-----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, JeeNlsBd7OceOKFEnux2eMzV15tymHNrhCnFNlVNs0yoUykvSCcJ7do1Piu3djz4 lSQDmXoUu5keOjKw4C/LiQ== 0000950123-97-006355.txt : 19970801 0000950123-97-006355.hdr.sgml : 19970801 ACCESSION NUMBER: 0000950123-97-006355 CONFORMED SUBMISSION TYPE: N-4 EL PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES CENTRAL INDEX KEY: 0001043306 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: N-4 EL SEC ACT: 1933 Act SEC FILE NUMBER: 333-32589 FILM NUMBER: 97649555 FILING VALUES: FORM TYPE: N-4 EL SEC ACT: 1940 Act SEC FILE NUMBER: 811-08313 FILM NUMBER: 97649556 BUSINESS ADDRESS: STREET 1: TRAVELERS INSURANCE FNCL SVCS LEGAL DIV STREET 2: ONE TOWER SQUARE CITY: HARTFORD STATE: CT ZIP: 06183 BUSINESS PHONE: 8602777379 MAIL ADDRESS: STREET 1: TRAVELERS INSURANCE FNCL SVCS LEGAL DIV STREET 2: ONE TOWER SQUARE CITY: HARTFORD STATE: CT ZIP: 06183 N-4 EL 1 TRAVELERS INSURANCE COMPANY 1 Registration Statement No. ----------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES -------------------------------------------------------- (Exact name of Registrant) THE TRAVELERS INSURANCE COMPANY ------------------------------- (Name of Depositor) ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183 ---------------------------------------------- (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including area code: (860) 277-0111 -------------- ERNEST J. WRIGHT The Travelers Insurance Company One Tower Square Hartford, Connecticut 06183 ---------------------------- (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: As soon as practicable following the effectiveness of the Registration Statement. It is proposed that this filing will become effective (check appropriate box): N/A immediately upon filing pursuant to paragraph (b) of Rule 485. - ----- N/A on ___________ pursuant to paragraph (b) of Rule 485. - ----- N/A 60 days after filing pursuant to paragraph (a)(1) of Rule 485. - ----- N/A on ___________ pursuant to paragraph (a)(1) of Rule 485. - ----- If appropriate, check the following box: this post-effective amendment designates a new effective date for a - ----- previously filed post-effective amendment. PURSUANT TO RULE 24f-2 OF THE INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT HEREBY DECLARES THAT AN INDEFINITE AMOUNT OF VARIABLE ANNUITY CONTRACT UNITS IS BEING REGISTERED UNDER THE SECURITIES ACT OF 1933. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. 2 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES Cross-Reference Sheet Form N-4
Item No. Caption in Prospectus - --- --------------------- 1. Cover Page Prospectus 2. Definitions Index of Special Terms 3. Synopsis Prospectus Summary 4. Condensed Financial Information Not Applicable 5. General Description of Registrant, The Insurance Company; The Separate Depositor, and Portfolio Companies Account and the Funding Options 6. Deductions Charges and Deductions; Distribution of Variable Annuity Contracts 7. General Description of Variable The Annuity Contract Annuity Contracts 8. Annuity Period The Annuity Period 9. Death Benefit Death Benefit 10. Purchases and Contract Value The Contract; Distribution of Variable Annuity Contract 11. Redemptions Surrenders and Redemptions 12. Taxes Federal Tax Considerations 13. Legal Proceedings Legal Proceedings and Opinions 14. Table of Contents of Statement Appendix C - Contents of the Statement of Additional Information of Additional Information
Caption in Statement of Additional Information --------------------------------------- 15. Cover Page Cover Page 16. Table of Contents Table of Contents 17. General Information and History The Insurance Company 18. Services Principal Underwriter; Distribution and Management Agreement 19. Purchase of Securities Being Offered Valuation of Assets 20. Underwriters Principal Underwriter 21. Calculation of Performance Data Performance Information 22. Annuity Payments Not Applicable 23. Financial Statements Financial Statements
3 PART A Information Required in a Prospectus 4 PFS VARIABLE ANNUITY CONTRACT PROFILE , 1997 THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE FULLY DESCRIBED IN THE FULL PROSPECTUS WHICH IS ATTACHED TO THIS PROFILE. PLEASE READ THE PROSPECTUS CAREFULLY. THE TERMS "WE," "US," "OUR" AND THE "COMPANY" REFER TO TRAVELERS INSURANCE COMPANY. "YOU" AND "YOUR" REFER TO THE CONTRACT OWNER. 1. THE VARIABLE ANNUITY CONTRACT. The Contract offered by Travelers Insurance Company is a variable annuity that is intended for retirement savings or other long-term investment purposes. The Contract provides a death benefit as well as guaranteed income options. Under a qualified Contract, you can make one or more payments, as you choose, on a tax-deferred basis. Under a nonqualified Contract, you can make one or more payments with after-tax dollars. You direct your payment(s) to one or more of the variable funding options listed in Section 4, and/or to the Fixed Account. We guarantee money directed to the Fixed Account as to principal and interest. The initial interest rate is guaranteed for a one-year period. After that, interest is guaranteed each calendar quarter by the Company. The variable funding options are designed to produce a higher rate of return than the Fixed Account; however, this is not guaranteed. You may also lose money in the variable funding options. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. During the accumulation phase, under a qualified contract, your tax-deferred contributions accumulate on a tax-deferred basis and are taxed as income when you make a withdrawal, presumably when you are in a lower tax bracket. During the accumulation phase, under a nonqualified contract, earnings on your after-tax contributions accumulate on a tax-deferred basis and are taxed as income when you make a withdrawal. The income phase occurs when you begin receiving payments from your Contract. The amount of money you accumulate in your Contract determines the amount of income (annuity payments) you receive during the income phase. 2. ANNUITY PAYMENTS (THE INCOME PHASE). You may chose to receive annuity payments from the Fixed Account or the variable funding options. If you want to receive scheduled payments from your annuity, you can choose one of the following annuity options: Option 1 -- payments for your life (life annuity) -- assuming that you are the annuitant; Option 2 -- payments for your life with an added guarantee that payments will continue to your beneficiary for a certain number of months (120, 180 or 240, as you select), if you should die during that period; Option 3 -- Joint and Last Survivor Annuity, in which payments are made for your life and the life of another person (usually your spouse); Option 4 -- Joint Survivor Life Annuity -- the annuity is reduced on death of Primary Payee. There are also two Income Options: Fixed Amount -- the cash surrender value of your Contract will be paid to you in equal payments; or Fixed Period -- the cash surrender value will be used to make payments for a fixed time period. If you should die before the end of the Fixed Period, the remaining amount will go to your beneficiary. Once you make an election of an annuity option and begin to receive payments, it cannot be changed. During the income phase, you have the same investment choices you had during the accumulation phase. If amounts are directed to the variable funding options, the dollar amount of your payments may increase or decrease. [/R] 3. PURCHASE. You may purchase the Contract with an initial payment of at least $5,000. You may make additional payments of at least $100 at any time during the accumulation phase. WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use in connection with (1) individual nonqualified purchases; (2) rollovers from Individual Retirement Annuities (IRAs); and (3) rollovers from other qualified retirement plans. Qualified contracts include 5 contracts qualifying under Section 401(a), 403(b), or 408(b) of the Internal Revenue Code of 1986, as amended. 4. INVESTMENT OPTIONS. You can direct your money into the Fixed Account or any or all of the following variable funding options. They are described in the accompanying fund prospectuses. Depending on market conditions, you may make or lose money in any of these options: Smith Barney Money Market Portfolio Smith Barney International Equity Portfolio Smith Barney Income & Growth Portfolio Smith Barney High Income Portfolio Smith Barney Appreciation Portfolio MFS Research Portfolio MFS Total Return Portfolio MFS OTC Portfolio Smith Barney Concert Select High Growth Portfolio Smith Barney Concert Select Growth Portfolio Smith Barney Concert Select Balanced Portfolio Smith Barney Concert Select Conservative Portfolio Smith Barney Concert Select Income Portfolio 5. EXPENSES. The Contract has insurance features and investment features, and there are costs related to each. The Company deducts an annual administrative charge of $30. The annual insurance charge is 1.25% of the amounts you direct to the funding options; and a related sub-account administrative charge of .15% annually is charged. Each funding option has charges for management and other expenses. The charges range from % to % annually, of the average daily net asset balance of the funding option, depending on the funding option. If you withdraw money, the Company may deduct a withdrawal charge (0% to 8%) of the purchase payments from the Contract. If you withdraw all amounts under the contract, or if you begin receiving annuity payments, the Company may be required by your state to deduct a premium tax of 0%-5%. The following table is designed to help you understand the Contract charges. The "Total Annual Insurance Charge" includes the mortality and expense risk charge and the administrative charges. The column "Total Annual Charges" reflects the $30 annual contract charge (which is represented as % below), the mortality and expense risk charge, the sub-account charge and the investment charges for each portfolio. The columns under the heading "Examples" show how much you would pay under the Contract for a one-year period and for a 10-year period. As required by the SEC, the examples assume that you invested $1,000 in a Contract that earns 5% annually and that you withdraw your money at the end of year 1 and at the end of year 10. For year 1, the Total Annual Insurance Charges are assessed as well as the withdrawal charges. For year 10, the example shows the aggregate of all the annual charges assessed during that time, but no withdrawal charge is shown. For these examples, the premium tax is assumed to be 0%. Please refer to the Fee Table contained in the prospectus for more details. ii 6
EXAMPLES: TOTAL ANNUAL TOTAL ANNUAL EXPENSES TOTAL ANNUAL FUNDING OPTION TOTAL ANNUAL AT END OF: PORTFOLIO NAME INSURANCE CHARGES EXPENSES CHARGES 1 YEAR 10 YEARS - ------------------------------------------------------------------------------------------------------------------ Smith Barney Money Market............... Smith Barney International Equity....... Smith Barney Income & Growth............ Smith Barney High Income................ Smith Barney Appreciation............... MFS Research............................ MFS Total Return........................ MFS OTC................................. Smith Barney Concert Select High Growth................................ Smith Barney Concert Select Growth...... Smith Barney Concert Select Balanced.... Smith Barney Concert Select Conservative.......................... Smith Barney Concert Select Income......
6. TAXES. The payments you make to a qualified Contract during the accumulation phase are made with before-tax dollars. You will be taxed on your purchase payments and on any earnings when you make a withdrawal or begin receiving annuity payments. Under a nonqualified Contract, payments to the contract are made with after-tax dollars, and any earnings will accumulate tax-deferred. You will be taxed on these earnings when they are withdrawn from the Contract. For owners of qualified Contracts, if you reach a certain age, you may be required by federal tax laws to begin receiving payments from your annuity or risk paying a penalty tax. In those cases, we can calculate and pay you the minimum required distribution amounts. If you are younger than 59 1/2 when you take money out, you may be charged a 10% federal penalty tax on the amount withdrawn. 7. ACCESS TO YOUR MONEY. You can take withdrawals any time during the accumulation phase. A withdrawal charge may apply. The amount of the charge depends on a number of factors, including the length of time since the purchase payment was made (8% if withdrawn within one year, gradually decreasing to 0% for payments held by the Company for 9 years or more). After the first contract year, you may withdraw up to 10% of the contract value (as of the end of the prior year end) without a withdrawal charge. Of course, you may also have to pay income taxes and a tax penalty on taxable amounts you withdraw. 8. DEATH BENEFIT. Assuming you are the Annuitant, if you die before you move to the income phase, the person you have chosen as your beneficiary will receive a death benefit. The death benefit paid depends on your age at the time of your death. The death benefit value is calculated at the close of the business day on which the Company's Home Office receives due proof of death. If you die after you reach age 85, the death benefit equals the cash value less any applicable premium tax. Please refer to the Contract prospectus for a description of the death benefit applicable if you die before you reach age 85. NOTE: In all cases, death benefit amounts will be reduced by premium taxes owed, partial withdrawals not previously deducted, and any outstanding loans, (if applicable). Certain states may have varying age requirements. The death benefit applies upon the first death of the owner, joint owner or annuitant. Please refer to the Contract prospectus for more details. 9. OTHER INFORMATION [/R] RIGHT TO RETURN. If you cancel the Contract within twenty days after you receive it, you will receive a full refund of the Contract Value (including charges). Where state law requires a longer right to return period, or the return of purchase payments, the Company will comply. You bear the investment risk during the right to return period; therefore, the Contract Value returned may be greater or less than your purchase payment. If the Contract is purchased as an Individual Retirement Annuity, and is returned within the first seven days after delivery, your full purchase iii 7 payment will be refunded; during the remainder of the right to return period, the Contract Value (including charges) will be refunded. The Contract Value will be determined at the close of business on the day we receive a written request for a refund. TRANSFER BETWEEN FUNDING OPTIONS. You can transfer between the funding options as frequently as you wish without any current tax implications. Currently there is no charge for transfers, nor a limit to the number of transfers allowed. The Company may charge a fee for any transfer requests which exceed twelve per year, or may limit the number of transfers allowed. The Company, at the minimum, would always allow one transfer every six months. ADDITIONAL FEATURES. This Contract has other features you may be interested in. These include: DOLLAR COST AVERAGING. This is a program that allows you to invest a fixed amount of money in funding options each month, theoretically giving you a lower average cost per unit over time than a single one-time purchase. Dollar Cost Averaging requires regular investments regardless of fluctuating price levels and does not guarantee profits or prevent losses in a declining market. Potential investors should consider their financial ability to continue purchases through periods of low price levels. SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can arrange to have money sent to you at set intervals throughout the year. Of course any applicable income and penalty taxes will apply on amounts withdrawn. AUTOMATIC REBALANCING. You may elect to have the Company periodically reallocate the values in your contract to match your original (or your latest) funding option allocation request. 10. INQUIRIES. If you need more information, please contact us at (800) 842-8573 or: Travelers Insurance Company Annuity Services One Tower Square Hartford, CT 06183 iv 8 PFS VARIABLE ANNUITY: THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES This prospectus describes PFS VARIABLE ANNUITY, a flexible premium variable annuity contract (the "Contract") issued by The Travelers Insurance Company (the "Company," "we" or "our"). The Contract is available in connection with certain retirement plans that qualify for special federal income tax treatment ("qualified Contracts") as well as those that do not qualify for such treatment ("nonqualified Contracts"). PFS Variable Annuity may be issued as an individual Contract or as a group Contract. In states where only group Contracts are available, you will be issued a certificate summarizing the provisions of the group Contract. For convenience, this prospectus refers to both Contracts and certificates as "Contracts." You can choose to have your purchase payments accumulate on a fixed basis (i.e., a Fixed Account funded through the Company's general account) and/or a variable basis (i.e., one or more of the sub-accounts ("funding options") of the Travelers Separate Account PF ("Separate Account PF"). Your contract value will vary daily to reflect the investment experience of the funding options you select. The funding options currently available are: Smith Barney Money Market Portfolio Smith Barney International Equity Portfolio Smith Barney Income & Growth Portfolio Smith Barney High Income Portfolio Smith Barney Appreciation Portfolio MFS Research Portfolio MFS Total Return Portfolio MFS OTC Portfolio Smith Barney Concert Select High Growth Portfolio Smith Barney Concert Select Growth Portfolio Smith Barney Concert Select Balanced Portfolio Smith Barney Concert Select Conservative Portfolio Smith Barney Concert Select Income Portfolio The contracts and/or some of the funding options may not be available in all states. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE FUNDING OPTIONS. THESE PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. This prospectus provides the information that you should know before investing in the Contract. You can receive additional information about Separate Account PF by requesting a copy of the Statement of Additional Information ("SAI") dated , 1997. The SAI has been filed with the Securities and Exchange Commission ("SEC") and is incorporated by reference into this prospectus. To request a copy, write to The Travelers Insurance Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183, or call (800) 842-8573. The Table of Contents of the SAI appears in Appendix C of this prospectus. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT. PROSPECTUS DATED , 1997 9 TABLE OF CONTENTS INDEX OF SPECIAL TERMS................. 2 FEE TABLE.............................. 3 THE ANNUITY CONTRACT................... 4 Purchase Payments...................... 5 Accumulation Units..................... 5 The Funding Options.................... 5 Substitutions and Additions............ 6 CHARGES AND DEDUCTIONS................. 6 Withdrawal Charge...................... 6 Free Withdrawal Allowance.............. 7 Administrative Charges................. 7 Mortality and Expense Risk Charge...... 7 Reduction or Elimination of Contract Charges.............................. 7 Funding Option Expenses................ 8 Premium Tax............................ 8 Changes in Taxes Based Upon Premium or Value................................ 8 OWNERSHIP PROVISIONS................... 8 Types of Ownership..................... 8 Beneficiary............................ 8 Annuitant.............................. 9 TRANSFERS.............................. 9 Dollar Cost Averaging.................. 10 ACCESS TO YOUR MONEY................... 10 Systematic Withdrawals................. 10 DEATH BENEFIT.......................... 11 Death Proceeds Before the Maturity Date . 11 Death Proceeds After the Maturity Date . 12 THE ANNUITY PERIOD..................... 12 Maturity Date.......................... 12 Allocation of Annuity.................. 13 Variable Annuity....................... 13 Fixed Annuity.......................... 13 PAYMENT OPTIONS........................ 14 Election of Options.................... 14 Annuity Options........................ 14 MISCELLANEOUS CONTRACT PROVISIONS...... 15 Right to Return........................ 15 Termination............................ 16 Required Reports....................... 16 Suspension of Payments................. 16 Transfers of Contract Values to Other Annuities............................ 16 THE SEPARATE ACCOUNT................... 16 Mixed and Shared Funding............... 16 Performance Information................ 17 FEDERAL TAX CONSIDERATIONS............. 17 General Taxation of Annuities.......... 17 Nonqualified Annuity Contracts......... 17 Qualified Annuity Contracts............ 17 Penalty Tax for Premature Distributions........................ 18 Diversification Requirements for Variable Annuities................... 18 Ownership of the Investments........... 18 Mandatory Distributions for Qualified Plans................................ 19 OTHER INFORMATION...................... 20 The Insurance Company.................. 20 Distribution of Variable Annuity Contracts............................ 20 Conformity with State and Federal Laws................................. 20 Voting Rights.......................... 20 Legal Proceedings And Opinions......... 20 APPENDIX A: The Fixed Account.......... 21 APPENDIX B: Waiver of Withdrawal Charge for Nursing Home Confinement......... 22 APPENDIX C: Table of Contents of the Statement of Additional Information.......................... 23
INDEX OF SPECIAL TERMS The following terms are italicized throughout the prospectus. Refer to the page listed for an explanation of each term. Accumulation Unit...................... 5 Annuitant.............................. 8 Annuity Payments....................... 12 Annuity Unit........................... 13 Cash Surrender Value................... 9 Contract Date.......................... 4 Contract Owner (You, Your)............. 4 Contract Value......................... 4 Contract Year.......................... 4 Funding Option(s)...................... 5 Maturity Date.......................... 4 Purchase Payment....................... 4 Written Request........................ 4 APPENDIX A: Fixed Account.............. 21
2 10 SEPARATE ACCOUNT PF FEE TABLE - -------------------------------------------------------------------------------- CONTRACT OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (as a percentage of purchase payments withdrawn):
LENGTH OF TIME FROM PURCHASE PAYMENT (NUMBER OF YEARS) CHARGE 1 8% 2 7% 3 6% 4 5% 5 4% 6 3% 7 2% 8 1% 9 and over 0% ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30 ANNUAL SEPARATE ACCOUNT CHARGES: (as a percentage of the average daily net assets of the Separate Account) Mortality and Expense Risk Charge............................................. 1.25% Administrative Expense Charge................................................. .15% ------ Total Separate Account Charges............................................ 1.40% FUNDING OPTION EXPENSES: (as a percentage of average daily net assets of the Funding Option)
MANAGEMENT OTHER TOTAL ANNUAL FEE EXPENSES FUNDING (AFTER EXPENSES (AFTER EXPENSES OPTION PORTFOLIO NAME ARE REIMBURSED) ARE REIMBURSED) EXPENSES - -------------------------------------------------------------------------------------------------------------- Smith Barney Money Market Portfolio Smith Barney International Equity Portfolio Smith Barney Income & Growth Portfolio Smith Barney High Income Portfolio Smith Barney Appreciation Portfolio MFS Research Portfolio MFS Total Return Portfolio MFS OTC Portfolio Smith Barney Concert Select High Growth Portfolio Smith Barney Concert Select Growth Portfolio Smith Barney Concert Select Balanced Portfolio Smith Barney Concert Select Conservative Portfolio Smith Barney Concert Select Income Portfolio
NOTES: The purpose of the Fee Table is to assist contract owners in understanding the various costs and expenses that a contract owner will bear, directly or indirectly. See "Charges and Deductions" in 3 11 this prospectus for additional information. Expenses shown do not include premium taxes, which may be applicable. EXAMPLE* Assuming a 5% annual return, a $1,000 investment would be subject to the following expenses, if (a) surrendered or withdrawn at the end of the period shown, or (b) if annuitized, or if no withdrawals are made at the end of the period shown.
- -------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME 1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------------------------------------------------------------------- Smith Barney Money Market.......................................... Smith Barney International Equity.................................. Smith Barney Income & Growth....................................... Smith Barney High Income........................................... Smith Barney Appreciation.......................................... MFS Research....................................................... MFS Total Return................................................... MFS OTC............................................................ Smith Barney Concert Select High Growth............................ Smith Barney Concert Select Growth................................. Smith Barney Concert Select Balanced............................... Smith Barney Concert Select Conservative........................... Smith Barney Concert Select Income.................................
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS EXAMPLE REFLECTS THE $30 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL CHARGE OF .021% OF ASSETS. FOR NEW FUNDING OPTIONS, EXPENSES ARE GIVEN ONLY FOR YEARS ONE AND THREE. THE ANNUITY CONTRACT - -------------------------------------------------------------------------------- PFS Variable Annuity is a contract between you, the contract owner, and Travelers Insurance Company (called "us" or the "Company"). Under this contract, you make purchase payments to us and we credit them to your Contract. The Company promises to pay you an income, in the form of annuity payments, beginning on a future date that you choose, the maturity date. The purchase payments accumulate tax deferred in the funding option(s) of your choice. The contract owner assumes the risk of gain or loss according to the performance of the funding options. The contract value is the amount of purchase payments, plus or minus any investment experience or interest. The contract value also reflects all surrenders made and charges deducted. There is generally no guarantee that at the maturity date the contract value will equal or exceed the total purchase payments made under the Contract, except as noted under the Death Benefit provisions described in this prospectus. The date the contract and its benefits became effective is referred to as the contract date. Each anniversary of this contract date is called a contract year. 4 12 Certain changes and elections must be made in writing to the Company. Where the term "written request" is used, it means that written information must be sent to the Company's Home Office in a form and content satisfactory to us. PURCHASE PAYMENTS The initial purchase payment must be at least $5,000. Additional payments of at least $100 may be made under the Contract at any time. Under certain circumstances, we may waive the minimum purchase payment requirement. Purchase Payments over $1,000,000 may be made with our prior consent. We will apply the initial purchase payment within two business days after we receive it at our Home Office in good order. Subsequent purchase payments received in good order will be credited to a Contract within one business day. Our business day ends when the New York Stock Exchange closes, usually 4:00 p.m. Eastern time. ACCUMULATION UNITS An accumulation unit is used to calculate the value of a Contract. An accumulation unit works like a share of a mutual fund. Each funding option has a corresponding accumulation unit value. The accumulation units are valued each business day and may increase or decrease from day to day. The number of accumulation units we will credit to your Contract once we receive a purchase payment is determined by dividing the amount directed to each funding option by the value of the accumulation unit. We calculate the value of an accumulation unit for each funding option each day after the New York Stock Exchange closes. After the value is calculated, your Contract is credited. During the annuity period (i.e., after the maturity date), you are credited with annuity units. THE FUNDING OPTIONS You choose which of the following funding options to have your purchase payments allocated to. You will find detailed information about the options and their inherent risks in the current prospectuses for the funding options which must accompany this prospectus. Since each option has varying degrees of risk, please read the prospectuses carefully before investing. Additional copies of the prospectuses may be obtained by contacting your Primerica Financial Services representative or by calling 1-800-842-8573. 5 13 The current funding options are listed below, along with their investment advisers and any subadviser:
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUB-ADVISER - -------------------------------------------------------------------------------------------------------------- Smith Barney Money Market maximum current income and Smith Barney Mutual Funds preservation of capital Management Inc. ("SBMFM") Smith Barney International Equity total return on assets from SBMFM growth of capital and income Smith Barney Income & Growth current income and long term SBMFM growth of income and capital Smith Barney High Income high current income SBMFM Smith Barney Appreciation long term appreciation of SBMFM capital MFS Research long term growth of capital and Travelers Investment Advisers ("TIA") current income /Massachusetts Financial Services Company ("MFS") MFS Total Return above-average income consistent TIA/MFS with the prudent employment of capital MFS OTC long term growth of capital TIA/MFS Smith Barney Concert Select High capital appreciation SBMFM Growth Smith Barney Concert Select long term growth of capital SBMFM Growth Smith Barney Concert Select balance of growth of capital SBMFM Balanced and income Smith Barney Concert Select income and, secondarily, long SBMFM Conservative term growth of capital Smith Barney Concert Select high current income SBMFM Income
SUBSTITUTIONS AND ADDITIONS If any of the funding options become unavailable for allocating purchase payments, or if we believe that further investment in a funding option is inappropriate for the purposes of the Contract, we may substitute another funding option. However, we will not make any substitutions without notifying you and obtaining any applicable state and SEC approval. From time to time we may make new funding options available. CHARGES AND DEDUCTIONS - -------------------------------------------------------------------------------- WITHDRAWAL CHARGE No sales charges are deducted from purchase payments when they are applied under the Contract. However, a withdrawal charge will be deducted if any or all of the contract value is withdrawn during the first eight years following a purchase payment. The length of time from when we receive the purchase payment to the time of withdrawal determines the amount of the charge. The withdrawal charge will be deducted from the total amount requested unless you instruct us to deduct it from the remaining contract value. 6 14 The withdrawal charge is equal to a percentage of purchase payments withdrawn from the Contract and is calculated as follows:
LENGTH OF TIME FROM PURCHASE PAYMENT WITHDRAWAL (NUMBER OF YEARS) CHARGE 1 8% 2 7% 3 6% 4 5% 5 4% 6 3% 7 2% 8 1% 9 and over 0%
For purposes of the withdrawal charge calculation, withdrawals will be deemed to be taken in the following order: (a) from any purchase payments to which no withdrawal charge is applicable; (b) from any remaining free withdrawal amount (as described below) after reduction by the amount of (a); (c) from any purchase payments to which withdrawal charges are applicable (on a first-in, first-out basis); and, finally (d) from any Contract earnings. NOTE: Any free withdrawals taken will not reduce purchase payments still subject to a withdrawal charge. We will not deduct a withdrawal charge (1) from payments we make due to the death of the contract owner or the death of the annuitant with no contingent annuitant surviving; or (2) upon election of an annuity payout (based upon life expectancy); (3) due to a minimum distribution under our minimum distribution rules then in effect; or (4) if the contract owner is hospitalized or confined to an Eligible Nursing Home as described in Appendix B. FREE WITHDRAWAL ALLOWANCE There is a 10% free withdrawal allowance available each year after the first contract year. The available amount will be calculated as a percentage of the contract value available at the end of the previous contract year. The free withdrawal allowance applies to any partial withdrawals and to full withdrawals, except those transferred directly to annuity contracts issued by other financial institutions. In Washington state, this provision applies to all withdrawals. ADMINISTRATIVE CHARGES A Contract administrative charge of $30 is deducted annually. This charge compensates us for expenses incurred in establishing and maintaining the Contract. The charge is deducted from the contract value on the fourth Friday of each August by canceling accumulation units applicable to each funding option on a pro rata basis. No contract administrative charge will be deducted from the Fixed Account. For the first year, this charge will be prorated (i.e. calculated) from the date of purchase. A prorated charge will also be made if the Contract is completely withdrawn or terminated. We will not deduct a contract administrative charge: (1) from the distribution of death proceeds; or (2) after an annuity payout has begun. An administrative expense charge (sometimes called "sub-account administrative charge") is deducted on each business day from amounts allocated to the variable funding options in order to compensate the Company for certain related administrative and operating expenses. The charge equals, on an annual basis, 0.15% of the daily net asset value allocated to each of the variable funding options. 