-----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, GqI2eqroP4AP/WsEanIpEO4dssWwnp6EiUNdSjAbnnpUDlcdLEdmOv6+CSqQ5bW4 o/b8RzZ2c0r8B0y7jbCqgA== 0000950146-96-001269.txt : 19960805 0000950146-96-001269.hdr.sgml : 19960805 ACCESSION NUMBER: 0000950146-96-001269 CONFORMED SUBMISSION TYPE: N-4 EL PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960802 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INS & ANNUITY CO CENTRAL INDEX KEY: 0000103005 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4 EL SEC ACT: 1933 Act SEC FILE NUMBER: 333-09515 FILM NUMBER: 96603398 BUSINESS ADDRESS: STREET 1: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 BUSINESS PHONE: 2032734808 MAIL ADDRESS: STREET 1: AETNA LIFE & CASUALTY STREET 2: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 FORMER COMPANY: FORMER CONFORMED NAME: VARIABLE ANNUITY ACCOUNT B OF AETNA VARIABLE ANNUITY LIFE IN DATE OF NAME CHANGE: 19791108 N-4 EL 1 As filed with the Securities and Exchange Registration No. ________ Commission on August 2, 1996 Registration No. 811-2512 - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 - ------------------------------------------------------------------------------- REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and Amendment to REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 - ------------------------------------------------------------------------------- Variable Annuity Account B of Aetna Life Insurance and Annuity Company (Exact Name of Registrant) Aetna Life Insurance and Annuity Company (Name of Depositor) 151 Farmington Avenue, RE4C, Hartford, Connecticut 06156 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code: (860) 273-7834 Susan E. Bryant, Counsel Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RE4C, Hartford, Connecticut 06156 (Name and Address of Agent for Service) - ------------------------------------------------------------------------------- Approximate date of Proposed Public Offering: As soon as practicable after the effectiveness of this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has registered an indefinite number of securities under the Securities Act of 1933. A Rule 24f-2 Notice for the fiscal year ended December 31, 1995 was filed on February 29, 1996. VARIABLE ANNUITY ACCOUNT B CROSS REFERENCE SHEET Form N-4 Item No. Part A (Prospectus) Location -------- ------------------ -------- 1 Cover Page.......................... Cover Page 2 Definitions......................... Definitions 3 Synopsis............................ Profile; Fee Table 4 Condensed Financial Information..... Not applicable 5 General Description of Registrant, Depositor, and Portfolio Companies.. Other Information; Investment Options 6 Deductions and Expenses............. Charges and Deductions; Distribution 7 General Description of Variable Annuity Contracts................... The Variable Annuity Contract; Purchase; Other Information 8 Annuity Period...................... Annuity Payments 9 Death Benefit....................... Death Benefit 10 Purchases and Contract Value........ Purchase; Valuation of Annuity Unit Values 11 Redemptions......................... Withdrawals--Access to Your Money; Free Look Period 12 Taxes............................... Taxes 13 Legal Proceedings................... Not Applicable 14 Table of Contents of the Statement of Additional Information........... Contents of the Statement of Additional Information Form N-4 Item No. Part B (Statement of Additional Information) Location ------- ------------------------------------------- -------- 15 Cover Page.......................... Cover Page 16 Table of Contents................... Table of Contents 17 General Information and History..... General Information and History 18 Services............................ General Information and History; Independent Auditors 19 Purchase of Securities Being Offered Offering and Purchase of Contracts 20 Underwriters........................ Offering and Purchase of Contracts 21 Calculation of Performance Data..... Not Applicable 22 Annuity Payments.................... Annuity Payments 23 Financial Statements................ Financial Statements Part C (Other Information) Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. A FIXED AND VARIABLE SINGLE PREMIUM IMMEDIATE ANNUITY issued by Aetna Life Insurance and Annuity Company The Contract offered in connection with this Prospectus is a combination fixed and/or variable single premium immediate annuity contract (the "Contract") issued by Aetna Life Insurance and Annuity Company (the "Company"). The Contract is designed to provide regular income payments for a certain period or for life (with or without a guaranteed period) commencing immediately after purchase under the payment method that you select. The Contract provides that your Purchase Payment may be allocated to a fixed dollar option and/or one or more of the Subaccounts of Variable Annuity Account B, a separate account of the Company. The Subaccounts invest directly in shares of the following Funds: o Aetna Variable Fund o Aetna Income Shares o Aetna Investment Advisers Fund, Inc. o Aetna Legacy Variable Portfolio o Alger American Small Cap Portfolio o Janus Aspen Growth Portfolio o Janus Aspen Worldwide Growth Portfolio o Neuberger & Berman Growth Portfolio The availability of the Funds is subject to applicable regulatory authorization. Not all Funds may be available in all jurisdictions or under all Contracts. This Prospectus provides information that you should know before purchasing the Contract. Additional information about the Contract and the Separate Account is contained in a Statement of Additional Information ("SAI") dated __________, 1996. The SAI has been filed with the Securities and Exchange Commission and is incorporated herein by reference. The Table of Contents for the SAI is printed on page 12 of this Prospectus. For a free copy of the SAI, call us at (800) 238-6273 or write us at: 151 Farmington Avenue, Hartford, Connecticut 06156, Attention: ARS Settlements. PLEASE KEEP THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE FUNDS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS IS DATED __________, 1996. TABLE OF CONTENTS ============================================================================= DEFINITIONS.................................................... Definitions-1 PROFILE ...................................................... Profile-1 FEE TABLE...................................................... Fee Table-1 1. THE VARIABLE ANNUITY CONTRACT............................. 1 2. ANNUITY PAYMENTS.......................................... 1 Annuity Elections......................................... 1 Annuity Options........................................... 1 Annuity Payments.......................................... 2 Valuation of Annuity Unit Values.......................... 2 3. PURCHASE.................................................. 3 Purchase Payments......................................... 3 How to Purchase........................................... 3 Allocation of Purchase Payment............................ 3 Free Look Period.......................................... 3 4. INVESTMENT OPTIONS........................................ 4 Fund Availability and Substitution........................ 5 Transfers Among Subaccounts............................... 5 5. CHARGES AND DEDUCTIONS.................................... 5 Mortality and Expense Risk Charge......................... 5 Administrative Charge..................................... 5 Withdrawal Charge ........................................ 5 Fund Expenses............................................. 6 Premium and Other Taxes................................... 6 6. TAXES..................................................... 6 Introduction.............................................. 6 Taxation of Annuity Payments.............................. 6 Taxation of Withdrawals................................... 7 Distributions--Tax-Deferred Annuities..................... 7 Tax Penalty............................................... 7 Nonnatural Owners......................................... 8 7. WITHDRAWALS - ACCESS TO YOUR MONEY........................ 8 Commutation............................................... 8 Commuted Value............................................ 8 8. PERFORMANCE............................................... 8 9. DEATH BENEFIT............................................. 9 Death Benefit Commutation................................. 9 10. OTHER INFORMATION......................................... 9 The Company............................................... 9 The Separate Account...................................... 9 Distribution.............................................. 10 Ownership................................................. 10 Beneficiary............................................... 10 Delay or Suspension of Payments........................... 10 Voting Rights............................................. 10 Modification of the Contract.............................. 11 Financial Statements...................................... 11 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............ 12 APPENDIX A - THE FIXED DOLLAR OPTION........................... 13 DEFINITIONS =============================================================================== The following terms are defined as they are used in this Prospectus: Annuitant/Joint Annuitant: An individual named in the contract (1) whose life determines the amount or continuation of life-contingent payments, and/or (2) whose death results in the payment of death benefits. Annuity Payment(s): A series of payments for life, a certain period or a combination of the two. Beneficiary(ies): The person or persons who are designated by the Contract Holder to receive any death benefit proceeds payable under the Contract. Commutation: The right to receive in a lump sum the present value of all or a portion of future Guaranteed Payments under a Period Certain Annuity. This right may be subject to a withdrawal charge. Commuted Value: The present value of any future Guaranteed Payments which have not yet been paid under the Contract. Company (We, Us): Aetna Life Insurance and Annuity Company. Contract: The individual single premium immediate annuity contract offered in connection with this Prospectus. Contract Holder (You): The person to whom the Contract is issued. The Company reserves the right to limit ownership to natural persons. Fund(s): An open-end registered management investment company whose shares are purchased by the Separate Account to fund the benefits provided by the Contract. Guaranteed Payment: A payment that is due whether or not the Annuitant, or Joint Annuitant (if applicable), is alive on the Payment Due Date. Home Office: The Company's principal executive offices located at 151 Farmington Avenue, Hartford, Connecticut 06156. LifeAnnuity: An annuity with payments that are based solely on whether or not the Annuitant, or Joint Annuitant (if applicable), is alive on the Payment Due Date. Payee: A person who receives Annuity Payments. The Contract Holder shall be the Payee unless the Contract Holder designates otherwise in writing. Payment Due Date: The date on which each Annuity Payment is scheduled to be paid. Such date can be either monthly, quarterly, semi-annually or annually, at the election of the Contract Holder. Period Certain Annuity: An annuity with a specified number of Guaranteed Payments that are payable whether or not the Annuitant, or Joint Annuitant (if applicable), is alive on the Payment Due Date. Separate Account: Variable Annuity Account B, a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. Subaccount(s): The portion of the assets of the Separate Account that is allocated to a particular Fund. Each Subaccount invests in the shares of only one corresponding Fund. Valuation Date: The date and time at which the value of the Subaccount is calculated. Currently, this calculation occurs at the close of business of the New York Stock Exchange on any normal business day, Monday through Friday, that the New York Stock Exchange is open. - -------------------------------------------------------------------------------- DEFINITIONS-1 VARIABLE ANNUITY CONTRACT PROFILE DATED _______________, 1996 FOR FIXED AND VARIABLE SINGLE PREMIUM IMMEDIATE ANNUITY CONTRACTS ISSUED BY AETNA LIFE INSURANCE AND ANNUITY COMPANY =============================================================================== THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE FULLY DESCRIBED IN THE FULL PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE READ THE PROSPECTUS CAREFULLY. 1. THE VARIABLE ANNUITY CONTRACT The fixed and variable single premium immediate annuity contract offered by the Company represents a contract between you and Aetna Life Insurance and Annuity Company. The purpose of the Contract is to provide regular income payments for a certain period or for life (with or without a guaranteed period) commencing immediately after purchase under the payment method that you select. A "variable" annuity means that the value of your Annuity Payments can go up or down depending upon the investment performance of the Subaccounts to which your Purchase Payment is allocated. This Contract offers you a fixed dollar option and a choice of eight different Subaccounts, of which you can choose to invest in four at any one time. You should carefully assess the risks of variable investing. 2. ANNUITY PAYMENTS Annuity Payments may be made on either a fixed, variable or combination fixed and variable basis. If a variable payout is selected, the payments will vary with the investment performance of the Subaccount(s) selected. You have the right to select the payment plan, or "Annuity Option," under which Annuity Payments are to be made. These Options can provide payments for life or for the joint lives of two Annuitants, with or without a Guaranteed Period, or for a certain period or number of payments. 3. PURCHASE You may purchase the Contract with a single Purchase Payment of $5,000 or more. Your registered representative can help you fill out the proper forms. The Contract is available to persons who wish to receive annuity income payments. Contracts may be issued on a nonqualified basis. Contracts may also be issued in connection with employer sponsored Section 401(a), Section 403(b) and Section 457 plans, or as an Individual Retirement Annuity (IRA). The maximum issue age is 75. The Company reserves the right to modify the maximum issue age. 4. INVESTMENT OPTIONS You can put all or some of your money in up to four Subaccounts. These Subaccounts invest directly in shares of the following Funds: o Aetna Variable Fund o Aetna Income Shares o Aetna Investment Advisers Fund, Inc. o Aetna Legacy Variable Portfolio o Alger American Small Cap Portfolio o Janus Aspen Growth Portfolio o Janus Aspen Worldwide Growth Portfolio o Neuberger & Berman Growth Portfolio Each of the Funds is fully described in a separate Fund prospectus. Depending on market conditions, you can make or lose money in any of these Funds. You may make transfers among the Subaccounts at any time. The Company reserves the right to limit such transfers to four (4) in any calendar year. Aetna may establish a minimum transfer amount. You can also put all or some of your money into a fixed dollar option which guarantees a fixed - ------------------------------------------------------------------------------- PROFILE-1 payment, as specified in the Contract. The fixed dollar option is described in Appendix A to the Prospectus. Transfers are currently not permitted into or out of the fixed dollar option. 5. CHARGES AND DEDUCTIONS The Contract has insurance features and investment features, and there are costs related to each. The Company deducts 1.25% of the average daily value of your Contract that is allocated to the Separate Account for mortality and expense risk charges. The Company may also deduct a daily administrative charge of up to 0.25%; however, this charge is currently waived. There are also charges deducted from each of the Funds. These charges currently range from 0.48% to 0.94% and cover each Fund's investment advisory fees and other related expenses. A withdrawal charge may apply if you elect to receive the Commuted Value under a Period Certain Annuity. The following table illustrates the total annual expenses that you will bear under the Contract. Please also refer to the Fee Table in the Prospectus for additional information on these expenses. - ----------------------------------------------------- Total Total Separate Total Annual Account Fund Contract Subaccount Charges Expenses Charges - ----------------------------------------------------- Aetna Variable Fund 1.25% 0.56% 1.81% Aetna Income Shares 1.25% 0.48% 1.73% Aetna Investment 1.25% 0.58% 1.83% Advisers Fund, Inc. Aetna Legacy 1.25% 0.75% 2.00% Variable Portfolio Alger Small Cap Port. 1.25% 0.92% 2.17% Janus Growth Portfolio 1.25% 0.78% 2.03% Janus Worldwide 1.25% 0.90% 2.15% Growth Portfolio Neuberger & Berman 1.25% 0.94% 2.19% Growth Portfolio - ----------------------------------------------------- 6. TAXES All or a portion of each Annuity Payment will generally be includable in gross income and subject to federal income tax. A 10% federal tax penalty may be imposed on certain Annuity Payments or withdrawals. 7. ACCESS TO YOUR MONEY Under a variable Period Certain Annuity, you may elect to receive the Commuted Value of all or a portion of future Guaranteed Payments, less any applicable withdrawal charge. The Commuted Value will be determined as of the Valuation Date next following the Company's receipt of your written request for Commutation. Withdrawals during the free look period will not incur a withdrawal charge. Withdrawals may also be subject to income tax and a federal tax penalty. 8. PERFORMANCE The value of the variable portion of this Contract will vary up or down depending upon the investment performance of the Subaccounts you choose. The Appendix to this Profile illustrates the hypothetical values of Annuity Payments made from each of the Subaccounts during the time periods shown based on the historical net asset values of the Funds. These numbers reflect the mortality and expense risk charge, as well as the advisory fees and other expenses of the Funds. Past performance is not a guarantee of future results. 