<Page>
CRC(R) COMPOUND RATE CONTRACT
MODIFIED GUARANTEED ANNUITY CONTRACT
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668
[THE HARTFORD LOGO]
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This Prospectus describes participating interests in a group deferred annuity
Contract and individual deferred annuity Contracts. Both are designed and
offered to provide retirement programs for you if you are an eligible
individual. With respect to the group Contract, eligible individuals include
persons who have established accounts with certain broker-dealers which have
entered into a distribution agreement to offer participating interests in the
Contract, and members of other eligible groups. (See "Distribution of
Contracts"). An individual deferred annuity Contract is offered in certain
states and to certain trusts. Certain Qualified Plans may also purchase the
Contract. (See Appendix A).
For a description of individual Contracts issued in certain states where this
Contract has not been approved, see Appendix B. Participation in a group
Contract will be separately accounted for by the issuance of a Certificate
evidencing your interest under the Contract. Participation in an individual
Contract is evidenced by the issuance of an individual annuity Contract. The
Certificate and individual annuity Contract are hereafter referred to as the
"Contract."
A minimum single purchase payment of at least $5,000 for Non-Qualified Contracts
($2,000 for Qualified Contracts) must accompany the application for a Contract.
Hartford Life Insurance Company ("Hartford") reserves the right to limit the
maximum single purchase payment amount. No additional payment is permitted on a
Contract although eligible individuals may purchase more than one Contract. (See
"Application and Purchase Payment").
Purchase payments become part of the general assets of Hartford. Hartford
intends generally to invest proceeds from the Contracts in investment-grade
securities. (See "Investments by Hartford").
THIS PROSPECTUS IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
SECURITIES AND EXCHANGE COMMISSION DOESN'T APPROVE OR DISAPPROVE THESE
SECURITIES OR DETERMINE IF THE INFORMATION IS TRUTHFUL OR COMPLETE. ANYONE WHO
REPRESENTS THAT THE SECURITIES AND EXCHANGE COMMISSION DOES THESE THINGS MAY BE
GUILTY OF A CRIMINAL OFFENSE.
This prospectus can also be obtained from the Securities and Exchange
Commission's website: (www.sec.gov).
Annuity contracts ARE NOT:
- - A bank deposit or obligation
- - Federally insured
- - Endorsed by any bank or governmental agency
This annuity may not be available for sale in all states.
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PROSPECTUS DATED: MAY 1, 2007
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2 HARTFORD LIFE INSURANCE COMPANY
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AVAILABLE INFORMATION
We are required by the Securities Exchange Act of 1934 to file reports and other
information with the SEC. You may read or copy these reports at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. You may call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
You may also obtain reports, proxy and information statements and other
information about us at the SEC's website at: www.sec.gov.
We filed a registration statement ("Registration Statement") relating to the
Contracts offered by this prospectus with the SEC under the Securities Act of
1933. This prospectus has been filed as a part of the Registration Statement and
does not contain all of the information contained in the Registration Statement.
For more information about the Contracts and us, you may obtain a copy of the
Registration Statement in the manner set forth in the preceding paragraph.
In addition, the SEC allows Hartford to "incorporate by reference" information
that Hartford files with the SEC into this prospectus, which means that
incorporated documents are considered part of this prospectus. Hartford can
disclose important information to you by referring you to those documents.
Information that Hartford files with the SEC will automatically update and
supercede the information in this prospectus.
This prospectus incorporates by reference the following documents:
(a) Our Annual Report on Form 10-K for the fiscal year ended December 31,
2006;
(b) Our Quarterly Report on Form 10-Q for the period ended March 31, 2007;
and
(c) Until this offering has been completed, any future filings we will make
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become part of this prospectus, may change or supercede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
Hartford will provide without charge to each person to whom a copy of this
prospectus has been delivered, upon the written or oral request of such person,
a copy of the document referred to above which has been incorporated by
reference in this prospectus, other than exhibits to such document. Requests for
such copies should be directed to Hartford Life Insurance Company, P.O. Box
5085, Hartford, Connecticut 06102-5085, telephone: 1-800-862-6668.
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HARTFORD LIFE INSURANCE COMPANY 3
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TABLE OF CONTENTS
<Table>
<Caption>
PAGE
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SUMMARY 5
GLOSSARY OF SPECIAL TERMS 6
DESCRIPTION OF CONTRACTS 7
A. Application and Purchase Payment 7
B. Accumulation Period 7
1. Initial and Subsequent Guarantee Periods 7
2. Establishment of Guarantee Rates and Current Rates 8
3. Surrenders 8
(a) General 8
(b) Surrender Charge 9
(c) Market Value Adjustment 9
(d) Special Surrenders 9
4. Guarantee Period Exchange Option 10
5. Premium Taxes 10
6. Death Benefit 10
7. Payment Upon Partial or Full Surrender 10
C. Annuity Period 10
1. Electing the Annuity Commencement Date and Form of Annuity 10
2. Change of Annuity Commencement Date or Annuity Option 11
3. Annuity Options 11
4. Annuity Payment 11
5. Death of Annuitant After Annuity Commencement Date 12
INVESTMENTS BY HARTFORD 12
AMENDMENT OF CONTRACTS 12
ASSIGNMENT OF CONTRACTS 12
DISTRIBUTION OF CONTRACTS 12
FEDERAL TAX CONSIDERATIONS 14
A. Introduction 14
B. Taxation of Hartford 15
C. Taxation of Annuities -- General Provisions Affecting Contracts 15
Not Held in Tax-Qualified Retirement Plans
1. Non-Natural Persons as Owners 15
2. Other Contract Owners (Natural Persons) 15
a. Distributions Prior to the Annuity Commencement Date 16
b. Distributions After Annuity Commencement Date 16
c. Aggregation of Two or More Annuity Contracts 16
d. 10% Penalty Tax -- Applicable to Certain Surrenders and Annuity 16
Payments
e. Special Provisions Affecting Contracts Obtained through a 17
Tax-Free Exchange of Other Annuity or Life Insurance Contracts
Purchased Prior to August 14, 1982
</Table>
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4 HARTFORD LIFE INSURANCE COMPANY
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<Table>
<Caption>
PAGE
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f. Required Distributions 17
g. Addition of Riders 17
h. Partial Exchanges 18
D. Federal Income Tax Withholding 18
E. General Provisions Affecting Qualified Retirement Plans 18
F. Annuity Purchases By Nonresident Aliens and Foreign Corporations 18
G. Estate, Gift and Generation-Skipping Transfer Tax and Related Tax 18
Considerations
INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS 19
THE COMPANY 22
LEGAL OPINION 23
EXPERTS 23
APPENDIX A -- MODIFIED GUARANTEED ANNUITY FOR QUALIFIED PLANS 24
APPENDIX B -- SPECIAL PROVISIONS FOR INDIVIDUAL CONTRACTS ISSUED IN THE 25
STATES OF CALIFORNIA, MICHIGAN, MISSOURI, NEW YORK, OREGON, SOUTH
CAROLINA, TEXAS, VIRGINIA AND WISCONSIN
APPENDIX C -- MARKET VALUE ADJUSTMENT 26
</Table>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALES PERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON.
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HARTFORD LIFE INSURANCE COMPANY 5
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SUMMARY
Upon application, or purchase order, you select an initial Guarantee Period from
among those then offered by Hartford. (See "Initial and Subsequent Guarantee
Periods" and "Establishment of Guarantee Rates and Current Rates"). Your
purchase payment (less surrenders and less applicable premium taxes, if any)
will earn interest at the initial Guarantee Rate which is an Annual Effective
Rate of Interest. Interest is credited daily to your account using the Compound
Interest Method. (See "Accumulation Period -- Initial and Subsequent Guarantee
Periods").
At the end of each Guarantee Period, a subsequent Guarantee Period of the same
duration will begin unless, within the 30-day period preceding the end of such
Guarantee Period, you elect a different duration from among those offered by us
at that time. In no event may subsequent Guarantee Periods extend beyond the
Annuity Commencement Date then in effect.
The Account Value as of the first day of each subsequent Guarantee Period will
earn interest at the Subsequent Guarantee Rate. Hartford's management will make
the final determination as to guarantee rates to be declared. We cannot predict,
nor can we guarantee, future guarantee rates. (See "Initial and Subsequent
Guarantee Periods" and "Establishment of Guarantee Rates and Current Rates").
Subject to certain restrictions, partial and total surrenders are permitted.
However, such surrenders may be subject to a surrender charge and/or a Market
Value Adjustment. A full or partial surrender made preceding the end of a
Guarantee Period will be subject to a Market Value Adjustment. Except as
described below, the surrender charge will be deducted from any partial or full
surrender made before the end of the seventh Contract Year. The surrender charge
will be equal to seven percent of the Gross Surrender Value in the first
Contract Year, and be reduced by one percentage point for each of the next six
Contract Years.
For a surrender made at the end of the initial guarantee period, no surrender
charge will be applied, provided such surrender occurs on or after the end of
the third contract year. For a surrender made at the end of any other guarantee
period, no surrender charge will be applied, provided such surrender occurs on
or after the end of the fifth contract year. A request for surrender at the end
of a guarantee period must be received in writing within 30 days preceding the
end of the guarantee period. A Market Value Adjustment will not be applied.
No surrender charges will be applicable to the application of your Account Value
to purchase an annuity on the Annuity Commencement Date. A Market Value
Adjustment will be applied if the Annuity Commencement Date is not at the end of
a Guarantee Period. To elect an Annuity Option you must notify us at least 30
days before the Annuity Commencement Date.
In addition, we will send you any interest that has been credited during the
prior 12 months if you so request in writing. We will not impose any surrender
charge or Market Value Adjustment on such interest payments. Any such surrender
may, however, be subject to tax. (See "Surrenders" and "Federal Tax
Considerations").
The Market Value Adjustment reflects the relationship between the Current Rate
for the duration remaining in the Guarantee Period at the time you request the
surrender and the applicable Guarantee Rate being applied to your Account Value.
Since Current Rates may reflect, in part, the investment yields available to
Hartford (see "Investments By Hartford"), the effect of the Market Value
Adjustment will be closely related to the levels of such yields. It is possible,
therefore, that should such yields increase significantly from the time you
purchased your Contract, the amount you would receive upon a full surrender of
your Contract may be less than your original purchase payment. If such yields
should decrease significantly, the amount you would receive upon a full
surrender may be more than your original purchase payment.
We may defer payment of any partial or full surrender for a period not exceeding
six months from the date of our receipt of your written notice of surrender or
the period permitted by state insurance law, if less. Such a deferral of payment
will be for a period greater than 30 days only under highly unusual
circumstances. Interest of at least 4 1/2% per annum will be paid on any amounts
deferred for more than 30 days if Hartford chooses to exercise this deferral
right. (See "Payment Upon Partial or Full Surrender").
