-----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, AWPLnbpyO7VlAupjmrY6jIIV0hEhFJRWQMQsmFb9u8b8iifujPgu/WenwUALHc/Y TrQX8MJuzz18NZmBmVwN4g== 0000950146-99-000418.txt : 19990305 0000950146-99-000418.hdr.sgml : 19990305 ACCESSION NUMBER: 0000950146-99-000418 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AETNA LIFE INSURANCE & ANNUITY CO /CT CENTRAL INDEX KEY: 0000837010 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 710294708 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: SEC FILE NUMBER: 033-60477 FILM NUMBER: 99557226 BUSINESS ADDRESS: STREET 1: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 BUSINESS PHONE: 2032737834 MAIL ADDRESS: STREET 1: 151 FARMINGTON AVENUE CITY: HARTFORD STATE: CT ZIP: 06156 POS AM 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Registration No. 33-60477 Commission on March 4, 1999 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-2 (previously filed on Form S-1) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Aetna Life Insurance and Annuity Company --------------------------------------------------------------------- Connecticut --------------------------------------------------------------------- 71-0294708 --------------------------------------------------------------------- 151 Farmington Avenue, Hartford, Connecticut 06156, (860) 273-4686 --------------------------------------------------------------------- Julie E. Rockmore, Counsel Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RE4A, Hartford, Connecticut 06156 (860) 273-4686 --------------------------------------------------------------------- (Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service) - -------------------------------------------------------------------------------- The annuities covered by this registration statement are to be issued from time to time after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [XX] If the registrant elects to deliver its latest annual report to security holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1) of this Form, check the following box. [XX] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ______________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ] ______________ If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ______________ If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CROSS REFERENCE SHEET Pursuant to Regulation S-K Item 501(b)
Form S-2 Item No. Information Required in Prospectus Location -------- ---------------------------------- -------- 1 Forepart of the Registration Statement and Outside Front Cover Page of Prospectus................................ Outside Front Cover 2 Inside Front and Outside Back Cover Pages of Prospectus..................................... Table of Contents (inside front cover) 3 Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges........................................ Summary 4 Use of Proceeds......................................... Investments 5 Determination of Offering Price......................... Not Applicable 6 Dilution................................................ Not Applicable 7 Selling Security Holders................................ Not Applicable 8 Plan of Distribution.................................... Description of the Guaranteed Accumulation Account 9 Description of Securities to be Registered.............. Description of the Guaranteed Accumulation Account 10 Interests of Named Experts and Counsel.................. Not Applicable 11 Information with Respect to the Not Applicable Registrant.............................................. 12 Incorporation of Certain Information by Reference....... Incorporation of Certain Documents by Reference; Experts 13 Disclosure of Commission Position on Indemnification for Securities Act Liabilities............................................. Not Applicable
Guaranteed Accumulation Account - May 3, 1999 - -------------------------------------------------------------------------------- Introduction The Guaranteed Accumulation Account (GAA) is a fixed interest option available during the accumulation phase of certain variable annuity contracts issued by Aetna Life Insurance and Annuity Company (the Company or we). Read this prospectus carefully before investing in GAA and save it for future reference. General Description GAA offers investors the opportunity to earn specified guaranteed rates of interest for specified periods of time, called guaranteed terms. We generally offer several guaranteed terms at any one time for those considering investing in GAA. Each guaranteed term offers a guaranteed interest rate for investments that remain in GAA for the duration of the specific guaranteed term. The guaranteed term establishes both the length of time for which we agree to credit a guaranteed interest rate and how long your investment must remain in GAA in order to receive the guaranteed interest rate. We guarantee both principal and interest if, and only if, your investment remains invested for the full guaranteed term. Charges related to the contract, such as a maintenance fee or early withdrawal charge, may still apply even if you withdraw at the end of the guaranteed term. Investments taken out of GAA prior to the end of the guaranteed term may be subject to a market value adjustment which may result in an investment gain or loss. (See "Market Value Adjustment", page 11.) This prospectus will explain: > Guaranteed interest rates and guaranteed terms > Contributions to GAA > Types of investments available, and how they are classified > How rates are offered > How there can be an investment risk, and how we calculate gain or loss > Contract charges that can affect your account value in GAA > Taking investments out of GAA > How to reinvest or withdraw at maturity Additional Disclosure Information Neither the Securities and Exchange Commission, nor any state securities commission, has approved or disapproved of these securities or passed on the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. We do not intend for this prospectus to be an offer to sell or a solicitation of an offer to buy these securities in any state or jurisdiction that does not permit their sale. Our Home Office: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 (800)-GAA-Fund or (800)-422-3863 TABLE OF CONTENTS Summary ..................................................................... 3 Description of the Guaranteed Accumulation Account .......................... 6 General, Contributions to GAA, Deposit Period, Guaranteed Terms, Guaranteed Classifications, Guaranteed Interest Rates, Maturity Value Transfer Provision Transfers ................................................................... 9 Transfers from GAA, Transfers Between Guaranteed Term Classifications Withdrawals ................................................................. 10 Market Value Adjustment ..................................................... 11 Deposit Period Yield, Current Yield, MVA Formula Contract Charges ............................................................ 12 Other Topics ................................................................ 13 Income Phase -- Deferral of Payments -- Reinvestment Privilege -- Contract Loans -- Investments -- Distribution of Contracts -- Taxation -- Year 2000 Readiness -- Experts -- Legal Matters -- Further Information -- Incorporation of Certain Documents by Reference -- Inquiries Appendix I -- Examples of Market Value Adjustment Calculations .............. 18 Appendix II -- Examples of Market Value Adjustment Yields ................... 20
Summary - -------------------------------------------------------------------------------- GAA is a fixed interest option that may be available during the accumulation phase of your variable annuity contract. The following is a summary of certain facts about GAA. In General. Amounts that you invest in GAA will earn a guaranteed interest rate if left in GAA for a specified period of time (the guaranteed term). You must invest amounts in GAA for the full guaranteed term in order to receive the quoted guaranteed interest rate. If you withdraw or transfer those amounts before the end of the guaranteed term, we may apply a "market value adjustment," which may be positive or negative. Deposit Periods. A deposit period is the time during which we offer a specific guaranteed interest rate if you deposit dollars for a specific guaranteed term. For a particular guaranteed interest rate and guaranteed term to apply to your account dollars, you must invest them during the deposit period during which that rate and term are offered. Guaranteed Terms. The guaranteed term is the period of time account dollars must be left in GAA in order to earn the guaranteed interest rate specified for that guaranteed term. We offer different guaranteed terms at different times. Check with your representative or the Company to learn the details about the guaranteed term(s) currently offered. Some variable annuity contracts that offer GAA distinguish between short- and long-term classifications of GAA. Under those contracts, we make the following distinction: > Short-term classification--three years or less > Long-term classification--ten years or less, but greater than three years Guaranteed Interest Rates. We guarantee different interest rates, depending on when account dollars are invested in GAA. The interest rate we guarantee is an annual effective yield; that means that the rate reflects a full year's interest. We credit interest at a rate that will provide the guaranteed annual effective yield over one year. The guaranteed interest rate(s) are guaranteed for that deposit period and for the length of the guaranteed term. The guaranteed interest rates we offer will always meet or exceed the minimums agreed to in the contract. Apart from meeting the contractual minimums, we can in no way guarantee any aspect of future offerings. Fees and Other Deductions. We do not make deductions from amounts in GAA to cover mortality and expense risks. Rather, we consider these risks when determining the credited rate. The following other types of charges may be deducted from amounts held in, withdrawn or transferred from GAA: > Market Value Adjustment (MVA)--see "Market Value Adjustment" > Tax Penalties and/or Tax withholding--see "Taxation"; see also the "Taxation" section of the contract prospectus > Early Withdrawal Charge--see "Contract Charges"; see also the "Fees" section of the contract prospectus > Maintenance Fee--see "Contract Charges"; see also the "Fees" section of the contract prospectus Market Value Adjustment (MVA). If you withdraw or transfer all or part of your account value from GAA before the guaranteed term is completed, an MVA may apply. The MVA reflects the change in the value of the investment 3 due to changes in interest rates since the date of deposit. The MVA may be positive or negative depending on interest rate activity at the time of withdrawal or transfer. Withdrawals from GAA due to election of a lifetime income option or due to the death of the participant (if withdrawn within the first six months following death) will be subject to an aggregate market value adjustment (the sum of all MVAs due to withdrawal) only if the aggregate market value adjustment is positive. Maturity of a Guaranteed Term. On or before the end of a guaranteed term, the contract holder or you, if permitted, may instruct us to > Transfer the matured amount to one or more new guaranteed terms available under the current deposit period > Transfer the matured amount to other available investment options > Withdraw the matured amount Deductions may apply to withdrawals. (See "Contract Charges" and the contract prospectus.) When a guaranteed term ends, if we have not received instructions, we will automatically transfer the maturing investment into a guaranteed term available in the current deposit period. (See "Maturity of a Guaranteed Term" and "Maturity Value Transfer Provision.") For contracts that distinguish between short-term and long-term classifications, we will generally transfer the maturing investment to the available deposit period for the guaranteed term having the shortest maturity within the same classification. For other contracts, we will generally transfer the maturing investment in the following manner based upon availability: > To a guaranteed term of the same duration, if available; or > To a guaranteed term with the next shortest duration, if available; or > To a guaranteed term with the next longest duration. Maturity Value Transfer Provision. If we automatically transfer the matured investment into the current deposit period, the contract holder or you, if permitted, may, for a limited time, transfer or withdraw all or a portion of the matured investment that was transferred without an MVA. Other fees may be assessed on any withdrawals. See "Maturity Value Transfer Provision." Transfer of Account Dollars. Generally, account dollars invested in GAA may be transferred among guaranteed terms offered through GAA, and/or to other investment options offered through the contract. However: > Transfers may not be made during the deposit period in which your account dollars are invested in GAA or for 90 days after the close of that deposit period. > We may apply an MVA to transfers made before the end of a guaranteed term. Investments. Guaranteed interest rates credited during any guaranteed term do not necessarily relate to investment performance. Deposits received into GAA, regardless of the length of the guaranteed term or, where applicable, guaranteed term classification, will generally be invested in federal, state and municipal obligations, corporate bonds, preferred stocks, real estate mortgages, real estate, certain other fixed income investments, and cash or cash equivalents. All of our general assets are available to meet guarantees under GAA. 4 Amounts allocated to GAA are held in a nonunitized separate account except for amounts allocated to short-term classifications of GAA before September 1, 1998, which are held in the Company's general account. To the extent provided for in the contract, assets of the separate account are not chargeable with liabilities arising out of any other business that we conduct. See "Investments" on page 13. Notification of Maturity. We will notify you at least 18 calendar days prior to the maturity of a guaranteed term. We will include information relating to the current deposit period's guaranteed interest rates and the available guaranteed terms. You may obtain information concerning available deposit periods, guaranteed interest rates, and guaranteed terms by telephone five business days prior to the maturity date (1-800-GAA-FUND or 1-800-422-3863). (See "Description of the Guaranteed Accumulation Account--General" and "Maturity of a Guaranteed Term.") 5 Description of the Guaranteed Accumulation Account - -------------------------------------------------------------------------------- General GAA offers guaranteed interest rates for specific guaranteed terms. For a particular guaranteed interest rate and guaranteed term to apply to your account dollars, you must invest them during the deposit period during which that rate and term are offered. Each deposit period may offer more than one guaranteed term. Guaranteed terms may be classified according to length of time to maturity, and each deposit period may offer various guaranteed terms within these classifications. A market value adjustment may be applied to any values withdrawn or transferred from a guaranteed term prior to the end of that guaranteed term, except for amounts transferred under the maturity value transfer provision. In the case of amounts withdrawn from a guaranteed term due to the death of the participant, we will apply an aggregate market value adjustment (the sum of all market value adjustments calculated due to this withdrawal), provided that it is positive, and provided that the withdrawal is requested within six months of death. After the six-month period, an aggregate market value adjustment, whether positive or negative, will be applied. Similarly, in the case of values withdrawn from guaranteed terms to provide income phase payments under one of the lifetime income options, we will apply an aggregate market value adjustment, provided that it is positive. We maintain a toll-free telephone number for those wishing to obtain information concerning available deposit periods, guaranteed interest rates, and guaranteed terms. The telephone number is 1-800-GAA-FUND (1-800-422-3863). At least 18 calendar days before a guaranteed term matures, we will notify the contract holder or you, if applicable, of the upcoming deposit period dates and the current guaranteed interest rates, guaranteed terms and projected matured guaranteed term values. Contributions to GAA The contract holder or you, if applicable, may invest in the guaranteed terms available in the current deposit period by allocating new payments to GAA or by transferring a sum from other funding options available under the contract or from other guaranteed terms. Though we may require a minimum payment(s) to a contract, we do not require a minimum investment for a guaranteed term. Refer to the contract prospectus. Investments may not be transferred from a guaranteed term during the deposit period in which the investment is applied or during the first ninety days after the close of the deposit period. This restriction does not apply to amounts transferred or withdrawn under the maturity value transfer provision. See "Maturity Value Transfer Provision." Deposit Period The deposit period is the period of time during which the contract holder or you, if applicable, may direct investments to a particular guaranteed term(s) and receive a stipulated guaranteed interest rate(s). Each deposit period may be a month, a calendar quarter, or any other period of time we specify. 6 Guaranteed Terms A guaranteed term is the time we specify during which we credit the guaranteed interest rate. We will offer at least one guaranteed term of three years or less and one term of more than three years in any deposit period. We offer guaranteed terms at our discretion for various periods ranging from one to ten years. Guaranteed Term Classifications Some contracts distinguish between long-term and short-term guaranteed term classifications. The following are the guaranteed term classifications: Short-term--All guaranteed terms of 3 years or less; or Long-term--All guaranteed terms of between 3 and 10 years. During each deposit period, we may offer more than one guaranteed term within each guaranteed term classification. The contract holder or you, if applicable, may allocate investments to guaranteed terms within one or both guaranteed term classifications during a deposit period. Guaranteed Interest Rates Guaranteed interest rates are the rates that we guarantee will be credited on amounts applied during a deposit period for a specific guaranteed term. Guaranteed interest rates are annual effective yields, reflecting a full year's interest. We credit interest at a rate that will provide the guaranteed annual effective yield over one year. Guaranteed interest rates are credited according to the length of the guaranteed term as follows: Guaranteed Terms of One Year or Less: The rate is credited from the date of deposit to the last day of the guaranteed term. Guaranteed Terms of Greater than One Year: Several different guaranteed interest rates may be applicable during a guaranteed term of more than one year. The initial guaranteed interest rate is credited from the date of deposit to the end of a specified period within the guaranteed term. We may credit several different guaranteed interest rates for subsequent specific periods of time within the guaranteed term. For example, for a 5-year guaranteed term we may guarantee 5% for the first year, 4.75% for the next two years, and 4.5% for the remaining two years. We announce the available guaranteed terms and current guaranteed interest rates for each deposit period at least 18 calendar days prior to the start of each deposit period. We will not guarantee or credit a guaranteed interest rate below the minimum rate specified in the contract, nor will we credit interest at a rate above the guaranteed interest rate we announce prior to the start of a deposit period. Our guaranteed interest rates are influenced by, but do not necessarily correspond to, interest rates available on fixed income investments we may buy using deposits directed to GAA (see "Investments"). We consider other factors when determining guaranteed interest rates including regulatory and tax requirements, sales commissions and administrative expenses borne by the Company, general economic trends, and competitive factors. We make the final determination regarding guaranteed interest rates. We cannot predict the level of future guaranteed interest rates. 7 [sidenote] Business Day--any business day on which the New York Stock Exchange is open [end sidenote] Maturity of a Guaranteed Term. At least 18 calendar days prior to the maturity of a guaranteed term, we will notify the contract holder or you, if applicable, of the upcoming deposit period, the projected value of the amount maturing at the end of the guaranteed term, and the guaranteed interest rate(s) and guaranteed term(s) available for the current deposit period. The contract holder or you, if applicable, may transfer amounts in any maturing guaranteed term to new guaranteed term(s), if available under the contract. The contract holder or you, if applicable, may also transfer amounts in any maturing guaranteed term to any of the allowable investment options available under the contract. We do not apply a market value adjustment to amounts transferred or surrendered from a guaranteed term on the date the guaranteed term matures; however, we may assess an early withdrawal charge or maintenance fee, if applicable. If we have not received direction from the contract holder or you, if applicable, by the maturity date of a guaranteed term, we will automatically transfer the matured value to one of the following: >For contracts distinguishing between short- and long-term classifications, we will generally transfer the amount maturing to the available deposit period for the guaranteed term having the shortest maturity within the same classification, though it may be different than the maturing term. >For contracts that do not distinguish between short- and long-term classifications, we will generally transfer the maturing amount as follows: o To a guaranteed term of the same duration, if available; or o To a guaranteed term with the next shortest duration, if available; or o To a guaranteed term with the next longest duration The contract holder or you, if applicable, will receive a confirmation statement, plus information on the new guaranteed interest rate(s) and guaranteed term. Maturity Value Transfer Provision If we automatically reinvest the proceeds from a matured guaranteed term, the contract holder or you, if applicable, may transfer or withdraw from GAA the amount that was reinvested without a market value adjustment. An early withdrawal charge or maintenance fee may apply to withdrawals. If the full amount reinvested is transferred or withdrawn, we will include interest credited to the date of the transfer or withdrawal. This provision is only available until the last business day of the month following the maturity date of the prior guaranteed term. This provision only applies to the first request received from the contract holder or you, if applicable, with respect to a particular matured guaranteed term value. 8 Transfers - -------------------------------------------------------------------------------- We do not permit transfers from any guaranteed term to any other guaranteed term or investment option during the deposit period for that guaranteed term nor during the first 90 days following the close of that deposit period. We do not apply a market value adjustment to the value transferred upon maturity of a guaranteed term nor for values transferred under the maturity value transfer provision. We do not count either of these types of transfers as one of the 12 free transfers allowed per calendar year by those contracts allowing only 12 free transfers. When the contract holder or you, if applicable, request the transfer of a specific dollar amount, we account for any applicable market value adjustment in determining the amount to be withdrawn from a guaranteed term(s) to fulfill the request. Therefore, the amount we actually withdraw from the guaranteed term(s) may be more or less than the requested dollar amount. (See "Appendix I" for an example.) For more information on transfers, see the contract prospectus. Transfers From GAA For contracts that do not distinguish between short- and long-term classifications, the contract holder or you, if applicable, may choose the guaranteed term from which funds will be first withdrawn. If there is more than one guaranteed term of the same duration, we will withdraw funds starting from the oldest guaranteed term that has not reached maturity. If we do not receive directions, we will withdraw funds pro rata from each guaranteed term in which you are invested. If there is more than one guaranteed term of the same duration, we will withdraw funds starting from the oldest guaranteed term that has not reached maturity. For contracts that distinguish between short- and long-term classifications, the contract holder or you, if applicable, may choose the guaranteed term classification from which funds will be first withdrawn. We will withdraw funds starting from the oldest guaranteed term that has not reached maturity within the classification chosen. If we do not receive directions, we will withdraw funds pro rata from the guaranteed term classifications, starting with the oldest guaranteed term that has not reached maturity, and any other investment options. We will apply a market value adjustment to the amount requested for transfer. (See "Market Value Adjustment.") Transfers Between Guaranteed Term Classifications (For contracts that distinguish between short-term and long-term classifications only) The contract holder or you, if applicable, may transfer amounts from short-term guaranteed terms to available long-term guaranteed terms of the current deposit period, or from long-term guaranteed terms to available short-term guaranteed terms of the current deposit period. 