7 15 MORTALITY AND EXPENSE RISK CHARGE Each business day, the Company deducts a mortality and expense risk charge. The deduction is reflected in our calculation of accumulation and annuity unit values. This charge equals, on an annual basis, 1.25% of the amounts held in each funding option. We reserve the right to lower this charge at any time. The mortality risk portion compensates us for guaranteeing to provide annuity payments according to the terms of the Contract regardless of how long the annuitant lives and for guaranteeing to provide the death benefit if an annuitant dies prior to the maturity date. The expense risk portion compensates us for the risk that the charges under the Contract, which cannot be increased during the duration of the Contract, will be insufficient to cover actual costs. REDUCTION OR ELIMINATION OF CONTRACT CHARGES The withdrawal charge, the administrative charges, the mortality and expense risk charge, and the distribution charge under the Contract may be reduced or eliminated when certain sales or administration of the Contract result in savings or reduction of administrative or sales expenses, and/or mortality and expense risks. Any such reduction will be based on the following: (1) the size and type of group to which sales are to be made; (2) the total amount of purchase payments to be received; and (3) any prior or existing relationship with the Company. There may be other circumstances, of which we are not presently aware, which could result in fewer sales expenses, administrative charges, or mortality and expense risk charges. For certain trusts, the Company may change the order in which purchase payments and earnings are withdrawn in order to determine the withdrawal charge. In no event will reduction or elimination of the withdrawal charge or the administrative charge be permitted where such reduction or elimination will be unfairly discriminatory to any person. FUNDING OPTION EXPENSES The deductions from and expenses paid out of the assets of the various funding options are summarized in the fee table and are described in the accompanying prospectuses. PREMIUM TAX Certain state and local governments charge premium taxes ranging from 0% to 5%, depending upon jurisdiction. The Company is responsible for paying these taxes and will determine the method used to recover premium tax expenses incurred. Where required, the Company will deduct any applicable premium taxes from the contract value either upon death, surrender, annuitization, or at the time purchase payments are made to the Contract, but no earlier than when the Company has a tax liability under state law. CHANGES IN TAXES BASED UPON PREMIUM OR VALUE If there is any change in a law assessing taxes against the Company based upon premiums, contract gains or value of the contract, we reserve the right to charge you proportionately for this tax. OWNERSHIP PROVISIONS - -------------------------------------------------------------------------------- TYPES OF OWNERSHIP Contract Owner ("you"). The Contract belongs to the contract owner named in the Contract (on the Specifications page), or to any other person to whom the contract is subsequently assigned. An assignment of ownership or a collateral assignment may be made only for nonqualified contracts. You have sole power during the annuitant's lifetime to exercise any rights and to receive 8 16 all benefits given in the contract provided you have not named an irrevocable beneficiary and provided the Contract is not assigned. You receive all payments while the annuitant is alive unless you direct them to an alternate recipient. An alternate recipient does not become the contract owner. Joint Owner. For nonqualified contracts only, joint owners (i.e., spouses) may be named in a written request before the contract is in effect. Joint owners may independently exercise transfers allowed under the Contract. All other rights of ownership must be exercised by both owners. Joint owners own equal shares of any benefits accruing or payments made to them. All rights of a joint owner end at death if the other joint owner survives. The entire interest of the deceased joint owner in the Contract will pass to the surviving joint owner. BENEFICIARY The beneficiary is named by you in a written request. The beneficiary has the right to receive any remaining contractual benefits upon the death of the annuitant or the contract owner. If more than one beneficiary survives the annuitant, they will share equally in benefits unless different shares are recorded with the Company by written request before the death of the annuitant or contract owner. With nonqualified contracts, as discussed under "Death Benefit," the beneficiary named in the contract may differ from the designated beneficiary (for example, the joint owner or a contingent annuitant). In such cases, the designated beneficiary receives the contract benefits (rather than the beneficiary) upon your death. Unless an irrevocable beneficiary has been named, you have the right to change any beneficiary by written request during the lifetime of the annuitant and while the Contract continues. ANNUITANT The annuitant is designated in the Contract (on the Specifications page), and is the individual on whose life the maturity date and the amount of the monthly annuity payments depend. The annuitant may not be changed after the contract is in effect. For nonqualified Contracts only, the contract owner may also name one individual as a contingent annuitant by written request before the Contract becomes effective. A contingent annuitant may not be changed, deleted or added after the Contract becomes effective. For Contracts issued in New York, a contingent annuitant may not be named. TRANSFERS - -------------------------------------------------------------------------------- Before the maturity date, you may transfer all or part of the contract value between funding options. There are no restrictions on the frequency of transfers currently; however, we reserve the right to assess a transfer charge of up to $10 on transfer requests exceeding twelve per year, and to limit the number of transfers. We will always allow at least one transfer in any six-month period. Since different funding options have different expenses, a transfer of contract values from one funding option to another could result in your investment becoming subject to higher or lower expenses. After the maturity date, you may make transfers between funding options only with our consent. DOLLAR COST AVERAGING Dollar cost averaging (or "automated transfers") allows you to transfer a set dollar amount to other funding options on a monthly or quarterly basis so that more accumulation units are purchased in a funding option if the value per unit is low and less accumulation units are purchased 9 17 if the value per unit is high. Therefore, a lower-than-average cost per unit may be achieved over the long run. You may elect automated transfers through written request or other method acceptable to the Company. (For Contracts issued in New York, the election must be made in writing.) You must have a minimum total contract value of $5,000 to enroll in the Dollar Cost Averaging program. The minimum amount that may be transferred through this program is $100. You may establish automated transfers of contract values from the Fixed Account, subject to certain restrictions. Automated transfers from the Fixed Account may not deplete your Fixed Account Value in less than twelve months from your enrollment in the Dollar Cost Averaging program. You may start or stop participation in the Dollar Cost Averaging program at any time, but you must give the Company at least 30 days' notice to change any automated transfer instructions that are currently in place. All provisions and terms of the Contract apply to automated transfers, including provisions relating to the transfer of money between investment options. We reserve the right to suspend or modify transfer privileges at any time and to assess a processing fee for this service. ACCESS TO YOUR MONEY - -------------------------------------------------------------------------------- Any time before the maturity date, you may redeem all or any portion of the cash surrender value, that is, the contract value, less any withdrawal charge, outstanding loans and any premium tax not previously deducted. You must submit a written request specifying the fixed or variable funding option(s) from which amounts are to be withdrawn. If no funding options are specified, the withdrawal will be made on a prorata basis. The cash surrender value will be determined as of the close of business after we receive your surrender request at the Home Office. The cash surrender value may be more or less than the purchase payments made depending on the contract value at the time of surrender. We may defer payment of any cash surrender value for a period of up to seven days after the written request is received, but it is our intent to pay as soon as possible. We cannot process requests for withdrawal that are not in good order. We will contact you if there is a deficiency causing a delay and will advise what is needed to act upon the withdrawal request. SYSTEMATIC WITHDRAWALS Beginning in the second contract year, before the maturity date, you may choose to withdraw a specified dollar amount (at least $100) on a monthly, quarterly, semiannual or annual basis. Any applicable withdrawal charges (on amounts in excess of the free withdrawal allowance) and any applicable premium taxes will be deducted. To elect systematic withdrawals, you must have a contract value of at least $15,000 and you must make the election on the form provided by the Company. We will surrender accumulation units pro rata from all funding options in which you have an interest, unless you instruct us otherwise. You may begin or discontinue systematic withdrawals at any time by notifying us in writing, but at least 30 days' notice must be given to change any systematic withdrawal instructions that are currently in place. We reserve the right to discontinue offering systematic withdrawals or to assess a processing fee for this service upon 30 days' written notice to contract owners (where allowed by state law). Each systematic withdrawal is subject to federal income taxes on the taxable portion. In addition, a 10% federal penalty tax may be assessed on systematic withdrawals if the contract owner is under age 59 1/2. You should consult with your tax adviser regarding the tax consequences of systematic withdrawals. 10 18 LOANS Loans may be available under your contract. If available, all loan provisions are described in your contract or loan agreement. DEATH BENEFIT - -------------------------------------------------------------------------------- Before the maturity date, a death benefit is payable to the beneficiary when either the annuitant, the contract owner or the first of joint owners dies and there is no contingent annuitant. The death benefit is calculated at the close of the business day on which the Company's Home Office received due proof of death. DEATH PROCEEDS PRIOR TO THE MATURITY DATE WHERE ANNUITANT WAS YOUNGER THAN AGE 67 ON THE CONTRACT DATE AND DIES BEFORE AGE 85: The death benefit payable as of the Death Report Date will be the greatest of (1), (2) or (3) below, less any applicable premium tax and outstanding loans: (1) the Contract Value on the Death Report Date; (2) the total Purchase Payments made under the Contract less the total amount of any partial surrenders; or (3) the maximum of all Step-Up Death Benefit Values (as described below) in effect on the Death Report Date which are associated with Contract Date anniversaries beginning with the eighth Contract Date anniversary and ending with the last Contract Date anniversary occurring on or before the Annuitant's 76th birthday. We must be notified no later than six months from the date of death in order for Us to make payment of proceeds as described above. If notification is received more than six months after the date of death, the Death Benefit payable will be the Contract Value on the Death Report Date less any applicable premium tax. WHERE ANNUITANT WAS AGE 67 THROUGH 75 ON THE CONTRACT DATE AND DIES BEFORE AGE 85: The death benefit payable as of the Death Report Date will be the greatest of (1), (2) or (3) below, less any applicable premium tax, and outstanding loans: (1) the Contract Value on the Death Report Date; (2) the total Purchase Payments made under the Contract; or (3) the Step-Up Death Benefit Value determined as of the eighth Contract Date Anniversary. We must be notified no later than six months from the date of death in order for Us to make payment of proceeds as described above. If notification is received more than six months after the date of death, the Death Benefit payable will be the Contract Value on the Death Report Date less any applicable premium tax. WHERE ANNUITANT WAS AGE 76 OR OLDER ON THE CONTRACT DATE: The death benefit payable as of the Death Report Date will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. WHERE ANNUITANT DIES ON OR AFTER AGE 85: The death benefit payable as of the Death Report Date will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. 11 19 STEP-UP DEATH BENEFIT VALUE: A separate Step-Up Death Benefit Value will be established on the eighth Contract Date anniversary, and on each Contract Date anniversary thereafter which occurs on or prior to the Death Report Date and will initially equal the Contract Value on that anniversary. After a Step-Up Death Benefit Value has been established, it will be recalculated each time a Purchase Payment is made or a partial surrender is taken until the Death Report Date. Step-Up Death Benefit Values will be recalculated by increasing them by the amount of each applicable Purchase Payment and by reducing them by a Partial Surrender Reduction (as described below) for each applicable partial surrender. Recalculations of Step-Up Death Benefit Values related to any Purchase Payments or any partial surrenders will be made in the order that such Purchase Payments or partial surrenders occur. The Partial Surrender Reduction referenced above is equal to: (1) the amount of a Step-Up Death Benefit Value immediately prior to the reduction for the partial surrender, multiplied by (2) the amount of the partial surrender divided by the Contract Value immediately prior to the partial surrender. PAYMENT OF PROCEEDS The process of paying death benefit proceeds under various situations is described below. Generally, the person(s) receiving the benefit may request that the proceeds be paid in a lump sum, or be applied to one of the settlement options available under the Contract. DEATH OF ANNUITANT WHO IS THE CONTRACT OWNER. The Company will pay the proceeds to any surviving joint owner, or if none, the beneficiary(ies), or if none, to the contract owner's estate. Under a nonqualified contract, the death benefit proceeds must be distributed to the beneficiary within five years of the contract owner's death. Or, the beneficiary may elect to receive payments from an annuity which begins within one year of the contract owner's death and is payable over the life of the beneficiary of over a period not exceeding the beneficiary's life expectancy. If the beneficiary is the contract owner's spouse, he or she may elect to continue the contract as the new contract owner rather than receiving the distribution. In such case, the distribution rules applicable when a contract owner dies generally will apply when that spouse as, as contract owner, dies. DEATH OF ANNUITANT WHO IS NOT THE CONTRACT OWNER. In the case of a nonqualified Contract, if there is no contingent annuitant, the Company will pay the death proceeds to the beneficiary. However, if there is a contingent annuitant, he or she becomes the annuitant and the Contract continues in effect (generally using the original maturity date). The proceeds described above will be paid upon the death of the last surviving contingent annuitant. ENTITY AS OWNER. In the case of a nonqualified Contract owned by a nonnatural person (e.g. a trust or another entity), any annuitant will be treated as the contract owner. Any change in the annuitant will be treated as the death of the contract owner. DEATH PROCEEDS AFTER THE MATURITY DATE If the death of any contract owner or annuitant occurs on or after the maturity date, the Company will pay the beneficiary a death benefit consisting of any benefit remaining under the annuity option then in effect. 12 20 THE ANNUITY PERIOD - -------------------------------------------------------------------------------- MATURITY DATE Under the Contract, you can receive regular income payments (annuity payments). You can choose the month and the year in which those payments begin (maturity date). You can also choose among income plans (annuity or income options). We ask you to choose the maturity date and the annuity option when you purchase the contract. While the annuitant is alive, you can change your selection any time up to the maturity date. Annuity payments will begin on the maturity date stated in the Contract unless the Contract has been fully surrendered or the proceeds have been paid to the beneficiary before that date. Annuity payments are a series of periodic payments (a) for life; (b) for life with either a minimum number of payments or a specific amount assured; or (c) for the joint lifetime of the annuitant and another person, and thereafter during the lifetime of the survivor. We may require proof that the annuitant is alive before annuity payments are made. Unless you elect otherwise, the maturity date will be the annuitant's 70th birthday for qualified contracts or, for nonqualified contracts, the annuitant's 75th birthday, or ten years after the effective date of the contract, if later. (For Contracts issued in Florida and New York, the maturity date elected may not be later than the annuitant's 90th birthday.) For nonqualified Contracts, at least 30 days before the original maturity date, a contract owner may elect to extend the maturity date to any time prior to the annuitant's 85th birthday or, for qualified Contracts, to a later date with the Company's consent. Certain annuity options taken at the maturity date may be used to meet the minimum required distribution requirements of federal tax law, or a program of partial surrenders may be used instead. These mandatory distribution requirements take effect generally upon the death of the contract owner, or with qualified contracts upon either the later of the contract owner's attainment of age 70 1/2 or year of retirement; or the death of the contract owner. Independent tax advice should be sought regarding the election of minimum required distributions. ALLOCATION OF ANNUITY When an annuity option is elected, it may be elected as a variable annuity, a fixed annuity, or a combination of both. (Variable payouts may not be available in all states. Refer to your contract.) If, at the time annuity payments begin, no election has been made to the contrary, the cash surrender value will be applied to provide an annuity funded by the same investment options (contract value, in Oregon). At least 30 days before the maturity date, you may transfer the contract value among the funding options in order to change the basis on which annuity payments will be determined. (See "Transfers.") VARIABLE ANNUITY You may choose an annuity payout that fluctuates depending on the investment experience of the variable funding options. The number of annuity units credited to the Contract is determined by dividing the first monthly annuity payment attributable to each funding option by the corresponding annuity unit value as of 14 days before the date annuity payments begin. An annuity unit is used to measure the dollar value of an annuity payment. The number of annuity units (but not their value) remains fixed during the annuity period. DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to determine the first monthly annuity payment. The amount applied to effect a variable annuity will be the value of the funding options as of 14 days before the date annuity payments begin less any applicable premium taxes not previously deducted. 13 21 The amount of the first monthly payment depends on the annuity option elected. A formula for determining the adjusted age is contained in the Contract. The total first monthly annuity payment is determined by multiplying the benefit per $1,000 of value shown in the tables of the Contract by the number of thousands of dollars of value of the Contract applied to that annuity option. The Company reserves the right to require satisfactory proof of age of any person on whose life annuity payments are based before making the first payment under any of the payment options. DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of the second and subsequent annuity payments is not predetermined and may change from month to month based on the investment experience of the applicable funding option. The total amount of each annuity payment will be equal to the sum of the basic payments in each funding option. The actual amounts of these payments are determined by multiplying the number of annuity units credited to each funding option by the corresponding annuity unit value as of the date 14 days before the date the payment is due. FIXED ANNUITY You may choose a fixed annuity that provides payments which do not vary during the annuity period. We will calculate the dollar amount of the first fixed annuity payment as described under "Variable Annuity," except that the amount applied to effect the annuity will be the cash surrender value, determined as of the date annuity payments begin. If it would produce a larger payment, the first fixed annuity payment will be determined using the Life Annuity Tables in effect on the maturity date. PAYMENT OPTIONS - -------------------------------------------------------------------------------- ELECTION OF OPTIONS While the annuitant is alive, you can change your annuity option selection any time up to the maturity date. Once annuity payments have begun, no further elections are allowed. During the annuitant's lifetime, if you do not elect otherwise before the maturity date, we will pay you (or another designated payee) the first of a series of monthly annuity payments based on the life of the annuitant, in accordance with Annuity Option 2 (Life Annuity with 120 monthly payments assured). For certain qualified contracts, Annuity Option 4 (Joint and Last Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will be the automatic option as described in the contract. The minimum amount that can be placed under an annuity option will be $1,000 unless we agree to a lesser amount. If any monthly periodic payment due is less than $100, the Company reserves the right to make payments at less frequent intervals, or to pay the contract value in a lump-sum. On the maturity date, we will pay the amount due under the Contract in one lump sum (except in Florida, where this is not permitted), or in accordance with the payment option that you select. You must elect an option in writing, in a form satisfactory to the Company. Any election made during the lifetime of the annuitant must be made by the contract owner. ANNUITY OPTIONS Subject to the conditions described in "Election of Options" above, all or any part of the cash surrender value (or, where required by state law, contract value) may be paid under one or more of the following annuity options. Payments under the annuity options may be elected on a monthly, quarterly, semiannual or annual basis. We may offer additional options. Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments during the lifetime of the annuitant ending with the last payment before death. This option offers the 14 22 maximum periodic payment, since there is no assurance of a minimum number of payments or provision for a death benefit for beneficiaries. Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The Company will make monthly annuity payments during the lifetime of the annuitant, with the agreement that if, at the death of that person, payments have been made for less than 120, 180 or 240 months as elected, we will continue making payments to the beneficiary during the remainder of the period. Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will make regular annuity payments during the lifetime of the annuitant and a second person. When either person dies, we will continue making payments to the survivor. No further payments will be made following the death of the survivor. Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of Primary Payee. The Company will make annuity payments during the lifetimes of the annuitant and a second person. One will be designated the primary payee, the other will be designated the secondary payee. On the death of the secondary payee, the Company will continue to make monthly annuity payments to the primary payee in the same amount that would have been payable during the joint lifetime of the two persons. On the death of the primary payee, the Company will continue to make annuity payments to the secondary payee in an amount equal to 50% of the payments which would have been made during the lifetime of the primary payee. No further payments will be made once both payees have died. Option 5 -- Other Annuity Options. The Company will make any other arrangements for annuity payments as may be mutually agreed upon. INCOME OPTIONS Instead of one of the annuity options described above, and subject to the conditions described under "Election of Options," all or part of the cash surrender value (or, where required by state law, contract value) may be paid under one or more of the following income options, provided that they are consistent with federal tax law qualification requirements. Payments under the income options may be elected on a monthly, quarterly, semiannual or annual basis: Option 1 -- Payments of a Fixed Amount. The Company will make equal payments of the amount elected until the cash surrender value applied under this option has been exhausted. The first payment and all later payments will be paid from amounts attributable to each investment option in proportion to the cash surrender value attributable to each. The final payment will include any amount insufficient to make another full payment. Option 2 -- Payments for a Fixed Period. The Company will make payments for the fixed period selected based on the cash surrender value as of the date payments begin. If, at the death of the annuitant, the total number of fixed payments has not been made, the payments will be made to the beneficiary. Option 3 -- Other Income Options. The Company will make any other arrangements for income payments as may be mutually agreed upon. The amount applied to effect an income option will be the cash surrender value as of the date income payments begin, less any applicable premium taxes not previously deducted and any applicable withdrawal charge. (Certain states may have different requirements that we will honor.) The cash surrender value used to determine the amount of any income payment will be determined on the same basis as the cash surrender value during the accumulation period, including the deduction for mortality and expense risks and the contract administrative expense charge. 15 23 MISCELLANEOUS CONTRACT PROVISIONS - -------------------------------------------------------------------------------- RIGHT TO RETURN You may return the Contract for a full refund of the contract value (including charges) within twenty days after you receive it (the "right to return period"). Where state law requires a longer period, the Company will comply. You bear the investment risk during the right to return period; therefore, the contract value returned may be greater or less than your purchase payment. If the Contract is purchased as an Individual Retirement Annuity, and is returned within the first seven days after delivery, your purchase payment will be refunded in full; during the remainder of the right to return period, the contract value (including charges) will be refunded. The contract value will be determined following the close of the business day on which we receive a written request for a refund. Refer to your Contract for any state-specific information. TERMINATION You do not need to make any purchase payments after the first to keep the Contract in effect. However, we reserve the right to terminate the Contract on any business day if the contract value as of that date is less than $2,000 and no purchase payments have been made for at least two years, unless otherwise specified by state law. Termination will not occur until 31 days after the Company has mailed notice of termination to the contract owner's last known address and to any assignee of record. If the Contract is terminated, we will pay you the cash surrender value (contract value less any applicable premium tax, in the states that so require), less any applicable charges and any outstanding loans. REQUIRED REPORTS As often as required by law, but at least once in each contract year before the due date of the first annuity payment, we will furnish a report showing the number of accumulation units credited to the Contract and the corresponding accumulation unit value(s) as of the date of the report for each funding option to which the contract owner has allocated amounts during the applicable period. The Company will keep all records required under federal or state laws. SUSPENSION OF PAYMENTS The Company reserves the right to suspend or postpone the date of any payment or determination of values on any business day (1) when the New York Stock Exchange ("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3) when an emergency exists as determined by the SEC so that the sale of securities held in the Separate Account may not reasonably occur or so that the Company may not reasonably determine the value the Separate Account's net assets; or (4) during any other period when the SEC, by order, so permits for the protection of security holders. TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES We may permit contract owners to transfer their contract values into other annuities offered by us or our affiliated insurance companies under rules then in effect. THE SEPARATE ACCOUNT - -------------------------------------------------------------------------------- The Travelers Separate Account PF For Variable Annuities ("Separate Account PF") was established on July 30, 1997 and is registered with the SEC as a unit investment trust (separate 16 24 account) under the Investment Company Act of 1940, as amended (the "1940 Act"). The assets of Separate Account PF will be invested exclusively in the shares of the variable funding options. The assets of Separate Account PF are held for the exclusive benefit of the owners of this separate account, according to the laws of Connecticut. Income, gains and losses, whether or not realized, from assets allocated to Separate Account PF are, in accordance with the Contracts, credited to or charged against Separate Account PF without regard to other income, gains and losses of the Company. The assets held by Separate Account PF are not chargeable with liabilities arising out of any other business which the Company may conduct. Obligations under the Contract are obligations of the Company. All investment income and other distributions of the funding options are payable to Separate Account PF. All such income and/or distributions are reinvested in shares of the respective funding option at net asset value. Shares of the funding options are currently sold only to life insurance company separate accounts to fund variable annuity and variable life insurance contracts. PERFORMANCE INFORMATION From time to time, we may advertise several types of historical performance for the Contract's funding options. We may advertise the "standardized average annual total returns" of the funding option, calculated in a manner prescribed by the SEC, as well as the "non-standardized total return," as described below. Specific examples of the performance information appear in the SAI. STANDARDIZED METHOD. Quotations of average annual total returns are computed according to a formula in which a hypothetical initial investment of $1,000 is applied to the funding option, and then related to ending redeemable values over one-, five-, and ten-year periods, or for a period covering the time during which the funding option has been in existence, if less. These quotations reflect the deduction of all recurring charges during each period (on a pro rata basis in the case of fractional periods). The deduction for the annual administrative charge ($30) is converted to a percentage of assets based on the actual fee collected (or anticipated to be collected, if a new product), divided by the average net assets for Contracts sold (or anticipated to be sold). Each quotation assumes a total redemption at the end of each period with the applicable withdrawal charge deducted at that time. NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a similar manner based on the performance of the funding options over a period of time, usually for the calendar year-to-date, and for the past one-, three-, five- and ten-year periods. Nonstandardized total returns will not reflect the deduction of any withdrawal charge or the $30 annual contract administrative charge, which, if reflected, would decrease the level of performance shown. The withdrawal charge is not reflected because the Contract is designed for long-term investment. GENERAL Within the guidelines prescribed by the SEC and the National Association of Securities Dealers, Inc. ("NASD"), performance information may be quoted numerically or may be presented in a table, graph or other illustration. Advertisements may include data comparing performance to well-known indices of market performance (including, but not limited to, the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley Capital International's EAFE Index). Advertisements may also include published editorial comments and performance rankings compiled by independent organizations (including, but not limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that monitor the performance of the Separate Account and the variable funding options. For funding options that were in existence prior to the date they became available under the Separate Account, the standardized and nonstandardized average annual total return quotations will show the investment performance that such funding options would have achieved (reduced by 17 25 the applicable charges) had they been held under the Contract for the period quoted. The total return quotations are based upon historical earnings and are not necessarily representative of future performance. The contract value at redemption may be more or less than original cost. FEDERAL TAX CONSIDERATIONS - -------------------------------------------------------------------------------- The following general discussion of the federal income tax consequences under this Contract is not intended to cover all situations, and is not meant to provide tax advice. Because of the complexity of the law and the fact that the tax results will vary depending on many factors, you should consult your tax adviser regarding your personal situation. For your information, a more detailed tax discussion is contained in the SAI. GENERAL TAXATION OF ANNUITIES Congress has recognized the value of saving for retirement by providing certain tax benefits, in the form of tax deferral, for money put into an annuity. The Internal Revenue Code (Code) governs how this money is ultimately taxed, depending upon the type of contract, qualified or non-qualified, and the manner in which the money is distributed, as briefly described below. TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED If you purchase an annuity contract with proceeds of an eligible rollover distribution from any pension plan, specially sponsored program, or individual retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a qualified contract. Some examples of qualified contracts are: IRAs, 403(b) annuities, pension and profit-sharing plans (including 401(k) plans), Keogh Plans, and certain other qualified deferred compensation plans. If you purchase the contract on an individual basis with after-tax dollars and not under one of the programs described above, your contract is referred to as nonqualified. NONQUALIFIED ANNUITY CONTRACTS As the owner of a nonqualified annuity, you do not receive any tax benefit (deduction or deferral of income) on purchase payments, but you will not be taxed on increases in the value of your contract until a distribution occurs -- either as a withdrawal (distribution made prior to the maturity date), or as annuity payments. When a withdrawal is made, you are taxed on the amount of the withdrawal that is considered earnings. Similarly, when you receive an annuity payment, part of each payment is considered a return of your purchase payments and will not be taxed. The remaining portion of the annuity payment (i.e., any earnings) will be considered ordinary income for tax purposes. If a nonqualified annuity is owned by other than an individual, however, (e.g., by a corporation), increases in the value of the contract attributable to purchase payments made after February 28, 1986 are includible in income annually. Furthermore, for contracts issued after April 22, 1987, if you transfer the contract without adequate consideration all deferred increases in value will be includible in your income at the time of the transfer. If you make a partial withdrawal, this money will generally be taxed as first coming from earnings, (income in the contract), and then from your purchase payments. These withdrawn earnings are includible in your income. (See "Penalty Tax for Premature Distributions" below.) There is income in the contract to the extent the contract value exceeds your investment in the contract. The investment in the contract equals the total purchase payments you paid less any amount received previously which was excludible from gross income. Any direct or indirect borrowing against the value of the contract or pledging of the contract as security for a loan will be treated as a cash distribution under the tax law. 18 26 Federal tax law requires that nonqualified annuity contracts meet minimum mandatory distribution requirements upon the death of the contract owner, including the first of joint owners. If these requirements are not met, the surviving joint owner, or the beneficiary, will have to pay taxes prior to distribution. The distribution required depends, among other things, upon whether an annuity option is elected or whether the new contract owner is the surviving spouse. We will administer Contracts in accordance with these rules and we will notify you when you should begin receiving payments. QUALIFIED ANNUITY CONTRACTS Under a qualified annuity, since amounts paid into the contract have not yet been taxed, the full amount of all distributions, including lump-sum withdrawals and annuity payments, are taxed at the ordinary income tax rate unless the distribution is transferred to an eligible rollover account or contract. The Contract is available as a vehicle for IRA rollovers and for other qualified contracts. There are special rules which govern the taxation of qualified contracts, including withdrawal restrictions, requirements for mandatory distributions, and contribution limits. We have provided a more complete discussion in the SAI. PENALTY TAX FOR PREMATURE DISTRIBUTIONS Taxable distributions taken before the contract owner has reached the age of 59 1/2 will be subject to a 10% additional tax penalty unless the distribution is taken in a series of periodic distributions, for life or life expectancy, or unless the distribution follows the death or disability of the contract owner. Other exceptions may be available in certain qualified plans. DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES The Code requires that any nonqualified variable annuity contracts based on a separate account shall not be treated as an annuity for any period if investments made in the account are not adequately diversified. Final tax regulations define how separate accounts must be diversified. The Company monitors the diversification of investments constantly and believes that its accounts are adequately diversified. The consequence of any failure to diversify is essentially the loss to the Contract Owner of tax deferred treatment. The Company intends to administer all contracts subject to this provision of law in a manner that will maintain adequate diversification. OWNERSHIP OF THE INVESTMENTS Assets in the separate accounts, also referred to as segregated asset accounts, must be owned by the Company and not by the Contract Owner for federal income tax purposes. Otherwise, the deferral of taxes is lost and income and gains from the accounts would be includable annually in the Contract Owner's gross income. The Internal Revenue Service has stated in published rulings that a variable contract owner will be considered the owner of the assets of a segregated asset account if the owner possesses an incident of ownership in those assets, such as the ability to exercise investment control over the assets. The Treasury Department announced, in connection with the issuance of temporary regulations concerning investment diversification, that those regulations "do not provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor, rather than the insurance company, to be treated as the owner of the assets of the account." This announcement, dated September 15, 1986, also stated that the guidance would be issued by way of regulations or rulings on the "extent to which policyholders may direct their investments to particular subaccounts [of a segregated asset account] without being treated as owners of the underlying assets." As of the date of this prospectus, no such guidance has been issued. 