On the Annuity Commencement Date specified by you, Hartford will make a lump-sum
payment or start to pay a series of payments based on the Annuity Options
selected by you. (See "Annuity Period").
The Contract provides for a Death Benefit. If the Annuitant dies before the
Annuity Commencement Date and there is no designated Contingent Annuitant
surviving, or if the Participant dies before the Annuity Commencement Date, the
Death Benefit will be payable to the Beneficiary as determined under the
Contract Control Provisions. With regard to joint Participants, at the first
death of a joint Participant preceding the Annuity Commencement Date, the
Beneficiary will be the surviving Participant notwithstanding that the
designated Beneficiary may be different. The Death Benefit is calculated as of
the date we receive written notification of Due Proof of Death at the offices of
Hartford.
The Death Benefit will equal the Account Value. If the named Beneficiary is the
spouse of the Participant and the Annuitant is living, the spouse may elect, in
lieu of receiving the Death Benefit, to become the Participant and continue the
Contract. (See "Death Benefit").
A deduction will be made for premium taxes for Contracts sold in certain states.
(See "Premium Taxes").
Certain special provisions apply only with respect to Contracts issued in the
states of California, Michigan, Missouri, New York, Oregon, South Carolina,
Texas, Virginia and Wisconsin. These are set forth in detail in Appendix B.
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6 HARTFORD LIFE INSURANCE COMPANY
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For Contracts issued as individual retirement annuities, Hartford will refund
the purchase payment to the Participant if the Contract is returned to Hartford
within seven days after Contract delivery.
GLOSSARY OF SPECIAL TERMS
In this Prospectus, "we," "us," and "our" refer to Hartford Life Insurance
Company. With respect to a group deferred annuity Contract, "you," "yours," and
"Participant" refer to a person/persons who has/have been issued a Certificate.
With respect to an individual annuity Contract, "you," "yours," and
"Participant" refer to a person/persons who has/have been issued a Contract.
In addition, as used in this Prospectus, the following terms have the indicated
meanings:
ACCOUNT VALUE: As of any date on which the New York Stock Exchange is open for
business, the Account Value is the sum of the purchase payment and all interest
earned to date less the sum of the Gross Surrender Value of any surrenders made
to that date.
ANNUAL EFFECTIVE RATE OF INTEREST: At the beginning of a year, the rate of
return an investment will earn during that year, where interest is not paid
until the end of the year (i.e., no surrenders or interest surrenders are made
during the year). If interest surrenders are taken more frequently than
annually, the total interest for a given year will be less than the Annual
Effective Rate of Interest times the Account Value at the beginning of the year.
ANNUITANT: The person upon whose life Annuity payments are issued.
ANNUITY COMMENCEMENT DATE: The date designated in the Contract or otherwise by
the Participant on which annuity payments are to start.
BENEFICIARY: The person entitled to receive benefits per the terms of the
Contract in case of the death of the Annuitant or the Participant or Joint
Participant, as applicable.
COMPOUND INTEREST METHOD: The process of interest being reinvested to earn
additional interest on a daily basis. This method results in an exponential
calculation of daily interest.
CONTRACT: For a group annuity Contract, "Contract" means the Certificate
evidencing a participating interest in the group annuity Contract as set forth
in this Prospectus. Any reference in this Prospectus to "Contract" includes the
underlying group annuity Contract. For an individual annuity Contract,
"Contract" means that individual annuity contract.
CONTRACT DATE: The effective date of Participant's participation under the group
annuity Contract, as designated in the Contract, or the date of issue of an
individual annuity Contract.
CONTRACT YEAR: A continuous 12 month period commencing on the Contract Date and
each anniversary thereof.
CONTINGENT ANNUITANT: The person so designated by the Participant, who upon the
Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CURRENT RATE: The applicable interest rate contained in a schedule of rates
established by us from time to time for various durations.
DUE PROOF OF DEATH: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Hartford.
GROSS SURRENDER VALUE: As of any date, that portion of the Account Value
specified by you for a full or a partial surrender.
GUARANTEE PERIOD: The period for which either an initial Guarantee Rate or
Subsequent Guarantee Rate is credited.
HARTFORD: Hartford Life Insurance Company.
GUARANTEE RATE: The rate of interest credited and compounded annually during the
Guarantee Period.
IN WRITING: A written form satisfactory to us and received at our offices,
Attn.: Individual Product Services, P.O. Box 5085, Hartford, Connecticut
06102-5085.
MARKET VALUE ADJUSTMENT: A positive or negative financial adjustment made in
connection with a full or partial surrender or annuitization during a Guarantee
Period. The adjustment will reflect the relationship between the Current Rate
for a new contract of the duration remaining in the Guarantee Period(s) at
surrender or upon annuitization during a Guarantee Period and the interest rate
for the Guarantee Period then applicable under the Contract.
NET SURRENDER VALUE: The amount payable to you on a full or partial surrender
under the Contract after the application of any Contract charges and/or Market
Value Adjustment.
NON-QUALIFIED CONTRACT: A Contract which is not classified as, or issued in
connection with, a tax-qualified retirement plan using pre-tax dollars under the
Internal Revenue Code of 1986, as amended (the "Code").
PURCHASE PAYMENT: The payment made to Hartford pursuant to the terms of the
Contract.
QUALIFIED CONTRACT: A Contract which qualifies as, or issued in connection with,
a tax-qualified retirement plan using pre-tax dollars under the Code, such as an
employer-sponsored Section 401(k) plan or an eligible state deferred
compensation plan under Section 457.
SUBSEQUENT GUARANTEE RATE: The rate of interest established by us for the
applicable subsequent Guarantee Period.
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HARTFORD LIFE INSURANCE COMPANY 7
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DESCRIPTION OF CONTRACTS
A. APPLICATION AND PURCHASE PAYMENT
To apply for a Contract, you must complete an application form or an order to
purchase. The application, along with your purchase payment, must be submitted
to Hartford for its approval.
The Contracts are issued within a reasonable time after the payment of a single
purchase payment. You may not contribute additional purchase payments to a
Contract in the future. You may, however, purchase additional Contracts, if you
are an eligible individual, at then-prevailing Guarantee Rates and terms.
The minimum purchase payment for a Contract is $5,000 for Non- Qualified
Contracts ($2,000 for Qualified Contracts). Hartford retains the right to limit
the amount of the maximum purchase payment.
Your purchase payment becomes part of our general assets and is credited to an
account we establish for you. We will generally confirm your purchase payment in
writing within five business days of receipt. You start earning interest on your
account the day the purchase payment is applied.
In the event that your application or an order to purchase is not properly
completed, we will attempt to contact you in writing or by telephone. We will
return the purchase payment three weeks after its receipt by us if the
application or an order to purchase has not, by that time, been properly
completed.
B. ACCUMULATION PERIOD
1. INITIAL AND SUBSEQUENT GUARANTEE PERIODS
Upon application, you will select the duration of your Initial Guarantee Period
from among those durations offered by us. The duration you select will determine
your initial Guarantee Rate. Your purchase payment (less surrenders and less
applicable premium taxes, if any) will earn interest at the initial Guarantee
Rate which is an Annual Effective Rate of Interest. Interest is credited daily
to your account using the Compound Interest Method. With compound interest, the
total investment of principal and interest earned to date is invested at all
times. You continue to earn interest on interest already earned. However, when
surrenders are made during the year, interest on the amount of the surrenders is
lost for the remainder of the year.
Set forth below is an illustration of how interest would be credited to your
Account Value during each Guarantee Period, using a five year Guarantee Period.
For the purpose of this example, we have made the assumptions.
No full or partial surrenders or pre-authorized distributions of interest during
the entire five year period. A Market Value Adjustment, surrender charge, or
both may apply to any such surrenders or distributions (see "Surrenders"). The
hypothetical interest rates are illustrative only and are not intended to
predict future interest rates to be declared under the contract. Actual interest
rates declared for any given time may be more or less than those shown.
EXAMPLE OF COMPOUNDING AT THE INITIAL GUARANTEE RATE
<Table>
Beginning Account Value: $50,000
Guarantee Period: 5 years
Guarantee Rate: 5.50% per annum
</Table>
<Table>
END OF CONTRACT YEAR:
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YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
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Beginning Account Value $50,000.00
(1+Guarantee Rate) 1.055
$52,750.00
Account Value at end of Contract Year 1 $52,750.00
x (1+Guarantee Rate) 1.055
$55,651.25
Account Value at end of Contract Year 2 $55,651.25
x (1+Guarantee Rate) 1.055
$58,712.07
Account Value at end of Contract Year 3 $58,712.07
x (1+Guarantee Rate) 1.055
$61,941.23
Account Value at end of Contract Year 4 $61,941.23
x (1+Guarantee Rate) 1.055
$65,348.00
Account Value at end of Guarantee Period $65,348.00
</Table>
<Table>
Total Interest Credited in $65,348.00 - 50,000.00 = $15,348.00
Guarantee Period
Account Value at end of Guarantee $50,000.00 + 15,348.00 = $65,348.00
Period
Account Value after 180 days from $50,000 x (1.055)(180/365) = $51,337.77
the Contract Date
</Table>
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8 HARTFORD LIFE INSURANCE COMPANY
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Unless you elect to make a surrender (see "Surrenders"), a subsequent Guarantee
Period will automatically commence at the end of a Guarantee Period. Each
subsequent Guarantee Period will be of the same duration as the previous
Guarantee Period unless you elect in writing, on any day within the 30 day
period preceding the end of the current Guarantee Period, a Guarantee Period of
a different duration from among those offered by us at that time. Under a
program currently offered by Hartford, this 30-day period is extended to 90
days, however a Market Value Adjustment will apply to your current Account Value
if you do not elect the subsequent Guarantee Period during the 30-day period
preceding the end of the current Guarantee Period. Hartford may discontinue this
program at any time.
In no event may subsequent Guarantee Periods extend beyond the Annuity
Commencement Date then in effect. For example, if you are age 62 upon the
expiration of a Guarantee Period and you have chosen age 65 as an Annuity
Commencement Date, we will provide a three year Guarantee Period to equal the
number of years remaining before your Annuity Commencement Date. Your Account
Value will then earn interest at a Guarantee Rate which we have declared for
that duration. The Guarantee Rate for the Guarantee Period automatically applied
in these circumstances may be higher or lower than the Guarantee Rate for longer
durations.
The Account Value at the beginning of any subsequent Guarantee Period will be
equal to the Account Value at the end of the Guarantee Period just ending. This
Account Value (less surrenders made after the beginning of the subsequent
Guarantee Period) will earn interest compounded annually at the Subsequent
Guarantee Rate.
