HARTFORD LIFE INSURANCE COMPANY
(A STOCK INSURANCE COMPANY)
HARTFORD PLAZA, HARTFORD, CONNECTICUT 06115
GROUP ANNUITY CONTRACT
INDIVIDUALLY ALLOCATED
CONTRACTHOLDER
CONTRACT EFFECTIVE DATE
PLACE OF DELIVERY
CONTRACT NUMBER
THIS CONTRACT IS ISSUED IN CONSIDERATION OF THE APPLICATION OF THE
CONTRACTHOLDER, A COPY OF WHICH IS ATTACHED TO AND MADE A PART OF THIS CONTRACT
AND THE PAYMENT OF CONTRIBUTIONS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF
THE CONTRACT.
THIS CONTRACT IS SUBJECT TO THE LAWS OF THE JURISDICTION WHERE IT IS DELIVERED.
THE CONDITIONS AND PROVISIONS OF THIS AND THE FOLLOWING PAGES ARE PART OF THE
CONTRACT.
THIS CONTRACT MAKES PROVISION FOR THE ACCUMULATION OF CONTRACT VALUES IN THE
GENERAL ACCOUNT OF THE INSURANCE COMPANY TO PROVIDE FIXED ANNUITY ACCUMULATIONS
AND BENEFITS AND IN A SEPARATE ACCOUNT OF THE INSURANCE COMPANY TO PROVIDE
VARIABLE ANNUITY ACCUMULATIONS AND BENEFITS. ACTUAL ANNUITY PAYOUT COMMENCING ON
THE ANNUITY COMMENCEMENT DATE MAY BE ON A VARIABLE BASIS (SEPARATE ACCOUNT)
AND/OR ON A FIXED BASIS (GENERAL ACCOUNT).
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED HEREIN.
INDIVIDUAL ALLOCATIONS -- NONPARTICIPATING
SIGNED FOR THE HARTFORD
/s/ ▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇. ▇▇▇▇▇▇▇
----------------------------------- -----------------------------------
▇▇▇ ▇. ▇▇▇▇▇, President ▇. ▇▇▇▇▇▇▇, Secretary
HL-14848 [LOGO]
TABLE OF CONTENTS
SECTION STARTING ON PAGE
---------------------------------------------------------------------------------------------------------------------
1 Definitions 2
2 Contribution Provisions 5
3 Allocation of Contributions 9
4 Investment of Contributions 11
5 Payment of Benefits 14
6 Distribution Value and Limitation on Transfers and Distributions 19
7 Minimum Required Distributions 20
8 Death Benefits 23
9 Settlement Options 25
10 Charges Against the Contract 31
11 Loans 35
12 General Provisions 38
13 Suspension and Termination Provisions 42
Following Last Section:
Annuity Purchase Rate Table A
Annuity Purchase Rate Table B
HL-14848
1
SECTION 1
DEFINITIONS
1.1 ACCUMULATION PERIOD -- The period under this Contract prior to the Annuity
Commencement Date.
1.2 ANNUITY COMMENCEMENT DATE -- The date on which annuity payments are
scheduled to begin as described under Sections 5 and 9 of this Contract.
1.3 ANNUITY PERIOD -- The period in the Contract, following the Accumulation
Period, during which actual annuity payments are made.
1.4 BENEFICIARY -- The person(s) designated to receive Participant Individual
Account values in the event of the Participant's death.
1.5 CODE -- The Internal Revenue Code of 1986 and any amendments thereto.
1.6 CONTRACT -- The Contract is
group annuity Contract GA -- [LESS THAN] issued
by the Insurance Company.
1.7 CONTRACTHOLDER -- The Contractholder is [LESS THAN].
1.8 CONTRACT YEAR -- A period of 12 months commencing with the effective date
of this contract or with any contract anniversary.
1.9 DATE OF COVERAGE -- the date on which the application on behalf of an
Eligible Employee is received in good order by the Insurance Company.
1.10 ELECTIVE DEFERRAL -- With respect to any taxable year of a Participant, the
Elective Deferral is the sum of all employer contributions made on behalf
of such Participant pursuant to an election to defer under
(1) any qualified cash or deferred arrangements as described in section
401(k) of the Code, (2) any simplified employee pension cash or deferred
arrangement as described in section 402(h)(1)(B) of the Code, (3) any
eligible deferred compensation plan under section 457 of the Code, (4) any
plan as described under section 501(c)(18) of the Code, and (5) an annuity
contract satisfying section 403(b) of the Code.
HL-14848
2
1.11 ELIGIBLE EMPLOYEE -- Any employee who is employed by the Employer.
Notwithstanding the foregoing, an Eligible Employee does not include an
employee who is customarily employed on a part-time, temporary, or
irregular basis for less than 20 hours per week. An Eligible Employee also
does not include a person whose employment is incidental to his or her
education program.
1.12 EMPLOYER -- The term Employer means [LESS THAN].
1.13 FUND -- The Funds described on the Contract Specification page which are
included in the Separate Account and such other Funds as may be added to
the Separate Account as they become available.
1.14 GENERAL ACCOUNT -- That portion of the Contract invested in the general
account of the Insurance Company.
1.15 HOME OFFICE -- The term Home Office refers to the mailing address of the
Insurance Company which is P.O. Box 2999, Hartford, Connecticut 06104-2999.
1.16 INSURANCE COMPANY -- The Insurance Company is Hartford Life Insurance
Company, a legal reserve life insurance company incorporated in
Connecticut.
1.17 PARTICIPANT -- Any Eligible Employee or former Eligible Employee who elects
to participate in this contract or formerly participated in this Contract,
and who currently has an Individual Account maintained on his or her behalf
under the Contract.
1.18 PARTICIPANT'S CONTRACT YEAR -- A period of twelve (12) months commencing
with the Date of Coverage of a Participant and each successive twelve (12)
month period thereafter.
1.19 PARTICIPANT'S INDIVIDUAL ACCOUNT -- An account to which the General Account
values and the Separate Account Accumulation Units held by the Contract
Owner on behalf of a Participant are allocated.
1.20 PREMIUM TAX -- The tax or amount of tax, if any, charged by a state or
municipality on premiums, purchase payments or contract value.
HL-14848
3
1.21 ROLLOVER CONTRIBUTION -- A contribution made to the Contract as described
in Section 2.2 of the Contract.
1.22 SALARY REDUCTION CONTRIBUTION -- A contribution made to the Contract
pursuant to a salary reduction agreement as described in Section 2.1 of the
Contract.
1.23 SEPARATE ACCOUNT -- A separate account of the Insurance Company, entitled
Hartford Life Insurance Company Separate Account Two, under which income,
gains and losses, whether or not realized, from assets allocated to such
account are, in accordance with the contracts issued with respect thereto,
credited to or charged against such separate account without regard to the
other income, gains, or losses of the Insurance Company.
1.24 SUB-ACCOUNT -- An account established and maintained within the Separate
Account with respect to a Fund.
1.25 TRANSFER AMOUNTS -- Any amount transferred to this Contract on behalf of an
Eligible Employee pursuant to Section 2.3 of the Contract.
HL-14848
4
SECTION 2
CONTRIBUTION PROVISIONS
2.1 SALARY REDUCTION CONTRIBUTIONS. (a) Any Eligible Employee may make
Salary Reduction Contributions to the Contract at any time. To
participate in the contract, an Eligible Employee must complete a
written salary reduction agreement with the Employer specifying the
portion of his compensation that is to be contributed to this
Contract as Salary Reduction Contributions. The salary reduction
agreement shall only apply to amounts earned after the agreement
becomes effective and shall be irrevocable with respect to
compensation earned while the salary reduction agreement is in
effect. An Eligible Employee may only enter into one salary reduction
agreement with the Employer during each taxable year of the Eligible
Employee. An Eligible Employee may terminate a salary reduction
agreement for amounts not yet earned at any time. An Eligible
Employee's salary reduction agreement shall remain in effect until
the Eligible Employee either terminates such agreement or files a new
salary reduction agreement with the Employer in a subsequent taxable
year.
(c) The Contractholder agrees to reduce each Participant's
compensation by the amount indicated in the salary reduction
agreement and remit such amount as a Salary Reduction Contribution to
the Insurance Company. Salary Reduction Contributions shall become
due and payable to the Insurance Company within thirty days of
deferral. A grace period of sixty days, or the time required by law
for the contribution to be made, if less, shall be allowed for such
payment.
