losses and expenses............................. 1,608 2,114 1,562
--------- --------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGES.................................... 903 504 1,130
--------- --------- ---------
Income taxes (benefits):
Current......................................................... 319 164 476
Deferred........................................................ (2) 71 (69)
--------- --------- ---------
Total taxes..................................................... 317 235 407
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES........................................... 586 269 723
Cumulative effect of accounting change for income taxes........... -- -- 12
--------- --------- ---------
NET INCOME........................................................ 586 269 735
Retained earnings, beginning of year.............................. 3,665 3,396 2,661
--------- --------- ---------
RETAINED EARNINGS, END OF YEAR.................................... $ 4,251 $ 3,665 $ 3,396
---------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
12
<PAGE>
CIGNA LIFE INSURANCE COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
(IN THOUSANDS)
-----------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1994 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities: available for sale, at fair value
(amortized cost, $13,014; $13,055).................................... $ 12,732 $ 14,364
Short-term investments................................................. 5,296 4,450
--------- ---------
Total investments...................................................... 18,028 18,814
Cash and cash equivalents................................................ 61 64
Accrued investment income................................................ 316 316
Premiums and accounts receivable......................................... 286 316
Deferred income taxes, net............................................... 516 --
-----------------------------------------------------------------------------------------------
Total.................................................................. $ 19,207 $ 19,510
-----------------------------------------------------------------------------------------------
--------------------
LIABILITIES
Future policy benefits................................................... $ 9,185 $ 8,984
Unpaid claims and claim expenses......................................... 383 378
--------- ---------
Total insurance liabilities............................................ 9,568 9,362
Accounts payable, accrued expenses and other liabilities................. 12 10
Current income taxes..................................................... 59 79
Deferred income taxes, net............................................... -- 43
-----------------------------------------------------------------------------------------------
Total liabilities...................................................... 9,639 9,494
-----------------------------------------------------------------------------------------------
--------------------
SHAREHOLDER'S EQUITY
Common stock (25 shares outstanding)..................................... 2,500 2,500
Additional paid-in capital............................................... 3,000 3,000
Net unrealized appreciation (depreciation) on investments................ (183) 851
Retained earnings........................................................ 4,251 3,665
-----------------------------------------------------------------------------------------------
Total shareholder's equity............................................. 9,568 10,016
-----------------------------------------------------------------------------------------------
Total.................................................................. $ 19,207 $ 19,510
-----------------------------------------------------------------------------------------------
--------------------
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
13
<PAGE>
CIGNA LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(IN THOUSANDS)
------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1994 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before cumulative effect of accounting changes.......... $ 586 $ 269 $ 723
Adjustments to reconcile income before cumulative effect of
accounting changes to net cash provided by (used in)
operating activities:
Insurance liabilities...................................... 206 233 308
Accrued investment income.................................. -- 3 (239)
Premiums and accounts receivable........................... 30 43 21
Deferred income taxes, net................................. (2) 71 (69)
Accounts payable, accrued expenses, other liabilities and
current income taxes...................................... (18) (36) 36
Other, net................................................. 41 31 24
--------- --------- ---------
Net cash provided by operating activities.................. 843 614 804
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from short-term investments sold...................... 562 815 10,600
Maturities and repayments of fixed maturities.................. 130 535 115
Investments purchased:
Fixed maturities............................................. (130) (555) (10,359)
Short-term investments....................................... (1,408) (1,366) (1,221)
--------- --------- ---------
Net cash used in investing activities...................... (846) (571) (865)
------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents........... (3) 43 (61)
Cash and cash equivalents, beginning of year................... 64 21 82
------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year......................... $ 61 $ 64 $ 21
------------------------------------------------------------------------------------------------
-------------------------------
Supplemental Disclosure of Cash Flow Information:
Income taxes paid, net of refunds............................ $ 340 $ 181 $ 454
------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
14
<PAGE>
CIGNA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: CIGNA Life Insurance Company (the Company) is a
wholly-owned subsidiary of Connecticut General Life Insurance Company (CGLIC),
which is an indirect wholly-owned subsidiary of CIGNA Corporation (CIGNA). These
financial statements have been prepared in conformity with generally accepted
accounting principles.
B) RECENT ACCOUNTING PRONOUNCEMENTS: In 1993, the Company implemented
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." SFAS No. 115 requires that
debt and equity securities be classified into different categories and carried
at fair value if they are not classified as held to maturity. SFAS No. 115 does
not permit retroactive application of its provisions. The effect of implementing
SFAS No. 115 as of December 31, 1993 resulted in an increase in investment
assets of $1.3 million and an increase in shareholder's equity of $851,000
resulting from the classification of certain fixed maturities previously carried
at amortized cost to available for sale. The increase in shareholder's equity is
net of deferred income taxes of $458,000. See Note 2 for additional information.
In 1992, the Company implemented SFAS No. 109, "Accounting for Income Taxes."
This accounting change was implemented as of January 1, 1992 through a
cumulative effect adjustment. Prior year financial statements were not restated.
The cumulative effect of implementing SFAS No. 109 as of January 1, 1992
resulted in a non-cash increase to net income of $12,000. The effect on income
tax expense for 1992 as a result of the implementation of SFAS No. 109 was not
material. See Note 5 for additional information.
C) FINANCIAL INSTRUMENTS: In the normal course of business, the Company
enters into transactions involving financial instruments such as fixed
maturities, short-term investments and investment and loan commitments. These
instruments have credit risk and also may be subject to risk of loss due to
interest rate and market fluctuations. The Company evaluates and monitors each
financial instrument individually and, where appropriate, obtains collateral or
other forms of security to minimize risk of loss.
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts and taxes are excluded) are carried in the financial
statements at amounts that approximate fair values. The fair values used for
financial instruments are estimates that in many cases may differ significantly
from the amounts that could be realized upon immediate liquidation. In cases
where market prices are not available, estimates of fair value are based on
discounted cash flow analyses which utilize current interest rates for similar
financial instruments with comparable terms and credit quality.
D) INVESTMENTS: Investments in fixed maturities principally consists of
bonds. At December 31, 1993, in accordance with SFAS No. 115, fixed maturities
classified as available for sale are carried at fair value, with unrealized
appreciation (depreciation) included in Shareholder's Equity. Prior to SFAS No.
115 implementation, fixed maturities were carried principally at amortized cost,
net of impairments. Fixed maturities are considered impaired and written down to
fair value when a decline in value is considered to be other than temporary.
Fixed maturities that are delinquent are placed on non-accrual status, and
thereafter interest income is recognized only when payment is received.
Realized investment gains and losses result from sales and investment asset
write-downs. Generally, realized investment gains and losses are based upon
specific identification of the investment assets.
15
<PAGE>
Unrealized investment gains and losses net of deferred income taxes, if
applicable, for investments carried at fair value are included directly in
Shareholder's Equity.
E) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are reported as cash equivalents.
F) FUTURE POLICY BENEFITS: Future policy benefits are liabilities for
individual life products. Such liabilities are established in amounts adequate
to meet the estimated future obligations of policies in force. These liabilities
are computed using the net level premium method for individual life policies,
and are based upon estimates as to future investment yield, mortality and
withdrawals that include provisions for adverse deviation. Future policy
benefits for individual life insurance policies are computed using interest
rates ranging from approximately 4.5% to 6.0%. Mortality, morbidity, and
withdrawal assumptions for all policies are based on either the Company's own
experience or various actuarial tables.
H) UNPAID CLAIMS AND CLAIM EXPENSES: Liabilities for unpaid claims and claim
expenses are estimates of payments to be made on insurance claims for reported
losses and estimates of losses incurred but not reported. The Company's prior
year claims and claim adjustment expenses were not material.
I) OTHER LIABILITIES: Other Liabilities consists principally of various
insurance-related liabilities for taxes, licenses and fees.
J) PREMIUMS AND FEES AND RELATED EXPENSES: Premiums for individual life
insurance are recognized as revenue when due. Benefits, losses and expenses are
matched with premiums.
K) INCOME TAXES: The Company is included in the consolidated United States
federal income tax return filed by CIGNA. In accordance with the United States
federal income tax consolidated return regulations, all corporations included in
a consolidated tax return are jointly and severally liable for all tax
liabilities. In accordance with a tax sharing agreement, the provision for
federal income tax is computed as if the Company was filing a separate federal
income tax return, except that benefits arising from tax credits and net
operating losses are allocated to those subsidiaries producing such attributes
only to the extent they are utilized in the consolidated federal income tax
provision.
Deferred income taxes are generally recognized when assets and liabilities
have different values for financial statement and tax reporting purposes. These
differences result primarily from loss reserves, investments and unrealized
appreciation or depreciation on investments.
NOTE 2 -- INVESTMENTS
A) FIXED MATURITIES: The amortized cost and fair value by contractual
maturity periods for fixed maturities as of December 31, 1994 were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Amortized Fair
(IN THOUSANDS) Cost Value
---------------------------------------------------------------------------------------------
<S> <C> <C>
Available for Sale (Carried at Fair Value)
Due in one year or less............................................... $ 25 $ 25
Due after one year through five years................................. 3,179 3,117
Due after five years through ten years................................ 9,769 9,550
Due after ten years................................................... 41 40
---------------------------------------------------------------------------------------------
Total................................................................. $ 13,014 $ 12,732
---------------------------------------------------------------------------------------------
---------------------
</TABLE>
16
<PAGE>
Actual maturities could differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. Also, the Company may extend maturity in some cases.
As of December 31, 1994, gross unrealized appreciation (depreciation) for
fixed maturities by type of issuer was as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Amortized Fair
(IN THOUSANDS) Cost Appreciation Depreciation Value
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for Sale (Carried at Fair Value)
Federal government bonds.................. $ 10,432 $ 16 $ (236) $ 10,212
Foreign government bonds.................. 535 -- (11) 524
Corporate bonds........................... 2,047 -- (51) 1,996
-------------------------------------------------------------------------------------------------
Total..................................... $ 13,014 $ 16 $ (298) $ 12,732
-------------------------------------------------------------------------------------------------
-----------------------------------------------------
</TABLE>
As of December 31, 1993, gross unrealized appreciation (depreciation) for
fixed maturities by type of issuer was as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Amortized Fair
(IN THOUSANDS) Cost Appreciation Depreciation Value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for Sale (Carried at Fair Value)
Federal government bonds.................. $ 10,462 $ 1,059 $ (11) $ 11,510
Foreign government bonds.................. 539 55 -- 594
Corporate bonds........................... 2,054 206 -- 2,260
------------------------------------------------------------------------------------------------
Total..................................... $ 13,055 $ 1,320 $ (11) $ 14,364
------------------------------------------------------------------------------------------------
----------------------------------------------------
</TABLE>
B) SHORT-TERM INVESTMENTS: As of December 31, 1994 and 1993, short-term
investments include debt securities, principally corporate securities of $5.2
million and $4.4 million, respectively; and federal government securities of
$70,000 and $59,000, respectively.
C) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS: Unrealized
appreciation and depreciation for investments carried at fair value (fixed
maturities) as of December 31 were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C>
Unrealized appreciation................................................... $ 16 $ 1,320
Unrealized depreciation................................................... (298) (11)
--------- ---------
(282) 1,309
Less: Deferred income taxes (benefit)..................................... (99) 458
------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)................................ $ (183) $ 851
------------------------------------------------------------------------------------------------
--------------------
</TABLE>
Net unrealized appreciation (depreciation) on investments that are carried at
fair value is included as a separate component of Shareholder's Equity, net of
deferred income taxes.
The increase (decrease) in net unrealized appreciation/depreciation was ($1.0)
million and $851,000 for the years ended December 31, 1994 and 1993,
respectively.
D) OTHER: As of December 31, 1994 and 1993, the Company had no concentration
of investments in a single investee exceeding 10% of Shareholder's Equity.
17
<PAGE>
NOTE 3 -- INVESTMENT INCOME AND GAINS AND LOSSES
A) NET INVESTMENT INCOME: The components of net investment income, for the
year ended December 31 were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities.................................................. $ 971 $ 981 $ 869
Short-term investments............................................ 225 191 261
--------- --------- ---------
1,196 1,172 1,130
Less investment expenses.......................................... 12 10 18
---------------------------------------------------------------------------------------------------
Net investment income............................................. $ 1,184 $ 1,162 $ 1,112
---------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
NOTE 4 -- SHAREHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS
The Connecticut Insurance Department (the Department) recognizes as net income
and surplus (shareholder's equity) those amounts determined in conformity with
statutory accounting practices prescribed or permitted by the Department, which
differ in certain respects from generally accepted accounting principles. As of
December 31, 1994, there were no material permitted accounting practices
utilized by the Company.
Capital stock of the Company at December 31, 1994 and 1993 consisted of 30,000
shares of common stock authorized, and 25,000 shares issued and outstanding (par
value $100).
Statutory surplus was $9.3 million and $8.7 million at December 31, 1994 and
1993, respectively. The Connecticut Insurance Holding Company Act limits the
maximum amount of annual dividends or other distributions available to
shareholders of Connecticut insurance companies without prior approval of the
Insurance Commissioner. Under current law, the maximum dividend distribution
which may be made by the Company during 1995 without prior approval is $927,000.
NOTE 5 -- INCOME TAXES
In accordance with SFAS No. 109, the Company adopted the liability method of
accounting for income taxes as discussed in Note 1.
As of December 31, 1994, the net deferred tax asset was $516,000 and at
December 31, 1993 the net deferred tax liability was $43,000.
Management believes, based on the Company's earnings history and its future
expectations, that the Company's taxable income in future years will be
sufficient to realize the net deferred tax asset. In determining the adequacy of
future taxable income, management considered the future reversal of its existing
taxable temporary differences and available tax planning strategies that could
be implemented, if necessary.
CIGNA's federal income tax returns are routinely audited by the Internal
Revenue Service (IRS), and provisions are made in the financial statements in
anticipation of the results of these audits. CIGNA resolved all issues
pertaining to the Company arising out of the audits for 1982 through 1990 which
resulted in a decrease to net income of $73,000 and $23,000 for 1993 and 1992,
respectively.
In management's opinion, adequate tax liabilities have been established for
all years.
18
<PAGE>
The tax effect of temporary differences which give rise to deferred income tax
assets and liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1994 1993
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Other insurance and contractholder liabilities.............................. $ 282 $ 301
Policy acquisition expenses................................................. 136 115
Unrealized depreciation on investments...................................... 99 --
--------- ---------
Total deferred tax assets................................................... 517 416
--------- ---------
Deferred tax liabilities:
Investments................................................................. 1 1
Unrealized appreciation on investments...................................... -- 458
--------- ---------
Total deferred tax liabilities.............................................. 1 459
----------------------------------------------------------------------------------------------------
Deferred income taxes, net.................................................... $ 516 $ (43)
----------------------------------------------------------------------------------------------------
--------------------
</TABLE>
As a result of the Omnibus Budget Reconciliation Act of 1993 (OBRA), the
federal corporate income tax rate increased by one percent to 35%, retroactive
to January 1, 1993. Deferred income tax benefits for 1993 included $14,000
related to an increase in the Company's net deferred tax asset as of January 1,
1993 due to the effect of the tax rate increase.
Total income tax expense was more than the amount computed using the nominal
federal income tax rate for the following reasons:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense at nominal rate (35% for 1994 and 1993, 34% for 1992)...... $ 316 $ 176 $ 384
Resolved federal tax audit issues...................................... -- 73 23
Increase in deferred tax asset for tax rate change..................... -- (14) --
Other, net............................................................. 1 -- --
--------------------------------------------------------------------------------------------------------
Total income tax expense............................................... $ 317 $ 235 $ 407
--------------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
Temporary and other differences which resulted in the deferred income tax
expense (benefit) for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1994 1993 1992
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Other insurance and contractholder liabilities......................... $ 19 $ 40 $ 31
Policy acquisition expenses............................................ (21) (28) (29)
Resolved federal tax audit issues...................................... -- 73 (71)
Federal tax rate change................................................ -- (14) --
--------------------------------------------------------------------------------------------------------
Deferred tax expense (benefit)......................................... $ (2) $ 71 $ (69)
--------------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>
NOTE 6 -- REINSURANCE
In the normal course of business, the Company assumes reinsurance related to
long-duration contracts from CGLIC. Insurance premiums assumed for the year
ended December 31, 1994, 1993 and 1992 were $1.3 million, $1.5 million and $1.6
million, respectively.
NOTE 7 -- CONTINGENCIES
A) REGULATORY AND INDUSTRY DEVELOPMENTS: The Company's businesses are
subject to a changing social, economic, legal, legislative and regulatory
environment which could affect them. Some of the changes include initiatives to
restrict insurance pricing and the application of underwriting standards; to
restrict investment practices; and to expand regulation.
19
<PAGE>
The National Association of Insurance Commissioners (NAIC) has developed model
solvency-related guidelines ("risk-based capital" rules) to strengthen solvency
regulation of insurance companies. Depending on the ratio of the insurer's
surplus to its risk-based capital, the insurer could be subject to various
regulatory actions ranging from increased scrutiny to conservatorship. At
December 31, 1994, the Company is adequately capitalized under the guidelines.
Also, the NAIC is addressing a proposal that would limit the types and amounts
of investment assets that an insurance company can hold. The Company is in
compliance with the proposed guidelines in the present form, however, the
Company cannot predict what effects, if any, changes to such guidelines will
have on its future operations, liquidity or financial condition.
Unfavorable economic conditions have contributed to an increase in the number
of insurance companies that are impaired or insolvent. This is expected to
result in an increase in mandatory assessments by state guaranty funds of, or
voluntary payments by, solvent insurance companies to cover losses to
policyholders of insolvent or rehabilitated companies. Mandatory assessments,
which are subject to statutory limits, can be partially recovered through a
reduction in future premium taxes in some states. Although future assessments
and payments may adversely affect results of operations in future periods, such
amounts are not expected to have a material adverse effect on the Company's
liquidity or financial condition.
The eventual effect on the Company of the changing environment in which it
operates remains uncertain.
B) LITIGATION: The Company is routinely engaged in litigation incidental to
its business. It is management's opinion that such litigation is not likely to
have a material adverse effect on the Company's financial condition, although it
may adversely affect results of operations, liquidity or financial condition in
future periods.
NOTE 8 -- RELATED PARTY TRANSACTIONS
The Company, together with other CIGNA subsidiaries, has entered into a
pooling arrangement known as the CIGNA Corporate Liquidity Account (the Account)
for the purpose of maximizing earnings on funds available for short-term
investment. Withdrawals from the Account, up to the total amount of the
participant's investment in the Account, are allowed on a demand basis. As of
December 31, 1994 and 1993, all of the Company's short-term investments are in
the Account. See also Note 2B for additional information regarding short-term
investments.
See also Note 6 for information on reinsurance activities with CGLIC.
20
<PAGE>
PART C. OTHER INFORMATION
<PAGE>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(1) Registrant -- Not Applicable. Registrant has not commenced operations.
(2) Depositor
(A) Statements of Income and Retained Earnings for the Years Ended
December 31, 1994, 1993, and 1992.
(B) Balance Sheets As of December 31, 1994 and 1993.
(C) Statements of Cash Flows for the Years Ended December 31, 1994, 1993
and 1992.
(b) Exhibits
(1) Resolution of Board of Directors of CIGNA Life Insurance Company Dated
As of October 11, 1994 Authorizing Establishment of Registrant
(2) Not Applicable
(3) Form of Selling Agreement among CIGNA Life Insurance Company, CIGNA
Financial Advisors, Inc. as principal underwriter, and selling dealers.
(4) Form of CIGNA Life Insurance Company Variable Annuity Contract Form
Number AN 420, together with Optional Methods of Settlement Riders
(Form Numbers AR 420 and AR 421).
(5) Form of Application Which May Be Used in Connection with the Contract
Shown As Exhibit (4), and Addendum (Form Numbers B10242 and B10243)
(6) (A) Certificate of Incorporation (Charter) of CIGNA Life Insurance
Company, as amended
(B) By-Laws of CIGNA Life Insurance Company
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Robert A. Picarello, Esq., Chief Counsel of CIGNA Life
Insurance Company*
(10) (A) Consent of Price Waterhouse LLP
(B) Consent of Robert A. Picarello, Esq. (included in Exhibit 9)*
(C)__Consent of George N. Gingold, Esq.
(11) Not Applicable
(12) Not Applicable
(13) Schedules for Computation of Performance Data
(14) Not Applicable
(15)_Power of Attorney Authorizing Signature of Any and All Amendments to
This Registration Statement
*___ Incorporated by reference to initial filing of this Registration
Statement made on April 6, 1995.
1
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The principal business address of each of the directors and officers of
CIGNA Life Insurance Company (the "Company") is the company's Home Office, 900
Cottage Grove Road, Bloomfield, Connecticut. The mailing address is Hartford, CT
06152.
DIRECTORS AND OFFICERS OF DEPOSITOR
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DEPOSITOR
-------------------- ------------------------------------------------------------------------
<S> <C>
John Wilkinson President (Principal Executive Officer)
James T. Kohan Vice President and Actuary (Principal Financial Officer)
Robert Moose Vice President (Principal Accounting Officer)
David C. Kopp Corporate Secretary
Andrew G. Helming Secretary
Marcy F. Blender Treasurer
Harold W. Albert Director
S. Tyrone Alexander Director
Robert W. Burgess Director
John G. Day Director
Lawrence P. English Director and Chairman of the Board
Arthur C. Reeds, III Director
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
There follows a chart of persons controlled by or under common control with
the Depositor. The consolidated financial statements of the Depositor include
the accounts of the Depositor and its wholly-owned subsidiaries.
[chart incorporated by reference to Pre-Effective Amendment No. 1 to this
Registration Statement on Form N-4, filed April 28,1995]
ITEM 27. NUMBER OF PURCHASERS
As of August 22, 1995 there were no owners of the Contracts.