9. DEATH BENEFIT A death benefit may be payable if your Contract is issued under certain Annuity Options. The death benefit is the right to receive any remaining Guaranteed Payments. The death benefit is payable upon the death of the Annuitant, or the survivor if there is a Joint Annuitant. Under Lifetime Annuity Options with Guaranteed Payments, the Beneficiary may elect, within six months of such death, to receive the Commuted Value of any remaining Guaranteed Payments. However, under a Period Certain Annuity, the Beneficiary may make such election at any time. No withdrawal charge will apply to the Commuted Value of the death benefit. 10. OTHER INFORMATION Ownership. You are the Contract Holder and you own and hold all right, title and interest in the Contract during the lifetime of the Annuitant, and the Joint Annuitant, if applicable. You may change ownership of the Contract to the extent permitted by law. Any choices selected under, or changes made to, - ------------------------------------------------------------------------------- PROFILE-2 the Contract must be in writing. The Company reserves the right to limit ownership to natural persons. Free Look Period. If you cancel the Contract within 10 days after receiving it (or whatever period is required in your state), we will return your money without assessing a withdrawal charge. You will receive whatever your Contract is worth on the day we receive your request, less any Annuity Payments already made. This amount may be more or less than your original Purchase Payment. Fixed Dollar Option. You may elect to allocate all or a portion of your Purchase Payment to a fixed dollar option under a Life Annuity or a Period Certain Annuity on a lifetime or a nonlifetime basis. The fixed dollar option guarantees a fixed payment for the term of your Contract. If you choose a fixed Period Certain Annuity, you may also purchase a right of Commutation which is exercisable once a year after the end of the first Contract year. A withdrawal charge will be deducted from the Commuted Value at the start of the second year through the end of the seventh year after the Contract Effective Date. 11. INQUIRIES Questions or requests for additional information may be directed to your agent or local representative, or you may contact the Company as follows: o Write to: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 Attention: ARS Settlements o Telephone: 1-800-238-6273 - -------------------------------------------------------------------------------- PROFILE-3 APPENDIX HYPOTHETICAL PERFORMANCE INFORMATION =============================================================================== The following tables have been prepared to show how investment performance affects variable annuity income payments over time. The tables illustrate hypothetical values that would have resulted under a Contract had you been receiving Annuity Payments during the periods indicated. The values are based on the actual historical net asset values of the Funds, net of advisory fees and other expenses actually charged for those periods. The annuity payment values assume a single purchase payment of $10,000 and the selection of a 10-year Period Certain Annuity. These values also reflect the deduction of the 1.25% mortality and expense risk charge, but do not reflect the impact of any withdrawal charge.
- ----------------------------------------------------------------------------------------------------- AETNA VARIABLE FUND Value of Hypothetical Annual Variable Annuity Payments ------------------------------------------------------ Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1988 1981 1994 1987 1980 1993 1986 1979 1992 1985 1978 1991 1984 1977 1990 1983 1976 1989 1982 1975 - ----------------------------------------------------------------------------------------------------- AETNA INCOME SHARES Value of Hypothetical Annual Variable Annuity Payments ------------------------------------------------------ Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1989 1983 1994 1988 1982 1993 1987 1981 1992 1986 1980 1991 1985 1979 1990 1984 1978 - ----------------------------------------------------------------------------------------------------- AETNA INVESTMENT ADVISERS FUND, INC. Value of Hypothetical Annual Variable Annuity Payments ------------------------------------------------------ Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1992 1989 1994 1991 1993 1990 - -----------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- PROFILE-4
- ----------------------------------------------------------------------------------------------------- AETNA LEGACY VARIABLE PORTFOLIO Value of Hypothetical Annual Variable Annuity Payments Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1988 1981 - ----------------------------------------------------------------------------------------------------- ALGER AMERICAN SMALL CAP PORTFOLIO Value of Hypothetical Annual Variable Annuity Payments Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1992 1989 1994 1991 1988 1993 1990 - ------------------ ---------------- ---------------- ----------------- ---------------- ------------- JANUS ASPEN GROWTH PORTFOLIO Value of Hypothetical Annual Variable Annuity Payments Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1994 1993 - ------------------ ---------------- ---------------- ----------------- ---------------- ---------------- JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value of Hypothetical Annual Variable Annuity Payments Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1994 1993 - -------------------------------------------------------------------------------------------------------- NEUBERGER & BERMAN GROWTH PORTFOLIO Value of Hypothetical Annual Variable Annuity Payments Year Ending Payment Year Ending Payment Year Ending Payment December 31 Amount December 31 Amount December 31 Amount ----------- ------ ----------- ------ ----------- ------ 1995 1991 1987 1994 1990 1986 1993 1989 1985 1992 1988 - ---------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- PROFILE-5 FEE TABLE =============================================================================== This information is intended to help you understand the various costs and expenses incurred directly or indirectly under your Contract. The table reflects expenses of the Subaccounts as well as of the Funds. Some expenses may vary as explained under "Charges and Deductions." Charges shown do not include premium taxes that may be applicable. For more information regarding fees and expenses paid out of the assets of a particular Fund, see the Fund's prospectus. SEPARATE ACCOUNT ANNUAL EXPENSES Each Subaccount pays these expenses out of its assets. The charges are reflected in the Subaccount's daily Unit Value and are not charged directly to you. The Separate Account charges include: Mortality and Expense Risk Charge 1.25% Administrative Charge (1) 0.00% ------- Total Separate Account Annual Expenses 1.25% WITHDRAWAL CHARGE Under a variable Period Certain Annuity, Commutations are subject to the following charges: Number of years from Withdrawal Charge Contract Effective Date % of Commuted Value (2) ----------------------- -------------------- Fewer than 1 5% 1 or more, but fewer than 2 5% 2 or more, but fewer than 3 4% 3 or more, but fewer than 4 4% 4 or more, but fewer than 5 3% 5 or more, but fewer than 6 2% 6 or more, but fewer than 7 1% 7 or more 0% (1) We currently do not impose an administrative charge. However, we reserve the right to deduct a daily charge from the Subaccounts, equivalent on an annual basis to not more than 0.25%. (2) The Company will monitor the applicable deductions for the total sales charges to ensure they will never exceed 8.5% of the Purchase Payment. - ------------------------------------------------------------------------------- FEE TABLE-1 ANNUAL EXPENSES OF THE FUNDS The following table illustrates the advisory fees and other expenses applicable to the Funds. These figures are a percentage of each Fund's average net assets and, except as noted, are based on figures for the year ended December 31, 1995. A Fund's "Other Expenses" include operating costs of the Fund. Advisory fees and other expenses are deducted from each Fund's net asset value and are not deducted from the value of your Contract.
Investment Advisory Fees (1) Other Expenses (after expense (after expense Total Fund reimbursement) reimbursement) Annual Expenses ------------- ------------- --------------- Aetna Variable Fund (2) 0.50% 0.06% 0.56% Aetna Income Shares (2) 0.40% 0.08% 0.48% Aetna Investment Advisers Fund, Inc. (2) 0.50% 0.08% 0.58% Aetna Legacy Variable Portfolio (2) 0.60% 0.15% 0.75% Alger American Small Cap Portfolio 0.85% 0.07% 0.92% Janus Aspen Growth Portfolio (3) 0.65% 0.13% 0.78% Janus Aspen Worldwide Growth Portfolio (3) 0.68% 0.22% 0.90% Neuberger & Berman Growth Portfolio (4) 0.84% 0.10% 0.94%
(1) Certain of the unaffiliated Fund advisers reimburse the Company for administrative costs incurred in connection with administering the Funds as variable funding options under the Contract. These reimbursements are paid out of the investment advisory fees and are not charged to investors. (2) As of May 1, 1996, the Company provides administrative services to the Fund and assumes the Fund's ordinary recurring direct costs under an Administrative Services Agreement. The "Other Expenses" shown are not based on figures for the year ended December 31,1995, but reflect the fee payable under this Agreement. The investment advisory fees reflect the fees in effect as of August 1, 1996. (3) The information for each Portfolio is net of fee waivers or reductions from Janus Capital Corporation. Fee reductions for the Growth and Worldwide Growth Portfolios reduce the management fee to the level of the corresponding Janus retail fund. Other waivers, if applicable, are first applied against the management fee and then against other expenses. Without such waivers, the Investment Advisory Fees, Other Expenses and Total Fund Annual Expenses for the Portfolios for the fiscal year ended December 31, 1995 would have been: 0.85%, 0.13% and 0.98%, respectively, for Janus Aspen Growth Portfolio; and 0.87%, 0.22% and 1.09%, respectively, for Janus Aspen Worldwide Growth Portfolio. Janus Capital may modify or terminate the waivers or reductions at any time upon 90 days' notice to the Portfolio's Board of Trustees. (4) Neuberger & Berman Advisers Management Trust (the "Trust") is divided into portfolios ("Portfolios"), each of which invests all of its net investment assets in a corresponding series ("Series") of Advisers Management Trust. Expenses in the table reflect expenses of the Portfolio and include the Portfolio's pro rata portion of the operating expenses of the Portfolio's corresponding Series. The Portfolio pays Neuberger & Berman Management Inc. ("NBMI") an administration fee based on the Portfolio's net asset value. The corresponding Series of the Portfolio pays NBMI a management fee based on the Series' average daily net assets. Accordingly, this table combines management fees at the Series level and administration fees at the Portfolio level in a unified fee rate. (See "Expenses" in the Trust's prospectus.) CONDENSED FINANCIAL INFORMATION Condensed Financial Information showing accumulation unit values is not included in this Prospectus because the Contract includes only immediate annuity benefits. - ------------------------------------------------------------------------------- FEE TABLE-2 1. THE VARIABLE ANNUITY CONTRACT ================================================================================ The fixed and variable single premium immediate annuity contract offered by the Company represents a contract between you and Aetna Life Insurance and Annuity Company, an insurance company. The purpose of the Contract is to provide regular income payments for a certain period or for life (with or without a guaranteed period) commencing immediately after purchase under the payment method that you select. You must select one of the annuity income options described in Section 2 below. Additionally, you may allocate your Purchase Payment to up to four of the eight different Subaccounts listed in Section 4 below, or to the fixed dollar option described in Appendix A to the Prospectus. Specific information on how to purchase a contract and to whom the contract is available is discussed in Section 3. 2. ANNUITY PAYMENTS =============================================================================== ANNUITY ELECTIONS Under the Contract, the Company will make regular income payments to you or to a Payee you designate in writing. You can choose to have payments made on a monthly, quarterly, semi-annual or annual basis. The first payment will generally be due on the last day of the payment period you select. If an annual frequency is elected, the payment will be due one day before one year after the Contract Effective Date. An alternate first payment date may be elected subject to the Company's approval and compliance with IRS regulations. If you choose to have any portion of your Annuity Payments come from the Subaccounts, the dollar amount of your payment will depend upon three things: (1) the value of that portion of your Contract that is allocated to the Subaccounts on the Annuity Date; (2) the Assumed Annual Net Return Rate that you select; and (3) the performance of the Subaccounts that you select. If the net return rate of the Subaccounts exceeds the Assumed Annual Net Return Rate stated in your Contract, your Annuity Payments will increase. Conversely, if the net return rate of the Subaccounts is less than the Assumed Annual Net Return Rate, your Annuity Payments will decrease. ANNUITY OPTIONS You must choose one of the following Annuity Options. The option may not be changed after the Contract is issued. The options are listed in two groups: Lifetime and Nonlifetime. A Lifetime Annuity Option means that Annuity Payments are based on the life of one or two Annuitants and will continue for as long as such Annuitant(s) is alive. A Nonlifetime Annuity Option means that Annuity Payments are guaranteed to continue for a certain period; the continuation of payments under such option is not based on the continued life of the Annuitant(s). LIFETIME ANNUITY OPTIONS: o Option 1 - Single Life Annuity - A stream of Annuity Payments that is payable for the life of the Annuitant. Payments cease upon the death of the Annuitant. o Option 2 - Single Life Annuity with Guaranteed Payments - A stream of Annuity Payments that is payable for the life of the Annuitant. If the Annuitant dies prior to the payment of all of the Guaranteed Payments, any remaining payments will be made to the Beneficiary. o Option 3 - Joint and Survivor Annuity - A stream of Annuity Payments that is payable for the lives of the Annuitant and Joint Annuitant. Upon the death of either Annuitant, payments continue for the life of the survivor at the full or reduced amount depending upon the option elected. Payments cease upon the death of the survivor. o Option 4 - Joint and Full Survivor Annuity with Guaranteed Payments - A stream of Annuity Payments that is payable for the lives of the Annuitant and the Joint Annuitant. Upon the death of either Annuitant, the full payment continues for the life of the survivor. If the survivor dies prior to the payment of all of the Guaranteed Payments, any remaining Guaranteed Payments will be paid to the Beneficiary. o Option 5 - Joint and Contingent Annuity - A stream of - ------------------------------------------------------------------------------- -1- Annuity Payments that is payable for the lives of the Annuitant and the Joint Annuitant. If the Annuitant is the first to die, payments continue for the life of the Joint Annuitant at a reduced amount. If the Joint Annuitant is the first to die, the full payment continues for the life of the Annuitant. Payments cease upon the death of the survivor. If you elect Lifetime Option 1, 3 or 5, it is possible that no Annuity Payments would be made if the Annuitant under Option 1, or the survivor under Option 3 or 5, dies prior to the first Annuity Payment Date. Lifetime Annuity Options do not provide for any withdrawal rights. NONLIFETIME ANNUITY OPTIONS: o Option 6 - Period Certain - A stream of Annuity Payments that continues for a certain period of time, as provided under your Contract. Payments are guaranteed for the number of Guaranteed Payments selected, and cease after the selected number of Guaranteed Payments have been made. If Option 6 is elected on a variable basis, you may request to receive the Commuted Value at any time. Any such withdrawal may be subject to a withdrawal charge. (See Section 5, "Charges and Deductions - Withdrawal Charge.") ANNUITY PAYMENTS Duration of Payments. Guaranteed Payments under a qualified annuity contract may not extend beyond (a) the life expectancy of the Annuitant, or (b) the joint life expectancies of the Annuitant and Beneficiary. In any event, qualified contract Annuity Payments must comply with the minimum distribution requirements of Code Section 401(a)(9). Amount of Each Annuity Payment. The amount of each payment depends on (1) the amount of your Purchase Payment, (2) how you allocate the Purchase Payment between the fixed dollar option and the Subaccounts, and (3) the Annuity Option and any features chosen. The initial Annuity Payment must be at least $50 per month, or aggregate to $250 per year for payments of any other frequency. For any portion of your Annuity Payments that is made on a variable basis, the first and subsequent payments will vary depending on the Assumed Annual Net Return Rate (3 1/2% or 5% per annum). Selection of a 5% rate causes a higher first payment, but Annuity Payments will increase thereafter only to the extent that the net return rate on the Subaccounts in which you have invested exceeds 5% on an annualized basis. Annuity Payments would decline if the net return rate was below 5%. Use of the 3 1/2% Assumed Annual Net Return Rate causes a lower first payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the net return rate. (See the Statement of Additional Information for further discussion on the impact of selecting an Assumed Annual Net Return Rate.) VALUATION OF ANNUITY UNIT VALUES The value of your interest in a Subaccount is expressed as the number of "Annuity Units" that you hold, multiplied by an Annuity Unit Value ("AUV") for each unit. The AUV on any Valuation Date is determined by multiplying the value on the immediately preceding Valuation Date by the net return factor of that Subaccount for the period between the immediately preceding Valuation Date and the current Valuation Date. (See "Net Return Factor" below.) The AUV will be affected by the investment performance, expenses and charges of the applicable Fund and is reduced each day by a percentage that accounts for the daily assessment of mortality and expense risk charges and the administrative charge (if any). Net Return Factor. The net return factor is used to measure the investment performance of a Subaccount from one Valuation Date to the next. The net return factor for a Subaccount for any valuation period is equal to the sum of 1.000000 plus the net return rate. The net return rate equals: (a) the value of the shares of the Fund held by the Subaccount on the current Valuation Date, minus - ------------------------------------------------------------------------------- -2- (b) the value of the shares of the Fund held by the Subaccount on the preceding Valuation Date, plus or minus (c) taxes (or reserves for taxes) attributable to the operation of the Subaccount (if any); (d) divided by the total value of the Subaccount's Annuity Units on the preceding Valuation Date; (e) minus a daily charge at the annual effective rate of 1.25% for mortality and expense risks and up to 0.25% for administrative expenses (currently 0%). A net return rate may be more or less than 0%. 