-----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, LsFZWcj+Bwfmt3FPU5irMzdtTvZboAlzsQ761k/TeESQwgdywgoG6IqkcM40Lk62 PgkQaCY9jBOBsPSlFiBCVA== 0000950123-98-009482.txt : 19981104 0000950123-98-009482.hdr.sgml : 19981104 ACCESSION NUMBER: 0000950123-98-009482 CONFORMED SUBMISSION TYPE: N-4/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19981103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES CENTRAL INDEX KEY: 0001065240 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 333-58809 FILM NUMBER: 98737151 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 811-08869 FILM NUMBER: 98737152 BUSINESS ADDRESS: STREET 1: FINANCIAL SERVICES LEGAL DIVISION STREET 2: ONE TOWER SQUARE CITY: HARTFORD STATE: CT ZIP: 06183 BUSINESS PHONE: 8602777379 MAIL ADDRESS: STREET 1: FINANCIAL SERVICES LEGAL DIVISION STREET 2: ONE TOWER SQUARE CITY: HARTFORD STATE: CT ZIP: 06183 N-4/A 1 N-4/A 1 Registration Statement No. 333-58809 811-08869 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. 1 And REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Pre-Effective Amendment No. 1 THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES --------------------------------------------------------- (Exact name of Registrant) THE TRAVELERS LIFE AND ANNUITY 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 Life and Annuity 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. 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 SIX 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 Contract Profile 4. Condensed Financial Information Not Applicable 5. General Description of Registrant, The Insurance Company; The Separate Account; Depositor, and Portfolio Companies 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 Annuity Contract; Distribution of Variable Annuity Contracts 11. Redemptions Access to Your Money 12. Taxes Federal Tax Considerations 13. Legal Proceedings Legal Proceedings and Opinions 14. Table of Contents of Statement Appendix A - Contents of the Statement of of Additional Information 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 TRAVELERS RETIREMENT VARIABLE ANNUITY CONTRACT PROFILE NOVEMBER 18, 1998 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 LIFE AND ANNUITY COMPANY. "YOU" AND "YOUR" REFER TO THE CONTRACT OWNER/PARTICIPANT. 1. THE VARIABLE ANNUITY CONTRACT. The Contract offered by Travelers Life and Annuity 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. The Contract 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," and individual participants are referred to as "Contract Owners". You can make one or more payments, as you choose, on a pre-tax basis. You direct your payment(s) to one or more of the variable funding options offered through the Separate Account, as listed in Section 4. Depending on market conditions, you may make or lose money in any of these options. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. During the accumulation phase, your pre-tax 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. 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). If you want to receive regular income 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 Life Annuity, in which payments are made for your life and the life of another person (usually your spouse); Option 4 -- Joint and Last Survivor Life Annuity, in which the annuity is reduced on death of Primary Payee; Option 5 -- payment for a Fixed Period. 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 funding options through the Separate Account, the dollar amount of your payments may increase or decrease. In addition, depending on which annuity option you select, and depending on market conditions, there are several other options and features available upon annuitization. These include an annuitization credit, a variable annuitization floor benefit, a liquidity benefit and an increasing benefit option. Please refer to your Contract and the attached prospectus for further details. 3. PURCHASE. You may purchase the Contract with an initial payment of at least $20,000. You may make additional payments of at least $5,000 at any time during the accumulation phase. CONSERVATION CREDIT. We may add a credit to funds received as purchase payments if such funds originated from another contract issued by Us or Our affiliates. If applied, the amount of this credit will be determined by us. 5 OPTIONAL DEATH BENEFIT CREDIT. If you select the Optional Death Benefit, we will add a credit to each purchase payment equal to 2% of that purchase payment. These credits are applied pro rata to the same funding options to which your purchase payment was applied. WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use in connection with qualified retirement plans, which include contracts qualifying under Section 401, 403, 408 or 457 of the Internal Revenue Code of 1986, as amended. 4. INVESTMENT OPTIONS. You can direct your money into any or all of the following 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: High Yield Bond Trust Managed Assets Trust Money Market Portfolio AMERICAN ODYSSEY FUNDS, INC. Core Equity Fund Emerging Opportunities Fund Global High-Yield Bond Fund Intermediate-Term Bond Fund International Equity Fund Long-Term Bond Fund DELAWARE GROUP PREMIUM FUND, INC. REIT Series Small Cap Value Series DREYFUS VARIABLE INVESTMENT FUND Capital Appreciation Portfolio Small Cap Portfolio GREENWICH STREET SERIES FUND Equity Index Portfolio Class II MONTGOMERY FUNDS III Montgomery Variable Series: Growth Fund OCC ACCUMULATION TRUST Equity Portfolio SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. Salomon Brothers Variable Capital Fund Salomon Brothers Variable Investors Fund Salomon Brothers Variable Total Return Fund STRONG VARIABLE INSURANCE FUNDS, INC. Strong Schafer Value Fund II TRAVELERS SERIES FUND, INC. Alliance Growth Portfolio MFS Total Return Portfolio Putnam Diversified Income Portfolio Smith Barney High Income Portfolio Smith Barney International Equity Portfolio Smith Barney Large Capitalization Growth Portfolio THE TRAVELERS SERIES TRUST Disciplined Mid Cap Stock Portfolio Disciplined Small Cap Stock Portfolio Equity Income Portfolio Federated Stock Portfolio Large Cap Portfolio Lazard International Stock Portfolio MFS Mid Cap Growth Portfolio MFS Research Portfolio Social Awareness Stock Portfolio Strategic Stock Portfolio Travelers Quality Bond Portfolio U.S. Government Securities Portfolio Utilities Portfolio WARBURG PINCUS TRUST Emerging Markets Portfolio 5. EXPENSES. The Contract has insurance features and investment features, and there are costs related to each. For the Standard Death Benefit, the annual insurance charge is .80% of the amounts you direct to the funding options. For the Optional Death Benefit and Credit option, the annual insurance charge is 1.25%. Each funding option has charges for management and other expenses. The charges range from .58% to 2.11% annually, of the average daily net asset balance of the funding option, depending on the funding option. Certain funding options have fee reimbursement and/or fee waiver arrangements which serve to reduce the charges shown. If you withdraw amounts under the Contract, the Company may deduct a withdrawal charge (0% to 5%) of the amount of purchase payments withdrawn 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%. If the Variable Annuitization Floor Benefit is selected, there is a Floor Benefit charge assessed. This charge increases your annual separate account charges by a percentage not to exceed 3% per year. This charge will vary based upon market conditions, and will be set at the time you choose this option. Once established, this charge will remain the same throughout the term of the ii 6 annuitization. The Floor Benefit charge compensates us for the risk we take in guaranteeing that, regardless of the performance of the funding options, your periodic annuity payments will never be less than a certain percentage of your first annuity payment. The following table is designed to help you understand the Contract charges. In the table below, "Total Annual Insurance Charge" includes the mortality and expense risk charge of .80% for the Standard Death Benefit(a), and 1.25% for the Optional Death Benefit and Credit(b). The column "Total Annual Charges" reflects the mortality and expense risk charge and the investment charges for each portfolio. Each of the American Odyssey Funds is listed twice, once with the optional CHART asset allocation fee of .80% reflected, and once without the optional asset allocation fee. 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 years 1 and 10, the examples show the aggregate of all the annual charges assessed during that time. For these examples, the premium tax is assumed to be 0%. Please refer to the fee table contained in the prospectus for more details.
TOTAL EXAMPLES: TOTAL TOTAL ANNUAL ANNUAL EXPENSES ANNUAL FUNDING TOTAL AT END OF: INSURANCE OPTION ANNUAL ----------------- PORTFOLIO NAME CHARGES EXPENSES CHARGES 1 YEAR 10 YEARS - --------------------------------------------------------------------------------------------------------------- High Yield Bond Trust................................. (a) .80% 0.84% 1.64% $67 $194 (b) 1.25% 0.84% 2.09% 71 242 Managed Assets Trust.................................. (a) .80% 0.63% 1.43% 65 171 (b) 1.25% 0.63% 1.88% 69 220 Money Market Portfolio................................ (a) .80% 0.40% 1.20% 62 145 (b) 1.25% 0.40% 1.65% 67 195 AMERICAN ODYSSEY FUNDS, INC.(1) Core Equity Fund.................................. (a) .80% 0.65% 1.45% 65 174 (b) 1.25% 0.65% 1.90% 69 222 Emerging Opportunities Fund....................... (a) .80% 0.86% 1.66% 67 197 (b) 1.25% 0.86% 2.11% 71 244 Global High-Yield Bond Fund....................... (a) .80% 0.68% 1.48% 65 177 (b) 1.25% 0.68% 2.05% 70 225 Intermediate-Term Bond Fund....................... (a) .80% 0.63% 1.43% 65 171 (b) 1.25% 0.63% 1.88% 69 220 International Equity Fund......................... (a) .80% 0.77% 1.57% 66 187 (b) 1.25% 0.77% 2.02% 71 235 Long-Term Bond Fund............................... (a) .80% 0.62% 1.42% 64 170 (b) 1.25% 0.62% 1.87% 69 219 AMERICAN ODYSSEY FUNDS, INC.(2) Core Equity Fund.................................. (a) .80% 1.45% 2.25% 73 258 (b) 1.25% 1.45% 2.70% 77 303 Emerging Opportunities Fund....................... (a) .80% 1.66% 2.46% 75 280 (b) 1.25% 1.66% 2.91% 79 323 Global High-Yield Bond Fund....................... (a) .80% 1.48% 2.28% 73 262 (b) 1.25% 1.48% 2.28% 78 306 Intermediate-Term Bond Fund....................... (a) .80% 1.43% 2.23% 73 256 (b) 1.25% 1.43% 2.68% 77 301 International Equity Fund......................... (a) .80% 1.57% 2.37% 74 271 (b) 1.25% 1.57% 2.82% 79 315 Long-Term Bond Fund............................... (a) .80% 1.42% 2.22% 73 255 (b) 1.25% 1.42% 2.67% 77 300 DELAWARE GROUP PREMIUM FUND, INC. REIT Series....................................... (a) .80% 0.85% 1.65% 67 195 (b) 1.25% 0.85% 2.10% 71 243 Small Cap Value Series............................ (a) .80% 0.85% 1.65% 67 195 (b) 1.25% 0.85% 2.10% 71 243
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TOTAL EXAMPLES: TOTAL TOTAL ANNUAL ANNUAL EXPENSES ANNUAL FUNDING TOTAL AT END OF: INSURANCE OPTION ANNUAL ----------------- PORTFOLIO NAME CHARGES EXPENSES CHARGES 1 YEAR 10 YEARS - --------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND Capital Appreciation Portfolio.................... (a) .80% 0.80% 1.60% $66 $190 (b) 1.25% 0.80% 2.05% 71 238 Small Cap Portfolio............................... (a) .80% 0.78% 1.58% 66 188 (b) 1.25% 0.78% 2.03% 71 236 GREENWICH STREET SERIES FUND Equity Index Portfolio Class II................... (a) .80% .55% 1.45% 64 162 (b) 1.25% .55% 1.80% 68 212 MONTGOMERY FUNDS III Montgomery Variable Series: Growth Fund........... (a) .80% 1.25% 2.05% 71 238 (b) 1.25% 1.25% 2.50% 75 284 OCC ACCUMULATION TRUST Equity Portfolio.................................. (a) .80% 0.99% 1.79% 68 211 (b) 1.25% 0.99% 2.24% 73 257 SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. Salomon Brothers Variable Capital Fund............ (a) .80% 1.00% 1.80% 68 212 (b) 1.25% 1.00% 2.25% 73 258 Salomon Brothers Variable Investors Fund.......... (a) .80% 1.00% 1.80% 68 212 (b) 1.25% 1.00% 2.25% 73 258 Salomon Brothers Variable Total Return Fund....... (a) .80% 1.00% 1.80% 68 212 (b) 1.25% 1.00% 2.25% 73 258 STRONG VARIABLE INSURANCE FUNDS, INC. Strong Schafer Value Fund II...................... (a) .80% 1.20% 2.00% 70 233 (b) 1.25% 1.20% 2.45% 75 279 TRAVELERS SERIES FUND, INC. Alliance Growth Portfolio......................... (a) .80% 0.82% 1.62% 66 192 (b) 1.25% 0.82% 2.07% 71 240 MFS Total Return Portfolio........................ (a) .80% 0.86% 1.66% 67 197 (b) 1.25% 0.80% 2.11% 71 244 Putnam Diversified Income Portfolio............... (a) .80% 0.88% 1.68% 67 199 (b) 1.25% 0.88% 2.13% 72 246 Smith Barney High Income Portfolio................ (a) .80% 0.70% 1.50% 65 179 (b) 1.25% 0.70% 1.95% 70 227 Smith Barney International Equity Portfolio....... (a) .80% 1.01% 1.81% 68 213 (b) 1.25% 1.01% 2.26% 73 260 Smith Barney Large Capitalization Growth Portfolio....................................... (a) .80% 1.00% 1.80% 68 212 (b) 1.25% 1.00% 2.25% 73 258 THE TRAVELERS SERIES TRUST Disciplined Mid Cap Stock Portfolio............... (a) .80% 0.95% 1.75% 68 206 (b) 1.25% 0.95% 2.20% 72 253 Disciplined Small Cap Stock Portfolio............. (a) .80% 1.00% 1.80% 68 212 (b) 1.25% 1.00% 2.25% 73 258 Equity Income Portfolio........................... (a) .80% 0.95% 1.75% 68 206 (b) 1.25% 0.95% 2.20% 72 253 Federated Stock Portfolio......................... (a) .80% 0.95% 1.75% 68 206 (b) 1.25% 0.95% 2.20% 72 253 Large Cap Portfolio............................... (a) .80% 0.95% 1.75% 68 206 (b) 1.25% 0.95% 2.20% 72 253 Lazard International Stock Portfolio.............. (a) .80% 1.25% 2.05% 71 238 (b) 1.25% 1.25% 2.50% 75 284 MFS Mid Cap Growth Portfolio...................... (a) .80% 1.00% 1.80% 68 217 (b) 1.25% 1.00% 2.25% 73 258 MFS Research Portfolio............................ (a) .80% 1.00% 1.80% 68 212 (b) 1.25% 1.00% 2.25% 73 258 Social Awareness Stock Portfolio.................. (a) .80% 0.98% 1.78% 68 209 (b) 1.25% 0.98% 2.23% 73 256 Strategic Stock Portfolio......................... (a) .80% 0.90% 1.70% 67 201 (b) 1.25% 0.90% 2.15% 72 248
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TOTAL EXAMPLES: TOTAL TOTAL ANNUAL ANNUAL EXPENSES ANNUAL FUNDING TOTAL AT END OF: INSURANCE OPTION ANNUAL ----------------- PORTFOLIO NAME CHARGES EXPENSES CHARGES 1 YEAR 10 YEARS - --------------------------------------------------------------------------------------------------------------- Travelers Quality Bond Portfolio.................. (a) .80% 0.75% 1.55% $66 $185 (b) 1.25% 0.75% 2.00% 70 233 U.S. Government Securities Portfolio.............. (a) .80% 0.58% 1.38% 64 166 (b) 1.25% 0.58% 1.83% 69 215 Utilities Portfolio............................... (a) .80% 1.06% 1.86% 69 218 (b) 1.25% 1.06% 2.31% 73 265 WARBURG PINCUS TRUST Emerging Markets Portfolio........................ (a) .80% 1.40% 2.20% 72 253 (b) 1.25% 1.40% 2.65% 77 298
(1) Reflects expenses that would be incurred for those Contract Owners who DO NOT participate in the CHART Asset Allocation program. (2) Reflects expenses that would be incurred for those Contract Owners who DO participate in the CHART Asset Allocation program. 6. TAXES. The payments you make 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. 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. During the annuity period, if you have elected the optional Variable Annuity Floor option and take a surrender, there will be tax implications. Consult your tax advisor. 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 (5% if withdrawn within one year, gradually decreasing to 0% for payments held by the Company for 6 years or more). During the first contract year, you may withdraw up to 20% of the initial purchase payment without a withdrawal charge. After the first contract year, you may withdraw up to 20% of the contract value (as of the end of the previous contract year) without a withdrawal charge. Of course, you may have to pay income taxes and a tax penalty on taxable amounts you withdraw. 8. PERFORMANCE. The value of the Contract will vary depending upon the investment performance of the funding options you choose. Past performance is not a guarantee of future results. The Separate Account is new, and therefore has no past performance. However, the funding options have been available for various periods of time. Performance information that predates the separate account is considered "nonstandard" by the SEC. Such nonstandard performance is shown in the Statement of Additional Information that you may request free of charge. 9. DEATH BENEFIT. The person chosen as the beneficiary will receive a death benefit upon the first death of any owner or the annuitant before the maturity date. You may select either the Standard Death Benefit or the Optional Death Benefit and Credit at the time of purchase: STANDARD DEATH BENEFIT:
- ----------------------------------------------------------------------------------------- ANNUITANT'S AGE DEATH BENEFIT PAYABLE ON THE CONTRACT DATE (CALCULATED AS OF THE DEATH REPORT DATE) - ----------------------------------------------------------------------------------------- Before age 80 Greater of: (1) contract value; or (2) total purchase payments less any withdrawals (and related charges). - ----------------------------------------------------------------------------------------- On or after age 80 Contract value. - -----------------------------------------------------------------------------------------
v 9 OPTIONAL DEATH BENEFIT AND CREDIT The Optional Death Benefit and Credit varies depending on the Annuitant's age on the Contract Date.
- ----------------------------------------------------------------------------------------- ANNUITANT'S AGE DEATH BENEFIT PAYABLE ON THE CONTRACT DATE (CALCULATED AS OF THE DEATH REPORT DATE) - ----------------------------------------------------------------------------------------- Under Age 70 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greatest of: (1) contract value; (2) total purchase payments, less any withdrawals (and related charges), or (3) maximum Step Up death benefit value associated with contract date anniversaries beginning with the 5th, and ending with the last before the annuitant's 76th birthday. IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract Value (unless prohibited by state law) - ----------------------------------------------------------------------------------------- Age 70-75 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greatest of: (1) above, (2) above, or (3) the Step Up death benefit value associated with the 5th contract date anniversary. IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract Value (unless prohibited by state law) - ----------------------------------------------------------------------------------------- Age 76-80 Greater of (1) or (2) above. - -----------------------------------------------------------------------------------------
All death benefit values described above are calculated at the close of business on the date the Company received due proof of death and written distribution instructions (the death report date). The amounts will be reduced by any applicable premium taxes due and any outstanding loans. 10. OTHER INFORMATION RIGHT TO RETURN. If you cancel the Contract within ten days after you receive it, you will receive a full refund of the purchase payment, less any applicable conservation credits. Where state law requires a variation, the Company will comply. 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 as compared to a single one-time purchase. Dollar cost averaging requires regular investments regardless of fluctuating price levels, and does not guarantee a profit nor prevent loss in a declining market. Potential investors should consider their financial ability to continue purchases through periods of low price levels. ASSET ALLOCATION ADVICE. If allowed, you may elect to enter into a separate advisory agreement with Copeland Financial Services, Inc. ("Copeland"), an affiliate of the Company, for the purpose of receiving asset allocation advice under Copeland's CHART Program. The CHART Program allocates all purchase payments among the American Odyssey Funds. The CHART Program and applicable fees are fully disclosed in a separate Disclosure Statement. 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. MANAGED DISTRIBUTION PROGRAM. This program allows for the Company to automatically calculate and distribute to you, in November of the applicable tax year, an amount that will satisfy the Internal Revenue Service's minimum distribution requirements imposed on certain contracts once the owner reaches age 70 1/2 or retires. These minimum distributions occur during the accumulation phase. 11. INQUIRIES. If you need more information, please contact us at (800) 842-9406 or: Travelers Life and Annuity Company Annuity Services One Tower Square Hartford, CT 06183 vi 10 PROSPECTUS THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES This prospectus describes TRAVELERS RETIREMENT VARIABLE ANNUITY, a group flexible premium deferred variable annuity contract (the "Contract") issued by The Travelers Life and Annuity 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") and Individual Retirement Accounts (IRAs). Travelers Retirement Product may be issued as an individual Contract or 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." Your purchase payments accumulate on a variable basis through one or more of the sub-accounts ("funding options") of the Travelers Separate Account Six for Variable Annuities ("Separate Account Six"). Your contract value will vary daily to reflect the investment experience of the funding options you select. The funding options currently available are: High Yield Bond Trust Managed Assets Trust Money Market Portfolio AMERICAN ODYSSEY FUNDS, INC. Core Equity Fund Emerging Opportunities Fund Global High-Yield Bond Fund Intermediate-Term Bond Fund International Equity Fund Long-Term Bond Fund DELAWARE GROUP PREMIUM FUND, INC. REIT Series Small Cap Value Series DREYFUS VARIABLE INVESTMENT FUND Capital Appreciation Portfolio Small Cap Portfolio GREENWICH STREET SERIES FUND Equity Index Portfolio Class II MONTGOMERY FUNDS III Montgomery Variable Series: Growth Fund OCC ACCUMULATION TRUST Equity Portfolio SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. Salomon Brothers Variable Capital Fund Salomon Brothers Variable Investors Fund Salomon Brothers Variable Total Return Fund STRONG VARIABLE INSURANCE FUNDS, INC. Strong Schafer Value Fund II TRAVELERS SERIES FUND, INC. Alliance Growth Portfolio MFS Total Return Portfolio Putnam Diversified Income Portfolio Smith Barney High Income Portfolio Smith Barney International Equity Portfolio Smith Barney Large Capitalization Growth Portfolio THE TRAVELERS SERIES TRUST Disciplined Mid Cap Stock Portfolio Disciplined Small Cap Stock Portfolio Equity Income Portfolio Federated Stock Portfolio Large Cap Portfolio Lazard International Stock Portfolio MFS Mid Cap Growth Portfolio MFS Research Portfolio Social Awareness Stock Portfolio Strategic Stock Portfolio Travelers Quality Bond Portfolio U.S. Government Securities Portfolio Utilities Portfolio WARBURG PINCUS TRUST Emerging Markets 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 Six by requesting a copy of the Statement of Additional Information ("SAI") dated November 18, 1998. 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 Life and Annuity Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183, call (800) 842-8573, or access the SEC's website (http://www.sec.gov). The Table of Contents of the SAI appears in Appendix A of this prospectus. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS IS ACCOMPANIED BY A COPY OF TRAVELERS LIFE AND ANNUITY COMPANY'S LATEST ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1997, LATEST QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1998 AND LATEST REPORT ON MATERIAL EVENTS AFFECTING THE COMPANY ON FORM 8K, WHICH CONTAIN ADDITIONAL INFORMATION ABOUT THE COMPANY. 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 NOVEMBER 18, 1998 11 TABLE OF CONTENTS INDEX OF SPECIAL TERMS................ 2 FEE TABLE............................. 3 THE ANNUITY CONTRACT.................. 8 Contract Owner Inquiries.............. 8 Purchase Payments..................... 8 Conservation Credit................... 8 Accumulation Units.................... 8 The Funding Options................... 8 CHARGES AND DEDUCTIONS................ 12 General............................... 12 Withdrawal Charge..................... 13 Free Withdrawal Allowance............. 13 Mortality and Expense Risk Charge..... 13 Floor Benefit Charge.................. 14 Funding Option Expenses............... 14 Premium Tax........................... 14 Changes in Taxes Based Upon Premium or Value............................... 14 OWNERSHIP PROVISIONS.................. 15 Types of Ownership.................... 15 Beneficiary........................... 15 TRANSFERS............................. 15 Dollar Cost Averaging................. 15 ACCESS TO YOUR MONEY.................. 15 Systematic Withdrawals................ 16 Managed Distribution Program.......... 16 DEATH BENEFIT......................... 16 Death Proceeds Before the Maturity Date................................ 16 Death Proceeds After the Maturity Date................................ 17 Payment of Proceeds................... 17 THE ANNUITY PERIOD.................... 18 Maturity Date......................... 17 Liquidity Benefit..................... 18 Allocation of Annuity................. 19 Variable Annuity...................... 19 Fixed Annuity......................... 19 PAYMENT OPTIONS....................... 20 Election of Options................... 20 Variable Annuitization Floor Benefit............................. 20 Annuity Options....................... 20 MISCELLANEOUS CONTRACT PROVISIONS..... 21 Right to Return....................... 21 Termination........................... 21 Required Reports...................... 21 Suspension of Payments................ 22 Asset Allocation Program.............. 22 THE SEPARATE ACCOUNT.................. 22 Performance Information............... 22 FEDERAL TAX CONSIDERATIONS............ 23 General Taxation of Annuities......... 23 Qualified Contracts................... 23 Penalty Tax for Premature Distributions....................... 23 Taxation of Surrenders Under Liquidity Feature............................. 24 Ownership of the Investments.......... 24 Mandatory Distributions for Qualified Plans............................... 24 OTHER INFORMATION..................... 24 The Insurance Company................. 24 Year 2000 Compliance.................. 24 Distribution of Variable Annuity Contracts........................... 25 Conformity with State and Federal Laws................................ 25 Voting Rights......................... 25 Legal Proceedings and Opinions........ 25 Financial Statements.................. 25 Available Information................. 26 Incorporation of Documents............ 26 APPENDIX A: Table of Contents of the Statement of Additional Information......................... A-1 APPENDIX B: Waiver of Withdrawal Charge for Nursing Home Confinement......................... B-1 APPENDIX C: Market Value Adjustment... C-1
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..................... 8 Annuitant............................. 15 Annuity Payments...................... 18 Annuity Unit.......................... 8 Contract Date......................... 8 Contract Owner (You, Your)............ 14 Contract Value........................ 8 Contract Year......................... 8 Death Report Date..................... 17 Funding Option(s)..................... 8 Maturity Date......................... 8 Purchase Payment...................... 8 Written Request....................... 8
2 12 FEE TABLE SEPARATE ACCOUNT SIX - -------------------------------------------------------------------------------- CONTRACT OWNER TRANSACTION EXPENSES: WITHDRAWAL CHARGE (as a percentage of original purchase payment withdrawn):
LENGTH OF TIME FROM PURCHASE PAYMENT WITHDRAWAL (NUMBER OF YEARS) CHARGE 1 5% 2 4% 3 3% 4 2% 5 1% 6 and thereafter 0%
During the annuity period, if you have elected the Liquidity Benefit, a surrender charge of 5% of the amount withdrawn will be assessed. See "Liquidity Benefit." ANNUAL SEPARATE ACCOUNT CHARGES: (as a percentage of the average daily net assets of the Separate Account)
OPTIONAL STANDARD DEATH BENEFIT DEATH BENEFIT & CREDIT Mortality and Expense Risk Charge.................... .80% 1.25% Administrative Expense Charge........................ None None ---- ------- Total Separate Account Charges.................... .80% 1.25%
During the annuity period, if you have elected the Floor Benefit, a charge of up to 3.80% or 4.25% may apply. See "Floor Benefit Charge." FUNDING OPTION EXPENSES: (as a percentage of average daily net assets of the Funding Option as of December 31, 1997, unless otherwise noted.) Each of the American Odyssey Funds is listed twice, once with the optional CHART asset allocation fee of .80% reflected, and once without the optional asset allocation fee.