9 For example, funds may be transferred from a 3-year guaranteed term (any time after 90 days from the close of the deposit period applicable to that 3-year guaranteed term) to the open deposit period of a 7-year guaranteed term. Funds will be first transferred from the oldest deposit period for which the guaranteed term has not reached maturity and we will assess a market value adjustment on the transferred amount. These transfers are counted toward the 12 free transfers allowed per calender year by those contracts allowing only 12 free transfers. We do not permit the transfer of value from one guaranteed term prior to its maturity to another guaranteed term within the same classification. For example we do not permit transfers from one-year to three-year, one-year to one-year, five-year to seven-year, or ten-year to seven-year guaranteed terms. Withdrawals - -------------------------------------------------------------------------------- The contract allows for full or partial withdrawals from GAA at any time during the accumulation phase. To make a full or partial withdrawal, a request form must be properly completed and submitted to our Home Office (or other designated office as provided in the contract). Partial withdrawals are made pro rata from funding options unless the contract holder or you, if applicable, request otherwise. For contracts that do not distinguish between short- and long-term classifications, each guaranteed term is considered a separate funding option for the purpose of a partial withdrawal. The contract holder or you, if applicable, may choose the guaranteed term from which funds will be withdrawn. If there is more than one guaranteed term of the same duration, we will withdraw funds starting from the oldest guaranteed term that has not reached maturity. If no guaranteed term is elected, we will withdraw funds pro rata from each guaranteed term in which you are invested. If there is more than one guaranteed term of the same duration, we will withdraw funds starting from the oldest guaranteed term that has not reached maturity. For contracts distinguishing between short- and long-term classifications, each guaranteed term classification is considered a separate funding option for the purpose of a partial withdrawal. The contract holder or you, if applicable, may elect to take a partial withdrawal from either guaranteed term classification. We will first withdraw funds from the oldest guaranteed term that has not reached maturity within the chosen classification. If no guaranteed term classification is elected, we will withdraw funds pro rata from each classification (starting with the oldest guaranteed term which has not reached maturity) and other funding options. We may apply a market value adjustment to withdrawals made prior to the end of a guaranteed term, except for withdrawals made under the maturity value transfer provision. (See "Market Value Adjustment.") We may deduct an early withdrawal charge and/or a maintenance fee depending on the terms of the contract. Refer to the contract prospectus for a description of these fees. When a request for a partial withdrawal of a specific dollar amount is made, we will include the market value adjustment in determining the amount to be withdrawn from the guaranteed term(s) to fulfill the request. Therefore, the 10 amount we actually take from the guaranteed term(s) may be more or less than the dollar amount requested. (See "Appendix I" for an example.) [sidenote] Aggregage MVA is the total of all MVAs applied due to a transfer or withdrawal. [end sidenote] Market Value Adjustment - -------------------------------------------------------------------------------- We apply a market value adjustment (MVA) to amounts transferred or withdrawn from GAA prior to the end of a guaranteed term. To accommodate early withdrawals or transfers, we may need to liquidate certain assets or use cash that could otherwise be invested at current interest rates. When we sell assets prematurely we could realize a profit or loss depending on market conditions. The MVA reflects changes in interest rates since the deposit period. When interest rates increase after the deposit period, the value of the investment decreases and the market value adjustment amount may be negative. Conversely, when interest rates decrease after the deposit period, the value of the investment increases and the market value adjustment amount may be positive. Therefore, the application of an MVA may increase or decrease the amount withdrawn from a guaranteed term to satisfy a withdrawal or transfer request. We may apply an aggregate MVA to transfers made in order to fund a nonlifetime income payment option; however, we will not apply a negative aggregate MVA to amounts transferred to fund lifetime income options. We will not apply a negative aggregate MVA to amounts withdrawn from guaranteed terms due to your death, if withdrawn during the six months following your death. After this six-month period, a positive or negative aggregate MVA may apply. Should two or more consecutive guaranteed terms have the same guaranteed interest rate and mature on the same date, we will calculate an MVA applicable to each. We will apply the MVA that is more favorable to you to any withdrawal or transfer from either guaranteed term prior to their maturity. The amount of the MVA depends on the relationship between: >The deposit period yield of U.S. Treasury Notes that will mature in the last quarter of the guaranteed term; and >The current yield of such U. S. Treasury Notes at the time of withdrawal. If the current yield is less than the deposit period yield, the MVA will decrease the amount withdrawn from a guaranteed term to satisfy a transfer or withdrawal request (the MVA will be positive). If the current yield is greater than the deposit period yield, the MVA will increase the amount withdrawn from a guaranteed term (the MVA will be negative or detrimental to the investor). Under some contracts, election of a Systematic Distribution Option, as described in the contract prospectus, will not result in an MVA for amounts withdrawn from GAA. Deposit Period Yield We determine the deposit period yield used in the MVA calculation by considering interest rates prevailing during the deposit period of the 11 guaranteed term from which the transfer or withdrawal will be made. First, we identify the Treasury Notes that mature in the last three months of the guaranteed term. Then, we determine their yield-to-maturity percentages for the last business day of each week in the deposit period. We then average the resulting percentages to determine the deposit period yield. Treasury Note information may be found each business day in publications such as the Wall Street Journal which publishes the yield-to-maturity percentages for all Treasury Notes as of the preceding business day. Current Yield We use the same Treasury Notes identified for the deposit period yield to determine the current yield. We use the yield-to-maturity percentages for the last business day of the week preceding the withdrawal and average those percentages to get the current yield. MVA Formula The mathematical formula used to determine the MVA is: x --- 365 {(1+i)} {-----} {(1+j)} where i is the deposit period yield; j is the current yield; and x is the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term. (For examples of how we calculate MVA, refer to Appendix I.) We make an adjustment in the formula of the MVA to reflect the period of time remaining in the guaranteed term from the Wednesday of the week of a withdrawal. Contract Charges - -------------------------------------------------------------------------------- Certain charges may be deducted directly or indirectly from the funding options available under the contract, including GAA. The contract may have a maintenance fee of up to $30 that we will deduct, on an annual basis, pro rata from all funding options including GAA. We may also deduct a maintenance fee upon full withdrawal of a contract. The contract may have an early withdrawal charge that we will deduct, if applicable, upon a full or partial withdrawal from the contract. If the withdrawal occurs prior to the maturity of a guaranteed term, both the early withdrawal charge and an MVA may be assessed. We do not deduct mortality and expense risk charges and other asset-based charges that may apply to variable funding options from GAA. These charges are only applicable to the variable funding options. We may deduct premium taxes of up to 4% from amounts in GAA, or, under some contracts, front end sales charges of up to 6%. 12 We reserve the right to charge $10 for each transfer over 12, for contracts that restrict the number of free transfers of accumulated investment value between available investment options to 12. Refer to the contract prospectus for details on contract deductions. Other Topics - -------------------------------------------------------------------------------- Income Phase GAA may not be used as a funding option during the income phase. Amounts invested in guaranteed terms must be transferred to one or more of the options available to fund income payments before income payments can begin. An aggregate MVA, as previously described, may be applied to amounts transferred to fund income payments before the end of a guaranteed term. Amounts used to fund lifetime income payments will receive either a positive aggregate MVA or none at all; however amounts transferred to fund a nonlifetime income payment option can receive a positive or negative aggregate MVA. Refer to the contract prospectus for a discussion of the income phase. Deferral of Payments Under certain emergency conditions, we may defer payment of a GAA withdrawal for up to six months. Refer to the contract prospectus for more details. Reinvestment Privilege The contract holder or you, if applicable, may elect to reinvest all or a portion of a full withdrawal during the 30 days following such a withdrawal. We must receive amounts for reinvestment within 60 days of the withdrawal. We will apply reinvested amounts to the current deposit period. Amounts are reinvested in the guaranteed term classifications, where applicable, in the same proportion as prior to the full withdrawal. Any negative MVA we applied to a withdrawal will not be refunded. Refer to the contract prospectus further details. Contract Loans (403(b) and some 401(a) Plans Only) The contract holder or you, if applicable, may not take a loan from amounts held in GAA, but we include GAA amounts when calculating the account value which determines the amount available for a loan. Amounts held in GAA must be transferred to a funding option available for loans in order to be received as a loan. (Refer to the contract prospectus for more information on contract loans.) We will apply an MVA to amounts transferred from guaranteed terms due to a loan request. Investments General Account. Amounts invested in guaranteed terms of three years or less prior to September 1, 1998 were deposited into the Company's general account 13 supporting insurance and annuity obligations and will remain invested in the general account until the end of their guaranteed terms. On or after September 1, 1998 the only new amounts allocated to the Company's general account are amounts allocated or rolled over to short-term classifications of GAA under contracts that had not yet received the necessary state approval to deposit those amounts in the Company's separate account. We invest general account assets of the Company in accordance with applicable state laws, which govern the nature of investments made by life insurance companies and the percentage of assets that may be committed to any particular type of investment. These laws generally permit investments in federal, state and municipal obligations; corporate bonds; preferred stocks; real estate mortgages; real estate and certain other fixed income investments. All of the general assets of the Company, including amounts deposited to GAA, are available to meet the guarantees under GAA. The assets of the Company's general account are chargeable with liabilities arising out of any other business of the Company. Separate Account. All guaranteed terms greater than three years, and except as noted above, guaranteed terms of less than three years allocated or rolled over on or after September 1, 1998 will be deposited in a nonunitized separate account established under Connecticut law. A nonunitized separate account is a separate account in which neither the contract holder nor you participate in the performance of the assets through unit values or any other interest. Contract holders and participants allocating funds to the nonunitized separate account do not receive a unit value of ownership of assets accounted for in this separate account. The risk of investment gain or loss is borne entirely by the Company. All Company obligations due to allocations to the nonunitized separate account are contractual guarantees of the Company and are accounted for in the separate account. To the extent provided for in the applicable contract, the assets of the nonunitized separate account are not chargeable with liabilities resulting from any other business of the Company. Income, gains and losses of the separate account are credited to or charged against the separated account without regard to other income, gains or losses of the Company. Types of Investments. The Company intends to invest primarily in investment- grade fixed income securities including: >Securities issued by the United States Government. >Issues of U.S. Government agencies or instrumentalities; these issues may or may not be guaranteed by the United States Government. >Debt securities which have an investment grade, at the time of purchase, within the four highest grades assigned by Moody's Investors Services, Inc. (Aaa, Aa, A or Baa), Standard & Poor's Corporation (AAA, AA, A or BBB) or any other nationally recognized rating service. >Other debt instruments, including those issued or guaranteed by banks or bank holding companies, and of corporations, which although not rated by Moody's, Standard & Poor's, or other nationally recognized rating services, are deemed by the Company's management to have an investment quality comparable to securities which may be purchased as stated above. >Commercial paper, cash or cash equivalents, and other short-term investments having a maturity of less than one year which are considered 14 by the Company's management to have investment quality comparable to securities which may be purchased as stated above. We may invest in futures and options. We purchase financial futures, related options and options on securities solely for non-speculative hedging purposes. Should securities prices be expected to decline, we may sell a futures contract or purchase a put option on futures or securities to protect the value of securities held in or to be sold for the general account or the nonunitized separate account. Similarly, if securities prices are expected to rise, we may purchase a futures contract or a call option against anticipated positive cash flow or may purchase options on securities. We are not obligated to invest the assets attributable to the contracts according to any particular strategy, except as required by Connecticut and other state insurance laws. The guaranteed interest rates established by the Company may not necessarily relate to the performance of the nonunitized separate account. Distribution of Contracts We serve as underwriter for the securities sold through 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. As underwriter, we will contract with one or more registered broker-dealers to offer and sell the contracts. We and our affiliate(s) may also sell the contracts directly. All registered representatives for the broker-dealers selling these securities will also be licensed as insurance agents to sell variable annuity contracts. For additional information, see the contract prospectus. Taxation You should seek advice from your tax adviser as to the application of federal (and where applicable, state and local) tax laws to amounts paid to or distributed under the contracts. Refer to the applicable contract prospectus for a discussion of tax considerations connected with the contracts. Taxation of the Company. We are taxed as a life insurance company under Part I of Subchapter L of the Internal Revenue Code. The Company owns all assets supporting the contract obligations of GAA. Any income earned on such assets is considered income to the Company. We do not intend to make any provision or impose a charge under the contracts with respect to any tax liability of the Company. Taxation of Payments and Distributions. For information concerning the tax treatment of payments to and distributions from the contracts, please refer to the applicable contract prospectus. Year 2000 Readiness The Company is dependent on computer systems and applications to conduct its business. The Company has developed and is currently executing a comprehensive risk-based plan designed to make its mission-critical information technology (IT) systems and embedded systems Year 2000 ready. The plan for IT systems covers five stages including (i) assessment, (ii) remediation, (iii) testing, (iv) implementation and (v) Year 2000 approval. At year-end 1997, the Company had substantially completed the assessment stage. The remediation of mission-critical IT systems was completed year end 1998. The Company expects to incur internal staffing costs, as well as consulting and other expenses related 15 to infrastructure and facilities enhancements necessary to prepare its systems for the Year 2000. Total Year 2000 costs for these systems are currently estimated to be at least $22 million (after tax) in 1998 and $16 million (after tax) in 1999 and are expected to be funded through operating cash flows. The Company deals with affiliated and unaffiliated third parties in connection with the investments made by the Company with the amounts allocated to GAA. Aetna Inc. and the Company have initiated communication with their critical external relationships to determine the extent to which the Aetna organization may be vulnerable to such parties' failure to resolve their own Year 2000 issues. The Aetna organization, including the Company, have assessed and are prioritizing responses in an attempt to mitigate risks with respect to the failure of these parties to be Year 2000 ready. The failure of third parties to complete adequate preparations in a timely manner could have an adverse effect on the operation of GAA, or the establishment of future guaranteed rates. Experts We have incorporated by reference into Post Effective Amendment No. 4 to the Registration Statement of which this prospectus is a part and/or into this prospectus: >The consolidated financial statements and schedules of the Company as of December 31, 1998 and 1997 >The consolidated financial statements for each of the years in the three-year period ended December 31, 1998 >The reports of KPMG LLP These statements are included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. We have relied upon the reports of KPMG LLP, independent certified public accountants and upon the authority of this firm as experts in accounting and auditing. Legal Matters The validity of the securities offered by this prospectus has been passed upon by counsel to the Company. Further Information This Prospectus does not contain all of the information contained in the registration statement of which this prospectus is a part. Portions of the registration statement have been omitted from this prospectus as allowed by the SEC. You may obtain the omitted information from the offices of the SEC, as described below. We are required by the Securities Exchange Act of 1934 to file periodic reports and other information with the SEC. You may inspect or copy information concerning the Company at the Public Reference Room of the SEC at: Securities and Exchange Commission 450 Fifth Street NW Washington, DC 20549 You may also obtain copies of these materials at prescribed rates from the Public Reference Room of the above office. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. 16 You may also find more information about the Company at http://www.aetna.com. A copy of the Company's annual report on Form 10-K for the year ended December 31, 1998 accompanies this prospectus. We refer to Form 10-K for a description of the Company and its business, including financial statements. We intend to send contract holders annual account statements and other such legally required reports. We do not anticipate such reports will include periodic financial statements or information concerning the Company. You can find this prospectus and other information the Company must file with the SEC on the SEC's web site at http://www.sec.gov. Incorporation of Certain Documents by Reference We have incorporated by reference the Company's latest Annual Report on Form 10-K, as filed with the SEC and in accordance with the Securities and Exchange Act of 1934. The Annual Report must accompany this prospectus. Form 10-K contains additional information about the Company including certified financial statements for the latest fiscal year. We were not required to file any other reports pursuant to Sections 13(a) or 15(d) of the Securities and Exchange Act since the end of the fiscal year covered by that Form 10-K. The registration statement for this prospectus incorporates some documents by reference. We will provide a free copy of any such documents upon the request of anyone who has received this prospectus. We will not include exhibits to those documents unless they are specifically incorporated by reference into the document. Direct requests to: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, CT 06156 800-GAA-FUND 800-422-3863 Inquiries You may contact us directly by writing to us at the address shown above or by calling (800)-GAA-FUND or (800)-422-3863. 17 Appendix I Examples of Market Value Adjustment Calculations - -------------------------------------------------------------------------------- The following are examples of market value adjustment ("MVA") calculations using several hypothetical deposit period yields and current yields. These examples do not include the effect of any early withdrawal charge that may be assessed under the contract upon withdrawal. EXAMPLE I Assumptions: i, the deposit period yield, is 8% j, the current yield, is 10% x, the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term, is 927. x --- 365 {(1+i)} MVA = {-----} {(1+j)} 927 --- 365 {(1.08)} = {------} {(1.10)} =.9545 In this example, the deposit period yield of 8% is less than the current yield of 10%; therefore, the MVA is less than 1. The amount withdrawn from the guaranteed term is multiplied by this MVA. If a withdrawal or transfer request of a specific dollar amount is requested, the amount withdrawn from a guaranteed term will be increased to compensate for the negative MVA amount. For example, a withdrawal request to receive a check for $2,000 would result in a $2,095.34 withdrawal from the guaranteed term. Assumptions: i, the deposit period yield, is 5% j, the current yield, is 6% x, the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term, is 927. x --- 365 {(1+i)} MVA = {-----} {(1+j)} 927 --- 365 = {(1.05} {------} {(1.06)} =.9762 In this example, the deposit period yield of 5% is less than the current yield of 6%; therefore, the MVA is less than 1. The amount withdrawn from the guaranteed term is multiplied by this MVA. If a withdrawal or transfer request of a specific dollar amount is requested, the amount withdrawn from a guaranteed term will be increased to compensate for the negative MVA amount. For example, a withdrawal request to receive a check for $2,000 would result in a $2,048.76 withdrawal from the guaranteed term. 18 EXAMPLE II Assumptions: i, the deposit period yield, is 10% j, the current yield, is 8% x, the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term, is 927. x --- 365 {(1+i)} MVA = {-----} {(1+j)} 927 --- 365 = {(1.08)} {------} {(1.10)} =1.0477 In this example, the deposit period yield of 10% is greater than the current yield of 8%; therefore, the MVA is greater than 1. The amount withdrawn from the guaranteed term is multiplied by this MVA. If a withdrawal or transfer request of a specific dollar amount is requested, the amount withdrawn from a guaranteed term will be decreased to reflect the positive MVA amount. For example, a withdrawal request to receive a check for $2,000 would result in a $1,908.94 withdrawal from the guaranteed term. Assumptions: i, the deposit period yield, is 5% j, the current yield, is 4% x, the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term, is 927. x --- 365 {(1+i)} MVA = {-----} {(1+j)} 927 --- 365 = {(1.05)} {------} {(1.04)} =1.0246 In this example, the deposit period yield of 5% is greater than the current yield of 4%; therefore, the MVA is greater than 1. The amount withdrawn from the guaranteed term is multiplied by this MVA. If a withdrawal or transfer request of a specific dollar amount is requested, the amount withdrawn from a guaranteed term will be decreased to reflect the positive MVA amount. For example, a withdrawal request to receive a check for $2,000 would result in a $1,951.98 withdrawal from the guaranteed term. 19 Appendix II Examples of Market Value Adjustment Yields - -------------------------------------------------------------------------------- The following hypothetical examples show the market value adjustment based on a given current yield at various times remaining in the guaranteed term. Table A illustrates figures based on a deposit period yield of 10%; Table B illustrates figures based on a deposit period yield of 5%. The market value adjustment will have either a positive or negative influence on the amount withdrawn from or remaining in a guaranteed term. Also, the amount of the market value adjustment generally decreases as the end of the guaranteed term approaches. TABLE A: Deposit Period Yield of 10%
Change in Deposit Current Period Time Remaining to Yield Yield Maturity of Guaranteed Term - --------- ---------- ---------------------------------------------------------------------------- 8 Years 6 Years 4 Years 2 Years 1 Year 3 Months ----------- ----------- ----------- --------- ---------- --------- 15% +5% -29.9% -23.4% -16.3% -8.5% -4.3% -1.1% 13% +3% -19.4 -14.9 -10.2 -5.2 -2.7 -0.7 12% +2% -13.4 -10.2 -7.0 -3.5 -1.8 -0.4 11% +1% -7.0 -5.3 -3.6 -1.8 -0.9 -0.2 9% -1% 7.6 5.6 3.7 1.8 0.9 0.2 8% -2% 15.8 11.6 7.6 3.7 1.9 0.5 7% -3% 24.8 18.0 11.7 5.7 2.8 0.7 5% -5% 45.1 32.2 20.5 9.8 4.8 1.2
TABLE B: Deposit Period Yield of 5%