ITEM 28. INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and
Officers of the Registrant are applicable:
CONNECTICUT LAW. Except where an applicable insurance policy is procured,
Connecticut General Statutes ("C.G.S.") Section 33-320a is the sole source of
indemnification rights for directors and officers of Connecticut corporations
and for persons who may be deemed to be controlling persons by reason of their
status as a shareholder, director, officer, employee or agent of a Connecticut
corporation. Under C.G.S. Section 33-320a, a corporation shall indemnify any
director or officer who was or is a party, or was threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter referred to as
"proceeding") by virtue of the fact that he or the person whose legal
representative he is: (i) is or was a director or officer of the corporation;
(ii) while a director or an officer of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise (hereinafter referred to as "enterprise"), other than
an employee benefit plan or trust; or (iii) while a director or an officer of
the corporation, is or was a director or officer serving at the request of the
corporation as a fiduciary or an employee benefit plan or trust maintained for
the benefit of employees of the corporation or any other enterprise, against
"covered expenditures" if (and only if) his conduct met the applicable statutory
eligibility standard. The types of expenditures which are covered and the
statutory eligibility standard vary according to the type of proceeding to which
the director or officer is or was a party or was threatened to be made a party.
2
<PAGE>
According to C.G.S. Section 33-320a, in non-derivative proceedings other
than ones brought in connection with an alleged claim based upon the purchase or
sale by a director or officer of securities of the corporation or of another
enterprise, which the director or officer serves or served at the request of the
corporation, the corporation shall indemnify a director or officer against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses,
including attorney's fees, actually incurred by him in connection with the
proceeding, or any appeal therein, IF AND ONLY IF he acted (i) in good faith and
(ii) in a manner he reasonably believed to be in the best interests of the
corporation or, in the case of a person serving as a fiduciary of any employee
benefit plan or trust, in a manner he reasonably believed to be in the best
interests of the corporation or in the best interest of the participants and
beneficiaries of such employee benefit plan or trust and consistent with the
provisions of such employee benefit plan or trust. However, where the proceeding
brought is criminal in nature, C.G.S. Section 33-320a requires that the director
or officer must satisfy the additional condition that he had no reasonable cause
to believe that his conduct was unlawful in order to be indemnified. A director
or officer also will be entitled to indemnification as described above if (i) he
is successful on the merits in the defense of any non-derivative proceeding
brought against him or (ii) a court shall have determined that in view of all
the circumstances he is fairly and reasonably entitled to be indemnified. The
decision about whether the director or officer qualifies for indemnification
under C.G.S. Section 33-320a may be made (i) in writing by a majority of those
members of the board of directors who were not parties to the proceeding in
question, (ii) in writing by independent legal counsel selected by a consent in
writing signed by a majority of those directors who were not parties to the
proceeding, or (iii) by the shareholders of the corporation at a special or
annual meeting by an affirmative vote of at least a majority of the voting power
of shares not owned by parties to the proceeding. A director or officer also may
apply to a court of competent jurisdiction for indemnification even though he
previously applied to the board, independent legal counsel or the shareholders
and his application for indemnification was rejected.
For purposes of C.G.S. Section 33-320a, the termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not create, of itself, a presumption that the director or
officer did not act in good faith or in a manner which that director or officer
did not believe reasonably to be in the best interests of the corporation or of
the participants and beneficiaries of an employee benefit plan or trust and
consistent with the provisions of such plan or trust. Likewise, the termination
of a criminal act or proceeding shall not create, of itself, a presumption that
the director or officer had reasonable cause to believe that his conduct was
unlawful.
In non-derivative proceedings based on the purchase or sale of securities of
the corporation or of another enterprise, which the director or officer serves
or served at the request of the corporation, C.G.S. Section 33-320a provides
that the corporation shall indemnify the director or officer only after a court
shall have determined upon application that, in view of all the circumstances,
the director or officer is fairly and reasonably entitled to be indemnified.
Furthermore, the expenditures for which the director or officer shall be
indemnified shall be only such amount as the court determines to be appropriate.
Pursuant to C.G.S. Section 33-320a, where a director or officer was or is a
party or was threatened to be made a party to a derivative proceeding, the
corporation shall indemnify him against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the proceeding or any
appeal therein, in relation to matters as to which he is finally adjudged not to
have breached his duty to the corporation. The corporation also shall indemnify
a director or officer where the court determines that, in view of all the
circumstances, such person is fairly and reasonably entitled to be indemnified;
however, in such a situation, the individual shall be indemnified only for such
amount as the court determines to be appropriate. Furthermore, the statute
provides that the corporation shall not indemnify a director or officer for
amounts paid to the corporation, to a plaintiff or to counsel for a plaintiff in
settling or otherwise disposing of a threatened or pending action, with or
without court approval, or for expenses incurred in defending a threatened
action or a pending action which is settled or otherwise disposed of without
court approval.
C.G.S. Section 33-320a also provides that expenses incurred in defending a
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding upon authorization of the board of directors, provided said
expenses are indemnifiable under the statute and the director or officer agrees
to repay such amount if he is later found not entitled to indemnification by the
corporation.
Lastly, C.G.S. Section 33-320a is intended to be an exclusive statute. A
corporation established under Connecticut statute cannot indemnify a director or
officer (other than a director or officer who is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee or agent
of another enterprise), to an extent either greater or less than that authorized
by the statute, and any provision in the certificate of incorporation, the
by-laws, a shareholder or
3
<PAGE>
director resolution, or agreement or otherwise that is inconsistent with the
statute is invalid. Notwithstanding the above, C.G.S. Section 33-320a
specifically authorizes a corporation to procure insurance providing greater
indemnification rights than those set out in the statute the premium cost of
which may be shared with the director or officer on such basis as may be agreed
upon.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provision, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The directors and officers may also be covered by an errors and omissions
policy or other insurance policies.
ITEM 29. PRINCIPAL UNDERWRITER
The Registrant's principal underwriter is CIGNA Financial Advisors, Inc.
("CFA"), 900 Cottage Grove Road, Hartford, Connecticut 06152. CFA has received
no commission or other compensation from the Registrant, as Registrant has not
yet commenced operations. CFA also acts as principal underwriter of Connecticut
General Life Insurance Company's CG Variable Annuity Separate Accounts I and II,
registered unit investment trusts issuing variable annuity contracts, CG
Variable Life Insurance Separate Account I, a registered unit investment trust
issuing variable life insurance policies, and a separate account issuing
variable life insurance contracts not required to be registered under the
Investment Company Act of 1940.
DIRECTORS AND OFFICERS OF PRINCIPAL UNDERWRITER
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH UNDERWRITER
-------------------- ------------------------------------------------------------------------
<S> <C>
Edward M. Berube President and Director
John Wilkinson Director
Roy H. Bubbs Vice President
Robert F. Clark Vice President
Karen R. Matheson Vice President
Allan P. Wick Vice President and Treasurer
Robert A. Picarello Chief Counsel and Assistant Secretary
Robert B. Pinkham Assistant Vice President
David C. Kopp Secretary
David A. Carlson Assistant Secretary
Howard R. Loos Assistant Secretary
Tina L. O'Connor Assistant Secretary
Pamela S. Williams Assistant Secretary
Charlotte J. Cardone Assistant Treasurer
Gail B. Marcus Assistant Treasurer
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder are
maintained by CIGNA Life Insurance Company at its Home Office at 900 Cottage
Grove Road, Hartford, CT 06152.
ITEM 31. MANAGEMENT SERVICES
All management policies are discussed in Part A or Part B.
4
<PAGE>
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post effective amendment to
this registration statement under the Securities Act of 1933 as frequently as
necessary to ensure that the audited financial statements in the registration
statement are never more than 16 months old for so long as Premium Payments
under the Contracts may be accepted.
(b) Registrant undertakes that it will include either (i) a postcard or
similar written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information or (ii) a
space in the Contract application that an applicant can check to request a
Statement of Additional Information.
(c) Registrant undertakes to deliver promptly, upon written or oral request
made to CIGNA Life Insurance Company at the address or phone number listed in
the Prospectus, any Statement of Additional Information and any financial
statements required by Form N-4 to be made available to applicants or contract
owners.
SECTION 403(B) REPRESENTATION
Registrant represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88),
regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act of
1940, in connection with redeemability restrictions on Section 403(b) Contracts,
and that paragraphs numbered (1) through (4) of that letter will be complied
with.
5
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Pre-Effective Amendment No. 2 to its
Registration Statement on Form N-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Bloomfield and State of
Connecticut on this 17th day of August, 1995.
CIGNA Variable Annuity Separate
Account I (Registrant)
By /s/ JOHN WILKINSON
------------------------------------
John Wilkinson
PRESIDENT
CIGNA Life Insurance Company
CIGNA Life Insurance Company
(Depositor)
By /s/ JOHN WILKINSON
------------------------------------
John Wilkinson
PRESIDENT
As required by the Securities Act of 1933, this Amendment to Registrant's
Registration Statement has been signed below on August 17, 1995 by the following
persons, as officers and directors of the Depositor, in the capacities
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ JOHN WILKINSON
------------------------------------------- President (Principal Executive Officer) and Director
John Wilkinson
*
------------------------------------------- Vice President and Actuary (Principal Financial Officer)
James T. Kohan
*
------------------------------------------- Vice President (Principal Accounting Officer)
Robert Moose
*
------------------------------------------- Director
Harold W. Albert
*
------------------------------------------- Director
S. Tyrone Alexander
*
------------------------------------------- Director
Robert W. Burgess
*
------------------------------------------- Director
John G. Day
*
------------------------------------------- Director
Lawrence P. English
*
------------------------------------------- Director
Arthur C. Reeds, III
*By /s/ ROBERT A. PICARELLO
---------------------------------------
Robert A. Picarello
ATTORNEY-IN-FACT
(A Majority of the Directors)
</TABLE>
<PAGE>
EXHIBIT 1
SECRETARY'S CERTIFICATE
CIGNA LIFE INSURANCE COMPANY
The undersigned hereby certifies that the following resolutions were adopted by
the Board of Directors of CIGNA Life Insurance Company at a meeting held on
October 11, 1994, a quorum being present; and such resolutions remain in full
force and effect as of the date of certification, not having been amended,
modified, or rescinded since the date of their adoption.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ESTABLISHMENT OF CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
WHEREAS, Section 38a-433 of the Connecticut Insurance Laws permits a
domestic life insurance company to establish one or more separate accounts;
and
WHEREAS, it is desired that the Company create such a separate account to
house certain of its variable annuity products;
NOW, THEREFORE, BE IT RESOLVED: That a separate account referred to herein
as "CIGNA Variable Annuity Separate Account I" is hereby established.
FURTHER RESOLVED: That the assets of CIGNA Variable Annuity Separate
Account I shall be derived solely from (a) sale of variable annuity
products, (b) funds corresponding to dividend accumulation with respect to
investment of such assets, and (c) advances made by the Company in
connection with operation of CIGNA Variable Annuity Separate Account I.
FURTHER RESOLVED: That this Company shall maintain in CIGNA Variable
Annuity Separate Account I assets with a fair market value at least equal
to the statutory valuation reserves for the variable annuity policies.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized in his or her discretion, as the Company may deem
appropriate from time to time, in accordance with applicable laws and
regulations (a) to divide CIGNA Variable Annuity Separate Account I into
divisions and subdivisions, with each division or subdivision investing in
shares of designated classes of designated investment companies or other
appropriate securities, (b) to modify or eliminate any
<PAGE>
such divisions or subdivisions, (c) to designate further any division or
subdivision thereof and (d) to change the designation of CIGNA Variable
Annuity Separate Account I to another designation.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized to invest cash from the Company's general account in
CIGNA Variable Annuity Separate Account I or in any division or subdivision
thereof as may be deemed necessary or appropriate to facilitate the
commencement of the operations of CIGNA Variable Annuity Separate Account I
or to meet any minimum capital requirements under the Investment Company
Act of 1940 and to transfer cash or securities from time to time between
the Company's general account and CIGNA Variable Annuity Separate Account I
as deemed necessary or appropriate so long as such transfers are not
prohibited by law and are consistent with the terms of the variable annuity
policies issued by the Company providing for allocations to CIGNA Variable
Annuity Separate Account I.
FURTHER RESOLVED: That the income, gains, and losses (whether or not
realized) from assets allocated to CIGNA Variable Annuity Separate Account
I shall, in accordance with any variable annuity policies issued by the
Company providing for allocations to CIGNA Variable Annuity Separate
Account I, be credited to or charged against CIGNA Variable Annuity
Separate Account I without regard to the other income, gains, or losses of
the Company.
FURTHER RESOLVED: That authority is hereby delegated to the President of
the Company to adopt procedures regarding, among other things, criteria by
which the Company shall afford a pass-through of voting rights to the
owners of variable annuity policies providing for allocation to CIGNA
Variable Annuity Separate Account I with respect to the shares of any
investment companies which are held in CIGNA Variable Annuity Separate
Account I.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized and directed to prepare and execute any necessary
agreements to enable CIGNA Variable Annuity Separate Account I to invest or
reinvest the assets of CIGNA Variable Annuity Separate Account I in
securities issued by investment companies registered under the Investment
Company Act of 1940 or other appropriate securities as the officers of the
Company may designate pursuant to the provisions of the variable annuity
policies providing for allocations to CIGNA Variable Annuity Separate
Account I.
<PAGE>
FURTHER RESOLVED: That the Company may register under the Securities Act of
1933 variable annuity policies, or units of interest thereunder, under
which amounts will be allocated by the Company to CIGNA Variable Annuity
Separate Account I to support reserves for such policies and, in connection
therewith, the officers of the Company be, and each of them hereby is,
authorized, to prepare, execute and file with the Securities and Exchange
Commission, in the name and on behalf of the Company, registration
statements under the Securities Act of 1933, including prospectuses,
supplements, exhibits and other documents relating thereto, and amendments
to the foregoing, in such form as the officer executing the same may deem
necessary or appropriate.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized to take all actions necessary to register CIGNA
Variable Annuity Separate Account I as a unit investment trust under the
Investment Company Act of 1940 and to take such related actions as they
deem necessary and appropriate to carry out the foregoing.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized to prepare, execute and file with the Securities and
Exchange Commission, applications and amendments thereto for such
exemptions from or orders under the Investment Company Act of 1940 and the
Securities Act of 1933, and to request from the Securities and Exchange
Commission no action and interpretative letters as they may from time to
time deem necessary or desirable.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized to prepare, execute and file all periodic reports
required under the Investment Company Act of 1940 and the Securities
Exchange Act of 1934.
FURTHER RESOLVED: That the Chief Counsel of the Company, or the person as
is designated by him from time to time, is hereby appointed as agent for
service under any such registration statement and is duly authorized to
receive communications and notices from the securities and Exchange
Commission with respect thereto, and to exercise powers given to such agent
by the Securities Act of 1933 and the Rules thereunder and any other
necessary Acts.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized to effect in the name and on behalf of the Company,
all such registrations, filings and qualifications under blue sky or other
applicable securities laws and regulations and under insurance securities
laws and insurance laws and
<PAGE>
regulations of such states and other jurisdictions as they may deem
necessary or appropriate, with respect to the Company, and with respect to
any variable annuity policies under which amounts will be allocated by the
Company to CIGNA Variable Annuity Separate Account I to support reserves
for such policies; such authorization shall include registration, filing
and qualification of the Company and of said policies, as well as
registration, filing and qualification of officers, employees and agents of
the Company as brokers, dealers, agents, salespersons, or otherwise; and
such authorization shall also include, in connection therewith, authority
to prepare, execute, acknowledge and file all such applications,
applications for exemptions, certificates, affidavits, covenants, consents
to service of process and other instruments, and to take all such action as
the officer executing the same or taking such action may deem necessary or
desirable.
FURTHER RESOLVED: That the officers of the Company be, and each of them
hereby is, authorized to execute and deliver all such documents and papers
and to do or cause to be done all such acts and things as they may deem
necessary or desirable to carry out the foregoing resolutions and the
intent and purpose thereof.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of said CIGNA Life
Insurance Company this 20th day of October, 1994.
/s/ DAVID C. KOPP
-----------------------
David C. Kopp
Corporate Secretary
(SEAL)
<PAGE>
EXHIBIT 3
BROKER-DEALER SELLING AGREEMENT
AGREEMENT by and between Connecticut General Life Insurance Company, a
Connecticut corporation ("CG Life"), CIGNA Life Insurance Company, a Connecticut
corporation ("CLIC"), CIGNA Financial Advisors, Inc. ("CFA"), a registered
Broker-Dealer with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934, and a member of the National Association of
Securities Dealers, Inc. ("NASD"); and ___________________ ("The Broker-
Dealer"), also a registered Broker-Dealer with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and a member of the NASD.
WITNESSETH:
WHEREAS, CG Life proposes to have the Broker-Dealer's registered
representatives ("Representatives") who are also licensed to sell insurance in
appropriate jurisdictions solicit and sell certain variable insurance contracts
(the "CG Variable Policies") more particularly described in this Agreement and
which are deemed to be securities under the Securities Act of 1933, and to sell
certain non-variable insurance contracts (the "CG Fixed Policies") more
particularly described in this Agreement (collectively the "CG Policies"); and
WHEREAS, CG Life has appointed CFA as the principal distributor of the CG
Variable Policies and has agreed with CFA that CFA shall be responsible for the
training and supervision of persons involved with the solicitation and offer or
sale of any of the CG Variable Policies, and CFA proposes to delegate, to the
extent legally permitted, said supervisory duties to the Broker-Dealer; and
WHEREAS, as full compensation, CG Life will pay to the Broker-Dealer the
commissions provided for in Schedule A-1 on premiums paid to CG Life on CG
Policies sold by the Broker-Dealer after this Agreement becomes effective; and
WHEREAS, CLIC proposes to have the Broker-Dealer's Representatives who are
also licensed to sell insurance in appropriate jurisdictions solicit and sell
certain variable insurance contracts (the "CLIC Variable Policies") more
particularly described in this Agreement and which are deemed to be securities
under the Securities Act of 1933, and to sell certain non-variable insurance
contracts (the "CLIC Fixed Policies") more particularly described in this
Agreement (collectively the "CLIC
Page 1 of 13
<PAGE>
Policies") (hereafter the CG Policies and the CLIC Policies may be collectively
referred to as the "Policies"); and
WHEREAS, CLIC has appointed CFA as the principal distributor of the CLIC
Variable Policies and has agreed with CFA that CFA shall be responsible for the
training and supervision of persons involved with the solicitation and offer or
sale of any of the CLIC Variable Policies, and CFA proposes to delegate, to the
extent legally permitted, said supervisory duties to the Broker-Dealer; and
WHEREAS, as full compensation, CLIC will pay to the Broker-Dealer the
commissions provided for in Schedule A-2 on premiums paid to CLIC on CLIC
Policies sold by the Broker-Dealer after this Agreement becomes effective;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. APPOINTMENT OF THE BROKER-DEALER. CG Life, CLIC and CFA hereby
appoint the Broker-Dealer to sell the Policies through its Representatives and
to provide certain administrative services to facilitate solicitations for and
sales of the Policies.
The Broker-Dealer agrees that its authority is limited to the solicitation
and marketing of the Policies in accordance with this Agreement and the Broker-
Dealer agrees that it will not make, alter, modify or discharge any contract or
extend any provision thereof, or extend the time for payment of premiums or
waive any forfeiture or guarantee dividends or estimate future interest,
mortality or expense factors except through the use of authorized illustrations
and projections approved by CG Life or CLIC, or deliver any contract unless the
applicant is at the time of delivery in good health and insurable condition, or
incur any debts or liability against CG Life, CLIC or CFA. Nothing in this
Agreement shall create or be construed to create an exclusive authority to
represent CG Life, CLIC or CFA or to effect sales of Policies, either with
respect to a specific geographic territory, or otherwise.
2. THE POLICIES.
(a) The Policies issued by CG Life to which this Agreement applies
are listed in Schedule B-1. Schedule B-1 may be amended at any time by CG Life.
CG Life in its sole discretion and
Page 2 of 13
<PAGE>
without notice to the Broker-Dealer, may suspend sales of any Policies or may
amend any policies or contracts evidencing such Policies.
(b) The Policies issued by CLIC to which this Agreement applies are
listed in Schedule B-2. Schedule B-2 may be amended at any time by CLIC. CLIC in
its sole discretion and without notice to the Broker-Dealer, may suspend sales
of any Policies or may amend any policies or contracts evidencing such Policies.
3. SECURITIES LICENSING. The Broker-Dealer shall, at all times when
performing its functions under this agreement, be registered as a securities
broker with the SEC and NASD and licensed or registered as a securities broker-
dealer in the states and other local jurisdictions that require such licensing
or registration in connection with variable insurance contract sales activities
or the supervision of Representatives who perform such activities in the
respective location.
4. INSURANCE LICENSING. The Broker-Dealer shall, at all times when
performing its functions under this agreement, be validly licensed as an
insurance agency in the states and other local jurisdictions that require such
licensing or registration in connection with the Broker-Dealer's variable or
fixed insurance contract sales activities, or maintain a validly licensed
insurance agency subsidiary in those states in which the Broker-Dealer cannot
obtain a corporate agent's license. The Broker-Dealer shall provide CG Life and
CLIC with a list of all licensed insurance agencies relied upon by the Broker-
Dealer to comply with this paragraph and covenants to maintain the completeness
and accuracy of such list.
5. APPOINTMENTS. The Broker-Dealer shall assist CG Life and CLIC in the
appointment of Representatives under the applicable insurance laws to sell the
Policies. The Broker-Dealer shall fulfill all requirements set forth in the
General Letter of Recommendation, attached as Schedule C-1 with respect to CG
Life and Schedule C-2 with respect to CLIC, in conjunction with the submission
of licensing/appointment papers for all applicants as insurance agents of CG
Life and of CLIC. All such licensing/appointment papers should be submitted by
the Broker-Dealer to CG Life or CLIC or their duly appointed agent.
Notwithstanding such submission, CG Life and CLIC shall each have sole
discretion to appoint, refuse to appoint, discontinue, or terminate the
appointment of any Representative as an insurance agent of CG Life or of CLIC.
Page 3 of 13
<PAGE>
6. SECURING APPLICATIONS.
(a) All applications for CG Life Policies shall be made on
application forms supplied by CG Life and all payments collected by the Broker-
Dealer or any Representative of the Broker-Dealer shall be remitted promptly in
full, together with such application forms and any other required documentation,
directly to CG Life at the address indicated on such application or to such
other address as CG Life may, from time-to-time, designate in writing. The
Broker-Dealer shall review all such applications for completeness. Checks in
payment on any such Policy shall be drawn to the order of "Connecticut General
Life Insurance Company." All applications are subject to acceptance or rejection
by CG Life at its sole discretion.