MANAGEMENT OTHER TOTAL ANNUAL FEE EXPENSES FUNDING (AFTER EXPENSES 12B-1 (AFTER EXPENSES OPTION PORTFOLIO NAME ARE REIMBURSED) FEES ARE REIMBURSED) EXPENSES - --------------------------------------------------------------------------------------------------------- High Yield Bond Trust..................... 0.50% 0% 0.34% 0.84% Managed Assets Trust...................... 0.50% 0% 0.13% 0.63% Money Market Portfolio.................... 0.32% 0% 0.08%(1) 0.40% AMERICAN ODYSSEY FUNDS, INC. Core Equity Fund..................... 0.57% 0% 0.08%(2) 0.65% Emerging Opportunities Fund.......... 0.60% 0% 0.26%(2) 0.86% Global High-Yield Bond Fund.......... 0.43% 0% 0.25%(3) 0.68% Intermediate-Term Bond Fund.......... 0.50% 0% 0.13%(2) 0.63% International Equity Fund............ 0.65% 0% 0.12%(2) 0.77% Long-Term Bond Fund.................. 0.50% 0% 0.12%(2) 0.62% AMERICAN ODYSSEY FUNDS, INC. (Includes CHART Asset Allocation Fee of 0.80%.) Core Equity Fund..................... 0.57% 0% 0.88%(2) 1.45% Emerging Opportunities Fund.......... 0.60% 0% 1.06%(2) 1.66% Global High-Yield Bond Fund.......... 0.43% 0% 1.05%(3) 1.48% Intermediate-Term Bond Fund.......... 0.50% 0% 0.93%(2) 1.43% International Equity Fund............ 0.65% 0% 0.92%(2) 1.57% Long-Term Bond Fund.................. 0.50% 0% 0.92%(2) 1.42%
3 13
MANAGEMENT OTHER TOTAL ANNUAL FEE EXPENSES FUNDING (AFTER EXPENSES 12B-1 (AFTER EXPENSES OPTION PORTFOLIO NAME ARE REIMBURSED) FEES ARE REIMBURSED) EXPENSES - --------------------------------------------------------------------------------------------------------- DELAWARE GROUP PREMIUM FUND, INC. REIT Series.......................... 0.75% 0% 0.10%(4) 0.85% Small Cap Value Series............... 0.75% 0% 0.10%(4) 0.85% DREYFUS VARIABLE INVESTMENT FUND Capital Appreciation Portfolio....... 0.75% 0% 0.05% 0.80% Small Cap Portfolio.................. 0.75% 0% 0.03% 0.78% GREENWICH STREET SERIES FUND Equity Index Portfolio Class II...... 0.21% .25% 0.09%(5) 0.55% MONTGOMERY FUNDS III Montgomery Variable Series: Growth Fund............................... 1.00% 0% 0.25%(6) 1.25% OCC ACCUMULATION TRUST Equity Portfolio..................... 0.80% 0% 0.19%(7) 0.99% SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. Salomon Brothers Variable Capital Fund............................... 0.85% 0% 0.15%(8) 1.00% Salomon Brothers Variable Investors Fund............................... 0.70% 0% 0.30%(8) 1.00% Salomon Brothers Variable Total Return Fund........................ 0.80% 0% 0.20%(8) 1.00% STRONG VARIABLE INSURANCE FUNDS, INC. Strong Schafer Value Fund II......... 1.00% 0% 0.20%(9) 1.20% TRAVELERS SERIES FUND, INC. Alliance Growth Portfolio............ 0.80% 0% 0.02%(10) 0.82% MFS Total Return Portfolio........... 0.80% 0% 0.06%(10) 0.86% Putnam Diversified Income Portfolio.......................... 0.75% 0% 0.13%(10) 0.88% Smith Barney High Income Portfolio... 0.60% 0% 0.10%(10) 0.70% Smith Barney International Equity Portfolio.......................... 0.90% 0% 0.11%(10) 1.01% Smith Barney Large Capitalization Growth Portfolio................... 0.75% 0% 0.25%(11) 1.00% THE TRAVELERS SERIES TRUST Disciplined Mid Cap Stock Portfolio.......................... 0.70% 0% 0.25%(13) 0.95% Disciplined Small Cap Stock Portfolio.......................... 0.80% 0% 0.20%(12) 1.00% Equity Income Portfolio.............. 0.75% 0% 0.20%(13) 0.95% Federated Stock Portfolio............ 0.63% 0% 0.32%(13) 0.95% Large Cap Portfolio.................. 0.75% 0% 0.20%(13) 0.95% Lazard International Stock Portfolio.......................... 0.83% 0% 0.42%(13) 1.25% MFS Mid Cap Growth Portfolio......... 0.80% 0% 0.20%(12) 1.00% MFS Research Portfolio............... 0.80% 0% 0.20%(12) 1.00% Social Awareness Stock Portfolio..... 0.65% 0% 0.33% 0.98% Strategic Stock Portfolio............ 0.60% 0% 0.30%(12) 0.90% Travelers Quality Bond Portfolio..... 0.32% 0% 0.43%(13) 0.75% U.S. Government Securities Portfolio.......................... 0.32% 0% 0.26% 0.58% Utilities Portfolio.................. 0.65% 0% 0.41% 1.06% WARBURG PINCUS TRUST Emerging Markets Portfolio........... 0.45% 0% 0.95%(14) 1.40%
NOTES: The purpose of this 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 this prospectus for additional information. Expenses shown do not include premium taxes, which may be applicable. "Other Expenses" include operating costs of the fund. These expenses are reflected in each funding option's net asset value and are not deducted from the account value under the Contract. 4 14 (1) Other Expenses have been restated to reflect the current expense reimbursement arrangement with The Travelers Insurance Company. Travelers has agreed to reimburse the Fund for the amount by which its aggregate expenses (including the management fee, but excluding brokerage commissions, interest charges and taxes) exceeds 0.40%. Without such arrangement, Total Annual Funding Option Expenses would have been 1.39% for the MONEY MARKET PORTFOLIO. (2) These fees reflect an expense reimbursement arrangement with the Funds' investment adviser. Without reimbursement, and without the CHART Asset Allocation Fee, Total Annual Funding Option Expenses would have been 0.79% for the INTERNATIONAL EQUITY FUND and 0.67% for the CORE EQUITY FUND. Without reimbursement and with the CHART Fee, Total Annual Funding Option Expenses would have been 1.59% and 1.47%, respectively. The figures After Expense Reimbursement may be greater than the figures Before Expense Reimbursement because of repayments by the Fund to the Manager once the Fund is operating below the expense limitation. (3) The Management Fees and Other Expenses for the GLOBAL-HIGH YIELD BOND FUND have been restated to reflect current fees. Prior to May 1, 1998, the Global High Yield Bond Fund was named the "Short-Term Bond Fund" and had a substantially different investment objective and investment program. Information about the Short-Term Bond Fund is unlikely to be helpful to investors in the Global High-Yield Bond Fund. (4) The adviser for the DELAWARE REIT SERIES and the DELAWARE SMALL CAP VALUE SERIES has agreed to voluntarily waive its fee and pay the expenses of the Series to the extent that the Series' Total Annual Funding Option Expenses, exclusive of taxes, interest, brokerage commissions and extraordinary expenses, exceed 0.85% of its average daily net assets through October 31, 1998. Without such waiver, the Small Cap Portfolio's total operating expenses would have been 0.90% for the fiscal year ended December 31, 1997. The adviser estimates that, at current asset levels, the Total Annual Funding Option Expenses for the REIT Portfolio would be 1.05% without the voluntary fee waiver. This arrangement will be reviewed by the adviser, and is subject to change at any time. (5) Other Expenses have been restated to reflect the current expense reimbursement arrangement whereby the adviser has agreed to reimburse the Portfolio for the amount by which its expenses exceed 0.30%. Without such arrangement, other expenses would have been 0.70%. (6) The Manager has agreed to reduce some or all of its management fees if necessary to keep total annual operating expenses for the Growth Fund at or below 1.25% of its average net assets. The Manager may also voluntarily reduce additional amounts to increase the return to investors. Without such reduction by the Manager, the Fund's actual Total Annual Funding Option Expenses would have been 1.97% for the period ended December 31, 1997. (7) The Fund's manager has agreed to reimburse the Fund the amount by which its Total Funding Option Expenses (net of any expense offsets) exceeds 1.00% of its average daily net assets. There were no fees waived or expenses reimbursed for the fiscal year ended December 31, 1997. (8) The amounts set forth for Other Expenses are based on estimates for the current fiscal year and will include fees for shareholder services, administrative fees, custodial fees, legal and accounting fees, printing costs and registration fees. These expenses reflect the voluntary agreement by the Fund's adviser to impose an expense cap for the fiscal year ending December 31, 1998 on the total operating expenses of each Fund (exclusive of taxes, interest and extraordinary expenses such as litigation and indemnification expenses) at the amounts shown in the table through the reimbursement of expenses. Absent such agreement, the ratio of other expenses and Total Annual Funding Option Expenses to the average daily net assets would be 1.91% and 2.61%, respectively, for the INVESTORS FUND; 1.91% and 2.71%, respectively, for the TOTAL RETURN FUND; and 1.91% and 2.76%, respectively, for the CAPITAL FUND. (9) Other Expenses are estimated for the current fiscal year. Additionally, these fees reflect a voluntary expense reimbursement arrangement whereby the Portfolio's adviser has voluntarily agreed to cap the Portfolio's total operating expenses at 1.20%. Absent the waiver, the Total Annual Funding Option Expenses would be 2.00%. (10) Other expenses are as of October 31, 1997 (the Fund's fiscal year end). There were no fees waived or expenses reimbursed for these funds in 1997. (11) Other Expenses are based on estimates for the current fiscal year ending October 31, 1998. Additionally, these fees reflect a voluntary expense limitation of 1.00% of the Portfolio's average net assets. (12) Other Expenses are based on estimates for the current fiscal year and will include fees for shareholder services, administrative fees, custodial fees , legal and accounting fees, printing costs and registration fees. Additionally, these fees reflect a voluntary expense reimbursement arrangement by Travelers to reimburse the Portfolios for the amount by which their aggregate total operating expenses exceed 1.00% for the DISCIPLINED SMALL CAP STOCK PORTFOLIO, MFS MID CAP GROWTH PORTFOLIO, MFS RESEARCH PORTFOLIO; and 0.90% for the STRATEGIC STOCK PORTFOLIO. Absent such agreement, the Total Funding Option Expenses for these Portfolios would be 1.78%, 1.96%, 1.53% and 1.62%, respectively. (13) Other Expenses reflect the current expense reimbursement arrangement with Travelers Insurance Company where Travelers Insurance Company has agreed to reimburse the Portfolios for the amount by which their aggregate expenses (including management fees, but excluding brokerage commissions, interest charges and taxes) exceeds 0.95% (1.25% for the Lazard International Stock Portfolio and 0.75% for the Quality Bond Portfolio). Without such arrangements, the Total Funding Option Expenses for the Portfolios would have been as follows: 1.14% for FEDERATED STOCK PORTFOLIO; 1.90% for EQUITY INCOME PORTFOLIO; 2.65% for LARGE CAP PORTFOLIO; 1.82% for DISCIPLINED MID CAP STOCK PORTFOLIO; 1.76% for LAZARD INTERNATIONAL STOCK PORTFOLIO; and 1.13% for QUALITY BOND PORTFOLIO. (14) The WARBURG PINCUS EMERGING MARKETS PORTFOLIO'S investment advisor and co-administrator have agreed to limit the Portfolio's Total Funding Option Expenses to 1.40% through December 31, 1998. Absent this waiver of fees, the Portfolio's Management Fees, Other Expenses and Total Funding Option Expenses would equal 1.25%, 0.71% and 1.96%, respectively. The Portfolio's other expenses are based on annualized estimates of expenses for the fiscal year ending December 31, 1998, net of any fee waivers or expense reimbursements. 5 15 EXAMPLE* Assuming a 5% annual return on assets, a $1,000 investment would be subject to the following expenses:
(A) = STANDARD DEATH BENEFIT (B) = OPTIONAL DEATH BENEFIT AND CREDIT - --------------------------------------------------------------------------------------------------------------------- IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR END OF PERIOD SHOWN ANNUITIZED AT END OF PERIOD SHOWN: ------------------------------------- ------------------------------------- UNDERLYING FUNDING OPTIONS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS - --------------------------------------------------------------------------------------------------------------------- High Yield Bond Trust............. (a) $67 $ 82 $ 99 $194 $17 $52 $ 89 $194 (b) 71 95 122 242 21 65 112 242 Managed Assets Trust.............. (a) 65 75 88 171 15 45 78 171 (b) 69 89 112 220 19 59 102 220 Money Market Portfolio............ (a) 62 68 76 145 12 38 66 145 (b) 67 82 100 195 17 52 90 195 AMERICAN ODYSSEY FUNDS, INC.(1) Core Equity Fund.............. (a) 65 76 89 174 15 46 79 174 (b) 69 90 113 222 19 60 103 222 Emerging Opportunities Fund... (a) 67 82 100 197 17 52 90 197 (b) 71 96 123 244 21 66 113 244 Global High-Yield Bond Fund... (a) 65 77 91 177 15 47 81 177 (b) 70 91 114 225 20 61 104 225 Intermediate-Term Bond Fund... (a) 65 75 88 171 15 45 78 171 (b) 69 89 112 220 19 59 102 220 International Equity Fund..... (a) 66 80 96 187 16 50 86 187 (b) 71 93 119 235 21 63 109 235 Long-Term Bond Fund........... (a) 64 75 88 170 14 45 78 170 (b) 69 89 111 219 19 59 101 219 AMERICAN ODYSSEY FUNDS, INC.(2) Core Equity Fund.............. (a) 73 100 130 258 23 70 120 258 (b) 77 114 153 303 27 84 143 303 Emerging Opportunities Fund... (a) 75 107 141 280 25 77 131 280 (b) 79 120 163 323 29 90 153 323 Global High-Yield Bond Fund... (a) 73 101 132 262 23 71 122 262 (b) 78 115 154 306 28 85 144 306 Intermediate-Term Bond Fund... (a) 73 100 129 256 23 70 119 256 (b) 77 113 152 301 27 83 142 301 International Equity Fund..... (a) 74 104 137 271 24 74 127 271 (b) 79 117 159 315 29 87 149 315 Long-Term Bond Fund........... (a) 73 99 129 255 23 69 119 255 (b) 77 113 151 300 27 83 141 300 DELAWARE GROUP PREMIUM FUND, INC. REIT Series................... (a) 67 82 100 195 17 52 90 195 (b) 71 96 123 243 21 66 113 243 Small Cap Value Series........ (a) 67 82 100 195 17 52 90 195 (b) 71 96 123 243 21 66 113 243 DREYFUS VARIABLE INVESTMENT FUND Capital Appreciation Portfolio................... (a) 66 80 97 190 16 50 87 190 (b) 71 94 120 238 21 64 110 238 Small Cap Portfolio........... (a) 66 80 96 188 16 50 86 188 (b) 71 94 119 236 21 64 109 236 GREENWICH STREET SERIES FUND Equity Index Portfolio Class II.......................... (a) 64 73 84 162 14 43 74 162 (b) 68 87 107 212 18 57 97 212 MONTGOMERY FUNDS III Montgomery Variable Series: Growth Fund................. (a) 71 94 120 238 21 64 110 238 (b) 75 108 143 284 25 78 133 284 OCC ACCUMULATION TRUST Equity Portfolio.............. (a) 68 86 107 211 18 56 97 211 (b) 73 100 130 257 23 70 120 257 SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. Salomon Brothers Variable Capital Fund................ (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258 Salomon Brothers Variable Investors Fund.............. (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258 Salomon Brothers Variable Total Return Fund........... (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258
6 16
(A) = STANDARD DEATH BENEFIT (B) = OPTIONAL DEATH BENEFIT AND CREDIT - --------------------------------------------------------------------------------------------------------------------- IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR END OF PERIOD SHOWN ANNUITIZED AT END OF PERIOD SHOWN: ------------------------------------- ------------------------------------- UNDERLYING FUNDING OPTIONS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS - --------------------------------------------------------------------------------------------------------------------- STRONG VARIABLE INSURANCE FUNDS, INC. Strong Schafer Value Fund II.......................... (a) $70 $ 93 $118 $233 $20 $63 $108 $233 (b) 75 106 141 279 25 76 131 279 TRAVELERS SERIES FUND, INC. Alliance Growth Portfolio..... (a) 66 81 98 192 16 51 88 192 (b) 71 95 121 240 21 65 111 240 MFS Total Return Portfolio.... (a) 67 82 100 197 17 52 90 197 (b) 71 96 123 244 21 66 113 244 Putnam Diversified Income Portfolio................... (a) 67 83 101 199 17 53 91 199 (b) 72 97 124 246 22 67 114 246 Smith Barney High Income Portfolio................... (a) 65 77 92 179 15 47 82 179 (b) 70 91 115 227 20 61 105 227 Smith Barney International Equity Portfolio............ (a) 68 87 108 213 18 57 98 213 (b) 73 101 131 260 23 71 121 260 Smith Barney Large Capitalization Growth Portfolio................... (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258 THE TRAVELERS SERIES TRUST Disciplined Mid Cap Stock Portfolio................... (a) 68 85 105 206 18 55 95 206 (b) 72 99 128 253 22 69 118 253 Disciplined Small Cap Stock Portfolio................... (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258 Equity Income Portfolio....... (a) 68 85 105 206 18 55 95 206 (b) 72 99 128 253 22 69 118 253 Federated Stock Portfolio..... (a) 68 85 105 206 18 55 95 206 (b) 72 99 128 253 22 69 118 253 Large Cap Portfolio........... (a) 68 85 105 206 18 55 95 206 (b) 72 99 128 253 22 69 118 253 Lazard International Stock Portfolio................... (a) 71 94 120 238 21 64 110 238 (b) 75 108 143 284 25 78 133 284 MFS Mid Cap Growth Portfolio.. (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258 MFS Research Portfolio........ (a) 68 87 107 212 18 57 97 212 (b) 73 100 130 258 23 70 120 258 Social Awareness Stock Portfolio................... (a) 68 86 106 209 18 56 96 209 (b) 73 100 129 256 23 70 119 256 Strategic Stock Portfolio..... (a) 67 84 102 201 17 54 92 201 (b) 72 97 125 248 22 67 115 248 Travelers Quality Bond Portfolio................... (a) 66 79 94 185 16 49 84 185 (b) 70 93 118 233 20 63 108 233 U.S. Government Securities Portfolio................... (a) 64 74 86 166 14 44 76 166 (b) 69 88 109 215 19 58 99 215 Utilities Portfolio........... (a) 69 88 111 218 19 58 101 218 (b) 73 102 134 265 23 72 124 265 WARBURG PINCUS TRUST Emerging Markets Portfolio.... (a) 72 99 128 253 22 69 118 253 (b) 77 112 151 298 27 82 141 298
* The Example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown. (1) Reflects expenses that would be incurred for those Contract Owners who DO NOT participate in the CHART Asset Allocation program. (2) Reflects expenses that would be incurred for those Contract Owners who DO participate in the CHART Asset Allocation program.
7 17 THE ANNUITY CONTRACT - -------------------------------------------------------------------------------- The Traveling Retirement Variable Annuity is a contract between you, the contract owner, and Travelers Life and Annuity 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 and any applicable credits 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 any applicable credits, plus or minus any investment experience or interest. The contract value also reflects all prior 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 12 month period following this contract date is called a contract year. 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. CONTRACT OWNER INQUIRIES Any questions you have about your Contract should be directed to the Company's Home Office at 1-800-842-9406. PURCHASE PAYMENTS The initial purchase payment must be at least $20,000. Additional payments of at least $5,000 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. If the Optional Death Benefit is selected, we will add a credit to your Contract with each purchase payment. Each credit is added to the contract value when the applicable purchase payment is applied, and will equal 2% of each purchase payment. These credits are applied pro rata to the same funding options to which your purchase payment was applied. CONSERVATION CREDIT If you are purchasing this Contract with funds which originate from another contract issued by Us or Our affiliate, you may receive a conservation credit to your purchase payments. If applied, the amount of such credit will be determined by Us. 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. 8 18 THE FUNDING OPTIONS You choose which of the following funding options, to have your purchase payments allocated to. These funding options are subsections of the Separate Account which invest in the underlying mutual funds which support the funding options. 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. You are not investing directly in the underlying mutual funds, but only through the Separate Account. 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 registered representative or by calling 1-800-842-9406. The current funding options are listed below, along with their investment advisers and any subadviser:
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUB-ADVISER - ------------------------------------------------------------------------------------------------------------------- High Yield Bond Trust Seeks generous income. The assets of the High TAMIC Yield Bond Trust will be invested in bonds which, as a class, sell at discounts from par value and are typically high risk securities. Managed Assets Trust Seeks high total investment return through a TAMIC fully managed investment policy in a Subadviser: Travelers portfolio of equity, debt and convertible Investment Management Company securities. ("TIMCO") Money Market Portfolio Seeks high current income from short-term TAMIC (formerly "Cash Income Trust") money market instruments while preserving capital and maintaining a high degree of liquidity. AMERICAN ODYSSEY FUNDS, INC. Core Equity Fund Seeks maximum long-term total return by American Odyssey Funds investing primarily in common stocks of well- Management, Inc. established companies. Subadviser: Equinox Capital Management, Inc. Emerging Opportunities Fund Seeks maximum long-term total return by American Odyssey Funds investing primarily in common stocks of Management, Inc. small, rapidly growing companies. Subadviser: Cowen Asset Management and Chartwell Investment Partners Global High-Yield Bond Fund Seeks maximum long-term total return (capital American Odyssey Funds appreciation and income) by investing Management, Inc. primarily in high-yield debt securities from Subadviser: BEA Associates the United States and abroad. Intermediate-Term Bond Fund Seeks maximum long-term total return by American Odyssey Funds investing primarily in intermediate-term Management, Inc. corporate debt securities, U.S. government Subadviser: TAMIC securities, mortgage-related securities and asset-backed securities, as well as money market instruments. International Equity Fund Seeks maximum long-term total return by American Odyssey Funds investing primarily in common stocks of Management, Inc. established non-U.S. companies. Subadviser: Bank of Ireland Asset Management (U.S.) Limited Long-Term Bond Fund Seeks maximum long-term total return by American Odyssey Funds investing primarily in long-term corporate Management, Inc. debt securities, U.S. government securities, Subadviser: Western Asset mortgage-related securities, and asset-backed Management Company securities, as well as money market instruments.