Change in Deposit Current Period Time Remaining to Yield Yield Maturity of Guaranteed Term - --------- ---------- ---------------------------------------------------------------------------- 8 Years 6 Years 4 Years 2 Years 1 Year 3 Months ----------- ----------- ----------- --------- ---------- --------- 9% +4% -25.9% -20.1% -13.9% -7.2% -3.7% -0.9% 8% +3% -20.2 -15.6 -10.7 -5.5 -2.8 -0.7 7% +2% -14.0 -10.7 -7.3 -3.7 -1.9 -0.5 6% +1% -7.3 -5.5 -3.7 -1.9 -0.9 -0.2 4% -1% 8.0 5.9 3.9 1.9 1.0 0.2 3% -2% 16.6 12.2 8.0 3.9 1.9 0.5 2% -3% 26.1 19.0 12.3 6.0 2.9 0.7 1% -4% 36.4 26.2 16.8 8.1 4.0 1.0
20 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution Not Applicable Item 15. Indemnification of Directors and Officers Section 21 of Public Act No. 97-246 of the Connecticut General Assembly (the "Act") provides that a corporation may provide indemnification of or advance expenses to a director, officer, employee or agent only as permitted by Sections 33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by Sections 12 to 20, inclusive, of this Act. Reference is hereby made to Section 33-771(e) of the Connecticut General Statutes ("CGS") regarding indemnification of directors and Section 33-776(d) of CGS 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, except to the extent that their certificate of incorporation expressly provides otherwise, indemnify their directors, officers, employees and agents against "liability" (defined as the obligation to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses incurred with respect to a proceeding) when (1) a determination is made pursuant to Section 33-775 that the party seeking indemnification has met the standard of conduct set forth in Section 33-771 or (2) a court has determined that indemnification is appropriate pursuant to Section 33-774. Under Section 33-775, the determination of and the authorization for indemnification are made (a) by the disinterested directors, as defined in Section 33-770(3); (b) by special counsel; (c) by the shareholders; or (d) in the case of indemnification of an officer, agent or employee of the corporation, by the general counsel of the corporation or such other officer(s) as the board of directors may specify. Also, Section 33-772 provides that a corporation shall 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 he was a director of the corporation. In the case of a proceeding by or in the right of the corporation or with respect to conduct for which the director, officer, agent or employee was adjudged liable on the basis that he received a financial benefit to which he was not entitled, indemnification is limited to reasonable expenses incurred in connection with the proceeding against the corporation to which the individual was named a party. The statute does specifically authorize a corporation to procure indemnification insurance on behalf of an individual who 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 16. Exhibits Exhibits: (4) Instruments Defining the Rights of Security Holders(1) (a) Variable Annuity Contract (G-CDA-HF)(2) (b) Variable Annuity Contract Certificate (GTCC-HF)(3) (c) Variable Annuity Contract (GIT-CDA-HO)(4) (d) Variable Annuity Contract (G-CDA-IA(RP))(5) (e) Variable Annuity Contract Certificate (GTCC-IA(RP))(6) (f) Form of Variable Annuity Contract (G-CDA(99)) (g) Form of Variable Annuity Contract Certificate (CDACERT (99)) (h) Variable Annuity Contract (GLIT-CDA-HO)(4) (i) Variable Annuity Contract (GST-CDA-HO)(4) (j) Variable Annuity Contract (IP-CDA-IB)(7) (k) Variable Annuity Contract (I-CDA-IA(RP))(5) (l) Variable Annuity Contract (I-CDA-HD)(4) (m) Variable Annuity Contract (GIH-CDA-HB)(3) (n) Variable Annuity Contract (IMT-CDA-HO)(3) (o) Variable Annuity Contract (G-401-IB(X/M))(8) (p) Variable Annuity Contract (G-CDA-IB(XC/SM))(8) (q) Variable Annuity Contracts (G-CDA-IB(ATORP)) and (G-CDA-IB(AORP))(9) (r) Variable Annuity Contract (G-CDA-96(TORP))(10) (s) Group Combination Annuity Contract (Nonparticipating) (A001RP95)(11) (t) Group Combination Annuity Contract (Nonparticipating) (A007RC95)(11) (u) Group Combination Annuity Certificate (Nonparticipating) (A020RV95)(11) (v) Group Combination Annuity Certificate (Nonparticipating) (A027RV95)(11) (w) Variable Annuity Contract (GID-CDA-HO)(12) (x) Variable Annuity Contract (GSD-CDA-HO)(12) (y) Variable Annuity Contract (IST-CDA-HO)(13) (z) Variable Annuity Contract (I-CDA-HD(XC))(13) (aa) Variable Annuity Contract (HR1O-DUA-GIA)(14) (bb) Variable Annuity Contract (GA-UPA-GO)(14) (cc) Variable Annuity Contracts (G-TDA-HH(XC/M)) and (G-TDA-HH(XC/S))(15) (dd) Variable Annuity Certificate (GTCC-HH(XC/M))(16) (ee) Variable Annuity Certificate (GTCC-HH(XC/S))(16) (ff) Variable Annuity Contract (IA-CDA-IA)(2) (gg) Variable Annuity Contract (GLID-CDA-HO)(12) (hh) Variable Annuity Contract (G-CDA-HD)(17) (ii) Variable Annuity Contract Certificate (GTCC-HD)(6) (jj) Variable Annuity Contract (G-CDA-IA(RPM/XC))(4) (kk) Variable Annuity Contracts and Certificate (G-CDA-95(ORP)), (G-CDA-95(TORP)) and (GTCC-95 (ORP))(9) (ll) Variable Annuity Contracts and Certificate (G-CDA-ORP), (CDA-IB(TORP)) and (GTCC-95(TORP))(9) (mm) Variable Annuity Contract (IRA-CDA-IC)(5) (nn) Variable Annuity Contract (GIP-CDA-HB)(18) (oo) Variable Annuity Contract (I-CDA-98(ORP))(16) (5) Opinion re Legality* (10) Material contracts are listed under Exhibit 10 in the Company's Form 10-K for the fiscal year ended December 31, 1998 (File No. 33-23376), as filed electronically with the Commission on _________, 1999 (Accession No. _______________). Each of the Exhibits so listed is incorporated by reference as indicated in the Form 10-K* (23) (a) Consent of Independent Auditors* (b) Consent of Legal Counsel (Included in Exhibit (5) above)* (24) (a) Powers of Attorney(19) (b) Certificate of Resolution Authorizing Signature by Power of Attorney(4) (27) Financial Data Schedule* Exhibits other than those listed above are omitted because they are not required or are not applicable. *To be filed by amendment 1. 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 (Accession No. 0000950146-96-000534). 2. Incorporated by reference to Post-Effective Amendment No. 14 to Registration Statement on Form N-4 (File No. 33-75964), as filed electronically on July 29, 1997 (Accession No. 0000950146-97-001101). 3. 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 (Accession No. 0000950146-97-000171). 4. Incorporated by reference to Post-Effective Amendment No. 12 to the Registration Statement or Form N-4 (File No. 33-75964), as filed electronically on February 11, 1997 (Accession No. 0000950146-97-000159). 5. Incorporated by reference to Post-Effective Amendment No. 5 to the Registration Statement or Form N-4 (File No. 33-75986), as filed electronically on April 12, 1996 (Accession No. 0000912057-96-006383). 6. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 333-01107), as filed electronically on February 4, 1999 (Accession No. 0000950146-99-000124). 7. Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 33-75988), as filed electronically on April 15, 1996 (Accession No. 0000912057-96-006419). 8. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-81216), as filed electronically on April 7, 1996 (Accession No. 0000912057-96-006581). 9. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-91846), as filed electronically on April 15, 1996 (Accession No. 0000912057-96-006418). 10. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-91846), as filed electronically on August 6, 1996 (Accession No. 0000912057-96-016381). 11. Incorporated by reference to Registration Statement on Form N-4 (File No. 333-01107), as filed electronically on February 21, 1996 (Accession No. 0000906287-96-000020). 12. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-75982), as filed electronically on February 20, 1997 (Accession No. 0000950146-97-000217). 13. Incorporated by reference to Post-Effective Amendment No. 7 to Registration Statement on Form N-4 (File No. 33-75992), as filed electronically on February 13, 1997 (Accession No. 0000950146-97-000181). 14. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75974), as filed electronically on February 28, 1997 (Accession No. 0000950146-97-000277). 15. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75962), as filed electronically on April 17, 1996 (Accession No. 0000912057-96-006579). 16. Incorporated by reference to Post-Effective Amendment No. 14 to Registration Statement on Form N-4 (File No. 33-75962), as filed electronically on April 17, 1998 (Accession No. 0000950146-98-000657). 17. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75982), as filed electronically on April 22, 1996 (Accession No. 0000912057-96-006790). 18. Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-75980), as filed electronically on August 19, 1997 (Accession No. 0000950146-97-001310). 19. Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 333-56297), as filed electronically on February 25, 1999, 1998 (Accession No. 0000950146-99-000336). Item 17. Undertakings The undersigned registrant hereby undertakes as follows, pursuant to Item 512 of Regulation S-K: (a) Rule 415 offerings: (1) To file, during any period in which offers or sales of the registered securities are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material changes to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (h) Request for Acceleration of Effective Date: Insofar as indemnification for liabilities 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 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. Item 18. Financial Statements and Schedules Not Applicable SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-2 and has duly caused this Post-Effective Amendment No. 4 to the Registration Statement on Form S-2 (File No. 33-60477) to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Hartford, State of Connecticut, on this 4th day of March, 1999. AETNA LIFE INSURANCE AND ANNUITY COMPANY (REGISTRANT) By: Thomas J. McInerney* ------------------------------------------- Thomas J. McInerney President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 4 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- Thomas J. McInerney* Director and President ) - ----------------------------------- (principal executive officer) ) Thomas J. McInerney ) ) ) Catherine H. Smith* Director and Chief Financial Officer ) March - ----------------------------------- ) Catherine H. Smith ) 4, 1999 ) ) Shaun P. Mathews* Director ) - ----------------------------------- ) Shaun P. Mathews ) ) ) Deborah Koltenuk* Vice President, Treasurer and Corporate Controller ) - ------------------------------------- ) Deborah Koltenuk ) By: /s/ Julie E. Rockmore --------------------------------------------------- Julie E. Rockmore *Attorney-in-Fact
Exhibit Index
Exhibit No. Exhibit - ----------- ------- 16(4)(f) Form of Variable Annuity Contract (G-CDA(99)) ---------- 16(4)(g) Form of Variable Annuity Contract Certificate (CDACERT (99)) ---------- 16(5) Opinion re Legality * 16(10) Material Contracts * 16(23)(a) Consent of Independent Auditors * 16(23)(b) Consent of Legal Counsel (Included in Item 16(a)(5) above) * 16(27) Financial Data Schedule *
*To be filed by amendment EX-99.16(4)(F) 2 FORM OF VARIABLE ANNUITY CONTRACT [Aetna Logo] ----------------------------------------------------------------- Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06150 800-525-4225 If you have questions about the Contract, call the toll-free number shown. Group Combination Deferred Annuity Contract (Nonparticipating) Aetna Life Insurance and Annuity Company (ALIAC), a stock company, will pay benefits according to the terms and conditions set forth in this Contract. This Contract is delivered in [YOUR STATE] and is subject to the laws of that jurisdiction. Please read this Contract carefully. It states ALIAC's contractual rights and obligations as well as the rights and obligations of the Contract Holder and Participants. Specifications - ------------------------------------------------------------------------------- Plan SPECIMEN - ------------------------------------------------------------------------------- Type of Plan SPECIMEN - ------------------------------------------------------------------------------- Contract Holder SPECIMEN - ------------------------------------------------------------------------------- Contract No. SPECIMEN - ------------------------------------------------------------------------------- Contract Effective Date SPECIMEN Right to Cancel - ------------------------------------------------------------------------------- The Contract Holder may cancel this Contract within 10 days of receiving it by returning it to ALIAC at the address shown above, or to the agent from whom it was purchased. Within seven days of receiving the cancellation request at its Home Office, ALIAC will return any Contributions received, plus any increase, or minus any decrease in value, on the amount, if any, allocated to the Separate Account. Signed at the Home Office on the Effective Date. [signature of Kirk P. Wickman] /s/ Thomas J. McInerney /s/ Kirk P. Wickman President Secretary All payments and values provided by the group Contract, when based on the investment experience of a Separate Account, are variable and the fixed dollar amount is not guaranteed. Amounts allocated to the Guaranteed Accumulation Account, if withdrawn before a guaranteed term maturity date, may be subject to a market value adjustment. The market value adjustment may result in an increase, or a decrease, in the Individual Account value. G-CDA(99) Table of Contents
Page Contract Schedule I. Accumulation Phase Contract Schedule II. Annuity Phase Definitions Section 1. General Contract Provisions 1.01 Entire Contract ................................................. 1.02 Nonparticipating Contract 1.03 Control of Contract ............................................. 1.04 Certificate .................................................... 1.05 Incontestability ................................................ 1.06 Grace Period .................................................... 1.07 Change of Contract .............................................. 1.08 Payments ........................................................ 1.09 Deferral of Payment ............................................. 1.10 Proof of Age .................................................... 1.11 Evidence of Survival ............................................ 1.12 Misstatements and Adjustments ................................... 1.13 Reports ......................................................... 1.14 State Laws....................................................... 1.15 Claims of Creditors ............................................. 1.16 Maintenance Fee ................................................. 1.17 Charges for Additional Services ................................. 1.18 Charges Subject to Change....................................... Part I. Accumulation Phase Section 2. Contributions and Individual Account Value 2.01 Contributions ................................................... 2.02 Premium Tax ..................................................... 2.03 Individual Account .............................................. 2.04 Experience Credit................................................ 2.05 Individual Account Value ........................................ Section 3. Separate Account 3.01 General ......................................................... 3.02 Funds Available ................................................. 3.03 Change or Substitution of Funds ................................. 3.04 Accumulation Units 3.05 Accumulation Unit Value 3.06 Net Investment Factor 3.07 Charges to the Separate Account ................................. 3.08 Separate Account Transfers....................................... 3.09 Withdrawals from the Separate Account............................ Section 4. Aetna GET Fund 4.01 GET Fund Guarantee Period ....................................... 4.02 GET Fund Offering Period ........................................ 4.03 GET Fund Guarantee .............................................. 4.04 GET Fund Maturity Date .......................................... 4.05 Transfers or Withdrawals from the GET Fund ......................
Section 5. Fixed Account 5.01 Fixed Account Minimum Guaranteed Interest Rate .................. 5.02 Transfers from the Fixed Account 5.03 Withdrawals from the Fixed Account Section 6. Fixed Plus Account 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate ............. 6.02 Transfers from the Fixed Plus Account 6.03 Partial Withdrawals from the Fixed Plus Account ................. 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account ... 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision .......... Section 7. Guaranteed Accumulation Account (GAA) 7.01 Nonunitized Separate Account .................................... 7.02 GAA Minimum Guaranteed Interest Rate ............................ 7.03 Deposit Period .................................................. 7.04 Guaranteed Term ................................................. 7.05 Guaranteed Term Groups .......................................... 7.06 Maturity Date, Maturity Value and Reinvestment .................. 7.07 Transfers and Withdrawals from the GAA .......................... 7.08 Application of the Market Value Adjustment ...................... 7.09 Market Value Adjustment (MVA) ................................... Section 8. Transfers, Withdrawals and Distributions 8.01 Transfers ....................................................... 8.02 Withdrawals ..................................................... 8.03 Withdrawal Restrictions Under the Code .......................... 8.04 Withdrawal Charge ............................................... 8.05 Waiver of Withdrawal Charge ..................................... 8.06 Reinstatement ................................................... 8.07 Required Distributions .......................................... 8.08 Systematic Distribution Options (SDOs) .......................... 8.09 Individual Account Termination .................................. Section 9. Loans 9.01 Loan Availability ............................................... Section 10. Death Benefit During the Accumulation Phase 10.01 Death Benefit ................................................. 10.02 Contract Beneficiary .......................................... 10.03 Distribution of Death Benefit Part II. Annuity Phase Section 11. General Provisions 11.01 Election ...................................................... 11.02 Change of Annuity Provisions .................................. 11.03 Annuity Options ............................................... 11.04 Mortality Table ............................................... 11.05 Minimum Payment Amount ........................................ 11.06 Investment Options ............................................ 11.07 Fixed Annuity Minimum Guaranteed Interest Rate ................ 11.08 Fixed Annuity Payment Amount .................................. 11.09 Variable Annuity Funds ........................................ 11.10 Variable Annuity Transfers .................................... 11.11 Variable Annuity Payment Amount ............................... 11.12 Death Benefit During the Annuity Phase ........................
Annuity Tables Contract Schedule I. Accumulation Phase Control of Contract (see 1.03) [The Contract Holder controls this Contract. By notifying us in writing, the Contract Holder may allow Participants to choose Investment Options for an Individual Account. The Contract Holder may, however, retain the right to choose Investment Options for employer contributions. Unless otherwise provided by the Plan, we will make payments only at the written direction of the Contract Holder and Participant. Unless otherwise specified by the Plan, we will make an inservice transfer under Internal Revenue Service Revenue Ruling 90-24 only at the written direction of the Contract Holder and Participant and will make checks payable to the acquiring investment provider(s). The Contract and Individual Accounts are nontransferable and nonassignable except to us in the event of a loan (if allowed under the Contract) or in the event of a qualified domestic relations order as allowed under the Retirement Equity Act of 1984. Participants have a nonforfeitable right to the value of employer Contributions made to their Individual Accounts subject to any Plan vesting limits as determined by the Contract Holder. Participants have a nonforfeitable right to the value of employee Contributions made to their Individual Accounts as provided by Code Section 403(b) and subject to the terms of the Plan. The Contract Holder must notify us in writing if the Plan is, or becomes, subject to the Employee Retirement Income Security Act of 1974 (ERISA) and/or related law or regulations including the Retirement Equity Act of 1984 (REA). We will rely on the Contract Holder's determination and representation of the applicability of such laws. If the Plan is subject to ERISA, before we will make a distribution from an Individual Account, the Contract Holder must certify in writing that all applicable REA requirements have been met and that the distribution complies with the Plan.] Maximum Maintenance Fee (see 1.16) The maintenance fee for each Individual Account will never be more than [$30] Contribution Limits (see 2.01) [Each year, Contributions to the Contract are limited to the lesser of: (a) The maximum exclusion allowance (MEA) limit under Code Section 403(b); or (b) The amount set forth in Code Section 415, generally, 25% of compensation up to $30,000. In addition, salary reduction contributions as defined in Code Section 402(g) may not exceed $10,000, or such larger amount as adjusted by the Secretary of the Treasury unless the alternative limitation under Code Section 402(g)(8) applies.] Maximum Daily Charges to the Separate Account (see 3.07) Charges to the Separate Account will never be more than the following: Mortality and Expense Risks Charge: [1.25%] (annual basis) Administrative Charge: [0.25%] (annual basis) Aetna GET Fund Availability (see Section 4) [The GET Fund is available.] Fixed Interest Options Available (see Section 5, Section 6, and Section 7) [Fixed Account Fixed Account is available for transferred amounts only (no ongoing Contributions). Fixed Plus Account Guaranteed Accumulation Account] Fixed Account Minimum Guaranteed Interest Rate (see 5.01) The interest rate will never be less than [3%] (effective annual yield) Fixed Account Annual Transfer Limit (see 5.02) [10%] Fixed Plus Account Minimum Guaranteed Interest Rate (see 6.01) The interest rate will never be less than [3%] (effective annual yield) Fixed Plus Account Transfer and Partial Withdrawal Limit (see 6.02 and 6.03) [20%] Full Withdrawal from the Fixed Plus Account (see 6.04) When a full withdrawal from the Fixed Plus Account is requested, the Individual Account value in the Fixed Plus Account may be withdrawn as follows: [(a) Twenty percent of the Individual Account value in the Fixed Plus Account as of the January 1 preceding the withdrawal request. The 20% is reduced by the amount, if any, transferred, withdrawn, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the prior 12 months; then, (b) Twenty-five percent of the remaining Individual Account value 12 months later; (c) Thirty-three and one-third percent of the remaining Individual Account value 12 months later; then, (d) One-half of the remaining Individual Account value 12 months later; and then, (e) The balance of the Individual Account value in the Fixed Plus Account 12 months later.] Waiver of Fixed Plus Account Full Withdrawal Provision (see 6.05) [When a full withdrawal is requested, payment from the Fixed Plus Account is not limited as described in 6.04 when the withdrawal is made: [(a) To a Participant who has attained age 59 1/2 and, if applicable, has completed nine Contribution periods; (b) When a Participant is separated from service, and when: (1) Separation from service is certified by the employer; (2) The amount is paid directly to the Participant; and (3) When the amount paid for all withdrawals due to separation from service during the previous 12-month period does not exceed 20% of the average value of all Individual Accounts under the Contract during that period. (c) Due to financial hardship, or hardship due to an unforeseeable emergency, as defined in the Code, and when: (1) The financial hardship or unforeseeable emergency is certified by the employer; (2) The amount is paid directly to the Participant; and (3) When the amount paid for all withdrawals due to financial hardship or unforeseeable emergency during the previous 12-month period does not exceed 20% of the average value of all Individual Accounts under the Contract during that period. (d) When the amount in the Fixed Plus Account is [$2,000] or less and during the previous [12] months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (e) Due to a Participant's death before Annuity payments begin and paid with six months of the Participant's death; (f) As provided in Section 8.09; or (g) To purchase Annuity payments on a life-contingent basis or payments for a stated period on a fixed-only basis.] Guaranteed Accumulation Account Minimum Guaranteed Interest Rate (see 7.02) The interest rate will never be less than [3%] (effective annual yield) Withdrawal Restrictions Under the Code (see 8.03) [Withdrawals are limited to the "restricted amount" which is the sum of: (1) Contributions attributable to a Participant's salary reduction contributions made on and after January 1, 1989; plus (2) The net increase, if any, in the Individual Account value after December 31, 1988 attributable to investment gains and losses and credited interest. Generally, withdrawals of the "restricted amount" are permitted only when a Participant has: (a) Separated from service when certified by the employer; (b) Attained age 59 1/2; (c) Died; (d) Become disabled, as defined by the Code; (e) Experienced financial hardship, as defined by the Code and as the amount is limited by the Code(in this situation the amount available is; or (f) Met other circumstances as otherwise allowed by federal law, regulations or rulings. No limitations apply to salary reduction Contributions made and earnings credited to such Contributions made on or before December 31, 1988. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code.] Withdrawal Charge (see 8.04) For each withdrawal from an Individual Account, we may deduct a withdrawal charge. This charge is a percentage of the amount withdrawn. The withdrawal charge is as follows.