(b) All applications for CLIC Policies shall be made on application
forms supplied by CLIC and all payments collected by the Broker-Dealer or any
Representative of the Broker-Dealer shall be remitted promptly in full, together
with such application forms and any other required documentation, directly to
CLIC at the address indicated on such application or to such other address as
CLIC may, from time-to-time, designate in writing. The Broker-Dealer shall
review all such applications for completeness. Checks in payment on any such
Policy shall be drawn to the order of "CIGNA Life Insurance Company." All
applications are subject to acceptance or rejection by CLIC at its sole
discretion.
(c) All records or information obtained hereunder by the Broker-
Dealer shall not be disclosed or used except as expressly authorized herein, and
the Broker-Dealer will keep such records and information confidential, to be
disclosed only as authorized or if expressly required by federal or state
regulatory authorities.
7. MONEY RECEIVED BY BROKER-DEALER. All money payable in connection with
any of the Policies, whether as premium or otherwise, and whether paid by or on
behalf of any policyholder, contract owner or anyone else having an interest in
the Policies, is the property of CG Life (with respect to CG Life Policies) or
CLIC (with respect to CLIC Policies) and shall be transmitted immediately in
accordance with the administrative procedures of CG Life or CLIC without any
deduction or offset for any reason, including, by way of example but not
limitation, any deduction or offset for compensation claimed by the Broker-
Dealer.
8. SUPERVISION OF REPRESENTATIVES. The Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
associated with the Broker-Dealer who are engaged directly or indirectly in the
offer or sale of the Policies, and
Page 4 of 13
<PAGE>
all such persons shall be subject to the control of and supervision of the
Broker-Dealer with respect to such persons' securities regulated activities, and
to the control of the Broker-Dealer or its appropriate licensed insurance agency
subsidiary with respect to such person's insurance regulated activities, in
connection with the solicitation and sale of and other communication with
respect to the Policies. The Broker-Dealer will cause the Representatives to be
trained in the sale of the Policies; will cause such Representatives to qualify
under applicable federal and state laws to engage in the sale of the Policies;
will cause such Representatives to be registered representatives of the Broker-
Dealer before such Representatives engage in the solicitation of applications
for the Policies; and will cause such Representatives to limit solicitation of
applications for the CG Life Policies to jurisdictions where CG Life has
authorized such solicitation and to limit solicitation of applications for the
CLIC Policies to jurisdictions where CLIC has authorized such solicitation. The
Broker-Dealer shall cause such Representatives' qualifications to be certified
to the satisfaction of CFA and shall notify CFA if any Representative ceases to
be a registered representative of the Broker-Dealer or ceases to maintain the
proper licensing required for the sale of any of the Policies. Each party shall
be liable for its own negligence and misconduct hereunder.
9. REPRESENTATIVES INSURANCE LICENSES AND APPOINTMENTS. The Broker-
Dealer, prior to allowing its Representatives to solicit for sales or sell the
Policies, shall require such Representatives to be validly insurance licensed,
registered and appointed by CG Life and CLIC as fixed and variable annuity and
variable life agents in accordance with the jurisdictional requirements of the
place where the solicitations and sales take place as well as the solicited
person's or entity's place of residence.
10. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. The Broker-Dealer shall fully comply with the requirements of
the National Association of Securities Dealers, Inc. and of the Securities
Exchange Act of 1934 and all other applicable federal or state laws and will
establish such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives. Upon request by
CFA, the Broker-Dealer shall furnish such appropriate records as may be
necessary to establish such diligent supervision.
Page 5 of 13
<PAGE>
11. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of the Broker-Dealer or
otherwise fails to meet the rules and standards imposed by the Broker-Dealer on
its Representatives, the Broker-Dealer shall advise CFA of this fact and shall
immediately notify such Representative that he or she is no longer authorized to
sell any of the Policies and the Broker-Dealer shall take whatever additional
action may be necessary to terminate the sales activities of such Representative
relating to the Policies.
12. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING.
(a) The Broker-Dealer shall be provided with prospectuses relating to
the registered Policies and such other material as CFA determines to be
necessary or desirable for use in connection with sales of the Variable
Policies. No sales promotion materials or any advertising relating to the
Variable Policies shall be used by the Broker-Dealer unless the specific item
has been approved in writing by CFA.
(b) The Broker-Dealer shall be provided with advertising and sales
material relating to the non-registered Policies and such other material as CG
Life or CLIC determines to be necessary or desirable for use in connection with
sales of the such Policies. No sales promotion materials or any advertising
relating to the Fixed Policies shall be used by the Broker-Dealer unless the
specific item has been approved in writing by CG Life or CLIC.
(c) In addition, the Broker-Dealer shall not print, publish or
distribute any advertisement, circular or any document relating to CG Life or
CLIC unless such advertisement, circular or document shall have been approved in
writing by CG Life or CLIC; provided, however, that nothing herein shall
prohibit the Broker-Dealer from advertising fixed or variable insurance in
general or on a generic basis.
(d) The Broker-Dealer agrees that all computer software containing
the rates and values of products issued by CG Life or CLIC, whether or not
distributed through CFA, all rate books, computer printouts, client files,
policies, brochures, prospectuses, sales promotion materials, whether in hard
copy or computer format, containing the name/logo of CG Life, CLIC, CFA, CIGNA
or any affiliated company, are furnished to the Broker-Dealer in confidence, and
the Broker-Dealer agrees to refrain from reproducing, publishing, or disclosing
such material other than in
Page 6 of 13
<PAGE>
the ordinary course of business. The Broker-Dealer further agrees that all such
property shall be returned to CG Life or CLIC upon demand or upon termination of
this Agreement.
13. RIGHT OF REJECTION. CG Life, CLIC or CFA, in its or their sole
discretion, may reject any applications or payments remitted by Representative
through the Broker-Dealer and may refund an applicant's payments to the
applicant. In the event such refunds are made and if the Broker-Dealer has
received compensation based on an applicant's payment that is refunded, the
Broker-Dealer shall promptly repay such compensation to CG Life or to CLIC. if
repayment is not promptly made, CG Life or CLIC may at its sole option deduct
any amounts due it from the Broker-Dealer from future commissions otherwise
payable to the Broker-Dealer. This provision shall survive termination of this
Agreement.
14. COMPENSATION.
(a) COMMISSIONS, FEES AND ALLOWANCES.
(i) Sales commissions payable to the Broker-Dealer in connection
with the CG Life Policies shall be paid by CG Life to the Broker-Dealer in
accordance with the provisions set forth in Schedule A-1. CG Life and/or CFA
will provide the Broker-Dealer with a copy of CG Life's current Schedule of
Sales Commissions. These fees and commissions will be paid as a percentage of
premiums received and accepted by CG Life on applications obtained by the
various Representatives of the Broker-Dealer. Upon termination of this Agreement
all compensation to the Broker-Dealer hereunder shall cease; however, the
Broker-Dealer shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due to CG Life.
(ii) Sales commissions payable to the Broker-Dealer in connection
with the CLIC Policies shall be paid by CLIC to the Broker-Dealer in accordance
with the provisions set forth in Schedule A-2. CLIC and/or CFA will provide the
Broker-Dealer with a copy of CLIC's current Schedule of Sales Commissions. These
fees and commissions will be paid as a percentage of premiums received and
accepted by CLIC on applications obtained by the various Representatives of the
Broker-Dealer and\or upon the account value of the CLIC Policies issued pursuant
to such applications. Upon termination of this Agreement all compensation to the
Broker-Dealer hereunder shall cease; however, the Broker-Dealer shall continue
to be liable for any chargebacks or for any other amounts advanced by or
otherwise due to CLIC.
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<PAGE>
(b) CHANGES TO COMMISSION SCHEDULE. CG Life and CLIC may, upon at
least ten (10) days prior written notice, change their respective Schedule of
Sales Commissions. Any such change shall apply to compensation due on
applications received by CG Life or CLIC after the effective date of such
notice.
(c) RESTRICTIONS.
(i) If the Broker-Dealer or any Representative shall rebate or
offer to rebate all or any part of a premium on a policy issued by CG Life or by
CLIC in violation of applicable state insurance laws or regulations, or if
Broker-Dealer or any Representative shall withhold any premium on any Policy
issued by CG Life or by CLIC, or if the Broker-Dealer or any Representative
rebates or offers to rebate all or any part of a commission paid or payable upon
the sale of a Policy, CG Life and/or CLIC may, at its or their option, terminate
this Agreement.
(ii) If the Broker-Dealer or any Representative shall at any
time induce or endeavor to induce any owner of a Policy to relinquish the Policy
except under circumstances where there is reasonable grounds for believing the
policy, contract or certificate is not suitable for such person, any and all
compensation due the Broker-Dealer hereunder shall cease and terminate.
(iii) Nothing in this Agreement shall be construed as giving the
Broker-Dealer the right to incur any indebtedness on behalf of CG Life or CLIC.
The Broker-Dealer hereby authorizes CG Life to set off liabilities of the
Broker-Dealer to CG Life against any and all amounts otherwise payable to the
Broker-Dealer by CG Life, and hereby authorizes CLIC to set off liabilities of
the Broker-Dealer to CLIC against any and all amounts otherwise payable to the
Broker-Dealer by CLIC.
15. POLICY DELIVERY. CG Life and CLIC may, upon written request of
Broker-Dealer, transmit Policies to Broker-Dealer for delivery to Policyowners.
Broker-Dealer hereby agrees to deliver all such Policies to policyowners within
ten (10) days of their receipt by Broker-Dealer from CG Life or CLIC and to
obtain from each Policyowner, and transmit monthly to CG Life and CLIC, a policy
receipt form signed by the Policyowner. Broker-Dealer agrees that the
indemnification provisions of paragraph 16(a) herein include any and all costs,
expenses, loss, damages and attorneys' fees resulting from the Broker-Dealer's
failure to Perform the undertakings described in this paragraph, and authorizes
CG Life to set off any amount it owes CG Life under this paragraph against any
and all amounts otherwise payable to Broker-
Page 8 of 13
<PAGE>
Dealer by CG Life, and authorizes CLIC to set off any amount it owes CLIC under
this paragraph against any and all amounts otherwise payable to Broker-Dealer by
CLIC.
16. INDEMNIFICATIONS.
(a) The Broker-Dealer shall indemnify and hold CG Life, CLIC and CFA
harmless from any and all costs, expenses, loss or damages, including reasonable
attorneys' fees, resulting from any negligent, fraudulent or unauthorized acts
or omissions of the Broker-Dealer or its Representatives.
(b) CG Life, CLIC and CFA shall indemnify and hold the Broker-Dealer
harmless from any and all cost, expense, loss or damages, including reasonable
attorneys' fees, resulting from any negligent, fraudulent or unauthorized acts
or omissions by CG Life, CLIC and CFA, their employees and authorized agents.
17. WAIVER. Failure of any party to insist upon strict compliance with any
of the conditions of this Agreement shall not be construed as a waiver of any of
the conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
18. INDEPENDENT CONTRACTORS.
(a) CG Life, CLIC and CFA are independent contractors with respect to
the Broker-Dealer and to Representatives. Nothing contained in this Agreement
shall create, or shall be construed to create, the relationship of employer and
employee between CG Life, CLIC or CFA and the Broker-Dealer.
(b) The Broker-Dealer shall, in its sole discretion, select the
persons from whom it will solicit applications for Policies, as well as the
time, manner and place of solicitation.
19. LIMITATIONS.
(a) No party other than CG Life shall have the authority to make,
alter, or discharge any policy, contract, or certificate issued by CG Life, to
waive any forfeiture or to grant, permit, nor extend the time for making any
payments nor to guarantee earnings or rates, nor to alter the forms which CG
Life may prescribe or
Page 9 of 13
<PAGE>
substitute other forms in place of those prescribed by CG Life, nor to enter
into any proceeding in a court of law or before a regulatory agency in the name
of or on behalf of CG Life.
(b) No party other than CLIC shall have the authority to make, alter,
or discharge any policy, contract, or certificate issued by CLIC, to waive any
forfeiture or to grant, permit, nor extend the time for making any payments nor
to guarantee earnings or rates, nor to alter the forms which CLIC may prescribe
or substitute other forms in place of those prescribed by CLIC, nor to enter
into any proceeding in a court of law or before a regulatory agency in the name
of or on behalf of CLIC.
20. FIDELITY BOND.
(a) The Broker represents that all of its directors, officers,
employees and Representatives who are appointed pursuant to this Agreement as CG
Life or CLIC agents for state insurance law purposes or who have access to funds
of CG Life or CLIC, including but not limited to funds submitted with
applications for the Policies or funds being returned to owners, shall at all
times be covered by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall be
maintained by the Broker-Dealer at the Broker-Dealer's expense. Such bond shall
be, at least, of the form, type and amount required under the NASD Rules of Fair
Practice. The Broker-Dealer shall maintain Errors and Omissions insurance
coverage in an amount and with a company satisfactory to CG Life, CLIC and CFA.
CG Life or CLIC may require evidence, satisfactory to it, that such coverage is
in force and the Broker-Dealer shall give prompt written notice to CG Life and
CLIC of any notice of cancellation or change of coverage.
(b) The Broker-Dealer assigns any proceeds received from the fidelity
bonding company to CG Life to the extent of any loss to CG Life due to
activities covered by the bond, and to CLIC to the extent of any loss to CLIC
due to activities covered by the bond. If there is any deficiency amount,
whether due to a deductible or otherwise, the Broker-Dealer shall promptly pay
CG Life or CLIC such amount on demand and the Broker-Dealer hereby indemnifies
and holds harmless CG Life and CLIC from any such deficiency and from the costs
of collection thereof (including reasonable attorneys' fees).
Page 10 of 13
<PAGE>
21. BINDING EFFECT. This Agreement shall be binding on and shall inure to
the benefit of the parties to it and their respective successors and assigns;
provided the Broker-Dealer may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of CG Life and of CLIC.
22. REGULATIONS. The parties agree to observe and comply with all
applicable local, state, and federal laws and rules or regulations, and to fully
compensate with any regulatory authority having jurisdiction with respect
thereto.
23. DEFINITIONS.
(a) NOTICES. All notices or communications shall be sent in writing
and to the addresses shown below or to such other address as the party may
request by giving written notice to the other parties. Notices shall be
effective immediately upon deposit in the mail, unless otherwise specifically
provided.
Connecticut General Life Insurance Company
Hartford, CT 06152-2351
Attn: Financial Institutions Department
S-351
CIGNA Life Insurance Company
Hartford, CT 06152-2351
Attn: Financial Institutions Department
S-351
CIGNA Financial Advisors, Inc.
Hartford, CT 06152-2351
Broker-Dealer:
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(b) Contract Year shall mean the period of one year commencing with
the date of issue of any Policy or Contract and the subsequent anniversaries of
such date of issue.
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<PAGE>
24. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Connecticut.
25. AMENDMENT OF AGREEMENT. CG Life and CLIC each reserve the right to
amend this Agreement at any time, and the submission of an application by the
Broker-Dealer after notice of any such amendment shall constitute agreement to
any such amendment.
26. TERMINATION.
(a) This Agreement may be terminated immediately by any party upon
written notice or if CFA or the Broker-Dealer shall cease to be registered
Broker-Dealers under the Securities Exchange Act of 1934 and members of the
NASD. In the event of such termination, commissions, fees and allowances for the
first contract year and for renewal years shall be payable, based upon the
commission schedule set forth in Schedules A-1 and A-2.
(b) This Agreement will automatically terminate:
(i) Upon the death or total and permanent physical or mental
disability of the Broker-Dealer, if an individual.
(ii) Upon dissolution of the Broker-Dealer, if a corporation or
a partnership, including LLC and LLP.
(iii) At the end of any calendar year during which the Broker-
Dealer has not maintained the minimum life premium and persistency requirements
as set forth in either Schedule A-1 or Schedule A-2.
(c) Termination of this Agreement will result in the termination of all
agreements with representatives recruited by the Broker-Dealer.
(d) Payment of broker compensation at a level that is higher than the
level of broker compensation set forth in Schedule A-1 or A-2 will, at the
option of CG Life or CLIC respectively, result in the termination of this
Agreement.
27. EFFECTIVE DATE. This Agreement shall be effective on the ____ day of
_________________ 19__.
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<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By:
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Print Name:
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Title:
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CIGNA LIFE INSURANCE COMPANY
By:
----------------------------------------------------
Print Name:
--------------------------------------------
Title:
-------------------------------------------------
CIGNA FINANCIAL ADVISORS, INC.
By:
----------------------------------------------------
Print Name:
--------------------------------------------
Title:
-------------------------------------------------
Broker-Dealer:
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Name of Firm
By:
----------------------------------------------------
Print Name:
--------------------------------------------
Title:
-------------------------------------------------
Date:
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Page 13 of 13
<PAGE>
SCHEDULE A-1
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
SCHEDULE OF SALES COMMISSIONS
CONTRACTS CONTRACT % PER
PREMIUM PAYMENT
<PAGE>
SCHEDULE A-2
CIGNA LIFE INSURANCE COMPANY
SCHEDULE OF SALES COMMISSIONS
CONTRACTS CONTRACT % PER
PREMIUM PAYMENT
<PAGE>
SCHEDULE B-1
CONNECTICUT GENERAL LIFE INSURANCE COMPANY POLICIES
<PAGE>
SCHEDULE B-2
CIGNA LIFE INSURANCE COMPANY POLICIES
<PAGE>
SCHEDULE C-1
General Letter of Recommendation
to Connecticut General Life Insurance Company
The Broker-Dealer hereby certifies to Connecticut General Life Insurance Company
("CG Life") and CIGNA Financial Advisors, ("CFA") that all the following
requirements will be fulfilled in conjunction with the submission of appointment
papers for all applicants as agents of CG Life submitted by Broker-Dealer.
Broker-Dealer will, upon request, forward proof of compliance with same to CG
Life in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence, business reputation, and experience
and declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good business
reputation, is reliable, is financially responsible and is worthy of
appointment as a variable product agent of CG Life. This inquiry and
background investigation has included a credit and criminal check on each
applicant. Based upon our investigation, we vouch for each applicant and
certify that each individual is trustworthy, competent and qualified to act
as an agent for CG Life to hold him/herself out in good faith to the
general public.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements
for the registration of each applicant as a registered representative
through our NASD member firm, and each applicant is presently registered as
an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license or appointment and
all the findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state each applicant is licensed in, and that, all such persons have
fulfilled the appropriate examination, education and training requirements.
4. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will
be properly protected.
<PAGE>
5. We will not permit any applicant to transact business as an agent until
duly licensed and appointed by CG Life. No applicants have been given a
contract or furnished supplies, nor have any applicants been permitted to
write, solicit business, or act as an agent in any capacity, and they will
not be so permitted until the certificate of authority applied for is
received.
<PAGE>
SCHEDULE C-2
General Letter of Recommendation
to CIGNA Life Insurance Company
The Broker-Dealer hereby certifies to CIGNA Life Insurance Company ("CLIC") and
CIGNA Financial Advisors, ("CFA") that all the following requirements will be
fulfilled in conjunction with the submission of appointment papers for all
applicants as agents of CLIC submitted by Broker-Dealer. Broker-Dealer will,
upon request, forward proof of compliance with same to CLIC in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence, business reputation, and experience
and declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good business
reputation, is reliable, is financially responsible and is worthy of
appointment as a fixed and variable product agent of CLIC. This inquiry and
background investigation has included a credit and criminal check on each
applicant. Based upon our investigation, we vouch for each applicant and
certify that each individual is trustworthy, competent and qualified to act
as an agent for CLIC to hold him/herself out in good faith to the general
public.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements
for the registration of each applicant as a registered representative
through our NASD member firm, and each applicant is presently registered as
an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license or appointment and
all the findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state each applicant is licensed in, and that, all such persons have
fulfilled the appropriate examination, education and training requirements.
4. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will
be properly protected.
<PAGE>
5. We will not permit any applicant to transact business as an agent until
duly licensed and appointed by CLIC. No applicants have been given a
contract or furnished supplies, nor have any applicants been permitted to
write, solicit business, or act as an agent in any capacity, and they will
not be so permitted until the certificate of authority applied for is
received.
<PAGE>
CIGNA LIFE INSURANCE COMPANY
A Stock Company Home Office Location: 900 Cottage Grove Road
Bloomfield, Connecticut
Mailing Address: CIGNA Individual Insurance
Variable Products Service Center - Routing S224
Hartford, CT 06152
The Company agrees with the Owner to provide the benefits in this contract.
RIGHT TO EXAMINE CONTRACT. The contract may be returned to the insurance agent
through whom it was purchased or to the Company via the Variable Products
Service Center within 10 days after its receipt (20 days after its receipt where
required by law for a contract issued in replacement of another contract). If
the contract is so returned, it will be deemed void from the Date of Issue, and
the Company will refund the Premium Payment(s) as provided plus or minus any
investment gains or losses under the contract as of the date the returned
contract is received by the Company, unless required otherwise by law.
The contract is issued and accepted subject to the terms set forth on this page
and on the following pages which are made a part of the contract. In
consideration of the Premium Payment(s) as provided, this contract is executed
by CIGNA Life Insurance Company as of its Date of Issue.
/s/ John Wilkinson
PRESIDENT
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO THE OWNER, INCLUDING WITHDRAWALS AND
TRANSFERS. PAYMENTS MADE FROM THE FIXED ACCOUNT PURSUANT TO AN ELECTION WHICH
BECOMES EFFECTIVE AT THE END OF A GUARANTEED PERIOD AND PAYMENTS MADE UNDER THE
"ANNUITY BENEFIT" PROVISIONS ARE NOT SUBJECT TO THE MARKET VALUE ADJUSTMENT.
PAYMENTS MADE UNDER THE "DEATH BENEFIT" PROVISIONS ARE NOT SUBJECT TO ANY
NEGATIVE MARKET VALUE ADJUSTMENT.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
USE OF CONTRACT. This contract is available for retirement and deferred
compensation plans some of which may qualify for special tax treatment under
various sections of the Internal Revenue Code.
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY.