3. PURCHASE =============================================================================== PURCHASE PAYMENTS A "Purchase Payment" is the money that you give us to buy the Contract. The minimum amount that we will accept is $5,000. The Contract is designed to be a single premium contract, which means that no additional payments may be made under the Contract. The Company reserves the right to establish a maximum Purchase Payment amount and to reject any Purchase Payment exceeding the maximum. The Contract is available to persons who wish to receive annuity income payments. Contracts may be issued on a nonqualified basis. Contracts may also be issued in connection with employer sponsored Section 401(a), Section 403(b) and Section 457 plans, or as an Individual Retirement Annuity (IRA). The maximum issue age is (75). The Company reserves the right to modify the maximum issue age. HOW TO PURCHASE You may purchase a Contract by submitting an application to the Company. The Company must accept or reject the application within two business days of receipt. If the application is incomplete, the Company may hold any forms and accompanying Purchase Payment for five days. A Purchase Payment may be held for longer periods only with your consent, pending acceptance of the forms. Any Purchase Payment accompanying the application, or received prior to the acceptance of the application, will be invested as of the date of acceptance. If the application is rejected, the application and any Purchase Payment will be returned. ALLOCATION OF PURCHASE PAYMENT Your Purchase Payment less applicable premium taxes ("Net Purchase Payment") will be allocated among the investment options that you designate on your application. You may select up to four Subaccounts from the available fund choices. You may also select a fixed dollar option and allocate all or a portion of your Purchase Payment to the Company's general account. Allocations must be in whole percentages. You may change your fund choices after the Contract is issued by calling or writing to the Company at its Home Office. The Company reserves the right to restrict fund transfers to no more than four in any calendar year and to establish a minimum transfer amount. FREE LOOK PERIOD If you change your mind about owning this Contract, you have the right to cancel it within 10 days of receiving it (or such longer period of time as may be required by your state). To exercise your right to cancel, both the Contract and a written notice of cancellation should be sent to the Company at its Home Office. If you cancel the Contract during this time period, you will not be assessed with a withdrawal charge. Following cancellation, you will receive back whatever your Contract is worth on the day we receive your request for cancellation, less any Annuity Payments already made. In certain states (or if you have purchased the Contract as an IRA), we may be required to give you back your entire Purchase Payment. - ------------------------------------------------------------------------------- -3- 4. INVESTMENT OPTIONS =============================================================================== The Contract offers 8 different variable investment options through the Separate Account. The Separate Account is divided into "Subaccounts" which do not invest directly in stocks, bonds or other investments. Instead, each Subaccount buys and sells shares of a corresponding Fund. Your Purchase Payment may be allocated to up to four of the Subaccounts as designated on the application. You may also allocate all or a portion of your Purchase Payment to the fixed dollar option. Please refer to Appendix A for a description of the fixed dollar option. The investment results of the Funds described below are likely to differ significantly and there is no assurance that any of the Funds will achieve their respective investment objectives. Except where otherwise noted, all of the Funds are diversified, as defined in the 1940 Act. o Aetna Variable Fund seeks to maximize total return through investments in a diversified portfolio of common stocks and securities convertible into common stock. (1) o Aetna Income Shares seeks to maximize total return, consistent with reasonable risk, through investments in a diversified portfolio consisting primarily of debt securities. (1) o Aetna Investment Advisers Fund, Inc. is a managed fund which seeks to maximize investment return consistent with reasonable safety of principal by investing in one or more of the following asset classes: stocks, bonds and cash equivalents based on the Company's judgment of which of those sectors or mix thereof offers the best investment prospects. (1) o Aetna Generation Portfolios, Inc. - Aetna Legacy Variable Portfolio seeks to provide total return consistent with preservation of capital by allocating its investments among equities and fixed income securities. The Portfolio is managed for investors who generally have an investment horizon exceeding five years and who have a low level of risk tolerance.(1) o Alger American Fund - Alger American Small Capitalization Portfolio seeks capital return through investment in common stock of smaller companies offering the potential for significant price gain. The Portfolio invests at least 65% of its net assets in equity securities of companies that have total market capitalization of less than $1 billion at the time of purchase.(2) o Janus Aspen Series - Growth Portfolio seeks long-term growth of capital in a manner consistent with the preservation of capital. The Portfolio pursues its investment objective by investing in common stocks of companies of any size. (3) o Janus Aspen Series - Worldwide Growth Portfolio seeks long-term growth of capital in a manner consistent with preservation of capital. The Portfolio pursues its investment objective primarily through investments in common stocks of foreign and domestic issuers. (3) o Neuberger & Berman Advisers Management Trust - Growth Portfolio seeks capital appreciation without regard to income. The Portfolio generally invests in securities believed to have the maximum potential for long-term capital appreciation. The Portfolio expects to be almost fully invested in common stocks, often of companies that may be temporarily out of favor in the market. (4) Investment Advisers for each of the Funds: (1) Aetna Life Insurance and Annuity Company (investment adviser); Aeltus Investment Management, Inc. (sub-adviser) (2) Fred Alger Management, Inc. (3) Janus Capital Corporation (4) Neuberger & Berman Management Inc. (investment manager); Neuberger & Berman, L.P. (sub-adviser) More comprehensive information, including a discussion of potential risks, is found in the respective Fund prospectuses which accompany this Prospectus. You should read the Fund prospectuses and consider carefully, and on a continuing basis, which Fund or combination of Funds is best suited to your long-term investment objectives. - ------------------------------------------------------------------------------- -4- FUND AVAILABILITY AND SUBSTITUTION The availability of Funds may be subject to regulatory authorization. In addition, the Company may add or withdraw Funds, as permitted by applicable law. Not all Funds may be available in all jurisdictions or under all Contracts. If the shares of any Fund should no longer be available for investment by the Separate Account, or if, in the judgment of the Company, further investments in such shares should become inappropriate under this type of Contract, we may cease to make such Fund shares available for investment under the Contract on a prospective basis. In addition, the Company may substitute shares of another Fund for shares already acquired. The Company reserves the right to substitute shares of another Fund for shares already acquired without a proxy vote. Any elimination, substitution or addition of Funds will be done in accordance with applicable state or federal securities laws. TRANSFERS AMONG SUBACCOUNTS Generally, you may make transfers among the Subaccounts at any time. The Company reserves the right to limit such transfers to four (4) in any calendar year. Transfers are currently not permitted into or out of the fixed dollar option. 5. CHARGES AND DEDUCTIONS =============================================================================== There are charges and other expenses associated with the Contract that reduce the amount of your Annuity Payments. These charges and expenses are as follows: MORTALITY AND EXPENSE RISK CHARGE The Company makes a daily deduction from each of the Subaccounts for the mortality and expense risk charge. The charge is equal, on an annual basis, to 1.25% of the daily net assets of the Subaccounts and compensates the Company for the assumption of mortality and/or expense risks under the Contract. The mortality risks are those assumed for any promise to make lifetime payments. The expense risk is the risk that the actual expenses for costs incurred under the Contract will exceed the maximum costs that can be charged under the Contract. If the amount deducted for mortality and expense risks is not sufficient to cover the mortality costs and expense shortfalls, the loss is borne by the Company. If the deduction is more than sufficient, the excess may be used to recover distribution expenses relating to the Contracts, and may also be used as a source of profit to the Company. The Company expects to make a profit from the mortality and expense risk charge. ADMINISTRATIVE CHARGE The Company reserves the right to make a deduction from each of the Subaccounts for an administrative charge. Under the Contract, the administrative charge may be an amount equal, on an annual basis, to not more than 0.25% of the daily net assets of the Subaccounts. There is currently no administrative charge assessed under the Contract. Once an administrative charge is established for your Contract, it may not be increased. If an administrative charge is assessed, it will be set at a level which does not exceed the average expected cost of the administrative services to be provided while the Contract is in force. The Company does not expect to make a profit from this charge. WITHDRAWAL CHARGE The withdrawal charge is, in effect, a deferred sales charge. It is imposed upon the surrender (Commutation) or withdrawal (partial Commutation) of the remaining Guaranteed Payments under a Period Certain Annuity at any time before the last Guaranteed Payment is made and while the Annuitant is living. The amount paid is equal to the Commuted Value minus the applicable withdrawal charge. The withdrawal charge is imposed to reimburse the Company for unrecovered acquisition and distribution costs. - ------------------------------------------------------------------------------- -5- The schedule for the calculation of the withdrawal charge is: Withdrawal Charge Number of years from Percentage of Contract Effective Date Commuted Value ----------------------- -------------- Fewer than 1 5% 1 or more, but fewer than 2 5% 2 or more, but fewer than 3 4% 3 or more, but fewer than 4 4% 4 or more, but fewer than 5 3% 5 or more, but fewer than 6 2% 6 or more, but fewer than 7 1% 7 or more 0% Reduction or Elimination of the Withdrawal Charge. We may reduce or eliminate the withdrawal charge when sales of the Contract are made to individuals or a group of individuals in such a manner that results in savings of sales expenses. The entitlement to such a reduction in the withdrawal charge will be based on the following criteria: (a) the size and type of group of individuals to whom the Contract is offered; or (b) whether there is a prior or existing relationship with the Company such as being an employee of the Company or one of its affiliates, receiving distributions or making internal transfers from other Contracts issued by the Company or one of its affiliates, or making transfers of amounts held under qualified plans sponsored by the Company or an affiliate. Any reduction or elimination of the withdrawal charge will not be unfairly discriminatory against any person. FUND EXPENSES Each Fund incurs certain expenses which are paid out of its net assets. These expenses include, among other things, the investment advisory or "management" fee. The expenses of the Funds are set forth in the Fee Table in this Prospectus and described more fully in the accompanying Fund prospectuses. PREMIUM AND OTHER TAXES Several states and municipalities impose a premium tax based on the amount of your Purchase Payment. These taxes currently range from 0% to 3.5%. The Company will deduct premium taxes from your Purchase Payment at the Contract Effective Date. Under certain circumstances, the Company reserves the right not to deduct premium taxes where the Purchase Payment is provided through an internal transfer from an annuity or other contract issued by the Company (or one of its affiliates) under which the Company previously deducted premium tax. 6. TAXES ================================================================================ INTRODUCTION The Company has prepared the following as a general discussion on federal taxes. This discussion is not intended as tax advice to any individual. Any person concerned about tax implications should consult a tax adviser before investing and before electing any Commutation feature permitted under the Contract. TAXATION OF ANNUITY PAYMENTS Nonqualified Contracts. Section 72 of the Internal Revenue Code ("Code") governs taxation of annuities. In general, under a nonqualified contract, only the portion of the Annuity Payment that represents the amount by which the expected return exceeds the "investment in the contract" will be taxed. After the "investment in the contract" is recovered, the full amount of any additional Annuity Payments is taxable. For variable Annuity Payments, the non-taxable portion of each payment is generally determined by dividing the "investment in the contract" (generally, your Purchase Payment) by the total number of expected Annuity Payments. For fixed Annuity Payments, the non-taxable portion is determined by a ratio your "investment in the contract" bears to the total dollar amount of expected Annuity Payments. Under either a variable or a fixed annuity, once the "investment in the contract" has been fully recovered, the full amount of each additional Annuity Payment is taxable. If Annuity Payments cease as a result of an Annuitant's death before full recovery of the "investment in the contract," you should consult a competent tax adviser regarding deductibility of the unrecovered amount. - ------------------------------------------------------------------------------- 6 Qualified Contracts. The taxation of Annuity Payments under a nonqualified contract described above does not apply to "qualified" contracts. Qualified contracts are contracts issued in conjunction with an Individual Retirement Annuity (IRA), a Code Section 403(b) Tax Deferred Annuity, a Code Section 457 deferred compensation plan or a Code Section 401(a) or 401(k) pension or profit sharing plan. Generally, the entire Annuity Payment received is taxable. Any portion of the Annuity Payment attributable to after-tax employee contributions to the plan is not taxable. Any portion of an Annuity Payment that is an "eligible rollover distribution" and that is properly rolled over to another plan of the same type or to an IRA also is not taxable. An Annuity Payment made in connection with a Section 403(b) Tax Deferred Annuity or a Section 401(a) or 401(k) pension or profit-sharing plan can be an "eligible rollover distribution" only if made under a Period Certain Annuity having a period of less than ten years and only to the extent that the Annuity Payment (1) is not attributable to after-tax contributions or (2) is not a required minimum distribution under Code Section 401(a)(9). If any portion of an eligible rollover distribution is paid to the employee, the Company is required to withhold 20% of that amount as federal income tax withholding. TAXATION OF WITHDRAWALS If the Commuted Value of all or any portion of the Guaranteed Payments is withdrawn or distributed as a death benefit, the amount received will be taxed as "an amount not received as an annuity." Nonqualified Contracts. If received under a nonqualified contract, the Commuted Value is generally includable in gross income to the extent that there is income on the contract. Income on the contract means the excess of the Commuted Value of the contract (determined without regard to any withdrawal charge) immediately before the amount is received over the investment in the contract at such time. Qualified Contracts. Generally, any distribution under a qualified contract is fully taxable upon receipt. If the distribution is made in connection with a Section 403(b) Tax Deferred Annuity or a Section 401(a) pension or profit sharing plan, it may not be taxable if attributable to after-tax contributions or if the distribution is an "eligible rollover distribution" (as defined above) that is properly rolled over to another contract or plan of the same type or to an IRA. DISTRIBUTIONS - TAX-DEFERRED ANNUITIES The Code limits the distribution of amounts contributed on or after January 1, 1989 under a salary reduction agreement to a Section 403(b) Tax Deferred Annuity. In general, such distributions can only be made if the participant has attained age 59 1/2, separates from service, dies or becomes disabled (as defined in the Code). TAX PENALTY The Code provides that any amount received under a qualified or nonqualified annuity