Within 30 days preceding the end of a Guarantee Period, we will notify you that
the current rate Guarantee Period is expiring.
2. ESTABLISHMENT OF GUARANTEE RATES AND CURRENT RATES
You will know the initial Guarantee Rate for the Guarantee Period you choose at
the time you purchase your Contract. Current Rates will be established
periodically along with the Guarantee Rates which will be applicable to
subsequent Guarantee Periods. After the end of each Contract Year, we will send
you a statement which will show (a) your Account Value as of the end of the
preceding Contract Year, (b) all transactions regarding your Contract during the
Contract Year, (c) your Account Value at the end of the current Contract Year,
and (d) the rate of interest being credited to your Contract.
Hartford has no specific formula for determining the rate of interest that it
will declare as Current Rates or Guarantee Rates in the future. The
determination of Current Rates and Guarantee Rates may reflect, in part, the
income anticipated from the types of debt instruments in which Hartford intends
to invest the proceeds attributable to the Contracts. (See "Investments by
Hartford"). In addition, Hartford's management may also consider various other
factors in determining Current Rates and Guarantee Rates for given periods,
including regulatory and tax requirements; sales commissions and administrative
expenses borne by Hartford; general economic trends; and competitive factors.
Hartford's management will make the final determination as to Current Rates and
Guarantee Rates to be declared. We cannot predict, nor can we guarantee, future
current rates or guarantee rates.
3. SURRENDERS
(a) GENERAL
Full surrenders may be made under a Contract at any time. Partial surrenders may
only be made if:
i. the Gross Surrender Value is at least $1,000; and
ii. the remaining Account Value after the Gross Surrender Value has been
deducted is at least $5,000.
In the case of all surrenders, the Account Value will be reduced by the Gross
Surrender Value on the Surrender Date and the Net Surrender Value will be
payable to you. The Net Surrender Value equals:
(A - B) x C, where:
A = the Gross Surrender Value;
B = the surrender charge plus any unpaid premium tax; and
C = the Market Value Adjustment.
Hartford will, upon request, inform you of the amount payable upon a full or
partial surrender.
Any full, partial or special surrender may be subject to tax. (See "Federal Tax
Considerations")
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(b) TAX-SHELTERED ANNUITIES. AS OF
DECEMBER 31, 1988, ALL SECTION 403(b) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL
SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY
INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS
THE CONTRACT OWNER/EMPLOYEE HAS: (A) ATTAINED AGE 59 1/2, (B) TERMINATED
EMPLOYMENT, (C) DIED, (D) BECOME DISABLED, OR (E) EXPERIENCED FINANCIAL
HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL BE
SUBJECT TO A PENALTY TAX OF 10%.
HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A SURRENDER
IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR SITUATION OR IN
MONITORING SURRENDER REQUESTS REGARDING PRE- OR POST- JANUARY 1, 1989 ACCOUNT
VALUES.
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HARTFORD LIFE INSURANCE COMPANY 9
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(b) SURRENDER CHARGE
No deduction for a sales charge is made from the purchase payment when received.
A surrender charge, however, may be deducted from the Gross Surrender Value
(before application of any Market Value Adjustment) of any partial or full
surrender made before the end of the seventh Contract Year regardless of the
length of Guarantee Periods, as follows:
<Table>
<Caption>
SURRENDER CHARGE AS
CONTRACT YEAR IN WHICH PERCENTAGE OF GROSS
SURRENDER IS MADE SURRENDER VALUE
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1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
</Table>
No surrender charge will be made for surrenders after Contract Year 7 or certain
surrenders effective at the end of a Guarantee Period. (See "Special
Surrenders").
The surrender charge may be reduced if you are surrendering to purchase a
variable annuity contract issued by Hartford or an affiliate of Hartford.
For example, assume you select an initial Guarantee Period of five years and
then you take no action to change the duration of the second Guarantee Period,
resulting in a second Guarantee Period also with a duration of five years. Any
surrenders made during the sixth Contract Year will be subject to a two percent
surrender charge even though you could have made a surrender of up to the
Account Value at the end of the initial five year Guarantee Period which would
not have been subject to a surrender charge.
(c) MARKET VALUE ADJUSTMENT
The amount payable on a partial or full surrender made during any Guarantee
Period may be adjusted up or down by the application of the Market Value
Adjustment. Where applicable, the Market Value Adjustment is applied to Gross
Surrender Value, net of any surrender charge.
In the case of either a partial or full surrender, the Market Value Adjustment
will reflect the relationship between the Current Rate for the duration
remaining in the Guarantee Period at the time you request the surrender, and the
Guarantee Rate then applicable to your Contract.
Generally, if your Guarantee Rate is lower than the applicable Current Rate,
then the application of the Market Value Adjustment will reduce the payment upon
surrender.
Similarly, if your Guarantee Rate is higher than the applicable Current Rate,
the application of the Market Value Adjustment will increase the payment upon
surrender.
For example, assume you purchase a Contract and select an initial Guarantee
Period of ten years and our Guarantee Rate for that duration is 8% per annum.
Assume that at the end of seven years you make a partial surrender. If the three
year Current Rate is then 6%, the amount payable upon partial surrender will
increase after the application of the Market Value Adjustment. On the other
hand, if such Current Rate is higher than your Guarantee Rate (for example,
10%), the application of the Market Value Adjustment will cause a decrease in
the amount payable to you upon this partial surrender.
Since Current Rates may reflect, in part, the investment yields available to
Hartford (see "Investments By Hartford"), the Market Value Adjustment may also
reflect, in part, the levels of such yields. It is possible, therefore, that
should such yields increase significantly from the time you purchased your
Contract, coupled with the application of the surrender charges, the amount you
would receive upon a full surrender of your Contract could be less than your
original purchase payment.
The formula for calculating the Market Value Adjustment is set forth in Appendix
C, which also contains an additional illustration of the application of the
Market Value Adjustment.
(d) SPECIAL SURRENDERS
No surrender charge is imposed:
(1) Upon a surrender made at the end of the initial Guarantee Period, provided
such surrender occurs on or after the end of the third Contract Year.
(2) Upon a surrender made at the end of any subsequent Guarantee Period,
provided such surrender occurs on or after the end of the fifth Contract
Year.
A request for surrender at the end of a Guarantee Period pursuant to (1) and (2)
above must be received in writing by Hartford during the 30 day period preceding
the end of that Guarantee Period. Under a program currently offered by Hartford,
this period is extended to 90 days if you exchange your Contract for a variable
or other annuity issued by Hartford or an affiliate. Hartford may discontinue or
modify this program at any time.
(3) Upon the application of your Account Value to purchase an annuity on the
Annuity Commencement Date. A Market Value Adjustment will be applied if the
Annuity Commencement Date is not at the end of a Guarantee Period. To elect
an Annuity Option, Hartford must receive your notice in writing at least 30
days before the end of that Guarantee Period.
In addition, we will send you any interest that has been credited during the
prior 12 months if you so request in writing. No surrender charge or Market
Value Adjustment will apply to such interest payments. Any such surrender may,
however, be subject to tax.
For certain tax-qualified plans, we reserve the right to offer by rider an
extended surrender privilege, without imposing a surrender charge or Market
Value Adjustment.
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10 HARTFORD LIFE INSURANCE COMPANY
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4. GUARANTEE PERIOD EXCHANGE OPTION
Once each Contract Year you may elect to transfer from your current rate
Guarantee Period into a new rate Guarantee Period of a different duration. A
Market Value Adjustment will be applied to your current Account Value at the
time of transfer. There will be no surrender charge for this exchange. Surrender
charges will continue to be based on time elapsed from the original Contract
Date. While we currently do not impose a transfer charge, Hartford reserves the
right to charge a fee of up to $50 for each transfer.
5. PREMIUM TAXES
A deduction is also made for premium taxes, if applicable, imposed by a state or
other governmental entity, currently upto 3.5%. Some states assess the tax at
the time purchase payments are made; others assess the tax when annuity payments
begin. Hartford will pay premium taxes at the time imposed under applicable law.
At its sole discretion, Hartford may deduct premium taxes at the time Hartford
pays such taxes to the applicable taxing authorities, upon surrender, or when
annuity payments commence.
6. DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant surviving, or if the Participant dies before the
Annuity Commencement Date, the Death Benefit will be payable to the Beneficiary
as determined under the Contract Control Provisions. With regard to Joint
Participants, at the first death of a Joint Participant preceding the Annuity
Commencement Date, the Beneficiary will be the surviving Participant,
notwithstanding that the Designated Beneficiary may be different. The Death
Benefit is calculated as of the date we receive at the offices of Hartford
written notification of Due Proof of Death. The Death Benefit will equal the
Account Value.
The Death Benefit may be taken in one sum, to be paid within six months after
the date we receive Due Proof of Death, or under any of the Annuity Options
available under the Contract; provided, however, that: (a) in the event of the
death of a Participant prior to the Annuity Commencement Date, any Annuity
Option selected must provide that any amount payable as a Death Benefit will be
distributed within five years of the date of death; and (b) in the event of the
death of a Participant or Annuitant which occurs on or after the Annuity
Commencement Date, any remaining interest in the Contract will be paid at least
as rapidly as under the method of distribution in effect at the time of death,
or, if the benefit is payable over a period not extending beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death. In the event of
the Participant's death, where the sole Beneficiary is the spouse of the
Participant and the Annuitant or Contingent Annuitant is living, such sole
Beneficiary may elect, in lieu of receiving the Death Benefit, to be treated as
the Participant.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant preceding the Annuity
Commencement Date will be payable only as one sum or under the same Annuity
Options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
Proceeds from the Death Benefit may be left with Hartford for a period not to
exceed five years from the date of the Participant's death preceding the Annuity
Commencement Date. The proceeds will remain in the same Guarantee Period and
continue to earn the same interest rate as at the time of death. If the
Guarantee Period ends before the end of the five year period, the Beneficiary
may elect a new Guarantee Period with a duration closest to but not to exceed
the time remaining in the period of five years from the date of the
Participant's death. Full or partial surrenders may be made at any time. In the
event of surrenders, the remaining value will equal the proceeds left with
Hartford, minus any surrenders, plus any interest earned. A Market Value
Adjustment will be applied to all surrenders except those occurring at the end
of a Guarantee Period.
The Beneficiary of a non-qualified Contract or IRA may also elect the "Single
Life Expectancy Only" option. This option allows the Beneficiary to take the
Death Benefit in a series of payments spread over a period equal to the
Beneficiary's remaining life expectancy. Distributions are calculated based on
IRS life expectancy tables. This option is subject to different limitations and
conditions depending on whether the Contract is non-qualified or an IRA.