19 27 The Company does not know if such guidance will be issued, or if it is, what standards it may set. Furthermore, the Company does not know if such guidance may be issued with retroactive effect. New regulations are generally issued with a prospective-only effect as to future sales or as to future voluntary transactions in existing contracts. The Company therefore reserves the right to modify the contract as necessary to attempt to prevent Contract Owners from being considered the owner of the assets of the separate account. MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS Federal tax law requires that minimum annual distributions begin by April 1st of the calendar year following the calendar year in which an IRA owner attains age 70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum distributions until the later of April 1st of the calendar year following the calendar year in which they attain age 70 1/2 or the year of retirement. Distributions must begin or be continued according to required patterns following the death of the contract owner or annuitant of both qualified and nonqualified annuities. OTHER INFORMATION - -------------------------------------------------------------------------------- THE INSURANCE COMPANY The Travelers Insurance Company is a stock insurance company chartered in 1864 in Connecticut and continuously engaged in the insurance business since that time. It is licensed to conduct life insurance business in all states of the United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company is an indirect wholly owned subsidiary of Travelers Group Inc. The Company's Home Office is located at One Tower Square, Hartford, Connecticut 06183. DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS The Company intends to sell the Contracts in all jurisdictions where it is licensed to do business and where the Contract is approved. The Contracts will be sold by life insurance sales agents who represent the Company, and who are licensed registered representatives of Primerica Financial Services, Inc. The compensation paid to sales representatives will not exceed % of the payments made under the Contracts. From time to time, the Company may pay or permit other promotional incentives, in cash, credit or other compensation. Any sales representative or employee will have been qualified to sell variable annuities under applicable federal and state laws. Each broker-dealer is registered with the SEC under the Securities Exchange Act of 1934, and all are members of the NASD. The principal underwriter for the Contracts is Tower Square Securities, Inc., an affiliate of the Company; however, it is currently anticipated that an affiliated broker-dealer may become the principal underwriter for the Contracts during 1997. CONFORMITY WITH STATE AND FEDERAL LAWS The Contract is governed by the laws of the state in which it is delivered. Any paid-up annuity, cash surrender value or death benefits that are available under the Contract are not less than the minimum benefits required by the statutes of the state in which the Contract is delivered. We reserve the right to make any changes, including retroactive changes, in the Contract to the extent that the change is required to meet the requirements of any law or regulation issued by any governmental agency to which the Company, the Contract or the contract owner is subject. 20 28 VOTING RIGHTS The Company is the legal owner of the shares of the funding options. However, we believe that when a funding option solicits proxies in conjunction with a vote of shareholders we are required to obtain from you and from other owners instructions on how to vote those shares. When we receive those instructions, we will vote all of the shares we own in proportion to those instructions. This will also include any shares we own on our own behalf. Should we determine that we are no longer required to comply with the above, we will vote on the shares in our own right. LEGAL PROCEEDINGS AND OPINIONS There are no pending material legal proceedings affecting Separate Account PF. Legal matters in connection with the federal laws and regulations affecting the issue and sale of the Contract described in this prospectus, as well as the organization of the Company, its authority to issue variable annuity contracts under Connecticut law and the validity of the forms of the variable annuity contracts under Connecticut law, have been reviewed by the General Counsel of the Company. 21 29 APPENDIX A - -------------------------------------------------------------------------------- THE FIXED ACCOUNT The Fixed Account is secured by part of the general assets of the Company. The general assets of the Company include all assets of the Company other than those held in Separate Account PF or any other separate account sponsored by the Company or its affiliates. The staff of the SEC does not generally review the disclosure in the prospectus relating to the Fixed Account. Disclosure regarding the Fixed Account and the general account may, however, be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in the prospectus. Under the Fixed Account, the Company assumes the risk of investment gain or loss, guarantees a specified interest rate, and guarantees a specified periodic annuity payment. The investment gain or loss of Fund ABD or any of the funding options does not affect the Fixed Account portion of the contract owner's contract value, or the dollar amount of fixed annuity payments made under any payout option. We guarantee that, at any time, the Fixed Account contract value will not be less than the amount of the purchase payments allocated to the Fixed Account, plus interest credited as described below, less any applicable premium taxes or prior surrenders. If the contract owner effects a surrender, the amount available from the Fixed Account will be reduced by any applicable withdrawal charge as described under "Charges and Deductions" in this prospectus. Purchase payments allocated to the Fixed Account and any transfers made to the Fixed Account become part of the Company's general account which supports insurance and annuity obligations. Neither the general account nor any interest therein is registered under, nor subject to the provisions of, the Securities Act of 1933 or Investment Company Act of 1940. We will invest the assets of the Fixed Account at our discretion. Investment income from such Fixed Account assets will be allocated to us and to the Contracts participating in the Fixed Account. Investment income from the Fixed Account allocated to us includes compensation for mortality and expense risks borne by us in connection with Fixed Account Contracts. The amount of such investment income allocated to the Contracts will vary from year to year in our sole discretion at such rate or rates as we prospectively declare from time to time. The initial rate for any allocations into the Fixed Account is guaranteed for one year from the date of such allocation. Subsequent renewal rates will be guaranteed for the calendar quarter. We also guarantee that for the life of the Contract we will credit interest at not less than 3% per year. Any interest credited to amounts allocated to the Fixed Account in excess of 3% per year will be determined in our sole discretion. You assume the risk that interest credited to the Fixed Account may not exceed the minimum guarantee of 3% for any given year. TRANSFERS You may make transfers from the Fixed Account to any other available funding option(s) twice a year during the 30 days following the semi-annual anniversary of the contract effective date. The transfers are limited to an amount of up to 15% of the Fixed Account Value on the semi-annual contract effective date anniversary. (This restriction does not apply to transfers from the Dollar Cost Averaging Program.) Amounts previously transferred from the Fixed Account to other funding options may not be transferred back to the Fixed Account for a period of at least six months from the date of transfer. We reserve the right to waive either of these restrictions. Automated transfers from the Fixed Account to any of the funding options may begin at any time. Automated transfers from the Fixed Account may not deplete your Fixed Account value in a period of less than twelve months from your enrollment in the Dollar Cost Averaging Program. 22 30 APPENDIX B - -------------------------------------------------------------------------------- WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT If the Annuitant is hospitalized and/or confined to an Eligible Nursing Home for thirty consecutive days, you may make a total or partial withdrawal of your contract value without incurring a Withdrawal Charge, even if the withdrawal occurs during the first seven years of your contract. However, such a withdrawal must be made within sixty days of the last day following a period of confinement which lasts at least thirty consecutive days. We will require proof of confinement in a form satisfactory to us, which may include certification by a licensed physician. An Eligible Nursing Home is defined as an institution or special nursing unit of a hospital which meets at least one of the following requirements: 1. Medicare approved as a provider of skilled nursing care, intermediate nursing care or custodial nursing care by the state in which it is located; or 2. Licensed and operated to provide skilled nursing care, intermediate nursing care or custodial nursing care by the state in which it is located; or 3. Meets all the requirements listed below: a. is licensed to operate as a nursing home by the state in which it is located; b. has, as a main function, the provision of skilled, intermediate, or custodial nursing care; c. is engaged in providing continuous room and board accommodations to 3 or more persons; d. is under the supervision of a Licensed Vocational Nurse (LVN) or a nurse of comparable qualifications; and e. maintains a daily medical record of each patient. FILING A CLAIM: You must provide the Company with written notice of a claim within thirty days following the last day of a period of confinement which lasts at least thirty consecutive days. Within fifteen days of receiving a written notice of claim, we will send you all the necessary claim forms. If you do not receive claim forms within that period of time, you may submit written proof of your claim without using our forms. Any withdrawal requested which falls under the scope of this waiver will be paid as soon as we receive proper written proof of your claim, and will be paid in a lump sum. You should consult with your personal tax advisor regarding the taxable nature of any withdrawals taken on your contract. No legal action may be brought to recover on this benefit until sixty days after you have submitted written proof of your claim. 23 31 APPENDIX C - -------------------------------------------------------------------------------- TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION The Statement of Additional Information contains more specific information and financial statements relating to The Travelers Insurance Company. A list of the contents of the Statement of Additional Information is set forth below: The Insurance Company Principal Underwriter Distribution and Management Agreement Mixed and Shared Funding Valuation of Assets Telephone Transfers Federal Tax Considerations Independent Accountants Financial Statements - -------------------------------------------------------------------------------- Copies of the Statement of Additional Information dated , 1997 (Form No. ) are available without charge. To request a copy, please clip this coupon on the dotted line above, enter your name and address in the spaces provided below, and mail to: The Travelers Insurance Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183-9061. Name: Address: 24 32 (THIS DOCUMENT IS NOT PART OF THE PROSPECTUS) TRAVELERS IRA DISCLOSURE STATEMENT - -------------------------------------------------------------------------------- This disclosure statement describes the general requirements of an Individual Retirement Annuity (IRA) as well as the specific features of The Travelers Insurance Company's Individual Retirement Annuity (The Travelers IRA). It is provided in accordance with Internal Revenue Service regulations. RIGHT TO REVOKE YOUR IRA You may revoke your Travelers IRA at any time within 10 days (unless state law requires a longer period) after the contract is delivered to you by notifying The Travelers in writing within that 10-day period. Notice of revocation should be submitted to: The Travelers Insurance Company and its Affiliates Annuity Services One Tower Square Hartford, Connecticut 06183-4056 You may also mail or deliver the revocation notice to your Financial Representative. If you return the Contract within seven days of delivery, then upon revocation you will be entitled to a full refund of your IRA contribution without adjustment for administrative expenses, sales commissions (if any) or fluctuations in market value. If you return the Contract during the remainder of the 10-day period, then upon revocation you will receive your Contract Value, without reduction for contract charges, but including the effects of any fluctuations in market value. If you have any questions concerning your right of revocation, please call 1-800-842-9368 during normal business hours. ANNUITY CONTRACT DESCRIPTION Your Travelers IRA is an annuity contract issued in your name for the exclusive benefit of you or your beneficiaries. The Contract has the following features: 1. Your interest in the Contract is nonforfeitable. 2. Ownership of the Contract is not transferable. 3. The Contract may not be pledged or used as security for a loan. 4. You may begin to receive distributions under the Contract at any time. The distributions may consist of a single sum, or a periodic annuity based upon life expectancy, or of a guaranteed amount per year for a period of years, or of any other distribution method agreed to by the Company. 5. If you die before distribution has begun, or after distribution has begun but before the entire interest has been distributed, your beneficiaries must receive distributions in the manner described under "DISTRIBUTIONS." ELIGIBLE INDIVIDUALS Anyone with earned income or compensation for services may contribute to an IRA. If you or your spouse are active participants in an employer sponsored retirement plan, your deductible contributions may be limited as described under "CONTRIBUTIONS." CONTRIBUTIONS Maximum Deductible Amount: If you are not married, the maximum deductible amount is $2,000. Whether you may deduct or the amount you may deduct depends on whether you (and/or your spouse if you are married) are an active participant in an employer-sponsored retirement plan as described below and the adjusted gross income indicated on your Federal income tax return. If 25 33 you are not an active participant in an employer-sponsored retirement plan, you may make a fully deductible IRA contribution in any amount up to the lesser of 100% of your earned income or compensation for the year or $2,000. Spousal IRA: If you are married and neither you or your spouse is an active participant in an employer-sponsored retirement plan, the maximum deductible amount of payments which can be made to your IRA and to your spouse's IRA is the lesser of $4,000 or 100% of your combined compensation. In any event, the maximum premium paid to either IRA (yours or your spouses) may not exceed $2,000. An Employer-Sponsored Retirement Plan: includes any of the following types of retirement plans: - - a qualified pension/profit sharing described in IRC Section 401(a) or 401(k); - - a Simplified Employee Pension plan (SEP) described in IRC Section 408(k); - - a pension or retirement plan maintained by a federal, state or local government or agency or Instrumentality thereof (other than a plan describe in IRC Section 457); - - tax sheltered annuities and custodial accounts described in IRC Section 403(b); - - a qualified annuity plan under IRC Section 403(a); - - a trust described in IRC Section 501(c)(18); or - - a SIMPLE IRA plan or a SIMPLE 401(k) plan Active Participant: You are an active participant in an employer-sponsored retirement plan even if you do not have a vested right to any benefits under the plan. Whether you are an "active participant" depends on the type of plan maintained by your employer. Generally, you are considered an active participant in a defined contribution plan if an employer contribution or forfeiture was credited to your account under the plan for the year. You are considered an active participant in a defined benefit plan if you are eligible to participate in the plan, even though you may elect not to participate. You are also treated as an active participant for a year during which you make voluntary or mandatory contribution to any type of plan, even though your employer makes no contribution to the plan. The Form W2 (Wage and Tax Statement) that you receive from your employer annually will indicate whether you were an active participant for the prior year. If you (or your spouse, if you are filing a joint tax return) are covered by an employer-sponsored retirement plan, your IRA contribution is tax deductible only to the extent that your adjusted gross income does not exceed the following limits. Applicable Dollar Amount: The maximum deductible amount of your IRA contribution is reduced proportionately for adjusted gross income which exceeds the "applicable dollar amount" if you are an active participant. The applicable dollar amount is $25,000 for an individual and $40,000 for married couples filing a joint tax return. The applicable dollar amount for married individuals filing separate returns is $0. A husband and a wife who file separate returns for a taxable year and who live apart at all times during such taxable year are not treated as married individuals for this purpose. If your adjusted gross income exceeds the applicable dollar amount by not more than $10,000, you may make a deductible IRA contribution but the deductible contribution will be proportionately less than the maximum. "Adjusted gross income" for this purpose is computed before your IRA deduction has been taken. If you qualify for less than the maximum deductible amount, use the following calculation to determine the amount of your deductible contribution: 1. Subtract the applicable dollar amount (discussed above) from your adjusted gross income. If the result is $10,000 or more, you can only make a nondeductible contribution. 2. Subtract the amount determined in Step 1 from $10,000. 26 34 3. Divide the amount determined in Step 2 by $10,000. 4. Multiply $2,000 (or $4,000 if a spousal IRA) times the fraction determined under Step 3. This is your maximum deductible contribution limit. If the adjusted dollar deduction limit is not a multiple of $10, it should be rounded up to the next highest $10 increment. If the amount calculated is less than $200 but more than zero, the deductible contribution limit equals $200. The $200 minimum floor on the deduction limit applies if your adjusted gross income does not exceed $35,000 (for a single taxpayer), $50,000 (for married taxpayers filing jointly), or $10,000 (for a married taxpayer filing separately). Adjusted gross income for married couples filing a joint tax return is calculated by aggregating the compensation of both spouses. The deduction limitations determined above apply to each individual. Non Deductible Amount: If you or your spouse are not eligible to make the maximum deductible contribution to an IRA, you may make a nondeductible contribution of up to the lesser of $2,000 ($4,000 if a spousal IRA) or 100% of your compensation reduced by any deductible IRA contribution. Earnings on all IRA contributions are tax deferred until distribution. You are required to report to the IRS on Form 8606 the extent to which your IRA contribution is nondeductible. If you overstate the amount of nondeductible contributions for a taxable year, a penalty of $100 will be assessed for each overstatement unless you can show that the overstatement was due to a reasonable cause and that steps have been taken to correct the overstatement. Compensation: Compensation means wages, salaries, professional fees, or other amounts derived from or received from personal service actually rendered (including, but not limited to, commissions) and includes earned income as defined in IRC Section 401 (c)(2). Compensation does not include amounts received as earnings or profits from property or amounts not includible in gross income. Compensation also does not include any amount received as a pension or annuity or as deferred compensation. The term "compensation" shall include any amount includible in the individual's gross income under IRC Section 71 with respect to a divorce or separation instrument. Time of Contribution: You may make contributions to your IRA at any time up to and including the due date for filing your tax return (without extensions) for the year. You may continue to make annual contributions to your IRA up to (but not including) the calendar year in which you reach age 70 1/2. You may continue to make annual contributions to your spousal IRA up to (but not including) the calendar year in which your spouse reaches age 70 1/2. ROLLOVER CONTRIBUTIONS Qualified Retirement Plan To IRA: You may roll over to an IRA any taxable portion of your balance in a qualified pension or profit-sharing plan, or in a tax-sheltered annuity qualified under Section 403(b) of the Internal Revenue Code, or to another IRA except generally for the following: a) any distribution that is part of a series of substantially equal payments made over your life or life expectancy or the joint life expectancies of you and your spouse; b) any distribution made for a specified period of ten years or more; and c) any distribution which is a required minimum distribution described under "DISTRIBUTIONS." If you are subsequently covered under another qualified pension or profit-sharing plan or tax sheltered annuity program which accepts rollover contributions, you may transfer the assets of a rollover IRA into the new plan, provided the rollover IRA assets were not commingled with other types of contributions (e.g., other IRA contributions or other plan contributions). SIMPLE IRA funds may not be rolled into your IRA during the first two years of your participation in your employer's SIMPLE IRA. 27 35 Mandatory Withholding Requirements: If an IRA rollover from a qualified pension or profit-sharing plan or from a tax-sheltered annuity is not conducted by means of a "direct rollover" of funds between qualified plan and IRA trustees, custodians or issuers, then 20% mandatory federal income tax withholding will be taken from the distribution. You will not have the right to elect out of this withholding. Qualified plans and tax-sheltered annuity plans and arrangements must offer you the option of transferring distributed amounts eligible for rollover by direct rollover to an eligible retirement plan, such as an IRA. If you elect not to use a direct rollover but do deposit the net taxable distribution in an IRA within 60 days from your receipt of the amount, you may make up the 20% withheld from any other funds that you have available. If you receive a distribution check from a qualified plan or tax-sheltered annuity that is negotiable only by the IRA trustee, custodian or issuer of the IRA which is to receive the rollover distribution, you may forward that check immediately (but no later than 60 days) to the IRA trustee, custodian or issuer and the Internal Revenue Service will treat the transaction as a direct rollover. Limitations: Rollovers must be completed within 60 days after receipt of the distribution. If the distribution is from a qualified pension/profit sharing plan or a tax sheltered annuity and if property other than cash is distributed, then you must roll over the property in the form received and may not first convert it to cash. SIMPLIFIED EMPLOYEE PENSION (SEP-IRA) A Simplified Employee Pension or "SEP" is a special IRA plan under IRC section 408(k) which permits employers to make deductible contributions to separate IRAs established for their employees. If your employer has adopted a SEP plan, your employer may make deductible SEP contributions directly to your Travelers IRA each year in an amount of up to the lesser of $30,000 or 15% of your current year compensation. The contributions and any earnings thereon are not taxable until withdrawn. Your employer must provide you with information describing the terms of your SEP plan. In addition, you may make your own annual contributions to your IRA each year up to the lesser of $2,000 or 100% of current year compensation. Contributions at Age 70 1/2 or Older: A deductible contribution may be made by your employer to a SEP even for years when you are age 70 1/2 or older. SPOUSAL IRA You may be eligible to set up and contribute to an IRA for your spouse whether or not he or she has received any compensation for the taxable year. You and your spouse must set up separate IRAs. The total deduction for both your IRA and the spousal IRA is limited to the lesser of $4,000 or 100% of the annual compensation includible in your gross income. The contribution may be divided between each IRA any way you wish, provided the total amount contributed to either IRA does not exceed $2,000. You must meet the following five requirements to set up a spousal IRA: 1. You must be married at the end of the year. 2. Your spouse must be under age 70 1/2 at the end of the tax year. 3. You must file a joint return for the tax year. 4. You must have taxable compensation for the year. 5. Your spouse's taxable compensation for the year is less than yours. SIMPLE IRA PLANS Beginning in 1997, certain small businesses may have a Savings Incentive Match Plan for Employees called a SIMPLE plan. SIMPLE contributions may only be made to SIMPLE IRA accounts through salary reduction and employer matching contributions. If an individual takes a distribution 28 36 from a SIMPLE IRA within two years of the date of participation in the plan, the 10% premature penalty for premature distributions is increased to 25%. After the two year period, a SIMPLE IRA may be rolled into an IRA. EXCESS CONTRIBUTIONS Excise Tax: Generally, any contributions exceeding the limitations discussed in "CONTRIBUTIONS" are excess contributions subject to a nondeductible 6% excise tax for each year (or portion thereof) that the excess contribution remains in the IRA . This excise tax is not applied if the excess contribution and any interest earned on it up to the date of distribution are withdrawn no later than the due date of your tax return, plus any extensions. The interest element will be taxable income to you in the tax year in which you receive it. Withdrawal of Excess Contributions: If the excess contribution and interest thereon is withdrawn after the due date for filing your return, and the excess contribution did not cause your total contribution for the year to exceed $4,000 ($30,000 if a Simplified Employee Pension) the 10% premature distribution tax penalty will not apply. The excess contribution will not be included in your gross income, provided no deduction was taken for such excess contribution. The 6% excise tax will generally apply to such amount however. Alternate Method: An excess contribution may be eliminated in later years where the maximum allowable contribution is not made. Thus, if you make less than the maximum contribution allowed in any year after the excess contribution is made, the difference between the allowable deduction and the amount contributed is used to reduce the excess contribution and accumulated earnings. You may use part of your current year allowable deduction to correct an excess contribution provided no deduction was taken for the excess contribution in the prior tax year. Failure To Eliminate Excess Contribution: If an excess amount is contributed in one year and not eliminated in later years, the excess will be subject to a 6% excise tax each year until it has been eliminated. TAX STATUS Tax Deductible Status: Your contributions are generally tax deductible to the extent described in "CONTRIBUTIONS" and any income earned from the Investment is not taxable until it is distributed. Loss of Deferred Status: If any of the events prohibited under Section 4975 of the Code (such as any sale, exchange or leasing of any property between you and your IRA) occurs during the existence of your IRA, your account will be disqualified and the entire balance in your account will be treated as if distributed to you as of the first day of the year in which the prohibited event occurs. The "distribution" will be subject to ordinary income tax and, if you are under age 59 1/2 at the time, it will also be subject to the 10% penalty tax on premature distributions during the year in which you make such a prohibited sale, exchange or leasing of property of the like. Annual Information: Financial Information pertaining to your IRA will be provided to you annually by the Company. Penalty Reporting/IRS Form 5329: IRS Form 5329 should be filed with your tax return for each taxable year during which penalty taxes are imposed on excess contributions, premature distributions, prohibited transactions, and excess accumulations. DISTRIBUTIONS Premature Distributions: If you receive a payment from your IRA before you attain age 59 1/2, the payment will be considered a premature distribution unless such distribution is made on account of death or disability, the distribution is made over life or life expectancy, or a rollover contribution of the entire amount is made to another IRA within 60 days. In addition, payments made after 29 37 1996 to pay medical expenses which exceed 7.5% of your adjusted gross income and distributions to pay medical insurance for yourself, spouse and dependents if you have separated from employment and have received unemployment compensation under a state or federal program for at least 12 weeks will not be considered a premature distribution. The amount received in a premature distribution will then be included in your gross income for the taxable year of receipt. If no exception applies, your income tax liability for that tax year is increased by an amount equal to 10% of the amount includible in your gross income. This additional tax will apply only to the portion of a distribution which is includible in your income. Distributions from a SIMPLE IRA made in the first two years of date of participation are subject to a 25% premature penalty tax. Distributions up to the amount of your nondeductible contributions are not subject to the 10% penalty tax, but any earnings on your nondeductible contributions will be subject to the 10% penalty tax. Use IRS Form 5329 to report and calculate the 10% tax penalty. Minimum Required Distributions: Distributions must begin by April 1st of the calendar year following the year in which you attain age 70 1/2. You may elect to receive your entire interest in a single sum or you may elect a periodic distribution over either (a) your life, (b) the lives of you and your designated beneficiary, (c) a period not extending beyond your life expectancy, or (d) a period not extending beyond the life expectancy of you and your designated beneficiary (subject to certain limitations if your designated beneficiary is not your spouse.) 50% Excise Tax: Once payments are required to commence, a minimum distribution is calculated based on your life expectancy or the joint life expectancy of you and your beneficiary. A 50% nondeductible excise tax may be imposed on an under-distribution, representing the difference between the minimum payout required for the tax year in question and the amount actually paid out to you. Use IRS Form 5329 to calculate and report the tax. For example, if the minimum payout that you should receive is $1,000 for the taxable year and you only receive $600, an excise tax of $200 (50% of the $400 under-payment) may apply. Payments received under a life annuity commencing not later than age 70 1/2 avoid this excise tax. Death After Commencement of Distributions: If you die after distributions have begun, but before the entire interest has been distributed, the entire remaining balance must be distributed at least as rapidly as under the method of distribution in effect as of the date of death. Death Before Commencement of Distributions: If you die before distributions have begun, the entire amount remaining in your IRA, at the election of your beneficiary(ies) will be: I. paid out by December 31, of the 5th year of the anniversary of your death; or II. paid in equal or substantially equal payments over the life or life expectancy of a designated beneficiary(ies); or III. if your beneficiary is a surviving spouse, the IRA balance may be rolled over into a IRA in the surviving spouses' name. If your surviving spouse is the sole beneficiary, distributions are not required until the date you would have attained age 70 1/2. If your spouse then dies before distributions begin he or she will be treated as the IRA contract owner, and the restrictions of the above paragraph apply. Ordinary Income: Distributions from your IRA are taxed as ordinary income regardless of their source. (See "Nondeductible Contributions" below.) IRA distributions are not eligible for capital gains treatment. Payments from a life annuity spread the tax over the duration of your life. Payments under the IRA contract are taxable as you receive them. Estate And Gift Tax: The value of an annuity or other payment received by your beneficiary is generally includible in your gross estate, but does not constitute a taxable gift to the beneficiary. Excess Distribution Penalty: If you receive more than $160,000 annually from IRAs and other retirement plans, you will generally be subject to a 15% tax on the excess over $160,000. The 30 38 excess distribution penalty has been temporarily suspended and will not apply to distributions taken during 1997, 1998 and 1999. Excess Accumulation Penalty: An excess accumulation penalty may be imposed on your estate if you die with an excess accumulation in your IRA when combined with your other retirement plans. You should consult your tax advisor for further information. Note that the excess accumulation penalty continues to apply in 1997, 1998 and 1999. Nondeductible Contributions: To the extent that a distribution constitutes a return of your nondeductible contributions, it will not be included in your income. The amount of any distribution includible in income is the portion that bears the same ratio to the total distribution that your aggregate nondeductible contributions bear to the balance at the end of the year (calculated after adding back distributions during the year) of all your IRAs. Rollover To Another IRA: The proceeds of your IRA or any portion may be used as a rollover contribution to another IRA. This rollover will avoid taxation to the extent you reinvest the distribution within 60 days of when you receive it. A rollover of this nature may occur only once a year. FURTHER INFORMATION MAY BE OBTAINED FROM ANY DISTRICT OFFICE OF THE INTERNAL REVENUE SERVICE OR BY OBTAINING IRS PUBLICATION 590, INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS). 31 39 PART B Information Required in a Statement of Additional Information 40 STATEMENT OF ADDITIONAL INFORMATION dated , 1997 for THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES ISSUED BY THE TRAVELERS INSURANCE COMPANY This Statement of Additional Information ("SAI") is not a prospectus but relates to, and should be read in conjunction with, the Individual Variable Annuity Contract Prospectus dated , 1997. A copy of the Prospectus may be obtained by writing to The Travelers Insurance Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183-9061, or by calling (800) 842-9368. TABLE OF CONTENTS THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 DISTRIBUTION AND MANAGEMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 1 VALUATION OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 TELEPHONE TRANSFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 FEDERAL TAX CONSIDERATIONS. . . . . . . . . . . . .. . . . . . . . . . . . . . . . 5 INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