AN420
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TABLE OF CONTENTS
CONTRACT SPECIFICATIONS................................................. 5
SCHEDULE OF CHARGES, EXPENSES AND FEES.................................. 7
DEFINITIONS............................................................. 9
PREMIUM PAYMENT PROVISIONS.............................................. 10
Premium Payments
Allocation of Premium Payments
Annuity Account Continuation
Minimum Value Requirements
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS........................ 11
Owner
Rights of Owner
Transfer of Ownership
Assignment
Beneficiary
Change of Beneficiary
FIXED AND VARIABLE ACCOUNTS PROVISIONS.................................. 12
Fixed Account and Sub-Accounts
Variable Account and Sub-Accounts
Investment Risk
Investments of the Variable Account Sub-Accounts
Substituted Securities
CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS................... 13
Part A - Fixed Account Value
Guaranteed Periods
Guaranteed Interest Rates
Fixed Accumulation Value
Minimum Surrender Value
Part B - Variable Account Value
Crediting Variable Accumulation Units
Variable Accumulation Unit Value
Variable Accumulation Value
Net Investment Factor
Part C - General
Annuity Account
Transfer Privilege
Annuity Account Fee
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE
ADJUSTMENT PROVISIONS................................................... 16
Cash Withdrawals
Withdrawal Charges
Market Value Adjustment
AN420 2
<PAGE>
TABLE OF CONTENTS (CONTINUED)
PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS........ 18
Penalty-Free Partial Withdrawals or Transfers
Full or Partial Withdrawals and Transfers at the
End of a Guaranteed Period
Waiver of Withdrawal Charge and/or Market Value Adjustment on
Death or Annuity Date
Penalty-Free Annuitization
BENEFIT PROVISIONS...................................................... 19
Annuity Benefit
Annuity Date
Election and Effective Date of Election with Respect
to Annuity Benefit
Determination of Amount
Income Payment Benefits
Death Benefit
Election and Effective Date of Election with Respect
to Death Benefit
Payment of Death Benefit
Amount of Death Benefit
Changing Death Benefit Options
Charging for Death Benefit Options
Section 72(s)
GENERAL PROVISIONS...................................................... 22
The Contract
Modification of Contract
Non-Participation
Loans
Determination of Values
Endorsement of Income Payments
Misstatement of Age
Claims of Creditors
Periodic Reports
Followed by Optional Methods of Settlement and any Riders
Note: Pages 4, 6, and 8 are intentionally "blank."
AN420 3
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CONTRACT SPECIFICATIONS
ANNUITANT JOHN DOE SPECIMEN CONTRACT NUMBER
AGE AT ISSUE 35 APRIL 1, 1995 DATE OF ISSUE
APRIL 1, 2025 ANNUITY DATE
-------------------------------------------------------------------------------
FORM BENEFIT INITIAL PREMIUM
PAYMENT
AN420 FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY $50,000
WITH FIXED AND VARIABLE ACCOUNTS
DEATH BENEFIT OPTION(S) ELECTED: NONE
INITIAL PREMIUM PAYMENT ALLOCATION PERCENTAGE
FIXED ACCOUNT - SUB-ACCOUNTS
PERCENTAGE ADJUSTMENT TO INDEX RATE "B": .50%
INITIAL GUARANTEED PERIOD/INTEREST RATE 1 YEAR / 4.55% 10%
INITIAL GUARANTEED PERIOD/INTEREST RATE 3 YEARS/ 5.80% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 5 YEARS/ 6.40% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 7 YEARS/ 6.65% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 10 YEARS/ 6.90% 0%
VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO 10%
MONEY MARKET PORTFOLIO 10%
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO 0%
INVESTMENT GRADE BOND PORTFOLIO 0%
FRED ALGER MANAGEMENT, INC.
ALGER AMERICAN FUND 0%
ALGER AMERICAN GROWTH PORTFOLIO 0%
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO 10%
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO 0%
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO 10%
MASSACHUSETTS FINANCIAL SERVICES
VARIABLE INSURANCE TRUST
MFS TOTAL RETURN SERIES 10%
MFS UTILITIES SERIES 0%
MFS WORLD GOVERNMENT SERIES 0%
(Continued on Page 5.1)
AN420 5
<PAGE>
CONTRACT SPECIFICATIONS (CONTINUED)
ANNUITANT JOHN DOE SPECIMEN CONTRACT NUMBER
AGE AT ISSUE 35 APRIL 1, 1995 DATE OF ISSUE
APRIL 1, 2025 ANNUITY DATE
-------------------------------------------------------------------------------
NEUBERGER & BERMAN
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST 0%
AMT BALANCED PORTFOLIO 0%
AMT LIMITED MATURITY BOND PORTFOLIO 10%
AMT PARTNERS PORTFOLIO 10%
QUEST FOR VALUE
QUEST FOR VALUE ACCUMULATION TRUST
QUEST GLOBAL EQUITY PORTFOLIO 10%
QUEST MANAGED PORTFOLIO 10%
QUEST SMALL CAP PORTFOLIO 0%
TOTAL 100%
SUBSEQUENT PREMIUM PAYMENTS ARE SUBJECT TO A 10% MINIMUM ALLOCATION REQUIREMENT
WITH RESPECT TO ANY ONE FIXED ACCOUNT SUB-ACCOUNT OR VARIABLE ACCOUNT SUB-
ACCOUNT AND THE FOLLOWING MINIMUM PAYMENT AMOUNTS:
$2,500 PER FIXED ACCOUNT GUARANTEED PERIOD
$ 100 PER VARIABLE ACCOUNT SUB-ACCOUNT
LIMITATIONS ON TRANSFERS FROM FIXED ACCOUNT: ONLY ONE SUCH TRANSFER ALLOWED PER
CONTRACT YEAR FROM EACH SUB-ACCOUNT, AND THE AMOUNT(S) TRANSFERRED MAY NOT
EXCEED 15% OF THE THEN CURRENT VALUE OF THE APPLICABLE SUB-ACCOUNT(S).
THIS CONTRACT IS FOR USE WITH "CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I": A
CIGNA LIFE INSURANCE COMPANY SEPARATE INVESTMENT ACCOUNT WHICH WAS ESTABLISHED
ON OCTOBER 11, 1994.
OWNER: THE ANNUITANT
BENEFICIARY: THE PERSON(S) DESIGNATED BY THE OWNER AND RECORDED BY THE COMPANY
AN420 5.1
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SCHEDULE OF CHARGES, EXPENSES AND FEES
Annuity Account Fee: The Annuity Account Fee is $35 per Contract Year and will
be deducted on the last Valuation Date of each Contract Year. The Annuity
Account Fee, however, will be waived for any year for which the Annuity Account
Value equals or exceeds $100,000 as of the last Valuation Date of such Contract
Year.
Withdrawal Charges: The Withdrawal charges applicable under this contract are as
follows.
WITHDRAWAL CHARGE
AGAINST PREMIUM PAY- YEAR
MENT WITHDRAWN APPLICABLE
7% During 1st year since Premium Payment Accepted
6% During 2nd year since Premium Payment Accepted
5% During 3rd year since Premium Payment Accepted
4% During 4th year since Premium Payment Accepted
3% During 5th year since Premium Payment Accepted
2% During 6th year since Premium Payment Accepted
l% During 7th year since Premium Payment Accepted
0% Thereafter
Each Subsequent Premium Payment will be subject to its own 7-year period.
Any Withdrawal from the Fixed Account prior to the end of a Guaranteed Period
may also be subject to a Market Value Adjustment which may increase, decrease,
or have no affect on the applicable account value(s). A Market Value Adjustment
would not apply to a withdrawal effective at the end of a Guaranteed Period.
Withdrawal charges are not applicable to certain partial withdrawals of 15% or
less of Premium Payments annually. Withdrawal charges and a Market Value
Adjustment are not applicable to annuitization of the contract at any time, and
no negative Market Value Adjustment is applicable to payment of the Death
Benefit. (See "Penalty-Free Withdrawals, Transfers and Annuitization
Provisions.")
Asset Charges: Mortality and Expense Risk Charge is a charge equal to an
effective annual rate of 1.20% of the daily net assets of the Variable Account.
Administrative Expense Charge is a charge equal to an effective annual rate of
.10% of the daily net assets of the Variable Account. These charges are deducted
from the Variable Account Value at the end of each Valuation Period.
In addition, Daily Fund Operating Expenses will be applied by each Fund as set
forth in the prospectus for the applicable Fund(s).
(Continued on Page 7.1)
AN420 7
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SCHEDULE OF CHARGES, EXPENSES AND FEES (Continued)
Taxes: Premium tax equivalents (including any related retaliatory taxes), if
any, and any other taxes due under this contract will be deducted if applicable.
It is currently the Company's practice to deduct such taxes, if any, at the time
the Annuity Account Value, or any portion thereof, becomes payable.
AN420 7.1
<PAGE>
DEFINITIONS
ACCUMULATION PERIOD. The period from the Date of Issue to the Annuity Date, the
date on which the Death Benefit becomes payable, or the date on which the
contract is surrendered or annuitized, whichever is earliest.
ANNUITANT. The person on whose life the first Income Payment is to be made upon
the annuitization of the contract. The Annuitant on the Date of Issue is the
person designated in the Contract Specifications and will remain the Annuitant
under the contract unless the Owner exercises the right to change the Annuitant
as set forth in the "Rights of Owner" provision. If prior to the Annuity Date,
the Annuitant predeceases the Owner, the Owner will then become the Annuitant
until such time as the Owner exercises the right to designate a new Annuitant as
set forth in the "Rights of Owner" provision. A request for change of Annuitant
must be in writing to the Company at its Variable Products Service Center's
Mailing Address and will not take effect until recorded by the Company.
ANNUITY ACCOUNT. The account which is comprised of the Fixed and Variable
Accounts with respect to this contract.
ANNUITY ACCOUNT VALUE. The account value which at any time equals the sum of
all the then current values of the Fixed and Variable Accounts with respect to
this contract. Applicable premium taxes, if any, will be deducted when the
Annuity Account Value amount to be applied under the Annuity Benefit, Death
Benefit, Cash Withdrawals or Penalty-Free Withdrawal and Annuitization
provisions is determined.
ANNUITY DATE. The date on which Income Payments begin upon the annuitization of
the contract.
CONTRACT YEARS AND CONTRACT ANNIVERSARIES. All Contract Years and Contract
Anniversaries are 12 month periods measured from the Date of Issue.
DATE OF ISSUE. The date on which the contract becomes effective.
DUE PROOF OF DEATH. An original certified copy of an official death
certificate, an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death, or any other proof of death
satisfactory to the Company.
EXPIRATION DATE(S). The date(s) on which Guaranteed Period(s), if any, end.
FIXED ACCOUNT. The term "Fixed Account" under this contract means all Sub-
Account(s) associated with Guaranteed Period(s) and Guaranteed Interest Rate(s).
Fixed Account assets are general assets of the Company and are distinguishable
from those allocated to a separate account of the Company.
FUND(S). The Portfolio(s) of Fund Group(s) whose shares are acquired for the
Variable Account Sub-Accounts in which Premium Payments or Transfers may be
invested.
FUND GROUP(S). The open-end management investment companies (mutual funds)
registered under the Investment Company Act of 1940, as amended (hereinafter
referred as the "1940 Act"), one or more of whose Portfolio(s)' shares are made
available as investment vehicles for the contract through Variable Accounts Sub-
Accounts.
GUARANTEED PERIOD. The Guaranteed Period is the period for which interest, at
either an initial or subsequent Guaranteed Interest Rate will be credited to an
amount under a Fixed Account Sub-Account.
HOME OFFICE. The term "Home Office" means CIGNA Life Insurance Company, the
mailing address of which for this contract is CIGNA Individual Insurance,
Variable Products Service Center, Routing S224, Hartford, Connecticut 06152.
IN WRITING. The term "in writing" means in a written form satisfactory to the
Company and received by the Company at its Variable Products Service Center's
Mailing Address.
AN420 9
<PAGE>
DEFINITIONS (CONTINUED)
INCOME PAYMENTS. Income Payments are the amounts payable under this contract as
determined by the settlement options provisions of the contract.
PAYOUT PERIOD. The period during which Income Payments are made under this
contract.
SUB-ACCOUNT. That portion of the Fixed Account associated with specific
Guaranteed Period(s) and Guaranteed Interest Rate(s) and that portion of the
Variable Account which invests in shares of a specific Fund.
VALUATION DATE. Every day on which the New York Stock Exchange ("NYSE") is open
for business, except any day on which trading on the NYSE is restricted, or on
which an emergency exists, as determined by the Securities and Exchange
Commission ("SEC") so that valuation or disposal of securities is not
practicable.
VALUATION PERIOD. The period of time beginning on the day following the
Valuation Date and ending on the next Valuation Date. A Valuation Period may be
more than one day in length.
VARIABLE ACCOUNT. The term "Variable Account" under this contract means all
Sub-Account(s) associated with investments in the Fund(s). Variable Account
assets are separate account assets of the Company, the investment performance of
which is kept separate from that of the general assets of the Company, and are
not chargeable with the general liabilities of the Company.
VARIABLE ACCUMULATION UNIT. A unit of measure used in the calculation of the
value of each Variable Account Sub-Account.
VARIABLE ANNUITY UNIT. A unit of measure used in the calculation of the value
of the variable portion of the Annuity Account during the Payout Period.
PREMIUM PAYMENT PROVISIONS
PREMIUM PAYMENTS. Premium Payments are payable to the Company at its Variable
Products Service Center's Mailing Address or to an authorized agent of the
Company. A receipt signed by the President or Secretary and duly countersigned
will be furnished upon request. The Initial Premium Payment is the amount paid
to the Company as consideration for the benefits provided under the contract on
the Date of Issue. Subsequent Premium Payments may be paid to the Company at
its Variable Products Service Center's Mailing Address from time to time after
the Date of Issue and prior to the Annuity Date. The Company will not accept any
Premium Payment which is less then the minimum amount requirement then in effect
as determined by the Company. In addition, the prior approval of the Company is
required before it will accept a Premium Payment in excess of the maximum amount
limit then in effect as determined by the Company. All Premium Payments must
meet the allocation requirements specified under the "Allocation of Premium
Payments" provision. The payment of any amount under the contract which is
derived, all or in part, from any Premium Payments made by check or draft may be
postponed until such check or draft has been honored by the financial
institution upon which it is drawn.
The Initial Premium Payment attributable to the contract is shown on the
Contract Specifications page.
ALLOCATION OF PREMIUM PAYMENTS. Upon receipt by the Company at its Variable
Products Service Center's Mailing Address, each Premium Payment will be added to
the Annuity Account established under the contract. The Annuity Account is
described under the "Annuity Account" provision and is comprised of Fixed
Account Sub-Account(s) and Variable Account Sub-Account(s). The Initial Premium
Payment will be allocated to one or more such Sub-Accounts in accordance with
the allocation percentages specified by the Owner and shown in the Contract
Specifications, provided such allocations to Fixed and/or Variable
AN420 10
<PAGE>
PREMIUM PAYMENT PROVISIONS (CONTINUED)
Accounts conform to the Company's minimum deposit requirements in effect as of
the Date of Issue. Subsequent Premium Payments will be allocated on the same
basis as the most recent previous Premium Payment unless the Company is
otherwise instructed to change the allocation percentages. If a portion of the
most recent previous Premium Payment was allocated to the Fixed Account and the
allocation percentages when applied to a Subsequent Premium Payment does not
produce an amount which meets the Fixed Account minimum requirements, the
Company will promptly seek further instructions from the Owner regarding
allocation of the premium or otherwise return the applicable portion of such
Premium Payment as provided by law.
ANNUITY ACCOUNT CONTINUATION. The Annuity Account shall be continued
automatically in full force from the Date of Issue until the Annuity Date or
until the contract is surrendered or annuitized, the Death Benefit is paid, or
the Annuity Account Value no longer meets the requirements specified in the
"Minimum Value Requirements" provision, whichever occurs first.
MINIMUM VALUE REQUIREMENTS. If no Premium Payments have been made for three
consecutive years and the Annuity Account Value decreases to less than $500
during that period, or if any partial withdrawal decreases the Annuity Account
Value to less than $500, the Company reserves the right to cancel the contract
and pay to the Owner an adjusted value of the Annuity Account as would be
calculated under the "Determination of Amount" provision. The Company will,
however, provide at least 30 days advance notice to the Owner of its intended
action. During the notification period an additional Premium Payment may be
made to meet the minimum value requirements.
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
OWNER. The Owner on the Date of Issue will be the person designated in the
Contract Specifications. If no Owner is designated, the Annuitant will be the
Owner.
RIGHTS OF OWNER. The Owner may exercise all rights and privileges under the
contract including the right to: (a) agree with the Company to any change in or
amendment to the contract, (b) transfer all rights and privileges to another
person, (c) change the Beneficiary, (d) change the Annuitant any time prior to
the Annuity Date or name a new Annuitant if the Annuitant predeceases the Owner,
(e) name the payee to whom Income Payments are to be directed, and (f) assign
the contract.
All rights and privileges of the Owner may be exercised without the consent of
any designated transferee, or any Beneficiary if the Owner has reserved the
right to change the Beneficiary. All such rights and privileges, however, may
be exercised only with the consent of any assignee on record with the Company.
TRANSFER OF OWNERSHIP. The Owner may transfer all rights and privileges of the
Owner. On the effective date of transfer, the transferee will become the Owner
and will have all the rights and privileges of the Owner. The Owner may revoke
any transfer prior to its effective date.
Unless provided otherwise, a transfer will not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.
A transfer of Ownership, or a revocation of transfer, must be in writing to the
Company at its Variable Products Service Center's Mailing Address. A transfer
or a revocation will not take effect until recorded in writing by the Company at
its Variable Product Service Center's Mailing Address. When a transfer or
revocation has been so recorded, it will take effect as of the effective date
specified by the Owner. Any payment made or any action taken or allowed by the
Company before the transfer or the revocation is recorded will be without
prejudice to the Company.
AN420 11
<PAGE>
OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS (CONTINUED)
ASSIGNMENT. The Company will not be affected by any assignment of the contract
until the original assignment or a certified copy of the assignment is filed
with the Company at its Variable Annuity Products Center's Mailing Address.
The Company does not assume responsibility for the validity or sufficiency of
any assignment. An assignment of the contract will operate so long as the
assignment remains in force.
To the extent provided under the terms of the assignment, an assignment will
transfer the interest of any designated transferee or of any Beneficiary if the
Owner has reserved the right to change the Beneficiary.
BENEFICIARY. The Beneficiary is the person who has the right to receive the
Death Benefit set forth in the contract and, for Non-Qualified Contracts, who is
the "designated beneficiary" for purposes of Section 72(s) of the Internal
Revenue Code in the event of the Owner's death. The Beneficiary on the Date of
Issue will be the person designated in the Contract Specifications.
Unless provided otherwise, the interest of any Beneficiary who dies before the
Owner will vest in the Owner or the Owner's administrators or assigns.
CHANGE OF BENEFICIARY. A new Beneficiary may be designated from time to time. A
request for change of Beneficiary must be in writing to the Company at its
Variable Products Service Center's Mailing Address. The request must be signed
by the Owner. The request must also be signed by the Beneficiary if the right
to change the Beneficiary has not been reserved to the Owner.
A change of Beneficiary will not take effect until recorded by the Company.
When a change of Beneficiary has been so recorded, whether or not the Owner is
then alive, it will take effect as of the date the request was signed. Any
payment made or any action taken or allowed by the Company before the change of
Beneficiary is recorded will be without prejudice to the Company.
Unless provided otherwise, the right to change any Beneficiary is reserved to
the Owner.
FIXED AND VARIABLE ACCOUNTS PROVISIONS
FIXED ACCOUNT AND SUB-ACCOUNTS. Fixed Account assets are general assets of the
Company and are distinguishable from those allocated to a separate account of
the Company. Any portion of Premium Payments allocated by the Owner to a Fixed
Account Sub-Account will become part of the Fixed Account.
VARIABLE ACCOUNT AND SUB-ACCOUNTS. The Variable Account to which the variable
accumulation values, if any, under this contract relate is shown in the Contract
Specifications. It was established pursuant to a resolution of its Board of
Directors as a "separate account" under governing law of Connecticut, the
Company's state of domicile, and registered as a unit investment trust under the
1940 Act. Under Connecticut law, the Variable Account assets (except assets in
excess of its reserves and other contract liabilities) cannot be charged with
the general liabilities from any other business of the Company. The Variable
Account assets are owned and controlled exclusively by the Company, and the
Company is not a trustee with respect to those assets.
The Variable Account is divided into Sub-Accounts. Each Variable Account Sub-
Account's assets are invested in shares of a particular Fund of one of the Fund
Groups made available as funding vehicles under this contract. For each Variable
Account Sub-Account, the Company maintains Variable Accumulation Units whose
values reflect the investment performance of the Fund whose shares are held in
that Sub-Account.
Subject to any vote by persons having the right under the 1940 Act to vote
thereon, the Company may elect to operate the Variable Account as a management
company rather than a unit investment trust under the 1940 Act, or, if
registration is no longer required, to deregister the Variable Account. In such
event, the Company may endorse this contract to reflect such change and any
necessary of appropriate action taken
AN420 12
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FIXED AND VARIABLE ACCOUNTS PROVISIONS (CONTINUED)
to effect the change. Any changes in Variable Account investment policy shall
have been approved by the Connecticut Insurance Commissioner and approved or
filed, as required, in the state or other jurisdiction where this policy was
issued.
INVESTMENT RISK. Each Variable Account Sub-Account's assets are always fully
invested in the shares of the particular Fund purchased for that Sub-Account.
Each Variable Account Sub-Account's investment performance reflects the
investment performance of the Fund. Fund share values fluctuate, reflecting the
risks of changing economic conditions and the ability of a Fund Group's
investment advisor or sub-adviser to manage that Fund and anticipate changes in
economic conditions. As to the Variable Account assets, the Owner bears the
entire investment risk of gain or loss.
INVESTMENTS OF THE VARIABLE ACCOUNT SUB-ACCOUNTS. All amounts allocated to a
Variable Account Sub-Account will be used to purchase shares of the specific
Fund of a Fund Group used by that Sub-Account. Each Fund Group is registered
under the 1940 Act as an open-end management investment company, and each Fund
of that Fund Group is regulated as an open-end management investment company.
All Funds available as funding vehicles under this contract as of the Date of
Issue are listed in this contract on page 5. The Company may add additional Fund
Groups and additional Funds at any time or may change Funds or Fund Groups in
accordance with the "Substituted Securities" provision.
Any and all distributions made by a Fund will be reinvested in additional shares
of that Fund at net asset value. Deductions by the Company from a Variable
Account Sub-Account will be made by redeeming a number of Fund shares at net
asset value equal in total value to the amount to be deducted.