(d) The amount of Elective Deferrals, including Salary Reduction
Contributions, for any Participant's taxable year under this Contract
and all other plans, contracts, or arrangements of the Employer shall
not exceed the dollar limit in effect under Code section 402(g) at
the beginning of such taxable year.
(e) Notwithstanding any other provision of the Contract, excess
deferrals, plus any income and minus any loss allocable thereto, may
be distributed to a Participant who requests such distribution in
accordance with this subsection (e):
(1) Not later than the March 1 following the close of the the
Participant's taxable year, the Participant may notify the
Insurance Company of the amount of excess deferrals received by
the Contract during the taxable year. The notification shall be in
writing, shall specify the amount of the Participant's excess
deferrals, and shall be accompanied by the
5
Participant's written statement that if such amounts are not
distributed, these amounts, when added to all other Elective
Deferrals made on behalf of the Participant during the taxable
year, shall exceed the dollar limitation specified in section
402(g) of the Code.
(2) If the Participant provides the Insurance Company with
satisfactory evidence and written notice to demonstrate that all
Elective Deferrals by the Participant to this Contract and any
other qualified plan exceed the applicable limit under section
402(g) of the Code for such individual's taxable year, then the
Insurance Company may (but is not required to) distribute a
sufficient amount attributable to the Participant's Salary
Reduction Contributions (not to exceed the amount of Salary
Reduction Contributions actually contributed to the Contract on
behalf of the Participant during the taxable year) from the
Contract to allow the Participant to comply with the applicable
limit. The evidence provided by the Participant must establish
clearly the amount of the excess deferral.
(3) The term "excess deferral" means those Elective Deferrals
that are includible in a Participant's gross income under section
402(g) of the Code because they exceed the applicable dollar limit
under section 402(g) of the Code.
(4) The excess deferral distributed to a Participant with respect
to a taxable year shall be adjusted to reflect income or loss in
the Participant's Individual Account for the taxable year
allocable thereto. The income or loss allocable to such excess
deferral shall be determined by the method generally used under
the Contract to allocate income or loss to a Participant's
Individual Account.
2.2 ROLLOVER CONTRIBUTIONS. (a) The Insurance Company will accept
Rollover Contributions on behalf of any Participant who is making
Salary Reduction Contributions to the Contract. The Rollover
Contribution must consist entirely of amount attributable to an
eligible rollover distribution from an annuity, custodial account, or
retirement income account described in section 403(b) of the Code
(referred to herein as a "403(b) annuity"). For purposes of this
section, the term "eligible rollover distribution" has the same
meaning as provided in Section 5.4(b) of the Contract.
6
(b) The Rollover Contribution may be remitted to the Contract by
either one of the following methods:
(1) A cash amount representing the Rollover Contribution may be
transferred directly from the 403(b) annuity from which such
amount is distributable to the Insurance Company; or
(2) the Participant may remit a cash amount to the Insurance
Company that constitutes the Rollover Contribution from a 403(b)
annuity or an individual retirement arrangement (as described in
Section 5.4(b) of the Contract) within sixty (60) days of receipt
of such amount from the 403(b) program or individual retirement
arrangement.
(c) The Insurance Company may require a Participant to provide
such information as it deems necessary to demonstrate that the
Participant is entitled to rollover an amount to this Contract.
2.3 TRANSFER AMOUNTS. The Insurance Company may accept directly from
another 403(b) annuity all or part of an Eligible Employee's interest
in such 403(b) annuity. Any transfer of an Eligible Employee's
interest from another 403(b) annuity into this Contract must comply
with the requirements of Revenue Ruling 90-24 and any other
applicable guidance issued by the Internal Revenue Service. The
Insurance Company may request any documents or other information from
the Eligible Employee or opinions of counsel which the Insurance
Company deems necessary to establish that such interest may be
properly transferred to this Contract. The Insurance Company shall
not accept any Transfer Amount to the extent that acceptance of such
Transfer Amount would necessitate the Insurance Company to take
actions inconsistent with the other provisions of this Contract.
2.4 LIMITATION ON ANNUAL ADDITIONS. (a) Notwithstanding anything in this
Section 2 to the contrary, the total annual additions made to the
Contract on behalf of a Participant for any year may not exceed the
limits imposed by section 415 of the Code, as they may be adjusted
from time to time. The limits of section 415 of the Code applicable
to 403(b) annuity contracts are herein incorporated by reference.
7
(b) If, as a result of a reasonable error in estimating a
Participant's annual compensation (as defined in section 415 of the
Code), a reasonable error in determining the amount of Salary
Reduction Contributions that may be made with respect to any
individual under the limits of section 415, or such other
circumstances that the Commissioner of Internal Revenue may find,
there is an amount allocated to a Participant's Individual Account in
excess of the section 415 limits, such excess may be disposed of as
follows at the request of the Participant:
(1) Any Salary Reduction Contributions (including any gains
thereon) to the extent they would reduce the excess amount, may be
returned to the Participant.
(c) For purposes of this Section 2.4, the term "annual additions"
means the amount of Salary Reduction Contributions credited to a
Participant's Individual Account for a taxable year.
2.5 LIMITATION OF AMOUNTS BY INSURANCE COMPANY. The Insurance Company
reserves the right to limit any increase in the amount of Salary
Reduction Contributions, Rollover Contributions, or Transfer Amounts
made to a Participant's Individual Account to no more than three (3)
times the total amount of such contributions or transfers made on
behalf of such Participant during the initial twelve (12) consecutive
months following the Date of Coverage. Increases in excess of those
described will be accepted only with the consent of the Insurance
Company and subject to the then current deductions being made under
the Contract.
8
SECTION 3
ALLOCATION OF CONTRIBUTIONS
3.1 ALLOCATION TO PARTICIPANT'S INDIVIDUAL ACCOUNT. (a) An account shall
be established and maintained under this Contract for each
Participant. Such account shall be referred to herein as the
Participant's Individual Account. All Salary Reduction Contributions,
Rollover Contributions, and Transfer Amounts made to the Contract on
behalf of a Participant shall be deposited to such Participant's
Individual Account and allocated to the General Account and Sub-
Accounts in accordance with the Participant's currently effective
investment election.
(b) With respect to an initial Salary Reduction Contribution,
Rollover Contribution, or Transfer Amount, the initial
contribution shall be credited to the Participant's Individual
Account by the Insurance Company within two business days of
receipt of a properly completed application and such initial
contribution. If an application or any other information is
complete when received, the contribution shall be credited to the
Participant's Individual Account within five (5) business days. If
an application is not received in good order, as determined by the
Insurance Company, within five (5) business days of the receipt of
the initial contribution, it will be returned to the Participant,
unless the Insurance Company informs the Participant of the delay
and the Participant requests that the contribution not be
returned.
3.2 INVESTMENT ELECTION. A Participant shall make an investment election
in the manner and form prescribed by the Insurance Company. The
investment election shall specify the percentage that Salary
Reduction Contributions and Rollover Contributions, as applicable,
shall be allocated between the General Account and the Sub-Accounts
of the Separate Account. The percentages specified in any investment
election must be in multiples of ten percent (10%) and the sum of
such percentages must equal one hundred percent (100%). A
Participant's investment election shall remain in effect until the
Participant changes the investment election, in the manner prescribed
by the Insurance Company.
9
3.3 CHANGE OF INVESTMENT ELECTION. A Participant may change the
investment election applicable to the allocation of contributions at
any time during the Accumulation Period. The percentages specified in
any changed investment election must be in multiples of ten percent
(10%) and the sum of such percentages under the resulting investment
election must equal one hundred percent (100%). Any change in
investment election must be requested in the form and manner required
by the Insurance Company.
3.4 TRANSFER OF AMOUNTS WITHIN CONTRACT. A Participant may, at any time,
elect to transfer, in multiples of ten percent (10%), the value of
such Participant's Individual Account among the various investment
alternative provided under the Contract, subject to the following
requirements:
(a) Amounts invested in a Sub-Account may be transferred to any other
Sub-Account offered under the Contract, to the General Account, or
to any combination thereof.
