-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KsLc1TkkyaYvgbungGghogtx2ozT5XivndSpDocO5vmVw40FcfsZhd6/7JjPgUwU 99ojVGro8GiNPwRF6TBoOQ== 0000950146-97-000181.txt : 19970222 0000950146-97-000181.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950146-97-000181 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970213 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARIABLE ANNUITY ACCT C OF AETNA LIFE INSURANCE & ANNUITY CO CENTRAL INDEX KEY: 0000103007 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-75992 FILM NUMBER: 97531234 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02513 FILM NUMBER: 97531235 BUSINESS ADDRESS: STREET 1: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 BUSINESS PHONE: 2032734808 MAIL ADDRESS: STREET 1: C/O AETNA LIFE & CASUALTY STREET 2: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 FORMER COMPANY: FORMER CONFORMED NAME: VARIABLE ANNUITY ACCOUNT C OF AETNA VARIABLE ANNUITY LIFE IN DATE OF NAME CHANGE: 19791108 485APOS 1 VARIABLE ANNUITY ACCOUNT C As filed with the Securities and Exchange Registration No. 33-75992 Commission on February 13, 1997 Registration No. 811-2513 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 - -------------------------------------------------------------------------------- Post-Effective Amendment No. 7 To REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and Amendment to REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 - -------------------------------------------------------------------------------- Variable Annuity Account C of Aetna Life Insurance and Annuity Company Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RC4A, Hartford, Connecticut 06156 Depositor's Telephone Number, including Area Code: (860) 273-7834 Susan E. Bryant, Counsel Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RC4A, Hartford, Connecticut 06156 (Name and Address of Agent for Service) - -------------------------------------------------------------------------------- It is proposed that this filing will become effective: 60 days after filing pursuant to paragraph (a)(2) of Rule 485 -------- X on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485 -------- Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has registered an indefinite number of securities under the Securities Act of 1933. Registrant expects to file a Rule 24f-2 Notice for the fiscal year ended December 31, 1996 on or before February 28, 1997. VARIABLE ANNUITY ACCOUNT C CROSS REFERENCE SHEET
FORM N-4 ITEM NO. PART A (PROSPECTUS) LOCATION 1 Cover Page........................................... Cover Page 2 Definitions.......................................... Definitions 3 Synopsis............................................. Prospectus Summary; Fee Table 4 Condensed Financial Information...................... Condensed Financial Information 5 General Description of Registrant, Depositor, and Portfolio Companies.................................. The Company; Variable Annuity Account C; The Funds 6 Deductions and Expenses.............................. Charges and Deductions; Distribution 7 General Description of Variable Annuity Contracts.... Purchase; Miscellaneous 8 Annuity Period....................................... Annuity Period 9 Death Benefit........................................ Death Benefit During Accumulation Period; Death Benefit Payable During the Annuity Period 10 Purchases and Contract Value......................... Purchase; Contract Valuation 11 Redemptions.......................................... Right to Cancel; Withdrawals 12 Taxes................................................ Tax Status 13 Legal Proceedings.................................... Miscellaneous - Legal Matters and Proceedings 14 Table of Contents of the Statement of Additional Information.......................................... Contents of the Statement of Additional Information FORM N-4 PART B (STATEMENT OF ADDITIONAL INFORMATION) ITEM NO. LOCATION 15 Cover Page........................................... Cover page 16 Table of Contents.................................... Table of Contents 17 General Information and History...................... General Information and History 18 Services............................................. General Information and History; Independent Auditors 19 Purchase of Securities Being Offered................. Offering and Purchase of Contracts 20 Underwriters......................................... Offering and Purchase of Contracts 21 Calculation of Performance Data...................... Performance Data; Average Annual Total Return Quotations 22 Annuity Payments..................................... Annuity Payments 23 Financial Statements................................. Financial Statements
Part C (Other Information) -------------------------- Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. PROSPECTUS ============================================================================= The Contracts offered in connection with this Prospectus are individual Installment and Single Purchase Payment deferred variable annuity contracts ("Contracts") issued by Aetna Life Insurance and Annuity Company (the "Company"). The Contracts are designed to provide for retirement income for Contracts established under Section 408 of the Internal Revenue Code. (See "Purchase.") Currently, the IRA is not available as a "Simple IRA" as defined in Section 408(p) of the Internal Revenue Code. The Contracts provide that contributions may be allocated to one or more of the Credited Interest Options or to one or more of the Subaccounts of Variable Annuity Account C, a separate account of the Company. The Subaccounts invest directly in shares of the following Funds:
(bullet) Aetna Variable Fund (bullet) Alger American Small Cap Portfolio (bullet) Aetna Income Shares (bullet) American Century VP Capital Appreciation (bullet) Aetna Variable Encore Fund (formerly known as TCI Growth) (bullet) Aetna Investment Advisers Fund, Inc. (bullet) Fidelity VIP II Contrafund Portfolio (bullet) Aetna Ascent Variable Portfolio (bullet) Fidelity VIP Equity-Income Portfolio (bullet) Aetna Crossroads Variable Portfolio (bullet) Fidelity VIP Growth Portfolio (bullet) Aetna Legacy Variable Portfolio (bullet) Fidelity VIP Overseas Portfolio (bullet) Aetna Variable Capital Appreciation Portfolio (bullet) Janus Aspen Aggressive Growth Portfolio (bullet) Aetna Variable Growth Portfolio (bullet) Janus Aspen Balanced Portfolio (bullet) Aetna Variable Index Plus Portfolio (bullet) Janus Aspen Growth Portfolio (bullet) Aetna Variable Small Company Portfolio (bullet) Janus Aspen Short-Term Bond Portfolio (bullet) Alger American Growth Portfolio (bullet) Janus Aspen Worldwide Growth Portfolio (bullet) Scudder International Portfolio Class A Shares
The Credited Interest Options currently available under the Contracts are the Guaranteed Interest Account, the Fixed Account and the Guaranteed Accumulation Account. Except as specifically mentioned, this Prospectus describes only investments through the Separate Account. A brief description of each of the Credited Interest Options is contained in Appendices to this Prospectus and additional information concerning the Guaranteed Accumulation Account is contained in a separate prospectus. The availability of the Funds and the Credited Interest Options is subject to applicable regulatory authorization. Not all Funds or Credited Interest Options may be available in all jurisdictions or under all Contracts. (See "Investment Options.") This Prospectus provides investors with the information that they should know about the Separate Account before investing in the Contract. Additional information about the Separate Account is contained in a Statement of Additional Information ("SAI") which has been filed with the Securities and Exchange Commission and is incorporated herein by reference. The Table of Contents for the SAI is printed on page of this Prospectus. An SAI may be obtained from the Company without charge by calling the number listed under the "Inquiries" section of the Prospectus Summary. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE FUNDS AND THE GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This Prospectus and the Statement of Additional Information are dated May 1, 1997. TABLE OF CONTENTS ============================================================================= DEFINITIONS DEFINITIONS - 1 PROSPECTUS SUMMARY SUMMARY - 1 FEE TABLE FEE TABLE - 1 CONDENSED FINANCIAL INFORMATION AUV HISTORY - 1 THE COMPANY 1 VARIABLE ANNUITY ACCOUNT C 1 INVESTMENT OPTIONS 1 The Funds 1 Credited Interest Options 3 PURCHASE 4 Contract Purchase and Availability 4 Purchase Payments 4 Right to Cancel 4 CHARGES AND DEDUCTIONS 4 Daily Deductions from the Separate Account 4 Mortality and Expense Risk Charge 4 Administrative Expense Charge 5 Maintenance Fee 5 Deferred Sales Charge 5 Fund Expenses 6 Premium and Other Taxes 6 CONTRACT VALUATION 6 Contract Value 6 Accumulation Units 6 Net Investment Factor 7 TRANSFERS 7 WITHDRAWALS 7 Reinvestment Privilege 8 ADDITIONAL WITHDRAWAL OPTIONS 8 DEATH BENEFIT DURING ACCUMULATION PERIOD 9 ANNUITY PERIOD 9 Annuity Period Elections 9 Annuity Options 10 Annuity Payments 10 Charges Deducted During the Annuity Period 10 Death Benefit Payable During the Annuity Period 10 TAX STATUS 11 Introduction 11 Taxation of the Company 11 Contracts Used with Certain Retirement Plans 11 MISCELLANEOUS 12 Distribution 12 Delay or Suspension of Payments 12 Performance Reporting 12 Voting Rights 13 Modification of the Contract 13 Involuntary Terminations 13 Legal Matters and Proceedings 13 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 14 APPENDIX I--GUARANTEED INTEREST ACCOUNT 15 APPENDIX II--FIXED ACCOUNT 16 APPENDIX III--GUARANTEED ACCUMULATION ACCOUNT 18 THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED HEREIN. DEFINITIONS ============================================================================= The following terms are defined as they are used in this Prospectus: Accumulation Period: The period during which Purchase Payment(s) credited to a Contract are invested to fund future annuity payments. Accumulation Unit: A measure of the value of each Subaccount before annuity payments begin. Annuitant: The person on whose life or life expectancy the annuity payments are based. Annuity: A series of payments for life, a definite period or a combination of the two. Annuity Date: The date on which annuity payments begin. Annuity Period: The period during which annuity payments are made. Annuity Unit: A measure of the value of each Subaccount selected during the Annuity Period. Beneficiary(ies): The person or persons identified on the Application who are to receive any death benefit proceeds payable under the Contract. Code: Internal Revenue Code of 1986, as amended. Company (We, Us): Aetna Life Insurance and Annuity Company. Contract: The individual deferred, variable annuity contracts offered by this Prospectus. Contract Holder (You): The person to whom the Contract is issued. Contract Value: The dollar value of amounts held under the Contract as of each Valuation Date during the Accumulation Period. Contract Year: The period of 12 months measured from the Contract's effective date or from any anniversary of such effective date. Credited Interest Options: The fixed interest options under the Contract. The Credited Interest Options currently consist of the Guaranteed Interest Account, the Fixed Account and the Guaranteed Accumulation Account, each of which is described in an Appendix to this Prospectus. Amounts allocated to the Credited Interest Options are included in the Contract Value. Fund(s): An open-end registered management investment company whose shares are purchased by the Separate Account to fund the benefits provided by the Contract. Home Office: The Company's principal executive offices located at 151 Farmington Avenue, Hartford, Connecticut 06156. Purchase Payment(s): The gross payment(s) submitted to the Company under a Contract. Purchase Payment Period: For "Installment Purchase Payment Contracts," the period of time for completion of the agreed upon annual number and amount of Purchase Payments. For example, if it is determined that the Purchase Payment Period will consist of 12 payments per year and only 11 payments are made, the Purchase Payment Period is not completed until the twelfth Purchase Payment is made. Separate Account: Variable Annuity Account C, a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. Subaccount(s): The portion of the assets of the Separate Account allocated to a particular Fund. Each Subaccount invests in the shares of only one corresponding Fund. Valuation Date: The date and time at which the Accumulation Unit Value and Annuity Unit Value of a Subaccount is calculated. Currently, this calculation occurs after the close of business of the New York Stock Exchange on any normal business day, Monday through Friday, that the New York Stock Exchange is open. ----------------------------------------------------------------------------- DEFINITIONS - 1 PROSPECTUS SUMMARY ============================================================================= Contracts Offered The Contracts offered in connection with this Prospectus are individual deferred variable annuity contracts issued by Aetna Life Insurance and Annuity Company (the "Company"). One allows single payments and the other allows installment payments. The Plans are adopted by or on behalf of individuals entitled to tax-deferred treatment under Section 408(b) of the Code ("IRA"), and established for employees whose employer contributes to their IRA plan pursuant to the Simplified Employee Pension Plan provisions of Section 408(k) ("SEP") of the Code. These Contracts may be purchased by completing the proper application form and submitting it to the Distributor. (See "Contract Purchase.") This Contract has been approved by the Internal Revenue Service ("IRS") as a prototype IRA. It can therefore be used in an IRS model SEP. The IRS approval, however, only pertains to whether the Contract meets the Code requirements for IRAs and is not a determination of the merits of the Annuity Contract. Currently, the IRA is not available as a "Simple IRA" as defined in Section 408(p) of the Internal Revenue Code. Free Look Period You may cancel the Contract no later than 10 days after you receive it (or as otherwise allowed by state law) by returning it to the Company with a written notice of cancellation. We will produce a refund not later than seven days after we receive the Contract and the written notice at our Home Office. Cancellations requested after you receive the Contract will consist of a refund of the Purchase Payment. (See "Purchase--Right to Cancel.") Investment Options The Company has established Variable Annuity Account C, a registered unit investment trust, for the purpose of funding the variable portion of the Contracts. The Separate Account is divided into Subaccounts which invest directly in shares of the Funds described herein, as you designate. The Contract allows investment in any or all of the Subaccounts, as well as in the Credited Interest Options described below. The total number of investment options that you may select during the Accumulation Period is limited. For a complete list of the Funds available under the Contracts, a description of the investment objectives of each of the Funds and their investment advisers and a description of the limitations on the number of investment options, see "Investment Options--The Funds" in this Prospectus, as well as the prospectuses for each of the Funds. The Contract also provides for investment in Credited Interest Options which allow you to earn fixed rates of interest. The fixed options available under the Contract are the Guaranteed Interest Account ("GIA"), the Fixed Account, and the Guaranteed Accumulation Account ("GAA"). (See the Appendices to this Prospectus.) Charges and Deductions Certain charges are associated with these Contracts. These charges include daily deductions from the Separate Account (the mortality and expense risk charge and an administrative expense charge), as well as any annual maintenance fee, allocation and transfer fees, and premium and other taxes. The Funds also incur certain fees and expenses which are deducted directly from the Funds. A deferred sales charge may apply upon a full or partial withdrawal of the Contract Value. (See the Fee Table and "Charges and Deductions.") Transfers Prior to the Annuity Date, and subject to certain limitations, Contract Values may be transferred among the Subaccounts and the Credited Interest Options without charge. Transfers can be requested in writing or by telephone in accordance with the Company's transfer procedures. (See the Appendices for a full description of the restrictions applicable to transfers made from the Credited Interest Options.) (See "Transfers.") Withdrawals All or a part of the Contract Value may be withdrawn prior to the Annuity Date by properly completing a disbursement form and sending it to the Company. Certain charges may be assessed upon withdrawal. (See "Withdrawals.") ----------------------------------------------------------------------------- SUMMARY - 1 The Contract offers certain Additional Withdrawal Options during the Accumulation Period to persons meeting certain criteria. Additional Withdrawal Options are not available in all states and may not be suitable in every situation. (See "Additional Withdrawal Options.") Death Benefit A death benefit is payable if you die before the Annuity Date. Death benefit proceeds will be paid to the Beneficiary in an amount equal to the Contract Value. Until the election of a method of payment, the Contract Value will remain invested under the Contract. The Beneficiary may elect to receive the proceeds in a lump sum or under any of the payment options available under the Contract. However, the Code requires that distributions begin within a certain time period. (See "Death Benefit During Accumulation Period.") After Annuity Payments have commenced, a death benefit may be payable to the Beneficiary depending upon the terms of the Contract and the Annuity Option selected. (See "Death Benefit Payable During the Annuity Period.") The Annuity Period You may elect to begin receiving Annuity Payments on the Annuity Date. Annuity Payments can be made on either a fixed, variable or combination fixed and variable basis. If you choose a variable payout, the payments will vary with the investment performance of the Subaccount(s) selected. The Company reserves the right to limit the number of Subaccounts that may be available during the Annuity Period. (See "Annuity Period.") Taxes Contributions and earnings are not generally taxed until you or your beneficiary(ies) actually receive a distribution from the Contract. A 10% federal tax penalty may be imposed on certain withdrawals. (See "Tax Status.") Inquiries Questions, inquiries or requests for additional information can be directed to your agent or local representative, or you may contact the Company as follows: (bullet) Write to: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156-1258 Attention: Customer Service (bullet) Call Customer Service: 1-800-531-4547 (for automated transfers or changes in the allocation of Contract Values, call: 1-800-262-3862) ----------------------------------------------------------------------------- SUMMARY - 2 FEE TABLE ============================================================================= This Fee Table describes the various charges and expenses associated with the Contract during the Accumulation Period. For amounts deducted during the Annuity Period, see "Charges Deducted During the Annuity Period." No sales charge is paid upon purchase of the Contract. Some expenses may vary as explained under "Annuity Period--Charges and Deductions." The charges and expenses shown below do not include premium taxes that may be applicable. For more information regarding expenses paid out of the assets of a particular Fund, see the Fund's prospectus. DIRECT CHARGES. These charges are deducted directly from the Contract Value. They include: Deferred Sales Charge. The deferred sales charge is deducted as a percentage of the amount withdrawn. The total amount deducted for the deferred sales charge will not exceed 8.5% of the total Purchase Payments applied to the Contract. The amount of the deferred sales charge varies depending on the type of Contract you own and is calculated as follows: Installment Purchase Payment Contract ----------------------------------------------------- Complete Purchase Deferred Sales Payment Periods Charge Deduction ----------------------------------------------------- Less than 5 5% 5 or more but less than 7 4% 7 or more but less than 9 3% 9 or more but less than 10 2% 10 or more 0% ----------------------------------------------------- Single Purchase Payment Contract ----------------------------------------------------- Completed Contract Deferred Sales Years Charge Deduction ----------------------------------------------------- Less than 5 5% 5 or more but less than 6 4% 6 or more but less than 7 3% 7 or more but less than 8 2% 8 or more but less than 9 1% 9 or more 0% ----------------------------------------------------- Annual Contract Maintenance Fee $20.00 The maintenance fee will generally be deducted annually from each Installment Purchase Payment Contract. There is no maintenance fee under Single Purchase Payment Contracts. Allocation and Transfer Fees $ 0.00 The Company currently allows an unlimited number of transfers or allocation changes without charge. However we reserve the right to assess a fee of $10.00 for each transfer or allocation change in excess of 12 made during each calendar year. INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The charges are reflected in the Subaccount's daily Accumulation Unit Value and are not charged directly to your Contract Value. They include: Mortality and Expense Risk Charge. 1.25% Administrative Expense Charge. 0.00%* -------- Total Separate Account Annual Expenses 1.25% ======== * We currently do not impose an Administrative Expense Charge. However, we reserve the right to deduct a daily charge of not more than 0.25% per year from the Subaccounts. ----------------------------------------------------------------------------- FEE TABLE - 1 Annual Expenses of the Funds The following table illustrates the advisory fees and other expenses applicable to the Funds. A Fund's "Other Expenses" include operating costs of the Fund. These expenses are reflected in the Fund's net asset value and are not deducted from your Contract Value. (Except as noted, the following figures are a percentage of average net assets and, except where otherwise indicated, are based on figures for the year ended December 31, 1996.)
Investment Advisory Fees(1) Other Expenses Total (after expense (after expense Fund Annual reimbursement) reimbursement) Expenses -------------- -------------- ------------ Aetna Variable Fund(2) 0.50% 0.06% 0.56% Aetna Income Shares(2) 0.40% 0.08% 0.48% Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35% Aetna Investment Advisers Fund, Inc.(2) 0.50% 0.08% 0.58% Aetna Ascent Variable Portfolio(2) 0.60% 0.15% 0.75% Aetna Crossroads Variable Portfolio(2) 0.60% 0.15% 0.75% Aetna Legacy Variable Portfolio(2) 0.60% 0.15% 0.75% Aetna Variable Capital Appreciation Portfolio(2) 0.60% 0.15% 0.75% Aetna Variable Growth Portfolio(2) 0.60% 0.15% 0.75% Aetna Variable Index Plus Portfolio(2) 0.35% 0.15% 0.50% Aetna Variable Small Company Portfolio(2) 0.75% 0.15% 0.90% Alger American Growth Portfolio 0.75% Alger American Small Cap Portfolio 0.85% American Century VP Capital Appreciation(3) 1.00% Fidelity VIP II Contrafund Portfolio(4) 0.61% Fidelity VIP Equity-Income Portfolio 0.51% Fidelity VIP Growth Portfolio 0.61% Fidelity VIP Overseas Portfolio 0.76% Janus Aspen Aggressive Growth Portfolio(5) 0.75% Janus Aspen Balanced Portfolio(5) 0.82% Janus Aspen Growth Portfolio(5) 0.65% Janus Aspen Short-Term Bond Portfolio(5) 0.00% Janus Aspen Worldwide Growth Portfolio(5) 0.68% Scudder International Portfolio Class A Shares 0.88%
(1) Certain of the unaffiliated Fund advisers reimburse the Company for administrative costs incurred in connection with administering the Funds as variable funding options under the Contract. These reimbursements are paid out of the investment advisory fees and are not charged to investors. (2) The Company provides administrative services to the Funds and assumes the Fund's ordinary recurring direct costs under an Administrative Services Agreement. The "Other Expenses" shown reflect the fee payable under that Agreement. (3) The Portfolio's investment adviser pays all expenses of the Portfolio except brokerage commissions, taxes, interest, fees, expenses of the non-interested person directors (including counsel fees) and extraordinary expenses. These expenses have historically represented a very small percentage (less than 0.01%) of total net assets in a fiscal year. (4) A portion of the brokerage commissions the Fund paid was used to reduce its expenses. Without this reduction, total operating expenses would have been % for the Contrafund Portfolio. (5) The information for each Portfolio is net of fee waivers or reductions from Janus Capital. Fee reductions for the Aggressive Growth, Balanced, Growth, and Worldwide Growth Portfolios reduce the management fee to the level of the corresponding Janus retail fund. Other waivers, if applicable, are first applied against the management fee and then against other expenses. Without such waivers or reductions, the Management Fee, Other Expenses and Total Fund Annual Expenses would have been %, %, and % for Aggressive Growth Portfolio; %, %, % for Balanced Portfolio; %, % and % for Growth Portfolio; %, % and % for Short-Term Bond Portfolio; and %, % and % for Worldwide Growth Portfolio; respectively. Janus Capital may modify or terminate the waivers or reductions at any time upon 90 days notice to the Portfolio's Board of Trustees. ----------------------------------------------------------------------------- FEE TABLE - 2 Hypothetical Illustration (Example) THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW. The following Examples illustrate the expenses that would have been paid assuming a $1,000 investment in the Contract and a 5% return on assets. For the purposes of these Examples, the $20 maintenance fee has been converted to a percentage of assets equal to %.
EXAMPLE A EXAMPLE B -------------------------------------- --------------------------------------- If you withdraw your entire Contract If you do not withdraw your Contract Value at the end of the periods shown, Value, or if you annuitize at the end you would pay the following expenses, of the periods shown, you would pay the including any applicable deferred following expenses (no deferred sales sales charge: charge is reflected):* 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years ------- ------- ------- ---------- ------- ------- ------- ----------- Aetna Variable Fund Aetna Income Shares Aetna Variable Encore Fund Aetna Investment Advisers Fund, Inc. Aetna Ascent Variable Portfolio Aetna Crossroads Variable Portfolio Aetna Legacy Variable Portfolio Aetna Variable Capital Appreciation Portfolio Aetna Variable Growth Portfolio Aetna Variable Index Plus Portfolio Aetna Variable Small Company Portfolio Alger American Growth Portfolio Alger American Small Cap Portfolio American Century VP Capital Appreciation Fidelity VIP II Contrafund Portfolio Fidelity VIP Equity-Income Portfolio Fidelity VIP Growth Portfolio Fidelity VIP Overseas Portfolio Janus Aspen Aggressive Growth Portfolio Janus Aspen Balanced Portfolio Janus Aspen Growth Portfolio Janus Aspen Short-Term Bond Portfolio Janus Aspen Worldwide Growth Portfolio Scudder International Portfolio Class A Shares
* This Example would not apply if a nonlifetime variable annuity option is selected and a lump sum settlement is requested within three years after annuity payments start since the lump sum payment will be treated as a withdrawal during the Accumulation Period and will be subject to any deferred sales charge that would then apply. (See Example A.) ----------------------------------------------------------------------------- FEE TABLE - 3 CONDENSED FINANCIAL INFORMATION (Selected data for accumulation units outstanding throughout each period) ============================================================================= The condensed financial information presented below for each of the years in the ten-year period ended December 31, 1996 (as applicable), is derived from the financial statements of the Separate Account, which financial statements have been audited by KPMG Peat Marwick LLP, independent auditors. The financial statements as of and for the year ended December 31, 1996 and the independent auditors' report thereon, are included in the Statement of Additional Information.