[Number of Years Since Individual Account Established] Withdrawal Charge [Fewer than 5 5% 5 or more, but fewer than 7 4% 7 or more, but fewer than 9 3% 9 or more, but fewer than 10 2% 10 or more 0%]
The withdrawal charge will never exceed [8 1/2%] of total Contributions, or the maximum permitted by National Association of Securities Dealers, Inc. (NASD) rules. Waiver of Withdrawal Charge (see 8.05) The withdrawal charge does not apply when the withdrawal is: [(a) Used to purchase Annuity Payments; (b) Used to purchase a single premium immediate annuity or individual retirement annuity issued by ALIAC or one of its affiliates, provided that the right to cancel under the new Contract is not exercised. We will treat exercise of the right to cancel as a reinstatement and any subsequent withdrawal may then be subject to the withdrawal charge applicable on the date of the withdrawal; (c) Under a systematic distribution option (see 8.08); (d) In an amount equal to [10%] of the Individual Account value when the withdrawal is the first partial withdrawal in a calendar year and is made to a Participant who is at least age 59 1/2 and not older than age 70 1/2 (not available when a systematic distribution option is in effect); (e) When we terminate an Individual Account as provided in 8.09; (f) When the Individual Account value is [$3,500] or less and during the previous 12 months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (g) Made by a Participant who has attained age 59 1/2 and, if applicable, has completed nine Contribution periods; (h) Made to a Participant who is separated from service when certified by the employer; (i) Due to financial hardship, or hardship due to an unforeseeable emergency, as defined in the Code; or (j) Due to a Participant's death before Annuity payments begin.] Required Distributions (see 8.07) [Generally, for Contributions made and earnings credited after December 31, 1986, distribution must begin by April 1 of the calendar year following the later of (1) the calendar year in which a Participant attains age 70 1/2, or (2) retires. For Individual Account values as of December 31, 1986, distribution must begin by the last day of the year in which a Participant attains age 75 or retires, whichever is later. Distribution of benefits to a Participant who is a five percent owner must begin by the April 1 following the calendar year in which the Participant attains age 70 1/2. If the Contract Holder is a governmental entity or church, distribution of Contributions and earnings credited to such Contributions must be made or begin to be made no later than April 1 of the calendar year in which the Participant attains age 70 1/2 or retires, whichever is later. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code. The entire Individual Account value must be distributed, or begin to be distributed, over the life or life expectancy of a Participant or a Participant and a Beneficiary.] Contract Beneficiary (see 10.02) [The Contract Holder is the Contract beneficiary. A Participant may designate a beneficiary under the Plan (the Plan beneficiary.] Contract Schedule II. Annuity Phase Guaranteed Payment Period (see 11.03) The period for which we will guarantee Annuity payments must be at [least five years and no more than 30 years]. Mortality Table (see 11.04) [Society of Actuaries' 1983 Table a] Maximum Number of Funds (see 11.07) The maximum number of Funds is [five]. Fixed Annuity Minimum Guaranteed Interest Rate (see 11.08) [3%] (annual basis) Number of Annual Transfers Among Funds (see 11.11) Each calendar year, we allow [five] transfers among funds. Maximum Daily Charges to the Separate Account (see 11.12) Charges to the Separate Account will never be more than the following: Mortality and Expense Risks Charge: [1.25%] (annual basis) Administrative Charge: [0.25%] (annual basis) Definitions - -------------------------------------------------------------------------------- Accumulation Phase The time between an Individual Account Effective Date and the date on which the entire Individual Account value is used to purchase Annuity payments, or otherwise distributed. Aetna GET Fund (GET Fund) The Aetna GET Fund is an Investment Option which may be available during the Accumulation Phase. The GET Fund operates as a series offering. Each series is a separate Fund. Aetna Life Insurance and Annuity Company (ALIAC) Aetna Life Insurance and Annuity Company, ("we," and "our," and "us" refer to ALIAC). Annuitant The person whose life expectancy determines the amount and/or duration of the payments under a life-contingent Annuity option. Annuity Payment of an income: (a) For a stated period; (b) For the life of one or two people; or (c) Some combination of (a) and (b). A fixed Annuity is one in which the payment amount does not vary. A variable Annuity is one in which the payment amount may vary based on the net investment results of the Funds. Annuity Phase The time during which we make Annuity payments. Business Day Each day our Home Office is open for business. Code The Internal Revenue Code of 1986, as it is amended from time to time. Contract This agreement between ALIAC and the Contract Holder. Contract Holder The entity or person named on the specifications page, to which the Contract is issued. Contribution The payment, less any applicable premium tax, made to us during the Accumulation Phase. Effective Date The date, shown on the specifications page, on which we issue the Contract or establish an Individual Account. Fixed Account A Fixed Interest Option. The Fixed Account is an obligation of our General Account. Fixed Interest Options Investment options, including the Fixed Account, the Fixed Plus Account and the Guaranteed Accumulation Account that credit interest. The Fixed Interest Options available during the Accumulation Phase are shown on Contract Schedule I under Fixed Interest Options Available. Fixed Plus Account A Fixed Interest Option. Limitations apply to withdrawals from the Fixed Plus Account. The Fixed Plus Account is an obligation of our General Account. Fund One of the variable Investment Options available under this Contract. The Funds are open-end, registered investment management companies (mutual funds) in which the Separate Account invests. General Account The account that holds our assets other than those held in the Separate Account or Nonunitized Separate Account. Guaranteed Accumulation Account (GAA) A Fixed Interest Option that may be available during the Accumulation Phase. Under this option, we guarantee specified rates of interest for specified periods of time. We hold amounts allocated to the Guaranteed Accumulation Account in the Nonunitized Separate Account. Good Order Instructions that are complete and clear enough to allow us to act without exercising discretion. Home Office Our main office located at 151 Farmington Avenue, Hartford, Connecticut. Individual Account An account, or accounts (including, if applicable, employer and employee accounts) established for each Participant to maintain a record of transactions and the value of Contributions as invested. Investment Options The Funds and Fixed Interest Options available under this Contract. Maturity Date The last day of a GAA guaranteed term. The last day of the guarantee period of an Aetna GET Fund series. Nonunitized Separate Account A separate account that holds assets allocated to the Guaranteed Accumulation Account. Participant A person who is covered under the retirement Plan or program for which this Contract is issued and who has an interest in this Contract. Plan The retirement plan or program for which this Contract is issued. Premium Tax Any tax assessed by any governmental entity on Contributions or amounts used to purchase Annuity payments. Separate Account An account that, through its subaccounts, buys and holds shares of the Funds. Valuation Date The date and time at which accumulation unit values and annuity unit values are calculated. Currently, this calculation is made after the close of business of the New York Stock Exchange on any the New York Stock Exchange is open. Section 1. General Contract Provisions - ------------------------------------------------------------------------------- 1.01 Entire Contract The entire Contract consists of this document and any endorsements incorporated. The Plan, if applicable, is not part of the Contract and ALIAC is not bound by its terms. 1.02 Nonparticipating Contract This Contract is nonparticipating. The Contract Holder, a Participant or a Contract beneficiary have no right to share in our earnings. 1.03 Control of Contract This Contract is issued to fund a plan or program which provides retirement income. Control of the Contract is as shown on Contract Schedule I under Control of Contract. 1.04 Certificate Any certificate provided to a Participant summarizes Contract provisions; it is for information only and is not part of the Contract. We will provide certificates as required by state in the state where the Contract is delivered. 1.05 Incontestability We will not cancel this Contract because of any error of fact. 1.06 Grace Period Except as provided in 8.09, this Contract and all Individual Accounts will remain in effect even if Contributions are not continued. 1.07 Change of Contract Only an ALIAC officer at the level of Vice President or higher, or an officer with written authorization from a Vice President or higher officer, may change the terms of this Contract. No other ALIAC employee, agent or representative can change this Contract. Except as noted below, this contract may be changed at any time by written mutual agreement between the Contract Holder and ALIAC. For changes we initiate requiring Contract Holder consent, we notify the Contract Holder 60 days in advance of the change and consider that the Contract Holder has agreed to the change unless we receive written notice that the Contract Holder does not agree to the change at least 30 days before the effective date of the change. If we propose a change requiring Contract Holder consent and the Contract Holder does not agree to the change, we have the right to not establish new Individual Accounts and to stop accepting Contributions to existing Individual Accounts. We will not change the guaranteed minimum interest rate for the Fixed Account and Fixed Plus Account. We have the right to change the following without Contract Holder consent: (a) Net Investment Factor (see 3.06) We may change the Net Investment Factor by notifying the Contract Holder in writing at least 30 days before the change becomes effective. If we do this, the change will apply only to Individual Accounts established, and Contributions received, after the effective date of the change (b) Guaranteed Accumulation Account A Market Value Adjustment (see 7.10) We may change the GAA Market Value Adjustment (see 7.10) by notifying the Contract Holder in writing at least 90 days before the change becomes effective. If we do this, the change will apply only to guaranteed terms offered in deposit periods after the effective date of the change. (c) Systematic Distribution Options (see 8.08) We may change the systematic distribution options by notifying the Contract Holder in writing at least 30 days before the change becomes effective. If we do this, the change will not apply to Participants or beneficiaries receiving payments under the option before the effective date of the change. (d) Annuity Options (see 11.02) We may change Annuity Options by notifying the Contract Holder in writing at least 30 days before the effective date of the change. If we do this, the change will not take effect until at least 12 months after the Effective Date of the Contract, or until at least 12 months after any previous change. Any change will not apply to Participants or beneficiaries receiving Annuity payments before the effective date of the change. (e) Mortality Table (see 11.04) We may change the mortality table by notifying the Contract Holder in writing at least 30 days before the effective date of the change. If we do this, the new table will not apply to Individual Accounts established before the Effective Date of the change. In addition, we may change this Contract as required to comply with state and federal law without Contract Holder consent by notifying the Contract Holder at least 30 days before the effective date of the change. Any unilateral change will not apply to Individual Accounts established before the effective date of the change, but will apply to Individual Accounts established on or after the change becomes effective. If we make a unilateral change, the Contract Holder or Participants, as applicable, are permitted to terminate participation in the Contract before the effective date of the change under the terms of the Contract in effect prior to the effective date of the change. We will make any change of Contract by endorsement, which may be subject to regulatory approval in the state where the Contract is issued. 1.08 Payments We make payments as directed by the Contract Holder or a Participant, as applicable. Payment requests must be in writing or as we otherwise allow in our administrative practice. We determine the amount of any payment based on the Individual Account value as of the Valuation Date following our receipt of a payment request in Good Order at our Home Office. Generally, we make payments within seven calendar days. 1.09 Deferral of Payment We may defer payment up to a period of six months or as otherwise provided by state and/or federal law. 1.10 Proof of Age If a life-contingent Annuity option is elected, we may require proof of the age of an Annuitant. 1.11 Evidence of Survival We may require proof that any Annuitant under a life-contingent Annuity option is living. 1.12 Misstatements and Adjustments If we learn that the age of any Annuitant or second Annuitant is misstated, we will use the correct age to adjust payments. We reserve the right to obtain reimbursement, or to adjust future payments for any amount we overpaid. We will pay the amount of any underpayment. 1.13 Reports Each calendar year we provide the Contract Holder or a Participant, as applicable, with a report of the Individual Account value. We also provide an annual report for the Separate Account. 1.14 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. To determine legal reserve valuation, we use Annuity tables required by law; such tables may be different from those we use to determine Annuity payments. 1.15 Claims of Creditors Individual Accounts are not subject to the claim of any creditor of the Contract Holder, a Participant or Beneficiary, except to the extent permitted by law. 1.16 Maintenance Fee We may deduct an annual maintenance fee during the Accumulation Phase. The amount of the maintenance fee, if any, for this Contract will never be more than the amount shown on Contract Schedule I under Maximum Maintenance Fee. The fee, if any, is deducted proportionately from each Investment Option in which the Individual Account is invested on the anniversary of the Individual Account Effective Date. The fee is also deducted if the entire Individual Account value is withdrawn. No fee is deducted, however, when a full withdrawal occurs within 90 calendar days of the date on which the fee was last deducted. If a Participant has more than one Individual Account, we may deduct the fee proportionately from all Individual Accounts. We may eliminate the fee for an Individual Account established with one Contribution. 1.17 Charges for Additional Services At the request of the Contract Holder, we, or our authorized representatives, may provide administrative services to the Plan. We reserve the right to charge for such services. 1.18 Charges Subject to Change The maintenance fee (see 1.15) and charges to the Separate Account (see 3.07) may vary (increase, decrease, or be eliminated) based on the total assets held in all Individual Accounts under the Contract. In determining total assets, we may aggregate Individual Accounts established under different ALIAC contracts. The aggregate amount is equal to the sum of assets in all Individual Accounts under this Contract, plus the value of Individual Accounts under other ALIAC contracts of the same class issued to the Contract Holder. We may determine the amount of the maintenance fee and/or charges to the Separate Account based on total assets on an annual basis. We will determine initial charges based on our estimate of the amount that will be allocated to the Contract during the first two years. Part I. Accumulation Phase Section 2. Contributions and Individual Account Value - ------------------------------------------------------------------------------ 2.01 Contributions We allocate Contributions in whole percentages among the Investment Options available as directed by the Contract Holder or a Participant, as applicable. Changes in future Contribution allocation may be made at any time, without charge. The Contract Holder or a Participant, as applicable, may also establish an Individual Account with a lump-sum Contribution. We reserve the right to establish minimum Contribution amounts and to refuse to accept any Contribution. Contributions to Individual Accounts may be limited as provided in the Code. The limits, if any, are shown on Contract Schedule I under Contribution Limits. 2.02 Premium Tax We pay any applicable premium tax when it is due. We will deduct the amount of any applicable premium tax from the Individual Account value no earlier than when there is a tax liability. 2.03 Individual Account We will establish an Individual Account for each Participant. If required, we will provide accounts that distinguish between employer and employee Contributions for each Participant. 2.04 Experience Credit We may apply experience credits (investment, administrative, mortality or other) under this Contract and may apply such credits as: (a) A reduction in the maintenance fee; (b) A reduction in the mortality and expense risks charge to the Separate Account; (c) A reduction in the administrative charge to the Separate Account; and (d) An increase in a Fixed Interest Option interest rate. We will apply experience credits at our sole discretion as we deem appropriate for the class of contracts to which the Contract is issued. 2.05 Individual Account Value As of the most recent Valuation Date, the Individual Account value is equal to the total of all Contributions: (a) Plus any interest added on the amount, if any, allocated to a Fixed Interest Option(s), (b) Plus or minus the investment experience on the amount, if any, held in the Separate Account; (c) Minus any applicable maintenance fees, any amounts withdrawn, or used to purchase Annuity payments, or any applicable premium tax; and (d) Minus any applicable fees or charges deducted. Section 3. Separate Account - ------------------------------------------------------------------------------- 3.01 General The Separate Account, established under Title 38a, Section 38a-433 of the Connecticut General Statutes, buys and holds shares of the Funds available. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940. We own the assets held in the Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Separate Account without regard to our other income, gains or losses. Except to the extent of reserves and other Contract liabilities, Separate Account assets cannot be charged with liabilities arising out of any other business we conduct. 3.02 Funds Available We reserve the right to limit the number of Funds in which an Individual Account may be invested, at one time or cumulatively, during the Accumulation Phase and/or Annuity Phase. 3.03 Change or Substitution of Funds We reserve the right to stop offering any Fund or to add Funds. We may substitute shares of a Fund for shares of another Fund. We will provide the Contract Holder with reasonable advance notice of any elimination, addition or substitution of a Fund. If the Plan is subject to ERISA, we will seek Contract Holder consent in advance of any Fund substitution. Consent will be deemed given unless, following notice of substitution and within a prescribed time period, the Contract Holder notifies us in writing that it does not consent and provides us with alternative investment instructions for the shares that would otherwise be affected by the substitution. 3.04 Accumulation Units Each Contribution allocated to one or more of the Funds is credited to an Individual Account as accumulation units. The number of accumulation units is calculated by dividing the amount of the Contribution allocated to the Fund by the accumulation unit value (see 3.05) as of the next Valuation Date after the Contribution is received at our Home Office in Good Order. 3.05 Accumulation Unit Value The value of each accumulation unit for any Fund for each Valuation Date is computed by multiplying the net investment factor (see 3.06) by the accumulation unit value for such Valuation Date. Accumulation unit values may increase or decrease from Valuation Date to Valuation Date. 3.06 Net Investment Factor The net investment factor is used to compute the accumulation unit value for any Fund. For each Valuation Date, for each Fund, the net investment factor is equal to 1.0000000, plus the net return rate. The net return rate equals: [a - b - c] ----------------------- - e - f, where: d a is the value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; b is the value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); d is the total value of the accumulation units and annuity units of the Separate Account at the start of the Valuation Period; e is Separate Account daily charges for mortality and expense risks and a daily administrative charge as shown on Contract Schedules I and II under Daily Charges to the Separate Account; and f is if applicable, a fee for the GET Fund Guarantee, which is deducted daily during the Guarantee Period. The fee, which is determined before the beginning of each offering period, is shown on Contract Schedule I under GET Fund Guarantee Fee. The net return rate may be greater or less than zero percent. 3.07 Charges to the Separate Account During the Accumulation Phase, we may deduct a mortality and expense risks charge from the Individual Account value invested in the Separate Account. In addition, we reserve the right to impose an administrative charge. The charges to the Separate Account are shown on Contracts Schedules I under Maximum Daily Charges to the Separate Account and are deducted daily. 3.08 Separate Account Transfers During the Accumulation Phase, any portion or all of the Individual Account value held in a Fund may be transferred to any other Fund or any available Fixed Interest Option. The Individual Account value will be based on the Fund's accumulation unit value next determined after we receive a transfer request in Good Order. 3.09 Withdrawals from the Separate Account If the Contract Holder or a Participant, as applicable, requests a partial or full withdrawal (see 8.02) from the Funds, a withdrawal charge may apply (see 8.04). Section 4. Aetna GET Fund (GET Fund) - ------------------------------------------------------------------------------- The following provisions apply if the GET Fund is available as shown on Contract Schedule I under Aetna GET Fund Availability. 4.01 GET Fund Guarantee Period For each GET Fund series, the period for which the GET Fund Guarantee applies. The Guarantee Period ends on the Maturity Date. 4.02 GET Fund Offering Period The period, usually from one to three months, during which the Contract Holder or a Participant, as applicable, may allocate (transfer or deposit) amounts to a GET Fund series. Each GET Fund series has a specific offering period. We will specify a minimum total asset amount required at the end of an offering period to offer a GET Fund series. If the minimum is not achieved, we reserve the right to not start the Guaranteed Period. If a GET Fund series is terminated, we will send written notification to all Contract Holders or Participants, as applicable, who have made allocations to that GET Fund series. We inform Contract Holder or Participant, as applicable, no later than 15 days after the end of the offering period. The Contract Holder or a Participant, as applicable, then has 45 days from the end of the offering period to reallocate the amount allocated to the GET Fund to any other available Investment Options. During this time, GET Fund assets are invested in money market instruments. If Contract Holder or a Participant, as applicable, makes no election by the end of the 45-day period, at the next Valuation Date, we will allocate the amount in the terminated GET Fund series to the money market fund. We reserve the right to specify a maximum total asset amount for a GET Fund series. If the maximum is achieved, we reserve the right to set a date on which we will stop accepting allocations for that GET Fund series. We will announce the date on which we will stop accepting transfer and allocations 10 days prior to that date. 4.03 GET Fund Guarantee On the Maturity Date of each GET Fund series, the GET Fund accumulation unit value for that series will not be less than the Fund accumulation unit value determined at the close of business on the last day of the offering period. If necessary to offset any shortfall in the GET Fund accumulation unit value, we will transfer funds from our General Account to the GET Fund. The GET Fund guarantee does not apply to transfers or withdrawals made before the Maturity Date. If GET Fund accumulation units are adjusted at any time during the guaranteed period, the GET Fund guarantee will be restated. We calculate the restated guarantee so that it is equivalent to the original guarantee for that GET Fund series. A daily charge is assessed on the amount, if any, allocated to the GET Fund. This charge for the GET Fund guarantee will range between 0.25% and 1.25% on an annual basis (the prospectus for each GET Fund series offering provides the charge applicable to that offering). 4.04 GET Fund Maturity Date The GET Fund Maturity Date is the date on which the guarantee period ends and GET Fund accumulation units are liquidated. Prior to the Maturity Date for each series, we send a written notice to each Contract Holder or Participant, as applicable, who has an Individual Account value in that series. In response, the Contract Holder or Participant, as applicable, must tell us to which available Investment Option to transfer the amount in the GET Fund on the Maturity Date. If we do not receive instructions, on the Maturity Date we transfer the portion of the Individual Account value held in the GET Fund to another GET Fund series, if available. If no GET Fund series is available, we transfer the amount to the Fund or Funds we designate. 4.05 Transfers or Withdrawals from the GET Fund Transfers or withdrawals from the GET Fund before the Maturity Date are based on the GET Fund Unit value for the Valuation Date next following the date on which we receive the request in Good Order (see 8.01 and 8.02). Section 5. Fixed Account - ------------------------------------------------------------------------------- The following provisions apply if the Fixed Account is available as shown on Contact Schedule I under Fixed Interest Options Available. 5.01 Fixed Account Minimum Guaranteed Interest Rate The Fixed Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or Participants, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or Participants, as applicable. 5.02 Transfers from the Fixed Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Account Annual Transfer Limit of the amount in the Fixed Account may be transferred to any available Investment Option. The amount available for transfer will be based on the Individual Account value in the Fixed Account as of the January 1 preceding the transfer request. There is no limit on the amount that may be transferred to the Fixed Plus Account. We may, on a temporary basis, allow transfer of a larger percentage. 5.03 Withdrawals from the Fixed Account If the Contract Holder or a Participant, as applicable, requests a partial or full withdrawal (see 8.02) from the Fixed Account, a withdrawal charge may apply (see 8.04). Section 6. Fixed Plus Account - ------------------------------------------------------------------------------- The following provisions apply if the Fixed Plus Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate The Fixed Plus Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Plus Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Plus Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or Participants, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or Participants, as applicable. 