7. PAYMENT UPON PARTIAL OR FULL SURRENDER
We may defer payment of any partial or full surrender for a period not exceeding
six months from the date of our receipt of your notice of surrender or the
period permitted by state insurance law, if less. We may defer a surrender
payment more than 30 days and, if we do, we will pay interest of at least 4 1/2%
per annum on the amount deferred. While all circumstances under which we could
defer payment upon surrender may not be foreseeable at this time, such
circumstances could include, for example, a time of an unusually high surrender
rate under the Contracts, accompanied by a radical shift in interest rates. If
we intend to withhold payment for more than 30 days, we will notify you in
writing. We will not, however, defer payment for more than 30 days as to any
surrender which is to be effective at the end of any Guarantee Period.
C. ANNUITY PERIOD
1. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
Upon application for a Contract, you select an Annuity Commencement Date. Within
30 days preceding your Annuity Commencement Date you may elect to have all or a
portion of your Net Surrender Value paid in a lump sum on your Annuity
Commencement Date. Alternatively, or with respect to any portion of your Net
Surrender Value not paid in a lump sum, you may elect, at least 30 days
preceding the Annuity Commencement Date, to have your Account Value with a
Market Value Adjustment, if applicable, or a portion thereof multiplied by the
Market Value Adjustment (less applicable premium
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HARTFORD LIFE INSURANCE COMPANY 11
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taxes, if any) applied on the Annuity Commencement Date under any of the Annuity
Options described below. In the absence of such election, Account Value with a
Market Value Adjustment, if applicable, will be applied on the Annuity
Commencement Date under the Life Annuity with 120 Monthly Payments Certain. This
Contract may not be surrendered for its Termination Value after the commencement
of annuity payments, except with respect to proceeds from the Death Benefit
remaining at Hartford.
2. CHANGE OF ANNUITY COMMENCEMENT DATE OR ANNUITY OPTION
You may change the Annuity Commencement Date and/or the Annuity Option from time
to time, but any such change must be made in writing and received by us at least
30 days preceding the scheduled Annuity Commencement Date. Once Annuity Payouts
begin, you cannot change the Annuity Payout Option. Also, the proposed Annuity
Commencement Date may not be beyond the Annuitant's 90th birthday.
3. ANNUITY OPTIONS
Any one of the following Annuity Options may be elected:
LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant, and terminating
with the last monthly payment due preceding the death of the Annuitant. It would
be possible under this Option for an Annuitant to receive only one Annuity
payment if he died preceding the due date of the second Annuity payment, two
payments if he died before the due date of the third Annuity payment, and so on.
LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
An annuity providing monthly income to the Annuitant for a fixed period of 120
months, 180 months or 240 months (as selected), and for as long thereafter as
the Annuitant shall live.
CASH REFUND LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant, provided that,
at the death of the Annuitant, the Beneficiary will receive an additional
payment equal to (a) minus (b), where (a) is the Account Value applied on the
Annuity Commencement Date under this Option and (b) is the dollar amount of
annuity payments already paid.
JOINT AND LAST SURVIVOR LIFE ANNUITY
An annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment preceding the death of the survivor. It
would be possible under this Option for the Annuitant, and designated second
person in the event of the common or simultaneous death of the parties, to
receive only one payment in the event of death preceding the due date for the
second payment, and so on.
PAYMENTS FOR A DESIGNATED PERIOD
We will make Annuity Payments for the number of years that you select. You can
select any number of years between 5 and 100 years minus the Annuitant's age.
If, at the death of the Annuitant, Annuity Payments have been made for less than
the time period selected, then the Beneficiary may elect to continue the
remaining Annuity Payments or receive the commuted value in one sum.
The Tables in the Contract provide for guaranteed dollar amounts of monthly
payments for each $1,000 applied under the five Annuity Options. Under the
First, Second or Third Options, the amount of each payment will depend upon the
age and sex of the Annuitant at the time the first payment is due. Under the
Fourth Option, the amount of each payment will depend upon the sex of both
payees and their ages at the time the first payment is due.
The Tables for the First, Second, Third and Fourth Options are based on the
1983a Individual Annuity Mortality Table, with ages set back one year and a net
investment rate of 4% per annum. The table for the Fifth Option is based on a
net investment rate of 4% per annum.
We may, from time to time, at our discretion if mortality appears more favorable
and interest rates justify, apply other tables which will result in higher
monthly payments for each $1,000 applied under one or more of the five Annuity
Options.
IMPORTANT INFORMATION: YOU CANNOT SURRENDER YOUR CONTRACT ONCE ANNUITY PAYMENTS
BEGIN.
FOR QUALIFIED CONTRACTS, IF YOU ELECT AN ANNUITY OPTION WITH 120, 180 OR 240
MONTHLY PAYMENTS CERTAIN, THE GUARANTEED NUMBER OF YEARS MUST BE LESS THAN THE
LIFE EXPECTANCY OF THE ANNUITANT AT THE TIME THE ANNUITY PAYMENTS BEGIN. WE
COMPUTE LIFE EXPECTANCY USING THE IRS MORTALITY TABLES.
AUTOMATIC ANNUITY PAYMENTS. If you do not elect an Annuity Option, annuity
payments will automatically begin on the Annuity Commencement Date under the
Life Annuity with 120 Monthly Payments Certain.
4. ANNUITY PAYMENT
The first payment under any Annuity Option will be made following the Annuity
Commencement Date. Subsequent payments will be made on the same day in
accordance with the manner of payment selected.
The option elected must result in a payment of an amount at least equal to the
minimum payment amount according to Hartford's rules then in effect. If at any
time payments are less than the minimum payment amount, Hartford has the right
to change the frequency to an interval resulting in a payment at least equal to
the minimum. If any amount due is less than the minimum per year, Hartford may
make other arrangements that are equitable to the Annuitant.
Once annuity payments have commenced, no surrender of the annuity benefit
(including benefits under the Payments for a
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12 HARTFORD LIFE INSURANCE COMPANY
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Designated Period Option) can be made for the purpose of receiving a lump sum
settlement in lieu thereof.
5. DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
In the event of the death of the Annuitant after the Annuity Commencement Date,
the present values on the date of death of the current dollar amount of any
remaining guaranteed payments will be paid in one sum to the Beneficiary unless
other provisions shall have been made and approved by us. Calculations of such
present value will be based on the interest rate that is used by us to determine
the amount of each certain payment.
INVESTMENTS BY HARTFORD
Assets of Hartford must be invested in accordance with the requirements
established 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.
Contract reserves will be accounted for in a non-unitized separate account.
Contract Owners have no priority claims on assets accounted for in this separate
account. All assets of Hartford, including those accounted for in this separate
account, are available to meet the guarantees under the Contracts and are
available to meet the general obligations of Hartford.
Nonetheless, in establishing Guarantee Rates and Current Rates, Hartford intends
to take into account the yields available on the instruments in which it intends
to invest the proceeds from the Contracts. (See "Establishment of Guarantee
Rates and Current Rate"). Hartford's investment strategy with respect to the
proceeds attributable to the Contracts will generally be to invest in
investment-grade debt instruments having durations tending to match the
applicable Guarantee Periods.
Investment-grade debt instruments in which Hartford intends to invest the
proceeds from the Contracts include:
Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the United
States Government.
Debt securities which have an investment grade, at the time of purchase, within
the four highest grades assigned by Moody's Investors Services, Inc. (Aaa, Aa, A
or Baa), Standard & Poor's Corporation (AAA, AA, A or BBB) or any other
nationally recognized rating service.
Other debt instruments, including, but not limited to, issues of or guaranteed
by banks or bank holding companies and corporations, which obligations, although
not rated by Moody's Investors Services, Inc. or Standard & Poor's Corporation
are deemed by Hartford's management to have an investment quality comparable to
securities which may be purchased as stated above.
While the foregoing generally describes our investment strategy with respect to
the proceeds attributable to the Contracts, we are not obligated to invest the
proceeds attributable to the Contract according to any particular strategy,
except as may be required by Connecticut and other state insurance laws.
AMENDMENT OF CONTRACTS
We reserve the right to amend the Contracts to meet the requirements of
applicable federal or state laws or regulations. We will notify you in writing
of any such amendments.
ASSIGNMENT OF CONTRACTS
Your rights as evidenced by a Contract may be assigned as permitted by
applicable law. An assignment will not be binding upon us until we receive
notice from you in writing. We assume no responsibility for the validity or
effect of any assignment. You should consult your tax adviser regarding the tax
consequences of an assignment.
DISTRIBUTION OF CONTRACTS
HOW CONTRACTS ARE SOLD -- We have entered into a distribution agreement with our
affiliate Hartford Securities Distribution Company, Inc. ("HSD") under which HSD
serves as the principal underwriter for the Contracts, which are offered on a
continuous basis. HSD is registered with the Securities and Exchange Commission
under the 1934 Act as a broker-dealer and is a member of the NASD. The principal
business address of HSD is the same as ours. PLANCO Financial Services, Inc., a
subsidiary of Hartford Life Insurance Company, provides marketing support for
us. Woodbury
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HARTFORD LIFE INSURANCE COMPANY 13
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Financial Services, Inc. is another affiliated broker-dealer that sells this
Contract.
HSD has entered into selling agreements with affiliated and unaffiliated
broker-dealers, and financial institutions ("Financial Intermediaries") for the
sale of the Contracts. We pay compensation to HSD for sales of the Contracts by
Financial Intermediaries. HSD, in its role as principal underwriter, did not
retain any underwriting commissions for the fiscal year ended December 31, 2006.
Contracts will be sold by individuals who have been appointed by us as insurance
agents and who are registered representatives of Financial Intermediaries
("Registered Representatives").
We list below types of arrangements that help to incentivize sales people to
sell our products. These types of arrangements could be viewed as creating
conflicts of interest.
Financial Intermediaries receive commissions (described below under
"Commissions"). Certain selected Financial Intermediaries also receive
additional compensation (described below under "Additional Payments"). All or a
portion of the payments we make to Financial Intermediaries may be passed on to
Registered Representatives according to a Financial Intermediaries' internal
compensation practices.
Affiliated broker-dealers also employ individuals called "wholesalers" in the
sales process. Wholesalers typically receive commissions based on the type of
Contract or optional benefits sold. Commissions are based on a specified amount
of Premium Payments or Contract Value.
COMMISSIONS
Up front commissions paid to Financial Intermediaries generally range from 1% to
up to 7% of each Premium Payment you pay for your Contract. We may pay a lower
commission for sales to people over age 80.
Commission arrangements vary from one Financial Intermediary to another. We are
not involved in determining your Registered Representative's compensation. Under
certain circumstances, your Registered Representative may be required to return
all or a portion of the commissions paid.