1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ----------- AETNA VARIABLE FUND Value at beginning of period $105.558 $107.925 $102.383 $97.165 Value at end of period $137.869 $105.558 $107.925 $102.383 Increase (decrease) in value of accumulation unit(1) 30.61% (2.19)% 5.41% 5.37% Number of accumulation units outstanding at end of period 6,364,000 13,966,072 21,148,863 24,201,565 AETNA INCOME SHARES Value at beginning of period $40.173 $42.283 $39.038 $36.789 Value at end of period $46.913 $40.173 $42.283 $39.038 Increase (decrease) in value of accumulation unit(1) 16.78% (4.99)% 8.31% 6.11% Number of accumulation units outstanding at end of period 2,377,622 5,108,720 8,210,666 8,507,292 AETNA VARIABLE ENCORE FUND Value at beginning of period $36.271 $35.282 $34.619 $33.812 Value at end of period $37.988 $36.271 $35.282 $34.619 Increase (decrease) in value of accumulation unit(1) 4.73% 2.80% 1.92% 2.39% Number of accumulation units outstanding at end of period 1,826,260 3,679,802 5,086,515 7,534,662 AETNA INVESTMENT ADVISERS FUND, INC. Value at beginning of period $14.288 $14.519 $13.379 $12.736 Value at end of period $17.954 $14.288 $14.519 $13.379 Increase (decrease) in value of accumulation unit(1) 25.65% (1.59)% 8.52% 5.05% Number of accumulation units outstanding at end of period 9,193,181 21,990,186 30,784,750 34,802,433 AETNA ASCENT VARIABLE PORTFOLIO Value at beginning of period $10.000(4) Value at end of period $10.976 Increase (decrease) in value of accumulation unit(1) 9.76% Number of accumulation units outstanding at end of period 49,748 AETNA CROSSROADS VARIABLE PORTFOLIO Value at beginning of period $10.000(4) Value at end of period $10.862 Increase (decrease) in value of accumulation unit(1) 8.62% Number of accumulation units outstanding at end of period 47,204 AETNA LEGACY VARIABLE PORTFOLIO Value at beginning of period $10.000(4) Value at end of period $10.626 Increase (decrease) in value of accumulation unit(1) 6.26% Number of accumulation units outstanding at end of period 20,531
1991 1990 1989 1988 1987 ---------- ---------- ---------- ---------- ----------- AETNA VARIABLE FUND Value at beginning of period $77.845 $76.311 $59.871 $52.885 $50.760 Value at end of period $97.165 $77.845 $76.311 $59.871 $52.885 Increase (decrease) in value of accumulation unit(1) 24.82% 2.01% 27.46% 13.21% 4.19% Number of accumulation units outstanding at end of period 20,948,226 18,362,906 17,142,820 16,455,396 16,497,406 AETNA INCOME SHARES Value at beginning of period $31.192 $28.943 $25.574 $24.061 $23.308 Value at end of period $36.789 $31.192 $28.943 $25.574 $24.061 Increase (decrease) in value of accumulation unit(1) 17.94% 7.77% 13.17% 6.29% 3.23% Number of accumulation units outstanding at end of period 7,844,412 6,984,793 6,202,834 5,955,293 5,372,271 AETNA VARIABLE ENCORE FUND Value at beginning of period $32.138 $30.012 $27.783 $26.171 $24.812 Value at end of period $33.812 $32.138 $30.012 $27.783 $26.171 Increase (decrease) in value of accumulation unit(1) 5.21% 7.08% 8.02% 6.16% 5.48% Number of accumulation units outstanding at end of period 8,430,082 10,220,110 8,286,033 8,154,644 7,326,151 AETNA INVESTMENT ADVISERS FUND, INC. Value at beginning of period $10.896 $10.437 $10.000(2) Value at end of period $12.736 $10.896 $10.437 Increase (decrease) in value of accumulation unit(1) 16.89% 4.40% 4.37% Number of accumulation units outstanding at end of period 22,898,099 17,078,985 9,535,986 Number of accumulation units outstanding at end of period AETNA ASCENT VARIABLE PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period AETNA CROSSROADS VARIABLE PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period AETNA LEGACY VARIABLE PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period
----------------------------------------------------------------------------- AUV HISTORY - 1 CONDENSED FINANCIAL INFORMATION (continued) =============================================================================
1996 1995 1994 1993 1992 ----- ---------- ---------- ---------- ------ AETNA VARIABLE INDEX PLUS PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period ALGER AMERICAN GROWTH PORTFOLIO Value at beginning of period $10.000(4) Value at end of period $11.379 Increase (decrease) in value of accumulation unit(1) 13.79% Number of accumulation units outstanding at end of period 284,978 ALGER AMERICAN SMALL CAP PORTFOLIO Value at beginning of period $9.437 $9.959 Value at end of period $13.450 $9.437 Increase (decrease) in value of accumulation unit(1) 42.52% (5.24)%(6) Number of accumulation units outstanding at end of period 1,081,375 208,874 AMERICAN CENTURY VP CAPITAL APPRECIATION* Value at beginning of period $10.213 $10.463 $10.000(3) Value at end of period $13.224 $10.213 $10.463 Increase (decrease) in value of accumulation unit(1) 29.47% (2.39)% 4.63% Number of accumulation units outstanding at end of period 4,184,701 12,096,731 12,272,152 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $10.000(7) Value at end of period $11.681 Increase (decrease) in value of accumulation unit(1) 16.81% Number of accumulation units outstanding at end of period 174,259 FIDELITY EQUITY-INCOME PORTFOLIO Value at beginning of period $10.403 $10.000 Value at end of period $13.880 $10.403 Increase (decrease) in value of accumulation unit(1) 33.42% 4.03%(8) Number of accumulation units outstanding at end of period 766,360 100,574 FIDELITY GROWTH PORTFOLIO Value at beginning of period $10.472 $10.000 Value at end of period $14.000 $10.472 Increase (decrease) in value of accumulation unit(1) 33.69% 4.72%(8) Number of accumulation units outstanding at end of period 612,992 121,070 FIDELITY OVERSEAS PORTFOLIO Value at beginning of period $9.474 $10.000 Value at end of period $10.262 $9.474 Increase (decrease) in value of accumulation unit(1) 8.32% (5.26)%(8) Number of accumulation units outstanding at end of period 166,303 54,387
1991 1990 1989 1988 1987 ----- ----- ----- ----- ------ AETNA VARIABLE INDEX PLUS PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period ALGER AMERICAN GROWTH PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period ALGER AMERICAN SMALL CAP PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period AMERICAN CENTURY VP CAPITAL APPRECIATION* Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period FIDELITY EQUITY-INCOME PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period FIDELITY GROWTH PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period FIDELITY OVERSEAS PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period
----------------------------------------------------------------------------- AUV HISTORY - 2 CONDENSED FINANCIAL INFORMATION (continued) =============================================================================
1996 1995 1994 1993 1992 ----- ---------- ---------- ----- ------ JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $10.000(7) Value at end of period $12.681 Increase (decrease) in value of accumulation unit(1) 28.61% Number of accumulation units outstanding at end of period 167,920 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $10.000(4) Value at end of period $11.259 Increase (decrease) in value of accumulation unit(1) 12.59% Number of accumulation units outstanding at end of period 34,072 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $10.000(4) Value at end of period $11.626 Increase (decrease) in value of accumulation unit(1) 16.26% Number of accumulation units outstanding at end of period 78,126 JANUS ASPEN SHORT-TERM BOND PORTFOLIO Value at beginning of period $10.000(5) Value at end of period $10.285 Increase (decrease) in value of accumulation unit(1) 2.85% Number of accumulation units outstanding at end of period 1,405 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $10.000(7) Value at end of period $12.216 Increase (decrease) in value of accumulation unit(1) 22.16% Number of accumulation units outstanding at end of period 65,384 SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES Value at beginning of period $12.687 $12.957 Value at end of period $13.923 $12.687 Increase (decrease) in value of accumulation unit(1) 9.74% (2.08)%(6) Number of accumulation units outstanding at end of period 432,183 187,169
1990 1989 1988 1987 ----- ----- ----- ----- JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period JANUS ASPEN SHORT-TERM BOND PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES Value at beginning of period Value at end of period Increase (decrease) in value of accumulation unit(1) Number of accumulation units outstanding at end of period
(1) The above figures are calculated by subtracting the beginning Accumulation Unit value from the ending Accumulation Unit value during a calendar year, and dividing the result by the beginning Accumulation Unit value. These figures do not reflect the deferred sales charge or the fixed dollar annual maintenance fee, if any. Inclusion of these charges would reduce the investment results shown. (2) The initial Accumulation Unit value was established at $10.000 on June 23, 1989, the date on which the Fund commenced operations. (3) The initial Accumulation Unit value was established at $10.000 on February 1, 1993, the date on which the Portfolio became available under the Contract. (4) Reflects less than a full year of performance activity. Funds were first available in this option during June 1995. (5) Reflects less than a full year of performance activity. Funds were first available in this option during July 1995. (6) Reflects less than a full year of performance activity. Funds were first received in this option during April 1994. (7) Reflects less than a full year of performance activity. Funds were first available in this option during May 1995. (8) Reflects less than a full year of performance activity. Funds were first received in this option during May 1994. (9) Reflects less than a full year of performance activity. Funds were first received in this option during September 1996. * Formerly TCI Portfolios, Inc.--TCI Growth. ----------------------------------------------------------------------------- AUV HISTORY - 3 THE COMPANY ============================================================================= Aetna Life Insurance and Annuity Company (the "Company") is the issuer of the Contract, and as such, it is responsible for providing the insurance and annuity benefits under the Contract. The Company is a stock life insurance company organized under the insurance laws of the State of Connecticut in 1976. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company, an Arkansas life insurance company organized in 1954). The Company is engaged in the business of issuing life insurance policies and variable annuity contracts in all states of the United States. The Company's principal executive offices are located at 151 Farmington Avenue, Hartford, Connecticut 06156. The Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc. and an indirect wholly owned subsidiary of Aetna Inc. VARIABLE ANNUITY ACCOUNT C ============================================================================= The Company established Variable Annuity Account C (the "Separate Account") in 1976 as a segregated asset account for the purpose of funding its variable annuity contracts. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"), and meets the definition of "separate account" under federal securities laws. The Separate Account is divided into "Subaccounts" which do not invest directly in stocks, bonds or other investments. Instead, each Subaccount buys and sells shares of a corresponding Fund. Although the Company holds title to the assets of the Separate Account, such assets are not chargeable with liabilities of any other business conducted by the Company. Income, gains or losses of the Separate Account are credited to or charged against the assets of the Separate Account without regard to other income, gains or losses of the Company. All obligations arising under the Contracts are general corporate obligations of the Company. INVESTMENT OPTIONS ============================================================================= The Funds Purchase Payments may be allocated to one or more of the Subaccounts as designated on the application. In turn, the Subaccounts invest in the corresponding Funds at net asset value. The total number of investment options that you may select during the Accumulation Period is limited to 18. Each Subaccount, the Fixed Account, and each classification of GIA/GAA count as one option once you have made an allocation to it, even if you no longer have amounts allocated to that option. The availability of Funds may be subject to applicable regulatory authorization. In addition, the Company may add, withdraw or substitute Funds, subject to the conditions in the Contract and in compliance with regulatory requirements. Not all Funds may be available in all jurisdictions or under all Contracts. The investment results of the Funds described below are likely to differ significantly and there is no assurance that any of the Funds will achieve their respective investment objectives. Except where otherwise noted, all of the Funds are diversified, as defined in the 1940 Act. (bullet) Aetna Variable Fund seeks to maximize total return through investments in a diversified portfolio of common stocks and securities convertible into common stock.(1) (bullet) Aetna Income Shares seeks to maximize total return, consistent with reasonable risk, through investments in a diversified portfolio consisting primarily of debt securities.(1) (bullet) Aetna Variable Encore Fund seeks to provide high current return, consistent with preservation of capital and liquidity, through investment in high-quality money market instruments. An investment in the Fund is neither insured nor guaranteed by the U.S. Government.(1) (bullet) Aetna Investment Advisers Fund, Inc. is a managed fund which seeks to maximize investment return consistent with reasonable safety of principal by investing in one or more of the following asset classes: stocks, bonds and cash ----------------------------------------------------------------------------- 1 equivalents based on the Company's judgment of which of those sectors or mix thereof offers the best investment prospects.(1) (bullet) Aetna Generation Portfolios, Inc.--Aetna Ascent Variable Portfolio seeks to provide capital appreciation by allocating its investments among equities and fixed income securities. The Portfolio is managed for investors who generally have an investment horizon exceeding 15 years, and who have a high level of risk tolerance.(1) (bullet) Aetna Generation Portfolios, Inc.--Aetna Crossroads Variable Portfolio seeks to provide total return (i.e., income and capital appreciation, both realized and unrealized) by allocating its investments among equities and fixed income securities. The Portfolio is managed for investors who generally have an investment horizon exceeding 10 years and who have a moderate level of risk tolerance.(1) (bullet) Aetna Generation Portfolios, Inc.--Aetna Legacy Variable Portfolio seeks to provide total return consistent with preservation of capital by allocating its investments among equities and fixed income securities. The Portfolio is managed for investors who generally have an investment horizon exceeding five years and who have a low level of risk tolerance.(1) (bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Capital Appreciation Portfolio seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities convertible into common stock. The Portfolio will use a value-oriented approach in an attempt to outperform the total return performance of publicly traded common stocks represented by the S&P 500 Composite Stock Price Index ("S&P 500"), a broad based stock market index composed of 500 common stocks selected by the Standard & Poor's Corporation. The Portfolio uses the S&P 500 as a comparative benchmark because it represents approximately two-thirds of the total market value of all U.S. common stocks, and is well known to investors.(1) (bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Growth Portfolio seeks growth of capital through investment in a diversified portfolio of common stocks and securities convertible into common stocks believed to offer growth potential.(1) (bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Index Plus Portfolio seeks to outperform the total return performance of publicly traded common stocks represented by the S&P 500.(1) (bullet) Aetna Variable Portfolios, Inc.--Aetna Variable Small Company Portfolio seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities convertible into common stocks of companies with smaller market capitalizations. Companies with smaller market capitalizations generally will have market capitalization at the time of purchase of $1 billion or less.(1) (bullet) Alger American Fund--Alger American Growth Portfolio seeks long-term capital appreciation by investing in a diversified, actively managed portfolio of equity securities. The Portfolio primarily invests in equity securities of companies which have a market capitalization of $1 billion or greater.(2) (bullet) Alger American Fund--Alger American Small Capitalization Portfolio seeks long-term capital appreciation. Except during temporary defensive periods, the Portfolio invests at least 65% of its total assets in equity securities of companies that, at the time of purchase of such securities, have total market capitalization within the range of companies included in the Russell 2000 Growth Index, updated quarterly. The Russell 2000 Growth Index is designed to track the performance of small capitalization companies. At , the range of market capitalization of these companies was $ million to $ billion.(2) (bullet) American Century Variable Portfolios, Inc.--American Century VP Capital Appreciation seeks capital growth. The Fund seeks to achieve its objective by investing in common stocks (including securities convertible into common stocks) and other securities that meet certain fundamental and technical standards of selection and, in the opinion of the Fund's investment manager, have better than average potential for appreciation.(3) (bullet) Fidelity Investments' Variable Insurance Products Fund II--Contrafund Portfolio seeks maximum total return over the long term by investing mainly in equity securities of companies that are undervalued or out-of-favor.(4) (bullet) Fidelity Investments' Variable Insurance Products Fund--Equity-Income Portfolio seeks reasonable income by investing primarily in income-producing equity securities. In selecting investments, the Fund also considers the potential for capital appreciation.(4) (bullet) Fidelity Investments' Variable Insurance Products Fund--Growth Portfolio seeks capital appreciation by investing mainly in common stocks, although its investments are not restricted to any one type of security.(4) ----------------------------------------------------------------------------- 2 (bullet) Fidelity Investments' Variable Insurance Products Fund--Overseas Portfolio seeks long-term growth by investing mainly in foreign securities (at least 65% of the Fund's total assets in securities of issuers from at least three countries outside of North America).(4) (bullet) Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified portfolio that seeks long-term growth of capital in a manner consistent with the preservation of capital. The Portfolio pursues its investment objective by normally investing at least 50% of its equity assets in securities issued by medium-sized companies. Medium- sized companies are those whose market capitalizations fall within the range of companies in the S&P MidCap 400 Index, which as of included companies with capitalizations between approximately $ million and $ billion, but which is expected to change on a regular basis.(5) (bullet) Janus Aspen Series--Balanced Portfolio seeks long-term capital growth, consistent with preservation of capital and balanced by current income. The Portfolio pursues its investment objective by investing 40%-60% of its assets in equity securities selected primarily for their growth potential and 40%-60% of its assets in fixed-income securities selected primarily for their income potential.(5) (bullet) Janus Aspen Series--Growth Portfolio seeks long-term growth of capital in a manner consistent with the preservation of capital. The Portfolio pursues its investment objective by investing in common stocks of companies of any size.(5) (bullet) Janus Aspen Series--Short-Term Bond Portfolio seeks as high a level of current income as is consistent with preservation of capital. The Portfolio pursues its investment objective by investing primarily in short- and intermediate-term fixed income securities.(5) (bullet) Janus Aspen Series--Worldwide Growth Portfolio seeks long-term growth of capital in a manner consistent with preservation of capital. The Portfolio pursues its investment objective primarily through investments in common stocks of foreign and domestic issuers.(5) (bullet) Scudder Variable Life Investment Fund--International Portfolio Class A Shares seeks long-term growth of capital primarily through diversified holdings of marketable foreign equity investments.(6) Investment Advisers for each of the Funds: (1) Aetna Life Insurance and Annuity Company (adviser); Aeltus Investment Management, Inc. (sub-adviser) (2) Fred Alger Management, Inc. (3) American Century Investment Management, Inc. (4) Fidelity Management & Research Company (5) Janus Capital Corporation (6) Scudder, Stevens & Clark, Inc. Risks Associated with Investment in the Funds. Some of the Funds may use instruments known as derivatives as part of their investment strategies. The use of certain derivatives may involve high risk of volatility to a Fund, and the use of leverage in connection with such derivatives can also increase risk of losses. Some of the Funds may also invest in foreign or international securities which involve greater risks than U.S. investments. More comprehensive information, including a discussion of potential risks, is found in the respective Fund prospectuses which accompany this Prospectus. You should read the Fund prospectuses and consider carefully, and on a continuing basis, which Fund or combination of Funds is best suited to your long-term investment objectives. Conflicts of Interest (Mixed and Shared Funding). Shares of the Funds are sold to each of the Subaccounts for funding the variable annuity contracts issued by the Company. Shares of the Funds may also be sold to other insurance companies for the same purpose. This is referred to as "shared funding." Shares of the Funds may also be used for funding variable life insurance contracts issued by the Company or by third parties. This is referred to as "mixed funding." Because the Funds available under the Contract are sold to fund variable annuity contracts and variable life insurance policies issued by us or by other companies, certain conflicts of interest could arise. If a conflict of interest were to occur, one of the separate accounts might withdraw its investment in a Fund, which might force that Fund to sell portfolio securities at disadvantageous prices, causing its per share value to decrease. Each Fund's Board of Directors or Trustees has agreed to monitor events in order to identify any material irreconcilable conflicts which might arise and to determine what action, if any, should be taken to address such conflict. Credited Interest Options Purchase Payments may be allocated to one or more of the Credited Interest Options available under the Contract as described below. (bullet) The Guaranteed Interest Account (GIA) is a part of the Company's general account and guarantees a minimum interest rate, as specified in the Contract. The Company may credit higher interest rates in its discretion. This ----------------------------------------------------------------------------- 3 Credited Interest Option is available in all states except Washington and New York. (See Appendix I.) (bullet) The Fixed Account is also a part of the Company's general account. The Fixed Account guarantees a minimum interest rate, as specified in the Contract. The Company may credit higher interest rates from time to time. Transfers from the Fixed Account are limited. (See Appendix II.) (bullet) The Guaranteed Accumulation Account (GAA) is a credited interest option through which we guarantee stipulated rates of interest for stated periods of time. Amounts must remain in GAA for the full guaranteed term to receive the quoted interest rates, or a market value adjustment (which may be positive or negative) will be applied. This credited interest option is offered in New York only. (See Appendix III.) PURCHASE ============================================================================= Contract Purchase and Availability The Contracts described in this Prospectus are individual deferred variable annuity contracts designed to fund plans adopted by or on behalf of individuals entitled to tax-deferred treatment under Section 408(b) of the Code ("IRA"), and plans established for employees whose employer contributes to their IRA plan pursuant to the Simplified Employee Pension ("SEP") Plan provisions of Section 408(k) of the Code. Currently, the IRA is not available as a "Simple IRA" as defined in Section 408(p) of the Code. These Contracts may be purchased by completing the proper application form and submitting it to the Distributor. The Company must accept or reject the application within two business days of receipt. If the application is incomplete, the Company may hold any forms and accompanying Purchase Payments for five days. Purchase Payments may be held for longer periods only with the consent of the Contract Holder, pending the acceptance of the application. If the application is rejected, the application and any Purchase Payments will be returned to the Contract Holder. Purchase Payments Two types of Contracts are available. Continuing periodic payments will be placed in "Installment Purchase Payments Contracts," and lump sum transfers of amounts accumulated under a pre-existing plan may be placed in "Single Purchase Payment Contracts" in accordance with the Company's procedures and minimums in effect at the time of purchase. The minimum Purchase Payment for a Single Payment Contract is $5,000. Installment Purchase Payments must be at least $85 per month or $1,000 annually for IRA and SEP Plans. (Monthly installments must be made via Automatic Bank Check Plan.) Allocation of Purchase Payments. Purchase Payments will initially be allocated to the Subaccounts or Credited Interest Options as specified on the application. Changes in such allocation may be made in writing or by telephone transfer. Allocations must be in whole percentages, and there may be limitations on the number of investment options that can be selected during the Accumulation Period. (See "Investment Options--the Funds.") Right to Cancel You may cancel the Contract no later than 10 days after you receive it (or as otherwise allowed by state law) by returning it to the Company with a written notice of cancellation. We will produce a refund not later than seven days after we receive the Contract and the written notice at our Home Office. Cancellations requested after you receive the Contract will consist of a refund of the Purchase Payment. CHARGES AND DEDUCTIONS ============================================================================= Daily Deductions from the Separate Account Mortality and Expense Risk Charge. The Company makes a daily deduction from each of the Subaccounts for the mortality and expense risk charge. The charge is equal, on an annual basis, to 1.25% of the daily net assets of the Subaccounts and compensates the Company for the assumption of the mortality and expense risks under the Contract. The mortality risks are those assumed for our promise to make lifetime payments according to annuity rates specified in the Contract. The expense risk is the risk that the actual expenses for costs incurred under the Contract will exceed the maximum costs that can be charged under the Contract. ----------------------------------------------------------------------------- 4 If the amount deducted for mortality and expense risks is not sufficient to cover the mortality costs and expense shortfalls, the loss is borne by the Company. If the deduction is more than sufficient, the excess may be used to recover distribution expenses relating to the Contracts and as a source of profit to the Company. The Company expects to make a profit from the mortality and expense risk charge. Administrative Expense Charge. The Company reserves the right to make a deduction from each of the Subaccounts for an administrative expense charge. The administrative expense charge compensates the Company for administrative expenses that exceed revenues from the maintenance fee described below. The charge is set at a level which does not exceed the average expected cost of the administrative services to be provided while the Contract is in force. The Company does not expect to make a profit from this charge. Under the Contract, the amount of the administrative expense charge may be of an amount up to, on an annual basis, 0.25% of the daily net assets of the Subaccounts. There is currently no administrative expense charge during the Accumulation Period or Annuity Period. The charge in effect at time of election of an Annuity Option will be applicable during the entire Annuity Period. Maintenance Fee During the Accumulation Period, the Company will deduct an annual maintenance fee of $20 from the Installment Purchase Payment Contract Value. The maintenance fee is to reimburse the Company for some of its administrative expenses relating to the establishment and maintenance of the Contract. There is no maintenance fee under Single Purchase Payment Contracts. Reduction or Elimination of Administrative Charge and Maintenance Fee The administrative charge and maintenance fee may be reduced or eliminated when sales of the Contracts are made to individuals or to a group of individuals in such a manner that results in savings of administrative expenses. The entitlement to such a reduction will be based on: (1) the size and type of group of individuals to whom the Contract is offered; and (2) the amount of expected Purchase Payments. Any reduction or elimination of the administrative charge or maintenance fees will not be unfairly discriminatory against any person. We will make any reduction in the administrative charge or annual maintenance fees according to our own rules in effect at the time an application for a Contract is approved. We reserve the right to change these rules from time to time. The maintenance fee is determined annually based on the Contract Value on the last day of the Contract Year. The maintenance fee will be deducted on a pro rata basis from each Subaccount or Credited Interest Option in which you have an interest. Deferred Sales Charge Withdrawals of all or a portion of the Account Value may be subject to a deferred sales charge. The deferred sales charge is a percentage of the amount withdrawn from the Subaccounts, the Fixed Account, the Guaranteed Accumulation Account and the Guaranteed Interest Account. For Installment Purchase Payment Contracts, the deferred sales charge is based on the number of completed Purchase Payment Periods. For Single Purchase Payment Contracts, it is based on the number of Contract Years that have elapsed since the Purchase Payments were made. The amount of the deferred sales charge is determined in accordance with the schedule set forth in the following tables: Installment Purchase Payment Contracts: - ------------------------------------------------------- Purchase Payment Deferred Sales Periods Completed Charge Deduction - ------------------------------------------------------- Less than 5 5% 5 or more but less than 7 4% 7 or more but less than 9 3% 9 or more but less than 10 2% 10 or more 0% - ------------------------------------------------------- Single Purchase Payment Contracts: Contract Years Deferred Sales Completed Charge Deduction - ------------------------------------------------------- Less than 5 5% 5 or more but less than 6 4% 6 or more but less than 7 3% 7 or more but less than 8 2% 8 or more but less than 9 1% 9 or more 0% - ------------------------------------------------------- A deferred sales charge will not be deducted from any portion of the Contract Value if the withdrawal is: (bullet) applied to provide Annuity benefits; (bullet) paid due to your death; ----------------------------------------------------------------------------- 5 (bullet) withdrawn on or after the tenth anniversary of the effective date of the Installment Purchase Payment Contract; (bullet) withdrawn due to the election of an Additional Withdrawal Option (see "Additional Withdrawal Options"); (bullet) paid where the Contract Value is $2,500 or less and no amount has been withdrawn from that Contract within the prior 12 months; or (bullet) in the case of any Installment Purchase Payment Contract, withdrawn in part or in full provided the Participant is at least age 59-1/2 and nine Purchase Payment Periods have been completed for the benefit of the Participant. Reduction or Elimination of the Deferred Sales Charge We may reduce or eliminate the deferred sales charge when sales of the Contracts are made to individuals or a group of individuals in such a manner that results in savings of sales expenses. The entitlement to such a reduction in the deferred sales charge will be based on the following: (1) the size and type of group of individuals to whom the Contract is offered; (2) the amount of expected Purchase Payments; and (3) whether there is a prior or existing relationship with the Company such as being an employee of the Company or an affiliate, receiving distributions or making internal transfers from other Contracts issued by the Company, or making transfers of amounts held under qualified plans sponsored by the Company or an affiliate. Any reduction or elimination of the deferred sales charge will not be unfairly discriminatory against any person. Free Withdrawal. Up to 10% of the current Contract Value may be withdrawn annually without a deferred sales charge. This applies only to the first partial withdrawal in each calendar year. The 10% amount will be calculated using the Contract Value on the date of withdrawal. This provision is only available if you are between the ages of 59-1/2 and 70-1/2. The deduction for the deferred sales charge will not exceed 8.5% of the total Purchase Payments actually made to the Contract. The Company does not anticipate that the deferred sales charge will cover all sales and administrative expenses which it incurs in connection with the Contract. The difference will be covered by the general assets of the Company which are attributable, in part, to mortality and expense risk charges under the Contract described above. Fund Expenses Each Fund incurs certain expenses which are paid out of its net assets. These expenses include, among other things, the investment advisory or "management" fee. The expenses of the Funds are set forth in the Fee Table in this Prospectus and described more fully in the accompanying Fund prospectuses. Premium and Other Taxes Several states and municipalities impose a premium tax on Annuities. These taxes currently range from 0% to 4%. The Company reserves the right to deduct premium tax against Purchase Payments or Contract Values at any time, but no earlier than when we have a tax liability under state law. The Company's current practice is to deduct for premium taxes at the time of complete withdrawal or annuitization. In addition to the premium tax, the Company reserves the right to assess a charge for any state or federal taxes due against the Contract or the Separate Account assets. (See "Tax Status.") Any municipal premium tax assessed at a rate in excess of 1% will be deducted from the Purchase Payment(s) or from the amount applied to an Annuity Option based upon our determination of when such tax is due. We will absorb any municipal premium tax that is assessed at 1% or less. We reserve the right, however, to reflect this added expense in our annuity purchase rates for residents of such municipalities. CONTRACT VALUATION ============================================================================= Contract Value Until the Annuity Date, the Contract Value is the total dollar value of amounts held in the Account as of any Valuation Date. The Contract Value at any given time is based on the value of the units held in each Subaccount, plus the value of amounts held in any of the Credited Interest Options. Accumulation