6.02 Transfers from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Annual Transfer and Withdrawal Limit of the amount in the Fixed Plus Account may be transferred to any available Investment Option. The amount available for transfer is based on the Individual Account value in the Fixed Plus Account on the January 1 preceding the transfer request reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the previous 12 months. In addition, we reserve the right to reduce the amount available for transfer by amounts withdrawn under a systematic distribution option. We reserve the right to waive the transfer limit when the amount in the Fixed Plus Account is $2,000 or less. In addition, 20% of the amount in the Fixed Plus Account may be transferred in each of four consecutive 12-month periods with the balance transferred in the succeeding 12-month period subject to the following conditions: (a) During the five-year period, no additional amounts are allocated to or transferred from the Fixed Plus Account; (b) We will include any amount transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the prior 12-month period when calculating the amount which equals 20%; and (c) We reserve the right to include amounts paid under a systematic distribution option when calculating the amount which equals 20%. 6.03 Partial Withdrawals from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Transfer and Withdrawal Limit may be withdrawn from the Fixed Plus Account. The amount available for withdrawal is based on the amount of the Individual Account value in the Fixed Plus Account on the January 1 preceding the withdrawal request reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments during the preceding 12-month period. In addition, we reserve the right to reduce the amount available by deducting any amount withdrawn under a systematic distribution option. The withdrawal limit does not apply when the partial withdrawal is: (a) Due to a Participant's death during the Accumulation Phase and is made within six months of the date of death (this exception applies to only one partial withdrawal); (b) Used to purchase Annuity payments; or (c) Due to other conditions as we may allow without discrimination. 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account The Contract Holder, or a Participant, as applicable, may withdraw the full amount held in the Fixed Plus Account. When we receive a request for a full withdrawal, no additional transfers, partial withdrawals or loans (if allowed under the Contract) are allowed. The Individual Account value held in the Fixed Plus Account may be withdrawn as shown on Contract Schedule I under Full Withdrawal from the Fixed Plus Account. No withdrawal charge applies to amounts withdrawn. The Contract Holder or Participant, as applicable, may cancel a full withdrawal request from the Fixed Plus Account at any time. 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision The restriction on payment of a full withdrawal from the Fixed Plus Account (see x.xx) does not apply to any of the circumstances shown on Contract Schedule I under Waiver of Fixed Plus Account Full Withdrawal Provision. Section 7. Guaranteed Accumulation Account (GAA) - -------------------------------------------------------------------------------- 7.01 Nonunitized Separate Account The Nonunitized Separate Account is established under Title 38a, Section 38a-433 of the Connecticut General Statutes. There are no discrete units for this account. We own the assets held in the Nonunitized Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Nonunitized Separate Account without regard to our other income, gains or losses. Except to the extent of reserves and other Contract liabilities, Nonunitized Separate Account assets cannot be charged with liabilities arising out of any other business we conduct. 7.02 GAA Minimum Guaranteed Interest Rate All Contributions allocated to a GAA guaranteed term (see 7.04) earn a rate of interest which we determine and which is guaranteed when the Contribution remains in the guaranteed term until the Maturity Date. The rate credited will never be less than the minimum interest rate shown on Contract Schedule I under Guaranteed Accumulation Account Minimum Guaranteed Interest Rate. For guaranteed terms of one year or less, one guaranteed rate is credited for the full guaranteed term. For longer guaranteed terms, we may credit an initial guaranteed interest rate from the date of deposit to the end of a specified period within the guaranteed term. We may credit different interest rates for subsequent specified periods throughout the guaranteed term. 7.03 Deposit Period A deposit period is the period of time we determine during which we accept allocations (Contributions, transfers, or reinvestments) to one or more guaranteed terms. We reserve the right to extend the deposit period. 7.04 Guaranteed Term A guaranteed term is the period of time for which we guarantee the declared interest rate for allocations (Contributions, transfers, or reinvestments) to GAA guaranteed terms. We may offer guaranteed terms ranging in duration from one to ten years. During each deposit period, we may offer more than one guaranteed term of varying lengths. The guaranteed term begins the day after the deposit period ends. The Contract Holder or a Participant, as applicable, may allocate new Contributions or transfers to any or all guaranteed terms available in the current deposit period. 7.05 Guaranteed Term Groups A guaranteed term group is comprised of all GAA guaranteed terms of the same duration. 7.06 Maturity Date, Maturity Value and Reinvestment The Maturity Date is the last day of a guaranteed term. The maturity value is the amount we pay at the end of a guaranteed term. At least 18 days before any guaranteed term Maturity Date, we notify the Contract Holder or a Participant, as applicable, of the projected maturity value and the guaranteed terms (and the guaranteed interest rates for each) available during the then-current deposit period. The Contract Holder, or a Participant, as applicable, may then tell us how to allocate the maturity value. If the Contract Holder or a Participant, as applicable, does not tell us how to reinvest the maturity value, we reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. We mail a confirmation of reinvestment. The confirmation includes the guaranteed term in which we have reinvested the maturity value and the guaranteed interest rate for that term. If we have reinvested the maturity value, during the month following the Maturity Date, the Contract Holder or a Participant, as applicable, may transfer or withdraw the reinvested amount, with interest earned (as of the date we receive the request) without incurring a Market Value Adjustment. 7.07 Transfers and Withdrawals from the GAA Except as noted below, the Contract Holder or a Participant, as applicable, may transfer any portion or all of the amount held in the GAA. Transfers or withdrawals before the Maturity date may be subject to a Market Value Adjustment (see 7.10). Amounts invested in a guaranteed term may not be transferred during the deposit period or for a period of 90 days after the close of the deposit period. Unless directed otherwise, when the Contract Holder or a Participant, as applicable, requests a transfer or withdrawal from the GAA, we withdraw amounts proportionately from each guaranteed term in which the Individual Account is invested. Within a guaranteed term group, we withdraw first from the oldest deposit period and then from the next oldest and so on until the amount requested is withdrawn. 7.08 Application of the Market Value Adjustment Transfers or withdrawals from the GAA before the Maturity date are subject to a Market Value Adjustment, except for: (a) A one-month period following the Maturity Date on which we have automatically reinvested the value on the Maturity Date; (b) Distributions under certain systematic distribution options; and (c) When the withdrawal is equal to the minimum distribution amount required under the Code, using a method permitted by the Code and which we offer. If the amount withdrawn is used to purchase life-contingent Annuity payments, the Market Value Adjustment applies only if it is positive. For withdrawals and transfers from the GAA made (1) within six months of a Participant's death; or (2) to purchase Annuity payments under a life-contingent Annuity option, the amount withdrawn from the GAA is the greater of: (a) The aggregate MVA amount which is the sum of all market value adjusted amounts calculated due to a withdrawal before the Maturity Date (which may be positive or negative); or (b) The amount in the GAA. For withdrawals made after the six month period following death, the withdrawal or transfer amount is the aggregate MVA amount. An MVA applies to amounts withdrawn to purchase Annuity payment under a period certain Annuity option. We may change the GAA Market Value Adjustment by notifying the Contract Holder in writing at least 90 days before the change becomes effective. Any such change will apply only to guaranteed terms offered in deposit periods after the effective date of the change and will apply to existing and new Individual Accounts. 7.09 Market Value Adjustment (MVA) The Market Value Adjustment reflects any change in yields on U.S. Treasury Notes from the time an amount is allocated to a GAA guaranteed term to the time of a transfer or withdrawal prior to the Maturity Date. When the Market Value Adjustment is applied, the amount transferred or withdrawn from the GAA is multiplied by a factor which is calculated as follows: x ------- 365 (1 + i) ----------------------- x ------- 365 (1 + j) Where: i is the deposit period 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 and the current yield are determined as follows: Deposit Period Yield -------------------- At the close of the last business day of each week of a deposit period, we compute a yield that is the average of the yields on U.S. Treasury Notes which mature in the last three months of the guaranteed term. The deposit period yield is the average of those yields for the deposit period. If a withdrawal is made prior to the close of the deposit period, the deposit period yield is the average of the yields of U.S. Treasury Notes for each week preceding the withdrawal. In the event that no U.S. Treasury Notes will mature in the last three months of the guaranteed term, we reserve the right to use the U.S. Treasury Notes that mature in a following quarter. Current Yield ------------- The Current Yield is the average of the yields of the same U.S. Treasury Notes used to calculate the deposit period yield on the last business day of the week preceding withdrawal. Section 8. Transfers, Withdrawals and Distributions - -------------------------------------------------------------------------------- 8.01 Transfers During the Accumulation Phase, the Contract Holder or a Participant, as applicable, may transfer all or any portion of the Individual Account value among the available Investment Options. The Individual Account value on any amount transferred from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order. The Contract Holder or a Participant, as applicable, may request a transfer by properly completing a transfer request form and sending it to our Home Office, or by otherwise complying with our administrative procedures. We reserve the right to establish a minimum transfer amount. 8.02 Withdrawals As allowed by the Plan, if applicable, and subject to provisions of the Code (see 8.03), during the Accumulation Phase, the Contract Holder or a Participant, as applicable, may withdraw any portion or all of the Individual Account value. The Individual Account value of any amount withdrawn from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order. The Contract Holder or a Participant, as applicable, may request a withdrawal by properly completing a withdrawal request form and forwarding it to our Home Office, or by otherwise complying with our administrative procedures. Unless the Contract Holder or Participant, as applicable, requests otherwise, the withdrawal will be made pro rata from the Investment Options in which the Individual Account is invested. A withdrawal charge may apply to amounts withdrawn (see 8.04). In addition, a market value adjustment may apply to amounts withdrawn from the GAA (see 7.08 and 7.09) and limitations may apply to withdrawals from the Fixed Plus Account (see 6.04). 8.03 Withdrawal Restrictions Under the Code The Code may impose restrictions on the amount and timing of withdrawals. The restrictions, if any, applicable to this Contract are shown on Contract Schedule I under Withdrawal Restrictions Under the Code. Withdrawals that do not comply with the Code may be subject to tax penalties. 8.04 Withdrawal Charge During the Accumulation Phase, we may deduct a withdrawal charge from the Individual Account value withdrawn. The charge, if any, is a percentage of the amount withdrawn from the Funds and/or Fixed Interest Options (except, if applicable, the Fixed Plus Account). The withdrawal charge will never exceed 8.5% of the total amount of Contributions. The withdrawal charge, if any, is shown on Contract Schedule I under Withdrawal Charge. 8.05 Waiver of Withdrawal Charge The withdrawal charge (see 8.04) does not apply in any of the circumstances shown on Contract Schedule I under Waiver of Withdrawal Charge. In addition, we reserve the right to reduce, waive or eliminate the withdrawal charge. 8.06 Reinstatement Within 30 days after a withdrawal, the Contract Holder or a Participant, as applicable may elect to reinstate all or a portion of the proceeds of a full withdrawal if allowed by applicable law. We must receive the reinstated amount within 60 days of the withdrawal. Any maintenance fee and withdrawal charge imposed at the time of the withdrawal is included in the reinstatement. If only a portion of the amount withdrawn is reinstated, the amount of any maintenance fee and withdrawal charge deducted will be restored proportionally. The amount of any market value adjustment deducted from any amount withdrawn from GAA is not included in the amount reinstated. Any amount reinstated to the GA Account will be credited to guaranteed terms available in the current deposit period. We will reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. Amounts withdrawn from a GET Fund series are reinstated to the current offering period if one is available. If no GET Fund offering period is available, any amount withdrawn from the GET Fund is reinstated equally among all other Investment Options in which the Individual Account is invested. Amounts are reinstated among the Investment Options in the same proportion as they were held at the time of withdrawal, except, as noted above, for amounts from the GET Fund. Any maintenance fee which falls due after the withdrawal and before the reinstatement is deducted from the amount reinstated. The number of accumulation units reinstated to any Fund is based on the accumulation unit value(s) next computed after we receive the reinstatement request in Good Order at our Home Office. Reinstatement is permitted only once. 8.07 Required Distributions While an Individual Account remains in the Accumulation Phase, the Code may require distribution of all or a portion of the Individual Account value. The Contract Holder, a Participant or Contract beneficiary, as applicable, must tell us when to begin distributions. We have no responsibility for adverse tax consequences as the result of the Contract Holder, Participant or Contract beneficiary, as applicable, not complying with minimum distribution requirements. The distribution requirements, if any, are shown on Contract Schedule I under Required Distributions. Generally, to meet distribution requirements, the Contract Holder, a Participant or Contract beneficiary, as applicable, may request partial withdrawals, a systematic distribution option (see 8.08) or an annuity option. 8.08 Systematic Distribution Options (SDOs) During the Accumulation Phase, we may offer one or more distribution options under which we make regularly scheduled automatic partial distributions of the Individual Account value. To request an SDO, the Contract Holder, a Participant or Contract beneficiary, as applicable, must complete an SDO election form and forward it to our Home Office. Each option is available without discrimination to any class of Contracts. The availability of any specific option may be subject to terms and conditions applicable to that option. We may discontinue the availability of an SDO option for future election; payments will, however, continue to Participants who elected the option before the date it is no longer available. 8.09 Individual Account Termination If the Individual Account value is $3,500 or less, and we have received no Contributions for 12 months, we reserve the right to terminate an Individual Account. Before we do this, we notify the Contract Holder or Participant, as applicable, 90 days in advance. When we terminate an Individual Account, we do not deduct a withdrawal charge. We do not exercise this right when the Individual Account value is $3,500 or less due to investment performance. Section 9. Loans - ------------------------------------------------------------------------------- 9.01 Loan Availability If loans are available under the Contract, a loan endorsement is attached. Section 10. Death Benefit During the Accumulation Phase - ------------------------------------------------------------------------------- 10.01 Death Benefit If a Participant dies during the Accumulation Phase, we pay a death benefit. The amount of the death benefit is the Individual Account value as of the Valuation Date following the date we receive acceptable proof of death at our Home Office (see 7.10 for amounts in the GAA). 10.02 Contract Beneficiary The Contract beneficiary is shown on Contract Schedule I under Contract beneficiary. Generally, the Participant may name a beneficiary under the Plan (the Plan beneficiary). If allowed by the Plan, when designating the Beneficiary, the Contract Holder or a Participant, as applicable, may specify, the form of payment as permitted by the Code. The Contract beneficiary and the form of payment, if applicable, may be designated or changed in writing or as we may otherwise allow in our administrative procedures. 10.03 Distribution of Death Benefit Generally, if the Plan beneficiary is the Participant's surviving spouse, distribution of the death benefit must begin no later than the year the Participant would have attained age 70 1/2 or any other date allowed under federal law or regulations. If the Plan beneficiary is not the Participant's surviving spouse, generally, the death benefit must be used to purchase Annuity payments within one year of the year of the Participant's death or otherwise paid within five years of the year of the Participant's death. Annuity payments to a Plan beneficiary may not extend beyond the period specified in the Code. Part II. Annuity Phase Section 11. General Provisions - ------------------------------------------------------------------------------- 11.01 Election The Contract Holder, a Participant , Contract or Plan beneficiary, as applicable, may elect an Annuity option by properly completing an election form and forwarding it to our Home Office no later than 30 days before the desired first Annuity payment date. All elections of an Annuity option must comply with the minimum distribution requirements of Code Section and any applicable laws and regulations. All or any portion of the Individual Account value (after the deduction of any applicable premium tax) may be used to purchase Annuity payments (for amounts from the GAA, see 7.08). The Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, must also select an Annuity option (see 11.03) and the Investment Option(s) (see 11.06). Once payments begin, an Annuity option may not be changed. 11.02 Change of Annuity Provisions We reserve the right to change Annuity options (see 11.03) and the mortality table (see 11.04) we use to calculate payment rates for life-contingent Annuity payments. If we do this, the change will not take effect until at least 12 months after the Contract Effective Date, or until at least 12 months after any previous change. A change to Annuity options or the mortality table used to calculate payment rates will not apply to Individual Accounts established before the effective date of the change. 11.03 Annuity Options The Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, must elect one of the following: Payments for a Stated Period ---------------------------- This option provides payments for a stated period. The number of years in the stated period must fall within the range shown on Contract Schedule II under Guaranteed Payment Period. If payments for this option are under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within five years of the first payment, the lump sum payment is treated as a withdrawal during the Accumulation Phase and any applicable withdrawal charge applies (see 8.04). If the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Life Income for One Annuitant ----------------------------- This option provides payments for the life of the Annuitant. If this option is elected, the Contract Holder, a Participant or Contract beneficiary, as applicable, must also choose one of the following: (a) Payments cease at the death of the Annuitant; or (b) Payments are guaranteed for a period within the range shown on Contract Schedule II under Guaranteed Payment Period; or (c) Fixed-only cash refund: at the death of the Annuitant, the Beneficiary receives a lump sum payment in an amount equal to the amount applied to the Annuity, less the amount of payments made to the Annuitant. Under (a) or (b), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Life Income for Two Annuitants ------------------------------ This option provides payments for the lives of the Annuitant and a second Annuitant. Payments continue until both Annuitants have died. If this option is elected, the Contract Holder or a Participant, as applicable, must also choose one of the following: (a) 100% of the payment amount to continue after the first death; or (b) 66 2/3% of the payment amount to continue after the first death; or (c) 50% of the payment amount to continue after the first death; or (d) 100% of the payment amount to continue after the first death with payments guaranteed to the Beneficiary after the second death for a period within the range shown on Contract Schedule II under Guaranteed Payment Period; or (e) 100% of the payment amount to continue at the death of the specified second Annuitant and 50% of the payment amount to continue at the death of the specified Annuitant; or (f) 100% of the fixed-only payment amount to continue after the first death with a cash refund to the Contract beneficiary after the second death. The amount of the cash refund is equal to the amount applied to the Annuity, less the amount of payments made. Under (a) or (d), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually may be elected at the time the Annuity option is chosen (if permitted by the Code). Other Options ------------- We may make other options available. 11.04 Mortality Table The mortality table used for calculating Annuity payments for life is shown on Contract Schedule II under Mortality Table. To calculate the payments for a fixed Annuity, or a variable Annuity guaranteed first payment, we use the Annuitant's and, if applicable, the second Annuitant's, adjusted age. The adjusted age is the person's age as of his or her nearest birthday closest to the day Annuity payments begin, reduced as follows: (a) Reduced by one year for payments before January 31, 1999; (b) Reduced by two years for payments beginning during the period from January 1, 2000 through December 31, 2009; (c) Starting on January 1, 2010, reduced by one additional year for payments beginning in each succeeding decade. 11.05 Minimum First Payment Amount The minimum first payment amount is shown on Contract Schedule II under Minimum Payment Amount. We reserve the right to increase the minimum first payment amount, if allowed by state law, based on increases reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993. 11.06 Investment Options When an Annuity option is elected, the Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, must also select: (a) A fixed Annuity; (b) A variable Annuity for which the underlying investment is one or more of the available Funds; or (c) A combination of (a) and (b). For a variable Annuity, the maximum number of Funds available during the Annuity Phase is shown on Contract Schedule II under Maximum Number of Funds. The Contract Holder, a Participant or Contract beneficiary, as applicable, may transfer amounts allocated to Funds during the Annuity Phase. If a fixed Annuity is elected, we will use the applicable current settlement option rates if these will provide high fixed Annuity payments. 11.07 Fixed Annuity Minimum Guaranteed Interest Rate For a Fixed Annuity, the interest rate is never less than the minimum guaranteed rate shown on Contract Schedule II under Fixed Annuity minimum Guaranteed Interest Rate. 11.08 Fixed Annuity Payment Amount The amount of Fixed Annuity payments is a function of the Annuity option elected, the adjusted age of the Annuitant(s) for life-contingent options, the rates in effect at the time payments begin and payment frequency. Sample rates are shown on the charts beginning on page XX. 11.09 Variable Annuity Funds The Funds available during the Annuity Phase may not be the same as those available during the Accumulation Phase. 11.10 Variable Annuity Transfers If a variable Annuity is elected, the Contract Holder, a Participant, Contract or Plan beneficary, as applicable, may request that we transfer all or a portion of the amount allocated to a Fund to any other available Fund. Transfer requests must be expressed as a percentage of the allocation among the Funds on which the variable payment is based. The number of transfers allowed each calendar year is shown on Contract Schedule II under Number of Annual Transfers Among Funds. We reserve the right to allow additional transfers. Transfers are effective as of the next Valuation Date after we receive a transfer request in Good Order at our Home Office. 11.11 Variable Annuity Payment Amount The first variable Annuity payment is calculated by multiplying the Individual Account value (minus any applicable premium tax), by an Annuity rate per $1,000. The Annuity rate is calculated based on: (a) The Annuity option elected; (b) Payment frequency; (c) The assumed investment rate (AIR); and (d) The adjusted age of the Annuitant(s). The Contact Holder, a Participant or Contract beneficiary, as applicable, must elect an AIR of 3.5% or 5.0%. Sample rates for each AIR are shown on the charts beginning on page xx. After the first payment, payment amounts are determined by comparing the performance of the net investment rate (NIR) of the Fund(s) to the AIR. For the amount of the payment to stay the same, or increase, the NIR of the Fund(s) must be equal to or greater than the AIR after the deduction of the daily mortality and expense risks charge and any applicable administrative charge. The amount of the daily mortality and expense risks charge and the administrative charge are shown on Contract Schedule II under Separate Account Daily Mortality and Expense Risks Charge and Separate Account Daily Administrative Charge. If the NIR is less than the AIR, the payment amount decreases. The assumed investment rate for 3.5% is 0.9999058; for 5.0% is 0.9998663. The net investment factor(s) for each Fund is equal to 1.0000000 plus the net return rate. The net return rate equals: [a - b + c] ----------------------- - e - f, where d a is the value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; b is the value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); d is the total value of the accumulation units and annuity units of the Separate Account at the start of the Valuation Period; e is Separate Account daily charges for mortality and expense risks and a daily administrative charge as shown on Contract Schedules I and II under Daily Charges to the Separate Account; and A net return rate may be more or less than 0%. 11.12 Death Benefit During the Annuity Phase The Contract Holder or Participant, as applicable, must name a beneficiary for the Annuity Phase. If an Annuitant(s) dies, any remaining guaranteed payments continue to the beneficiary. Payments are made at least as rapidly as provided by the option in effect at the death of the Annuitant. Annuity payments to an beneficiary may not extend beyond (1) the life of the beneficiary, or (2) any period certain greater than the beneficiary's life expectancy as determined by the Code. The beneficiary may also elect a lump sum payment equal to the present value of any remaining payments. The interest rate used to determine the first Annuity payment is used to calculate the present value. The present value is determined as of the Valuation Date in which we receive acceptable proof of death and a written claim for the death benefit. If the beneficiary dies while receiving payments, the present value of any remaining guaranteed payments is paid in a lump sum to the Contract beneficiary's estate.
