-----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, U1QNNdpBXK6RUHaPe5owuT4fVhkTb1blBrCCXDv1XNb6M1YvYmKykqfTyOR2Wsqf Nq1gjpavKj+p/tHW+GfbUA== 0000950146-97-001918.txt : 19971217 0000950146-97-001918.hdr.sgml : 19971217 ACCESSION NUMBER: 0000950146-97-001918 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19971216 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: 485APOS SEC ACT: SEC FILE NUMBER: 033-34370 FILM NUMBER: 97738886 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 811-02512 FILM NUMBER: 97738887 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 485APOS 1 FORM N-4 As filed with the Securities and Exchange Registration No. 33-34370* Commission on December 16, 1997 Registration No. 811-2512 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 - ------------------------------------------------------------------------------- POST-EFFECTIVE AMENDMENT NO. 32 TO 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 Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RE4A, Hartford, Connecticut 06156 Depositor's Telephone Number, including Area Code: (860) 273-4686 Julie E. Rockmore, Counsel Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RE4A, Hartford, Connecticut 06156 (Name and Address of Agent for Service) - -------------------------------------------------------------------------------- It is proposed that this filing will become effective: [X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on _______________________ pursuant to paragraph (a)(1) of Rule 485 *Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has included a combined prospectus under this Registration Statement which includes all the information which would currently be required in a prospectus relating to the following earlier Registration Statement: 33-87932. VARIABLE ANNUITY ACCOUNT B CROSS REFERENCE SHEET LOCATION - FORM N-4 PROSPECTUS DATED NOVEMBER 28, 1997, ITEM NO. PART A (PROSPECTUS) AND AS AMENDED FEBRUARY 16, 1998 1 Cover Page............................. Cover Page, and as amended 2 Definitions............................ Definitions, and as amended 3 Synopsis............................... Prospectus Summary, and as amended; Fee Table, and as amended 4 Condensed Financial Information........ Condensed Financial Information 5 General Description of Registrant, The Company; Variable Annuity Depositor, and Portfolio Companies..... Account B; The Funds, and as amended 6 Deductions and Expenses................ Charges and Deductions, and as amended; Distribution 7 General Description of Variable Annuity Contracts...................... Purchase, and as amended; Miscellaneous 8 Annuity Period......................... Annuity Period, and as amended 9 Death Benefit.......................... Death Benefit During Accumulation Period; Death Benefit Payable During the Annuity Period 10 Purchases and Contract Value........... Purchase, and as amended; Contract Valuation, and as amended 11 Redemptions............................ Right to Cancel; Withdrawals, and as amended 12 Taxes.................................. Tax Status, and as amended 13 Legal Proceedings...................... Miscellaneous - Legal Matters and Proceedings 14 Table of Contents of the Statement Contents of the Statement of of Additional Information.............. Additional Information LOCATION - FORM N-4 PART B (STATEMENT OF STATEMENT OF ADDITIONAL INFORMATION ITEM NO. ADDITIONAL INFORMATION) DATED FEBRUARY 16, 1998 15 Cover Page.............................. Cover Page 16 Table of Contents....................... Table of Contents 17 General Information and History......... General Information and History 18 Services................................ General Information and History; Independent Auditors 19 Purchase of Securities Being Offered.... Offering and Purchase of Contracts 20 Underwriters............................ Offering and Purchase of Contracts 21 Calculation of Performance Data......... Performance Data Average Annual Total Return Quotations 22 Annuity Payments........................ Annuity Payments 23 Financial Statements.................... Financial Statements Part C (Other Information) Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. PARTS A AND B The Prospectus is incorporated into Part A of this Post-Effective Amendment No. 32 by reference to Post-Effective Amendment No. 31 to the Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on November 26, 1997 (Accession No. 0000950146-97-001802). A Supplement dated February 16, 1998 to the Prospectus is included in this Post-Effective Amendment No. 32. The Statement of Additional Information is included in Part B of this Post-Effective Amendment No. 32. Supplement dated February 16, 1998 to Prospectus Dated November 28, 1997 Aetna Life Insurance and Annuity Company Variable Annuity Account B Aetna Marathon Plus The prospectus dated May 1, 1997 and amended on November 28, 1997, is amended as follows: 1. The cover page is amended to: a. Add references to "Roth IRAs" and Section 408A of the Internal Revenue Code, subject to approval by state regulatory agencies, in (2) of the opening paragraph. b. Add "In most states," to the beginning of the second paragraph. Add the following sentence after the first sentence: "In certain states, Purchase Payments may be allocated to the Fixed Account when the Guaranteed Account is not available." c. Add the following sentence in the paragraph following the list of investment options: "The Fixed Account is described in a separate Appendix to this Prospectus." d. The name of Calvert Responsibly Invested Balanced Portfolio is changed to Calvert Social Balanced Portfolio. 2. The definitions listed below are added or amended to describe a Contract offered as a Roth IRA or to describe a Fixed Account. Contract Year: The number of completed years since the date of the first payment under an individual Contract or to an Account under a group Contract. Fixed Account: A fixed interest option available in certain states which is described in an Appendix to this Prospectus. Amounts allocated to the Fixed Account are included in the Account Value. Individual Retirement Annuity: An individual or group variable deferred annuity intended to qualify under Code Section 408(b) or 408A. Qualified Contracts: Contracts available for use with plans entitled to special federal income tax treatment under Code Sections 401(a), 403(b), 408(b), 408A or 457. Roth IRA: An Individual Retirement Annuity intended to qualify under Code Section 408A. 3. The Prospectus Summary is amended as follows: a. Contracts Offered is amended to add "including Roth IRAs" after "("IRAs")" in (2) of paragraph one: b. Free Look Period is amended to add the following sentence at the end of the paragraph: If the Purchase Payment to a Roth IRA is a rollover from a contract issued by the Company or an affiliate where the deferred sales charge was eliminated or reduced to facilitate the rollover to this Contract, the Purchase Payment will be restored to the contract from which it came. c. Investment Options is amended to add "or Fixed Account" after "Guaranteed Account" in the first paragraph. A third paragraph is added to read: "The Fixed Account is an option available under the Contract which allows you to earn a fixed rate of interest. (See the Appendix to this Prospectus.)" d. Transfers is amended to add "or Fixed Account" after "Guaranteed Account" in the first sentence. In the second paragraph, the following sentence is added after the second sentence: "In a Contract with a Fixed Account, the Fixed Account is only available for dollar cost averaging from the Fixed Account to the other investment options over a period not to exceed 12 months." e. Taxes is amended to read as follows: Earnings are not generally taxed until you or your Beneficiary(ies) actually receive a distribution from the Contract. A 10% federal tax penalty may be imposed on certain withdrawals. Special rules apply to distributions from a Roth IRA. (See "Tax Status.") 4. The section entitled "Fee Table" is amended to add the following information applicable to Roth IRAs: CONTRACT HOLDER TRANSACTION EXPENSES Deferred Sales Charge for withdrawals under each Contract (as a percentage of each Purchase Payment withdrawn). If the Purchase Payment is a rollover from another contract issued by the Company or an affiliate where the deferred sales charge has been waived, the deferred sales charge is based on the number of completed Contract Years since the date of the initial payment to the predecessor contract. The Company reserves the right to not accept any rollover contribution to an existing Contract. Completed Contract Years Less than 1 5% 1 or more but less than 2 4% 2 or more but less than 3 3% 3 or more but less than 4 2% 4 or more but less than 5 1% 5 or more 0% Annual Maintenance Fee(1) $30.00 Transfer Charge(2) $ 0.00
SEPARATE ACCOUNT ANNUAL EXPENSES (Daily deductions, equal to the percentage shown on an annual basis, made from amounts allocated to the variable options under each Contract) During the Accumulation Period Mortality and Expense Risk Charge ...... 1.10%(3) Administrative Charge .................. 0.15% Total Subaccount Annual Expenses ...... 1.25% During the Annuity Period Mortality and Expense Risk Charge ...... 1.25% Administrative Charge .................. 0.00%(4) Total Subaccount Annual Expenses ...... 1.25%
- ---------- 1) The maintenance fee, if applicable, will generally be deducted from each Account annually and if the full Account Value is withdrawn. The maintenance fee is waived when the Account Value is $50,000 or more on the date the maintenance fee is due. The amount shown is the maximum maintenance fee that can be deducted under the Contract. 2) During the Accumulation Period we currently allow an unlimited number of transfers without charge. However, we reserve the right to impose a fee of $10 for each transfer in excess of 12 per year. 3) Under certain Contracts the mortality and expense risk charge during the Accumulation Period may be reduced. See "Charges and Deductions" in the prospectus. 4) We currently do not impose an Administrative Charge during the Annuity Period. However, we reserve the right to deduct a daily charge of not more than 0.25% per year from the Subaccounts. ANNUAL EXPENSES OF THE FUNDS--Please refer to Fee Table--2 of the Prospectus. HYPOTHETICAL ILLUSTRATION (EXAMPLE) THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES AND/OR RETURN MAYBE MORE OR LESS THAN THOSE SHOWN BELOW. The following Examples illustrate the expenses that would have been paid assuming a $1,000 investment in the Contract and a 5% return on assets. For the purposes of these Examples, the maximum maintenance fee of $30.00 that can be deducted under the Contract has been converted to a percentage of assets equal to 0.005%.
EXAMPLE A EXAMPLE B If you withdraw the entire Account If you do not withdraw the Value at the end of the periods shown, Account Value, or if you annuitize at you would pay the following expenses, the end of the periods shown, you would including any applicable deferred pay the following expenses (no sales charge: deferred sales charge is reflected)(1): 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years ------ ------- ------- -------- ------ ------- ------- -------- Aetna Variable Fund Aetna Income Shares Aetna Income Variable Encore Fund Aetna Investment Advisers Fund, Inc. Aetna Ascent Variable Portfolio Aetna Crossroads Variable Portfolio Aetna Legacy Variable Portfolio Aetna Variable Capital Appreciation Portfolio Aetna Variable Growth Portfolio Aetna Variable Index Plus Portfolio Aetna Variable Small Company Portfolio Calvert Social Balanced Portfolio (formerly Calvert Responsibly Invested Balanced Portfolio) Fidelity VIP Equity-Income Portfolio Fidelity VIP Growth Portfolio Fidelity VIP High Income Portfolio Fidelity VIP Overseas Portfolio Fidelity VIP II Asset Manager Portfolio Fidelity VIP Contrafund Portfolio Fidelity VIP II Index 500 Portfolio Janus Aspen Aggressive Growth Portfolio Janus Aspen Balanced Portfolio Janus Aspen Flexible Income Portfolio Janus Aspen Growth Portfolio Janus Aspen Worldwide Growth Portfolio MFS Total Return Series MFS World Governments Series Oppenheimer Capital Appreciation Fund Oppenheimer Global Securities Fund Oppenheimer Growth & Income Fund Oppenheimer Strategic Bond Fund Portfolio Partners MFS Emerging Equities Portfolio Portfolio Partners MFS Research Growth Portfolio Portfolio Partners MFS Value Equity Portfolio Portfolio Partners Scudder International Growth Portfolio Portfolio Partners T. Rowe Price Growth Equity Portfolio
- ---------- (1)This example would not apply if a nonlifetime variable annuity option is selected, and a lump sum settlement is requested within three years after annuity payments start, since the lump sum payment will be treated as a withdrawal during the Accumulation Period and will be subject to any deferred sales charge that would then apply. (Refer to Example A) 5. The Funds section of Investment Options on page 1 of the Prospectus is amended to add ", or an investment in the Fixed Account in Contracts where the Guaranteed Account is not available," after the word "duration" in the last sentence of the first paragraph. 6. A new section "Fixed Account" is added after Credited Interest Option on page 5 of the Prospectus. It reads: "Fixed Account In certain states, Purchase Payments may be allocated to the Fixed Account. Through the Fixed Account we guarantee to pay the minimum interest rate specified in the Contract. (See the Appendix)." 7. The Purchase section of the Prospectus on page 5 is amended to add "including Roth IRAs" after "Annuities" in the first sentence and to add the following to the end of the first paragraph: A Roth IRA Contract is a special form of IRA which can accept nondeductible annual contributions. Contributions to a Simplified Employee Pension Plan ("SEP") are not permitted in a Roth IRA Contract. The Roth IRA Contract can also accept transfers and rollovers, but only from an Individual Retirement Annuity/Individual Retirement Account, subject to ordinary income tax, or from another Roth IRA. If the Purchase Payment to a Roth IRA is a rollover from a contract issued by the Company or an affiliate where the deferred sales charge was eliminated or reduced and the Contract is canceled during the free look period, the Purchase Payment will be restored to the predecessor contract. 8. Add the following sentence to the end of Individual Contracts on page 5: "However, if the Purchase Payment to a Roth IRA is a rollover from a contract issued by the Company or an affiliate where the deferred sales charge was eliminated or reduced and the Contract is canceled during the free look period, the Purchase Payment will be restored to the predecessor contract." 9. Add "or Fixed Account" after "Guaranteed Account" in Allocation of Purchase Payments on page 6. 10. In Mortality and Expense Risk Charge on page 6, add the following sentence after the second sentence: "If the Contract is issued as a Roth IRA, the mortality and expense risk charge is equal, on an annual basis, to 1.10% of the daily net assets of the Subaccounts." 11. The first two paragraphs under Deferred Sales Charge on page 8 are replaced with the following: Withdrawals of all or a portion of the Account Value may be subject to a deferred sales charge. The deferred sales charge is a percentage of Purchase Payments withdrawn from the Subaccounts and the Guaranteed Account or Fixed Account and, except for Roth IRAs, is based on the number of years which have elapsed since the Purchase Payment was made. The deferred sales charge on withdrawals from a Roth IRA is based on the number of years which have elapsed from the Account effective date. The deferred sales charge for each Purchase Payment is determined by multiplying the Purchase Payment withdrawn by the appropriate percentage, in accordance with the schedule set forth in the tables below. If the Purchase Payment is a rollover from another contract issued by the Company or an affiliate where the deferred sales charge has been waived, the deferred sales charge is based on the number of completed Contract Years since the date of the initial payment to the predecessor contract. The Company reserves the right to not accept any rollover contribution to an existing Contract. Withdrawals are taken first against Purchase Payments, then against any increase in value. However, the deferred sales charge only applies to the Purchase Payment (not to any associated changes in value). To satisfy a partial withdrawal, the deferred sales charge is calculated as if the Purchase Payments are withdrawn from the Subaccounts in the same order they were applied to the Account. Partial withdrawals from the Guaranteed Account or the Fixed Account will be treated as described in the Appendices attached to this Prospectus and the prospectus for the Guaranteed Account. The total charge will be the sum of the charges applicable for all of the Purchase Payments withdrawn. The following table applies to Roth IRA Contracts, including those issued in New York.
Deferred Sales Completed Contract Years Charge Deduction Less than 1 5% 1 or more but less than 2 4% 2 or more but less than 3 3% 3 or more but less than 4 2% 4 or more but less than 5 1% 5 or more 0%
12. Deferred Sales Charge, page 8. In addition to the list of circumstances where a deferred sales charge will not be deducted, a deferred sales charge will not be deducted if the withdrawal is applied as a rollover to certain Roth Individual Retirement Annuities issued by the Company or an affiliate. 13. In Account Value on page 9, add "or the Fixed Account" to the end of the paragraph. 14. In Transfers on page 10 add as the third sentence to the first paragraph: "Transfers may be made from the Fixed Account to any of the investment options available subject to certain restrictions. Amounts may not be transferred into the Fixed Account from any of the investment options." 15. In Dollar Cost Averaging on page 10, add "or Fixed Account" after "Guaranteed Term" in the third sentence. Add as the next to the last sentence in the first paragraph: "If Dollar Cost Averaging is stopped with regard to amounts in the Fixed Account, the remaining balance in the Fixed Account will be transferred to the Aetna Variable Encore Fund Subaccount (a money market fund)." 16. Add the following to the end of the first paragraph under Withdrawals on page 10: Roth IRAs provide for a tax-free withdrawal of all assets in the Contract, both contributions and earnings, provided the withdrawal is not made within the 5-taxable year period beginning with the first tax year for which a contribution was made, and the distribution is made after attainment of age 59-1/2, or on account of death or disability, or for a qualified first-time home purchase. Also add "or Fixed Account" after "Guaranteed Account" in the third paragraph. 17. Under Systematic Distribution Option add the following: "ECO" is not available under the Roth IRA Contract." 18. Under Annuity Period on page 14, add the following: For Roth IRAs, the minimum distribution rules do not apply prior to your death. You are not required to begin taking minimum annual distributions by April 1 of the calendar year following the calendar year in which you attain age 70-1/2. The general rule that annuity payments may not extend beyond your life/life expectancy or beyond the joint lives/joint life expectancies of you and your beneficiaries does not apply to a Roth IRA. The minimum distribution rules which apply to the beneficiary at your death and which are described in the Prospectus continue to apply. The rules differ depending on whether you die after distributions have begun. 19. Under Individual Retirement Annuities and Simplified Employee Pension Plans on page 22, add the following: Section 408A of the Code permits eligible individuals to contribute to a Roth IRA on an after-tax (nondeductible) basis. Distributions from other types of qualified plans are not permitted to be transferred or rolled over to a Roth IRA. A Roth IRA can accept transfers/rollovers only from an IRA, subject to ordinary income tax, or from another Roth IRA. 20. Under Withdrawals on page 19, add the following: Any "qualified" distribution from a Roth IRA is not includible in gross income. A "qualified" distribution is any distribution made after you have attained age 59-1/2, or on account of your death or disability, or for a qualified first-time home purchase. A distribution will not be treated as "qualified" if it is made within the 5-taxable year period beginning with the first taxable year for which a contribution was made. If a distribution is not "qualified", the accumulated earnings are includible in income. The 10% premature distribution penalty will apply to the taxable portion of the distribution unless one of the exceptions under the Code applies. (See Section 21 of this Supplement.) A partial distribution will first be treated as a return of cost basis (i.e. aggregate amount of contributions.) For Roth IRAs the minimum distribution rules do not apply prior to your death. (See "Annuity Period" above.) 21. Under Penalty Tax on page 19, replace the language in the fourth paragraph with the following: In general, except for (d), the same exceptions described in the preceding paragraph will apply to distributions made from an Individual Retirement Annuity, including a distribution from a Roth IRA that is not a "qualified distribution" or a rollover to a Roth IRA that is not a "qualified rollover" contribution. Beginning January 1, 1997, the penalty tax is also waived on distributions made from an IRA to pay for health insurance premiums for certain unemployed individuals. Beginning January 1, 1998, the penalty tax is waived if the amounts withdrawn are used for a qualified first-time home purchase or for higher education expenses. APPENDIX FIXED ACCOUNT The Fixed Account is an investment option available during the Accumulation Period under the Contracts. The following summarizes material information concerning the Fixed Account that is offered as an option under the Contract. Additional information may be found in your Contract. Amounts allocated to the Fixed Account are held in the Company's general account that supports insurance and annuity obligations. Interests in the Fixed Account have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended. Disclosure in this prospectus regarding the Fixed Account, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of the statements. Disclosure in this Appendix regarding the Fixed Account has not been reviewed by the SEC. Fixed Account Amounts allocated to this option will earn the minimum guaranteed interest rate specified in the Contract. The Company may credit a higher interest rate from time to time. The Company's determination of interest rates reflects the investment income earned on invested assets and the amortization of any capital gains and/or losses realized on the sale of invested assets. Under this option, the Company assumes the risk of investment gain or loss by guaranteeing Net Purchase Payment values and promising a minimum interest rate and Annuity payment. Amounts applied to the Fixed Account will earn the interest rate declared on the date the Purchase Payment is received in good order at the Company's Home Office. The Fixed Account is only available in certain states. If a withdrawal is made from the Fixed Account, a deferred sales charge may apply. Amounts allocated to the Fixed Account will count as an option for purposes of the 18 investment option limit. (See the Contract Prospectus). Dollar Cost Averaging Amounts invested in the Fixed Account must be transferred into the other investment options available under the Contract over a period not to exceed 12 months under the Dollar Cost Averaging Program. In the event a Certificate Holder discontinues dollar cost averaging, the remaining balance in the Fixed Account will be transferred into the Aetna Variable Encore Fund Subaccount (a money market fund) unless directed otherwise. Mortality and Expense Risk Charges The Fixed Account will reflect a compound interest rate credited by the Company. The interest rate quoted is an annual effective yield. The Company makes no deductions from the credited interest rate for mortality and expense risks; these risks are considered in determining the credited rate. Transfers Among Investment Options Transfers from the Fixed Account to any other available investment option under the Contract are allowed in each calendar year during the Accumulation Period. The amount which may be transferred may vary at the Company's discretion; however, it will never be less than 10% of the amount held under the Fixed Account. By giving notice to the Company at its Home Office at least 30 days before Annuity payments begin, the Certificate Holder may elect to have amounts which have accumulated under the Fixed Account transferred to one or more of the investment options available during the Annuity Period to provide Annuity payments. Under certain emergency conditions, we may defer payment of a Fixed Account withdrawal value (a) for a period of up to six months, or (b) as allowed by federal law. Condensed Financial Information--Page AUV History--1 through AUV History--4 The following information supplements the Condensed Financial Information Table to reflect condensed financial information for investment options available as of September 30, 1997. Not all investment options shown here are currently available. [Actual condensed financial information to be provided in a 485(b) filing] - -------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY COMPANY - -------------------------------------------------------------------------------- Statement of Additional Information dated February 16, 1998 Marathon Plus New York Growth Plus 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 November 28, 1997 and as supplemented on February 16, 1998. A free prospectus is available upon request from the local Aetna Life Insurance and Annuity Company office or by writing to or calling: Aetna Life Insurance and Annuity Company Customer Service 151 Farmington Avenue Hartford, Connecticut 06156 1-800-531-4547 Read the prospectus before you invest. Terms used in this Statement of Additional Information shall have the same meaning as in the prospectus. TABLE OF CONTENTS Page ---- General Information and History.......................................... 2 Variable Annuity Account B............................................... 2 Offering and Purchase of Contracts....................................... 3 Performance Data......................................................... 3 General............................................................ 3 Average Annual Total Return Quotations............................. 4 Annuity Payments......................................................... 9 Sales Material and Advertising........................................... 10 Independent Auditors..................................................... 10 Financial Statements of the Separate Account............................. S-1 Financial Statements of the Company...................................... F-1 GENERAL INFORMATION AND HISTORY Aetna Life Insurance and Annuity Company (the "Company") is a stock life insurance company which was organized under the insurance laws of the State of Connecticut in 1976. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in 1954). As of December 31, 1996, the Company had $30.1 billion invested through its products, including $15.0 billion in its separate accounts (of which the Company oversees the management of $10.5 billion) and $1.1 billion in its mutual funds offered outside of its separate accounts. As of December 31, 1995, it ranked among the top 2% of all U.S. life insurance companies based on assets. 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 charges and administrative 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. Purchase Payments made under the Contract may be allocated to one or more of the Subaccounts. Each Subaccount invests in the shares of only one of the Funds listed below. The Company may make additions to, deletions from or substitution of available investment options as permitted by law and subject to the conditions of the Contract. The availability of the Funds is subject to applicable regulatory authorization. Not all Funds are available in all jurisdictions or under all Contracts. -2- The Funds currently available under the Marathon Plus Contract are as follows: Aetna Variable Fund Fidelity VIP II Index 500 Portfolio Aetna Income Shares Janus Aspen Aggressive Growth Portfolio Aetna Variable Encore Fund Janus Aspen Balanced Portfolio Aetna Investment Advisers Fund, Inc. Janus Aspen Flexible Income Portfolio Aetna Ascent Variable Portfolio Janus Aspen Growth Portfolio Aetna Crossroads Variable Portfolio Janus Aspen Worldwide Growth Portfolio Aetna Legacy Variable Portfolio MFS Total Return Series Aetna Variable Capital Appreciation Portfolio MFS World Governments Series Aetna Variable Growth Portfolio Oppenheimer Capital Appreciation Fund Aetna Variable Index Plus Portfolio Oppenheimer Global Securities Fund Aetna Variable Small Company Portfolio Oppenheimer Growth & Income Fund Calvert Social Balanced Portfolio Oppenheimer Strategic Bond Fund (formerly Calvert Responsibily Portfolio Partners MFS Emerging Equities Portfolio Invested Balanced Fund) Portfolio Partners MFS Research Growth Portfolio Fidelity VIP Equity-Income Portfolio Portfolio Partners MFS Value Equity Portfolio Fidelity VIP Growth Portfolio Portfolio Partners Scudder International Fidelity VIP High Income Portfolio Growth Portfolio Fidelity VIP Overseas Portfolio Portfolio Partners T. Rowe Price Growth Fidelity VIP II Asset Manager Portfolio Equity Portfolio Fidelity VIP II Contrafund Portfolio
The Funds currently available under the New York Growth Plus Contract are as follows: Federated American Leaders Fund II Federated High Income Bond Fund II Federated Equity Income Fund II Federated International Equity Fund II Federated Fund for U.S. Government Securities II Federated Prime Money Fund II Federated Growth Strategies Fund II Federated Utility Fund II