(b) Amounts invested in the General Account may be transferred to one
or any combination of any Sub-Accounts offered under the Contract.
(c) Notwithstanding (b) above, amounts invested in the General
Account, or amounts previously invested in the General Account
during the three month period immediately preceding the date such
transfer is requested, may not be transferred to any Sub-Account
which the Insurance Company considers to be a competing fixed
income account.
(d) A transfer may be elected by a Participant under this Section 3.4
only during the Accumulation Period that applies to such
Participant.
(e) A transfer shall only be made in the form and manner prescribed by
the Insurance Company.
(f) The amount transferred from the General Account to a Sub-Account
may be limited by the Insurance Company in accordance with the
terms of Section 6.2 of the Contract.
10
SECTION 4
INVESTMENT OF CONTRIBUTIONS
4.1 VALUE OF GENERAL ACCOUNT (a) The value of the portion of a Participant's
Individual Account invested in the General Account on any date is an amount
equal to the product of the number of General Account Accumulation Units
credited to such Participant's Individual Account multiplied by the dollar
value of a General Account Accumulation Unit for that date.
(b) When an amount is allocated to the Contract on behalf of a Participant
for investment in the General Account, the portion of the Participant's
Individual Account invested in the General Account shall be credited with a
number of General Account Accumulation Units equal to the amount so
allocated divided by the General Account Accumulation Unit Value as of that
date.
(c) When an amount is transferred or distributed from that portion of a
Participant's Individual Account invested in the General Account, the
Participant's Individual Account shall be debited by the number of General
Accumulation Units equal to the amount transferred or distributed divided
by the General Account Accumulation Unit Value as of the date of the
transfer or distribution.
(d) The General Account Accumulation Unit Value as of any date shall be
calculated in accordance with the following formula:
UV + PV x (1 + i) TO THE POWER OF 1/N
Where:
UV is the General Account Accumulation Unit Value as of the current
date.
PV is the General Account Accumulation Unit Value on the immediately
preceding date.
i is the Declared Interest Rate (as described in Section 4.1(f) below)
on such date.
N is the number of days in the applicable calendar year.
11
(e) The number of General Account Accumulation Units credited to a
Participant's Individual Account is determined by dividing the amount
allocated to that portion of the Participant's Individual Account invested
in the General Account by the General Account Accumulation Unit Value for
that date.
(f) For purposes of this Contract, the "Declared Interest Rate" is the
rate of interest credited to the General Account for any period of time as
shall be determined by the Insurance Company. As of the Effective Date of
this Contract the Declared Interest Rate is >percent. The Declared Interst
Rate may be changed by the Insurance Company from time to time. Any such
change shall be declared in advance and shall become effective as of the
first day of the month immediately following the date the Contractholder is
notified of such change. The Declared Interest Rate shall not be less than
> percent. The Declared Interest Rate shall be compounded annually.
4.2 VALUE OF SEPARATE ACCOUNT. (a) The value of a Participant's Individual
Account under the Separate Account shall be determined by multiplying the
total number of Sub-Account Accumulation Units credited to the
Participant's Individual Account by the current Accumulation Unit value for
the respective Sub-Account.
(b) A "Sub-Account Accumulation Unit" is an accounting unit of measure
used to calculate the Separate Account value of a Participant's Individual
Account during the Accumulation Period. The Sub-Account Accumulation Unit
Value shall be determined on each Valuation Day by a Net Investment Factor
for that Sub-Account for the Valuation Period then ended.
(c) The value of the Sub-Account Accumulation Units in the Separate
Account representing an interest in the appropriate Fund shares that are
held under the Contract were initially established on the date that
contributions were first contributed to the appropriate Sub-Account of the
Separate Account. The Accumulation Unit value for each Sub-Account will
vary to reflect the investment experience of the applicable Fund and shall
be determined on each Valuation Day by multiplying the Accumulation Unit
value of the particular Sub-Account on the preceding day by the "Net
Investment Factor" for that Sub-Account for the Valuation Period then
ended.
12
(d) The Net Investment Factor for each of the Sub-Accounts is equal to the
net asset value per share of the corresponding Fund at the end of the
Valuation Period, plus the per share amount of any dividends or capital
gains by that Fund if the ex-dividend date occurs in the Valuation Period
ended, divided by the net asset value per share of the corresponding Fund
at the beginning of the Valuation Period then ending.
(e) The shares of the Fund are valued at net asset value on a daily basis.
(f) For purposes of this Section 4, the Valuation Date is each day the New
York Stock Exchange is open for unrestricted trading and the Insurance
Company is open to transact normal business.
(g) For purposes of this Section 4, the Valuation Period is the period
between Valuation Days.
13
SECTION 5
PAYMENT OF BENEFITS
5.1 COMMENCEMENT OF PAYMENTS. (a) Payments will begin to be paid to a
Participant from the Contract as of the Participant's Annuity Commencement
Date. The Insurance Company reserves the right to begin payments on the
first day of the month coincident with or next following the Participant's
65th birthday under Option 2, as described in Section 9.2 of the Contract,
with 120 Monthly Payments Certain, unless the Participant elects otherwise
in accordance with the remaining provisions of this Section 5.1
(b) A Participant may elect as an Annuity Commencement Date the first day
of any month. Notwithstanding the foregoing, in no event may a Participant
elect an Annuity Commencement Date earlier than the date the Participant
attains age 59 1/2, unless such Participant has separated from service
(within the meaning of Section 5.2(c) of the Contract) or has become
disabled (within the meaning of Section 5.2(d) of the Contract).
(c) A Participant may elect to have the benefit paid from the Contract
pursuant to any of the annuity options described in Section 9.2 of the
Contract.
(d) Election of any of the options provided in (b) and (c) above must be
made by notice in writing to the Home Office of the Insurance Company at
least thirty (30) days prior to the date such election is to become
effective.
5.2 OTHER DISTRIBUTIONS. (a) A Participant may request, in form and manner
prescribed by the Insurance Company, a distribution of all or a portion of
the value of his Participant's Individual Account provided that the
Participant demonstrates that the distribution is a result of one of the
events described in (b), (c), (d), or (e) below. Distributions pursuant to
this Section 5.2 shall be paid be paid pursuant to the single sum payment
option, as described in Section 9.3 of the Contract, except that a
Participant may request that a distribution made on account of the
Participant's separation from service, as described in (c) below, be paid
in accordance with either the single sum payment option or the systematic
withdrawal option described in Section 9.4 of the Contract. Any
distribution requested under this Section 5.2 must also satisfy the
requirements of (f) and (g) below.
14
(b) A Participant may request a distribution on or after the date such
Participant attains age 59-1/2.
(c) A Participant may request a distribution if such Participant separates
from service. For purposes of this subsection, the term "separates from
service" means the actual severance of the employment relationship between
the Participant and the Employer of a presumably permanent nature for
reasons other than temporary absence, any change in position or other
occurrence qualifying as a temporary break in service, the transfer or
other change of position resulting in employment by an entity controlling,
controlled by, or under common control by the Employer, or the cessation of
an employment relationship resulting from a reorganization, merger, or the
sale or discontinuance of all or any part of the Employer's business.
(d) A Participant may request a distribution on or after the date such
Participant becomes disabled within the meaning of Code section 72(m)(7),
provided that such disability would entitle the Participant to receive
social security disability benefits.
(e) A Participant may request a distribution if such Participant incurs a
hardship. The amount distributed on account of a hardship may not include
any income attributable to contributions made pursuant to a salary
reduction agreement. For purposes of this Contract, the term "hardship"
means an immediate and heavy financial need of the Participant. In
addition, a distribution may be made on account of a hardship only if the
distribution is necessary to satisfy the immediate and heavy financial
need.
(1) For purposes of this Contract, a distribution is made on account of
an immediate and heavy financial need only if the distribution is on
account of:
(A) Expenses for medical care described in Code section 213(d)
previously incurred by the Participant, the Participant's
spouse, or any dependents of the Participant (as described in
Code section 152) or necessary for these persons to obtain
medical care described in Code section 213(d);
(B) Costs directly related to the purchase of a principal residence
for the Participant (excluding mortgage payments);
15
(C) Payment of tuition, related educational fees, and room and board
expenses, for the next 12 months of post-secondary education for
the Participant, or the Participant's spouse, children, or
dependents (as defined in Code section 152); or
(D) Payments necessary to prevent the eviction of the Participant
from the Participant's principal residence or foreclosure on the
mortgage on that residence.