Check with your Registered Representative to verify whether your account is a
brokerage or an advisory account. Your interests may differ from ours and your
Registered Representative (or the Financial Intermediary with which they are
associated). Please ask questions to make sure you understand your rights and
any potential conflicts of interest. If you are an advisory client, your
Registered Representative (or the Financial Intermediary with which they are
associated) can be paid both by you and by us based on what you buy. Therefore,
profits, and your Registered Representative's (or their Financial
Intermediary's) compensation, may vary by product and over time. Contact an
appropriate person at your Financial Intermediary with whom you can discuss
these differences.
ADDITIONAL PAYMENTS
Subject to NASD and Financial Intermediary rules, we (or our affiliates) also
pay the following types of promotional fees to encourage the sale of this
Contract. These additional payments could create an incentive for your
Registered Representative, and the Financial Intermediary with which they are
associated, to recommend products that pay them more than others.
<Table>
<Caption>
ADDITIONAL
PAYMENT TYPE WHAT IT'S USED FOR
- --------------------------------------------------------------------------------------------------------------------------------
Access Access to Registered Representatives and/or Financial Intermediaries such as one-on-one wholesaler
visits.
Gifts & Entertainment Occasional meals and entertainment, tickets to sporting events and nominal gifts.
Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/ participation; sponsorship of
Financial Intermediary sales contests and/or promotions in which participants (including Registered
Representatives) receive prizes such as travel awards, merchandise and recognition.
Support Sales support through such things as providing hardware and software, operational and systems
integration, links to our website from a Financial Intermediary's websites; shareholder services
(including sub-accounting and the preparation of account statements and other communications),
sponsorship of Financial Intermediary due diligence meetings; and/or expense allowances and
reimbursements.
Training Educational, sales or training seminars, conferences and programs, sales and service desk training,
and/or client or prospect seminar sponsorships.
Visibility Inclusion of our products on a Financial Intermediary's "preferred list"; participation in, or
visibility at, national and regional conferences; and/or articles in Financial Intermediary publications
highlighting our products and services.
Volume Pay for the overall volume of their sales or the amount of money investing in our products.
</Table>
As of December 31, 2006, we have entered into arrangements to make Additional
Payments (excluding Travel & Entertainment) to the following Financial
Intermediaries for our entire suite of variable annuities:
A.G. Edwards & Sons, Inc., AIG Financial Advisors, American Classic Securities,
American General Securities Inc., Ameritas Investment Corp., Amsouth Investment
Services, Arvest Asset Management, Associated Investment Services Inc.,
Associated Securities Corp., B.C. Ziegler and Company, Banc of America
Investment Services Inc., BancWest Investment Services Inc.,
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14 HARTFORD LIFE INSURANCE COMPANY
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BB&T Investment Services, Inc., Berthel, Fisher & Company Financial Services
Inc., BI Investments, LLC, BNY Investment Center Inc., BOSC, Inc., Brecek &
Young Advisors, Inc., Brookstreet Securities Corp., Cadaret, Grant & Co., Inc.,
Cambridge Investment Research, Inc., Cantella & Co., Inc., Capital Analysts,
Inc., Capital Investment Group, Inc., Centaurus Financial, Inc., Citicorp
Investment Services, Colonial Brokerage, Inc., Comerica Securities, Commerce
Brokerage Services, Inc., Commerce Capital Markets, Inc., Commonwealth Financial
Network, Compass Brokerage, Inc., Crown Capital Securities, LLP, Cuna Brokerage
Services, Inc., Cuso Financial Services, L.P., Davenport & Company LLC, DFC
Investor Services, Dominion Investor Services, Inc., Edward D. Jones & Co.,
L.P., Empire Securities Corporation, Equity Services, Inc., Essex National
Securities, Inc., Ferris/Baker Watts, FFP Securities, Inc., Fifth Third
Securities, Financial Network Investment Corporation, Fintegra LLC, First Allied
Securities, First St. Louis Securities, Inc., First Tennessee Bank, First
Tennessee Brokerage, Inc., FNB Brokerage Services, Inc., FNIC F.I.D. Div., Frost
Brokerage Services Inc., FSC Securities Corporation, Geneos Wealth Management,
Inc., Girard Securities Inc., Great American Advisors, Inc., Gunnallen
Financial, Inc., H&R Block Financial Advs., Inc., H. Beck, Inc., H.D.Vest
Investment Services, Harbour Investments, Inc., Hefren-Tillotson/ Masterplan,
Hornor, Townsend & Kent, Inc., HSBC Securities (USA) Inc., IBC Investments, IFMG
Securities, Inc., Infinex Investment, Inc., ING Financial Partners,
InterSecurities, Inc., INVEST Financial Corporation, Investacorp, Inc.,
Investment Centers of America, Investment Professionals, Inc., Investors Capital
Corp., J.B. Hanauer & Co., Janney Montgomery Scott, Inc., JJB Hilliard/WL Lyons,
Inc., Key Investment Services, KMS Financial Services, Inc., LaSalle Financial
Services, Inc., LaSalle Street Securities, Inc., Legacy Financial Services,
Inc., Lincoln Financial Advisors Corporation, Linsco/Private Ledger, M&I
Brokerage Services, Inc., M&T Securities, Inc., Mercantile Brokerage Services
Inc., Merrill Lynch Pierce Fenner & Smith, MML Investor Services, Inc., Money
Concepts Capital Corp., Morgan Keegan & Co., Inc., Morgan Keegan FID Division,
Morgan Stanley, Mutual Service Corp., NatCity Investments, National Planning
Corporation, National Planning Holdings (Invest Financial Corp., Investment
Centers of America, Inc., National Planning Corp., SII Investments, Inc.), NBC
Securities, Inc., Newbridge Securities Corp., Next Financial Group, NFP
Securities, Inc., North Ridge Securities Corp., Ohio Savings Securities, Inc.,
OneAmerica Securities Inc., Oppenheimer and Co., Inc., Pacific West Securities,
Inc., Peoples Securities, Inc., PrimeVest Financial Services, Princor Financial
Service Corp., ProEquities, Inc., Prospera Financial Services, QA3 Financial
Corp., Questar Capital Corp., Raymond James & Associates, Inc., Raymond James
FID Division, Raymond James Financial Services, Inc., RBC Dain FID Division, RBC
Dain Rauscher Inc., Robert W. Baird & Co. Inc., Royal Alliance Associates, Inc.,
Ryan Beck & Co., Scott & Stringfellow, Inc., Securian Financial Services,
Securities America, Inc., Securities Service Network, Inc., Sigma Financial
Corporation, Signator Investors Inc., SII Investments, Smith Barney, Sorrento
Pacific, South Valley Wealth Management, Spectrum Capital, Inc., Sterne Agee &
Leach, Inc., Stifel, Nicolaus & Co., Inc., Summit Brokerage Services Inc.,
SunTrust Investment Services, Inc., Synovus Securities, TFS Securities, Inc.,
The Huntington Investment Co., Tower Square Securities, Inc., Transamerica
Financial Advisor, Triad Advisors, Inc., UBS Financial Services, Inc., UnionBanc
Investment Services, United Brokerage Services, Inc., US Bancorp FID, UVest
Financial Services, Vanderbilt Securities, LLC, Vision Investment Services,
Inc., Vorpahl Wing Securities, VSR Financial Services, Inc., Wachovia Sec Inc
Fncl Network, Wachovia Securities ISG, Wachovia Securities LLC, Wall Street
Financial Group, Waterstone Financial Group, Webster Investments, Weitzel
Financial Services Inc., Wells Fargo Investments, WesBanco Securities, Inc., WM
Financial Services, Inc., Woodbury Financial Services, Inc., Workman Securities
Corp., XCU Capital Corp., Inc.
Inclusion on this list does not imply that these sums necessarily constitute
"special cash compensation" as defined by NASD Conduct Rule 2830(l)(4). We will
endeavor to update this listing annually and interim arrangements may not be
reflected. We assume no duty to notify any investor whether their Registered
Representative is or should be included in any such listing.
For the fiscal year ended December 31, 2006, Additional Payments did not in the
aggregate exceed approximately $720,000 (excluding corporate-sponsorship related
perquisites and travel and entertainment expenses) or approximately 0.07% of
average assets. For the fiscal year ended December 31, 2006, total travel and
entertainment expenses incurred by our wholesalers did not in the aggregate
exceed approximately $485,000.
FEDERAL TAX CONSIDERATIONS
What are some of the federal tax consequences which affect these Contracts?
A. INTRODUCTION
The following summary of tax rules does not provide or constitute any tax
advice. It provides only a general discussion of certain of the expected federal
income tax consequences with respect to amounts contributed to, invested in or
received from a Contract, based on our understanding of the existing provisions
of the Code, Treasury Regulations thereunder, and public interpretations thereof
by the IRS (e.g., Revenue Rulings, Revenue Procedures or Notices) or by
published court decisions. This summary discusses only certain federal income
tax consequences to United States Persons, and does not discuss state, local or
foreign tax consequences. The term United States Persons means citizens or
residents of the United States, domestic corporations, domestic partnerships,
trust or estates that are subject to United States federal income tax,
regardless of the source of their income. See "Annuity Purchases by Non
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HARTFORD LIFE INSURANCE COMPANY 15
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resident Aliens and Foreign Corporations," regarding annuity purchases by
non-U.S. citizens or residents.
This summary has been prepared by us after consultation with tax counsel, but no
opinion of tax counsel has been obtained. We do not make any guarantee or
representation regarding any tax status (e.g., federal, state, local or foreign)
of any Contract or any transaction involving a Contract. In addition, there is
always a possibility that the tax treatment of an annuity contract could change
by legislation or other means (such as regulations, rulings or judicial
decisions). Moreover, it is always possible that any such change in tax
treatment could be made retroactive (that is, made effective prior to the date
of the change). Accordingly, you should consult a qualified tax adviser for
complete information and advice before purchasing a Contract.
In addition, this discussion does not address many of the tax consequences if
you use the Contract in various arrangements, including Charitable Remainder
Trusts, tax-qualified retirement arrangements, deferred compensation plans,
split-dollar insurance arrangements, or other employee benefit arrangements. The
tax consequences of any such arrangement may vary depending on the particular
facts and circumstances of each individual arrangement and whether the
arrangement satisfies certain tax qualification or classification requirements.
In addition, the tax rules affecting such an arrangement may have changed
recently, e.g., by legislation or regulations that affect compensatory or
employee benefit arrangements. Therefore, if you are contemplating the use of a
Contract in any arrangement the value of which to you depends in part on its tax
consequences, you should consult a qualified tax adviser regarding the tax
treatment of the proposed arrangement and of any Contract used in it.
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL
TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED
HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A
QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A
CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW.