Units The value of your interests in a Subaccount is expressed as the number of "Accumulation Units" that you hold multiplied by an "Accumulation Unit Value" (or "AUV") for each unit. The AUV on any Valuation Date is determined by multiplying the value on the immediately preceding Valuation Date by the net investment factor of ----------------------------------------------------------------------------- 6 that Subaccount for the period between the immediately preceding Valuation Date and the current Valuation Date. (See "Net Investment Factor" below.) The Accumulation Unit Value will be affected by the investment performance, expenses and charges of the applicable Fund and is reduced each day by a percentage that accounts for the daily assessment of mortality and expense risk charges and the administrative expense charge (if any). Initial Purchase Payments will be credited to your Contract at the AUV computed on the next Valuation Date following our acceptance of the application, as described under "Purchase--Contract Purchase and Availability." Each subsequent Purchase Payment (or amount transferred) received by the Company by the close of business of the New York Stock Exchange will be credited to your Contract at the AUV computed on the next Valuation Date following our receipt of your payment or transfer request. The value of an Accumulation Unit may increase or decrease. Net Investment Factor The net investment factor is used to measure the investment performance of a Subaccount from one Valuation Date to the next. The net investment factor for a Subaccount for any valuation period is equal to the sum of 1.0000 plus the net investment rate. The net investment rate equals: (a) the net assets of the Fund held by the Subaccount on the current Valuation Date, minus (b) the net assets of the Fund held by the Subaccount on the preceding Valuation Date, plus or minus (c) taxes or provisions for taxes, if any, attributable to the operation of the Subaccount; (d) divided by the total value of the Subaccounts Accumulation and Annuity Units on the preceding Valuation Date; (e) minus a daily charge at the annual effective rate of 1.25% for mortality and expense risks and up to 0.25% (currently 0%) as an administrative expense charge. The net investment rate may be either positive or negative. TRANSFERS ============================================================================= At any time prior to the Annuity Date, you can transfer amounts held under your Contract from one Subaccount to another. Transfers between the Credited Interest Options and the Subaccounts are subject to certain restrictions. (See Appendices I, II and III.) A request for transfer can be made either in writing or by telephone. The telephone transfer privilege is available automatically; no special election is necessary. All transfers must be in accordance with the terms of the Contract. The Company currently allows unlimited transfers of accumulated amounts to available investment options without charge. However, the total number of investment options that you may select during the Accumulation Period is limited. (See "Investment Options--The Funds.") In addition, we reserve the right to assess a fee of $10.00 for each transfer or allocation change in excess of 12 made during each calendar year. Any transfer will be based on the Accumulation Unit Value next determined after the Company receives a valid transfer request at its Home Office. Transfers are not available during the Annuity Period. WITHDRAWALS ============================================================================= All or a portion of the Contract Value may be withdrawn at any time during the Accumulation Period. To request a withdrawal, you must properly complete a disbursement form and send it to our Home Office. Payments for withdrawal requests will be made in accordance with SEC requirements, but normally not later than seven calendar days following our receipt of a disbursement form. Withdrawals may be requested in one of the following forms: (bullet) Full Withdrawal of the Contract: The amount paid for a full withdrawal will be the Contract Value minus any applicable deferred sales charge and maintenance fee. ----------------------------------------------------------------------------- 7 (bullet) Partial Withdrawals (Percentage): The amount paid will be the percentage of the Contract Value requested minus any applicable deferred sales charge. (bullet) Partial Withdrawal (Specified Dollar Amount): The amount paid will be the dollar amount requested. However, the amount withdrawn from the Contract will equal the amount requested plus any applicable deferred sales charge. For any partial withdrawal, amounts will be withdrawn proportionately from each Subaccount or Credited Interest Option in which the Account is invested, unless you request otherwise in writing. All amounts paid will be based on Contract Values as of the next Valuation Date after we receive a request for withdrawal at our Home Office, or on such later date as the disbursement form may specify. Reinvestment Privilege You may elect to reinvest all or a portion of the proceeds received from a full withdrawal of your Contract within 30 days after such withdrawal has been made. Accumulation Units will be credited to the Contract for the amount reinvested, as well as any maintenance fee and deferred sales charge imposed at the time of withdrawal. Any maintenance fee which falls due after the withdrawal and before the reinvestment will be deducted from the amounts reinvested. Reinvested amounts will be reallocated to the applicable investment options in the same proportion as they were allocated at the time of withdrawal. Accumulation Units will be credited to your Contract based on the Accumulation Unit Value next computed following our receipt of your request along with the amount to be reinvested. The reinvestment privilege may be used only once. See Appendix I and III for a discussion of amounts withdrawn from GIA or GAA and then reinvested. If you are contemplating reinvestment, you should seek competent advice regarding the tax consequences associated with such a transaction. ADDITIONAL WITHDRAWAL OPTIONS ============================================================================= The Company offers certain withdrawal options under the Contract that are not considered annuity options ("Additional Withdrawal Options"). To exercise these options, your Contract Value must meet the minimum dollar amounts and age criteria applicable to that option. The Additional Withdrawal Options currently available under the Contract include the following: (bullet) SWO--Systematic Withdrawal Option. SWO is a series of partial withdrawals from your Contract based on a payment method you select. It is designed for those who want a periodic income while retaining investment flexibility for amounts accumulated under a Contract. (bullet) ECO--Estate Conservation Option. ECO offers the same investment flexibility as SWO but is designed for those who want to receive only the minimum distribution that the Code requires each year. Under ECO, the Company calculates the minimum distribution amount required by law at age 70-1/2, and pays you that amount once a year. (See "Tax Status.") Other Additional Withdrawal Options may be added from time to time. Additional information relating to any of the Additional Withdrawal Options may be obtained from your local representative or from the Company at its Home Office. If you select one of the Additional Withdrawal Options, you will retain all of the rights and flexibility permitted under the Contract during the Accumulation Period. Your Contract Value will continue to be subject to the charges and deductions described in this Prospectus. Taking a withdrawal under one of these Additional Withdrawal Options may have tax consequences. Any person concerned about tax implications should consult a competent tax advisor prior to electing an option. Once you elect an Additional Withdrawal Option, you may revoke it any time by submitting a written request to our Home Office. Once an option is revoked, it may not be elected again, nor may any other Additional Withdrawal Option be elected unless permitted by the Code. The Company reserves the right to discontinue the availability of one or all of these Additional Withdrawal Options at any time, and/or to change the terms of future elections. ----------------------------------------------------------------------------- 8 DEATH BENEFIT DURING ACCUMULATION PERIOD ============================================================================= The Contract provides that a death benefit is payable to the Beneficiary(ies) if you die before the Annuity Date. The amount of the death benefit will be equal to the Contract Value. Death benefit proceeds may be paid to the Beneficiary: (bullet) in a lump sum; or (bullet) in accordance with any of the Annuity Options available under the Contract; or (bullet) under any Additional Withdrawal Options available under the Contract (if the beneficiary is your spouse). The Beneficiary may instead elect one of the following two options; however, the Code limits how long the death benefit proceeds may be left in these options (see below): (bullet) to leave the Contract Value invested in the Contract; or (bullet) to leave the Contract Value on deposit in the Company's general account, and to receive monthly, quarterly, semi- annual or annual interest payments at the interest rate then being credited on such deposits. The balance on deposit can be withdrawn at any time or applied to an Annuity Option. When paying the Beneficiary, we will determine the Contract Value on the Valuation Date following the date on which we receive proof of death acceptable to the Company. Interest, if any, will be paid from the date of death at a rate no less than required by law. We will mail payment to the Beneficiary within seven days after we receive proof of death. The Code requires that distribution of death proceeds begin within a certain period of time. Generally, either payments must begin by December 31 of the year following the year of your death, or the entire value of your benefits must be distributed by December 31 of the fifth year following the year of your death. If your Beneficiary is your spouse, he or she is not required to begin distributions until the year you would have attained age 70-1/2. In no event may payments extend beyond the life expectancy of the Beneficiary or any period certain greater than the Beneficiary's life expectancy. If no elections are made, no distributions will be made. Failure to commence distributions within the above time periods can result in tax penalties. Regardless of the method of payment, death benefit proceeds will generally be taxed to the Beneficiary in the same manner as if you had received those payments. (See "Tax Status.") ANNUITY PERIOD ============================================================================= Annuity Period Elections For the types of Contracts described in this Prospectus, the Code requires that minimum annual distributions of the Contract Value begin by April 1st of the calendar year following the calendar year in which you attain age 70-1/2. In addition, distributions must be in a form and amount sufficient to satisfy the Code requirements. These requirements may be satisfied by the election of certain Annuity Options or Additional Withdrawal Options. (See "Tax Status.") At least 30 days prior to the Annuity Date, you must notify us in writing of the following: (bullet) the date on which you would like to start receiving annuity payments; (bullet) the Annuity Option under which you want your payments to be calculated and paid; (bullet) whether the payments are to be made monthly, quarterly, semi-annually or annually; and (bullet) the investment option(s) used to provide annuity payments (i.e., a fixed annuity using the general account or any of the Subaccounts available at the time of annuitization). As of the date of this Prospectus, Aetna Variable Fund, Aetna Income Shares and Aetna Investment Advisers Fund, Inc. are the only Subaccounts available. Annuity Payments will not begin until an Annuity Option has been selected. Until a date and option are elected, the Contract will continue in the Accumulation Period. Once Annuity Payments begin, the Annuity Option may not be changed, nor may transfers be made among the investment option(s) selected. ----------------------------------------------------------------------------- 9 Annuity Options You may choose one of the following Annuity Options. You may make or change your selection at any time prior to 30 days before the Annuity Date. We may also offer additional Annuity Options under your Contract from time to time. Lifetime Annuity Options: (bullet) Option 1--Life Annuity--An annuity with payments ending on the Annuitant's death. (bullet) Option 2--Life Annuity with Guaranteed Payments--An annuity with payments guaranteed for 5, 10, 15 or 20 years, or such other periods as the Company may offer at the time of annuitization. (bullet) Option 3--Life Income based Upon the Lives of Two Payees--An annuity will be paid during the lives of the Annuitant and a second Annuitant, with 100%, 66-2/3% or 50% of the payment to continue after the first death, or 100% of the payment to continue at the death of the second Annuitant and 50% of the payment to continue at the death of the Annuitant. (bullet) Option 4--Life Income based Upon the Lives of Two Payees--An annuity with payments for a minimum of 120 months, with 100% of the payment to continue after the first death. If Option 1 or 3 is elected, it is possible that only one Annuity Payment will be made if the Annuitant under Option 1, or the surviving Annuitant under Option 3, should die prior to the due date of the second Annuity Payment. Once lifetime Annuity Payments begin, the Annuitant cannot elect to receive a lump-sum settlement. Nonlifetime Annuity Options: (bullet) Option 1--Payments for a Specified Period--payments will continue for a specified period of time, as provided for under your Contract. An Annuity may be selected on a fixed or variable basis and payments be made for 3 to 30 years, as selected. If this option is elected on a variable basis, the Annuitant may request at any time during the payment period that the present value of all or any portion of the remaining variable payments be paid in one sum. However, any lump-sum elected before three years of payments have been completed will be treated as a withdrawal during the Accumulation Period and any applicable deferred sales charge will be assessed. (See "Charges and Deductions-- Deferred Sales Charge.") The nonlifetime option is not available on a variable basis under a Contract which provides for immediate Annuity benefits. We may also offer additional Annuity Options under your Contract from time to time. Annuity Payments Date Payouts Start. When payments start, the age of the Annuitant plus the number of years for which payments are guaranteed must not exceed 95. Annuity payments may not extend beyond (a) the life of the Annuitant, (b) the joint lives of the Annuitant and Beneficiary, (c) a period certain greater than the Annuitant's life expectancy, or (d) a period certain greater than the joint life expectancies of the Annuitant and Beneficiary. Amount of Each Annuity Payment. The amount of each payment depends on how you allocate your Contract Value between fixed and variable payouts. No election may be made that would result in the first Annuity payment of less than $20, or total yearly Annuity payments of less than $100. If your Contract Value on the Annuity Date is insufficient to elect an option for the minimum amount specified, a lump-sum payment must be elected. If Annuity Payments are to be made on a variable basis, the first and subsequent payments will vary depending on the assumed net investment rate selected (3-1/2% or 5% per annum). Selection of a 5% rate causes a higher first payment, but Annuity Payments will increase thereafter only to the extent that the net investment rate exceeds 5% on an annualized basis. Annuity Payments would decline if the rate were below 5%. Use of the 3-1/2% assumed rate causes a lower first payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the net investment rate. (See the Statement of Additional Information for further discussion on the impact of selecting an assumed net investment rate). Charges Deducted During the Annuity Period We make a daily deduction for mortality and expense risks from any amounts held on a variable basis. Therefore, electing the nonlifetime option on a variable basis will result in a deduction being made even though we assume no mortality risk. We may also deduct a daily administrative expense charge from amounts held under the variable options. (See "Charges and Deductions.") Death Benefit Payable During the Annuity Period If an Annuitant dies after Annuity Payments have begun, any death benefit payable will depend on the terms of the Contract and the Annuity Option selected. If Option 1 or ----------------------------------------------------------------------------- 10 Option 3 was elected, Annuity Payments will cease on the death of the Annuitant under Option 1 or the death of the surviving Annuitant under Option 3. If Lifetime Option 2 or Option 4 was elected and the death of the Annuitant under Option 2, or the surviving Annuitant under Option 4, occurs prior to the end of the guaranteed minimum payment period, we will pay to the Beneficiary in a lump sum, unless otherwise requested, the present value of the guaranteed annuity payments remaining. If the nonlifetime option was elected, and the Annuitant dies before all payments are made, the value of any remaining payments may be paid in a lump-sum to the Beneficiary (unless otherwise requested), and no deferred sales charge will be imposed. If the Annuitant dies after Annuity payments have begun and if there is a death benefit payable under the Annuity option elected, the remaining value must be distributed to the Beneficiary at least as rapidly as under the original method of distribution. Any lump-sum payment paid under the applicable lifetime or nonlifetime Annuity options will be made within seven calendar days after proof of death acceptable to us, and a request for payment are received at our Home Office. The value of any death benefit proceeds will be determined as of the next Valuation Date after we receive acceptable proof of death and a request for payment. Under Options 2 and 4, such value will be reduced by any payments made after the date of death. TAX STATUS ============================================================================= Introduction The following provides a general discussion and is not intended as tax advice. This discussion reflects the Company's understanding of current federal income tax law. Such laws may change in the future, and it is possible that any change could be retroactive (i.e., effective prior to the date of the change). The Company makes no guarantee regarding the tax treatment of any Contract or transaction involving a Contract. The ultimate effect of federal income taxes on the amounts held under a Contract, on Annuity payments, and on the economic benefit to the Contract Holder or Beneficiary may depend upon the tax status of the individual concerned. Any person concerned about these tax implications should consult a competent tax adviser before initiating any transaction. Taxation of the Company The Company is taxed as a life insurance company under the Code. Since the Separate Account is not an entity separate from the Company, it will not be taxed separately as a "regulated investment company" under the Code. Investment income and realized capital gains are automatically applied to increase reserves under the Contracts. Under existing federal income tax law, the Company believes that the Separate Account investment income and realized net capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the Contracts. The Company does not anticipate that it will incur any federal income tax liability attributable to the Separate Account and, therefore, the Company does not intend to make provisions for any such taxes. However, if changes in the federal tax laws or interpretation thereof result in the Company being taxed on income or gains attributable to the Separate Account, then the Company may impose a charge against the Separate Account (with respect to some or all Contracts) in order to set aside provisions to pay such taxes. Contracts Used with Certain Retirement Plans In General. The Contract is designed for use with retirement plans qualified under Sections 408(b) or 408(k) of the Code. The tax rules applicable to participants and beneficiaries in retirement plans vary according to the type of plan and the terms and conditions of the plan. The Company makes no attempt to provide more than general information about use of the Contracts with the various types of retirement plans. Purchasers are responsible for determining that contributions, distributions and other transactions with respect to the Contracts satisfy applicable laws, and should consult their legal counsel and tax adviser regarding the suitability of the Contract. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity or Individual Retirement Account, each hereinafter referred to as an "IRA". Also, distributions from certain other types of qualified plans may be "rolled over" on a tax-deferred basis into an IRA. Employers may establish Simplified Employee Pension (SEP) Plans and make contributions to an IRA on behalf of their employees. The sale of a Contract for use with an IRA requires special disclosure as mandated by the Internal Revenue Code. Purchasers of an IRA Contract will be provided with supplemental information as required by the Internal ----------------------------------------------------------------------------- 11 Revenue Code. Such purchasers will have the right to revoke their purchase within seven days of the earlier of the establishment of the IRA or their purchase. A Contract issued as an IRA will be amended as necessary to conform to the requirements of the Code. Taxation of Distributions. All distributions will be taxed as they are received unless you made a rollover contribution of the distribution to another retirement plan or to another IRA in accordance with the Code, or unless you have made after-tax contributions to the plan, which are not taxed upon distribution. The Code has specific rules that apply, depending on the type of distribution received, if after-tax contributions were made. In general, payments received by your beneficiaries after your death are taxed in the same manner as if you have received those payments, a limited death benefit exclusion may apply for payments due to deaths occurring on or before August 20, 1996. This exclusion no longer applies to payments due to deaths occurring after August 20, 1996. The Code imposes a 10% penalty tax on the taxable portion of any distribution from and IRA unless made when (a) you have attained age 59-1/2, (b) you have become disabled as defined by the Code, (c) the distribution amount is rolled over in accordance with the terms of the Code, (d) it is paid in a series of substantially equal periodic payments, or (e) you have been unemployed and receiving unemployment benefits as further described in the Code. In addition, the penalty tax does not apply for the amount of a distribution equal to unreimbursed medical expenses incurred by you that qualify for deduction as specified in the Code. The Code may impose other penalty taxes in other circumstances. MISCELLANEOUS ============================================================================= Distribution The Company will serve as the principal underwriter for the securities sold by this Prospectus. The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the National Association of Securities Dealers, Inc. (NASD). As underwriter, the Company will contract with one or more registered broker-dealers ("Distributors"), including at least one affiliate of the Company, to offer and sell the Contracts. All persons offering and selling the Contracts must be registered representatives of the Distributors and must also be licensed as insurance agents to sell variable annuity contracts. These registered representatives may also provide services in connection with establishing the Contract. Payment of Commissions. Persons offering and selling the Contracts may receive commissions in connection with the sale of the Contracts. The maximum percentage amount that the Company will ever pay as commission with respect to any given Purchase Payment is with respect to those made during the first year of Purchase Payments under a Contract. The percentage amount will range from 2% to 4% of those Purchase Payments. The Company may also pay renewal commissions on Purchase Payments made after the first year and service fees. The average of all payments made by the Company is estimated to equal approximately 3% of the total Purchase Payments made over the life of an average Contract. In addition, some sales personnel may receive various types of non-cash compensation as special sales incentives, including trips and educational and/or business seminars. Supervisory and other management personnel of the Company may receive compensation that will vary based on the relative profitability to the Company of the funding options you select. Funding options that invest in Funds advised by the Company or its affiliates are generally more profitable to the Company. The Company may also reimburse the Distributor for certain expenses. The name of the Distributor and the registered representative responsible for your Contract are set forth on your application. Commissions and sales related expenses are paid by the Company and are not deducted from Purchase Payments. (See "Charges and Deductions--Deferred Sales Charge.") Delay or Suspension of Payments The Company reserves the right to suspend or postpone the date of payment for any benefit or values (a) on any Valuation Date on which the New York Stock Exchange ("Exchange") is closed (other than customary weekend and holiday closings) or when trading on the Exchange is restricted; (b) when an emergency exists, as determined by the SEC, so that disposal of securities held in the Subaccounts is not reasonably practicable or it is not reasonably practicable for the Company fairly to determine the value of the Subaccount's assets; or (c) during such other periods as the SEC may by order permit for the protection of investors. The conditions under which restricted trading or an emergency exists shall be determined by the rules and regulations of the SEC. Performance Reporting From time to time, the Company may advertise different types of historical performance for the Subaccounts of the Separate Account. The Company may ----------------------------------------------------------------------------- 12 advertise the "standardized average annual total returns" of the Subaccounts, calculated in a manner prescribed by the SEC, as well as the "non-standardized returns." "Standardized average annual total returns" are computed according to a formula in which a hypothetical investment of $1,000 is applied to the Subaccount and then related to the ending redeemable values over the most recent one, five and ten-year periods (or since inception, if less than ten years). Standardized returns will reflect the reduction of all recurring charges during each period (e.g., mortality and expense risk charges, annual maintenance fees, administrative expense charge (if any) and any applicable deferred sales charge). "Non-standardized returns" will be calculated in a similar manner, except that non- standardized figures will not reflect the deduction of any applicable deferred sales charge (which would decrease the level of performance shown if reflected in these calculations). The non-standardized figures may also include monthly, quarterly, year-to-date and three-year periods. The Company may also advertise certain ratings, rankings or other information related to the Company, the Subaccounts or the Funds. Further details regarding performance reporting and advertising are described in the Statement of Additional Information. Voting Rights In accordance with the Company's view of present applicable law, it will vote the shares of each of the Funds held by the Separate Account at regular and special meetings of Fund shareholders in accordance with instructions received from persons having a voting interest in the Separate Account. The Company will vote shares for which it has not received instructions in the same proportion as it votes shares for which it has received instructions. Each person having a voting interest in the Separate Account will receive periodic reports relating to the Fund(s) in which he or she has an interest, as well as any proxy materials and a form on which to give voting instructions. Voting instructions will be solicited by written communication at least 14 days before such meeting. The number of votes to which each person may give direction will be determined as of the record date set by the Fund. The number of votes that you may cast during the Accumulation Period is equal to the portion of the Contract Value attributable to that Fund, divided by the net asset value of one share of that Fund. During the Annuity Period, the number of votes is equal to the valuation reserve applicable to the portion of the Contract attributable to that Fund, divided by the net asset value of one share of that Fund. In determining the number of votes, fractional votes will be recognized. Modification of the Contract The Company may modify the Contract when it deems an amendment appropriate, by giving written notice to you 30 days before the effective date of the change. The most likely reason for a change to the Contract would be to ensure compliance with applicable law. Certain changes will require the approval of appropriate state or federal regulatory authorities. Involuntary Terminations Subject to state regulatory approval, following the completion of two Contract Years in which no Purchase Payments have been made, the Company reserves the right to pay the full Contract Value to the Contract Holder if the Contract Value is less than $1,500, provided the Company gives the Contract Holder 90 days written notice. Such Contract Value paid may not be reinstated. The full Contract Value payable to the Contract Holder will not be reduced by any deferred sales charge, and amounts withdrawn from GIA, if applicable, will not receive a reduced rate of interest. Amounts withdrawn from GIA will receive a guaranteed effective annual yield to the date of Contract termination as if the amounts had remained in GIA until the end of a Guaranteed Term. (See Appendix I.) Amounts surrendered from GAA will receive the greater of: (a) The aggregate MVA amount from all Guaranteed Terms prior to the end of those terms; or (b) The applicable portion of the Contract Value in GAA. This provision does not apply for any Contract that has elected an Annuity Option. Legal Matters and Proceedings The Company knows of no material legal proceedings pending to which the Separate Account or the Company is a party or which would materially affect the Separate Account. The validity of the securities offered by this Prospectus has been passed upon by Counsel to the Company. ----------------------------------------------------------------------------- 13 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ============================================================================= The Statement of Additional Information contains more specific information on the Separate Account and the Contract, as well as the financial statements of the Separate Account and the Company. A list of the contents of the SAI is set forth below: General Information and History Variable Annuity Account C Offering and Purchase of Contracts Performance Data General Average Annual Total Return Quotations Annuity Payments Sales Material and Advertising Independent Auditors Financial Statements of the Separate Account Financial Statements of the Company ----------------------------------------------------------------------------- 14 APPENDIX I GUARANTEED INTEREST ACCOUNT (Available in all states except Washington and New York) ============================================================================= The Guaranteed Interest Account ("GIA") is a Credited Interest Option available during the Accumulation Period. Amounts allocated to Short-Term Classifications of GIA are held in the Company's general account that supports insurance and annuity obligations. Amounts allocated to Long-Term Classifications of GIA are held in a noninsulated, nonunitized separate account. Interests in GIA have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended. Disclosure in this Prospectus regarding GIA may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of such statements. Disclosure in this Appendix regarding the Guaranteed Interest Account has not been reviewed by the SEC. GIA is a Credited Interest Option under which we guarantee stipulated rates of interest for stated periods of time. Interest is credited daily at a rate that will provide the guaranteed effective yield by the end of the stated period. During a stated period of time, amounts may be applied to any or all available Guaranteed Terms within the Short-Term and Long-Term Classifications. The Short-Term Classification consists of all Guaranteed Terms of 3 years or less and the Long-Term Classification consists of all Guaranteed Terms of 10 years or less, but greater than 3 years. As long as amounts are not withdrawn before the end of a stated term, we will pay the guaranteed rate of interest. If amounts are withdrawn or transferred before the end of a stated period of time, except if pursuant to the Company's termination of the Contract (see "Miscellaneous--Involuntary Termination of the Contract,") we will pay a reduced rate of interest, but never less than the minimum stated in the Contract. As a Guaranteed Term matures, assets accumulating under GIA may be (a) transferred to a new Guaranteed Term, (b) transferred to the other available investment options, or (c) withdrawn. Amounts withdrawn may be subject to a deferred sales charge and/or tax liabilities. Mortality and Expense Risk Charges We make no deductions from the credited interest rate for mortality and expense risks; these risks are considered in determining the credited interest rate. Transfers Transfers are permitted from Guaranteed Terms of one Classification to available Guaranteed Terms of another Classification. We will apply a reduced rate of interest to amounts transferred prior to the end of a Guaranteed Term. Transfers of GIA values due to a maturity are not subject to a reduced rate of interest. By notifying us at our Home Office at least 30 days before Annuity payments begin, you may elect to have amounts that have been accumulating under GIA transferred to one or more of the funds currently available during the Annuity Period, to provide variable Annuity payments. GIA cannot be used as an investment option during the Annuity Period. Reinvestment Privilege Any amounts reinvested in GIA will be applied to the current deposit period. Amounts are proportionately reinvested to the Classifications in the same manner as they were allocated before the withdrawal. ----------------------------------------------------------------------------- 15 APPENDIX II FIXED ACCOUNT ============================================================================= The following summarizes material information concerning the Fixed Account. Amounts allocated to the Fixed Account are held in the Company's general account that supports general insurance and annuity obligations. Interests in the Fixed Account have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended. Disclosure in the Prospectus regarding the Fixed Account, may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of such statements. Disclosure in this Appendix regarding the Fixed Account has not been reviewed by the SEC. The Fixed Account guarantees the minimum interest rate specified in the Contract. These minimum interest rates cannot be changed by the Company; however, the Company may credit a higher interest rate from time to time. The Company's determination of interest rates reflects the investment income earned on invested assets and the amortization of any capital gains and/or losses realized on the sale of invested assets. Under the Fixed Account, the Company assumes the risk of investment gain or loss by guaranteeing Contract