OPTION 1: Payments for a Specified Period - --------------------------------------------------------------------------------------- Monthly Amount for Each $1,000* Rates for a Fixed Annuity with a 3% Guaranteed Interest Rate - --------------------------------------------------------------------------------------- Years Payment Years Payment - --------------------------------------------------------------------------------------- 5 $17.91 20 $5.51 10 9.61 25 4.71 15 6.87 30 4.18 - --------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 3.5% AIR - --------------------------------------------------------------------------------------- Years Payment Years Payment - --------------------------------------------------------------------------------------- 5 $18.12 20 $5.75 10 9.83 25 4.96 15 7.10 30 4.45 - --------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 5% AIR - --------------------------------------------------------------------------------------- Years Payment Years Payment - --------------------------------------------------------------------------------------- 5 $18.74 20 $6.51 10 10.51 25 5.76 15 7.82 30 5.28 - ---------------------------------------------------------------------------------------
* Net of any applicable premium tax deduction G-CDA(99) Page
Option 2: Life Income Based on the Life of One Annuitant - ----------------------------------------------------------------------------------------------------------------------------------- Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3% Guaranteed Interest Rate - ----------------------------------------------------------------------------------------------------------------------------------- Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Option 2(c): Adjusted payments for payments payments payments payments Cash Refund Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years - ----------------------------------------------------------------------------------------------------------------------------------- 55 4.44 4.42 4.39 4.32 4.22 4.19 60 4.95 4.93 4.86 4.73 4.55 4.57 65 5.65 5.61 5.47 5.22 4.89 5.06 66 5.82 5.77 5.61 5.33 4.96 5.18 70 6.64 6.54 6.23 5.76 5.19 5.70 75 8.06 7.82 7.14 6.25 5.38 6.51 - ----------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate ------------------------------------------------------------------------------------------------------------------- Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ------------------------------------------------------------------------------------------------------------------- 55 4.72 4.71 4.67 4.60 4.50 60 5.23 5.21 5.13 5.00 4.82 65 5.94 5.89 5.73 5.48 5.15 70 6.92 6.81 6.49 6.00 5.43 75 8.35 8.08 7.38 6.48 5.62 ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate - -------------------------------------------------------------------------------------------------------------------- Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years - ------------------------------------------------------------------------------------------------------------------- 55 5.63 5.61 5.56 5.47 5.36 60 6.12 6.09 6.00 5.85 5.65 65 6.82 6.75 6.57 6.30 5.95 70 7.80 7.67 7.30 6.78 6.21 75 9.23 8.93 8.16 7.23 6.38 - -------------------------------------------------------------------------------------------------------------------
* Net of any applicable premium tax deduction G-CDA(99) Page
Option 3: Life Income Based on the Lives of Two Annuitants - ----------------------------------------------------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3.0% Guaranteed Interest Rate - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted Ages - ----------------------------- payments guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f) - ----------------------------------------------------------------------------------------------------------------------------------- 55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67 55 60 3.99 4.44 4.71 3.98 4.20 3.94 65 60 4.38 4.97 5.32 4.38 4.93 4.29 65 70 4.93 5.68 6.15 4.91 5.27 4.74 75 70 5.69 6.68 7.32 5.62 6.67 5.29 75 80 6.78 8.11 8.99 6.54 7.36 5.93 - ----------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate - -------------------------------------------------------------------------------------------------------------------------- Adjusted Ages - ---------------------------------- payments guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) - -------------------------------------------------------------------------------------------------------------------------- 55 50 $3.97 $4.35 $4.56 $3.97 $4.31 55 60 4.27 4.73 5.00 4.26 4.48 65 60 4.66 5.25 5.61 4.65 5.22 65 70 5.19 5.97 6.44 5.17 5.54 75 70 5.95 6.96 7.61 5.87 6.95 75 80 7.04 8.39 9.29 6.79 7.64 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate - -------------------------------------------------------------------------------------------------------------------------- Adjusted Ages - ---------------------------------- payments guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) - -------------------------------------------------------------------------------------------------------------------------- 55 50 $4.88 $5.26 $5.48 $4.88 $5.23 55 60 5.15 5.63 5.91 5.14 5.38 65 60 5.52 6.14 6.51 5.51 6.10 65 70 6.04 6.84 7.34 6.00 6.41 75 70 6.77 7.84 8.51 6.68 7.81 75 80 7.86 9.28 10.20 7.57 8.49 - --------------------------------------------------------------------------------------------------------------------------
* Net of any applicable premium tax deduction G-CDA(99) Page - -------------------------------------------------------------------------------- Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06150 (800) 525-4547 Group Combination, Deferred Annuity Contract (Nonparticipating) - -------------------------------------------------------------------------------- G-CDA(99) EX-99.16(4)(G) 3 FORM OF VAR. ANN. CONTRACT CERT. Form of Variable Annuity Contract Certificate --------------------------------------------------- Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06150 800-525-4225 If you have questions about this Certificate, call the toll-free number shown. Group Combination Deferred Annuity Certificate (Nonparticipating) Aetna Life Insurance and Annuity Company (ALIAC), a stock company, will pay benefits according to the terms and conditions set forth in the group Contract. The Contract is delivered in [YOUR STATE] and is subject to the laws of that jurisdiction. This Certificate summarizes provisions of the group annuity Contract in which you have an interest. This Certificate is for information only and is not part of the Contract. Please read this Certificate carefully. It states ALIAC's rights and obligations under the group Contract as well as the rights and obligations of the Contract Holder and Participants. Specifications |------------------------------------------------------------------------------- | Group Contract Holder | SPECIMEN |------------------------------------------------------------------------------- | Group Annuity Contract Number | SPECIMEN |------------------------------------------------------------------------------- | Participant | SPECIMEN |------------------------------------------------------------------------------- | Certificate Number | SPECIMEN |------------------------------------------------------------------------------- | Effective Date | SPECIMEN Right to Cancel - -------------------------------------------------------------------------------- You may cancel your interest in Contract within 10 days of receiving this Certificate by returning it to ALIAC at the address shown above, or to the agent from whom it was purchased. Within seven days of receiving the cancellation request at its Home Office, ALIAC will return any Contributions received, plus any increase, or minus any decrease in value, on the amount, if any, allocated to the Separate Account. Signed at the Home Office on the Effective Date. President Secretary All payments and values provided by the group Contract, when based on the investment experience of a Separate Account, are variable and the fixed dollar amount is not guaranteed. Amounts allocated to the Guaranteed Accumulation Account, if withdrawn before a guaranteed term maturity date, may be subject to a market value adjustment. The market value adjustment may result in an increase, or a decrease, in the Individual Account value. C-CDA(99) Table of Contents
Page Contract Schedule I. Accumulation Phase Contract Schedule II. Annuity Phase Definitions Section 1. General Contract Provisions 1.01 Entire Contract ...................................... 1.02 Nonparticipating Contract ............................ 1.03 Control of Contract .................................. 1.04 Certificate .......................................... 1.05 Incontestability ..................................... 1.06 Grace Period ......................................... 1.07 Change of Contract ................................... 1.08 Payments ............................................. 1.09 Deferral of Payment .................................. 1.10 Proof of Age ......................................... 1.11 Evidence of Survival ................................. 1.12 Misstatements and Adjustments ........................ 1.13 Reports .............................................. 1.14 State Laws ........................................... 1.15 Claims of Creditors .................................. 1.16 Maintenance Fee ...................................... 1.17 Charges for Additional Services ...................... 1.18 Charges Subject to Change ............................ Part I. Accumulation Phase Section 2. Contributions and Individual Account Value 2.01 Contributions ........................................ 2.02 Premium Tax .......................................... 2.03 Individual Account ................................... 2.04 Experience Credit .................................... 2.05 Individual Account Value ............................. Section 3. Separate Account 3.01 General .............................................. 3.02 Funds Available ...................................... 3.03 Change or Substitution of Funds ...................... 3.04 Accumulation Units ................................... 3.05 Accumulation Unit Value .............................. 3.06 Net Investment Factor ................................ 3.07 Charges to the Separate Account ...................... 3.08 Separate Account Transfers ........................... 3.09 Withdrawals from the Separate Account ................
C-CDA(99) Page Section 4. Aetna GET Fund 4.01 GET Fund Guarantee Period ............................ 4.02 GET Fund Offering Period ............................. 4.03 GET Fund Guarantee ................................... 4.04 GET Fund Maturity Date ............................... 4.05 Transfers or Withdrawals from the GET Fund ........... Section 5. Fixed Account 5.01 Fixed Account Minimum Guaranteed Interest Rate ....... 5.02 Transfers from the Fixed Account ..................... 5.03 Withdrawals from the Fixed Account ................... Section 6. Fixed Plus Account 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate .. 6.02 Transfers from the Fixed Plus Account ................ 6.03 Partial Withdrawals from the Fixed Plus Account ...... 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account ......................................... 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision ............................................ Section 7. Guaranteed Accumulation Account (GAA) 7.01 Nonunitized Separate Account ......................... 7.02 GAA Minimum Guaranteed Interest Rate ................. 7.03 Deposit Period ....................................... 7.04 Guaranteed Term ...................................... 7.05 Guaranteed Term Groups ............................... 7.06 Maturity Date, Maturity Value and Reinvestment ....... 7.07 Transfers and Withdrawals from the GAA ............... 7.08 Application of the Market Value Adjustment ........... 7.09 Market Value Adjustment (MVA) ........................ Section 8. Transfers, Withdrawals and Distributions 8.01 Transfers ............................................ 8.02 Withdrawals .......................................... 8.03 Withdrawal Restrictions Under the Code ............... 8.04 Withdrawal Charge .................................... 8.05 Waiver of Withdrawal Charge .......................... 8.06 Reinstatement ........................................ 8.07 Required Distributions ............................... 8.08 Systematic Distribution Options (SDOs) ............... 8.09 Individual Account Termination ....................... Section 9. Loans 9.01 Loan Availability .................................... Section 10. Death Benefit During the Accumulation Phase 10.01 Death Benefit ........................................ 10.02 Contract Beneficiary ................................. 10.03 Distribution of Death Benefit ........................
C-CDA(99) Page Part II. Annuity Phase Section 11. General Provisions 11.01 Election ............................................. 11.02 Change of Annuity Provisions ......................... 11.03 Annuity Options ...................................... 11.04 Mortality Table ...................................... 11.05 Minimum Payment Amount ............................... 11.06 Investment Options ................................... 11.07 Fixed Annuity Minimum Guaranteed Interest Rate ....... 11.08 Fixed Annuity Payment Amount ......................... 11.09 Variable Annuity Funds ............................... 11.10 Variable Annuity Transfers ........................... 11.11 Variable Annuity Payment Amount ...................... 11.12 Death Benefit During the Annuity Phase ...............
Annuity Tables C-CDA(99) Page Contract Schedule I Accumulation Phase Control of Contract (see 1.03) [The Contract Holder controls this Contract. By notifying us in writing, the Contract Holder may allow you to choose Investment Options for an Individual Account. The Contract Holder may, however, retain the right to choose Investment Options for employer contributions. Unless otherwise provided by the Plan, we will make payments only at the written direction of the Contract Holder and you. Unless otherwise specified by the Plan, we will make an inservice transfer under Internal Revenue Service Revenue Ruling 90-24 only at the written direction of the Contract Holder and you and will make checks payable to the acquiring investment provider(s). The Contract and Individual Accounts are nontransferable and nonassignable except to us in the event of a loan (if allowed under the Contract) or in the event of a qualified domestic relations order as allowed under the Retirement Equity Act of 1984. You have a nonforfeitable right to the value of employer Contributions made to their Individual Accounts subject to any Plan vesting limits as determined by the Contract Holder. You have a nonforfeitable right to the value of employee Contributions made to their Individual Accounts as provided by Code Section 403(b) and subject to the terms of the Plan. The Contract Holder must notify us in writing if the Plan is, or becomes, subject to the Employee Retirement Income Security Act of 1974 (ERISA) and/or related law or regulations including the Retirement Equity Act of 1984 (REA). We will rely on the Contract Holder's determination and representation of the applicability of such laws. If the Plan is subject to ERISA, before we will make a distribution from an Individual Account, the Contract Holder must certify in writing that all applicable REA requirements have been met and that the distribution complies with the Plan.] Maximum Maintenance Fee (see 1.16) The maintenance fee for each Individual Account will never be more than [$30]. Contribution Limits (see 2.01) [Each year, Contributions to the Contract are limited to the lesser of: (a) The maximum exclusion allowance (MEA) limit under Code Section 403(b); or (b) The amount set forth in Code Section 415, generally, 25% of compensation up to $30,000. In addition, salary reduction contributions as defined in Code Section 402(g) may not exceed $10,000, or such larger amount as adjusted by the Secretary of the Treasury unless the alternative limitation under Code Section 402(g)(8) applies.] Maximum Daily Charges to the Separate Account (see 3.07) Charges to the Separate Account will never be more than the following: Mortality and Expense Risks Charge: [1.25%] (annual basis) Administrative Charge: [0.25%] (annual basis)
Aetna GET Fund Availability (see Section 4 [The GET Fund is available.] Fixed Interest Options Available (see Section 5, Section 6, and Section 7) [Fixed Account Fixed Account is available for transferred amounts only (no ongoing Contributions). Fixed Plus Account Guaranteed Accumulation Account] Fixed Account Minimum Guaranteed Interest Rate (see 5.01) The interest rate will never be less than [3%] (effective annual yield). Fixed Account Annual Transfer Limit (see 5.02) [10%.] Fixed Plus Account Minimum Guaranteed Interest Rate (see 6.01) The interest rate will never be less than [3%] (effective annual yield) Fixed Plus Account Transfer and Partial Withdrawal Limit (see 6.02 and 6.03) [20%.] Full Withdrawal from the Fixed Plus Account (see 6.04 When a full withdrawal from the Fixed Plus Account is requested, the Individual Account value in the Fixed Plus Account may be withdrawn as follows: (a) Twenty percent of the Individual Account value in the Fixed Plus Account as of the January 1 preceding the withdrawal request. The 20% is reduced by the amount, if any, transferred, withdrawn, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the prior 12 months; then, (b) Twenty-five percent of the remaining Individual Account value 12 months later; (c) Thirty-three and one-third percent of the remaining Individual Account value 12 months later; then, (d) One-half of the remaining Individual Account value 12 months later; and then, (e) The balance of the Individual Account value in the Fixed Plus Account 12 months later.] Waiver of Fixed Plus Account Full Withdrawal Provision (see 6.05) [When a full withdrawal is requested, payment from the Fixed Plus Account is not limited as described in 6.04 when the withdrawal is made: (a) If you have attained age 59-1/2 and, if applicable, have completed nine Contribution periods; (b) When you have separated from service, and when: (1) Separation from service is certified by the employer; (2) The amount is paid directly to you; and (3) When the amount paid for all withdrawals due to separation from service during the previous 12-month period does not exceed 20% of the average value of all Individual Accounts under the Contract during that period. (c) Due to financial hardship, or hardship due to an unforeseeable emergency, as defined in the Code, and when: (1) The financial hardship or unforeseeable emergency is certified by the employer; (2) The amount is paid directly to you; and (3) When the amount paid for all withdrawals due to financial hardship or unforeseeable emergency during the previous 12-month period does not exceed 20% of the average value of all Individual Accounts under the Contract during that period. (d) When the amount in the Fixed Plus Account is [$2,000] or less and during the previous [12] months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (e) Due to your death before Annuity payments begin and paid with six months of your death; (f) As provided in Section 8.09; or (g) To purchase Annuity payments on a life-contingent basis or payments for a stated period on a fixed-only basis.] Guaranteed Accumulation Account Minimum Guaranteed Interest Rate (see 7.02) The interest rate will never be less than [3%] (effective annual yield). Withdrawal Restrictions Under the Code (see 8.03) [Withdrawals are limited to the "restricted amount" which is the sum of: (1) Contributions attributable to your salary reduction contributions made on and after January 1, 1989; plus (2) The net increase, if any, in the Individual Account value after December 31, 1988 attributable to investment gains and losses and credited interest. Generally, withdrawals of the "restricted amount" are permitted only when you have: (a) Separated from service when certified by your employer; (b) Attained age 59-1/2; (c) Died; (d) Become disabled, as defined by the Code; (e) Experienced financial hardship, as defined by the Code and as the amount is limited by the Code(in this situation the amount available is; or (f) Met other circumstances as otherwise allowed by federal law, regulations or rulings. No limitations apply to salary reduction Contributions made and earnings credited to such Contributions made on or before December 31, 1988. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code.] Withdrawal Charge (see 8.04) For each withdrawal from an Individual Account, we may deduct a withdrawal charge. This charge is a percentage of the amount withdrawn. The withdrawal charge is as follows.