41 THE INSURANCE COMPANY The Travelers Insurance Company (the "Company"), is a stock insurance company chartered in 1864 in Connecticut and continuously engaged in the insurance business since that time. It is licensed to conduct life insurance business in all states of the United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company is an indirect wholly owned subsidiary of Travelers Group Inc., a financial services holding company. The Company's Home Office is located at One Tower Square, Hartford, Connecticut 06183. STATE REGULATION. The Company is subject to the laws of the state of Connecticut governing insurance companies and to regulation by the Insurance Commissioner of the state of Connecticut. An annual statement covering the operations of the Company for the preceding year, as well as its financial conditions as of December 31 of such year, must be filed with the Commissioner in a prescribed format on or before March 1 of each year. The Company's books and assets are subject to review or examination by the Commissioner or his agents at all times, and a full examination of its operations is conducted at least once every four years. The Company is also subject to the insurance laws and regulations of all other states in which it is licensed to operate. However, the insurance departments of each of these states generally apply the laws of the home state (jurisdiction of domicile) in determining the field of permissible investments. THE SEPARATE ACCOUNT. Separate Account PF meets the definition of a separate account under the federal securities laws, and will comply with the provisions of the 1940 Act. Additionally, the operations of Separate Account PF are subject to the provisions of Section 38a-433 of the Connecticut General Statutes which authorizes the Connecticut Insurance Commissioner to adopt regulations under it. Section 38a-433 contains no restrictions on the investments of the Separate Account, and the Commissioner has adopted no regulations under the Section that affect the Separate Account. PRINCIPAL UNDERWRITER Tower Square Securities, Inc. ("Tower Square"), an indirect, wholly-owned subsidiary of the Company, serves as principal underwriter for Separate Account PF and the Contracts. The offering is continuous. Tower Square's principal executive offices are located at One Tower Square, Hartford, Connecticut. It is anticipated that an affiliated broker dealer will become the principal underwriter during 1997. DISTRIBUTION AND MANAGEMENT AGREEMENT Under the terms of the Distribution and Management Agreement among Separate Account PF, the Company and Tower Square, the Company provides all administrative services and mortality and expense risk guarantees related to variable annuity contracts sold by the Company in connection with Separate Account PF. Tower Square performs the sales functions related to the Contracts. The Company reimburses Tower Square for commissions paid, other sales expenses and certain overhead expenses connected with sales functions. The Company also pays all costs (including costs associated with the preparation of sales literature); all costs of qualifying Separate Account PF and the variable annuity contract with regulatory authorities; the costs of proxy solicitation; and all custodian, 1 42 accountant's and legal fees. The Company also provides without cost to Separate Account PF all necessary office space, facilities, and personnel to manage its affairs. VALUATION OF ASSETS FUNDING OPTIONS: The value of the assets of each funding option is determined on each business day as of the close of the New York Stock Exchange. Each security traded on a national securities exchange is valued at the last reported sale price on the business day. If there has been no sale on that day, then the value of the security is taken to be the mean between the reported bid and asked prices on the business day or on the basis of quotations received from a reputable broker or any other recognized source. Any security not traded on a securities exchange but traded in the over-the-counter-market and for which market quotations are readily available is valued at the mean between the quoted bid and asked prices on the business day or on the basis of quotations received from a reputable broker or any other recognized source. Securities traded on the over-the-counter-market and listed securities with no reported sales are valued at the mean between the last reported bid and asked prices or on the basis of quotations received from a reputable broker or other recognized source. Short-term investments for which a quoted market price is available are valued at market. Short-term investments maturing in more than sixty days for which there is no reliable quoted market price are valued by "marking to market" (computing a market value based upon quotations from dealers or issuers for securities of a similar type, quality and maturity.) "Marking to market" takes into account unrealized appreciation or depreciation due to changes in interest rates or other factors which would influence the current fair values of such securities. Short-term investments maturing in sixty days or less for which there is no reliable quoted market price are valued at amortized cost which approximates market. THE CONTRACT VALUE: The value of an accumulation unit on any business day is determined by multiplying the value on the preceding business day by the net investment factor for the valuation period just ended. The net investment factor is used to measure the investment performance of a funding option from one valuation period to the next. The net investment factor for a funding option for any valuation period is equal to the sum of 1.000000 plus the net investment rate (the gross investment rate less any applicable funding option deductions during the valuation period relating to the mortality and expense risk charge and the administrative expense charge). The gross investment rate of a funding option is equal to (a) minus (b), divided by (c) where: (a) = investment income plus capital gains and losses (whether realized or unrealized); (b) = any deduction for applicable taxes (presently zero); and (c) = the value of the assets of the funding option at the beginning of the valuation period. The gross investment rate may be either positive or negative. A funding option's investment income includes any distribution whose ex-dividend date occurs during the valuation period. 2 43 ACCUMULATION UNIT VALUE. The value of an accumulation unit on any business day is determined by multiplying the value on the preceding business day by the net investment factor for the valuation period just ended. The net investment factor is calculated for each funding option and takes into account the investment performance, expenses and the deduction of certain expenses. ANNUITY UNIT VALUE. An annuity unit value as of any business day is equal to (a) the value of the annuity unit on the immediately preceding business day, multiplied by (b) the corresponding net investment factor for the valuation period just ended, divided by (c) the assumed net investment factor for the valuation period. (For example, the assumed net investment factor based on an annual assumed net investment rate of 3.0% for a Valuation Period of one day is 1.000081 and, for a period of two days, is 1.000081 x 1.000081.) PERFORMANCE INFORMATION From time to time, the Company may advertise several types of historical performance for the Funding Options of Separate Account PF. The Company may advertise the "standardized average annual total returns" of the Funding Option, calculated in a manner prescribed by the Securities and Exchange Commission, as well as the "non-standardized total return," as described below: STANDARDIZED METHOD. Quotations of average annual total returns are computed according to a formula in which a hypothetical initial investment of $1,000 is applied to the Funding Option, and then related to ending redeemable values over one-, five-, and ten-year periods, or for a period covering the time during which the Funding Option has been in existence, if less. If a Funding Option has been in existence for less than one year, the "since inception" total return performance quotations are year-to-date and are not average annual total returns. These quotations reflect the deduction of all recurring charges during each period (on a pro rata basis in the case of fractional periods). The deduction for the annual administrative charge ($30) is converted to a percentage of assets based on the actual fee collected (or anticipated to be collected, if a new product), divided by the average net assets for contracts sold (or anticipated to be sold) under the Prospectus to which this Statement of Additional Information relates. Each quotation assumes a total redemption at the end of each period with the assessment of any applicable Withdrawal Charge at that time. NON-STANDARDIZED METHOD. Non-standardized "total returns" will be calculated in a similar manner based on the performance of the Funding Options over a period of time, usually for the calendar year-to-date, and for the past one-, three-, five- and ten-year periods. Non-standardized total returns will not reflect the deduction of any applicable Withdrawal Charge or the $30 annual contract administrative charge, which, if reflected, would decrease the level of performance shown. The Withdrawal Charge is not reflected because the Contract is designed for long-term investment. GENERAL. Within the guidelines prescribed by the SEC and the National Association of Securities Dealers, Inc. ("NASD"), performance information may be quoted numerically or may be presented in a table, graph or other illustration. Advertisements may include data comparing performance to well-known indices of market performance (including, but not limited to, the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley Capital International's EAFE Index). Advertisements may also include published editorial comments and performance rankings compiled by independent organizations (including, but not 3 44 limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that monitor the performance of Separate Account PF and the Underlying Funds. For Funding Options that were in existence prior to the date they became available under Separate Account PF, the standardized and non-standardized average annual total return quotations will show the investment performance that such Funding Options would have achieved (reduced by the applicable charges) had they been held under the Contract for the period quoted. The total return quotations are based upon historical earnings and are not necessarily representative of future performance. An Owner's Contract Value at redemption may be more or less than original cost. Average annual total returns for each of the Funding Options computed according to the standardized and non-standardized methods for the period ending December 31, 1996 (beginning at inception date) are set forth in the following table. TOTAL RETURN CALCULATIONS FUNDING OPTIONS OF SEPARATE ACCOUNT PF
- ------------------------------------------------------------------------------------------------------------------------- STANDARDIZED NON-STANDARDIZED Inception Date - ------------------------------------------------------------------------------------------------------------------------- 1-YR 5-YR 10-YR 1-YR 3-YR 5-YR 10-YR Smith Barney Money Market Smith Barney International Equity Smith Barney Income and Growth Smith Barney High Income Smith Barney Appreciation MFS OTC MFS Research MFS Total Return Smith Barney Concert Select High Growth Smith Barney Concert Select Growth Smith Barney Concert Select Balanced Smith Barney Concert Select Conservative Smith Barney Concert Select Income
* Since inception. 4 45 TELEPHONE TRANSFERS A contract owner may place a transfer request by telephone. The telephone transfer privilege is available automatically; no special election is necessary for a contract owner to have this privilege. All transfers must be in accordance with the terms of the Contract. In certain cases, the Company may allow you to authorize your agent to make telephone transfers. Transfer instructions are currently accepted on each Valuation Date between 9:00 a.m. and 4:00 p.m., Eastern time, at 1-800-842-8573. Once instructions have been accepted, they may not be rescinded; however, new telephone instructions may be given the following day. If the transfer instructions are not in good order, the Company will not execute the transfer and will promptly notify the caller. The Company will make a reasonable effort to record each telephone transfer conversation, but in the event that no recording is effective or available, the contract owner will remain liable for each telephone transfer effected. Additionally, the Company is not liable for acting upon instructions believed to be genuine and in accordance with the procedures described above. As a result of this policy, the contract owner may bear the risk of loss in the event that the Company follows instructions that prove to be fraudulent. FEDERAL TAX CONSIDERATIONS The following description of the federal income tax consequences under this Contract is not exhaustive and is not intended to cover all situations. Because of the complexity of the law and the fact that the tax results will vary according to the factual status of the individual involved, tax advice may be needed by a person contemplating purchase of an annuity contract and by a contract owner or beneficiary who may make elections under a contract. For further information, please consult a qualified tax adviser. MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS Federal tax law requires that minimum annual distributions begin by April 1st of the calendar year following the calendar year in which a participant under a qualified plan, a Section 403(b) annuity, or an IRA attains age 70 1/2. Distributions must also begin or be continued according to required patterns following the death of the contract owner or the annuitant. NONQUALIFIED ANNUITY CONTRACTS Individuals may purchase tax-deferred annuities without tax law funding limits. The purchase payments receive no tax benefit, deduction or deferral, but increases in the value of the contract are generally deferred from tax until distribution. If a nonqualified annuity is owned by other than an individual, however, (e.g., by a corporation), the increases in value attributable to purchase payments made after February 28, 1986 are includable in income annually. Furthermore, for contracts issued after April 22, 1987, all deferred increases in value will be includable in the income of a contract owner when the contract owner transfers the contract without adequate consideration. If two or more annuity contracts are purchased from the same insurer within the same calendar year, distributions from any of them will be taxed based upon the amount of income in all of the same calendar year series of annuities. This will generally have the effect of causing taxes to be paid sooner on the deferred gain in the contracts. 5 46 Those receiving partial distributions made before the maturity date will generally be taxed on an income-first basis to the extent of income in the contract. If you are exchanging another annuity contract for this annuity, certain pre-August 14, 1982 deposits into an annuity contract that have been placed in the contract by means of a tax-deferred exchange under Section 1035 of the Code may be withdrawn first without income tax liability. This information on deposits must be provided to the Company by the other insurance company at the time of the exchange. There is income in the contract generally to the extent the cash value exceeds the investment in the contract. The investment in the contract is equal to the amount of premiums paid less any amount received previously which was excludable from gross income. Any direct or indirect borrowing against the value of the contract or pledging of the contract as security for a loan will be treated as a cash distribution under the tax law. The federal tax law requires that nonqualified annuity contracts meet minimum mandatory distribution requirements upon the death of the contract owner, including the first of joint owners. Failure to meet these requirements will cause the surviving joint owner, or the beneficiary, to lose the tax benefits associated with annuity contracts, i.e., primarily the tax deferral prior to distribution. The distribution required depends, among other things, upon whether an annuity option is elected or whether the new contract owner is the surviving spouse. Contracts will be administered by the Company in accordance with these rules and the Company will make a notification when payments should be commenced. INDIVIDUAL RETIREMENT ANNUITIES To the extent of earned income for the year and not exceeding $2,000 per individual, an individual may make deductible contributions to an individual retirement annuity (IRA). There are certain limits on the deductible amount based on the adjusted gross income of the individual and spouse and based on their participation in a retirement plan. If an individual is married and the spouse does not have earned income, the individual may establish IRAs for the individual and spouse. Purchase payments may then be made annually into IRAs for both spouses in the maximum amount of 100% of earned income up to a combined limit of $4,000. The Code provides for the purchase of a Simplified Employee Pension (SEP) plan. A SEP is funded through an IRA with an annual employer contribution limit of 15% of compensation up to $30,000 for each participant. SIMPLE Plan IRA Form Effective January 1, 1997, employers may establish a savings incentive match plan for employees ("SIMPLE plan") under which employees can make elective salary reduction contributions to an IRA based on a percentage of compensation of up to $6,000. (Alternatively, the employer can establish a SIMPLE cash or deferred arrangement under IRS Section 401(k)). Under a SIMPLE plan IRA, the employer must either make a matching contribution of 100% on the first 3% or 7% contribution for all eligible employees. Early withdrawals are subject to the 10% early withdrawal penalty generally applicable to IRAs, except that an early withdrawal by an employee under a SIMPLE plan IRA, within the first two years of participation, shall be subject to a 25% early withdrawal tax. QUALIFIED PENSION AND PROFIT-SHARING PLANS 6 47 Under a qualified pension or profit-sharing plan, purchase payments made by an employer are not currently taxable to the participant and increases in the value of a contract are not subject to taxation until received by a participant or beneficiary. Distributions are taxable to the participant or beneficiary as ordinary income in the year of receipt. Any distribution that is considered the participant's "investment in the contract" is treated as a return of capital and is not taxable. Certain lump-sum distributions may be eligible for special forward averaging tax treatment for certain classes of individuals. FEDERAL INCOME TAX WITHHOLDING The portion of a distribution which is taxable income to the recipient will be subject to federal income tax withholding as follows: 1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR ARRANGEMENTS OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS There is a mandatory 20% tax withholding for plan distributions that are eligible for rollover to an IRA or to another retirement plan but that are not directly rolled over. A distribution made directly to a participant or beneficiary may avoid this result if: (a) a periodic settlement distribution is elected based upon a life or life expectancy calculation, or (b) a term-for-years settlement distribution is elected for a period of ten years or more, payable at least annually, or (c) a minimum required distribution as defined under the tax law is taken after the attainment of the age of 70 1/2 or as otherwise required by law. A distribution including a rollover that is not a direct rollover will be subject to the 20% withholding, and a 10% additional tax penalty may apply to any amount not added back in the rollover. The 20% withholding may be recovered when the participant or Beneficiary files a personal income tax return for the year if a rollover was completed within 60 days of receipt of the funds, except to the extent that the participant or spousal Beneficiary is otherwise underwithheld or short on estimated taxes for that year. 2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS) To the extent not described as requiring 20% withholding in 1 above, the portion of a non-periodic distribution which constitutes taxable income will be subject to federal income tax withholding, if the aggregate distributions exceed $200 for the year, unless the recipient elects not to have taxes withheld. If no such election is made, 10% of the taxable distribution will be withheld as federal income tax. Election forms will be provided at the time distributions are requested. This form of withholding applies to all annuity programs. 3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE YEAR) The portion of a periodic distribution which constitutes taxable income will be subject to federal income tax withholding under the wage withholding tables as if the recipient were married claiming three exemptions. A recipient may elect not to have income taxes withheld or have income taxes 7 48 withheld at a different rate by providing a completed election form. Election forms will be provided at the time distributions are requested. This form of withholding applies to all annuity programs. As of January 1, 1997, a recipient receiving periodic payments (e.g., monthly or annual payments under an annuity option) which total $14,850 or less per year, will generally be exempt from periodic withholding. Recipients who elect not to have withholding made are liable for payment of federal income tax on the taxable portion of the distribution. All recipients may also be subject to penalties under the estimated tax payment rules if withholding and estimated tax payments are not sufficient to cover tax liabilities. Recipients who do not provide a social security number or other taxpayer identification number will not be permitted to elect out of withholding. Additionally, U.S citizens residing outside of the country, or U.S. legal residents temporarily residing outside the country, are not permitted to elect out of withholding. INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P., independent accountants, 100 Pearl Street, Hartford, Connecticut, are the independent auditors for Separate Account PF. The services provided to Separate Account PF will include primarily the audit of the Separate Account's financial statements. Financial statements for Separate Account PF are not available since the Separate Account had no assets or activity as of the effective date of this SAI. The consolidated financial statements of the Travelers Insurance Company and Subsidiaries as of December 31, 1996 and 1995, and for each of the years in the three-year period ended December 31, 1996, have been included herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, and upon the authority of said firm as experts in accounting and auditing. 8 49 PART C Other Information Item 24. Financial Statements and Exhibits (a) The financial statements of the Registrant will not be provided since the Registrant will have no assets as of the effective date of the Registrant Statement. The consolidated financial statements of The Travelers Insurance Company and Subsidiaries and the report of Independent Accountants will be provided in a pre-effective amendment. (b) Exhibits 1. Resolution of The Travelers Insurance Company Board of Directors authorizing the establishment of the Registrant. 2. Not Applicable. 3(a). Form of Distribution and Management Agreement among the Registrant, The Travelers Insurance Company and Tower Square Securities, Inc. 3(b). Form of Selling Agreement. To be filed by amendment. 4. Variable Annuity Contract. 5. Not Applicable. 6(a). Charter of The Travelers Insurance Company, as amended on October 19, 1994. (Incorporated herein by reference to Exhibit 3(a)(i) to Registration Statement on Form S-2, File No. 33-58677, filed via Edgar on April 18, 1995.) 6(b). By-Laws of The Travelers Insurance Company, as amended on October 20, 1994. (Incorporated herein by reference to Exhibit 3(b)(i) to the Registration Statement on Form S-2, File No. 33-58677, filed via Edgar on April 18, 1995.) 9. Opinion of Counsel as to the legality of securities being registered. 10(a). Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants. To be filed by amendment. 13. Computation of Total Return Calculations - Standardized and Non-Standardized. To be filed by amendment. 15. Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as signatory for Michael A. Carpenter, Jay S. Benet, George C. Kokulis, Robert I. Lipp, Ian R. Stuart, Katherine M. Sullivan and Marc P. Weill. 50 Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant OWNERSHIP OF THE TRAVELERS INSURANCE COMPANY
Company State of Organization Ownership Principal Business - ------- --------------------- --------- ------------------ Travelers Group Inc. Delaware Publicly Held ---------------- Associated Madison Companies Inc. Delaware 100.00 ---------------- PFS Services Inc. Georgia 100.00 ---------------- The Travelers Insurance Group, Inc. Connecticut 100.00 ---------------- The Travelers Insurance Company Connecticut 100.00 Insurance
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE TRAVELERS INSURANCE COMPANY
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ AC Health Ventures, Inc. Delaware 100.00 Inactive AMCO Biotech, Inc. Delaware 100.00 Inactive Associated Madison Companies, Inc. Delaware 100.00 Holding company American National Life Insurance (T & C), Ltd. Nevis 100.00 Insurance ERISA Corporation New York 100.00 Inactive Mid-America Insurance Services, Inc. Georgia 100.00 Third party administrator National Marketing Corporation Pennsylvania 100.00 Inactive PFS Services, Inc. Georgia 100.00 General partner and holding company The Travelers Insurance Group Inc. Connecticut 100.00 Holding company Constitution Plaza, Inc. Connecticut 100.00 Real estate brokerage
51
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ KP Properties Corporation Massachusetts 100.00 Real estate KPI 85, Inc. Massachusetts 100.00 Real estate KRA Advisers Corporation Massachusetts 100.00 Real estate KRP Corporation Massachusetts 100.00 Real estate La Metropole S.A. Belgium 98.83 P-C insurance/reinsurance The Prospect Company Delaware 100.00 Investments 89th & York Avenue Corporation New York 100.00 Real estate 979 Third Avenue Corporation Delaware 100.00 Real estate Meadow Lane, Inc. Georgia 100.00 Real estate development Panther Valley, Inc. New Jersey 100.00 Real estate management Prospect Management Services Company Delaware 100.00 Real estate management The Travelers Asset Funding Corporation Connecticut 100.00 Investment adviser Travelers Capital Funding Corporation Connecticut 100.00 Furniture/equipment The Travelers Insurance Company Connecticut 100.00 Insurance Applied Expert Systems Inc. Massachusetts 23.40 EDP Software The Plaza Corporation Connecticut 100.00 Holding company The Copeland Companies (Holding Company) New Jersey 100.00 Holding company American Odyssey Funds Management, Inc. New Jersey 100.00 Investment advisor American Odyssey Funds, Inc. Maryland 100.00 Investment management Copeland Associates, Inc. Delaware 100.00 Fixed/variable annuities Copeland Associates Agency of Ohio, Inc. Ohio 99.00 Fixed/variable annuities Copeland Associates of Alabama, Inc. Alabama 100.00 Fixed/variable annuities Copeland Associates of Montana, Inc. Montana 100.00 Fixed/variable annuities Copeland Associates of Nevada, Inc. Nevada 100.00 Insurance Copeland Benefits Management Company New Jersey 51.00 Investment marketing Copeland Equities, Inc. New Jersey 100.00 Fixed/variable annuities Donald F. Smith & Associates New Jersey 100.00 Insurance agency Donald F. Smith Insurance Benefit Services, Inc. Massachusetts 100.00 Insurance agent H.C. Copeland Associates, Inc. of Massachusetts Massachusetts 100.00 Fixed annuities Smith Annuity Services, Inc. New Jersey 100.00 Broker dealer
2 52
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Copeland Financial Services, Inc. New Jersey 100.00 Investment advisory services. Copeland Mortgage Services, Inc. New Jersey 100.00 Mortgage services H.C. Copeland and Associates, Inc. of Texas Texas 100.00 Fixed/variable annuities Three Parkway Inc. - I Pennsylvania 100.00 Investment real estate Three Parkway Inc. - II Pennsylvania 100.00 Investment real estate Three Parkway Inc. - III Pennsylvania 100.00 Investment real estate Tower Square Securities, Inc. Connecticut 100.00 Broker dealer Travelers Asset Management International Corporation New York 100.00 Investment adviser Travelers Distribution Company Delaware 100.00 Broker dealer Travelers Investment Adviser, Inc. Delaware 100.00 Investment advisor Travelers/Net Plus Insurance Agency, Inc. Massachusetts 100.00 Insurance agency Travelers/Net Plus, Inc. Connecticut 100.00 Insurance agency Travelers/Net Plus Agency of Ohio, Inc. Ohio 100.00 Insurance agency The Travelers Life and Annuity Company Connecticut 100.00 Life insurance Travelers Group Investment Management, LLC Delaware 50.00 Investment advisor Travelers Insurance Holdings Inc. Georgia 100.00 Holding company AC RE, Ltd. Bermuda 100.00 Reinsurance American Financial Life Insurance Company Texas 100.00 Insurance Primerica Life Insurance Company Massachusetts 100.00 Life insurance National Benefit Life Insurance Company New York 100.00 Insurance Primerica Financial Services (Canada) Ltd. Canada 100.00 Holding company PFSL Investments Canada Ltd. Canada 100.00 Mutual fund dealer Primerica Financial Services Ltd. Canada 82.82 General agent Primerica Life Insurance Company of Canada Canada 100.00 Life insurance The Travelers Insurance Corporation Proprietary Limited Australia 100.00 Inactive Travelers Canada Corporation Canada 100.00 Inactive Travelers Mortgage Securities Corporation Delaware 100.00 Collateralized obligations Travelers Property Casualty Corp. Delaware 82.00 Holding company The Standard Fire Insurance Company Connecticut 100.00 Insurance company AE Properties, Inc. California 100.00 Insurance
3 53
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Community Rehabilitation Investment Corporation Connecticut 100.00 Investment services The Automobile Insurance Company of Hartford, Connecticut 100.00 Insurance company Connecticut TravCal Secure Insurance Company California 100.00 Auto insurance TravCal Indemnity Company California 100.00 Auto insurance Travelers Personal Security Insurance Company Connecticut 100.00 Insurance company Travelers Property Casualty Insurance Company Connecticut 100.00 Insurance company Travelers Property Casualty Insurance Company of Illinois 100.00 Insurance company Illinois The Travelers Indemnity Company Connecticut 100.00 P-C insurance Commercial Insurance Resources, Inc. Delaware 100.00 Holding company Gulf Insurance Company Missouri 100.00 P-C insurance Atlantic Insurance Company Texas 100.00 P-C insurance Gulf Group Lloyds Texas 0.00 P-C insurance Gulf Risk Services, Inc. Delaware 100.00 Claims/risk management Gulf Underwriters Insurance Company Missouri 100.00 P-C ins/surplus lines Select Insurance Company Texas 100.00 P-C insurance Countersignature Agency, Inc. Florida 100.00 Countersign ins policies First Floridian Auto and Home Insurance Company Florida 100.00 Insurance company First Trenton Indemnity Company New Jersey 100.00 P-C insurance Red Oak Insurance Company New Jersey 100.00 Insurance company Laramia Insurance Agency, Inc. North Carolina 100.00 Flood insurance Secure Affinity Agency, Inc. Delaware 100.00 P-C insurance agency The Charter Oak Fire Insurance Company Connecticut 100.00 P-C insurance The Parker Realty and Insurance Agency, Inc. Vermont 58.00 Real estate The Phoenix Insurance Company Connecticut 100.00 P-C insurance Constitution State Service Company Montana 100.00 Service company The Travelers Indemnity Company of America Georgia 100.00 P-C insurance The Travelers Indemnity Company of Connecticut Connecticut 100.00 Insurance The Travelers Indemnity Company of Illinois Illinois 100.00 P-C insurance The Premier Insurance Company of Massachusetts Massachusetts 100.00 Insurance The Travelers Home and Marine Insurance Company Indiana 100.00 P-C insurance
4 54
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ The Travelers Indemnity Company of Missouri Missouri 100.00 P-C insurance The Travelers Lloyds Insurance Company Texas 100.00 Non-life insurance The Travelers Marine Corporation California 100.00 General insurance brokerage TI Home Mortgage Brokerage, Inc. Delaware 100.00 Mortgage brokerage services TravCo Insurance Company Indiana 100.00 P-C insurance Travelers Bond Investments, Inc. Connecticut 100.00 Bond investments Travelers General Agency of Hawaii, Inc. Hawaii 100.00 Insurance agency Travelers Medical Management Services Inc. Delaware 100.00 Managed care Travelers Specialty Property Casualty Company, Inc. Connecticut 100.00 Insurance management Travelers Casualty and Surety Company Connecticut 100.00 Insurance company AE Development Group, Inc. Connecticut 100.00 Insurance Aetna Casualty & Surety Company of Canada Canada 100.00 Insurance company Aetna Information Services Inc. Connecticut 50.00 Insurance Aetna National Accounts U.K. Limited United Kingdom 100.00 Insurance company Charter Oak Services Corporation New York 100.00 Insurance Farmington Casualty Company Connecticut 100.00 Insurance company Farmington Management, Inc. Connecticut 100.00 Management services Travelers Casualty and Surety Company of America Connecticut 100.00 Insurance company Travelers Casualty and Surety Company of Illinois Illinois 100.00 Insurance company Travelers Casualty Company of Connecticut Connecticut 100.00 Insurance company Travelers Commercial Insurance Company Connecticut 100.00 Insurance company Travelers Excess and Surplus Lines Company Connecticut 100.00 Insurance Company Travelers Lloyds of Texas Insurance Company Texas 100.00 Insurance company Urban Diversified Properties, Inc. Connecticut 100.00 Insurance Primerica Client Services, Inc. Delaware 100.00 Discount purchase club Primerica Convention Services, Inc. Georgia 100.00 Convention planner Primerica Finance Corporation Delaware 100.00 Holding company PFS Distributors, Inc. Georgia 100.00 General partner PFS Investments Inc. Georgia 100.00 Broker dealer PFS T.A., Inc. Delaware 100.00 Joint venture partner
5 55
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Primerica Financial Services Home Mortgages, Inc. Georgia 100.00 Mortgage loan broker Primerica Financial Services, Inc. Nevada 100.00 General agency Primerica Financial Services Agency of New York, Inc. New York 100.00 General agency licensing Primerica Financial Services Insurance Marketing of Connecticut, Inc. Connecticut 100.00 General agency licensing Primerica Financial Services Insurance Marketing of Idaho, Inc. Idaho 100.00 General agency licensing Primerica Financial Services Insurance Marketing of Nevada, Inc. Nevada 100.00 General agency licensing Primerica Financial Services Insurance Marketing of Pennsylvania, Inc. Pennsylvania 100.00 General agency licensing Primerica Financial Services Insurance Marketing of the Virgin Islands, Inc. United States Virgin Islands 100.00 General agency licensing Primerica Financial Services Insurance Marketing of Wyoming, Inc. Wyoming 100.00 General agency licensing Primerica Financial Services Insurance Marketing, Inc. Delaware 100.00 General agency licensing Primerica Financial Services of Alabama, Inc. Alabama 100.00 General agency licensing Primerica Financial Services of Arizona, Inc. Arizona 100.00 General agency licensing Primerica Financial Services of Kentucky Inc. Kentucky 100.00 General agency licensing Primerica Financial Services of New Mexico, Inc. New Mexico 100.00 General agency licensing Primerica Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 General agency licensing Primerica Insurance Marketing Services of Puerto Rico, Inc. Puerto Rico 100.00 Insurance agency Primerica Insurance Services of Louisiana, Inc. Louisiana 100.00 General agency licensing Primerica Insurance Services of Maryland, Inc. Maryland 100.00 General agency licensing Primerica Services, Inc. Georgia 100.00 Print operations RCM Acquisition Inc. Delaware 100.00 Investments SCN Acquisitions Company Delaware 100.00 Investments SL&H Reinsurance, Ltd. Nevis 100.00 Reinsurance Southwest Service Agreements, Inc. North Carolina 100.00 Warranty/service agreements Southwest Warranty Corporation Florida 100.00 Extended automobile warranty Berg Associates New Jersey 100.00 Inactive CCC Holdings, Inc. Delaware 100.00 Holding company Commercial Credit Company Delaware 100.00 Holding company. American Health and Life Insurance Company Maryland 100.00 LH&A Insurance Brookstone Insurance Company Vermont 100.00 Insurance managers CC Finance Company, Inc. New York 100.00 Consumer lending
6 56
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ CC Financial Services, Inc. Hawaii 100.00 Consumer lending CCC Fairways, Inc. Delaware 100.00 Investment company Chesapeake Appraisal and Settlement Services Inc. Maryland 100.00 Appraisal/title Chesapeake Appraisal and Settlement Services Agency of Ohio Inc. Ohio 100.00 Appraisal/Title City Loan Financial Services, Inc. Ohio 100.00 Direct loan City Loan Financial, Inc. Ohio 100.00 Consumer finance Commercial Credit Banking Corporation Oregon 100.00 Consumer finance Commercial Credit Consumer Services, Inc. Minnesota 100.00 Consumer finance Commercial Credit Corporation (Hawaii) Hawaii 100.00 Financial services Commercial Credit Corporation (AL) Alabama 100.00 Consumer finance Commercial Credit Corporation (CA) California 100.00 Consumer finance Commercial Credit Corporation (IA) Iowa 100.00 Consumer finance Commercial Credit of Alabama, Inc. Delaware 100.00 Consumer lending Commercial Credit of Mississippi, Inc. Delaware 100.00 Consumer finance Commercial Credit Corporation (KY) Kentucky 100.00 Consumer finance Certified Insurance Agency, Inc. Kentucky 100.00 Insurance agency Commercial Credit Investment, Inc. Kentucky 100.00 Investment company National Life Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency Union Casualty Insurance Agency, Inc. Kentucky 100.00 Insurance agency Commercial Credit Corporation (MD) Maryland 100.00 Consumer finance Action Data Services, Inc. Missouri 100.00 Data processing Commercial Credit Plan, Incorporated (OK) Oklahoma 100.00 Consumer finance Commercial Credit Corporation (NY) New York 100.00 Consumer finance Commercial Credit Corporation (SC) South Carolina 100.00 Consumer finance Commercial Credit Corporation (WV) West Virginia 100.00 Consumer finance Commercial Credit Corporation NC North Carolina 100.00 Consumer finance Commercial Credit Europe, Inc. Delaware 100.00 Inactive Commercial Credit Far East Inc. Delaware 100.00 Inactive Commercial Credit Insurance Services, Inc. Maryland 100.00 Insurance broker Commercial Credit Insurance Agency (P&C) of Mississippi, Inc. Mississippi 100.00 Insurance agency
7 57
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Commercial Credit Insurance Agency of Alabama, Inc. Alabama 100.00 Insurance agency Commercial Credit Insurance Agency of Hawaii, Inc. Hawaii 100.00 Insurance agency Commercial Credit Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency Commercial Credit Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance agency Commercial Credit Insurance Agency of Nevada, Inc. Nevada 100.00 Credit LH&A, P-C insurance Commercial Credit Insurance Agency of New Mexico, Inc. New Mexico 100.00 Insurance agency/Broker Commercial Credit Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance agency/broker Commercial Credit International, Inc. Delaware 100.00 Holding company Commercial Credit International Banking Corporation Oregon 100.00 International lending Commercial Credit Corporation CCC Limited Canada 100.00 Second mortgage loans Commercial Credit Services do Brazil Ltda. Brazil 99.00 Inactive Commercial Credit Services Belgium S.A. Belgium 100.00 Inactive Commercial Credit Limited Delaware 100.00 Inactive Commercial Credit Loan, Inc. (NY) New York 100.00 Consumer finance Commercial Credit Loans, Inc. (DE) Delaware 100.00 Consumer finance Commercial Credit Loans, Inc. (OH) Ohio 100.00 Consumer finance Commercial Credit Loans, Inc. (VA) Virginia 100.00 Consumer finance Commercial Credit Management Corporation Maryland 100.00 Intercompany services Commercial Credit Plan Incorporated (TN) Tennessee 100.00 Consumer finance Commercial Credit Plan Incorporated (UT) Utah 100.00 Consumer finance Commercial Credit Plan Incorporated of Georgetown Delaware 100.00 Consumer finance Commercial Credit Plan Industrial Loan Company Virginia 100.00 Consumer finance Commercial Credit Plan, Incorporated (CO) Colorado 100.00 Consumer finance Commercial Credit Plan, Incorporated (DE) Delaware 100.00 Consumer finance Commercial Credit Plan, Incorporated (GA) Georgia 100.00 Consumer finance Commercial Credit Plan, Incorporated (MO) Missouri 100.00 Consumer finance Commercial Credit Securities, Inc. Delaware 100.00 Broker dealer DeAlessandro & Associates, Inc. Delaware 100.00 Inactive Park Tower Holdings, Inc. Delaware 100.00 Holding company CC Retail Services, Inc. Delaware 100.00 Leasing, financing