9 19
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUB-ADVISER - ------------------------------------------------------------------------------------------------------------------- DELAWARE GROUP PREMIUM FUND, INC. REIT Series Seeks maximum long-term total return by Delaware Management Company, investing in securities of companies Inc. primarily engaged in the real estate Subadviser: Lincoln Investment industry. Management, Inc. DELAWARE GROUP PREMIUM FUND, INC., (CONT.) Small Cap Value Series Seeks capital appreciation by investing Delaware Management Company, primarily in common stocks whose market Inc. values appear low relative to their underlying value or future potential. DREYFUS VARIABLE INVESTMENT FUND Capital Appreciation Portfolio Seeks primarily to provide long-term capital The Dreyfus Corporation growth consistent with the preservation of Subadviser: Fayez Sarofim & Co. capital; current income is a secondary ("Sarofim") investment objective. The portfolio invests primarily in the common stocks of domestic and foreign issuers. Small Cap Portfolio Seeks to maximize capital appreciation. The Dreyfus Corporation GREENWICH STREET SERIES FUND Equity Index Portfolio Seeks to replicate, before deduction of TIMCO Class II(1) expenses, the total return performance of the S&P 500 Index. MONTGOMERY FUNDS III Montgomery Variable Series: Seeks capital appreciation. Under normal Montgomery Asset Management Growth Fund conditions, it invests at least 65% of its assets in equity securities. OCC ACCUMULATION TRUST Seeks long-term capital appreciation through Op Cap Advisors Equity Portfolio investment in a diversified portfolio of equity securities selected on the basis of a value oriented approach to investing. SALOMON BROTHERS VARIABLE SERIES FUND, INC. Salomon Brothers Variable Seeks above-average income (compared to a Salomon Brothers Asset Total Return Fund portfolio invested entirely in equity Management ("SBAM") securities). Secondarily, seeks opportunities for growth of capital and income. Salomon Brothers Variable Seeks long-term growth of capital. Current SBAM Investors Fund income is a secondary objective. Salomon Brothers Variable Seeks capital appreciation through SBAM Capital Fund investments primarily in common stock, or securities convertible to common stocks, which are believed to have above-average price appreciation potential and which may also involve above-average risk. STRONG VARIABLE INSURANCE FUNDS, INC. Strong Shafer Value Seeks primarily long-term capital Strong Capital Management, Inc. Fund II appreciation. Current income is a secondary Subadviser: Shafer Capital objective when selecting investments. Management, Inc.
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FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUB-ADVISER - ------------------------------------------------------------------------------------------------------------------- TRAVELERS SERIES FUND, INC. Alliance Growth Portfolio Seeks long-term growth of capital by Travelers Investment Adviser investing predominantly in equity securities ("TIA") of companies with a favorable outlook for Subadviser: Alliance Capital earnings and whose rate of growth is expected Management L.P. to exceed that of the U.S. economy over time. Current income is only an incidental consideration. MFS Total Return Portfolio Seeks to obtain above-average income TIA (compared to a portfolio entirely invested in Subadviser: Massachusetts equity securities) consistent with the Financial Services Company prudent employment of capital. Generally, at ("MFS") least 40% of the Portfolio's assets will be invested in equity securities. TRAVELERS SERIES FUND, INC., (CONT.) Putman Diversified Income Seeks high current income consistent with TIA Portfolio preservation of capital. The Portfolio will Subadviser: Putnam Investment allocate its investments among the U.S. Management, Inc. Government Sector, the High Yield Sector, and the International Sector of the fixed income securities markets. Smith Barney High Income Seeks high current income. Capital Mutual Management Portfolio appreciation is a secondary objective. The Corporation ("MMC") (formerly Portfolio will invest at least 65% of its Smith Barney Mutual Fund assets in high-yielding corporate debt Management, Inc.) obligations and preferred stock. Smith Barney International Seeks total return on assets from growth of MMC Equity Portfolio capital and income by investing at least 65% of its assets in a diversified portfolio of equity securities of established non-U.S. issuers. Smith Barney Large Seeks long-term growth of capital by MMC Capitalization Growth Portfolio investing in equity securities of companies with large market capitalizations. TRAVELERS SERIES TRUST Disciplined Mid Cap Seeks growth of capital by investing TAMIC Stock Fund primarily in a broadly diversified portfolio Subadviser: TIMCO of common stocks. Disciplined Small Cap Fund Seeks long term capital appreciation by TAMIC investing primarily (at least 65% of its Subadviser: TIMCO total assets) in the common stocks of U.S. Companies with relatively small market capitalizations at the time of investment. Equity Income Portfolio Seeks reasonable income by investing at least TAMIC 65% in income-producing equity securities. Subadviser: Fidelity Management The balance may be invested in all types of & Research Company domestic and foreign securities, including bonds. The Portfolio seeks to achieve a yield that exceeds that of the securities comprising the S&P 500. The Subadviser also considers the potential for capital appreciation. Federated Stock Portfolio Seeks growth of income and capital by TAMIC investing principally in a professionally Subadviser: Federated managed and diversified portfolio of common Investment Counseling, Inc. stock of high-quality companies (i.e., leaders in their industries and characterized by sound management and the ability to finance expected growth).
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FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUB-ADVISER - ------------------------------------------------------------------------------------------------------------------- Large Cap Portfolio Seeks long-term growth of capital by TAMIC investing primarily in equity securities of Subadviser: Fidelity Management companies with large market capitalizations. & Research Company Lazard International Stock Seeks capital appreciation by investing TAMIC Portfolio primarily in the equity securities of Subadviser: Lazard Asset non-United States companies (i.e., Management incorporated or organized outside the United States). MFS Mid Cap Growth Seeks to obtain long term growth of capital TAMIC Portfolio by investing, under normal market conditions, Subadviser: MFS at least 65% of its total assets in equity securities of companies with medium market capitalization which the investment adviser believes have above-average growth potential. TRAVELERS SERIES TRUST, (CONT.) MFS Research Portfolio Seeks to provide long-term growth of capital TAMIC and future income. Subadviser: MFS Social Awareness Stock Seeks long-term capital appreciation and MMC Portfolio retention of net investment income by selecting investments, primarily common stocks, which meet the social criteria established for the Portfolio. Social criteria currently excludes companies that derive a significant portion of their revenues from the production of tobacco, tobacco products, alcohol, or military defense systems, or in the provision of military defense related services or gambling services. Strategic Stock Portfolio Seeks to provide an above-average total TAMIC return through a combination of potential Subadviser: TIMCO capital appreciation and dividend income by investing primarily in high dividend yield stocks periodically selected from the companies included in (i) the Dow Jones Industrial Average and (ii) the Standard & Poor's 100 Stock Index. Travelers Quality Bond Seeks current income, moderate capital TAMIC Portfolio(1) volatility and total return. U.S. Government Seeks to select investments from the point of TAMIC Securities Portfolio(1) view of an investor concerned primarily with highest credit quality, current income and total return. The assets of the U.S. Government Securities Portfolio will be invested in direct obligations of the United States, its agencies and instrumentalities. Utilities Portfolio Seeks to provide current income by investing MMC in equity and debt securities of companies in the utility industries. WARBURG PINCUS TRUST Emerging Markets Portfolio Seeks long-term growth of capital by Warburg Pincus Asset investing primarily in equity securities of Management, Inc. non-U.S. issuers consisting of companies in emerging market securities.
(1) Currently available under Variable Annuitization Floor Benefit. An asset allocation program is available for certain funding options under the Contract. See "Asset Allocation Advice." 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 12 22 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 - -------------------------------------------------------------------------------- GENERAL We deduct the charges described below. The charges are for the service and benefits we provide, costs and expenses we incur, and risks we assume under the Contracts. Services and benefits we provide include: the ability for you to make withdrawals and surrenders under the Contracts; the death benefit paid on the death of the annuitant, the available funding options and related programs, including dollar-cost averaging, portfolio rebalancing, and managed distribution program; administration of the annuity options available under the Contracts; and the distribution of various reports to contract owners. Costs and expenses we incur include those associated with various overhead and other expenses associated with providing the services and benefits provided by the Contracts, sales and marketing expenses, and other costs of doing business. Risks we assume include the risks that annuitants may live longer than estimated when the annuity factors under the Contracts were established, and that the amount of the death benefit will be greater than the contract value. We may also deduct a charge for taxes. Unless otherwise specified, charges are deducted proportionately from all funding options in which you are invested. 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 five 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 is equal to a percentage of the amount of purchase payments, plus any credits applied, which are withdrawn from the Contract and is calculated as follows:
LENGTH OF TIME FROM PURCHASE PAYMENT WITHDRAWAL (NUMBER OF YEARS) CHARGE 1 5% 2 4% 3 3% 4 2% 5 1% 6 and thereafter 0%
For purposes of the withdrawal charge calculation, withdrawals will be deemed to be taken first from (a) any purchase payments and associated credits to which no withdrawal charge applies; (b) next from any remaining free withdrawal amount (as described below) after the reduction by the amount of (a); (c) next from remaining purchase payments and associated credits (on a first-in, first-out basis); and then (d) from contract earnings (in excess of any free withdrawal amount). Unless you instruct us otherwise, we will deduct the withdrawal charge from the amount requested. Where permitted by state law, we will not deduct a withdrawal charge (1) from payments we make due to the death of the annuitant; (2) if an annuity payout, other than under the Liquidity Benefit Option, (see "Liquidity Benefit") has begun; (3) if an income option of at least ten years' duration is elected; (4) from amounts withdrawn which are deposited to other contracts issued by Us or our affiliate (subject to Our approval); (5) if withdrawals are taken under our Managed 13 23 Distribution Program, if elected by you (see "Access to Your Money"); or (6) if you are confined to an Eligible Nursing Home, as described in Appendix B. FREE WITHDRAWAL ALLOWANCE There is a 20% free withdrawal allowance available each year. During the first contract year, the available withdrawal amount will be 20% of the initial purchase payment. After the first contract year, the available withdrawal amount will be calculated as of the end of the previous contract year. The free withdrawal allowance applies to partial withdrawals and to full withdrawals, except those transferred directly to annuity contracts issued by other financial institutions. In Washington state, the free withdrawal provision applies to all withdrawals. 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. For the Standard Death Benefit, this charge equals, on an annual basis, .80% of the amounts held in each funding option. For the Optional Death Benefit and Credit, the charge equals on an annual basis, 1.25%. We reserve the right to lower the charge at any time. FLOOR BENEFIT/LIQUIDITY BENEFIT CHARGES If the Variable Annuitization Floor Benefit is selected, a charge is deducted upon election of this benefit. This charge compensates us for guaranteeing a minimum variable annuity payment regardless of the performance of the funding options selected by you. This charge will vary based upon market conditions, but will never increase your annual separate account charge by more than 3%. The charge will be set at the time of election, and will remain level throughout the term of annuitization. If the Liquidity Benefit is selected, there is a surrender charge of 5% of the amount withdrawn. Please refer to "The Annuity Period" for a description of these benefits. CHART ASSET ALLOCATION PROGRAM CHARGES Under the CHART Program, purchase payments and cash values are allocated among the specified asset allocation funds. The charge for this advisory service is equal to a maximum of .80% of the assets subject to the CHART Program. The CHART Program fee will be paid by quarterly withdrawals from the cash values allocated to the asset allocation funds. The Company will not treat these withdrawals as taxable distributions. Please refer to "Miscellaneous Contract Provisions" for further information. 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. 14 24 OWNERSHIP PROVISIONS - -------------------------------------------------------------------------------- TYPES OF OWNERSHIP Contract owner (you). The Contract belongs to the contract owner named in the Contract (on the Specifications page). The annuitant is the individual upon whose life the maturity date and the amount of monthly annuity payments depend. Because this is a qualified contract, the contract owner and the annuitant must always be the same person. You have sole power to exercise any rights and to receive all benefits given in the contract provided you have not named an irrevocable beneficiary. Beneficiary. The beneficiary is named by you in a written request. The beneficiary has the right to receive any remaining contractual benefits upon your death. 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 your death. Unless an irrevocable beneficiary has been named, you have the right to change any beneficiary by written request and while the Contract continues. TRANSFERS - -------------------------------------------------------------------------------- Up to 30 days before the maturity date, you may transfer all or part of the contract value between funding options. Transfers are made at the value(s) next determined after we receive your request at the Home Office. There are no charges or restrictions on the amount or frequency of transfers currently; however, we reserve the right to charge a per-transfer fee on transfers exceeding 12 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 also make transfers between funding options. 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 cost per unit is low and less accumulation units are purchased if the cost 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. You must have a minimum total Contract Value of $5,000 to enroll in the Dollar Cost Averaging program. The minimum total automated transfer amount is $100. 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 funding 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 contract value, less any premium tax not previously deducted. You must submit a written request specifying the funding option(s) from which amounts are to be withdrawn. If no funding options are specified, the withdrawal will be made on a pro rata basis. The contract value will be determined as of the close of business after we receive your surrender request at the Home Office. The value may be more or less than the purchase payments made depending on the contract value at the time of surrender. 15 25 We may defer payment of any cash surrender value (that is, contract value, less charges for surrender and any premium taxes due) 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. We also provide access to your money during the annuitization period, which is discussed in detail in the "Annuity Period" section of this prospectus. SYSTEMATIC WITHDRAWALS 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 (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. We will surrender accumulation units 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 imposed 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. MANAGED DISTRIBUTION PROGRAM. Under the Systematic Withdrawal option, you may choose to participate in the Managed Distribution Program. At no cost to you, you may instruct the Company to calculate and make minimum distributions that may be required by the IRS upon reaching age 70 1/2. (See "Federal Tax Considerations".) These payments will not be subject to the withdrawal charge and will be in lieu of the 20% free withdrawal allowance. No Dollar Cost Averaging will be permitted if you are participating in the Managed Distribution Program. DEATH BENEFIT - -------------------------------------------------------------------------------- DEATH PROCEEDS BEFORE THE MATURITY DATE The person chosen as the beneficiary will receive a death benefit upon the first death of any owner or the annuitant before the maturity date. You may select either the Standard Death Benefit or the Optional Death Benefit and Credit at the time of purchase: STANDARD DEATH BENEFIT:
- ------------------------------------------------------------------------------------------ ANNUITANT'S AGE DEATH BENEFIT PAYABLE ON THE CONTRACT DATE (CALCULATED AS OF THE DEATH REPORT DATE) - ------------------------------------------------------------------------------------------ Before age 80 Greater of: (1) contract value, or (2) total purchase payments less any withdrawals (and related charges). - ------------------------------------------------------------------------------------------ On or after age 80 Contract value. - ------------------------------------------------------------------------------------------
OPTIONAL DEATH BENEFIT AND CREDIT The Optional Death Benefit and Credit varies depending on the Annuitant's age on the Contract Date. 16 26
- ------------------------------------------------------------------------------------------ ANNUITANT'S AGE DEATH BENEFIT PAYABLE ON THE CONTRACT DATE (CALCULATED AS OF THE DEATH REPORT DATE) - ------------------------------------------------------------------------------------------ Under Age 70 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greatest of: (1) contract value; (2) total purchase payments, less any withdrawals (and related charges), or (3) maximum Step Up death benefit value (described below) associated with contract date anniversaries beginning with the 5th, and ending with the last before the annuitant's 76th birthday. IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract Value (unless prohibited by state law) - ------------------------------------------------------------------------------------------ Age 70-75 IF NOTIFIED WITHIN 6 MONTHS OF THE DEATH: Greatest of: (1) above, (2) above, or (3) the Step Up death benefit value (described below) associated with the 5th contract date anniversary. IF NOTIFIED 6 MONTHS OR MORE AFTER THE DEATH: Contract Value (unless prohibited by state law) - ------------------------------------------------------------------------------------------ Age 76-80 Greater of (1) or (2) above. - ------------------------------------------------------------------------------------------ Age over 80 The contract value. - ------------------------------------------------------------------------------------------
All death benefit values described above are calculated at the close of business on the date the Company received due proof of death and written distribution instructions (the death report date). The amounts will be reduced by any applicable premium taxes due and any outstanding loans. STEP-UP DEATH BENEFIT VALUE A separate Step-Up death benefit value will be established on the fifth contract date anniversary, and on each subsequent contract date anniversary on or before 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. DEATH PROCEEDS AFTER THE MATURITY DATE If the death of the 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. PAYMENT OF PROCEEDS The process of paying death benefit proceeds 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. The Company will pay the proceeds to the beneficiary(ies), or if none, to the contract owner's estate. 17 27 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). While the annuitant is alive, you can change your selection any time up to 30 days prior the maturity date. Annuity payments will begin on the maturity date requested by you 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 or (d) for a number of payments assured. We may require proof that the annuitant is alive before annuity payments are made. You may annuitize your contract immediately after purchase, or select a later maturity date. Unless you elect otherwise, the maturity date will be the later of the annuitant's 90th birthday, or ten years after the effective date of the Contract. In certain states, the maturity date elected may not be later than the annuitant's 90th birthday. 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. Depending on your plan, these mandatory distribution requirements take effect generally 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. Please refer to the optional, no-cost Managed Distribution Program described in the "Access to Your Money" section of this prospectus. Independent tax advice should be sought regarding the election of minimum required distributions. LIQUIDITY BENEFIT Additionally, if you have selected any period certain option, you may elect to surrender a payment equal to a portion or all of the present value of the remaining period certain payments any time after the first contract year. There is a surrender charge of 5% of the amount withdrawn under this option. For variable annuity payments, the interest rate used to calculate the present value is the Assumed Net Investment Factor, as shown in your Contract. If you request a portion of the total amount available, your remaining payments for the period certain will be reduced by that percentage. After the period certain expires, your payments will increase to the level they would have been had no liquidation taken place. For fixed annuity payments, we calculate the present value of the remaining period certain payments using a current interest rate. This interest rate is the current rate of return offered by Us on new annuitizations for the amount of time remaining in the certain period annuity option. If you request a percentage of the total amount available, your remaining payments for the period chosen will be reduced by that percentage. After the certain period expires, your remaining payments will increase back to the level they would have been as if no certain liquidation had taken place. The market value adjustment formula for calculating the present value described above for fixed annuity payments is as follows: Present Value =LOGO[Payment(s) X (1/1 + iC)(t/365)] Where iC = the interest rate described above n = the number of payments remaining in the contract owner's certain period at the time of request for this benefit t = number of days remaining until that payment is made, adjusting for leap years.