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 as defined in the prospectus. The offering of the Contracts is continuous. A description of the manner in which Contracts are purchased may be found in the prospectus under the sections titled "Purchase" and "Contract Valuation." PERFORMANCE DATA GENERAL From time to time, the Company may advertise different types of historical performance for the Subaccounts of the Separate Account available under the Contracts. The Company may advertise the "standardized average annual total returns," calculated in a manner prescribed by the Securities and -3- Exchange Commission (the "standardized return"), as well as "non-standardized returns," both of which are described below. The standardized and non-standardized total return figures are computed according to a formula in which a hypothetical initial Purchase Payment of $1,000 is applied to the various Subaccounts under the Contract, and then related to the ending redeemable values over one, five and ten year periods (or fractional periods thereof). The redeemable value is then divided by the initial investment and this quotient is taken to the Nth root (N represents the number of years in the period) and 1 is subtracted from the result which is then expressed as a percentage, carried to at least the nearest hundredth of a percent. The standardized figures use the actual returns of the Fund since the date the Fund was first available under the Separate Account and then adjust them to reflect the deduction of all recurring charges under the Contracts during each period (e.g., mortality and expense risk charges, maintenance fees, administrative charges, and deferred sales charges). These charges will be deducted on a pro rata basis in the case of fractional periods. The maintenance fee is converted to a percentage of assets based on the average account size under the Contracts described in the prospectus. The total return figures shown below may be different from the actual historical total return under your Contract because for periods prior to 1994, the Subaccount's investment performance reflected the investment performance of the underlying Fund plus any cash held by the Subaccount. The non-standardized figures will be calculated in a similar manner, except that they will not reflect the deduction of any applicable deferred sales charge (which would decrease the level of performance shown if reflected in these calculations). The non-standardized figures may also include monthly, quarterly, year-to-date and three-year periods and may include returns calculated from the Fund's inception date and/or the date the Fund was added to the Separate Account. Investment results of the Subaccounts will fluctuate over time, and any presentation of the Subaccounts' total return quotations for any prior period should not be considered as a representation of how the Subaccounts will perform in any future period. Additionally, the Account Value upon redemption may be more or less than your original cost. AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized The tables shown below reflect the average annual standardized and non-standardized total return quotation figures for the periods ended September 30, 1997 for the Subaccounts available under the Separate Account as of September 30, 1997 (not all such Funds are currently available). Table A reflects the total return quotations for Contracts issued nationwide (other than Contracts or Certificates issued in New York). Table B reflects the total return quotations for Marathon Plus and Growth Plus Contracts or Certificates issued in the state of New York. For those Subaccounts where results are not available for the full calendar period indicated, the percentage shown is an average annual return since the date the Fund was first added to the Separate Account (in the case of standardized performance) or the Fund's inception date (in the case of nonstandardized performance). (Percentages reflecting partial periods are denoted with an asterisk.) -4-
TABLE A ------------------------------------------------------------------------------------------- DATE FUND ADDED TO FUND SEPARATE INCEPTION ($30 MAINTENANCE FEE) STANDARDIZED ACCOUNT NON-STANDARDIZED DATE - ------------------------------------------------------------------------------------------------------------------------------------ SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Fund 05/01/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Income Shares 05/15/73 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Encore Fund 08/01/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Investment Advisers Fund, Inc. 04/03/89 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Ascent Variable Portfolio 07/05/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Crossroads Variable Portfolio 07/05/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Legacy Variable Portfolio 07/05/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Index Plus Portfolio 09/16/96 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Balanced Portfolio 09/05/89 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Growth Portfolio 01/09/89 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Income and Growth Portfolio 11/15/88 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Leveraged AllCap Portfolio 01/25/95 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American MidCap Growth Portfolio 05/03/93 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Small Capitalization Portfolio 09/21/88 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP Balanced 05/01/91 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP Capital Appreciation 11/20/87 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP International 05/01/94 - ------------------------------------------------------------------------------------------------------------------------------------ Calvert Social Balanced Portfolio 09/02/86 - ------------------------------------------------------------------------------------------------------------------------------------ Federated American Leaders Fund II 02/10/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated Fund for U.S. Government Securities II 03/28/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated High Income Bond Fund II 03/01/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated Utility Fund II 02/10/94 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Equity-Income Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ -5- ------------------------------------------------------------------------------------------- DATE FUND ADDED TO FUND SEPARATE INCEPTION ($30 MAINTENANCE FEE) STANDARDIZED ACCOUNT NON-STANDARDIZED DATE - ------------------------------------------------------------------------------------------------------------------------------------ SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Growth Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP High Income Portfolio 09/19/85 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Overseas Portfolio 02/13/87 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Asset Manager 09/06/89 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Contrafund Portfolio 01/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Index 500 Portfolio 08/27/92 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Investment Grade Bond Portfolio 12/05/88 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Aggressive Growth 09/13/93 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Balanced Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Flexible Income Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Short-Term Bond Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Worldwide Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Lexington Emerging Markets Fund, Inc. 03/30/94 - ------------------------------------------------------------------------------------------------------------------------------------ Lexington Natural Resources Trust 10/14/91 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Series 07/24/95 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research Series 07/26/95 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Total Return Series 01/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Value Series 08/14/96 - ------------------------------------------------------------------------------------------------------------------------------------ MFS World Governments Series 06/14/94 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund 08/15/86 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Global Securities Fund 11/12/90 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Growth & Income Fund 07/06/95 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Strategic Bond Fund 05/03/93 - ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the Tables for an explanation of the charges included in the Standardized and Non-Standardized figures. These figures represent historical performance and should not be considered a projection of future performance. -6-
TABLE B CONTRACTS OR CERTIFICATES ISSUED IN NEW YORK ------------------------------------------------------------------------------------------- DATE FUND ADDED TO FUND SEPARATE INCEPTION ($30 MAINTENANCE FEE) STANDARDIZED ACCOUNT NON-STANDARDIZED DATE - ------------------------------------------------------------------------------------------------------------------------------------ SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Fund 05/01/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Income Shares 05/15/73 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Encore Fund 08/01/75 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Investment Advisers Fund, Inc. 04/03/89 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Ascent Variable Portfolio 07/05/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Crossroads Variable Portfolio 07/05/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Legacy Variable Portfolio 07/05/95 - ------------------------------------------------------------------------------------------------------------------------------------ Aetna Variable Index Plus Portfolio 09/16/96 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Balanced Portfolio 09/05/89 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Growth Portfolio 01/09/89 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Income and Growth Portfolio 11/15/88 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Leveraged AllCap Portfolio 01/25/95 - ------------------------------------------------------------------------------------------------------------------------------------ Alger American MidCap Growth 05/03/93 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Alger American Small Capitalization Portfolio 09/21/88 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP Balanced 05/01/91 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP Capital Appreciation 11/20/87 - ------------------------------------------------------------------------------------------------------------------------------------ American Century VP International 05/01/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated American Leaders Fund II 02/10/94 - ------------------------------------------------------------------------------------------------------------------------------------ Calvert Social Balanced Portfolio 09/02/86 - ------------------------------------------------------------------------------------------------------------------------------------ Federated Fund for U.S. Government Securities II 03/28/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated Growth Strategies Fund II 10/02/95 - ------------------------------------------------------------------------------------------------------------------------------------ Federated High Income Bond Fund II 03/01/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated International Equity Fund II 05/08/95 ----------------------------------------------------------------------------------------------------------------------------------- Federated Prime Money Fund II 11/18/94 - ------------------------------------------------------------------------------------------------------------------------------------ Federated Utility Fund II 02/10/94 - ------------------------------------------------------------------------------------------------------------------------------------ -7- - ------------------------------------------------------------------------------------------------------------------------------------ DATE FUND ADDED TO FUND SEPARATE INCEPTION ($30 MAINTENANCE FEE) STANDARDIZED ACCOUNT NON-STANDARDIZED DATE - ------------------------------------------------------------------------------------------------------------------------------------ SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Equity-Income Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Growth Portfolio 10/09/86 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP High Income Portfolio 09/19/85 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP Overseas Portfolio 02/13/87 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Asset Manager 09/06/89 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Contrafund Portfolio 01/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Index 500 Portfolio 08/27/92 - ------------------------------------------------------------------------------------------------------------------------------------ Fidelity VIP II Investment Grade Bond Portfolio 12/05/88 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Aggressive Growth 09/13/93 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Balanced Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Flexible Income Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Growth Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Short-Term Bond Portfolio 09/13/93 - ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Worldwide Growth 09/13/93 Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Lexington Emerging Markets Fund, Inc. 03/30/94 - ------------------------------------------------------------------------------------------------------------------------------------ Lexington Natural Resources Trust 10/14/91 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Series 07/24/95 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research Series 07/26/95 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Total Return Series 01/03/95 - ------------------------------------------------------------------------------------------------------------------------------------ MFS Value Series 08/14/96 - ------------------------------------------------------------------------------------------------------------------------------------ MFS World Governments Series 06/14/94 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Capital Appreciation Fund 08/15/86 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Global Securities Fund 11/12/90 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Growth & Income Fund 07/06/95 - ------------------------------------------------------------------------------------------------------------------------------------ Oppenheimer Strategic Bond Fund 05/03/93 - ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the Tables for an explanation of the charges included in the Standardized and Non-Standardized figures. These figures represent historical performance and should not be considered a projection of future performance. -8- ANNUITY PAYMENTS When Annuity payments are to begin, the value of the Account is determined using Accumulation Unit values as of the tenth Valuation Date before the first Annuity payment is due. Such value (less any applicable premium tax) is applied to provide an Annuity in accordance with the Annuity and investment options elected. The Annuity option tables found in the Contract show, for each form of Annuity, the amount of the first Annuity payment for each $1,000 of value applied. Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s) fluctuates with the investment experience of the selected investment option(s). The first payment and subsequent payments also vary depending on the assumed net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a higher first payment, but Annuity payments will increase thereafter only to the extent that the net investment rate increases by more than 5% on an annual basis. Annuity payments would decline if the rate failed to increase by 5%. Use of the 3.5% assumed rate causes a lower first payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the net investment rate. When the Annuity Period begins, the Annuitant is credited with a fixed number of Annuity Units (which does not change thereafter) in each of the designated investment options. This number is calculated by dividing (a) by (b), where (a) is the amount of the first Annuity payment based on a particular investment option, and (b) is the then current Annuity Unit value for that investment option. As noted, Annuity Unit values fluctuate from one Valuation Date to the next; such fluctuations reflect changes in the net investment factor for the appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company time to process Annuity payments) and a mathematical adjustment which offsets the assumed net investment rate of 3.5% or 5% per annum. The operation of all these factors can be illustrated by the following hypothetical example. These procedures will be performed separately for the investment options selected during the Annuity Period. EXAMPLE: - -------- Assume that, at the date Annuity payments are to begin, there are 3,000 Accumulation Units credited under a particular Account and that the value of an Accumulation Unit for the tenth Valuation Date prior to retirement was $13.650000. This produces a total value of $40,950. Assume also that no premium tax is payable and that the Annuity table in the Contract provides, for the option elected, a first monthly variable Annuity payment of $6.68 per $1000 of value applied; the Annuitant's first monthly payment would thus be 40.950 multiplied by $6.68, or $273.55. Assume then that the value of an Annuity Unit for the Valuation Date on which the first payment was due was $13.400000. When this value is divided into the first monthly payment, the number of Annuity Units is determined to be 20.414. The value of this number of Annuity Units will be paid in each subsequent month. If the net investment factor with respect to the appropriate Subaccount is 1.0015000 as of the tenth Valuation Date preceding the due date of the second monthly payment, multiplying this factor by .9999058* (to neutralize the assumed net investment rate of 3.5% per annum built into the number of Annuity Units determined above) produces a result of 1.0014057. This is then multiplied by the Annuity Unit value for the prior Valuation Date (assume such value to be $13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation Date on which the second payment is due. -9- The second monthly payment is then determined by multiplying the number of Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359, which produces a payment of $276.07. *If an assumed net investment rate of 5% is elected, the appropriate factor to neutralize such assumed rate would be .9998663. SALES MATERIAL AND ADVERTISING The Company may include hypothetical illustrations in its sales literature that explain the mathematical principles of dollar cost averaging, compounded interest, tax deferred accumulation, and the mechanics of variable annuity contracts. The Company may also discuss the difference between variable annuity contracts and other types of savings or investment products, including, but not limited to, personal savings accounts and certificates of deposit. We may distribute sales literature that compares the percentage change in Accumulation Unit values for any of the Subaccounts to established market indices such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average or to the percentage change in values of other management investment companies that have investment objectives similar to the Subaccount being compared. We may publish in advertisements and reports, the ratings and other information assigned to us by one or more independent rating organizations such as A.M. Best Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors Services, Inc. The purpose of the ratings is to reflect our financial strength and/or claims-paying ability. We may also quote ranking services such as Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable Insurance Products Performance Analysis Service (VIPPAS), which rank variable annuity or life Subaccounts or their underlying funds by performance and/or investment objective. We may illustrate in advertisements the performance of the underlying funds, if accompanied by performance which also shows the performance of such funds, reduced by applicable charges under the Separate Account. We may also show in advertisements the portfolio holdings of the underlying funds, updated at various intervals. From time to time, we will quote articles from newspapers and magazines or other publications or reports, including, but not limited to The Wall Street Journal, Money magazine, USA Today and The VARDS Report. The Company may provide in advertising, sales literature, periodic publications or other materials information on various topics of interest to current and prospective Certificate Holders. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing), the advantages and disadvantages of investing in tax-deferred and taxable investments, customer profiles and hypothetical purchase and investment scenarios, financial management and tax and retirement planning, and investment alternatives to certificates of deposit and other financial instruments, including comparison between the Contracts and the characteristics of and market for such financial instruments. INDEPENDENT AUDITORS KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the independent auditors for the Separate Account and for the Company. The services provided to the Separate Account include primarily the examination of the Separate Account's financial statements and the review of filings made with the SEC. -10- FINANCIAL STATEMENTS VARIABLE ANNUITY ACCOUNT B AETNA LIFE INSURANCE AND ANNUITY COMPANY To Be Filed By Amendment VARIABLE ANNUITY ACCOUNT B PART C - OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: (1) Included in Part A: Condensed Financial Information (2) Included in Part B: Financial Statements of Variable Annuity Account B: * - Independent Auditors' Report - Statement of Assets and Liabilities as of December 31, 1996 - Statements of Operations and Changes in Net Assets for the years ended December 31, 1996 and 1995 - Notes to Financial Statements - Unaudited Statement of Assets and Liabilities as of September 30, 1997 - Unaudited Statements of Operations for the nine-month periods ended September 30, 1997 and 1996 - Unaudited Statement of Changes in Net Assets for the nine- month period ended September 30, 1997 Financial Statements of the Depositor: * - Independent Auditors' Report - Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994 - Consolidated Balance Sheets as of December 31, 1996 and 1995 - Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 1996, 1995 and 1994 - Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 - Notes to Consolidated Financial Statements - Unaudited Consolidated Balance Sheets as of September 30, 1997 - Unaudited Consolidated Statements of Income for the three- and nine-month periods ended September 30, 1997 and 1996 - Unaudited Consolidated Statements of changes in Shareholder's Equity for the nine-month periods ended September 30, 1997 and 1996 - Unaudited Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 1997 and 1996 - Condensed Notes to Consolidated Financial Statements *To be filed by Amendment (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) Selling Agreement(2) (3.2) Alternative Form of Wholesaling Agreement and Related Selling Agreement(3) (3.3) Federated Broker Dealer Agreement (9/2/94)(4) (4.1) Variable Annuity Contract G-CDA-97(NY) (4.2) Variable Annuity Contract Certificate GMCC-97(NY) to Contract G-CDA-97(NY) (4.3) Variable Annuity Contract G-MP1(5/97)(5) (4.4) Variable Annuity Contract Certificate MP1CERT(5/97)(5) (4.5) Variable Annuity Contract I-MP1(5/97)(5) (4.6) Variable Annuity Contract G-MP1(5/96)(6) (4.7) Variable Annuity Contract Certificate MP1CERT(5/96)(6) (4.8) Variable Annuity Contract I-MP1(5/96)(6) (4.9) Variable Annuity Contract G-CDA-96(NY)(6) (4.10) Variable Annuity Contract Certificate GMCC-96(NY)(6) (4.11) Variable Annuity Contracts and Certificates G-CDA-IC(NQ), G-CDA-IC(IR), I-CDA-IC(NQ/MP), I-CDA-IC(IR/MP), GMCC-IC(NQ)(7) (4.12) Variable Annuity Contracts and Certificates G-CDA-IC(IR/NY), GMCC-IC(IR/NY), G-CDA-IC(NQ/NY), and GMCC-IC(NQ/NY)(8) (4.13) Endorsements MP1IRA(5/97) and I-MP1IRA(5/97) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(6) (4.14) Endorsements MP1QP(5/97) and I-MP1QP(5/97) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(6) (4.15) Endorsements MP1TDA(5/97) and I-MP1TDA(5/97) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(6) (4.16) Endorsements MP1DC(5/97) and I-MP1DC(5/97) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(6) (4.17) Endorsement G-MP1IRA(11/96) to Contract G-CDA-96(NY) and Certificate GMCC-96(NY)(6) (4.18) Endorsements MP1END(5/97) and I-MP1END (5/97) to Contract GMP1(5/96) and Certificate MP1CERT(5/96)(6) (4.19) Endorsement MP1END(9/97) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(5) (4.20) Endorsement I-MP1END(9/97) to Contract I-MP1(5/96)(5) (4.21) Endorsement E1-MPROTH-97 to Contract G-MP1 (5/97) (4.22) Endorsement EI1MPROTH-97 to Contract I-MP1 (5/97) (4.23) Endorsement MP1IRA (11/97) to Contract G-MP1 (5/97) (4.24) Endorsement I-MP1IRA (11/97) to Contract I-MP1 (5/97) (4.25) Contract Schedule I Accumulation Period (G-MP1 (11/97)-5) to Group Contract (G-MP1 (5/97)) (4.26) Contract Schedule I Accumulation Period (I-MP1 (11/97)-5) to Individual Contract (I-MP1 (5/97)) (5.1) Variable Annuity Contract Application (300-MAR-IB)(9) (5.2) Variable Annuity Contract Application (710.6.13)(9) (5.3) Variable Annuity Contract Application MPAPPNY (1/96) (6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity Company(10) (6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance and Annuity Company(11) (6.3) By-Laws, as amended September 17, 1997, of Aetna Life Insurance and Annuity Company((2) (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 as of March 31, 1995(3) (8.2) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993(3) (8.3) Second Amendment dated January 1, 1996 to Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993(13) (8.4) Third Amendment dated February 11, 1997 to Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993 and January 1, 1996(14) (8.5) Fourth Amendment dated February 28, 1997 to Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993, January 1, 1996, and February 11, 1997(15) (8.6) Fund Participation Agreement by and among Aetna Life Insurance and Annuity Company, Insurance Management Series and Federated Advisors dated July 1, 1994(16) (8.7) Fund Participation Agreements between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(11) (8.8) Fifth Amendment, dated as of May 1, 1997, to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(5) (8.9) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(1)) (8.10) Fifth Amendment, dated as of May 1, 1997, to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(5) (8.11) Service Agreement between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995(13) (8.12) Amendment dated January 1, 1997 to Service Agreement between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995(5) (8.13) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Janus Aspen Series dated April 19, 1994, and amended June 15, 1994, July 31, 1995 and March 1, 1996(5) (8.14) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Lexington Management Corporation regarding Natural Resources Trust dated December 1, 1988 and amended February 11, 1991(3) (8.15) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Lexington Emerging Markets Fund, Inc. and Lexington Management Corporation (its investment advisor) dated April 28, 1994(2) (8.16) Fund Participation Agreement among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company dated April 30, 1996(6) (8.17) First Amendment dated September 3,1996 to Fund Participation Agreement among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company dated April 30, 1996(17) (8.18) Second Amendment dated March 14, 1997 to Fund Participation Agreement among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company dated April 30, 1996(16) (8.19) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc. dated March 11, 1997(16) (8.20) Service Agreement between Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity Company dated March 11, 1997(16) (8.21) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Investors Research Corporation and TCI Portfolios, Inc. dated July 29, 1992 and amended December 22, 1992 and June 1, 1994(3) (8.22) Administrative Service Agreement between Aetna Life Insurance and Annuity Company and Agency, Inc.(2) (9) Opinion and Consent of Counsel (10) Consent of Independent Auditors* (11) Not applicable (12) Not applicable (13) Schedule for Computation of Performance Data(17) (14) Not applicable (15.1) Powers of Attorney(18) (15.2) Authorization for Signatures(3) (27) Financial Data Schedule* *To be filed by Amendment 1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75986), as filed electronically on April 22, 1996 (Accession No. 0000950146-96-000563). 2. Incorporated by reference to Post-Effective Amendment No. 22 to Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on April 22, 1996 (Accession No. 0000912057-96-006805). 3. 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 (Accession No. 0000912057-96-006383). 4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-79122), as filed electronically on August 16, 1995 (Accession No. 0000950109-95-003265). 5. Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on September 29, 1997 (Accession No. 0000950146-97-001485). 6. Incorporated by reference to Post-Effective Amendment No. 26 to Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on February 21, 1997 (Accession No. 0000950146-97-000226). 7. Incorporated by reference to Post-Effective Amendment No. 15 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 19, 1994. 8. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 33-87932), as filed electronically on September 19, 1995 (Accession No. 0000950109-95-003821). 9. Incorporated by reference to Post-Effective Amendment No. 29 to Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on August 18, 1997 (Accession No. 0000950146-97-001290). 10. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form S-1 (File No. 33-60477), as filed electronically on April 15, 1996 (Accession No. 0000950146-96-000534). 11. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-75964), as filed electronically on February 11, 1997 (Accession No. 0000950146-97-000159). 12. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-91846), as filed electronically on October 30, 1997 (Accession No. 0000950146-97-001589). 13. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-88720), as filed electronically on June 28, 1996 (Accession No. 0000928389-96-000136). 14. Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 333-01107), as filed electronically on February 26, 1997 (Accession No. 0000950146-97-000241). 15. Incorporated by reference to Post-Effective Amendment No. 14 to Registration Statement on Form N-4 (File No. 33-75964), as filed electronically on July 29, 1997 (Accession No. 0000950146-97-001101). 16. Incorporated by reference to Post-Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on April 16, 1997 (Accession No. 0000950146-97-000617). 17. Incorporated by reference to Post-Effective Amendment No. 24 to Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on September 16, 1996 (Accession No. 0000912057-96-020393). 18. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form S-6 (File No. 333-27337), as filed electronically on December 9, 1997 (Accession No. 0000950146-97-001872). Item 25. Directors and Officers of the Depositor Name and Principal Business Address* Positions and Offices with Depositor - ----------------- ------------------------------------ Thomas J. McInerney Director and President Timothy A. Holt Director, Senior Vice President and Chief Financial Officer Christopher J. Burns Director and Senior Vice President J. Scott Fox Director and Senior Vice President John Y. Kim Director and Senior Vice President Shaun P. Mathews Director and Senior Vice President Thomas P. Waldron Director Deborah Koltenuk Vice President and Treasurer, Corporate Controller Frederick D. Kelsven Vice President and Chief Compliance Officer Kirk P. Wickman Vice President, General Counsel and Corporate Secretary * The principal business address of all directors and officers listed is 151 Farmington Avenue, Hartford, Connecticut 06156. Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant Incorporated herein by reference to Item 26 of Post-Effective Amendment No. 31 to the Registration Statement on Form N-4 (File No. 33-34370), as filed electronically on November 26, 1997 (Accession No. 0000950146-97-001802). Item 27. Number of Contract Owners As of November 30, 1997, there were 60,086 individuals holding interests in variable annuity contracts funded through Variable Annuity Account B. Item 28. Indemnification Reference is hereby made to Section 33-771(f) of the Connecticut General Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4) regarding indemnification of officers, employees and agents of Connecticut corporations. These statutes provide in general that Connecticut corporations incorporated prior to January 1, 1997 shall indemnify their officers, directors, employees and agents against "liability" (defined as the obligation to pay a judgment, settlement, penalty, fine, excise tax in the case of an employee benefit plan or reasonable expenses incurred with respect to a proceeding). In the case of a proceeding by or in the right of the corporation, indemnification is limited to reasonable expenses incurred in connection with the proceeding against the corporation to which the individual was named a party. The corporation's obligation to provide such indemnification does not apply unless (1) the individual has met the standard of conduct set forth in Section 33-771; and (2) a determination is made (by majority vote of a quorum of the board of directors who were not parties to the proceeding, or if a quorum cannot be obtained, by a committee of the board selected as described in Section 33-775(b)(2); by special legal counsel selected by the board of directors or members thereof as described in Section 33-775(b)(3); by shareholders) that the individual met the standard set forth in Section 33-771; or (3) the court, upon application by the individual, determines in view of all the circumstances that such person is reasonably entitled to be indemnified. Also, unless limited by its Certificate of Incorporation, a corporation must indemnify an individual who was wholly successful on the merits or otherwise against reasonable expenses incurred by him in connection with a proceeding to which he was a party because of his relationship as director, officer, employee or agent of the corporation. The statute does specifically authorize a corporation to procure indemnification insurance on behalf of an individual who is or was a director, officer, employer or agent of the corporation. Consistent with the statute, Aetna Inc. has procured insurance from Lloyd's of London and several major United States excess insurers for its directors and officers and the directors and officers of its subsidiaries, including the Depositor. Item 29. Principal Underwriter (a) In addition to serving as the principal underwriter and depositor for the Registrant, Aetna Life Insurance and Annuity Company (Aetna) also acts as the investment adviser, only, for Aetna Series Fund, Inc., and the principal underwriter and investment adviser for Portfolio Partners, Inc., Aetna Variable Encore Fund, Aetna Variable Fund, Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna Investment Advisers Fund, Inc., Aetna GET Fund, and Aetna Variable Portfolios, Inc. (all management investment companies registered under the Investment Company Act of 1940 (1940 Act)). Additionally, Aetna acts as the principal underwriter and depositor for Variable Life Account B of Aetna, Variable Annuity Account C of Aetna and Variable Annuity Account G of Aetna (separate accounts of Aetna registered as unit investment trusts under the 1940 Act). Aetna is also the principal underwriter for Variable Annuity Account I of Aetna Insurance Company of America (AICA) (a separate account of AICA registered as a unit investment trust under the 1940 Act). (b) See Item 25 regarding the Depositor. (c) Compensation as of December 31, 1996: (1) (2) (3) (4) (5) Name of Net Underwriting Compensation on Principal Discounts and Redemption or Brokerage Underwriter Commissions Annuitization Commissions Compensation* - ----------- ---------------- --------------- ----------- ------------- Aetna Life $288,029 $17,661,810 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) The Company hereby represents that it is relying upon and will comply with the provisions of Paragraphs (1) through (4) of the SEC Staff's No-Action Letter dated November 22, 1988 with respect to language concerning withdrawal restrictions applicable to plans established pursuant to Section 403(b) of the Internal Revenue Code. See American Counsel of Life Insurance; SEC No-Action Letter, [1989 Transfer Binder] Fed. SEC. L. Rep. (CCH) P. 78,904 at 78,523 (November 22, 1988). (e) 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. (f) Aetna Life Insurance and Annuity Company represents that the fees and charges deducted under the contracts covered by this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and Annuity Company has duly caused this Post-Effective Amendment to its Registration Statement on Form N-4 (File No. 33-34370) to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hartford, State of Connecticut, on the 16th day of December, 1997. VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY COMPANY (Registrant) By: AETNA LIFE INSURANCE AND ANNUITY COMPANY (Depositor) By: Thomas J. McInerney* ----------------------------------------- Thomas J. McInerney President As required by the Securities Act of 1933, this Post-Effective Amendment No. 32 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- Thomas J. McInerney* Director and President ) - ------------------------- (principal executive officer) ) Thomas J. McInerney ) ) Timothy A. Holt* Director, Senior Vice President ) - ------------------------- and Chief Financial Officer ) Timothy A. Holt ) ) Christopher J. Burns* Director ) December - ------------------------- ) Christopher J. Burns ) 16, 1997 ) J. Scott Fox* Director ) - ------------------------- ) J. Scott Fox ) ) John Y. Kim* Director ) - ------------------------- ) John Y. Kim ) Shaun P. Mathews* Director ) - ------------------------- ) Shaun P. Mathews ) ) Thomas P. Waldron* Director ) - ------------------------- ) Thomas P. Waldron ) ) Deborah Koltenuk* Vice President and Treasurer, ) - ------------------------- Corporate Controller ) Deborah Koltenuk ) By: /s/ Julie E. Rockmore ----------------------------- Julie E. Rockmore *Attorney-in-Fact 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 Selling Agreement * 99-B.3.2 Alternative Form of Wholesaling Agreement and Related * Selling Agreement 99-B.3.3 Federated Broker Dealer Agreement (9/2/94) * 99-B.4.1 Variable Annuity Contract G-CDA-97(NY) ______ 99-B.4.2 Variable Annuity Contract Certificate GMCC-97(NY) to ______ Contract G-CDA-97(NY) 99-B.4.3 Variable Annuity Contract G-MP1(5/97) * 99-B.4.4 Variable Annuity Contract Certificate MP1CERT(5/97) * 99-B.4.5 Variable Annuity Contract I-MP1(5/97) * 99-B.4.6 Variable Annuity Contract G-MP1(5/96) * 99-B.4.7 Variable Annuity Contract Certificate MP1CERT(5/96) * 99-B.4.8 Variable Annuity Contract I-MP1(5/96) * 99-B.4.9 Variable Annuity Contract G-CDA-96(NY) * 99-B.4.10 Variable Annuity Contract Certificate GMCC-96(NY) * 99-B.4.11 Variable Annuity Contracts and Certificates * G-CDA-IC(NQ), G-CDA-IC(IR), I-CDA-IC(NQ/MP), I-CDA-IC(IR/MP), GMCC-IC(NQ) 99-B.4.12 Variable Annuity Contracts and Certificates * G-CDA-IC(IR/NY), GMCC-IC(IR/NY), G-CDA-IC(NQ/NY), and GMCC-IC(NQ/NY) *Incorporated by reference Exhibit No. Exhibit Page 99-B.4.13 Endorsements MP1IRA(5/97) and I-MP1IRA(5/97) to Contract * G-MP1(5/96) and Certificate MP1CERT(5/96) 99-B.4.14 Endorsements MP1QP(5/97) and I-MP1QP(5/97) to Contract * G-MP1(5/96) and Certificate MP1CERT(5/96) 99-B.4.15 Endorsements MP1TDA(5/97) and I-MP1TDA(5/97) to Contract * G-MP1(5/96) and Certificate MP1CERT(5/96) 99-B.4.16 Endorsements MP1DC(5/97) and I-MP1DC(5/97) to Contract * G-MP1(5/96) and Certificate MP1CERT(5/96) 99-B.4.17 Endorsement G-MP1IRA(11/96)) to Contract G-CDA-96(NY) * and Certificate GMCC-96(NY) 99-B.4.18 Endorsements MP1END(5/97) and I-MP1END(5/97) to Contract * GMP1(5/96) and Certificate MP1CERT(5/96) 99-B.4.19 Endorsement MP1END(9/97) to Contract G-MP1(5/96) and * Certificate MP1CERT(5/96) 99-B.4.20 Endorsement I-MP1END(9/97) to Contract I-MP1(5/96) * 99-B.4.21 Endorsement E1-MPROTH-97 to Contract G-MP1 (5/97) ___ 99-B.4.22 Endorsement EI1MPROTH-97 to Contract I-MP1 (5/97) ___ 99-B.4.23 Endorsement MP1IRA (11/97) to Contract G-MP1 (5/97) ___ 99-B.4.24 Endorsement I-MP1IRA (11/97) to Contract I-MP1 (5/97) ___ 99-B.4.25 Contract Schedule I Accumulation Period (G-MP1 (11/97)-5) ___ to Group Contract (G-MP1 (5/97)) 99-B.4.26 Contract Schedule I Accumulation Period (I-MP1 (11/97)-5) ___ to Individual Contract (I-MP1 (5/97)) 99-B.5.1 Variable Annuity Contract Application (300-MAR-IB) * 99-B.5.2 Variable Annuity Contract Application (710.6.13) * 99-B.5.3 Variable Annuity Contract Application MPAPPNY (1/96) ___ 99-B.6.1 Certificate of Incorporation of Aetna Life Insurance and * Annuity Company 99-B.6.2 Amendment of Certificate of Incorporation of Aetna Life * Insurance and Annuity Company 99-B.6.3 By-Laws, as amended September 17, 1997, of Aetna Life * Insurance and Annuity Company 99-B.8.1 Fund Participation Agreement (Amended and Restated) * between Aetna Life Insurance and Annuity Company, Alger American Fund and Fred Alger Management, Inc. dated March 31, 1995 *Incorporated by reference Exhibit No. Exhibit Page 99-B.8.2 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company and Calvert Asset Management Company, Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993 99-B.8.3 Second Amendment dated January 1, 1996 to Fund * Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company, Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993 99-B.8.4 Third Amendment dated February 11, 1997 to Fund * Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company, Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993 and January 1, 1996 99-B.8.5 Fourth Amendment dated February 28, 1997 to Fund * Participation Agreement between Aetna Life Insurance and Annuity Company and Calvert Asset Management Company, Inc. (Calvert Responsibly Invested Balanced Portfolio, formerly Calvert Socially Responsible Series) dated March 13, 1989 and amended December 27, 1993, January 1, 1996, and February 11, 1997 99-B.8.6 Fund Participation Agreement by and among Aetna Life * Insurance and Annuity Company, Insurance Management Series and Federated Advisors dated July 1, 1994 99-B.8.7 Fund Participation Agreements between Aetna Life * Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 *Incorporated by reference Exhibit No. Exhibit Page 99-B.8.8 Fifth Amendment, dated as of May 1, 1997, to the Fund * Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 99-B.8.9 Fund Participation Agreement between Aetna Life * Insurance and Annuity * Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 99-B.8.10 Fifth Amendment, dated as of May 1, 1997, to the Fund * Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 99-B.8.11 Service Agreement between Aetna Life Insurance and * Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995 99-B.8.12 Amendment dated January 1, 1997 to Service Agreement * between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995 99-B.8.13 Fund Participation Agreement between Aetna Life * Insurance and Annuity * Company and Janus Aspen Series dated April 19, 1994, and amended June 15, 1994, July 31, 1995 and March 1, 1996 99-B.8.14 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company and Lexington Management Corporation regarding Natural Resources Trust dated December 1, 1988 and amended February 11, 1991 *Incorporated by reference Exhibit No. Exhibit Page 99-B.8.15 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company, Lexington Emerging Markets Fund, Inc. and Lexington Management Corporation (its investment advisor) dated April 28, 1994 99-B.8.16 Fund Participation Agreement among MFS Variable * Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company dated April 30, 1996 99-B.8.17 First Amendment dated September 3,1996 to Fund * Participation Agreement among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company dated April 30, 1996 99-B.8.18 Second Amendment dated March 14, 1997 to Fund * Participation Agreement among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company dated April 30, 1996 99-B.8.19 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc. dated March 11, 1997 99-B.8.20 Service Agreement between Oppenheimer Funds, Inc. and * Aetna Life Insurance and Annuity Company dated March 11, 1997 99-B.8.21 Fund Participation Agreement between Aetna Life * Insurance and Annuity Company, Investors Research Corporation and TCI Portfolios, Inc. dated July 29, 1992 and amended December 22, 1992 and June 1, 1994 99-B.8.22 Administrative Service Agreement between Aetna Life * Insurance and Annuity Company and Agency, Inc. 99-B.9 Opinion and Consent of Counsel ______ 99-B.10 Consent of Independent Auditors ** 99-B.13 Schedule for Computation of Performance Data * *Incorporated by reference **To be filed by amendment Exhibit No. Exhibit Page 99-B.15.1 Powers of Attorney * 99-B.15.2 Authorization for Signatures * 27 Financial Data Schedule ** *Incorporated by reference **To be filed by Amendment EX-99.B.4.1 2 VARIABLE ANNUITY CONTRACT ------------------------------------------------- Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 (800) 531-4547 Aetna Life Insurance and Annuity Company, herein called Aetna, agrees to pay the benefits stated in this Contract. Specifications - -------------------------------------------------------------------------------- Plan SPECIMEN - -------------------------------------------------------------------------------- Type of Plan SPECIMEN - -------------------------------------------------------------------------------- Contract Holder SPECIMEN - -------------------------------------------------------------------------------- Annuitant SPECIMEN - -------------------------------------------------------------------------------- Contract No. SPECIMEN - -------------------------------------------------------------------------------- Effective Date SPECIMEN - -------------------------------------------------------------------------------- This Contract is Delivered in NEW YORK and is Subject to the Laws of that Jurisdiction THE VARIABLE FEATURES OF THE CONTRACT ARE DESCRIBED IN PARTS III AND IV. Right to Cancel - -------------------------------------------------------------------------------- The Contract Holder may cancel this Contract within 10 days of receiving it by returning this Contract along with a written notice to Aetna at the above address or to the agent from whom it was purchased. Within 7 days after it receives the notice of cancellation and this Contract at its Home Office, Aetna will return the entire consideration paid. This page, the following pages, and the application make up the entire Contract. Signed at the Home Office on the Effective Date. /s/ Dan Kearney /s/ Kirk Wickman President Secretary Group Variable, Fixed, or Combination Annuity Contract Nonparticipating ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY. G-CDA-97(NY) Specifications - -------------------------------------------------------------------------------- Guaranteed There is a guaranteed interest rate Interest Rate for Purchase Payment(s) held in the ALIAC Guaranteed Account (see Contract Schedule I). - -------------------------------------------------------------------------------- Deductions from There will be deductions for mortality and the Separate expense risks and administrative fees (see Account Contract Schedule I and II). - -------------------------------------------------------------------------------- Deduction from Purchase Payment(s) are subject to a deduction Purchase for premium taxes, if any (see 3.01.) Payment(s) - -------------------------------------------------------------------------------- Surrender Fee There will be a charge deducted upon surrender (see Contract Schedule I). This Contract is a legal contract and constitutes the entire legal relationship between Aetna and the Contract Holder. READ THIS CONTRACT CAREFULLY. This Contract sets forth, in detail, all of the rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT YOU READ THIS CONTRACT CAREFULLY. 2 Contract Schedule I Accumulation Period Separate Account - -------------------------------------------------------------------------------- Separate Account: Variable Annuity Account B Charges to Separate A daily charge isdeducted from any portion of the Account: Current Value allocated to the Separate Account. The deduction is the daily equivalent of the annual effective percentage shown in the following chart: Administrative Charge 0.15% Mortality Risk Charge 0.35% Expense Risk Charge 0.90% Total Separate Account ----- Charges 1.40% ALIAC Guaranteed Account (AG Account) - -------------------------------------------------------------------------------- Minimum Guaranteed 3.0%. Interest Rate (effective annual rate of return): Separate Account and AG Account - -------------------------------------------------------------------------------- Minimum Initial Purchase $5,000 ($1,500 for a qualified plan) Payment: Maximum Initial Purchase $1,000,000 Payment Without Home Office Approval: Transfers: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each subsequent Transfer. Minimum Transfer Amount: $500 Maintenance Fee: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the Maintenance Fee is to be deducted, the Maintenance Fee is $0. 3 Contract Schedule I (Cont'd) Accumulation Period Separate Account and AG Account (Cont'd) - -------------------------------------------------------------------------------- Surrender Fee: For each surrender, the Surrender Fee will be determined as follows: Surrender Fee as percentage Length of Time from Deposit (of Net of Net Purchase Payment (Years) Purchase Payment) Less than 1 year 7% 1 or more but less than 2 years 6% 2 or more but less than 3 years 5% 3 or more but less than 4 years 4% 4 or more but less than 5 years 3% 5 or more but less than 6 years 2% 6 or more but less than 7 years 1% 7 years or more 0% Systematic Withdrawal The specified payment or specified percentage may Option (SWO) Percentage: not be greater than 10% of the Current Value at time of election. SWO Minimum Initial $20,000 Current Value: SWO Minimum Payment Amount: $100 See 1. GENERAL DEFINITIONS for explanations. 4 Contract Schedule II Annuity Period Separate Account - -------------------------------------------------------------------------------- Charges to Separate Account: A daily charge at an annual effective rate of 1.25% for Annuity mortality and expense risks. The administrative charge is established upon election of an Annuity option. This charge will not exceed 0.25%. Variable Annuity Assumed If a Variable Annuity is chosen, an assumed annual Annual Net Return Rate: 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 assumed annual net return rate factor for 3.5% per year is 0.9999058. The assumed annual net return rate factor for 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. Fixed Annuity - -------------------------------------------------------------------------------- Minimum Guaranteed 3.0% Interest Rate (effective annual rate of return): See 1. GENERAL DEFINITIONS for explanations. 5 TABLE OF CONTENTS Page I. GENERAL DEFINITIONS - ------------------------------------------------------------------------------ 1.01 Account..............................................................8 1.02 Accumulation Period..................................................8 1.03 Adjusted Current Value...............................................8 1.04 ALIAC Guaranteed Account (AG Account)................................8 1.05 Annuitant............................................................8 1.06 Annuity..............................................................8 1.07 Beneficiary..........................................................8 1.08 Certificate Holder...................................................8 1.09 Code.................................................................8 1.10 Contract.............................................................8 1.11 Contract Holder......................................................9 1.12 Current Value........................................................9 1.13 Deposit Period.......................................................9 1.14 Fixed Annuity........................................................9 1.15 Fund(s)..............................................................9 1.16 General Account......................................................9 1.17 Guaranteed Rate -- AG Account........................................9 1.18 Guaranteed Term......................................................9 1.19 Guaranteed Term(s) Groups............................................9 1.20 Maintenance Fee.....................................................10 1.21 Market Value Adjustment (MVA).......................................10 1.22 Matured Term Value..................................................10 1.23 Matured Term Value Transfer.........................................10 1.24 Maturity Date.......................................................10 1.25 Net Purchase Payment(s).............................................10 1.26 Nonunitized Separate Account........................................10 1.27 Purchase Payment(s).................................................10 1.28 Rebalancing Program.................................................10 1.29 Reinvestment........................................................11 1.30 Separate Account....................................................11 1.31 Surrender Value.....................................................11 1.32 Transfers...........................................................11 1.33 Valuation Period (Period)...........................................11 1.34 Variable Annuity....................................................11 II. GENERAL PROVISIONS - ------------------------------------------------------------------------------ 2.01 Change of Contract..................................................11 2.02 Change of Fund(s)...................................................12 2.03 Nonparticipating Contract...........................................12 2.04 Payments and Elections..............................................13 2.05 State Laws..........................................................13 2.06 Control of Contract.................................................13 2.07 Designation of Beneficiary..........................................13 2.08 Misstatements and Adjustments.......................................14 2.09 Incontestability....................................................14 6 Page 2.10 Grace Period........................................................14 2.11 Individual Certificates.............................................14 III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS - ------------------------------------------------------------------------------ 3.01 Net Purchase Payment................................................14 3.02 Certificate Holder's Account........................................14 3.03 Fund(s) Record Units -- Separate Account............................15 3.04 Net Return Factor(s) -- Separate Account............................15 3.05 Fund Record Unit Value -- Separate Account..........................15 3.06 Market Value Adjustment.............................................15 3.07 Transfer of Current Value from the Funds or ALIAC Guaranteed Account............................................17 3.08 Notice to the Certificate Holder....................................18 3.09 Loans...............................................................18 3.10 Systematic Withdrawal Option (SWO)..................................18 3.11 Death Benefit Amount................................................19 3.12 Death Benefit Options Available to Beneficiary......................21 3.13 Liquidation of Surrender Value......................................22 3.14 Surrender Fee.......................................................22 3.15 Payment of Surrender Value..........................................23 IV. ANNUITY PROVISIONS - ------------------------------------------------------------------------------ 4.01 Choices to be Made..................................................23 4.02 Terms of Annuity Options............................................24 4.03 Death of Annuitant/Beneficiary......................................25 4.04 Fund(s) Annuity Units -- Separate Account...........................26 4.05 Fund(s) Annuity Unit Value -- Separate Account......................26 4.06 Annuity Net Return Factor(s) -- Separate Account....................26 4.07 Annuity Options.....................................................27 7 I. GENERAL DEFINITIONS - -------------------------------------------------------------------------------- 1.01 Account: A record established for each Certificate Holder to maintain the value of the Net Purchase Payment held on his/her behalf during the Accumulation Period. 1.02 Accumulation Period: The period during which the Net Purchase Payment(s) are applied to an Account to provide future Annuity payment(s). 1.03 Adjusted Current Value: The Current Value of an Account plus or minus any aggregate ALIAC Guaranteed Account MVA, if applicable. (See 1.21) 1.04 ALIAC Guaranteed An accumulation option where Aetna guarantees Account (AG Account): stipulated rate(s) of interest for specified periods of time. All assets of Aetna, including amounts in the Nonunitized Separate Account, are available to meet the guarantees under the AG Account. 1.05 Annuitant: The person whose life is measured for purposes of the Guaranteed Death Benefit and the duration of Annuity payments under this Contract. 1.06 Annuity: Payment of an income: (a) For the life of one or two persons; (b) For a stated period; or (c) For some combination of (a) and (b). 1.07 Beneficiary: The individual or estate entitled to receive any payment from the Contract upon the death of the Annuitant, or if the Certificate Holder is different from the Annuitant, upon the death of the Certificate Holder. If the Account is held by joint Certificate Holders, the survivor will be deemed the designated Beneficiary and any other Beneficiary on record will be treated as the contingent Beneficiary. 1.08 Certificate Holder: A person who purchases an interest in this Contract as evidenced by a certificate. Aetna reserves the right to limit ownership to natural persons. If more than one Certificate Holder owns an account, each Certificate Holder will be a joint Certificate Holder. Unless we allow otherwise in response to a written request prior to Contract issue, any joint Certificate Holder must be the spouse of the other joint Certificate Holder. Joint Certificate Holders have joint ownership rights and both must authorize exercising any ownership rights unless Aetna allows otherwise. If the account is owned by a nonnatural person, the death benefit will be paid at the death of the Annuitant. 1.09 Code: The Internal Revenue Code of 1986, as it may be amended from time to time. 1.10 Contract: This agreement between Aetna and the Contract Holder. 8 1.11 Contract Holder: The entity to which a group Contract is issued. 1.12 Current Value: As of the most recent Valuation Period, the Net Purchase Payment and any additional amount deposited pursuant to 3.11 plus any interest added to the portion allocated to the ALIAC Guaranteed Account; and plus or minus the investment experience of the portion allocated to the Funds since deposit; less all Maintenance Fees deducted, any amounts surrendered and any amounts applied to an Annuity. 1.13 Deposit Period: A calendar week, a calendar month, a calendar quarter, or any other period of time specified by Aetna during which Net Purchase Payment(s), Transfers and Reinvestments are accepted into the ALIAC Guaranteed Account for one or more Guaranteed Terms. Aetna reserves the right to extend the Deposit Period. 1.14 Fixed Annuity: An Annuity with payments that do not vary in amount. 1.15 Fund(s): The open-end management investment companies (mutual funds) in which the Separate Account invests. 1.16 General Account: The Account holding the assets of Aetna, other than those assets held in Aetna's separate accounts. 1.17 Guaranteed Rate -- Aetna will declare the interest rate applicable to AG Account: a specific Guaranteed Term at the start of the Deposit Period for that Guaranteed Term. The rate is guaranteed by Aetna for that Deposit Period and the ensuing Guaranteed Term. The Guaranteed Rate is an annual effective yield. That is, interest is credited daily at a rate that will produce the Guaranteed Rate over the period of a year. No Guaranteed Rate will ever be less than the Minimum Guaranteed Rate shown on Contract Schedule I. 1.18 Guaranteed Term: The period of time for which AG Account Guaranteed Rate is guaranteed on Net Purchase Payments, Transfers and Reinvestments made into a current Deposit Period for the AG Account. Such period begins on the day following the close of the Deposit Period and ends on the designated Maturity Date. Guaranteed Terms are offered at Aetna's discretion for various lengths of time ranging up to and including ten years. During a Deposit Period, Aetna may make available any number of Guaranteed Terms. The Contract Holder may allocate Net Purchase Payments and Transfers into any or all of the available Guaranteed Terms. 1.19 Guaranteed Term(s) All AG Account Guaranteed Term(s) with the same Groups: length of time from the close of the Deposit Period until the designated Maturity Date. 9 1.20 Maintenance Fee: The Maintenance Fee (see Contract Schedule I) will be deducted during the Accumulation Period from the Current Value on each anniversary of the date the Account is established and upon surrender of the entire Account. 1.21 Market Value Adjustment An adjustment that may apply to an amount (MVA): withdrawn or transferred from an AG Account Guaranteed Term prior to the end of that Guaranteed Term. The adjustment reflects the change in the value of the investment due to changes in interest rates since the date of deposit and is computed using the formula given in 3.06. The adjustment is expressed as a percentage of each dollar being withdrawn or transferred. 1.22 Matured Term Value: The amount payable on an AG Account Guaranteed Term's Maturity Date. 1.23 Matured Term Value During the calendar month following an AG Account Transfer: Maturity Date, the Certificate Holder may notify Aetna's Home Office in writing to Transfer or surrender all or part of the Matured Term Value, plus interest at the new Guaranteed Rate accrued thereon, from the AG Account without an MVA. This provision only applies to the first such written request received from the Certificate Holder during this period for any Matured Term Value. 1.24 Maturity Date: The last day of an AG Account Guaranteed Term. 1.25 Net Purchase The Purchase Payment less premium taxes, if Payment(s): applicable. 1.26 Nonunitized Separate A separate account subject to the laws of New York Account: set up by Aetna under Title 38, Section 38a-433, of the Connecticut General Statutes, that holds assets for AG Account Terms. There are no discrete units for this Account. The Certificate Holder does not participate in the investment gain or loss from the assets held in the Nonunitized Separate Account. Such gain or loss is borne entirely by Aetna. These assets may be chargeable with liabilities arising out of any other business of Aetna. 1.27 Purchase Payment(s): Payment(s) accepted by Aetna at its Home Office. Aetna reserves the right to refuse to accept any Purchase Payment at any time for any reason. No advance notice will be given to the Certificate Holder. 1.28 Rebalancing Program: A program that allows Contract Holders to have portions of their Current Value automatically reallocated annually to a specified percentage. Only the portion of the Current Value held in the separate account can be rebalanced. Contract Holders may participate in this program by completing the Rebalancing Section of the enrollment form, or by requesting the service in writing from the Company's Home Office. Reallocations under the Rebalancing Program will not be counted for purposes of any transfer limitations imposed under the contract. 