contract may be subject to a premature distribution penalty equal to 10% of the amount that is includable in income. Because some of the exceptions to the 10% penalty discussed below require that the payment or distribution be part of a series of "substantially equal periodic payments," your selection of an increasing annuity or receipt of the Commuted Value may be subject to the 10% penalty unless one of the other exceptions applies. You should consult with a tax adviser to determine how this will affect your tax liability. Nonqualified Contracts. There is an except-ion to the tax penalty for nonqualified contracts if the payment is made under an immediate annuity contract. An immediate annuity is defined as a contract that (1) is purchased with a single premium, (2) has an annuity starting date no later than one year from the date of purchase, and (3) provides for a series of substantially equal periodic payments to be made no less frequently than annually over the annuity period. However, the IRS has ruled that where an immediate annuity contract is received in exchange for a deferred annuity contract pursuant to a Section 1035 exchange, the immediate annuity contract does not qualify for this exception to the 10% penalty. In addition to the immediate annuity exception, the 10% penalty also does not apply to (1) payments made on or after the date the taxpayer becomes age 59 1/2>, (2) any payment attributable to the taxpayer becoming disabled (as defined by the Code), (3) any payment made on or after the death of the Contract Holder, or (4) any payment which is part of a series of - ------------------------------------------------------------------------------- 7 substantially equal periodic payments made at least annually for the life or life expectancy of the taxpayer or the joint lives or joint life expectancies of the taxpayer and his designated Beneficiary. (Modification of the series of payments prior to the later of age 59 1/2 or 5 years may result in an additional tax in the year of modification equal to the penalty which would have been imposed, plus interest, if the exception had not applied.) Qualified Contracts. The 10% penalty may apply to amounts received under a qualified contract, other than a contract issued in conjunction with a Section 457 deferred compensation plan. The 10% penalty does not apply to distributions that are (1) made on or after the date the employee attains age 59 1/2, (2) made to a Beneficiary on or after the death of the employee, (3) attributable to the employee's disability (as defined by the Code), (4) made to an employee after separation from service after age 55 (not applicable to an IRA), or (5) part of a series of substantially equal periodic payments made at least annually for the life or life expectancy of the employee or the joint lives or joint life expectancies of the employee and a designated Beneficiary. (Modification of the series of payments prior to the later of age 59 1/2 or 5 years may result in an additional tax in the year of modification equal to the penalty which would have been imposed, plus interest, if the exception had not applied.) NONNATURAL OWNERS If a nonqualified contract is owned by a person who is not a natural person, the contract is not treated as an annuity contract for income tax purposes and the "income on the contract" for the taxable year is currently taxable as ordinary income. This rule does not apply to an immediate annuity, which is defined in the same way as for 10% penalty purposes. (See "Tax Penalty" above.) Therefore, if you elect an increasing annuity or elect to receive the Commuted Value, you should consult with a tax adviser to determine how this will affect your tax liability. This rule also does not apply to a trust or other entity which holds the contract solely as an agent for a natural person (other than an employer which holds for the benefit of employees). The rule also does not apply to qualified contracts (other than a contract held in connection with a Section 457 deferred compensation plan). A tax-exempt organization should consult with its tax adviser regarding treatment of "income on the contract" for purposes of the unrelated business income tax. 7. WITHDRAWALS - ACCESS TO YOUR MONEY =============================================================================== COMMUTATION If you elect a Period Certain Annuity, you may elect to receive the Commuted Value of all or a portion of the Guaranteed Payments, less any applicable withdrawal charge. Commuted Value means the present value of any remaining Guaranteed Payments which have not yet been paid under the Contract. If a portion of the Guaranteed Payments under a variable Period Certain Annuity is commuted, the remaining Annuity Payments will be reduced pro rata from all of the Subaccounts unless you designate otherwise Commutations may be subject to a withdrawal charge as described in Section 5 "Charges and Deductions." COMMUTED VALUE Under the Period Certain Annuity, the Commuted Value is equal to the present value of the remaining Guaranteed Payments calculated using the Assumed Annual Net Return Rate stated in the Contract. All Commuted Values will be determined as of the Valuation Date next following the date on which a written request for Commutation is received in good order by the Company at its Home Office. 8. PERFORMANCE =============================================================================== The Company may illustrate the hypothetical values of Annuity Payments made from each of the Subaccounts during the time periods shown based on the historical net asset values of the Funds. These numbers reflect the mortality and expense risk charge, as well as the advisory fees and other expenses of the - ------------------------------------------------------------------------------- 8 Funds. Please see the Appendix to the Profile for values for the period ending __________. The Company may advertise certain ratings, rankings or other information related to the Company, the Subaccounts or the Funds. Further details regarding performance reporting are described in the Separate Account's Statement of Additional Information. 9. DEATH BENEFIT =============================================================================== The following describes the death benefit provision applicable to variable Annuity Payments under the Contract. For information on the death benefit provision applicable to the fixed dollar option under the Contract, please refer to Appendix A. A death benefit may be payable if your Contract is issued under (i) a Single Life Annuity with Guaranteed Payments (Option 2), (ii) a Joint and Full Survivor Annuity with Guaranteed Payments (Option 4), or (iii) a Period Certain Annuity (Option 6). The death benefit is payable upon the death of the Annuitant, or the death of the survivor if there is a Joint Annuitant. If the Annuitant dies, or if the survivor under a Joint Annuity Option dies, any remaining Guaranteed Payments will be paid to the Beneficiary in the form specified in the Contract. Such payments will be paid at least as rapidly as under the method of distribution then in effect. Under Options 2 and 4, the Beneficiary may elect, within six months of such death, to receive the Commuted Value of any remaining Guaranteed Payments. Under Option 6, the Beneficiary may make such election at any time. No withdrawal charge will apply to the Commuted Value of the death benefit. If the Contract Holder who is not the Annuitant dies, Annuity Payments will continue to be paid to the Payee in the form specified in the Contract. If no Payee survives the death of the Contract Holder, Annuity Payments will be made to the Annuitant. Such payments will be paid at least as rapidly as under the method of distribution then in effect. DEATH BENEFIT COMMUTATION The Commuted Value under this death benefit provision will be determined on the next Valuation Date after the Company receives acceptable proof of death and a request for payment in good order at its Home Office. The Commuted Value is equal to the present value of any remaining Guaranteed Payments calculated using the Assumed Annual Net Return Rate stated in the Contract. 10. OTHER INFORMATION =============================================================================== THE COMPANY Aetna Life Insurance and Annuity Company (the "Company") is a stock life insurance company organized in 1976 under the insurance laws of the State of Connecticut. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company, an Arkansas life insurance company organized in 1954). The Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc., and an indirect wholly owned subsidiary of Aetna Inc. The Company is engaged in the business of issuing life insurance policies and variable annuity contracts in all states of the United States. The Company's principal executive offices are located at 151 Farmington Avenue, Hartford, Connecticut 06156. THE SEPARATE ACCOUNT The Company has established a separate account, Variable Annuity Account B, for the purpose of funding its variable annuity contracts. The Board of Directors of the Company adopted a resolution in 1976 to establish the Separate Account under Connecticut insurance law. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940, and meets the - ------------------------------------------------------------------------------- 9 definition of "separate account" under the federal securities laws. Although the Company holds title to the assets of the Separate Account, such assets are not chargeable with liabilities of any other business conducted by the Company. Income, gains or losses of the Separate Account are credited to or charged against the assets of the Separate Account without regard to other income, gains or losses of the Company. All obligations arising under the Contracts are general corporate obligations of the Company. DISTRIBUTION The Company acts as the Principal Underwriter for the securities sold by this Prospectus, and as the distributor of the Contracts. Compensation will be paid to broker-dealers who sell the Contracts. Broker-dealers will be paid commissions of up to 3.5% of the Purchase Payment. Under certain circumstances, such broker-dealers may also be paid additional compensation of up to 0.5%. The names of the broker-dealer and the registered representative responsible for your Contract are set forth on your application. Commissions and sales related expenses are paid by the Company and are not deducted from your Purchase Payment. To the extent that the withdrawal charge is insufficient to cover the actual costs of distribution, the Company may use any of its corporate assets, including any profit from the mortality and expense risk charge, to make up any difference. OWNERSHIP The Contract is owned by the Contract Holder (You). You have all title to the Contract, as well as all rights to amounts held in the Contract during the lifetime of the Annuitant, and the Joint Annuitant (if applicable). Any choices selected under the Contract must be made by you in writing, unless otherwise allowed by the Company. Until we receive amendments to any such choices, we will rely on any previous choices made. Ownership of the Contract may be changed to the extent permitted by law. You should immediately notify the Company, in writing, of any change in ownership. No such ownership change will be binding until such notification is received and recorded by the Company at its Home Office. BENEFICIARY If the Contract provides for any Guaranteed Payments following the death of the Annuitant and the Joint Annuitant (if applicable), you have the right to name a Beneficiary. The Beneficiary is the person entitled to receive any death benefit proceeds. The Company will pay any death benefit proceeds based on the last written Beneficiary designation on file at its Home Office as of the date of death. Changes in Beneficiary Designations. The designated Beneficiary may be changed at any time during the lifetime of the Annuitant and the Joint Annuitant (if applicable). Such change must be submitted to the Company in writing, and will not become effective until written notice of the change is received by the Company. Some restrictions may apply to Beneficiary changes under qualified contracts. DELAY OR SUSPENSION OF PAYMENTS The Company reserves the right to suspend or postpone the date of payment for any benefit or values (a) on any Valuation Date on which the New York Stock Exchange ("Exchange") is closed (other than customary weekend and holiday closings) or when trading on the Exchange is restricted; (b) when an emergency exists, as determined by the SEC, so that disposal of securities held in the Subaccounts is not reasonably practicable or is not reasonably practicable for the value of the Subaccount's assets; or (c) during such other periods as the SEC may by order permit for the protection of investors. The conditions under which restricted trading or an emergency exists shall be determined by the rules and regulations of the SEC. VOTING RIGHTS The Company is the legal owner of the shares of the Funds. However, we believe that when a Fund solicits proxies in conjunction with a vote of shareholders, we are required to obtain from you and other owners instructions as to how to vote those shares. When we receive those instructions, we will vote all of the shares we own in proportion to those instructions. This will also include any shares that the Company owns on its own behalf. Should we determine that we are no longer required to comply 10 with the above, we will vote the shares in our own right. MODIFICATION OF THE CONTRACT The Company reserves the right to modify the Contract to meet the requirements of state or federal laws or regulations. The Company will notify you in writing of any changes. FINANCIAL STATEMENTS [The consolidated financial statements of the Company and of the Separate Account have been included in the Statement of Additional Information.] (NOTE: Financial statements will be filed in an Amendment to the Registration Statement.) 11 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ================================================================= General Information and History Variable Annuity Account B Offering and Purchase of Contract Annuity Payments Sales Material and Advertising Independent Auditors Financial Statements of the Separate Account Financial Statements of the Company APPENDIX A THE FIXED DOLLAR OPTION ================================================================================ The following summarizes material information concerning the fixed dollar option. Amounts allocated to the fixed dollar option are held in the Company's general account that supports general insurance and annuity obligations. Interests in the fixed dollar option have not been registered with the SEC in reliance upon exemptions under the Securities Act of 1933, as amended. Disclosure in the Prospectus regarding the fixed dollar option may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of such statements. Disclosure in this Appendix regarding the fixed dollar option has not been reviewed by the SEC. 1. THE FIXED DOLLAR OPTION In addition to allocating your Purchase Payment to the Subaccounts described in the Prospectus, you may choose to allocate all or a portion of your Purchase Payment to the fixed dollar option. If you choose the fixed dollar option, your Annuity Payments will remain fixed as specified in your Contract over the term of the Contract unless you elect an Increasing Annuity. There is no right of Commutation for Annuity Payments supported by the fixed dollar option under any Lifetime Annuity Option. you may purchase a right of Commutation for Annuity Payments supported by the fixed dollar option under a Period Certain Annuity. The right of Commutation is described in Section 4 below. 2. ANNUITY OPTIONS All of the Annuity Options described in Section 2 of the Prospectus are available for the fixed dollar option. If you allocate all or a portion of your Purchase Payment to a fixed dollar option, you may also elect one of the following features in connection with the portion of your Annuity Payments that are derived from the fixed dollar option: (a) a Cash Refund feature that offers a death benefit in connection with certain Lifetime Annuity Options. If the Annuitant dies, or the survivor dies if there is a Joint Annuitant, the Beneficiary will receive a lump sum payment equal to the Net Purchase Payment allocated to the fixed dollar option less the total amount of fixed annuity payments paid prior to such death. The Cash Refund feature may be elected only with a Single Life Annuity (Option 1) or a Joint and Full Survivor Annuity (Option 3) that has no reduction in payment to the survivor. (b) an Increasing Annuity under which the Annuity Payments supported by the fixed dollar option will increase by a stated percentage compounded annually. You must elect 1, 2 or 3% as the stated percentage. The feature is not available under Contracts purchased in conjunction with Section 457 deferred compensation plans. Annuity Payments. The amount of each Annuity Payment depends on (1) the Net Purchase Payment you allocate to the fixed dollar option, and (2) the Annuity Option and features chosen. 3. CHARGES AND DEDUCTIONS If you have elected a Period Certain Annuity and have purchased a right of Commutation, a withdrawal charge may apply to any Commuted Value you receive. This charge is, in effect, a deferred sales charge. It is imposed upon any Commutation of a Period Certain Annuity before the last Guaranteed Payment is made, and while the Annuitant is living. The amount paid upon Commutation is equal to the Commuted Value minus the applicable withdrawal charge. This charge is imposed to reimburse the Company for unrecovered acquisition and distribution costs. 13 The following sets forth the schedule for the calculation of the withdrawal charge. Withdrawal Charge Number of years from Percentage of Contract Effective Date Commuted Value ----------------------- -------------- 1 or more, but fewer than 2 5% 2 or more, but fewer than 3 4% 3 or more, but fewer than 4 4% 4 or more, but fewer than 5 3% 5 or more, but fewer than 6 2% 6 or more, but fewer than 7 1% 7 or more 0% Reduction or Elimination of the Withdrawal Charge. We may reduce or eliminate the withdrawal charge when sales of the Contract are made to individuals or a group of individuals in such a manner that results in savings of sales expenses. The entitlement to such a reduction in the withdrawal charge will be based on the following criteria: (a) the size and type of group of individuals to whom the Contract is offered; or (b) whether there is a prior or existing relationship with the Company such as being an employee of the Company or one of its affiliates, receiving distributions or making internal transfers from other Contracts issued by the Company or one of its affiliates, or making transfers of amounts held under qualified plans sponsored by the Company or an affiliate. Any reduction or elimination of the withdrawal charge will not be unfairly discriminatory against any person. 