B. TAXATION OF HARTFORD
Hartford is taxed as a life insurance company under Subchapter L of Chapter 1 of
the Code. The assets underlying the Contracts will be owned by Hartford. The
income earned on such assets will be Hartford's income.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING CONTRACTS NOT HELD IN
TAX-QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS AS OWNERS
Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other
than a natural person generally is not treated as an annuity contract under the
Code. Instead, such a non-natural Contract Owner generally could be required to
include in gross income currently for each taxable year the excess of (a) the
sum of the Contract Value as of the close of the taxable year and all previous
distributions under the Contract over (b) the sum of net premiums paid for the
taxable year and any prior taxable year and the amount includable in gross
income for any prior taxable year with respect to the Contract under Section
72(u). However, Section 72(u) does not apply to:
- - A contract the nominal owner of which is a non-natural person but the
beneficial owner of which is a natural person (e.g., where the non-natural
owner holds the contract as an agent for the natural person),
- - A contract acquired by the estate of a decedent by reason of such decedent's
death,
- - Certain contracts acquired with respect to tax-qualified retirement
arrangements,
- - Certain contracts held in structured settlement arrangements that may
qualify under Code Section 130, or
- - A single premium immediate annuity contract under Code Section 72(u)(4),
which provides for substantially equal periodic payments and an annuity
starting date that is no later than 1 year from the date of the contract's
purchase.
A non-natural Contract Owner that is a tax-exempt entity for federal tax
purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder
Trust) generally would not be subject to federal income tax as a result of such
current gross income under Code Section 72(u). However, such a tax-exempt
entity, or any annuity contract that it holds, may need to satisfy certain tax
requirements in order to maintain its qualification for such favorable tax
treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable
Remainder Trusts.
Pursuant to Code Section 72(s), if the Contract Owner is a non-natural person,
the primary annuitant is treated as the "holder" in applying the required
distribution rules described below. These rules require that certain
distributions be made upon the death of a "holder." In addition, for a
non-natural owner, a change in the primary annuitant is treated as the death of
the "holder." However, the provisions of Code Section 72(s) do not apply to
certain contracts held in tax-qualified retirement arrangements or structured
settlement arrangements.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract until an
amount is received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
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16 HARTFORD LIFE INSURANCE COMPANY
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a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract." It is
unclear what value should be used in determining the "income on the
contract." We believe that the current Contract Value (determined without
regard to surrender charges) generally is an appropriate measure. However,
in some instances the IRS could take the position that the value should be
the current Contract Value (determined without regard to surrender charges)
increased by some measure of the value of certain future cash-value type
benefits.
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a withdrawal or partial surrender) is deemed to come
first from any such "income on the contract" and then from "investment in
the contract," and for these purposes such "income on the contract" shall
be computed by reference to any aggregation rule in subparagraph 2.c.
below. As a result, any such amount received or deemed received (1) shall
be includable in gross income to the extent that such amount does not
exceed any such "income on the contract," and (2) shall not be includable
in gross income to the extent that such amount does exceed any such
"income on the contract." If at the time that any amount is received or
deemed received there is no "income on the contract" (e.g., because the
gross value of the Contract does not exceed the "investment in the
contract" and no aggregation rule applies), then such amount received or
deemed received will not be includable in gross income, and will simply
reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or
incident to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the
Annuity Commencement Date, any additional payments (including surrenders)
will be entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same owner within the same calendar year (other than certain
contracts held in connection with tax-qualified retirement arrangements) will be
aggregated and treated as one annuity contract for the purpose of determining
the taxation of distributions prior to the Annuity Commencement Date. An annuity
contract received in a tax-free exchange for another annuity contract or life
insurance contract may be treated as a new contract for this purpose. We believe
that for any Contracts subject to such aggregation, the values under the
Contracts and the investment in the contracts will be added together to
determine the taxation under subparagraph 2.a., above, of amounts received or
deemed received prior to the Annuity Commencement Date. Withdrawals will be
treated first as withdrawals of income until all of the income from all such
Contracts is withdrawn. In addition, the Treasury Department has specific
authority under the aggregation rules in Code Section 72(e)(12) to issue
regulations to prevent the avoidance of the income-out-first rules for
non-periodic distributions through the serial purchase of annuity contracts or
otherwise. As of the date of this prospectus, there are no regulations
interpreting these aggregation provisions.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten
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HARTFORD LIFE INSURANCE COMPANY 17
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percent of the portion of the amount includable in gross income, unless an
exception applies.
ii. The 10% penalty tax will not apply to the following distributions:
1. Distributions made on or after the date the recipient has attained
the age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially
equal periodic payments (not less frequently than annually) for the
life (or life expectancy) of the recipient (or the joint lives or
life expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions made under certain annuities issued in connection
with structured settlement agreements.
6. Distributions of amounts which are allocable to the "investment in
the contract" prior to August 14, 1982 (see next subparagraph e.).
7. Distributions purchased by an employer upon termination of certain
qualified plans and held by the employer until the employee
separates from service.
If the taxpayer avoids this 10% penalty tax by qualifying for the substantially
equal periodic payments exception and later such series of payments is modified
(other than by death or disability), the 10% penalty tax will be applied
retroactively to all the prior periodic payments (i.e., penalty tax plus
interest thereon), unless such modification is made after both (a) the taxpayer
has reached age 59 1/2 and (b) 5 years have elapsed since the first of these
periodic payments.
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED
PRIOR TO AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried over to, as well
as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income. In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such
post-exchange Contracts are generally subject to the rules described in this
subparagraph e.
f. REQUIRED DISTRIBUTIONS.
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement
Date and before the entire interest in the Contract has been
distributed, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of distribution
being used as of the date of such death;
2. If any Contract Owner dies before the Annuity Commencement Date,
the entire interest in the Contract shall be distributed within 5
years after such death; and
3. If the Contract Owner is not an individual, then for purposes of 1.
or 2. above, the primary annuitant under the Contract shall be
treated as the Contract Owner, and any change in the primary
annuitant shall be treated as the death of the Contract Owner. The
primary annuitant is the individual, the events in the life of whom
are of primary importance in affecting the timing or amount of the
payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above
is payable to or for the benefit of a designated beneficiary, such
beneficiary may elect to have the portion distributed over a period that
does not extend beyond the life or life expectancy of the beneficiary.
Such distributions must begin within a year of the Contract Owner's death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for
the benefit of his or her spouse, and the Annuitant or Contingent
Annuitant is living, such spouse shall be treated as the Contract Owner of
such portion for purposes of section i. above. This spousal contract
continuation shall apply only once for this contract.
g. ADDITION OF RIDER OR MATERIAL CHANGE
The addition of a rider to the Contract, or a material change in the Contract's
provisions, could cause it to be considered newly issued or entered into for tax
purposes, and thus could cause the Contract to lose certain grandfathered tax
status. Please contact your tax adviser for more information.
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18 HARTFORD LIFE INSURANCE COMPANY
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h. PARTIAL EXCHANGES
The IRS in Rev. Rul. 2003-76 has confirmed that the owner of an annuity contract
can direct its insurer to transfer a portion of the contract's cash value
directly to another annuity contract (issued by the same insurer or by a
different insurer), and such a direct transfer can qualify for tax-free exchange
treatment under Code Section 1035 (a "partial exchange"). However, Rev. Rul.
2003-76 also refers to caveats and additional guidance in the companion Notice
2003-51, which discusses cases in which a partial exchange is followed by a
surrender, withdrawal or other distribution from either the old contract or the
new contract. Notice 2003-51 specifically indicates that the IRS is considering
(1) under what circumstances it should treat a partial exchange followed by such
a distribution within 24 months as presumptively for "tax avoidance" purposes
(e.g., to avoid the income-out-first rules on amounts received under Code
Section 72) and (2) what circumstances it should treat as rebutting such a
presumption (e.g., death, disability, reaching age 59 1/2, divorce or loss of
employment). Accordingly, we advise you to consult with a qualified tax adviser
as to potential tax consequences before attempting any partial exchange.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of an amount received under a Contract that is taxable gross income
to the recipient is also subject to federal income tax withholding, pursuant to
Code Section 3405, which requires the following:
1. Non-Periodic Distributions. The portion of a non-periodic
distribution that is includable in gross income is subject to
federal income tax withholding unless the recipient elects not to
have such tax withheld ("election out"). We will provide such an
"election out" form at the time such a distribution is requested.
If the necessary "election out" forms are not submitted to us in a
timely manner, we are required to withhold 10 percent of the
includable amount of distribution and remit it to the IRS.
2. Periodic Distributions (payable over a period greater than one
year). The portion of a periodic distribution that is includable in
gross income is subject to federal income tax withholding as if the
recipient were married claiming 3 exemptions, unless the recipient
elects otherwise. A recipient may elect out of such withholding, or
elect to have income tax withheld at a different rate, by providing
a completed election form. We will provide such an election form at
the time such a distribution is requested. If the necessary
"election out" forms are not submitted to us in a timely manner, we
are required to withhold tax as if the recipient were married
claiming 3 exemptions, and remit the tax to the IRS.
Generally no "election out" is permitted if the distribution is delivered
outside the United States and any possession of the United States regardless of
any "election out" (or any amount of tax actually withheld) on an amount
received from a Contract, the recipient is generally liable for any failure to
pay the full amount of tax due on the includable portion of such amount
received. You also may be required to pay penalties under the estimated income
tax rules, if your withholding and estimated tax payments are insufficient to
satisfy your total tax liability.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I for information relative to the types of plans
for which it may be used and the general explanation of the tax features of such
plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on taxable annuity distributions at a
30% rate, unless a lower treaty rate applies and any required tax forms are
submitted to us. If withholding tax applies, we are required to withhold tax at
a 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. In
addition, purchasers may be subject to state premium tax, other state and/or
municipal taxes, and taxes that may be imposed by the purchaser's country of
citizenship or residence.
G. ESTATE, GIFT AND GENERATION-SKIPPING TAX AND RELATED TAX CONSIDERATIONS
Any amount payable upon a Contract Owner's death, whether before or after the
Annuity Commencement Date, is generally includable in the Contract Owner's
estate for federal estate tax purposes. Similarly, prior to the Contract Owner's
death, the payment of any amount from the Contract, or the transfer of any
interest in the Contract, to a beneficiary or other person for less than
adequate consideration may have federal gift tax consequences. In addition, any
transfer to, or designation of, a non-spouse beneficiary who either is (1) 37
1/2 or more years younger than a Contract Owner or (2) a grandchild (or more
remote further descendent) of a Contract Owner may have federal generation-
skipping-transfer ("GST") tax consequences under Code Section 2601. Regulations
under Code Section 2662 may require us to deduct any such GST tax from your
Contract, or from any applicable payment, and pay it directly to the IRS.