See Appendix C for examples of this market value adjustment. 18 28 ALLOCATION OF ANNUITY 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 selected during the accumulation period. 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.") ANNUITIZATION CREDIT. This credit is applied to the contract value used to purchase one of the Annuity Options described below. The credit equals 0.5% of your contract value if you annuitize during contract years 2-5, 1% during contract years 6-10, and 2% after contract year 10. There is no credit applied to contracts held less than 1 year. 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 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. The amount of the first monthly payment depends on the annuity option and assumed net investment factor elected. At the time of annuitization, you may choose between an Assumed Net Investment Factor ("ANIF") of 3% or 5%. An ANIF of 5% will result in higher initial payments, while the 3% ANIF provides payments which increase more quickly. 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 applicable 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 settlement options. If it would produce a larger payment, the first variable annuity payment will be determined using the Variable Life Annuity Tables in effect on the maturity date. 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 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 Fixed Life Annuity Tables in effect on the maturity date. If you have elected the Increasing Benefit Option, the payments will be calculated as above, however, the initial payment will be less than that reflected in the table and the subsequent payments will be increased by the percentage you elected. 19 29 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 fixed 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 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 $2,000 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 as described above. 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. VARIABLE ANNUITIZATION FLOOR BENEFIT. This benefit may not be available, or may only be available under certain annuity options, if we determine the market conditions so dictate. If available, the Company will guarantee that, regardless of the performance of the funding options selected by you, your annuity payments will never be less than a certain percentage of your first annuity payment. This percentage will vary depending on market conditions, but will never be less than 50%. You may not elect this benefit if you are over age 80. Additionally, you must select from certain funds available under this guarantee. Currently, these funds are the Equity Index Portfolio Class II, the Travelers Quality Bond Portfolio, and the U.S. Government Securities Portfolio. We may, at our discretion increase or decrease the number of funds available under this benefit. This benefit is not currently available under Option 5. The benefit is not available with the 5% assumed net investment factor under any option. If you select this benefit, you may not elect to liquidate any portion of your contract. There is a charge for this guarantee, which will begin upon election of this benefit. This charge will vary based upon market conditions, and will be established at the time the benefit is elected. Once established, the charge will remain level throughout the remainder of the annuitization, and will never increase your annual separate account charge by more than 3% per year. We reserve the right to restrict the amount of contract value to be annuitized under this benefit. ANNUITY OPTIONS Subject to the conditions described in "Election of Options" above, all or any part of the contract value may be paid under one or more of the following annuity options. We may offer additional options. Options 1-5 below may be applied to either a Fixed or Variable Annuity. INCREASING BENEFIT OPTION. For Fixed Annuities, the annuity payment you receive may be either level (except after death of Primary Payee in Option 4) or increasing. If increasing payments are elected, the initial payment will be less than the corresponding level payment for the same annuity option, but your payments will increase on each contract date anniversary by a percentage chosen by you. You may choose a whole number from 1 to 4%. 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 maximum periodic payment, since there is no assurance of a minimum number of payments or provision for a death benefit for beneficiaries. 20 30 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 -- Payment for a Fixed Period. The Company will make monthly payments for the period selected. MISCELLANEOUS CONTRACT PROVISIONS - -------------------------------------------------------------------------------- RIGHT TO RETURN You may return the Contract within ten days after you receive it for a full refund of the purchase payment less any applicable credits applied. Where state law requires a longer period or other variations of this provision, the Company will comply. 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 contract value, less any applicable contract or premium tax charges. 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 21 31 Account's net assets; or (4) during any other period when the SEC, by order, so permits for the protection of security holders. ASSET ALLOCATION ADVICE Owners may elect to enter into a separate advisory agreement with Copeland Financial Services, Inc. ("Copeland"), an affiliate of the Company, if the program is available. For a fee, Copeland provides asset allocation advice under its CHART program, which is fully described in a separate disclosure statement. The CHART Program may not be available in all marketing programs through which this Contract is sold. THE SEPARATE ACCOUNT - -------------------------------------------------------------------------------- The Travelers Separate Account Six For Variable Annuities ("Separate Account Six") was established on June 8, 1998 and is registered with the SEC as a unit investment trust (separate account) under the Investment Company Act of 1940, as amended (the "1940 Act"). The assets of Separate Account Six will be invested exclusively in the shares of the variable funding options. The assets of Separate Account Six are held for the exclusive benefit of the owners of this separate account, according to the laws of Connecticut. The assets held by Separate Account Six 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 Six. 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 "nonstandardized 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). Each quotation assumes a total redemption at the end of each period. 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. The withdrawal charge is not reflected because the contract is designed for long-term investment. For underlying funds that were in existence prior to the date they became available under the Separate Account, the standardized average annual total return quotations may be accompanied by returns showing the investment performance that such underlying funds 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. 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 22 32 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. 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. This contract is intended primarily for use as a qualified annuity, therefore this tax discussion will be limited to such contracts. QUALIFIED CONTRACTS 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. 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. TAXATION OF SURRENDERS UNDER LIQUIDITY FEATURE As discussed above, no taxable income is recognized prior to the distribution of proceeds to the Contract Owner. The Liquidity Benefit available under this Contract is a distribution under the Code, and is therefore subject to ordinary income tax as well as the penalty tax for premature distributions, if applicable. 23 33 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. 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. Distributions must begin or be continued according to required patterns following the death of the contract owner or annuitant of qualified annuities. OTHER INFORMATION - -------------------------------------------------------------------------------- THE INSURANCE COMPANY The Travelers Life and Annuity Company is a stock insurance company chartered in 1973 in Connecticut and continuously engaged in the insurance business since that time. It is licensed to conduct life insurance business in a majority of the states of the United States, and intends to seek licensure in the remaining states except New York. The Company is an indirect wholly owned subsidiary of Citigroup, Inc. The Company's Home Office is located at One Tower Square, Hartford, Connecticut 06183. YEAR 2000 COMPLIANCE The Company is highly dependent on computer systems and system applications for conducting its ongoing business functions. In 1996, the Company began the process of identifying, assessing and implementing changes to computer programs to address the year 2000 issue and developed a comprehensive plan to address the issue. The issue involves the ability of computer systems that have time sensitive programs to recognize properly the year 2000. The inability to do so could result in major failures or miscalculations that would disrupt the Company's ability to meet its customer and other obligations on a timely basis. 24 34 The Company is in the process of implementing necessary changes, in accordance with its Year 2000 plan, to bring all its critical business systems into year 2000 compliance by yearend 1998. As part of, and following achievement of year 2000 compliance, systems have been, and will continue to be, subjected to a certification process which validates the renovated code before it is certified for use in production. In addition, the Company is developing contingency plans to be used in the event of an unexpected failure, which may result from the complex interrelationships among our clients, business partners, and other parties upon whom it relies. The total cost associated with the required modifications and conversions, which are expensed as incurred, is not expected to have a material effect on its financial position, results of operations or liquidity. The Company also has third party customers, financial institutions, vendors and others with which it conducts business and has communicated with them on their plans to address and resolve year 2000 issues on a timely basis. While it is likely that these efforts by third party vendors will be successful, it is possible that a series of failures by third parties could have a material adverse effect on the Company's results of operations in future years. 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, or certain other registered broker-dealers. The compensation paid to sales representatives will not exceed 6.5% 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 CFBDS, Inc., an unaffiliated company, 21 Milk Street, Boston, Massachusetts 02109. 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, contract 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. 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 the Separate Account. 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. 25 35 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The Financial Statements for the Company are located in the Statement of Additional Information. Because Separate Account Six is new, it does not yet have a financial statement. AVAILABLE INFORMATION - -------------------------------------------------------------------------------- The Company is subject to the information requirements of the Securities Exchange Act of 1934 (the "1934 Act"), as amended, and files reports and other information with the Securities and Exchange Commission (the "Commission"). Such reports and other information can be inspected and copied at the public reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. and at the Commission's Regional Offices located at Seven World Trade Center, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Under the Securities Act of 1933, the Company has filed with the Commission a registration statement (the "Registration Statement") relating to the Contracts offered by this Prospectus. This Prospectus has been filed as a part of the Registration Statement and does not contain all of the information set forth in the Registration Statement and the exhibits, and reference is hereby made to such Registration Statement and exhibits for further information relating to the Company and the Contracts. The Registration Statement and the exhibits may be inspected and copied as described above. Although the Company does furnish the Annual report on Form 10-K for the year ended December 31, 1997 to owners of contracts or certificates, the Company does not plan to furnish subsequent annual reports containing financial information to the owners of contracts or certificates described in this Prospectus. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - -------------------------------------------------------------------------------- The Company's latest Annual Report on Form 10-K has been filed with the Commission pursuant to Section 15(d) of the 1934 Act. The Company's most recent Form 10Q and Form 8K, in addition to Form 10K, are incorporated by reference into this Prospectus and copies must accompany this Prospectus. The Form 10-K for the fiscal year ended December 31, 1997 contains additional information about the Company, including audited financial statements for the Company's latest fiscal year. It was filed on March 24, 1998 via Edgar; File No. 33-58677. The Form 10Q for the fiscal quarter ended September 30, 1998 includes updated audited financial statements, and was filed via EDGAR; File No. 33-58677. The Form 8K includes information regarding recent material events affecting the Company, and was filed on April 22, 1998 via EDGAR; File No. 33-58677. If requested, the Company will furnish, without charge, to each person to whom a copy of this Prospectus is delivered, a copy of the documents referred to above which have been incorporated by reference in the Prospectus, other than exhibits to the documents (unless such exhibits are specifically incorporated by reference in such documents). Any such requests should be directed to Travelers Life and Annuity Company, One Tower Square, Hartford, Connecticut 06183-5030, Attention: Annuity Services. The telephone number is (860) 422-3985. You may also obtain copies of any documents, incorporated by reference into this prospectus by accessing the SEC's website (http://www.sec.gov). 26 36 APPENDIX A - -------------------------------------------------------------------------------- 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 Life and Annuity 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 Valuation of Assets Mixed and Shared Funding Performance Information Federal Tax Considerations Independent Accountants Financial Statements - -------------------------------------------------------------------------------- Copies of the Statement of Additional Information dated November 18, 1998 (Form No. 21257S) 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 Life and Annuity Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183-9061. Name: Address: A-1 37 APPENDIX B - -------------------------------------------------------------------------------- WAIVER OF WITHDRAWAL CHARGE FOR NURSING HOME CONFINEMENT If, after the first contract year and prior to the maturity date of the Contract, the annuitant begins confinement in an Eligible Nursing Home, and remains confined for the qualifying period, you may make a total or partial withdrawal, subject to the maximum withdrawal amount described below, without incurring a Withdrawal Charge. In order for the Withdrawal Charge to be waived, the withdrawal must be made during continued confinement in an Eligible Nursing Home after the qualifying period has been satisfied, or within sixty (60) days after such confinement ends. The qualifying period is confinement in an Eligible Nursing Home for ninety (90) consecutive days. We will require proof of confinement in a form satisfactory to us, which may include certification by a licensed physician that such confinement is medically necessary. An Eligible Nursing Home is defined as an institution or special nursing unit of a hospital which: (a) is Medicare approved as a provider of skilled nursing care services; and (b) is not, other than in name only, an acute care hospital, a home for the aged, a retirement home, a rest home, a community living center, or a place mainly for the treatment of alcoholism, mental illness or drug abuse. OR Meets all of the following standards: (a) is licensed as a nursing care facility by the state in which it is licensed; (b) is either a freestanding facility or a distinct part of another facility such as a ward, wing, unit or swing-bed of a hospital or other facility; (c) provides nursing care to individuals who are not able to care for themselves and who require nursing care; (d) provides, as a primary function, nursing care and room and board; and charges for these services; (e) care is provided under the supervision of a licensed physician, registered nurse (RN) or licensed practical nurse (LPN); (f) may provide care by a licensed physical, respiratory, occupational or speech therapist; and (g) is not, other than in name only, an acute care hospital, a home for the aged, a retirement home, a rest home, a community living center, or a place mainly for the treatment of alcoholism, mental illness or drug abuse. FILING A CLAIM: You must provide the Company with written notice of a claim during continued confinement following completion of the qualifying period, or within sixty days after such confinement ends. The maximum withdrawal amount available without incurring a Withdrawal Charge is the contract value on the next valuation date following written proof of claim, less any purchase payments made within a one year period prior to the date confinement in an Eligible Nursing Home begins, less any additional purchase payments made on or after the Annuitant's 71st birthday. 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 adviser regarding the taxable nature of any withdrawals taken from your contract. B-1 38 APPENDIX C - -------------------------------------------------------------------------------- MARKET VALUE ADJUSTMENT If you (the Annuitant) have selected any period certain option, you may elect to surrender a payment equal to a portion or all of the present value of the remaining period certain payments any time after the first contract year. There is a surrender charge of 5% of the amount withdrawn under this option. For fixed annuity payments, we calculate the present value of the remaining period certain payments using a current interest rate. The current interest rate is the then current annual rate of return offered by Us on new Fixed Annuity period certain only annuitizations for the amount of time remaining in the certain period. If the period of time remaining is less than the minimum length of time for which we offer a new Fixed Annuity Period Certain Only Annuitization, then the interest rate will be the rate of return for that minimum length of time. The formula for calculating the Present Value is as follows: Present Value =LOGO[Payment(s) X (1/1 + iC)(t/365)] Where iC = the interest rate described above n = the number of payments remaining in the contract owner's certain period at the time of request for this benefit t = number of days remaining until that payment is made, adjusting for leap years. If you request a percentage of the total amount available, the remaining period certain payments will be reduced by that percentage for the remainder of the certain period. After the certain period expires, any remaining payments will increase to the level they would have been had no liquidation taken place. Illustration: Amount Annuitized: $12,589.80 Annuity Option: Life w/10 Year Certain $1,000 Annually--first payment Annuity Payments: immediately
For the purposes of this illustration, assume after two years (immediately preceding the third payment), you choose to receive full liquidity, and the current rate of return which we are then crediting for 8 year fixed Period Certain Only Annuitizations is 4.00%. The total amount available for liquidity is calculated as follows: 1000 + (1000/1.04) + (1000/1.04)( 7/8)2 + (1000/1.04)( 7/8)3 + (1000/1.04) ( 7/8)4 + (1000/1.04)( 7/8)5 + (1000/1.04)( 7/8)6 + (1000/1.04)( 7/8)7 = $7002.06 The surrender penalty is calculated as 5% of $7,002.06, or $350.10. The net result to you after subtraction of the surrender penalty of $350.10 would be $6,651.95. You would receive no more payments for 8 years. After 8 years, if you are still living, you will receive $1000 annually until your death. C-1 39 PART B Information Required in a Statement of Additional Information 40 TRAVELERS RETIREMENT VARIABLE ANNUITY STATEMENT OF ADDITIONAL INFORMATION dated November 18, 1998 for THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES ISSUED BY THE TRAVELERS LIFE AND ANNUITY COMPANY This Statement of Additional Information ("SAI") is not a prospectus but relates to, and should be read in conjunction with, the Variable Annuity Contract Prospectus dated November 18, 1998. A copy of the Prospectus may be obtained by writing to The Travelers Life and Annuity Company, Annuity Services, One Tower Square, Hartford, Connecticut 06183-8036, or by calling (800) 842-9406. TABLE OF CONTENTS THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 1 PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . 1 DISTRIBUTION AND MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . 2 VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 2 MIXED AND SHARED FUNDING . . . . . . . . . . . . . . . . . . . . . . . 3 PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 4 FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . 6 INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . F-1
41 THE INSURANCE COMPANY The Travelers Life and Annuity Company (the "Company") is a stock insurance company chartered in 1973 in Connecticut. It is a wholly owned subsidiary of The Travelers Insurance Company, which is a wholly owned subsidiary of Citigroup, Inc. Citigroup consists of businesses that produce a broad range of financial services, including asset management, banking and consumer finance, credit and charge cards, insurance, investments, investment banking and trading. Among its businesses are Citibank, Commercial Credit, Primerica Financial Services, Salomon Smith Barney, Salomon Smith Barney Asset Management, and Travelers Property Casualty. 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 Six 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 Six 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 CFBDS, Inc. serves as principal underwriter for Separate Account Six and the Contracts. The offering is continuous. CFBDS, Inc.'s principal executive offices are located at 21 Milk Street, Boston, MA 02116. DISTRIBUTION AND MANAGEMENT AGREEMENT Under the terms of the Distribution and Management Agreement among Separate Account Six, the Company and CFBDS, 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 Six. CFBDS performs the sales functions related to the Contracts. The Company reimburses CFBDS 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 Six and the variable annuity contract with regulatory authorities; the costs of proxy solicitation; and all custodian, accountant's and legal fees. The Company also provides without cost to Separate Account Six all necessary office space, facilities, and personnel to manage its affairs. 1 42 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. ACCUMULATION UNIT VALUE. The value of the accumulation unit for each funding option was initially established at $1.00. 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 2 43 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. The initial Annuity Unit Value applicable to each funding option was established at $1.00. An annuity unit value as of any business day is equal to (a) the value of the annuity unit on the 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.) MIXED AND SHARED FUNDING Certain variable annuity separate accounts and variable life insurance separate accounts may invest in the funding options simultaneously (called "mixed" and "shared" funding). It is conceiveable that in the future it may be disadvantageous to do so. Although the Company and the funding options do not currently forsee any such disadvantages either to variable annuity contract owners or variable life policy owners, each funding option's Board of Directors intends to monitor events in order to identify any material conflicts between them and to determine what action, if any, should be taken. If a Board of Directors was to conclude that separate funds should be established for variable life and variable annuity separate accounts, the variable annuity contract owners would not bear any of the related expenses, but variable annuity contract owners and variable life insurance policy owners would no longer have the economies of scale resulting from a larger combined fund. PERFORMANCE INFORMATION From time to time, the Company may advertise several types of historical performance for the Funding Options of Separate Account Six. 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 "nonstandardized total returns," 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). Each quotation assumes a total redemption at the end of each period with the assessment of any applicable withdrawal charge 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 applicable withdrawal charge which, if reflected, would 3 44 decrease the level of performance shown. The withdrawal charge is not reflected because the Contract is designed for long-term investment. For Funding Options that were in existence prior to the date they became available under Separate Account Six, the standardized average annual total return quotations may be accompanied by returns showing 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. 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 Separate Account Six and the Funding Options. Average annual total returns have been calculated using each funding option's investment performance since inception. The returns were computed according to the nonstandardized method for the period ending December 31, 1997 as if they had been available under Separate Account Six during that time. They are set forth in the following tables. No standardized information is currently available. 4 45
M & E CHARGE = 1.25% NONSTANDARDIZED NONSTANDARDIZED --------------- --------------- (taking into account all charges (taking into account all charges and fees except and fees) deferred sales charge) - ----------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO 10 YEAR 10 YEAR FUND OR OR INCEPTION 1 YEAR 5 YEAR INCEPTION 1 YEAR 3 YEAR 5 YEAR INCEPTION DATE - ----------------------------------------------------------------------------------------------------------------------------------- High Yield Bond Trust 15.12% 10.56% 8.91% 15.12% 14.59% 10.56% 8.91% 6/83 - ----------------------------------------------------------------------------------------------------------------------------------- Managed Assets Trust 19.78% 11.98% 1.66% 19.78% 19.09% 11.98% 1.66% 6/83 - ----------------------------------------------------------------------------------------------------------------------------------- Money Market Portfolio 3.76% 2.79% 3.99% 3.76% 3.19% 2.79% 3.99% 12/87 - ----------------------------------------------------------------------------------------------------------------------------------- AMERICAN ODYSSEY FUNDS (1): - ----------------------------------------------------------------------------------------------------------------------------------- Core Equity Fund 30.27% - 17.76% 30.27% 29.40% - 17.76% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Emerging Opportunities Fund 5.71% - 9.74% 5.71% 9.71% - 9.74% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Global High Yield Bond Fund * - - - - - - - 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Intermediate-Term Bond Fund 6.17% - 4.51% 6.17% 7.37% - 4.51% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- International Equity Fund 3.74% - 10.46% 3.74% 13.63% - 10.46% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Long-Term Bond Fund 10.65% - 6.66% 10.65% 10.21% - 6.66% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- AMERICAN ODYSSEY FUNDS (2): - ----------------------------------------------------------------------------------------------------------------------------------- Core Equity Fund 28.65% - 16.31% 28.65% 27.81% - 16.31% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Emerging Opportunities Fund 4.39% - 8.38% 4.39% 8.36% - 8.38% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Global High Yield Bond Fund * - - - - - - - 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Intermediate-Term Bond Fund 4.85% - 3.22% 4.85% 6.04% - 3.22% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- International Equity Fund 2.45% - 9.09% 2.45% 12.23% - 9.09% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- Long-Term Bond Fund 9.28% - 5.34% 9.28% 8.84% - 5.34% 5/93 - ----------------------------------------------------------------------------------------------------------------------------------- DELAWARE GROUP PREMIUM FUND, INC. - ----------------------------------------------------------------------------------------------------------------------------------- REIT Series - - - - - 5/98 - ----------------------------------------------------------------------------------------------------------------------------------- Small Cap Value Series 31.30% - 17.79% 31.30% 23.88% - 17.79% 12/93 - ----------------------------------------------------------------------------------------------------------------------------------- DREYFUS VARIABLE INVESTMENT FUND - ----------------------------------------------------------------------------------------------------------------------------------- Capital Appreciation Portfolio 26.49% - 18.39% 26.49% 27.40% - 18.39% 4/93 - ----------------------------------------------------------------------------------------------------------------------------------- Small Cap Portfolio 15.31% 24.58% 42.22% 15.31% 19.26% 24.58% 42.22% 8/90 - ----------------------------------------------------------------------------------------------------------------------------------- GREENWICH STREET SERIES FUND - ----------------------------------------------------------------------------------------------------------------------------------- Equity Index Portfolio Class II 31.46% 18.92% 18.37% 31.46% 29.47% 18.92% 18.37% 11/91 - ----------------------------------------------------------------------------------------------------------------------------------- MONTGOMERY VARIABLE SERIES - ----------------------------------------------------------------------------------------------------------------------------------- Growth Fund 27.00% - 28.10% 27.00% - 28.10% 2/96 - ----------------------------------------------------------------------------------------------------------------------------------- OCC ACCUMULATION TRUST - ----------------------------------------------------------------------------------------------------------------------------------- Equity Portfolio 25.08% 17.94% 16.33% 25.08% 27.84% 17.94% 16.33% 8/88 - ----------------------------------------------------------------------------------------------------------------------------------- SALOMON BROTHERS VARIABLE SERIES FUNDS, INC. - ----------------------------------------------------------------------------------------------------------------------------------- Salomon Brothers Variable - - - - - - - 2/98 Capital Fund - ----------------------------------------------------------------------------------------------------------------------------------- Salomon Brothers Variable - - - - - - - 2/98 Investors Fund - ----------------------------------------------------------------------------------------------------------------------------------- Salomon Brothers Variable Total - - - - - - - 2/98 Return Fund - ----------------------------------------------------------------------------------------------------------------------------------- STRONG VARIABLE INSURANCE FUNDS, INC. - ----------------------------------------------------------------------------------------------------------------------------------- Strong Schafer Value Fund II - - -5.56% - - - -5.56% 10/97 - ----------------------------------------------------------------------------------------------------------------------------------- TRAVELERS SERIES FUND, INC. - ----------------------------------------------------------------------------------------------------------------------------------- Alliance Growth Portfolio 27.43% - 26.11% 27.43% 29.41% - 26.11% 6/94 - ----------------------------------------------------------------------------------------------------------------------------------- MFS Total Return Portfolio 19.69% - 15.10% 19.69% 18.87% - 15.10% 6/94 - ----------------------------------------------------------------------------------------------------------------------------------- Putnam Diversified Income 6.36% - 8.37% 6.36% 9.63% - 8.37% 6/94 Portfolio - ----------------------------------------------------------------------------------------------------------------------------------- Smith Barney High Income 12.46% - 11.30% 12.46% 13.90% - 11.30% 6/94 Portfolio - ----------------------------------------------------------------------------------------------------------------------------------- Smith Barney International Equity 1.44% - 6.20% 1.44% 9.02% - 6.20% 6/94 Portfolio - ----------------------------------------------------------------------------------------------------------------------------------- Smith Barney Large Cap Growth - - - - - - - 5/98 Portfolio - -----------------------------------------------------------------------------------------------------------------------------------
5 46