10 1.29 Reinvestment: Aetna will mail a notice to the Certificate Holder at least 18 calendar days and not more than 45 days before a Guaranteed Term's Maturity Date. This notice will contain the Terms available during current Deposit Periods with their Guaranteed Rate, and projected Matured Term Value. If no specific direction is given by the Certificate Holder prior to the Maturity Date, each Matured Term Value will be reinvested in the current Deposit Period for a Guaranteed Term of the same duration. If a Guaranteed Term of the same duration is unavailable, each Matured Term Value will automatically be reinvested in the current Deposit Period for the next shortest Guaranteed Term available. If no shorter Guaranteed Term is available, the next longer Guaranteed Term will be used. Aetna will mail a confirmation statement to the Certificate Holder the next business day after the Maturity Date. This notice will state the Guaranteed Term and Guaranteed Rate which will apply to the reinvested Matured Term Value. 1.30 Separate Account: A separate account that buys and holds shares of the Fund(s). 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 as to such amounts. This Separate Account generally is not guaranteed and is held at market value. The assets of the Separate Account, to the extent of reserves and other contract liabilities of the Account, shall not be charged with other Aetna liabilities. 1.31 Surrender Value: The amount payable by Aetna upon the surrender of any portion of an account. 1.32 Transfers: The movement of invested amounts among the available Fund(s) and the AG Account under this Contract during the Accumulation Period. 1.33 Valuation Period The period of time for which a Fund determines its (Period): net asset value, usually from 4:15 p.m. Eastern time each day the New York Stock Exchange is open until 4:15 p.m. the next such day, or such other day that one or more of the Funds determines its net asset value. 1.34 Variable Annuity: An Annuity with payments that vary with the net investment results of one or more Funds held under the Separate Account. II. GENERAL PROVISIONS - -------------------------------------------------------------------------------- 2.01 Change of Contract: Only an authorized officer of Aetna may change the terms of this contract. Aetna will notify the Contract Holder in writing at least 30 days before the effective date of any change. Any change will not affect the amount or terms of any Annuity which begins before the change. 11 2.01 Change of Contract Aetna may make any change that affects the AG (Cont'd): least 30 days' advance written notice to the Contract Holder and the Certificate Holder. Any such change shall become effective for any new Term and will be applicable only if it is more favorable to the Contract Holder and/or the Certificate Holder. Any change that affects any of the following under this Contract will not apply to Accounts in existence before the effective date of the change: (a) Net Purchase Payment (3.01) (b) AG Account Guaranteed Rate (1.04) (c) Net Return Factor(s) -- Separate Account (3.04) (d) Current Value (1.12) (e) Surrender Value (1.31) (f) Fund(s) Annuity Unit Value -- Separate Account (4.05) (g) Annuity Options (4.07) (h) Fixed Annuity Guaranteed Interest Rates (4.01) (i) Transfers (1.32). This Contract may be changed as deemed necessary by Aetna to comply with federal or state law. Any such change is subject to the prior approval of the New York Insurance Department. 2.02 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 our 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. Aetna 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 federal securities laws and are subject to the approval of the Superintendent of the New York Insurance Department and Aetna will notify the Contract Holder of such change. 2.03 Nonparticipating The Contract Holder, Certificate Holder's or Contract: Beneficiaries will not have a right to share in the earnings of Aetna. 12 2.04 Payments and While the Certificate Holder is living, Aetna will Elections: pay the Certificate Holder any Annuity payments as and when due. After the Certificate Holder's death, or at the death of the first Certificate Holder if the Account is owned jointly, any Annuity payments required to be made will be paid in accordance with 4.03. Aetna will determine other payments and/or elections as of the end of the Valuation Period in which the request is received at its Home Office. Such payments will be made within 7 calendar days of receipt at its Home Office of a written claim for payment which is in good order, except as provided in 3.15. 2.05 State Laws: The Contract and the Certificate's comply with the laws of the state in which they are delivered. Any surrender, death, or Annuity payments are equal to or greater than the minimum required by such laws. Annuity tables for legal reserve valuation shall be as required by state law. Such tables may be different from Annuity tables used to determine Annuity payments. 2.06 Control of Contract: This is a Contract is between the Contract Holder and Aetna. The Contract Holder has title to the Contract. Nothing in the group annuity contract invalidates or impairs any right granted to the Certificate Holder. The Certificate Holder has all other rights to amounts held in his or her Account. Each Certificate Holder shall own all amounts held in his or her Account. Each Certificate Holder may make any choices allowed by this Contract for his or her Account. Certificate Holder choices made under this contract must be in writing. If the Account is owned jointly, both joint Certificate Holders must authorize any Certificate Holder change in writing. Until receipt of such choices at Aetna's Home Office, Aetna may rely on any previous choices made. The Account may not be attached, alienated, or subject to the claims of creditors of the Contract Holder or the Certificate Holder except to the extent permitted by law. The Certificate Holder may assign or transfer his or her rights under the Contract. Aetna reserves the right not to accept assignment or transfer to a nonnatural person. Any assignment or transfer made must be submitted to Aetna's Home Office in writing and will not be effective until accepted by Aetna. 2.07 Designation of Each Certificate Holder shall name his or her Beneficiary: Beneficiary. If the Account is owned jointly, both joint Certificate Holders must agree in writing to the Beneficiary designated. The Beneficiary may be changed at any time. Changes to a Beneficiary must be submitted to Aetna's Home Office in writing and will not be effective until accepted by Aetna. 13 2.08 Misstatements and If Aetna finds the age or sex of any Annuitant to Adjustments: be misstated, the amount payable under the Contract shall be adjusted for the correct age or sex; the amount of any underpayment or overpayment, with interest at six per cent per year, shall be credited to, or charged against, the current or next succeeding payment or payments to be made by Aetna under the Contract. 2.09 Incontestability: Aetna cannot cancel the Contract because of any error of fact on the application. Aetna cannot cancel an Account because of any error of fact on the enrollment form. 2.10 Grace Period: This Contract will remain in effect even if Purchase Payments are not continued. 2.11 Individual Aetna shall issue a certificate to each Certificates Certificate Holder. The certificate will summarize certain provisions of the contract. Certificates are for information only and are not a part of the Contract. III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS - -------------------------------------------------------------------------------- 3.01 Net Purchase Payment: This amount is the actual Purchase Payment less any premium tax. Aetna will generally deduct the premium tax when Annuity benefits are elected (see Part IV). If Aetna determines that under applicable state law, it must pay a premium tax when the Purchase Payment is received or at any other time, it will deduct the tax at that time. The Net Purchase Payment will be credited among: (a) The current Deposit Period(s) for Guaranteed Terms under the AG Account; and (b) The Fund(s) in which the Separate Account invests. For each Net Purchase Payment, the Certificate Holder shall tell Aetna the allocation percentage to be applied to the current Deposit Period for each of the available Guaranteed Terms in the AG Account and/or each Fund. If allocation instructions are not received along with any subsequent Net Purchase Payment, the allocation will be the same as that indicated on the original application. If the same Guaranteed Term is no longer available, the Net Purchase Payment will be allocated to the next shortest Guaranteed Term available in the current Deposit Period. If no shorter Guaranteed Term is available, the next longer Guaranteed Term will be used. The minimum acceptable additional Purchase Payment is shown on Contract Schedule I. The maximum acceptable Purchase Payment without Home Office approval is also provided on Contract Schedule I. 3.02 Certificate Holder's Aetna will maintain an Account for each Account: Certificate Holder. 14 3.03 Fund(s) Record Units -- The portion of the Net Purchase Payment(s) applied Separate Account: to each Fund under the Separate Account will determine the number of Fund record units for that Fund. This number is equal to the portion of the Net Purchase Payment(s) applied to each Fund divided by the Fund record unit value (see 3.05) for the Valuation Period in which the Purchase Payment is received in good order at Aetna's Home Office. 3.04 Net Return Factor(s) -- The net return factor(s) are used to compute all Separate Account: Separate Account record units for any Fund. The net return factor(s) 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 the Valuation Period; minus (b) The value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; plus or minus (c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (d) The total value of the Fund record units and Fund Annuity units of the Separate Account at the start of the Valuation Period; minus (e) A daily Separate Account charge at an annual rate as shown on Contract Schedule I for mortality and expense risks, which may include profit; and a daily administrative charge. 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. 3.05 Fund Record Unit A Fund record unit value is computed by Value -- Separate multiplying the net return factors for the current Account: Valuation Period by the Fund record unit value for the previous Period. The dollar value of Fund record units, Separate Account assets, and Variable Annuity payments may go up or down due to investment gain or loss. 3.06 Market Value Excepted as noted below, there will be an MVA for Adjustment: a withdrawal from the AG Account before the end of a Guaranteed Term when the withdrawal is due to: 3.06 Market Value (a) a Transfer; except for Transfers as specified Adjustment (Cont'd): in 1.23, AG Account Matured Term Value Transfer; (b) A full or partial surrender (including a 15% free withdrawal under 3.14), except for a partial withdrawal under the Systematic Withdrawal Option (see 3.10); or (c) An election of Annuity option 1 (see 4.07). 15 Full and partial surrenders and Transfers made within six months after the date of the Annuitant's death will be the greater of: (a) The aggregate MVA amount which is the sum of all market value adjusted amounts calculated due to a withdrawal of amounts. This total may be greater or less than the Current Value of those amounts; or (b) The applicable portion of the Current Value in the AG Account. After the six-month period, the surrender or Transfer will be the aggregate MVA amount, which may be greater or less than the Current Value of those amounts. The greater of the aggregate MVA amount or the applicable portion of the Current Value applies to amounts withdrawn from the AG Account on account of an election of Annuity options 2 or 3 (see 4.07). Market value adjusted amounts will be equal to the amount withdrawn multiplied by the following ratio: x --- 365 (1 + i) ---------- x --- 365 (1 + j) Where: i is the Deposit Period Yield j is the Current Yield x is the number of days remaining, (computed from Wednesday of the week of withdrawal) in the Guaranteed Term. The Deposit Period Yield will be determined as follows: (a) At the close of the last business day of each week of the Deposit Period, a yield will be computed as the average of the yields on that day of U.S. Treasury Notes which mature in the last three months of the Guaranteed Term. 3.06 Market Value (b) The Deposit Period Yield is the average of Adjustment (Cont'd): those yields for the Deposit Period. If withdrawal is made before the close of the Deposit Period, it is the average of those yields on each week preceding withdrawal. The Current Yield is the average of the yields on the last business day of the week preceding withdrawal on the same U.S. Treasury Notes included in the Deposit Period Yield. 16 In the event that no U.S. Treasury Notes which mature in the last three months of the Guaranteed Term exist, Aetna reserves the right to use the U.S. Treasury Notes that mature in the following quarter. If U.S. Treasury Notes are no longer available, a suitable replacement index, subject to approval of the Superintendent of the New York Insurance Department, would then be utilized. A detailed description of the MVA has been filed with the Superintendent of the New York Insurance Department. 3.07 Transfer of Current Before an Annuity option is elected, all or any Value from the Funds portion of the Adjusted Current Value may be or AG Account: transferred from any Fund or Guaranteed Term of the AG Account: (a) To any other Fund; or (b) To any Guaranteed Term of the AG Account available in the current Deposit Period. Transfer requests can be submitted as a percentage or as a dollar amount. The minimum transfer amount is shown on Contract Schedule I. Within a Guaranteed Term Group, the amount to be surrendered or transferred will be withdrawn first from the oldest Deposit Period, then from the next oldest, and so on until the amount requested is satisfied. The Certificate Holder may make an unlimited number of Transfers during the Accumulation Period. The number of free Transfers allowed by Aetna is shown on Contract Schedule I. Additional Transfers may be subject to a Transfer fee as shown on Contract Schedule I. Amounts transferred as a Matured Term Value on or within one calendar month of the Term's Maturity Date do not count against the annual Transfer limit. Amounts applied to Guaranteed Terms of the AG Account may not be transferred to the Funds or to another Guaranteed Term during the Deposit Period or for 90 days after the close of the Deposit Period except for a Matured Term Value(s) during the calendar month following the Term's Maturity Date. Transfers from Guaranteed Terms of the AG Account are subject to the MVA provisions of 3.06. 17 3.08 Notice to the The Certificate Holder will receive quarterly Certificate Holder: statements from Aetna of: (a) The value of any amounts held in: (1)The AG Account; and (2)The Fund(s) under the Separate Account. (b) The number of any Fund(s) record units; and (c) The Fund(s) record unit value. Such number or values will be as of a specific date no more than 60 days before the date of the notice. 3.09 Loans: Loans are not available under this Contract. 3.10 Systematic Withdrawal The following distribution options may be elected Option (SWO): by the Certificate Holder or a Beneficiary during the Accumulation Period. A distribution option under which a portion of the Accounts' Current Value will automatically be surrendered and distributed each year. SWO payments will be calculated on the Accounts' full Current Value. The distributed amount is withdrawn pro rata from each investment option under the Account. A Surrender Fee will not be deducted from any portion of the Current Value which is paid as a distribution under SWO. Certificate Holders should consult their tax advisers prior to requesting this distribution option. Aetna will not be responsible for any adverse tax consequences due to receiving SWO payments. (a) Amount of Distribution: The Certificate Holder or a Beneficiary may elect one of the three payment methods described below. (1) Specified Payment: Payments of a designated dollar amount. The annual amount may not be greater than the percentage of the Account's Current Value on the date of the SWO election as shown on Contract Schedule I. This annual dollar amount will remain constant. The minimum SWO payment amount is shown on Contract Schedule I. If SWO payments are made more frequently than annually, the designated annual amount is divided by the number of payments due each year; or (2) Specified Period: Payments made over a designated period of time of at least 10 years. The annual amount is calculated by dividing the Current Value as of December 31 of the year prior to the payment year by the number of payment years remaining; or 18 3.10 Systematic Withdrawal (3) Specified Percentage: Payments of a Option (SWO) (Cont'd): designated percentage which cannot be greater than the percentage of the Current Value at the time of election as shown on Contract Schedule I. The percentage may be changed by written request. Aetna reserves the right to limit the number of times the percentage may be changed. The annual amount is calculated by multiplying the Current Value as of December 31 of the year prior to the payment year by the designated percentage. Payments upon the Contract Holder's death will continue to the Beneficiary in the manner described in 3.11. (b) Minimum Initial Current Value: The Minimum Initial Current Value required to begin SWO is shown on Contract Schedule I. If after election of this option, the Current Value is insufficient to make a scheduled SWO payment, Aetna will distribute the entire balance. (c) Date of Distribution: The Contract Holder or a Beneficiary shall specify the first payment date. The earliest allowable first payment date is the date on which the Contract Holder attains age 59 1/2. The latest allowable SWO payment date is the month of the Annuitant's 90th birthday. As elected by the Contract Holder, SWO payments will be made on a monthly, quarterly, semi-annual or annual basis. If SWO payments are made more frequently than annually, the designated annual amount is divided by the number of payments due each year. Subsequent payments will be made on the 15th of the appropriate months or on such other date as Aetna may designate or allow. (d) Election and Revocation: SWO may be elected by the Certificate Holder or Beneficiary if elected after the Certificate Holders death by submitting a completed and signed election form to Aetna's Home Office. Once elected, this option may be revoked by the Certificate Holder or Beneficiary, if elected after the Certificate Holder's death, by submitting a written request to Aetna at its Home Office. Any revocation will apply only to amounts not yet paid. SWO may be elected only once by the Certificate Holder or by the Beneficiary. 3.11 Death Benefit Amount: If the Certificate Holder or Annuitant dies before Annuity payments start, the Beneficiary is entitled to a death benefit under the Account. If the Account is owned jointly, the death benefit is paid at the death of the first joint Certificate Holder to die. The claim date is the date when proof of death and the Beneficiary's claim are received in good order at Aetna's Home Office. The amount of the death benefit is determined as follows: (a) Death of Annuitant less than 85 years of age: The guaranteed death benefit is the greatest of: 19 3.11 Death Benefit Amount (1) The sum of all Net Purchase Payment(s) (Cont'd): made to the Account (as of the date of death) minus the sum of all amounts surrendered, applied to an Annuity, or deducted from the Account; (2) The highest step-up value as of the date of death. A step-up value is determined on each anniversary of the Effective Date. Each step-up value is calculated as the Account's Current Value on the Effective Date anniversary, increased by the amount of any Purchase Payment(s) made, and decreased by the sum of all amounts surrendered, deducted, and/or applied to an Annuity option since the Effective Date anniversary. (3) The Account's Current Value as of the date of death. The excess, if any, of the guaranteed death benefit value over the Account's Current Value is determined as of the date of death. Any excess amount will be deposited to the Account and allocated to Aetna Variable Encore Fund as of the claim date. The Current Value on the claim date plus any excess amount deposited becomes the Account's Current Value. (b) Death of Annuitant age 85 or greater: The death benefit amount is the greatest of: (1) The sum of all Net Purchase Payment(s) made to the Account (as of the date of death) minus the sum of all amounts surrendered, applied to an Annuity, or deducted from the Account; (2) The highest step-up value prior to the Certificate Holder's 85th birthday. A step-up value is determined on each anniversary of the Effective Date. Each step-up value is calculated as the Account's Current Value on the Effective Date anniversary, increased by the amount of any Purchase Payment(s) made, and decreased by the sum of all amounts surrendered, deducted, and/or applied to an Annuity option since the Effective Date anniversary. (3) The Account's Current Value as of the date of death. The excess, if any of the guaranteed death benefit value over the Account's Current Value is determined as of the date of death. Any excess amount will be deposited in the Account and allocated to Aetna Variable Encore Fund as of the claim date. The Current Value on the claim date plus any excess amount deposited, becomes the Account's Current Value. 20 3.11 Death Benefit Amount (c) Death of the Certificate Holder if the (Cont'd): Certificate Holder is not the Annuitant: The death benefit amount is the Account's Adjusted Current Value on the Claim Date. A Surrender Fee may apply to any full or partial surrender (see 3.14 and Contract Schedule I). (d) At the death of a surviving spouse Beneficiary who continued the Account in his or her own name, the death benefit amount is equal to the Account's Current Value less any applicable Surrender Fee on the amount of any Purchase Payment(s) made since the death of the Certificate Holder. 3.12 Death Benefit Options Prior to any election, or until amounts must be Available to otherwise distributed under this section, the Beneficiary: Current Value of the account will be retained in the Account. The Beneficiary has the right under the Contract to allocate or reallocate any amount to any of the available investment options (subject to an MVA, as applicable). The following options are available to the Beneficiary: (a) When the Certificate Holder is the Annuitant: If the Certificate Holder/Annuitant dies, and: (1) If the Beneficiary is the Certificate Holder's surviving spouse, the Beneficiary may exercise all rights under the Contract and continue in the Accumulation Period, or may elect (i), or (ii) below. Under the Code, distributions from the Account are not required until the Spousal Beneficiary's death. The Spousal Beneficiary may elect to: (i) Apply some or all of the Adjusted Current Value of the Account to Annuity option (see 4.07); (ii) Receive, at any time, a lump sum payment equal to the Adjusted Current Value of the Account. (2) If the Beneficiary is other than the Certificate's Holder's surviving spouse, then options (i) or (ii) under (1) above apply. Any portion of the Adjusted Current Value of the Account not applied to an Annuity option within one year of the Certificate Holder's death, must be distributed within five years of the date of death. (3) If no Beneficiary exists, a lump sum payment equal to the Adjusted Current Value will be made to the Certificate Holder's estate. (b) When the Certificate Holder is not the Annuitant and the Certificate Holder dies, and: 21 3.12 Death Benefit (1) If the Beneficiary is the Certificate Options Available Holder's surviving spouse, the to Beneficiary Beneficiary may exercise all rights under (Cont'd): the Contract and continue in the Accumulation Period, or may elect (i), or (ii) below. Under the Code, distributions from the Account are not required until the spousal Beneficiary's death. The spousal Beneficiary may elect to: (i) Apply some or all of the Adjusted Current Value of the Account to an Annuity option (see 4.07); (ii) Receive, at any time, a lump sum payment equal to the Surrender Value. (2) If the Beneficiary is other than the Certificate Holder's surviving spouse, then options (i), or (ii) under (1) above apply. Any portion of the Adjusted Current Value not applied to an Annuity option within one year of the Certificate Holder's death, must be distributed within five years of the date of death. (3) If no Beneficiary exists, a lump sum payment equal to the Surrender Value will be made to the Certificate Holder's estate. (c) When the Certificate Holder is not the Annuitant and the Annuitant dies: The Beneficiary must elect an Annuity option within 60 days of the date of death or the gain, if any, will be includible in the Beneficiary's income in the tax year in which the Annuitant dies. 3.13 Liquidation of All or any portion of the Account's Current Value Surrender Value: may be surrendered at any time as requested by the Certificate Holder. Surrender requests can be submitted as a percentage of the Account's Adjusted Current Value or as a specific dollar amount. Net Purchase Payment amounts are withdrawn first, and then the excess value, if any. For any partial surrender, amounts are withdrawn on a pro rata basis from the Fund(s) and/or the Guaranteed Term(s) Groups of the AG Account in which the Current Value is invested. Within a Guaranteed Term Group, the amount to be surrendered or transferred will be withdrawn first from the oldest Deposit Period, then from the next oldest, and so on until the amount requested is satisfied. After deduction of the Maintenance Fee, if applicable, the surrendered amount shall be reduced by a Surrender Fee, if applicable. An MVA may apply to amounts surrendered from the AG Account. 3.14 Surrender Fee: The Surrender Fee only applies to the Net Purchase Payment(s) portion surrendered and varies according to the elapsed time since deposit (see Contract Schedule I). Net Purchase Payment amounts are withdrawn in the same order they were applied. 22 3.14 Surrender Fee No Surrender Fee is deducted from any portion of (Cont'd): the Net Purchase Payment which is paid: (a) To a Beneficiary due to the Annuitant's death before Annuity payments start, up to a maximum of the aggregate Net Purchase Payment(s) minus the total of all partial surrenders, amounts applied to an Annuity and deductions made prior to the Annuitant's date of death; (b) As a premium for an Annuity option under this Contract (see 4.07); (c) As a distribution under the SWO provision (see 3.10); (d) At least 12 months after the date of the first Purchase Payment to the Account, in an amount equal to or less than 15% of the Current Value. This applies to the first surrender request, partial or full, in a calendar year. The Current Value is calculated as of the date the surrender request is received in good order at Aetna's Home Office. This waiver is not available to the Contract Holder while SWO is in effect; or (e) For a full surrender where the Account's Current Value is $2,500 or less and no surrenders have been taken from the Contract within the prior 12 months. 3.15 Payment of Under certain emergency conditions, Aetna may Surrender Value: defer payment: (a) For a period of up to 6 months (unless not allowed by state law); or (b) As provided by federal law under the Investment Company Act of 1940. IV. ANNUITY PROVISIONS - -------------------------------------------------------------------------------- 4.01 Choices to be Made: The Certificate Holder may tell Aetna to apply any portion of the Adjusted Current Value (minus any premium tax) for an Annuity option (see 4.07). The first Annuity payment may not be earlier than one calendar year after the initial Purchase Payment nor later than the first day of the month following the Annuitant's 90th birthday. When an Annuity option is chosen, Aetna must also be told if payments are to be made other than monthly and whether to pay: 4.01 Choices to be Made (a) A Fixed Annuity using the General Account; (Cont'd): (b) A Variable Annuity using any of the Fund(s) available under this Contract for Annuity purposes; or (c) A combination of (a) and (b). 23 If a Fixed Annuity is chosen, the Annuity purchase rate for the option chosen reflects at least the Minimum Guaranteed Interest Rate (see Contract Schedule II), but may reflect a higher interest rate. If a Variable Annuity is chosen, the initial Annuity payment for the option chosen reflects the assumed annual return rate elected. (see Contract Schedule II). 4.02 Terms of Annuity (a) When payments start, the age of the Annuitant Options: plus the number of years for which payments are guaranteed must not exceed 95. (b) An Annuity option may not be elected if the first payment would be less than $50 or if the total payments in a year would be less than $250 (less if required by state law). Aetna reserves the right to increase the minimum first Annuity payment amount and the minimum annual Annuity payment amount based upon increases reflected in the Consumer Price Index-Urban, (CPI-U) since July 1, 1993. (c) If a Fixed Annuity is chosen and a larger payment would result from applying the Surrender Value or, if greater, 95% of what the surrender would be if there were no surrender fee, to a current Aetna single premium immediate Annuity, Aetna will make the larger payment. (d) For purposes of calculating the guaranteed first payment of a Variable Annuity or the payments for a Fixed Annuity, the Annuitant's and second Annuitant's adjusted age will be used. The Annuitant's and second Annuitant's adjusted age is his or her age as of the birthday closest to the Annuity commencement date reduced by one year for Annuity commencement dates occurring during the period of time from July 1, 1993 through December 31, 1999. The Annuitant's and second Annuitant's age will be reduced by two years for Annuity commencement dates occurring during the period of time from January 1, 2000 through December 31, 2009. The Annuitant's and second Annuitant's age will be reduced by one additional year for Annuity commencement dates occurring in each succeeding decade. The Annuity purchase rates for options 2 and 3 are based on mortality from 1983 Table a. 4.02 Terms of Annuity (e) Assumed Annual Net Return Rate is the interest Options (Cont'd): rate used to determine the amount of the first Annuity payment under a Variable Annuity as shown on Contract Schedule II. The Separate Account must earn this rate plus enough to cover the mortality and expense risks charges (which may include profit) and administrative charges if future Variable Annuity Payments are to remain level, (see Annuity return factor under Variable Annuity Assumed Annual Net Return Rate on Contract Schedule II). 24 (f) Once elected, Annuity payments cannot be commuted to a lump sum except for Variable Annuity payments under option 1 (see 4.07). The life expectancy of the Annuitant and the Annuitant and second Annuitant shall be irrevocable upon the election of an Annuity option. 4.03 Death of (a) Certificate Holder is Annuitant: When the Annuitant/Beneficiary: Certificate Holder is the Annuitant and the Annuitant dies under option 1 or 2, or both the Annuitant and the second Annuitant die under option 3(d), the present value of any remaining guaranteed payments will be paid in one sum to the Beneficiary, or upon election by the Beneficiary, any remaining payments will continue to the Beneficiary. If option 3 has been elected and the Certificate Holder dies, the remaining payments will continue to the successor payee. If no successor payee has been designated, the Beneficiary will be treated as the successor payee. If the Account has joint Certificate Holders, the surviving joint Certificate Holder will be deemed the successor payee. (b) Certificate Holder is Not Annuitant: When the Certificate Holder is not the Annuitant and the Certificate Holder dies, the remaining payments will continue to the successor payee. If no successor payee has been designed, the Beneficiary will be treated as the successor payee. If the Account has joint Certificate Holders, the surviving joint Certificate Holder will be deemed the successor payee. If the Annuitant dies under the option 1 or 2, or if both the Annuitant and the second Annuitant die under option 3(d), the present value of any remaining guaranteed payments will be paid in one sum to the Beneficiary, or upon the election by the Beneficiary, any remaining payments will continue to the Beneficiary. If option 3 has been elected, and the Annuitant dies, the remaining payments will continue to the Certificate Holder. (c) No Beneficiary Named/Surviving: If there is no Beneficiary, the present value of any remaining payments will be paid in one sum to the Certificate Holder, or if the Certificate Holder is not living, then to the Certificate Holder's estate. 