(2) A distribution will be considered as necessary to satisfy an
immediate an heavy financial need of the Participant only if:
(A) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans (to the extent
that the loan would not increase the amount of the need) under
all plans maintained by the Employer; and
(B) the distribution is not in excess of the amount of the immediate
and heavy financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution).
(3) If a Participant receives a hardship distribution in accordance with
this subsection (e), such Participant shall be suspended from making
additional Salary Reduction Contributions to the Contract for a
period of twelve months beginning on the first day of the month
immediately following the month such distribution is paid to the
Participant.
(4) The Insurance Company may rely on the Participant's representations
that the hardship is on account of an immediate and heavy financial
need and that the amount requested is necessary to satisfy such
immediate and heavy financial need.
16
(f) If the amount requested to be distributed is less than the full value
of the Participant's Individual Account, such amount shall either be taken
out of the General Account and Sub- Account(s) in which the Participant
Individual Account is invested, as specified in the request for
distribution, or, if no specification is made, the requested distribution
shall be taken out of the Participant's Individual Account from the General
Account and Sub-Account(s) in which such Individual Account is invested on
the same basis as the Participant's investment election applicable to the
allocation of contributions then in effect.
(g) The amount actually distributed to a Participant pursuant to this
Section 5.2 shall be equal to the Distribution Value as determined under
Section 6 of the Contract.
(h) Any distribution made in accordance with this Section 5.2, other than
distributions made pursuant to Section 5.2(c) or 5.2(d), may be limited by
the Insurance Company in accordance with the terms of Section 6.2 of the
Contract.
5.3 TRANSFER TO ANOTHER PLAN. (a) Notwithstanding anything in this Section 5
to the contrary, a Participant may request in writing, that the Insurance
Company transfer all or a portion of the Participant's Individual Account
to:
(1) another annuity contract that qualifies under Code section 403(b); or
(2) a custodial account for regulated investment company stock that
qualifies under Code section 403(b).
(b) The amount actually transferred pursuant to this Section 5.3 shall be
equal to the Distribution Value of the Participant's Individual Account as
determined under Section 6 of the Contract.
(c) Any transfer to another plan may be limited by the Insurance Company
in accordance with the terms of Section 6.2 of the Contract.
5.4 DIRECT ROLLOVERS. (a) This section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision in this Contract to
the contrary that would otherwise limit a distributee's election under
this section, a distributee may elect, at the time and in the manner
prescribed by the Insurance Company, to have any portion of an eligible
rollover distribution paid directly to an eligible rollover plan
specified by the distributee in a direct rollover.
17
(b) Definitions.
(1) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or a portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of
substantially equal period payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee
and the distributee's or the joint lives (or joint life
expectancies) of the distributees and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
section 401(a)(9) of the Code; the portion of any distribution that
is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities); and any other distribution that the Internal Revenue
Service provides by rule or regulation is not an eligible rollover
distribution.
(2) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the
Code, and individual retirement annuity described in section 408(b)
of the Code, or an annuity, custodial account, or retirement income
account described in section 403(b) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case
of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or an
individual retirement annuity.
(3) Distributee: A distributee includes an employee or former employee.
In addition, the employee's or former employee's surviving spouse
and the employee's or former employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse.
(4) Direct rollover: A direct rollover is a payment by the Contract to
the eligible retirement plan specified by the distributee.
18
SECTION 6
DISTRIBUTION VALUE AND
LIMITATION ON TRANSFERS AND DISTRIBUTIONS
6.1 DISTRIBUTION VALUE. (a) The Distribution Value of a Participant's
Individual Account for any day during the Accumulation Period is equal to
the value of the Participant's Individual Account on that day, less:
(1) any applicable premium taxes not previously deducted; and
(2) the Annual Contract Fee described in Section 10, if applicable;
and
(3) any applicable Contingent Deferred Sales Charge described in
Section 10; and
(4) the amount of any outstanding loan made from this Contract.
(b) The value of a Participant's Individual Account shall be determined in
accordance with the provisions of Section 4 of this Contract.
6.2 LIMITATION ON TRANSFERS AND DISTRIBUTIONS. The Insurance Company reserves
the right to limit a transfer or distribution (as described in Section
3.4(f), Section 5.2(h), and Section 5.3(e) of the Contract) from that
portion of a Participant's Individual Account invested in the General
Account, if the amount of such transfer or distribution, when added to the
aggregate of all transfers or distributions from the General Account made
by all Participants during the current Contract Year would exceed one-sixth
(1/6) of the balance of the General Account as of the first day of such
Contract Year.
(b) If this Section 6.2 applies to a transfer or distribution, the amount
of such transfer or distribution shall be disbursed in level monthly
installments over a period not to exceed five (5) years, in which event
interest will continue to be credited to the unpaid balance remaining in
the General Account in accordance to the terms of Section 4.1 of the
Contract. Notwithstanding the foregoing, the Insurance Company reserves the
right to disburse at any time the remaining unpaid balance in a single sum
payment.
19
SECTION 7
MINIMUM REQUIRED DISTRIBUTIONS
7.1 APPLICABILITY. (a) The requirements of this Section shall apply to any
distributions of a Participant's interest from this Contract and will take
precedence over any inconsistent provisions of the Contract.
(b) All distributions hereunder shall be made in accordance with the
requirements of section 401(a)(9) of the Code, including the incidental
death benefit requirements of section 401(a)(9)(G) of the Code, and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
7.2 REQUIRED DISTRIBUTIONS BEFORE DEATH. (a) The entire interest of a
Participant will be distributed or commence to be distributed no later than
the first of April following the calendar year in which such Participant
attains age 70 1/2 (required beginning date), over (a) the life of such
Participant, or the lives of such Participant and his or her designated
beneficiary, or (b) a period certain not extending beyond the life
expectancy of such individual, or the joint and last survivor expectancy of
such participant and his or her designated beneficiary. Payments must be
made in periodic payments at intervals no longer than one year. In
addition, payments must be either nonincreasing or they may increase only
as provided in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
(b) Life Expectancy is computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the individual by the time distributions are required
to begin, life expectancies shall be recalculated annually. Such election
shall be irrevocable by the Participant and shall apply to all subsequent
years. The life expectancy of a non-spouse beneficiary may not be
recalculated. Instead, life expectancy will be calculated assuming the
attained age of such beneficiary during the calendar year in which the
beneficiary attains age 70 1/2, and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar
year which has elapsed since the calendar year life expectancy was first
calculated.
20
7.3 REQUIRED DISTRIBUTIONS UPON DEATH. (a) If the individual dies after
distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the individual's death.
(b) If the Participant dies before distribution of his or her interest
begins, distributions of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made to receive distributions in accordance with (1) or (2)
below:
(1) If the Participant's interest is payable to a designated
beneficiary, then the entire interest of the Participant may be
distributed over a period not greater than the life expectancy of the
designated beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
individual died.
(2) If the designated beneficiary is the Participant's surviving
spouse, the date distributions are required to begin in accordance
with (1) above shall not be earlier than the later of (A) December 31
of the calendar year immediately following the calendar year in which
the Participant died, or (B) December 31 of the calendar year in which
the Participant would have attained age 70-1/2.
(c) Life expectancy is computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations. For
purposes of distributions beginning after the Participant's death, unless
otherwise elected by the surviving spouse by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable by the surviving spouse and shall apply to
all subsequent years. In the case of any other designated beneficiary, life
expectancies shall be calculated using the attained age of such beneficiary
using the calendar year in which distributions are required to begin
pursuant to this section, and payments for any subsequent calendar year
shall be calculated based on such life expectancy reduced by one for such
calendar year which has elapsed since the calendar year life expectancy was
first calculated.
21
(d) Distributions under this section are considered to have begun if
distributions are made on account of the individual reaching his or her
required beginning date or if prior to the required beginning date
distributions irrevocably commence to a Participant over a period permitted
and in an annuity form acceptable under section 1.401(a)(9) of the
Regulations.