SUBSTITUTED SECURITIES. Shares corresponding to a particular Fund may not always
be available for purchase or the Company may decide that further investment in
such Fund is no longer appropriate in view of the purposes of the Variable
Account, or in view of legal, regulatory or federal income tax restrictions. In
such event, shares of another registered open-end investment company or unit
investment trust may be substituted both for Fund shares already purchased
and/or as the securities to be purchased in the future, provided that these
substitutions meet applicable Internal Revenue Service diversification
guidelines and any necessary regulatory or other approvals of such substitutions
have been obtained. In the event of any substitution pursuant to this
provision, the Company may make appropriate endorsement(s) to this contract to
reflect the substitution.
CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS
PART A - FIXED ACCOUNT VALUE
GUARANTEED PERIODS. The Initial Guaranteed Period(s), if any, are selected by
the Owner and are shown in the Contract Specifications. The duration of the
Initial Guaranteed Period(s) will affect the Initial Guaranteed Interest
Rate(s). Any Premium Payment or the portion thereof (or amount transferred in
accordance with the "Transfer Privilege" provision described below) allocated to
a particular Guaranteed Period will earn interest at the specified Guaranteed
Interest Rate during the Guaranteed Period. Initial Guaranteed Periods begin on
the date a Premium Payment is accepted (or, in the case of a transfer, on the
effective date of the transfer) and end on the Expiration Date for each duration
selected.
Any portion of the Annuity Account Value comprising a particular Fixed Account
Sub-Account (including interest earned thereon) will be referred to in this
contract as the "Guaranteed Period Amount." As a result of renewals, Subsequent
Payments, deductions for applicable Annuity Account Fee(s) and the cost of Death
Benefit Option(s), if any, and transfers of portions of the Annuity Account
Value, Guaranteed Period Amounts for Guaranteed Periods of the same duration may
have different Expiration Dates, and each Guaranteed Period Amount will be
treated separately for purposes of determining any Market Value Adjustment.
AN420 13
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CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
The Company will notify the Owner in writing about the upcoming expiration of a
Guaranteed Period with respect to a Fixed Account Sub-Account at least 60 days
prior to the Expiration Date of such Guaranteed Period. A subsequent Guaranteed
Period of the same duration will begin automatically at the end of the previous
Guaranteed Period unless the Company receives, in writing at its Variable
Products Service Center's Mailing Address within the 60-day period immediately
preceding the end of such Guaranteed Period, an election by the Owner of a
different Guaranteed Period from among those being offered by the Company at
such time, or instructions to transfer all or a portion of the applicable
Guaranteed Period Amount to one or more Fixed Account or Variable Account Sub-
Accounts in accordance with the "Transfer Privilege" provision.
GUARANTEED INTEREST RATES. The Company will establish the applicable Guaranteed
Interest Rate that will be used to determine the interest with respect to a
Fixed Account Sub-Account for each Guaranteed Period at the beginning of the
Guaranteed Period. This rate will be guaranteed for the duration of the
applicable Guaranteed Period. The Initial or Subsequent Guaranteed Interest Rate
will never be less than 3% per year, compounded annually. Subsequent Guaranteed
Interest Rate(s) will also be determined at the beginning of Guaranteed
Period(s) and may be higher or lower than the previous rate, but will never be
less than 3% per year, compounded annually. (See "Minimum Surrender Value"
provision.)
FIXED ACCUMULATION VALUE. Upon receipt of a Premium Payment by the Company at
its Variable Products Service Center's Mailing Address, all or that portion, if
any, of the Premium Payment which is allocated to the Fixed Account will be
credited to the Fixed Account and allocated to the Fixed Account Sub-Accounts
selected by the Owner. The Fixed Accumulation Value, if any, at any time, is
equal to the sum of the then current values of all Guaranteed Period Amounts
with respect to this contract.
MINIMUM SURRENDER VALUE. The Minimum Surrender Value for the Fixed Account for
a given Contract Year is the Premium Payment(s), or portion thereof, and
transfers allocated to the Fixed Account accumulated at 3% per year, compounded
annually, less the deduction of the applicable withdrawal charge(s), any prior
withdrawals or transfers out of the Fixed Account, premium taxes, if any, and
applicable Annuity Account Fee(s) and deductions, if any, for the cost of Death
Benefit Option(s) in effect.
PART B - VARIABLE ACCOUNT VALUE
CREDITING VARIABLE ACCUMULATION UNITS. Upon receipt of a Premium Payment (or a
request for transfer in accordance with the "Transfer Privilege" provision) by
the Company at its Variable Products Service Center's Mailing Address, all or
that portion, if any, of the Premium Payment (or the net amount transferred) to
be allocated to the Variable Account Sub-Accounts will be credited to the
Variable Account in the form of Variable Accumulation Units. The number of
particular Variable Accumulation Units to be credited is determined by dividing
the dollar amount allocated to the Particular Variable Account Sub-Account by
the Variable Accumulation Unit Value for the particular Variable Account Sub-
Account for the Valuation Period during which the Premium Payment is received at
the Company's Variable Products Service Center's Mailing Address.
VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit Value for each
Variable Account Sub-Account was established at $10.00 for the first Valuation
Period of the particular Variable Account Sub-Account. The Variable Accumulation
Unit Value for the particular Variable Account Sub-Account for any subsequent
Valuation Period is determined by methodology which is the mathematical
equivalent of multiplying the Variable Accumulation Unit Value for the
particular Variable Account Sub-Account for the immediately preceding Valuation
Period by the Net Investment Factor for the particular Variable Account Sub-
Account for such subsequent Valuation Period. The Variable Accumulation Unit
Value for each Variable Account Sub-Account for any Valuation Period is the
value determined as of the end of the particular Valuation Period and may
increase, decrease or remain constant from Valuation Period to Valuation Period.
VARIABLE ACCUMULATION VALUE. The Variable Accumulation Value of the Annuity
Account, if any, for any Valuation Period is equal to the sum of the value of
all Variable Accumulation Units of each Variable Account Sub-Account credited to
the Variable Account with respect to this contract for such Valuation Period.
The
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CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
Variable Accumulation Value of each Variable Account Sub-Account is determined
by multiplying the number of Variable Accumulation Units, if any, credited to
each Variable Account Sub-Account with respect to this contract by the Variable
Accumulation Unit Value of the particular Variable Account Sub-Account for such
Valuation Period, less deductions for applicable expense charges and fees and
for the cost of Death Benefit Option(s), if any.
NET INVESTMENT FACTOR. The Net Investment Factor is an index applied to measure
the investment performance of a Variable Account Sub-Account from one Valuation
Period to the next. The Net Investment Factor may be greater or less than or
equal to 1.0: therefore, the value of a Variable Accumulation Unit may increase,
decrease or remain the same.
The Net Investment Factor for any Variable Account Sub-Account for any Valuation
Period is determined by dividing (a) by (b) and then subtracting (c) from the
result where:
(a) is the net result of:
(1) the net asset value (as described in the prospectus for the Fund)
of a Fund share held in the Variable Account Sub-Account determined as
of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution
declared by the Fund on the shares held in the Variable Account Sub-
Account if the "ex-dividend" date occurs during the Valuation Period,
plus or minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account:
(b) is the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the preceding Valuation Period; and
(c) is the asset charge factor determined by the Company for the Valuation
Period to reflect the charges for assuming the mortality and expense risks
and for administrative expenses.
The asset charge factor for any Valuation Period is equal to the daily asset
charge factor multiplied by the number of 24-hour periods in the Valuation
Period. The daily asset charge factor will be determined annually by the
Company, but in no event may it exceed that specified in the Schedule of
Charges, Expenses and Fees.
PART C - GENERAL
ANNUITY ACCOUNT. The Company will establish an Annuity Account under the
contract and will maintain the Annuity Account during the Accumulation Period.
The Annuity Account Value at any time equals the sum of all the then current
values of the Fixed and Variable Accounts with respect to this contract.
TRANSFER PRIVILEGE. At any time during the Accumulation Period, other than
during the "Right to Examine Contract" period, the Owner may transfer all or
part of the Annuity Account Value to one or more of the Fixed or Variable
Account Sub-Accounts then available under the contract, subject to the
provisions set forth below. Transfers may be made in writing, or by telephone
if telephone transfers have been previously authorized in writing. Transfer
requests must be received at the Company's Variable Products Service Center
prior to the time of day set forth in the prospectus, and provided the NYSE is
open for business, in order to be processed as of the close of business on the
date the request is received; otherwise, the transfer will be processed on the
next business day the NYSE is open for business. The Company will not be
legally responsible for (a) any liability for acting in good faith upon any
transfer instructions given by telephone, or (b) the authenticity of such
instructions.
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CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)
Transfers involving Variable Account Sub-Accounts will reflect the purchase or
cancellation of Variable Accumulation Units having an aggregate value equal to
the dollar amount being transferred to or from a particular Variable Account
Sub-Account. The purchase or cancellation of such units shall be made using
Variable Accumulation Unit Values of the applicable Variable Account Sub-Account
for the Valuation Period during which the transfer is effective. Transfers to a
Fixed Account Sub-Account will result in a new Guaranteed Period for the amount
being transferred. Any such Guaranteed Period will begin on the effective date
of the transfer and end on its Expiration Date. The amount transferred into such
Fixed Account Sub-Account will earn interest at the Guaranteed Interest Rate
declared by the Company for that Guaranteed Period as of the effective date of
the transfer.
Transfers shall be subject to the following conditions: (a) No transfer fee will
be imposed on the 1st through 3rd transfer made during a Contract Year, and no
transfer fee will be imposed on the 4th through 12th transfer made during a
Contract Year if the Annuity Account Value at the time of the transfer is equal
to or greater than $5,000; otherwise, a transfer fee, based on the Company's
then current fee schedule will be imposed on each transfer made in excess of
these limits (in counting the number of transfers, the frequency limitation
shown in the Contract Specifications with respect to transfers from the Fixed
Account will be included); (b) No withdrawal charge will be imposed on
transferred amounts, however, transfers of all or a portion out of a Fixed
Account Sub-Account may be subject to the Market Value Adjustment set forth
below unless such transfer is made in accordance with the "Full or Partial
Withdrawals and Transfers at the End of a Guaranteed Period" provision; (c) The
amount being transferred may not be less than $2,500 per Fixed Account
Sub-Account or $500 per Variable Account Sub-Account, unless the entire value of
the Fixed or Variable Account Sub-Account is being transferred; (d) The amount
being transferred may not exceed the Company's maximum amount limit then in
effect; (e) The amount transferred to any Fixed Account Sub-Account may not be
less than $2,500; (f) Unless a transfer out of a Fixed Account Sub-Account is
made in accordance with the "Full or Partial Withdrawals and Transfers at the
End of a Guaranteed Period" provision, the amount transferred from each Fixed
Account Sub-Account during any Contract Year may not exceed the limits shown in
the Contract Specifications; (g) Any value remaining in a Fixed Account
Sub-Account, following a transfer, may not be less than $1,000 and any value
remaining in a Variable Account Sub-Account, following a transfer, may not be
less than $500; (h) The Company reserves the right to defer transfers of amounts
from the Fixed Account for a period not to exceed six months from the date the
request for such transfer is received by the Company in writing or by telephone,
if such has been previously authorized, at its Variable Products Service Center;
and (i) Transfers involving Variable Account Sub-Account(s) shall be subject to
such terms and conditions as may be imposed by the Funds.
ANNUITY ACCOUNT FEE. Prior to the Annuity Date, on the last Valuation Date of
each Contract Year the Company will deduct from the value of the Annuity Account
the annual Annuity Account Fee, if any, shown in the Schedule of Charges,
Expenses and Fees to reimburse it for administrative expenses relating to the
Annuity Account. Such Annuity Account Fee will be deducted on a pro rata basis
from amounts allocated to each Fixed and Variable Account Sub-Account in which
the Annuity Account values are invested at the time of such deduction. If the
Annuity Account is surrendered for its full value, the Annuity Account Fee will
be deducted in full at the time of such surrender. On the Annuity Date the value
of the Annuity Account will be reduced by a proportionate amount of the Annuity
Account Fee to reflect the time elapsed between the last Valuation Date of the
most recent Contract Year and the day before the Annuity Date.
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS
CASH WITHDRAWALS. At any time before the Annuity Date, the Owner may elect to
receive a cash withdrawal payment from the Company by filing with the Company at
its Variable Products Service Center's Mailing Address a written election in
such form as the Company may require. Any such election shall specify the amount
of the withdrawal and will be effective on the date that it is received at the
Company's Variable Products Service Center's Mailing Address. Any cash
withdrawal payment will be paid within seven days of the Company's receipt of
such request, except as the Company may be permitted to defer the payment of
amounts withdrawn from the Variable Account in accordance with the Investment
Company Act of 1940.
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CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)
The Company reserves the right to defer the payment of amounts withdrawn from
the Fixed Account for a period not to exceed six months from the date written
request for such withdrawal is received by the Company at its Variable Products
Service Center's Mailing Address.
The amount of the cash withdrawal payment may be for any amount not to exceed
the Annuity Account Value at the end of the Valuation Period during which the
election becomes effective, less any applicable Annuity Account Fee, plus or
minus any applicable Market Value Adjustment, and less any applicable withdrawal
charge and premium taxes. In the case of a full surrender, the Annuity Account
will be canceled and the contract will terminate. A partial withdrawal will
result in a decrease in the Annuity Account Value by an amount with an aggregate
dollar value equal to the dollar amount of the cash withdrawal payment, plus or
minus any applicable Market Value Adjustment, any applicable withdrawal charge
and premium taxes.
In the case of a partial withdrawal, the Owner must instruct the Company as to
the amounts to be withdrawn from each Fixed and/or Variable Account Sub-Account.
If not so instructed, the Company will effect such withdrawal from each Fixed
and/or Variable Sub-Account in proportion to the then current Sub-Account
values. Partial withdrawals cannot reduce any Fixed Account Sub-Account below
$1,000 or any Variable Account Sub-Account below $500. Such partial withdrawals
will be treated as a full surrender of that Sub-Account and the balance will be
transferred to the largest Variable Account Sub-Account, if any. Partial
withdrawals cannot reduce the total Annuity Account Value below $500. (See
"Minimum Value Requirements" provision.) Such partial withdrawals will be
treated as a full surrender.
Cash withdrawals from a Variable Account Sub-Account will result in the
cancellation of Variable Accumulation Units attributable to the Annuity Account
with an aggregate value on the effective date of the withdrawal equal to the
total amount by which the Variable Account Sub-Account is reduced. The
cancellation of such units will be based on the Variable Accumulation Unit
values of the Variable Account Sub-Account for the Valuation Period during which
the cash withdrawal is effective.
All cash withdrawals or transfers of any portion of Fixed Account Sub-Accounts,
except those specified otherwise under "Penalty-Free Withdrawals, Transfers and
Annuitization Provisions," will be subject to the Market Value Adjustment
described below.
WITHDRAWAL CHARGES. If a cash withdrawal is made, a withdrawal charge may be
assessed by the Company. The length of time between the Company acceptance of
the Premium Payment(s) and the receipt of a withdrawal request determines the
withdrawal charge. For this purpose each withdrawal is deemed to represent a
withdrawal of a Premium Payment previously accepted (or a portion thereof).
Premium Payments will be deemed to have been withdrawn in the order in which the
Premium Payments were received by the Company (i.e., oldest premium first).
After all Premium Payments have been deemed withdrawn, the Company will deem
further withdrawals to be from net investment results attributable to such
Premium Payments, if any. The schedule of withdrawal charges is set forth in the
"Schedule of Charges, Expenses and Fees." On withdrawal, any applicable Annuity
Account Fee, the cost of Death Benefit Option(s), if any, and Market Value
Adjustment will be deducted before application of any withdrawal charge.
Withdrawal charges are deducted proportionately from the Fixed and/or Variable
Account Sub-Account(s) from which the withdrawal is to be made, provided such
Sub-Account(s) have sufficient account value(s) for making such deduction(s). If
any of the account value(s) of such Sub-Account(s), however, are insufficient,
the amount payable upon withdrawals will be net of any remaining withdrawal
charges, unless the Owner and the Company agree otherwise.
See "Penalty-Free Withdrawals. Transfers and Annuitization Provisions" for
situations in which a withdrawal charge is not imposed.
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CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)
For the purpose of any qualified plan riders which may be attached to this
contract, the term "Surrender Charge" wherever referenced therein, shall mean
"withdrawal charge" as set forth above, and the term "Annuity Value" shall mean
"Annuity Account Value."
MARKET VALUE ADJUSTMENT. Any cash withdrawal or transfer from a Fixed Account
Sub-Account, except those specified otherwise under the "Penalty-Free
Withdrawals, Transfers and Annuitization Provisions," will be subject to a
Market Value Adjustment.
The amount payable on such cash withdrawal or transfer may be adjusted up or
down by the application of the Market Value Adjustment. The Index Rate Factor
applicable to the amount of such cash withdrawal or transfer is:
(1 + A)N
--------
(1 + B)N
where:
A = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the beginning of the Guaranteed
Period.
B = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the time of cash withdrawal or
transfer, plus the percentage adjustment to "B" as shown in the Contract
Specifications. If Index Rates "A" and "B" are within .25% of each other when
the Index Rate Factor is determined, no such percentage adjustment to "B" will
be made.
N = The number of years remaining in the applicable Guaranteed Period (e.g. 1
year and 73 days = 1 + (73 divided by 365) = 1.2 years)
Straight-line interpolation is used for periods to maturity not quoted.
PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS
PENALTY-FREE PARTIAL WITHDRAWALS OR TRANSFERS. Upon request in writing, the
Owner may, during any Contract Year prior to the Annuity Date, withdraw up to
15% of the Premium Payment(s) or portion remaining thereof, without incurring a
withdrawal charge. For this purpose each withdrawal is deemed to represent a
withdrawal of a portion of a Premium Payment previously accepted. Premium
Payments will be deemed to be withdrawn in the order in which they were received
by the Company (i.e., the oldest premium first). Any such withdrawal from a
Fixed Account Sub-Account may be subject to a Market Value Adjustment unless the
withdrawal is made at the end of a Guaranteed Period as set forth below. The
Owner must specify from which Fixed and/or Variable Sub-Accounts the withdrawal
is to be made, otherwise the Company may effect such withdrawal on a
proportionate basis from all Fixed and/or Variable Sub-Accounts in which the
Annuity Account is invested.
Such partial withdrawals may be either taken as a lump sum or, upon consent of
the Company, paid in equal installments, however, (a) no more than one
penalty-free partial withdrawal may be made during any one Contract Year, (b)
the first withdrawal in any Contract Year will be deemed to be the penalty-free
withdrawal up to the amount specified above, and (c) the amount of each such
partial withdrawal must be at least $1,000.
No withdrawal charge will be imposed on any withdrawal with respect to a Premium
Payment after the end of the seventh year following the Company's acceptance of
that Premium Payment.
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PENALTY-FREE WITHDRAWALS, TRANSFERS AND
ANNUITIZATION PROVISIONS (CONTINUED)
The Owner may also transfer amounts within the Annuity Account during the
Accumulation Period without the application of a withdrawal charge, however; (a)
any transfers would be subject to any terms and conditions as may be imposed
under the "Transfer Privilege" provision, (b) transfers from a Fixed Account
Sub-Account may be subject to the "Market Value Adjustment" provision, and (c)
the amount of such transfer(s) must be at least $2,500 per Fixed Account
Sub-Account or $500 per Variable Account Sub-Account.
FULL OR PARTIAL WITHDRAWALS AND TRANSFERS AT THE END OF A GUARANTEED PERIOD. No
Market Value Adjustment will be imposed on a full or partial withdrawal or
transfer made from a Fixed Account Sub-Account which becomes effective at the
end of the applicable initial or subsequent Guaranteed Period. In such event,
the Owner's proper request for withdrawal or transfer must be received at the
Company's Variable Products Service Center's Mailing Address within a 60-day
period immediately preceding the end of such Guaranteed Period.
WAIVER OF WITHDRAWAL CHARGE AND/OR MARKET VALUE ADJUSTMENT ON DEATH OR ANNUITY
DATE. No withdrawal charge or Market Value Adjustment will be imposed upon
payments made under the Annuity Benefit provisions of this contract, and no
negative Market Value Adjustment will be imposed upon payments made under the
"Death Benefit" provisions of the contract.
PENALTY-FREE ANNUITIZATION. At any time the Owner may request in writing payment
of the then current Annuity Account Value in accordance with any one of the
settlement options set forth in this contract. In such event, no withdrawal
charge or Market Value Adjustment will be imposed at the time such settlement is
made. Such annuitization will automatically result in a change in the Annuity
Date to the date Income Payments commence under the settlement option elected.
BENEFIT PROVISIONS
ANNUITY BENEFIT. On the Annuity Date the Company will pay all or a part of the
adjusted value of the Annuity Account (as set forth below) in cash or apply it
in accordance with the settlement option(s) elected by the Owner. However, if
the amount to be applied under any settlement option is less than $5,000, or if
the first Income Payment payable in accordance with such option is less than
$50, the Company will pay the adjusted value in a single payment to the payee
designated by the Owner.
ANNUITY DATE. The Annuity Date initially selected by the Owner of this contract
is shown in the Contract Specifications. The Annuity Date may be changed from
time to time by the Owner by notifying the Company in writing. The notice must
be received at the Company's Variable Products Service Center's Mailing Address
at least 45 days prior to the Annuity Date then in effect. The new Annuity Date
selected must be at least 30 days after the effective date of the change and not
later than the Annuitant's 90th birthday.
After the Annuity Date, no change of a settlement option is permitted, no
payments may be requested under the "Cash Withdrawals" provision of the
contract, and no Death Benefit is payable under the contract except as otherwise
specified under the settlement option selected.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO ANNUITY BENEFIT. During
the lifetime of the Owner and prior to the Annuity Date, the Owner may elect to
have the adjusted value of the Annuity Account applied on the Annuity Date under
one or more of the settlement options set forth in this contract, or under any
other settlement option as agreed to by the Company. The Owner may also change
any election, but any election or change of election must be received at the
Company's Variable Products Service Center's Mailing Address at least 45 days
prior to the Annuity Date. The election or change of election may be made by
filing with the Company at its Variable Products Service Center's Mailing
Address written notice in such form as the Company may require. If no such
election is in effect on the 30th day prior to the Annuity Date, the adjusted
value of the Annuity Account will be applied under a Life Annuity with 120
months guaranteed.
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BENEFIT PROVISIONS (CONTINUED)
In such situation, the portion of the adjusted value of the Annuity Account to
be applied for a Fixed Life Annuity under the Second Option and/or a Variable
Life Annuity under Option II will be determined on a pro rata basis from the
composition of the Annuity Account on the Annuity Date.