4.03 Death of Annuitant/ (d) If the Beneficiary or the successor payee dies Beneficiary (Cont'd): while receiving Annuity payments, the present value of any remaining guaranteed payments will be paid in one sum to the successor Beneficiary/payee, or upon election by the successor Beneficiary/payee, any remaining payments will continue to the successor Beneficiary/payee. If no successor Beneficiary/payee has been designated, the present value of any remaining guaranteed payments will be paid in one sum to the Beneficiary's/payee's estate. 25 (e) The present value will be determined as of the Valuation Period in which proof of death acceptable to Aetna and a request for payment is received at Aetna's Home Office. The interest rate used to determine the first payment will be used to calculate the present value. 4.04 Fund(s) Annuity The number of each Fund's Annuity units is based Units -- Separate on the amount of the first Variable Annuity Account: payment which is equal to: (a) The portion of the Current Value applied to pay a Variable Annuity (minus any premium tax); divided by (b) 1,000; multiplied by (c) The payment rate for the option chosen. Such amount, or portion, of the variable payment will be divided by the appropriate Fund Annuity unit value (see 4.05) on the tenth Valuation Period before the due date of the first payment to determine the number of each Fund Annuity units. The number of each Fund Annuity units remains fixed. 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 Period prior to the due date of the payment is used. 4.05 Fund(s) Annuity For any Valuation Period, a Fund Annuity unit Unit Value -- value is equal to: Separate Account: (a) The value for the previous Period; multiplied by (b) The Annuity net return factor(s) (see 4.06 below) for the Period; multiplied by (c) A factor to reflect the assumed annual net return rate (see Contract Schedule II). The dollar value of a Fund Annuity unit value and Annuity payments may go up or down due to investment gain or loss. 4.06 Annuity Net Return The Annuity net return factor(s) are used to Factor(s) -- Separate compute Annuity payments for any Fund. Account: The Annuity net return factor(s) for each Fund is equal to 1.0000000 plus the net return rate. 26 4.06 Annuity Net Return The net return rate is equal to: Factor(s) -- Separate (a) The value of the shares of the Fund held by Account (Cont'd): the Separate Account at the end of a Valuation Period; minus (b) The value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; plus or minus (c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (d) The total value of the Fund record units and Fund Annuity units of the Separate Account at the start of the Valuation Period; minus (e) A daily charge for Annuity mortality and expense risks, which may include profit, and a daily administrative charge (at the annual rate as shown on Contract Schedule II). A net return rate may be more of 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. Payments shall not be changed due to changes in the mortality or expense results or administrative charges. 4.07 Annuity Options: Option 1 -- Payments for a Stated Period of Time -- An Annuity will be paid for the number of years chosen. The number of years must be at least 5 and not more than 30. If payments for this option are made under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within 3 years after the start of payments, it will be treated as a surrender and any applicable Surrender Fee will be applied (see 3.14). If a nonspouse Beneficiary elects this option at the death of the Contract Holder, the period selected may not extend beyond the Beneficiary's life expectancy. Option 2 -- Life Income -- An Annuity will be paid for the life of the Annuitant. If also chosen, Aetna will guarantee payments for 60, 120, 180, or 240 months. Option 3 -- Life Income Based upon the Lives of Two Annuitants -- An Annuity will be paid during the lives of the Annuitant and a second Annuitant. Payments will continue until both Annuitants have died. When this option is chosen, a choice must be made of: 27 4.07 Annuity Options (a) 100% of the payment to continue after the (Cont'd): first death; (b) 66-2/3% of the payment to continue after the first death; (c) 50% of the payment to continue after the first death; (d) Payments for a minimum of 120 months with 100% of the payment to continue after the first death; or (e) 100% of the payment to continue at the death of the second Annuitant and 50% of the payment to continue at the death of the Annuitant. Other Options -- Aetna may make other options available as allowed by the laws of the state in which this Contract and the Certificate is delivered. 28 OPTION 1 Payments for a Stated Period of Time Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0% - -------------------------------------------------------------------------------- Guaranteed Monthly Quarterly Semi-Annual Annual Years Rate Payment Payment Payment Payment - -------------------------------------------------------------------------------- 5 3.00% 17.91 53.59 106.78 211.99 6 3.00% 15.14 45.30 90.27 179.22 7 3.00% 13.16 39.39 78.49 155.83 8 3.00% 11.68 34.96 69.66 138.31 9 3.00% 10.53 31.52 62.81 124.69 10 3.00% 9.61 28.77 57.33 113.82 11 3.00% 8.86 26.52 52.85 104.93 12 3.00% 8.24 24.65 49.13 97.54 13 3.00% 7.71 23.08 45.98 91.29 14 3.00% 7.26 21.73 43.29 85.95 15 3.00% 6.87 20.56 40.96 81.33 16 3.00% 6.53 19.54 38.93 77.29 17 3.00% 6.23 18.64 37.14 73.74 18 3.00% 5.96 17.84 35.56 70.59 19 3.00% 5.73 17.13 34.14 67.78 20 3.00% 5.51 16.50 32.87 65.26 21 3.00% 5.32 15.92 31.72 62.98 22 3.00% 5.15 15.40 30.68 60.92 23 3.00% 4.99 14.92 29.74 59.04 24 3.00% 4.84 14.49 28.88 57.33 25 3.00% 4.71 14.09 28.08 55.76 26 3.00% 4.59 13.73 27.36 54.31 27 3.00% 4.47 13.39 26.68 52.97 28 3.00% 4.37 13.08 26.06 51.74 29 3.00% 4.27 12.79 25.49 50.60 30 3.00% 4.18 12.52 24.95 49.53 - -------------------------------------------------------------------------------- 29 OPTION 2 Life Income Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0% Payments Guaranteed for a Stated Period of Months
- -------------------------------------------------------------------------------------------- Adjusted None 60 120 180 240 Age of --------------------------------------------------------------------------------- Annuitant Male Female Male Female Male Female Male Female Male Female - -------------------------------------------------------------------------------------------- 50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82 51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88 52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93 53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99 54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04 55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11 56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17 57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23 58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30 59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37 60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44 61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51 62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58 63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65 64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72 65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79 66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86 67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93 68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00 69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06 70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12 71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18 72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23 73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28 74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32 75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35 - --------------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 30 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Male and Second Annuitant is Female) Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0% - -------------------------------------------------------------------------------- Adjusted Ages - --------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------- 55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13 55 55 3.88 4.25 4.47 3.87 4.25 55 60 3.06 4.47 4.71 4.06 4.36 60 55 3.99 4.44 4.71 3.98 4.55 60 60 4.24 4.71 4.99 4.23 4.70 60 65 4.49 5.01 5.32 4.48 4.85 65 60 4.38 4.97 5.32 4.38 5.10 65 65 4.72 5.33 5.70 4.71 5.32 65 70 5.07 5.75 6.17 5.05 5.54 70 65 4.93 5.68 6.15 4.91 5.86 70 70 5.40 6.21 6.70 5.36 6.18 70 75 5.89 6.82 7.40 5.81 6.49 75 70 5.69 6.68 7.32 5.62 6.92 75 75 6.37 7.45 8.15 6.23 7.40 75 80 7.07 8.34 9.16 6.78 7.85 - -------------------------------------------------------------------------------- Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Male and the Second Annuitant is Female. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 31 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Female and Second Annuitant is Male) Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0% - -------------------------------------------------------------------------------- Adjusted Ages - --------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------- 55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98 55 55 3.88 4.25 4.47 3.87 4.06 55 60 3.99 4.44 4.71 3.98 4.12 60 55 4.06 4.47 4.71 4.06 4.37 60 60 4.24 4.71 4.99 4.23 4.47 60 65 4.38 4.97 5.32 4.38 4.54 65 60 4.49 5.01 5.32 4.48 4.89 65 65 4.72 5.33 5.70 4.71 5.02 65 70 4.93 5.68 6.15 4.91 5.14 70 65 5.07 5.75 6.17 5.05 5.60 70 70 5.40 6.21 6.70 5.36 5.79 70 75 5.69 6.68 7.32 5.62 5.96 75 70 5.89 6.83 7.40 5.81 6.63 75 75 6.37 7.45 8.15 6.23 6.92 75 80 6.78 8.11 8.99 6.54 7.15 - -------------------------------------------------------------------------------- Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Female and the Second Annuitant is Male. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 32 OPTION 1 Payments for a Stated Period of Time Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% - -------------------------------------------------------------------------------- Guaranteed Monthly Quarterly Semi-Annual Annual Years Rate Payment Payment Payment Payment - -------------------------------------------------------------------------------- 5 3.50% 18.12 54.19 107.92 213.99 6 3.50% 15.35 45.92 91.44 181.32 7 3.50% 13.38 40.01 79.69 158.01 8 3.50% 11.90 35.59 70.88 140.56 9 3.50% 10.75 32.16 64.05 127.00 10 3.50% 9.83 29.42 58.59 116.18 11 3.50% 9.09 27.18 54.13 107.34 12 3.50% 8.46 25.32 50.42 99.98 13 3.50% 7.94 23.75 47.29 93.78 14 3.50% 7.49 22.40 44.62 88.47 15 3.50% 7.10 21.24 42.31 83.89 16 3.50% 6.76 20.23 40.29 79.89 17 3.50% 6.47 19.34 38.51 76.37 18 3.50% 6.20 18.55 36.94 73.25 19 3.50% 5.97 17.85 35.54 70.47 20 3.50% 5.75 17.22 34.28 67.98 21 3.50% 5.56 16.65 33.15 65.74 22 3.50% 5.39 16.13 32.13 63.70 23 3.50% 5.24 15.66 31.19 61.85 24 3.50% 5.09 15.24 30.34 60.17 25 3.50% 4.96 14.85 29.56 58.62 26 3.50% 4.84 14.49 28.85 57.20 27 3.50% 4.73 14.15 28.19 55.90 28 3.50% 4.63 13.85 27.58 54.69 29 3.50% 4.53 13.57 27.02 53.57 30 3.50% 4.45 13.30 26.49 52.53 - -------------------------------------------------------------------------------- 33 OPTION 1 Payments for a Stated Period of Time Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 5.0% - -------------------------------------------------------------------------------- Guaranteed Monthly Quarterly Semi-Annual Annual Years Rate Payment Payment Payment Payment - -------------------------------------------------------------------------------- 5 5.00% 18.74 56.00 111.33 219.98 6 5.00% 15.99 47.77 94.96 187.64 7 5.00% 14.02 41.90 83.30 164.59 8 5.00% 12.56 37.52 74.58 147.35 9 5.00% 11.42 34.11 67.81 133.99 10 5.00% 10.51 31.40 62.42 123.34 11 5.00% 9.77 29.19 58.03 114.66 12 5.00% 9.16 27.36 54.38 107.45 13 5.00% 8.64 25.81 51.31 101.39 14 5.00% 8.20 24.50 48.69 96.21 15 5.00% 7.82 23.36 46.44 91.75 16 5.00% 7.49 22.37 44.47 87.88 17 5.00% 7.20 21.51 42.75 84.48 18 5.00% 6.94 20.74 41.23 81.47 19 5.00% 6.71 20.06 39.88 78.80 20 5.00% 6.51 19.46 38.68 76.42 21 5.00% 6.33 18.91 37.59 74.28 22 5.00% 6.17 18.42 36.62 72.35 23 5.00% 6.02 17.98 35.73 70.61 24 5.00% 5.88 17.57 34.93 69.02 25 5.00% 5.76 17.20 34.20 67.57 26 5.00% 5.65 16.87 33.53 66.25 27 5.00% 5.54 16.56 32.92 65.04 28 5.00% 5.45 16.28 32.35 63.93 29 5.00% 5.36 16.01 31.83 62.90 30 5.00% 5.28 15.77 31.35 61.95 - -------------------------------------------------------------------------------- 34 Option 2 Life Income Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% Payments Guaranteed for a Stated Period of Months
- ------------------------------------------------------------------------------------ Adjusted None 60 120 180 240 Age of ------------------------------------------------------------------------ Annuitant Male Female Male Female Male Female Male Female Male Female - ------------------------------------------------------------------------------------ 50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11 51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16 52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21 53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27 54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32 55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38 56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44 57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50 58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57 59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63 60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70 61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77 62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84 63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91 64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98 65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05 66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12 67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18 68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25 69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31 70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.58 5.51 5.37 71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42 72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47 73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51 74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55 75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59 - ------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 35 Option 2 Life Income Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 5.0% Payments Guaranteed for a Stated Period of Months
- ------------------------------------------------------------------------------------ Adjusted None 60 120 180 240 Age of ------------------------------------------------------------------------ Annuitant Male Female Male Female Male Female Male Female Male Female - ------------------------------------------------------------------------------------ 50 $5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01 51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05 52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10 53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15 54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20 55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25 56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31 57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37 58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42 59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48 60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55 61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61 62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67 63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73 64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80 65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86 66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92 67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99 68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04 69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10 70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15 71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20 72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25 73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29 74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33 75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36 - ------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 36 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Male and Second Annuitant is Female) Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% - -------------------------------------------------------------------------------- Adjusted Ages - --------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------- 55 50 $3.97 $4.35 $4.56 $3.97 $4.42 55 55 4.16 4.54 4.76 4.15 4.54 55 60 4.34 4.76 5.00 4.34 4.64 60 55 4.27 4.73 5.00 4.26 4.83 60 60 4.51 4.99 5.27 4.50 4.98 60 65 4.76 5.29 5.60 4.75 5.13 65 60 4.66 5.25 5.61 4.65 5.39 65 65 4.99 5.61 5.99 4.98 5.60 65 70 5.34 6.03 6.46 5.31 5.81 70 65 5.19 5.97 6.44 5.17 6.14 70 70 5.67 6.49 6.99 5.62 6.47 70 75 6.16 7.10 7.68 6.07 6.77 75 70 5.95 6.96 7.61 5.87 7.20 75 75 6.64 7.73 8.43 6.48 7.68 75 80 7.33 8.62 9.45 7.02 8.13 - -------------------------------------------------------------------------------- Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Male and the Second Annuitant is Female. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 37 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Female and Second Annuitant is Male) Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% - -------------------------------------------------------------------------------- Adjusted Ages - --------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------- 55 50 $4.03 $4.36 $4.55 $4.03 $4.41 55 55 4.16 4.54 4.76 4.15 4.54 55 60 4.27 4.73 5.00 4.26 4.83 60 55 4.34 4.76 5.00 4.34 4.64 60 60 4.51 4.99 5.27 4.50 4.98 60 65 4.66 5.25 5.61 4.65 5.39 65 60 4.76 5.29 5.60 4.75 5.13 65 65 4.99 5.61 5.99 4.98 5.60 65 70 5.19 5.97 6.44 5.17 6.14 70 65 5.34 6.03 6.46 5.31 5.81 70 70 5.67 6.49 6.99 5.62 6.47 70 75 5.95 6.96 7.61 5.87 7.20 75 70 6.16 7.10 7.68 6.07 6.77 75 75 6.64 7.73 8.43 6.48 7.68 75 80 7.04 8.39 9.29 6.79 8.70 - -------------------------------------------------------------------------------- Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Female and the Second Annuitant is Male. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 38 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Male and Second Annuitant is Female) Rates for a Variable Annuity with Assumed Net Return Rate of 5.0% - -------------------------------------------------------------------------------- Adjusted Ages - --------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------- 55 50 $4.88 $5.26 $5.48 $4.88 $5.34 55 55 5.04 5.44 5.66 5.04 5.43 55 60 5.21 5.65 5.89 5.21 5.53 60 55 5.15 5.63 5.91 5.14 5.73 60 60 5.37 5.87 6.16 5.37 5.86 60 65 5.61 6.16 6.49 5.60 6.01 65 60 5.52 6.14 6.51 5.51 6.28 65 65 5.83 6.49 6.87 5.82 6.47 65 70 6.17 6.90 7.33 6.13 6.67 70 65 6.04 6.84 7.34 6.00 7.03 70 70 6.49 7.35 7.87 6.44 7.33 70 75 6.97 7.96 8.56 6.87 7.62 75 70 6.77 7.84 8.51 6.68 8.08 75 75 7.45 8.60 9.33 7.27 8.55 75 80 8.14 9.49 10.35 7.80 8.98 - -------------------------------------------------------------------------------- Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Male and the Second Annuitant is Female. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 39 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Female and Second Annuitant is Male) Rates for a Variable Annuity with Assumed Net Return Rate of 5.0% - -------------------------------------------------------------------------------- Adjusted Ages - --------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------- 55 50 $4.93 $5.27 $5.46 $4.93 $5.19 55 55 5.04 5.44 5.66 5.04 5.43 55 60 5.15 5.63 5.91 5.14 5.73 60 55 5.21 5.65 5.89 5.21 5.53 60 60 5.37 5.87 6.16 5.37 5.86 60 65 5.52 6.14 6.51 5.51 6.28 65 60 5.61 6.16 6.49 5.60 6.01 65 65 5.83 6.49 6.87 5.82 6.47 65 70 6.04 6.84 7.34 6.00 7.03 70 65 6.17 6.90 7.33 6.13 6.67 70 70 6.49 7.35 7.87 6.44 7.33 70 75 6.77 7.84 8.51 6.68 8.08 75 70 6.97 7.96 8.56 6.87 7.62 75 75 7.45 8.60 9.33 7.27 8.55 75 80 7.86 9.28 10.20 7.57 9.59 - -------------------------------------------------------------------------------- Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Female and the Second Annuitant is Male. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 40 - -------------------------------------------------------------------------------- Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 (800) 525-4225 Certificate of Group Annuity Coverage - -------------------------------------------------------------------------------- ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY. G-CDA-97(NY) EX-99.B.4.2 3 VARIABLE ANNUITY CONTRACT CERTIFICATE ------------------------------------------------ Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 (800) 531-4547 Aetna Life Insurance and Annuity Company, herein called Aetna, agrees to pay the benefits stated in the Contract. - -------------------------------------------------------------------------------- Certificate of Group Annuity To the Certificate Holder: Coverage Aetna certifies that coverage is in force for you under the stated Group Annuity Contract and Certificate numbers. All data shown here is taken from Aetna records and is based upon information furnished by you. This Certificate is a summary of the Group Annuity Contract provisions. It replaces any and all prior certificates, riders, or amendments issued to you under the stated Contract and Certificate numbers. This Certificate is for information only and is not a part of the Contract. THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE DESCRIBED IN PARTS III AND IV. - -------------------------------------------------------------------------------- Right to Cancel You may cancel this Certificate within 10 days of receiving it by returning this Certificate along with a written notice to Aetna at the above address or to the agent from whom it was purchased. Within 7 days after it receives the notice of cancellation and this Certificate at its Home Office, Aetna will return the entire consideration paid. /s/ Dan Kearney /s/ Kirk Wickman President Secretary - -------------------------------------------------------------------------------- Contract Holder Group Annuity Contract No. SPECIMEN SPECIMEN - -------------------------------------------------------------------------------- Certificate Holder Certificate No. SPECIMEN SPECIMEN SPECIMEN - -------------------------------------------------------------------------------- Annuitant Name Type of Plan SPECIMEN SPECIMEN - -------------------------------------------------------------------------------- ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY. GMCC-97(NY) Specifications - -------------------------------------------------------------------------------- Guaranteed There are guaranteed interest rates Interest Rate for amounts held in the AG Account (See Contract Schedule I). - -------------------------------------------------------------------------------- Deductions from the There will be deductions for mortality and Separate Account expense risks and administrative fees. (See Contract Schedule I and II). - -------------------------------------------------------------------------------- Deduction from Purchase The Purchase Payment is subject to a deduction Payment for premium taxes, if any. (See 3.01.) - -------------------------------------------------------------------------------- Surrender Fee There will be a charge deducted upon surrender. (See Contract Schedule I). 2 Contract Schedule I Accumulation Period Separate Account - -------------------------------------------------------------------------------- Separate Account: Variable Annuity Account B Charges to Separate A daily charge is deducted from any portion of Account: the Current Value allocated to the Separate Account. The deduction is the daily equivalent of the annual effective percentage shown in the following chart: Administrative Charge 0.15% Mortality Risk Charge 0.35% Expense Risk Charge 0.90% Total Separate Account ----- Charges 1.40% ALIAC Guaranteed Account (AG Account) - -------------------------------------------------------------------------------- Minimum Guaranteed Interest Rate (effective annual rate of return): 3.0% Separate Account and AG Account - -------------------------------------------------------------------------------- Minimum Initial Purchase Payment: $5,000 ($1,500 for a qualified plan) Maximum Initial Purchase $1,000,000 Payment Without Home Office Approval: Transfers: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each subsequent Transfer. Minimum Transfer Amount: $500 Maintenance Fee: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the Maintenance Fee is to be deducted, the Maintenance Fee is $0. 3 Separate Account and AG Account (Cont'd) - -------------------------------------------------------------------------------- Surrender Fee: For each surrender, the Surrender Fee will be determined as follows: Surrender Fee Length of Time from Deposit of Net (as percentage of Purchase Payment (Years) Net Purchase Payment) Less than 1 year 7% 1 or more but less than 2 years 6% 2 or more but less than 3 years 5% 3 or more but less than 4 years 4% 4 or more but less than 5 years 3% 5 or more but less than 6 years 2% 6 or more but less than 7 years 1% 7 years or more 0% Systematic Withdrawal The specified payment or specified percentage Option (SWO) Percentage: may not be greater than 10% of the Current Value at time of election. SWO Minimum Initial $20,000 Current Value: SWO Minimum Payment Amount: $100 See 1. GENERAL DEFINITIONS for explanations. 4 Contract Schedule II Annuity Period Separate Account - -------------------------------------------------------------------------------- Charges to Separate Account: A daily charge at an annual effective rate of 1.25% for Annuity mortality and expense risks. The administrative charge is established upon election of an Annuity option. This charge will not exceed 0.25%. Variable Annuity Assumed If a Variable Annuity is chosen, an assumed Annual Net Return Rate: 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 assumed annual net return rate factor for 3.5% per year is 0.9999058. The assumed annual net return rate factor for 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. Fixed Annuity - -------------------------------------------------------------------------------- Minimum Guaranteed 3.0% Interest Rate (effective annual rate of return): See 1. GENERAL DEFINITIONS for explanations. 5 TABLE OF CONTENTS Page I. GENERAL DEFINITIONS - ------------------------------------------------------------------------------- 1.01 Account...............................................................8 1.02 Accumulation Period...................................................8 1.03 Adjusted Current Value................................................8 1.04 ALIAC Guaranteed Account (AG Account).................................8 1.05 Annuitant.............................................................8 1.06 Annuity...............................................................8 1.07 Beneficiary...........................................................8 1.08 Certificate Holder....................................................8 1.09 Code..................................................................8 1.10 Contract..............................................................8 1.11 Contract Holder.......................................................9 1.12 Current Value.........................................................9 1.13 Deposit Period........................................................9 1.14 Fixed Annuity.........................................................9 1.15 Fund(s)...............................................................9 1.16 General Account.......................................................9 1.17 Guaranteed Rate -- AG Account.........................................9 1.18 Guaranteed Term.......................................................9 1.19 Guaranteed Term(s) Groups.............................................9 1.20 Maintenance Fee......................................................10 1.21 Market Value Adjustment (MVA)........................................10 1.22 Matured Term Value...................................................10 1.23 Matured Term Value Transfer..........................................10 1.24 Maturity Date........................................................10 1.25 Net Purchase Payment(s)..............................................10 1.26 Nonunitized Separate Account.........................................10 1.27 Purchase Payment(s)..................................................10 1.28 Rebalancing Program..................................................10 1.29 Reinvestment.........................................................11 1.30 Separate Account.....................................................11 1.31 Surrender Value......................................................11 1.32 Transfers............................................................11 1.33 Valuation Period (Period)............................................11 1.34 Variable Annuity.....................................................11 II. GENERAL PROVISIONS - ------------------------------------------------------------------------------- 2.01 Change of Contract...................................................11 2.02 Change of Fund(s)....................................................12 2.03 Nonparticipating Contract............................................12 2.04 Payments and Elections...............................................13 2.05 State Laws...........................................................13 2.06 Control of Contract..................................................13 2.07 Designation of Beneficiary...........................................13 2.08 Misstatements and Adjustments........................................14 6 Page 2.09 Incontestability.....................................................14 2.10 Grace Period.........................................................14 III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS - ------------------------------------------------------------------------------- 3.01 Net Purchase Payment.................................................14 3.02 Certificate Holder's Account.........................................15 3.03 Fund(s) Record Units Separate Account................................15 3.04 Net Return Factor(s) - Separate Account..............................15 3.05 Fund Record Unit Value - Separate Account............................16 3.06 Market Value Adjustment..............................................16 3.07 Transfer of Current Value from the Funds or ALIAC Guaranteed Account 3.08 Notice to the Contract Holder........................................18 3.09 Loans................................................................18 3.10 Systematic Withdrawal Option (SWO)...................................18 3.11 Death Benefit Amount.................................................20 3.12 Death Benefit Options available to Beneficiary.......................21 3.13 Liquidation of Surrender Value.......................................23 3.14 Surrender Fee........................................................23 3.15 Payment of Surrender Value...........................................24 IV. ANNUITY PROVISIONS - ------------------------------------------------------------------------------- 4.01 Choices to be Made...................................................24 4.02 Terms of Annuity Options.............................................24 4.03 Death of Annuitant/Beneficiary.......................................26 4.04 Fund(s) Annuity Units - Separate Account.............................27 4.05 Fund(s) Annuity Unit Value - Separate Account........................27 4.06 Annuity Net Return Factor(s) - Separate Account......................27 4.07 Annuity Options......................................................28 7 I. GENERAL DEFINITIONS - -------------------------------------------------------------------------------- 1.01 Account A record established for each Certificate Holder to maintain the value of the Net Purchase Payment held on his/her behalf during the Accumulation Period. 