However, any federal estate, gift or GST tax payment with respect to a Contract
could produce an offsetting income tax deduction for a beneficiary or transferee
under Code Section 691(c) (partially offsetting such federal estate or GST tax)
or a basis increase for a beneficiary or transferee under Code Section 691(c) or
Section 1015(d). In addition, as indicated above in "Distributions Prior to the
Annuity Commencement Date," the transfer of a Contract for less than adequate
consideration during the Contract Owner's lifetime generally is treated as
producing an amount received by such Contract Owner that is subject to both
income tax and the 10% penalty tax. To the extent that such an amount deemed
received
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HARTFORD LIFE INSURANCE COMPANY 19
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causes an amount to be includable currently in such Contract Owner's gross
income, this same income amount could produce a corresponding increase in such
Contract Owner's tax basis for such Contract that is carried over to the
transferee's tax basis for such Contract under Code Section 72(e)(4)(C)(iii) and
Section 1015.
INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by a tax-qualified
retirement plan. State income tax rules applicable to tax-qualified retirement
plans often differ from federal income tax rules, and this summary does not
describe any of these differences. Because of the complexity of the tax rules,
owners, participants and beneficiaries are encouraged to consult their own tax
advisors as to specific tax consequences.
The Contracts may offer death benefits that may exceed the greater of the
amounts paid for the Contract or the Contract's cash value. Owners who intend to
use the Contract in connection with tax-qualified retirement plans should
consider the income tax effects that such a death benefit may have on the plan.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
WE DO NOT CURRENTLY OFFER THE CONTRACTS IN CONNECTION WITH ALL OF THE TYPES OF
TAX-QUALIFIED RETIREMENT PLANS DISCUSSED BELOW AND MAY NOT OFFER THE CONTRACTS
FOR ALL TYPES OF TAX-QUALIFIED RETIREMENT PLANS IN THE FUTURE.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under section
401 of the Code. Rules under section 401(k) of the Code govern certain "cash or
deferred arrangements" under such plans. Rules under section 408(k) govern
"simplified employee pensions". Tax-qualified pension and profit-sharing plans
are subject to limitations on the amount that may be contributed, the persons
who may be eligible to participate, the time when distributions must commence,
and the form in which distributions must be paid. Employers intending to use the
Contracts in connection with tax-qualified pension or profit-sharing plans
should seek competent tax and other legal advice. If the death benefit under the
Contract can exceed the greater of the amount paid for the Contract and the
Contract's cash value, it is possible that the IRS would characterize such death
benefit as an "incidental death benefit." There are limitations on the amount of
incidental benefits that may be provided under pension and profit sharing plans.
In addition, the provision of such benefits may result in currently taxable
income to the participants.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) -- Public schools and certain
types of charitable, educational and scientific organizations, as specified in
section 501(c)(3) of the Code, can purchase tax-sheltered annuity contracts for
their employees. Tax-deferred contributions can be made to tax-sheltered annuity
contracts under section 403(b) of the Code, subject to certain limitations. In
general, total contributions may not exceed the lesser of (1) 100% of the
participant's compensation, and (2) $40,000 (adjusted for increases in
cost-of-living). The maximum elective deferral amount is equal to $14,000 for
2005 and $15,000 for 2006 and thereafter, indexed. The limitation on elective
deferrals may be increased to allow certain "catch-up" contributions for
individuals who have attained age 50.
Tax-sheltered annuity programs under section 403(b) are subject to a PROHIBITION
AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO CONTRIBUTIONS MADE
PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such distribution is made:
- - after the participating employee attains age 59 1/2;
- - upon severance from employment;
- - upon death or disability; or
- - in the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable to
cash values or other amounts held under a section 403(b) contract as of December
31, 1988.
If the death benefit under the Contract can exceed the greater of the amount
paid for the Contract and the Contract's cash value, it is possible that the IRS
would characterize such death benefit as an "incidental death benefit." If the
death benefit were so characterized, this could result in currently taxable
income to purchasers. In addition, there are limitations on the amount of
incidental death benefits that may be provided under a section 403(b)
arrangement.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- Certain governmental
employers or tax-exempt employers other than a governmental unit can establish a
Deferred Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political
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subdivision of a State, or an agency or an instrumentality of a State or
political subdivision of a State. Employees and independent contractors
performing services for a governmental or tax-exempt employer can elect to have
contributions made to a Deferred Compensation Plan of their employer in
accordance with the employer's plan and section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of the
Code are called "eligible" Deferred Compensation Plans. Section 457(b) limits
the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is the lesser of (1) 100% of a participant's includible
compensation or (2) the applicable dollar amount, equal to $14,000 for 2005 and
$15,000 for 2006 and thereafter, indexed. The plan may provide for additional
"catch-up" contributions during the three taxable years ending before the year
in which the participant attains normal retirement age. In addition, the
contribution limitation may be increased to allow certain "catch-up"
contributions for individuals who have attained age 50.
All of the assets and income of an eligible Deferred Compensation Plan for a
governmental employer must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, certain custodial
accounts and annuity contracts are treated as trusts. The requirement of a trust
does not apply to amounts under an eligible Deferred Compensation Plan of a
tax-exempt (non-governmental) employer. In addition, the requirement of a trust
does not apply to amounts under a Deferred Compensation Plan of a governmental
employer if the Deferred Compensation Plan is not an eligible plan within the
meaning of section 457(b) of the Code. In the absence of such a trust, amounts
under the plan will be subject to the claims of the employer's general
creditors.
In general, distributions from an eligible Deferred Compensation Plan to a
participant or beneficiary are prohibited under section 457 of the Code unless
made after the participating employee:
- - attains age 70 1/2,
- - has a severance from employment as defined in the Code (including death of
the participating employee), or
- - suffers an unforeseeable financial emergency as defined in the Code.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS. -- Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. See Section 6 below for a
discussion of rollovers involving IRAs.
SIMPLE IRAS -- Eligible employees may establish SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer under section 408(p) of the Code. Special
rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from one SIMPLE
IRA to another SIMPLE IRA. However, amounts can be rolled over from a SIMPLE IRA
to a Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS -- Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA, SIMPLE IRA or Simplified Employee Pension under
Section 408(k) of the Code may be converted into a Roth IRA or a distribution
from such an arrangement may be rolled over to a Roth IRA. However, a conversion
or a rollover to a Roth IRA is not excludable from gross income. If certain
conditions are met, qualified distributions from a Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72 of the
Code. Under these rules, a portion of each distribution may be excludable from
income. The excludable amount is the portion of the distribution that bears the
same ratio as the after-tax contributions bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a
distribution from certain tax-qualified retirement plans. However, the 10%
penalty tax does not apply to a distribution that is:
- - Made on or after the date on which the employee reaches age 59 1/2;
- - Made to a beneficiary (or to the estate of the employee) on or after the
death of the employee;
- - Attributable to the employee's becoming disabled (as defined in the Code);
- - Part of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
employee or the joint lives (or joint life expectancies) of the employee and
his or her designated beneficiary. In determining whether a payment stream
designed to satisfy this exception qualifies, it is possible that the IRS
could take the position that the entire interest in the Contract should
include not only the current Contract value, but also some measure of the
value of certain future benefits;
- - Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
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- - Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
IN ADDITION, THE 10% PENALTY TAX DOES NOT APPLY TO A DISTRIBUTION FROM AN IRA
THAT IS:
- - Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- - Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
- - A qualified first-time homebuyer distribution meeting the requirements
specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the 10%
penalty tax is increased to 25% with respect to non-exempt early distributions
made from your SIMPLE IRA during the first two years following the date you
first commenced participation in any SIMPLE IRA plan of your employer.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must be
distributed, or begin to be distributed, not later than the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
- - the calendar year in which the individual attains age 70 1/2; or
- - the calendar year in which the individual retires from service with the
employer sponsoring the plan.
The Required Beginning Date for an individual who is a five (5) percent owner
(as defined in the Code), or who is the owner of an IRA, is April 1 of the
calendar year following the calendar year in which the individual attains age 70
1/2.
The entire interest of the Participant must be distributed beginning no later
than the Required Beginning Date over:
- - the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary (as defined in the Code), or
- - over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's
designated beneficiary.
Each annual distribution must equal or exceed a "minimum distribution amount"
which is determined generally by dividing the account balance by the applicable
life expectancy. This account balance is generally based upon the entire value
of all benefits provided under a Contract as of the close of business on the
last day of the previous calendar year. The death benefit and any optional
benefits purchased under the Contract may affect the amount of the minimum
required distribution that must be taken. In addition, minimum distribution
incidental benefit rules may require a larger annual distribution. Required
minimum distributions also can be made in the form of annuity payments if the
payment structure satisfies certain rules set forth in Income Tax Regulations.
If an individual dies before reaching his or her Required Beginning Date, the
individual's entire interest must generally be distributed within five years of
the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have attained
age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or after
distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
The minimum distribution requirements apply to Roth IRAs after the Contract
owner dies, but not while the Contract owner is alive. In addition, if the owner
of a Traditional or Roth IRA dies and the Contract owner's spouse is the sole
designated beneficiary, the surviving spouse may elect to treat the Traditional
or Roth IRA as his or her own.
In 2002 and in 2004, the Internal Revenue Service issued final and temporary
regulations in the Federal Register relating to minimum required distributions.
Please consult with your tax or legal adviser with any questions regarding the
new regulations.
(c) WITHHOLDING We are generally required to withhold federal income tax from
the taxable portion of each distribution made under a Contract. The federal
income tax withholding requirements, including the rate at which
withholding applies, depend on whether a distribution is or is not an
eligible rollover distribution.
Federal income tax withholding from the taxable portion of distributions that
are not eligible rollover distributions is required unless the payee is eligible
to, and does in fact, elect not to have income tax withheld by filing an
election with us. Where the payee does not elect out of withholding, the rate of
income tax to be withheld depends on whether the distribution is nonperiodic or
periodic. Regardless of whether an election is made not to have federal income
taxes withheld, the recipient is still liable for payment of federal income tax
on the taxable portion of the distribution.
For periodic payments, federal income tax will be withheld from the taxable
portion of the distribution by treating the payment as wages under IRS wage
withholding tables, using the marital status and number of withholding
allowances elected by the payee on an IRS Form W-4P, or acceptable substitute,
filed us. Where the payee has not filed a Form W-4P, or acceptable substitute,
with us, the payee will be treated as married
<Page>
22 HARTFORD LIFE INSURANCE COMPANY
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claiming three withholding allowances. Special rules apply where the payee has
not provided us with a proper taxpayer identification number or where the
payments are sent outside the United States or U.S. possessions.
For nonperiodic distributions, where a payee has not elected out of withholding,
income tax will be withheld at a rate of 10 percent from the taxable portion of
the distribution.