DETERMINATION OF AMOUNT. On the Annuity Date the Annuity Account will be
canceled and the adjusted value of the Annuity Account to be applied under the
settlement options provisions shall be equal to the Annuity Account Value for
the Valuation Period which ends immediately preceding the Annuity Date, minus a
proportionate amount of the Annuity Account Fee to reflect the time elapsed
between the last Valuation Date for the most recent calendar year and the
Valuation Date before the Annuity Date, minus any applicable premium or similar
tax. For the purposes of any qualified plan riders which may be attached to this
contract, the term "Annuity Value," wherever referenced therein, shall mean the
"adjusted value of the Annuity Account" as defined above.
INCOME PAYMENT BENEFITS. On the Annuity Date, the adjusted value of the Annuity
Account as determined under the "Determination of Amount" provision may be
applied, as elected by the Owner, under one or more of the settlement options
set forth in the contract to effect: (a) a Fixed Income Payment Benefit or a
Variable Income Payment Benefit; or (b) a combination of the Fixed Income
Payment Benefit and the Variable Income Payment Benefit. If a combination Fixed
and Variable Income Payment Benefit is elected, the Owner may specify the amount
to be allocated to the Fixed Income Payment Benefit and the amount to be
allocated to the Variable Income Payment Benefit. Such election and allocation
may also be made by a Beneficiary to the extent provided in the "Election and
Effective Date of Election with Respect to Death Benefit Provision."
DEATH BENEFIT. If the Owner dies before the Annuity Date, the Company will pay
the Death Benefit to the Beneficiary upon receipt of due proof of the death of
the Owner in accordance with the "Payment of Death Benefit" provision. If there
is no Beneficiary living on the date of death of the Owner, the Company will pay
the Death Benefit, upon receipt of due proof of the death of both the Owner and
the Beneficiary, in one sum to the estate of the Owner.
ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO DEATH BENEFIT. During
the lifetime of the Annuitant and prior to the Annuity Date, the Owner may elect
one or more of the settlement options set forth in this contract to effect an
annuity for the Beneficiary as payee after the death of the Owner. This election
may be made or subsequently revoked by filing with the Company at its Variable
Products Service Center's Mailing Address a written election or revocation of an
election in such form as required by the Company.
Any election or revocation of an election of a method of settlement of the Death
Benefit will become effective on the date it is received by the Company at its
Variable Products Service Center's Mailing Address.
Unless otherwise specified in writing by the Owner, the Beneficiary may elect
(a) to receive the Death Benefit as a cash payment, in which event the Annuity
Account will be canceled, or (b) to have the Death Benefit applied under one or
more of the settlement options set forth under the contract. This election may
be made by filing with the Company a written request in a form as required by
the Company. Any written request for an election of a settlement option for the
Death Benefit by the Beneficiary will become effective on the later of (a) the
date the request is received by the Company at its Variable Products Service
Center's Mailing Address; or (b) the date due proof of the death of the Owner is
received by the Company at its Variable Products Service Center's Mailing
Address. If a written request for a settlement option by the Beneficiary is not
received by the Company within 60 days following the date due proof of the death
of the Owner is received by the Company, the Beneficiary shall be deemed to have
elected a cash payment as of the last day of the 60-day period.
Notwithstanding the above, the Owner or Beneficiary may only elect a settlement
option which provides for the distribution of the entire Death Benefit to the
Beneficiary within five years of the Owner's death unless: (a) the entire
interest in the contract is distributed over the life of the Beneficiary, with
distributions beginning within one year of the Owner's death; (b) the entire
interest in the contract is distributed over a period not extending beyond the
life expectancy of the Beneficiary, with distributions beginning within one year
of the
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BENEFIT PROVISIONS (CONTINUED)
Owner's death; or (c) the Beneficiary is the deceased Owner's spouse and elects
to continue the contract and become the new Owner, but in no event may such an
election be made under this contract more than once.
For purposes of Section 72(s) of the Internal Revenue Code, if any Owner is not
an individual, the death or change of any Annuitant is treated as the death of
an Owner, and if the Owner is a grantor trust within the meaning of the Internal
Revenue Code, the death of the grantor of such trust is also treated as the
death of an Owner.
PAYMENT OF DEATH BENEFIT. If the Death Benefit is to be paid in cash to the
Beneficiary, payment will be made within 7 days of the date the election becomes
effective or is deemed to become effective, provided due proof of the death of
the Owner is received by the Company at its Variable Products Service Center's
Mailing Address, except as the Company may be permitted to defer any such
payment of amounts derived from the Variable Account in accordance with the
Investment Company Act of 1940. If the Death Benefit is to be paid in one sum to
the estate of the deceased Owner, payment will be made within 7 days of the date
due proof of the death of the Owner (and/or Beneficiary, if necessary) is
received by the Company at its Variable Products Service Center's Mailing
Address, except as the Company may be permitted to defer any such payment of
amounts derived from the Variable Account in accordance with the Investment
Company Act of 1940. If settlement under the settlement option provisions is
elected, the Income Payments will commence 30 days following the effective date
or the deemed effective date of the election and the Annuity Account will be
maintained in effect until such Income Payments commence.
AMOUNT OF DEATH BENEFIT. No negative Market Value Adjustment is assessed against
amounts which are applied toward payment of a death benefit, and if no Death
Benefit Option(s) are then in effect, the amount of the death benefit determined
as of the effective date or deemed effective date of the death benefit election
(not as of the date of death) is equal to the Annuity Account Value for the
Valuation Period during which the death benefit election is effective or deemed
to become effective. If however, one or more of the following Death Benefit
Options is in effect when the death benefit becomes payable, the amount of the
death benefit will be the greater of the amount described above or the largest
of the amounts of the Death Benefit Option(s) in effect under this contract.
The Death Benefit Option(s) in effect under this contract, if any, are shown in
the Contract Specifications as Death Benefit Options(s) A, B, C, and/or D; such
are described below:
Option A: The amount of death benefit equals Premium Payments made, less
partial withdrawals.
Option B: The amount of death benefit equals Premium Payments made, less
partial withdrawals, with interest compounded daily at a rate
equivalent to 5% per year during the first 7 Contract Years. As
of the beginning of the 8th Contract Year, the amount of death
benefit will decrease and thereafter be equal to total Premium
Payments made, less partial withdrawals.
Option C: The amount of death benefit equals the Annuity Account Value on
the seven-year Contract Anniversary immediately preceding the
date the death benefit election is effective or is deemed to
become effective, adjusted for any subsequent Premium Payments
and partial withdrawals and charges made between the immediate
preceding seven-year Contract Anniversary and the date the death
benefit election is effective or is deemed to become effective
(as referenced herein, seven-year Contract Anniversary means
the 7th Contract Anniversary and each succeeding Contract
Anniversary occurring at any seven-year interval thereafter,
for example, the 14th and 21st Contract Anniversaries).
Option D: The amount of death benefit equals the highest Annuity Account
Value ever attained on a Contract Anniversary date, with
adjustments for any subsequent Premium Payments and partial
withdrawals and charges made since the last determination of
such highest value.
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BENEFIT PROVISIONS (CONTINUED)
CHANGING DEATH BENEFIT OPTIONS. The election of the Death Benefit Option(s)
shown in the Contract Specifications may be changed once, and only once, while
the contract is in force, and the only change permitted is to drop one or more
of the Death Benefit Option(s) in effect at that time. The request for change
must be made in writing by the Owner. The Company reserves the right to charge
for the change at the time the request for change is processed.
CHARGING FOR DEATH BENEFIT OPTIONS. On each Contract Anniversary the Company
will determine the amount of the death benefit in effect under the contract
during the past Contract Year, and if such amount is based on one or more Death
Benefit Options (i.e., A, B, C, or D), a cost of insurance charge will be
calculated as (a) times (b) where:
(a) equals the greatest coverage provided under the Death Benefit
Option(s) elected less the then current Annuity Account Value
(expressed on a per $1,000 basis), and
(b) is the appropriate cost of insurance rate per $1,000 from the table
below:
<TABLE>
<CAPTION>
Cost of Insurance
Annual Rates Per $1,000
-----------------------
Attained Age* Male Female
------------- ---- ------
<S> <C> <C>
less than 40 $2.40 $1.99
40-45 3.02 2.54
46-50 4.92 4.02
51-55 7.30 5.70
56-60 11.46 8.34
61-65 17.54 11.55
66-70 27.85 18.19
71-75 43.30 27.57
76-80 70.53 47.33
81-85 117.25 87.04
86-90 179.55 147.37
<FN>
* Attained Age of the person covered under the death benefit
provisions of the contract.
</TABLE>
The cost of insurance charge will then be deducted on each Contract Anniversary
on a pro-rata basis from the Fixed Account and Variable Account Sub-Accounts
under the contract.
SECTION 72(s). The provisions above will be interpreted so as to comply with the
requirements of Section 72(s) of the Internal Revenue Code.
GENERAL PROVISIONS
THE CONTRACT. The contract constitutes the entire contract between the parties.
Only the President, a Vice President, a Secretary, a Director or an Assistant
Director of the Company may make or modify this contract.
The contract is executed at the Company's Home Office, the mailing address of
which for this contract is CIGNA Individual Insurance, Variable Products Service
Center, Routing S224, Hartford, Connecticut 06152.
MODIFICATION OF CONTRACT. The Company reserves the right to modify this contract
to meet the requirements of applicable state and federal laws or regulations.
The Company will notify the Owner in writing of any changes.
AN420 22
<PAGE>
GENERAL PROVISIONS (CONTINUED)
NON-PARTICIPATION. The contract is not entitled to share in surplus
distribution.
LOANS. Loans are not permitted under this contract.
DETERMINATION OF VALUES. The method of determination by the Company of the Net
Investment Factor and the number and value of Accumulation Units and Annuity
Units shall be conclusive upon the Owner, and any Beneficiary or payee.
ENDORSEMENT OF INCOME PAYMENTS. The Company will make each Income Payment at the
Home Office by check. Each check must be personally endorsed by the
payee/Annuitant, or the Company may require that proof of the payee/Annuitant's
survival be furnished.
MISSTATEMENT OF AGE. If the age of the Annuitant is misstated, the amount
payable under the contract will be adjusted to be the amount of income which the
actual premium paid would have purchased for the correct age according to the
Company's rates in effect on the Date of Issue. Any overpayment by the Company,
with interest at the rate of 6% per year, compounded annually, will be charged
against the payments to be made next succeeding the adjustment. Any underpayment
by the Company will be paid in a lump sum, with interest at the rate of 6% per
year, compounded annually.
CLAIMS OF CREDITORS. To the extent permitted by law, no amounts payable under
this contract will be subject to the claims of creditors of any payee.
PERIODIC REPORTS. At least once each calendar year, the Company will furnish the
Owner a report as required by law showing the Annuity Account Value at the end
of the preceding year, all transactions during the year, the current Annuity
Account Value, the number of Accumulation Units in each Variable Accumulation
Account, the applicable Accumulation Unit Value as of the date of the report and
the interest rate credited to the Fixed Account Sub-Account(s). The Company will
also send such statements reflecting transactions in the Annuity Account as may
be required by applicable laws, rules and regulations.
AN420 23
<PAGE>
CIGNA LIFE INSURANCE COMPANY
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING
AN420
<PAGE>
OPTIONAL METHODS OF SETTLEMENT
This rider is made part of the contract to which it is attached as of the Date
of Issue. Upon written request, the Company will agree to pay in accordance with
any one of the options shown below all or part of the net proceeds that may be
payable under the contract.
While the Owner is alive, the request, including the designation of the payee,
may be made by the Owner. At the time a Death Benefit becomes payable under the
contract, the request, including the designation of the payee, may then be made
by the Beneficiary. Once Income Payments have begun, no surrender of the Annuity
Value can be made (unless Variable Income Payments are made under Option III)
and the Annuitant cannot be changed, nor can the settlement option be changed.
PAYMENT DATES. The first Income Payment under the settlement option selected
will be made on the first day of the month following the Annuity Date.
Subsequent payments will be made on the first day of each month in accordance
with the manner of payment selected.
MINIMUM PAYMENT AMOUNT. The settlement option elected must result in an Income
Payment at least equal to the minimum payment amount in accordance with the
Company's rules then in effect. If at any time payments are less than the
minimum payment amount, the Company has the right to change the frequency to an
interval that will provide the minimum payment amount. If any amount due is less
than the minimum per year, the Company may make other arrangements that are
equitable.
FIXED BENEFIT OPTIONS
FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. The amount of each Fixed
Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable. The
mortality table used for the 1983 Individual Annuitant Mortality (IAM) Table "a"
and 3% interest. In determining the settlement amount, the settlement age of the
Annuitant will be reduced by one year when the first instalment is payable
during the 1990's, reduced by two years when the first instalment is payable
during the decade 2000-2009, and so on.
FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during the
lifetime of the Annuitant, ceasing with the last payment due prior to the death
of the Annuitant.
SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing monthly
income to the payee for a fixed period of 60, 120, 180, or 240 months (as
selected), and for as long thereafter as the Annuitant shall live.
THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the payee
during the lifetime of the Annuitant ceasing with the last payment due prior to
the death of the Annuitant provided that, at the death of the Annuitant, the
payee will receive an additional payment equal to the excess, if any, of (a)
over (b) where: (a) is the initial value of the proceeds applied under this
option; and (b) is the dollar amount of payments already paid.
FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.
EXCESS INTEREST. At the sole discretion of the Company excess interest may be
paid or credited from time to time in addition to the payments guaranteed under
any fixed benefit Optional Method of Settlement.
AR420 (Page 1) AR420
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
VARIABLE BENEFIT OPTIONS
VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment shall
be determined in accordance with the terms of the settlement option and the
table(s) set forth in this rider, as applicable. The mortality table used is the
1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In determining the
settlement amount, the settlement age of the Annuitant will be reduced by one
year when the first instalment is payable during the 1990's, reduced by two
years when the first instalment is payable during the decade 2000-2009 and so
on.
All Variable Income Payments other than the first are determined by means of
Annuity Units credited to the contract with respect to the particular payee. The
number of Annuity Units to be credited in respect of a particular Sub-Account is
determined by dividing that portion of the first Variable Income Payment
attributable to that Sub-Account by the Annuity Unit Value of that Sub-Account
for the Valuation Period which ends immediately preceding the Annuity Date. The
number of Annuity Units of each Sub-Account credited with respect to the
particular payee then remains fixed unless an exchange of Annuity Units is made
pursuant to the "Exchange of Variable Annuity Units" section. The dollar amount
of each Variable Income Payment after the first may increase, decrease or remain
constant, and is equal to the sum of the amounts determined by multiplying the
number of Annuity Units of a particular Sub-Account for the Valuation Period
which ends immediately preceding the due date of each subsequent payment by the
Annuity Unit Value for the particular Sub-Account for the first Valuation Period
occurring on or immediately prior to the first day of each month.
ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-Account was established
at $10.00 for the first Valuation Period of the particular Sub-Account. The
Annuity Unit Value for the particular Sub-Account for any subsequent Valuation
Period is determined by multiplying the Annuity Unit Value for the particular
Sub-Account for the immediately preceding Valuation Period by the Net Investment
Factor for the current Valuation Period and then multiplying that product by a
factor to neutralize the assumed interest rate of 3% per year to establish the
Annuity Payment Rates set forth in this rider. The factor is 0.99991902 for a
one day valuation period.
EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Variable Products Service
Center's Mailing Address, exchange the value of a designated number of Annuity
Units of particular Variable Sub-Accounts then credited with respect to such
payee into other Annuity Units, the value of which would be such that the dollar
amount of an Income Payment made on the date of the exchange would be unaffected
by the exchange. Unless otherwise authorized by the Company in writing, no more
than 3 exchanges may be made in any Contract Year.
Exchanges may be made among the Variable Sub-Accounts only. Exchanges shall be
made using the Annuity Unit Values for the Valuation Period during which the
request for exchange is received by the Company at its Variable Products Service
Center's Mailing Address.
ANNUITY ACCOUNT FEE. After the Annuity Date an Annuity Account Fee amounting to
$35 per year will be deducted in equal amounts from each variable Income Payment
made during the year. For example, this would amount to a $2.92 deduction from
each monthly Variable Income Payment. No deduction will be made from Fixed
Income Payments.
OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the payee
during the lifetime of the Annuitant, ceasing with the last payment due prior to
the death of the Annuitant.
AR420 (Page 2) AR420
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity which
provides monthly payments during the lifetime of the annuitant and further
provides that if, at the death of the annuitant, payments have been made for
less than the elected period certain, which may be 60, 120, 180 or 240 months,
the annuity payments will be continued during the remainder of such period.
OPTION III: VARIABLE ANNUITY CERTAIN. A variable amount payable monthly for the
number of years selected which may be from 5 to 30 years. At any time during the
period certain the Annuitant may elect that (1) all or a portion of any future
payments to which the Annuitant is entitled be commuted and paid in one sum, or
(2) such commuted amount, provided that the value thereof meets the minimum
payment amount in accordance with the Company's rules then in effect, be applied
to effect a variable annuity under one of the other options described herein. At
the expiration of the period certain, no further payments of any kind are
payable. If the Annuitant dies before the specified number of certain payments
have been received, the remainder of the payments will be continued during the
remainder of such period.
ADDITIONAL FIXED AND VARIABLE OPTIONS. Any proceeds payable under the contract
may also be settled under any other method of settlement offered by the Company
at the time of the request.