1.02 Accumulation Period: The period during which the Net Purchase Payment(s) are applied to an Account to provide future Annuity payment(s). 1.03 Adjusted Current Value: The Current Value of an Account plus or minus any aggregate ALIAC Guaranteed Account MVA, if applicable. (See 1.21) 1.04 ALIAC Guaranteed An accumulation option where Aetna guarantees Account (AG Account): stipulated rate(s) of interest for specified periods of time. All assets of Aetna, including amounts in the Nonunitized Separate Account, are available to meet the guarantees under the AG Account. 1.05 Annuitant: The person whose life is measured for purposes of the Guaranteed Death Benefit and the duration of Annuity payments under the Contract. 1.06 Annuity Payment of an income: (a) For the life of one or two persons; (b) For a stated period; or (c) For some combination of (a) and (b). 1.07 Beneficiary: The individual or estate entitled to receive any payment from the Contract upon the death of the Annuitant, or if the Certificate Holder is different from the Annuitant, upon the death of the Certificate Holder. If the Account is held by joint Certificate Holders, the survivor will be deemed the designated Beneficiary and any other Beneficiary on record will be treated as the contingent Beneficiary. 1.08 Certificate Holder: A person who purchases an interest in the Contract as evidenced by a certificate. Aetna reserves the right to limit ownership to natural persons. If more than one Certificate Holder owns an account, each Certificate Holder will be a joint Certificate Holder. Unless we allow otherwise in response to a written request prior to Contract issue, any joint Certificate Holder must be the spouse of the other joint Certificate Holder. Joint Certificate Holders have joint ownership rights and both must authorize exercising any ownership rights unless Aetna allows otherwise. If the account is owned by a nonnatural person, the death benefit will be paid at the death of the Annuitant. 1.09 Code: The Internal Revenue Code of 1986, as it may be amended from time to time. 1.10 Contract: This agreement between Aetna and the Contract Holder. 8 1.11 Contract Holder: The entity to which a group Contract is issued. 1.12 Current Value: As of the most recent Valuation Period, the Net Purchase Payment and any additional amount deposited pursuant to 3.11 plus any interest added to the portion allocated to the ALIAC Guaranteed Account; and plus or minus the investment experience of the portion allocated to the Funds since deposit; less all Maintenance Fees deducted, any amounts surrendered and any amounts applied to an Annuity. 1.13 Deposit Period: A calendar week, a calendar month, a calendar quarter, or any other period of time specified by Aetna during which Net Purchase Payment(s), Transfers and Reinvestments are accepted into the ALIAC Guaranteed Account for one or more Guaranteed Terms. Aetna reserves the right to extend the Deposit Period. 1.14 Fixed Annuity: An Annuity with payments that do not vary in amount. 1.15 Fund(s): The open-end management investment companies (mutual funds) in which the Separate Account invests. 1.16 General Account: The Account holding the assets of Aetna, other than those assets held in Aetna's separate accounts. 1.17 Guaranteed Rate -- Aetna will declare the interest rate applicable AG Account: to a specific Guaranteed Term at the start of the Deposit Period for that Guaranteed Term. The rate is guaranteed by Aetna for that Deposit Period and the ensuing Guaranteed Term. The Guaranteed Rate is an annual effective yield. That is, interest is credited daily at a rate that will produce the Guaranteed Rate over the period of a year. No Guaranteed Rate will ever be less than the Minimum Guaranteed Rate shown on Contract Schedule I. 1.18 Guaranteed Term: The period of time for which AG Account Guaranteed Rate is guaranteed on Net Purchase Payments, Transfers and Reinvestments made into a current Deposit Period for the AG Account. Such period begins on the day following the close of the Deposit Period and ends on the designated Maturity Date. Guaranteed Terms are offered at Aetna's discretion for various lengths of time ranging up to and including ten years. During a Deposit Period, Aetna may make available any number of Guaranteed Terms. The Contract Holder may allocate Net Purchase Payments and Transfers into any or all of the available Guaranteed Terms. 1.19 Guaranteed Term(s) Groups: All AG Account Guaranteed Term(s) with the same length of time from the close of the Deposit Period until the designated Maturity Date. 9 1.20 Maintenance Fee: The Maintenance Fee (see Contract Schedule I) will be deducted during the Accumulation Period from the Current Value on each anniversary of the date the Account is established and upon surrender of the entire Account. 1.21 Market Value An adjustment that may apply to an amount Adjustment (MVA): withdrawn or transferred from an AG Account Guaranteed Term prior to the end of that Guaranteed Term. The adjustment reflects the change in the value of the investment due to changes in interest rates since the date of deposit and is computed using the formula given in 3.06. The adjustment is expressed as a percentage of each dollar being withdrawn or transferred. 1.22 Matured Term Value: The amount payable on an AG Account Guaranteed Term's Maturity Date. 1.23 Matured Term Value During the calendar month following an AG Transfer: Account Maturity Date, the Certificate Holder may notify Aetna's Home Office in writing to Transfer or surrender all or part of the Matured Term Value, plus interest at the new Guaranteed Rate accrued thereon, from the AG Account without an MVA. This provision only applies to the first such written request received from the Certificate Holder during this period for any Matured Term Value. 1.24 Maturity Date: The last day of an AG Account Guaranteed Term. 1.25 Net Purchase Payment(s): The Purchase Payment less premium taxes, if applicable. 1.26 Nonunitized Separate A separate account subject to the laws of New Account: York set up by Aetna under Title 38, Section 38a-433, of the Connecticut General Statutes, that holds assets for AG Account Terms. There are no discrete units for this Account. The Certificate Holder does not participate in the investment gain or loss from the assets held in the Nonunitized Separate Account. Such gain or loss is borne entirely by Aetna. These assets may be chargeable with liabilities arising out of any other business of Aetna. 1.27 Purchase Payment(s): Payment(s) accepted by Aetna at its Home Office. Aetna reserves the right to refuse to accept any Purchase Payment at any time for any reason. No advance notice will be given to the Certificate Holder. 1.28 Rebalancing Program: A program that allows Contract Holders to have portions of their Current Value automatically reallocated annually to a specified percentage. Only the portion of the Current Value held in the separate account can be rebalanced. Contract Holders may participate in this program by completing the Rebalancing Section of the enrollment form, or by requesting the service in writing from the Company's Home Office. Reallocations under the Reblancing Program will not be counted for purposes of any transfer limitations imposed under the contract. 10 1.29 Reinvestment: Aetna will mail a notice to the Certificate Holder at least 18 calendar days and not more than 45 days before a Guaranteed Term's Maturity Date. This notice will contain the Terms available during current Deposit Periods with their Guaranteed Rate, and projected Matured Term Value. If no specific direction is given by the Certificate Holder prior to the Maturity Date, each Matured Term Value will be reinvested in the current Deposit Period for a Guaranteed Term of the same duration. If a Guaranteed Term of the same duration is unavailable, each Matured Term Value will automatically be reinvested in the current Deposit Period for the next shortest Guaranteed Term available. If no shorter Guaranteed Term is available, the next longer Guaranteed Term will be used. Aetna will mail a confirmation statement to the Certificate Holder the next business day after the Maturity Date. This notice will state the Guaranteed Term and Guaranteed Rate which will apply to the reinvested Matured Term Value. 1.30 Separate Account: A separate account that buys and holds shares of the Fund(s). 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 as to such amounts. This Separate Account generally is not guaranteed and is held at market value. The assets of the Separate Account, to the extent of reserves and other contract liabilities of the Account, shall not be charged with other Aetna liabilities. 1.31 Surrender Value: The amount payable by Aetna upon the surrender of any portion of an account. 1.32 Transfers: The movement of invested amounts among the available Fund(s) and the AG Account under the Contract during the Accumulation Period. 1.33 Valuation Period The period of time for which a Fund determines (Period): its net asset value, usually from 4:15 p.m. Eastern time each day the New York Stock Exchange is open until 4:15 p.m. the next such day, or such other day that one or more of the Funds determines its net asset value. 1.34 Variable Annuity: An Annuity with payments that vary with the net investment results of one or more Funds held under the Separate Account. II. GENERAL PROVISIONS - -------------------------------------------------------------------------------- 2.01 Change of Contract: Only an authorized officer of Aetna may change the terms of the contract. Aetna will notify the Contract Holder in writing at least 30 days before the effective date of any change. Any change will not affect the amount or terms of any Annuity which begins before the change. 11 Aetna may make any change that affects the AG Account Market Value Adjustment (3.06) with at least 30 days' advance written notice to the Contract Holder and the Certificate Holder. Any such change shall become effective for any new Term and will be applicable only if it is more favorable to the Contract Holder and/or the Certificate Holder. Any change that affects any of the following under the Contract will not apply to Accounts in existence before the effective date of the change: (a) Net Purchase Payment (3.01) (b) AG Account Guaranteed Rate (1.04) (c) Net Return Factor(s) -- Separate Account (3.04) (d) Current Value (1.12) (e) Surrender Value (1.31) (f) Fund(s) Annuity Unit Value -- Separate Account (4.05) (g) Annuity Options (4.07) (h) Fixed Annuity Guaranteed Interest Rates (4.01) (i) Transfers (1.32). This Contract may be changed as deemed necessary by Aetna to comply with federal or state law. Any such change is subject to the prior approval of the New York Insurance Department. 2.02 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 our 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. Aetna reserves the right to substitute shares of another Fund for shares already acquired without a proxy vote. 2.02 Change of Fund(s) Any elimination, substitution or addition of (Cont'd): Funds will be done in accordance with federal securities laws and are subject to the approval of the Superintendent of the New York Insurance Department and Aetna will notify the Contract Holder of such change. 2.03 Nonparticipating The Contract Holder, Certificate Holder's or Contract: Beneficiaries will not have a right to share in the earnings of Aetna. 12 2.04 Payments and Elections: While the Certificate Holder is living, Aetna will pay the Certificate Holder any Annuity payments as and when due. After the Certificate Holder's death, or at the death of the first Certificate Holder if the Account is owned jointly, any Annuity payments required to be made will be paid in accordance with 4.03. Aetna will determine other payments and/or elections as of the end of the Valuation Period in which the request is received at its Home Office. Such payments will be made within 7 calendar days of receipt at its Home Office of a written claim for payment which is in good order, except as provided in 3.15. 2.05 State Laws: The Contract and the Certificate's comply with the laws of the state in which they are delivered. Any surrender, death, or Annuity payments are equal to or greater than the minimum required by such laws. Annuity tables for legal reserve valuation shall be as required by state law. Such tables may be different from Annuity tables used to determine Annuity payments. 2.06 Control of Contract: The Contract is between the Contract Holder and Aetna. The Contract Holder has title to the Contract. Nothing in the group annuity contract invalidates or impairs any right granted to the Certificate Holder. The Certificate Holder has all other rights to amounts held in his or her Account. Each Certificate Holder shall own all amounts held in his or her Account. Each Certificate Holder may make any choices allowed by this Contract for his or her Account. Certificate Holder choices made under the contract must be in writing. If the Account is owned jointly, both joint Certificate Holders must authorize any Certificate Holder change in writing. Until receipt of such choices at Aetna's Home Office, Aetna may rely on any previous choices made. The Account may not be attached, alienated, or subject to the claims of creditors of the Contract Holder or the Certificate Holder except to the extent permitted by law. 2.06 Control of Contract The Certificate Holder may assign or transfer (Cont'd): his or her rights under the Contract. Aetna reserves the right not to accept assignment or transfer to a nonnatural person. Any assignment or transfer made must be submitted to Aetna's Home Office in writing and will not be effective until accepted by Aetna. 2.07 Designation of Each Certificate Holder shall name his or her Beneficiary: Beneficiary. If the Account is owned jointly, both joint Certificate Holders must agree in writing to the Beneficiary designated. The Beneficiary may be changed at any time. Changes to a Beneficiary must be submitted to Aetna's Home Office in writing and will not be effective until accepted by Aetna. 13 2.08 Misstatements and If Aetna finds the age or sex of any Annuitant Adjustments: to be misstated, the amount payable under the Contract shall be adjusted for the correct age or sex; the amount of any underpayment or overpayment, with interest at six per cent per year, shall be credited to, or charged against, the current or next succeeding payment or payments to be made by Aetna under the Contract. 2.09 Incontestability: Aetna cannot cancel the Contract because of any error of fact on the application. Aetna cannot cancel an Account because of any error of fact on the enrollment form. 2.10 Grace Period: This Contract will remain in effect even if Purchase Payments are not continued. III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS - -------------------------------------------------------------------------------- 3.01 Net Purchase Payment: This amount is the actual Purchase Payment less any premium tax. Aetna will generally deduct the premium tax when Annuity benefits are elected (see Part IV). If Aetna determines that under applicable state law, it must pay a premium tax when the Purchase Payment is received or at any other time, it will deduct the tax at that time. The Net Purchase Payment will be credited among: (a) The current Deposit Period(s) for Guaranteed Terms under the AG Account; and (b) The Fund(s) in which the Separate Account invests. 3.01 Net Purchase Payment For each Net Purchase Payment, the Certificate (Cont'd): Holder shall tell Aetna the allocation percentage to be applied to the current Deposit Period for each of the available Guaranteed Terms in the AG Account and/or each Fund. If allocation instructions are not received along with any subsequent Net Purchase Payment, the allocation will be the same as that indicated on the original application. If the same Guaranteed Term is no longer available, the Net Purchase Payment will be allocated to the next shortest Guaranteed Term available in the current Deposit Period. If no shorter Guaranteed Term is available, the next longer Guaranteed Term will be used. The minimum acceptable additional Purchase Payment is shown on Contract Schedule I. The maximum acceptable Purchase Payment without Home Office approval is also provided on Contract Schedule I. 3.02 Certificate Holder's Aetna will maintain an Account for each Account: Certificate Holder. 14 3.03 Fund(s) Record Units -- The portion of the Net Purchase Payment(s) Separate Account: applied to each Fund under the Separate Account will determine the number of Fund record units for that Fund. This number is equal to the portion of the Net Purchase Payment(s) applied to each Fund divided by the Fund record unit value (see 3.05) for the Valuation Period in which the Purchase Payment is received in good order at Aetna's Home Office. 3.04 Net Return Factor(s) -- The net return factor are used to compute all Separate Account: Separate Account record units for any Fund. The net return factor(s) 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 the Valuation Period; minus (b) The value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; plus or minus (c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (d) The total value of the Fund record units and Fund Annuity units of the Separate Account at the start of the Valuation Period; minus (e) A daily Separate Account charge at an annual rate as shown on Contract Schedule I for mortality and expense risks, which may include profit; and a daily administrative charge. 3.04 Net Return Factor(s) -- A net return rate may be more or less than 0%. Separate Account The value of a share of the Fund is equal to (Cont'd): the net assets of the Fund divided by the number of shares outstanding. 3.05 Fund Record Unit Value -- A Fund record unit value is computed by Separate Account: multiplying the net return factors for the current Valuation Period by the Fund record unit value for the previous Period. The dollar value of a Fund record units, Separate Account assets, and Variable Annuity payments may go up or down due to investment gain or loss. 3.06 Market Value Adjustment: Excepted as noted below, there will be an MVA for a withdrawal from the AG Account before the end of a Guaranteed Term when the withdrawal is due to: (a) a Transfer; except as specified in 1.24, AG Account Matured Term Value Transfer; (b) A full or partial surrender (including a 15% free withdrawal under 3.14), except for a partial withdrawal under the Systematic Withdrawal Option (see 3.10); or (c) An election of Annuity option 1 (see 4.07). 15 Full and partial surrenders and Transfers made within six months after the date of the Annuitant's death will be the greater of: (a) The aggregate MVA amount which is the sum of all market value adjusted amounts calculated due to a withdrawal of amounts. This total may be greater or less than the Current Value of those amounts; or (b) The applicable portion of the Current Value in the AG Account. After the six-month period, the surrender or Transfer will be the aggregate MVA amount, which may be greater or less than the Current Value of those amounts. The greater of the aggregate MVA amount or the applicable portion of the Current Value applies to amounts withdrawn from the AG Account on account of an election of Annuity options 2 or 3 (see 4.07). Market value adjusted amounts will be equal to the amount withdrawn multiplied by the following ratio: x --- 365 (1 + i) ------- x --- 365 (1 + j) 3.06 Market Value Where: Adjustment (Cont'd): i is the Deposit Period Yield j is the Current Yield x is the number of days remaining, (computed from Wednesday of the week of withdrawal) in the Guaranteed Term. The Deposit Period Yield will be determined as follows: (a) At the close of the last business day of each week of the Deposit Period, a yield will be computed as the average of the yields on that day of U.S. Treasury Notes which mature in the last three months of the Guaranteed Term. (b) The Deposit Period Yield is the average of those yields for the Deposit Period. If withdrawal is made before the close of the Deposit Period, it is the average of those yields on each week preceding withdrawal. The Current Yield is the average of the yields on the last business day of the week preceding withdrawals on the same U.S. Treasury Notes included in the Deposit Period Yield. 16 In the event that no U.S. Treasury Notes which mature in the last three months of the Guaranteed Term exist, Aetna reserves the right to use the U.S. Treasury Notes that mature in the following quarter. If U.S. Treasury Notes are no longer available, a suitable replacement index, subject to approval of the Superintendent of the New York Insurance Department, would then be utilized. A detailed description of the MVA has been filed with the Superintendent of the New York Insurance Department. 3.07 Transfer of Current Before an Annuity option is elected, all or any Value from the Funds portion of the Adjusted Current Value may be or AG Guaranteed transferred from any Fund or Guaranteed Term of Account (Cont'd): the AG Account: (a) To any other Fund; or (b) To any Guaranteed Term of the AG Account available in the current Deposit Period. Transfer requests can be submitted as a percentage or as a dollar amount. The minimum transfer amount is shown on Contract Schedule I. Within a Guaranteed Term Group, the amount to be surrendered or transferred will be withdrawn first from the oldest Deposit Period, then from the next oldest, and so on until the amount requested is satisfied. 3.07 Transfer of Current The Certificate Holder may make an unlimited Value from the Funds number of Transfers during the Accumulation or AG Guaranteed Period. The number of free Transfers allowed by Account Aetna is shown on Contract Schedule I. Additional Transfers may be subject to a Transfer fee as shown on Contract Schedule I. Amounts transferred as a Matured Term Value on or within one calendar month of the Term's Maturity Date do not count against the annual Transfer limit. Amounts applied to Guaranteed Terms of the AG Account may not be transferred to the Funds or to another Guaranteed Term during the Deposit Period or for 90 days after the close of the Deposit Period except for a Matured Term Value(s) during the calendar month following the Term's Maturity Date. Transfers from Guaranteed Terms of the AG Account are subject to the MVA provisions of 3.06. 17 3.08 Notice to the The Certificate Holder will receive quarterly Contract Holder: statements from Aetna of: (a) The value of any amounts held in: (1)The AG Account; and (2)The Fund(s) under the Separate Account (b) The number of any Fund(s) record units; and (c) The Fund(s) record unit value. Such number or values will be as of a specific date no more than 60 days before the date of the notice. 3.09 Loans: Loans are not available under this Contract. 3.10 Systematic Withdrawal The following distribution options may be Option (SWO): elected by the Certificate Holder or a Beneficiary during the Accumulation Period. A distribution option under which a portion of the Accounts' Current Value will automatically be surrendered and distributed each year. SWO payments will be calculated on the Accounts' full Current Value. The distributed amount is withdrawn pro-rata from each investment option used under the Account. A Surrender Fee will not be deducted from any portion of the Current Value which is paid as a distribution under SWO. Certificate Holders should consult their tax advisers prior to requesting this distribution option. Aetna will not be responsible for any adverse tax consequences due to receiving SWO payments. (a) Amount of Distribution: The Certificate Holder or a Beneficiary may elect one of the three payment methods described below. 3.10 Systematic Withdrawal (1) Specified Payment: Payments of a designated Option (SWO) (Cont'd): dollar amount. The annual amount may not be greater than the percentage of the Account's Current Value on the date of the SWO election as shown on Contract Schedule I. This annual dollar amount will remain constant. The minimum SWO payment amount is shown on Contract Schedule I. If SWO payments are made more frequently than annually, the designated annual amount is divided by the number of payments due each year; or (2) Specified Period: Payments made over a designated period of time of at least 10 years. The annual amount is calculated by dividing the Current Value as of December 31 of the year prior to the payment year by the number of payment years remaining; or 18 (3) Specified Percentage: Payments of a designated percentage which cannot be greater than the percentage of the Current Value at the time of election as shown on Contract Schedule I. The percentage may be changed by written request. Aetna reserves the right to limit the number of times the percentage may be changed. The annual amount is calculated by multiplying the Current Value as of December 31 of the year prior to the payment year by the designated percentage. Payments upon the Contract Holder's death will continue to the Beneficiary in the manner described in 3.11. (b) Minimum Initial Current Value: The Minimum Initial Current Value required to begin SWO is shown on Contract Schedule I. If after election of this option, the Current Value is insufficient to make a scheduled SWO payment, Aetna will distribute the entire balance. (c) Date of Distribution: The Contract Holder or a Beneficiary shall specify the first payment date. The earliest allowable first payment date is the date on which the Contract Holder attains age 59 1/2. The latest allowable SWO payment date is the month of the Annuitant's 90th birthday. As elected by the Contract Holder, SWO payments will be made on a monthly, quarterly, semi-annual or annual basis. If SWO payments are made more frequently than annually, the designated annual amount is divided by the number of payments due each year. Subsequent payments will be made on the 15th of the appropriate months or on such other date as Aetna may designate or allow. 3.10 Systematic Withdrawal (d) Election and Revocation: SWO may be elected Option (SWO) (Cont'd): by the Certificate Holder or Beneficiary if elected after the Certificate Holders death by submitting a completed and signed election form to Aetna's Home Office. Once elected, this option may be revoked by the Certificate Holder or Beneficiary, if elected after the Certificate Holder's death, by submitting a written request to Aetna at its Home Office. Any revocation will apply only to amounts not yet paid. SWO may be elected only once by the Certificate Holder or by the Beneficiary. 3.11 Death Benefit Amount: If the Certificate Holder or Annuitant dies before Annuity payments start, the Beneficiary is entitled to a death benefit under the Account. If the Account is owned jointly, the death benefit is paid at the death of the first joint Certificate Holder to die. The claim date is the date when proof of death and the Beneficiary's claim are received in good order at Aetna's Home Office. The amount of the death benefit is determined as follows: (a) Death of Annuitant less than 85 years of age: The guaranteed death benefit is the greatest of: 19 (1) The sum of all Net Purchase Payment(s) made to the Account (as of the date of death) minus the sum of all amounts surrendered, applied to an Annuity, or deducted from the Account; (2) The highest step-up value as of the date of death. A step-up value is determined on each anniversary of the Effective Date. Each step up value is calculated as the Account's Current Value on the Effective Date anniversary, increased by the amount of any Purchase Payment(s) made, and decreased by the sum of all amounts surrendered, deducted, and/or applied to an Annuity option since the Effective Date anniversary. (3) The Account's Current Value as of the date of death. The excess, if any, of the guaranteed death benefit value over the Account's Current Value is determined as of the date of death. Any excess amount will be deposited to the Account and allocated to Aetna Variable Encore Fund as of the claim date. The Current Value on the claim date plus any excess amount deposited becomes the Account's Current Value. (b) Death of Annuitant age 85 or greater: The death benefit amount is the greatest of: 3.11 Death Benefit Amount (1) The sum of all Net Purchase Payment(s) (Cont'd): made to the Account (as of the date of death) minus the sum of all amounts surrendered, applied to an Annuity, or deducted from the Account; (2) The highest step-up value prior to the Certificate Holder's 85th birthday. A step-up value is determined on each anniversary of the Effective Date. Each step-up value is calculated as the Account's Current Value on the Effective Date anniversary, increased by the amount of any Purchase Payment(s) made, and decreased by the sum of all amounts surrendered, deducted, and/or applied to an Annuity option since the Effective Date anniversary. (3) The Account's Current Value as of the date of death. The excess, if any of the guaranteed death benefit value over the Account's Current Value is determined as of the date of death. Any excess amount will be deposited to the Account and allocated to Aetna Variable Encore Fund as of the claim date. The Current Value on the claim date plus any excess amount deposited becomes the Account's Current Value. 20 (c) Death of the Certificate Holder if the Certificate Holder is not the Annuitant: The death benefit amount is the Account's Adjusted Current Value on the Claim Date. A Surrender Fee may apply to any full or partial surrender (see 3.14 and Contract Schedule I). (d) At the death of a surviving spouse Beneficiary who continued the Account in his or her own name, the death benefit amount is equal to the Account's Current Value less any applicable Surrender Fee on the amount of any Purchase Payment(s) made since the death of the Certificate Holder. 