22
SECTION 8
DEATH BENEFITS
8.1 DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE. (a) If a Participant dies
prior to the earlier of the Annuity Commencement Date or the Participant's
65th birthday, the Insurance Company will pay the Participant's Beneficiary
the greater of (a) the value in the Participant's Individual Account as of
the day written proof of death of such person is received by the Insurance
Company, or (b) 100% of the total contributions made to the contract,
reduced by any prior distributions.
(b) If a Participant dies prior to his Annuity Commencement Date but on or
after his 65th birth date, the Beneficiary shall receive the value of the
Participant's Individual Account as of the date of receipt of due proof of
the death at the Home Office of the Insurance Company.
(c) Notwithstanding anything in this Section 8.1 to the contrary, in no
event shall the amount of any death benefit exceed the Distribution Value
of the Participant's Individual Account determined in accordance with
Section 6 of the Contract.
8.2 DEATH BENEFIT ON OR AFTER ANNUITY COMMENCEMENT DATE. (a) If the Participant
dies on or after the Annuity Commencement Date, the death benefit, if any,
will be paid in accordance with the terms of the applicable annuity
certificate.
8.3 FORM OF DEATH BENEFIT. (a) The death benefit shall be paid to the
Beneficiary in a single sum, in which case payment will be made within
seven days of receipt of proof of death by the Insurance Company, unless
otherwise provided. In lieu of payment in a single sum, a Beneficiary may
elect that the amount be applied any settlement option described in Section
9 of the Contract.
(b) An election to receive death benefits under a form of Annuity must be
made (1) prior to the payment of a single sum settlement and (2) prior to
the December 31 of the calendar year immediately following the calendar
year in which the employee died. No election to provide Annuity Payments
will become operative unless the initial Annuity payment is at least $20.00
on either a fixed or variable basis, or $20.00 on each basis when a
combination benefit is selected.
8.4 BENEFICIARY DESIGNATION. (a) The designation of a Beneficiary will remain
in effect until changed by the Participant.
23
(b) Changes in designation of the Beneficiary may be made during the
lifetime of the Participant by written notice to the Insurance Company
provided, however, that when a Beneficiary has been designated irrevocably,
such designation cannot be changed or revoked without such Beneficiary's
written consent.
(c) Upon receipt of such notice and written consent, if required, at the
Home Office of the Insurance Company, the new designation shall take effect
as of the date the notice is signed, whether or not the Participant is
alive at the time of receipt of such notice subject to any payment made or
other action taken by the Insurance Company before such receipt.
(d) At the Participant's death the Beneficiary will be as provided in the
beneficiary designation then in effect. If no Beneficiary is then in effect
or if there is no designated Beneficiary living, the Participant's estate
will be the Beneficiary.
24
SECTION 9
SETTLEMENT OPTIONS
9.1 SETTLEMENT OPTIONS. This section describes the various options by
which benefits may be paid from this Contract to a Participant or a
Beneficiary. Such options may only be elected by a Participant or
Beneficiary as otherwise permitted under the terms of this Contract.
9.2 ANNUITY OPTIONS. The following annuity options are available under
the contract and may be elected by a Participant as otherwise provided
under the terms of this contract:
Option 1: Life Annuity. This is an annuity payable during the
lifetime of the Annuitant and terminating with the last monthly
payment preceding the death of the Annuitant.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments
Certain. This is an annuity payable monthly during the lifetime of
the annuitant with the provision that if, at the death of the
Annuitant, payments have been made for less than 120, 180, or 240
months, as elected, the remaining guaranteed monthly payments will
be made to the Participant's Beneficiary.
Option 3: Unit Refund Annuity. This is an annuity payable monthly
for the lifetime of the annuitant terminating with the last payment
due prior to the death of the Annuitant, except that an additional
payment will be made to the Beneficiary if (1) exceeds (2) below:
(1) equals the total amount applied under the option at the
Annuity Commencement Date divided by the Annuity Unit value (as
described in Section 9.4 below) at the Annuity Commencement Date;
and
2) equals the number of Annuity Units represented by each
monthly Annuity payment made multiplied by the number of monthly
annuity payments made.
25
The amount of the additional payments will be determined by
multiplying such excess by the Annuity Unit Value as of the date the
proof of death is received by the Insurance Company.
Option 4: Joint and Last Survivor Annuity. This is an annuity
payable monthly for the lifetime of the annuitant. At the
annuitant's death, payments will continue to the contingent
annuitant, if living, for the remainder of the contingent
annuitant's life. When the annuity is purchased, the annuitant
elects what percentage (50%, 66 2/3%, or 100%) of the monthly
payment will be continued to be paid to the contingent annuitant.
The following also applies to this annuity option:
Option 5: Designated (Fixed) Period Annuity. This is an annuity
payable monthly for the number of years selected, but not less than
three. In the event of the payee's death prior to the end of the
designated period, any then remaining proceeds will be paid in to
the Beneficiary unless other provisions are made and approved by the
Insurance Company. Option 5 does not involve life contingencies and
thus no mortality guarantee.
In addition to the annuity options described above, a Participant
may select any type of annuity which the Insurance Company agrees in
writing to issue.
(b) Under any of the annuity options above, except Option 5 when
paid on a variable basis, no surrenders are permitted once payments
commence. Surrenders out of Option 5 will be subject to any
applicable contingent deferred sales charge.
(c) The amount the Insurance Company will apply toward the purchase
of an annuity will be the Distribution Value of the Individual
Account as of the Annuity Commencement Date.
(d) Any annuity option provided in Section 9.1 above may be paid as
(1) a fixed annuity, (2) a variable annuity, or (3) a combination of
both a fixed annuity and a variable annuity.
26
(e) Fixed Annuity Payments. To determine the amount of each fixed
annuity payment, the amount available to purchase an annuity is
multiplied by the annuity purchase rate then in effect for all
contracts in this class of business. In no event shall the annuity
purchase rates used for the purchase of a fixed annuity be greater
than those provided in Annuity Purchase Rate Table A which is attached
to and made a part of this Contract.
(e) Variable Annuity Payments.
(1) To determine the amount of the first monthly variable annuity
payment, the amount available to purchase the variable annuity is
multiplied by the appropriate annuity purchase rate based on the
1983 IAM Mortality Table, set back one year, with an assumed
interest rate of four percent (4%), as represented by Annuity
Purchase Rate Table B.
(2) On or before the fifth business day immediately preceding the
annuitant's Annuity Commencement Date, the annuitant must elect
the Sub-Accounts into which the amount used to provide the
variable annuity will be invested, and the percentages that such
amounts will be allocated to such Sub-Accounts. Failure to make
an election in accordance with the preceding sentence shall be
deemed to be an election to invest the amount used to provide the
variable annuity in the same Sub-Accounts and at the same
percentages as the Participant's Individual Account is invested
on such date and to transfer any amounts held in the General
Account on such date proportionately to such Sub-Accounts. In no
event may any election made in accordance with this paragraph (2)
be changed on or after the Annuity Commencement Date.
(3) The amount of the first monthly annuity payment is divided by
the value of an Annuity Unit for the appropriate Sub-Account as
of the close of business on the fifth business day preceding the
day on which payment is due in order to determine the number of
Annuity Units represented by the first payment. The number of
Annuity Units remains fixed during the Annuity Period, and in
each subsequent month the dollar amount of the Annuity payment is
determined by multiplying the fixed number of Annuity Units by
the then current Annuity Unit value.
27
(4) An "Annuity Unit" is an accounting unit of measure in the
Separate Account used to calculate the amount of variable annuity
payments. The value of the Annuity Unit for each Sub-Account in
the Separate Account for any day is determined by multiplying the
value for the preceding day by the product of (1) the Net
Investment Factor (as described in Section 4.2 of the Contract)
for the day for which the Annuity Unit value is being calculated,
and (2) a factor to neutralize the assumed interest rate.
(5) When annuity payments are to commence, the value of the
contract is determined as the product of the value of the
Sub-Account Accumulation Unit (as described in Section 4.2 of the
Contract) credited to each Sub- Account as of the close of
business on the fifth business day preceding the date the first
annuity payment is due and the number of Sub-Account Accumulation
Units credited to each Sub-Account as of the date the annuity is
to commence.