8 58
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Troy Textiles, Inc. Delaware 100.00 Inactive Commercial Credit Development Corporation Delaware 100.00 Direct loan Myers Park Properties, Inc. Delaware 100.00 Inactive Travelers Home Mortgage Services of Alabama, Inc. Delaware 100.00 Inactive Penn Re, Inc. North Carolina 100.00 Management company Plympton Concrete Products, Inc. Delaware 100.00 Inactive Resource Deployment, Inc. Texas 100.00 Management company Security Pacific Finance System Incorporated Delaware 100.00 Holding company BA Financial Management Services, Inc. Delaware 100.00 Mgt, payroll, leaseholding Dealers Credit, Inc. Delaware 100.00 Insurance agent Security Pacific Consumer Discount Company Pennsylvania 100.00 Consumer loans Security Pacific Finance Credit Corp. Delaware 100.00 Consumer credit Security Pacific Financial Services Inc. Delaware 100.00 Consumer credit Security Pacific Financial Services of Minnesota Inc. Minnesota 100.00 Consumer credit Security Pacific Financial Services of Nevada Inc. Nevada 100.00 Credit insurance Security Pacific Financial Services of West Virginia Inc. West Virginia 100.00 Industrial loans SPF Advertising Agency, Inc. Kansas 100.00 Advertising discounts The Midwestern Agency Corporation, Inc. Iowa 100.00 Insurance commissions Security Pacific Financial Services of Des Moines Inc. Iowa 100.00 Consumer loans Security Pacific Mortgage Corporation Virginia 100.00 Second mortgages The Travelers Bank Delaware 100.00 Banking services The Travelers Bank USA Delaware 100.00 Credit card bank Travelers Home Equity, Inc. North Carolina 100.00 Financial services CC Consumer Services of Alabama, Inc. Alabama 100.00 Financial services CC Home Lenders Financial, Inc. Georgia 100.00 Financial services CC Home Lenders, Inc. Ohio 100.00 Financial services Commercial Credit Corporation (TX) Texas 100.00 Consumer finance Commercial Credit Financial of Kentucky, Inc. Kentucky 100.00 Consumer finance Commercial Credit Financial of West Virginia, Inc. West Virginia 100.00 Consumer finance Commercial Credit Plan Consumer Discount Company Pennsylvania 100.00 Financial services
9 59
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Commercial Credit Services of Kentucky, Inc. Kentucky 100.00 Financial services. Travelers Home Mortgage Services, Inc. North Carolina 100.00 Financial services Travelers Home Mortgage Services of Pennsylvania, Inc. Pennsylvania 100.00 Financial services Triton Insurance Company Missouri 100.00 P-C insurance Verochris Corporation Delaware 100.00 Joint venture company AMC Aircraft Corp. Delaware 100.00 Aviation World Service Life Insurance Company Colorado 100.00 Life insurance Greenwich Street Capital Partners, Inc. Delaware 100.00 Investments Greenwich Street Investments, Inc. Delaware 100.00 Investments Greenwich Street Capital Partners Offshore Holdings, Inc. Delaware 100.00 Investments Mirasure Insurance Company, Ltd. Bermuda 100.00 Inactive Pacific Basin Investments Ltd. Delaware 100.00 Inactive Primerica Corporation (WY) Wyoming 100.00 Inactive Primerica, Inc. Delaware 100.00 Name saver Smith Barney Corporate Trust Company Delaware 100.00 Trust company Smith Barney Holdings Inc. Delaware 100.00 Holding company Nextco Inc. Delaware 100.00 Purchasing R-H Capital, Inc. Delaware 100.00 Investments R-H Sports Enterprises Inc Georgia 100.00 Sports representation SB Cayman Holdings I Inc. Delaware 100.00 Holding company Smith Barney Private Trust Company (Cayman) Limited Cayman Islands 50.00 Trust company Greenwich (Cayman) I Limited Cayman Islands 50.00 Corporate services Greenwich (Cayman) II Limited Cayman Islands 50.00 Corporate services Greenwich (Cayman) III Limited Cayman Islands 50.00 Corporate services SB Cayman Holdings II Inc. Delaware 100.00 Holding company Smith Barney Private Trust Company (Cayman) Limited Cayman Islands 50.00 Trust company Greenwich (Cayman) I Limited Cayman Islands 50.00 Corporate services Greenwich (Cayman) II Limited Cayman Islands 50.00 Corporate services Greenwich (Cayman) III Limited Cayman Islands 50.00 Corporate services SB Cayman Holdings III Inc. Delaware 100.00 Holding company
10 60
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Smith Barney Credit Services (Cayman) Ltd. Cayman Islands 50.00 Corporate services SB Cayman Holdings IV Inc. Delaware 100.00 Holding company Smith Barney Credit Services (Cayman) Ltd. Cayman Islands 50.00 Corporate services Smith Barney (Delaware) Inc. Delaware 100.00 Holding company 1345 Media Corp. Delaware 100.00 Holding company Corporate Realty Advisors, Inc. Delaware 100.00 Realty trust adviser IPO Holdings Inc. Delaware 100.00 Holding company Institutional Property Owners, Inc. V Delaware 100.00 Investments Institutional Property Owners, Inc. VI Delaware 100.00 General partner MLA 50 Corporation Delaware 100.00 Limited partner MLA GP Corporation Delaware 100.00 General partner Smith Barney Acquisition Corporation Delaware 100.00 Offshore fund adviser Smith Barney Acquisition Fund, Inc. Cayman Islands 100.00 Commodities fund Smith Barney Global Capital Management, Inc. Delaware 100.00 Investment management Smith Barney Realty, Inc. Delaware 100.00 Investments Smith Barney Risk Investors, Inc. Delaware 100.00 Investments Smith Barney Venture Corp. Delaware 100.00 Investments Smith Barney (Ireland) Limited Ireland 100.00 Fund management Smith Barney Asia Inc. Delaware 100.00 Investment banking Smith Barney Asset Management Group (Asia) Pte. Ltd. Singapore 100.00 Asset management Smith Barney Canada Inc. Canada 100.00 Investment dealer Smith Barney Capital Services Inc. Delaware 100.00 Derivative product transactions Smith Barney Cayman Islands, Ltd. Cayman Islands 100.00 Securities trading Smith Barney Commercial Corp. Delaware 100.00 Commercial credit Smith Barney Commercial Corporation Asia Limited Hong Kong 99.00 Commodities trading Smith Barney Europe Holdings, Ltd. United Kingdom 100.00 Holding company Smith Barney Europe, Ltd. United Kingdom 100.00 Corporate finance Smith Barney Futures Management Inc. Delaware 100.00 Commodities pool operator Smith Barney Offshore Fund Ltd. Delaware 100.00 Commodity pool Smith Barney Overview Fund PLC Dublin 100.00 Commodity fund
11 61
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Smith Barney Inc. Delaware 100.00 Broker dealer KEB Smith Barney Securities Co., Ltd. Korea 49.00 Broker dealer SBHU Life Agency, Inc. Delaware 100.00 Insurance brokerage Robinson-Humphrey Insurance Services Inc. Georgia 100.00 Insurance brokerage Robinson-Humphrey Insurance Services of Alabama, Inc. Alabama 100.00 Insurance brokerage SBHU Life Agency of Arizona, Inc. Arizona 100.00 Insurance brokerage SBHU Life Agency of Indiana, Inc. Indiana 100.00 Insurance brokerage SBHU Life Agency of Utah, Inc. Utah 100.00 Insurance brokerage SBHU Life Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance brokerage SBS Insurance Agency of Hawaii, Inc. Hawaii 100.00 Insurance brokerage SBS Insurance Agency of Idaho, Inc. Idaho 100.00 Insurance brokerage SBS Insurance Agency of Maine, Inc. Maine 100.00 Insurance brokerage SBS Insurance Agency of Montana, Inc. Montana 100.00 Insurance brokerage SBS Insurance Agency of Nevada, Inc. Nevada 100.00 Insurance brokerage SBS Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance brokerage SBS Insurance Agency of South Dakota, Inc. South Dakota 100.00 Insurance brokerage SBS Insurance Agency of Wyoming, Inc. Wyoming 100.00 Insurance brokerage SBS Insurance Brokerage Agency of Arkansas, Inc. Arkansas 100.00 Insurance brokerage SBS Insurance Brokers of Kentucky, Inc. Kentucky 100.00 Insurance brokerage SBS Insurance Brokers of New Hampshire, Inc. New Hampshire 100.00 Insurance brokerage SBS Insurance Brokers of North Dakota, Inc. North Dakota 100.00 Insurance brokerage SBS Life Insurance Agency of Puerto Rico, Inc. Puerto Rico 100.00 Insurance brokerage SLB Insurance Agency of Maryland, Inc. Maryland 100.00 Insurance brokerage Smith Barney Life Agency Inc. Louisiana 100.00 Insurance brokerage Smith Barney (Hong Kong) Limited Hong Kong 100.00 Broker dealer Smith Barney (Netherlands) Inc. Delaware 100.00 Broker dealer Smith Barney International Incorporated Oregon 100.00 Broker dealer Smith Barney (Singapore) Pte Ltd Singapore 100.00 Commodities Smith Barney Pacific Holdings, Inc. British Virgin Islands 100.00 Holding company Smith Barney (Asia) Limited Hong Kong 100.00 Broker dealer
12 62
% of Voting Securities Owned Directly State of or Indirectly by Organization The Travelers Inc. Principal Business ------------ ------------------ ------------------ Smith Barney (Pacific) Limited Hong Kong 100.00 Commodities dealer Smith Barney Securities Pte Ltd Singapore 100.00 Securities brokerage Smith Barney Puerto Rico Inc. Puerto Rico 100.00 Broker dealer The Robinson-Humphrey Company, Inc. Delaware 100.00 Broker dealer Smith Barney Mortgage Brokers Inc. Delaware 100.00 Mortgage brokerage Smith Barney Mortgage Capital Corp. Delaware 100.00 Mortgage-backed securities Smith Barney Mortgage Capital Group, Inc. Delaware 100.00 Mortgage trading Smith Barney Mutual Funds Management Inc. Delaware 100.00 Investment management Smith Barney Asset Management Co., Ltd. Japan 100.00 Investment advisor Smith Barney Strategy Advisers Inc. Delaware 100.00 Investment management E.C. Tactical Management S.A. Luxembourg 100.00 Investment management Travelers Group Investment Management, LLC Delaware 50.00 Investment advisor Smith Barney Offshore, Inc. Delaware 100.00 Decathlon Fund advisor Decathlon Offshore Limited Cayman Islands 100.00 Commodity fund Smith Barney Securities Investment Consulting Co. Ltd. Taiwan 99.00 Investment analysis Smith Barney Shearson (Chile) Corredora de Seguro Limitada Chile 100.00 Insurance brokerage Structured Mortgage Securities Corporation Delaware 100.00 Mortgage-backed securities The Travelers Investment Management Company Connecticut 100.00 Investment advisor Smith Barney Private Trust Company New York 100.00 Trust company. Smith Barney Private Trust Company of Florida Florida 100.00 Trust company Tinmet Corporation Delaware 100.00 Inactive Travelers Group Diversified Distribution Services, Inc. Delaware 100.00 Alternative marketing Travelers Group Exchange, Inc. Delaware 100.00 Insurance agency Travelers Services Inc. Delaware 100.00 Holding company Tribeca Management Inc. Delaware 100.00 Management services TRV Employees Investments, Inc. Delaware 100.00 Investments TRV/RCM Corp. Delaware 100.00 Inactive TRV/RCM LP Corp. Delaware 100.00 Inactive
13 63 Item 27. Number of Contract Owners Not applicable. Item 28. Indemnification Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding indemnification of directors and officers of Connecticut corporations provides in general that Connecticut corporations shall indemnify their officers, directors and certain other defined individuals against judgments, fines, penalties, amounts paid in settlement and reasonable expenses actually incurred in connection with proceedings against the corporation. The corporation's obligation to provide such indemnification generally does not apply unless (1) the individual is successful on the merits in the defense of any such proceeding; or (2) a determination is made (by persons specified in the statute) that the individual acted in good faith and in the best interests of the corporation; or (3) the court, upon application by the individual, determines in view of all of the circumstances that such person is fairly and reasonably entitled to be indemnified, and then for such amount as the court shall determine. With respect to proceedings brought by or in the right of the corporation, the statute provides that the corporation shall indemnify its officers, directors and certain other defined individuals, against reasonable expenses actually incurred by them in connection with such proceedings, subject to certain limitations. C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation cannot indemnify a director or officer to an extent either greater or less than that authorized by the statute, e.g., pursuant to its certificate of incorporation, by-laws, or any separate contractual arrangement. However, the statute does specifically authorize a corporation to procure indemnification insurance to provide greater indemnification rights. The premiums for such insurance may be shared with the insured individuals on an agreed basis. Travelers Group Inc. also provides liability insurance for its directors and officers and the directors and officers of its subsidiaries, including the Depositor. This insurance provides for coverage against loss from claims made against directors and officers in their capacity as such, including, subject to certain exceptions, liabilities under the Federal securities laws. Rule 484 Undertaking 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 liability (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 64 Item 29. Principal Underwriter (a) Tower Square Securities, Inc. One Tower Square Hartford, Connecticut 06183 Tower Square Securities, Inc. also serves as principal underwriter for the following : The Travelers Growth and Income Stock Account for Variable Annuities The Travelers Quality Bond Account for Variable Annuities The Travelers Money Market Account for Variable Annuities The Travelers Timed Growth and Income Stock Account for Variable Annuities The Travelers Timed Short-Term Bond Account for Variable Annuities The Travelers Timed Aggressive Stock Account for Variable Annuities The Travelers Timed Bond Account for Variable Annuities The Travelers Fund U for Variable Annuities The Travelers Fund VA for Variable Annuities The Travelers Fund BD for Variable Annuities The Travelers Fund BD II for Variable Annuities The Travelers Fund BD III for Variable Annuities The Travelers Fund BD IV for Variable Annuities The Travelers Fund ABD for Variable Annuities The Travelers Fund ABD II for Variable Life Insurance The Travelers Separate Account QP for Variable Annuities The Travelers Separate Account QP II for Variable Annuities The Travelers Fund UL for Variable Life Insurance The Travelers Fund UL II for Variable Life Insurance The Travelers Variable Life Insurance Separate Account One The Travelers Variable Life Insurance Separate Account Two The Travelers Variable Life Insurance Separate Account Three The Travelers Variable Life Insurance Separate Account Four
(b) Name and Principal Positions and Offices Business Address * With Underwriter ------------------ ---------------- Russell H. Johnson Chairman of the Board Chief Executive Officer, President and Chief Operating Officer William F. Scully, III Member, Board of Directors, Senior Vice President, Treasurer and Chief Financial Officer Cynthia P. Macdonald Vice President, Chief Compliance Officer, and Assistant Secretary Joanne K. Russo Member, Board of Directors Senior Vice President William D. Wilcox General Counsel and Secretary Kathleen A. McGah Assistant Secretary Jay S. Benet Member, Board of Directors George C. Kokulis Member, Board of Directors Warren H. May Member, Board of Directors Donald R. Munson, Jr. Senior Vice President Stuart L. Baritz Vice President
65
(b) Name and Principal Positions and Offices Business Address * With Underwriter ------------------ ---------------- Michael P. Kiley Vice President Tracey Kiff-Judson Second Vice President Robin A. Jones Second Vice President Whitney F. Burr Second Vice President Marlene M. Ibsen Second Vice President John F. Taylor Second Vice President John J. Williams, Jr. Director and Assistant Compliance Officer Susan M. Cursio Director and Operations Manager Dennis D. D'Angelo Director Thomas P. Tooley Director Nancy S. Waldrop Assistant Treasurer
* Principal business address: One Tower Square, Hartford, Connecticut 06183 (c) Not Applicable Item 30. Location of Accounts and Records (1) The Travelers Insurance Company One Tower Square Hartford, Connecticut 06183 Item 31. Management Services Not Applicable. Item 32. Undertakings The undersigned Registrant hereby undertakes: (a) To file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for so long as payments under the variable annuity contracts may be accepted; (b) To include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for 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. The Company hereby represents: (a). That the aggregate charges under the Contracts of the Registrant described herein are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company. 66 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement to be signed on its behalf in the City of Hartford, State of Connecticut, on July 31, 1997. THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES (Registrant) THE TRAVELERS INSURANCE COMPANY (Depositor) By: *IAN R. STUART ----------------------------------------------- Ian R. Stuart Senior Vice President, Chief Financial Officer, Chief Accounting Office and Controller Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on July 31, 1997. *MICHAEL A. CARPENTER Director, Chairman of the Board, President - --------------------------------- and Chief Executive Officer (Michael A. Carpenter) *JAY S. BENET Director - --------------------------------- (Jay S. Benet) *GEORGE C. KOKULIS Director - --------------------------------- (George C. Kokulis *ROBERT I. LIPP Director - --------------------------------- (Robert I. Lipp) *IAN R. STUART Director, Senior Vice President, Chief - --------------------------------- Financial Officer, Chief Accounting Officer (Ian R. Stuart) *KATHERINE M. SULLIVAN Director, Senior Vice President and - --------------------------------- General Counsel (Katherine M. Sullivan) *MARC P. WEILL Director - --------------------------------- (Marc P. Weill)
*By: Ernest J. Wright, Attorney-in-Fact 67 EXHIBIT INDEX
Exhibit No. Description Method of Filing - ------------ ----------- ---------------- 1. Resolution of The Travelers Insurance Company Electronically Board of Directors authorizing the establishment of the Registrant. 3(a). Form of Distribution and Management Agreement among Electronically the Registrant, The Travelers Insurance Company and Tower Square Securities, Inc. 3(b). Form of Selling Agreement To be filed by amendment 4. Form of Variable Annuity Contract. Electronically 6(a). Charter of The Travelers Insurance Company, as amended on October 19, 1994. (Incorporated herein by reference to Exhibit 3(a)(i) to the Registration Statement on Form S-2, File No. 33-58677, filed via Edgar on April 18, 1995.) 6(b). By-Laws of The Travelers Insurance Company, as amended on October 20, 1994. (Incorporated herein by reference to Exhibit 3(b)(i) to the Registration Statement on Form S-2, File No. 33-58677, filed via Edgar on April 18, 1995.) 9. Opinion of Counsel as to the legality of securities being Electronically registered by Registrant. 10(a). Consent of KPMG Peat Marwick LLP, Independent To be filed by Certified Public Accountants. amendment 13. Schedule for Computation of Total Return To be filed by Calculations - Standardized and Non-Standardized. amendment 15. Powers of Attorney authorizing Ernest J. Wright or Electronically Kathleen A. McGah as signatory for Michael A. Carpenter, Jay S. Benet, George C. Kokulis, Robert I. Lipp, Ian R. Stuart, Katherine M. Sullivan and Marc P. Weill.
EX-99.1 2 RESOLUTION 1 EXHIBIT 1 CERTIFICATE I, ERNEST J. WRIGHT, Secretary of THE TRAVELERS INSURANCE COMPANY, DO HEREBY CERTIFY that by unanimous consent action of the Board of Directors of The Travelers Insurance Company effective the 22nd day of October, 1993, the following resolutions were adopted: VOTED: That pursuant to authority granted by Section 38a-433a of the Connecticut General Statutes, the Chairman of the Board, the President or Chief Investment Officer, or any one of them acting alone, for the purpose of doing variable life insurance or variable annuity business, is authorized to establish a separate account or accounts to invest in shares of investment companies pursuant to plans and contracts issued and sold by the Company in connection therewith. VOTED: That the proper officers are authorized to take such action as may be necessary to register as unit investment trust investment companies under the Investment Company Act of 1940 the separate account or accounts to be established to hold shares of investment companies; to file any necessary or appropriate exemptive requests, and any amendments thereto, for such separate account or accounts under the Investment Company Act of 1940; to file one or more registration statements, and any amendments, exhibits and other documents thereto, in order to register plans and contracts of the Company and interests in such separate account or accounts in connection therewith under the Securities Act of 1933; and to take any and all action as may in their judgment be necessary or appropriate in connection therewith. I FURTHER CERTIFY that by unanimous consent action of the Board of Directors of The Travelers Insurance Company effective the 21st day of September, 1994, the following resolution was adopted: VOTED: That each officer and director who may be required, on their own behalf and in the name and on behalf of the Company, to execute one or more registration statements, and any amendments thereto, under the Securities Act of 1933 and the Investment Company Act of 1940 relating to the separate account or accounts to be established to invest in shares of investment companies is authorized to execute a power of attorney appointing representatives to act as their attorney and agent to execute said registration statement, and any amendments thereto, in their name, place and stead; and that the Secretary, or any Assistant Secretary designated by the Secretary, is designated and appointed the agent for service of process of the Company under the Securities Act of 1933 and the Investment Company Act of 1940 in connection with such registration statement, and any amendments thereto, with all the powers incident to such appointment. AND I DO FURTHER CERTIFY that the foregoing actions of the said Board of Directors is still in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of THE TRAVELERS INSURANCE COMPANY at Hartford, Connecticut, this 31st day of July 1997. Ernest J. Wright Secretary EX-99.3.A 3 DISTRO AND MANAGEMENT AGREEMENT 1 EXHIBIT 3(a) FORM OF DISTRIBUTION AND MANAGEMENT AGREEMENT DISTRIBUTION AND MANAGEMENT AGREEMENT made this ___ day of _____, 1997, by and among The Travelers Insurance Company, a Connecticut stock insurance company (hereinafter the "Company"), Tower Square Securities, Inc., a Connecticut general business corporation (hereinafter "Tower Square"), and The Travelers Separate Account PF for Variable Annuities (hereinafter "Separate Account PF"), a separate account of the Company established by its President and Chief Executive Officer pursuant to a resolution of the Company's Board of Directors on July 30, 1997, pursuant to Section 38a-433 of the Connecticut General Statutes. 1. The Company hereby agrees to provide all administrative services relative to variable annuity contracts and revisions thereof (hereinafter "Contracts") sold by the Company, the net proceeds of which or reserves for which are maintained in Separate Account PF. 2. Tower Square hereby agrees to perform all sales functions relative to the Contracts. The Company agrees to reimburse Tower Square for commissions paid, other sales expenses and properly allocable overhead expenses incurred in performance thereof. 3. For providing the administrative services referred to in paragraph 1 above and reimbursing Tower Square for the sales functions referred to in paragraph 2 above, the Company will receive the deductions for sales and administrative expenses which are stated in the Contracts. 4. The Company will furnish at its own expense and without cost to Separate Account PF the administrative expenses of Separate Account PF, including but not limited to: (a) office space in the offices of the Company or in such other place as may be agreed upon from time to time, and all necessary office facilities and equipment; (b) necessary personnel for managing the affairs of Separate Account PF, including clerical, bookkeeping, accounting and other office personnel; (c) all information and services, including legal services, required in connection with registering and qualifying Separate Account PF or the Contracts with federal and state regulatory authorities, preparation of registration statements and prospectuses, including amendments and revisions thereto, and annual, semi-annual and periodic reports, notices and proxy solicitation materials furnished to variable annuity Contract Owners or regulatory authorities, including the costs of printing and mailing such items; (d) the costs of preparing, printing, and mailing all sales literature; (e) all registration, filing and other fees in connection with compliance requirements of federal and state regulatory authorities; (f) the charges and expenses of any custodian or depository appointed by Separate Account PF for the safekeeping of its cash, securities and other property; and (g) the charges and expenses of independent accountants retained by Separate Account PF. 2 5. The services of the Company and Tower Square to Separate Account PF hereunder are not to be deemed exclusive and the Company and Tower Square shall be free to render similar services to others so long as its services hereunder are not impaired or interfered with thereby. 6. The Company agrees to guarantee that the annuity payments will not be affected by mortality experience (under Contracts the reserves for which are invested in Separate Account PF) and as such assumes the risks (a) that the actuarial estimate of mortality rates among annuitants may prove erroneous and that reserves set up on the basis of such estimates will not be sufficient to meet the Company's variable annuity payment obligations, and (b) that the charges for services and expenses of the Company set forth in the Contracts may not prove sufficient to cover its actual expenses. For providing these mortality and expense risk guarantees, the Company will receive from Separate Account PF an amount per valuation period of Separate Account PF, as provided from time to time. 7. This Agreement will be effective on the date executed, and will remain effective until terminated by any party upon sixty (60) days notice; provided, however, that this agreement will terminate automatically in the event of its assignment by any of the parties hereto. 8. Notwithstanding termination of this Agreement, the Company shall continue to provide administrative services and mortality and expense risk guarantees provided for herein with respect to Contracts in effect on the date of termination, and the Company shall continue to receive the compensation provided under this Agreement. 9. This Agreement is subject to the provisions of the Investment Company Act of 1940, as amended, and the rules of the Securities and Exchange Commission. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officials thereunto duly authorized and, in the case of the Company and Tower Square, seals to be affixed as of the day and year first above written. THE TRAVELERS INSURANCE COMPANY (Seal) By: ------------------------------------ Title: --------------------------------- ATTEST: - ---------------------------- Assistant Secretary THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES By: ------------------------------------ Title: --------------------------------- WITNESS: - ---------------------------- TOWER SQUARE SECURITIES, INC. By: ----------------------------------- Title: -------------------------------- ATTEST: (SEAL) - ---------------------------- Corporate Secretary -2- EX-99.4 4 VARIABLE ANNUITY CONTRACT 1 EXHIBIT 4 THE TRAVELERS INSURANCE COMPANY - ONE TOWER SQUARE - HARTFORD, CONNECTICUT - 06183 A STOCK COMPANY We are pleased to provide you the benefits of this Variable Annuity Contract. Please read your contract and all attached forms carefully. RIGHT TO EXAMINE THIS CONTRACT IF THIS CONTRACT IS RETURNED TO US AT OUR OFFICE OR TO OUR AGENT TO BE CANCELLED WITHIN 20 DAYS AFTER ITS DELIVERY TO YOU, WE WILL PAY YOU THE CONTRACT VALUE DETERMINED AS OF THE NEXT VALUATION DATE AFTER WE RECEIVE THE WRITTEN REQUEST AT OUR OFFICE, PLUS ANY PREMIUM TAX CHARGES OR CONTRACT CHARGES PAID. AFTER THE CONTRACT IS RETURNED, IT WILL BE CONSIDERED AS NEVER IN EFFECT. This contract is issued in consideration of the purchase payment. It is subject to the terms and conditions stated on the attached pages, all of which are a part of it. Executed at Hartford, Connecticut /s/ M.A. CARPENTER President This is a legal contract between you and us. READ YOUR CONTRACT CAREFULLY. INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT TAX QUALIFIED LIFE ANNUITY COMMENCING AT MATURITY DATE ELECTIVE OPTIONS NON-PARTICIPATING ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. 2 TABLE OF CONTENTS Right to Examine this Contract Cover Page Contract Specifications Page 3 Definitions Page 5 Owner, Beneficiary and Annuitant Provisions Page 6 Purchase Payment and Valuation Provisions Pages 7-9 Death Benefit Provisions Page 10 Settlement Provisions Pages 11-13 General Provisions Pages 14-15 Table of Values Page 16 Life Annuity Tables Pages 17-18
Any Riders or Endorsements follow the Life Annuity Tables. Page 2 3 CONTRACT SPECIFICATIONS OWNER JOHN DOE ANNUITANT JOHN DOE CONTRACT NUMBER SPECIMEN CONTRACT DATE 07/01/97 MATURITY DATE 07/01/27 MONTHLY LIFE ANNUITY INITIAL PURCHASE PAYMENT $5,000.00
PURCHASE PAYMENTS: Minimum Initial Purchase Payment: $5,000 Minimum Subsequent Purchase Payment: $100 Maximum Purchase Payment: $1,000,000 unless we consent to a larger amount. THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES
FUNDING OPTIONS: SUB ACCOUNT DEDUCTION PER DAY Smith Barney Concert Allocation Series Inc.: Select Balanced Portfolio .0000384 Select Conservative Portfolio .0000384 Select Growth Portfolio .0000384 Select High Growth Portfolio .0000384 Select Income Portfolio .0000384 Smith Barney Series Fund: Appreciation Portfolio .0000384 Travelers Series Fund Inc.: Smith Barney High Income Portfolio .0000384 Smith Barney Income and Growth Portfolio .0000384 Smith Barney International Equity Portfolio .0000384 Smith Barney Money Market Portfolio .0000384 MFS Total Return Portfolio .0000384
SUB ACCOUNT DEDUCTIONS: The Sub Account Deduction Per Day is based on the following annual charges: ADMINISTRATIVE CHARGE: .15% MORTALITY AND EXPENSE RISK CHARGE: 1.25% FIXED ACCOUNT GUARANTEED INTEREST PERIODS: The initial rate for any deposit is guaranteed for one year from date of deposit. Subsequent renewal rates will be guaranteed for the calendar quarter. TRANSFER CHARGE: We reserve the right to assess a Transfer Charge of up to $10.00 on transfers exceeding 12 per year. We will notify You in Writing at Your last known address at least 31 days prior to the imposition of any such Transfer Charge. You may transfer up to 15% of the Fixed Account value to any of the Sub-Accounts twice a year during the 30 days following the semi-annual Contract Date anniversary. 3 4 CONTRACT CHARGE $30.00 Annually. This charge will be taken on the fourth Friday of August of each year. No Contract Charge will be deducted from the Fixed Account. This charge will not be assessed under the following situations: a) distribution of proceeds due to death; or b) after an Annuity or Income payout has begun. WITHDRAWAL CHARGES DEDUCTED ON SURRENDER:
DEFERRED SALES CHARGE YEARS SINCE PURCHASE (PERCENT OF PURCHASE PAYMENTS NOT PREVIOUSLY PAYMENT WAS PAID SURRENDERED) (FIRST-IN, FIRST-OUT BASIS) ---------------- ---------------------------------------- 1 8% 2 7% 3 6% 4 5% 5 4% 6 3% 7 2% 8 1% 9 AND THEREAFTER 0%
For purposes of the Deferred Sales Charge calculation, withdrawals will be deemed to be taken in the following order: a) from any Purchase Payments to which no withdrawal charge is applicable; b) from any remaining Withdrawal Allowance after reduction by the amount of (a); c) from any Purchase Payments to which a Deferred Sales Charge is applicable (on a First-In, First-Out basis); and d) from any Contract interest. WITHDRAWAL ALLOWANCE: After the first Contract Year,and to the extent permitted under the currently effective tax law qualification rider, You may take partial surrenders annually of up to 10% of Your Contract Value as of the first Valuation Date of each Contract Year without imposition of a Withdrawal Charge. The Withdrawal Allowance is available for any partial withdrawal and for a full withdrawal except those withdrawals directly transferred to annuity contracts with other financial institution(s). Any withdrawal deemed to be taken from Purchase Payments to which no Withdrawal Charge applies will reduce any withdrawal allowance available in that Contract Year. Any withdrawal deemed to be taken from the Withdrawal Allowance will not reduce the amount of Purchase Payments to which a Deferred Sales Charge is applicable. DISTRIBUTION NOT SUBJECT TO A WITHDRAWAL CHARGE: We will not deduct a Withdrawal Charge for Payments under this Contract due to: a) distribution of proceeds due to death; b) minimum distribution as defined by the Internal Revenue Code; c) an Annuity Option based upon life expectancy; or d) an Income Option with payments for a fixed period of five years or greater, elected after the first Contract Year. UPON ANNUITIZATION, ASSUMED DAILY NET INVESTMENT FACTOR IS 1.000081 FOR ALL SUB-ACCOUNTS. TERMINATION We reserve the right to terminate this contract when the Contract Value is less than the Termination Amount of $2,000 and no Purchase Payments have been made for at least two years. 4 5 DEFINITIONS (a) ACCOUNT(S) - the Sub-Accounts and/or the Fixed Account under this contract. (b) ACCUMULATION UNIT - an accounting unit of measure used to calculate the value of this contract before Annuity payments begin. (c) AGE - age last birthday. (d) ANNUITANT - the person on whose life the Maturity Date and Annuity payments depend. (e) ANNUITY UNIT - an accounting unit of measure used to calculate the amount of Annuity Payments. (f) CODE - the Internal Revenue Code of 1986, as amended, and all related laws and regulations which are in effect during the term of this contract. (g) CONTRACT DATE - the date on which the contract is issued. (h) CONTRACT YEARS - twelve month periods beginning with the Contract Date. (i) DEATH REPORT DATE - the Valuation Date coincident with or next following the day on which we have received 1) Due Proof of Death and 2) a Written Request for an election of a single sum payment or an alternate Settlement Option as described in the contract. (j) DUE PROOF OF DEATH - (I) a copy of a certified death certificate; (ii) a copy of a certified decree of a court of competent jurisdiction as to the finding of death; (iii) a written statement by a medical doctor who attended the deceased; or (iv) any other proof satisfactory to us. (k) FIXED ACCOUNT - an account that consists of all of the assets under this contract other than those in the Separate Account. (l) FUNDING OPTION - an open-end diversified management investment company indicated in the CONTRACT SPECIFICATIONS, which serves as an investment option under the Separate Account. (m) MATURITY DATE - the date on which the Annuity payments are to begin. (n) OUR OFFICE - the Home Office of The Travelers Life and Annuity Company or any other office which we may designate for the purpose of administering this contract. (o) RECORDED - a Written Request is recorded when the information is noted in our file for this contract. (p) SEPARATE ACCOUNTS - those Separate Accounts indicated in the CONTRACT SPECIFICATIONS which we established for this class of contracts and certain other contracts. (q) SETTLEMENT OPTIONS - an Annuity or Income option elected under this contract. (r) SUB-ACCOUNT - that portion of the assets of a Separate Account which is allocated to a particular Underlying Fund. (s) TAX QUALIFIED CONTRACT - a contract used in a retirement plan or program that is intended to qualify under Sections 401, 403, 408, or 414(d) of the Code. (t) VALUATION DATE - a date on which a Sub-Account is valued. (u) VALUATION PERIOD - the period between successive valuations. (v) WE, US, OUR - The Travelers Insurance Company. (w) WRITTEN REQUEST - written information including requests for contract changes sent to us in a form and content satisfactory to us and received at Our Office. (x) YOU, YOUR - the Owner. 5 6 OWNER, BENEFICIARY AND ANNUITANT PROVISIONS OWNER This contract belongs to the owner shown on the CONTRACT SPECIFICATIONS. As owner, you have sole power to exercise rights and receive benefits under this contract during the Annuitant's lifetime. In order to maintain tax qualification, this contract may not be sold, assigned, transferred, discounted or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose except as may be required or permitted under applicable sections of the Code. We will administer this contract only as a Tax Qualified Contract. You will be the recipient of all payments while the Annuitant is alive unless you direct them to an alternative recipient under a Recorded payment direction. An alternative recipient under a payment direction does not become the owner. A payment direction is revocable by you at any time by Written Request giving 30 days advance notice. CREDITOR CLAIMS To the extent permitted by law, no right or benefit of the owner, Annuitant or Beneficiary under this contract shall be subject to the claims of creditors or any legal process. BENEFICIARY The Beneficiary is the party named in a Written Request. The Beneficiary receives any remaining contractual benefits upon the death of the Annuitant. You may change or add a Beneficiary by Written Request during the lifetime of the Annuitant and while this contract continues. Once a change of Beneficiary is Recorded by us, it will take effect as of the date of the request, subject to any payments made or other actions taken by us before the recording. If no beneficiary has been named by you, or none survives when the Annuitant dies, the interest of any Beneficiary will pass: a. to the estate of the owner of a Tax Qualified Contract qualifying under Section 408 of the Code, or to the estate of the owner of a non-trusteed Tax Qualified Contract under other than Section 408 of the Code; or b. to the trustee or plan administrator of a trusteed Tax Qualified plan contract for further distribution in accordance with the plan. ANNUITANT The Annuitant is the individual shown on the CONTRACT SPECIFICATIONS on whose life the first Annuity payment is made. The Annuitant may not be changed after the Contract Date except as may be provided under a provision of the tax law qualification rider currently in effect for this contract. 