[Number of Years Since Individual Account Established] Withdrawal Charge [Fewer than 5 5% 5 or more, but fewer than 7 4% 7 or more, but fewer than 9 3% 9 or more, but fewer than 10 2% 10 or more 0%]
The withdrawal charge will never exceed [8-1/2%] of total Contributions, or the maximum permitted by National Association of Securities Dealers, Inc. (NASD) rules. Waiver of Withdrawal Charge (see 8.05) The withdrawal charge does not apply when the withdrawal is: (a) Used to purchase Annuity Payments; (b) Used to purchase a single premium immediate annuity or individual retirement annuity issued by ALIAC or one of its affiliates, provided that the right to cancel under the new Contract is not exercised. We will treat exercise of the right to cancel as a reinstatement and any subsequent withdrawal may then be subject to the withdrawal charge applicable on the date of the withdrawal; (c) Under a systematic distribution option (see 8.08); (d) In an amount equal to [10%] of the Individual Account value when the withdrawal is the first partial withdrawal in a calendar year and is made when you are at least age 59-1/2 and not older than age 70-1/2 (not available when a systematic distribution option is in effect); (e) When we terminate an Individual Account as provided in 8.09; (f) When the Individual Account value is [$3,500] or less and during the previous 12 months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (g) If you have attained age 59-1/2 and, if applicable, have completed nine Contribution periods; (h) You have separated from service when certified by your employer; (i) Due to financial hardship, or hardship due to an unforeseeable emergency, as defined in the Code; or (j) Due to your death before Annuity payments begin.] Required Distributions (see 8.07) [Generally, for Contributions made and earnings credited after December 31, 1986, distribution must begin by April 1 of the calendar year following the later of (1) the calendar year in which you attain age 70-1/2, or (2) retire. For Individual Account values as of December 31, 1986, distribution must begin by the last day of the year in which you attain age 75 or retire, whichever is later. Distribution of benefits to a Participant who is a five percent owner must begin by the April 1 following the calendar year in which you attain age 70-1/2. If the Contract Holder is a governmental entity or church, distribution of Contributions and earnings credited to such Contributions must be made or begin to be made no later than April 1 of the calendar year in which you attain age 70-1/2 or retire, whichever is later. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code. The entire Individual Account value must be distributed, or begin to be distributed, over your life or life expectancy, or that of you and a Beneficiary.] Contract Beneficiary (see 10.02) [The Contract Holder is the Contract beneficiary. You designate a beneficiary under the Plan (the Plan beneficiary.] C-CDA(99) Page Contract Schedule II. Annuity Phase Guaranteed Payment Period (see 11.03) The period for which we will guarantee Annuity payments must be at [least five years and no more than 30 years]. Mortality Table (see 11.04) [Society of Actuaries' 1983 Table a.] Maximum Number of Funds (see 11.07) The maximum number of Funds is [five]. Fixed Annuity Minimum Guaranteed Interest Rate (see 11.08) [3%] (annual basis). Number of Annual Transfers Among Funds (see 11.11) Each calendar year, we allow [five] transfers among funds. Maximum Daily Charges to the Separate Account (see 11.12) Charges to the Separate Account will never be more than the following: Mortality and Expense Risks Charge: [1.25%] (annual basis) Administrative Charge: [0.25%] (annual basis) C-CDA(99) Page Definitions - -------------------------------------------------------------------------------- Accumulation Phase The time between an Individual Account Effective Date and the date on which the entire Individual Account value is used to purchase Annuity payments, or otherwise distributed. Aetna GET Fund (GET Fund) The Aetna GET Fund is an Investment Option which may be available during the Accumulation Phase. The GET Fund operates as a series offering. Each series is a separate Fund. Aetna Life Insurance and Annuity Company (ALIAC) Aetna Life Insurance and Annuity Company, ("we," and "our," and "us" refer to ALIAC). Annuitant The person whose life expectancy determines the amount and/or duration of the payments under a life-contingent Annuity option. Annuity Payment of an income: (a) For a stated period; (b) For the life of one or two people; or (c) Some combination of (a) and (b). A fixed Annuity is one in which the payment amount does not vary. A variable Annuity is one in which the payment amount may vary based on the net investment results of the Funds. Annuity Phase The time during which we make Annuity payments. Business Day Each day our Home Office is open for business. Code The Internal Revenue Code of 1986, as it is amended from time to time. Contract This agreement between ALIAC and the Contract Holder. Contract Holder The entity or person named on the specifications page, to which the Contract is issued. Contribution The payment, less any applicable premium tax, made to us during the Accumulation Phase. Effective Date The date, shown on the specifications page, on which we issue the Contract or establish an Individual Account. Fixed Account A Fixed Interest Option. The Fixed Account is an obligation of our General Account. Fixed Interest Options Investment options, including the Fixed Account, the Fixed Plus Account and the Guaranteed Accumulation Account that credit interest. The Fixed Interest Options available during the Accumulation Phase are shown on Contract Schedule I under Fixed Interest Options Available. Fixed Plus Account A Fixed Interest Option. Limitations apply to withdrawals from the Fixed Plus Account. The Fixed Plus Account is an obligation of our General Account. Fund One of the variable Investment Options available under this Contract. The Funds are open-end, registered investment management companies (mutual funds) in which the Separate Account invests. General Account The account that holds our assets other than those held in the Separate Account or Nonunitized Separate Account. Guaranteed Accumulation Account (GAA) A Fixed Interest Option that may be available during the Accumulation Phase. Under this option, we guarantee specified rates of interest for specified periods of time. We hold amounts allocated to the Guaranteed Accumulation Account in the Nonunitized Separate Account. Good Order Instructions that are complete and clear enough to allow us to act without exercising discretion. Home Office Our main office located at 151 Farmington Avenue, Hartford, Connecticut. Individual Account An account, or accounts (including, if applicable, employer and employee accounts) established for you to maintain a record of transactions and the value of Contributions as invested. Investment Options The Funds and Fixed Interest Options available under this Contract. Maturity Date The last day of a GAA guaranteed term. The last day of the guarantee period of an Aetna GET Fund series. Nonunitized Separate Account A separate account that holds assets allocated to the Guaranteed Accumulation Account. Participant A person who is covered under the retirement Plan or program for which this Contract is issued and who has an interest in this Contract (you). Plan The retirement plan or program for which this Contract is issued. Premium Tax Any tax assessed by any governmental entity on Contributions or amounts used to purchase Annuity payments. Separate Account An account that, through its subaccounts, buys and holds shares of the Funds. Valuation Date The date and time at which accumulation unit values and annuity unit values are calculated. Currently, this calculation is made after the close of business of the New York Stock Exchange on any the New York Stock Exchange is open. C-CDA(99) Page Section 1. General Contract Provisions - -------------------------------------------------------------------------------- 1.01 Entire Contract The entire Contract consists of this document and any endorsements incorporated. The Plan, if applicable, is not part of the Contract and ALIAC is not bound by its terms. 1.02 Nonparticipating Contract This Contract is nonparticipating. The Contract Holder, you, or a Contract beneficiary have no right to share in our earnings. 1.03 Control of Contract This Contract is issued to fund a plan or program which provides retirement income. Control of the Contract is as shown on Contract Schedule I under Control of Contract. 1.04 Certificate Any certificate provided to a Participant summarizes Contract provisions; it is for information only and is not part of the Contract. We will provide certificates as required by state in the state where the Contract is delivered. 1.05 Incontestability We will not cancel this Contract because of any error of fact. 1.06 Grace Period Except as provided in 8.09, this Contract and all Individual Accounts will remain in effect even if Contributions are not continued. 1.07 Change of Contract Only an ALIAC officer at the level of Vice President or higher, or an officer with written authorization from a Vice President or higher officer, may change the terms of this Contract. No other ALIAC employee, agent or representative can change this Contract. Except as noted below, this contract may be changed at any time by written mutual agreement between the Contract Holder and ALIAC. For changes we initiate requiring Contract Holder consent, we notify the Contract Holder 60 days in advance of the change and consider that the Contract Holder has agreed to the change unless we receive written notice that the Contract Holder does not agree to the change at least 30 days before the effective date of the change. If we propose a change requiring Contract Holder consent and the Contract Holder does not agree to the change, we have the right to not establish new Individual Accounts and to stop accepting Contributions to existing Individual Accounts. We will not change the guaranteed minimum interest rate for the Fixed Account and Fixed Plus Account. We have the right to change the following without Contract Holder consent: (a) Net Investment Factor (see 3.06) We may change the Net Investment Factor by notifying the Contract Holder in writing at least 30 days before the change becomes effective. If we do this, the change will apply only to Individual Accounts established, and Contributions received, after the effective date of the change. (b) Guaranteed Accumulation Account A Market Value Adjustment (see 7.10) We may change the GAA Market Value Adjustment (see 7.10) by notifying the Contract Holder in writing at least 90 days before the change becomes effective. If we do this, the change will apply only to guaranteed terms offered in deposit periods after the effective date of the change. (c) Systematic Distribution Options (see 8.08) We may change the systematic distribution options by notifying the Contract Holder in writing at least 30 days before the change becomes effective. If we do this, the change will not apply to you or beneficiaries receiving payments under the option before the effective date of the change. (d) Annuity Options (see 11.02) We may change Annuity Options by notifying the Contract Holder in writing at least 30 days before the effective date of the change. If we do this, the change will not take effect until at least 12 months after the Effective Date of the Contract, or until at least 12 months after any previous change. Any change will not apply to you or beneficiaries receiving Annuity payments before the effective date of the change. (e) Mortality Table (see 11.04) We may change the mortality table by notifying the Contract Holder in writing at least 30 days before the effective date of the change. If we do this, the new table will not apply to Individual Accounts established before the Effective Date of the change. In addition, we may change this Contract as required to comply with state and federal law without Contract Holder consent by notifying the Contract Holder at least 30 days before the effective date of the change. Any unilateral change will not apply to Individual Accounts established before the effective date of the change, but will apply to Individual Accounts established on or after the change becomes effective. If we make a unilateral change, the Contract Holder or you, as applicable, are permitted to terminate participation in the Contract before the effective date of the change under the terms of the Contract in effect prior to the effective date of the change. We will make any change of Contract by endorsement, which may be subject to regulatory approval in the state where the Contract is issued. 1.08 Payments We make payments as directed by the Contract Holder or you, as applicable. Payment requests must be in writing or as we otherwise allow in our administrative practice. We determine the amount of any payment based on the Individual Account value as of the Valuation Date following our receipt of a payment request in Good Order at our Home Office. Generally, we make payments within seven calendar days. 1.09 Deferral of Payment We may defer payment up to a period of six months or as otherwise provided by state and/or federal law. 1.10 Proof of Age If a life-contingent Annuity option is elected, we may require proof of the age of an Annuitant. 1.11 Evidence of Survival We may require proof that any Annuitant under a life-contingent Annuity option is living. 1.12 Misstatements and Adjustments If we learn that the age of any Annuitant or second Annuitant is misstated, we will use the correct age to adjust payments. We reserve the right to obtain reimbursement, or to adjust future payments for any amount we overpaid. We will pay the amount of any underpayment. 1.13 Reports Each calendar year we provide the Contract Holder or you, as applicable, with a report of the Individual Account value. We also provide an annual report for the Separate Account. 1.14 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. To determine legal reserve valuation, we use Annuity tables required by law; such tables may be different from those we use to determine Annuity payments. 1.15 Claims of Creditors Individual Accounts are not subject to the claim of any creditor of the Contract Holder, you, or any Beneficiary, except to the extent permitted by law. 1.16 Maintenance Fee We may deduct an annual maintenance fee during the Accumulation Phase. The amount of the maintenance fee, if any, for this Contract will never be more than the amount shown on Contract Schedule I under Maximum Maintenance Fee. The fee, if any, is deducted proportionately from each Investment Option in which the Individual Account is invested on the anniversary of the Individual Account Effective Date. The fee is also deducted if the entire Individual Account value is withdrawn. No fee is deducted, however, when a full withdrawal occurs within 90 calendar days of the date on which the fee was last deducted. If you have more than one Individual Account, we may deduct the fee proportionately from all Individual Accounts. We may eliminate the fee for an Individual Account established with one Contribution. 1.17 Charges for Additional Services At the request of the Contract Holder, we, or our authorized representatives, may provide administrative services to the Plan. We reserve the right to charge for such services. 1.18 Charges Subject to Change The maintenance fee (see 1.15) and charges to the Separate Account (see 3.07) may vary (increase, decrease, or be eliminated) based on the total assets held in all Individual Accounts under the Contract. In determining total assets, we may aggregate Individual Accounts established under different ALIAC contracts. The aggregate amount is equal to the sum of assets in all Individual Accounts under this Contract, plus the value of Individual Accounts under other ALIAC contracts of the same class issued to the Contract Holder. We may determine the amount of the maintenance fee and/or charges to the Separate Account based on total assets on an annual basis. We will determine initial charges based on our estimate of the amount that will be allocated to the Contract during the first two years. Part I. Accumulation Phase Section 2. Contributions and Individual Account Value - -------------------------------------------------------------------------------- 2.01 Contributions We allocate Contributions in whole percentages among the Investment Options available as directed by the Contract Holder or you, as applicable. Changes in future Contribution allocation may be made at any time, without charge. The Contract Holder or you, as applicable, may also establish an Individual Account with a lump-sum Contribution. We reserve the right to establish minimum Contribution amounts and to refuse to accept any Contribution. Contributions to Individual Accounts may be limited as provided in the Code. The limits, if any, are shown on Contract Schedule I under Contribution Limits. 2.02 Premium Tax We pay any applicable premium tax when it is due. We will deduct the amount of any applicable premium tax from the Individual Account value no earlier than when there is a tax liability. 2.03 Individual Account We will establish an Individual Account for you. If required, we will provide accounts that distinguish between your Contributions and those of your employer. 2.04 Experience Credit We may apply experience credits (investment, administrative, mortality or other) under this Contract and may apply such credits as: (a) A reduction in the maintenance fee; (b) A reduction in the mortality and expense risks charge to the Separate Account; (c) A reduction in the administrative charge to the Separate Account; and (d) An increase in a Fixed Interest Option interest rate. We will apply experience credits at our sole discretion as we deem appropriate for the class of contracts to which the Contract is issued. 2.05 Individual Account Value As of the most recent Valuation Date, the Individual Account value is equal to the total of all Contributions: (a) Plus any interest added on the amount, if any, allocated to a Fixed Interest Option(s), (b) Plus or minus the investment experience on the amount, if any, held in the Separate Account; (c) Minus any applicable maintenance fees, any amounts withdrawn, or used to purchase Annuity payments, or any applicable premium tax; and (d) Minus any applicable fees or charges deducted. Section 3. Separate Account - -------------------------------------------------------------------------------- 3.01 General The Separate Account, established under Title 38a, Section 38a-433 of the Connecticut General Statutes, buys and holds shares of the Funds available. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940. We own the assets held in the Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Separate Account without regard to our other income, gains or losses. Except to the extent of reserves and other Contract liabilities, Separate Account assets cannot be charged with liabilities arising out of any other business we conduct. 3.02 Funds Available We reserve the right to limit the number of Funds in which an Individual Account may be invested, at one time or cumulatively, during the Accumulation Phase and/or Annuity Phase. 3.03 Change or Substitution of Funds We reserve the right to stop offering any Fund or to add Funds. We may substitute shares of a Fund for shares of another Fund. We will provide the Contract Holder with reasonable advance notice of any elimination, addition or substitution of a Fund. If the Plan is subject to ERISA, we will seek Contract Holder consent in advance of any Fund substitution. Consent will be deemed given unless, following notice of substitution and within a prescribed time period, the Contract Holder notifies us in writing that it does not consent and provides us with alternative investment instructions for the shares that would otherwise be affected by the substitution. 3.04 Accumulation Units Each Contribution allocated to one or more of the Funds is credited to an Individual Account as accumulation units. The number of accumulation units is calculated by dividing the amount of the Contribution allocated to the Fund by the accumulation unit value (see 3.05) as of the next Valuation Date after the Contribution is received at our Home Office in Good Order. 3.05 Accumulation Unit Value The value of each accumulation unit for any Fund for each Valuation Date is computed by multiplying the net investment factor (see 3.06) by the accumulation unit value for such Valuation Date. accumulation unit values may increase or decrease from Valuation Date to Valuation Date. 3.06 Net Investment Factor The net investment factor is used to compute the accumulation unit value for any Fund. For each Valuation Date, for each Fund, the net investment factor is equal to 1.0000000, plus the net return rate. The net return rate equals: [a - b - c] -------------- - e - f d Where: a is the value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; b is the value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); d is the total value of the accumulation units and annuity units of the Separate Account at the start of the Valuation Period; e is Separate Account daily charges for mortality and expense risks and a daily administrative charge as shown on Contract Schedules I and II under Daily Charges to the Separate Account; and f is if applicable, a fee for the GET Fund Guarantee, which is deducted daily during the Guarantee Period. The fee, which is determined before the beginning of each offering period, is shown on Contract Schedule I under GET Fund Guarantee Fee. The net return rate may be greater or less than zero percent. 3.07 Charges to the Separate Account During the Accumulation Phase, we may deduct a mortality and expense risks charge from the Individual Account value invested in the Separate Account. In addition, we reserve the right to impose an administrative charge. The charges to the Separate Account are shown on Contracts Schedules I under Maximum Daily Charges to the Separate Account and are deducted daily. 3.08 Separate Account Transfers During the Accumulation Phase, any portion or all of the Individual Account value held in a Fund may be transferred to any other Fund or any available Fixed Interest Option. The Individual Account value will be based on the Fund's accumulation unit value next determined after we receive a transfer request in Good Order. 3.09 Withdrawals from the Separate Account If the Contract Holder or you, as applicable, requests a partial or full withdrawal (see 8.02) from the Funds, a withdrawal charge may apply (see 8.04). Section 4. Aetna GET Fund (GET Fund) - -------------------------------------------------------------------------------- The following provisions apply if the GET Fund is available as shown on Contract Schedule I under Aetna GET Fund Availability. 4.01 GET Fund Guarantee Period For each GET Fund series, the period for which the GET Fund Guarantee applies. The Guarantee Period ends on the Maturity Date. 4.02 GET Fund Offering Period The period, usually from one to three months, during which the Contract Holder or you, as applicable, may allocate (transfer or deposit) amounts to a GET Fund series. Each GET Fund series has a specific offering period. We will specify a minimum total asset amount required at the end of an offering period to offer a GET Fund series. If the minimum is not achieved, we reserve the right to not start the Guaranteed Period. If a GET Fund series is terminated, we will send written notification to all Contract Holders or you, as applicable, who have made allocations to that GET Fund series. We inform Contract Holder or you, as applicable, no later than 15 days after the end of the offering period. The Contract Holder or you, as applicable, then has 45 days from the end of the offering period to reallocate the amount allocated to the GET Fund to any other available Investment Options. During this time, GET Fund assets are invested in money market instruments. If Contract Holder or you, as applicable, makes no election by the end of the 45-day period, at the next Valuation Date, we will allocate the amount in the terminated GET Fund series to the money market fund. We reserve the right to specify a maximum total asset amount for a GET Fund series. If the maximum is achieved, we reserve the right to set a date on which we will stop accepting allocations for that GET Fund series. We will announce the date on which we will stop accepting transfer and allocations 10 days prior to that date. 4.03 GET Fund Guarantee On the Maturity Date of each GET Fund series, the GET Fund accumulation unit value for that series will not be less than the Fund accumulation unit value determined at the close of business on the last day of the offering period. If necessary to offset any shortfall in the GET Fund accumulation unit value, we will transfer funds from our General Account to the GET Fund. The GET Fund guarantee does not apply to transfers or withdrawals made before the Maturity Date. If GET Fund accumulation units are adjusted at any time during the guaranteed period, the GET Fund guarantee will be restated. We calculate the restated guarantee so that it is equivalent to the original guarantee for that GET Fund series. A daily charge is assessed on the amount, if any, allocated to the GET Fund. This charge for the GET Fund guarantee will range between 0.25% and 1.25% on an annual basis (the prospectus for each GET Fund series offering provides the charge applicable to that offering). 4.04 GET Fund Maturity Date The GET Fund Maturity Date is the date on which the guarantee period ends and GET Fund accumulation units are liquidated. Prior to the Maturity Date for each series, we send a written notice to each Contract Holder or you, as applicable, who has an Individual Account value in that series. In response, the Contract Holder or you, as applicable, must tell us to which available Investment Option to transfer the amount in the GET Fund on the Maturity Date. If we do not receive instructions, on the Maturity Date we transfer the portion of the Individual Account value held in the GET Fund to another GET Fund series, if available. If no GET Fund series is available, we transfer the amount to the Fund or Funds we designate. 4.05 Transfers or Withdrawals from the GET Fund Transfers or withdrawals from the GET Fund before the Maturity Date are based on the GET Fund Unit value for the Valuation Date next following the date on which we receive the request in Good Order (see 8.01 and 8.02). Section 5. Fixed Account - -------------------------------------------------------------------------------- The following provisions apply if the Fixed Account is available as shown on Contact Schedule I under Fixed Interest Options Available. 5.01 Fixed Account Minimum Guaranteed Interest Rate The Fixed Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or you, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or you, as applicable. 5.02 Transfers from the Fixed Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Account Annual Transfer Limit of the amount in the Fixed Account may be transferred to any available Investment Option. The amount available for transfer will be based on the Individual Account value in the Fixed Account as of the January 1 preceding the transfer request. There is no limit on the amount that may be transferred to the Fixed Plus Account. We may, on a temporary basis, allow transfer of a larger percentage. 5.03 Withdrawals from the Fixed Account If the Contract Holder or you, as applicable, requests a partial or full withdrawal (see 8.02) from the Fixed Account, a withdrawal charge may apply (see 8.04). Section 6. Fixed Plus Account - ------------------------------------------------------------------------------- The following provisions apply if the Fixed Plus Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate The Fixed Plus Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Plus Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Plus Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or you, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or you, as applicable. 6.02 Transfers from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Annual Transfer and Withdrawal Limit of the amount in the Fixed Plus Account may be transferred to any available Investment Option. The amount available for transfer is based on the Individual Account value in the Fixed Plus Account on the January 1 preceding the transfer request reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the previous 12 months. In addition, we reserve the right to reduce the amount available for transfer by amounts withdrawn under a systematic distribution option. We reserve the right to waive the transfer limit when the amount in the Fixed Plus Account is $2,000 or less. In addition, 20% of the amount in the Fixed Plus Account may be transferred in each of four consecutive 12-month periods with the balance transferred in the succeeding 12-month period subject to the following conditions: (a) During the five-year period, no additional amounts are allocated to or transferred from the Fixed Plus Account; (b) we will include any amount transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the prior 12-month period when calculating the amount which equals 20%; and (c) we reserve the right to include amounts paid under a systematic distribution option when calculating the amount which equals 20%. 6.03 Partial Withdrawals from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Transfer and Withdrawal Limit may be withdrawn from the Fixed Plus Account. The amount available for withdrawal is based on the amount of the Individual Account value in the Fixed Plus Account on the January 1 preceding the withdrawal request reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments during the preceding 12-month period. In addition, we reserve the right to reduce the amount available by deducting any amount withdrawn under a systematic distribution option. The withdrawal limit does not apply when the partial withdrawal is: (a) Due to your death during the Accumulation Phase and is made within six months of the date of death (this exception applies to only one partial withdrawal); (b) Used to purchase Annuity payments; or (c) Due to other conditions as we may allow without discrimination. 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account The Contract Holder, or you, as applicable, may withdraw the full amount held in the Fixed Plus Account. When we receive a request for a full withdrawal, no additional transfers, partial withdrawals or loans (if allowed under the Contract) are allowed. The Individual Account value held in the Fixed Plus Account may be withdrawn as shown on Contract Schedule I under Full Withdrawal from the Fixed Plus Account. No withdrawal charge applies to amounts withdrawn. The Contract Holder or you, as applicable, may cancel a full withdrawal request from the Fixed Plus Account at any time. 