(6) Annuity payments will be made on the first day of each month
following selection. The Annuity Unit value used in calculating
the amount of annuity payments will be based on an Annuity Unit
value determined as of the close of business on a day not more
than the fifth business day preceding the date of the annuity
payment.
9.3 SINGLE SUM PAYMENT OPTION. Under this option payments are made in the
form of a single sum cash payment.
9.4 SYSTEMATIC WITHDRAWAL OPTION. (a) Under this option payments are made
in a series of monthly, quarterly, semiannual, or annual installments,
as elected by the Participant, over a period not extending beyond the
Participant's life expectancy, or the joint and last survivor life
expectancy of the Participant and the Participant's Beneficiary, as of
the start date. Any election of the systematic withdrawal option is
subject to the following requirements:
(1) To be eligible to elect payments under the systematic
withdrawal option, the value of a Participant's Individual
Account must equal or exceed ten thousand dollars ($10,000.00) at
the time payments begin under this option. A Participant may not
elect the systematic withdrawal option if they have a loan
outstanding from the Contract.
28
(2) Each installment payment shall be equal in amount, except for
the last payment in the series, which may be less, to the extent
that the value of the Participant's Individual Account is
insufficient to make a full installment payment.
(3) The minimum periodic payment amount that may be elected is
one hundred dollars ($100).
(4) The maximum amount that may be paid as a periodic installment
payment may not exceed, on an annual basis, eighteen percent
(18%) of the value of the Participant's Individual Account
balance calculated at the time the Systematic Withdrawal Option
is implemented.
(5) A Participant may elect to have the installment payments (A)
equal a certain number of payments, or (B) paid as a specified
dollar amount until the Participant's Individual Account is
depleted. Under either election, the number of installment
payments made shall be limited to the amount that can be provided
from the value of the Participant's Individual Account. In no
event may installment payments be made over a period of time
extending beyond the Participant's life expectancy as of the
start date, or the joint and last survivor life expectancy of the
Participant and the Participant's Beneficiary as of the start
date.
(6) A Participant may change an election previously made with
regard to the systematic withdrawal option four times during a
calendar year, provided the Participant notifies the Insurance
Company of such change at least thirty (30) days before such
change is to become effective.
(8) A Participant may cancel the systematic withdrawal option at
anytime.
(b) If a Participant dies while the systematic withdrawal option is
in effect, payments under the systematic withdrawal option shall
cease and any remaining value in the Participant's Individual
Account shall be paid to the Participant's Beneficiary in
accordance with the provisions of Section 8 of the Contract.
29
(c) Payments under the systematic withdrawal option shall be made
pro rata from each Sub-Account and the General Account in which the
Participant's Individual Account is invested.
(d) Definitions. For purposes of this Section 9.4, the following
definitions shall apply:
(1) The "start date" is the day for which the first payment under
the systematic withdrawal option is scheduled to be paid.
(2) The term "life expectancy" means the determination of life
expectancies made on the basis of the expected return multiples
in Tables V and VI of Section 1.72-9 of the federal Treasury
Regulations and shall be calculated annually for the Participant
and/or his Beneficiary, if the Beneficiary is his spouse, as
determined by the Participant at the time installment payments
begin.
30
SECTION 10
CHARGES AGAINST THE CONTRACT
10.1 ANNUAL CONTRACT FEE. (a) The Annual Contract Fee is thirty dollars
($30.00). The Annual Contract Fee shall be deducted from the value
of each Participant's Individual Account on the last business day of
each Participant's Contract Year. However, if the value of the
Participant's Individual Account is distributed in full at any time
before the last business day of the Participant's Contract Year, the
Annual Contract Fee charge shall be deducted from the proceeds of
such distribution.
(b) No deduction for the Annual Contract Fee shall be made from a
Participant's Individual Account during the Annuity Period under the
Contract. The Annual Contract Fee shall also not be applied to any
distribution which is on account of a Participant's:
(1) death,
(2) disability within the meaning of Code section 72(m)(7),
provided such disability would entitle the Participant to receive
social security disability benefits,
(3) long term confinement in an officially recognized nursing home
or hospital, provided the Participant's confinement in the hospital
or nursing home is prescribed by a physician and such confinement is
for at least ninety (90) days,
(4) separation from service on or after the fifth Participant's
Contract Year, provided the Participant has attained age 59 1/2, or
(5) hardship, as described in Section 5.2(e) of the Contract, other
than hardship resulting from the purchase of a principal residence,
as described in Section 5.2(e)(1)(B) of the Contract and a hardship
resulting from the payment of tuition, related educational fees, and
room and board expenses as described in Section 5.2(e)(1)(C) of the
Contract.
Paragraphs (1) through (5) above are further subject to the requirements
of Section 5 or 8 of the Contract, whichever is applicable.
31
10.2 DEDUCTION FOR MORTALITY, EXPENSE, AND ADMINISTRATIVE UNDERTAKINGS.
(a) For assuming the mortality, expense and administrative
undertakings under this Contract, the Insurance Company shall take a
deduction from the average daily net assets of the Separate Account.
The deduction for such risks has initially been set at 1.25% per
year of the average net assets of the Separate Account. The rate or
amount may be increased by the Insurance Company in its sole
discretion, subject to a maximum charge of 2.00% per year.
10.3 TRANSFER FEE. Transfers among the available investment alternatives
provided under this Contract, as described in Section 3.4 herein,
shall be subject to a fee of five dollars ($5.00). Such transfer fee
shall be deducted from the Sub-Account or the General Account in
which the Participant's Individual Account is invested and from
which the transfer is being made. Notwithstanding the preceding, the
transfer fee shall be waived for the first twelve (12) transfers
during a Participant's Contract Year.
10.4 CONTINGENT DEFERRED SALES CHARGE. (a) Except as otherwise provided
in this Section 10.4, distributions from the Contract (including
transfers made pursuant to Section 5.3 of the Contract) shall be
subject to a Contingent Deferred Sales Charge. The Contingent
Deferred Sales Charge is a percentage, determined in accordance with
the table in subsection (b) below, of the amount distributed. The
number of Participant's Contract Years completed prior to the
distribution will determine the amount of the Contingent Deferred
Sales Charge.
(b) The Contingent Deferred Sales Charge shall be determined from
the following table:
TABLE OF CONTINGENT DEFERRED
SALES CHARGE
PARTICIPANT'S CONTRACT CONTINGENT DEFERRED
YEAR OF WITHDRAWAL SALES CHARGE
------------------------------------------------------
1 5%
2 5%
3 5%
4 5%
5 5%
6 4%
7 3%
8 2%
9 1%
10 and later None
32
(c) A Participant may request a distribution, in accordance with
the provisions of Section 5 of the Contract, of up to ten percent
(10%) of his Individual Account value on a non-cumulative basis each
Participant Contract Year, after the first participant Contract
Year, without application of the Contingent Deferred Sales Charge.
For any portion of a distribution to be eligible for a waiver of the
Contingent Deferred Sales Charge, the amount distributed may not be
less than two hundred and fifty dollars ($250.00).
(d) The Contingent Deferred Sales Charge shall also be waived for
any distribution which is on account of a Participant's:
(1) death,
(2) disability within the meaning of Code section 72(m)(7),
provided such disability would entitle the Participant to receive
social security disability benefits,
(3) long term confinement in an officially recognized nursing home
or hospital, provided the Participant's confinement in the hospital
or nursing home is prescribed by a physician and such confinement is
for at least ninety (90) days.
(4) separation from service on or after the fifth Participant's
Contract Year, provided the Participant has attained age 59 1/2, or
(5) hardship, as described in Section 5.2(e) of the Contract, other
than hardship resulting from the purchase of a principal residence,
as described in Section 5.2(e)(1)(B) of the Contract and a hardship
resulting from the payment of tuition, related educational fees, and
room and board expenses as described in Section 5.2(e)(1)(C) of the
Contract.
Paragraphs (1) through (5) above are further subject to the requirements
of Section 5 or 8 of the Contract, whichever is applicable.
(e) Amounts applied to effect an annuity payment involving life
contingencies or non-life contingencies for a period of three (3) years
or more shall not be subject to a Contingent Deferred Sales Charge.