Values and promising a minimum interest rate and Annuity Payment. Under certain emergency conditions, we may defer payment of a Fixed Account withdrawal value (a) for a period of up to six months, or (b) as provided by federal law. In addition, if allowed by state law, the Company may pay any Fixed Account withdrawal value in equal payments, with interest, over a period not to exceed 60 months, when: (a) the amount held in the Fixed Account under this Contract exceeds $250,000 on the day prior to the current withdrawal; and (b) the sum of the current Fixed Account withdrawal and the total of all Fixed Account withdrawals from the Contract within the past 12 calendar months exceeds 20% of the amount in the Fixed Account on the day prior to the current withdrawal. Interest, as used above, will not be more than two percentage points below any rate determined prospectively by the Board of Directors for this class of Contract. In no event will the interest rate be less than the minimum stated in the Contract. Amounts applied to the Fixed Account will earn the interest rate in effect when actually applied to the Fixed Account. The Fixed Account will reflect a compound interest rate credited by us. The interest rate quoted is an annual effective yield. We make no deductions from the credited interest rate for mortality and expense risks; these risks are considered in determining the credited rate. Transfers Among Investment Options Transfers from the Fixed Account to any other available investment options(s) are allowed in each calendar year during the Accumulation Period. The amount which may be transferred may vary at our discretion; however, it will never be less than 10% of the amount held under the Fixed Account. By notifying us at our Home Office at least 30 days before Annuity payments begin, you may elect to have amounts which have been accumulating under the Fixed Account transferred to one or more of the Subaccounts available during the Annuity Period to provide variable Annuity Payments. Additionally, any remaining balance in the Fixed Account under the Contract may be transferred by you in its entirety to any other investment option(s) if: (a) the Current Value in the Fixed Account is $2,000 or less; or ----------------------------------------------------------------------------- 16 (b) the maximum percentage allowed was transferred from the Fixed Account in each of the four consecutive calendar years and no additional Net Purchase Payment(s) have been allocated to the Fixed Account during that same time period. By notifying us at our Home Office at least 30 days before Annuity Payments begin, you may elect to have amounts which have been accumulating under the Fixed Account transferred to one or more of the Subaccounts available during the Annuity Period to provide variable Annuity Payments. ----------------------------------------------------------------------------- 17 APPENDIX III GUARANTEED ACCUMULATION ACCOUNT (Offered in New York only) ============================================================================= The Guaranteed Accumulation Account ("GAA") is a Credited Interest Option available during the Accumulation Period under the Contracts discussed in this Prospectus. Amounts allocated to Long-Term Classifications of GAA are held in a noninsulated, nonunitized separate account. Amounts allocated to Short-Term Classifications of GAA are held in the Company's general account. This Appendix is a summary of GAA and is not intended to replace the GAA prospectus. You should read the accompanying GAA prospectus carefully before investing. GAA is a Credited Interest Option in which we guarantee stipulated rates of interest for stated periods of time on amounts directed to GAA. The interest rate stipulated is an annual effective yield; that is, it reflects a full year's interest. Interest is credited daily at a rate that will provide the guaranteed annual effective yield for one year. This option guarantees the minimum interest rate specified in the Contract. During a specified period of time (the "deposit period"), amounts may be applied to any or all available Guaranteed Terms within the Short-Term and Long-Term classifications. Short-Term GAA has Guaranteed Terms from one to three years, and Long-Term GAA has Guaranteed Terms from three to ten years. Purchase Payments must remain in GAA for the full Guaranteed Term to receive the quoted interest rates. Withdrawals or transfers from a Guaranteed Term before the end of that Guaranteed Term may be subject to a market value adjustment ("MVA"). An MVA reflects the change in the value of the investments due to changes in interest rates since the date of deposit. When interest rates increase after the date of deposit, the value of the investment decreases and the MVA is negative. Conversely, when interest rates decrease after the date of deposit, the value of the investment increases, and the MVA is positive. It is possible that a negative MVA could result in your receipt of an amount which is less than the amount paid into GAA. As a Guaranteed Term matures, assets accumulating under GAA may be (a) transferred to a new Guaranteed Term, (b) transferred to other available investment options, or (c) withdrawn. Amounts withdrawn may be subject to a deferred sales charge and/or federal tax penalties or mandatory income tax withholding. By notifying us at least 30 days prior to the Annuity Date, you may elect a variable annuity and have amounts that have been accumulating under GAA transferred to one or more of the Subaccounts available during the Annuity Period. GAA cannot be used as an investment option during the Annuity Period. Mortality and Expense Risk Charges We make no deductions from the credited interest rate for mortality and expense risks; these risks are considered in determining the credited rate. Transfers Transfers are permitted among Guaranteed Terms. However, amounts applied to GAA may not be transferred to another Guaranteed Term of GAA, or to any other Subaccount or Credited Interest Option available under the Contract, during the deposit period or the 90 days after the close of the deposit period. We will apply an MVA to transfers made before the end of a Guaranteed Term, unless such transfer is due to the maturity of the Guaranteed Term. Reinvestment Privilege If amounts are withdrawn from GAA and reinvested, they will be applied to the current deposit period. Amounts are proportionately reinvested in the same manner as they were allocated before the withdrawal. Any negative MVA amount applied to a withdrawal is not included in the reinvestment. ----------------------------------------------------------------------------- 18 Please attach to your Application I hereby acknowledge receipt of an Account C Individual Variable Annuity Contract Prospectus dated May 1, 1997 for Individual Retirement Annuities and Simplified Employee Pension Plans, as well as all current prospectuses pertaining to the variable investment options available under the Contracts. Please send an Account C Statement of Additional Information (Form No. SAI.75992-97) dated May 1, 1997. ----------------------------------------------------------------------------- CONTRACT HOLDER'S SIGNATURE ----------------------------------------------------------------------------- DATE PROS.75992-97 - -------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT C OF AETNA LIFE INSURANCE AND ANNUITY COMPANY - -------------------------------------------------------------------------------- Statement of Additional Information dated May 1, 1997 Variable Annuity Contracts for Individual Retirement Annuities under Section 408(b) and Simplified Employee Pension Plans under Section 408(k) This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus for Variable Annuity Account C (the "Separate Account") dated May 1, 1997. A free prospectus is available upon request from the local Aetna Life Insurance and Annuity Company office or by writing to or calling: Aetna Life Insurance and Annuity Company Customer Service 151 Farmington Avenue Hartford, Connecticut 06156 1-800-531-4547 Read the prospectus before you invest. Terms used in this Statement of Additional Information shall have the same meaning as in the prospectus. TABLE OF CONTENTS Page General Information and History............................................ 2 Variable Annuity Account C................................................. 2 Offering and Purchase of Contracts......................................... 3 Performance Data........................................................... 3 General............................................................... 3 Average Annual Total Return Quotations................................ 4 Annuity Payments........................................................... 7 Sales Material and Advertising............................................. 8 Independent Auditors....................................................... 8 Financial Statements of the Separate Account............................... S-1 Financial Statements of Aetna Life Insurance and Annuity Company............F-1 GENERAL INFORMATION AND HISTORY Aetna Life Insurance and Annuity Company (the "Company") is a stock life insurance company which was organized under the insurance laws of the State of Connecticut in 1976. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in 1954). As of December 31, 1996, the Company had assets of $___ billion (subject to $___ billion of customer and other liabilities, $___ billion of shareholder equity) which includes $__ billion in assets held in the Company's separate accounts. The Company had $__ billion in assets under management, including $__ billion in its mutual funds. As of ____________, it ranked among the top __% of all U.S. life insurance companies by size. The Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc. and an indirect wholly owned subsidiary of Aetna Inc. The Company is engaged in the business of issuing life insurance policies and annuity contracts in all states of the United States. The Company's Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. In addition to serving as the principal underwriter and the depositor for the Separate Account, the Company is also a registered investment adviser under the Investment Advisers Act of 1940, and a registered broker-dealer under the Securities Exchange Act of 1934. The Company provides investment advice to several of the registered management investment companies offered as variable investment options under the Contracts funded by the Separate Account (see "Variable Annuity Account C" below). Other than the mortality and expense risk charges and administrative expense charge described in the prospectus, all expenses incurred in the operations of the Separate Account are borne by the Company. (See "Charges and Deductions" in the prospectus.) The Company receives reimbursement for certain administrative costs from some unaffiliated sponsors of the Funds used as funding options under the Contract. These fees generally range up to 0.25%. The assets of Separate Account are held by the Company. The Separate Account has no custodian. However, the Funds in whose shares the assets of the Separate Account are invested each have custodians, as discussed in their respective prospectuses. VARIABLE ANNUITY ACCOUNT C Variable Annuity Account C (the "Separate Account") is a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940, as amended. The assets of each of the Subaccounts of the Separate Account will be invested exclusively in shares of the Funds described in the Prospectus. Purchase Payments made under the Contract may be allocated to one or more of the Subaccounts. The Company may make additions to, deletions from or substitutions of available investment options as permitted by law and subject to the conditions in the Contract. The availability of the Funds is subject to applicable regulatory authorization. Not all Funds are available in all jurisdictions or under all Contracts. 2 The Funds currently available under the Contract are as follows: Aetna Variable Fund American Century VP Capital Appreciation Aetna Income Shares (formerly TCI Growth) Aetna Variable Encore Fund Fidelity VIP II Contrafund Portfolio Aetna Investment Advisers Fund, Inc. Fidelity VIP Equity-Income Portfolio Aetna Ascent Variable Portfolio Fidelity VIP Growth Portfolio Aetna Crossroads Variable Portfolio Fidelity VIP Overseas Portfolio Aetna Legacy Variable Portfolio Janus Aspen Aggressive Growth Portfolio Aetna Variable Capital Appreciation Portfolio Janus Aspen Balanced Portfolio Aetna Variable Growth Portfolio Janus Aspen Growth Portfolio Aetna Variable Index Plus Portfolio Janus Aspen Short-Term Bond Portfolio Aetna Variable Small Company Portfolio Janus Aspen Worldwide Growth Portfolio Alger American Growth Portfolio Scudder International Portfolio Class A Shares Alger American Small Cap Portfolio
Complete descriptions of each of the Funds, including their investment objectives, policies, risks and fees and expenses, are contained in the prospectuses and statements of additional information for each of the Funds. OFFERING AND PURCHASE OF CONTRACTS The Company is both the depositor and the principal underwriter for the securities sold by the prospectus. The Company offers the Contracts through life insurance agents licensed to sell variable annuities who are registered representatives of the Company or of other registered broker-dealers who have sales agreements with the Company. The offering of the Contracts is continuous. A description of the manner in which Contracts are purchased may be found in the prospectus under the section titled "Purchase" and "Contract Valuation." PERFORMANCE DATA GENERAL From time to time, the Company may advertise different types of historical performance for the Subaccounts of the Separate Account available under the Contracts. The Company may advertise the "standardized average annual total returns," calculated in a manner prescribed by the Securities and Exchange Commission (the "standardized return"), as well as "non-standardized returns," both of which are described below. The standardized and non-standardized total return figures are computed according to a formula in which a hypothetical initial Purchase Payment of $1,000 is applied to the various Subaccounts under the Contract, and then related to the ending redeemable values over one, five and ten year periods (or fractional periods thereof). The redeemable value is then divided by the initial investment and this quotient is taken to the Nth root (N represents the number of years in the period) and 1 is subtracted from the result which is then expressed as a percentage, carried to at least the nearest hundredth of a percent. The standardized figures reflect the deduction of all recurring charges during each period (e.g., mortality and expense risk charges, maintenance fees, administrative expense charges, and deferred sales charges). 3 These charges will be deducted on a pro rata basis in the case of fractional periods. The maintenance fee is converted to a percentage of assets based on the average account size under the Contracts described in the Prospectus. The non-standardized figures will be calculated in a similar manner, except that they will not reflect the deduction of any applicable deferred sales charge (which would decrease the level of performance shown if reflected in these calculations). The non-standardized figures may also include monthly, quarterly, year-to-date and three-year periods. If a Fund was in existence prior to the date it became available under the Contract, standardized and non-standardized total returns may include periods prior to such date. These figures are calculated by adjusting the actual returns of the Fund to reflect the charges that would have been assessed under the Contract had that Fund been available under the Contract during that period. Investment results of the Funds will fluctuate over time, and any presentation of the Subaccounts' total return quotations for any prior period should not be considered as a representation of how the Subaccounts will perform in any future period. Additionally, the Contract Value upon redemption may be more or less than your original cost. AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized The tables below reflect the average annual standardized and non-standardized total return quotation figures for the periods ended December 31, 1996 for the Subaccounts under the Contract. Tables A and B reflect the average annual standardized and non-standardized total return quotation figures for the periods ended December 31, 1996 for the Subaccounts under a Single Payment Account with a $0 maintenance fee and an Installment Payment Account with a $20 annual maintenance fee, respectively. For those Subaccounts where results are not available for the full calendar period indicated, the percentage shown is an average annual return since inception (denoted with an *). 4
TABLE A ------------------------------------------------------------------------------------------- Single Payment Account: Fund ($0 Maintenance Fee) STANDARDIZED NON-STANDARDIZED Inception Date - ------------------------------------------------------------------------------------------------------------------------------------ SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Fund 04/30/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Income Shares 06/01/78 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Encore Fund 09/01/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Investment Advisers Fund, Inc. 06/23/89 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Ascent Variable Portfolio 07/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Crossroads Variable Portfolio 07/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Legacy Variable Portfolio 07/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Index Plus Portfolio 09/12/96 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Growth Portfolio 01/09/89 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Small Cap Portfolio 09/21/88 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP Capital Appreciation 11/20/87 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP ll Contrafund Portfolio 01/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Equity-Income Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Growth Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Overseas Portfolio 01/28/87 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Aggressive Growth 09/13/93 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Balanced Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Short-Term Bond Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Worldwide Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Scudder International Portfolio Class A Shares 05/1/87 - ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the Tables for an explanation of the charges included in the Standardized and Non-Standardized figures. These figures represent historical performance and should not be considered a projection of future performance. 5
TABLE B ------------------------------------------------------------------------------------------- Installment Payment Account: Fund ($20 Maintenance Fee) STANDARDIZED NON-STANDARDIZED Inception Date - ------------------------------------------------------------------------------------------------------------------------------------ SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Fund 04/30/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Income Shares 06/01/78 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Encore Fund 09/01/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Investment Advisers Fund, Inc. 06/23/89 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Ascent Variable Portfolio 07/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Crossroads Variable Portfolio 07/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Legacy Variable Portfolio 07/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Index Plus Portfolio 09/12/96 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Growth Portfolio 01/09/89 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Small Cap Portfolio 09/21/88 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP Capital Appreciation 11/20/87 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP ll Contrafund Portfolio 01/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Equity-Income Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Growth Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Overseas Portfolio 01/28/87 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Aggressive Growth 09/13/93 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Balanced Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Short-Term Bond Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Worldwide Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Scudder International Portfolio Class A Shares 05/1/87 - ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the Tables for an explanation of the charges included in the Standardized and Non-Standardized figures. These figures represent historical performance and should not be considered a projection of future performance. 6 ANNUITY PAYMENTS When Annuity payments are to begin, the value of the Contract is determined using Accumulation Unit values as of the tenth Valuation Date before the first Annuity payment is due. Such value (less any applicable premium tax) is applied to provide an Annuity in accordance with the Annuity and investment options elected. The Annuity option tables found in the Contract show, for each form of Annuity, the amount of the first Annuity payment for each $1,000 of value applied. Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s) fluctuates with the investment experience of the selected investment option(s). The first payment and subsequent payments also vary depending on the assumed net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a higher first payment, but Annuity payments will increase thereafter only to the extent that the net investment rate increases by more than 5% on an annual basis. Annuity payments would decline if the rate failed to increase by 5%. Use of the 3.5% assumed rate causes a lower first payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the net investment rate. When the Annuity Period begins, the Annuitant is credited with a fixed number of Annuity Units (which does not change thereafter) in each of the designated investment options. This number is calculated by dividing (a) by (b), where (a) is the amount of the first Annuity payment based on a particular investment option, and (b) is the then current Annuity Unit value for that investment option. As noted, Annuity Unit values fluctuate from one Valuation Date to the next; such fluctuations reflect changes in the net investment factor for the appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company time to process Annuity payments) and a mathematical adjustment which offsets the assumed net investment rate of 3.5% or 5% per annum. The operation of all these factors can be illustrated by the following hypothetical example. These procedures will be performed separately for the investment options selected during the Annuity Period. EXAMPLE: Assume that, at the date Annuity payments are to commence, there are 3,000 Accumulation Units credited under a particular Contract and that the value of an Accumulation Unit for the tenth Valuation Date prior to retirement was $13.650000. This produces a total value of $40,950. Assume also that no premium tax is payable and that the Annuity table in the Contract provides, for the option elected, a first monthly variable Annuity payment of $6.68 per $1000 of value applied; the Annuitant's first monthly payment would thus be 40.950 multiplied by $6.68, or $273.55. Assume then that the value of an Annuity Unit for the Valuation Date on which the first payment was due was $13.400000. When this value is divided into the first monthly payment, the number of Annuity Units is determined to be 20.414. The value of this number of Annuity Units will be paid in each subsequent month. If the net investment factor with respect to the appropriate Subaccount is 1.0015000 as of the tenth Valuation Date preceding the due date of the second monthly payment, multiplying this factor by .9999058* (to neutralize the assumed net investment rate of 3.5% per annum built into the number of Annuity Units determined above) produces a result of 1.0014057. This is then multiplied by the Annuity Unit value for the prior Valuation Date (assume such value to be $13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation Date on which the second payment is due. 7 The second monthly payment is then determined by multiplying the number of Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359, which produces a payment of $276.07. *If an assumed net investment rate of 5% is elected, the appropriate factor to neutralize such assumed rate would be .9998663. SALES MATERIAL AND ADVERTISING The Company may include hypothetical illustrations in its sales literature that explain the mathematical principles of dollar cost averaging, compounded interest, tax deferred accumulation, and the mechanics of variable annuity contracts. The Company may also discuss the difference between variable annuity contracts and other types of savings or investment products, including, but not limited to, personal savings accounts and certificates of deposit. We may distribute sales literature that compares the percentage change in Accumulation Unit values for any of the Subaccounts to established market indices such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average or to the percentage change in values of other management investment companies that have investment objectives similar to the Subaccount being compared. We may publish in advertisements and reports, the ratings and other information assigned to us by one or more independent rating organizations such as A.M. Best Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors Services, Inc. The purpose of the ratings is to reflect our financial strength and/or claims-paying ability. We may also quote ranking services such as Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable Insurance Products Performance Analysis Service (VIPPAS), which rank variable annuity or life Subaccounts or their underlying funds by performance and/or investment objective. We may illustrate in advertisements the performance of the underlying funds, if accompanied by performance which also shows the performance of such funds reduced by applicable charges under the Separate Account. We may also show in advertisements the portfolio holdings of the underlying funds, updated at various intervals. From time to time, we will quote articles from newspapers and magazines or other publications or reports, including, but not limited to The Wall Street Journal, Money magazine, USA Today and The VARDS Report. The Company may provide in advertising, sales literature, periodic publications or other materials information on various topics of interest to current and prospective Contract Holders. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing), the advantages and disadvantages of investing in tax-deferred and taxable investments, customer profiles and hypothetical purchase and investment scenarios, financial management and tax and retirement planning, and investment alternatives to certificates of deposit and other financial instruments, including comparison between the Contracts and the characteristics of and market for such financial instruments. INDEPENDENT AUDITORS KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the independent auditors for the Separate Account and for the Company. The services provided to the Separate Account include primarily the examination of the Separate Account's financial statements and the review of filings made with the SEC. 8 FINANCIAL STATEMENTS VARIABLE ANNUITY ACCOUNT C Index Independent Auditors' Report............................................... S- Statement of Assets and Liabilities........................................ S- Statement of Operations.................................................... S- Statements of Changes in Net Assets........................................ S- Notes to Financial Statements ............................................. S- Condensed Financial Information............................................ S- FINANCIAL STATEMENTS OF VARIABLE ANNUITY ACCOUNT C AND AETNA LIFE INSURANCE AND ANNUITY COMPANY TO BE FILED BY AMENDMENT S-1 STATEMENT OF ADDITIONAL INFORMATION VARIABLE ANNUITY ACCOUNT C VARIABLE ANNUITY CONTRACTS issued by AETNA LIFE INSURANCE AND ANNUITY COMPANY Form No. SAI.75992-97 ALIAC Ed. May 1997 VARIABLE ANNUITY ACCOUNT C PART C - OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: * (1) Included in Part A: Condensed Financial Information (2) Included in Part B: Financial Statements of Variable Annuity Account C: - Independent Auditors' Report - Statement of Assets and Liabilities as of December 31, 1996 - Statement of Operations for the year ended December 31, 1996 - Statements of Changes in Net Assets for the years ended December 31, 1996 and 1995 - Notes to Financial Statements Financial Statements of the Depositor: - Independent Auditors' Report - Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994 - Consolidated Balance Sheets as of December 31, 1996 and 1995 - Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 1996, 1995 and 1994 - Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 - Notes to Consolidated Financial Statements (b) Exhibits (1) Resolution of the Board of Directors of Aetna Life Insurance and Annuity Company establishing Variable Annuity Account C(1) (2) Not applicable (3.1) Form of Broker-Dealer Agreement(2) (3.2) Alternative Form of Wholesaling Agreement and Related Selling Agreement(2) (4.1) Form of Variable Annuity Contract (I-CDA-HD)(3) (4.2) Form of Variable Annuity Contract (GIH-CDA-HB) and (IMT-CDA-HO)(4) (4.3) Form of Variable Annuity Contract (IST-CDA-HO) (4.4) Form of Variable Annuity Contract (I-CDA-HD(XC)) (4.5) Form of Endorsement (EIP-SDOTHD-97) to Contract I-CDA-HD (4.6) Form of Endorsement (EIP-SDOTHD-97(NY)) to Contract I-CDA-HD(XC) (4.7) Form of Endorsement (EIP-SDOTPM-97(NY)) to Contracts IMT-CDA-HO and IST-CDA-HO (4.8) Form of Endorsement (EIP-SDOTPM-97) to Contracts IMT-CDA-HO and IST-CDA-HO (5) Form of Variable Annuity Contract Application (710.00.16H)(3) (6.1) Certification of Incorporation and By-Laws of Aetna Life Insurance and Annuity Company(5) (6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance and Annuity Company(3) (7) Not applicable (8.1) Fund Participation Agreement (Amended and Restated) between Aetna Life Insurance and Annuity Company, Alger American Fund and Fred Alger Management, Inc. dated March 31, 1995(2) (8.2) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(3) (8.3) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1. 1995, May 1, 1995, January 1, 1996 and March 1,1996(3) (8.4) Service Agreement between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995(6) (8.5) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Janus Aspen Series dated April 19, 1994 and amended March 1, 1996(2) (8.6) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Scudder Variable Life Investment Fund dated April 27, 1992 and amended February 19, 1993 and August 13, 1993(2) (8.7) Amendment dated as of February 20, 1996 to Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Scudder Variable Life Investment Fund dated April 27, 1992 as amended February 19, 1993 and August 13, 1993(6) (8.8) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Investors Research Corporation and TCI Portfolios, Inc. dated July 29, 1992 and amended December 22, 1992 and June 1, 1994(2) (9) Opinion of Counsel* (10.1) Consent of Independent Auditors* (10.2) Consent of Counsel* (11) Not applicable (12) Not applicable (13) Schedule for Computation of Performance Data(7) (14) Not applicable (15.1) Powers of Attorney(3) (15.2) Authorization for Signatures(2) (27) Financial Data Schedule* *To be filed by amendment. 1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75986), as filed electronically on April 22, 1996. 2. Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed electronically on April 12, 1996. 3. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-75964), as filed electronically on February 11, 1997. 4. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75980), as filed electronically on February 12, 1997. 5. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form S-1 (File No. 33-60477), as filed electronically on April 15, 1996. 6. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-88720), as filed electronically on June 28, 1996. 7. Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 33-75964) filed on April 28, 1995. Item 25. Directors and Officers of the Depositor - -----------------------------------------------------
Name and Principal Business Address* Positions and Offices with Depositor - ----------------- ------------------------------------ Daniel P. Kearney Director and President Timothy A. Holt Director, Senior Vice President and Chief Financial Officer Christopher J. Burns Director and Senior Vice President Laura R. Estes Director and Senior Vice President Gail P. Johnson Director and Vice President John Y. Kim Director and Senior Vice President Shaun P. Mathews Director and Vice President Glen Salow Director and Vice President Creed R. Terry Director and Vice President Deborah Koltenuk Vice President and Treasurer, Corporate Controller Frederick D. Kelsven Vice President and Chief Compliance Officer Kirk P. Wickman Vice President, General Counsel and Secretary
* The principal business address of all directors and officers listed is 151 Farmington Avenue, Hartford, Connecticut 06156. Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant - -------------------------------------------------------------------- Incorporated herein by reference to Item 26 of Post-Effective Amendment No. 12 to the Registration Statement on Form N-4 (File No. 33-75964), as filed electronically on February 11, 1997. Item 27. Number of Contract Owners - --------------------------------------- As of December 31, 1996, there were 600,951 individuals holding interests in variable annuity contracts funded through Variable Annuity Account C. Item 28. Indemnification - ----------------------------- Reference is hereby made to Section 33-771(f) of the Connecticut General Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4) regarding indemnification of officers, employees and agents of Connecticut corporations. These statutes provide in general that Connecticut corporations incorporated prior to January 1, 1997 shall indemnify their officers, directors, employees and agents against "liability" (defined as the obligation to pay a judgment, settlement, penalty, fine, excise tax in the case of an employee benefit plan or reasonable expenses incurred with respect to a proceeding). In the case of a proceeding by or in the right of the corporation, indemnification is limited to reasonable expenses incurred in connection with the proceeding against the corporation to which the individual was named a party. The corporation's obligation to provide such indemnification does not apply unless (1) the individual has met the standard of conduct set forth in Section 33-771; and (2) a determination is made (by majority vote of a quorum of the board of directors who were not parties to the proceeding, or if a quorum cannot be obtained, by a committee of the board selected as described in Section 33-775(b)(2); by special legal counsel selected by the board of directors or members thereof as described in Section 33-775(b)(3); by shareholders) that the individual met the standard set forth in Section 33-771; or (3) the court, upon application by the individual, determines in view of all the circumstances that such person is reasonably entitled to be indemnified. Also, unless limited by its Certificate of Incorporation, a corporation must indemnify an individual who was wholly successful on the merits or otherwise against reasonable expenses incurred by him in connection with a proceeding to which he was a party because of his relationship as director, officer, employee or agent of the corporation. The statute does specifically authorize a corporation to procure indemnification insurance on behalf of an individual who is or was a director, officer, employer or agent of the corporation. Consistent with the statute, Aetna Inc. has procured insurance from Lloyd's of London and several major United States excess insurers for its directors and officers and the directors and officers of its subsidiaries, including the Depositor. Item 29. Principal Underwriter - ----------------------------------- (a) In addition to serving as the principal underwriter and depositor for the Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also acts as the principal underwriter and investment adviser for Aetna Variable Encore Fund, Aetna Variable Fund, Aetna Series Fund, Inc., Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna Investment Advisers Fund, Inc., Aetna GET Fund, and Aetna Variable Portfolios, Inc. (all registered management investment companies under the 1940 Act). Additionally, ALIAC acts as the principal underwriter and depositor for Variable Life Account B and Variable Annuity Accounts B and G (separate accounts of ALIAC registered as unit investment trusts under the 1940 Act). ALIAC is also the principal underwriter for Variable Annuity Account I (a separate account of Aetna Insurance Company of America registered as a unit investment trust under the 1940 Act). (b) See Item 25 regarding the Depositor. (c) Compensation as of December 31, 1996:
(1) (2) (3) (4) (5) Name of Net Underwriting Compensation on Principal Underwriter Discounts and Redemption or Brokerage Commissions Annuitization Commissions Compensation* Aetna Life Insurance $1,325,661 $96,924,599 and Annuity Company
* Compensation shown in column 5 includes deductions for mortality and expense risk guarantees and contract charges assessed to cover costs incurred in the sales and administration of the contracts issued under Variable Annuity Account C. Item 30. Location of Accounts and Records - ---------------------------------------------- All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the Rules under it relating to the securities described in and issued under this Registration Statement are located at the home office of the Depositor as follows: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 Item 31. Management Services - --------------------------------- Not applicable Item 32. Undertakings - -------------------------- Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement on Form N-4 as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for as long as payments under the variable annuity contracts may be accepted; (b) to include as part of any application to purchase a contract offered by a prospectus which is part of this registration statement on Form N-4, a space that an applicant can check to request a Statement of Additional Information; and (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form N-4 promptly upon written or oral request. (d) Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (e) Aetna Life Insurance and Annuity Company represents that the fees and charges deducted under the contracts covered by this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Variable Annuity Account C of Aetna Life Insurance and Annuity Company, has caused this Post-Effective Amendment No. 7 to its Registration Statement on Form N-4 (File No. 33-75992) to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hartford, State of Connecticut, on the 13th day of February, 1997. VARIABLE ANNUITY ACCOUNT C OF AETNA LIFE INSURANCE AND ANNUITY COMPANY (Registrant) By: AETNA LIFE INSURANCE AND ANNUITY COMPANY (Depositor) By: Daniel P. Kearney* ------------------------------------------- Daniel P. Kearney President As required by the Securities Act of 1933, this Post-Effective Amendment No. 7 to the Registration Statement on Form N-4 (File No. 33-75992) has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- Daniel P. Kearney* Director and President ) - ------------------------------------ (principal executive officer) ) Daniel P. Kearney ) Timothy A. Holt* Director, Senior Vice President and ) February - ----------------------------------- Chief Financial Officer ) 13, 1997 Timothy A. Holt ) Christopher J. Burns* Director ) - ------------------------------------ Christopher J. Burns ) ) Laura R. Estes* Director ) - ------------------------------------ Laura R. Estes ) ) Gail P. Johnson* Director ) - ------------------------------------ Gail P. Johnson ) ) John Y. Kim* Director ) - ------------------------------------ John Y. Kim ) ) Shaun P. Mathews* Director ) - ------------------------------------ Shaun P. Mathews ) ) Glen Salow* Director ) - ------------------------------------ Glen Salow ) ) Creed R. Terry* Director ) - ------------------------------------ Creed R. Terry ) ) Deborah Koltenuk* Vice President and Treasurer, Corporate Controller ) - ------------------------------------ Deborah Koltenuk )
By: /s/ Julie E. Rockmore ------------------------------------------------------------ *Julie E. Rockmore Attorney-in-Fact VARIABLE ANNUITY ACCOUNT C EXHIBIT INDEX
Exhibit No. Exhibit Page - ----------- ------- ---- 99-B.1 Resolution of the Board of Directors of Aetna Life Insurance and Annuity * Company establishing Variable Annuity Account C 99-B.3.1 Form of Broker-Dealer Agreement * 99-B.3.2 Alternative Form of Wholesaling Agreement and Related Selling Agreement * 99-B.4.1 Form of Variable Annuity Contract (I-CDA-HD) * 99-B.4.2 Form of Variable Annuity Contract (GIH-CDA-HB) and (IMT-CDA-HO) * 99-B.4.3 Form of Variable Annuity Contract (IST-CDA-HO) ---- 99-B.4.4 Form of Variable Annuity Contract (I-CDA-HD(XC)) ---- 99-B.4.5 Form of Endorsement (EIP-SDOTHD-97) to Contract IA-CDA-HD ---- 99-B.4.6 Form of Endorsement (EIP-SDOTHD-97(NY)) to Contract I-CDA-HD(XC) ---- 99-B.4.7 Form of Endorsement (EIP-SDOTPM-97(NY)) to Contracts IMT-CDA-HO and IST-CDA-HO ---- 99-B.4.8 Form of Endorsement (EIP-SDOTPM-97) to Contracts IMT-CDA-HO and IST-CDA-HO ---- 99-B.5 Form of Variable Annuity Contract Application (710.00.16H) * 99-B.6.1 Certification of Incorporation and By-Laws of Depositor * 99-B.6.2 Amendment of Certificate of Incorporation of Depositor * 99-B.8.1 Fund Participation Agreement (Amended and Restated) between Aetna Life * Insurance and Annuity Company, Alger American Fund and Fred Alger Management, Inc. dated March 31, 1995 *Incorporated by reference **To be filed by amendment Exhibit No. Exhibit Page - ----------- ------- ---- 99-B.8.2 Fund Participation Agreement between Aetna Life Insurance * and Annuity * Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 99-B.8.3 Fund Participation Agreement between Aetna Life Insurance * and Annuity * Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1. 1995, May 1, 1995, January 1, 1996 and March 1,1996 99-B.8.4 Service Agreement between Aetna Life Insurance and Annuity Company and * Fidelity Investments Institutional Operations Company dated as of November 1, 1995 99-B.8.5 Fund Participation Agreement between Aetna Life Insurance and Annuity * Company and Janus Aspen Series dated April 19, 1994 and amended March 1, 1996 99-B.8.6 Fund Participation Agreement between Aetna Life Insurance and Annuity * Company and Scudder Variable Life Investment Fund dated April 27, 1992 and amended February 19, 1993 and August 13, 1993 99-B.8.7 Amendment dated as of February 20, 1996 to Fund Participation Agreement * between Aetna Life Insurance and Annuity Company and Scudder Variable Life Investment Fund dated April 27, 1992 as amended February 19, 1993 and August 13, 1993 99-B.8.8 Fund Participation Agreement between Aetna Life Insurance and Annuity * Company, Investors Research Corporation and TCI Portfolios, Inc. dated July 29, 1992 and amended December 22, 1992 and June 1, 1994 99-B.9 Opinion of Counsel ** *Incorporated by reference **To be filed by amendment Exhibit No. Exhibit Page - ----------- ------- ---- 99-B.10.1 Consent of Independent Auditors ** 99-B.10.2 Consent of Counsel ** 99-B.13 Schedule for Computation of Performance Data * 99-B.15.1 Powers of Attorney * 99-B.15.2 Authorization for Signatures * 27 Financial Data Schedule **
*Incorporated by reference **To be filed by amendment EX-99.4.3 2 Aetna Life Insurance and Annuity Company Home Office: 151 FARMINGTON AVE. HARTFORD, CONNECTICUT 06156 203-273-0123 Herein called Aetna Agrees to pay the benefits stated in this Contract. DETAILS OF VARIABLE FEATURES OF THIS CONTRACT ARE IN THE DEPOSIT, RESERVE, AND SURRENDER PROVISIONS, AND ANNUITY PROVISIONS. RIGHT TO CANCEL The Owner may cancel this Contract within 10 days of receiving it, by sending a written notice to Aetna at the above address or to the agent from whom it was purchased. Aetna will return all payments made for this Contract within 7 days after it receives the notice of cancellation and this Contract. This page, the following pages, and the application, make up the entire Contract. Signed at the Hartford, Connecticut on the Date of Issue. /s/ Stephen B. Middlebrook /s/ William O. Bailey Secretary President INDIVIDUAL SINGLE DEPOSIT CONTRACT VARIABLE OR FIXED ANNUITY OR COMBINATION NON-PARTICIPATING 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. IST-CDA-HO 39176 SPECIFICATIONS Annuitant Contract No. Date of Issue Deduction from Deposit - The amount of the Net Deposit applied will be the deposit received minus a deduction for premium taxes, if any then deducted (see Deposit, Reserve, and Surrender Provisions of this Contract). Deductions From The Separate Account And The Funds - Total deductions equal 1.5% on an annual basis. Once Annuity payments begin, Aetna must earn a gross return on the assets of the Separate Account of: (a) 5% on an annual basis if an assumed net return rate of 3.5% is chosen; or (b) 6.5% on an annual basis if an assumed net return rate of 5% is chosen; in order that the dollar amount of the Variable Annuity payments will not decrease. IST-CDA-HO 2 COVER SHEET This Contract is a legal contract between Owner and Aetna. READ THIS CONTRACT CAREFULLY. This cover sheet is only a brief outline of some of the important features of this Contract. This cover sheet is not the insurance contract. Only the actual terms of this Contract will control. This Contract sets forth, in detail, all of the rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY. TABLE OF CONTENTS Page GENERAL DEFINITIONS 1. Annuity..................................................................5 2. Fixed Annuity............................................................5 3. Variable Annuity.........................................................5 4. General Account..........................................................5 5. Separate Accounts........................................................5 6. Fund(s)..................................................................5 7. Valuation Period.........................................................5 GENERAL PROVISIONS 1. Contract.................................................................6 2. Incontestability.........................................................6 3. Ownership; Claims of Creditors...........................................6 4. Beneficiary..............................................................6 5. Misstatements and Adjustments............................................6 6. State Laws...............................................................6 7. Non-Participating Contract...............................................7 DEPOSIT, RESERVE, AND SURRENDER PROVISIONS 1. Net Deposit(s)...........................................................7 2. Credit of Net Deposit(s).................................................7 3. Guaranteed Interest Rate - General Account...............................7 4. Record Units - Separate Account..........................................7 5. Investment Increment Factors - Separate Account..........................8 6. Record Unit Value - Separate Account.....................................8 7. Reserve..................................................................9 8. Transfer of Reserve......................................................9 9. Notice to the Owner......................................................9 10. Sum Payable at Death (Before Annuity Payments Start).....................9 11. Surrender Value.........................................................10 12. Table of Minimum Values - General Account...............................10 IST-CDA-HO 3 ANNUITY PROVISIONS 1. Choices to be Made......................................................12 2. Fund(s) Annuity Units - Separate Account................................12 3. Fund(s) Annuity Unit Value - Separate Account...........................13 4. Annuity Options.........................................................13 5. Special Terms Under Annuity Options.....................................24 6. Other Terms of Annuity Options..........................................24 7. Death of Annuitant/Beneficiary..........................................24 IST-CDA-HO 4 GENERAL DEFINITIONS 1. ANNUITY - Payment of an income: (a) for the life of one or two people; (b) for a stated period; (c) for some mix of (a) and (b); or (d) until there are no funds left. 2. FIXED ANNUITY - An Annuity of a fixed dollar amount paid from the General Account. 3. VARIABLE ANNUITY - An Annuity of a varying dollar amount paid from the Separate Account. 4. GENERAL ACCOUNT - The Account which holds the assets of Aetna, other than those assets of Aetna in the Separate Accounts. Reserves for a Fixed Annuity are held in the General Account. 5. SEPARATE ACCOUNTS - Accounts set up by Aetna under the Connecticut Insurance Laws. Assets for this class of variable contracts are set apart from other assets of Aetna. Reserves for a Variable Annuity are held in a Separate Account and invested in shares of Fund(s). 6. FUND(S) - The open-end management investment companies (mutual funds) registered under the Investment Company Act of 1940. They are: (a) Aetna Variable Fund, Inc. (Variable Fund); (b) Aetna Variable Encore Fund, Inc. (Encore Fund); (c) Aetna Income Shares, Inc. (Income Fund); and (d) Other funds (if any) which Aetna may allow. 7. VALUATION PERIOD - The period of time from the end of one business day to the end of the next business day. IST-CDA-HO 5 GENERAL PROVISIONS 1. Contract This Contract may be changed only by an officer of Aetna. Any change must be made in writing. Any choices under this Contract by the Owner, Annuitant or beneficiary must be in writing. Until receipt of such choices in the Home Office of Aetna, Aetna may rely on any previous choices made. Aetna will make Annuity payments as and when due. Any other payments will be made by Aetna within 7 days of receipt of the written claim for payment. 2. Incontestability Aetna cannot cancel this Contract because of any error of fact on the application. 3. Ownership; Claims of Creditors The Owner shall be as stated on the application, or as later changed by the Owner. During the lifetime of the Annuitant, all of the benefits and rights granted by this Contract, or allowed by Aetna, belong to the Owner. The Owner may be changed only to the Annuitant on a non-transferrable basis. This Contract may not be: (a) subject to the claims of any creditors; and (b) sold, assigned, or pledged to other than Aetna. 4. Beneficiary The beneficiary shall be as stated on the application, or as later changed by the Owner. If no beneficiary is living at the death of the Annuitant, payment of any amount due will be made to the Owner or to the estate of the Owner. 5. Misstatements and Adjustments If the age or sex of any payee is found to be misstated, the correct facts will be used to adjust payments. 6. State Laws This Contract follows the laws of the state in which it is delivered. Any cash, death or Annuity payments are equal to or greater than the minimum required by such laws. IST-CDA-HO 6 7. Non-Participating Contract The Owner will have no right to share in the earnings of Aetna. DEPOSIT, RESERVE, AND SURRENDER PROVISIONS 1. Net Deposit The Net Deposit is the single deposit minus a charge to pay premium taxes, if any. As a rule, Aetna will take this charge out of the Reserve (see below) when annuity payments are to start. But, if Aetna determines that it must pay any imposed premium tax at any other time, it may take out the charge at any time. 2. Credit of Net Deposit(s) On the basis of information supplied by the Owner, Aetna will credit the Net Deposit in either: (a) the General Account; (b) the Separate Account where it is invested in Fund(s) as directed by the Owner; or (c) a mix of (a) and (b). 3. Guaranteed Interest Rate - General Account On a Net Deposit made to the General Account, Aetna will add interest daily at an annual rate no less than: (a) 4% except under the Annuity Provisions; and (b) 3.5% under the Annuity Provisions. Aetna may add interest daily at any higher rate. 4. Record Units - Separate Account The portion of the Net Deposit applied to the Separate Account Fund(s) will determine the number of Record Units. This number is equal to the Net Deposit divided by the Record Unit Value (see below) for the Valuation Period when the Net Deposit is received. IST-CDA-HO 7 5. Investment Increment Factors - Separate Account Investment Increment Factors are those items used to determine a Fund's net return factor for each Valuation Period. The net return factor(s) are then used to compute all Separate Account values and payments. The gross return is equal to: (a) investment income; plus (b) realized and unrealized capital gains; minus (c) realized and unrealized capital losses; minus (d) certain investment expenses; and minus (e) a daily charge at an annual rate of .25% for investment management expense and profit. The gross return is divided by the net assets of the Fund at the start of the Valuation Period to compute the gross return rate. A gross return rate may be more or less than 0. The net return rate is equal to: (a) the gross return rate; plus or minus (b) taxes (or charges to a tax reserve) on the Separate Account; and minus (c) a daily charge at an annual rate of 1.25% for annuity mortality and expense risks and profit. A net return rate may be more or less than 0. The net return factor for each Fund is equal to the net return rate plus 1.000000. 6. Record Unit Value - Separate Account The Record Unit Value of each Separate Account Fund is computed by multiplying the net return factor for the current Valuation Period by the Record Unit Value for the previous Period. The dollar value of Record Units, Separate Account Reserves, and Variable Annuity payments may go up or down due to investment gain or loss. IST-CDA-HO 8 7. Reserve The Reserve is equal to: (a) the Net Deposit credited to the General Account (if any); plus (b) General Account interest added by Aetna; plus (c) the value of the Separate Account Record Units (if any); and minus (d) any amounts previously surrendered. 8. Transfer of Reserve The Owner may transfer any portion of the Reserve from any Fund to any other Fund or to the General Account. The Reserve cannot be transferred from the General Account to any of the Funds. A transfer of the Reserve cannot be made within 90 days of a previous transfer. 9. Notice to the Owner Aetna will notify the Owner each year of: (a) the investments held in the Fund(s) for the Separate Account; and (b) the number of record units; or (c) the number of annuity units; and (d) the value of a unit. Such number or values will be as of a date no more than 60 days before the date of the notice. 10. Sum Payable at Death (Before Annuity Payments Start) Aetna will pay to the beneficiary the Reserve if: (a) the participant dies before Annuity payments start; and (b) the notice of death is received by Aetna. The sum paid will be the Reserve on the date when the notice is received. The beneficiary may choose to apply any sum under Annuity Options (see Annuity Provisions). IST-CDA-HO 9 11. Surrender Value The owner, before Annuity payments start, may choose to surrender all or a portion of the Reserve. The amount paid by Aetna on any surrender will be the Reserve surrendered less a percentage charge. The charge will vary according to the period of time between the Date of Issue and the date of surrender, as follows: If period of time is Charge Less than 5 years 5% From 5 to 6 years 4% From 6 to 7 years 3% From 7 to 8 years 2% From 8 to 9 years 1% 9 or more years None In no event, however, will the charge on a total surrender exceed 9% of the actual deposit made to that Account. Under certain emergency conditions, Aetna has the right to defer payment of any surrender value as provided by federal or state law. 12. Table of Minimum Values - General Account The Table below shows minimum (Fixed) General Account values at the end of contract years. These values assume: (a) the deposit to the General Account was made on the Date of Issue; (b) there have been no partial surrenders; and (c) interest has been added at the guaranteed interest rate (see Guaranteed Interest Rate). If interest is added at a higher rate at any time, actual values will be more than those shown below. IST-CDA-HO 10 TABLE OF MINIMUM (FIXED) GENERAL ACCOUNT VALUES PER $1,000 OF NET DEPOSIT TO THE GENERAL ACCOUNT
Minimum Minimum End of Minimum Surrender End of Minimum Surrender Year Reserve Value Year Reserve Value 1 $ 1,040 $ 988 16 $ 1,872 $ 1,872 2 1,082 1,028 17 1,947 1,947 3 1,125 1,069 18 2,025 2,025 4 1,170 1,111 19 2,106 2,106 5 1,217 1,156 20 2,191 2,191 6 1,265 1,215 25 2,665 2,665 7 1,316 1,276 8 1,369 1,341 30 3,243 3,243 9 1,423 1,409 10 1,480 1,480 35 3,946 3,946 11 1,539 1,539 40 4,801 4,801 12 1,601 1,601 13 1,665 1,665 45 5,841 5,841 14 1,731 1,731 15 1,800 1,800 50 7,106 7,106
IST-CDA-HO 11 ANNUITY PROVISIONS 1. Choices to be Made The Owner may tell Aetna to pay the Reserve (minus any charge for premium taxes) as a premium for an Annuity under Options 2, 3, 4, and 5 (see below). The first Annuity payment must generally be made no later than the first day of the month following the Annuitant's 75th birthday. The Owner may tell Aetna to make the first Annuity payment on the first day of any prior month. When any option is chosen, the Owner or beneficiary choosing the option must tell Aetna if payments are to be made other than monthly. They must also tell Aetna to pay: (a) a Fixed Annuity; (b) a Variable Annuity using any Variable Fund; (c) a Variable Annuity using Income Fund; or (d) any mix of these. When choosing a Variable Annuity, an assumed net return rate of 5% per year may be chosen. If not chosen, Aetna will use an assumed net return rate of 3.5% per year. 2. Fund(s) Annuity Units - Separate Account the amount of the first Variable Annuity payment will be equal to: (a) the portion of the Individual Account Reserve (minus any charges for premium taxes) to be used to pay a Variable Annuity using the Fund(s); times (b) the rate for each $1,000 for the Option chosen. Such amount, or portion, of the payment using a Fund will be divided by the Fund(s) Annuity Unit Value (see below) on the due date of the first payment to determine the number of the Fund(s) Annuity Units. Such number of the Fund(s) Annuity Units remains fixed. Each future payment is equal to such number times the Fund(s) Annuity Unit Value on the due date of each payment. IST-CDA-HO 12 3. Fund(s) Annuity Unit Value - Separate Account For any Valuation Period the Fund(s) Annuity Unit Value is equal to: (a) the Value for the next previous Period; times (b) the net return factor(s) (see Investment Increment Factors - Separate Account provisions) for the tenth previous Period; times (c) a factor to reflect the assumed net return rate. The factor for 3.5% per year is .9999058; for 5% per year it is .9998663. The dollar amount of Annuity Units, values, and payments may go up or down due to investment gain or loss. Payments shall not be changed due to mortality or expense results. 4. Annuity Options Option 1 - Payment of Interest on Sum Left With Aetna - This Option may be used only by the beneficiary when the death of the Annuitant is before Aetna has started paying an Annuity. A portion or all of the sum due may be held in the General Account of Aetna at interest (see Guaranteed Interest Rate - General Account provision). The beneficiary may later tell Aetna to: (a) pay a portion, or all, of the sum held by Aetna; or (b) apply a portion, or all, of the sum held by Aetna under any of the Annuity Options below. Option 2 - Payments of a Stated Dollar Amount - An Annuity of a chosen amount will be paid until there are no funds left. The payments to be made in a year must be no less than $60 for each $1,000 applied to this Option, but cannot exceed an amount which would deplete the funds in less than 3 years. Where there is a right under Federal Securities Law to forego future payments and receive the present value of the Annuity under this Option in a lump sum, the exercise of that right within a 3 year period after the start of payments shall be treated as a surrender (see Surrender Value under Deposit, Reserve and Surrender Provisions). Option 3 - Payments for a Stated Period of Time - An Annuity will be paid for the number of years chosen. The number of years must be no less than 3 and no more than 30. IST-CDA-HO 13 Where there is a right under Federal Securities Law to forego future payments and receive the present value of the Annuity under this Option in a lump sum, the exercise of that right within a 3 year period after the start of payments shall be treated as a surrender (see Surrender Value under Deposit, Reserve and Surrender Provisions). IST-CDA-HO 14 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% PAYMENTS FOR A STATED PERIOD
Years of Amount of Years of Amount of Years of Amount of Payments Payments Payments Payments Payments Payments - -------- -------- -------- -------- -------- -------- 3 $29.19 13 $7.94 22 $5.39 4 22.27 14 7.49 23 5.24 5 18.12 15 7.10 24 5.09 6 15.35 16 6.76 25 4.96 7 13.38 17 6.47 26 4.84 8 11.90 18 6.20 27 4.73 9 10.75 19 5.97 28 4.63 10 9.83 20 5.75 29 4.53 11 9.09 21 5.56 30 4.45 12 8.46
Rates for a Variable Annuity with Assumed Net Return Rate of 5% PAYMENTS FOR A STATED PERIOD
Years of Amount of Years of Amount of Years of Amount of Payments Payments Payments Payments Payments Payments - -------- -------- -------- -------- -------- -------- 3 $29.80 13 $8.64 22 $6.17 4 22.89 14 8.20 23 6.02 5 18.74 15 7.82 24 5.88 6 15.99 16 7.49 25 5.76 7 14.02 17 7.20 26 5.65 8 12.56 18 6.94 27 5.54 9 11.42 19 6.71 28 5.45 10 10.51 20 6.51 29 5.36 11 9.77 21 6.33 30 5.28 12 9.16
IST-CDA-HO 15 Option 4 - Life Income - An Annuity will be paid for life. Payments may be made for a minimum stated period, if chosen, of 60, 120, 180 or 240 months. If the Annuitant dies before the end of such stated period, payments will be made to the beneficiary for the rest of the stated period. IST-CDA-HO 16 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
LIFE INCOME WITH Age of Payments Guaranteed for a Stated Period of Months: Annuitant None 60 120 180 240 Male Female ---- ------ ---- -- --- --- --- 50 55 $4.98 $4.96 $4.89 $4.77 $4.62 51 56 5.08 5.05 4.98 4.85 4.68 52 57 5.18 5.16 5.07 4.93 4.74 53 58 5.30 5.26 5.17 5.01 4.80 54 59 5.41 5.38 5.27 5.09 4.86 55 60 5.54 5.49 5.37 5.17 4.92 56 61 5.67 5.62 5.48 5.26 4.98 57 62 5.80 5.75 5.59 5.35 5.04 58 63 5.95 5.89 5.71 5.44 5.10 59 64 6.10 6.03 5.83 5.53 5.16 60 65 6.27 6.19 5.96 5.62 5.22 61 66 6.44 6.35 6.09 5.72 5.27 62 67 6.63 6.52 6.23 5.81 5.33 63 68 6.82 6.71 6.38 5.91 5.38 64 69 7.04 6.90 6.53 6.00 5.43 65 70 7.26 7.11 6.68 6.10 5.47 66 71 7.50 7.33 6.84 6.19 5.52 67 72 7.76 7.56 7.01 6.28 5.55 68 73 8.04 7.80 7.18 6.37 5.59 69 74 8.34 8.07 7.35 6.46 5.62 70 75 8.67 8.34 7.52 6.54 5.65 71 9.01 8.63 7.70 6.62 5.67 72 9.39 8.94 7.88 6.69 5.69 73 9.79 9.26 8.05 6.76 5.71 74 10.22 9.61 8.22 6.81 5.72 75 10.69 9.96 8.39 6.87 5.73
Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. IST-CDA-HO 17 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for Variable Annuity with Assumed Net Return Rate of 5%
LIFE INCOME WITH Age of Payments Guaranteed for a Stated Period of Months: Annuitant None 60 120 180 240 Male Female ---- ------ ---- -- --- --- --- 50 55 $5.89 $5.86 $5.78 $5.65 $5.48 51 56 5.99 5.96 5.86 5.71 5.53 52 57 6.09 6.06 5.95 5.79 5.59 53 58 6.20 6.16 6.04 5.86 5.64 54 59 6.32 6.27 6.14 5.94 5.70 55 60 6.44 6.39 6.24 6.02 5.75 56 61 6.57 6.51 6.34 6.10 5.80 57 62 6.71 6.64 6.45 6.18 5.86 58 63 6.85 6.77 6.56 6.26 5.91 59 64 7.00 6.92 6.68 6.35 5.97 60 65 7.16 7.07 6.80 6.43 6.02 61 66 7.34 7.23 6.93 6.52 6.07 62 67 7.52 7.40 7.06 6.61 6.12 63 68 7.72 7.58 7.20 6.70 6.17 64 69 7.93 7.77 7.35 6.79 6.21 65 70 8.16 7.97 7.50 6.88 6.25 66 71 8.40 8.19 7.65 6.97 6.29 67 72 8.66 8.42 7.81 7.05 6.33 68 73 8.94 8.66 7.97 7.14 6.36 69 74 9.24 8.92 8.13 7.22 6.39 70 75 9.56 9.19 8.30 7.29 6.41 71 9.91 9.48 8.47 7.36 6.43 72 10.29 9.78 8.64 7.43 6.45 73 10.69 10.10 8.80 7.49 6.47 74 11.13 10.43 8.97 7.55 6.48 75 11.60 10.79 9.13 7.60 6.49
Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. IST-CDA-HO 18 Option 5 - Life Income for Two Payees - An Annuity will be paid during the lives of the Annuitant and a second annuitant. At the death of either, payments will continue to the survivor. When this option is chosen, a choice must be made of: (a) 100% of the payment to continue to the survivor; (b) 662/3% of the payment to continue to the survivor; (c) 50% of the payment to continue to the survivor; or (d) payments for a minimum of 120 months, with 100% of the payment to continue to the survivor. IST-CDA-HO 19 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR NO MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $4.10 $4.27 $4.43 $4.57 $4.69 $4.79 $4.86 55 60 4.21 4.43 4.65 4.86 5.04 5.20 5.32 60 65 4.30 4.57 4.86 5.15 5.43 5.68 5.88 65 70 4.38 4.69 5.04 5.43 5.83 6.21 6.56 70 75 4.44 4.79 5.20 5.68 6.21 6.78 7.33 75 80 4.48 4.86 5.32 5.88 6.56 7.33 8.16 80 85 -- 4.91 5.41 6.03 6.82 7.80 8.95
Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR NO MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $5.00 $5.16 $5.31 $5.44 $5.57 $5.67 $5.75 55 60 5.11 5.31 5.51 5.71 5.90 6.06 6.19 60 65 5.20 5.44 5.71 5.99 6.26 6.52 6.73 65 70 5.28 5.57 5.90 6.26 6.65 7.04 7.38 70 75 5.34 5.67 6.06 6.52 7.04 7.59 8.14 75 80 5.38 5.75 6.19 6.73 6.38 8.14 8.96 80 85 -- 5.81 6.29 6.90 7.66 8.62 9.76
Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. IST-CDA-HO 20 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY 66 2/3% TO THE SURVIVOR NO MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $4.51 $4.72 $4.94 $5.18 $5.44 $5.71 $6.00 55 60 4.70 4.94 5.20 5.49 5.81 6.14 6.49 60 65 4.90 5.18 5.49 5.84 6.23 6.65 7.09 65 70 5.11 5.44 5.81 6.23 6.71 7.25 7.82 70 75 5.34 5.71 6.14 6.65 7.25 7.93 8.69 75 80 5.58 6.00 6.49 7.09 7.82 8.69 9.69 80 85 -- 6.28 6.84 7.53 8.39 9.47 10.77
Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY 66 2/3% TO THE SURVIVOR NO MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $5.43 $5.62 $5.84 $6.08 $6.36 $6.65 $6.98 55 60 5.62 5.84 6.10 6.38 6.70 7.06 7.44 60 65 5.82 6.08 6.38 6.72 7.11 7.54 8.01 65 70 6.06 6.36 6.70 7.11 7.58 8.12 8.71 70 75 6.31 6.65 7.06 7.54 8.12 8.80 9.56 75 80 6.59 6.98 7.44 8.01 8.71 9.56 10.56 80 85 -- 7.31 7.84 8.49 9.33 10.38 11.66
Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. IST-CDA-HO 21 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY 50% TO THE SURVIVOR NO MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $4.75 $4.98 $5.24 $5.55 $5.91 $6.32 $6.79 55 60 4.99 5.24 5.54 5.88 6.28 6.76 7.30 60 65 5.26 5.55 5.88 6.27 6.73 7.27 7.90 65 70 5.59 5.91 6.28 6.73 7.26 7.90 8.65 70 75 5.96 6.32 6.76 7.27 7.90 8.67 9.57 75 80 6.37 6.79 7.30 7.90 8.65 9.57 10.69 80 85 -- 7.30 7.88 8.59 9.49 10.61 12.00
Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY 50% TO THE SURVIVOR NO MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $5.67 $5.89 $6.15 $6.47 $6.84 $7.29 $7.81 55 60 5.91 6.15 6.44 6.78 7.20 7.70 8.28 60 65 6.20 6.47 6.78 7.16 7.63 8.19 8.86 65 70 6.54 6.84 7.20 7.63 8.16 8.80 9.58 70 75 6.95 7.29 7.70 8.19 8.80 9.56 10.48 75 80 7.42 7.81 8.28 8.86 9.58 10.48 11.60 80 85 -- 8.39 8.94 9.61 10.46 11.56 12.92
Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. IST-CDA-HO 22 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR 120 MONTHS MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $4.10 $4.27 $4.42 $4.56 $4.68 $4.77 $4.83 55 60 4.21 4.42 4.64 4.84 5.02 5.16 5.26 60 65 4.30 4.56 4.84 5.12 5.38 5.61 5.78 65 70 4.37 4.68 5.02 5.38 5.76 6.10 6.37 70 75 4.42 4.77 5.16 5.61 6.10 6.58 7.00 75 80 4.46 4.83 5.26 5.78 6.37 7.00 7.58 80 85 -- 4.86 5.33 5.88 6.55 7.29 8.02
Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR 120 MONTHS MINIMUM PERIOD
Age of Second Annuitant Age of Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Male 75 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 ---- ------ --------- --------- --------- --------- --------- --------- -------- 50 55 $5.00 $5.15 $5.30 $5.43 $5.55 $5.64 $5.71 55 60 5.10 5.30 5.50 5.69 5.87 6.01 6.12 60 65 5.19 5.43 5.69 5.96 6.21 6.44 6.61 65 70 5.27 5.55 5.87 6.21 6.57 6.90 7.17 70 75 5.32 5.64 6.01 6.44 6.90 7.37 7.78 75 80 5.36 5.71 6.12 6.61 7.17 7.78 8.34 80 85 -- 5.75 6.19 6.72 7.35 8.06 8.76
Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. IST-CDA-HO 23 5. Special Terms Under Annuity Options5. Special Terms Under Annuity Options (a) when payments start, the age of the Annuitant plus the number of years for which payments are guaranteed must not exceed 95. (b) the present value of the payments to the Annuitant when payments start shall be more than 50% of the present value of the payments to be made to all payees; this restriction does not apply if Option 5 is chosen and the second Annuitant is the spouse of the Annuitant. 6. Other Terms of Annuity Options No choice of any Annuity Option may be made if the first payment would be less than $20 or if the total payments in a year would be less than $100. Age, where used in the above tables, means age nearest birthday on the date of the first payment. The tables for Options 4 and 5 use the Annuity table for 1949 with: (a) a 1 year age reduction for males; and (b) a 6 year age reduction for females. If Fixed Annuity Options 3, 4, or 5 are chosen and Aetna's current applicable rates at that time are larger than the rates above, the larger payment will be made. 7. Death of Annuitant/Beneficiary When an Annuitant dies while payments are being made under an Annuity Option, payments will be continued to the beneficiary as provided by the option. If no beneficiary is living, the present value of any remaining payments will be paid in one sum to the estate of the Annuitant. The present value will assume the same interest rate that was used when the first payment was made. When a beneficiary dies while a sum is held at interest, the amount held will be paid in one sum to the estate of the beneficiary. When a beneficiary dies while payments are being made under an Annuity Option, the present value of any remaining payments will be paid in one sum to the estate of the beneficiary. The present value will assume the same interest rate that was used when the first payment was made. IST-CDA-HO 24 Aetna Life Insurance and Annuity Company Home Office: 151 FARMINGTON AVE. HARTFORD, CONNECTICUT 06156 (203) 273-0123 GROUP DEPOSIT ADMINISTRATION CONTRACT ACTIVE LIFE FUND IN SEPARATE ACCOUNT AND GENERAL ACCOUNT ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. IST-CDA-HO 25 Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract or Certificate is hereby endorsed as follows: Payments under any life Annuity Option in this Contract or Certificate; which is elected on or after the effective date of this endorsement, will be determined without regard to the sex of the Annuitant(s). Any such payments will be based solely on the age of the Annuitant(s) (as determined by the Contract or Certificate); using the most favorable rate for that age under the benefit elected. If a larger payment would result by a female Annuitant using the rates shown in the Contract or Certificate for a male, the larger payment will be made. Endorsed and made a part of the Contract or Certificate effective August 1, 1983. /s/ William O. Bailey President EUSR-HC Aetna Life Insurance and Annuity Company ENDORSEMENT Aetna hereby endorses this Contract to allow the transfer of Reserves out of the General Account. Such transfers will be: (1) a minimum of 10% of the Reserves held in the General Account; (2) without deduction of any charge; (3) to any of the Fund(s); (4) allowed once during each calendar year; (5) prior to the election of an Annuity Option; and (6) without affecting the rights of transfer now in the contract. Aetna may, for temporary periods of time, allow any larger percentage to be transferred. The value of the Reserves held in the General Account, as used above, is the value when the request is received at the Home Office of Aetna. Endorsed and made a part of this Contract on the later of September 1, 1983 or the Date of Issue of this Contract. /s/ William O. Bailey President EGAWI-HC Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is endorsed to allow for the election of a loan subject to the following conditions: A. Add to the DEPOSIT, RESERVE, AND SURRENDER PROVISIONS the following provision: 13. Loan Value: The Owner, before an annuity option is elected, may borrow from the Reserve according to the terms specified below: (a) Requesting a Loan: The request must be in writing in a form acceptable to Aetna and must assign to Aetna that portion of the Reserve necessary to cover the loan amount plus interest. A loan may not be requested within 12 months of any prior loan request. (b) Loan Amount: The amount of the loan requested must be greater than $5,000 and, when added to the total of any prior loans outstanding, may not exceed the Reserve remaining in the Contract. The total amount of any outstanding loan(s) may not exceed $50,000. Loans can only be made from those amounts held in the Fund(s) and the Fixed Account. Loans may not be made against amounts held in the Guaranteed Interest Account. If the Owner intends to request a loan against any portion of the Guaranteed Interest Account, that portion of the Guaranteed Interest Account must be transferred to any Fund(s) or to the Fixed Account. The transferred amount will be subject to the Withdrawals provision. When a loan is made, an amount equal to the loan amount will be withdrawn from the Reserve. Unless instructed otherwise, the amount withdrawn will be allocated on a pro-rata basis among the Fixed Account and the Fund(s). (c) Loan Interest: Loan interest will accrue on a daily basis at an annual rate to 3%. Loan interest must be paid in full at least annually. The interest must be paid directly to Aetna by the Owner. If interest is not paid when due, the entire loan amount plus interest will be treated as a surrender under the terms of Contract. E-LNIE-HG 1 (d) Loan Repayment: The repayment of any portion of a loan will be allocated on a current basis among the Fund(s) and Fixed Account in the same proportion as when the loan was initially made. Repayment may be made at any time during the 5 years from the date the loan was first made. Any unpaid portion of a loan must be repaid at the end of the 5 years, upon election of an annuity option under this Contract, or upon full surrender of the Contract; whichever occurs first. Aetna may require all outstanding loans be paid if the Reserve falls below an amount equal to 25% of the total loans outstanding. Any loan and accrued interest not repaid will be treated as a surrender. B. Add to the end of Section 7 - Reserve, the following: and less any amount withdrawn for a loan, if applicable. C. Add to Section 10 - Sum payable at Death (Before Annuity Payments Start), the following: The Reserve payable under the terms of this section will be reduced by the amount of the accrued interest on any outstanding loan. Endorsed and made a part of this Contract on the effective date of the Contract. /s/ William O. Bailey President E-LNIE-HG 2 Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is endorsed to provide an additional accumulation option. This option does not replace or limit the use of any other option(s) available under this Contract for such purpose. This option is known as Aetna Guaranteed Equity Trust (GET Fund). The use of this option is described and limited as follows: 1. Aetna Guaranteed Equity Trust (GET Fund) - An open-end registered management investment company organized as a series fund. Each series of GET Fund constitutes a separate Fund under this Contract. 2. Allocation Period - The period of time, usually from one to three months, during which amounts may be allocated to a series of GET Fund, whether by transferring values from the other accumulation options, or by Purchase Payments. The Allocation Period is the only time during which amounts may be allocated to a series. At its discretion, prior to the beginning of an Allocation Period, Aetna may specify a minimum amount per transfer and per Purchase Payment amount for each series. A new series will be established for each Allocation Period. 3. Guaranteed Period - The length of time to which the Guarantee applies for a series. This period will be specified for a series before its Allocation Period begins. 4. Maturity Date - The date at which the Guaranteed Period for that series will end and the GET Fund Record Units for that series will be liquidated. Another accumulation option must then be elected. If no such election is made by the Maturity Date, Contract Values based on that GET Fund series will be transferred to Aetna Variable Encore Fund. Transfers made for this reason will not be counted as one of the four free transfers. The Maturity Date will be specified before the Allocation Period for that series begins. 5. Guarantee - Aetna guarantees that on a series' Maturity Date if the value of each GET Fund Record Unit then outstanding in that series is less than the value of that Record Unit at a date specified before the Allocation Period began, such date being the beginning of the Guaranteed Period, it will transfer to the Separate Account, from its General Account, any amount necessary to bring that Record Unit value to the guaranteed level. This Guarantee does not apply to GET Fund Record Unit values withdrawn or transferred before the Maturity Date. 6. Net Return Factor - Separate Account: The Net Return Factor for GET Fund is equal to 1.0000000 plus the Net Return Rate. EGET-HG 1 The Net Return Rate for each series of GET Fund, notwithstanding any other provision of this Contract is equal to: a. The value of the shares of that series of GET Fund held by the Separate Account at the end of a Valuation Period; minus b. The value of the shares of that series of GET Fund held by the Separate Account at the start of the Valuation Period; plus or minus c. The proportional share of taxes (or reserves for taxes) on the Separate Account (if any); divided by d. The total value of the GET Fund Record Units of the Separate Account for that series at the start of the Valuation Period; minus e. A daily actuarial charge at an annual rate of 1.25% for annuity mortality and expense risks and profit; f. A daily fee at an annual rate of .25% during the Guaranteed Period for Aetna's guarantee of Record Unit values and profit; and g. A daily administrative charge which will not exceed .25% on an annual basis. The Net Return Rate may be more or less than 0. The value of a share of a GET Fund series is equal to the net assets of that series divided by the number of outstanding shares of that series. 7. Withdrawals and Transfers - Withdrawals or transfers from a GET Fund series before the Maturity Date will be at the then applicable GET Fund Record Unit value, which may be more or less than the value guaranteed at the Maturity Date . 8. Election of an Annuity Option - Contract values based on any GET Fund series must be transferred to another accumulation option prior to election of an Annuity Option. 9. Current Value shall include the sum of any GET Fund Record Units. 10. Unless specifically indicated otherwise in this endorsement, all references to Fund(s) in this Contract shall include each GET Fund series. EGET-HG 2 Endorsed and made a part of this Contract on July 1, 1987 or the effective date of the Contract whichever is later. /s/ Dean E. Wolcott President EGET-HG 3 Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to include the following new provisions: During any calendar year, Aetna may be told to change the investment mix twelve times. Should Aetna allow additional changes, each may be subject to a fee of up to $10. Twelve transfers of Current Value (excluding transfers from the GA Account at the end of a Guaranteed Term) can be made during a calendar year period. Should Aetna allow additional transfers, each may be subject to a fee of up to $10. Endorsed and made a part of this Contract effective May 1, 1989. /s/ John J. Martin President Aetna Life Insurance and Annuity Company EIECVT-HI Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to add the following new provision under Surrender Value: No surrender fee is deducted: o On and after the tenth anniversary of the Effective Date of the Individual Account; or o From any portion of this Contract which is paid when the Reserve is $2,500 or less and no surrenders have been taken within the prior 12 months. If there is more than one Contract for the Annuitant, then this provision will only apply when the total in all of the Annuitant's Contracts is $2,500 or less. Endorsed and made a part of this Contract on May 1, 1989 or the Effective Date of the Contract whichever is later. /s/ John J. Martin President Aetna Life Insurance and Annuity Company EEISV-HI Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: The definition of Separate Account under the Definition of Certain Terms or General Definitions section of the contract is hereby amended to read as follows: Separate Account: An account which buys and holds shares of the Fund(s). Income, gains or losses, realized or unrealized are credited or charged to this account without regard to other income, gains or losses of Aetna. Aetna owns the assets held in a separate account and is not a trustee as to such amounts. These accounts generally are not guaranteed and are held at market value. The assets of such accounts, to the extent of reserves and other contract liabilities of the account, shall not be charged with other Aetna liabilities. Endorsed and made a part of the Contract. /s/ Edmund F. Kelly President Aetna Life Insurance and Annuity EGISA-IA Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is endorsed to provide an additional accumulation option. This option does not replace or limit the use of any other option(s) available under this Contract. This option is know as TCI Growth. The use of this option is described and limited as follows: 1. TCI Growth is one of three portfolios of TCI Portfolios, Inc., a registered open-end management investment company. 2. All references to Fund(s) in this Contract shall include TCI Growth unless specifically indicated otherwise. 3. Net Return Factor - Separate Account: The Net Return Factor for TCI Growth is equal to 1.0000000 plus the Net Return Rate. The Net Return Rate for TCI Growth notwithstanding any other provisions of this Contract, is equal to: a. The value of shares of TCI Growth held by the Separate Account at the end of a Valuation Period; minus b. The value of shares of TCI Growth held by the Separate Account at the start of the Valuation Period; plus or minus c. Taxes (or reserves for taxes) on the Separate Account (if any); divided by d. The total value of the TCI Growth Record Units at the start of the Valuation Period; minus e. A daily actuarial charge at an annual rate of 1.25% for annuity mortality and expense risks and profits; and f. A daily administrative charge which will not exceed 0.25% on an annual basis. The Net Return Rate may be more or less than 0. The value of a share of TCI Growth is equal to the net assets of TCI Growth divided by the number of outstanding shares of TCI Growth. The daily administrative charge may be changed annually except for amounts which have been used to purchase an Annuity. This charge will not exceed 0.25% on an annual basis. ETCI-IB 1 Endorsed and made a part of this Contract on February 1, 1993 or the effective date of the Contract, whichever is later. /s/ G. G. Benanav President Aetna Life Insurance and Annuity Company Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract is hereby endorsed. The term Valuation Period under Definitions is amended to read as follows: The period of time for which a Fund determines its net asset value, usually from 4:15 p.m. Eastern time each day the New York Stock Exchange is open until 4:15 p.m. the next such day, or such other day that one or more of the Funds determines its net asset value. Endorsed and made a part of the Contract. /s/ G. G. Benanav President Aetna Life Insurance and Annuity Company EVPE-IC Aetna Life Insurance and Annuity Company ENDORSEMENT Add the following conditions to the Contributions, Valuation and Discontinuance Contributions or the Deposit, Reserve and Surrender Provision portion of the Contract: The following distribution options may be elected by the Owner. (a) Estate Conservation Option (ECO): A distribution option under which a portion of the Individual Account Reserve Value will automatically be surrendered and distributed each year. (1) An ECO payment will be determined in the following manner: a. Payments will commence no earlier than the year in which the Owner attains age 70 1/2, and will be calculated on the full Reserve Value of the Individual Account, except as provided in b. b. If Aetna maintains separate records of the value of the account as of December 31, 1986, (see below), payments made on or after the year in which the Owner attains age 75 will only be calculated on amounts contributed after December 31, 1986, plus all interest credited after that date. The method under this rule is only used upon election of the Owner and will no longer be effective if the Owner submits a withdrawal request in addition to a scheduled ECO payment from the Individual Account, at which time ECO payments will then be determined under a. Aetna will maintain separate records if the Owner has not requested any withdrawals from his or her Individual Account since December 31, 1986. If a Owner attained age 70 1/2 prior to 1988 or is a Owner in a governmental or church Tax Deferred Annuity (TDA) plan, the Owner must be retired in order to qualify under b. (2) Amount of Distribution: Each year that ECO is in effect, Aetna will calculate and distribute an amount equal to the minimum required distribution under the Code. The annual distribution will be determined by dividing the Individual Account Reserve Value, including any current loan(s) outstanding, as of December 31 of the year prior to the year for which the payment is to be made, by a life expectancy factor. As elected by the Owner, the factor is either the single life or joint life expectancy based on tables in Section 401(a)(9) of the Code or related EITECSWE-IO 1 regulations. If joint life expectancy is elected and the Owner or spouse dies, payments will be calculated based on the survivor's life expectancy. These calculations may be changed as necessary to comply with the Code minimum distribution rules. The joint life expectancy factor can only be elected based on the joint life expectancy of the Owner and his or her spouse, and such spouse must be named as the beneficiary of any death benefits under the Contract while ECO is in effect. (3) Minimum Reserve Value: At its discretion, Aetna may require a minimum initial Reserve Value for election of this option. If after election of this option the Reserve Value is insufficient to make a scheduled ECO payment, Aetna will distribute the entire balance of the Individual Account. (4) Date of Distribution: The Owner shall specify the initial distribution date. The earliest date is the first day of the calendar year in which the Owner attains age 70 1/2. Subsequent distributions will be made annually on June 15 or such other date Aetna may designate or allow. (5) Elections and Revocation: ECO may be elected by the Owner by submitting a completed and signed election form to Aetna's Home Office. If the Contract Owner has notified Aetna that the TDA Plan is subject to Title I of the Employee Retirement Income Security Act of 1974 as amended, the Owner must also submit the appropriate joint and survivor annuity waiver and spousal consent form(s) to Aetna at its Home Office. Once elected, this option may be revoked by the Owner by submitting a written request to Aetna at its Home Office. Any revocation will apply only to amounts not yet paid. ECO may be elected only once. (6) Reservation of Rights: Aetna reserves the right to change the terms of ECO for future elections and discontinue the availability of this option after proper notification. Aetna also reserves the right to allow payments to be made more frequently than annually. (b) Systematic Withdrawal Option (SWO): A distribution option under which a portion of the Individual Account Reserve Value will automatically be surrendered and distributed each year. (1) Amount of Distribution: The Owner may elect one of the two payment methods described below. o Specified Amount: Payments of a designated dollar amount which must be no greater than 10% of the initial Reserve Value and shall EITECSWE-IO 2 remain constant unless a higher amount is required under Code minimum distribution rules. Each year that the Specified Amount is in effect, Aetna will calculate the minimum required distribution under the Code and distribute this amount if it is larger than the amount elected by the Owner. The life expectancy factor for this purpose will be the Owner's life expectancy at the time of the election of this option, and with each subsequent calendar year the factor will be reduced by one. The minimum required distribution will be determined by dividing the Individual Account Reserve Value, including any current loan(s) outstanding, as of December 31 of the year prior to the year for which the payment is to be made, by a life expectancy factor. At its discretion, Aetna may require a minimum initial payment amount; or o Specified Period: Payments which are made over a period of time which must be at least 10 years, unless otherwise required by Code minimum distribution rules. The maximum specified period will be limited by the Code minimum distribution rules. The annual amount paid each year is calculated by dividing the Individual Account Reserve Value as of December 31 of the prior year, including any outstanding loan(s), by the number of payment years remaining. The life expectancy factor is either the single life or joint life expectancy, as elected by the Owner, based on tables in Section 401(a)(9) of the Code or related regulations. If the joint life expectancy is elected, upon the death of either the Owner or the spouse, the minimum required distribution for the Specified Amount payment method will continue to be calculated in the same manner as described in (b)(1). Payments upon the Owner's death will continue in the manner described above, unless the spouse elects an alternate payment mode. Any mode elected must provide payments to be made at least as rapidly as those made prior to the Owner's death. These calculations may be changed as necessary to comply with the Code minimum distribution rules. The joint life expectancy factor can only be elected based on the joint life expectancy of the Owner and his or her spouse, and such spouse must be named as the beneficiary of any death benefits under the Contract while SWO is in effect. (2) Minimum Initial Reserve Value: At its discretion, Aetna may require a minimum initial Reserve Value for election of this option. If after election of this option the Reserve Value is insufficient to make a scheduled SWO payment, Aetna will distribute the entire balance of the Individual Account. EITECSWE-IO 3 (3) Date of Distribution: The Owner shall specify the initial distribution date. The earliest date is the first day of the calendar year in which the Owner attains age 70 1/2. SWO payments will be made annually. Subsequent distributions will be made annually on June 15 or such other date Aetna may designate or allow. (5) Elections and Revocation: SWO may be elected by the Owner by submitting a completed and signed election form to Aetna's Home Office. If the Contract Owner has notified Aetna that the TDA Plan is subject to Title I of the Employee Retirement Income Security Act of 1974 as amended, the Owner must also submit the appropriate joint and survivor annuity waiver and spousal consent form(s) to Aetna at its Home Office. Once elected, this option may be revoked by the Owner by submitting a written request to Aetna at its Home Office. Any revocation will apply only to amounts not yet paid. SWO may be elected only once. (6) Reservation of Rights: Aetna reserves the right to change the terms of SWO for future elections and discontinue the availability of this option after proper notification. Aetna also reserves the right to allow payments to be made more frequently than annually. Endorsed and made a part of the Contract on October 15, 1990 or the effective date of the Contract whichever is later. /s/ John J. Martin President Aetna Life Insurance and Annuity Company EITECSWE-IO 4 EX-99.4.4 3 Aetna Life Insurance and Annuity Company Home Office: 151 FARMINGTON AVE. HARTFORD, CONNECTICUT 06156 1-800-525-4225 Herein called Aetna Agrees to pay the benefits stated in this Contract. THE VARIABLE FEATURES OF THIS CONTRACT ARE DESCRIBED IN PARTS III AND IV. RIGHT TO CANCEL The Contract Holder may cancel this Contract within 10 days of receiving it, by returning this Contract along with a written notice to Aetna at the above address or to the agent from whom it was purchased. Within 7 days after it receives the notice of cancellation and this Contract at its Home Office, Aetna will return the entire consideration paid; plus any increase or minus any decrease in the cash value of any funds allocated to the Separate Accounts. This page, the following pages, and the application make up the entire Contract. Signed at the Home Office on the Effective Date. /s/ Susan E. Schechter /s/ Dan Kearney Secretary President INDIVIDUAL VARIABLE, FIXED, OR COMBINATION ANNUITY CONTRACT NON-PARTICIPATING 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. I-CDA-HD (XC) 39324 SPECIFICATIONS TYPE OF PLAN ANNUITANT CONTRACT HOLDER CONTRACT NO. EFFECTIVE DATE THIS CONTRACT IS DELIVERED IN AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION THIS CONTRACT MAY NOT BE SUITABLE IF ONLY ONE(1) LARGE PURCHASE PAYMENT IS MADE. Guaranteed Interest Rate - There is a guaranteed interest rate for Purchase Payment(s) held in the General Account. (See 3.02.) Surrender Fee - There will be a charge deducted for early surrender. (See Part V.) Deductions from the Separate Account - There will be deductions for mortality and expense risks and administrative fees. (See 3.05). This Contract is a legal contract and constitutes the entire legal relationship between Aetna and the Contract Holder. READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY. I-CDA-HD (XC) 2 TABLE OF CONTENTS I. GENERAL DEFINITIONS Page 1.01. Annuitant............................................................5 1.02. Annuity..............................................................5 1.03. Fixed Account........................................................5 1.04. Fixed Annuity........................................................5 1.05. Fund(s)..............................................................5 1.06. General Account......................................................5 1.07. Purchase Payments....................................................5 1.08. Separate Accounts....................................................5 1.09. Valuation Period.....................................................5 1.10. Variable Annuity.....................................................5 II. GENERAL PROVISIONS 2.01. Change of Contract...................................................6 2.02. Change of Fund(s)....................................................6 2.03. Non-Participating Contract...........................................6 2.04. Payments.............................................................6 2.05. State Laws...........................................................6 2.06. Control of Contract..................................................6 2.07. Designation of Beneficiary...........................................7 2.08. Misstatements and Adjustments........................................7 2.09. Incontestability.....................................................7 2.10. Grace Period.........................................................7 III. PURCHASE PAYMENT, CURRENT VALUE AND SURRENDER PROVISIONS 3.01. Net Purchase Payment(s):.............................................8 3.02. Guaranteed Interest Rate - Fixed Account.............................8 3.03. Maintenance Fee......................................................8 3.04. Fund(s) Record Units - Separate Account..............................8 3.05. Net Return Factor(s) - Separate Account..............................8 3.06. Fund(s) Record Unit Value - Separate Account.........................9 3.07 Current Value........................................................9 3.08. Transfer of Current Value from the Funds.............................9 3.09. Transfer of Current Value from the Fixed Account.....................9 3.10. Notice to the Contract Holder........................................9 3.11 Sum Payable at Death (Before Annuity Payments Start):................9 3.12. Surrender Value.....................................................10 3.13. Payment of Surrender Value..........................................10 3.14. Reinstatement.......................................................10 3.15. Payment of Current Value............................................10 I-CDA-HD (XC) 3 IV. ANNUITY PROVISIONS 4.01. Choices to be Made..................................................11 4.02. Terms of Annuity Options............................................11 4.03. Death of Annuitant/Beneficiary......................................12 4.04. Fund(s) Annuity Units - Separate Account............................12 4.05. Fund(s) Annuity Unit Value - Separate Account.......................12 4.06. Annuity Options.....................................................12 V. SPECIAL PROVISIONS 5.01 Deferred Compensation Plan..........................................21 5.02. Pension or Profit Sharing Plan......................................21 5.03. Individual Retirement Annuity Plan (IRA)............................22 5.04. Tax Deferred Annuity Plan...........................................24 5.05. Individual Annuity Plan.............................................25 VI. FEE SCHEDULE 6.01. Maintenance Fee.....................................................26 6.02. Surrender Fee.......................................................26 6.03. Table of Values - Fixed Account.....................................26 I-CDA-HD (XC) 4 I. GENERAL DEFINITIONS 1.01. Annuitant - A person on whose life an Annuity has been effected under this Contract. 1.02. Annuity - Payment of an income: (a) for the life of one or two persons; (b) for a stated period, or amount; or, (c) for some mix of (a) and (b). 1.03. Fixed Account - An accumulation option with a guaranteed minimum interest rate. Aetna may credit a higher rate which is not guaranteed. 1.04. Fixed Annuity - An Annuity with payments which do not vary in amount. 1.05. Fund(s) - The open-end registered management investment companies, (mutual funds) made available by Aetna under this Contract. 1.06. General Account - The Account holding the assets of Aetna, other than those assets held in the Separate Accounts. 1.07. Purchase Payments - Payments made to Aetna. 1.08. Separate Accounts - Accounts set up by Aetna under the Connecticut Insurance Laws which purchase shares of the Fund(s). 1.09. Valuation Period (Period) - The period of time from the end of one business day on the New York Stock Exchange to the end of the next business day. 1.10. Variable Annuity - An Annuity with payments which vary with the net investment results of a Separate Account. I-CDA-HD (XC) 5 II. GENERAL PROVISIONS 2.01. Change of Contract: Only an authorized officer of Aetna may change the terms of this Contract. Aetna will notify the Contract Holder in writing at least 30 days before the effective date of any change. Any change will not affect the amount or terms of any Annuity which begins before the change. The following provisions of this Contract will not be changed: (a) Net Purchase Payment(s); (b) Guaranteed Interest Rate - Fixed Account; (c) Net Return Factor(s) - Separate Account; (d) Current Value; (e) Surrender Value; (f) Fund(s) Annuity Unit Value - Separate Account; (g) Annuity Options; (h) Fixed Annuity minimum interest rate; (i) Maximum transfer, maintenance or surrender fees. This Contract may also be changed as required by federal or state law. 2.02. Change of Fund(s): Aetna, or the Separate Account and the Fund(s), may: (a) change the Fund(s) which may be invested in by the Separate Account; and (b) replace the shares of any Fund(s) held in the Separate Account with shares of any other Fund(s). Changes must be: (1) approved by a majority vote of persons having an interest in the Separate Account and the Fund(s); or (2) deemed necessary by Aetna under the Investment Company Act of 1940; or (3) deemed necessary by Aetna to accomplish the purpose of the Separate Account. Aetna will notify the Contract Holder of any change. 2.03. Non-Participating Contract: The Contract Holder, Annuitant, or beneficiaries will not have a right to share in the earnings of Aetna. 2.04. Payments: Aetna will make Annuity payments as and when due. Aetna will make other payments within 7 days of receipt at its Home Office of a written claim for payment which is in good order, except as provided in 3.13. 2.05. State Laws: This Contract complies with the laws of the state in which it is delivered. Any cash, death or Annuity payments are equal to or greater than the minimum required by such laws. Annuity tables for legal reserve valuation shall be as required by state law. Such tables may be different from annuity tables used to determine Annuity payments. 2.06. Control of Contract: See Part V. I-CDA-HD (XC) 6 2.07. Designation of Beneficiary: See Part V. The beneficiary may be changed at any time. 2.08. Misstatements and Adjustments: If Aetna finds the age, or any other relevant facts to be misstated, the correct facts will be used to adjust payments. 2.09. Incontestability: Aetna cannot cancel this Contract because of any error of fact on the application. 2.10. Grace Period This Contract will remain in effect even if Purchase Payments are not continued. I-CDA-HD (XC) 7 III. PURCHASE PAYMENT, CURRENT VALUE AND SURRENDER PROVISIONS 3.01. Net Purchase Payment(s): The actual Purchase Payment less any premium tax. As a rule, Aetna will deduct the premium tax when Annuity benefits are purchased (see Part IV). If Aetna determines that it must pay a premium tax when Purchase Payments are received or at any other time, it will deduct the tax at that time. The Net Purchase Payment(s) will be credited to: (a) the Fixed Account; (b) the Fund(s) in which the Separate Account invests. Aetna must be told the percentage of the Net Purchase Payment(s) to be applied to each investment above. During any calendar year, Aetna may be told to change the investment mix four times if more than one Purchase Payment is made. If additional changes are allowed, each may be subject to a fee of up to $10. 3.02. Guaranteed Interest Rate - Fixed Account: On any Purchase Payment(s) made to the Fixed Account, Aetna will add interest daily at any annual rate no less than 4%. Aetna may add interest daily at any higher rate determined by its Board of Directors. 3.03. Maintenance Fee: See Part V. 3.04. Fund(s) Record Units - Separate Account: The portion of the Net Purchase Payment(s) applied to the Separate Account will determine the number of Fund(s) Record Units. This number is equal to a Net Purchase Payment divided by the Fund(s) Record Unit Value (see 3.06) for the Valuation Period in which the Purchase Payment is received in good order. 3.05. Net Return Factor(s) - Separate Account: The Net Return Factors are used to compute all Separate Account values and payments for any Fund. The Net Return Factor for each Fund is equal to 1.0000000 plus the Net Return Rate. The Net Return Rate is equal to: (a) The value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; minus (b) the value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; plus or minus (c) taxes (or reserves for taxes) on the Separate Account (if any); divided by (d) the total value of the Fund Record Units and Fund Annuity Units of the Separate Account (see 3.06 and 4.05) at the start of the Valuation Period; minus (e) a daily actuarial charge at an annual rate of 1.25% for annuity mortality and expense risks and profit; and a daily administrative charge which will not exceed .25% on an annual basis. I-CDA-HD (XC) 8 A Net Return Rate may be more or less than 0. The value of a share of the Fund is equal to the net assets of the Fund divided by the number of shares outstanding. The administrative charge may be changed annually except for amounts which have been used to purchase an annuity. This charge will not exceed .25%. 3.06. Fund(s) Record Unit Value - Separate Account: The Fund(s) Record Unit Value is computed by multiplying the Net Return Factor for the current Valuation Period by the Fund(s) Record Unit Value for the previous Period. The dollar value of the Fund(s) Record Units, Separate Account assets, and Variable Annuity payments may go up or down due to investment gain or loss. 3 07. Current Value: The Current Value (of this Contract) is equal to: (a) Any amounts in the Fixed Account, including Fixed Account interest added by Aetna; plus (b) The sum of any Separate Account Record Unit value(s); less (c) Any Maintenance Fee(s) due. Current Value does not include amounts used to purchase an Annuity. 3.08. Transfer of Current Value from the Funds: Before an annuity option is elected, all or any portion of the Current Value may be transferred from any Fund to any other Fund or to the Fixed Account. Four transfers of Current Value can be made during a calendar year period. If additional transfers are allowed, each may be subject to a fee of up to $10. 3.09. Transfer of Current Value from the Fixed Account: 10% of the Current Value held in the Fixed Account may be transferred to any Fund(s). Such transfer will be: (a) without charge; (b) allowed once per calendar year; (c) not allowed under an annuity option. Aetna may, on a temporary basis, allow any larger percent to be transferred. The Current Value of the Fixed Account, as used above, is the value when the request is received at the Home Office of Aetna. 3.10. Notice to the Contract Holder: Aetna will notify the Contract Holder each year of: (a) The value of any amounts held in: (1) the Fixed Account; and (2) the Fund(s) for the Separate Account; and (b) the number of any Fund(s) Record Units; and (c) the Fund(s) Record Unit Value(s); and (d) the Surrender Value of the amounts. Such number or values will be as of a date no more than 60 days before the date of the notice. 3.11. Sum Payable at Death (Before Annuity Payments Start): See Part V. I-CDA-HD (XC) 9 3.12. Surrender Value: See Part V. 3.13. Payment of Surrender Value: Under certain emergency conditions, Aetna may defer payment: (a) for a period of up to 6 months (unless not allowed by state law); and (b) as provided by federal law. 3.14. Reinstatement: All or a portion of the proceeds of a full surrender of this Contract may be reinvested within 30 days after the surrender if allowed by law. Any Maintenance Fee and Surrender Fee charged at the time of surrender on the amount being reinvested will be included in the reinstatement. Amounts will be reinstated among the Fixed Account and Separate Account in the same proportion as they were at the time of surrender. The number of Record Units reinstated will be based on the Record Unit Value(s) next computed after receipt at Aetna's Home Office of the reinstatement request and the amount to be reinvested. Any Maintenance Fee which falls due after the surrender and before the reinstatement will be deducted from the amount reinstated. Reinstatement is permitted only once. 3.15. Payment of Current Value: Aetna may pay in a lump sum any Current Value if Purchase Payment(s) have not been received for three full years and the Current Value is less than $2,000. Such Current Value paid may not be reinstated. I-CDA-HD (XC) 10 IV. ANNUITY PROVISIONS 4.01. Choices to be Made: Aetna will pay the Current Value (minus any premium tax) as a premium for an annuity under Option 4 with no guaranteed period. Any other Annuity Option may be elected by telling Aetna to pay all or any portion of the Current Value (minus any premium tax) as a premium for an Annuity under Option 2, 3, 4 or 5 (see 4.06). The first Annuity payment must generally be made no later than the first day of the month following the Annuitant's 75th birthday. If this Contract is issued under an IRA (see Specifications page), the first Annuity payment must be made not later than December 31 of the year the Annuitant attains age 70 1/2. Aetna may be told to make the first Annuity payment during any prior month. When an Option is chosen, Aetna must also be told whether payments are to be made other than monthly and (except for Option 2) to pay: (a) a Fixed Annuity using the General Account; or (b) a Variable Annuity using any of the Fund(s) made available by Aetna for Annuity purposes; or (c) a mix of (a) and (b). If a Fixed Annuity is chosen, Aetna will add interest daily at an annual rate no less than 3.5%. Aetna may add interest daily at any higher rate. If a Variable Annuity is chosen, an Assumed Annual Net Return Rate of 5% may be chosen. If not chosen, Aetna will use an Assumed Annual Net Return Rate of 3.5%. 