- ---------------------------------------------------------------------------------------------------------------------------------- M & E CHARGE = 1.25% NONSTANDARDIZED NONSTANDARDIZED --------------- --------------- (taking into account all (taking into account all charges and ------------------------ charges and fees fees except deferred sales charge) - ---------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO 10 YEAR 10 YEAR OR OR FUND INCEPTION 1 YEAR 5 YEAR INCEPTION 1 YEAR 3 YEAR 5 YEAR INCEPTION DATE - ---------------------------------------------------------------------------------------------------------------------------------- THE TRAVELERS SERIES TRUST - ---------------------------------------------------------------------------------------------------------------------------------- Disciplined Mid Cap Stock Portfolio - - 46.43% - - - 46.43% 4/97 - ---------------------------------------------------------------------------------------------------------------------------------- Disciplined Small Cap Stock - - - - - - - 5/98 Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Equity Income Portfolio 30.06% - 31.80% 30.06% - - 31.80% 8/96 - ---------------------------------------------------------------------------------------------------------------------------------- Federated Stock Portfolio 31.78% - 33.92% 31.78% - - 33.92% 8/96 - ---------------------------------------------------------------------------------------------------------------------------------- Large Cap Portfolio 20.49% - 25.81% 20.49% - - 25.81% 8/96 - ---------------------------------------------------------------------------------------------------------------------------------- Lazard International Stock Portfolio 6.89% - 10.31% 6.89% - - 10.31% 8/96 - ---------------------------------------------------------------------------------------------------------------------------------- MFS Mid Cap Growth Portfolio - - - - - - - 3/98 - ---------------------------------------------------------------------------------------------------------------------------------- MFS Research Portfolio - - - - - - - 3/98 - ---------------------------------------------------------------------------------------------------------------------------------- Social Awareness Stock Portfolio 25.72% 14.91% 14.70% 25.72% 25.18% 14.91% 14.70% 5/92 - ---------------------------------------------------------------------------------------------------------------------------------- Strategic Stock Portfolio - - - - - - 5/98 - ---------------------------------------------------------------------------------------------------------------------------------- Travelers Quality Bond Portfolio 5.81% - 6.73% 5.81% - - 6.73% 8/96 - ---------------------------------------------------------------------------------------------------------------------------------- U.S. Government Securities 11.24% 6.66% 6.73% 11.24% 11.06% 6.66% 6.73% 1/92 Portfolio - ---------------------------------------------------------------------------------------------------------------------------------- Utilities Portfolio 23.74% - 14.31% 23.74% 18.79% - 14.31% 2/94 - ---------------------------------------------------------------------------------------------------------------------------------- WARBURG PINCUS TRUST - ---------------------------------------------------------------------------------------------------------------------------------- Warburg Pincus Emerging Markets - - - - - - - 12/97 Portfolio - ----------------------------------------------------------------------------------------------------------------------------------
1 Without Chart Fees 2 With Chart Fees of 1.25% *Formerly American Odyssey Short-Term Bond Fund. The name, investment objective and investment adviser of this fund were changed pursuant to a shareholder vote effective May 1, 1998 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. 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. 6 47 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. ROTH IRAS Effective January 1, 1998, Section 408A of the Code permits certain individuals to contribute to a Roth IRA. Eligibility to make contributions is based upon income, and the applicable limits vary based on marital status and/or whether the contribution is a rollover contribution from another IRA or an annual contribution. Contributions to a Roth IRA, which are subject to certain limitations ($2,000 per year for annual contributions), are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and other special rules apply. You should consult a tax adviser before combining any converted amounts with other Roth IRA contributions, including any other conversion amounts from other tax years. Qualified distributions from a Roth IRA are tax-free. A qualified distribution requires that the Roth IRA has been held for at least 5 years, and the distribution is made after age 59 1/2, on death or disability of the owner, or for a limited amount ($10,000) for a qualified first time home purchase for the owner or certain relatives. Income tax and a 10% penalty tax may apply to distributions made (1) before age 59 1/2 (subject to certain exceptions) or (2) during five taxable years starting with the year in which the first contribution is made to the Roth IRA. QUALIFIED PENSION AND PROFIT-SHARING PLANS 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. 7 48 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 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, 1998, a recipient receiving periodic payments (e.g., monthly or annual payments under an annuity option) which total $15,200 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 8 49 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 The consolidated financial statements of the Travelers Life and Annuity Company and Subsidiaries as of December 31, 1997 and 1996, and for each of the years in the three-year period ended December 31, 1997, have been included herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. 9 50 TRAVELERS RETIREMENT VARIABLE ANNUITY STATEMENT OF ADDITIONAL INFORMATION SEPARATE ACCOUNT SIX Individual and Group Variable Annuity Contract issued by The Travelers Life and Annuity Company One Tower Square Hartford, Connecticut 06183 November 18, 1998 L-21257S 10 51 THE TRAVELERS LIFE AND ANNUITY COMPANY INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholder The Travelers Life and Annuity Company: We have audited the accompanying balance sheets of The Travelers Life and Annuity Company as of December 31, 1997 and 1996, and the related statements of income and retained earnings and cash flows for each of the years in the three-year period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Travelers Life and Annuity Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP Hartford, Connecticut January 26, 1998 F-1 52 THE TRAVELERS LIFE AND ANNUITY COMPANY STATEMENTS OF INCOME AND RETAINED EARNINGS ($ in thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997 1996 1995 ---- ---- ---- REVENUES Premiums $ 35,190 $ 17,462 $ 10,691 Net investment income 168,653 151,326 123,197 Realized investment gains (losses) 44,871 (9,613) 18,713 Other 8,163 2,276 1,286 -------- -------- -------- Total Revenues 256,877 161,451 153,887 -------- -------- -------- BENEFITS AND EXPENSES Current and future insurance benefits 95,639 77,285 73,818 Interest credited to contractholders 35,165 35,607 30,472 Operating expenses, including amortization of deferred acquisition costs and value of insurance in force 16,498 8,977 6,161 -------- -------- -------- Total Benefits and Expenses 147,302 121,869 110,451 -------- -------- -------- Income before federal income taxes 109,575 39,582 43,436 -------- -------- -------- Federal income taxes: Current 33,859 29,456 2,555 Deferred expense (benefit) 4,344 (15,665) 11,964 -------- -------- -------- Total Federal Income Taxes 38,203 13,791 14,519 -------- -------- -------- Net income 71,372 25,791 28,917 Retained earnings beginning of year 167,698 157,907 128,990 Dividends to parent 14,000 16,000 - -------- -------- -------- Retained Earnings End of Year $225,070 $167,698 $157,907 ======== ======== ========
See Notes to Financial Statements. F-2 53 THE TRAVELERS LIFE AND ANNUITY COMPANY BALANCE SHEETS ($ in thousands)
DECEMBER 31, 1997 1996 - ------------ ---- ---- ASSETS Fixed maturities, available for sale at fair value (cost, $1,571,121; $1,440,806) $1,678,120 $1,484,670 Equity securities, at fair value (cost, $15,092; $12,396) 16,289 15,902 Mortgage loans 160,247 128,440 Real estate held for sale - 10,111 Policy loans 2,894 1,750 Short-term securities 169,229 81,162 Other invested assets 118,348 88,641 ---------- ---------- Total Investments $2,145,127 $1,810,676 ---------- ---------- Separate accounts 812,059 290,940 Deferred acquisition costs and value of insurance in force 90,966 40,027 Deferred federal income taxes 33,661 57,617 Other assets 73,414 55,023 ---------- ---------- Total Assets $3,155,227 $2,254,283 ---------- ---------- LIABILITIES Future policy benefits $971,602 $967,621 Contractholder funds 818,971 582,183 Separate accounts 812,059 290,716 Other liabilities 86,934 41,895 ---------- ---------- Total Liabilities $2,689,566 $1,882,415 ---------- ---------- SHAREHOLDER'S EQUITY Common stock, par value $100; 100,000 shares authorized, 30,000 issued and outstanding 3,000 3,000 Additional paid-in capital 167,314 167,314 Retained earnings 225,070 167,698 Unrealized investment gains, net of taxes 70,277 33,856 ---------- ---------- Total Shareholder's Equity 465,661 371,868 ---------- ---------- Total Liabilities and Shareholder's Equity $3,155,227 $2,254,283 ========== ==========
See Notes to Financial Statements. F-3 54 THE TRAVELERS LIFE AND ANNUITY COMPANY STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH ($ in thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997 1996 1995 - ------------------------------- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Premiums collected $ 34,553 $ 6,472 $ 1,950 Net investment income received 170,460 71,083 66,219 Benefits and claims paid (90,820) (70,331) (71,710) Interest credited to contractholders (35,165) (813) - Operating expenses paid (40,868) (5,482) (3,013) Income taxes paid (22,440) (23,931) (35,305) Other (7,702) (6,857) (6,772) ---------- --------- --------- Net Cash Provided by (Used in) Operating Activities 8,018 (29,859) (48,631) ---------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturities of investments Fixed maturities 81,899 20,301 11,752 Mortgage loans 8,972 37,789 24,137 Proceeds from sales of investments Fixed maturities 856,846 978,970 459,971 Equity securities 12,404 12,818 11,823 Mortgage loans 5,483 22,437 7,013 Real estate held for sale 4,493 - - Purchases of investments Fixed maturities (1,020,803) (994,443) (515,098) Equity securities (6,382) (5,412) (156) Mortgage loans (41,967) (21,450) (4,890) Policy loans (1,144) (1,750) - Short-term securities, purchases, net (88,067) (19,688) (5,051) Other investments, (purchases) sales, net (51,502) (6,160) 9,274 Securities transactions in course of settlement 10,526 (51,703) 45,727 ---------- --------- --------- Net Cash Provided by (Used in) Investing Activities (229,242) (28,291) 44,502 ---------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Contractholder fund deposits 325,932 96,490 5,707 Contractholder fund withdrawals (89,145) (22,340) (1,874) Dividends to parent company (14,000) (16,000) - ---------- --------- --------- Net Cash Provided by Financing Activities $ 222,787 $ 58,150 $ 3,833 ---------- --------- --------- Net increase (decrease) in cash $ 1,563 $ - $ (296) ---------- --------- --------- Cash at December 31, $ 1,563 $ - $ - ========== ========= =========
See Notes to Financial Statements. F-4 55 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies used in the preparation of the accompanying financial statements follow. Basis of Presentation The Travelers Life and Annuity Company (the Company) is a wholly owned subsidiary of The Travelers Insurance Company (TIC), an indirect wholly owned subsidiary of Travelers Group Inc. (Travelers Group). The financial statements and accompanying footnotes of the Company are prepared in conformity with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and benefits and expenses during the reporting period. Actual results could differ from those estimates. The accompanying financial statements reflect a change in presentation of the assets, liabilities and operations of the structured settlement separate account business of the Company. The assets and liabilities were previously reported in separate account line items and are now incorporated in various financial statement classifications. As a result of this change, invested assets in the amount of $814.5 million and $863.6 million at December 31, 1997 and 1996, respectively, associated with structured settlement contract obligations, are reported as investments. The related structured settlement contract obligations, which were $842.3 million and $809.1 million at December 31, 1997 and 1996, respectively, are included in future policy benefits and contractholder funds. Additionally, structured settlement transactions included in the income statement for the years ended December 31, 1997, 1996 and 1995 are premiums of $23.2 million, $8.1 million and $8.0 million, respectively, net investment income of $65.9 million, $62.3 million and $60.0 million, respectively, and benefits and expenses of $66.5 million, $56.4 million and $51.8 million, respectively. The 1996 and 1995 amounts were previously reported as a net $13.9 million and $16.2 million, respectively, included in other revenue. This change in presentation has no effect on net income, total assets, total liabilities, or shareholder's equity as reflected in the statements of income and retained earnings, and balance sheets for the periods presented. The Company has determined that a change in presentation was warranted because of the nature of this particular separate account and the change in product focus of the Company. The assets of the structured settlement separate account are owned by, and investment risk is borne by, the Company, which also guarantees the obligations of this separate account. Consequently, the Company, not the contractholder, bears the risks of this separate account. The Company is now offering a variety of variable annuity products where the investment risk is borne by the contractholder, not the Company, and the benefits are not guaranteed. The premiums and deposits related to these products are reported in separate accounts. The Company considers it necessary to differentiate, for financial statement purposes, the results of the risks it has assumed from those it has not. See also Note 6. Certain reclassifications have been made to the prior year's financial statements to conform to the current year's presentation. F-5 56 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Accounting Changes EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS In February, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" (FAS 132). FAS 132 supersedes the disclosure requirements in FASB Statements No. 87, "Employers' Accounting for Pensions," No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefits Pension Plans and Termination of Benefits," and No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." FAS 132 addresses disclosure only and does not address measurement or recognition. In addition to other disclosure changes, FAS 132 allows employers to disclose total contributions to multi-employer plans without disaggregating the amounts attributable to pensions and other postretirement benefits. This statement is effective for fiscal years beginning after December 15, 1997. Earlier application is encouraged. Effective December 31, 1997, the Company adopted FAS 132. The adoption of this standard did not have any impact on results of operations, financial condition or liquidity. ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES Effective January 1, 1997, the Company adopted Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (FAS 125). FAS 125 establishes accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. These standards are based on an approach that focuses on control. Under this approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. FAS 125 provides standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The requirements of FAS 125 are effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and are to be applied prospectively. However, in December 1996 the FASB issued Statement of Financial Accounting Standards No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125," which delays until January 1, 1998 the effective date for certain provisions. Application of FAS 125 prior to the effective date or retroactively is not permitted. The adoption of the provisions of FAS 125 effective January 1, 1997 did not have a material impact on results of operations, financial condition or liquidity. The adoption of the provisions of FAS 127 effective January, 1998 will not have a material impact on the results of operations, financial condition or liquidity of the Company. ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF Effective January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement establishes accounting standards for the impairment of long-lived assets and certain identifiable intangibles to be disposed. This statement requires a write down to fair value when long-lived assets to be held and used are impaired. The statement also requires long-lived assets to be disposed (e.g., real estate held for sale) be carried at the lower of cost or fair value less cost to sell, and does not allow such assets to be depreciated. The adoption of this standard did not have a material impact on the Company's financial condition, results of operations or liquidity. F-6 57 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Accounting for Stock-Based Compensation In October 1995, the FASB issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS 123). This statement establishes financial accounting and reporting standards for stock-based employee compensation plans as well as transactions in which an entity issues its equity instruments to acquire goods or services from non-employees. This statement defines a fair value-based method of accounting for employee stock options or similar equity instruments, and encourages all entities to adopt this method of accounting for all employee stock compensation plans. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Entities electing to remain with the accounting method prescribed in APB 25 must make pro-forma disclosures of net income and earnings per share, as if the fair value-based method of accounting defined by FAS 123 had been applied. FAS 123 is applicable to fiscal years beginning after December 15, 1995. The Company has elected to continue to account for its stock-based employee compensation plans using the accounting method prescribed by APB 25 and, had the Company applied FAS 123 in accounting for stock options, net income would have been reduced by an insignificant amount in 1997, 1996 and 1995. The Company has adopted FAS 123 for its stock-based non-employee compensation plans. Accounting Policies INVESTMENTS Fixed maturities include bonds, notes and redeemable preferred stocks. Fair values of investments in fixed maturities are based on quoted market prices or dealer quotes or, if these are not available, discounted expected cash flows using market rates commensurate with the credit quality and maturity of the investment. Fixed maturities are classified as "available for sale" and are reported at fair value, with unrealized investment gains and losses, net of income taxes, charged or credited directly to shareholder's equity. Equity securities, which include common and non-redeemable preferred stocks, are classified as "available for sale" and are carried at fair value based primarily on quoted market prices. Changes in fair values of equity securities are charged or credited directly to shareholder's equity, net of income taxes. Mortgage loans are carried at amortized cost. A mortgage loan is considered impaired when it is probable that the Company will be unable to collect principal and interest amounts due. For mortgage loans that are determined to be impaired, a reserve is established for the difference between the amortized cost and fair market value of the underlying collateral. In estimating fair value, the Company uses interest rates reflecting the higher returns required in the current real estate financing market. Impaired loans were insignificant at December 31, 1997 and 1996. Real estate held for sale is carried at the lower of cost or fair value less estimated cost to sell. Fair value of foreclosed properties is established at the time of foreclosure by internal analysis or external appraisers, using discounted cash flow analyses and other accepted techniques. Thereafter, an allowance for losses on real estate held for sale is established if the carrying value of the property exceeds its current fair value less estimated costs to sell. There was no such allowance at December 31, 1996. Short-term securities, consisting primarily of money market instruments and other debt issues purchased with a maturity of less than one year, are carried at amortized cost which approximates market. F-7 58 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Accrual of income, included in other assets, is suspended on fixed maturities or mortgage loans that are in default, or on which it is likely that future payments will not be made as scheduled. Interest income on investments in default is recognized only as payment is received. Included in investments are invested assets associated with Structured Settlement Guaranteed Separate Accounts where the investment risk is borne by the Company. See Note 6. INVESTMENT GAINS AND LOSSES Realized investment gains and losses are included as a component of pre-tax revenues based upon specific identification of the investments sold on the trade date. Also included are gains and losses arising from the remeasurement of the local currency value of foreign investments to U.S. dollars, the functional currency of the Company. POLICY LOANS Policy loans are carried at the amount of the unpaid balances that are not in excess of the net cash surrender values of the related insurance policies. The carrying value of policy loans, which have no defined maturities, is considered to be fair value. SEPARATE ACCOUNTS The Company has separate account assets and liabilities representing funds for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholders. Each of these accounts have specific investment objectives. The assets and liabilities of these accounts are carried at fair value, and amounts assessed to the contractholders for management services are included in revenues. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues, and related liability increases are excluded from benefits and expenses. The Company also has a separate account for structured settlement annuity obligations where the investment risk is borne by the Company. The assets and liabilities of this separate account are included in investments, future policy benefits and contractholder funds for financial reporting purposes. See Note 6. DEFERRED ACQUISITION COSTS AND VALUE OF INSURANCE IN FORCE Costs of acquiring individual life insurance and annuity business, principally commissions and certain expenses related to policy issuance, underwriting and marketing, all of which vary with and are primarily related to the production of new business, are deferred. Acquisition costs relating to traditional life insurance are amortized in relation to anticipated premiums; universal life in relation to estimated gross profits; and annuity contracts employing a level yield method. A 10- to 25-year amortization period is used for life insurance, and a 10- to 20-year period is employed for annuities. Deferred acquisition costs are reviewed periodically for recoverability to determine if any adjustment is required. Adjustments, if any are charged to income. F-8 59 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) The value of insurance in force represents the actuarially determined present value of anticipated profits to be realized from annuities contracts at the date of acquisition using the same assumptions that were used for computing related liabilities where appropriate. The value of insurance in force was the actuarially determined present value of the projected future profits discounted at an interest rate of 16% for the business acquired. The value of the business in force is amortized using current interest crediting rates to accrete interest and amortized employing a level yield method. The value of insurance in force is reviewed periodically for recoverability to determine if any adjustment is required. Adjustments, if any, are charged to income. FUTURE POLICY BENEFITS Benefit reserves represent liabilities for future insurance policy benefits. Benefit reserves for life insurance and annuity policies have been computed based upon mortality, morbidity, persistency and interest assumptions applicable to these coverages, which range from 3.0% to 7.5%, including a provision for adverse deviation. These assumptions consider Company experience and industry standards. The assumptions vary by plan, age at issue, year of issue and duration. CONTRACTHOLDER FUNDS Contractholder funds represent receipts from the issuance of universal life, certain individual annuity contracts, and structured settlement contracts. Contractholder fund balances are increased by such receipts and credited interest and reduced by withdrawals, mortality charges and administrative expenses charged to the contractholders. Interest rates credited to contractholder funds range from 3.9% to 7.2%. PERMITTED STATUTORY ACCOUNTING PRACTICES The Company, domiciled in the State of Connecticut, prepares statutory financial statements in accordance with the accounting practices prescribed or permitted by the State of Connecticut Insurance Department. Prescribed statutory accounting practices include certain publications of the National Association of Insurance Commissioners as well as state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The impact of any permitted accounting practices on the statutory surplus of the Company is not material. PREMIUMS Premiums are recognized as revenues when due. Reserves are established for the portion of premiums that will be earned in future periods. OTHER REVENUES Other revenues include surrender, mortality and administrative charges, and fees earned on investment and other insurance contracts. FEDERAL INCOME TAXES The provision for federal income taxes is comprised of two components, current income taxes and deferred income taxes. Deferred federal income taxes arise from changes during the year in cumulative temporary differences between the tax basis and book basis of assets and liabilities. The deferred federal income tax asset is recognized to the extent that future realization of the tax benefit is more likely than not, with a valuation allowance for the portion that is not likely to be recognized. F-9 60 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Future Application of Accounting Standards In December 1997, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments" (SOP 97-3). SOP 97-3 provides guidance for determining when an entity should recognize a liability for guaranty-fund and other insurance-related assessments, how to measure that liability, and when an asset may be recognized for the recovery of such assessments through premium tax offsets or policy surcharges. This SOP is effective for financial statements for fiscal years beginning after December 15, 1998, and the effect of initial adoption is to be reported as a cumulative catch-up adjustment. Restatement of previously issued financial statements is not allowed. The Company has not yet determined when it will implement this SOP and does not anticipate any material impact on the Company's financial condition, results of operations or liquidity. In June 1997, the FASB issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS 130). FAS 130 establishes standards for the reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. All items that are required to be recognized under accounting standards as components of comprehensive income are to be reported in a financial statement that is displayed with the same prominence as other financial statements. FAS 130 stipulates that comprehensive income reflect the change in equity of an enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income will thus represent the sum of net income and other comprehensive income, although FAS 130 does not require the use of the terms comprehensive income or other comprehensive income. The accumulated balance of other comprehensive income shall be displayed separately from retained earnings and additional paid-in capital in the statement of financial position. FAS 130 is effective for fiscal years beginning after December 15, 1997. The Company anticipates that the adoption of FAS 130 will result primarily in reporting unrealized gains and losses on investments in debt and equity securities in comprehensive income. In June 1997, the FASB also issued Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information" (FAS 131). FAS 131 establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires that selected information about those operating segments be reported in interim financial statements. FAS 131 supersedes Statement of Financial Accounting Standards No. 14, "Financial Reporting for Segments of a Business Enterprise" (FAS 14). FAS 131 requires that all public enterprises report financial and descriptive information about its reportable operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decisionmaker in deciding how to allocate resources and in assessing performance. FAS 131 is effective for fiscal years beginning after December 15, 1997. The Company's reportable operating segment will not change as a result of the adoption of FAS 131. F-10 61 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. REINSURANCE The Company participates in reinsurance in order to limit losses, minimize exposure to large risks, provide capacity for future growth and to effect business-sharing arrangements. The Company remains primarily liable as the direct insurer on all risks reinsured. Life insurance in force ceded to TIC at December 31, 1997 and 1996 was $76.4 million and $90.7 million, respectively. Life insurance in force ceded to non-affiliates at December 31, 1997 and 1996, was $4.5 billion and $2.2 billion, respectively. 3. SHAREHOLDER'S EQUITY Unrealized Investment Gains (Losses) See Note 11 for an analysis of the change in unrealized gains and losses on investments. Shareholder's Equity and Dividend Availability The Company's statutory net income was $80.3 million, $17.9 million and $23.0 million for the years ended December 31, 1997, 1996 and 1995, respectively. Statutory capital and surplus was $328.2 million and $254.1 million at December 31, 1997 and 1996, respectively. The Company is currently subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to its parent without prior approval of insurance regulatory authorities. Statutory surplus of $63.6 million is available in 1998 for dividend payments by the Company without prior approval of the Connecticut Insurance Department. 4. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS Derivative Financial Instruments The Company uses derivative financial instruments, including financial futures, equity options, forward contracts and interest rate swaps as a means of hedging exposure to foreign currency, equity price changes and/or interest rate risk on anticipated transactions or existing assets and liabilities. The Company does not hold or issue derivative instruments for trading purposes. These derivative financial instruments have off-balance sheet risk. Financial instruments with off-balance sheet risk involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of these instruments reflect the extent of involvement the Company has in a particular class of financial instrument. However, the maximum loss of cash flow associated with these instruments can be less than these amounts. For forward contracts and interest rate swaps, credit risk is limited to the amounts calculated to be due the Company on such contracts. Financial futures contracts and purchased listed option contracts have little credit risk since organized exchanges are the counterparties. F-11 62 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) The Company monitors creditworthiness of counterparties to these financial instruments by using criteria of acceptable risk that are consistent with on-balance sheet financial instruments. The controls include credit approvals, limits and other monitoring procedures. The Company uses exchange traded financial futures contracts to manage its exposure to changes in interest rates which arise from the sale of certain insurance and investment products, or the need to reinvest proceeds from the sale or maturity of investments. To hedge against adverse changes in interest rates, the Company enters long or short positions in financial futures contracts to offset asset price changes resulting from changes in market interest rates until an investment is purchased or a product is sold. Margin payments are required to enter a futures contract and contract gains or losses are settled daily in cash. The contract amount of futures contracts represents the extent of the Company's involvement, but not future cash requirements, as open positions are typically closed out prior to the delivery date of the contract. At December 31, 1997 and 1996, the Company held financial futures contracts with notional amounts of $156.3 million and $20.3 million, respectively. At December 31, 1997 and 1996, the Company's futures contracts had no fair value because these contracts are marked to market and settled in cash daily. The off-balance sheet risks of equity options, forward contracts, and interest rate swaps were not significant at December 31, 1997 and 1996. Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Company issues fixed and variable rate loan commitments and has unfunded commitments to partnerships. The off-balance sheet risk of these financial instruments was not significant at December 31, 1997 and 1996. Fair Value of Certain Financial Instruments The Company uses various financial instruments in the normal course of its business. Fair values of financial instruments that are considered insurance contracts are not required to be disclosed and are not included in the amounts discussed. At December 31, 1997, investments in fixed maturities had a carrying value and a fair value of $1.7 billion, compared with a carrying value and a fair value of $1.5 billion at December 31, 1996. See Notes 1 and 11. At December 31, 1997 and 1996, mortgage loans had a carrying value of $160.2 million and $128.4 million, respectively, which approximates fair value. In estimating fair value, the Company used interest rates reflecting the higher returns required in the current real estate financing market. The carrying values of $33.8 million and $22.7 million of financial instruments classified as other assets approximated their fair values at December 31, 1997 and 1996, respectively. The carrying values of $72.7 million and $38.5 million of financial instruments classified as other liabilities also approximated their fair values at December 31, 1997 and 1996, respectively. Fair value is determined using various methods, including discounted cash flows, as appropriate for the various financial instruments. F-12 63 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) At December 31, 1997, contractholder funds with defined maturities had a carrying value of $694.9 million and a fair value of $695.9 million, compared with a carrying value of $546.5 million and a fair value of $545.2 million at December 31, 1996. The fair value of these contracts is determined by discounting expected cash flows at an interest rate commensurate with the Company's credit risk and the expected timing of cash flows. Contractholder funds without defined maturities had a carrying value of $98.5 million and a fair value of $93.9 million at December 31, 1997, compared with a carrying value of $26.9 million and a fair value of $25.6 million at December 31, 1996. These contracts generally are valued at surrender value. The carrying values of short-term securities and policy loans approximated their fair values. 5. COMMITMENTS AND CONTINGENCIES Financial Instruments with Off-Balance Sheet Risk The Company has, in the normal course of business, provided fixed rate loan commitments and commitments to partnerships. The off-balance sheet risks of fixed rate loan commitments, commitments to partnerships and forward contracts were not significant at December 31, 1997 and 1996. Litigation The Company is a defendant in various litigation matters in the normal course of business. Although there can be no assurances, as of December 31, 1997, the Company believes, based on information currently available, that the ultimate resolution of these legal proceedings would not be likely to have a material adverse effect on its results of operations, financial condition or liquidity. 