33
10.5 ADDITIONAL SERVICES. If the Contractholder requests that the Insurance
Company perform an additional service not specifically provided under the
terms of this Contract that is related to the Contractholder's 403(b)
annuity program, and the Insurance Company agrees to perform such
service, the Insurance Company reserves the right to charge the
Contractholder an additional fee for the performance of such service
calculated on an hourly rate. The hourly charge shall be determined by
agreement between the Contractholder and the Insurance Company.
34
SECTION 11
LOANS
11.1 AVAILABILITY OF LOANS. A Participant may request a cash loan from
the Contract during the Participant's Accumulation Period.
11.2 ELIGIBILITY FOR LOANS. Only one loan may be outstanding at any time
for any Participant. Once a loan has been made, it may not be
refinanced. Once a loan has been repaid, a Participant may not
obtain a subsequent loan until after the period of six months from
the date the previous loan has been repaid in full.
11.3 AVAILABILITY OF LOANS. (a) Application for a loan must be made to
the Insurance Company in writing and on a form prescribed by the
Insurance Company. The decisions by the Insurance Company on loan
applications shall be made on a reasonably equivalent, uniform and
nondiscriminatory basis. The Insurance Company may change the terms
of any outstanding loan to the extent required by applicable law.
(b) Loan proceeds shall be distributed from the Contract as soon as
practicable after the end of any month to Participants whose
applications are received by the Insurance Company on or before the
20th day of such month and approved by the Insurance Company by the
end of such month.
11.4 AMOUNT OF LOAN. A loan shall be derived from, and the amount
available for a loan shall be based on, the value of the
Participant's Individual Account based on the most recent account
valuation available to the Insurance Company on the date the loan is
approved. The minimum loan amount is $2,000. The maximum loan
available is the lesser of (1) 50% of the value of the Participant's
Individual Account, or (2) $50,000, reduced by the highest
outstanding balance of any loan to such Participant during the
twelve-month period ending on the day before the loan is made. In no
event shall the amount of any loan made from this Contract to a
Participant exceed the Distribution Value of the Participant's
Individual Account, determined in accordance with Section 6, as of
the date of such loan.
35
11.5 TERMS OF LOAN. (a) A loan shall be secured by a lien on the
Participant's Individual Account, to the maximum extent permitted by
the relevant provisions of the Internal Revenue Code and any
regulations or other guidance issued thereunder.
(b) At the beginning of each calendar quarter the Insurance Company
shall determine the rate of interest to be charged to all loans
issued during such quarter. Such rate shall reflect current
investment market conditions and prevailing loan interest levels
under this Contract. The maximum rate charged shall not exceed the
current guaranteed interest rate as provided under Section 4.1(c) of
the Contract plus 2%.
(c) The principal amount and interest on a loan shall be repaid no
less frequently than monthly. Such loan repayment shall be due and
payable to the Insurance Company on the last business day of each
month such loan is outstanding. A Participant may prepay the full
amount of the outstanding loan upon the Participant's separation
from service (as described in Section 5.2(c) of the Contract) or
after the first twelve months following distribution of the loan
proceeds to the Participant. The Participant may elect a repayment
term from one(1) to five (5) years, in twelve (12) month increments,
starting from the last business day of the first month in which the
loan amount is distributed from the contract, except that the
Participant may elect a repayment term of up to ten (10) years, in
twelve (12) month increments, if the loan is for the acquisition of
a dwelling unit to be used as the principal residence of the
Participant (determined at the time the loan is made). The Insurance
Company may request any documents or other information from the
Participant the Insurance Company deems necessary to establish the
suitability of a loan repayment period greater than five (5) years.
(d) Repayment of both principal and interest, less a monthly charge
of .166% of the outstanding loan balance at the beginning of the
month (to be retained by the Insurance Company), shall be credited
to the General Account.
(e) Each loan shall be evidenced by a promissory note, evidencing
the Participant's obligation to repay the borrowed amount to the
Contract, in such form and with such provisions consistent with this
Section 11 as are acceptable to the Insurance Company.
36
(f) Under the terms of the loan agreement, an Insurance Company
representative may determine a loan to be in default, and may take
such actions upon default in accordance with Section 11.7 below.
11.6 DISTRIBUTION AND REPAYMENT OF LOAN. (a) The loan proceeds shall be
derived from the Participant's Individual Account attributable to
the General Account. The Participant's Individual Account remaining
after the loan proceeds are distributed to the Participant shall be
reduced by a $100.00 loan processing fee which shall be retained by
the Insurance Company.
(b) Repayments of loans shall be made to the Participant's General
Account.
11.7 EVENTS OF DEFAULT AND ACTIONS UPON DEFAULT. (a) If a Participant
does not repay the principal and account interest with respect to a
loan at the time required by the terms of the loan, the loan shall
be in default and the unpaid balance of the loan, together with
interest thereon, shall become immediately due and payable. In
addition to the foregoing, the loan agreement may include such other
events of default as the Insurance Company shall determine are
necessary or desirable.
(b) Upon the default of a loan by any Participant, the Insurance
Company may take such action as it reasonably determines to be
necessary in order to preclude the loss of principal and interest,
including:
(1) demanding repayment of the outstanding amount on the loan
(including principal and accrued interest); or
(2) if the loan is not repaid within 31 days of a request for
repayment, causing a foreclosure of the loan to occur by
distributing the promissory note to the Participant or
otherwise reducing the Participant's Individual Account by
the value of the loan. For these purposes, such loan shall
be deemed to have a fair market value equal to its face
value (including accrued but unpaid interest) reduced by
any payments thereon by the Participant. In all events,
however, no foreclosure shall be made until the earliest
time contributions made pursuant to a salary reduction
agreement may be distributed without violating any
provisions of Section 403(b) of the Code and the
regulations issued thereunder.
37
SECTION 12
GENERAL PROVISIONS
12.1 ENTIRE CONTRACT. This Contract and the application for the Contract
together with any tables, schedules, or endorsements which are
attached hereto when issued to the Contractholder, constitute the
entire contract. All statements in the application shall, in the
absence of fraud, be deemed representations and not warranties. No
statement shall avoid this contract or be used in defense of a claim
under it unless contained in the written application for this
contract.
12.2 MODIFICATION OF CONTRACT. (a) This Contract may be modified at any
time by written agreement between the Contractholder and the
Insurance Company. No modification will affect the amount or terms
of any annuities begun prior to the effective date of the
modification, unless it is required to conform this Contract to, or
give the Contractholder the benefit of, any federal or state
statutes or any rule or regulation of the United States Treasury
Department.
(b) The Insurance Company reserves the right to modify the Contract,
but only if such modification: (1) is necessary to make the contract
or the Separate Account comply with any law or regulation issued by
a governmental agency to which the Company is subject; (2) is
necessary to assure continued qualification of the contract under
section 403(b) of the Code or other federal or state laws relating
to retirement annuities or annuity contracts; (3) is necessary to
reflect a change in the operation of the Separate Account; (4)
provides additional Separate Account options; or (5) withdraws
Separate Account options. In the event of any such modification, the
Insurance Company will provide notice to the Contractholder, or to
the payee(s) during the annuity period. The Insurance Company may
also make appropriate endorsement in the Contract to reflect such
modification.
38
(c) On and after the fifth anniversary of the Contract Effective
Date, the Insurance Company may change from time to time any or all
of the terms of this contract by giving 90 days' advance written
notice of such change to the Contractholder except that the annuity
tables, guaranteed interest rates and Contingent Deferred Sales
Charges which are applicable on the Date of Coverage of a
Participant's Individual Account under this contract will continue
to be applicable to all contributions made to such Individual
Account which in any year do not exceed three times the total
contributions made to such Individual Account during the initial
Participant's Contract Year. In addition, the limitations on the
deductions for the mortality, expense risks, administrative
undertakings and the Annual Contract Fee will continue to apply in
all Contract Years.
(d) No modification of this Contract shall be made except over the
signature of the President, a Vice President, an Assistant Vice
President, a Secretary, or an Assistant Secretary.
12.3 NON-PARTICIPATING. This contract does not share in the surplus
earnings of the Company.
12.4 MISSTATEMENT OF AGE. (a) If the age of an annuitant has been
misstated, the amount of the annuity payable by the Insurance
Company shall be that provided by the values under this Contract
allocated to effect such annuity on the basis of the corrected
information, without changing the date of the first payment of such
annuity.