6 7 PURCHASE PAYMENT AND VALUATION PROVISIONS PURCHASE PAYMENTS PURCHASE PAYMENT Purchase payments are the payments you make for this contract and the benefits it provides. An initial lump sum purchase payment must be made to the contract and is due and payable before the contract becomes effective. Each purchase payment is payable as shown on the CONTRACT SPECIFICATIONS to us at Our Office or to one of our authorized representatives. No purchase payments after the initial purchase payment are required to continue this contract in force, except as provided in the "Termination" provision. Net purchase payments are that part of your purchase payments applied to the Contract Value. A net purchase payment is equal to the purchase payment less any applicable premium tax charge. ALLOCATION OF PURCHASE PAYMENTS We will apply any net purchase payments to provide Accumulation Units of selected Sub-Accounts and/or the Fixed Account of this contract. The initial purchase payment will be applied within two business days following its receipt at Our Office. Any subsequent purchase payments will be applied as of the next valuation following receipt of those payments at Our Office. The net purchase payment will be allocated to the Accounts in the proportion specified by you for this contract. By Written Request, you may change your choice of Accounts or allocation percentages. The available Funding Options to which Sub-Account assets are allocated are shown on the CONTRACT SPECIFICATIONS; funds may be subsequently added or deleted. SUB-ACCOUNT VALUATION NUMBER OF ACCUMULATION UNITS The number of Accumulation Units to be credited to each Sub-Account once a purchase payment has been received by us will be determined by dividing the net purchase payment applied to that Sub-Account by the then Accumulation Unit Value of that Sub-Account. ACCUMULATION UNIT VALUE The initial value of an Accumulation Unit for each Sub-Account was set at $1.00. We determine the value of an Accumulation Unit in each Sub-Account on each Valuation Date by multiplying the value on the immediately preceding Valuation Date by the net investment factor for that Sub-Account for the Valuation Period just ended. The value of an Accumulation Unit on any date other than a Valuation Date will be equal to its value as of the next Valuation Date. NET INVESTMENT FACTOR The net investment factor is a factor applied to measure the investment performance of a Sub-Account from one Valuation Period to the next. The net investment factor for a Sub-Account for any Valuation Period is equal to the sum of 1.0000 plus the net investment rate. Each Sub-Account's net investment rate for a Valuation Period is equal to the gross investment rate for that Sub-Account, less the applicable Sub-Account deduction for the Valuation Period. All Sub-Account deductions are shown on the CONTRACT SPECIFICATIONS. The gross investment rate of a Sub-Account for a Valuation Period is equal to (1) divided by (2) where (1) is: a. investment income, plus b. capital gains and losses, whether realized or unrealized; less c. a deduction for any tax levied against the Separate Account and its Funding Options; and (2) is the amount of the assets at the beginning of the Valuation Period. The gross investment rate for a Sub-Account may be either positive or negative. If a Sub-Account is invested in shares of a Funding Option, assets are based on the net asset value of the Funding Option. Investment income includes any distribution whose ex-dividend date occurs during the Valuation Period. 7 8 FIXED ACCOUNT VALUATION NUMBER OF ACCUMULATION UNITS - We will determine the number of Accumulation Units to be credited to the Fixed Account on receipt of a purchase payment by dividing the net purchase payment applied to the Fixed Account by the then dollar value of one Accumulation Unit Value of the Fixed Account. ACCUMULATION UNIT VALUE - We determine the value of an Accumulation Unit in the Fixed Account on any day by multiplying the value on the immediately preceding day by the net interest factor for the day on which the value is being determined. NET INTEREST FACTOR - The net interest factor for any day is the guaranteed net interest rate which is equivalent to an effective annual interest rate of 3.00%, plus 1.0000. The method of crediting additional interest will be at our discretion. Interest is declared in advance. Before Annuity or Income payments begin, we may credit the Fixed Account with annual interest rates higher than the minimum guaranteed interest rate of 3.00%. Interest rates may be higher or lower than the initial interest rates, but not less than the minimum guaranteed interest rate of 3.00%. Additional amounts may be credited by us at our discretion for the guaranteed interest periods shown on the CONTRACT SPECIFICATIONS. TRANSFER BETWEEN ACCOUNTS You may transfer all or any part of the Contract Value from one Sub-Account to any other Sub-Account at any time up to 30 days before the due date of the first Annuity or Income payment. Additionally, you may transfer a part of the Fixed Account value to any of the Sub-Accounts, twice a year during the 30 days following the semi-annual Contract Date Anniversary in the amount shown on the CONTRACT SPECIFICATIONS. Amounts may generally be transferred from the Sub-Accounts to the Fixed Account at any time, up to 30 days before the due date of the first Annuity or Income payment. Amounts previously transferred from the Fixed Account to the Sub-Accounts may not be transferred back to the Fixed Account for a period of at least 6 months from the date of transfer. We reserve the right to limit the number of transfers from one Sub-Account to any other Sub-Account or to the Fixed Account. We will not limit these transfers to less than one in any six month period. Transfers between Accounts will result in the addition or deletion of Accumulation Units having a total value equal to the dollar amount being transferred to or from a particular Account. The number of Accumulation Units will be determined by using the Accumulation Unit Value of the Accounts involved as of the next valuation after we receive notification of request for transfer. Transfers will be subject to any applicable Transfer charge stated on the CONTRACT SPECIFICATIONS. CONTRACT VALUES CONTRACT VALUE The Contract Value of this contract on any date equals the sum of the accumulated values in the Accounts. The accumulated value in an Account equals the number of outstanding Accumulation Units credited to that Account, multiplied by the then Accumulation Unit Value for that Account. The Guaranteed Value of the Fixed Account equals the accumulated values of the Fixed Account calculated by using the guaranteed net interest factor. The Guaranteed Values of the Fixed Account are shown in the Table of Values. CONTRACT CHARGE A Contract Charge in the amount and for the period shown on the CONTRACT SPECIFICATIONS will be deducted from the Contract Value to reimburse us for administrative expenses relating to the contract. The Contract Charge will be deducted by surrendering on a pro rata basis Accumulation Units from all Sub-Accounts in which you have an interest. We will deduct the charge on a pro rata basis if the contract has been in effect for less than a full period on the date a Contract Charge is deducted. The Contract Charge will also be prorated upon full surrender or termination of the contract. CASH SURRENDER You may elect by Written Request to receive the Cash Surrender Value of this contract before the due date of the first Annuity or Income payment and without the consent of any Beneficiary unless irrevocably named. You may elect either a full or partial surrender of the Cash Surrender Value. In the case of a full surrender, this contract will be cancelled. A partial surrender will result in a reduction in your Contract Value. If you have a balance in more than one Account, your Contract Value will be reduced from all your accounts on a pro rata basis, unless you request otherwise. 8 9 The Cash Surrender Value will be determined as of the next valuation following receipt of your Written Request. We may delay payment of the Cash Surrender Value of the Sub-Accounts for a period of not more than five days after we receive your Written Request. We may delay payment of the Cash Surrender Value of the Fixed Account for a period of not more than six months after we receive your Written Request. CASH SURRENDER VALUE The Cash Surrender Value is equal to the Contract Value less any amounts deducted on surrender which are shown on the CONTRACT SPECIFICATIONS, any applicable premium tax not previously deducted, and any outstanding loan balance. The Guaranteed Cash Surrender Value of the Fixed Account equals the Guaranteed Value of the Fixed Account less any amounts deducted on surrender which are shown on the CONTRACT SPECIFICATIONS, less any applicable premium tax not previously deducted and less any outstanding loan balance. For Guaranteed Cash Surrender Values of the Fixed Account, see the Table of Values. CONTRACT CONTINUATION Except as provided in the "Termination" provision, this contract does not require continuing purchase payments and will automatically continue as a paid-up contract during the lifetime of the Annuitant until the Maturity Date or until it is surrendered. 9 10 DEATH BENEFITS PROVISIONS A death Benefit is payable to the Beneficiary upon the death of the Annuitant before the Maturity Date. A death benefit is also payable under those Settlement Options which provide for death benefits. We will pay the Beneficiary the death benefit in a single sum as described below upon receiving Due Proof of Death. A Beneficiary may request that a death benefit payable under this contract be applied to a Settlement Option subject to the provisions of this contract. DEATH PROCEEDS PRIOR TO THE MATURITY DATE If the Annuitant dies before age 75 and before the Maturity Date, we will pay the Beneficiary the greatest of a), b), or c) below, less any applicable premium tax, prior surrenders not previously deducted or outstanding loans as of the Death Report Date: a. the Contract Value; b. the total purchase payments under the contract; or c. the death benefit value, which will be reset once every five years to the then current Contract Value, immediately preceding the Death Report Date. If the Annuitant dies on or after age 75, but before age 85 and before the Maturity Date, we will pay the Beneficiary the greatest of a), b), or c) below, less any applicable premium tax, prior surrenders not previously deducted or outstanding loans as of the Death Report Date: a. the Contract Value; b. the total purchase payments under the contract; or c. the death benefit value, which will be reset once every five years to the then current Contract Value, occurring on or before the Annuitant's 75th birthday. If the Annuitant dies on or after age 85 and before the Maturity Date, we will pay the Beneficiary the Contract Value of this contract, less any applicable premium tax or outstanding loans as of the Death Report Date. DEATH PROCEEDS AFTER THE MATURITY DATE If the Annuitant dies on or after the Maturity Date, we will pay the Beneficiary a death benefit consisting of any benefit remaining under the Annuity or Income option then in effect. 10 11 SETTLEMENT PROVISIONS MATURITY DATE The Maturity Date is shown on the CONTRACT SPECIFICATIONS. This is the date on which we will begin paying to you the first of a series of Annuity or Income payments in accordance with the Settlement Option elected by you. Annuity or Income payments will begin under this contract on the Maturity Date unless the contract has been fully surrendered or the proceeds have been paid to the Beneficiary prior to that date. We may require proof that the Annuitant is alive before Annuity payments are made. If no Maturity Date is specified, the automatic Maturity Date will be the date when the Annuitant reaches age 70. Additionally, to the extent permitted by law, at least 30 days before the original Maturity Date, you may change the Maturity Date by Written Request to a later date with our consent. ELECTION OF SETTLEMENT OPTIONS On the Maturity Date, or other agreed upon date, we will pay the amount payable under this contract to you in one lump sum or in accordance with the option elected by you. While the Annuitant is alive, you may change your Settlement Option election by Written Request, but only before the Maturity Date. Once Annuity or Income payments have commenced, no further election changes are allowed. If no election has been made on the Maturity Date and if the Annuitant is living and has a spouse, we will pay to you the first of a series of monthly Annuity payments based on the life of the Annuitant as primary payee and the Annuitant's spouse as secondary payee, in accordance with Annuity Option 4. During the Annuitant's lifetime, if no election has been made and the Annuitant has no spouse on the Maturity Date, we will pay to you the first of a series of monthly Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. MINIMUM AMOUNTS The minimum amount that can be placed under a Settlement Option is $2,000 unless we consent to a lesser amount. If any periodic payments due are less than $100.00, we reserve the right to make payments at less frequent intervals. ALLOCATION OF ANNUITY At the time an election of one of the Annuity Options is made, the person electing the option may further elect to have the Cash Surrender Value applied to provide a Variable Annuity, a Fixed Annuity or a combination of both. If no election is made to the contrary, the value of a Sub-Account will be applied when Annuity payments start to provide an Annuity which varies with the investment experience of that same Sub-Account and the value of the Fixed Account will be applied to provide a Fixed Annuity. You may elect to transfer Contract Value from one Account to another, as described in the provision "Transfer Between Accounts," in order to reallocate the basis on which Annuity payments will be determined. Once Annuity payments start, you may, with our consent, change the allocation of your values in each Sub-Account. VARIABLE ANNUITY AMOUNT OF BASIC FIRST PAYMENT The LIFE ANNUITY TABLES are used to determine the basic first monthly Annuity payment. They show the dollar amount of the basic first monthly Annuity payment which can be purchased with each $1,000 applied. The amount applied to an Annuity will be the Cash Surrender Value as of 14 days before the date Annuity payments start. We reserve the right to require satisfactory proof of the age of any person on whose life Annuity payments are based before making the first payment under any of these options. ANNUITY UNIT VALUE The initial value of an Annuity Unit for each Sub-Account was set at $1.00. On any Valuation Date, the Annuity Unit Value for a Sub-Account equals the Sub-Account Annuity Unit Value on the immediately preceding Valuation Date, multiplied by the net investment factor for that Sub-Account for the Valuation Period just ended, divided by the Assumed Daily Net Investment Factor. The Assumed Daily Net Investment Factor is shown on the CONTRACT SPECIFICATIONS. 11 12 The Value of an Annuity Unit as of any date other than a Valuation Date will be equal to its value as of the next succeeding Valuation Date. NUMBER OF ANNUITY UNITS We determine the number of Annuity Units credited to this contract in each Sub-Account by dividing the basic first monthly Annuity payment attributable to that Sub-Account by the Sub-Account's Annuity Unit Value as of 14 days before the due date of the first Annuity payment. AMOUNT OF SECOND AND SUBSEQUENT BASIC PAYMENTS The dollar amount of the second and subsequent payments may change from month to month. The total amount of each Annuity payment will be equal to the sum of the basic payments in each Sub-Account. The actual amount of the basic payments in each Sub-Account is found by multiplying the number of Annuity Units credited to the contract in that Sub-Account by the Annuity Unit Value of the Sub-Account as of the date 14 days prior to the date on which the payment is due. FIXED ANNUITY A Fixed Annuity is an Annuity with payments which remain fixed as to dollar amount throughout the payment period. The dollar amount of the first Fixed Annuity payment will be calculated as described above in the "Amount of Basic First Payment" provision. All subsequent payments will be in the same amount and that amount will be assured throughout the payment period. If it would produce a larger payment, we agree that the Fixed Annuity payment will be determined using the Life Annuity Tables in effect on the Maturity Date. ANNUITY OPTIONS Subject to conditions stated in ELECTIONS OF SETTLEMENT OPTIONS and MINIMUM AMOUNTS, all or any part of the Cash Surrender Value of this contract may be paid under one or more of the Annuity Options below. OPTION 1. LIFE ANNUITY - NO REFUND We will make monthly annuity payments during the lifetime of the person on whose life the payments are based, ending with the last monthly payment preceding death. OPTION 2. LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED We will make monthly Annuity payments during the lifetime of the person on whose life the payments are based, and under the conditions stated below. If at the death of that person, payments have been made for less than 120, 180, or 240 months, as elected, we will continue to make payments to the designated Beneficiary during the remainder of the period. OPTION 3. JOINT AND LAST SURVIVOR LIFE ANNUITY We will make monthly Annuity payments during the joint lifetime of two persons on whose lives payments are based and during the lifetime of the survivor. No more payments will be made after the death of the survivor. OPTION 4. JOINT AND LAST SURVIVOR LIFE ANNUITY - ANNUITY REDUCED ON DEATH OF PRIMARY PAYEE We will make monthly Annuity payments during the joint lifetime of two persons on whose lives payments are based. One of the two persons will be designated as the primary payee. The other will be designated as the secondary payee. On the death of the secondary payee, if survived by the primary payee, we will continue to make monthly Annuity payments to the primary payee in the same amount that would have been payable during the joint lifetime of the two persons. On the death of the primary payee, if survived by the secondary payee, we will continue to make monthly annuity payments to the secondary payee in an amount equal to 50% of the payments which would have been made during the lifetime of the primary payee. No further payments will be made following the death of the survivor. OPTION 5. OTHER ANNUITY OPTIONS We will make any other arrangements for Annuity payments as may be mutually agreed. 12 13 INCOME OPTIONS We will pay all or any part of the Cash Surrender Value to you under one or more of the Income Options below subject to the conditions stated in ELECTION OF SETTLEMENT OPTIONS and MINIMUM AMOUNTS and your tax qualification rider. The Cash Surrender Value used to determine the amount of any Income payment will be based on the Accumulation Unit Value as of 14 days before the date an Income payment is due and will be determined the same way as in the Accumulation period. OPTION 1. PAYMENTS OF A FIXED AMOUNT We will make equal payments each month in the amount elected until the Cash Surrender Value applied under this option is gone. The first monthly payment will be paid from each Sub-Account in proportion to its Cash Surrender Values applied. The second payment and all later payments from each Sub-Account will be the same as the first payment under this option. The final payment will include any amount that is not enough to make another full payment. OPTION 2. PAYMENTS FOR A FIXED PERIOD We will make monthly payments for the period selected. The amount of each payment will be equal to the then remaining Cash Surrender Value applied under this option divided by the number of remaining payments. OPTION 3. OTHER INCOME OPTIONS We will make any other arrangements for Income payments as may be mutually agreed. 13 14 GENERAL PROVISIONS THE CONTRACT The entire contract between you and us consists of the contract and all attached pages. CONTRACT CHANGES The only way this contract may be changed is by a written endorsement signed by one of our officers. SUBSTITUTION OF SEPARATE ACCOUNT OR FUNDING OPTIONS If it is not possible to continue to offer a Separate Account or Funding Option, or in our judgment becomes inappropriate for the purposes of this contract, we may substitute another Separate Account or Funding Option without your consent. Substitution may be made with respect to both existing investments and investment of future premium payments. However, no such substitution will be made without notice to you and without prior approval of the Securities and Exchange Commission, to the extent required by law. MISSTATEMENT If the Annuitant's date of birth was misstated, all benefits of this contract are what the purchase payment paid would have purchased at the correct age. Proof of the Annuitant's age may be filed at any time at Our Office. INCONTESTABILITY We will not contest this contract from its Contract Date. TERMINATION We reserve the right to terminate this contract on any Valuation Date if the Contract Value as of the date is less than the Termination Amount shown on the CONTRACT SPECIFICATIONS, and purchase payments have not been made to this contract for at least two years. Termination will not occur until 31 days after we have mailed notice of termination to you at your last known address. If this contract is terminated, we will pay you the Cash Surrender Value, if any. REQUIRED REPORTS We will furnish a report to the owner as often as required by law, but at least once in each Contract Year before the due date of the first Annuity or Income payment. The report will show the number of Accumulation Units credited to the contract in each Account and the corresponding Accumulation Unit Value as of the date of the report. VOTING RIGHTS If required by federal law, you may have the right to vote at the meetings of the Shareholders of the Funding Options. If you have voting rights, we will send a notice to you telling you the time and place of a meeting. The notice will also explain matters to be voted upon and how many votes you may exercise. MORTALITY AND EXPENSES Our actual mortality and expense experience will not affect the amount of any Annuity or Income payments or any other values under this contract. NON-PARTICIPATING This contract does not share in our surplus earnings, so you will receive no dividends under it. CONTRACT MODIFICATION We reserve the right to modify this contract to qualify it under provision of Sections 401, 403, 408 or 414(d) of the Code and all related laws and regulations which are in effect during the term of this contract. We will obtain the approval of any regulatory authority needed for the modifications. STATE LAWS This contract is governed by the law of the state in which it is delivered. Any paid-up Annuity, Cash Surrender or death benefits that are available under this contract are not less than the minimum benefits required by the statutes of the state in which this contract is delivered. CHANGES IN TAXES BASED UPON PREMIUMS OR VALUE If there is any change in a law assessing taxes against us based upon the premiums or value of this contract, we reserve the right to charge you proportionately for that tax. This would include a tax based upon our realized net capital gains in the Sub-Accounts and on earnings in the Fixed Account, on which we are not currently taxed. 14 15 EMERGENCY PROCEDURE We reserve the right to suspend or postpone the date of any payment of any benefit or values for any Valuation Period (1) when the New York Stock Exchange is closed; (2) when trading on the Exchange is restricted; (3) when an emergency exists as determined by the Securities and Exchange Commission so that disposal of the securities held in the Sub-Accounts is not reasonably practicable and it is not reasonably practicable to determine the value of the Sub-Account's net assets, or (4) during any other period when the Securities and Exchange Commission, by order, so permits for the protection of security holders. Any provision of this contract which specifies a Valuation Date will be superseded by this Emergency Procedure. RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNTS AND SUB-ACCOUNTS We will have exclusive and absolute ownership and control of the assets of our Separate Account and the Sub-Accounts. That portion of the assets of a Separate Account or Sub-Account equal to the reserves and other contract liabilities with respect to such Separate Account or Sub-Account shall not be chargeable with liabilities arising out of any other business we conduct. Our determination of the value of an Accumulation Unit and an Annuity Unit by the method described in this contract will be conclusive. 15 16 TABLE OF VALUES GUARANTEED VALUES OF THE FIXED ACCOUNT PER $1,000 OF NET PURCHASE PAYMENT APPLIED
NO. OF YEARS FROM GUARANTEED NO. OF YEARS FROM DATE PAYMENT GUARANTEED CASH SURRENDER DATE PAYMENT IS GUARANTEED CASH IS APPLIED VALUE VALUE APPLIED GUARANTEED VALUE SURRENDER VALUE 1 1030 950 36 2898 2898 2 1060 990 37 2985 2985 3 1092 1032 38 3074 3074 4 1125 1075 39 3167 3167 5 1159 1119 40 3262 3262 6 1194 1164 41 3359 3359 7 1229 1209 42 3460 3460 8 1266 1256 43 3564 3564 9 1304 1304 44 3671 3671 10 1343 1343 45 3781 3781 11 1384 1384 46 3895 3895 12 1425 1425 47 4011 4011 13 1468 1468 48 4132 4132 14 1512 1512 49 4256 4256 15 1557 1557 50 4383 4383 16 1604 1604 51 4515 4515 17 1652 1652 52 4650 4650 18 1702 1702 53 4790 4790 19 1753 1753 54 4934 4934 20 1806 1806 55 5082 5082 21 1860 1860 56 5234 5234 22 1916 1916 57 5391 5391 23 1973 1973 58 5553 5553 24 2032 2032 59 5720 5720 25 2093 2093 60 5891 5891 26 2156 2156 61 6068 6068 27 2221 2221 62 6250 6250 28 2287 2287 63 6437 6437 29 2356 2356 64 6631 6631 30 2427 2427 65 6829 6829 31 2500 2500 66 7034 7034 32 2575 2575 67 7245 7245 33 2652 2652 68 7463 7463 34 2731 2731 69 7687 7687 35 2813 2813 70 7917 7917
16 17 LIFE ANNUITY TABLES DOLLAR AMOUNT OF THE FIRST MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED WITH EACH $1,000 APPLIED OPTIONS 1 AND 2-SINGLE LIFE ANNUITIES
120 180 240 MONTHLY MONTHLY MONTHLY ADJUSTED NO PAYMENTS PAYMENTS PAYMENTS AGE REFUND ASSURED ASSURED ASSURED 50 $4.13 $4.10 $4.06 $4.00 51 4.20 4.17 4.13 4.06 52 4.28 4.25 4.20 4.12 53 4.37 4.33 4.27 4.18 54 4.46 4.41 4.35 4.25 55 4.55 4.50 4.42 4.31 56 4.65 4.59 4.51 4.38 57 4.76 4.69 4.59 4.44 58 4.87 4.79 4.68 4.51 59 4.99 4.90 4.77 4.58 60 5.12 5.01 4.86 4.65 61 5.26 5.13 4.96 4.72 62 5.40 5.25 5.06 4.79 63 5.56 5.39 5.16 4.85 64 5.72 5.52 5.27 4.92 65 5.90 5.67 5.37 4.99 66 6.09 5.82 5.48 5.05 67 6.29 5.97 5.59 5.11 68 6.51 6.13 5.69 5.16 69 6.74 6.30 5.80 5.21 70 6.99 6.48 5.90 5.26 71 7.26 6.66 6.01 5.31 72 7.54 6.84 6.11 5.34 73 7.86 7.03 6.20 5.38 74 8.19 7.22 6.29 5.41 75 8.55 7.41 6.38 5.43
OPTION 3 - JOIN AND LAST SURVIVOR LIFE ANNUITY
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE FIRST LIFE 51 56 58 61 63 66 71 50 $3.69 $3.81 $3.85 $3.91 $3.94 $3.98 $4.04 55 3.82 3.99 4.06 4.15 4.20 4.28 4.38 57 3.87 4.06 4.14 4.25 4.32 4.41 4.53 60 3.93 4.17 4.26 4.40 4.48 4.61 4.78 65 4.02 4.32 4.44 4.63 4.76 4.95 5.24 70 4.09 4.43 4.59 4.83 5.01 5.27 5.72
Dollar amounts of the first monthly payments for ages not shown in these Tables will be calculated on the same basis as those shown and may be obtained from us. Amounts shown in these Tables are based on the Progressive Annuity Table, with a two year set-back, (assuming births in the year 1900) with interest at the rate of 3% per annum. The adjusted age of the person on whose life the Annuity is based is determined from the actual age last birthday on the due date of the first Annuity payment in the following manner. Calendar Year in which First Payment is Due . . 1991-2000 2001-2010 2011 & later Adjusted Age is Actual Age minus 0 minus 1 minus 2
17 18 OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
ADJUSTED AGE OF ADJUSTED AGE OF SECOND PAYEE PRIMARY PAYEE 46 51 56 61 50 $3.82 $3.90 $3.96 $4.01 55 4.05 4.15 4.25 4.34 60 4.31 4.45 4.59 4.73 65 4.60 4.78 4.98 5.19 70 4.93 5.16 5.43 5.71
Dollar amounts of the first monthly payments for ages not shown in these Tables will be calculated on the same basis as those shown and may be obtained from us. Amounts shown in these Tables are based on the Progressive Annuity Table, with a two year set-back, (assuming births in the year 1900) with interest at the rate of 3% per annum. The adjusted age of the person on whose life the Annuity is based is determined from the actual age last birthday on the due date of the first Annuity payment in the following manner. Calendar Year in which First Payment is Due . . 1991-2000 2001-2010 2011 & later Adjusted Age is Actual Age minus 0 minus 1 minus 2
18 19 This Page Left Blank Intentionally 20 INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT Tax Qualified Non-Participating 21 INDIVIDUAL RETIREMENT ANNUITY QUALIFICATION RIDER As requested by you, this Contract is amended as follows to qualify as an Individual Retirement Annuity (IRA) under Section 408(b) of the Code of 1986, as amended. I. EXCLUSIVE BENEFIT This Contract is established for the exclusive benefit of you or your Beneficiaries. II. PROHIBITION OF ASSIGNMENT OR LOAN This Contract shall not be pledged or otherwise encumbered and it shall not be sold, assigned or otherwise transferred to any person or entity other than us. No loans shall be made under this Contract. III. LIMITATION ON PURCHASE PAYMENTS Notwithstanding the provisions of the Contract and except in the case of a rollover contribution (as permitted by Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code) or a contribution made in accordance with the terms of a Simplified Employee Pension (SEP) program as described in Section 408(k) of the Code, the total contributions shall not exceed the lesser of $2,000 or 100% of compensation for any taxable year. In the case of a spousal IRA, the maximum contribution shall not exceed the lesser of $2,250 or 100% of compensation, but no more than $2,000 can be contributed to either spouse's IRA. In the case of a Simplified Employee Pension Plan qualifying under Section 408(k), the annual contribution under the Contract may not exceed the lesser of $30,000 or 15% of compensation. No contributions will be accepted unless they are in cash. The amount of purchase payments beyond the minimum purchase payment under this Contract is not fixed. The minimum purchase payment must be received as a rollover (see Section X). Payment of purchase payments beyond the first will not be required to continue this contract. Purchase payments after the first will not be required to continue this Contract in force. We reserve the right, however, to terminate this Contract when no purchase payments have been made for at least two consecutive years and the Contract Value of the Contract is less than the termination amount of $1,000 or the paid up Annuity benefit at maturity would be less than $20 per month. If this Contract is terminated, we will pay you the Cash Surrender Value, if any. IV. COMPENSATION Compensation means wages, salaries, professional fees, or other amounts derived from or received from personal service actually rendered (including, but not limited to, commissions) and includes earned income as defined in Code Section 401(c)(2). Compensation does not include amounts received as earnings or profits from property or amounts not includible in gross income. Compensation also does not include any amount received as a pension or Annuity or as deferred compensation. The term "compensation" shall include any amount includible in the individual's gross income under Code Section 71 with respect to a divorce or separation instrument. V. DISTRIBUTION OF BENEFITS Notwithstanding any provision of this contract to the contrary, the distribution of an individual's interest shall be made in accordance with the minimum distribution requirements of Section 408(a)(6) or Section 408(b)(3) of the Code and the regulations thereunder, including the incidental death benefit provisions of Section 1.401(a)(9)-2 of the proposed regulations, all of which are herein incorporated by reference. Your entire interest in the account must be distributed, or begin to be distributed, by your required beginning date, which is the April 1 following the calendar year in which you reach age 70 1/2. For each succeeding year, a distribution must be made on or before December 31. By the required beginning date you may elect to have the balance in the account distributed in one of the following forms: 1. a single sum payment; 2. equal or substantially equal payments over your life; 22 3. equal or substantially equal payments over the lives of you and your designated Beneficiary; 4. equal or substantially equal payments over a specified period that may not be longer than your life expectancy; 5. equal or substantially equal payments over a specified period that may not be longer than the joint life and last survivor expectancy of you and your designated Beneficiary. MINIMUM AMOUNTS TO BE DISTRIBUTED If your interest is to be distributed in other than a lump sum or substantially equal amounts as discussed above, then the amount to be distributed each year, commencing at your required beginning date, must be at least an amount equal to the quotient obtained by dividing your entire interest by your life expectancy or the joint and survivor expectancy of you and your designated Beneficiary. Life expectancy and joint and last survivor expectancy are computed by use of the return multiples contained in section 1.72-9 of the Income Tax Regulations. For purposes of this computation, the owner's life expectancy may be recalculated no more frequently than annually; however, the life expectancy of a nonspouse Beneficiary may not be recalculated. If your designated Beneficiary is not your spouse, then the minimum amount required to be distributed shall be the greater of the amount determined above, or the amount determined under the incidental benefit rules set forth in Treasury Regulation Section 1.401(a)(9)-2. VI. DEATH If you die before your entire interest is distributed, the entire remaining interest will be distributed as follows: 1. If you die on or after distributions have begun under the DISTRIBUTION OF BENEFITS section, the entire remaining interest must be distributed at least as rapidly as provided under the DISTRIBUTION OF BENEFITS section. 2. If you die before distributions have begun under the DISTRIBUTION OF BENEFITS section, the entire remaining interest must be distributed as elected by you, or, if you have not so elected, as elected by the Beneficiary or Beneficiaries, as follows: a. by December 31st of the year containing the fifth anniversary of your death; or b. in equal or substantially equal payments over the life or life expectancy of the designated Beneficiary or Beneficiaries starting by December 31st of the year following the year of your death. If the Beneficiary is your surviving spouse and he or she elects to treat this contract as his or her own, this distribution may be deferred until December 31st of the year you would have turned age 70 1/2. If your surviving spouse dies before distributions begin, the restrictions in paragraphs 2 (a) and (b) above shall apply. Unless otherwise elected by you prior to the commencement of distributions under the DISTRIBUTION OF BENEFITS section, or, if applicable, by the surviving spouse where you die before distributions have commenced, life expectancies of you or your spousal Beneficiary shall be recalculated annually for purposes of distributions under the DISTRIBUTION OF BENEFITS section and the DEATH section. An election not to recalculate shall be irrevocable and shall apply to all subsequent years. The life expectancy of a non-spouse Beneficiary shall not be recalculated. VII. ALTERNATIVE CALCULATION METHOD An individual may satisfy the minimum distribution requirements under section 408(a)(6) and 408(b)(3) of the Code by receiving a distribution for one IRA that is equal to the amount required to satisfy the minimum distribution requirements for two or more IRAs. For this purpose, the owner of two or more IRAs may use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements described above. VIII. NONFORFEITABILITY Your entire interest in this Contract is nonforfeitable. 