6. STRUCTURED SETTLEMENT CONTRACTS The Company has structured settlement contracts that provide guarantees for the contractholders independent of the investment performance of the assets held in the related separate account. The assets held in the separate account are owned by the Company and contractholders do not share in their investment performance. The Company maintains assets sufficient to fund the guaranteed benefits attributable to the liabilities. Assets held in the separate account cannot be used to satisfy any other obligations of the Company. The Company reports the related assets and liabilities in investments, future policy benefit reserves and contractholder funds. F-13 64 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. BENEFIT PLANS Pension and Other Postretirement Benefits The Company participates in a qualified, noncontributory defined benefit pension plan sponsored by an affiliate. In addition, the Company provides certain other postretirement benefits to retired employees through a plan sponsored by an affiliate. The Company's share of net expense for the qualified pension and other postretirement benefit plans was not significant for 1997, 1996 and 1995. Beginning January 1, 1996, the Company's other postretirement benefit plans were amended to restrict benefit eligibility to retirees and certain retiree-eligible employees. Previously, covered employees could become eligible for postretirement benefits if they reached retirement age while working for the Company. 401(k) Savings Plan Substantially all of the Company's employees are eligible to participate in a 401(k) savings plan sponsored by Travelers Group. Prior to January 1, 1996, the Company made matching contributions to the 401(k) savings plan on behalf of participants in the amount of 50% of the first 5% of pre-tax contributions made by the employee, plus an additional variable matching contribution based on the profitability of The Travelers Insurance Group Inc. (TIGI) and its subsidiaries. During 1996, the Company made matching contributions in an amount equal to the lesser of 100% of the pre-tax contributions made by the employee or $1,000. Effective January 1, 1997, the Company discontinued matching contributions for the majority of its employees. The Company's expenses in connection with the 401(k) savings plan were not significant in 1997, 1996 and 1995. 8. RELATED PARTY TRANSACTIONS The principal banking functions, including payment of salaries and expenses, for certain subsidiaries and affiliates of TIGI, including the Company, are handled by two companies. TIC handles banking functions for the life and annuity operations of Travelers Life and Annuity and some of its non-insurance affiliates. The Travelers Indemnity Company handles banking functions for the property-casualty operations, including most of its property-casualty insurance and non-insurance affiliates. Settlements between companies are made at least monthly. TIC provides various employee benefit coverages to certain subsidiaries of TIGI. The premiums for these coverages were charged in accordance with cost allocation procedures based upon salaries or census. In addition, investment advisory and management services, data processing services and claims processing services are provided by affiliated companies. Charges for these services are shared by the companies on cost allocation methods based generally on estimated usage by department. TIC maintains a short-term investment pool in which the Company participates. The position of each company participating in the pool is calculated and adjusted daily. At December 31, 1997 and 1996, the pool totaled approximately $2.6 billion and $2.9 billion, respectively. The Company's share of the pool amounted to $145.5 million and $68.2 million at December 31, 1997 and 1996, respectively, and is included in short-term securities in the balance sheet. The Company's TTM Modified Guaranteed Annuity Contracts are subject to a limited guarantee agreement by TIC in a principal amount of up to $400 million. TIC's obligation is to pay in full to any owner or beneficiary of the TTM Modified Guaranteed Annuity Contracts principal and interest as and when due under the annuity contract to the extent that the Company fails to make such payment. In addition, TIC guarantees that the Company will maintain a minimum statutory capital and surplus level. F-14 65 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) The Company sells structured settlement annuities to an affiliate, The Travelers Indemnity Company. Premiums and deposits were $70.6 million, $36.9 million and $36.6 million for 1997, 1996 and 1995, respectively. The Company began marketing variable annuity products through its affiliate, Salomon Smith Barney, in 1995. Premiums and deposits related to these products were $615.6 million, $300.0 million and $20.5 million in 1997, 1996 and 1995, respectively. The Company participates in a stock option plan sponsored by Travelers Group that provides for the granting of stock options in Travelers Group common stock to officers and key employees. To further encourage employee stock ownership, during 1997 Travelers Group introduced the WealthBuilder stock option program. Under this program, all employees meeting certain requirements have been granted Travelers Group stock options. Most leasing functions for TIGI and its subsidiaries are handled by TAP. Rent expense related to these leases are shared by the companies on a cost allocation method based generally on estimated usage by department. The Company's rent expense was insignificant in 1997, 1996 and 1995. At December 31, 1997 and 1996, the Company had investments in Tribeca Investments LLC in the amounts of $16.5 million and $7.8 million, included in other invested assets. 9. FEDERAL INCOME TAXES ($ in thousands)
EFFECTIVE TAX RATE FOR THE YEAR ENDED DECEMBER 31, 1997 1996 1995 ------------------------------- ---- ---- ---- Income Before Federal Income Taxes $109,575 $39,582 $43,436 Statutory Tax Rate 35% 35% 35% -------- ------- ------- Expected Federal Income Taxes 38,351 13,854 15,203 Tax Effect of: Non-taxable investment income (24) (15) (13) Other, net (124) (48) (671) -------- ------- ------- Federal Income Taxes 38,203 $13,791 $14,519 ======== ======= ======= Effective Tax Rate 35% 35% 33% -------- ------- ------- COMPOSITION OF FEDERAL INCOME TAXES Current: United States 33,805 $29,435 $2,555 Foreign 54 21 - -------- ------- ------- Total 33,859 29,456 2,555 -------- ------- ------- Deferred: United States 4,344 (15,665) 11,964 -------- ------- ------- Total Net Earned Premiums $38,203 $13,791 $14,519 ======== ======= =======
F-15 66 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) The net deferred tax assets at December 31, 1997 and 1996 were comprised of the tax effects of temporary differences related to the following assets and liabilities:
($ in thousands) 1997 1996 ---- ---- Deferred Tax Assets: Benefit, reinsurance and other reserves $100,969 $79,484 Other 2,571 3,043 -------- ------- Total 103,540 82,527 -------- ------- Deferred Tax Liabilities: Investments, net 42,933 12,113 Deferred acquisition costs and value of insurance in force 23,650 10,066 Other 1,226 662 ------- ------- Total 67,809 22,841 ------- ------- Net Deferred Tax Asset Before Valuation Allowance 35,731 59,686 Valuation Allowance for Deferred Tax Assets (2,070) (2,070) ------- ------- Net Deferred Tax Asset After Valuation Allowance $33,661 $57,616 ------- -------
Starting in 1994 and continuing for at least five years, TIC and its life insurance subsidiaries, including the Company, has filed, and will file, a consolidated federal income tax return. Federal income taxes are allocated to each member on a separate return basis adjusted for credits and other amounts required by the consolidation process. Any resulting liability has been, and will be, paid currently to TIC. Any credits for losses have been, and will be, paid by TIC to the extent that such credits are for tax benefits that have been utilized in the consolidated federal income tax return. A net deferred tax asset valuation allowance of $2.1 million has been established to reduce the deferred tax asset on investment losses to the amount that, based upon available evidence, is more likely than not to be realized. Reversal of the valuation allowance is contingent upon the recognition of future capital gains in the Company's consolidated life insurance company federal income tax return through 1998, and if life/non-life consolidation is elected in 1999, the consolidated federal income tax return of Travelers Group commencing in 1999, or a change in circumstances which causes the recognition of the benefits to become more likely than not. There was no change in the valuation allowance during 1997. The initial recognition of any benefit provided by the reversal of the valuation allowance will be recognized by reducing goodwill. In management's judgment, the $33.7 million "net deferred tax asset after valuation allowance" as of December 31, 1997, is fully recoverable against expected future years' taxable ordinary income and capital gains. At December 31, 1997, the Company has no ordinary or capital loss carryforwards. The "policyholders surplus account", which arose under prior tax law, is generally that portion of the gain from operations that has not been subjected to tax, plus certain deductions. The balance of this account, which, under provisions of the Tax Reform Act of 1984, will not increase after 1983, is estimated to be $2.0 million. This amount has not been subjected to current income taxes but, under certain conditions that management considers to be remote, may become subject to income taxes in future years. At current rates, the maximum amount of such tax (for which no provision has been made in the financial statements) would be approximately $700 thousand. F-16 67 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. NET INVESTMENT INCOME
FOR THE YEAR ENDED DECEMBER 31, ($ in thousands) 1997 1996 1995 ---- ---- ---- GROSS INVESTMENT INCOME Fixed maturities $120,900 $113,296 $105,821 Equity securities 704 554 835 Mortgage loans 14,905 18,278 14,974 Real estate held for sale 1,457 3,480 2,476 Other 32,459 19,854 2,537 -------- -------- -------- 170,425 155,462 126,643 -------- -------- -------- Investment expenses 1,772 4,136 3,446 -------- -------- -------- Net investment income $168,653 $151,326 $123,197 -------- -------- --------
11. INVESTMENTS AND INVESTMENT GAINS (LOSSES) Realized investment gains (losses) for the periods were as follows:
FOR THE YEAR ENDED DECEMBER 31, ($ in thousands) 1997 1996 1995 ---- ---- ---- REALIZED INVESTMENT GAINS (LOSSES) Fixed maturities $29,236 $(11,491) $(4,240) Equity securities 8,385 4,613 6,138 Mortgage loans (8) 1,979 725 Real estate held for sale 2,164 (73) (35) Other 5,094 (4,641) 16,125 ------- -------- ------- Total Realized Investment Gains (Losses) $44,871 $(9,613) $18,713 ------- -------- -------
Changes in net unrealized investment gains (losses) that are included as a separate component of shareholder's equity were as follows:
FOR THE YEAR ENDED DECEMBER 31, ($ in thousands) 1997 1996 1995 ---- ---- ---- UNREALIZED INVESTMENT GAINS (LOSSES) Fixed maturities $34,451 $(23,953) $111,551 Equity securities (2,394) (746) 1,834 Other 23,975 22,431 4,390 ------- -------- -------- Total Unrealized Investment Gains (Losses) 56,032 (2,268) 117,775 Related taxes 19,611 (794) 41,221 ------- -------- -------- Change in unrealized investment gains (losses) 36,421 (1,474) 76,554 Balance beginning of year 33,856 35,330 (41,224) ------- -------- ------- Balance End of Year $70,277 $33,856 $35,330 ------- -------- -------
F-17 68 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Fixed Maturities Proceeds from sales of fixed maturities classified as available for sale were $856.8 million and $2.1 billion in 1997 and 1996, respectively. Gross gains of $38.1 million and $8.4 million and gross losses of $8.9 million and $19.9 million in 1997 and 1996, respectively, were realized on those sales. Fair values of investments in fixed maturities are based on quoted market prices or dealer quotes or, if these are not available, discounted expected cash flows using market rates commensurate with the credit quality and maturity of the investment. The fair value of investments for which a quoted market price or dealer quote are not available amounted to $485.3 million and $360.1 million at December 31, 1997 and 1996, respectively. The amortized cost and fair values of investments in fixed maturities were as follows:
DECEMBER 31, 1997 GROSS GROSS ($ in thousands) AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ---- ----- ------ ----- AVAILABLE FOR SALE: Mortgage-backed securities - CMOs and pass-through securities $ 144,921 $ 8,254 $ (223) $ 152,952 U.S. Treasury securities and obligations of U.S. Government and government agencies and authorities 248,081 34,111 (123) 282,069 Obligations of states and political subdivisions 14,560 392 (2) 14,950 Debt securities issued by foreign governments 85,367 6,194 (228) 91,333 All other corporate bonds 1,077,211 59,972 (1,387) 1,135,796 Redeemable preferred stock 981 48 (9) 1,020 ---------- -------- ------- ---------- Total Available For Sale $1,571,121 $108,971 $(1,972) $1,678,120 ========== ======== ======= ==========
F-18 69 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 GROSS GROSS ($ in thousands) AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ---- ----- ------ ----- AVAILABLE FOR SALE: Mortgage-backed securities - CMOs and pass-through securities $154,788 $ 3,312 $(901) $157,199 U.S. Treasury securities and obligations of U.S. Government and government agencies and authorities 255,858 16,855 (61) 272,652 Obligations of states and political subdivisions 16,124 263 (189) 16,198 Debt securities issued by foreign governments 109,120 3,215 (1,447) 110,888 All other corporate bonds 904,831 28,204 (5,387) 927,648 Redeemable preferred stock 85 - - 85 ---------- ------- ------- ---------- Total Available For Sale $1,440,806 $51,849 $(7,985) $1,484,670 ========== ======= ======= ==========
The amortized cost and fair value of fixed maturities available for sale at December 31, 1997, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
($ in thousands) AMORTIZED FAIR COST VALUE MATURITY: Due in one year or less $ 17,978 $ 18,312 Due after 1 year through 5 years 211,272 216,191 Due after 5 years through 10 years 381,690 401,338 Due after 10 years 815,260 889,327 ---------- ---------- 1,426,200 1,525,168 ---------- ---------- Mortgage-backed securities 144,921 152,952 ---------- ---------- Total Maturity $1,571,121 $1,678,120 ========== ==========
The Company makes significant investments in collateralized mortgage obligations (CMOs). CMOs typically have high credit quality, offer good liquidity, and provide a significant advantage in yield and total return compared to U.S. Treasury securities. The Company's investment strategy is to purchase CMO tranches which are protected against prepayment risk, including planned amortization class (PAC) tranches. Prepayment protected tranches are preferred because they provide stable cash flows in a variety of interest rate scenarios. The Company does invest in other types of CMO tranches if a careful assessment indicates a favorable risk/return tradeoff. The Company does not purchase residual interests in CMOs. F-19 70 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) At December 31, 1997 and 1996, the Company held CMOs with a market value of $122.8 million and $126.3 million, respectively. The Company's CMO holdings were 97.5% and 97.6% collateralized by GNMA, FNMA or FHLMC securities at December 31, 1997 and 1996, respectively. Equity Securities The cost and market values of investments in equity securities were as follows:
EQUITY SECURITIES: GROSS GROSS ($ in thousands) UNREALIZED UNREALIZED COST GAINS LOSSES FAIR VALUE ---- ----- ------ ---------- DECEMBER 31, 1997 Common stocks $ 3,318 $ 583 $ (70) $ 3,831 Non-redeemable preferred stocks 11,774 931 (247) 12,458 ------- ------ ----- ------- Total Equity Securities $15,092 $1,514 $(317) $16,289 ------- ------ ----- ------- DECEMBER 31, 1996 Common stocks $ 2,722 $3,441 $(163) $ 6,000 Non-redeemable preferred stocks 9,674 323 (95) 9,902 ------- ------ ----- ------- Total Equity Securities $12,396 $3,764 $(258) $15,902 ------- ------ ------ -------
Proceeds from sales of equity securities were $12.4 million and $20.3 million in 1997 and 1996, respectively. Gross gains of $8.6 million and $4.7 million and gross losses of $172 thousand and $155 thousand in 1997 and 1996, respectively, were realized on those sales. Mortgage Loans and Real Estate Held For Sale Underperforming assets include delinquent mortgage loans, loans in the process of foreclosure, foreclosed loans and loans modified at interest rates below market. At December 31, 1997 and 1996, the Company's mortgage loan portfolios and real estate held for sale consisted of the following:
($ in thousands) 1997 1996 ---- ---- Current Mortgage Loans $ 160,247 $128,292 Underperforming Mortgage Loans - 148 --------- -------- Total 160,247 128,440 --------- -------- Real Estate Held For Sale - 10,111 --------- -------- Total $ 160,247 $138,551 --------- --------
F-20 71 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Aggregate annual maturities on mortgage loans at December 31, 1997 are as follows:
($ in thousands) Past Maturity $ - 1998 5,108 1999 8,773 2000 8,920 2001 11,352 2002 17,986 Thereafter 108,108 -------- Total $160,247 ========
Joint Venture In October 1997, TIC and Tishman Speyer Properties (Tishman), a worldwide real estate owner, developer and manager, formed a joint real estate venture with an initial equity commitment of $792 million. TIC and certain of its affiliates committed $420 million in real estate equity and $100 million in cash while Tishman committed $272 million in properties and cash. Both companies are serving as asset managers for the venture and Tishman is primarily responsible for the venture's real estate acquisition and development efforts. The Company's investment in the joint venture totaled $54.8 million at December 31, 1997. Concentrations At December 31, 1997 and 1996, the Company had investments of $50.8 million and $75.1 million in the State of Israel, respectively. Additionally, in 1996 the Company had $40.6 million in Merrill Lynch Trust Series 45. The Company participates in a short-term investment pool maintained by an affiliate. See Note 8. Included in fixed maturities are below investment grade assets totaling $76.7 million and $81.7 million at December 31, 1997 and 1996, respectively. The Company defines its below investment grade assets as those securities rated "Ba1" or below by external rating agencies, or the equivalent by internal analysts when a public rating does not exist. Such assets include publicly traded below investment grade bonds and certain other privately issued bonds that are classified as below investment grade bonds. The Company also had concentrations of investments, primarily fixed maturities, in the following industries:
($ in thousands) 1997 1996 ---- ---- Transportation $138,903 $ 86,819 Banking 130,966 71,506 Electric utilities 106,724 76,426 ------- ------
Below investment grade assets included in the preceding table were not significant. F-21 72 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) Concentrations of mortgage loans by property type at December 31, 1997 and 1996 were as follows:
($ in thousands) 1997 1996 ---- ---- Agricultural $62,463 $49,801 Office 47,453 35,333 Retail 23,214 21,924 ------ ------
The Company monitors creditworthiness of counterparties to all financial instruments by using controls that include credit approvals, limits and other monitoring procedures. Collateral for fixed maturities often includes pledges of assets, including stock and other assets, guarantees and letters of credit. The Company's underwriting standards with respect to new mortgage loans generally require loan to value ratios of 75% or less at the time of mortgage origination. Non-Income Producing Investments Investments included in the balance sheets that were non-income producing for the preceding 12 months were insignificant. Restructured Investments The Company had mortgage loan and debt securities which were restructured at below market terms totaling approximately $1.0 million at December 31, 1996. The new terms typically defer a portion of contract interest payments to varying future periods. The accrual of interest is suspended on all restructured assets, and interest income is reported only as payment is received. Gross interest income on restructured assets that would have been recorded in accordance with the original terms of such assets was insignificant. Interest on these assets, included in net investment income was insignificant. 12. LIFE AND ANNUITY DEPOSIT FUNDS AND RESERVES At December 31, 1997, the Company had $1.8 million of life and annuity deposit funds and reserves. Of that total, $1.5 million were not subject to discretionary withdrawal based on contract terms. The remaining $.3 million were life and annuity products that were subject to discretionary withdrawal by the contractholders. Included in the amount that is subject to discretionary withdrawal were $.2 million of liabilities that are surrenderable with market value adjustments. An additional $.1 million of the life insurance and individual annuity liabilities are subject to discretionary withdrawals with an average surrender charge of 4.8%. The life insurance risks would have to be underwritten again if transferred to another carrier, which is considered a significant deterrent for long-term policyholders. Insurance liabilities that are surrendered or withdrawn from the Company are reduced by outstanding policy loans and related accrued interest prior to payout. F-22 73 THE TRAVELERS LIFE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) 13. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES The following table reconciles net income to net cash provided by (used in) operating activities:
FOR THE YEAR ENDED DECEMBER 31, 1997 1996 1995 ---- ---- ---- ($ in thousands) Net Income From Continuing Operations $71,372 $ 25,791 $ 28,917 Adjustments to reconcile net income to cash provided by operating activities: Realized (gains) losses (44,871) 9,613 (18,713) Deferred federal income taxes 4,344 (15,665) 11,964 Amortization of deferred policy acquisition costs and value of insurance in force 6,036 3,286 1,563 Additions to deferred policy acquisition costs (56,975) (20,753) (3,109) Investment income accrued 908 1,308 (819) Premium balances receivable (3,450) (3,561) (2,277) Insurance reserves and accrued expenses 3,981 (16,459) (20,081) Other 26,673 (13,419) (46,076) ------ -------- -------- Net cash provided by (used in) operations $8,018 $(29,859) $(48,631) ------ -------- --------
14. NON-CASH INVESTING AND FINANCING ACTIVITIES There were no significant non-cash investing and financing activities for 1997, 1996 and 1995. F-23 74 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 financial statements of The Travelers Life and Annuity Company and the report of Independent Accountants, are contained in the Prospectus. The financial statements of The Travelers Life and Annuity Company include: Statements of Income and Retained Earnings for the years ended December 31, 1997, 1996 and 1995 Balance Sheets as of December 31, 1997 and 1996 Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 Notes to Financial Statements (b) Exhibits 1. Resolution of The Travelers Life and Annuity Company Board of Directors authorizing the establishment of the Registrant. (Incorporated herein by reference to Exhibit 1 to the Registration Statement on Form N-4, filed July 9, 1998.) 2. Not Applicable. 3(a). Form of Distribution and Principal Underwriting Agreement among the Registrant, The Travelers Life and Annuity Company and CFBDS, Inc. 3(b). Form of Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form N-4, File No. 333-40191, filed June 10, 1998.) 4. Variable Annuity Contract. 5. Application. 6(a). Charter of The Travelers Life and Annuity Company, as amended on April 10, 1990. (Incorporated herein by reference to Exhibit 6(a) to the Registration Statement on Form N-4, File No. 333-40191, filed November 13, 1998.) 6(b). By-Laws of The Travelers Life and Annuity Company, as amended on October 20, 1994. (Incorporated herein by reference to Exhibit 6(b) to the Registration Statement on Form N-4, File No. 333-40191, filed November 13, 1998.) 9. Opinion of Counsel as to the legality of securities being registered. (Incorporated herein by reference to Exhibit 9 to the Registration Statement on Form N-4, filed July 9, 1998.) 10. Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants. 13. Computation of Total Return Calculations - Standardized and Non-Standardized. 75 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. (Incorporated herein by reference to Exhibit 15 to the Registration Statement on Form N-4, filed July 9, 1998.) Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices Business Address with Insurance Company - -------------------------- ---------------------- Michael A. Carpenter* Director, Chairman of the Board President and Chief Executive Officer Jay S. Benet* Director and Senior Vice President George C. Kokulis* Director and Senior Vice President Robert I. Lipp* Director Ian R. Stuart* Director, Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Controller Katherine M. Sullivan* Director and Senior Vice President and General Counsel Marc P. Weill*** Director and Senior Vice President Stuart Baritz** Senior Vice President Jay S. Fishman* Senior Vice President Elizabeth C. Georgakopoulos* Senior Vice President Barry Jacobson* Senior Vice President Russell H. Johnson* Senior Vice President Warren H. May* Senior Vice President Christine M. Modie* Senior Vice President David A. Tyson* Senior Vice President F. Denney Voss* Senior Vice President Paula Burton* Vice President Virginia M. Meany* Vice President Ambrose J. Murphy* Deputy General Counsel Selig Ehrlich* Vice President and Actuary Donald R. Munson, Jr.* Second Vice President Ernest J. Wright* Vice President and Secretary Kathleen A. McGah* Assistant Secretary and Counsel Principal Business Address: * The Travelers Life and Annuity Company *** Travelers Group Inc. One Tower Square 399 Park Avenue Hartford, CT 06183 New York, N.Y. 10043 ** Travelers Portfolio Group 1345 Avenue of the Americas New York, NY 10105
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant Incorporated herein by reference to Item 26 to Post-Effective Amendment No. 3 to the Registration Statement on Form N-4, File No. 33-58131 filed April 10, 1998. 76 Item 27. Number of Contract Owners Not applicable. Item 28. Indemnification Section 33-770 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 33-770 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. Citigroup 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. 77 Item 29. Principal Underwriter (a) CFBDS, Inc. 21 Milk Street Boston, MA 02109 CFBDS, 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 PF for Variable Annuities The Travelers Separate Account PF II for Variable Annuities The Travelers Separate Account TM for Variable Annuities The Travelers Separate Account TM II for Variable Annuities The Travelers Separate Account Five for Variable Annuities The Travelers Separate Account Seven for Variable Annuities The Travelers Separate Account Eight 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 CitiFunds Trust I CitiFunds Trust II CitiFunds Trust III CitiFunds International Trust CitiFunds Fixed Income Trust CitiFunds Tax Free Income Trust CitiFunds Tax Free Reserves CitiFunds Multi-State Tax Free Trust CitiFunds Premium Trust CitiFunds Institutional Trust CitiVariable Annuity CitiVariable Annuity Plus Variable Annuity Portfolios The Premium Portfolios Asset Allocation Portfolios Cash Reserve Portfolio Tax Free Reserves Portfolio U.S. Treasury Reserves Portfolio 78 CONCERT INVESTMENT SERIES: Emerging Growth Fund Government Fund Growth and Income Fund International Equity Fund Municipal Fund CONSULTING GROUP CAPITAL MARKETS FUNDS: Balanced Investments Emerging Markets Equity Investments Government Money Investments High Yield Investments Intermediate Fixed Income Investments International Equity Investments International Fixed Income Investments Large Capitalization Growth Investments Large Capitalization Value Equity Investments Long-Term Bond Investments Mortgage Backed Investments Municipal Bond Investments Small Capitalization Growth Investments Small Capitalization Value Equity Investments GREENWICH STREET SERIES FUND: Appreciation Portfolio Diversified Strategic Income Portfolio Emerging Growth Portfolio Equity Income Portfolio (Class I) Equity Income Portfolio (Class II) Equity Index Portfolio Growth & Income Portfolio Intermediate High Grade Portfolio International Equity Portfolio Money Market Portfolio Total Return Portfolio SMITH BARNEY ADJUSTABLE RATE GOVERNMENT INCOME FUND SMITH BARNEY AGGRESSIVE GROWTH FUND INC. SMITH BARNEY APPRECIATION FUND SMITH BARNEY ARIZONA MUNICIPALS FUND INC. SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC. SMITH BARNEY CONCERT ALLOCATION SERIES INC.: Balanced Portfolio Conservative Portfolio Growth Portfolio High Growth Portfolio Income Portfolio Global Portfolio Select Balanced Portfolio Select Conservative Portfolio Select Growth Portfolio Select High Growth Portfolio Select Income Portfolio SMITH BARNEY EQUITY FUNDS: Concert Social Awareness Fund Smith Barney Large Cap Blend Fund SMITH BARNEY FUNDAMENTAL VALUE FUND INC. 79 SMITH BARNEY FUNDS, INC.: Large Cap Value Fund Short-Term High Grade Bond Fund U.S. Government Securities Fund SMITH BARNEY INCOME FUNDS: Smith Barney Convertible Fund Smith Barney Diversified Strategic Income Fund Smith Barney Exchange Reserve Fund Smith Barney High Income Fund Smith Barney Municipal High Income Fund Smith Barney Premium Total Return Fund Smith Barney Total Return Bond Fund SMITH BARNEY INSTITUTIONAL CASH MANAGEMENT FUND, INC.: Cash Portfolio Government Portfolio Municipal Portfolio SMITH BARNEY INVESTMENT FUNDS INC.: Concert Peachtree Growth Fund Smith Barney Contrarian Fund Smith Barney Government Securities Fund Smith Barney Hansberger Global Small Cap Value Fund Smith Barney Hansberger Global Value Fund Smith Barney Investment Grade Bond Fund Smith Barney Special Equities Fund SMITH BARNEY INVESTMENT TRUST: Smith Barney Intermediate Maturity California Municipals Fund Smith Barney Intermediate Maturity New York Municipals Fund Smith Barney Large Cap Capitalization Growth Fund Smith Barney S&P 500 Index Fund Smith Barney Mid Cap Blend Fund SMITH BARNEY MANAGED GOVERNMENTS FUND INC. SMITH BARNEY MANAGED MUNICIPALS FUND INC. SMITH BARNEY MASSACHUSETTS MUNICIPALS FUND SMITH BARNEY MONEY FUNDS, INC.: Cash Portfolio Government Portfolio Retirement Portfolio SMITH BARNEY MUNI FUNDS: California Money Market Portfolio Florida Portfolio Georgia Portfolio Limited Term Portfolio New York Money Market Portfolio New York Portfolio Pennsylvania Portfolio SMITH BARNEY MUNICIPALS MONEY MARKET FUND, INC. SMITH BARNEY NATURAL RESOURCES FUND INC. SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC. SMITH BARNEY OREGON MUNICIPALS FUND SMITH BARNEY PRINCIPAL RETURN FUND: Zeros Plus Emerging Growth Series 2000 Smith Barney Security and Growth Fund SMITH BARNEY SMALL CAP BLEND FUND, INC. SMITH BARNEY TELECOMMUNICATIONS TRUST: Smith Barney Telecommunications Income Fund 80 SMITH BARNEY VARIABLE ACCOUNT FUNDS: Income and Growth Portfolio Reserve Account Portfolio U.S. Government/High Quality Securities Portfolio SMITH BARNEY WORLD FUNDS, INC.: Emerging Markets Portfolio European Portfolio Global Government Bond Portfolio International Balanced Portfolio International Equity Portfolio Pacific Portfolio TRAVELERS SERIES FUND INC.: AIM Capital Appreciation Portfolio Alliance Growth Portfolio GT Global Strategic Income Portfolio MFS Total Return Portfolio Putnam Diversified Income Portfolio Smith Barney High Income Portfolio Smith Barney Large Cap Value Portfolio Smith Barney International Equity Portfolio Smith Barney Large Capitalization Growth Portfolio Smith Barney Money Market Portfolio Smith Barney Pacific Basin Portfolio TBC Managed Income Portfolio Van Kampen American Capital Enterprise Portfolio CENTURION FUNDS, INC.: Centurion Tax-Managed U.S. Equity Fund Centurion Tax-Managed International Equity Fund Centurion U.S. Protection Fund Centurion International Protection Fund AMERICAN ODYSSEY FUNDS: Global High-Yield Bond Fund International Equity Fund Emerging Opportunities Fund Core Equity Fund Long-Term Bond Fund Intermediate-Term Bond Fund SALOMON BROTHERS VARIABLE SERIES FUND: Salomon Brothers Total Return Fund Salomon Brothers Capital Fund Salomon Brothers High Yield Bond Fund Salomon Brothers Variable Investors Fund Salomon Brothers Strategic Bond Fund 81
(b) Name and Principal Positions and Offices Business Address * With Underwriter ------------------ ---------------- Phillip W. Coolidge Chairman of the Board, Director Chief Executive Officer, and President Linda T. Gibson Secretary Molly S. Mugler Assistant Secretary Linwood C. Downs Treasurer John R. Elder Assistant Treasurer Susan Jakuboski Assistant Treasurer Donald S. Chadwick Director Robert G. Davidoff Director Leeds Hackett Director Laurence E. Levine Director
* Principal business address: 21 Milk Street, Boston, MA 02109 (c) Not Applicable Item 30. Location of Accounts and Records (1) The Travelers Life and Annuity 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. 82 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its behalf in the City of Hartford, State of Connecticut, on November 3, 1998. THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES (Registrant) THE TRAVELERS LIFE AND ANNUITY 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 Pre-Effective Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities indicated on November 3, 1998. *MICHAEL A. CARPENTER Director, Chairman of the Board, President - ------------------------------------------- and Chief Executive Officer (Michael A. Carpenter) *JAY S. BENET Director and Senior Vice President - ------------------------------------------- (Jay S. Benet) *GEORGE C. KOKULIS Director and Senior Vice President - ------------------------------------------- (George C. Kokulis *ROBERT I. LIPP Director - ------------------------------------------- (Robert I. Lipp) *IAN R. STUART Director, Senior Vice President and - ------------------------------------------- Chief Financial 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: /s/ Ernest J. Wright, Attorney-in-Fact 83 EXHIBIT INDEX
Exhibit No. Description Method of Filing - --------- ----------- ---------------- 1 Resolution of The Travelers Life and Annuity Company Board of Directors authorizing the establishment of the Registrant. (Incorporated herein by reference to Exhibit 1 to the Registration Statement on Form N-4, filed July 9, 1998.) 3(a) Form of Distribution and Principal Underwriting Agreement among Electronically the Registrant, The Travelers Life and Annuity Company and CFBDS, Inc. 3(b) Form of Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form N-4, File No. 333-40191, filed June 10, 1998.) 4 Form of Variable Annuity Contract. Electronically 5 Application. Electronically 6(a) Charter of The Travelers Life and Annuity Company, as amended on April 10, 1990. (Incorporated herein by reference to Exhibit 6(a) to the Registration Statement on Form N-4, File No. 333-40191, filed November 13, 1998.) 6(b) By-Laws of The Travelers Life and Annuity Company, as amended on October 20, 1994. (Incorporated herein by reference to Exhibit 6(a) to the Registration Statement on Form N-4, File No. 333-40191, filed November 13, 1998.) 9 Opinion of Counsel as to the legality of securities being registered by Registrant. (Incorporated herein by reference to Exhibit 9 to the Registration Statement on Form N-4, filed July 9, 1998.) 10 Consent of KPMG Peat Marwick LLP, Independent Electronically Certified Public Accountants. 13 Schedule for Computation of Total Return Electronically Calculations - Standardized and Non-Standardized. 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. (Incorporated herein by reference to Exhibit 15 to the Registration Statement on Form N-4, filed July 9, 1998.)