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision The restriction on payment of a full withdrawal from the Fixed Plus Account (see x.xx) does not apply to any of the circumstances shown on Contract Schedule I under Waiver of Fixed Plus Account Full Withdrawal Provision. Section 7. Guaranteed Accumulation Account (GAA) - -------------------------------------------------------------------------------- 7.01 Nonunitized Separate Account The Nonunitized Separate Account is established under Title 38a, Section 38a-433 of the Connecticut General Statutes. There are no discrete units for this account. We own the assets held in the Nonunitized Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Nonunitized Separate Account without regard to our other income, gains or losses. Except to the extent of reserves and other Contract liabilities, Nonunitized Separate Account assets cannot be charge with liabilities arising out of any other business we conduct. 7.02 GAA Minimum Guaranteed Interest Rate All Contributions allocated to a GAA guaranteed term (see 7.04) earn a rate of interest which we determine and which is guaranteed when the Contribution remains in the guaranteed term until the Maturity Date. The rate credited will never be less than the minimum interest rate shown on Contract Schedule I under Guaranteed Accumulation Account Minimum Guaranteed Interest Rate. For guaranteed terms of one year or less, one guaranteed rate is credited for the full guaranteed term. For longer guaranteed terms, we may credit an initial guaranteed interest rate from the date of deposit to the end of a specified period within the guaranteed term. We may credit different interest rates for subsequent specified periods throughout the guaranteed term. 7.03 Deposit Period A deposit period is the period of time we determine during which we accept allocations (Contributions, transfers, or reinvestments) to one or more guaranteed terms. We reserve the right to extend the deposit period. 7.04 Guaranteed Term A guaranteed term is the period of time for which we guarantee the declared interest rate for allocations (Contributions, transfers, or reinvestments) to GAA guaranteed terms. We may offer guaranteed terms ranging in duration from one to ten years. During each deposit period, we may offer more than one guaranteed term of varying lengths. The guaranteed term begins the day after the deposit period ends. The Contract Holder or you, as applicable, may allocate new Contributions or transfers to any or all guaranteed terms available in the current deposit period. 7.05 Guaranteed Term Groups A guaranteed term group is comprised of all GAA guaranteed terms of the same duration. 7.06 Maturity Date, Maturity Value and Reinvestment The Maturity Date is the last day of a guaranteed term. The maturity value is the amount we pay at the end of a guaranteed term. At least 18 days before any guaranteed term Maturity Date, we notify the Contract Holder or you, as applicable, of the projected maturity value and the guaranteed terms (and the guaranteed interest rates for each) available during the then-current deposit period. The Contract Holder, or you, as applicable, may then tell us how to allocate the maturity value. If the Contract Holder or you, as applicable, does not tell us how to reinvest the maturity value, we reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. We mail a confirmation of reinvestment. The confirmation includes the guaranteed term in which we have reinvested the maturity value and the guaranteed interest rate for that term. If we have reinvested the maturity value, during the month following the Maturity Date, the Contract Holder or you, as applicable, may transfer or withdraw the reinvested amount, with interest earned (as of the date we receive the request) without incurring a Market Value Adjustment. 7.07 Transfers and Withdrawals from the GAA Except as noted below, the Contract Holder or you, as applicable, may transfer any portion or all of the amount held in the GAA. Transfers or withdrawals before the Maturity date may be subject to a Market Value Adjustment (see 7.10). Amounts invested in a guaranteed term may not be transferred during the deposit period or for a period of 90 days after the close of the deposit period. Unless directed otherwise, when the Contract Holder or you, as applicable, requests a transfer or withdrawal from the GAA, we withdraw amounts proportionately from each guaranteed term in which the Individual Account is invested. Within a guaranteed term group, we withdraw first from the oldest deposit period and then from the next oldest and so on until the amount requested is withdrawn. 7.08 Application of the Market Value Adjustment Transfers or withdrawals from the GAA before the Maturity date are subject to a Market Value Adjustment, except for: (a) A one-month period following the Maturity Date on which we have automatically reinvested the value on the Maturity Date; (b) Distributions under certain systematic distribution options; and (c) When the withdrawal is equal to the minimum distribution amount required under the Code, using a method permitted by the Code and which we offer. If the amount withdrawn is used to purchase life-contingent Annuity payments, the Market Value Adjustment applies only if it is positive. For withdrawals and transfers from the GAA made (1) within six months of your death; or (2) to purchase Annuity payments under a life-contingent Annuity option, the amount withdrawn from the GAA is the greater of: (a) The aggregate MVA amount which is the sum of all market value adjusted amounts calculated due to a withdrawal before the Maturity Date (which may be positive or negative); or (b) The amount in the GAA. For withdrawals made after the six month period following death, the withdrawal or transfer amount is the aggregate MVA amount. An MVA applies to amounts withdrawn to purchase Annuity payment under a period certain Annuity option. We may change the GAA Market Value Adjustment by notifying the Contract Holder in writing at least 90 days before the change becomes effective. Any such change will apply only to guaranteed terms offered in deposit periods after the effective date of the change and will apply to existing and new Individual Accounts. 7.09 Market Value Adjustment (MVA) The Market Value Adjustment reflects any change in yields on U.S. Treasury Notes from the time an amount is allocated to a GAA guaranteed term to the time of a transfer or withdrawal prior to the Maturity Date. When the Market Value Adjustment is applied, the amount transferred or withdrawn from the GAA is multiplied by a factor which is calculated as follows: x --- 365 (1 + I) ----------- x --- 365 (1 + j) Where: I is the deposit period 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 and the current yield are determined as follows: Deposit Period Yield At the close of the last business day of each week of a deposit period, we compute a yield that is the average of the yields on U.S. Treasury Notes which mature in the last three months of the guaranteed term. The deposit period yield is the average of those yields for the deposit period. If a withdrawal is made prior to the close of the deposit period, the deposit period yield is the average of the yields of U.S. Treasury Notes for each week preceding the withdrawal. In the event that no U.S. Treasury Notes will mature in the last three months of the guaranteed term, we reserve the right to use the U.S. Treasury Notes that mature in a following quarter. Current Yield The Current Yield is the average of the yields of the same U.S. Treasury Notes used to calculate the deposit period yield on the last business day of the week preceding withdrawal. Section 8. Transfers, Withdrawals and Distributions - -------------------------------------------------------------------------------- 8.01 Transfers During the Accumulation Phase, the Contract Holder or you, as applicable, may transfer all or any portion of the Individual Account value among the available Investment Options. The Individual Account value on any amount transferred from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order. The Contract Holder or you, as applicable, may request a transfer by properly completing a transfer request form and sending it to our Home Office, or by otherwise complying with our administrative procedures. We reserve the right to establish a minimum transfer amount. 8.02 Withdrawals As allowed by the Plan, if applicable, and subject to provisions of the Code (see 8.03), during the Accumulation Phase, the Contract Holder or you, as applicable, may withdraw any portion or all of the Individual Account value. The Individual Account value of any amount withdrawn from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order. The Contract Holder or you, as applicable, may request a withdrawal by properly completing a withdrawal request form and forwarding it to our Home Office, or by otherwise complying with our administrative procedures. Unless the Contract Holder or you, as applicable, requests otherwise, the withdrawal will be made pro rata from the Investment Options in which the Individual Account is invested. A withdrawal charge may apply to amounts withdrawn (see 8.04). In addition, a market value adjustment may apply to amounts withdrawn from the GAA (see 7.08 and 7.09) and limitations may apply to withdrawals from the Fixed Plus Account (see 6.04). 8.03 Withdrawal Restrictions Under the Code The Code may impose restrictions on the amount and timing of withdrawals. The restrictions, if any, applicable to this Contract are shown on Contract Schedule I under Withdrawal Restrictions Under the Code. Withdrawals that do not comply with the Code may be subject to tax penalties. 8.04 Withdrawal Charge During the Accumulation Phase, we may deduct a withdrawal charge from the Individual Account value withdrawn. The charge, if any, is a percentage of the amount withdrawn from the Funds and/or Fixed Interest Options (except, if applicable, the Fixed Plus Account). The withdrawal charge will never exceed 8.5% of the total amount of Contributions. The withdrawal charge, if any, is shown on Contract Schedule I under Withdrawal Charge. 8.05 Waiver of Withdrawal Charge The withdrawal charge (see 8.04) does not apply in any of the circumstances shown on Contract Schedule I under Waiver of Withdrawal Charge. In addition, we reserve the right to reduce, waive or eliminate the withdrawal charge. 8.06 Reinstatement Within 30 days after a withdrawal, the Contract Holder or you, as applicable may elect to reinstate all or a portion of the proceeds of a full withdrawal if allowed by applicable law. We must receive the reinstated amount within 60 days of the withdrawal. Any maintenance fee and withdrawal charge imposed at the time of the withdrawal is included in the reinstatement. If only a portion of the amount withdrawn is reinstated, the amount of any maintenance fee and withdrawal charge deducted will be restored proportionally. The amount of any market value adjustment deducted from any amount withdrawn from GAA is not included in the amount reinstated. Any amount reinstated to the GA Account will be credited to guaranteed terms available in the current deposit period. We will reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. Amounts withdrawn from a GET Fund series are reinstated to the current offering period if one is available. If no GET Fund offering period is available, any amount withdrawn from the GET Fund is reinstated equally among all other Investment Options in which the Individual Account is invested. Amounts are reinstated among the Investment Options in the same proportion as they were held at the time of withdrawal, except, as noted above, for amounts from the GET Fund. Any maintenance fee which falls due after the withdrawal and before the reinstatement is deducted from the amount reinstated. The number of accumulation units reinstated to any Fund is based on the accumulation unit value(s) next computed after we receive the reinstatement request in Good Order at our Home Office. Reinstatement is permitted only once. 8.07 Required Distributions While an Individual Account remains in the Accumulation Phase, the Code may require distribution of all or a portion of the Individual Account value. The Contract Holder, you or Contract beneficiary, as applicable, must tell us when to begin distributions. We have no responsibility for adverse tax consequences as the result of the Contract Holder, you or Contract beneficiary, as applicable, not complying with minimum distribution requirements. The distribution requirements, if any, are shown on Contract Schedule I under Required Distributions. Generally, to meet distribution requirements, the Contract Holder, you or Contract beneficiary, as applicable, may request partial withdrawals, a systematic distribution option (see 8.08) or an annuity option. 8.08 Systematic Distribution Options (SDOs) During the Accumulation Phase, we may offer one or more distribution options under which we make regularly scheduled automatic partial distributions of the Individual Account value. To request an SDO, the Contract Holder, you or Contract beneficiary, as applicable, must complete an SDO election form and forward it to our Home Office. Each option is available without discrimination to any class of Contracts. The availability of any specific option may be subject to terms and conditions applicable to that option. We may discontinue the availability of an SDO option for future election; payments will, however, continue to you if you elected the option before the date it is no longer available. 8.09 Individual Account Termination If the Individual Account value is $3,500 or less, and we have received no Contributions for 12 months, we reserve the right to terminate an Individual Account. Before we do this, we notify the Contract Holder or you, as applicable, 90 days in advance. When we terminate an Individual Account, we do not deduct a withdrawal charge. We do not exercise this right when the Individual Account value is $3,500 or less due to investment performance. Section 9. Loans - -------------------------------------------------------------------------------- 9.01 Loan Availability If loans are available under the Contract, a loan endorsement is attached. Section 10. Death Benefit During the Accumulation Phase - -------------------------------------------------------------------------------- 10.01 Death Benefit If you die during the Accumulation Phase, we pay a death benefit. The amount of the death benefit is the Individual Account value as of the Valuation Date following the date we receive acceptable proof of death at our Home Office (see 7.10 for amounts in the GAA). 10.02 Contract Beneficiary The Contract beneficiary is shown on Contract Schedule I under Contract beneficiary. Generally, you may name a beneficiary under the Plan (the Plan beneficiary). If allowed by the Plan, when designating the Beneficiary, the Contract Holder or you, as applicable, may specify, the form of payment as permitted by the Code. The Contract beneficiary and the form of payment, if applicable, may be designated or changed in writing or as we may otherwise allow in our administrative procedures. 10.03 Distribution of Death Benefit Generally, if the Plan beneficiary is your surviving spouse, distribution of the death benefit must begin no later than the year the you have attained age 70-1/2 or any other date allowed under federal law or regulations. If the Plan beneficiary is not the your surviving spouse, generally, the death benefit must be used to purchase Annuity payments within one year of the year of your death or otherwise paid within five years of the year of your death. Annuity payments to a Plan beneficiary may not extend beyond the period specified in the Code. Part II. Annuity Phase Section 11. General Provisions - -------------------------------------------------------------------------------- 11.01 Election The Contract Holder, you, a Contract or Plan beneficiary, as applicable, may elect an Annuity option by properly completing an election form and forwarding it to our Home Office no later than 30 days before the desired first Annuity payment date. All elections of an Annuity option must comply with the minimum distribution requirements of Code Section and any applicable laws and regulations. All or any portion of the Individual Account value (after the deduction of any applicable premium tax) may be used to purchase Annuity payments (for amounts from the GAA, see 7.08). The Contract Holder, you, a Contract or Plan beneficiary, as applicable, must also select an Annuity option (see 11.03) and the Investment Option(s) (see 11.06). Once payments begin, an Annuity option may not be changed. 11.02 Change of Annuity Provisions We reserve the right to change Annuity options (see 11.03) and the mortality table (see 11.04) we use to calculate payment rates for life-contingent Annuity payments. If we do this, the change will not take effect until at least 12 months after the Contract Effective Date, or until at least 12 months after any previous change. A change to Annuity options or the mortality table used to calculate payment rates will not apply to Individual Accounts established before the effective date of the change. 11.03 Annuity Options The Contract Holder, you, a Contract or Plan beneficiary, as applicable, must elect one of the following: Payments for a Stated Period This option provides payments for a stated period. The number of years in the stated period must fall within the range shown on Contract Schedule II under Guaranteed Payment Period. If payments for this option are under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within five years of the first payment, the lump sum payment is treated as a withdrawal during the Accumulation Phase and any applicable withdrawal charge applies (see 8.04). If the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Life Income for One Annuitant This option provides payments for the life of the Annuitant. If this option is elected, the Contract Holder, you, or a Contract beneficiary, as applicable, must also choose one of the following: (a) Payments cease at the death of the Annuitant; or (b) Payments are guaranteed for a period within the range shown on Contract Schedule II under Guaranteed Payment Period; or (c) Fixed-only cash refund: at the death of the Annuitant, the Beneficiary receives a lump sum payment in an amount equal to the amount applied to the Annuity, less the amount of payments made to the Annuitant. Under (a) or (b), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Life Income for Two Annuitants This option provides payments for the lives of the Annuitant and a second Annuitant. Payments continue until both Annuitants have died. If this option is elected, the Contract Holder, you, or a Contract or Plan beneficiary, as applicable, must also choose one of the following: (a) 100% of the payment amount to continue after the first death; or (b) 66-2/3% of the payment amount to continue after the first death; or (c) 50% of the payment amount to continue after the first death; or (d) 100% of the payment amount to continue after the first death with payments guaranteed to the Beneficiary after the second death for a period within the range shown on Contract Schedule II under Guaranteed Payment Period; or (e) 100% of the payment amount to continue at the death of the specified second Annuitant and 50% of the payment amount to continue at the death of the specified Annuitant; or (f) 100% of the fixed-only payment amount to continue after the first death with a cash refund to the Contract beneficiary after the second death. The amount of the cash refund is equal to the amount applied to the Annuity, less the amount of payments made. Under (a) or (d), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually may be elected at the time the Annuity option is chosen (if permitted by the Code). Other Options We may make other options available. 11.04 Mortality Table The mortality table used for calculating Annuity payments for life is shown on Contract Schedule II under Mortality Table. To calculate the payments for a fixed Annuity, or a variable Annuity guaranteed first payment, we use the Annuitant's and, if applicable, the second Annuitant's, adjusted age. The adjusted age is the person's age as of his or her nearest birthday closest to the day Annuity payments begin, reduced as follows: (a) Reduced by one year for payments before January 31, 1999; (b) Reduced by two years for payments beginning during the period from January 1, 2000 through December 31, 2009; (c) Starting on January 1, 2010, reduced by one additional year for payments beginning in each succeeding decade. 11.05 Minimum First Payment Amount The minimum first payment amount is shown on Contract Schedule II under Minimum Payment Amount. We reserve the right to increase the minimum first payment amount, if allowed by state law, based on increases reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993. 11.06 Investment Options When an Annuity option is elected, the Contract Holder, you, a Contract or Plan beneficiary, as applicable, must also select: (a) A fixed Annuity; (b) A variable Annuity for which the underlying investment is one or more of the available Funds; or (c) A combination of (a) and (b). For a variable Annuity, the maximum number of Funds available during the Annuity Phase is shown on Contract Schedule II under Maximum Number of Funds. The Contract Holder, you, or a Contract beneficiary, as applicable, may transfer amounts allocated to Funds during the Annuity Phase. If a fixed Annuity is elected, we will use the applicable current settlement option rates if these will provide high fixed Annuity payments. 11.07 Fixed Annuity Minimum Guaranteed Interest Rate For a Fixed Annuity, the interest rate is never less than the minimum guaranteed rate shown on Contract Schedule II under Fixed Annuity minimum Guaranteed Interest Rate. 11.08 Fixed Annuity Payment Amount The amount of Fixed Annuity payments is a function of the Annuity option elected, the adjusted age of the Annuitant(s) for life-contingent options, the rates in effect at the time payments begin and payment frequency. Sample rates are shown on the charts beginning on page XX. 11.09 Variable Annuity Funds The Funds available during the Annuity Phase may not be the same as those available during the Accumulation Phase. 11.10 Variable Annuity Transfers If a variable Annuity is elected, the Contract Holder, you, or a Contract or Plan beneficiary, as applicable, may request that we transfer all or a portion of the amount allocated to a Fund to any other available Fund. Transfer requests must be expressed as a percentage of the allocation among the Funds on which the variable payment is based. The number of transfers allowed each calendar year is shown on Contract Schedule II under Number of Annual Transfers Among Funds. We reserve the right to allow additional transfers. Transfers are effective as of the next Valuation Date after we receive a transfer request in Good Order at our Home Office. 11.11 Variable Annuity Payment Amount The first variable Annuity payment is calculated by multiplying the Individual Account value (minus any applicable premium tax), by an Annuity rate per $1,000. The Annuity rate is calculated based on: (a) The Annuity option elected; (b) Payment frequency; (c) The assumed investment rate (AIR); and (d) The adjusted age of the Annuitant(s). The Contact Holder, you, or a Contract or Plan beneficiary, as applicable, must elect an AIR of 3.5% or 5.0%. Sample rates for each AIR are shown on the charts beginning on page xx. After the first payment, payment amounts are determined by comparing the performance of the net investment rate (NIR) of the Fund(s) to the AIR. For the amount of the payment to stay the same, or increase, the NIR of the Fund)s) must be equal to or greater than the AIR after the deduction of the daily mortality and expense risks charge and any applicable administrative charge. The amount of the daily mortality and expense risks charge and the administrative charge are shown on Contract Schedule II under Separate Account Daily Mortality and Expense Risks Charge and Separate Account Daily Administrative Charge. If the NIR is less than the AIR, the payment amount decreases. The assumed investment rate for 3.5% is 0.9999058; for 5.0% is 0.9998663. The net investment factor(s) for each Fund is equal to 1.0000000 plus the net return rate. The net return rate equals: [a - b + c] ------------ - e - f d Where: a is the value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; b is he value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); d is the total value of the accumulation units and annuity units of the Separate Account at the start of the Valuation Period; e is Separate Account daily charges for mortality and expense risks and a daily administrative charge as shown on Contract Schedules I and II under Daily Charges to the Separate Account; and A net return rate may be more or less than 0%. 11.12 Death Benefit During the Annuity Phase The Contract Holder or you, as applicable, must name a beneficiary for the Annuity Phase. If an Annuitant(s) dies, any remaining guaranteed payments continue to the beneficiary. Payments are made at least as rapidly as provided by the option in effect at the death of the Annuitant. Annuity payments to an beneficiary may not extend beyond (1) the life of the beneficiary, or (2) any period certain greater than the beneficiary's life expectancy as determined by the Code. The beneficiary may also elect a lump sum payment equal to the present value of any remaining payments. The interest rate used to determine the first Annuity payment is used to calculate the present value. The present value is determined as of the Valuation Date in which we receive acceptable proof of death and a written claim for the death benefit. If the beneficiary dies while receiving payments, the present value of any remaining guaranteed payments is paid in a lump sum to the Contract beneficiary's estate. C-CDA(99) OPTION 1: Payments for a Specified Period
- ---------------------------------------------------------------------- Monthly Amount for Each $1,000* Rates for a Fixed Annuity with a 3% Guaranteed Interest Rate - ---------------------------------------------------------------------- Years Payment Years Payment - ---------------------------------------------------------------------- 5 $17.91 20 $5.51 10 9.61 25 4.71 15 6.87 30 4.18 - ----------------------------------------------------------------------
- ---------------------------------------------------------------------- First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 3.5% AIR - ---------------------------------------------------------------------- Years Payment Years Payment - ---------------------------------------------------------------------- 5 $18.12 20 $5.75 10 9.83 25 4.96 15 7.10 30 4.45 - ----------------------------------------------------------------------
- ---------------------------------------------------------------------- First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 5% AIR - ---------------------------------------------------------------------- Years Payment Years Payment - ---------------------------------------------------------------------- 5 $18.74 20 $6.51 10 10.51 25 5.76 15 7.82 30 5.28 - ----------------------------------------------------------------------
* Net of any applicable premium tax deduction C-CDA(99) Option 2: Life Income Based on the Life of One Annuitant
- ----------------------------------------------------------------------------------------------- Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3% Guaranteed Interest Rate - ----------------------------------------------------------------------------------------------- Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Option 2(c): Adjusted payments for payments payments payments payments Cash Refund Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years - ----------------------------------------------------------------------------------------------- 55 4.44 4.42 4.39 4.32 4.22 4.19 60 4.95 4.93 4.86 4.73 4.55 4.57 65 5.65 5.61 5.47 5.22 4.89 5.06 66 5.82 5.77 5.61 5.33 4.96 5.18 70 6.64 6.54 6.23 5.76 5.19 5.70 75 8.06 7.82 7.14 6.25 5.38 6.51 - -----------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate - ---------------------------------------------------------------------------------- Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years - ---------------------------------------------------------------------------------- 55 4.72 4.71 4.67 4.60 4.50 60 5.23 5.21 5.13 5.00 4.82 65 5.94 5.89 5.73 5.48 5.15 70 6.92 6.81 6.49 6.00 5.43 75 8.35 8.08 7.38 6.48 5.62 - ----------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate - ---------------------------------------------------------------------------------- Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years - ---------------------------------------------------------------------------------- 55 5.63 5.61 5.56 5.47 5.36 60 6.12 6.09 6.00 5.85 5.65 65 6.82 6.75 6.57 6.30 5.95 70 7.80 7.67 7.30 6.78 6.21 75 9.23 8.93 8.16 7.23 6.38 - ----------------------------------------------------------------------------------
* Net of any applicable premium tax deduction C-CDA(99) Option 3: Life Income Based on the Lives of Two Annuitants
- --------------------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3.0% Guaranteed Interest Rate - --------------------------------------------------------------------------------------------------- Adjusted Ages - -------------------- payments guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f) - --------------------------------------------------------------------------------------------------- 55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67 55 60 3.99 4.44 4.71 3.98 4.20 3.94 65 60 4.38 4.97 5.32 4.38 4.93 4.29 65 70 4.93 5.68 6.15 4.91 5.27 4.74 75 70 5.69 6.68 7.32 5.62 6.67 5.29 75 80 6.78 8.11 8.99 6.54 7.36 5.93 - ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate - ---------------------------------------------------------------------------------------- Adjusted Ages - --------------------- payments guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) - ---------------------------------------------------------------------------------------- 55 50 $3.97 $4.35 $4.56 $3.97 $4.31 55 60 4.27 4.73 5.00 4.26 4.48 65 60 4.66 5.25 5.61 4.65 5.22 65 70 5.19 5.97 6.44 5.17 5.54 75 70 5.95 6.96 7.61 5.87 6.95 75 80 7.04 8.39 9.29 6.79 7.64 - ----------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------- First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate - ----------------------------------------------------------------------------------------- Adjusted Ages - ---------------------- payments guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) - ----------------------------------------------------------------------------------------- 55 50 $4.88 $5.26 $ 5.48 $4.88 $5.23 55 60 5.15 5.63 5.91 5.14 5.38 65 60 5.52 6.14 6.51 5.51 6.10 65 70 6.04 6.84 7.34 6.00 6.41 75 70 6.77 7.84 8.51 6.68 7.81 75 80 7.86 9.28 10.20 7.57 8.49 - -----------------------------------------------------------------------------------------
* Net of any applicable premium tax deduction C-CDA(99) - -------------------------------------------------------------------------------- Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06150 (800) 525-4547 Group Combination, Deferred Annuity Contract (Nonparticipating) - -------------------------------------------------------------------------------- C-CDA(99) -----END PRIVACY-ENHANCED MESSAGE-----