4. WITHDRAWALS - ACCESS TO YOUR MONEY Commutation. If you elect a fixed Period Certain Annuity with a right of Commutation, you may elect to receive the Commuted Value of all or a portion of the remaining Guaranteed Payments, less any applicable withdrawal charge. Such Commutations may be elected once each calendar year. No Commutations are allowed from a fixed dollar option in the first Contract year. In subsequent contract years, full or partial Commutations are allowed, provided that under a partial Commutation the remaining Annuity Payments would equal $50 or more. If a portion of the Guaranteed Payments is commuted, the remaining Annuity Payments will be reduced proportionately. Commutations are subject to a withdrawal charge. Commuted Value. Under a fixed Period Certain Annuity, the Commuted Value is equal to the present value of the remaining Guaranteed Payments calculated using the adjusted contract rate. The adjusted contract rate equals: (Rate of Return ) + CY - IY where: o Rate of Return is the Fixed Annuity Present Value Interest Rate shown in the Contract; o CY is the Commutation Yield; and o IY is the Issue Yield. CY is determined as follows: (1) CY is the average of the yields, as published in the Wall Street Journal on the Friday before the date of Commutation, of the three (or more if the Company deems necessary) noncallable, noninflation adjusted Treasury Notes or Bonds maturing on or closest to the Commutation Duration Date. (2) The Commutation Duration Date is the date (month and year) obtained when the Commutation duration is added to the date of Commutation. (3) Commutation Duration equals 1 plus the number of whole years from the date of Commutation until the final Guaranteed Payment is due, divided by 2. Any resulting fraction will be rounded up to the next whole number. IY is determined as follows: (1) IY is the average of the yields, as published in the Wall Street Journal on the Friday before the contract effective date, of the three (or more if the Company deems necessary) noncallable, noninflation adjusted Treasury Notes or Bonds maturing on or closest to the Issue Duration Date. (2) The Issue Duration Date (month and year) is obtained when the Issue Duration is added to the Contract Effective Date. 14 (3) Issue Duration equals 1 plus the number of whole years from issue until the final payment is due, divided by 2. Any resulting fraction will be rounded up to the next whole number. 5. DEATH BENEFIT The death benefit is payable upon the death of the Annuitant, or the death of the survivor if there is a Joint Annuitant, and if there are remaining Guaranteed Payments. Any remaining Guaranteed Payments will be paid to the Beneficiary in the form specified in the Contract. Such payments will be paid at least as rapidly as under the method of distribution then in effect. Within six months of such death, the Beneficiary may elect to receive the Commuted Value of any remaining Guaranteed Payments. However, under a Period Certain Annuity where you have purchased a right of Commutation, the Beneficiary may make such election at any time. No withdrawal charge will apply to the Commuted Value of the death benefit. If a Cash Refund feature is elected, the death benefit is payable in one sum to the Beneficiary. If the Contract Holder who is not the Annuitant dies, Annuity Payments will continue to be paid to the Payee in the form specified in the Contract. If no Payee survives the death of the Contract Holder, Annuity Payments will be made to the Annuitant. Such payments will be paid at least as rapidly as under the method of distribution then in effect. Death Benefit Commutation. The Commuted Value of the death benefit will be determined as of the Valuation Date next following the Company's receipt at its Home Office of proof of death acceptable to the Company and a request for payment in good order. If the Contract is issued as a Period Certain Annuity with a right of Commutation, the Commuted Value will be determined as described in Section 4 above. If the Contract is issued as a Life Annuity with Guaranteed Payments or a Period Certain where you have not purchased a right of Commutation, the rate used to determined the Commuted Value of the remaining Guaranteed Payments will be the Fixed Annuity Present Value Interest Rate shown in the Contract. 15 - ------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY COMPANY - ------------------------------------------------------------------------------- Statement of Additional Information dated ___________, 1996 Individual Fixed and Variable Single Premium Immediate Annuity Contracts This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus for Variable Annuity Account B (the "Separate Account") dated ___________, 1996. A free prospectus is available upon request from the local Aetna Life Insurance and Annuity Company office or by writing to or calling: Aetna Life Insurance and Annuity Company Attn: ARS Settlements 151 Farmington Avenue Hartford, Connecticut 06156 1-800-238-6273 Read the prospectus before you invest. Terms used in this Statement of Additional Information shall have the same meaning as in the Prospectus. TABLE OF CONTENTS Page ---- General Information and History........................................... 2 Variable Annuity Account B................................................ 2 Offering and Purchase of Contracts........................................ 3 Annuity Paymets........................................................... 3 Sales Material and Advertising............................................ 4 Independent Auditors...................................................... 5 Financial Statements of the Separate Accout............................... S-1 Financial Statements of Aetna Life Insurance and Annuity Company.......... F-1 GENERAL INFORMATION AND HISTORY Aetna Life Insurance and Annuity Company (the "Company") is a stock life insurance company which was organized under the insurance laws of the State of Connecticut in 1976. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in 1954). As of December 31, 1995, the Company had assets of $27.1 billion (subject to $25.5 billion of customer and other liabilities, $1.6 billion of shareholder equity) which includes $11 billion in assets held in the Company's separate accounts. The Company had $22 billion in assets under management, including $8 billion in its mutual funds. As of December 31, 1994, it ranked among the top 2% of all U.S. life insurance companies by size. The Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc., which is in turn a wholly owned subsidiary of Aetna Retirement Services, Inc., and an indirect wholly owned subsidiary of Aetna Inc. The Company is engaged in the business of issuing life insurance policies and annuity contracts in all states of the United States. The Company's Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. In addition to serving as the principal underwriter and the depositor for the Separate Account, the Company is also a registered investment adviser under the Investment Advisers Act of 1940, and a registered broker-dealer under the Securities Exchange Act of 1934. The Company provides investment advice to several of the registered management investment companies offered as variable investment options under the Contracts funded by the Separate Account (see "Variable Annuity Account B" below). Other than the mortality and expense risk charge described in the Prospectus, all expenses incurred in the operations of the Separate Account are borne by the Company. (See "Charges and Deductions" in the Prospectus.) The Company receives reimbursement for certain administrative costs from some unaffiliated sponsors of the Funds used as funding options under the Contract. These fees generally range up to 0.25%. The assets of the Separate Account are held by the Company. The Separate Account has no custodian. However, the Funds in whose shares the assets of the Separate Account are invested each have custodians, as discussed in their respective prospectuses. VARIABLE ANNUITY ACCOUNT B Variable Annuity Account B (the "Separate Account") is a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940, as amended. The assets of each of the Subaccounts of the Separate Account will be invested exclusively in shares of the mutual funds described in the Prospectus. Purchase Payments made under the Contract may be allocated to one or more of the Subaccounts. The Company may make additions to or deletions from available investment options as permitted by law. The availability of the Funds is subject to applicable regulatory authorization. Not all Funds are available in all jurisdictions, under all Contracts, or under all Plans. The Funds currently available under the Contract are as follows: Aetna Variable Fund Alger American Small Cap Portfolio Aetna Income Shares Janus Aspen Growth Portfolio Aetna Investment Advisers Fund, Inc. Janus Aspen Worldwide Growth Portfolio Aetna Legacy Variable Portfolio Neuberger & Berman Growth Portfolio 2 Complete descriptions of each of the Funds, including their investment objectives, policies, risks and fees and expenses, are contained in the prospectuses and statements of additional information for each of the Funds. OFFERING AND PURCHASE OF CONTRACTS The Company is both the depositor and the principal underwriter for the securities sold by the prospectus. The Company offers the Contracts through life insurance agents licensed to sell variable annuities who are registered representatives of the Company or of other registered broker-dealers who have sales agreements with the Company. The offering of the Contracts is continuous. A description of the manner in which Contracts are purchased is in the prospectus. ANNUITY PAYMENTS Your variable Annuity Payment will fluctuate as the Annuity Unit value(s) fluctuates with the investment experience of the selected Subaccount(s). The first payment and subsequent payments also vary depending on the assumed net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a higher first payment, but Annuity Payments will increase thereafter only to the extent that the net investment rate increases by more than 5% on an annual basis. Annuity Payments would decline if the rate failed to increase by 5%. Use of the 3.5% assumed rate causes a lower first payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the net investment rate. A fixed number of Annuity Units is determined in each of the designated Subaccounts on the Contract Effective Date. The number of Annuity Units, which does not change thereafter, is calculated by dividing (a) by (b), where (a) is the amount of the Annuity Payment as if the Annuity Payment was calculated as of the Contract Effective Date, and (b) is the Annuity Unit value for that investment option on the Contract Effective Date. The first payment will be calculated ten Valuation Dates prior to the payment due date which depends upon the payment frequency you have selected. As noted above, Annuity Unit values fluctuate from one Valuation Date to the next; such fluctuations reflect changes in the net investment factor for the applicable Subaccount(s) (with a ten Valuation Date lag which gives the Company time to process Annuity Payments) and a mathematical adjustment which offsets the assumed net investment rate of 3.5% or 5% per annum. The operation of all these factors can be illustrated by the following hypothetical example. These procedures will be performed separately for each Subaccount selected. EXAMPLE: Assume that you purchase a Single Premium Immediate Annuity Contract with a $50,000 premium. The payment option that you select has a payment factor of $6.68 per $1,000 of value applied. Also assume that no premium tax is payable. If a payment was determined as of the Contract Effective Date, that payment would be calculated by multiplying $6.68 per $1,000 by 50.000. This would produce an initial payment of $334.00. Assume that the value of the Annuity Unit on the Contract Effective Date is 13.400000. The payment calculated as of the Contract Effective Date is divided by the Annuity Unit value to 3 determine the number of Annuity Units (that is, $334.00/13.400000 = 24.925 Annuity Units). The number of Annuity Units will remain constant over the term of your contract as determined by your annuity option. The value of each payment will be determined on the tenth Valuation Date prior to the payment due date by multiplying the number of Annuity Units by that date's Annuity Unit value. Payments will subsequently fluctuate depending upon the net investment performance that occurs between payment Valuation Dates less a factor that represents the Assumed Annual Net Return Rate. This offsets the Assumed Annual Net Return Rate built into the number of Annuity Units determined above. Annuity Unit Values are calculated on a daily basis by multiplying the Annuity Unit Value by the daily net investment factor and by the daily Assumed Annual Net Return Rate. The factor for a 3.5% Assumed Annual Net Return Rate is 0.9999058 and for 5.0%, 0.9998663. The new payment is calculated by multiplying the number of Annuity Units by the new Annuity Unit Value. SALES MATERIAL AND ADVERTISING The Company may include hypothetical illustrations in its sales literature that explain the mathematical principles of dollar cost averaging, compounded interest, tax deferred accumulation, and the mechanics of variable annuity contracts. The Company may also discuss the difference between variable annuity contracts and other types of savings or investment products, including, but not limited to, personal savings accounts and certificates of deposit. We may distribute sales literature that compares the percentage change in Accumulation Unit values for any of the Subaccounts to established market indices such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average or to the percentage change in values of other management investment companies that have investment objectives similar to the Subaccount being compared. We may publish in advertisements and reports, the ratings and other information assigned to us by one or more independent rating organizations such as A.M. Best Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors Services, Inc. The purpose of the ratings is to reflect our financial strength and/or claims-paying ability. We may also quote ranking services such as Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable Insurance Products Performance Analysis Service (VIPPAS), which rank variable annuity or life Subaccounts or their underlying funds by performance and/or investment objective. From time to time, we will quote articles from newspapers and magazines or other publications or reports, including, but not limited to The Wall Street Journal, Money magazine, USA Today and The VARDS Report. The Company may provide in advertising, sales literature, periodic publications or other materials information on various topics of interest to current and prospective Contract Holders or Participants. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing), the advantages and disadvantages of investing in tax-deferred and taxable investments, customer profiles and hypothetical purchase and investment scenarios, financial management and tax and retirement planning, and investment alternatives to certificates of deposit and other financial instruments, including comparison between the Contracts and the characteristics of and market for such financial instruments. 4 INDEPENDENT AUDITORS KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the independent auditors for the Separate Account and for the Company. The services provided to the Separate Account include primarily the examination of the Separate Account's financial statements and the review of filings made with the SEC. 5 FINANCIAL STATEMENTS VARIABLE ANNUITY ACCOUNT B and AETNA LIFE INSURANCE AND ANNUITY COMPANY TO BE FILED IN A SUBSEQUENT AMENDMENT TO THE REGISTRATION STATEMENT S-1 STATEMENT OF ADDITIONAL INFORMATION VARIABLE ANNUITY ACCOUNT B VARIABLE ANNUITY CONTRACTS issued by AETNA LIFE INSURANCE AND ANNUITY COMPANY Form No.______(S) ALIAC Ed.______1996 VARIABLE ANNUITY ACCOUNT B PART C - OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: (1) Included in Part A: Not applicable (2) Included in Part B: Financial Statements of Variable Annuity Account B: - Independent Auditors' Report - Statement of Assets and Liabilities as of December 31, 1995 - Statement of Operations for the year ended December 31, 1995 - Statements of Changes in Net Assets for the years ended December 31, 1995 and 1994 - Notes to Financial Statements Financial Statements of the Depositor: - Independent Auditors' Report - Consolidated Statements of Income for the years ended December 31, 1995, 1994 and 1993 - Consolidated Balance Sheets as of December 31, 1995 and 1994 - Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 1995, 1994 and 1993 - Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993 - Notes to Consolidated Financial Statements (b) Exhibits (1) Resolution of the Board of Directors of Aetna Life Insurance and Annuity Company establishing Variable Annuity Account B(1) (2) Not applicable (3.1) Form of Broker-Dealer Agreement(2) (3.2) Alternative Form of Wholesaling Agreement and Related Selling Agreement(2) (4) Form of Variable Annuity Contracts (A050SP96) (5) Form of Variable Annuity Contract Application (82926(7/96)) (6) Certificate of Incorporation and By-Laws of Depositor(3) (7) Not applicable (8.1) Fund Participation Agreement(Amended and Restated) between Aetna Life Insurance and Annuity Company, Alger American Fund and Fred Alger Management, Inc. dated March 31, 1995(2) (8.2) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Janus Aspen Series dated April 19, 1994 and amended March 1, 1996(2) (8.3) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Advisers Management Trust (now Neuberger & Berman Advisers Management Trust) dated April 14, 1989 and as assigned and modified on May 1, 1995(2) (9) Opinion of Counsel* (10.1) Consent of Independent Auditors* (10.2) Consent of Counsel (included in Exhibit 24(b)(9))* (11) Not applicable (12) Not applicable (13) Not applicable (14) Financial Data Schedule* (15.1)Powers of Attorney (See signature page) (15.2) Authorization for Signatures(2) * To be filed by Amendment. 