23 IX. NONTRANSFERABLE This Contract is not transferable. X. ROLLOVERS A. Subject to subparagraphs (B) and (C) hereof, and the limitations stated in the Contract, you may transfer to this Contract your interest in any of the following: 1. the entire amount, or any portion thereof, under any other individual retirement account or individual retirement Annuity qualified under Section 408 of the Code; 2. the entire amount, or any portion thereof, excluding nondeductible employee voluntary contributions, under a trust described in Section 401(a) of the Code which is exempt from tax under Section 501(a) of the Code or under a qualified annuity plan described in Section 403(a) of the Code. 3. the entire amount or any portion thereof, excluding nondeductible employee voluntary contributions, to which you are entitled under a tax sheltered annuity described in Section 403(b) of the Code. 4. distributions you roll over from retirement plans or arrangements described in A.2. and A.3. above to this contract must be completed by means of a direct transfer or rollover in accordance with Code Section 401(a)(31) in order to avoid mandatory 20% income tax withholding from the distribution and a possible 10% additional tax penalty under Code Section 72(t). You may replace amounts withheld from other sources to complete the full rollover, but the 10% penalty may continue to be due, if you do not specify that the transfer of the distribution be conducted by direct transfer or rollover. B. You shall not make a rollover under subparagraph (A)(1) hereof during the 12 month period commencing on the date you last made a rollover contribution of the type described in subparagraph (A)(1). C. We must receive any amount which qualifies for a rollover within 60 days after you receive the distribution. XI. DISTRIBUTIONS PRIOR TO AGE 59 1/2 Except in the event of your death, disability or attainment of age 59 1/2, we shall receive from you a declaration of your intention as to the disposition of the amounts distributed before making any distribution from this Contract. XII. REPORTS As the issuer of this Contract, we will furnish reports concerning the status of the Annuity at least annually. XIII. DISABILITY PAYMENTS If the Contract contains a Rider for waiver of premium and disability payment benefits, any disability payments provided for in the CONTRACT SPECIFICATIONS will be applied as purchase payments under the contract. XIV. AMENDMENT This Contract may be amended by us at any time to maintain its qualified status under Section 408(b) of the Code, following all regulatory approvals. Any such amendment may be made retroactively effective if necessary or appropriate to conform to the requirements of the Code (or any State law granting IRA tax benefits.) THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President 24 TAX-SHELTERED ANNUITY QUALIFICATION RIDER This endorsement is made a part of this contract in order to comply with Section 403(b) of the Code. The following conditions, restrictions and limitations apply. OWNERSHIP - NON-TRANSFERABLE You may not sell, assign, or discount this contract or pledge this contract as collateral for a loan or as security for the performance of an obligation or for any other purpose, to any person or organization other than to us. This provision supersedes any provisions of the contract which may be inconsistent with it. ELECTIVE DEFERRAL CONTRIBUTION LIMITS In order to meet the qualification requirements of Code Section 403(b), elective deferral contributions may not exceed the limitations in effect under Code Section 402(g). This rule is an individual limitation that applies to all elective deferral plans, contracts or arrangements in the aggregate. WITHDRAWAL RESTRICTIONS To qualify as a contract which can defer compensation under a Code Section 403(b) plan or arrangement, the withdrawal restrictions under Code Section 403(b)(11) must be met. Withdrawals attributable to contributions made pursuant to a salary reduction agreement may be paid only upon or after attainment of age 59 1/2, separation from service, death, total or permanent disability (as defined in Code Section 72(m)(7)) or in the case of hardship (as defined in the Treasury Regulations). The hardship exception applies only to the salary reduction contribution and not to any income attributable to such contribution. These withdrawal restrictions apply to years beginning after December 31, 1988 but only with respect to assets other than those assets held as of the close of the last year beginning before January 1, 1989. If contributions attributable to a custodial account described in Section 403(b)(7) of the Code are transferred to this contract, the following conditions, restrictions, and limitations apply. Withdrawals attributable to these transferred contributions may be paid only upon or after attainment of age 59 1/2, separation from service, death, or total and permanent disability (as defined in Code Section 72(m)(7)). Withdrawals on account of hardship may be made only with respect to assets attributable to a custodial account as of the close of the last year beginning before January 1, 1989 and amounts contributed thereafter under a salary reduction agreement but not to any income attributable to such conditions. ELIGIBLE ROLLOVERS To the extent you are otherwise eligible for a distribution under this contract, and provided the distribution is an eligible rollover distribution, you may elect to have such distribution or a portion of it paid directly to an eligible retirement plan. You must specify the eligible retirement plan to which such distribution is to be paid in a form and at such time acceptable to us. Such distribution shall be made as of a direct transfer to the eligible retirement plan so specified. Contract surrender penalties may apply to all rollovers. Previously taxed amounts in this contract are not eligible for rollover. Amounts that are rolled over are taxed generally until later distributed. An eligible rollover distribution includes generally any taxable distribution or portion thereof from this contract except: a. any distribution which is one of a series of substantially equal periodic payments made not less frequently than annually and made to you for life or life expectancy or to you or your joint life beneficiary for joint lives or life expectancies, or for a specified period of 10 years or more, or b. any distribution which is a required distribution as described above under "MANDATORY DISTRIBUTION REQUIREMENTS." 25 An eligible retirement plan includes an individual retirement annuity or account described in Code Section 408. It also includes a tax sheltered annuity plan or arrangement under Code Section 403(b), provided it accepts eligible rollovers and is a defined contribution plan. If you receive a distribution that is eligible for rollover, but you receive the check directly, then mandatory income tax withholding will be taken from the distribution. You may roll over the balance to an individual retirement annuity or account within 60 days of receipt, and may make up the amount withheld from other sources in the rollover in order to roll over the maximum without possible early distribution tax penalty on the amount of the tax withholding. MANDATORY DISTRIBUTION REQUIREMENTS In order to meet the qualification requirements of Code Section 403(b), all plans must meet the required mandatory distribution rules in Code Section 401(a)(9). Code Section 401(a)(9) states that a plan will not be qualified unless the entire interest of each employee is distributed to such employee not later than the "required beginning date" or over the life or life expectancy of such employee or over the lives or joint life expectancy of such employee and a designated Beneficiary. Generally, the "required beginning date" means April 1 of the calendar year following the calendar year in which the employee attains age 70 1/2. If the employee dies after the distribution has begun but before his/her entire interest has been distributed, the remaining interest must be paid out at least as rapidly as it was being paid out under the method of payment in effect at the time of death. If the employee dies before the distribution of his/her entire interest has begun, the entire interest must be distributed within five years after the employee's death or an Annuity payable over no longer than life or life expectancy must be distributed to an electing designated Beneficiary starting within one year of the employee's death. A spousal designated Beneficiary may elect to defer distributions until the employee would have attained the age of 70 1/2. ADMINISTRATIVE COMPLIANCE If changes in the Code and related law, regulations and rulings require a distribution greater than described above in order to keep this Annuity qualified under the Code, we will administer the contract in accordance with these laws, regulations and rulings. We will provide you with a revised rider describing any necessary changes, following all regulatory approvals. THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President 26 PENSION/PROFIT SHARING PLAN QUALIFICATION RIDER If the owner of this contract requested that it be issued to comply with Section 401(a) of the Code, the following conditions, restrictions and limitations apply to this contract. OWNERSHIP - NON-TRANSFERABLE You may not sell, assign, or discount this contract or pledge this contract as collateral for a loan as security for the performance of an obligation or for any other purpose, to any person or organization other than The Travelers Life and Annuity Company; provided, however, the restrictions of this provision will not apply to the Trustee of any Trust described in Section 401(a) or the Administrator of any Annuity Plan described in Section 403(a) of the Code. This provision supersedes any provisions of the contract which may be inconsistent with it. MANDATORY DISTRIBUTION RESTRICTIONS In order to meet the qualification requirements of Code Section 401(a), all plans must meet the required mandatory distribution rules in Code Section 401(a)(9). Code Section 401(a)(9) states that a plan will not be qualified unless the entire interest of each employee is distributed to such employee not later than the "required beginning date" or over no longer than the life or life expectancy of such employee or the lives or joint life expectancy of such employee and a designated Beneficiary. Generally, the "required beginning date" means April 1 of the calendar year following the calendar year in which the employee attains age 70 1/2. If the employee dies before his/her entire interest has been distributed, the remaining interest must be paid out at least as rapidly as under the method of payment in effect at the time of death. If the employee dies before the distribution of his/her entire interest has begun, the entire interest must be distributed within five years after the employee's death or an Annuity payable over no longer than life or life expectancy must be distributed to an electing designated Beneficiary starting within one year of the employee's death. A spousal designated Beneficiary may elect to defer distributions until the employee would have attained the age of 70 1/2. ANNUITIES DISTRIBUTED UNDER QUALIFIED PLANS If the applicant for this contract requested that it be issued to comply with Section 401(a) of the Code, and this contract has subsequently been transferred to the Annuitant, the following conditions, restrictions and limitations apply to this contract in addition to the above. Spousal Consent Death Benefit - If the Annuitant dies while the contract continues and the Annuitant has a spouse at the time of the Annuitant's death, we will pay the death benefit to a person other than the current spouse of the Annuitant only if proof of spousal consent, which meets the requirements of Section 417 of the Code, is furnished to us. If the Beneficiary is not the current spouse and such spousal consent is not furnished, we will pay 50% of the death benefit to the current spouse. We will pay the balance of the death benefit to the Beneficiary. Cash Surrender - Before the due date of the first Annuity or Income Payment, 1) if you do not have a spouse and without the consent of any Beneficiary; or, 2) if you do have a current spouse then only with the written consent of your spouse, as required by Section 417 of the Code; we will pay to you all or any portion of the Cash Surrender Value of the contract upon receipt of your Written Request for it. Settlement Option - If the Annuitant is living on the Maturity Date, payment must be made in accordance with Option 4 under ANNUITY OPTIONS unless you elect another form of Annuity Option and furnish us a qualified election which meets the requirements of Section 417 of the Code. THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President 27 DEATH BENEFIT ENDORSEMENT This endorsement is made a part of this contract as of the date it is attached to the contract. The "DEATH PROCEEDS PRIOR TO THE MATURITY DATE" provision is amended by deleting the provision and replacing it with the following: DEATH PROCEEDS PRIOR TO THE MATURITY DATE WHERE ANNUITANT WAS YOUNGER THAN AGE 67 ON THE CONTRACT DATE AND DIES BEFORE AGE 85: The death benefit payable as of the Death Report Date will be the greatest of (a), (b) or (c) below, less any applicable premium tax and outstanding loans: (a) the Contract Value on the Death Report Date; (b) the total Purchase Payments made under the contract less the total amount of any partial surrenders; or (c) the maximum of all Step-Up Death Benefit Values (as described below) in effect on the Death Report Date which are associated with Contract Date anniversaries beginning with the eighth Contract Date anniversary, and ending with the last Contract Date anniversary occurring on or before the Annuitant's 76th birthday. We must be notified no later than six months from the date of death in order for Us to make payment of proceeds as described above. If notification is received more than six months after the date of death, the death benefit payable will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. WHERE ANNUITANT WAS AGE 67 THROUGH 75 ON THE CONTRACT DATE AND DIES BEFORE AGE 85: The death benefit payable as of the Death Report Date will be the greatest of (a), (b) or (c) below less any applicable premium and outstanding loans: (a) the Contract Value on the Death Report Date; (b) the total Purchase Payments made under the contract less the total amount of any partial surrenders; or (c) the Step-Up Death Benefit Value (as described below) in effect on the Death Report Date associated with the eighth Contract Date Anniversary. We must be notified no later than six months from the date of death in order for Us to make payment of proceeds as described above. If notification is received more than six months after the date of death, the death benefit payable will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. 28 WHERE ANNUITANT WAS AGE 76 OR OLDER ON THE CONTRACT DATE: The death benefit payable as of the Death Report Date will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. WHERE ANNUITANT DIES ON OR AFTER AGE 85: The death benefit payable as of the Death Report Date will be the Contract Value on the Death Report Date, less any applicable premium taxes or outstanding loans. STEP-UP DEATH BENEFIT VALUE A separate Step-Up Death Benefit Value will be established on the eighth Contract Date anniversary, and on each Contract Date anniversary thereafter, which occurs on or prior to the Death Report Date and will initially equal the Contract Value on that anniversary. After a Step-Up Death Benefit Value has been established, it will be recalculated each time a Purchase Payment is made or a partial surrender is taken until the Death Report Date. Step-Up Death Benefit Values will be recalculated by increasing them by the amount of each applicable Purchase Payment and by reducing them by a Partial Surrender Reduction (as described below) for each applicable partial surrender. Recalculations of Step-Up Death Benefit Values related to any Purchase Payments or any partial surrenders will be made in the order that such Purchase Payments or partial surrenders occur. PARTIAL SURRENDER REDUCTION The Partial Surrender Reduction referenced above is equal to: (a) the amount of a Step-Up Death Benefit Value immediately prior to the reduction for the partial surrender, multiplied by (b) the amount of the partial surrender divided by the Contract Value immediately prior to the partial surrender. THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President 29 RIDER WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT This rider is made a part of this contract as of the date it is attached to the contract. If the Annuitant is hospitalized and/or confined to an Eligible Nursing Home for thirty consecutive days, You may make a total or partial withdrawal of your Contract Value without incurring a Withdrawal Charge, even if the withdrawal occurs during the first seven (?) years of your contract. However, such a withdrawal must be made within sixty days of the last day following a period of confinement which lasts at least thirty consecutive days. We will require proof of confinement in a form satisfactory to us, which may include certification by a licensed physician. An Eligible Nursing Home is defined as an institution or special nursing unit of a hospital which meets at least one of the following requirements: 1. Medicare approved as a provider of skilled nursing care, intermediate nursing care or custodial nursing care by the state in which it is located; or 2. Licensed and operated to provide skilled nursing care, intermediate nursing care or custodial nursing care by the state in which it is located; or 3. Meets all the requirements listed below: a. is licensed to operate as a nursing home by the state in which it is located; b. has, as a main function, the provision of skilled, intermediate, or custodial nursing care; c. is engaged in providing continuous room and board accommodations to 3 or more persons; d. is under the supervision of a Licensed Vocational Nurse (LVN) or a nurse of comparable qualifications; and e. maintains a daily medical record of each patient. FILING A CLAIM: You must provide the Company with written notice of a claim within thirty days following the last day of a period of confinement which lasts at least 30 days. Within fifteen days of receiving a written notice of claim, We will send You all the necessary claim forms. If You do not receive claim forms within that period of time, You may submit written proof of your claim without using Our forms. Any withdrawal requested which falls under the scope of this waiver will be paid as soon as We receive proper written proof of your claim, and will be paid in a lump sum. You should consult with your personal tax advisor regarding the taxable nature of any withdrawals taken on your contract. No legal action may be brought to recover on this benefit until sixty days after You have submitted written proof of your claim. THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President 30 THE TRAVELERS INSURANCE COMPANY - ONE TOWER SQUARE - HARTFORD, CONNECTICUT - 06183 A STOCK COMPANY We are pleased to provide you the benefits of this Variable Annuity Contract. Please read your contract and all attached forms carefully. RIGHT TO EXAMINE THIS CONTRACT IF THIS CONTRACT IS RETURNED TO US AT OUR OFFICE OR TO OUR AGENT TO BE CANCELLED WITHIN 20 DAYS AFTER ITS DELIVERY TO YOU, WE WILL PAY YOU THE CONTRACT VALUE DETERMINED AS OF THE NEXT VALUATION DATE AFTER WE RECEIVE THE WRITTEN REQUEST AT OUR OFFICE, PLUS ANY PREMIUM TAX CHARGES OR CONTRACT CHARGES PAID. AFTER THE CONTRACT IS RETURNED, IT WILL BE CONSIDERED AS NEVER IN EFFECT. This contract is issued in consideration of the purchase payment. It is subject to the terms and conditions stated on the attached pages, all of which are a part of it. Executed at Hartford, Connecticut /s/ M.A. CARPENTER President This is a legal contract between you and us. READ YOUR CONTRACT CAREFULLY. INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT NON TAX QUALIFIED LIFE ANNUITY COMMENCING AT MATURITY DATE ELECTIVE OPTIONS NON-PARTICIPATING ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. 31 TABLE OF CONTENTS Right to Examine this Contract Cover Page Contract Specifications Pages 3-4 Definitions Page 5 Owner, Beneficiary and Annuitant Provisions Pages 6-7 Purchase Payment and Valuation Provisions Pages 8-10 Death Benefit Provisions Page 11 Settlement Provisions Pages 12-14 General Provisions Pages 15-16 Table of Values Page 17 Life Annuity Tables Pages 19-20
Any Riders or Endorsements follow the Life Annuity Tables. Page 2 32 CONTRACT SPECIFICATIONS OWNER JOHN DOE JOINT OWNER ANNUITANT JOHN DOE CONTINGENT ANNUITANT CONTRACT NUMBER SPECIMEN CONTRACT DATE 07/01/97 MATURITY DATE 07/01/27 MONTHLY LIFE ANNUITY INITIAL PURCHASE PAYMENT $5,000.00
PURCHASE PAYMENTS: Minimum Initial Purchase Payment: $5,000 Minimum Subsequent Purchase Payment: $100 Maximum Purchase Payment: $1,000,000 unless we consent to a larger amount. THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES
FUNDING OPTIONS: SUB ACCOUNT DEDUCTION PER DAY Smith Barney Concert Allocation Series Inc.: Select Balanced Portfolio .0000384 Select Conservative Portfolio .0000384 Select Growth Portfolio .0000384 Select High Growth Portfolio .0000384 Select Income Portfolio .0000384 Smith Barney Series Fund: Appreciation Portfolio .0000384 Travelers Series Fund Inc.: Smith Barney High Income Portfolio .0000384 Smith Barney Income and Growth Portfolio .0000384 Smith Barney International Equity Portfolio .0000384 Smith Barney Money Market Portfolio .0000384 MFS Total Return Portfolio .0000384
SUB ACCOUNT DEDUCTIONS: The Sub Account Deduction Per Day is based on the following annual charges: ADMINISTRATIVE CHARGE: .15% MORTALITY AND EXPENSE RISK CHARGE: 1.25% FIXED ACCOUNT GUARANTEED INTEREST PERIODS: The initial rate for any deposit is guaranteed for one year from date of deposit. Subsequent renewal rates will be guaranteed for the calendar quarter. TRANSFER CHARGE: $0.00 We reserve the right to assess a Transfer Charge of up to $10.00 on transfers exceeding 12 per year. We will notidy You in Writing at Your last known address at least 31 days prior to the imposition of any such Transfer Charge You may transfer up to 15% of the Fixed Account value to any of the Sub-Accounts twice a year during the 30 days following the semi-annual Contract Date anniversary. 3 33 CONTRACT CHARGE $30.00 Annually. This charge will be taken on the fourth Friday of August of each year. No Contract Charge will be deducted from the Fixed Account. This charge will not be assessed under the following situations: a. distribution of proceeds due to death; or b. after an Annuity or Income payout has begun. WITHDRAWAL CHARGES DEDUCTED ON SURRENDER:
DEFERRED SALES CHARGE YEARS SINCE PURCHASE (PERCENT OF PURCHASE PAYMENTS NOT PREVIOUSLY PAYMENT WAS PAID SURRENDERED) (FIRST-IN, FIRST-OUT BASIS) ---------------- ---------------------------------------- 1 8% 2 7% 3 6% 4 5% 5 4% 6 3% 7 2% 8 1% 9 AND THEREAFTER 0%
For purposes of the Deferred Sales Charge calculation, withdrawals will be deemed to be taken in the following order: a) from any Purchase Payments to which no withdrawal charge is applicable; b) from any remaining Withdrawal Allowance after reduction by the amount of (a); c) from any Purchase Payments to which a Deferred Sales Charge is applicable (on a First-In, First-Out basis); and d) from any Contract interest. WITHDRAWAL ALLOWANCE: After the first Contract Year, You may take partial surrenders annually of up to 10% of Your Contract Value as of the first Valuation Date of each Contract Year without imposition of a Withdrawal Charge. The Withdrawal Allowance is available for any partial withdrawal and for a full withdrawal except those withdrawals directly transferred to annuity contracts with other financial institution(s). Any withdrawal deemed to be taken from Purchase Payments to which no Withdrawal Charge applies will reduce any withdrawal allowance available in that Contract Year. Any withdrawal deemed to be taken from the Withdrawal Allowance will not reduce the amount of Purchase Payments to which a Deferred Sales Charge is applicable. DISTRIBUTION NOT SUBJECT TO A WITHDRAWAL CHARGE: We will not deduct a Withdrawal Charge for Payments under this Contract due to: a) distribution of proceeds due to death; b) an Annuity Option based upon life expectancy; or c) an Income Option with payments for a fixed period of five years or greater, elected after the first Contract Year. UPON ANNUITIZATION, ASSUMED DAILY NET INVESTMENT FACTOR IS 1.000081 FOR ALL SUB-ACCOUNTS. TERMINATION We reserve the right to terminate this contract when the Contract Value is less than the Termination Amount of $2,000 and no Purchase Payments have been made for at least two years. 4 34 DEFINITIONS (a) ACCOUNT(S) - the Sub-Accounts and/or the Fixed Account under this contract. (b) ACCUMULATION UNIT - an accounting unit of measure used to calculate the value of this contract before Annuity payments begin. (c) AGE - age last birthday. (d) ANNUITANT - the person on whose life the Maturity Date and Annuity payments depend. (e) ANNUITY UNIT - an accounting unit of measure used to calculate the amount of Annuity Payments. (f) CODE - the Internal Revenue Code of 1986, as amended, and all related laws and regulations which are in effect during the term of this contract. (g) CONTRACT DATE - the date on which the contract is issued. (h) CONTRACT YEARS - twelve month periods beginning with the Contract Date. (i) DEATH REPORT DATE - the Valuation Date coincident with or next following the day on which we have received 1) Due Proof of Death and 2) a Written Request for an election of a single sum payment or an alternate Settlement Option as described in the contract. (j) DUE PROOF OF DEATH - (I) a copy of a certified death certificate; (ii) a copy of a certified decree of a court of competent jurisdiction as to the finding of death; (iii) a written statement by a medical doctor who attended the deceased; or (iv) any other proof satisfactory to us. (k) FIXED ACCOUNT - an account that consists of all of the assets under this contract other than those in the Separate Account. (l) FUNDING OPTION - an open-end diversified management investment company indicated in the CONTRACT SPECIFICATIONS, which serves as an investment option under the Separate Account. (m) MATURITY DATE - the date on which the Annuity payments are to begin. (n) OUR OFFICE - the Home Office of The Travelers Life and Annuity Company or any other office which we may designate for the purpose of administering this contract. (o) RECORDED - a Written Request is recorded when the information is noted in our file for this contract. (p) SEPARATE ACCOUNTS - those Separate Accounts indicated in the CONTRACT SPECIFICATIONS which we established for this class of contracts and certain other contracts. (q) SETTLEMENT OPTIONS - an Annuity or Income option elected under this contract. (r) SUB-ACCOUNT - that portion of the assets of a Separate Account which is allocated to a particular Underlying Fund. (s) VALUATION DATE - a date on which a Sub-Account is valued. (t) VALUATION PERIOD - the period between successive valuations. (u) WE, US, OUR - The Travelers Insurance Company. (v) WRITTEN REQUEST - written information including requests for contract changes sent to us in a form and content satisfactory to us and received at Our Office. (w) YOU, YOUR - the Owner, including a joint owner 5 35 OWNER, BENEFICIARY AND ANNUITANT PROVISIONS OWNER This contract belongs to the owner shown on the CONTRACT SPECIFICATIONS or to any person subsequently named in a Written Request of transfer of owner as provided below. As owner, you have sole power during the Annuitant's lifetime to exercise any rights and to receive all benefits given in this contract provided you have not named an irrevocable Beneficiary and provided the contract is not assigned. You will be the recipient of all payments while the Annuitant is alive unless you direct them to an alternate recipient under a Recorded payment direction. An alternate recipient under a payment direction does not become the owner. A payment direction is revocable by you at any time by Written Request giving 30 days advance notice. JOINT OWNER Joint Owners may be named in a Written Request prior to the Contract Date. Joint owners may independently exercise transfers between accounts. All other rights of ownership must be exercised by joint action. Joint owners own equal shares of any benefits accruing or payments made to them. All rights of a joint owner end at death if another joint owner survives. The entire interest of the deceased joint owner in this contract will pass to the surviving joint owner. If the owner dies and is survived by the Annuitant before payment of an Annuity or Income Option begins, any surviving joint or suceeding owner is the "designated beneficiary" referred to in Section 72(s) of the Code, and his or her rights pre-empt those of the Beneficiary named in a Written Request. TRANSFER OF OWNER You may transfer ownership by Written Request. You may not revoke any transfer after the effective date. Once the transfer of owner is Recorded by us, it will take effect as of the date of your Request, subject to any payments made or other actions taken by us before the recording. Unless provided otherwise, a transfer does not affect the interest of any Beneficiary designated prior to the effective date of the transfer. A transfer of ownership may have adverse tax consequences to you as the former owner. ASSIGNMENT You may collaterally assign ownership of all or a portion of this contract by Written Request without the approval of any Beneficiary unless irrevocably named. You may not exercise any rights of ownership while the assignment remains in effect without the approval of the collateral assignee. We are not responsible for the validity of any assignment. Once the collateral assignment is Recorded by us, it will take effect as of the date of your Written Request, subject to any payments made or other actions taken by us before the Request is received. If a claim is made based on an assignment, we may require proof of interest of the claimant. A Recorded assignment takes precedence over any rights of a Beneficiary. Any amounts due under a Recorded assignment will be paid in a single sum. An assignment may have adverse tax consequences to you. CREDITOR CLAIMS To the extent permitted by law, no right or benefit of the owner or Beneficiary under this contract shall be subject to the claims of creditors or any legal process except as may be provided by an assignment. BENEFICIARY The Beneficiary is the party named in a Written Request. The Beneficiary has the right to receive any remaining contractual benefits upon the death of the Annuitant, or under certain circumstances, upon the death of the owner. If there is more than one Beneficiary surviving the Annuitant, the Beneficiaries will share equally in benefits unless different shares are Recorded with us by Written Request prior to the death of the Annuitant. If the owner dies and is survived by the Annuitant before payment of an Annuity or Income Option begins, any surviving joint owner is the "designated beneficiary" referred to in Section 72(s) of the Code, and his or her rights pre-empt those of the Beneficiary named in a Written Request. Unless an irrevocable Beneficiary has been named, you have the right to change any Beneficiary by Written Request during the lifetime of the Annuitant and while the contract continues. 6 36 Once a change in Beneficiary is Recorded by us, it will take effect as of the date of the Written Request, subject to any payments made or other actions taken by us before the recording. If no Beneficiary has been named by you, or if no Beneficiary is living when the Annuitant dies, the interest of any Beneficiary will pass: a. if you are living, to you; b. if you have died and there is a surviving joint owner, to the joint owner; c. if you have died and there is not a joint owner surviving, to your estate. ANNUITANT The Annuitant is the individual shown on the CONTRACT SPECIFICATIONS on whose life the first Annuity payment is made. The Annuitant may not be changed after the Contract Date. CONTINGENT ANNUITANT You may name one individual as a contingent annuitant by Written Request prior to the Contract Date. A contingent annuitant may not be changed, deleted or added to the contract after the Contract Date. For purposes of this provision the owner cannot be the Annuitant. If the Annuitant dies prior to the Maturity Date while this contract is in effect and while the contingent annuitant is living: a. the death benefit will not be payable upon the Annuitant's death; b. the contingent annuitant becomes the Annuitant; and c. all other rights and benefits provided by this contract will continue in effect. When a contingent annuitant becomes the Annuitant, the Maturity Date remains the same as previously in effect, unless otherwise provided. 7 37 PURCHASE PAYMENT AND VALUATION PROVISIONS PURCHASE PAYMENTS PURCHASE PAYMENT Purchase payments are the payments you make for this contract and the benefits it provides. An initial lump sum purchase payment must be made to the contract and is due and payable before the contract becomes effective. Each purchase payment is payable as shown on the CONTRACT SPECIFICATIONS to us at Our Office or to one of our authorized representatives. No purchase payments after the initial purchase payment are required to continue this contract in force, except as provided in the "Termination" provision. Net purchase payments are that part of your purchase payments applied to the Contract Value. A net purchase payment is equal to the purchase payment less any applicable premium tax charge. ALLOCATION OF PURCHASE PAYMENTS We will apply any net purchase payments to provide Accumulation Units of selected Sub-Accounts and/or the Fixed Account of this contract. The initial purchase payment will be applied within two business days following its receipt at Our Office. Any subsequent purchase payments will be applied as of the next valuation following receipt of those payments at Our Office. The net purchase payment will be allocated to the Accounts in the proportion specified by you for this contract. By Written Request, you may change your choice of Accounts or allocation percentages. The available Funding Options to which Sub-Account assets are allocated are shown on the CONTRACT SPECIFICATIONS; funds may be subsequently added or deleted. SUB-ACCOUNT VALUATION NUMBER OF ACCUMULATION UNITS The number of Accumulation Units to be credited to each Sub-Account once a purchase payment has been received by us will be determined by dividing the net purchase payment applied to that Sub-Account by the then Accumulation Unit Value of that Sub-Account. ACCUMULATION UNIT VALUE The initial value of an Accumulation Unit for each Sub-Account was set at $1.00. We determine the value of an Accumulation Unit in each Sub-Account on each Valuation Date by multiplying the value on the immediately preceding Valuation Date by the net investment factor for that Sub-Account for the Valuation Period just ended. The value of an Accumulation Unit on any date other than a Valuation Date will be equal to its value as of the next Valuation Date. NET INVESTMENT FACTOR The net investment factor is a factor applied to measure the investment performance of a Sub-Account from one Valuation Period to the next. The net investment factor for a Sub-Account for any Valuation Period is equal to the sum of 1.0000 plus the net investment rate. Each Sub-Account's net investment rate for a Valuation Period is equal to the gross investment rate for that Sub-Account, less the applicable Sub-Account deduction for the Valuation Period. All Sub-Account deductions are shown on the CONTRACT SPECIFICATIONS. The gross investment rate of a Sub-Account for a Valuation Period is equal to (1) divided by (2) where (1) is: a. investment income, plus b. capital gains and losses, whether realized or unrealized; less c. a deduction for any tax levied against the Separate Account and its Funding Options; and (2) is the amount of the assets at the beginning of the Valuation Period. The gross investment rate for a Sub-Account may be either positive or negative. If a Sub-Account is invested in shares of a Funding Option, assets are based on the net asset value of the Funding Option. Investment income includes any distribution whose ex-dividend date occurs during the Valuation Period. 8 38 FIXED ACCOUNT VALUATION NUMBER OF ACCUMULATION UNITS - We will determine the number of Accumulation Units to be credited to the Fixed Account on receipt of a purchase payment by dividing the net purchase payment applied to the Fixed Account by the then dollar value of one Accumulation Unit Value of the Fixed Account. ACCUMULATION UNIT VALUE - We determine the value of an Accumulation Unit in the Fixed Account on any day by multiplying the value on the immediately preceding day by the net interest factor for the day on which the value is being determined. NET INTEREST FACTOR - The net interest factor for any day is the guaranteed net interest rate which is equivalent to an effective annual interest rate of 3.00%, plus 1.0000. The method of crediting additional interest will be at our discretion. Interest is declared in advance. Before Annuity or Income payments begin, we may credit the Fixed Account with annual interest rates higher than the minimum guaranteed interest rate of 3.00%. Interest rates may be higher or lower than the initial interest rates, but not less than the minimum guaranteed interest rate of 3.00%. Additional amounts may be credited by us at our discretion for the guaranteed interest periods shown on the CONTRACT SPECIFICATIONS. TRANSFER BETWEEN ACCOUNTS You may transfer all or any part of the Contract Value from one Sub-Account to any other Sub-Account at any time up to 30 days before the due date of the first Annuity or Income payment. Additionally, you may transfer a part of the Fixed Account value to any of the Sub-Accounts, twice a year during the 30 days following the semi-annual Contract Date Anniversary in the amount shown on the CONTRACT SPECIFICATIONS. Amounts may generally be transferred from the Sub-Accounts to the Fixed Account at any time, up to 30 days before the due date of the first Annuity or Income payment. Amounts previously transferred from the Fixed Account to the Sub-Accounts may not be transferred back to the Fixed Account for a period of at least 6 months from the date of transfer. We reserve the right to limit the number of transfers from one Sub-Account to any other Sub-Account or to the Fixed Account. We will not limit these transfers to less than one in any six month period. Transfers between Accounts will result in the addition or deletion of Accumulation Units having a total value equal to the dollar amount being transferred to or from a particular Account. The number of Accumulation Units will be determined by using the Accumulation Unit Value of the Accounts involved as of the next valuation after we receive notification of request for transfer. Transfers will be subject to any applicable Transfer charge stated on the CONTRACT SPECIFICATIONS. CONTRACT VALUES CONTRACT VALUE The Contract Value of this contract on any date equals the sum of the accumulated values in the Accounts. The accumulated value in an Account equals the number of outstanding Accumulation Units credited to that Account, multiplied by the then Accumulation Unit Value for that Account. The Guaranteed Value of the Fixed Account equals the accumulated values of the Fixed Account calculated by using the guaranteed net interest factor. The Guaranteed Values of the Fixed Account are shown in the Table of Values. CONTRACT CHARGE A Contract Charge in the amount and for the period shown on the CONTRACT SPECIFICATIONS will be deducted from the Contract Value to reimburse us for administrative expenses relating to the contract. The Contract Charge will be deducted by surrendering on a pro rata basis Accumulation Units from all Sub-Accounts in which you have an interest. We will deduct the charge on a pro rata basis if the contract has been in effect for less than a full period on the date a Contract Charge is deducted. The Contract Charge will also be prorated upon full surrender or termination of the contract. CASH SURRENDER You may elect by Written Request to receive the Cash Surrender Value of this contract before the due date of the first Annuity or Income payment and without the consent of any Beneficiary unless irrevocably named. You may elect either a full or partial surrender of the Cash Surrender Value. In the case of a full surrender, this contract will be cancelled. A partial surrender will result in a reduction in your Contract Value. If you have a balance in more than one Account, your Contract Value will be reduced from all your accounts on a pro rata basis, unless you request otherwise. 