CIGNA Life Insurance Company
/s/ John Wilkinson
PRESIDENT
AR420 (Page 3) AR420
<PAGE>
OPTIONAL METHODS OF SETTLEMENT (CONTINUED)
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH
$1,000 APPLIED - MALE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
------------------------------------------------------------------------------
Age Life Annuity
<S> <C> <C> <C> <C> <C>
10 $2.87 $2.87 $2.87 $2.87 $2.87
11 2.89 2.89 2.89 2.88 2.88
12 2.90 2.90 2.90 2.90 2.90
13 2.92 2.92 2.91 2.91 2.91
14 2.93 2.93 2.93 2.93 2.92
15 2.95 2.95 2.95 2.94 2.94
16 2.96 2.96 2.96 2.96 2.96
17 2.98 2.98 2.98 2.98 2.97
18 3.00 3.00 3.00 2.99 2.99
19 3.02 3.02 3.01 3.01 3.01
20 3.04 3.04 3.03 3.03 3.03
21 3.06 3.05 3.05 3.05 3.05
22 3.08 3.08 3.07 3.07 3.07
23 3.10 3.10 3.09 3.09 3.09
24 3.12 3.12 3.12 3.11 3.11
25 3.14 3.14 3.14 3.14 3.13
26 3.17 3.17 3.16 3.16 3.15
27 3.19 3.19 3.19 3.19 3.18
28 3.22 3.22 3.22 3.21 3.20
29 3.25 3.25 3.24 3.24 3.23
30 3.28 3.28 3.27 3.27 3.26
31 3.31 3.31 3.30 3.30 3.29
32 3.34 3.34 3.33 3.33 3.32
33 3.37 3.37 3.37 3.36 3.35
34 3.41 3.41 3.40 3.39 3.38
------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------
Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
------------------------------------------------------------------------------
Age Life Annuity
<S> <C> <C> <C> <C> <C>
35 $3.44 $3.44 $3.44 $3.43 $3.41
36 3.48 3.48 3.48 3.46 3.45
37 3.52 3.52 3.52 3.50 3.48
38 3.57 3.56 3.56 3.54 3.52
39 3.61 3.61 3.60 3.58 3.56
40 3.66 3.65 3.65 3.63 3.60
41 3.71 3.70 3.69 3.67 3.64
42 3.76 3.75 3.74 3.72 3.68
43 3.81 3.81 3.79 3.77 3.73
44 3.87 3.86 3.85 3.82 3.77
45 3.93 3.92 3.90 3.87 3.82
46 3.99 3.98 3.96 3.92 3.87
47 4.05 4.05 4.02 3.98 3.92
48 4.12 4.11 4.09 4.04 3.97
49 4.19 4.18 4.15 4.10 4.03
50 4.27 4.26 4.22 4.17 4.08
51 4.34 4.33 4.30 4.23 4.14
52 4.43 4.41 4.37 4.30 4.20
53 4.51 4.50 4.45 4.37 4.26
54 4.60 4.59 4.54 4.45 4.32
55 4.70 4.68 4.62 4.53 4.39
56 4.80 4.78 4.72 4.61 4.45
57 4.91 4.89 4.82 4.69 4.51
58 5.03 5.00 4.92 4.78 4.58
59 5.15 5.12 5.03 4.87 4.65
------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------
Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
------------------------------------------------------------------------------
Age Life Annuity
<S> <C> <C> <C> <C> <C>
60 $5.28 $5.25 $5.14 $4.96 $4.71
61 5.43 5.39 5.27 5.06 4.78
62 5.58 5.53 5.39 5.16 4.84
63 5.74 5.69 5.53 5.26 4.90
64 5.91 5.85 5.66 5.36 4.96
65 6.10 6.03 5.81 5.46 5.02
66 6.30 6.21 5.96 5.56 5.08
67 6.51 6.41 6.12 5.66 5.13
68 6.73 6.62 6.28 5.77 5.18
69 6.97 6.84 6.44 5.86 5.23
70 7.23 7.07 6.61 5.96 5.27
71 7.51 7.32 6.79 6.05 5.31
72 7.80 7.58 6.96 6.14 5.34
73 8.12 7.85 7.14 6.23 5.37
74 8.46 8.14 7.32 6.31 5.40
75 8.82 8.45 7.50 6.38 5.42
76 9.21 8.76 7.67 6.45 5.44
77 9.63 9.10 7.84 6.51 5.45
78 10.08 9.44 8.01 6.57 5.47
79 10.56 9.80 8.17 6.62 5.48
80 11.07 10.17 8.33 6.66 5.49
81 11.62 10.55 8.48 6.70 5.49
82 12.20 10.94 8.61 6.73 5.50
83 12.82 11.33 8.74 6.76 5.50
84 13.47 11.73 8.86 6.79 5.51
85 14.17 12.12 8.97 6.81 5.51
------------------------------------------------------------------------------
</TABLE>
AR420 (Page 4)
<PAGE>
LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH
$1,000 APPLIED - FEMALE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
------------------------------------------------------------------------------
Age Life Annuity
<S> <C> <C> <C> <C> <C>
10 $2.80 $2.80 $2.80 $2.80 $2.80
11 2.81 2.81 2.81 2.81 2.81
12 2.82 2.82 2.82 2.82 2.82
13 2.83 2.83 2.83 2.83 2.83
14 2.85 2.85 2.85 2.84 2.84
15 2.86 2.86 2.86 2.86 2.86
16 2.87 2.87 2.87 2.87 2.87
17 2.89 2.89 2.89 2.88 2.88
18 2.90 2.90 2.90 2.90 2.90
19 2.92 2.92 2.92 2.91 2.91
20 2.93 2.93 2.93 2.93 2.93
21 2.95 2.95 2.95 2.95 2.94
22 2.96 2.96 2.96 2.96 2.96
23 2.98 2.98 2.98 2.98 2.98
24 3.00 3.00 3.00 3.00 2.99
25 3.02 3.02 3.02 3.02 3.01
26 3.04 3.04 3.04 3.03 3.03
27 3.06 3.06 3.06 3.06 3.05
28 3.08 3.08 3.08 3.08 3.07
29 3.10 3.10 3.10 3.10 3.09
30 3.13 3.13 3.12 3.12 3.12
31 3.15 3.15 3.15 3.14 3.14
32 3.18 3.18 3.17 3.17 3.16
33 3.20 3.20 3.20 3.20 3.19
34 3.23 3.23 3.23 3.22 3.22
------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------
Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
------------------------------------------------------------------------------
Age Life Annuity
<S> <C> <C> <C> <C> <C>
35 $3.26 $3.26 $3.26 $3.25 $3.24
36 3.29 3.29 3.29 3.28 3.27
37 3.32 3.32 3.32 3.31 3.30
38 3.35 3.35 3.35 3.34 3.33
39 3.39 3.39 3.38 3.38 3.37
40 3.42 3.42 3.42 3.41 3.40
41 3.46 3.46 3.46 3.45 3.43
42 3.50 3.50 3.50 3.49 3.47
43 3.54 3.54 3.54 3.53 3.51
44 3.59 3.59 3.58 3.57 3.55
45 3.64 3.63 3.63 3.61 3.59
46 3.68 3.68 3.67 3.66 3.63
47 3.73 3.73 3.72 3.71 3.68
48 3.79 3.79 3.77 3.76 3.72
49 3.84 3.84 3.83 3.81 3.77
50 3.90 3.90 3.89 3.86 3.82
51 3.97 3.96 3.95 3.92 3.88
52 4.03 4.03 4.01 3.98 3.93
53 4.10 4.10 4.08 4.04 3.99
54 4.18 4.17 4.15 4.11 4.04
55 4.25 4.25 4.22 4.18 4.11
56 4.34 4.33 4.30 4.25 4.17
57 4.42 4.41 4.38 4.32 4.23
58 4.52 4.51 4.47 4.40 4.30
59 4.61 4.60 4.56 4.48 4.37
------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------
Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
------------------------------------------------------------------------------
Age Life Annuity
<S> <C> <C> <C> <C> <C>
60 $4.72 $4.70 $4.66 $4.57 $4.44
61 4.83 4.81 4.76 4.66 4.51
62 4.95 4.93 4.87 4.75 4.58
63 5.08 5.05 4.98 4.85 4.65
64 5.21 5.18 5.10 4.95 4.72
65 5.36 5.32 5.22 5.05 4.79
66 5.51 5.47 5.36 5.16 4.86
67 5.67 5.63 5.50 5.26 4.93
68 5.85 5.80 5.65 5.37 5.00
69 6.04 5.98 5.80 5.49 5.06
70 6.25 6.18 5.97 5.60 5.12
71 6.47 6.39 6.14 5.71 5.18
72 6.71 6.62 6.32 5.83 5.23
73 6.98 6.86 6.50 5.94 5.28
74 7.26 7.12 6.69 6.04 5.32
75 7.57 7.40 6.89 6.14 5.35
76 7.90 7.69 7.09 6.24 5.39
77 8.26 8.01 7.29 6.33 5.41
78 8.65 8.34 7.49 6.41 5.43
79 9.08 8.70 7.69 6.49 5.45
80 9.54 9.07 7.89 6.55 5.47
81 10.03 9.47 8.08 6.61 5.48
82 10.58 9.88 8.26 6.66 5.49
83 11.16 10.31 8.43 6.70 5.49
84 11.80 10.75 8.59 6.74 5.50
85 12.48 11.20 8.74 6.77 5.50
------------------------------------------------------------------------------
</TABLE>
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Numbers of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
--------------------------------------------------------------------------------
<S> <C> <C>
1 $1,000.00 $84.47
2 507.39 42.86
3 343.23 28.99
4 261.19 22.06
5 211.99 17.91
6 179.22 15.14
7 155.83 13.16
8 138.31 11.68
--------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------
Numbers of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
--------------------------------------------------------------------------------
<S> <C> <C>
9 $124.69 $10.53
10 113.82 9.61
11 104.93 8.86
12 97.54 8.24
13 91.29 7.71
14 85.95 7.26
15 81.33 6.87
--------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------
Numbers of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
--------------------------------------------------------------------------------
<S> <C> <C>
16 $77.29 $6.53
17 73.74 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71
30 49.53 4.18
--------------------------------------------------------------------------------
</TABLE>
AR420 (Page 5)
<PAGE>
Exhibit 5
VARIABLE ANNUITY APPLICATION CIGNA LIFE INSURANCE COMPANY
a CIGNA company
-----------------------------------
MAILING ADDRESS:
CIGNA INDIVIDUAL INSURANCE
VARIABLE PRODUCTS SERVICE CENTER, ROUTING S224
HARTFORD, CONNECTICUT 06152-2224
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1
OWNER Name ______________________________________________________
First Middle Last
Address ___________________________________________________
Number Street City State Zip Code
Date of Birth ___/___/___ SS# ________________ Sex / /M
Mo. Day Yr. (or Tax Iden. #) / /F
Telephone (___)_______________________(HOME)
(___)_______________________(WORK)
Full Name of Trust ________________________________________
(if applicable) (Date of Trust)
Name(s) of Trustee(s) _____________________________________
(if applicable)
--------------------------------------------------------------------------------
2
ANNUITANT Name ______________________________________________________
(If different First Middle Last
from Owner)
Address ___________________________________________________
Number Street City State Zip Code
(Annuitant may Address ___________________________________________________
not be a Number Street City State Zip Code
corporation
or trust) Date of Birth ___/___/___ SS# ________________ Sex / /M
Mo. Day Yr. (or Tax Iden. #) / /F
Telephone (___)_______________________(HOME)
(___)_______________________(WORK)
--------------------------------------------------------------------------------
3
OWNER'S Primary Beneficiary(s) and relationship to Proposed
BENEFICIARY Insured
DESIGNATION
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Contingent Beneficiary(s) and relationship to Proposed
Insured
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
--------------------------------------------------------------------------------
4
PREMIUM I. Premium Payment
PAYMENT(S)
$__________ (MAKE CHECK PAYABLE TO "CGLIC")
II. Plan Type (CHECK ONE)
/ / QUALIFIED (IF QUALIFIED, PLEASE COMPLETE ADDENDUM
TO APPLICATION - FORM B10243)
/ / NON-QUALIFIED
III. Does any portion of the payment represent after-tax
dollars?
/ / YES / / NO
IF YES, SPECIFY THE AMOUNT $______________________
--------------------------------------------------------------------------------
5
PREMIUM FIXED ACCOUNT GUARANTEED PERIODS - (SUB-ACCOUNTS)
PAYMENT
ALLOCATION ____% 1 Year ____% 3 Years ____% 5 Years ____% 7 Years
____% 10 Years
____% ____Years (IF AVAILABLE FROM THE COMPANY)
VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
(Allocation FIDELITY INVESTMENTS
to any ____% Asset Manager Portfolio
one % line ____% Equity-Income Portfolio
must be 10% ____% Investment Grade Bonds Portfolio
or more) ____% Money Market Portfolio
(Use Whole FRED ALGER MANAGEMENT, INC.
percentages ____% Alger American Growth Portfolio
only. Must ____% Alger American Leveraged AllCap Portfolio
total 100%.) ____% Alger American MidCap Growth Portfolio
____% Alger American Small Capitalization Portfolio
MASSACHUSETTS FINANCIAL SERVICES
____% MFS Total Return Series
____% MFS Utilities Series
____% MFS World Governments Series
NEUBERGER & BERMAN
____% AMT Balanced Portfolio
____% AMT Limited Maturity Bond Portfolio
____% AMT Partners Portfolio
QUEST FOR VALUE
____% Quest Global Equity Portfolio
____% Quest Managed Portfolio
____% Quest Small Cap Portfolio
OTHER (IF AVAILABLE FROM THE COMPANY)
____% _______________________________
____% _______________________________
____% TOTAL of percentages allocated to Fixed Account
and/or Variable Account (MUST EQUAL 100%).
--------------------------------------------------------------------------------
6
TELEPHONE I(We) acknowledge that neither the Company nor any person
TRANSFER authorized by the Company will be responsible for any
AUTHOR- claim, loss, liability or expense in connection with a
IZATION telephone transfer if the Company or such other person
acted on telephone transfer instructions in good faith in
reliance on this authorization.
Check here if you DO NOT wish to authorize telephone
transfer instructions. / /
Check here if you wish to authorize your registered
representative/agent to make telephone transfers. / /
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
B10242 (Page 1)
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7
ANNUITY DATE The Annuity Date (INCOME PAYMENTS BEGIN ON THE FIRST DAY OF
THE MONTH FOLLOWING THE ANNUITY DATE) must be at least one
month after the Date of Issue. If no date is selected, the
initial Annuity Date will be the Annuitant's 90th birthday
(FOR QUALIFIED PLANS, AGE 70-1/2).
Initial Annuity Date ______________________
MONTH YEAR
--------------------------------------------------------------------------------
8
DEATH BENEFIT The contract provides for a death benefit equal to the
Annuity Account Value. The death benefit options provide for
greater amounts to be paid but require additional charges
under the contract. (Please refer to the prospectus.)
Death Benefit Options (Check one or more):
/ / Death Benefit Option A
/ / Death Benefit Option B
/ / Death Benefit Option C
/ / Death Benefit Option D
--------------------------------------------------------------------------------
9
DOLLAR COST SELECT ONE TRANSFER OPTION ($1,000 MINIMUM PER TRANSFER):
AVERAGING / / $_____________ monthly / / $_____________ quarterly
(For Variable Each amount transferred is to be applied to the following
Account only) Fund(s) in these percentages (USE WHOLE PERCENTAGES ONLY.
TOTAL MUST EQUAL 100%):
($12,000 minimum FIDELITY INVESTMENTS
balance required ____% Asset Manager Portfolio
in the Fund ____% Equity-Income Portfolio
specified) ____% Investment Grade Bonds Portfolio
____% Money Market Portfolio
FRED ALGER MANAGEMENT, INC.
____% Alger American Growth Portfolio
____% Alger American Leveraged AllCap Portfolio
____% Alger American MidCap Growth Portfolio
____% Alger American Small Capitalization Portfolio
MASSACHUSETTS FINANCIAL SERVICES
____% MFS Total Return Series
____% MFS Utilities Series
____% MFS World Governments Series
NEUBERGER & BERMAN
____% AMT Balanced Portfolio
____% AMT Limited Maturity Bond Portfolio
____% AMT Partners Portfolio
QUEST FOR VALUE
____% Quest Global Equity Portfolio
____% Quest Managed Portfolio
____% Quest Small Cap Portfolio
OTHER (IF AVAILABLE FROM THE COMPANY)
____% _______________________________
____% _______________________________
--------------------------------------------------------------------------------
10
REPLACEMENT Will the contract replace one or more existing annuity or
life insurance contracts? / / YES / / NO
IF YES, PLEASE PROVIDE COMPANY NAME, POLICY NUMBER AND
AMOUNT IN SPECIAL REMARKS SECTION AND FOR NON-QUALIFIED
PLANS, COMPLETE THE FOLLOWING:
INDICATE COST BASIS: COST BASIS GAIN
PRE-TEFRA (PRIOR TO 8/13/82) __________ __________
POST-TEFRA (ON OR AFTER 8/13/82) __________ __________
--------------------------------------------------------------------------------
11
SPECIAL
REMARKS
--------------------------------------------------------------------------------
12
HOME OFFICE
CHANGES OR
CORRECTIONS
--------------------------------------------------------------------------------
13
SIGNATURES(S) I(We) hereby certify that the answers to the above questions
are true and correct to the best of my(our) knowledge and
belief and agree that this application will be made a part
of any contract issued by the Company. ALL PAYMENTS AND
VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET
VALUE ADJUSTMENT FORMULA THAT MAY INCREASE OR DECREASE THE
VALUE OF ANY PARTIAL OR FULL SURRENDER MADE PRIOR TO THE END
OF A GUARANTEED PERIOD. ALL PAYMENTS AND VALUES PROVIDED BY
THE CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. I(We) acknowledge receipt of a current
prospectus. Please check here / / if you wish to receive a
copy of the Statement of Additional Information which
supplements the information in the prospectus. Under
penalties of perjury, I (the Owner) certify that the above
Social Security and Taxpayer Identification numbers are
correct and that I am of legal age to enter into this
agreement.
Signed at (City and State)__________________________________
On ____/____/____
MO DAY YEAR
__________________________________________
SIGNATURE(S) OF OWNER(S)
--------------------------------------------------------------------------------
14
CERTIFICATION/ The Registered Representative hereby certifies that the
REPORT BY contract / /IS / / IS NOT intended to replace or change
REGISTERED any existing annuity or life insurance.
REPRESENTA-
TIVE/ Print Name _______________________________________
WITNESS SS# _______________________________________
Rep. Code/Percentage_________________/___________%
Signature ________________________________________
Telephone ________________________________________
Field Office Code ________________________________
--- --- --- --- --- --- --- --- --- --- --- --- ---
Print Name _______________________________________
SS# _______________________________________
Rep. Code/Percentage_________________/___________%
Signature ________________________________________
Telephone ________________________________________
Field Office Code ________________________________
--------------------------------------------------------------------------------
15
BROKER/ Print Name _______________________________________
DEALER Address _______________________________________
INFORMATION _______________________________________
Telephone ________________________________________
Broker Code ______________________________________
Field Office Code ________________________________
--------------------------------------------------------------------------------
B10242 (Page 2)
<PAGE>
CIGNA LIFE INSURANCE COMPANY
HARTFORD, CONNECTICUT
ADDENDUM TO VARIABLE ANNUITY APPLICATION
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SUPPLEMENTAL I. Specify below how payment is to be applied:
INFORMATION
FOR QUALIFIED / / IRA and/or SEP - Please complete the following:
PLANS
(i) Does any portion of the payment represent an
IRA and/or SEP contribution?
/ / YES / / NO
IF YES, SPECIFY THE AMOUNT $______________
AND TAX YEAR 19___.
(ii) I (the Owner) certify that my signature below
indicates that:
(a) I HAVE READ AND UNDERSTAND THE IRA
DISCLOSURE STATEMENT WHICH HAS BEEN PROVIDED;
AND
(b) IF I AM OPENING THIS IRA WITH A
DISTRIBUTION FROM AN EMPLOYER-SPONSORED
RETIREMENT PLAN, SUCH DISTRIBUTION IS A
QUALIFIED DISTRIBUTION AS DEFINED IN THE
INTERNAL REVENUE CODE AND TREASURY
REGULATIONS, THE DISTRIBUTION QUALIFIES FOR
ROLLOVER TREATMENT, AND I IRREVOCABLY ELECT
TO TREAT THIS DISTRIBUTION AS A ROLLOVER
CONTRIBUTION.
/ / Tax Sheltered Annuity (403(b)) -
Please complete the following:
(i) EMPLOYEE - I (the Owner) certify that my
signature below indicates that:
(a) I ACKNOWLEDGE AND UNDERSTAND THAT
REDEMPTIONS ARE RESTRICTED TO THE FOLLOWING
EVENTS; DEATH, ATTAINMENT OF AGE 59-1/2,
SEPARATION FROM SERVICE, DISABILITY, OR
FINANCIAL HARDSHIP, EXCEPT THAT INCOME
ATTRIBUTABLE TO ELECTIVE CONTRIBUTIONS MAY
NOT BE DISTRIBUTED IN THE CASE OF HARDSHIP;
AND (b) I HAVE BEEN INFORMED OF AND
UNDERSTAND THE INVESTMENT ALTERNATIVES
AVAILABLE UNDER MY EMPLOYERS 403(b)
ARRANGEMENT TO WHICH I MAY ELECT TO TRANSFER
MY CONTRACT VALUE.
(ii) Please complete for ongoing contributions
only: EMPLOYER - I (as employer of the
employee) represent that a salary reduction
agreement is currently in place between the
sponsoring organization/employer and the
employee.
________________ (EMPLOYER'S SIGNATURE)
/ / Pension Plan (Specify plan year-end date
____/____/____)
/ / Profit Sharing Plan (Specify plan year-end date
____/____/____)
/ / Other __________________________
II. Specify below the type of plan from which the
distribution was made:
/ / IRA
/ / Tax Sheltered Annuity (403(b))
/ / Pension Plan
/ / Profit Sharing Plan (including 401(k))
/ / Other ________________________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Signed at (City and State) ___________________________________________
On ____/____/____
MO. DAY YEAR
________________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
B10243
<PAGE>
EXHIBIT 6(a)
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION BY ACTION OF / / INCORPORATION / / BOARD OF DIRECTORS
/X/ BOARD OF DIRECTORS / / BOARD OF DIRECTORS
AND SHAREHOLDERS AND MEMBERS
(Stock Corporation) (Nonstock Corporation)
STATE OF CONNECTICUT
SECRETARY OF THE STATE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. NAME OF CORPORATION DATE
Connecticut General Life and Casualty Insurance Company July 13, 1984
--------------------------------------------------------------------------------
2. The Certificate of incorporation is / / A. AMENDED ONLY / / B. AMENDED AND
RESTATED
/ / C. RESTATED ONLY by the following resolution
SEE ATTACHED RESOLUTIONS AND
ACCOMPANYING RESTATED CHARTER (RIDER A)
3. (Omit if 2A is checked.)
(a) The above resolution merely restates and does not change the provisions of
the original Certificate of Incorporation as supplemented and amended to
date, except as follows:
(Indicate amendments made, if any; if none, so indicate.)
The words "Connecticut General Life and Casualty Insurance Company" are deleted
from the first sentence of Section 1, and the words "CIGNA Life Insurance
Company" are substituted therefor.
The second sentence of Section 1 is deleted.
The word "initially" is deleted from the second sentence of Section 3.
Section 5 and Section 6, as amended, are deleted.
The statement of incorporators, which was filed as part of the charter, is
deleted.
(b) Other than as indicated in Par. 3(a), there is no discrepancy between the
provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BY ACTION OF INCORPORATORS
/ / 4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote, if any).
We (at least two-thirds of the incorporators) hereby declare, under the
penalties of false statement that the statements made in the foregoing
certificate are true.
--------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
--------------------------------------------------------------------------------
APPROVED
(All subscribers, or, if nonstock corporation, all applicants
for membership entitled to vote, if none, so indicate)
--------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(over)
<PAGE>
(Continued)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS
/ / 4. (Omit if 2C is checked.) The above resolutions are adopted by the board
of directors acting alone,
/ / there being no shareholders or subscribers
/ / the board of directors being so authorized pursuant to Section 33-341,
Conn. G.S. as amended
/ / the corporation being a nonstock corporation and having no members and
no applicants for membership entitled to vote on such resolution.
--------------------------------------------------------------------------------
5. The number of affirmative votes 6. The number of directors' votes
required to adopt such resolution is: in favor of the resolution was:
--------------------------------------------------------------------------------
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
/X/ 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class.)
--------------------------------------------------------------------------------
NUMBER OF SHARES ENTITLED TO VOTE TOTAL VOTING VOTE REQUIRED VOTE FAVORING
POWER FOR ADOPTION ADOPTION
10,000 10,000 6667 10,000
--------------------------------------------------------------------------------
(b) (If the shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
G. Robert O'Brien David C. Kopp
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
/s/ G. Robert O'Brien /s/ David C. Kopp
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
/ / 4. The above resolution was adopted by the board of directors and by
members.
5. Vote of members:
(a) (Use if no members are required to vote as a class)
--------------------------------------------------------------------------------
NUMBER OF MEMBERS VOTING TOTAL VOTING VOTE REQUIRED VOTE FAVORING
POWER FOR ADOPTION ADOPTION
--------------------------------------------------------------------------------
(b) (If the members of any class are entitled to vote as a class, indicate the
designation and number of members of each such class, the voting power
thereof and the vote of each such class for the amendment resolution.)
--------------------------------------------------------------------------------
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
For office use only
[Filing Stamp] FILING FEE CERTIFICATION FEE TOTAL FEES
$ 30 $ 37.50 $ 69
--------------------------------------------------------
SIGNED (For Secretary of the State)
/s/
--------------------------------------------------------
CERTIFIED COPY SENT ON (Date) INITIALS
/s/ David Kopp
--------------------------------------------------------
TO
Cigna Corp.
--------------------------------------------------------
CARD LIST PROOF
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
WHEREAS, It is deemed appropriate to change the name of the Company by
amending Section 1 of the Certificate of Incorporation or Charter of the Company
(hereinafter referred to as the "Charter"); and
WHEREAS, It is also deemed appropriate to further amend the Charter,
primarily by deletion of certain items relating to the initial organization of
the Company; and
WHEREAS, It is also deemed appropriate to restate the Charter, thereby
incorporating the original Charter and all amendments into a single document;
NOW, THEREFORE, BE IT RESOLVED, That the Charter of the Company is hereby
amended and restated to read as indicated in Rider A attached hereto.
RESOLVED FURTHER, That the name of the Company is hereby changed from
Connecticut General Life and Casualty Insurance Company to CIGNA Life
Insurance Company.
RESOLVED FURTHER, That the officers of the Company are hereby authorized
and directed to take such actions and to execute such documents as they may deem
necessary or appropriate to effectuate the purposes of the foregoing
resolutions.
<PAGE>
RIDER A
Section 1. The CIGNA Life Insurance Company is created a body politic and
corporate and under that name shall have all the powers granted by the general
statutes, as now enacted or hereafter amended, to corporations formed under the
stock corporation act.