EX-99.3.A 2 FORM OF DISTRIBUTION AND MANAGEMENT AGREEMENT 1 EXHIBIT 3(a) DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT THIS AGREEMENT is made this 8th day of October, 1998, by and among The Travelers Life and Annuity Company ("TLAC"), a Connecticut stock insurance company, with its principal offices in Hartford, Connecticut and each of the investment companies as set forth in Schedule A attached hereto, as the same may be amended from time to time, each acting on its own behalf and not on behalf of any other investment company and each being solely responsible for its obligations, (each, a "Separate Account" and collectively, the "Separate Accounts"), each of which is a registered, open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") of TLAC established pursuant to Connecticut State Insurance Law with its principal offices in Hartford. Connecticut, and CFBDS, Inc. (the "Distributor") a Massachusetts general business corporation. WHEREAS, the Distributor is engaged principally in the business of distributing variable insurance products and investment company shares, is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the National Association of Securities Dealers, Inc. ("NASD"); WHEREAS, TLAC and each Separate Account have registered variable annuity contracts (the "Contracts") under the Securities Act of 1933, as amended (the "1933 Act"), and desire to retain the Distributor to distribute the Contracts and the Distributor is willing to distribute the Contracts in the manner and on the terms set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, TLAC, each Separate Account, and the Distributor hereby agree as follows: 1. Definitions. The terms "affiliated person," "assignment," "interested person," and "majority of the outstanding voting securities," when used in this Agreement, shall have the respective meanings specified under the 1940 Act and rules thereunder. In addition, the term "representative," when used in this Agreement shall have the meaning specified under the 1934 Act and rules thereunder. 2. Distribution and Principal Underwriting of the Contracts. (a) Right to Distribute Contracts. TLAC and each Separate Account hereby grant to the Distributor the exclusive right, subject to the requirements of the 1933 Act, the 1934 Act, and the 1940 Act, and the terms set forth herein, to act as agent for distribution of the Contracts and as principal underwriter during the term of this Agreement. The Distributor shall at all times function as and be deemed to be an independent contractor and nothing herein contained shall constitute the Distributor or its agents, officers, or employees as agents, officers, or employees of TLAC solely by virtue of their activities in connection with the sale of the Contracts hereunder. The Distributor will use its best efforts to distribute the Contracts in accordance with applicable laws, including the rules of the NASD. 2 TLAC and each Separate Account hereby authorize the Distributor to enter into written sales or service agreements, on such terms and conditions as the Distributor may determine are consistent with this Agreement, with broker-dealers that are registered under the 1934 Act and are members of the NASD and who agree to distribute the Contracts. Distributor shall not be obligated or authorized to make retail sales to the public. (b) Limits on Authority. This Agreement notwithstanding, TLAC retains the ultimate right to control the sale of the Contracts, including the right to suspend sales in any jurisdiction or jurisdictions, to appoint and discharge agents of TLAC, or to refuse to sell a Contract to any applicant for any reason whatsoever. Furthermore, the Distributor and its representatives shall not have authority, on behalf of TLAC: to make, alter, or discharge any Contract or other variable contract entered into pursuant to a Contract; to waive any Contract forfeiture provision; to extend the time of paying any premium, or to receive any monies or premiums. The Distributor shall not expend, nor contract for the expenditure of, the funds of TLAC. The Distributor shall not possess or exercise any authority on behalf of TLAC other than that expressly conferred on the Distributor by this Agreement. (c). Registration; Compliance with NASD Conduct Rules. To the extent necessary to distribute the Contracts, the Distributor shall be duly registered or otherwise qualified under all applicable securities laws of any state or other jurisdiction in which the Distributor is licensed or otherwise authorized to distribute the Contracts, if required. The Distributor shall be responsible for the training, supervision, and control of its representatives for the purpose of the NASD Conduct Rules and all applicable federal and state securities law requirements. (d) Representations and Warranties of the Distributor. The Distributor represents and warrants to TLAC that the Distributor is, and during the term of this Agreement shall remain, registered as a broker-dealer under the 1934 Act, admitted as a member with the NASD, and duly registered under applicable state securities laws, and that the Distributor is and shall remain during the term of this Agreement in compliance with Section 9(a) of the 1940 Act. (e) Marketing Materials; Preparation and Filing. TLAC shall design and develop all promotional, sales, and advertising material relating to the Contracts and any other marketing-related documents for use in the sale of the Contracts, subject to review and approval by Distributor of such material and documents in accordance with Section 2210 of the NASD Conduct Rules. The Distributor shall be responsible for filing such material with the NASD and any state securities regulatory authorities requiring such filings. TLAC shall be responsible for filing all promotional, sales, or advertising material, as required, with any state insurance regulatory authorities. TLAC shall be responsible for preparing the Contract forms and filing them with applicable state insurance regulatory authorities, and for preparing the prospectuses and registration statements for the Contracts and filing them with the Securities and Exchange Commission (the "SEC") and state regulatory authorities, to the extent required. The parties shall notify each other expeditiously of any comments provided by the SEC, NASD, or any securities or insurance regulatory authority on such material, and will cooperate expeditiously in resolving and implementing any comments, as applicable. 2 3 3. Books and Records. (a) TLAC, each Separate Account, and the Distributor shall cause to be maintained and preserved all books of account and related financial records as are required by the 1934 Act, the NASD, and any other applicable laws and regulations. These books and records as to all transactions hereunder shall be maintained so as to disclose clearly and accurately the nature and details of the transactions. All the books and records maintained by TLAC on behalf of the Distributor, or by any person on behalf of TLAC, or by the Distributor directly, in connection with the offer and sale of the Contracts, shall be maintained and preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act or the corresponding provisions of any future federal securities laws or regulations. All such books and records shall be maintained and held by TLAC or by any person on behalf of TLAC on behalf of and as agent for the Distributor, whose property they are and shall remain. Such books and records shall be at all times subject to inspection by the SEC in accordance with Section 17(a) of the 1934 Act. TLAC shall have access to all records maintained in connection with the Contracts. (b) TLAC, as agent for the Distributor, shall confirm to each purchaser of a Contract, in accordance with Rule 10b-10 under the 1934 Act, acceptance of premiums and such other transactions as are required by and in accordance with Rule 10b-10 and administrative interpretations thereunder. 4. Reports. (a) The Distributor shall cause TLAC and each Separate Account to be furnished with such reports as either or both may reasonably request for the purpose of meeting reporting and record keeping requirements under the 1933 Act, the 1934 Act, and the 1940 Act and rules thereunder, as well as the insurance laws of the State of Connecticut and any other applicable states or jurisdictions. (b) The Distributor and TLAC shall submit to all regulatory and administrative bodies having jurisdiction over the present and future operations of each Separate Account, any information, reports, or other material which any such body by reason of this Agreement may request or require pursuant to applicable laws or regulations. 5. Maintaining Registration and Approvals. TLAC shall be responsible for maintaining the registration of the Contracts with the SEC and any state securities regulatory authority with which such registration is required, and for gaining and maintaining approval of the Contract forms where required under the insurance laws and regulations of each state or other jurisdiction in which the Contracts are to be offered. 6. Issuance and Administration of Contracts. TLAC shall be responsible for issuing the Contracts and administering the Contracts and each Separate Account and a Travelers affiliated broker-dealer shall have full responsibility for the securities activities of all persons employed by TLAC, engaged directly or indirectly in the Contract operations, and for the training, supervision, and control of such persons to the extent of such activities. 3 4 7. Non-Exclusivity. TLAC and each Separate Account agree that the services to be provided by the Distributor hereunder are not to be deemed exclusive and the Distributor is free to act as distributor of other variable insurance products or investment company shares. 8. Affiliated Persons. It is understood that any Contract owner or agent of each Separate Account may be a Contract owner, shareholder, director, officer, employee, or agent of, or be otherwise interested in, the Distributor, any affiliated person of the Distributor, any organization in which the Distributor may have an interest or any organization which may have an interest in the Distributor; that the Distributor, any such affiliated person, or any such organization may have an interest in each Separate Account and that the existence of any such dual interest shall not affect the validity hereof or any transaction thereunder except as may otherwise be provided in the articles of organization or by-laws of the Distributor or by specific provisions of applicable law. 9. Indemnification. (a) By TLAC. TLAC on its behalf and on behalf of each Separate Account shall indemnify and hold harmless the Distributor and any officer, director, or employee of the Distributor against any and all losses, claims, damages, or liabilities, joint or several (including any investigative, legal, and other expenses reasonably incurred in connection with, and any amounts paid in settlement of, any action, suit, or proceeding or any claim asserted), to which the Distributor and/or any such person may become subject, under any statute or regulation, any NASD rule or interpretation, at common law or otherwise, insofar as such losses, claims, damages, or liabilities: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made, contained in any registration statement or in any prospectus for the Contracts; provided that TLAC shall not be liable in any such case to the extent that such loss, claim, damage, or liability arises out of, or is based upon, an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon information furnished in writing to TLAC by the Distributor specifically for use in the preparation of any such registration statement or any amendment thereof or supplement thereto; or (ii) result from any breach by TLAC of any provision of this Agreement. This indemnification agreement shall be in addition to any liability that TLAC may otherwise have; provided, however, that no person shall be entitled to indemnification pursuant to this provision if such loss, claim, damage, or liability is due to the willful misfeasance, bad faith, gross negligence, or reckless disregard of duty by the person seeking indemnification. (b) By The Distributor. The Distributor shall indemnify and hold harmless TLAC on its behalf and on behalf of each Separate Account and any officer, director, or employee of TLAC or each Separate Account against any and all losses, claims, damages, or 4 5 liabilities, joint or several (including any investigative, legal, and other expenses reasonably incurred in connection with, and any amounts paid in settlement of, any action, suit, or proceeding or any claim asserted), to which TLAC and/or any such person may become subject under any statute or regulation, any NASD rule or interpretation, at common law or otherwise, insofar as such losses, claims, damages, or liabilities: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, in light of the circumstances in which they were made, contained in any registration statement or in any prospectus for the Contracts; in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon information furnished in writing by the Distributor to TLAC specifically for use in the preparation of any such registration statement or any amendment thereof or supplement thereto; or (ii) result from any breach by the Distributor of any provision of this Agreement; or (iii) result from the Distributor's own misconduct or negligence. This indemnification agreement shall be in addition to any liability that the Distributor may otherwise have; provided, however, that no person shall be entitled to indemnification pursuant to this provision if such loss, claim, damage, or liability is due to the willful misfeasance, bad faith, gross negligence, or reckless disregard of duty by the person seeking indemnification. (c) General. Promptly after receipt by a party entitled to indemnification ("indemnified person") under this Paragraph 9 of notice of the commencement of any action as to which a claim will be made against any person obligated to provide indemnification under this Paragraph 9 ("indemnifying party"), such indemnified person shall notify the indemnifying party in writing of the commencement thereof as soon as practicable thereafter, but failure to so notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have to the indemnified person otherwise than on account of this Paragraph 9. The indemnifying party will be entitled to participate in the defense of the indemnified person but such participation will not relieve such indemnifying party of the obligation to reimburse the indemnified person for reasonable legal and other expenses incurred by such indemnified person in defending himself or itself. The indemnification provisions contained in this Paragraph 9 shall remain operative in full force and effect, regardless of any termination of this Agreement. A successor by law of the Distributor or TLAC, as the case may be, shall be entitled to the benefits of the indemnification provisions contained in this Paragraph 9. 10. Regulation. This Agreement shall be subject to the provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules, regulation, and rulings thereunder, and of the NASD, as in effect from time to time, including such exemptions and other relief as the SEC, its 5 6 staff, or the NASD may grant, and the terms hereof shall be interpreted and construed in accordance therewith. 11. Investigation and Proceedings. (a) Each party hereto shall advise the other promptly of (i) any action of the SEC or any authorities of any state or territory, of which it has knowledge, affecting registration or qualification of each Separate Account and the Contracts, or the right to offer the Contracts for sale, and (ii) the happenings of any event that makes untrue any statement or which requires the making of any change, in the registration statement or prospectus for the Contracts in order to make the statements therein not misleading. (b) TLAC, each Separate Account, and the Distributor agree to cooperate fully in any regulatory inspection, inquiry, investigation, or proceeding or any judicial proceeding with respect to TLAC, each Separate Account, or the Distributor, their affiliates and their representatives to the extent that such inspection, inquiry, investigation, or proceeding is in connection with the Contracts distributed under this Agreement. 12. Duration and Termination of the Agreement. (a) This Agreement shall become effective with respect to the Contracts as of the date first written above, and shall continue in full force and effect until termination or expiration. This Agreement may be amended at any time by mutual agreement of the parties hereto. (b) This Agreement shall continue in effect for two years from the date of its execution, and thereafter from year to year, but only so long as such continuance is specifically approved at least annually by (i) each Separate Account's Board of Managers (the "Board"), or by a vote of the majority of the outstanding voting securities of each Separate Account, and (ii) a vote of a majority of those members of the Board who are not parties to this Agreement nor interested persons of such parties, cast in person at a meeting called for the purpose of voting on such approval. (c) This Agreement may be terminated at any time for any reason by either party upon 60 days' written notice to the other party, without payment of any penalty. This Agreement may be terminated immediately at the option of either party to this Agreement upon the other party's material breach of any provision of this Agreement, unless such breach has been cured within 10 days after receipt of notice from the non-breaching party of such breach. (d) This Agreement shall automatically terminate in the event of its assignment. (The term "assigned" shall not include any transaction exempted from Section 15(b)(2) of the 1940 Act). (e) Upon termination of this Agreement, all authorizations, rights and obligations shall cease except the obligation to settle accounts, and the provisions contained in Paragraph 9 regarding indemnification agreements. 6 7 13. Rights, Remedies, etc. are Cumulative. The rights, remedies, and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies, and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. Failure of either party to insist upon strict compliance with any of the conditions of this Agreement shall not be construed as a waiver of any of the conditions, but the same shall remain in full force and effect. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. 14. Interpretation. This Agreement constitutes the whole agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior oral or written understandings, agreements, or negotiations between the parties with respect to such matter. No prior writing by or between the parties with respect to the subject matter hereof shall be used by either party in connection with the interpretation of any provisions of this Agreement. 15. Severability. This is a severable Agreement. In the event that any provision of this Agreement would require a party to take action prohibited by applicable federal or state law or prohibit a party from taking action required by applicable federal or state law, then it is the intention of the parties hereto that such provision shall be enforced to the extent permitted under the law, and, in any event, that all other provisions of this Agreement shall remain valid and duly enforceable as if the provision at issue had never been a part hereof. 16. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall be deemed one instrument. 17. Notices. All notices and other communications provided for hereunder shall be in writing and shall be either hand-delivered, transmitted by registered or certified United States mail with return receipt requested, or by overnight mail by a nationally recognized courier. All notices shall be effective upon delivery and shall be addressed as follows: (a) If to TLAC - The Travelers Life and Annuity Company One Tower Square Hartford, CT 01683 Attention: General Counsel (b) If to each Separate Account The Travelers Life and Annuity Company, Separate Account One Tower Square Hartford, CT 06183 Attention: General Counsel 7 8 (c) If to the Distributor - CFBDS, Inc. 21 Milk Street Boston, MA 02109 Attention: or to such other address as TLAC, each Separate Account, or the Distributor shall designate by written notice to the other parties. 18. Miscellaneous. Captions in this Agreement are included for convenience or reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. IN WITNESS WHEREOF, The Travelers Life and Annuity Company, each Separate Account, and the Distributor have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officer on the day and year first above written. THE TRAVELERS LIFE AND ANNUITY COMPANY Attest: By: ----------------- ------------------------------------ Name: ---------------------------------- Title: --------------------------------- EACH OF THE SEPARATE ACCOUNTS LISTED ON SCHEDULE A, ATTACHED HERETO. Attest: By: ----------------- ------------------------------------ Name: ---------------------------------- Title: --------------------------------- CFBDS, INC. Attest: By: ----------------- ------------------------------------ Name: ---------------------------------- Title: --------------------------------- 8 9 SCHEDULE A TO THE DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT LIST OF SEPARATE ACCOUNTS 1. The Travelers Fund VA for Variable Annuities 2. The Travelers Fund BD II for Variable Annuities 3. The Travelers Fund BD IV for Variable Annuities 4. The Travelers Fund ABD II for Variable Annuities 5. The Travelers Separate Account PF II for Variable Annuities 6. The Travelers Separate Account TM II for Variable Annuities 7. The Travelers Separate Account Six for Variable Annuities 8. The Travelers Separate Account Eight for Variable Annuities 9. The Travelers Fund UL II for Variable Life Insurance 10. The Travelers Variable Life Insurance Separate Account One 11. The Travelers Variable Life Insurance Separate Account Two 12. The Travelers Separate Account MGA II 9 EX-99.4 3 FORM OF VARIABLE ANNUITY CONTRACT 1 THE TRAVELERS LIFE AND ANNUITY COMPANY - ONE TOWER SQUARE - HARTFORD, CONNECTICUT - 06183 A STOCK COMPANY Please read Your Contract and all attached forms carefully. IF YOU HAVE ANY QUESTIONS CONCERNING YOUR CONTRACT, PLEASE CONTACT US AT [800-842-9406. RIGHT TO EXAMINE IF ANY CERTIFICATE IS RETURNED TO US AT OUR OFFICE OR TO OUR AGENT TO BE CANCELED WITHIN 10 DAYS AFTER ITS DELIVERY TO THE CERTIFICATE OWNER, WE WILL REFUND TO THE CERTIFICATE OWNER THE FULL AMOUNT OF ANY PURCHASE PAYMENTS PAID, WITHOUT ADJUSTMENT FOR ANY PREMIUM TAX OR CERTIFICATE CHARGES PAID, AFTER WE RECEIVE THE REQUEST AT OUR OFFICE. AFTER THE CERTIFICATE IS RETURNED, IT WILL BE CONSIDERED AS NEVER IN EFFECT. This Contract is issued in consideration of the master application. It is subject to the terms and conditions stated on the attached pages, and in Certificates issued pursuant to this Contract. It is made effective as stated in the master application. Executed at Hartford, Connecticut /s/ M.A. CARPENTER President This is a legal Contract between You and Us. READ YOUR CONTRACT CAREFULLY. DEFERRED FLEXIBLE PREMIUM VARIABLE ANNUITY MASTER GROUP CONTRACT TAX QUALIFIED ELECTIVE OPTIONS NON-PARTICIPATING ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY RELATED CERTIFICATES, 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 Cover Page Contract Specifications Page 3 Definitions Page 5 Owner, Beneficiary and Annuitant Provisions Page 7 Purchase Payment, Credits and Valuation Provisions Page 8 Death Benefit Provisions Page 10 Settlement Provisions Page 11 General Provisions Page 14 Annuity Tables Page 16
Any Amendments, Riders or Endorsements follow the Annuity Tables. The provisions of any rider or endorsement supersede any contrary provisions in the Contract. 2 3 ================================================================================ CONTRACT SPECIFICATIONS ================================================================================ CONTRACT NUMBER CONTRACT OWNER [THE TRAVELERS RETIREMENT TRUST FOR VARIABLE ANNUITIES] CONTRACT DATE - -------------------------------------------------------------------------------- MINIMUM PURCHASE PAYMENT: $20,000.00 PER CERTIFICATE MINIMUM SUBSEQUENT PURCHASE PAYMENT: $5,000 PER CERTIFICATE MAXIMUM PURCHASE PAYMENT: $1,000,000 PER CERTIFICATE UNLESS WE CONSENT TO A LARGER AMOUNT. CERTIFICATE FEE: None WITHDRAWAL CHARGES DEDUCTED ON SURRENDER BEFORE THE MATURITY DATE OF THE CERTIFICATE: Prior to the Maturity Date, the Withdrawal Charge is calculated as a percentage of the Purchase Payments and associated credits withdrawn on a first in, first out basis. For the purpose of determining the withdrawal charges, the order of withdrawal will be deemed to be taken first from (a) any Purchase Payments and associated credits to which no withdrawal charge applies; (b) next from any remaining free withdrawal amount (as described below) after the reduction by the amount of (a); (c) next from remaining Purchase Payments and associated credits (on a first-in, first-out basis); and then (d) from Certificate earnings.