4.02. Terms of Annuity Options: (a) When payments start, the age of the Annuitant plus the number of years for which payments are guaranteed must not exceed 95. (b) The present value of the expected payments to the Annuitant when payments start shall be more than 50% of the present value of the total expected payments to be made; this restriction does not apply if Option 5 is chosen and the second Annuitant is the spouse of the Annuitant. (c) No choice of any Annuity Option may be made if the first payment would be less than $20 or if the total payments in a year would be less than $100. (d) If a Fixed Annuity under Option 3, 4 or 5 is chosen and a larger payment would result from applying the surrender value to a single premium immediate annuity currently offered by Aetna to the same class of annuitants, Aetna will make the larger payment. (e) Age, where used in the following tables, means age on the birthday closest to the date of the first payment. (f) Assumed Annual Net Return Rate is the interest rate used to determine the amount of the first annuity payment under a Variable Annuity. The Separate Account must earn this rate plus enough to cover the mortality and expense risk and administrative fee charges if future Variable Annuity payments are to remain level. I-CDA-HD (XC) 11 4.03. Death of Annuitant/Beneficiary: When an Annuitant dies any remaining payments will be continued to the beneficiary. If the beneficiary is not a person or persons, the present value of any remaining payments will be paid in one sum. If no beneficiary exists, the present value of any remaining payments will be paid in one sum to the estate of the Annuitant. If a beneficiary dies while under Option 1; or while receiving Annuity payments, the present value of any remaining payments will be paid in one sum to the estate of the beneficiary. The interest rate used to determine the first payment will be used to calculate the present value. 4.04. Fund(s) Annuity Units - Separate Account: The number of Fund(s) Annuity Units is based on the amount of the first Variable Annuity payment which is equal to: (a) the portion of the Current Value (minus any premium tax) applied to pay a Variable Annuity; divided by (b) 1,000; times (c) the payment rate for the Option chosen. Such amount, or portion, of the variable payment will be divided by the Fund(s) Annuity Unit Value (see 4.05) on the tenth Valuation Period before the due date of the first payment to determine the number of Fund(s) Annuity Units. The number of Fund(s) Annuity Units remains fixed. Each future payment is equal to this number times the Fund(s) Annuity Unit Value on the tenth Valuation Period prior to the due date of the payment. 4.05. Fund(s) Annuity Unit Value - Separate Account: For any Valuation Period the Fund(s) Annuity Unit Value is equal to: (a) the Value for the previous Period; times (b) the Net Return Factor(s) (see 3.05) for the Period; times (c) a factor to reflect the Assumed Annual Net Return Rate. The factor for 3.5% per year is .9999058; for 5% per year it is .9998663. The dollar value of the Fund(s) Annuity Unit Values and payments may go up or down due to investment gain or loss. If Variable Annuity payments are not to decrease, Aetna must earn a gross return on the assets of the Separate Account of: o 4.75% on an annual basis, plus an annual return of up to .25% needed to offset the administrative charge set at the time Annuity payments commenced, if an Assumed Annual Net Return Rate of 3.5% is chosen; or, o 6.25% on an annual basis, plus an annual return of up to .25% needed to offset the administrative charge set at the time Annuity payments commence, if an Assumed Annual Net Return Rate of 5% is chosen. Payments shall not be changed due to changes in the mortality or expense results or administrative charges. 4.06. Annuity Options: Option 1 - Payment of Interest on Sum Left with Aetna. This Option may be used only by the beneficiary when the Annuitant dies before Aetna has started paying an Annuity. A portion or all of the sum paid upon death may be held under this Option and will be held in the General I-CDA-HD (XC) 12 Account of Aetna at interest (see 4.01). The beneficiary may later tell Aetna to: (a) pay a portion, or all, of the sum held by Aetna; or (b) apply a portion, or all, of the sum held by Aetna to any Annuity Option below. If this Contract is issued under an IRA and the beneficiary elects that the full sum paid upon death is to be held under this Option, the beneficiary, if a spouse, must elect (a) or (b) above within 5 years after the death of the Annuitant. If the beneficiary is not a spouse, the beneficiary must tell Aetna to pay the full sum within 5 years after the death of the Annuitant. Option 2 - Payments of a Stated Dollar Amount - This Option may only be elected as a Fixed Annuity. An Annuity of a chosen amount will be paid until no funds are left. The payments to be made in a year must be greater than $65 for each $1,000 applied to this Option, but cannot exceed an amount which would deplete the funds in less than 3 years. During any year, Aetna reserves the right to make as a minimum payment an amount equal to 105% of the interest for that year. Option 3 - Payments for a Stated Period of Time - An Annuity will be paid for the number of years chosen. The number of years must be at least 3 and not more than 30. If payments for this Option are made under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within 3 years after the start of payments, it will be treated as a surrender (see Part V). Option 4 - Life Income - An Annuity will be paid for the life of the Annuitant. If also chosen, Aetna will guarantee payments for 60, 120, 180, or 240 months. Option 5 - Life Income for Two Payees - An Annuity will be paid during the lives of the Annuitant and a second Annuitant. At the death of either, payments will continue to the survivor. When this Option is chosen, a choice must be made of: (a) 100% of the payment to continue to the survivor; (b) 662/3% of the payment to continue to the survivor; (c) 50% of the payment to continue to the survivor; or (d) Payments for a minimum of 120 months, with 100% of the payment to continue to the survivor. Other Options - Aetna may make other options available as allowed by the laws of the state in which this Contract is delivered. I-CDA-HD (XC) 13 OPTION 3 PAYMENTS FOR A STATED PERIOD OF TIME AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Years of Amount of Years of Amount of Years of Amount of Payments Payments Payments Payments Payments Payments -------- -------- -------- -------- -------- -------- 3 $29.19 13 $7.94 22 $5.39 4 22.27 14 7.49 23 5.24 5 18.12 15 7.10 24 5.09 6 15.35 16 6.76 25 4.96 7 13.38 17 6.47 26 4.84 8 11.90 18 6.20 27 4.73 9 10.75 19 5.97 28 4.63 10 9.83 20 5.75 29 4.53 11 9.09 21 5.56 30 4.45 12 8.46
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
Years of Amount of Years of Amount of Years of Amount of Payments Payments Payments Payments Payments Payments -------- -------- -------- -------- -------- -------- 3 $29.80 13 $8.64 22 $6.17 4 22.89 14 8.20 23 6.02 5 18.74 15 7.82 24 5.88 6 15.99 16 7.49 25 5.76 7 14.02 17 7.20 26 5.65 8 12.56 18 6.94 27 5.54 9 11.42 19 6.71 28 5.45 10 10.51 20 6.51 29 5.36 11 9.77 21 6.33 30 5.28 12 9.16
I-CDA-HD (XC) 13 OPTION 4 LIFE INCOME AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Months Age of None 60 120 180 240 Annuitant Male Female Male Female Male Female Male Female Male Female --------- ---- ------ ---- ------ ---- ------ ---- ------ ---- ------ 50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11 51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16 52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21 53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27 54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32 55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38 56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44 57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50 58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57 59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63 60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70 61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77 62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84 63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91 64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98 65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05 66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12 67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18 68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25 69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31 70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37 71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42 72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47 73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51 74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55 75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
Rates are based on mortality from 1983 Table a. Rate for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. I-CDA-HD (XC) 15 OPTION 4 LIFE INCOME AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Months Age of None 60 120 180 240 Annuitant Male Female Male Female Male Female Male Female Male Female --------- ---- ------ ---- ------ ---- ------ ---- ------ ---- ------ 50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01 51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05 52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10 53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15 54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20 55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25 56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31 57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37 58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42 59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48 60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55 61 6.60 6.00 6.55 5.97 6.39 5.90 6.15 5.77 5.85 5.61 62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67 63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73 64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80 65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86 66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92 67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99 68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04 69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10 70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15 71 6.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20 72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25 73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29 74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33 75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
Rates are based on mortality from 1983 Table a. Rate for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. I-CDA-HD (XC) 16 OPTION 5 LIFE INCOME FOR TWO PAYEES JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR NO MINIMUM PERIOD AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $3.69 $3.80 $3.90 $3.98 $4.05 $4.11 $4.15 $4.18 $4.20 50 3.75 3.89 4.03 4.16 4.27 4.36 4.43 4.48 4.52 55 3.81 3.97 4.16 4.34 4.51 4.66 4.78 4.86 4.92 60 3.84 4.04 4.27 4.51 4.76 4.99 5.18 5.33 5.43 65 3.87 4.09 4.35 4.66 4.99 5.34 5.66 5.92 6.11 70 3.90 4.13 4.42 4.78 5.19 5.67 6.16 6.61 6.95 75 3.91 4.15 4.47 4.86 5.35 5.95 6.64 7.33 7.95 80 3.92 4.17 4.50 4.92 5.46 6.17 7.04 8.04 9.03 85 3.92 4.18 4.51 4.95 5.53 6.31 7.34 8.63 10.05
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $4.63 $4.72 $4.81 $4.89 $4.96 $5.02 $5.07 $5.10 $5.12 50 4.68 4.80 4.93 5.05 5.16 5.25 5.33 5.38 5.42 55 4.73 4.88 5.04 5.21 5.38 5.52 5.65 5.74 5.80 60 4.77 4.95 5.15 5.37 5.61 5.83 6.04 6.19 6.30 65 4.80 5.00 5.24 5.52 5.83 6.17 6.49 6.76 6.96 70 4.82 5.04 5.30 5.63 6.04 6.49 6.97 7.42 7.79 75 4.84 5.06 5.35 5.72 6.20 6.77 7.45 8.14 8.76 80 4.85 5.08 5.39 5.79 6.31 6.99 7.86 8.84 9.83 85 4.86 5.10 5.41 5.83 6.39 7.15 8.16 9.43 10.86
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. I-CDA-HD (XC) 17 OPTION 5 LIFE INCOME FOR TWO PAYEES JOINT AND LAST SURVIVOR ANNUITY 662/3% TO THE SURVIVOR NO MINIMUM PERIOD AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5% and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $3.94 $4.06 $4.20 $4.36 $4.54 $4.74 $4.96 $5.19 $5.42 50 4.05 4.20 4.36 4.55 4.76 4.99 5.24 5.51 5.78 55 4.18 4.35 4.54 4.76 5.00 5.28 5.58 5.90 6.22 60 4.32 4.51 4.73 4.99 5.29 5.63 6.00 6.40 6.79 65 4.48 4.69 4.95 5.25 5.61 6.03 6.51 7.02 7.52 70 4.66 4.89 5.18 5.53 5.97 6.49 7.10 7.77 8.45 75 4.84 5.09 5.42 5.82 6.33 6.96 7.73 8.62 9.56 80 5.02 5.30 5.65 6.11 6.69 7.43 8.39 9.54 10.82 85 5.19 5.49 5.87 6.37 7.02 7.88 9.02 10.46 12.15
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $4.87 $4.99 $5.12 $5.28 $5.46 $5.68 $5.93 $6.21 $6.49 50 4.99 5.12 5.27 5.45 5.66 5.90 6.18 6.50 6.82 55 5.12 5.26 5.44 5.65 5.89 6.17 6.50 6.86 7.23 60 5.27 5.43 5.63 5.87 6.16 6.50 6.89 7.32 7.76 65 5.44 5.63 5.85 6.14 6.49 6.90 7.38 7.92 8.47 70 5.64 5.85 6.11 6.44 6.84 7.35 7.96 8.64 9.36 75 5.86 6.09 6.38 6.75 7.23 7.84 8.60 9.49 10.46 80 6.09 6.33 6.65 7.07 7.62 8.34 9.28 10.42 11.71 85 6.30 6.57 6.92 7.38 8.00 8.83 9.93 11.35 13.04
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. I-CDA-HD (XC) 18 OPTION 5 LIFE INCOME FOR TWO PAYEES JOINT AND LAST SURVIVOR ANNUITY 50% TO THE SURVIVOR NO MINIMUM PERIOD AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $4.07 $4.21 $4.38 $4.58 $4.83 $5.13 $5.49 $5.91 $6.35 50 4.22 4.37 4.55 4.77 5.04 5.37 5.77 6.23 6.72 55 4.40 4.56 4.76 5.00 5.29 5.66 6.10 6.62 7.18 60 4.61 4.79 5.00 5.27 5.60 6.01 6.51 7.11 7.76 65 4.87 5.06 5.31 5.61 5.99 6.46 7.04 7.74 8.52 70 5.17 5.39 5.66 6.01 6.44 6.99 7.68 8.52 9.47 75 5.49 5.75 6.06 6.46 6.96 7.61 8.43 9.45 10.64 80 5.84 6.13 6.49 6.95 7.54 8.29 9.29 10.54 12.03 85 6.18 6.51 6.91 7.43 8.11 9.00 10.17 11.71 13.57
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $5.01 $5.14 $5.30 $5.50 $5.75 $6.08 $6.48 $6.96 $7.49 50 5.15 5.29 5.46 5.68 5.95 6.29 6.73 7.25 7.82 55 5.33 5.48 5.66 5.89 6.18 6.56 7.03 7.60 8.24 60 5.56 5.71 5.91 6.16 6.49 6.90 7.42 8.06 8.78 65 5.83 6.01 6.23 6.51 6.87 7.33 7.93 8.67 9.50 70 6.17 6.36 6.61 6.93 7.34 7.87 8.56 9.43 10.43 75 6.55 6.78 7.05 7.42 7.89 8.51 9.33 10.35 11.57 80 6.98 7.23 7.54 7.96 8.51 9.23 10.20 11.44 12.95 85 7.40 7.68 8.05 8.53 9.16 10.00 11.14 12.64 14.51
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. I-CDA-HD (XC) 19 OPTION 5 LIFE INCOME FOR TWO PAYEES JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR 120 MONTHS MINIMUM PERIOD AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $3.69 $3.79 $3.89 $3.98 $4.05 $4.11 $4.15 $4.17 $4.19 50 3.75 3.89 4.03 4.16 4.27 4.36 4.42 4.47 4.49 55 3.80 3.97 4.15 4.34 4.51 4.65 4.76 4.83 4.88 60 3.84 4.04 4.26 4.50 4.75 4.97 5.16 5.29 5.36 65 3.87 4.09 4.35 4.65 4.98 5.31 5.61 5.83 5.97 70 3.89 4.13 4.41 4.76 5.17 5.62 6.07 6.43 6.67 75 3.91 4.15 4.46 4.84 5.31 5.87 6.48 7.02 7.40 80 3.91 4.16 4.48 4.89 5.41 6.05 6.79 7.50 8.04 85 3.92 4.17 4.49 4.91 5.46 6.15 6.98 7.83 8.50
Rates for a Variable Annuity with Assumed Net Return Rate of 5%
Age of Male Age of Female Annuitant Annuitant 45 50 55 60 65 70 75 80 85 --------- -- -- -- -- -- -- -- -- -- 45 $4.63 $4.72 $4.81 $4.89 $4.96 $5.02 $5.06 $5.09 $5.11 50 4.68 4.80 4.93 5.05 5.15 5.25 5.32 5.36 5.39 55 4.73 4.88 5.04 5.21 5.37 5.51 5.63 5.71 5.75 60 4.77 4.94 5.14 5.37 5.60 5.82 6.00 6.14 6.22 65 4.80 4.99 5.23 5.51 5.82 6.13 6.43 6.66 6.80 70 4.82 5.03 5.29 5.62 6.00 6.44 6.87 7.23 7.47 75 4.84 5.06 5.34 5.70 6.15 6.68 7.27 7.80 8.17 80 4.85 5.07 5.37 5.75 6.24 6.86 7.57 8.26 8.79 85 4.85 5.08 5.38 5.78 6.30 6.96 7.76 8.58 9.23
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. I-CDA-HD (XC) 20 V. SPECIAL PROVISIONS The Special Provisions section which applies to this Contract is shown on the Specifications page under Type of Plan. The other sections under Special Provisions do not apply. 5.01 Deferred Compensation Plan (a) Control of Contract: All rights in this Contract rest with the Contract Holder, who is entitled to all amounts held under this Contract. The Contract Holder, or authorized designee of the Contract Holder (as allowed by law), may make any choices allowed by this Contract. Any choices made under this Contract must be in writing. Until receipt of such choices in its Home Office, Aetna may rely on any prior choices made. This Contract is not subject to the claims of any creditors of the Annuitant except to the extent permitted by law. (b) Designation of Beneficiary: The beneficiary shall be the Contract Holder. (c) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will be deducted from the Current Value on the anniversary of the Contract effective date and on surrender of the entire Contract. Any portion of any Maintenance Fee deducted from the Fixed Account will not exceed the interest in excess of 4% and any Net Purchase Payment credited to the Fixed Account during the 12 months prior to the deduction. (d) Sum Payable at Death (Before Annuity Payments Start): Aetna will pay to the Beneficiary the Current Value if: (1) The Annuitant dies before Annuity payments start; and (2) The notice of death is received in good order by Aetna. The sum paid will be the Current Value on the date the notice is received at Aetna's Home Office. The amount paid from the Fixed Account will not be less than the Net Purchase Payment(s) allocated to the Fixed Account for the Annuitant (less any prior transfers (see 3.09) or surrenders). The beneficiary may choose to apply all or any part of the proceeds to an Annuity Option (see Part IV). (e) Surrender Value: After deduction of the Maintenance Fee, if any, Aetna will reduce the amount payable upon surrender of any portion of the Current Value by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in 6.02. The total deductions made on surrender of the entire Contract will not exceed 7% of the Current Value as of the date of surrender and the Surrender Fee will not exceed 8.5% of the Purchase Payment(s) made to the Contract. (f) The following sections 5.02, 5.03, 5.04 and 5.05 of the Special Provisions do not apply to this Contract. 5.02. Pension or Profit Sharing Plan I-CDA-HD (XC) 21 (a) The preceding section 5.01 of the Special Provisions does not apply to this Contract. (b) Control of Contract: All rights in this Contract rest with the Contract Holder. The Contract Holder owns all amounts held under this Contract. The Contract Holder (or authorized designee,) may make any choices allowed by this Contract. Any choices under this Contract must be in writing. Until receipt of such choices in its Home Office, Aetna may rely on any prior choices made. This Contract is not subject to the claims of any creditors except to the extent permitted by law. (c) Designation of Beneficiary: The Contract Holder shall name the beneficiary. (d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will be deducted from the Current Value on each anniversary of the Contract effective date and upon surrender of the entire Contract. Any portion of any Maintenance Fee deducted from the Fixed Account will not exceed the interest in excess of 4% and any Net Purchase Pyament credited to the Fixed Account during the 12 months prior to the deduction. (e) Sum Payable at Death (Before Annuity Payments Start): Aetna will pay the Current Value to the beneficiary if: (1) the Annuitant dies before Annuity payments start; and (2) the notice of death is received in good order by Aetna. The sum paid will be the Current Value on the date when the notice is received at Aetna's Home Office. The amount paid from the Fixed Account will not be less than the Net Purchase Payment(s) allocated to the Fixed Account (less any prior transfers (see 3.09) or surrenders). The Contract Holder will determine if any additional amounts are payable to the beneficiary. The beneficiary may choose to apply all or part of the payment to an Annuity Option (see Part IV). If no beneficiary exists, the payment will be made to the estate of the Annuitant. (f) Surrender Value: After deduction of the Maintenance Fee, if any, Aetna will reduce the amount payable upon surrender of any portion of the Current Value by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in 6.02. The total deductions made on surrender of an entire Contract will not exceed 7% of the Current Value as of the date of surrender. (g) The following Sections 5.03, 5.04 and 5.05 of the Special Provisions do not apply to this Contract. 5.03. Individual Retirement Annuity Plan (IRA) (a) The preceding Sections 5.01 and 5.02 of the Special Provisions do not apply to this Contract. (b) Control of Contract: All rights in this Contract rest with the Contract Holder. The Contract Holder owns all amounts held under this Contract. The Contract Holder I-CDA-HD (XC) 22 may make any choices allowed by this Contract. Any choices under this Contract must be in writing. Until receipt of such choices in its Home Office, Aetna may rely on any prior choices made. The Contract may not be transferred. The Contract may not be assigned except to the Company. (c) Designation of Beneficiary: The Contract Holder shall name the beneficiary. (d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will be deducted from the Current Value on each anniversary of the Contract effective date and upon surrender of the entire Contract. Any portion of any Maintenance Fee deducted from the Fixed Account will not exceed the interest in excess of 4% and any Net Purchase Payment credited to the Fixed Account during the 12 months prior to the deduction. (e) Purchase Payments: The total deductible annual Purchase Payments made on behalf of any individual under this Contract cannot exceed $2,000. (f) Sum Payable at Death (Before Annuity Payments Start): Aetna will pay the current value to the beneficiary if: (1) The Annuitant dies before Annuity payments start; and (2) The notice of death is received in good order by Aetna. The sum paid will be the Current Value on the date the notice is received at Aetna's Home Office. The amount paid from the Fixed Account will not be less than the Net Purchase Payment(s) allocated to the Fixed Account (less any prior transfers (see 3.09) or surrenders). The beneficiary, if a spouse, may choose to apply all or any portion of the payment to any Annuity Option. If the beneficiary is not a spouse, all or a portion of the payment may be applied only to Annuity Options 1, 2 or 3, providing the full sum is paid to the beneficiary within 5 years of the death of the Annuitant. (See Part IV) If no beneficiary exists, the payment will be made to the estate of the Annuitant. (g) Annuity Payments: In no event may any payments to the Annuitant or beneficiary under any Annuity Option extend beyond: (1) The life of the Annuitant; or (2) The lives of the Annuitant and spouse; or (3) Any certain period greater than the Annuitant's life expectancy; or (4) Any certain period greater than the life expectancies of the Annuitant and spouse. (h) Surrender Value: After deduction of the Maintenance Fee (if any), the amount paid by Aetna upon the surrender of any portion of the Current Value shall be reduced by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in 6.02. I-CDA-HD (XC) 23 The total deductions made on surrender of an entire Contract will not exceed 7% of the Current Value as of the date of surrender and the Surrender Fee will not exceed 8.5% of the actual Purchase Payment(s) made to the Contract. (i) The following Sections 5.04 and 5.05 of the Special Provisions do not apply to this Contract. 5.04. Tax Deferred Annuity Plan (a) The preceding Sections 5.01, 5.02 and 5.03 of the Special Provisions do not apply to this Contract. (b) Control of Contract: The Contract Holder shall own all amounts held under this Contract and may make any choices allowed by this Contract. Choices made under this Contract must be in writing. Until receipt of such choices in its Home Office, Aetna may rely on any previous choices made. This Contract shall not be subject to the claims of any creditors. This Contract is non-assignable and nontransferable. (c) Designation of Beneficiary: The Contract Holder shall name the beneficiary. (d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will be deducted from the Current Value on each anniversary of the Contract effective date and upon surrender of the entire Contract. Any portion of any Maintenance Fee deducted from the Fixed Account will not exceed the interest in excess of 4% and any Net Purchase Payment credited to the Fixed Account during the 12 months prior to the deduction. (e) Sum Payable at Death (Before Annuity Payments Start): Aetna will pay the Current Value to the beneficiary if: (1) The Contract Holder dies before Annuity payments start; and (2) The notice of death is received in good order by Aetna. The sum paid will be the Current Value on the date the notice is received at Aetna's Home Office. The amount paid from the Fixed Account will not be less than the Net Purchase Payment(s) allocated to the Fixed Account (less any prior transfers (see 3.09) or surrenders). The beneficiary may choose to apply all or any portion of the payment to an Annuity Option (see Part IV). If no beneficiary exists, the payment will be made to the estate of the Contract Holder. (f) Surrender Value: After deduction of the Maintenance Fee (if any), Aetna will reduce the amount payable upon surrender of any portion of the Current Value by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in 6.02. The total deductions made on surrender of an entire Contract will not exceed 7% of the Current Value as of the date of surrender and the Surrender Fee will not exceed 8.5% of the actual Purchase Payment(s) made to the Contract. I-CDA-HD (XC) 24 (g) The following Section 5.05 of the Special Provisions does not apply to this Contract. 5.05. Individual Annuity Plan (a) The preceding Sections 5.01, 5.02, 5.03 and 5.04 of the Special Provisions do not apply to this Contract. (b) Control of Contract: All rights in this Contract rest with the Contract Holder. The Contract Holder owns all amounts held under this Contract. The Contract Holder may make any choices allowed by this Contract. Choices made under this Contract must be in writing. Until receipt of such choices at its Home Office, Aetna may rely on any previous choices made. (c) Designation of Beneficiary: The Contract Holder shall name the beneficiary. (d) Maintenance Fee: The Maintenance Fee, if any, (see 6.01) will be deducted from the Current Value on the anniversary of the Contract effective date and on surrender of the entire Contract. Any portion of any Maintenance Fee deducted from the Fixed Account will not exceed the interest in excess of 4% and any Net Purchase Payment credited to the Fixed Account during the 12 months prior to the deduction. (e) Sum Payable at Death (Before Annuity Payments Start): Aetna will pay the Current Value to the beneficiary if: (1) The Contract Holder dies before Annuity payments start; and (2) The notice of death is received in good order by Aetna. The sum paid will be the Current Value on the date the notice is received at Aetna's Home Office. The amount paid from the Fixed Account will not be less than the Net Purchase Payment(s) allocated to the Fixed Account (less any prior transfers (see 3.09) or surrenders). The beneficiary may choose to apply all or any portion of the payment to an Annuity Option (see Part IV). If no beneficiary exists, the payment will be made to the estate of the Contract Holder. (f) Surrender Value: After deduction of the Maintenance Fee, if any, Aetna will reduce the amount payable upon surrender of any portion of the Current Value by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in 6.02. The total deductions made on surrender of an entire Contract will not exceed 7% of the Current Value as of the date of surrender and the Surrender Fee will not exceed 8.5% of the actual Purchase Payment(s) made to the Contract. I-CDA-HD (XC) 25 AETNA LIFE INSURANCE AND ANNUITY COMPANY Home Office: 151 FARMINGTON AVE. HARTFORD, CONNECTICUT 06156 1-800-525-4225 INDIVIDUAL VARIABLE, FIXED, OR COMBINATION CONTRACT NON-PARTICIPATING 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 I-CDA-HD (XC) (NU) VI. FEE SCHEDULE INDIVIDUAL RETIREMENT ANNUITY PLAN (IRA) 6.01. Maintenance Fee: The Maintenance Fee will be $20. 6.02. Surrender Fee: For each surrender, the Surrender Fee will vary according to the number of Purchase Payment Cycles completed. The number and amount of Purchase Payments to be made in a year is chosen by the Contract Holder. A Purchase Payment Cycle is completed when this number and amount of Purchase Payments have been made. The number of Purchase Payment Cycles completed may not be greater than the number of whole years since the Contract was issued. For each surrender, the Fee will be as follows: Number of Purchase Payment Cycles Completed Surrender Fee Less than 5 5% 5 or more but less than 7 4% 7 or more but less than 9 3% 9 or more 2% No Surrender Fee is deducted from any portion of the Current Value which is paid: (a) At the death of the Annuitant before Annuity payments start; or (b) As a premium for an Annuity under this Contract; or (c) After the Annuitant has reached age 59 1/2and 9 or more Purchase Payment Cycles have been completed. 6.03. Table of Values - Fixed Account: The values in the following table only apply to annual Purchase Payments of $1,000. The Paid-Up Annuity Benefit assumes the Current Value has accumulated in the Fixed Account at the Guaranteed Interest Rate until age 65 and is applied to Option 4 with a stated period of 120 months. The Surrender Value assumes the Purchase Payments are credited to the Fixed Account at the Guaranteed Interest Rate at the beginning of each Contract year. The Maintenance Fee and applicable Surrender Fee are deducted. The values would be different for other Purchase Payment amounts, if Purchase Payments are not made when due, if partial surrenders are made, or if Aetna adds interest at a rate greater than the Guaranteed Interest Rate-Fixed Account. IMIRA-HD (XC) 26 VI. FEE SCHEDULE INDIVIDUAL RETIREMENT ANNUITY PLAN (IRA) 6.01. Maintenance Fee: The Maintenance Fee will be $0. 6.02. Surrender Fee: For each surrender, the Surrender Fee will vary according to the period of time between the effective date of the Contract and the date of surrender. The Surrender Fee will be determined as follows: If Period of Time is Surrender Fee 5 years or less 5% More than 5 years but not more than 6 years 4% More than 6 years but not more than 7 years 3% More than 7 years but not more than 8 years 2% More than 8 years but not more than 9 years 1% More than 9 years 0% No Surrender Fee is deducted from any portion of the Current Value which is paid: (a) At the death of the Annuitant before Annuity payments start; or (b) As a premium for an Annuity under this Contract. 6.03. Table of Values - Fixed Account: The values in the following table only apply to a single Purchase Payment of $10,000. The Paid-Up Annuity Benefit assumes the Current Value has accumulated in the Fixed Account at the Guaranteed Interest Rate until age 65 and is applied to Option 4 with a state period of 120 months. The Surrender Value assumes the Purchase Payment is credited to the Fixed Account at the Guaranteed Interest Rate at the beginning of the first Contract Year. The applicable Surrender Fees are deducted. Values would be different for other Purchase Payment amounts, if made at another time, if partial surrenders are made, or if Aetna adds interest at a rate greater than the Guaranteed Interest Rate-Fixed Account. 