Section 2. The corporation shall have the power to write life insurance,
endowments, annuities, accident and health, fire, marine, casualty, liability,
indemnity, fidelity and surety insurance, bonds and other undertakings and any
and all other forms of insurance against hazards or risks of every kind and
description which now or hereafter may lawfully be the subject of insurance; to
accept and to cede reinsurance of any such risks or hazards; to issue policies
and contracts for any kind or combination of kinds of insurance herein
authorized; to issue policies or contracts either with or without participation
in profits; and to acquire and hold any or all of the shares or other securities
of any insurance corporation or any other kind of corporation, provided if the
corporation shall engage in both the business of life insurance, endowments or
annuities, and any other kind of insurance business, a life insurance department
of the corporation shall be established and assets equal to the liabilities for
such business of life insurance, endowments or annuities shall be maintained
separately in such department and shall not be liable for the payment or
satisfaction of liabilities, obligations or expenses incurred in connection with
any other kind of insurance business and such department shall be kept distinct
in all matters of accounting and investment. The corporation is authorized to
exercise the powers herein granted in any state, territory or jurisdiction of
the United States or in any foreign country.
Section 3. The capital with which the corporation shall commence business
shall be an amount not less than one thousand dollars. The authorized capital
shall be one million five hundred thousand dollars divided into fifteen thousand
shares of common capital stock with a par value of one hundred dollars each. The
corporation may borrow money necessary for the purposes of its business and
issue subordinated notes therefor upon an agreement that such money, and the
interest thereon, shall be repaid only out of free surplus; money so borrowed
shall not be included in the legal liabilities of the corporation as set forth
in financial and other statements filed with the commissioner of insurance but,
until repaid shall be shown as a footnote to such statements.
<PAGE>
Section 4. The business, property and affairs of the corporation shall be
engaged by the chief executive officer and his delegated officers under the
direction of the board of directors. The board of directors shall be charged
with the following responsibilities and duties: Selection, surveillance and
removal of the chief executive officer and, subject to the provisions of any
applicable bylaws, other corporate officers; provision of periodic statements to
the shareholders concerning the operation and financial status of the
corporation; amendment of the bylaws; authorization or approval of major
acquisitions and dispositions of assets; authorization or approval of mergers,
consolidations and reorganizations; the taking of action with respect to the
issuance, acquisition, retirement or cancellation, redemption or determination
or terms, limitations and relative rights and preferences of the corporation's
capital stock or any class thereof; the incurrence of major corporate
indebtedness; declaration of dividends with respect to outstanding shares of the
corporation's capital stock; action with respect to the dissolution of the
corporation; and such other responsibilities and duties as may be required by
law. The number of directorships shall be fixed in the bylaws. The number of
directorships so fixed shall be filled by an election of directors at each
annual meeting of the shareholders to serve until the next annual meeting or
until their respective successors shall be elected and shall qualify, except as
provided in the Connecticut stock corporation act.
<PAGE>
STATE OF CONNECTICUT )
) SS. HARTFORD
OFFICE OF THE SECRETARY OF THE STATE )
I hereby certify that this is a true copy of record
in this Office
In testimony whereof, I have hereunto set my hand,
and affixed the Seal of said State, at Hartford,
this 21st day of February A.D. 1995
/s/ Miles S. Rapoport
------------------------------------------------------
SECRETARY OF THE STATE
<PAGE>
STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDING * HARTFORD, CONNECTICUT 06115
THIS IS TO CERTIFY, THAT the attached amendment to the Articles of Incorporation
of the CIGNA Life Insurance Company has been approved.
WITNESS MY HAND AND OFFICIAL SEAL,
AT HARTFORD, THIS 8th DAY OF December, 1986
/s/ illegible
INSURANCE COMMISSIONER
[Stamp]
Rec. Mark Parsons
Cigna life Insurance Co.
Bloomfield, Ct
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION BY ACTION OF / / INCORPORATION / / BOARD OF DIRECTORS
/X/ BOARD OF DIRECTORS / / BOARD OF DIRECTORS
AND SHAREHOLDERS AND MEMBERS
(Stock Corporation) (Nonstock Corporation)
STATE OF CONNECTICUT
SECRETARY OF THE STATE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. NAME OF CORPORATION DATE
CIGNA Life Insurance Company December 8, 1986
--------------------------------------------------------------------------------
2. The Certificate of incorporation is /X/ A. AMENDED ONLY / / B. AMENDED AND
RESTATED
/ / C. RESTATED ONLY by the following resolution
WHEREAS, It is deemed appropriate to amend the Certificate of
Incorporation or Charter of the Company, as previously amended and restated
(hereinafter referred to as the "Charter") in order to increase the
authorized capital stock of the Company;
RESOLVED, That the second sentence of Section 3 of the Charter is
hereby amended to read as follows:
"The authorized capital shall be three million
dollars divided into thirty thousand shares of
common capital stock with a par value of one
hundred dollars each."
RESOLVED, That the Officers of the Company are authorized and directed
to take such actions and to execute such documents as they may deem
necessary or appropriate to effectuate the purpose of the foregoing
resolution.
3. (Omit if 2A is checked.)
(a) The above resolution merely restates and does not change the provisions of
the original Certificate of Incorporation as supplemented and amended to
date, except as follows:
(Indicate amendments made, if any; if none, so indicate)
(b) Other than as indicated in Par. 3(a), there is no discrepancy between the
provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BY ACTION OF INCORPORATORS
/ / 4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote, if any).
We (at least two-thirds of the incorporators) hereby declare, under the
penalties of false statement that the statements made in the foregoing
certificate are true.
--------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
--------------------------------------------------------------------------------
APPROVED
(All subscribers, or, if nonstock corporation, all applicants for membership
entitled to vote, if none, so indicate)
--------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Over)
<PAGE>
(Continued)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS
/ / 4. (Omit if 2C is checked.) The above resolution was adopted by the board
of directors acting alone,
/ / there being no shareholders or subscribers
/ / the board of directors being so authorized pursuant to Section 33-341,
Conn. G.S. as amended
/ / the corporation being a nonstock corporation and having no members and
no applicants for membership entitled to vote on such resolution.
--------------------------------------------------------------------------------
5. The number of affirmative votes 6. The number of directors' votes
required to adopt such resolution is: in favor of the resolution was:
--------------------------------------------------------------------------------
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
/X/ 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class)
--------------------------------------------------------------------------------
NUMBER OF SHARES ENTITLED TO VOTE TOTAL VOTING VOTE REQUIRED VOTE FAVORING
POWER FOR ADOPTION ADOPTION
10,000 10,000 6,667 10,000
--------------------------------------------------------------------------------
(b) (If the shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
G. Robert O'Brien David C. Kopp
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
/s/ G. Robert O'Brien /s/ David C. Kopp
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
/ / 4. The above resolution was adopted by the board of directors and by
members.
5. Vote of members:
(a) (Use if no members are required to vote as a class)
--------------------------------------------------------------------------------
NUMBER OF MEMBERS VOTING TOTAL VOTING VOTE REQUIRED VOTE FAVORING
POWER FOR ADOPTION ADOPTION
--------------------------------------------------------------------------------
(b) (If the members of any class are entitled to vote as a class, indicate the
designation and number of members of each such class, the voting power
thereof, and the vote of each such class for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
For office use only
[Filing Stamp] FILING FEE CERTIFICATION FEE TOTAL FEES
$ 75 ftx 30f $ $ 105 Total
--------------------------------------------------------
SIGNED (For Secretary of the State)
/s/ Rec. Mark Parsons
--------------------------------------------------------
CERTIFIED COPY SENT ON (Date) INITIALS
1/23/87 Cigna Insurance
--------------------------------------------------------
TO
Bloomfield, Ct
--------------------------------------------------------
CARD LIST PROOF
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
STATE OF CONNECTICUT )
) SS. HARTFORD
OFFICE OF THE SECRETARY OF THE STATE )
I hereby certify that this is a true copy of record
in this Office
In testimony whereof, I have hereunto set my hand,
and affixed the Seal of said State, at Hartford,
this 21st day of February A.D. 1995
/s/ Miles S. Rapoport
------------------------------------------------------
SECRETARY OF THE STATE
<PAGE>
STATE OF CONNECTICUT
INSURANCE DEPARTMENT
STATE OFFICE BUILDING * HARTFORD, CONNECTICUT 06115
THIS IS TO CERTIFY, THAT the attached "Certificate Amending or Restating
Certificate of Incorporation" of CIGNA Life Insurance Company by action of its
board of directors and shareholders, dated July 24, 1989, to amend Section 2 of
the Certificate of Incorporation or Charter of the Company, as previously
amended and restated, (hereinafter referred to as the "Charter"), in order to
delete property and casualty authority from the Charter, is hereby approved.
WITNESS MY HAND AND OFFICIAL SEAL,
AT HARTFORD, THIS 2nd DAY OF August, 1989.
/s/ Peter T. Kelly
INSURANCE COMMISSIONER
[Stamp]
<PAGE>
CERTIFICATE
AMENDING OR RESTATING CERTIFICATE
OF INCORPORATION BY ACTION OF / / INCORPORATION / / BOARD OF DIRECTORS
/X/ BOARD OF DIRECTORS / / BOARD OF DIRECTORS
AND SHAREHOLDERS AND MEMBERS
(Stock Corporation) (Nonstock Corporation)
STATE OF CONNECTICUT
SECRETARY OF THE STATE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. NAME OF CORPORATION DATE
CIGNA Life Insurance Company July 24, 1989
--------------------------------------------------------------------------------
2. The Certificate of incorporation is /X/ A. AMENDED ONLY / / B. AMENDED AND
RESTATED
/ / C. RESTATED ONLY by the following resolutions of directors and
shareholders:
SEE ATTACHED RESOLUTIONS
(ATTACHMENT A)
3. (Omit if 2A is checked.)
(a) The above resolution merely restates and does not change the provisions of
the original Certificate of Incorporation as supplemented and amended to
date, except as follows:
(Indicate amendments made, if any; if none, so indicate.)
(b) Other than as indicated in Par. 3(a), there is no discrepancy between the
provisions of the original Certificate of Incorporation as supplemented to
date, and the provisions of this Certificate Restating the Certificate of
Incorporation.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BY ACTION OF INCORPORATORS
/ / 4. The above resolution was adopted by vote of at least two-thirds of the
incorporators before the organization meeting of the corporation, and
approved in writing by all subscribers (if any) for shares of the
corporation, (or if nonstock corporation, by all applicants for membership
entitled to vote, if any).
We (at least two-thirds of the incorporators) hereby declare, under the
penalties of false statement that the statements made in the foregoing
certificate are true.
--------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
--------------------------------------------------------------------------------
APPROVED
(All subscribers, or, if nonstock corporation, all applicants for membership
entitled to vote, if none, so indicate)
--------------------------------------------------------------------------------
SIGNED SIGNED SIGNED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Over)
<PAGE>
(Continued)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS
/ / 4. (Omit if 2C is checked.) The above resolutions are adopted by the board
of directors acting alone,
/ / there being no shareholders or subscribers
/ / the board of directors being so authorized pursuant to Section 33-341,
Conn. G.S. as amended
/ / the corporation being a nonstock corporation and having no members and
no applicants for membership entitled to vote on such resolution.
--------------------------------------------------------------------------------
5. The number of affirmative votes 6. The number of directors' votes
required to adopt such resolution is: in favor of the resolution was:
--------------------------------------------------------------------------------
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
--------------------------------------------------------------------------------
BY ACTION OF BOARD OF DIRECTORS AND SHAREHOLDERS
/X/ 4. The above resolution was adopted by the board of directors and by
shareholders.
5. Vote of shareholders:
(a) (Use if no shares are required to be voted as a class)
--------------------------------------------------------------------------------
NUMBER OF SHARES ENTITLED TO VOTE TOTAL VOTING VOTE REQUIRED VOTE FAVORING
POWER FOR ADOPTION ADOPTION
25,000 25,000 16,667 25,000
--------------------------------------------------------------------------------
(b) (If the shares of any class are entitled to vote as a class, indicate
the designation and number of outstanding shares of each such class,
the voting power thereof, and the vote of each such class for the
amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
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NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
G. Robert O'Brien David C. Kopp
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SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
/s/ G. Robert O'Brien /s/ David C. Kopp
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BY ACTION OF BOARD OF DIRECTORS AND MEMBERS
/ / 4. The above resolution was adopted by the board of directors and by
members.
5. Vote of members:
(a) (Use if no members are required to vote as a class)
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NUMBER OF MEMBERS VOTING TOTAL VOTING VOTE REQUIRED VOTE FAVORING
POWER FOR ADOPTION ADOPTION
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(b) (If the members of any class are entitled to vote as a class, indicate the
designation and number of members of each such class, the voting power
thereof and the vote of each such class for the amendment resolution.)
We hereby declare, under the penalties of false statement that the statements
made in the foregoing certificate are true.
--------------------------------------------------------------------------------
NAME OF PRESIDENT OR VICE PRESIDENT NAME OF SECRETARY OR ASSISTANT
(Print or Type) SECRETARY (Print or Type)
--------------------------------------------------------------------------------
SIGNED (President or Vice President) SIGNED (Secretary or Assistant
Secretary)
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For office use only
[Filing Stamp] FILING FEE CERTIFICATION FEE TOTAL FEES
$ 45 $ $ 144.00
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SIGNED (For Secretary of the State)
8/7/89
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CERTIFIED COPY SENT ON (Date) INITIALS
Rec. John D. Molloy
--------------------------------------------------------
TO
900 Cottage Grove Rd.
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CARD LIST PROOF
Bloomfield CT 06002
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<PAGE>
ATTACHMENT A
WHEREAS, It is deemed appropriate to amend the Certificate of
Incorporation or Charter of the Company, as previously amended and restated
(hereinafter referred to as the "Charter"), in order to delete property and
casualty authority from the Charter;
RESOLVED, That Section 2 of the Charter is hereby amended to read as
follows:
"Section 2. The corporation shall have the power to write life insurance,
endowments, annuities, accident and health insurance and other undertakings
and any and all other forms of insurance which any other corporation now or
hereafter chartered by Connecticut and empowered to do a life insurance
business may now or hereafter lawfully do; to accept and to cede
reinsurance of any such risks or hazards; to issue policies and contracts
for any kind or combination of kinds of insurance herein authorized; to
issue policies or contracts either with or without participation in
profits; and to acquire and hold any or all of the shares or other
securities of any insurance corporation or any other kind of corporation.
The corporation is authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in any foreign
country."
RESOLVED, That the Officers of the Company are authorized and directed to
take such actions and to execute such documents as they may deem necessary or
appropriate to effectuate the purpose of the foregoing resolution.
<PAGE>
STATE OF CONNECTICUT )
) SS. HARTFORD
OFFICE OF THE SECRETARY OF THE STATE )
I hereby certify that this is a true copy of record
in this Office
In testimony whereof, I have hereunto set my hand,
and affixed the Seal of said State, at Hartford,
this 21st day of February A.D. 1995
/s/ Miles S. Rapoport
------------------------------------------------------
SECRETARY OF THE STATE
<PAGE>
EXHIBIT 6(B)
BY-LAWS
of
CIGNA Life Insurance Company
ARTICLE 1
All meetings of the stockholders shall be held in Bloomfield or in such other
town in Connecticut as the directors may determine. The annual meeting shall be
held on such day during the first half of the year as the directors may
determine. A written or printed notice of any meeting shall be mailed to each
stockholder at least ten days prior to the meeting.
ARTICLE 2
The number and terms of office of the directors shall be determined from time to
time by the board of directors. No person shall be elected as a director after
attaining the age of 70 years. The compensation of directors shall be as
determined by the directors.
ARTICLE 3
The directors shall hold a meeting, in Bloomfield or in such other town in
Connecticut as the directors may determine, each year immediately following the
annual meeting of the stockholders; and they shall hold meetings thereafter at
such times and places as they may determine. Special meetings of the directors
may be called by the president and shall be called by the president or in his
absence by another director upon request in writing of any three directors. One-
third of the total number of directors shall constitute a quorum. Action of the
directors shall be by majority vote of the directors present.
ARTICLE 4
The directors shall determine the order of their business and their own rules of
order and they shall preserve a written record of their doings.
ARTICLE 5
The directors, by resolution adopted by a majority of the entire board, may
appoint from their number one or more committees, each consisting of two or
more directors and each of which, to the extent provided in such resolution,
shall have all the authority of the board. A majority of the members of a
committee shall constitute a quorum.
<PAGE>
ARTICLE 6
The directors shall elect a president, one or more vice presidents and one or
more secretaries. They may also elect such other officers as they may deem
desirable.
ARTICLE 7
All loans and purchases for investment shall be authorized or approved by the
directors or by an authorized committee of the board.
ARTICLE 8
The sale or other disposition of any stocks, bonds or other investments shall be
authorized or approved by the directors or an authorized committee of the board.
The president or a vice president or a secretary or an assistant secretary is
authorized to execute any instruments necessary in connection with the purchase
or the sale or other disposition of any stocks, bonds or other investments and
to execute any agreements relating to any investments.
ARTICLE 9
Home office real estate and branch office real estate may be sold only upon
specific authorization of the directors or an authorized committee of the board.
Other real estate may be sold by the president or a vice president. The
instrument of conveyance of any real estate shall be executed by the president
or a vice president and by a secretary or an assistant secretary, and contracts
of sale relating to any real estate shall be executed in like manner.
ARTICLE 10
The president or a vice president may execute fidelity and surety bonds and
other bonds, contracts of indemnity, recognizances, stipulations, undertakings,
receipts, releases, deeds, releases of mortgages, contracts, agreements,
policies, notices of appearance, waivers of citation and consents to
modifications of contracts as may be required in the ordinary course of business
or by vote of the directors, and such execution may be attested where necessary
or desirable and the seal of the company where necessary or desirable may be
affixed to the specific instrument by a secretary or an assistant secretary.
The president or a vice president may with the concurrence of a secretary or an
assistant secretary appoint and authorize an attorney-in-fact or any other
person to execute on behalf of the company any such instruments and undertakings
and to affix the seal of the company thereto where necessary or desirable.
<PAGE>
The president or a vice president shall have the power with the concurrence of a
secretary or an assistant secretary to appoint and authorize resident managers,
bond superintendents and field managers to execute, seal and deliver on behalf
of the company unto such person or persons as they may select, its power of
attorney constituting each such person attorney-in-fact of the company with full
power and authority to execute, seal and deliver for and on behalf of the
company in its name and in its behalf, as surety, one - and one only - specific
bond or undertaking as described in each instance in each power of attorney.
The attorneys-in-fact under the preceding paragraphs of this article are
authorized and empowered to certify to a copy of any of the bylaws of the
company or any resolutions adopted by the directors or to the financial
statement of the condition of the company and to affix the seal of the company
thereto where necessary or desirable.
The directors may at any time and from time to time enlarge, restrict or in any
way modify the authorizations granted in this Article 10. However, no such
restriction or other modification shall affect in any way any person who has
relied on an authorization granted in the preceding paragraphs and who does not
have actual notice of the restriction or other modification imposed by order of
the directors.
ARTICLE 11
These bylaws may be altered, amended or repealed and new bylaws may be adopted
by the directors or by the shareholders at any regular or special meeting.
<PAGE>
SECRETARY'S CERTIFICATE
CIGNA LIFE INSURANCE COMPANY
The undersigned, the duly elected Corporate Secretary of CIGNA Life Insurance
Company (the "Company") , does hereby represent and certify that attached hereto
is a true, correct and complete copy of the Bylaws of the Company; and such
Bylaws remain in full force and effect as of the date hereof, not having been
amended, modified or rescinded since September 29, 1988.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of said CIGNA Life
Insurance Company this 23rd day of February, 1995.
/s/ DAVID C. KOPP
------------------------------------
David C. Kopp
Corporate Secretary
(SEAL)
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 2 to the registration
statement of the CIGNA Variable Annuity Separate Account I on Form N-4 of our
report dated February 13, 1995, relating to the financial statements of CIGNA
Life Insurance Company, which appears in such Statement of Additional
Information. We also consent to the reference to us under the heading "Experts"
in such Statement of Additional Information.
PRICE WATERHOUSE LLP
Hartford, Connecticut
August 21, 1995
<PAGE>
George N. Gingold
Consultant
CIGNA Individual
Insurance
Legal Department
900 Cottage Grove Road
Hartford, CT 06152-2321
Telephone 203.726.4357
Facsimile 203.726.1778
August 22, 1995
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Commissioners:
I hereby consent to the reference to my name under the caption "Legal
Matters" in the Statement of Additional Information contained in Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 33-90984) to
be filed by CIGNA Life Insurance Company and CIGNA Variable Annuity Separate
Account I with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended.
Sincerely,
/s/ George N. Gingold
--------------------------
George N. Gingold, Esquire
<PAGE>
POWER OF ATTORNEY
We, the undersigned directors and officers of CIGNA Life Insurance Company,
hereby severally constitute and appoint David C. Kopp and Robert A. Picarello,
and each of them individually, our true and lawful attorneys-in-fact, with full
power to them and each of them to sign for us, and in our names and in the
capacities indicated below, any and all amendments to Registration Statement No.
33-90984 which may be filed with the Securities and Exchange Commission under
the Securities Act of 1933, on behalf of the Company in its own name or in the
name of one of its Separate Accounts, hereby ratifying and confirming our
signatures as they may be signed by either of our attorneys-in-fact to any
amendment to such Registration Statement.
WITNESS our hands and common seal on this 28th day of April, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ JOHN WILKINSON
------------------------------------------- President (Principal Executive Officer)
John Wilkinson
/s/ JAMES T. KOHAN
------------------------------------------- Vice President and Actuary (Principal Financial Officer)
James T. Kohan
/s/ ROBERT MOOSE
------------------------------------------- Vice President (Principal Accounting Officer)
Robert Moose
/s/ HAROLD W. ALBERT
------------------------------------------- Director
Harold W. Albert
/s/ S. TYRONE ALEXANDER
------------------------------------------- Director
S. Tyrone Alexander
/s/ ROBERT W. BURGESS
------------------------------------------- Director
Robert W. Burgess
/s/ JOHN G. DAY
------------------------------------------- Director
John G. Day
/s/ LAWRENCE P. ENGLISH
------------------------------------------- Director
Lawrence P. English
/s/ ARTHUR C. REEDS, III
------------------------------------------- Director
Arthur C. Reeds, III
</TABLE>