9 39 The Cash Surrender Value will be determined as of the next valuation following receipt of your Written Request. We may delay payment of the Cash Surrender Value of the Sub-Accounts for a period of not more than five days after we receive your Written Request. We may delay payment of the Cash Surrender Value of the Fixed Account for a period of not more than six months after we receive your Written Request. CASH SURRENDER VALUE The Cash Surrender Value is equal to the Contract Value less any amounts deducted on surrender which are shown on the CONTRACT SPECIFICATIONS and any applicable premium tax not previously deducted. The Guaranteed Cash Surrender Value of the Fixed Account equals the Guaranteed Value of the Fixed Account less any amounts deducted on surrender which are shown on the CONTRACT SPECIFICATIONS, less any applicable premium tax not previously deducted and less any outstanding loan balance. For Guaranteed Cash Surrender Values of the Fixed Account, see the Table of Values. CONTRACT CONTINUATION Except as provided in the "Termination" provision, this contract does not require continuing purchase payments and will automatically continue as a paid-up contract during the lifetime of the Annuitant until the Maturity Date or until it is surrendered. 10 40 DEATH BENEFIT PROVISIONS DEATH OF ANNUITANT A death benefit is payable to the Beneficiary upon the death of the Annuitant before the Maturity Date, unless prior to the Maturity Date there is a contingent annuitant surviving. A death benefit is also payable under those Settlement Options which provide for death benefits. We will pay the Beneficiary the death benefit in a single sum as described below upon receiving Due Proof of Death. A Beneficiary may request that a death benefit payable under this contract be applied to a Settlement Option subject to the provisions of this contract and the current Tax Law Qualification Rider. DEATH OF OWNER WITH ANNUITANT SURVIVING If the owner dies (including the first of joint owners) before the Maturity Date and with the Annuitant surviving, we will recalculate the value of the death benefit under provisions of DEATH PROCEEDS PRIOR TO THE MATURITY DATE below. The value of the death benefit, as recalculated, will be paid in a single lump sum or by other election to the party taking proceeds under the current Tax Law Qualification Rider. The party must take distributions no later than under the applicable elections of that provision. All references to annuitant in the DEATH PROCEEDS PRIOR TO MATURITY DATE provision will be replaced with reference to the owner. DEATH PROCEEDS PRIOR TO THE MATURITY DATE If the Annuitant dies before age 75 and before the Maturity Date, we will pay the Beneficiary the greatest of a), b), or c) below, less any applicable premium tax or prior surrenders not previously deducted as of the Death Report Date: a. the Contract Value; b. the total purchase payments under the contract; or c. the death benefit value, which will be reset once every five years to the then current Contract Value, immediately preceding the Death Report Date. If the Annuitant dies on or after age 75, but before age 85 and before the Maturity Date, we will pay the Beneficiary the greatest of a), b), or c) below, less any applicable premium tax or prior surrenders not previously deducted as of the Death Report Date: a. the Contract Value; b. the total purchase payments under the contract; or c. the death benefit value, which will be reset once every five years to the then current Contract Value, occurring on or before the Annuitant's 75th birthday. If the Annuitant dies on or after age 85 and before the Maturity Date, we will pay the Beneficiary the Contract Value less any applicable premium tax as of the Death Report Date. DEATH PROCEEDS AFTER THE MATURITY DATE If the Annuitant dies on or after the Maturity Date, we will pay the Beneficiary a death benefit consisting of any benefit remaining under the Annuity or Income option then in effect. 11 41 SETTLEMENT PROVISIONS MATURITY DATE The Maturity Date is shown on the CONTRACT SPECIFICATIONS. This is the date on which we will begin paying to you the first of a series of Annuity or Income payments in accordance with the Settlement Option elected by you. Annuity or Income payments will begin under this contract on the Maturity Date unless the contract has been fully surrendered or the proceeds have been paid to the Beneficiary prior to that date. We may require proof that the Annuitant is alive before Annuity payments are made. If no Maturity Date is specified, the automatic Maturity Date will be the greater of when the Annuitant reaches age 75 or ten years after the Contract Date. Additionally, to the extent permitted by law, at least 30 days before the original Maturity Date, you may change the Maturity Date by Written Request to any time prior to the Annuitant's 85th birthday or to a later date with our consent. ELECTION OF SETTLEMENT OPTIONS On the Maturity Date, or other agreed upon date, we will pay the amount payable under this contract to you in one lump sum or in accordance with the option elected by you. While the Annuitant is alive, you may change your Settlement Option election by Written Request, but only before the Maturity Date. Once Annuity or Income payments have commenced, no further election changes are allowed. During the Annuitant's lifetime, if no election has been made on the Maturity Date, we will pay to you the first of a series of monthly Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. MINIMUM AMOUNTS The minimum amount that can be placed under a Settlement Option is $2,000 unless we consent to a lesser amount. If any periodic payments due are less than $100.00, we reserve the right to make payments at less frequent intervals. ALLOCATION OF ANNUITY At the time an election of one of the Annuity Options is made, the person electing the option may further elect to have the Cash Surrender Value applied to provide a Variable Annuity, a Fixed Annuity or a combination of both. If no election is made to the contrary, the value of a Sub-Account will be applied when Annuity payments start to provide an Annuity which varies with the investment experience of that same Sub-Account and the value of the Fixed Account will be applied to provide a Fixed Annuity. You may elect to transfer Contract Value from one Account to another, as described in the provision "Transfer Between Accounts," in order to reallocate the basis on which Annuity payments will be determined. Once Annuity payments start, you may, with our consent, change the allocation of your values in each Sub-Account. VARIABLE ANNUITY AMOUNT OF BASIC FIRST PAYMENT The LIFE ANNUITY TABLES are used to determine the basic first monthly Annuity payment. They show the dollar amount of the basic first monthly Annuity payment which can be purchased with each $1,000 applied. The amount applied to an Annuity will be the Cash Surrender Value as of 14 days before the date Annuity payments start. We reserve the right to require satisfactory proof of the age of any person on whose life Annuity payments are based before making the first payment under any of these options. ANNUITY UNIT VALUE The initial value of an Annuity Unit for each Sub-Account was set at $1.00. On any Valuation Date, the Annuity Unit Value for a Sub-Account equals the Sub-Account Annuity Unit Value on the immediately preceding Valuation Date, multiplied by the net investment factor for that Sub-Account for the Valuation Period just ended, divided by the Assumed Daily Net Investment Factor. The Assumed Daily Net Investment Factor is shown on the CONTRACT SPECIFICATIONS. 12 42 The Value of an Annuity Unit as of any date other than a Valuation Date will be equal to its value as of the next succeeding Valuation Date. NUMBER OF ANNUITY UNITS We determine the number of Annuity Units credited to this contract in each Sub-Account by dividing the basic first monthly Annuity payment attributable to that Sub-Account by the Sub-Account's Annuity Unit Value as of 14 days before the due date of the first Annuity payment. AMOUNT OF SECOND AND SUBSEQUENT BASIC PAYMENTS The dollar amount of the second and subsequent payments may change from month to month. The total amount of each Annuity payment will be equal to the sum of the basic payments in each Sub-Account. The actual amount of the basic payments in each Sub-Account is found by multiplying the number of Annuity Units credited to the contract in that Sub-Account by the Annuity Unit Value of the Sub-Account as of the date 14 days prior to the date on which the payment is due. FIXED ANNUITY A Fixed Annuity is an Annuity with payments which remain fixed as to dollar amount throughout the payment period. The dollar amount of the first Fixed Annuity payment will be calculated as described above in the "Amount of Basic First Payment" provision. All subsequent payments will be in the same amount and that amount will be assured throughout the payment period. If it would produce a larger payment, we agree that the Fixed Annuity payment will be determined using the Life Annuity Tables in effect on the Maturity Date. ANNUITY OPTIONS Subject to conditions stated in ELECTIONS OF SETTLEMENT OPTIONS and MINIMUM AMOUNTS, all or any part of the Cash Surrender Value of this contract may be paid under one or more of the Annuity Options below. OPTION 1. LIFE ANNUITY - NO REFUND We will make monthly annuity payments during the lifetime of the person on whose life the payments are based, ending with the last monthly payment preceding death. OPTION 2. LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED We will make monthly Annuity payments during the lifetime of the person on whose life the payments are based, and under the conditions stated below. If at the death of that person, payments have been made for less than 120, 180, or 240 months, as elected, we will continue to make payments to the designated Beneficiary during the remainder of the period. OPTION 3. JOINT AND LAST SURVIVOR LIFE ANNUITY We will make monthly Annuity payments during the joint lifetime of two persons on whose lives payments are based and during the lifetime of the survivor. No more payments will be made after the death of the survivor. OPTION 4. JOINT AND LAST SURVIVOR LIFE ANNUITY - ANNUITY REDUCED ON DEATH OF PRIMARY PAYEE We will make monthly Annuity payments during the joint lifetime of two persons on whose lives payments are based. One of the two persons will be designated as the primary payee. The other will be designated as the secondary payee. On the death of the secondary payee, if survived by the primary payee, we will continue to make monthly Annuity payments to the primary payee in the same amount that would have been payable during the joint lifetime of the two persons. On the death of the primary payee, if survived by the secondary payee, we will continue to make monthly Annuity payments to the secondary payee in an amount equal to 50% of the payments which would have been made during the lifetime of the primary payee. No further payments will be made following the death of the survivor. OPTION 5. OTHER ANNUITY OPTIONS We will make any other arrangements for Annuity payments as may be mutually agreed. 13 43 INCOME OPTIONS We will pay all or any part of the Cash Surrender Value to you under one or more of the Income Options below subject to the conditions stated in ELECTION OF SETTLEMENT OPTIONS and MINIMUM AMOUNTS and the currently effective Tax Qualification Rider. The Cash Surrender Value used to determine the amount of any Income payment will be based on the Accumulation Unit Value as of 14 days before the date an Income payment is due and will be determined the same way as in the Accumulation period. OPTION 1. PAYMENTS OF A FIXED AMOUNT We will make equal payments each month in the amount elected until the Cash Surrender Value applied under this option is gone. The first monthly payment will be paid from each Sub-Account in proportion to its Cash Surrender Values applied. The second payment and all later payments from each Sub-Account will be the same as the first payment under this option. The final payment will include any amount that is not enough to make another full payment. OPTION 2. PAYMENTS FOR A FIXED PERIOD We will make monthly payments for the period selected. The amount of each payment will be equal to the then remaining Cash Surrender Value applied under this option divided by the number of remaining payments. OPTION 3. OTHER INCOME OPTIONS We will make any other arrangements for Income payments as may be mutually agreed. 14 44 GENERAL PROVISIONS THE CONTRACT The entire contract between you and us consists of the contract and all attached pages. CONTRACT CHANGES The only way this contract may be changed is by a written endorsement signed by one of our officers. SUBSTITUTION OF SEPARATE ACCOUNT OR FUNDING OPTIONS If it is not possible to continue to offer a Separate Account or Funding Option, or in our judgment becomes inappropriate for the purposes of this contract, we may substitute another Separate Account or Funding Option without your consent, upon approval of the Insurance Commissioner. Substitution may be made with respect to both existing investments and investment of future premium payments. However, no such substitution will be made without notice to you and without prior approval of the Securities and Exchange Commission, to the extent required by law. MISSTATEMENT If the Annuitant's or owner's sex or date of birth was misstated, all benefits of this contract are what the purchase payment paid would have purchased at the correct sex and age. Proof of the Annuitant's and owner's age may be filed at any time at Our Office. INCONTESTABILITY We will not contest this contract from its Contract Date. TERMINATION We reserve the right to terminate this contract on any Valuation Date if the Contract Value as of the date is less than the Termination Amount shown on the CONTRACT SPECIFICATIONS, and purchase payments have not been made to this contract for at least two years. Termination will not occur until 31 days after we have mailed notice of termination to you at your last known address. If this contract is terminated, we will pay you the Cash Surrender Value, if any. REQUIRED REPORTS We will furnish a report to the owner as often as required by law, but at least once in each Contract Year before the due date of the first Annuity or Income payment. The report will show the number of Accumulation Units credited to the contract in each Account and the corresponding Accumulation Unit Value as of the date of the report. VOTING RIGHTS If required by federal law, you may have the right to vote at the meetings of the Shareholders of the Funding Option. If you have voting rights, we will send a notice to you telling you the time and place of a meeting. The notice will also explain matters to be voted upon and how many votes you may exercise. MORTALITY AND EXPENSES Our actual mortality and expense experience will not affect the amount of any Annuity or Income payments or any other values under this contract. NON-PARTICIPATING This contract does not share in our surplus earnings, so you will receive no dividends under it. CHANGES IN TAXES BASED UPON PREMIUM OR VALUE If there is any change in a law assessing taxes against us based upon the premiums or value of this contract, we reserve the right to charge you proportionately for that tax. This would include a tax based upon our realized net capital gains in the Sub-Accounts and on earnings in the Fixed Account, on which we are not currently taxed. CONFORMITY WITH STATE AND FEDERAL LAWS This contract is governed by the law of the state in which it is delivered. Any paid-up Annuity, Cash Surrender or death benefits that are available under this contract are not less than the minimum benefits required by the statutes of the state in which this contract is delivered. Upon receiving appropriate state approval, we may at any time make any changes, including retroactive changes, in this contract to the extend that the change is required to meet the requirements of any law or regulation issued by an governmental agency to which we or you are subject. 15 45 EMERGENCY PROCEDURE We reserve the right to suspend or postpone the date of any payment of any benefit or values for any Valuation Period (1) when the New York Stock Exchange is closed; (2) when trading on the Exchange is restricted; (3) when an emergency exists as determined by the Securities and Exchange Commission so that disposal of the securities held in the Sub-Accounts is not reasonably practicable or it is not reasonably practicable to determine the value of the Sub-Account's net assets, or (4) during any other period when the Securities and Exchange Commission, by order, so permits for the protection of security holders. Any provision of this contract which specifies a Valuation Date will be superseded by this Emergency Procedure. RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNTS AND SUB-ACCOUNTS We will have exclusive and absolute ownership and control of the assets of our Separate Account and the Sub-Accounts. That portion of the assets of a Separate Account or Sub-Account equal to the reserves and other contract liabilities with respect to such Separate Account or Sub-Account shall not be chargeable with liabilities arising out of any other business we conduct. Our determination of the value of an Accumulation Unit and an Annuity Unit by the method described in this contract will be conclusive. 16 46 TABLE OF VALUES GUARANTEED VALUES OF THE FIXED ACCOUNT PER $1,000 OF NET PURCHASE PAYMENT APPLIED
NO. OF YEARS FROM GUARANTEED NO. OF YEARS FROM DATE PAYMENT GUARANTEED CASH SURRENDER DATE PAYMENT IS GUARANTEED CASH IS APPLIED VALUE VALUE APPLIED GUARANTEED VALUE SURRENDER VALUE 1 1030 950 36 2898 2898 2 1060 990 37 2985 2985 3 1092 1032 38 3074 3074 4 1125 1075 39 3167 3167 5 1159 1119 40 3262 3262 6 1194 1164 41 3359 3359 7 1229 1209 42 3460 3460 8 1266 1256 43 3564 3564 9 1304 1304 44 3671 3671 10 1343 1343 45 3781 3781 11 1384 1384 46 3895 3895 12 1425 1425 47 4011 4011 13 1468 1468 48 4132 4132 14 1512 1512 49 4256 4256 15 1557 1557 50 4383 4383 16 1604 1604 51 4515 4515 17 1652 1652 52 4650 4650 18 1702 1702 53 4790 4790 19 1753 1753 54 4934 4934 20 1806 1806 55 5082 5082 21 1860 1860 56 5234 5234 22 1916 1916 57 5391 5391 23 1973 1973 58 5553 5553 24 2032 2032 59 5720 5720 25 2093 2093 60 5891 5891 26 2156 2156 61 6068 6068 27 2221 2221 62 6250 6250 28 2287 2287 63 6437 6437 29 2356 2356 64 6631 6631 30 2427 2427 65 6829 6829 31 2500 2500 66 7034 7034 32 2575 2575 67 7245 7245 33 2652 2652 68 7463 7463 34 2731 2731 69 7687 7687 35 2813 2813 70 7917 7917
17 47 This Page Intentionally Left Blank 18 48 LIFE ANNUITY TABLES DOLLAR AMOUNT OF THE FIRST MONTHLY ANNUITY PAYMENT WHICH IS PURCHASED WITH EACH $1,000 APPLIED OPTIONS 1 AND 2-SINGLE LIFE ANNUITIES
120 180 240 ADJUSTED ADJUSTED MONTHLY MONTHLY MONTHLY AGE AGE NO PAYMENTS PAYMENTS PAYMENTS MALE FEMALE REFUND ASSURED ASSURED ASSURED 50 54 $4.13 $4.10 $4.06 $4.00 51 55 4.20 4.17 4.13 4.06 52 56 4.28 4.25 4.20 4.12 53 57 4.37 4.33 4.27 4.18 54 58 4.46 4.41 4.35 4.25 55 59 4.55 4.50 4.42 4.31 56 60 4.65 4.59 4.51 4.38 57 61 4.76 4.69 4.59 4.44 58 62 4.87 4.79 4.68 4.51 59 63 4.99 4.90 4.77 4.58 60 63 5.12 5.01 4.86 4.65 61 65 5.26 5.13 4.96 4.72 62 66 5.40 5.25 5.06 4.79 63 67 5.56 5.39 5.16 4.85 64 68 5.72 5.52 5.27 4.92 65 69 5.90 5.67 5.37 4.99 66 70 6.09 5.82 5.48 5.05 67 71 6.29 5.97 5.59 5.11 68 72 6.51 6.13 5.69 5.16 69 73 6.74 6.30 5.80 5.21 70 74 6.99 6.48 5.90 5.26 71 75 7.26 6.66 6.01 5.31 72 76 7.54 6.84 6.11 5.34 73 77 7.86 7.03 6.20 5.38 74 78 8.19 7.22 6.29 5.41 75 79 8.55 7.41 6.38 5.43
OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY
ADJUSTED AGE OF ADJUSTED AGE OF SECOND LIFE FIRST LIFE M-51 M-56 M-58 M-61 M-63 M-66 M-71 MALE FEMALE F-55 F-60 F-62 F-65 F-67 F-70 F-75 50 54 $3.69 $3.81 $3.85 $3.91 $3.94 $3.98 $4.04 55 59 3.82 3.99 4.06 4.15 4.20 4.28 4.38 57 61 3.87 4.06 4.14 4.25 4.32 4.41 4.53 60 64 3.93 4.17 4.26 4.40 4.48 4.61 4.78 62 66 3.97 4.23 4.34 4.49 4.60 4.74 4.96 65 69 4.02 4.32 4.44 4.63 4.76 4.95 5.24 70 74 4.09 4.43 4.59 4.83 5.01 5.27 5.72
Dollar amounts of the first monthly payments for ages not shown in these Tables will be calculated on the same basis as those shown and may be obtained from us. Amounts shown in these Tables are based on the Progressive Annuity Table, with a two year set-back, (assuming births in the year 1900) with interest at the rate of 3% per annum. The adjusted age of the person on whose life the Annuity is based is determined from the actual age last birthday on the due date of the first Annuity payment in the following manner. Calendar Year in which First Payment is Due . . 1991-2000 2001-2010 2011 & later Adjusted Age is Actual Age plus 2 plus 1 plus 0
19 49 OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY ANNUITY REDUCES ON DEATH OF PRIMARY PAYEE
ADJUSTED AGE OF PRIMARY PAYEE ADJUSTED AGE OF SECOND PAYEE MALE 50 55 60 65 50 $3.82 $3.90 $3.96 $4.01 55 4.05 4.15 4.25 4.34 60 4.31 4.45 4.59 4.73 65 4.60 4.78 4.98 5.19 70 4.93 5.16 5.43 5.71
ADJUSTED AGE OF PRIMARY PAYEE ADJUSTED AGE OF SECOND PAYEE FEMALE 50 55 60 65 50 $3.70 $3.75 $3.79 $3.81 55 3.93 4.00 4.06 4.11 60 4.19 4.30 4.40 4.48 65 4.48 4.64 4.79 4.92 70 4.81 5.03 5.25 5.46
Dollar amounts of the first monthly payments for ages not shown in these Tables will be calculated on the same basis as those shown and may be obtained from us. Amounts shown in these Tables are based on the Progressive Annuity Table, with a two year set-back, (assuming births in the year 1900) with interest at the rate of 3% per annum. The adjusted age of the person on whose life the Annuity is based is determined from the actual age last birthday on the due date of the first Annuity payment in the following manner. Calendar Year in which First Payment is Due . . 1991-2000 2001-2010 2011 & later Adjusted Age is Actual Age plus 2 plus 1 plus 0
20 50 This Page Left Blank Intentionally 51 INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT Non-Tax Qualified Non-Participating 52 TAX LAW QUALIFICATION RIDER This rider is made a part of this contract as its Contract Date in order to comply with the tax rules under Section 72(s) of the Code for required distributions upon the death of any contract owner. The following conditions, restrictions and limitations must apply to maintain the tax qualified status of your Annuity. REQUIRED DISTRIBUTIONS WHERE OWNER AND ANNUITANT DIE SIMULTANEOUSLY If you are the owner and the Annuitant or you are the owner and you die simultaneously with the Annuitant before payment of any Annuity or Income Option begins, an amount equal to the Death Benefit will be distributed within five years of your death to the contract Beneficiary unless: a. the Beneficiary elects by Written Request to have the proceeds distributed over the Beneficiary's life or over a period not extending beyond life expectancy, and the payments begin within one year of your death; or b. the sole Beneficiary is your spouse who elects by Written Request to continue the contract as the owner and Annuitant. If you are the owner and the Annuitant or you are the owner and you die simultaneously with the Annuitant after an Annuity or Income option begins but before your entire interest has been distributed, the remaining proceeds of the contract will be distributed at least as rapidly as they were being distributed under the method of payment in effect at the time of your death. The death of the first joint owner triggers these distribution requirements. NON-NATURAL OWNER HOLDING FOR NATURAL PERSONS The above rules also apply if you are not an individual and the primary Annuitant dies before payment of an Annuity or Income Option begins. Payments will be made to the Beneficiary. The primary Annuitant is the first-named Annuitant and the individual who is of primary importance in affecting the timing or amount of payments under the contract. If you are not an individual and the primary annuitant dies after payment of an Annuity or Income option begins, the remaining proceeds of the contract will be distributed at least as rapidly as they were being distributed under the method of payment in effect at the time of the primary Annuitant's death. REQUIRED DISTRIBUTIONS WHERE OWNER AND ANNUITANT DO NOT DIE SIMULTANEOUSLY If you are the owner but not the Annuitant, and you die before the Annuitant and before payment of an Annuity or Income Option begins, an amount equal to the Death Benefit will be distributed within five years of your death to the joint owner surviving you. In this circumstance, the joint owner is the "designated beneficiary" referred to in Section 72(s) of the Code, and his or her rights preempt those of the Beneficiary named in a Written Request. The distribution may be made over a period that exceeds five years from your death or postponed by your spouse if: a. the joint owner elects by Written Request to have the proceeds distributed over his or her life or over a period not extending beyond life expectancy, and the payments begin within one year of your death; or b. the sole joint owner is your spouse, who elects by Written Request to continue the contract as owner. The joint owner is determined by contract designation. If there is no joint owner or Beneficiary surviving you, ownership of this contract passes to your estate. The estate or the individual taking the contract benefits through your estate must take complete distribution within five years of your death. If you are the owner but not the Annuitant, and you die before payment of an Annuity or Income Option begins, the remaining proceeds of the contract will be distributed at least as rapidly as they were being distributed under the method of payment in effect at the time of your death. The death of the first joint owner triggers these distribution requirements. 53 ADMINISTRATIVE COMPLIANCE If the Code and related law, regulations and rulings require a distribution other than described above in order to keep this Annuity contract qualified under the Code, we will administer the contract in accordance with these laws, regulations, and rulings. We will provide you with a revised rider describing any necessary changes, following all regulatory approvals THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER PRESIDENT 54 DEATH BENEFIT ENDORSEMENT This endorsement is made a part of this contract as of the date it is attached to the contract. The "DEATH PROCEEDS PRIOR TO THE MATURITY DATE" provision is amended by deleting the provision and replacing it with the following: DEATH PROCEEDS PRIOR TO THE MATURITY DATE WHERE ANNUITANT WAS YOUNGER THAN AGE 67 ON THE CONTRACT DATE AND DIES BEFORE AGE 85: The death benefit payable as of the Death Report Date will be the greatest of (a), (b) or (c) below, less any applicable premium tax and outstanding loans: (a) the Contract Value on the Death Report Date; (b) the total Purchase Payments made under the contract less the total amount of any partial surrenders; or (c) the maximum of all Step-Up Death Benefit Values (as described below) in effect on the Death Report Date which are associated with Contract Date anniversaries beginning with the eighth Contract Date anniversary, and ending with the last Contract Date anniversary occurring on or before the Annuitant's 76th birthday. We must be notified no later than six months from the date of death in order for Us to make payment of proceeds as described above. If notification is received more than six months after the date of death, the death benefit payable will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. WHERE ANNUITANT WAS AGE 67 THROUGH 75 ON THE CONTRACT DATE AND DIES BEFORE AGE 85: The death benefit payable as of the Death Report Date will be the greatest of (a), (b) or (c) below less any applicable premium and outstanding loans: (a) the Contract Value on the Death Report Date; (b) the total Purchase Payments made under the contract less the total amount of any partial surrenders; or (c) the Step-Up Death Benefit Value (as described below) in effect on the Death Report Date associated with the eighth Contract Date Anniversary. We must be notified no later than six months from the date of death in order for Us to make payment of proceeds as described above. If notification is received more than six months after the date of death, the death benefit payable will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. 55 WHERE ANNUITANT WAS AGE 76 OR OLDER ON THE CONTRACT DATE: The death benefit payable as of the Death Report Date will be the Contract Value on the Death Report Date, less any applicable premium tax and outstanding loans. WHERE ANNUITANT DIES ON OR AFTER AGE 85: The death benefit payable as of the Death Report Date will be the Contract Value on the Death Report Date, less any applicable premium taxes or outstanding loans. STEP-UP DEATH BENEFIT VALUE A separate Step-Up Death Benefit Value will be established on the eighth Contract Date anniversary, and on each Contract Date anniversary thereafter, which occurs on or prior to the Death Report Date and will initially equal the Contract Value on that anniversary. After a Step-Up Death Benefit Value has been established, it will be recalculated each time a Purchase Payment is made or a partial surrender is taken until the Death Report Date. Step-Up Death Benefit Values will be recalculated by increasing them by the amount of each applicable Purchase Payment and by reducing them by a Partial Surrender Reduction (as described below) for each applicable partial surrender. Recalculations of Step-Up Death Benefit Values related to any Purchase Payments or any partial surrenders will be made in the order that such Purchase Payments or partial surrenders occur. PARTIAL SURRENDER REDUCTION The Partial Surrender Reduction referenced above is equal to: (a) the amount of a Step-Up Death Benefit Value immediately prior to the reduction for the partial surrender, multiplied by (b) the amount of the partial surrender divided by the Contract Value immediately prior to the partial surrender. THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President 56 RIDER WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT This rider is made a part of this contract as of the date it is attached to the contract. If the Annuitant is hospitalized and/or confined to an Eligible Nursing Home for thirty consecutive days, You may make a total or partial withdrawal of your Contract Value without incurring a Withdrawal Charge, even if the withdrawal occurs during the first seven (?) years of your contract. However, such a withdrawal must be made within sixty days of the last day following a period of confinement which lasts at least thirty consecutive days. We will require proof of confinement in a form satisfactory to us, which may include certification by a licensed physician. An Eligible Nursing Home is defined as an institution or special nursing unit of a hospital which meets at least one of the following requirements: 1. Medicare approved as a provider of skilled nursing care, intermediate nursing care or custodial nursing care by the state in which it is located; or 2. Licensed and operated to provide skilled nursing care, intermediate nursing care or custodial nursing care by the state in which it is located; or 3. Meets all the requirements listed below: a. is licensed to operate as a nursing home by the state in which it is located; b. has, as a main function, the provision of skilled, intermediate, or custodial nursing care; c. is engaged in providing continuous room and board accommodations to 3 or more persons; d. is under the supervision of a Licensed Vocational Nurse (LVN) or a nurse of comparable qualifications; and e. maintains a daily medical record of each patient. FILING A CLAIM: You must provide the Company with written notice of a claim within thirty days following the last day of a period of confinement which lasts at least 30 days. Within fifteen days of receiving a written notice of claim, We will send You all the necessary claim forms. If You do not receive claim forms within that period of time, You may submit written proof of your claim without using Our forms. Any withdrawal requested which falls under the scope of this waiver will be paid as soon as We receive proper written proof of your claim, and will be paid in a lump sum. You should consult with your personal tax advisor regarding the taxable nature of any withdrawals taken on your contract. No legal action may be brought to recover on this benefit until sixty days after You have submitted written proof of your claim. THE TRAVELERS INSURANCE COMPANY /s/ M.A. CARPENTER President EX-99.9 5 OPINION OF COUNSEL 1 EXHIBIT 9 July 31, 1997 The Travelers Insurance Company The Travelers Separate Account PF for Variable Annuities One Tower Square Hartford, Connecticut 06183 Gentlemen: With reference to the Registration Statement on Form N-4 filed by The Travelers Insurance Company and The Travelers Separate Account PF for Variable Annuities with the Securities and Exchange Commission covering Variable Annuity contracts, I have examined such documents and such law as I have considered necessary and appropriate, and on the basis of such examination, it is my opinion that: 1. The Travelers Insurance Company is duly organized and existing under the laws of the State of Connecticut and has been duly authorized to do business and to issue variable annuity contracts by the Insurance Commissioner of the State of Connecticut. 2. The Travelers Separate Account PF for Variable Annuities is a duly authorized and validly existing separate account established pursuant to Section 38a-433 of the Connecticut General Statutes. 3. The variable annuity contracts covered by the above Registration Statement, and all pre-and post-effective amendments relating thereto, will be approved and authorized by the Insurance Commissioner of the State of Connecticut and when issued will be valid, legal and binding obligations of The Travelers Insurance Company and The Travelers Separate Account PF for Variable Annuities. I hereby consent to the filing of this opinion as an exhibit to the above-referenced Registration Statement and to the reference to this opinion under the caption "Legal Proceedings and Opinion" in the Prospectus constituting a part of the Registration Statement. Very truly yours, Katherine M. Sullivan General Counsel The Travelers Insurance Company EX-99.15 6 POWERS OF ATTORNEY 1 EXHIBIT 15 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Chairman, President and Chief Executive Officer of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/Michael A. Carpenter Chairman, President and Chief Executive Officer The Travelers Insurance Company 2 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, JAY S. BENET of West Hartford, Connecticut, a director of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/Jay S. Benet Director The Travelers Insurance Company 3 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, GEORGE C. KOKULIS of Simsbury, Connecticut, a director of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/George C. Kokulis Director The Travelers Insurance Company 4 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, ROBERT I. LIPP of Scarsdale, New York, a director of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary, of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/Robert I. Lipp Director The Travelers Insurance Company 5 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, IAN R. STUART of East Hampton, Connecticut, director, Senior Vice President, Chief Financial Officer and Chief Accounting Officer of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/Ian R. Stuart Director, Senior Vice President, Chief Financial Officer and Chief Accounting Officer The Travelers Insurance Company 6 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, KATHERINE M. SULLIVAN of Longmeadow, Massachusetts, Director, Senior Vice President and General Counsel of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/Katherine M. Sullivan Director, Senior Vice President and General Counsel The Travelers Insurance Company 7 THE TRAVELERS SEPARATE ACCOUNT PF FOR VARIABLE ANNUITIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, MARC P. WEILL of New York, New York, a director of The Travelers Insurance Company (hereafter the "Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of them acting alone, my true and lawful attorney-in-fact, for me, and in my name, place and stead, to sign registration statements on behalf of said Company on Form N-4 or other appropriate form under the Securities Act of 1933 for The Travelers Separate Account PF for Variable Annuities, a separate account of the Company dedicated specifically to the funding of variable annuity contracts to be offered by the Company, and further, to sign any and all amendments thereto, including post-effective amendments, that may be filed by the Company on behalf of said registrant. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 1997. /s/Marc P. Weill Director The Travelers Insurance Company -----END PRIVACY-ENHANCED MESSAGE-----