1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75986), as filed electronically on April 22, 1996. 2. Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed electronically on April 12, 1996. 3. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form S-1 (File No. 33-60477), as filed electronically on April 15, 1996. Item 25. Directors and Officers of the Depositor Name and Principal Business Address* Positions and Offices with Depositor - ------------------ ------------------------------------ Daniel P. Kearney Director and President Timothy A. Holt Director, Senior Vice President and Chief Financial Officer Christopher J. Burns Director and Senior Vice President Laura R. Estes Director and Senior Vice President Gail P. Johnson Director and Vice President John Y. Kim Director and Senior Vice President Shaun P. Mathews Director and Vice President Glen Salow Director and Vice President Creed R. Terry Director and Vice President Deborah Koltenuk Vice President and Treasurer, Corporate Controller Zoe Baird Senior Vice President and General Counsel Diane Horn Vice President and Chief Compliance Officer Susan E. Schechter Corporate Secretary and Counsel * The principal business address of all directors and officers listed is 151 Farmington Avenue, Hartford, Connecticut 06156. Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant Incorporated by reference to Item 26 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4 (File No. 333-01107), as filed electronically on August 2, 1996. Item 27. Number of Contract Owners As of May 31, 1996, there were 38,720 individual holders of interests in variable annuity contracts funded through Variable Annuity Account B. Item 28. Indemnification Reference is hereby made to Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding indemnification of directors and officers of Connecticut corporations. The statute provides in general that Connecticut corporations shall indemnify their officers, directors, employees, agents, and certain other defined individuals against judgments, fines, penalties, amounts paid in settlement and reasonable expenses actually incurred in connection with proceedings against the corporation. The corporation's obligation to provide such indemnification does not apply unless (1) the individual is successful on the merits in the defense of any such proceeding; or (2) a determination is made (by a majority of the board of directors not a party to the proceeding by written consent; by independent legal counsel selected by a majority of the directors not involved in the proceeding; or by a majority of the shareholders not involved in the proceeding) that the individual acted in good faith and in the best interests of the corporation; or (3) the court, upon application by the individual, determines in view of all the circumstances that such person is reasonably entitled to be indemnified. C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut corporation cannot indemnify a director or officer to an extent either greater or less than that authorized by the statute, e.g., pursuant to its certificate of incorporation, bylaws, or any separate contractual arrangement. However, the statute does specifically authorize a corporation to procure indemnification insurance to provide greater indemnification rights. The premiums for such insurance may be shared with the insured individuals on an agreed basis. Consistent with the statute, Aetna Life and Casualty Company 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, which supplements the indemnification rights provided by C.G.S. Section 33-320a to the extent such coverage does not violate public policy. Item 29. Principal Underwriter (a)In addition to serving as the principal underwriter for the Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also acts as the principal underwriter for Variable Life Account B and Variable Annuity Accounts C and G (separate accounts of ALIAC registered as unit investment trusts), and Variable Annuity Account I (a separate account of Aetna Insurance Company of America registered as a unit investment trust). Additionally, ALIAC is the investment adviser for Aetna Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna GET Fund, Aetna Series Fund, Inc. and Aetna Generation Portfolios, Inc. ALIAC is also the depositor of Variable Life Account B and Variable Annuity Accounts C and G. (b) See Item 25 regarding the Depositor. (c) Compensation as of December 31, 1995: (1) (2) (3) (4) (5) Name of Net Underwriting Compensation Principal Discounts and on Redemption Brokerage Underwriter Commissions or Annuitization Commissions Compensation* - ----------- ---------------- ---------------- ----------- ------------- Aetna Life $294,931 $11,944,532 Insurance and Annuity Company * Compensation shown in column 5 includes deductions for mortality and expense risk guarantees and contract charges assessed to cover costs incurred in the sales and administration of the contracts issued under Variable Annuity Account B. Item 30. Location of Accounts and Records All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the Rules under it relating to the securities described in and issued under this Registration Statement are located at the home office of the Depositor as follows: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 Item 31. Management Services Not applicable Item 32. Undertakings Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement on Form N-4 as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for as long as payments under the variable annuity contracts may be accepted; (b) to include as part of any application to purchase a contract offered by a prospectus which is part of this registration statement on Form N-4, a space that an applicant can check to request a Statement of Additional Information; and (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form N-4 promptly upon written or oral request. (d) Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and Annuity Company, has duly caused this Registration Statement to be signed on its behalf in the City of Hartford, State of Connecticut, on the 31st day of July, 1996. VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY COMPANY (Registrant) By: AETNA LIFE INSURANCE AND ANNUITY COMPANY (Depositor) By: /s/ Daniel P. Kearney ------------------------------------------- Daniel P. Kearney President As required by the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby constitutes Susan E. Bryant, Kirk P. Wickman, and Julie E. Rockmore and each of them individually, such person's true and lawful attorneys, and agents with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign for such person and in such person's name and capacity indicated below, any and all amendments to this Registration Statement, hereby ratifying and confirming such person's signatures as it may be signed by said attorneys to any and all amendments. Signature Title Date - --------- ----- ---- /s/ Daniel P. Kearney Director and President ) - ---------------------- (principal executive officer) ) Daniel P. Kearney ) ) /s/ Timothy A. Holt Director and Chief Financial ) - ---------------------- Officer ) Timothy A. Holt ) ) ) /s/ Christopher J. Burns Director ) - ---------------------- ) Christopher J. Burns ) July 31, 1996 ) ) /s/ Laura R. Estes Director ) - ---------------------- ) Laura R. Estes ) ) /s/ Gail P. Johnson Director ) - ---------------------- ) Gail P. Johnson ) ) /s/ John Y. Kim Director ) - ---------------------- ) John Y. Kim ) ) /s/ Shaun P. Mathews Director ) - ---------------------- ) Shaun P. Mathews ) ) /s/ Glen Salow Director ) - ---------------------- ) Glen Salow ) ) /s/ Creed R. Terry Director ) - ---------------------- ) Creed R. Terry ) ) /s/ Deborah Koltenuk Vice President and Treasurer, ) - ----------------------- Corporate Controller ) Deborah Koltenuk ) ) VARIABLE ANNUITY ACCOUNT B EXHIBIT INDEX Exhibit No. Exhibit Page - ---------- ------- ---- 99-B.1 Resolution of the Board of Directors of Aetna Life * Insurance and Annuity Company establishing Variable Annuity Account B 99-B.3.1 Form of Broker-Dealer Agreement * 99-B.3.2 Alternative Form of Wholesaling Agreement and * Related Selling Agreement 99-B.4 Form of Variable Annuity Contracts (A050SP96) _______ 99-B.5 Form of Variable Annuity Contract Application _______ (82826(7/96)) 99-B.6 Certificate of Incorporation and By-Laws of Depositor * 99-B.8.1 Fund Participation Agreement (Amended and Restated) * between Aetna Life Insurance and Annuity Company, Alger American Fund and Fred Alger Management, Inc. dated March 31, 1995 99-B.8.2 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company and Janus Aspen Series dated April 19, 1994 and amended March 1, 1996 99-B.8.3 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company and Advisers Management Trust (now Neuberger & Berman Advisers Management Trust) dated April 14, 1989 and as assigned and modified on May 1, 1995 99-B.9 Opinion of Counsel ** 99-B.10.1 Consent of Independent Auditors ** 99-B.10.2 Consent of Counsel (included in Exhibit 99-B.9) ** *Incorporated by reference **To be filed by Amendment Exhibit No. Exhibit Page - ---------- ------- ---- 99-B.15.1 Powers of Attorney (included on signature page of * this Registration Statement) 99-B.15.2 Authorization for Signatures * 27 Financial Data Schedule ** *Incorporated by reference **To be filed by Amendment EX-99.B4 2 CONTRACT [Aetna logo] ---------------------------------------- Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 (800) 238-6273 A Stock Company Aetna Life Insurance and Annuity Company, herein called Aetna, agrees to pay the benefits stated in this contract. Individual Single Premium Immediate Fixed, Variable or Combination Annuity Contract (Nonparticipating) Right to Cancel - ------------------------------------------------------------------------------- THE CONTRACT HOLDER MAY CANCEL THIS CONTRACT WITHIN 10 DAYS OF RECEIVING IT BY RETURNING THIS CONTRACT, ALONG WITH A WRITTEN NOTICE, TO AETNA AT THE ABOVE ADDRESS OR TO THE AGENT FROM WHOM IT WAS PURCHASED. WITHIN 7 DAYS AFTER AETNA RECEIVES THE NOTICE OF CANCELLATION AND THIS CONTRACT AT ITS HOME OFFICE, AETNA WILL RETURN THE ENTIRE CONSIDERATION PAID LESS ANY PAYMENTS MADE PLUS ANY INCREASE OR MINUS ANY DECREASE IN THE CURRENT VALUE OF ANY FUNDS ALLOCATED TO THE SEPARATE ACCOUNT. Signed at the Home Office on the Effective Date. /s/ Dan Kearney /s/ Susan W. Schecter President Secretary This contract sets forth, in detail, all of the rights and obligations of both the Contract Holder and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY. This contract and any attached documents constitute the entire legal relationship between Aetna and the Contract Holder ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. A050SP96 Page 1 This page intentionally left blank. A050SP96 Page 2 Table of Contents Separate Account.......................................... 6 Charges to Separate Account............................ 6 Variable Annuity Assumed Annual Net Return Rate........ 6 Transfers................................................. 6 Commutation............................................... 6 Commutation Frequency and Amounts...................... 6 Commutation Fee........................................ 6 I. DEFINITIONS............................................ 7 1.01 Annuitant/Joint Annuitant......................... 7 1.02 Annuity........................................... 7 1.03 Beneficiary(ies).................................. 7 1.04 Contract Holder................................... 7 1.05 Fixed Annuity..................................... 7 1.06 Fund(s)........................................... 7 1.07 Guaranteed Payment................................ 7 1.08 Life Annuity...................................... 7 1.09 Payee............................................. 7 1.10 Period Certain Annuity............................ 7 1.11 Separate Account.................................. 8 1.12 Survivor.......................................... 8 1.13 Valuation Date.................................... 8 1.14 Valuation Period.................................. 8 1.15 Variable Annuity.................................. 8 II. GENERAL PROVISIONS.................................... 8 2.01 Premium........................................... 8 2.02 Payments.......................................... 8 2.03 Change of Contract................................ 8 2.04 Ownership......................................... 9 2.05 Misstatements and Adjustments..................... 9 2.06 Incontestability.................................. 9 2.07 Beneficiary Designation........................... 9 2.08 Nonparticipating Contract......................... 9 2.09 State Laws........................................ 9 III. VARIABLE ANNUITY PROVISIONS.......................... 9 3.01 Fund Annuity Units - Separate Account............. 9 3.02 Fund Annuity Unit Value........................... 9 3.03 Fund Annuity Net Return Factors.................. 10 3.04 Transfer(s)...................................... 10 3.05 Notice to the Contract Holder ................... 10 3.06 Change of Fund(s)................................ 10 IV. BENEFIT PROVISIONS................................... 11 4.01 Commutation/Partial Commutation.................. 11 4.02 Commuted Value................................... 11 4.03 Death Benefit Provision.......................... 11 A050SP96 Page 3 SPECIFICATIONS Contract Number: M2828 123123121 Contract Effective Date: September 4, 1996 Contract Holder: John F. Smith Single Premium: $5,000.00 Annuitant: John F. Smith Joint Annuitant: Sally Q. Smith Annuitant Issue Age: 53 Joint Annuitant Issue Age: 53 First Payment Date: October 4, 1996 Payment Frequency: Monthly SCHEDULE OF BENEFITS Joint and Full Survivor Annuity: Annuity payments will begin on the First Payment Date and will continue for the lives of the Annuitant and Joint Annuitant. At the death of either the Annuitant or Joint Annuitant, the payment amount will continue to be paid for the life of the Survivor. Payments cease upon the death of the Survivor. Payment Information: Payments will be made on a Fixed and Variable basis. Fixed Payment From the General Account: $xx.xx Fixed Annuity Present Value Interest Rate: 5.9% Number of Fund's Annuity Variable Funding Elections: Units per Payment Aetna Variable Fund 7.992 Janus Aspen Worldwide Growth Portfolio 10.678 Alger American Small Cap Portfolio 13.473 Variable Annuity Assumed Annual Net Return Rate: 3.5% A050SP96 Page 5 Contract Schedule Separate Account - ------------------------------------------------------------------------------- Charges to Separate Account A daily charge at an annual effective rate of [1.25%] for mortality and expense risk and profit (M & E) is deducted from any portion of the current value allocated to a Variable Annuity. A daily charge at an annual effective rate of up to [0.25%] for administration is deducted from any portion of the current value allocated to a Variable Annuity. Variable Annuity Assumed Annual Net Return Rate If a Variable Annuity is chosen, an assumed annual net return rate of [5.0%] may be elected. If [5.0%] is not elected, Aetna will use an assumed annual net return rate of [3.5%]. The daily net return rate factor for an assumed annual net return rate of [3.5%] per year is [0.9999058]. The daily net return rate factor for an assumed annual net return rate [5.0%] per year is [0.9998663]. If the portion of a Variable Annuity payment for any Fund is not to decrease, the Annuity return factor under the Separate Account for that Fund must be: a) [4.75%] on an annual basis plus an annual return of up to [0.25%] to offset the administrative charge set at the time Annuity payments commence if an assumed annual net return rate of [3.5%] is chosen; or b) [6.25%] on an annual basis plus an annual return of up to [0.25%] to offset the administrative charge set at the time Annuity payments commence, if an assumed annual net return rate of [5%] is chosen. Transfers - -------------------------------------------------------------------------------- Maximum Number of Allowable Fund Transfers: [One per Calendar Year] Commutation - ------------------------------------------------------------------------------- Commutation Frequency and Amounts Variable Annuity Commutations: Under a Variable Period Certain Annuity, commutations may be elected [once] a year. Commutation Fee [Number of Years from Commutation Fee Contract Effective Date (% of Commuted Value) Fewer than 1 7% 1 or more, but fewer than 2 6% 2 or more, but fewer than 3 5% 3 or more, but fewer than 4 4% 4 or more, but fewer than 5 3% 5 or more, but fewer than 6 2% 6 or more, but fewer than 7 1% 7 or more 0%] A050SP96 Page 6 I. DEFINITIONS - -------------------------------------------------------------------------------- 1.01 Annuitant/Joint Annuitant An individual named on the Specifications page of this contract (1) whose death terminates or adjusts the amount of life-contingent payments, and/or (2) whose death results in the payment of death benefits; a measured life. 1.02 Annuity Payment of a specified amount(s) or specified number of units made: a) On specified dates or intervals for the lifetime of one or more Annuitants with or without Guaranteed Payments; or b) On specified dates or intervals for a specified period of time. Annuity benefits payable under this contract are shown in the Schedule of Benefits on the Specifications page. 1.03 Beneficiary(ies) The person(s), named by the Contract Holder, entitled to receive death benefits, if any, under the terms of this contract. 1.04 Contract Holder The person to whom this contract is issued. Aetna reserves the right to limit ownership to natural persons. 1.05 Fixed Annuity An Annuity that is not a Variable Annuity. 1.06 Fund(s) The open-end registered management investment companies whose shares are purchased by the Separate Account to fund the benefits provided by the contract. 1.07 Guaranteed Payment A payment that is due whether or not the Annuitant, or Joint Annuitant, if applicable, is alive on the payment due date, as described in the Schedule of Benefits on the Specifications page. 1.08 Life Annuity An Annuity with payments that are based solely on whether or not the Annuitant, or Joint Annuitant, if applicable, is alive on the payment due date as described in the Schedule of Benefits on the Specifications page. 1.09 Payee A person that receives Annuity payments. The Contract Holder shall be the Payee unless the Contract Holder designates otherwise in writing. 