3.12 Death Benefit Options Prior to any election, or until amounts must be available to Beneficiary: otherwise distributed under this section, the Current Value of the Account will be retained in the Account. The Beneficiary has the right under the Contract to allocate or reallocate any amount to any of the available investment options (subject to an MVA, as applicable). The following options are available to the Beneficiary: (a) When the Certificate Holder is the Annuitant: If the Certificate Holder/Annuitant dies, and: 3.12 Death Benefit Options (1) If the Beneficiary is the Certificate available to Beneficiary Holder's surviving spouse, the (Cont'd): Beneficiary may exercise all rights under the Contract and continue in the Accumulation Period, or may elect (i), or (ii) below. Under the Code, distributions from the Account are not required until the Spousal Beneficiary's death. The Spousal Beneficiary may elect to: (i) Apply some or all of the Adjusted Current Value of the Account to Annuity option (see 4.07); (ii) Receive, at any time, a lump sum payment equal to the Adjusted Current Value of the Account. (2) If the Beneficiary is other than the Certificate's Holder's surviving spouse, then options (i) or (ii), under (1) above only apply. Any portion of the Adjusted Current Value of the Account not applied to an Annuity option within one year of the Certificate Holder's death, must be distributed within five years of the date of death. (3) If no Beneficiary exists, a lump sum payment equal to the Adjusted Current Value will be made to the Certificate Holder's estate. (b) When the Certificate Holder is not the Annuitant and the Certificate Holder dies, and: 21 (1) If the Beneficiary is the Certificate Holder's surviving spouse, the Beneficiary may exercise all rights under the Contract and continue in the Accumulation Period, or may elect (i), or (ii) below. Under the Code, distributions from the Account are not required until the spousal Beneficiary's death. The spousal Beneficiary may elect to: (i) Apply some or all of the Adjusted Current Value of the Account to an Annuity option (see 4.07); (ii) Receive, at any time, a lump sum payment equal to the Surrender Value. (2) If the Beneficiary is other than the Certificate Holder's surviving spouse, then options (i) or (ii) under (1) above apply. Any portion of the Adjusted Current Value not applied to Annuity option within one year of the Certificate Holder's death, must be distributed within five years of the date of death. 3.12 Death Benefit Options (3) If no Beneficiary exists, a lump sum available to Beneficiary payment equal to the Surrender Value (Cont'd): will be made to the Certificate Holder's estate. (c) When the Certificate Holder is not the Annuitant and the Annuitant dies: The Beneficiary must elect an Annuity option within 60 days of the date of death or the gain, if any, will be includible in the Beneficiary's income in the tax year in which the Annuitant dies. 3.13 Liquidation of Surrender All or any portion of the Account's Current Value: Value may be surrendered at any time as requested by the Certificate Holder. Surrender requests can be submitted as a percentage of the Account's Adjusted Current Value or as a specific dollar amount. Net Purchase Payment amounts are withdrawn first, and then the excess value, if any. For any partial surrender, amounts are withdrawn on a pro rata basis from the Fund(s) and/or the Guaranteed Term(s) Groups of the AG Account in which the Current Value is invested. Within a Guaranteed Term Group, the amount to be surrendered or transferred will be withdrawn first from the oldest Deposit Period, then from the next oldest, and so on until the amount requested is satisfied. After deduction of the Maintenance Fee, if applicable, the surrendered amount shall be reduced by a Surrender Fee, if applicable. An MVA may apply to amounts surrendered from the AG Account. 3.14 Surrender Fee: The Surrender Fee only applies to the Net Purchase Payment(s) portion surrendered and varies according to the elapsed time since deposit (see Contract Schedule I). Net Purchase Payment amounts are withdrawn in the same order they were applied. 22 No Surrender Fee is deducted from any portion of the Net Purchase Payment which is paid: (a) To a Beneficiary due to the Annuitant's death before Annuity payments start, up to a maximum of the aggregate Net Purchase Payment(s) minus the total of all partial surrenders, amounts applied to an Annuity and deductions made prior to the Annuitant's date of death; (b) As a premium for an Annuity option under this Contract (see 4.07); (c) As a distribution under the SWO provision (see 3.10); 3.14 Surrender Fee (Cont'd): (d) At least 12 months after the date of the first Purchase Payment to the Account, in an amount equal to or less than 15% of the Current Value. This applies to the first surrender request, partial or full, in a calendar year. The Current Value is calculated as of the date the surrender request is received in good order at Aetna's Home Office. This waiver is not available to the Contract Holder while SWO is in effect; or (e) For a full surrender where the Account's Current Value is $2,500 or less and no surrenders have been taken from the Contract within the prior 12 months. 3.15 Payment of Surrender Under certain emergency conditions, Aetna may Value: defer payment: (a) For a period of up to 6 months (unless not allowed by state law); or (b) As provided by federal law under the Investment Company Act of 1940. IV. ANNUITY PROVISIONS - -------------------------------------------------------------------------------- 4.01 Choices to be Made: The Certificate Holder may tell Aetna to apply any portion of the Adjusted Current Value (minus any premium tax) for an Annuity option (see 4.07). The first Annuity payment may not be earlier than one calendar year after the initial Purchase Payment nor later than the first day of the month following the Annuitant's 90th birthday. When an Annuity option is chosen, Aetna must also be told if payments are to be made other than monthly and whether to pay: (a) A Fixed Annuity using the General Account; (b) A Variable Annuity using any of the Fund(s) available under this Contract for Annuity purposes; or (c) A combination of (a) and (b). 23 If a Fixed Annuity is chosen, the Annuity purchase rate for the option chosen reflects at least the Minimum Guaranteed Interest Rate (see Contract Schedule II), but may reflect a higher interest rate. If a Variable Annuity is chosen, the initial Annuity payment for the option chosen reflects the assumed annual return rate elected. (see Contract Schedule II). 4.02 Terms of Annuity (a) When payments start, the age of the Options: Annuitant plus the number of years for which payments are guaranteed must not exceed 95. 4.02 Terms of Annuity (b) An Annuity option may not be elected if the Options (Cont'd): first payment would be less than $50 or if the total payments in a year would be less than $250 (less if required by state law). Aetna reserves the right to increase the minimum first Annuity payment amount and the minimum annual Annuity payment amount based upon increases reflected in the Consumer Price Index-Urban, (CPI-U) since July 1, 1993. (c) If a Fixed Annuity is chosen and a larger payment would result from applying the Surrender Value or, if greater, 95% of what the surrender would be if there were no surrender fee, to a current Aetna single premium immediate Annuity, Aetna will make the larger payment. (d) For purposes of calculating the guaranteed first payment of a Variable Annuity or the payments for a Fixed Annuity, the Annuitant's and second Annuitant's adjusted age will be used. The Annuitant's and second Annuitant's adjusted age is his or her age as of the birthday closest to the Annuity commencement date reduced by one year for Annuity commencement dates occurring during the period of time from July 1, 1993 through December 31, 1999. The Annuitant's and second Annuitant's age will be reduced by two years for Annuity commencement dates occurring during the period of time from January 1, 2000 through December 31, 2009. The Annuitant's and second Annuitant's age will be reduced by one additional year for Annuity commencement dates occurring in each succeeding decade. The Annuity purchase rates for options 2 and 3 are based on mortality from 1983 Table a. (e) Assumed Annual Net Return Rate is the interest rate used to determine the amount of the first Annuity payment under a Variable Annuity as shown on Contract Schedule II. The Separate Account must earn this rate plus enough to cover the mortality and expense risks charges (which may include profit) and administrative charges if future Variable Annuity Payments are to remain level, (see Annuity return factor under Variable Annuity Assumed Annual Net Return Rate on Contract Schedule II). 24 (f) Once elected, Annuity payments cannot be commuted to a lump sum except for Variable Annuity payments under option 1 (see 4.07). The life expectancy of the Annuitant and the Annuitant and second Annuitant shall be irrevocable upon the election of an Annuity option. 4.03 Death of Annuitant/ (a) Certificate Holder is Annuitant: When the Beneficiary: Certificate Holder is the Annuitant's and the Annuitant dies under option 1 or 2, or both the Annuitant and the second Annuitant die under option 3(d), the present value of any remaining guaranteed payments will be paid in one sum to the Beneficiary, or upon election by the Beneficiary, any remaining payments will continue to the Beneficiary. If option 3 has been elected and the Certificate Holder dies, the remaining payments will continue to the successor payee. If no successor payee has been designated, the Beneficiary will be treated as the successor payee. If the Account has joint Certificate Holders, the surviving joint Certificate Holder will be deemed the successor payee. (b) Certificate Holder is Not Annuitant: When the Certificate Holder is not the Annuitant and the Certificate Holder dies, the remaining payments will continue to the successor payee. If no successor payee has been designed, the Beneficiary will be treated as the successor payee. If the Account has joint Certificate Holders, the surviving joint Certificate Holder will be deemed the successor payee. If the Annuitant dies under the option 1 or 2, or if both the Annuitant and the second Annuitant die under option 3(d), the present value of any remaining guaranteed payments will be paid in one sum to the Beneficiary, or upon the election by the Beneficiary, any remaining payments will continue to the Beneficiary. If option 3 has been elected, and the Annuitant dies, the remaining payments will continue to the Certificate Holder. (c) No Beneficiary Named/Surviving: If there is no Beneficiary, the present value of any remaining payments will be paid in one sum to the Certificate Holder, or if the Certificate Holder is not living, then to the Certificate Holder's estate. (d) If the Beneficiary or the successor payee dies while receiving Annuity payments, the present value of any remaining guaranteed payments will be paid in one sum to the successor Beneficiary/payee, or upon election by the successor Beneficiary/payee, any remaining payments will continue to the successor Beneficiary/payee. If no successor Beneficiary/payee has been designated, the present value of any remaining guaranteed payments will be paid in one sum to the Beneficiary's/payee's estate. 25 (e) The present value will be determined as of the Valuation Period in which proof of death acceptable to Aetna and a request for payment is received at Aetna's Home Office. The interest rate used to determine the first payment will be used to calculate the present value. 4.04 Fund(s) Annuity Units - The number of each Fund's Annuity units is based Separate Account: on the amount of the first Variable Annuity payment which is equal to: (a) The portion of the Current Value applied to pay a Variable Annuity (minus any premium tax); divided by (b) 1,000; multiplied by (c) The payment rate for the option chosen. Such amount, or portion of the Variable payment will be divided by the appropriate Fund Annuity unit value (see 4.05) of the tenth Valuation Period before the due date of the first payment to determine the number of each Fund Annuity units. The number of each Fund Annuity units remains fixed. 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 Period prior to the due date of the payment is used. 4.05 Fund(s) Annuity Unit For any Valuation Period, a Fund Annuity unit Value - Separate Account: value is equal to: (a) The Value for the previous Period; multiplied by (b) The Annuity net return factor(s) (see 4.06 below) for the Period; multiplied by (c) A factor to reflect the assumed annual net return rate (see Contract Schedule II). The dollar value of a Fund Annuity unit value and Annuity payments may go up or down due to investment gain or loss. 4.06 Annuity Net Return The Annuity net return factor(s) are used to Factor(s) - Separate compute Annuity payments for any Fund. Account: The Annuity net return factor(s) for each Fund is equal to 1.0000000 plus the net return rate. The net return rate is equal to: 26 (a) The value of the shares of the Fund held by the Separate Account at the end of a Valuation Period; minus (b) The value of the shares of the Fund held by the Separate Account at the start of the Valuation Period; plus or minus (c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (d) The total value of the Fund record units and Fund Annuity units of the Separate Account at the start of the Valuation Period; minus (e) A daily charge for Annuity mortality and expense risks, which may include profit, and a daily administrative charge (at the annual rate as shown on Contract Schedule II). 4.06 Annuity Net Return A net return rate may be more of less than 0%. Factor(s) - Separate Account (Cont'd): The value of a share of the Fund is equal to the net assets of the Fund divided by the number of shares outstanding. Payments shall not be changed due to changes in the mortality or expense results or administrative charges. 4.07 Annuity Options: Option 1 -- Payments for a Stated Period of Time -- An Annuity will be paid for the number of years chosen. The number of years must be at least 5 and not more than 30. If payments for this option are made under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within 3 years after the start of payments, it will be treated as a surrender and any applicable Surrender Fee will be applied (see 3.14). If a nonspouse Beneficiary elects this option at the death of the Contract Holder, the period selected may not extend beyond the Beneficiary's life expectancy. Option 2 -- Life Income -- An Annuity will be paid for the life of the Annuitant. If also chosen, Aetna will guarantee payments for 60, 120, 180, or 240 months. Option 3 -- Life Income Based upon the Lives of Two Annuitants -- An Annuity will be paid during the lives of the Annuitant and a second Annuitant. Payments will continue until both Annuitants have died. When this option is chosen, a choice must be made of: 27 (a) 100% of the payment to continue after the first death; (b) 66-2/3% of the payment to continue after the first death; (c) 50% of the payment to continue after the first death; (d) Payments for a minimum of 120 months with 100% of the payment to continue after the first death; or (e) 100% of the payment to continue at the death of the second Annuitant and 50% of the payment to continue at the death of the Annuitant. Other Options -- Aetna may make other options available as allowed by the laws of the state in which the Contract and this Certificate is delivered. 28 OPTION 1 Payments for a Stated Period of Time Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0% - ------------------------------------------------------------------------------ Guaranteed Monthly Quarterly Semi-Annual Annual Years Rate Payment Payment Payment Payment - ------------------------------------------------------------------------------ 5 3.00% 17.91 53.59 106.78 211.99 6 3.00% 15.14 45.30 90.27 179.22 7 3.00% 13.16 39.39 78.49 155.83 8 3.00% 11.68 34.96 69.66 138.31 9 3.00% 10.53 31.52 62.81 124.69 10 3.00% 9.61 28.77 57.33 113.82 11 3.00% 8.86 26.52 52.85 104.93 12 3.00% 8.24 24.65 49.13 97.54 13 3.00% 7.71 23.08 45.98 91.29 14 3.00% 7.26 21.73 43.29 85.95 15 3.00% 6.87 20.56 40.96 81.33 16 3.00% 6.53 19.54 38.93 77.29 17 3.00% 6.23 18.64 37.14 73.74 18 3.00% 5.96 17.84 35.56 70.59 19 3.00% 5.73 17.13 34.14 67.78 20 3.00% 5.51 16.50 32.87 65.26 21 3.00% 5.32 15.92 31.72 62.98 22 3.00% 5.15 15.40 30.68 60.92 23 3.00% 4.99 14.92 29.74 59.04 24 3.00% 4.84 14.49 28.88 57.33 25 3.00% 4.71 14.09 28.08 55.76 26 3.00% 4.59 13.73 27.36 54.31 27 3.00% 4.47 13.39 26.68 52.97 28 3.00% 4.37 13.08 26.06 51.74 29 3.00% 4.27 12.79 25.49 50.60 30 3.00% 4.18 12.52 24.95 49.53 - ------------------------------------------------------------------------------ 29 OPTION 2 Life Income Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0% Payments Guaranteed for a Stated Period of Months
- ------------------------------------------------------------------------------------------------------------------- Adjusted None 60 120 180 240 Age of ---------------------------------------------------------------------------------------------------- Annuitant Male Female Male Female Male Female Male Female Male Female - ------------------------------------------------------------------------------------------------------------------- 50 $ 4.27 $ 3.90 $ 4.26 $ 3.90 $ 4.22 $ 3.89 $ 4.17 $ 3.86 $ 4.08 $ 3.82 51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88 52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93 53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99 54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04 55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11 56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17 57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23 58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30 59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37 60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44 61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51 62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58 63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65 64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72 65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79 66 6.30 5.51 6.21 5.47 5.96 5.36 5.56 5.16 5.08 4.86 67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93 68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00 69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06 70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12 71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18 72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23 73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28 74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32 75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35 - -------------------------------------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 30 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Male and Second Annuitant is Female) Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- -------------------------------------------------------------------------------------------- Adjusted Ages - -------------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - -------------------------------------------------------------------------------------------- 55 50 $ 3.69 $ 4.05 $ 4.27 $ 3.69 $ 4.13 55 55 3.88 4.25 4.47 3.87 4.25 55 60 3.06 4.47 4.71 4.06 4.36 60 55 3.99 4.44 4.71 3.98 4.55 60 60 4.24 4.71 4.99 4.23 4.70 60 65 4.49 5.01 5.32 4.48 4.85 65 60 4.38 4.97 5.32 4.38 5.10 65 65 4.72 5.33 5.70 4.71 5.32 65 70 5.07 5.75 6.17 5.05 5.54 70 65 4.93 5.68 6.15 4.91 5.86 70 70 5.40 6.21 6.70 5.36 6.18 70 75 5.89 6.82 7.40 5.81 6.49 75 70 5.69 6.68 7.32 5.62 6.92 75 75 6.37 7.45 8.15 6.23 7.40 75 80 7.07 8.34 9.16 6.78 7.85 - --------------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Male and the Second Annuitant is Female. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 31 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Female and Second Annuitant is Male) Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
- ------------------------------------------------------------------------------------------ Adjusted Ages - ------------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - ------------------------------------------------------------------------------------------ 55 50 $ 3.75 $ 4.07 $ 4.26 $ 3.75 $ 3.98 55 55 3.88 4.25 4.47 3.87 4.06 55 60 3.99 4.44 4.71 3.98 4.12 60 55 4.06 4.47 4.71 4.06 4.37 60 60 4.24 4.71 4.99 4.23 4.47 60 65 4.38 4.97 5.32 4.38 4.54 65 60 4.49 5.01 5.32 4.48 4.89 65 65 4.72 5.33 5.70 4.71 5.02 65 70 4.93 5.68 6.15 4.91 5.14 70 65 5.07 5.75 6.17 5.05 5.60 70 70 5.40 6.21 6.70 5.36 5.79 70 75 5.69 6.68 7.32 5.62 5.96 75 70 5.89 6.83 7.40 5.81 6.63 75 75 6.37 7.45 8.15 6.23 6.92 75 80 6.78 8.11 8.99 6.54 7.15 - ------------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Female and the Second Annuitant is Male. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 32 OPTION 1 Payments for a Stated Period of Time Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% - ------------------------------------------------------------------------------- Guaranteed Monthly Quarterly Semi-Annual Annual Years Rate Payment Payment Payment Payment - ------------------------------------------------------------------------------- 5 3.50% 18.12 54.19 107.92 213.99 6 3.50% 15.35 45.92 91.44 181.32 7 3.50% 13.38 40.01 79.69 158.01 8 3.50% 11.90 35.59 70.88 140.56 9 3.50% 10.75 32.16 64.05 127.00 10 3.50% 9.83 29.42 58.59 116.18 11 3.50% 9.09 27.18 54.13 107.34 12 3.50% 8.46 25.32 50.42 99.98 13 3.50% 7.94 23.75 47.29 93.78 14 3.50% 7.49 22.40 44.62 88.47 15 3.50% 7.10 21.24 42.31 83.89 16 3.50% 6.76 20.23 40.29 79.89 17 3.50% 6.47 19.34 38.51 76.37 18 3.50% 6.20 18.55 36.94 73.25 19 3.50% 5.97 17.85 35.54 70.47 20 3.50% 5.75 17.22 34.28 67.98 21 3.50% 5.56 16.65 33.15 65.74 22 3.50% 5.39 16.13 32.13 63.70 23 3.50% 5.24 15.66 31.19 61.85 24 3.50% 5.09 15.24 30.34 60.17 25 3.50% 4.96 14.85 29.56 58.62 26 3.50% 4.84 14.49 28.85 57.20 27 3.50% 4.73 14.15 28.19 55.90 28 3.50% 4.63 13.85 27.58 54.69 29 3.50% 4.53 13.57 27.02 53.57 30 3.50% 4.45 13.30 26.49 52.53 - ------------------------------------------------------------------------------- 33 OPTION 1 Payments for a Stated Period of Time Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 5.0% - ------------------------------------------------------------------------------- Guaranteed Monthly Quarterly Semi-Annual Annual Years Rate Payment Payment Payment Payment - ------------------------------------------------------------------------------- 5 5.00% 18.74 56.00 111.33 219.98 6 5.00% 15.99 47.77 94.96 187.64 7 5.00% 14.02 41.90 83.30 164.59 8 5.00% 12.56 37.52 74.58 147.35 9 5.00% 11.42 34.11 67.81 133.99 10 5.00% 10.51 31.40 62.42 123.34 11 5.00% 9.77 29.19 58.03 114.66 12 5.00% 9.16 27.36 54.38 107.45 13 5.00% 8.64 25.81 51.31 101.39 14 5.00% 8.20 24.50 48.69 96.21 15 5.00% 7.82 23.36 46.44 91.75 16 5.00% 7.49 22.37 44.47 87.88 17 5.00% 7.20 21.51 42.75 84.48 18 5.00% 6.94 20.74 41.23 81.47 19 5.00% 6.71 20.06 39.88 78.80 20 5.00% 6.51 19.46 38.68 76.42 21 5.00% 6.33 18.91 37.59 74.28 22 5.00% 6.17 18.42 36.62 72.35 23 5.00% 6.02 17.98 35.73 70.61 24 5.00% 5.88 17.57 34.93 69.02 25 5.00% 5.76 17.20 34.20 67.57 26 5.00% 5.65 16.87 33.53 66.25 27 5.00% 5.54 16.56 32.92 65.04 28 5.00% 5.45 16.28 32.35 63.93 29 5.00% 5.36 16.01 31.83 62.90 30 5.00% 5.28 15.77 31.35 61.95 - ------------------------------------------------------------------------------- 34 Option 2 Life Income Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% Payments Guaranteed for a Stated Period of Months
- ------------------------------------------------------------------------------------------------------------------ Adjusted None 60 120 180 240 Age of ------------------------------------------------------------------------------------------------- Annuitant Male Female Male Female Male Female Male Female Male Female - ------------------------------------------------------------------------------------------------------------------ 50 $ 4.56 $ 4.20 $ 4.55 $ 4.19 $ 4.51 $ 4.18 $ 4.45 $ 4.15 $4.36 $ 4.11 51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16 52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21 53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27 54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32 55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38 56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44 57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50 58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57 59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63 60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70 61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77 62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84 63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91 64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98 65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05 66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12 67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18 68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25 69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31 70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.58 5.51 5.37 71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42 72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47 73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51 74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55 75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59 - ------------------------------------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 35 Option 2 Life Income Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes Rates for a Variable Annuity with Assumed Net Return Rate of 5.0% Payments Guaranteed for a Stated Period of Months
- ------------------------------------------------------------------------------------------------------------------ Adjusted None 60 120 180 240 Age of ------------------------------------------------------------------------------------------------- Annuitant Male Female Male Female Male Female Male Female Male Female - ------------------------------------------------------------------------------------------------------------------ 50 $ 5.48 $ 5.12 $ 5.46 $ 5.11 $ 5.41 $ 5.09 $ 5.34 $ 5.06 $ 5.24 $ 5.01 51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05 52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10 53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15 54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20 55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25 56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31 57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37 58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42 59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48 60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55 61 6.60 6.00 6.55 6.97 6.39 5.90 6.15 5.77 5.85 5.61 62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67 63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73 64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80 65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86 66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92 67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99 68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04 69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10 70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15 71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20 72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25 73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29 74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33 75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36 - ------------------------------------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 36 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Male and Second Annuitant is Female) Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- ------------------------------------------------------------------------------------- Adjusted Ages - ----------------------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - ------------------------------------------------------------------------------------- 55 50 $ 3.97 $ 4.35 $ 4.56 3.97 $ 4.42 55 55 4.16 4.54 4.76 4.15 4.54 55 60 4.34 4.76 5.00 4.34 4.64 60 55 4.27 4.73 5.00 4.26 4.83 60 60 4.51 4.99 5.27 4.50 4.98 60 65 4.76 5.29 5.60 4.75 5.13 65 60 4.66 5.25 5.61 4.65 5.39 65 65 4.99 5.61 5.99 4.98 5.60 65 70 5.34 6.03 6.46 5.31 5.81 70 65 5.19 5.97 6.44 5.17 6.14 70 70 5.67 6.49 6.99 5.62 6.47 70 75 6.16 7.10 7.68 6.07 6.77 75 70 5.95 6.96 7.61 5.87 7.20 75 75 6.64 7.73 8.43 6.48 7.68 75 80 7.33 8.62 9.45 7.02 8.13 - -------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Male and the Second Annuitant is Female. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 37 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Female and Second Annuitant is Male) Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
- ------------------------------------------------------------------------------------- Adjusted Ages - ----------------------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - ------------------------------------------------------------------------------------- 55 50 $ 4.03 $ 4.36 $ 4.55 $ 4.03 $ 4.41 55 55 4.16 4.54 4.76 4.15 4.54 55 60 4.27 4.73 5.00 4.26 4.83 60 55 4.34 4.76 5.00 4.34 4.64 60 60 4.51 4.99 5.27 4.50 4.98 60 65 4.66 5.25 5.61 4.65 5.39 65 60 4.76 5.29 5.60 4.75 5.13 65 65 4.99 5.61 5.99 4.98 5.60 65 70 5.19 5.97 6.44 5.17 6.14 70 65 5.34 6.03 6.46 5.31 5.81 70 70 5.67 6.49 6.99 5.62 6.47 70 75 5.95 6.96 7.61 5.87 7.20 75 70 6.16 7.10 7.68 6.07 6.77 75 75 6.64 7.73 8.43 6.48 7.68 75 80 7.04 8.39 9.29 6.79 8.70 - -------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Female and the Second Annuitant is Male. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 38 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Male and Second Annuitant is Female) Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- ------------------------------------------------------------------------------------- Adjusted Ages - ----------------------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - ------------------------------------------------------------------------------------- 55 50 $ 4.88 $5.26 $ 5.48 $ 4.88 $ 5.34 55 55 5.04 5.44 5.66 5.04 5.43 55 60 5.21 5.65 5.89 5.21 5.53 60 55 5.15 5.63 5.91 5.14 5.73 60 60 5.37 5.87 6.16 5.37 5.86 60 65 5.61 6.16 6.49 5.60 6.01 65 60 5.52 6.14 6.51 5.51 6.28 65 65 5.83 6.49 6.87 5.82 6.47 65 70 6.17 6.90 7.33 6.13 6.67 70 65 6.04 6.84 7.34 6.00 7.03 70 70 6.49 7.35 7.87 6.44 7.33 70 75 6.97 7.96 8.56 6.87 7.62 75 70 6.77 7.84 8.51 6.68 8.08 75 75 7.45 8.60 9.33 7.27 8.55 75 80 8.14 9.49 10.35 7.80 8.98 - --------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Male and the Second Annuitant is Female. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 39 OPTION 3 Life Income for Two Payees Amount of First Monthly Payment for Each $1,000 After Deduction of any Charge for Premium Taxes (Annuitant is Female and Second Annuitant is Male) Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