26 ISIRA-HD (XC) Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: Add to Section I. GENERAL DEFINITIONS the following paragraph: Maturity Date: The last day of a GA Account Term. Matured Term Value: The amount payable on a GA Account Term's Maturity Date. Nonunitized Separate Account: An account set up by Aetna under Title 38, Sec. 38-154a, of the Connecticut General Statutes, which is used to hold assets for GA Account Terms greater than three years. The Contract Holder or Participant, as applicable, does not participate in the investment gain or loss from the assets held in the GA Account. Section 3.02 or 3.03 - Guaranteed Accumulation Account (GA Account) is amended and restated as follows: The GA Account guarantees stipulated rates of interest for stated periods of time (see (a) and (c) below). Amounts withdrawn before the end of a Guaranteed Term may be subject to a Market Value Adjustment (MVA) (see (g) below). (a) Deposit Period - A calendar month, a calendar quarter, or any other period of time specified by Aetna during which Net Purchase Payment(s) and transfers are accepted into the GA Account for one or more Guaranteed Terms. (b) Guaranteed Term (Term) - The period of time for which interest rates are guaranteed on Net Purchase Payment(s) and on transfers made into a Deposit Period of the GA Account. Terms are offered at Aetna's discretion for various lengths of time ranging up to and including ten years. (c) Guaranteed Term Classifications - The grouping of Terms according to their time to maturity. The following are the Classifications: (1) Short-Term: Terms of up to and including 3 years; or (2) Long-Term: Terms of greater than 3 years and up to and including 10 years. During a Deposit Period, Aetna may make available one or more Terms within a Classification. The Contract Holder has the option to allocate Net Purchase Payment(s) and transfers into any or all of the available Deposit Period Terms. If no specific direction is given. Net Purchase Payment (s) and transfers will go into available Terms on a pro rata basis within the Classification(s) previously chosen by the Contract Holder. At least one Term in the Short-Term Classification will be available each Deposit Period. EGAA-IO (XC) 1 (d) Guaranteed GA Account Interest Rates (Guaranteed Rates) - Aetna will declare all interest rate(s) applicable to a specific Term at the start of the Deposit Period for that Term. These rate(s) are guaranteed by Aetna for that Deposit Period and the ensuing Term and are not based on the actual investment experience of the underlying assets in the GA Account. The Guaranteed Rates are annual effective yields. The interest is credited daily at a rate that will produce the guaranteed annual effective yield over the period of a year. No annual rate will ever be less than 4%. For Terms of one year or less, one Guaranteed Interest Rate is set and announced for that full Term. For other Terms, there may be two or more rates. All of these rate(s) may be set and announced prior to the Deposit Period for that Term and will not be subject to change. (e) Withdrawals from GA Account - Full or partial surrenders may be requested at any time from the GA Account. However, amounts withdrawn prior to the Maturity Date of a Term to satisfy a surrender request may be subject to an MVA (see (g) below). Full and partial surrenders are satisfied by withdrawing amounts from each of the Fund(s), the Fixed Account, the GA Account Short-Term Classification and the GA Account Long-Term Classification on a pro rata basis. However, the Contract Holder or Participant, as applicable, may specify a particular order in which investment options will be liquidated in order to satisfy a partial surrender request. For purposes of withdrawals, Terms within the GA Account Short-Term and Long-Term Classifications are considered as two separate investment options. Any withdrawal which is a surrender will be subject to the Maintenance Fee and Surrender Fee as appropriate. Also, amounts will be removed within a GA Account Classification starting with the Term still in effect with the oldest Deposit Period. Amounts may be transferred at any time subject to Contract specifications (see 3.10, 3.11, or 3.12 below). Amounts transferred prior to the Maturity Date of a Term are subject to an MVA (see (g) below). Fund(s) will be removed within the elected Classification starting with the Term still in effect with the oldest Deposit Period. During the Deposit Period and the 90 days following the close of the Deposit Period, any amounts applied to the GA Account during that Deposit Period may not be withdrawn unless due to: (1) A full or partial surrender; (2) A payment of a premium for an Annuity Option; or (3) The Sum Payable at Death provision. (f) Maturity Date Reinvestment - For all GA Account Term(s) existing as of the effective date of this endorsement in addition to GA Account Term(s) announced subsequent to that date, the Contract Holder or Participant, as applicable, will be mailed a notice at least 18 calendar days before a Term's Maturity Date. This notice will contain the current Deposit Period's Guaranteed Rate(s), Term(s) and a projected Matured Term Value. EGAA-IO (XC) 2 The Matured Term Value may be surrendered or transferred on the Term's Maturity Date without an MVA. If no specific direction is given by the Contract Holder or Participant, as applicable, prior to the Maturity Date, each Matured Term Value will be reinvested in a Term of the same duration. In the event that a Term of the same duration is unavailable, each Matured Term Value will automatically be reinvested in the next shortest Term available in the same Classification during the then current Deposit Period. If however, only one Term is available within the Classification, then the Matured Term Value will automatically be reinvested in that Term. Within two business days after the Maturity Date, the Contract Holder or Participant, as applicable, will be mailed a confirmation statement. This statement will state the Terms and Guaranteed Rates which will apply to the reinvested Matured Term Value. During the calendar month following their Term's Maturity Date, one exception is allowed to the 90 day transfer restriction and MVA under (e) and (g). This exception is applicable to each Matured Term Value plus any interest accrued thereon, provided no part of the Matured Term Value was transferred on the Maturity Date. During this calendar month period, the Contract Holder or Participant, as applicable, may notify Aetna's Home Office to transfer or surrender all or part of the Matured Term Value Plus any interest accrued thereon from the GA Account without an MVA. This provision only applies to the first such request received from the Contract Holder or Participant, as applicable, during this period for any Matured Term Value. The Matured Term Value plus any interest accrued thereon may be transferred upon such request without an MVA: (1) To any other Terms of the GA Account available in the current Deposit Period; or (2) To any other allowable Fund(s). If no such notification is given, the Matured Term Value will remain subject to the terms and conditions of the new Term. All surrender and transfer requests will be processed as of the date they are received in good order at Aetna's Home Office. If this Contract is issued under a Tax Deferred Annuity Plan (see Specifications page) the above notice will be sent to the Participant(s). (g) Market Value Adjustment (MVA) - There will be an MVA for a withdrawal from the GA Account before the end of a Term when the withdrawal is due to: (1) A transfer, (2) A full or partial surrender, or (3) A payment of a premium for Annuity Option 2. The amount of the withdrawal will be adjusted to a market value amount as described below. The market value adjusted amount will be equal to the amount withdrawn multiplied by the following ratio: EGAA-IO (XC) 3 x --- 365 (1 + i) -------------- x --- 365 (1 + j) Where: i is the Deposit Yield j is the Current Yield x is the number of days remaining (computed from Wednesday of the week of withdrawal) in the Guaranteed Term. The Deposit Period Yield will be determined as follows: o At the close of the last business day of each week of the Deposit Period, a yield will be computed as the average of the yields on that day of U.S. Treasury Notes which mature in the last three months of the Guaranteed Term. o The Deposit Period Yield is the average of those yields for the Deposit Period. If withdrawal is made prior to the close of the Deposit Period, it is the average of those yields on each week preceding withdrawal. The Current yield is the average of the yields on the last business day of the week preceding withdrawal on the same U.S. Treasury Notes included in the Deposit Period Yield. In the event that no U.S. Treasury Notes which mature in the last three months of the Guaranteed Term exist. Aetna reserves the right to use the U.S. Treasury Notes that mature in a following quarter. Full and partial surrenders as well as transfers made within six months of the date of death of the Participant under the Sum Payable at Death provision will be the greater of: o The aggregate MVA amount which is the sum of all market value adjusted amounts calculated due to a withdrawal of amounts (or surrender or transfer) from Terms prior to the end of those Terms. The aggregate MVA may be either positive or negative, or o The applicable portion of the Current Value in the GA Account. After six month period, the surrender or transfer will be the aggregate MVA amount (i.e., including all MVAs). The greater of the aggregate MVA amount or the applicable portion of the Current Value in the GA Account is applied to amounts withdrawn from the GA Account for payment of a premium under Annuity Options 3 or 4. Aetna may make any change to Section 3.02 or 3.03 with 30 days advance written notice to the Contract Holder or Participant, as applicable. Any such change shall become effective for EGAA-IO (XC) 4 Purchase Payment(s), transfers or reinvestments made to any new Term by any present or future Participant. A detailed description of the Market Value Adjustment has been filed with the New York Insurance Department Superintendent in compliance with Section 4223(a)(1)(C) of the New York Insurance Law. (h) Deposits to the GA Account - All amounts in the GA Account under the Short-Term Classification are made to the General Account. All amounts in the GA Account under the Long-Term Classifications are made to a Nonunitized Separate Account. There are no discrete units for this Nonunitized Separate Account. The Contract Holder or Participant, as applicable, does not participate in the gain or loss from the assets held in the Nonunitized Separate Account. Such gain or loss is borne entirely by Aetna. These assets may be chargeable with liabilities arising out of any other business of Aetna. For Terms under both the Short-Term and Long-Term Classifications. Aetna guarantees stipulated interest rates to be credited to the GA Account. All assets of Aetna including amounts made to the GA Account are available to meet the guarantees under the GA Account. Section 3.10, 3.11 or 3.12 - Transfer of Current Value from the Fund(s) or GA Account is deleted and replaced by the following: Before an Annuity Option is elected, all or any portion of the Current Value may be transferred from any Fund or GA Account: (a) To any other allowable Fund; (b) To the Fixed Account; or (c) To Terms of the GA Account available in the current Deposit Period. Amounts in a specific GA Account Term cannot be transferred to the Deposit Period of another Term within the same Classification except at the Term's maturity (see 3.02(f) or 3.03(f)). Amounts applied to Classifications of the GA Account may not be transferred to the Fund(s) or to the Fixed Account during the Deposit Period or for 90 days after the close of the Deposit Period. Transfers from Terms of the GA Account are subject to the Withdrawal and MVA provisions (see 3.02(e) and (g) or 3.03(e) and (g)). Twelve transfers of Current Value can be made during a calendar year period. The Transfer of any portion of the GA Account value at the Maturity Date of a Term is not counted for this purpose. Aetna may allow additional transfers, but each may be subject to a fee of up to $10. Add the following statement to Section 3.14 or 3.15 entitled Surrender Value as follows: EGAA-IO (XC) 5 To comply with Section 4223 of New York Insurance Laws, the surrender charge will never be greater than (a) plus (b) below: (a) 10% of amounts surrendered from options other than the GA Account; plus (b) 10% reduced (but not below zero) by one percent for each year the Contract has been inforce, of amounts surrendered from the GA Account. Aetna reserves the right to compute the surrender charge for amounts transferred into the GA Account within 90 days prior to surrender as if such amounts had not been transferred. Endorsed and made a part of this Contract on May 1, 1991 or the effective date of the Contract whichever is later. /s/ John J. Martin President Aetna Life Insurance and Annuity Company EGAA-IO (XC) 6 Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: The definition of Separate Account under the Definition of Certain Terms or General Definitions section of the contract is hereby amended to read as follows: Separate Account: An account which buys and holds shares of the Fund(s). Income, gains or losses, realized or unrealized are credited or charged to this account without regard to other income, gains or losses of Aetna. Aetna owns the assets held in a separate account and is not a trustee as to such amounts. These accounts generally are not guaranteed and are held at market value. The assets of such accounts, to the extent of reserves and other contract liabilities of the account, shall not be charged with other Aetna liabilities. Endorsed and made a part of the Contract. /s/ Edmund F. Kelly President Aetna Life Insurance and Annuity EGISA-IA Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: Section 3.09 Transfer of Current Value from the Fixed Account is amended and restated as follows: 10% of the Current Value held in the Fixed Account may be transferred to any Fund(s) and/or to the GA Account's current Deposit Period if available. Such transfer will be: (a) Without charge; (b) Allowed once per calendar year, and (c) Not allowed under an Annuity Option. Aetna may, on a temporary basis, allow any larger percent to be transferred. The following applies to Contracts subject to Special Provisions Sections 5.02, 5.03, and 5.04. Any remaining balance in the Fixed Account under the Contract may be transferred by the Contract Holder in its entirety to any of the Fund(s) and/or to the GA Account's current Deposit Period if: (a) The Current Value in the Fixed Account under the Contract is $2,000.00 or less; or (b) The maximum percentage allowed was transferred from the Fixed Account in each of the four consecutive prior calendar years and no additional Net Purchase Payment(s) to the Contract have been allocated to the Fixed Account during the same four consecutive calendar year periods. The Current Value of the Fixed Account, as used above, is the value when the request is received at Aetna's Home Office in good order. Endorsed and made part of this Contract. /s/ Edmund F. Kelly President Aetna Life Insurance and Annuity Company EIFA-IO(XC) Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to amend and restate the following: Section 3.01. Net Purchase Payment(s) - Delete the last paragraph and replace it with the following: During any calendar year, Aetna may be told to change the investment mix twelve times. Should Aetna allow additional changes, each may be subject to a fee of up to $10. Section 3.08. Transfer of Current Value from the Funds - Delete the last paragraph and replace it with the following: Twelve transfers of Current Value (excluding transfers from the GA Account at the end of a Guaranteed Term) can be made during a calendar year period. Should Aetna allow additional transfers, each may be subject to a fee of up to $10. Endorsed and made a part of this Contract effective May 1, 1989. /s/ John J. Martin President Aetna Life Insurance and Annuity Company EIMCVT-HI(XC) Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to add the following new provisions to the end of Section 6.02 entitled Surrender Fee as follows: No Surrender Fee is deducted from any portion of the Current Value which is paid: (d) When the Current Value is $2,500 or less and no surrenders have been taken from the Contract within the prior 12 months. If there is more than one Contract, then this provision will only apply when the total in all of the Contracts is $2,500 or less; or (e) In an amount equal to or less than 10% if the Current Value, as part of the first partial surrender request in a calendar year to a Contract Holder who is at least age 59 1/2 and less than 70 1/2. The Current Value is calculated as of the date the partial surrender request is received in good order at Aetna's Home Office. This provision does not apply to full surrender requests. Endorsed and made a part of this Contract. /s/ Edmund F. Kelly President Aetna Life Insurance and Annuity Company EIMIS-IA(XC) Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: Section 1.05 entitled Fund(s) is amended and restated as follows: The open-end and registered management investment companies (mutual funds) made available by Aetna under this Contract. These Funds currently are: o Aetna Variable Fund - a growth and income fund; o Aetna Income Shares - a bond fund; o Aetna Variable Encore Fund - a money market fund; o Aetna Investment Advisers Fund, Inc. - a managed fund; o TCI Portfolios, Inc., (TCI Growth) - a growth fund. Additional information regarding these Funds is available in each Fund prospectus. Endorsed and made a part of this Contract on February 1, 1993 or the effective date of the Contract, whichever is later. /s/ G. G. Benanav President Aetna Life Insurance and Annuity Company EIPMF-IB(XC) Aetna Life Insurance Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: (1) The Annuity Provisions of the Contract are endorsed to change the first paragraph of Section 4.01. "Choices to be Made" to read: An Annuity Option may be elected by telling Aetna to pay all or any portion of the Current Value (minus any premium tax) as a premium for an Annuity under Option 2, 3, 4 or 5 (see 4.06). The first Annuity payment must generally be made no later than the first day of the month following the Annuitant's 75th birthday. If this Contract is issued under an IRA or SEP (see Specifications page), the first Annuity payment must be made not later than the April 1 following the calendar year in which the Annuitant attains age 70 1/2. Aetna may be told to make the first Annuity payment during any prior month. (2) The Annuity Provisions of the Contract are endorsed to change the second paragraph of Section 4.06. "Annuity Options" to read: If this Contract is issued under an IRA or SEP and the beneficiary elects that the full sum paid upon death is to be held under this Option, the beneficiary, if a spouse, must elect (a) or (b) above not later than the date the Annuitant would have attained age 70 1/2. If the beneficiary is not a spouse, the beneficiary must tell Aetna to pay the full sum within 5 years after the death of the Annuitant. (3) Section 5.03. "Individual Retirement Annuity Plan (IRA)" is deleted and the following section added: (a) The preceding Sections 5.01 and 5.02 of the Special Provisions do not apply to this Contract. (b) Control of Contract: All rights in this Contract rest with the Contract Holder. The Contract Holder owns all amounts held under this Contract. The Contract Holder may make any choices allowed by this Contract. Any choices under this Contract must be in writing. Until receipt of such choices in its Home Office, Aetna may rely on any prior choices made. The Contract may not be transferred. The Contract may not be assigned except to the Company. (c) Designation of Beneficiary: The Contract Holder shall name the beneficiary. (d) Maintenance Fee: Maintenance Fee, if any, (see 6.01) will be deducted from the Current Value on each anniversary of the Contract effective date and upon surrender of the entire Contract. (e) Purchase Payments: Purchase Payments must be in cash and the total of such payments cannot exceed $2,000 for any individual for any taxable year. EIRAC-HH (XC) 1 Exceptions to the dollar maximum are: (1) Rollover contributions as permitted by Internal Revenue Code Sections 402(a)(5), 402(a)(7), 403(a)(4); and (2) Employer contributions made according to the terms of a Simplified Employee Pension Plan as described in Internal Revenue Code Section 408(k). (f) Required Distribution to Annuitant: Distribution to the Annuitant must begin in the form of Annuity Payments no later than the April 1 following the calendar year in which the Annuitant attains age 70 1/2, or be made in a lump sum by the same date. (g) Annuity Payments to Annuitant: In no event may any payments to the Annuitant under any Annuity Option extend beyond: (1) The life of the Annuitant: (2) The lives of the Annuitant and beneficiary; (3) Any certain period greater than the Annuitant's life expectancy as determined according to regulations under Internal Revenue Code Section 401(a)(9); or (4) Any certain period greater than the life expectancies of the Annuitant and beneficiary as determined according to regulations under Internal Revenue Code Section 401(a)(9). In addition, the present value of the expected payments to the Annuitant when payments start must be more than 50% of the present value of the total expected payments to be made to the Annuitant and beneficiary under 5.03(g) (2) or (4). (h) Sum Payable at Death (Before Annuity Payments Start): Aetna will pay the current value to the beneficiary if: (1) The Annuitant dies before Annuity payments start; and (2) The notice of death is received in good order by Aetna. The sum paid will be the Current Value on the date the notice is received at Aetna's Home Office. The amount paid from the Fixed Account will not be less than the Net Purchase Payment(s) allocated to the Fixed Account (less any prior transfers (see 3.09) or surrenders). The beneficiary, if a spouse, may choose to apply all or part of the payment to any Annuity Option or may elect to defer payments to a date not later than when the Annuitant would have attained age 70 1/2. Alternatively, the spouse may choose to treat this Contract as his or her own. If the beneficiary is not the spouse, all of the payments must either be applied only to Annuity Option 2, 3 or 4 within one year of the Annuitant's death, or be paid to the beneficiary within 5 years of the death of the EIRAC-HH (XC) 2 Annuitant. (See Part IV.) If no beneficiary exists, the payment will be made to the estate of the Annuitant. (i) Annuity Payments to Beneficiary: In no event may any payments to the beneficiary under an Annuity Option extend beyond: (1) The life of the beneficiary; or (2) Any certain period greater than the beneficiary's life expectancy as determined by regulations under Internal Revenue Code Section 401(a)(9). (j) Surrender Value: After deduction of the Maintenance Fee (if any), the amount paid by Aetna upon the surrender of any portion of the Current Value shall be reduced by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in section 6.02. The total deductions made on surrender of an entire Contract will not exceed 7% of the Current Value as of the date of surrender and the Surrender Fee will not exceed 8.5% of the actual Purchase Payment(s) made to the Contract. (k) Application of Refund of Premium: Any refund of premiums (other than those from excess contributions) will be applied before the close of the calendar year following the year of the refund, toward future payments or the purchase of additional benefits. (l) Reports: Aetna, as issuer of this Individual Retirement Annuity contract, will make any reports required by federal law. (m) The following Sections 5.04 and 5.05 of the Special Provisions do not apply to this Contract. Endorsed and made a part of this Contract on the effective date of the Contract. /s/ Dean E. Wolcott President EIRAC-HH (XC) 3 Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to add to Section 5.03, Individual Retirement Annuity (IRA); Simplified Employee Pension Plan, the following: 5.03 (b) Control of Contract: The Contract is established for the exclusive benefit of the individual Contract Holder or his or her beneficiaries. Section 5.03 (m) is restated as 5.03(n) and the following is added: 5.03 (m) Minimum Distribution Requirements (1) General Requirement: Notwithstanding any provision of this Contract to the contrary, the distribution of the Contract Holder's Current Value shall be made in accordance with the minimum distribution requirements of section 408(a)(6) or section 408(b)(3) of the Code and the regulations thereunder, including the incidental death benefit provisions of section 1.401(a)(9)-2 of the proposed regulations, all of which are herein incorporated by reference. (2) Minimum Payments to Contract Holder: The Contract Holder's entire Current Value in the Contract must be distributed, or begin to be distributed, by the Contract Holder's required beginning date, which is the April 1 following the calendar year in which the Contract holder turns age 70 1/2. For each succeeding year, a distribution must be made on or before December 31. By the required beginning date, the Contract Holder may elect to have the balance under the Contract distributed in one of the following forms according to the terms of the Contract: (a) a lump sum payment; (b) equal or substantially equal payments over the life of the Contract Holder; (c) equal or substantially equal payments over the lives of the Contract Holder and his or her designated beneficiary; (d) equal or substantially equal payments over a specified period that may not be longer than the Contract Holder's life expectancy; (e) equal or substantially equal payments over a specified period that may not be longer than the joint life and last survivor expectancy of the Contract Holder and his or her designated beneficiary. (3) Minimum Death Benefits: If the Contract Holder dies before his or her entire Current Value is distributed, the entire remaining balance will be distributed as follows: EIRACF-IC 1 (a) If the Contract Holder dies on or after the date distributions have begun under paragraph 2 above, the entire remaining balance must be distributed at least as rapidly as provided under such paragraph 2. (b) If the Contract Holder dies before distributions have begun under paragraph 2 above, the entire remaining balance must be distributed as elected by the Contract Holder or, if the Contract Holder has not so elected, as elected by the beneficiary or beneficiaries, as follows: (i) by December 31st of the year containing the fifth anniversary of the Contract Holder's death; or (ii) in equal or substantially equal payments over the life or life expectancy of the designated beneficiary or beneficiaries starting by December 31st of the year following the year of the Contract Holder's death. If, however, the beneficiary is the Contract Holder's surviving spouse, then this distribution is not required to begin before December 31st of the year in which the Contract Holder would have turned 70 1/2. (4) Life Expectancies: Unless an Annuity Option has been elected by the Contract Holder prior to the commencement of distributions in accordance with paragraph 2 above (or, if applicable, by the surviving spouse where the Contract Holder dies before distributions have commenced), life expectancies of the Contract Holder or spouse beneficiary shall be recalculated annually for purposes of distributions under paragraphs 2 and 3 above. An election not to recalculate shall be irrevocable and shall apply to all subsequent years. The life expectancy of a non-spouse beneficiary shall not be recalculated. 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. (5) Multiple IRAs: An individual may satisfy the minimum distribution requirements under sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from one IRA that is equal to the amount required to satisfy the minimum distribution requirements of two or more IRAs. For this purpose, the Contract Holder of two or more IRAs may use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements described above. Endorsed and made part of this Contract on the effective date of this Contract. /s/ G. G. Benanav President Aetna Life Insurance and Annuity Company EIRACF-IC 1 Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to add the following new provisions to the end of Section 6.02 entitled Surrender Fee as follows: No Surrender Fee is deducted from any portion of the Current Value which is paid: (c) When the Current Value is $2,500 or less and no surrenders have been taken from the Contract within the prior 12 months. If there is more than one Contract, then this provision will only apply when the total in all of the Contracts is $2,500 or less; or (d) In an amount equal to or less than 10% if the Current Value, as part of the first partial surrender request in a calendar year to a Contract Holder who is at least age 59 1/2 and less than 70 1/2. The Current Value is calculated as of the date the partial surrender request is received in good order at Aetna's Home Office. This provision does not apply to full surrender requests. Endorsed and made a part of this Contract. /s/ Edmund F. Kelly President Aetna Life Insurance and Annuity Company EISIS-IA(XC) Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: The following language amends and restates the last paragraph of the cover page of the Contract: INDIVIDUAL VARIABLE, FIXED OR COMBINATION ANNUITY CONTRACT NONPARTICIPATING 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. THIS CONTRACT CONTAINS A MARKET-VALUE ADJUSTMENT FORMULA. APPLICATION OF A MARKET-VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR DECREASE IN THE CASH VALUE. THE MARKET-VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY. Endorsed and made a part of the Contract effective May 1, 1991. /s/ John J. Martin President Aetna Life Insurance and Annuity Company EMVA-IO(NY) Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed to add the following new provision to the end of the section on page 26 titled Surrender Fee: On the tenth anniversary of the Effective Date of this Contract, the Surrender Fee shall reduce to 0%. Endorsed and made a part of this Contract effective September 1, 1984. /s/ William O. Bailey President ESFPPS-HO Aetna Life Insurance and Annuity Company ENDORSEMENT This Contract is hereby endorsed as follows: Section 5.01(e), Section 5.02(f), Section 5.03(h) Section 5.04(f) and Section 5.05(f) entitled Surrender Value, is deleted and replaced by the following: After deduction of the Maintenance fee (if any), Aetna will reduce the amount payable upon surrender of any portion of the Individual Account(s) by a Surrender Fee. The Surrender Fee will be in accordance with the Surrender Fee table in 6.02. The Surrender Fee will not exceed 9% of the Purchase Payments made to that Account. Endorsed and made a part of this Contract on March 1, 1989 or the effective date of the Contract whichever is later. /s/ John J. Martin President ESVI-HH(XC) Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract and the Certificate, (as applicable), is hereby endorsed. The term Valuation Period under General Definitions is amended to read as follows: The period of time for which a Fund determines its net asset value, usually from 4:15 p.m. Eastern time each day the New York Stock Exchange is open until 4:15 p.m. the next such day, or such other day that one or more of the Funds determines its net asset value. Endorsed and made a part of the Contract. /s/ G. G. Benanav President Aetna Life Insurance and Annuity Company EVP-IC EX-99.4.5 4 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract is hereby endorsed as follows: Part III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS of this Contract is endorsed to add the following new Sections: Section 3.16 Systematic Distribution Options: Without further amendment of this Contract, Aetna may, from time to time, establish and make available for election by the Contract Holder, one or more Systematic Distribution Options (SDO). When an SDO election is in effect, installment payments will be made from the Contract without reducing any portion of the Current Value by a Surrender Fee. Any SDO offered by Aetna will be subject to the following criteria: (a) Any SDO established by Aetna will be made available among similarly situated contracts uniformly and on the basis of objective criteria consistently applied; (b) The availability of any SDO may be limited by minimum terms and conditions applicable to the election of such SDO; and (c) Aetna may discontinue the availability of an SDO at any time. Except to the extent required in order to comply with applicable law, any such discontinuance shall not apply to any contracts as to which an election under such SDO is in effect at the time of such SDO's discontinuance. Section 3.17 Termination of Contract: Following the completion of two Contract Years in which no Purchase Payments have been made, Aetna reserves the right to pay the full Surrender Value to the Contract Holder if the Current Value is less than $1,500, provided Aetna gives the Contract Holder 90 days written notice. Such Surrender Value paid may not be reinstated. The full Surrender Value payable to the Contract Holder will not be reduced by any Surrender Fee and amounts withdrawn from the Guaranteed Interest Account (GIA), if applicable, (see Section 3.15 added by endorsement) will not receive any reduced rate of interest. Surrenders from GIA will receive the same guaranteed effective annual yield to the date of contract termination as if amounts had remained in GIA until the end of a Guaranteed Term. This provision does not apply for any Contract that has elected an Annuity Option. Endorsed and made a part of this Contract. /s/ Dan Kearney President Aetna Life Insurance and Annuity Company EIP-SDOTHD-97 EX-99.4.6 5 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract is hereby endorsed as follows: Part III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS of this Contract is endorsed to add the following new Section: 3.16 Systematic Distribution Options: Without further amendment of this Contract, Aetna may, from time to time, establish and make available for election by the Contract Holder, one or more Systematic Distribution Options (SDO). When an SDO election is in effect, installment payments will be made from the Contract without reducing any portion of the Current Value by a Surrender Fee or a Market Value Adjustment (MVA). Any SDO offered by Aetna will be subject to the following criteria: (a) Any SDO established by Aetna will be made available among similarly situated contracts uniformly and on the basis of objective criteria consistently applied; (b) The availability of any SDO may be limited by minimum terms and conditions applicable to the election of such SDO; and (c) Aetna may discontinue the availability of an SDO at any time. Except to the extent required in order to comply with applicable law, any such discontinuance shall not apply to any contracts as to which an election under such SDO is in effect at the time of such SDO's discontinuance. 3.15 Payment of Current Value is amended and restated as follows: Following the completion of two Contract Years in which no Purchase Payments have been made, Aetna reserves the right to pay the full Surrender Value to the Contract Holder if the Current Value is less than $1,500, provided Aetna gives the Contract Holder 90 days written notice. Such Surrender Value paid may not be reinstated. The full Surrender Value payable to the Contract Holder will not be reduced by any Surrender Fee and amounts from the Guaranteed Accumulation Account (GAA), if applicable, (see Section 3.02 added by endorsement) will receive the greater of: (a) The aggregate MVA amount from all Guaranteed Terms prior to the end of those Terms; or (b) The applicable portion of the Current Value in GAA. This provision does not apply for any Contract that has elected an Annuity Option. Endorsed and made a part of this Contract. /s/ Dan Kearney President Aetna Life Insurance and Annuity Company EIP-SDOTHD-97(NY) EX-99.4.7 6 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract is hereby endorsed as follows: The DISCONTINUANCE, NON-FORFEITURE or SURRENDER PROVISIONS as applicable in this contract are endorsed to add the following new Sections: Systematic Distribution Options: Without further amendment of this Contract, Aetna may, from time to time, establish and make available for election by the Contract Owner, one or more Systematic Distribution Options (SDO). When an SDO election is in effect, installment payments will be made from the Contract without reducing any portion of the value by a Surrender Fee or a Market Value Adjustment (MVA). Any SDO offered by Aetna will be subject to the following criteria: (a) Any SDO established by Aetna will be made available among similarly situated contracts uniformly and on the basis of objective criteria consistently applied; (b) The availability of any SDO may be limited by minimum terms and conditions applicable to the election of such SDO; and (c) Aetna may discontinue the availability of an SDO at any time. Except to the extent required in order to comply with applicable law, any such discontinuance shall not apply to any contracts as to which an election under such SDO is in effect at the time of such SDO's discontinuance. Termination of Contract: Following the completion of two contract years, or premium years if applicable, in which no stipulated payments have been made, Aetna reserves the right to pay the full Surrender Value to the Contract Owner if the contract value is less than $1,500, provided Aetna gives the Contract Owner 90 days written notice. Such Surrender Value paid may not be reinstated. The full Surrender Value payable to the Contract Owner will not be reduced by any Surrender Fee and amounts from the Guaranteed Accumulation Account (GAA), (added by endorsement to the contract, if applicable) will receive the greater of: (a) The aggregate MVA amount from all Guaranteed Terms prior to the end of those Terms; or (b) The applicable portion of the contract value in GAA. This provision does not apply for any Contract that has elected an Annuity Option. Endorsed and made a part of this Contract. /s/ Dan Kearney President Aetna Life Insurance and Annuity Company EIP-SDOTPM-97(NY) EX-99.4.8 7 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract is hereby endorsed as follows: The DISCONTINUANCE, NON-FORFEITURE or SURRENDER PROVISIONS as applicable in this Contract are endorsed to add the following new Sections: Systematic Distribution Options: Without further amendment of this Contract, Aetna may, from time to time, establish and make available for election by the Contract Owner, one or more Systematic Distribution Options (SDO). When an SDO election is in effect, installment payments will be made from the Contract without reducing any portion of the value by a Surrender Fee. Any SDO offered by Aetna will be subject to the following criteria: (a) Any SDO established by Aetna will be made available among similarly situated contracts uniformly and on the basis of objective criteria consistently applied; (b) The availability of any SDO may be limited by minimum terms and conditions applicable to the election of such SDO; and (c) Aetna may discontinue the availability of an SDO at any time. Except to the extent required in order to comply with applicable law, any such discontinuance shall not apply to any contracts as to which an election under such SDO is in effect at the time of such SDO's discontinuance. Termination of Contract: Following the completion of two contract years, or premium years if applicable, in which no stipulated payments have been made, Aetna reserves the right to pay the full Surrender Value to the Contract Owner if the contract value is less than $1,500, provided Aetna gives the Contract Owner 90 days written notice. Such Surrender Value paid may not be reinstated. The full Surrender Value payable to the Contract Owner will not be reduced by any Surrender Fee and amounts withdrawn from the Guaranteed Interest Account (GIA), (added by endorsement to the contract, if applicable) will not receive any reduced rate of interest. Surrenders from GIA will receive the same guaranteed effective annual yield to the date of contract termination as if amounts had remained in GIA until the end of a Guaranteed Term. This provision does not apply for any Contract that has elected an Annuity Option. Endorsed and made a part of this Contract. /s/ Dan Kearney President Aetna Life Insurance and Annuity Company EIP-SDOTPM-97 -----END PRIVACY-ENHANCED MESSAGE-----