1.10 Period Certain Annuity An Annuity with a specified number of Guaranteed Payments without a life contingency. A050SP96 Page 7 1.11 Separate Account An account, established by Aetna under Section 38a-433 of the Connecticut General Statutes, that buys and holds shares of the Fund(s) available under this contract. Income, gains or losses, realized or unrealized are credited or charged to the Separate Account without regard to other income, gains or losses of Aetna. Aetna owns the assets held in the Separate Account and is not a trustee of such amounts. Amounts in the Separate Account are not generally guaranteed and are held at market value. The assets of the Separate Account, to the extent of reserves and other contract liabilities of the Account, cannot be charged with other Aetna liabilities arising out of any other Aetna business. 1.12 Survivor With an Annuity based on the lives of an Annuitant and Joint Annuitant, the individual who is not the first to die. 1.13 Valuation Date The date and time on which a Fund Annuity Unit Value is calculated. Currently, this calculation will be determined at the close of business of the New York Stock Exchange on any normal business day, Monday through Friday, that the New York Stock Exchange is open. 1.14 Valuation Period The period of time between successive Valuation Dates. 1.15 Variable Annuity An Annuity with payments that vary with the net investment results of the Funds available under this contract. II. GENERAL PROVISIONS - ------------------------------------------------------------------------------- 2.01 Premium The amount of the premium applied to this contract will be the premium received minus a deduction for premium taxes, if any. 2.02 Payments Aetna will pay to the Payee a Fixed or Variable Annuity or a combination of the two as selected by the Contract Holder and as shown in the Schedule of Benefits on the Specifications page. Aetna discharges its obligation to pay when it makes payment by check or electronic funds transfer to the Payee's address or the bank that Aetna has on record as of 15 business days before the payment due date. We reserve the right to suspend any life-contingent payments to a Payee if acceptable proof of life of an Annuitant or Joint Annuitant is not furnished when requested. 2.03 Change of Contract Only an authorized officer of Aetna may change the terms of this contract. Aetna reserves the right to modify this contract to meet the requirements of applicable state and federal laws or regulations. Aetna will notify the Contract Holder in writing of any changes. A050SP96 Page 8 2.04 Ownership This is a contract between the Contract Holder and Aetna. The Contract Holder has title to the contract and, during the lifetime of the Annuitant, and, if applicable, Joint Annuitant, all rights to amounts held in the contract. Any choice allowed under this contract must be made by the Contract Holder in writing, unless Aetna allows otherwise. Until receipt of such choices in Aetna's home office, Aetna may rely on any previous choices made. The contract is not subject to the claims of any creditors except to the extent permitted by law. Ownership of the contract may be changed to the extent permitted by law by notifying Aetna in writing in a form acceptable to Aetna. No such ownership change is binding until such notification is received and recorded by Aetna at its home office. 2.05 Misstatements and Adjustments If the age, sex, or any relevant fact concerning any Annuitant is found to be misstated, the correct facts will be used to adjust payments. 2.06 Incontestability Aetna will not contest this contract from its effective date. 2.07 Beneficiary Designation If the contract provides for any Guaranteed Payments following the death of the Annuitant, and the Joint Annuitant if applicable, the Contract Holder has the right to name a Beneficiary(ies). The Beneficiary designation may be changed by the Contract Holder during the lifetime of the Annuitant, and, if applicable, the Joint Annuitant, by sending written notice of the change in a form acceptable to Aetna to Aetna's home office. Such change will not be effective until received and recorded by Aetna. In all cases, Aetna will pay death benefits based on the last written Beneficiary designation it has on record on the date of the death. 2.08 Nonparticipating Contract The Contract Holder or Beneficiaries do not have a right to share in the earnings of Aetna. 2.09 State Laws This contract complies with the laws of the state in which it is delivered. Annuity payments under this contract are equal to or greater than the minimum required by such laws. III. VARIABLE ANNUITY PROVISIONS - ------------------------------------------------------------------------------- 3.01 Fund Annuity Units - Separate Account The initial number of a Fund's Annuity units is stated on the Specifications page. Each future payment is equal to the sum of the products of each Fund Annuity unit value multiplied by the appropriate number of units. The Fund Annuity unit value on the tenth Valuation Date prior to the due date of the payment is used. 3.02 Fund Annuity Unit Value For any Valuation Date, a Fund's Annuity unit value is equal to: a) The value for the preceding Valuation Date; multiplied by b) The Annuity net return factor(s) for the Valuation Period; multiplied by A050SP96 Page 9 c) A factor to reflect the assumed annual net return rate. The factors for the assumed annual net return are shown on the Contract Schedule. 3.03 Fund Annuity Net Return Factors The Annuity net return factor(s) are used to compute all Separate Account Annuity unit values for any Fund. The Annuity net return factor for each Fund is equal to 1.0000000 plus the net return rate. The net return rate is equal to: a) The value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; minus b) The value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; plus or minus c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by d) The total value of the Fund Annuity units of the Separate Account at the start of the Valuation Period; minus e) A Separate Account charge at an annual effective rate as shown on the Contract Schedule for Annuity mortality and expense risks and profit and a daily administrative charge which will not exceed the amount shown on the Contract Schedule on an annual basis. The daily administrative charge will be established on the Effective Date of this contract. A net return rate may be more or less than 0%. The value of a share of the Fund is equal to the net assets of the Fund divided by the number of shares outstanding. 3.04 Transfer(s) At the request of a Contract Holder, all or any portion of the current value may be transferred from any Fund to any other allowable Fund. Transfers will be processed as of the Valuation Date next following when a Transfer request is received in good order at Aetna's home office. The maximum number of allowable transfers in a calendar year is shown on the Contract Schedule. Aetna reserves the right to increase the number of allowable transfers. Transfer requests must be expressed as a percentage of the allocation among the Funds of the amount upon which the Variable Annuity will be based. Aetna may establish a minimum transfer amount. 3.05 Notice to the Contract Holder Once a year, Aetna will notify the Contract Holder of: a) The number of Fund(s) Annuity units; and b) The value of Fund(s) Annuity units. Such numbers or values will be as of a date no more than 60 days before the date of the notice. 3.06 Change of Fund(s) The assets of the Separate Account are segregated by Fund. If the shares of any Fund are no longer available for investment by the Separate Account or if in Aetna's judgment further investment in such shares should become inappropriate in view of the purpose of the contract, Aetna may cease to make such Fund shares available for investment under the contract prospectively, or Aetna may substitute shares of another Fund for shares already acquired. Aetna may also, from time to time, add additional Funds. Any elimination, substitution or addition of Funds will be done in accordance with applicable state and federal securities laws. Aetna reserves the right to substitute shares of another Fund for shares already acquired without a proxy vote. A050SP96 Page 10 IV. BENEFIT PROVISIONS - ------------------------------------------------------------------------------- 4.01 Commutation/Partial Commutation If this contract is issued as a Variable Period Certain Annuity, the Contract Holder may elect to receive the commuted value of all or a portion of the Guaranteed Payments. If a portion of the Guaranteed Payments under a Variable Period Certain Annuity is commuted, the remaining Variable Annuity payments will be reduced pro-rata from all of the Funds or otherwise as the Contract Holder so designates. Commutations may be subject to a commutation fee as shown on the Contract Schedule. 4.02 Commuted Value a) Under a Variable Period Certain Annuity, the commuted value is equal to the present value of the remaining Guaranteed Payments calculated using the assumed net return rate stated on the Contract Schedule. b) All commuted values will be determined as of the Valuation Date next following when a written request for commutation is received in good order by Aetna at its home office. 4.03 Death Benefit Provision a) If the Annuitant dies, or under a joint Annuity option the Survivor dies, any remaining Guaranteed Payments will be paid to the Beneficiary in the form specified in the Schedule of Benefits on the Specifications page. Such payments will be paid at least as rapidly as under the method of distribution then in effect. Within six months of such death, the Beneficiary may elect to receive the commuted value of any remaining Guaranteed Payments; however, under a Variable Period Certain Annuity, the Beneficiary may make such election at any time. No commutation fee will apply to the commuted value in this situation. b) If the Contract Holder who is not the Annuitant(s) dies, payments will be paid to the Payee in the form specified in the Schedule of Benefits on the Specifications page. If no Payee designated by the Contract Holder survives the death of the Contract Holder, payments will be made to the Annuitant. Such payments will be paid at least as rapidly as under the method of distribution then in effect. c) The commuted value under this death benefit provision will be determined as of the Valuation Date next following when proof of death acceptable to Aetna and a request for payment are received in good order at Aetna's home office. If this contract is issued as a Variable Period Certain Annuity, the commuted value will be determined as described in Section 4.02. If this contract is issued as a Fixed Period Certain Annuity or as a Life Annuity with Guaranteed Payments, the rate used to determine the commuted value will be 1) for Fixed Annuities, the Fixed Annuity Present Value Interest Rate shown on the Specifications page and 2) for Variable Annuities, the Variable Annuity Assumed Annual Net Return Rate shown on the Specifications page. A050SP96 Page 11 Aetna Life Insurance and Annuity Company ENDORSEMENT The contract is endorsed to permit the contract to be used to pay benefits under a pension or profit sharing plan qualified under Section 401(a) of the Internal Revenue Code ("Code") and, if applicable, the Employee Retirement Income Security Act (ERISA). The following provisions apply and, in the case of a conflict with any provision in the contract, this endorsement controls. Nontransferable. The contract is nontransferable in accordance with Code Section 401(g). The contract may not be sold, assigned, transferred or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose, except pursuant to a qualified domestic relations order as described in Code Section 414(p). This restriction shall not apply to the trustee of any trust described in Code Section 401(a), which is exempt from tax under Section 501(a). Contract Holder. The Contract Holder must be the employer sponsoring the plan or, if the plan has a trust, the trustee of such trust. The Contract Holder may assign ownership of the contract to the Participant in which case the Participant shall become the Contract Holder. Participant. The Participant is the participant under the Code Section 401(a) plan on whose behalf the contract is purchased. Beneficiary. If the Contract Holder is the employer or plan trustee, the Beneficiary is the Contract Holder. If the contract has been assigned to the Participant, the Participant shall name a Beneficiary. However, if the contract is subject to ERISA and the Participant is married, the Participant must name the spouse as Beneficiary of 50% of any remaining Guaranteed Payments. However, if the Participant has attained age 35, an alternate Beneficiary may be named for this portion of the contract provided the Participant furnishes to Aetna a waiver and spousal consent satisfying the requirements of Code Section 417. Any Beneficiary may be named for the balance without the consent of the spouse. Distributions. The Annuity payments will only be paid to the Contract Holder, or to the Participant at the direction of the Contract Holder. Death Benefit. At the death of the Annuitant, Aetna will pay any remaining Guaranteed Payments, as directed by the Contract Holder or, if the Participant is the Contract Holder, by the designated Beneficiary. If the contract is subject to ERISA, the Contract Holder who is not the Participant must certify in a form acceptable to Aetna that the distribution to a non-spouse plan beneficiary complies with the waiver and spousal consent requirements of Code Section 417. In the absence of such certification, payment will be made to the Contract Holder. Commutation/Partial Commutation. If the Contract is subject to ERISA and the Contract Holder has a right of commutation under this contract, to exercise such right the Contract Holder must certify in a form acceptable to Aetna that the distribution complies with the waiver and spousal consent requirements of Code Section 417. In the absence of such certification, Aetna will pay the commuted value to the Contract Holder provided the Contract Holder is the employer or plan trustee. Endorsed and made a part of the contract as of the Contract Effective Date. A050SP96 Aetna Life Insurance and Annuity Company ENDORSEMENT The contract is endorsed in order to meet the requirements of Section 403(b) of the Internal Revenue Code ("Code") and, if applicable, the Employee Retirement Income Security Act (ERISA). The following provisions apply and, in the case of a conflict with any provision in the contract, this endorsement controls. Nontransferable. The contract is nontransferable in accordance with Code Section 401(g). The contract may not be sold, assigned, transferred or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose, except pursuant to a qualified domestic relations order as described in Code Section 414(p). Contract Holder. The Contract Holder must be a participant under a Code Section 403(b) Tax Deferred Annuity program. Annuitant. The Annuitant is the Contract Holder. Beneficiary. The Contract Holder shall name a Beneficiary. If the Contract is subject to ERISA and the Contract Holder is married, the spouse must be named as Beneficiary of 50% of any remaining Guaranteed Payments. However, if the Contract Holder has attained age 35, an alternate Beneficiary may be named for this portion of the Contract provided the Contract Holder furnishes to Aetna a waiver and spousal consent satisfying the requirements of ERISA Section 205. Any Beneficiary may be named for the balance without the consent of the spouse. Premium. The premium applied to the contract must be an amount rolled over from (1) another contract qualified under Code Section 403(b) or a custodial account qualified under Code Section 403(b)(7), or (2) from an Individual Retirement Account or Annuity qualified under Code Sections 408(a) or 408(b) that contains only amounts previously rolled over from a 403(b) Tax Deferred Annuity. Any amount rolled over from a Code Section 403(b) contract or custodial account must be eligible for distribution under the withdrawal instructions set forth in Code Section 403(b)(7) or 403(b)(11), as applicable. Distributions. The Annuity payments will only be paid to the Contract Holder, or to an alternate payee pursuant to a qualified domestic relations order as described in Code Section 414(p). Commutation/Partial Commutation. If the contract is subject to ERISA and if the Contract Holder has a right of commutation under this contract, to exercise such right the Contract Holder must furnish to Aetna a waiver and spousal consent satisfying the requirements of ERISA Section 205. Endorsed and made a part of the contract as of the Contract Effective Date. A050SP96 Aetna Life Insurance and Annuity Company ENDORSEMENT This contract is endorsed to permit an employer to purchase the contract in conjunction with a nonqualified deferred compensation plan or a deferred compensation plan under Section 457 of the Internal Revenue Code ("Code"). The following provisions apply and, in the case of a conflict with any provision in the contract, this endorsement controls. Contract Holder. The Contract Holder must be the employer who sponsors the deferred compensation plan. Annuitant. The Annuitant is a participant or plan beneficiary under the deferred compensation plan. Beneficiary. The Beneficiary is the Contract Holder. Death Benefit. At the death of the Annuitant, Aetna will pay any remaining Guaranteed Payments as directed by the Contract Holder. Endorsed and made a part of the contract as of the Contract Effective Date. A050SP96 Aetna Life Insurance and Annuity Company ENDORSEMENT The contract is endorsed to meet the qualification requirements for an Individual Retirement Annuity under Internal Revenue Code ("Code") Section 408(b). The following provisions apply and, in the case of a conflict with any provision in the contract, this endorsement controls. Contract Holder. The Contract Holder and the Annuitant must be the same person. Nontransferable/Nonforfeitable. The contract is nontransferable. The Contract Holder may not sell, assign, transfer, pledge or use as collateral for a loan or as security for the performance of an obligation or for any other purpose, his or her interest in the contract to any person other than the issuer of the contract or to a spouse incident to a divorce under the provisions of Code Section 408(d)(6). The Contract Holder's