(b) Any underpayments by the Insurance Company shall be made up
immediately and any overpayment shall be charged against future
amounts becoming payable.
12.5 REPORTS TO THE CONTRACTHOLDER. The Insurance Company will at the end
of each calendar year quarter, transmit to each Participant a
written statement of account showing the total value of General
Account and Separate Account interests held in each Participant's
Individual Accounts under this Contract.
12.6 REPORTS FROM THE CONTRACTHOLDER. The Contractholder will furnish any
information which the Insurance Company may reasonably require in
order to administer this Contract. If the Contract Owner cannot
furnish any required item of information, the Company may request
the person concerned to furnish the information. The Insurance
Company will not be liable for the fulfillment of any obligations
dependent upon that information until it receives such information.
39
12.7 PROOF OF SURVIVAL. The payment of any annuity benefit will be
subject to evidence that the annuitant is alive on the date such
payment is otherwise due.
12.8 INDIVIDUAL CERTIFICATES. The Insurance Company will issue to each
Participant an individual certificate which evidences that
contributions are to be made on behalf of that Participant under
this Contract. The Insurance Company will also issue an individual
annuity certificate to each individual for whom an annuity is
purchased from the Contract.
12.9 NONFORFEITURE. A Participant shall have a nonforfeitable right to
his Participant's Individual Account at all times.
12.10 DUE PROOF OF DEATH. A certified copy of the 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
the Company.
12.11 DEFERRAL OF PAYMENTS FROM GENERAL ACCOUNT. (a) The Insurance Company
has the right to defer payment of a surrender of General Account
values under this contract for a period not to exceed six (6) months
from the date the Participant's request is received in the Home
Office of the Company. If the Insurance Company defers payment as
specified above, the deferred amount will be credited with interest
at the rate of four percent (4%) from the date such request is
deferred to the date the requested amount of the surrender is paid.
(b) A deferral of any payment by the Insurance Company of General
Account values may be made only to the extent such deferral will not
cause a surrender of a Participant's Individual Account to fail to
satisfy section 401(a)(9) of the Code.
12.12 PREMIUM TAXES. For any Contract subject to a Premium Tax, the
Insurance Company will pay the taxes when imposed by the applicable
taxing authority. The Insurance Company, in its sole discretion,
will deduct the taxes from Contributions when received, from the
proceeds at surrender, or from the amount applied to effect an
Annuity at the time annuity payments commence.
40
12.13 PARTICIPATION AND BENEFICIARY RIGHTS. The rights enforceable under
the Contract with respect to a Participant's Individual Account
shall be exercised solely by the Participant or the Participant's
designated Beneficiary. Where the Contract provides that these
rights are enforceable by the Contractholder, they shall be
exercised by the Contractholder solely in its capacity as the
authorized representative of the Participant or the Participant's
Beneficiary, and with such Participant's or Beneficiary's direction
and approval.
12.14 NON-TRANSFERABILITY. Amounts held in a Participant's Individual
Account are nontransferable and cannot be sold, assigned, or pledged
as security, except as otherwise permitted under the Code and the
terms of this Contract.
41
SECTION 13
SUSPENSION AND TERMINATION PROVISIONS
13.1 SUSPENSION OF CONTRACT. This contract may be suspended by the
Contractholder by written notice to the Insurance Company at its
Home Office least 90 days prior to the effective date of such
suspension The Contract will be suspended automatically on a
Contract Year anniversary if the Contractholder fails to assent to
any modifications, as described under Modification of the Contract
in Section 12 which would have been effective on or before that
contract anniversary. On suspension, contributions will be accepted
by the Insurance Company on behalf of Participants covered under the
Contract prior to the date of suspension, but no contributions will
be accepted on behalf of new Participants. Suspension of the
Contract will not affect payments to be made by the Insurance
Company under an annuity which commenced prior to the date of
suspension.
13.2 CHANGE TO PAID-UP CONTRACT. The Contract will be deemed paid-up
within 30 days after the end of the Contract Year if the
Contractholder has not remitted a contribution to the Insurance
Company during the preceding twelve-month period. Effective with a
change to paid-up status, no further contributions will be accepted
by the Insurance Company and each Participant will be considered an
inactive Participant until the commencement of annuity payments on
his behalf or until the value of a Participant's Individual Account
is disbursed or applied in accordance with the Termination
Provisions.
13.3 An annuity effected under this contract may not be surrendered for
its termination value after the commencement of annuity payments.
13.4 TIMING OF CASH DISTRIBUTIONS FROM SEPARATE ACCOUNT. When all or any
part of the Separate Account value of a Participant's Individual
Account is taken by the Participant in the form of a cash
settlement, payment will be made within seven (7) days following the
day the request is received, except as the Company may be permitted
to defer payment under the Investment Company Act of 1940.
13.5 TERMINATION PROVISIONS. (a) On termination of contributions to the
Contract by the Contractholder on behalf of a Participant prior to
the selected Annuity Commencement Date for such Participant, the
Participant shall have the following options:
(1) To continue the Participant's Individual Account under the
Contract. When the selected ▇▇▇▇▇▇▇ Commencement Date
arrives, the Participant shall begin
42
to receive payments pursuant to the selected Annuity
Option under Section 9.2 of the Contract. Prior to the
Annuity Commencement Date, the Participant may request a
distribution in accordance with Section 5.2 of the
Contract.
(2) To request an immediate distribution pursuant to one of
the settlement options described in Section 9 of the
Contract, provided such distribution otherwise satisfies
the terms of Section 5 of this Contract.
(3) To transfer an amount to another plan as provided in
Section 5.3 of the Contract.
(b) This Contract shall be considered terminated when the last
payment due a Participant or Beneficiary has been paid and not
assets remain invested hereunder.
43
ANNUITY PURCHASE RATE
TABLE A
Fixed Annuity
Amount Required To Purchase $1.00 of Yearly Retirement Annuity
LIFE LIFE ANNUITY WITH 50% CONTINGENT ANNUITY
ANNUITANT'S ANNUITY 120 PAYMENTS CERTAIN AGE OF CONTINGENT ANNUITANT
AGE* 55 60 65 70
-------------------------------------------------------------------------------------------------
55 18.97 19.18 20.35 19.96 19.65 19.41
60 17.06 17.37 19.00 18.50 18.06 17.72
65 14.98 15.47 17.65 17.03 16.46 15.99
70 12.81 13.59 16.33 15.60 14.90 14.28
*Age nearest birthday on date premium is determined.
Amounts required for ages and forms of annuity not shown will be furnished by
The Hartford upon request. The rates applied to purchase other forms of
annuities will be the actuarial equivalent of the rates in this Annuity Purchase
Rate Table A, as determined by The Hartford.
Annuity Purchase Rate Table A is based on the 1983 IAM Mortality Table, set back
one year, and a net investment rate of 3% per annum.
VARIABLE ANNUITY PURCHASE RATE
TABLE B
Amount of First Monthly Payment For Each $1000 Applied
FIRST, SECOND AND THIRD OPTIONS:
LIFE ANNUITY LIFE ANNUITY LIFE ANNUITY
WITH WITH WITH UNIT
PAYEE'S LIFE 120 PAYMENTS 180 PAYMENTS 240 PAYMENTS REFUND
AGE* ANNUITY CERTAIN CERTAIN CERTAIN ANNUITY
------------------------------------------------------------------------------------------
50 4.62 4.58 4.54 4.48 4.48
55 4.98 4.92 4.85 4.75 4.77
60 5.46 5.36 5.24 5.06 5.15
65 6.14 5.94 5.70 5.38 5.64
70 7.08 6.67 6.20 5.66 6.28
*Age nearest birthday on date premium applied.
Amounts required for ages and forms of annuity not shown will be furnished by
The Hartford upon request. The rates applied to purchase other forms of
annuities will be the actuarial equivalent of the rates in this Annuity Purchase
Rate Table B, as determined by The Hartford.
Annuity Purchase Rate Table B is based on the 1983 IAM Mortality Table, set back
one year, and an assumed interest rate (AIR) of 4%.
SECOND AND SUBSEQUENT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT EXPERIENCE OF
A SEPARATE ACCOUNT AND ARE VARIABLE AND NOT GUARANTEED AS TO A FIXED DOLLAR
AMOUNT.