Federal income tax withholding is required at a rate of 20 percent from the
taxable portion of any distribution that is an eligible rollover distribution to
the extent it is not directly rolled over to an eligible recipient plan. Payees
cannot elect out of income tax withholding with respect to such distributions.
Also, special withholding rules apply with respect to distributions from
non-governmental section 457(b) plans, and to distributions made to individuals
who are neither citizens or resident aliens of the United States.
6. ROLLOVER DISTRIBUTIONS -- Under present federal tax law, "eligible rollover
distributions" from qualified retirement plans under section 401(a) of the Code,
qualified annuities under section 403(a) of the Code, section 403(b)
arrangements, and governmental 457(b) plans generally can be rolled over
tax-free within 60 days to any of such plans or arrangements that accept such
rollovers. Similarly, distributions from an IRA generally are permitted to be
rolled over tax-free within 60 days to a qualified plan, qualified annuity,
section 403(b) arrangement, or governmental 457(b) plan. After tax contributions
may be rolled over from a qualified plan, qualified annuity or governmental 457
plan into another qualified plan or an IRA. In the case of such a rollover of
after tax contributions, the rollover is permitted to be accomplished only
through a direct rollover. In addition, a qualified plan is not permitted to
accept rollovers of after tax contributions unless the plan provides separate
accounting for such contributions (and earnings thereon). Similar rules apply
for purposes of rolling over after tax contributions from a section 403(b)
arrangement. After tax contributions (including nondeductible contributions to
an IRA) are not permitted to be rolled over from an IRA into a qualified plan,
qualified annuity, section 403(b) arrangement, or governmental 457(b) plan.
For this purpose, an eligible rollover distribution is generally a distribution
to an employee of all or any portion of the balance to the credit of the
employee in a qualified trust under section 401(a) of the Code, qualified
annuity under section 403(a) of the Code, a 403(b) arrangement or governmental
457(b) plan. However, an eligible rollover distribution does not include: any
distribution which is one of a series of substantially equal periodic payments
(not less frequently than annually) made (1) for the life (or life expectancy)
of the employee or the joint lives (or joint life expectancies) of the employee
and the employee's designated beneficiary, or (2) for a specified period of 10
years or more; any distribution to the extent it is a required minimum
distribution amount (discussed above); or any distribution which is made upon
hardship of the employee.
Separate accounting is required on amounts rolled from plans described under
Code sections 401, 403(b) or 408(IRA), when those amounts are rolled into plans
described under section 457(b) sponsored by governmental employers. These
amounts, when distributed from the governmental 457(b) plan, will be subject to
the 10% early withdrawal tax applicable to distributions from plans described
under sections 401, 403(b) or 408(IRA), respectively.
THE COMPANY
Hartford Life Insurance Company is the issuer of the Contract. Hartford Life
Insurance Company is a life insurance company organized under the laws of
Connecticut. Our Home Office is located at 200 Hopmeadow Street, Simsbury, CT
06089.
Hartford Life Insurance Company and its subsidiaries ("Hartford Life Insurance
Company" or the "Company"), is a direct subsidiary of Hartford Life and Accident
Insurance Company ("HLA"), a wholly owned subsidiary of Hartford Life, Inc.
("Hartford Life"). Hartford Life is an indirect subsidiary of The Hartford
Financial Services Group, Inc. ("The Hartford"). The Company, together with HLA,
provides (i) retail and institutional investment products, including variable
annuities, fixed market value adjusted ("MVA") annuities, private placement life
insurance, which includes life insurance products purchased by a company on the
lives of its employees, and retirement plan services for the savings and
retirement needs of over 5.0 million customers, (ii) life insurance for wealth
protection, accumulation and transfer needs for approximately 738,000 customers,
(iii) group benefits products such as group life and group disability insurance
for the benefit of millions of individuals and (iv) fixed annuity products
through its international operations. The Company is one of the largest sellers
of individual variable annuities, variable universal life insurance and group
disability insurance in the United States. The Company's strong position in each
of its core businesses provides an opportunity to increase the sale of the
Company's products and services as individuals increasingly save and plan for
retirement, protect themselves and their families against the financial
uncertainties associated with disability or death and engage in estate planning.
Hartford Life Insurance Company is licensed to operate in the District of
Columbia and all jurisdictions. We intend to offer the Contract in any
jurisdictions in which we are licensed.
<Page>
HARTFORD LIFE INSURANCE COMPANY 23
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LEGAL OPINION
The validity of the interests in the Contracts described in this Prospectus will
be passed upon for Hartford by Richard J. Wirth, Senior Counsel for Hartford
Life Insurance Company.
EXPERTS
The consolidated financial statements and related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 2006 have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their
report dated February 27, 2007 (which report expresses an unqualified opinion
and includes an explanatory paragraph relating to the Company's change in its
method of accounting and reporting for certain nontraditional long-duration
contracts and for separate accounts in 2004) which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 2007 and 2006 which is incorporated herein by reference,
Deloitte & Touche LLP, an independent registered public accounting firm, have
applied limited procedures in accordance with the standards of the Public
Company Accounting Oversight Board (United States) for a review of such
information. However, as stated in their reports included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial information because
those reports are not "reports" or a "part" of the registration statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Act.
<Page>
24 HARTFORD LIFE INSURANCE COMPANY
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APPENDIX A -- MODIFIED GUARANTEED ANNUITY FOR QUALIFIED PLANS
The CRC(R) (Compound Rate Contract) Annuity for Qualified Plans is a group
deferred annuity Contract under which one or more purchase payments may be made.
Plans eligible to purchase the Contract are pension and profit-sharing plans
qualified under Section 401(a) of the Internal Revenue Code (the "Code"), Keogh
Plans and eligible state deferred compensation plans under Section 457 of the
Code ("Qualified Plans").
To apply for a Group Annuity Contract, the trustee or other applicant need only
complete an application for the Group Annuity Contract and make its initial
purchase payment. A Group Annuity Contract will then be issued to the applicant
and subsequent Purchase Payments may be made, subject to the same $2,000 minimum
applicable to qualified purchasers of Certificates. While no Certificates are
issued, each purchase payment, and the Account established thereby, are
confirmed to the Contract Owner. The initial and subsequent purchase payments
operate to establish Accounts under the Group Annuity Contract in the same
manner as non-qualified purchases. Each Account will have its own Initial and
Subsequent Guarantee Periods and Guaranteed Rates. Surrenders under the Group
Annuity Contract may be made, at the election of the Contract Owner, from one or
more of the Accounts established under the Contract. Account surrenders are
subject to the same limitations, adjustments and charges as surrenders made
under a certificate (see "Surrenders"). Net Surrender Values may be surrendered
or applied to purchase annuities for the Contract Owners' Qualified Plan
Participants.
Because there are no individual participant accounts, the Qualified Group
Annuity Contract issued in connection with a Qualified Plan does not provide for
death benefits. Annuities purchased for Qualified Plan Participants may provide
for a payment upon the death of the Annuitant, depending on the option chosen
(see "Annuity Options"). Additionally, since there are no Annuitants prior to
the actual purchase of an Annuity by the Contract Owner, the provisions
regarding the Annuity Commencement Date are not applicable.
If you are purchasing the Contract for use in an IRA or other qualified
retirement plan, you should consider other features of the Contract besides tax
deferral, since any investment vehicle used within an IRA or other qualified
plan receives tax deferred treatment under the Code.
<Page>
HARTFORD LIFE INSURANCE COMPANY 25
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APPENDIX B -- SPECIAL PROVISIONS FOR INDIVIDUAL CONTRACTS ISSUED IN THE STATE OF
CALIFORNIA, MICHIGAN, MISSOURI, NEW YORK, OREGON, SOUTH CAROLINA, TEXAS,
VIRGINIA AND WISCONSIN
The following provision, among others, applies only to individual Contracts
issued in the States of California, Michigan, Missouri, New York, Oregon, South
Carolina, Texas, Virginia and Wisconsin:
(1) The Contract Owner has the right to request, in writing, a surrender of the
Contract within ten (10) days after it was purchased. In such event, in
California, New York, Oregon, Texas, Virginia and Wisconsin, Hartford will
pay the Contract Owner an amount equal to the sum of (a) the Account Value
on the date the written request for surrender was received multiplied by
the Market Value Adjustment formula and (b) any charges deducted from the
Purchase Payment. In Michigan, Missouri and South Carolina, the Contract
will be cancelled and any premium paid will be refunded in full.
<Page>
26 HARTFORD LIFE INSURANCE COMPANY
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APPENDIX C -- MARKET VALUE ADJUSTMENT
The formula which will be used to determine the Market Value Adjustment is: [(1
+ i)/(1 + J)](n/12)
i = The Guarantee Rate in effect for the Current Guarantee
Period(expressed as a decimal, e.g., 1% = .01)
J = The Current Rate (expressed as a decimal, e.g., 1% = .01) in effect
for durations equal to the number of years remaining in the current
Guarantee Period (years are rounded to the next highest number of
years).
N = The number of complete months from the surrender date to the end of
the current Guarantee Period.
EXAMPLE OF MARKET VALUE ADJUSTMENT
<Table>
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3
</Table>
EXAMPLE 1:
<Table>
Gross Surrender Value at middle of Contract Year 3 = $50,000 (1.055)TO THE POWER OF 2.5 = $57,161.18
Net Surrender Value at middle of Contract Year 3 = [$57,161.18 - (0.05) x $57,161.18]
x Market Value Adjustment
= $54,303.12 x Market Value Adjustment
Market Value Adjustment
i = 0.055
J = 0.061
N = 30
Market Value Adjustment = [(1 + i)/(1 + J)]TO THE POWER OF n/12
= (1.055/1.061)TO THE POWER OF 30/12
= 0.985922
Net Surrender Value at middle of Contract Year 3 = $54,303.12 x 0.985922
= $53,538.64
</Table>
EXAMPLE OF MARKET VALUE ADJUSTMENT
<Table>
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3
</Table>
EXAMPLE 2:
<Table>
Gross Surrender Value at middle of Contract Year 3 = $50,000 (1.055)TO THE POWER OF 2.5 = $57,161.18
Net Surrender Value at middle of Contract Year 3 = [$57,161.18 - (0.05) x $57,161.18]
x Market Value Adjustment
= $54,303.12 x Market Value Adjustment
Market Value Adjustment
i = .055
J = 0.050
N = 30
Market Value Adjustment = [(1 + i)/(1 + J)]TO THE POWER OF n/12
= (1.055/1.05)TO THE POWER OF 30/12
= 1.011947
Net Surrender Value at middle of Contract Year 3 = $54,303.12 x 1.011947
= $54,951.88
</Table>
This example does not include any applicable taxes.