- ------------------------------------------------------------------------------------- Adjusted Ages - ----------------------------------- Second Annuitant Annuitant Option 3a Option 3b Option 3c Option 3d Option 3e - ------------------------------------------------------------------------------------- 55 50 $4.93 $5.27 $ 5.46 $ 4.93 $5.19 55 55 5.04 5.44 5.66 5.04 5.43 55 60 5.15 5.63 5.91 5.14 5.73 60 55 5.21 5.65 5.89 5.21 5.53 60 60 5.37 5.87 6.16 5.37 5.86 60 65 5.52 6.14 6.51 5.51 6.28 65 60 5.61 6.16 6.49 5.60 6.01 65 65 5.83 6.49 6.87 5.82 6.47 65 70 6.04 6.84 7.34 6.00 7.03 70 65 6.17 6.90 7.33 6.13 6.67 70 70 6.49 7.35 7.87 6.44 7.33 70 75 6.77 7.84 8.51 6.68 8.08 75 70 6.97 7.96 8.56 6.87 7.62 75 75 7.45 8.60 9.33 7.27 8.55 75 80 7.86 9.28 10.20 7.57 9.59 - -------------------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates assume the Annuitant is Female and the Second Annuitant is Male. Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. 40 - -------------------------------------------------------------------------------- Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 (800) 525-4225 Certificate of Group Annuity Coverage - -------------------------------------------------------------------------------- ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CERTIFICATE CONTAINS A MARKET VALUE ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY. GMCC-97(NY) EX-99.B.4.21 4 ENDORSEMENT Aetna Life Insurance and Annuity Company Endorsement The Contract and Certificate are hereby endorsed to meet the qualification requirements for a Roth Individual Retirement Annuity under Internal Revenue Code ("Code") Section 408A. The following provisions apply and, in the case of a conflict with any provision in the Contract, this endorsement controls. Certificate Holder. The Certificate Holder and the Annuitant must be the same person. Joint Certificate Holders are not permitted. Nontransferable/Nonforfeitable. The Contract is nontransferable. The Certificate 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 Certificate Holder's entire interest in the Contract is nonforfeitable. Exclusive Benefit. The Account is established for the exclusive benefit of the Cetificate Holder or his or her Beneficiary(ies). Contributions. All contributions must be in cash. Except in the case of a qualified rollover contribution as defined in Code Section 408A(e), the total contributions shall not exceed $2,000 for any taxable year. Aetna reserves the right to not accept rollover contributions to an existing contract. Distributions. The distribution rules of Code Section 401(a)(9)(A) do not apply. Any periodic payments will be paid only to the Certificate Holder. Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death benefit amount is determined in accordance with the provisions of Sections 3.11 and 3.06. At the death of the Certificate Holder: (a) If the Certificate Holder dies on or after the date distribution of his or her interest has begun, the remaining portion of such interest, if any, will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Certificate Holder's death. (b) If the Certificate Holder dies before distribution of his or her interest begins, the death benefit payable to the Beneficiary will be distributed no later than December 31 of the calendar year which contains the fifth anniversary of the date of the Certificate Holder's death, except to the extent that an election is made to receive a distribution in accordance with (i) or (ii) below. (i) Distributions to the Beneficiary may be made in installments over the life of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary, commencing no later than December 31 of the calendar year immediately following the calendar year in which the Certificate Holder died. (ii) If the Beneficiary is the Certificate Holder's surviving spouse, and distributions are to be made in accordance with (i) above, distributions must begin on or before the later of December 31 of the calendar year immediately following the calendar year in which the Certificate Holder died or December 31 of the calendar year in which the Certificate Holder would have attained age 70-1/2. If the Certificate Holder dies before Annuity payments begin, a spousal Beneficiary may elect an Annuity option, a systematic distribution option, a lump sum payment or to treat the Account as his E1-MPROTH-97 or her own IRA. The election to treat the Account as his or her own IRA will be deemed to have been made if such surviving spouse makes a rollover to or from such Account, or fails to elect to receive a distribution in accordance with (b) above. Life expectancy is computed by use of the expected return multiples in Table V of Section 1.72-9 of the Income Tax Regulations. Life expectancies for distributions under an Annuity option may not be recalculated. Annual Reports. Aetna will furnish annual calendar year reports concerning the status of the Certificate Holder's Account. Termination of Account. Upon 90 days written notice to the Certificate Holder, Aetna may terminate the Certificate Holder's Account if no Purchase Payment(s) have been received for two full consecutive Certificate years and the paid-up Annuity benefit at maturity would be less than $20 per month. Right to Cancel. The Certificate Holder may cancel the Certificate within 10 days of receiving it by returning it to Aetna or to the person from whom it was purchased. Within seven days from the cancellation request, Aetna will return all the Certificate Holder's Purchase Payment(s). If the source of the Purchase Payment(s) was a rollover from a contract issued by Aetna or one of its affiliates in which the Surrender Fee was waived or reduced, then the Purchase Payment(s) will be restored to the predecessor contract. Surrender Fee. Section 3.14 is amended to add the following item (I). "(I) As a Purchase Payment for a Roth Individual Retirement Annuity, issued by Aetna or one of its affiliates, that gives credit for time spent in the predecessor contract in applying the surrender fee." Surrender Fee. The first paragraph of Section 3.14 is deleted and replaced with the following: "The Surrender Fee only applies to the Net Purchase Payment(s) portion surrendered (see Contract Schedule I)". Endorsed and made a part of the Contract and Certificate as of the Effective Date. /s/ Thomas J. McInerney ----------------------- Thomas J. McInerney, President Aetna Life Insurance and Annuity Company E1-MPROTH-97 EX-99.B.4.22 5 ENDORSEMENT Aetna Life Insurance and Annuity Company Endorsement The Contract is hereby endorsed to meet the qualification requirements for a Roth Individual Retirement Annuity under Internal Revenue Code ("Code") Section 408A. 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. Joint Contract Holders are not permitted. 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 Account is established for the exclusive benefit of the Contract Holder or his or her Beneficiary(ies). Contributions. All contributions must be in cash. Except in the case of a qualified rollover contribution as defined in Code Section 408A(e), the total contributions shall not exceed $2,000 for any taxable year. Aetna reserves the right to not accept rollover contributions from an existing contract. Distributions. The distribution rules of Code Section 401(a)(9)(A) do not apply. Any periodic payments will be paid only to the Contract Holder. Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death benefit amount is determined in accordance with the provisions of Sections 3.11 and 3.06 At the death of the Contract Holder: (a) If the Contract Holder dies on or after the date distribution of his or her interest has begun, the remaining portion of such interest, if any, will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Contract Holder's death. (b) If the Contract Holder dies before distribution of his or her interest begins, the death benefit payable to the Beneficiary will be distributed no later than December 31 of the calendar year which contains the fifth anniversary of the date of the Contract Holder's death, except to the extent that an election is made to receive a distribution in accordance with (i) or (ii) below. (i) Distributions to the Beneficiary may be made in installments over the life of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary, commencing no later than December 31 of the calendar year immediately following the calendar year in which the Contract Holder died. (ii) If the Beneficiary is the Contract Holder's surviving spouse, and distributions are to be made in accordance with (i) above, distributions must begin on or before the later of December 31 of the calendar year immediately following the calendar year in which the Contract Holder died or December 31 of the calendar year in which the Contract Holder would have attained age 70-1/2. If the Contract Holder dies before Annuity payments begin, a spousal Beneficiary may elect an Annuity option, a systematic distribution option, a lump sum payment or to treat the Account as his or her own IRA. The election to treat the Account as his or her own IRA will be deemed to have EI1-MPROTH-97 been made if such surviving spouse makes a rollover to or from such Account, or fails to elect to receive a distribution in accordance with (b) above. Life expectancy is computed by use of the expected return multiples in Table V of Section 1.72-9 of the Income Tax Regulations. Life expectancies for distributions under an Annuity option may not be recalculated. Annual Reports. Aetna will furnish annual calendar year reports concerning the status of the Contract Holder's Account. Termination of Account. Upon 90 days written notice to the Contract Holder, Aetna may terminate the Contract Holder's Account if no Purchase Payment(s) have been received for two full consecutive contract years and the paid-up Annuity benefit at maturity would be less than $20 per month. Right to Cancel. The Contract Holder may cancel the contract within 10 days of receiving it by returning it to Aetna or to the person from whom it was purchased. Within seven days from the cancellation request, Aetna will return all the Contract Holder's Purchase Payment(s). If the source of the Purchase Payment(s) was a rollover from a contract issued by Aetna or one of its affiliates in which the Surrender Fee was waived or reduced, then the Purchase Payment(s) will be restored to the predecessor contract. Surrender Fee. Section 3.14 is amended to add the following item (I). "(I) As a Purchase Payment for a Roth Individual Retirement Annuity, issued by Aetna or one of its affiliates, that gives credit for time spent in the predecessor contract in applying the surrender fee." Surrender Fee. The first paragraph of Section 3.14 is deleted and replaced with the following: "The Surrender Fee only applies to the Net Purchase Payment(s) portion surrendered (see Contract Schedule I)". Endorsed and made a part of the Contract as of the Effective Date. /s/ Thomas J. McInerney Thomas J. McInerney, President Aetna Life Insurance and Annuity Company EI1-MPROTH-97 EX-99.B.4.23 6 ENDORSEMENT Aetna Life Insurance and Annuity Company Endorsement The Contract and Certificate are hereby endorsed to meet the qualification requirements for a 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. Certificate Holder. The Certificate Holder and the Annuitant must be the same person. Joint Certificate Holders are not permitted. Nontransferable/Nonforfeitable. The Contract is nontransferable. The Certificate 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 Certificate Holder's entire interest in the Contract is nonforfeitable. Exclusive Benefit. The Account is established for the exclusive benefit of the Certificate Holder or his or her Beneficiary(ies). Contributions. All contributions must be in cash. Except in the case of a qualified rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) or a contribution made in accordance with the terms of a Simplified Employee Pension (SEP) as described in Code Section 408(k), the total contributions shall not exceed $2,000 for any taxable year. Distributions. All distributions will be made in accordance with the requirements of Code Section 401(a)(9). Any periodic payments will be paid only to the Certificate Holder. Required Beginning Date. No later than the April 1 following the calendar year in which the Certificate Holder attains age 70-1/2, the Certificate Holder may elect to receive the entire interest in a lump sum, or may elect to begin periodic payments under a systematic distribution option which must be distributed over: (a) The life of the Certificate Holder, or the lives of the Certificate Holder and his or her designated Beneficiary, or (b) A period certain not extending beyond the life expectancy of the Certificate Holder or the joint and last survivor expectancy of the Certificate Holder and his or her designated Beneficiary. Periodic payments must be made at intervals of no longer than one year. In addition, payments made as an annuity must be either nonincreasing of they may increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax Regulations. Life expectancy is computed by use of the expected return multiples in Tables V and VI of section 1.72-9 of the Income Tax Regulations. Life expectancy for distributions under an Annuity option may not be recalculated. Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death benefit amount is determined in accordance with the provisions of Sections 3.11 and 3.06 At the death of the Certificate Holder: MP1IRA(11/97) (a) If the Certificate Holder dies on or after the date distribution of his or her interest has begun, the remaining portion of such interest, if any, will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Certificate Holder's death. (b) If the Certificate Holder dies before distribution of his or her interest begins, the death benefit payable to the Beneficiary will be distributed no later than December 31 of the calendar year which contains the fifth anniversary of the date of the Certificate Holder's death, except to the extent that an election is made to receive a distribution in accordance with (i) or (ii) below. (i) Distributions to the Beneficiary may be made in installments over the life of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary, commencing no later than December 31 of the calendar year immediately following the calendar year in which the Certificate Holder died. (ii) If the Beneficiary is the Certificate Holder's surviving spouse, and distributions are to be made in accordance with (i) above, distributions must begin on or before the later of December 31 of the calendar year immediately following the calendar year in which the Certificate Holder died or December 31 of the calendar year in which the Certificate Holder would have attained age 70-1/2. If the Certificate Holder dies before Annuity payments begin, a spousal Beneficiary may elect an Annuity option, a systematic distribution option, a lump sum payment or to treat the Account as his or her own IRA. The election to treat the Account as his or her own IRA will be deemed to have been made if such surviving spouse makes a rollover to or from such Account, or fails to elect to receive a distribution in accordance with (b) above. Life expectancy is computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancies for distributions under an Annuity option may not be recalculated. Distributions under this section are considered to have begun if distributions are made on account of the Certificate Holder reaching the required beginning date or if prior to the required beginning date distributions irrevocably commence over a period permitted and in an Annuity option acceptable under Section 1.401(a)(9) of the Proposed Income Tax Regulations. Annual Reports. Aetna will furnish annual calendar year reports concerning the status of the Certificate Holder's Account. Termination of Account. Upon 90 days written notice to the Certificate Holder, Aetna may terminate the Certificate Holder's Account if no Purchase Payment(s) have been received for two full consecutive Certificate years and the paid-up Annuity benefit at maturity would be less than $20 per month. Right to Cancel. The Certificate Holder may cancel the Certificate within 10 days of receiving it by returning it to Aetna or to the person from whom it was purchased. Within seven days from the cancellation request, Aetna will return all the Certificate Holder's Purchase Payment(s). If the source of the Purchase Payment(s) was a rollover from a contract issued by Aetna or one of its affiliates in which the Surrender Fee was waived or reduced, then the Purchase Payment(s) will be restored to the predecessor contract. Surrender Fee. Section 3.14 is amended to add the following item (I). "(I) As a Purchase Payment for a Roth Individual Retirement Annuity, issued by Aetna or one of its affiliates, that gives credit for time spent in the predecessor contract in applying the surrender fee. MP1IRA(11/97) Endorsed and made a part of the Contract and Certificate as of the Effective Date. /s/ Thomas J. McInerney Thomas J. McInerney, President Aetna Life Insurance and Annuity Company MP1IRA(11/97) EX-99.B.4.24 7 ENDORSEMENT Aetna Life Insurance and Annuity Company Endorsement The Contract is hereby endorsed to meet the qualification requirements for a 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. Joint Contract Holders are not permitted. 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). Contributions. All contributions must be in cash. Except in the case of a qualified rollover contribution as permitted by Code Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) or a contribution made in accordance with the terms of a Simplified Employee Pension (SEP) as described in Code Section 408(k), the total contributions shall not exceed $2,000 for any taxable year. Distributions. All distributions will be made in accordance with the requirements of Code Section 401(a)(9). Any periodic payments will be paid only to the Contract Holder. Required Beginning Date. No later than the April 1 following the calendar year in which the Contract Holder attains age 70-1/2, the Contract Holder may elect to receive the entire interest in a lump sum, or may elect to begin periodic payments under a systematic distribution option which must be distributed over: (a) The life of the Contract Holder, or the lives of the Contract Holder and his or her designated Beneficiary, or (b) A period certain not extending beyond the life expectancy of the Contract Holder or the joint and last survivor expectancy of the Contract Holder and his or her designated Beneficiary. Periodic payments must be made at intervals of no longer than one year. In addition, payments made as an annuity must be either nonincreasing of they may increase only as provided in Section 1.401(a)(9)-1 of the Proposed Income Tax Regulations. Life expectancy is computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancy for distributions under an Annuity option may not be recalculated. I-MP1IRA(11/97) Payment of Death Benefit. Section 3.12 is deleted in its entirety. The death benefit amount is determined in accordance with the provisions of Sections 3.11 and 3.06 At the death of the Contract Holder: (a) If the Contract Holder dies on or after the date distribution of his or her interest has begun, the remaining portion of such interest, if any, will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Contract Holder's death. (b) If the Contract Holder dies before distribution of his or her interest begins, the death benefit payable to the Beneficiary will be distributed no later than December 31 of the calendar year which contains the fifth anniversary of the date of the Contract Holder's death, except to the extent that an election is made to receive a distribution in accordance with (i) or (ii) below. (i) Distributions to the Beneficiary may be made in installments over the life of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary, commencing no later than December 31 of the calendar year immediately following the calendar year in which the Contract Holder died. (ii) If the Beneficiary is the Contract Holder's surviving spouse, and distributions are to be made in accordance with (i) above, distributions must begin on or before the later of December 31 of the calendar year immediately following the calendar year in which the Contract Holder died or December 31 of the calendar year in which the Contract Holder would have attained age 70-1/2. If the Contract Holder dies before Annuity payments begin, a spousal Beneficiary may elect an Annuity option, a systematic distribution option, a lump sum payment or to treat the Account as his or her own IRA. The election to treat the Account as his or her own IRA will be deemed to have been made if such surviving spouse makes a rollover to or from such Account, or fails to elect to receive a distribution in accordance with (b) above. Life expectancy is computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Life expectancies for distributions under an Annuity option may not be recalculated. Distributions under this section are considered to have begun if distributions are made on account of the Contract Holder reaching the required beginning date or if prior to the required beginning date distributions irrevocably commence over a period permitted and in an Annuity option acceptable under Section 1.401(a)(9) of the Proposed Income Tax Regulations. Annual Reports. Aetna will furnish annual calendar year reports concerning the status of the Contract Holder's Account. Termination of Account. Upon 90 days written notice to the Holder, Aetna may terminate the Contract Holder's Account if no Purchase Payment(s) have been received for two full consecutive contract years and the paid-up Annuity benefit at maturity would be less than $20 per month. Right to Cancel. The Contract Holder may cancel the contract within 10 days of receiving it by returning it to Aetna or to the person from whom it was purchased. Within seven days from the cancellation request, Aetna will return all the Contract Holder's Purchase Payment(s). If the source of the Purchase Payment(s) was a rollover from a contract issued by Aetna or one of its affiliates in which the Surrender Fee was waived or reduced, then the Purchase Payment(s) will be restored to the predecessor contract. I-MP1IRA(11/97) Surrender Fee. Section 3.14 is amended to add the following item (I). "(I) As a Purchase Payment for a Roth Individual Retirement Annuity, issued by Aetna or one of its affiliates, that gives credit for time spent in the predecessor contract in applying the surrender fee. Endorsed and made a part of the Contract as of the Effective Date. /s/ Thomas J. McInerney Thomas J. McInerney, President Aetna Life Insurance and Annuity Company I-MP1IRA(11/97) EX-99.B.4.25 8 CONTRACT SCHEDULE I ACCUMULATION PERIOD Contract Schedule I Accumulation Period Separate Account - -------------------------------------------------------------------------------- Separate Account: Variable Annuity Account B Charges to Separate A daily charge is deducted from any portion of Account: the Current Value allocated to the Separate Account. The deduction is the daily equivalent of the annual effective percentage shown in the following chart: Administrative Charge [0.15%] Mortality Risk Charge [0.35%] Expense Risk Charge [0.75%] ---- Total Separate Account Charges [1.25%] ALIAC Guaranteed Account (AG Account) - -------------------------------------------------------------------------------- Minimum Guaranteed [3.0%] (effective annual rate of return) Interest Rate: Separate Account and AG Account - -------------------------------------------------------------------------------- Transfers: An unlimited number of Transfers are allowed during the Accumulation Period. Aetna allows [12] free Transfers in any calendar year. Thereafter, Aetna reserves the right to charge [$10] for each subsequent Transfer. Maintenance Fee: The annual Maintenance Fee is [$30]. If the Account's Current Value is [$50,000] or more on the date the Maintenance Fee is to be deducted, the Maintenance Fee is [$0]. Annual Waiver of As provided in 3.14 (d), the amount that may be Surrender Fee: withdrawn without a surrender fee cannot exceed [10%] of the Current Value calculated on the date Aetna receives a surrender request in good order at its Home Office. G-MP1(11/97)-5 1 Contract Schedule I (Continued) Accumulation Period Separate Account and AG Account (Cont'd) - -------------------------------------------------------------------------------- Surrender Fee: For each surrender, the Surrender Fee will be determined as follows: Surrender Fee Length of Time from (as percentage of Account Effective Date Net Purchase Payment) ---------------------- --------------------- [Less than 1 year 5%] [1 year but less than 2 4%] [2 years but less than 3 3%] [3 years but less than 4 2%] [4 years but less than 5 1%] [5 years or more 0%] If an Account is established as a rollover from another Aetna contract, the Surrender Fee will be determined according to the effective date of the account under such predecessor contract. Systematic Withdrawal The specified payment or specified percentage Option (SWO): may not be greater than [10%] of the Account's Current Value at time of election. See 1. GENERAL DEFINITIONS for explanations. G-MP1(11/97)-5 2 EX-99.B.4.26 9 CONTRACT SCHEDULE I ACCUMULATION PERIOD Contract Schedule I Accumulation Period Separate Account - -------------------------------------------------------------------------------- Separate Account: Variable Annuity Account B Charges to Separate A daily charge is deducted from any portion Account: of the Current Value allocated to the Separate Account. The deduction is the daily equivalent of the annual effective percentage shown in the following chart: Administrative Charge [0.15%] Mortality Risk Charge [0.35%] Expense Risk Charge [0.75%] ---- Total Separate Account Charges [1.25%] ALIAC Guaranteed Account (AG Account) - -------------------------------------------------------------------------------- Minimum Guaranteed [3.0%] (effective annual rate of return) Interest Rate: Separate Account and AG Account - -------------------------------------------------------------------------------- Transfers: An unlimited number of Transfers are allowed during the Accumulation Period. Aetna allows [12] free Transfers in any calendar year. Thereafter, Aetna reserves the right to charge [$10] for each subsequent Transfer. Maintenance Fee: The annual Maintenance Fee is [$30]. If the Account's Current Value is [$50,000] or more on the date the Maintenance Fee is to be deducted, the Maintenance Fee is [$0]. Annual Waiver of As provided in 3.14 (d), the amount that may be Surrender Fee: withdrawn without a surrender fee cannot exceed [10%] of the Current Value calculated on the date Aetna receives a surrender request in good order at its Home Office. I-MP1(11/97)-5 1 Contract Schedule I (Continued) Accumulation Period Separate Account and AG Account (Cont'd) - -------------------------------------------------------------------------------- Surrender Fee: For each surrender, the Surrender Fee will be determined as follows: Surrender Fee Length of Time from (as percentage of Account Effective Date Net Purchase Payment) ---------------------- --------------------- [Less than 1 year 5%] [1 year but less than 2 4%] [2 years but less than 3 3%] [3 years but less than 4 2%] [4 years but less than 5 1%] [5 years or more 0%] If an Account is established as a rollover from another Aetna contract, the Surrender Fee will be determined according to the effective date of the account under such predecessor contract. Systematic Withdrawal The specified payment or specified percentage Option (SWO): may not be greater than [10%] of the Account's Current Value at time of election. See 1. GENERAL DEFINITIONS for explanations. I-MP1(11/97)-5 2 EX-99.B.5.3 10 CONTRACT APPLICATION
[Aetna Logo] Aetna Life Insurance & Annuity Company Aetna Marathon Plus Home Office: 151 Farmington Avenue Group Variable Annuity Hartford, Connecticut 06156-8022 Contract Application - ----------------------------------------------------------------------------------------------------------------------------------- Contract 1. Name of Contract Holder Holder (Firm) Information --------------------------------------------------------------------------------------------------------------- Please print 2. Address (Address) --------------------------------------------------------------------------------------------------------------- City State Zip Code (City) (State) (Zip) --------------------------------------------------------------------------------------------------------------- 3. Tax Identification Number (Tax Id) --------------------------------------------------------------------------------------------------------------- 4. Contract Effective Date (Effective Date) --------------------------------------------------------------------------------------------------------------- 5. Type of Contract: [X] Nonqualified [X] IRA Rollover (IRC Section 408) --------------------------------------------------------------------------------------------------------------- 6. Special Requests --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 7. Will this contract change or replace any existing life insurance or annuity contract? |_| Yes {X} No If yes, please provide carrier name, policy number and proposed cancellation date. --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- I understand that (1) 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 that (2) some payments made from the ALIAC Guaranteed Account prior to the completion of a guaranteed term are subject to Market Value Adjustment which may result in a positive or negative adjustment to amounts payable. The length of these terms vary from one to ten years. I acknowledge receipt of the Aetna Marathon Plus Variable Annuity Contract Prospectus dated _________ and all current prospectuses pertaining to the variable investment options under the contract. [_] Check here to receive a Statement of Additional Information. Dated at ______________________ this ____ day of _______________ 19____. City and State --------------------------------------------------------------------------------------------------------------- Contract Holder Title Witness --------------------------------------------------------------------------------------------------------------- Agent's Note Do you have any reason to believe any existing life insurance or annuity contracts will be modified or replaced if this contract is issued? [_] Yes [_] No --------------------------------------------------------------------------------------------------------------- Signature of Agent --------------------------------------------------------------------------------------------------------------- Home Office Use Errors and omissions may be corrected by a company agent number but no change in plan, classification, Only amount, or extra benefits can be made without written consent of the Contract Holder. Accepted_________________
MPAPPNY(1/96) EX-99.B.9 11 OPINION AND CONSENT OF COUNSEL [AETNA LETTERHEAD] [AETNA LOGO] December 16, 1997 151 Farmington Avenue Hartford, CT 06156 Julie E. Rockmore Counsel Law Division, RE4A Investments & Financial Services (860) 273-4686 Fax: (860) 273-8340 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Re: Aetna Life Insurance and Annuity Company and its Variable Annuity Account B Post-Effective Amendment No. 32 to Registration Statement on Form N-4 Prospectus Title: Aetna Marathon Plus - Group and Individual Deferred Variable Annuity Contracts File Nos. 33-34370* and 811-2512 Dear Sir or Madam: The undersigned serves as counsel to Aetna Life Insurance and Annuity Company, a Connecticut life insurance company (the "Company"). It is my understanding that the Company, as depositor, has registered an indefinite amount of securities (the "Securities") under the Securities Act of 1933 (the "Securities Act") as provided in Rule 24f-2 under the Investment Company Act of 1940 (the "Investment Company Act"). In connection with this opinion, I have reviewed the N-4 Registration Statement, as amended to the date hereof, and this Post-Effective Amendment No. 32. I have also examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, trust records and other instruments I have deemed necessary or appropriate for the purpose of rendering this opinion. For purposes of such examination, I have assumed the genuineness of all signatures on original documents and the conformity to the original of all copies. I am admitted to practice law in Connecticut, and do not purport to be an expert on the laws of any other state. My opinion herein as to any other law is based upon a limited inquiry thereof which I have deemed appropriate under the circumstances. - -------- * Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has included a combined prospectus under this Registration Statement which includes all the information which would currently be required in a prospectus relating to the following earlier Registration Statement: 33-87932. Based upon the foregoing, and, assuming the Securities are sold in accordance with the provisions of the prospectus, I am of the opinion that the Securities being registered will be legally issued and will represent binding obligations of the Company. I consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, /s/ Julie E. Rockmore Julie E. Rockmore -----END PRIVACY-ENHANCED MESSAGE-----