entire interest in the Contract is nonforfeitable. Exclusive Benefit. The contract is established for the exclusive benefit of the Contract Holder or his or her Beneficiary(ies). Premium. The premium applied to this contract must be a rollover contribution as permitted under Code Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3). Distributions. The Annuity payments will be paid only to the Contract Holder. Annuity payments must be made at intervals of no longer than one year and must be either nonincreasing or they may increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax Regulations. Annual Reports. Aetna will furnish annual calendar year reports concerning the status of the contract. Right to Cancel. The Contract Holder may cancel the contract within 10 days of receiving it by returning it to Aetna at the address above or to the person from whom it was purchased. Within seven days from the cancellation request, Aetna will return all the Contract Holder's premium Payments, less any Annuity payments made. Endorsed and made a part of the contract as of the Contract Effective Date. A050SP96 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract is hereby endorsed as follows: The section entitled Commutation Frequency and Amounts in the Contract Schedule is amended to add the following language: Fixed Period Certain Annuity Commutations: Under a Fixed Period Certain Annuity, commutations may be elected [once] a year. No commutations are allowed from a Fixed Period Certain Annuity in the first contract year. In subsequent contract years, full or partial commutations are allowed, provided that under a partial commutation the remaining Annuity payments would equal [$50] or more. The section entitled Commutation/Partial Commutation is amended to add the following language: If this contract is issued as a Fixed Period Certain Annuity as described on the Specifications page, the Contract Holder may elect to receive the commuted value of all or a portion of the Guaranteed Payments in the amounts and frequency as stated on the Contract Schedule. If a portion of the Guaranteed Payments under a Fixed Period Certain Annuity is commuted, the remaining Annuity payments will be reduced proportionally. Commutations are subject to a commutation fee as shown on the Contract Schedule, unless an exception under this contract applies. The section entitled Commuted Value is amended to add the following language: c) Under a Fixed Period Certain Annuity, the commuted value is equal to the present value of the remaining Guaranteed Payments calculated using the adjusted contract rate. The adjusted contract rate equals: (Rate of Return) + CY - IY where: Rate of Return is the Fixed Annuity Present Value Interest Rate shown on the Specifications page CY is the Commutation Yield IY is the Issue Yield CY is determined as follows: 1) CY is the average of the yields, as published in the Wall Street Journal on the Friday before the date of commutation, of the three, or more if Aetna deems necessary, noncallable noninflation adjusted Treasury Notes or Bonds maturing on or closest to the Commutation Duration Date. 2) "Commutation Duration Date" is the date (month and year) obtained when the commutation duration is added to the date of commutation. 3) "Commutation Duration" equals 1 plus the number of whole years from the date of commutation until the final Guaranteed Payment is due, divided by 2. Any resulting fraction will be rounded up to the next whole number. IY is determined as follows: 1) IY is the average of the yields as published in the Wall Street Journal on the Friday before the Contract Effective Date, of the three, or more if Aetna deems necessary, noncallable noninflation adjusted Treasury Notes or Bonds maturing on or closest to the Issue Duration Date. A050SP96 2) "Issue Duration Date" (month and year) is obtained when Issue Duration is added to the Contract Effective Date. 3) "Issue Duration" equals 1 plus the number of whole years from issue until the final payment is due, divided by 2. Any resulting fraction will be rounded up to the next whole number. The section entitled Death Benefit Provision is amended by deleting items a) and c) and replacing them with the following: a) If the Annuitant dies, or under a joint Annuity option the Survivor dies, any remaining Guaranteed Payments will be paid to the Beneficiary as specified in the Schedule of Benefits on the Specifications page. Such payments will be paid at least as rapidly as under the method of distribution then in effect. The Beneficiary may elect to receive the commuted value of any remaining Guaranteed Payments. No commutation fee will apply to the commuted value in this situation. c) The commuted value under this death benefit provision will be determined as of the Valuation Date next following when proof of death acceptable to Aetna and a request for payment are received in good order at Aetna's home office. If this contract is issued as a Period Certain Annuity, the commuted value will be determined as described in the section entitled Commuted Value. If this contract is issued as a Life Annuity with Guaranteed Payments, the rate used to determine the commuted value will be 1) for Fixed Annuities, the Fixed Annuity Present Value Interest Rate shown on the Specifications page and 2) for Variable Annuities, the Variable Annuity Assumed Annual Net Return Rate shown on the Specifications page. Endorsed and made a part this contract on the Contract Effective Date. /s/ Dan Kearney A050SP96 This page intentionally left blank A050SP96 This page intentionally left blank. A050SP96 - ------------------------------------------------------------------------------- [Aetna logo] Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 (800) 238-6273 Individual Single Premium Immediate Fixed, Variable or Combination Annuity Contract Nonparticipating - -------------------------------------------------------------------------------- ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. A050SP96 EX-99.B5 3 APPLICATION [Aetna logo] Individual Single Premium Aetna Life Insurance and Annuity Company Immediate Annuity (SPIA) 151 Farmington Avenue Application Hartford, Connecticut 06156 1-800-238-6273 Type of Contract: [ ] Nonqualified (subject to ERISA [ ] Yes [ ] No) [ ] IRA [ ] Other - ----------------- ---------------------------------------------------------- Contract Holder Name (Last, First, Middle Initial) Social Security Number Information ---------------------------------------------------------- The contract Address (Street/P.O. Box) Telephone Number holder will be [ ] Home the payee unless [ ] Work otherwise requested. ----------------------------------------------------------- City, State, ZIP Code [ ] Male [ ] Female Date of Birth This information will be used ----------------------------------------------------------- for tax reporting Are you associated with a National Association of Securities Dealer Firm? [ ]Yes [ ]No Changes to SS# If yes, please specify. or Date of Birth must be initialed. - ------------------------------------------------------------------------------- Annuitant Name (Last, First, Middle Initial) Social Security Number If different from Contract ----------------------------------------------------------- Holder. Address (Street/P.O. Box) Telephone Number [ ] Home If an IRA or TDA, [ ] Work the Annuitant and Contract Holder ----------------------------------------------------------- must be the City, State, ZIP Code [ ] Male [ ] Female Date of Birth same person. - -------------------------------------------------------------------------------- Joint Annuitant Name (Last, First, Middle Initial) Relationship (Joint lifetime option only.) Social Security # [ ] Male [ ] Female Date of Birth - -------------------------------------------------------------------------------- Annuity Options [ ]Fixed Only [ ]Variable Only [ ]Combination Variable/Fixed (Only one box may be checked.) Complete the Only one option may be elected. Single Payment Amount type of Annuity; Non-Lifetime Options $___________ and select an A. ____ Period Certain of Annuity Option. ___(5-30 years) Single Lifetime Options For an IRA, B. ____ Single Life Only 401, 403(b) C. ____ Single Life with or 457 contract, Guarantee of the Annuity ___(5-30 years) Option election Joint Lifetime Options must comply with D. ____ Joint & 100% Survivor IRC 401(a)(9) E. ____ Joint & 100% Survivor with Guarantee of If subject to ___(5-30 years) ERISA, Joint F. ____ Joint & 66-2/3% Survivor Lifetime G. ____ Joint & 50% Survivor Option H must H. ____ Joint & 50% Contingent be elected, Survivor unless spousal consent is provided. - ------------------------------------------------------------------------------- Fixed Only [ ] Cash Refund - Only available with Features Lifetime Options B and D above. These features [ ] Increasing Annuity - Only available with may only be Non-Lifetime Options A and Lifetime Options B, C, D or E. elected if the ____ 1, 2, or 3% Annual Increase Fixed Only option (complete desired percentage) is indicated above. [ ] Commutability - Only available with Non-Lifetime Option A. - -------------------------------------------------------------------------------- Investment Variable (Select up to four.) Options Small Company ____% [106] Alger American Small Cap Portfolio Complete World Stock ____% [123] Janus Aspen Worldwide Growth Investment Portfolio Options if Variable Only Growth ____% [117] Janus Aspen Growth Portfolio or a Combination ____% [100] Neuberger & Berman Growth Variable/Fixed Portfolio option is Growth & Income ____% [001] Aetna Variable Fund indicated above. Corporate Bond ____% [004] Aetna Income Shares Up to four Asset Allocation ____% [008] Aetna Investment Advisers variable options Fund may be selected. ____% [033] Aetna Legacy Variable Portfolio Fixed Dollar Option ____% ALIAC Fixed Dollar ____ 100 % Total Assumed Annual Net Return Rate [ ] 3-1/2% [ ] 5% (3-1/2% will be assumed if no election is made.) ______________________________________ - -------------------------------------------------------------------------------- Special Requests / Optional Information - -------------------------------------------------------------------------------- Replacement Will this contract change or replace any existing life Information insurance or annuity contracts? [ ] Yes [ ] No If yes, provide carrier name and account number: [ ] Aetna [ ] Other Carrier ___________________ Account # _________ For an Aetna Annuity replacement only, I have received annuity option proposals for both the original and new contracts and understand the differences: [ ] Yes [ ] No - -------------------------------------------------------------------------------- Financial Annual Household Income Disclosure [ ] [Less than] $25,000 [ ] $25,000-$49,999 [ ] $50,000-$99,999 [ ] [More than] $100,000 Please provide estimates. Net Worth [ ] [Less than] $25,000 [ ] $25,000 - $49,999 [ ] $50,000 - $99,999 [ ] $100,000 - $250,000 [ ] [More than] $250,000 ------------------------------------------------------------ How would you categorize yourself as an investor? [ ] Aggressive [ ] Moderately Aggressive [ ] Moderate [ ] Moderately Conservative [ ] Conservative ------------------------------------------------------------ Estimated percent of retirement income from this investment [ ] [Less than] 25% [ ] 25 - 50% [ ] 50 - 75% [ ] [More than] 75% ------------------------------------------------------------ Other Retirement Income Sources [ ] Social Security [ ] IRA/401K [ ] Employer Pension [ ] Savings/CD's [ ] Stocks/Mutual Funds [ ] Other__________________ ------------------------------------------------------------ Please check which of the following features in this contract are important to you: [ ] More than four (4) funds [ ] Ability to transfer among funds [ ] Ability to commute payments under a specified period option [ ] Increasing benefits under a fixed option ------------------------------------------------------------ Other Aetna Products (Please indicate all other Aetna products currently owned by the customer) [ ] None [ ] Mutual Funds [ ] IRA [ ] Non-Qualified Annuities [ ] Pension [ ] Other ------------------------------------------------------------ 82926 (7/96) Agent Notes - -------------------------------------------------------------------------------- Beneficiary(ies) Unless directed otherwise, we will pay any death benefit in equal shares to the primary beneficiary(ies) named or to all living members of a class (e.g., children). If no primary beneficiary is living, payment will be made in equal shares to the contingent beneficiary(ies). Primary Contingent Complete Legal Name Relationship % Social Security # [ ] [ ] ___________________ ____________ __ _____________ [ ] [ ] ___________________ ____________ __ _____________ [ ] [ ] ___________________ ____________ __ _____________ [ ] [ ] ___________________ ____________ __ _____________ If subject to ERISA, a spouse must be the primary beneficiary for at least 50%, unless spousal consent is provided. - -------------------------------------------------------------------------------- Payment Payment Frequency - Payments will be monthly unless Information otherwise requested: Check box for [ ] quarterly [ ] semi-annually [ ] annually type of payment [ ] EFT (Electronic Funds Transfer. Complete information for EFT below.) The first [ ] Check payment(s) will ----------------------------------------------------------- be mailed to Bank Name and Address (Street, City, State, ZIP) your resident address until EFT becomes effective (normally 3 - 6 weeks). ----------------------------------------------------------- Bank Routing Number Bank Account Number ----------------------------------------------------------- Type of Account: (Please attach voided check or deposit slip) [ ] Checking [ ] Savings - -------------------------------------------------------------------------------- Form W-4P Periodic payments from a settlement option (other than OMB NO. 1545-0415 interest only payments) are generally subject to Federal Withholding Notice Income Tax withholding unless you elect not to have and Election withholding apply. Tax will be withheld only on the portion that is subject to Federal Income Tax. There will be no withholding on the return of amounts paid into the contract with dollars that have already been taxed. Elect withholding or no withholding by checking the appropriate box below. To change or revoke your election, send a new Form W-4P (available at IRS offices) to Aetna. This change will be effective no later than the January 1, May 1, July 1, or October 1 after it is received provided we receive it 30 days prior to that date. Otherwise, the change or revocation will be effective on the next scheduled date. Whether or not you have tax withheld, by January 31 of each year, you will receive a statement from Aetna showing the total taxable amount of your distribution and the total income tax withheld, if any. CAUTION: There are penalties for not paying enough tax during the year, either through withholding or estimated tax payments, or both. For more information see Publication 505, Tax Withholding and Estimated Tax, available from most IRS offices. It explains estimated tax requirements and penalties in detail. COMPLETE THE FOLLOWING APPLICABLE LINES: [ ] 1. I elect to have no income tax withheld from my annuity. (Do not complete lines 2 or 3.) [ ] 2. I elect to have taxes withheld from each periodic annuity payment to be figured using the number of allowances and marital status shown: ______________ (allowances). (You may also designate an additional amount on line 3.) [ ] SINGLE [ ] MARRIED [ ] MARRIED, BUT WITHHOLD AT HIGHER SINGLE RATE [ ] 3. I want the following additional amount withheld from each pension or annuity payment. Note: For periodic payments, you cannot enter an amount here without entering the number (including zero) of allowances on line 2: $ _________. SOCIAL SECURITY OR SIGNATURE ___________ EMPLOYER ID NUMBER ____________ Date ___________ - -------------------------------------------------------------------------------- Anti-Fraud Any person who knowingly and with intent to injure, Statement defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. - -------------------------------------------------------------------------------- Your Acknowledgment I declare that the information on the preceding page is correct and true to the best of my knowledge. I represent that the Social Security number(s) shown on this form is/are correct. I understand that when based on the investment experience of a Separate Account, all payments and contract values are variable and are not guaranteed as to fixed dollar amount, and I have received a current prospectus. If I have elected EFT, and by my signature below, I authorize Aetna to deposit my payments by EFT to my bank account. This request will remain in effect until I give Aetna written notice of a change and sufficient time to process the change. Aetna will notify my bank of my intentions and will confirm my account number before the first electronic transfer of my payment. If payments are directed to a bank account, I authorize and direct the bank to refund to Aetna and charge to my account the amount of any payments made to the bank for any due date after my death. I understand the following individual(s)/organization(s) will receive compensation as the result of my purchase (completed by agent): _____________________/________________/___________________ [ ] Please send me a Statement of Additional Information [ ] The Company may hold my application and Purchase Payment if it cannot accept my application within five business days after receiving it at its home office. ----------------------------------------------------------- Signature of Contract Holder City , State Where Signed Date ----------------------------------------------------------- Signature of Payee if EFT is elected Date - -------------------------------------------------------------------------------- Registered Do you have any reason to believe any existing insurance Representative and/or annuity contracts will be modified or replaced if this contract is issued? [ ] Yes [ ] No ----------------------------------------------------------- Broker/Dealer Firm (PRINT) ----------------------------------------------------------- Representative's Name (PRINT) Code ----------------------------------------------------------- Social Security Number State License Number ----------------------------------------------------------- Signature of Registered Representative Date - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----