YEARS SINCE PURCHASE PERCENT OF PURCHASE PAYMENTS AND ASSOCIATED CREDITS PAYMENT WAS MADE (NOT PREVIOUSLY SURRENDERED) 1 5% 2 4% 3 3% 4 2% 5 1% 6 and thereafter 0%
Withdrawals prior to or at the Certificate Maturity Date are not subject to withdrawal charges if: - - a life Annuity option payment is begun; - - payments for a period certain of at least 10 years duration are begun; - - the Annuitant dies; - - subject to Our approval, withdrawals of a specified amount are taken from a Certificate to be deposited to other contracts/certificates issued by Us or Our affiliate. Such withdrawals will be processed upon Our receipt of a Written Request. The withdrawn amount will be subject to the provisions of that contract/certificate. - - Withdrawals are taken under Our managed distribution program then in effect if elected by the Certificate Owner by a Written Request. During the first Certificate Year, the Certificate Owner may take withdrawals of up to 20% of his/her initial Purchase Payment, without imposition of withdrawal charges. Each Certificate Year thereafter, the Certificate Owner may take withdrawals of up to 20% of his/her Certificate Value as of the end of the previous Certificate Year, without imposition of withdrawal charges. This free withdrawal allowance applies to partial withdrawals of any amount and to full withdrawals, except those full withdrawals going to annuity contracts issued by other financial institutions. We reserve the right to modify the free withdrawal allowance. TRANSFER CHARGE: $0 We reserve the right to assess a Transfer Charge of up to $10.00 per transfer on transfers exceeding 12 per year. We will notify the Certificate Owner In Writing at his/her last known address at least 31 day's prior to the imposition of any such Transfer Charge. TERMINATION: We reserve the right to terminate any Certificate when the Certificate Value is less than $2,000 and no Purchase Payments have been made for two years. 3 4 ================================================================================ CONTRACT SPECIFICATIONS ================================================================================ THE TRAVELERS SEPARATE ACCOUNT [SIX] FOR VARIABLE ANNUITIES UNDERLYING FUNDS High Yield Bond Trust The Travelers Series Trust Managed Assets Trust Equity Income Portfolio Money Market Portfolio Federated Stock Portfolio American Odyssey Funds, Inc. Large Cap Portfolio American Odyssey Core Equity Fund Lazard International Stock Portfolio American Odyssey Emerging Opportunities Fund MFS Mid Cap Growth Portfolio American Odyssey Global High-Yield Bond Fund MFS Research Portfolio American Odyssey Intermediate-Term Bond Fund Social Awareness Stock Portfolio American Odyssey International Equity Fund Strategic Stock Portfolio American Odyssey Long-Term Bond Fund Disciplined Mid Cap Stock Portfolio Delaware Group Premium Fund, Inc. Disciplined Small Cap Stock Portfolio REIT Series Travelers Quality Bond Portfolio Small Cap Value Series U.S. Government Securities Portfolio Dreyfus Variable Investment Fund Utilities Portfolio Capital Appreciation Portfolio Travelers Series Fund, Inc. Small Cap Portfolio Alliance Growth Portfolio OCC Accumulation Trust MFS Total Return Portfolio Equity Portfolio Putnam Diversified Income Portfolio Salomon Brothers Variable Series Funds, Inc. Smith Barney High Income Portfolio Salomon Brothers Variable Capital Fund Smith Barney International Equity Portfolio Salomon Brothers Variable Investors Fund Smith Barney Large Capitalization Growth Portfolio Salomon Brothers Variable Total Return Fund Warburg Pincus Trust Strong Variable Insurance Funds, Inc. Emerging Markets Portfolio Strong Schafer Value Fund II Greenwich Street Series Fund The Montgomery Funds III Equity Index Portfolio Class II Montgomery Variable Series: Growth Fund
FUNDING OPTION DEDUCTIONS The annual mortality and expense risk deduction is [.80%] for all funds listed above and is deducted on a pro rata basis from all Underlying Funds in the Certificate Owner's Accounts. This amounts to a daily deduction of .00002192 per fund. ASSUMED NET INVESTMENT FACTOR Upon each partial or full annuitization, the Certificate Owner may select one of the Assumed Net Investment Factors shown below: A. The Assumed Net Investment Factor is 1.000081 for all Underlying Funds. When expressed on an annual basis this equals 3%. B. The Assumed Net Investment Factor is 1.000134 for all Underlying Funds. When expressed on an annual basis this equals 5%. 4 5 ================================================================================ DEFINITIONS ================================================================================ ACCUMULATION UNIT - an accounting unit of measure used to calculate the value of a Certificate before Annuity payments begin. AGE - age last birthday. ANNUITANT - the person on whose life the Maturity Date and Annuity payments depend. ANNUITY UNIT - an accounting unit of measure used to calculate the amount of Annuity Payments. CERTIFICATE - the individual Certificate provided to the Certificate Owner, which describes the benefits, rights and obligations of the Certificate Owner and Us. CERTIFICATE DATE - the date on which a Certificate is issued. CERTIFICATE OWNER - a person who participates under this Contract and is given a Certificate. CERTIFICATE YEAR(s) - the twelve month period(s) beginning with the Certificate Date. 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 and related Certificates. CONTRACT - a Contract which describes the benefits, rights and obligations of the Owner and Us. CONTRACT DATE - the date shown on the Contract Specifications page on which the Contract is issued. CONTRACT OWNER - the party indicated in the Contract Specifications or any party subsequently named. CONTRACT YEARS - twelve month periods beginning with the Contract Date. 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. 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. FUNDING OPTIONS - subsections of the Separate Account which invest in the Underlying Funds for this Contract. MATURITY DATE - the date on which the Annuity payments are to begin. 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. PREMIUM TAX - the amount of tax, if any, charged by a state or municipality. We will deduct any applicable Premium Tax from the Certificate Value either upon surrender, annuitization, death, or at the time a Purchase Payment is made, but no earlier than when We have the liability under state law. PURCHASE PAYMENTS - payments of premium a Certificate Owner makes to Us under a Certificate. QUALIFIED CONTRACT - a Contract used in a retirement plan or program whereby the Purchase Payments and any gains are intended to qualify under Sections 401, 403, 408, 414(d) or 457 of the Code. RECORDED - a Written Request is Recorded when the information is noted in Our file for this Contract and related Certificates. 5 6 SEPARATE ACCOUNT- the Separate Account indicated in the Contract Specifications which We established for this class of Contracts, Certificates and certain other Contracts. TERMINATION - discontinuance of this Contract and/or related Certificates by Us or by Your Written Request. UNDERLYING FUND - an open-end diversified management investment company or portfolio thereof, indicated in the Contract Specifications, which serves as a variable investment option under the Separate Account. VALUATION DATE -a date on which a Funding Option is valued, which is every day the New York Stock Exchange is open for trading (except for when trading is restricted due to an emergency as defined by the Securities and Exchange Commission.) VALUATION PERIOD - the period beginning at the close of business of the New York Stock Exchange on each Valuation Date and ending at the close of business for the next succeeding Valuation Date. Also referred to as the period between successive valuations. WE, US, OUR - The Travelers Life and Annuity Company. WRITTEN REQUEST - written information including requests for Contract/Certificate changes sent to Us in a form and content satisfactory to Us and received at Our Office. YOU, YOUR - The Contract Owner. The Contract Owner is the person or entity named as such on the Contract Specifications page. 6 7 ================================================================================ OWNER, BENEFICIARY AND ANNUITANT PROVISIONS ================================================================================ OWNER This Contract belongs to the Contract Owner shown in the Contract Specifications or to any person subsequently named in a Written Request. The Certificate belongs to the Certificate Owner. A Certificate Owner has sole power during the Annuitant's lifetime to exercise any rights and to receive all benefits given in the Certificate. The Certificate Owner will be the recipient of all payments while the Annuitant is alive unless he/she directs them to an alternate recipient under a Recorded payment direction. An alternate recipient under a payment direction does not become the Certificate Owner. A payment direction is revocable by the Certificate Owner 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 Certificate Owner or Beneficiary under any Certificate 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 has the right to receive any remaining Certificate benefits upon the death of the Annuitant, or under certain circumstances, upon the death of the Certificate 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. Unless an irrevocable Beneficiary has been named, the Certificate Owner has the right to change any Beneficiary by Written Request during the lifetime of the Annuitant and while the Certificate continues. 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 the Certificate Owner, or if no Beneficiary is living when the Annuitant dies, the interest of any Beneficiary will pass to: a) the Certificate Owner or to the Certificate Owner's estate, or b) to the trustee or plan administrator of a trusteed Tax Qualified plan certificate for further distribution in accord with the plan. ANNUITANT The Annuitant is the individual shown in the Certificate Specifications on whose life Annuity payments are based. The Annuitant may not be changed after the Certificate Date. 7 8 ================================================================================ PURCHASE PAYMENT, CREDITS AND VALUATION PROVISIONS ================================================================================ PURCHASE PAYMENT PURCHASE PAYMENT A Purchase Payment is any payment the Certificate Owner makes for a Certificate and the benefits it provides. An initial lump sum Purchase Payment must be made to the Certificate and is due and payable before the Certificate becomes effective. Each Purchase Payment is payable as shown in the Contract Specifications to Us at Our Office or to one of Our authorized representatives. No Purchase Payment after the initial Purchase Payment is required to continue a Certificate in force, except as provided in the Termination provision. Net Purchase Payments are that part of the Certificate Owner's Purchase Payments applied to the Certificate Value. A net Purchase Payment is equal to the Purchase Payment less any applicable Premium Tax. ALLOCATION OF PURCHASE PAYMENT We will apply any net Purchase Payment to provide Accumulation Units in selected Funding Options. The Purchase Payment will be applied within two business days following its receipt at Our Office. The net Purchase Payment will be allocated to the Funding Options in the proportion specified by the Certificate Owner for a Certificate. The available Underlying Funds to which Funding Option assets are allocated are shown in the Contract Specifications; Underlying Funds may be subsequently added or deleted. CONSERVATION CREDITS We may apply conservation credits under this Contract and related Certificates to funds received as Purchase Payments where such funds originated from other contracts/certificates issued by Us or Our affiliates. Any such credits will be computed as decided by Us. FUNDING OPTION VALUATION NUMBER OF ACCUMULATION UNITS The number of Accumulation Units to be credited to each Funding Option once a Purchase Payment has been received by Us will be determined by dividing the net Purchase Payment applied to that Funding Option by the then Accumulation Unit Value of that Funding Option. ACCUMULATION UNIT VALUE We determine the value of an Accumulation Unit in each Funding Option on each Valuation Date by multiplying the value on the preceding Valuation Date by the net investment factor for that Funding Option 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 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 1.0000 plus the net investment rate. Each Funding Option's net investment rate for a Valuation Period is equal to the gross investment rate for that Funding Option, less the applicable Funding Option deduction for the Valuation Period. All Funding Option deductions are shown in the Contract Specifications and the applicable attached riders. The gross investment rate of a Funding Option for a Valuation Period is equal to (1) divided by (2): where (1) is: a) investment income, plus 8 9 b) capital gains and losses, whether realized or unrealized, less c) a deduction for any tax levied against the Separate Account and its Underlying Funds; and (2) is the value of the net assets at the beginning of the Valuation Period. The gross investment rate is based on the net asset value of the Underlying Fund and may be either positive or negative. Investment income includes any distribution whose ex-dividend date occurs during the Valuation Period. TRANSFER AMONG FUNDING OPTIONS A Certificate Owner may transfer all or any part of the Certificate Value from one Funding Option to any other Funding Option at any time up to [30] days before the due date of the first Annuity payment. We reserve the right to limit the number of transfers from one Funding Option to any other Funding Option. We will always allow at least one transfer in any six month period. Transfers among Funding Options 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 Funding Option. The number of Accumulation Units will be determined by using the Accumulation Unit Value of the Funding Options involved as of the next Valuation Date after We receive notification of request for transfer. Transfers will be subject to any applicable Transfer Charge stated in the Contract Specifications. CERTIFICATE VALUES PRIOR TO MATURITY DATE CERTIFICATE VALUE Before the Maturity Date, the Certificate Value on any date equals the sum of the accumulated values in the Funding Options. The accumulated value in a Funding Option equals the number of outstanding Accumulation Units credited to that Funding Option, multiplied by the then current Accumulation Unit Value for that Funding Option. CERTIFICATE FEE A Certificate Fee in the amount and for the period shown in the Contract Specifications will be deducted from the Certificate Value to reimburse Us for administrative expenses relating to the Contract and Certificates. The Certificate Fee will be deducted by surrendering on a pro rata basis Accumulation Units from all Funding Options in which the Certificate Owner has an interest. We will deduct the charge on a pro rata basis if the Certificate has been in effect for less than a full period on the date a Certificate Fee is deducted. The Certificate Fee will also be pro rated upon full surrender or Termination of the Certificate. CERTIFICATE CASH SURRENDER VALUE Before the Maturity Date, the Certificate Cash Surrender Value is equal to the Certificate Value less any applicable charges, fees or taxes deducted upon surrender. CASH SURRENDER A Certificate Owner may elect by Written Request to receive the Cash Surrender Value at or before the due date of the first Annuity payment and without the consent of any Beneficiary unless irrevocably named. In the case of a full surrender, the Certificate will be canceled. A partial surrender will reduce the Certificate Value. If a Certificate Owner has a balance in more than one Funding Option, his/her Certificate Value will be reduced from all of his/her Funding Options on a pro rata basis, unless the Certificate Owner requests otherwise. The Certificate Cash Surrender Value will be determined as of the next Valuation Date following receipt of the Certificate Owner's Written Request. We may delay payment of the Certificate Cash Surrender Value of the Funding Options for a period of not more than five business days after We receive the Certificate Owner's Written Request. CERTIFICATE CONTINUATION Except as provided in the Termination provision, a Certificate does not require continuing Purchase Payments and will automatically continue as a paid-up Certificate during the lifetime of the Annuitant until the Maturity Date, or until it is surrendered. 9 10 ================================================================================ DEATH BENEFIT PROVISIONS ================================================================================ DEATH OF ANNUITANT 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 a Certificate be applied to a Settlement Option subject to the provisions of a Certificate and the current tax laws. DEATH OF CERTIFICATE OWNER WITH ANNUITANT SURVIVING If the Certificate Owner is not the Annuitant, and the Certificate Owner dies before the Maturity Date with the Annuitant surviving, We will recalculate the value of the death benefit under the provisions of Death Proceeds Prior To The Maturity Date below; by replacing all references to "Annuitant" with " Certificate Owner." 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 laws. The party must take distributions no later than under the applicable elections of that provision. DEATH PROCEEDS PRIOR TO THE MATURITY DATE If the Annuitant is Age 80 or younger on the Certificate Date and dies before the Maturity Date, We will pay the Beneficiary the greater of a) or b) below, less any applicable Premium Tax as of the Death Report Date: a) the Certificate Value on the Death Report Date; or b) the total Purchase Payments less the total amount of any partial surrenders (including associated charges, if any) made under the Certificate. We must be notified of the Annuitant's death no later than six months from the Annuitant's date of death in order for Us to make payment of death proceeds as described above. If notification is received more than six months after the Annuitant's death, We will make payment of death proceeds equal to the Certificate Value on the Death Report Date less any applicable Premium Tax. If the Annuitant is older than Age 80 on the Certificate Date and dies before the Maturity Date, We will pay the Beneficiary the Certificate Value on the Death Report Date less any applicable Premium Tax. 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 option then in effect. INTEREST ON DEATH PROCEEDS Any interest on death proceeds will be paid in accordance with rules in effect in the state of issue of the Certificate Owner at the time of death. 10 11 ================================================================================ SETTLEMENT PROVISIONS ================================================================================ MATURITY DATE The Maturity Date is shown in the Certificate Owner's Certificate Specifications. This is the date on which We will begin paying to the Certificate Owner the first of a series of Annuity payments in accordance with an Annuity Option elected by the Certificate Owner. Annuity payments will begin under a Certificate on the Maturity Date unless the Certificate 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 later of when the Annuitant reaches Age 90 or ten years after the Certificate Date. Additionally, to the extent permitted by law, at least 30 days before the original Maturity Date, the Certificate Owner may change the Maturity Date by Written Request to any time prior to the Annuitant's 90th 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 a Certificate to the Certificate Owner in one lump sum or in accordance with an Annuity Option elected. While the Annuitant is alive, the Certificate Owner may change his/her Settlement Option election by Written Request, but only before the Maturity Date. 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 Annuity Option. During the Annuitant's lifetime, if no election has been made on the Maturity Date, We will pay to the Certificate Owner the first of a series of periodic Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. Once Annuity payments have commenced, no election changes are allowed. 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, We reserve the right to change the frequency to an interval resulting in a payment of at least $100.00. ALLOCATION OF ANNUITY At the time an election of one of the Annuity Options is made, the person electing the option may elect to have all or part of the Certificate 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 Funding Option will be applied when Annuity payments start to provide an Annuity which varies with the investment experience of that same Funding Option. A Certificate Owner may elect to transfer Certificate Value from one Funding Option to another, as described in the provision Transfer Between Funding Options, in order to reallocate the basis on which Annuity payments will be determined. After Annuity payments start, the Certificate Owner may, with Our consent, change the allocation of his/her values in each Funding Option. Transfers among Funding Options will result in the addition or deletion of Annuity Units having a total value equal to the dollar amount being transferred to or from a particular Funding Option. The number of Annuity Units will be determined by using the Annuity Unit Value of the Funding Options involved as of the next Valuation Day after We receive notification of request for transfer. Transfers will be subject to any applicable Transfer Charge stated in the Contract Specifications. VARIABLE ANNUITY AMOUNT OF FIRST PAYMENT 11 12 The Certificate Owner may select one of the Assumed Net Investment Factors shown on the Contract Specifications. The Life Annuity Tables for the Assumed Net Investment Factor selected are used to determine the first monthly Annuity payment. They show the dollar amount of the first monthly Annuity payment which can be purchased with each $1,000 applied. The amount applied to a Variable Annuity will be the Certificate Value as of 14 days before the date Annuity payments start. If it would produce a larger first Annuity payment, the Variable Annuity payment will be determined using the Variable Life Annuity tables in effect on the Maturity Date. ANNUITY UNIT VALUE On any Valuation Date, the Annuity Unit Value for a Funding Option equals the Funding Option Annuity Unit Value on the preceding Valuation Date, multiplied by the net investment factor for that Funding Option for the Valuation Period just ended, divided by the Assumed Net Investment Factor chosen by the Certificate Owner. The Assumed Net Investment Factors are shown in the Contract Specifications. The Value of an Annuity Unit on any date other than a Valuation Date will be equal to its value as of the next Valuation Date. NUMBER OF ANNUITY UNITS We determine the number of Annuity Units credited to a Certificate in each Funding Option by dividing the first monthly Annuity payment attributable to that Funding Option by the Funding Option's Unit Value as of [14] days before the due date of the first Annuity payment. AMOUNT OF SECOND AND SUBSEQUENT PAYMENTS The dollar amount of the second and subsequent payments may change from month to month. The amount of the Annuity payment for each Funding Option is found by multiplying the number of Annuity Units credited to the Certificate for that Funding Option by the Annuity Unit Value for that Funding Option. The total amount of each Annuity Payment will be equal to the sum of the payments in each Funding Option. FIXED ANNUITY A Fixed Annuity is an Annuity with payments which do not vary with the investment performance of an underlying fund. The Fixed Life Annuity Tables are used to determine level monthly Annuity payments. They show the dollar amount of level monthly Annuity payments which can be purchased with each $1,000 applied. The amount applied to a Fixed Annuity will be the Certificate Value applied to the Fixed Annuity as of the day Fixed Annuity payments begin. If it would produce a larger payment, the Fixed Annuity payment will be determined using the Fixed Life Annuity Tables in effect on the Maturity Date. ANNUITIZATION CREDIT Upon each election of one of the Annuity Options described below, an annuitization credit will be applied to the Certificate Value used to purchase the Fixed or Variable Annuity. The credit will be calculated as a percentage of the Certificate Value applied to the Fixed or Variable Annuity. The credit will be : For Certificate Years 2-5 0.5% For Certificate Years 6-10 1.0% For Certificate Years 11+ 2.0% There is no annuitization credit during Certificate Year 1. ANNUITY OPTIONS Subject to conditions stated in Elections Of Settlement Options and Minimum Amounts, all or any part of the Certificate Value may be applied to one or more of the Annuity Options below. We may offer additional options. Options 1 - 5 below may be applied to either a Fixed or Variable Annuity. If a Fixed Annuity is elected, the periodic Annuity payments may be either level (except after the primary payee's death in Option 4) or increasing. If increasing payments are elected, the payments will increase on each Certificate Date anniversary by the percentage the Certificate Owner chooses. The Certificate Owner may choose a whole number percentage from 1 to 4%. If payments are received more frequently than on an annual basis, payments will remain level between Certificate Date anniversaries. If increasing payments are elected, the initial payment will be less than the corresponding level payment for the same Annuity Option. The Fixed Life Annuity tables are 12 13 used to determine the level monthly annuity payments. The equivalent values for initial increasing payments will be less than the values shown for level payments. The difference will be calculated in an actuarially equivalent manner. OPTION 1. LIFE ANNUITY - NO REFUND We will make periodic Annuity payments during the lifetime of the person on whose life the payments are based, ending with the last payment preceding death. OPTION 2. LIFE ANNUITY WITH PERIOD CERTAIN We will make periodic Annuity payments during the lifetime of the person on whose life the payments are based. 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 periodic 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 periodic 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 periodic 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 periodic 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. PERIOD CERTAIN ANNUITY We will make periodic payments for the period selected. OPTION 6 . OTHER ANNUITY OPTIONS We will make any other arrangements for Annuity payments as may be mutually agreed upon by Us and a Certificate Owner. 13 14 ================================================================================ GENERAL PROVISIONS ================================================================================ CONTRACT The entire Contract between the Contract Owner and Us consists of the Contract, together with the application, if a copy of such application is attached to the Contract when issued and any Amendments, Riders or Endorsements. CERTIFICATE Each Certificate Owner will receive an individual Certificate stating in substance the benefits he/she is entitled to under the Certificate and Contract. The Certificate does not constitute a part of the Contract. The entire Certificate consists of the Certificate, together with the data collection form, if a copy of such data collection form is attached to the Certificate when issued and any Amendments, Riders or Endorsements. CONTRACT/CERTIFICATE CHANGES The only way this Contract and related Certificates may be changed is by a written Amendment, Rider or Endorsement signed by one of Our officers. INCONTESTABILITY We will not contest a Contract/Certificate from its Contract/Certificate Date. MISSTATEMENT If an Annuitant's date of birth was misstated, all benefits of the Certificate are what the Purchase Payment(s) paid would have purchased at the correct Age. Proof of the Annuitant's Age may be filed at any time at Our Office. SUBSTITUTION OF UNDERLYING FUNDS If it is not possible to continue to offer an Underlying Fund, or in Our judgment becomes inappropriate for the purposes of a Certificate, We may substitute another Underlying Fund without a Certificate Owner's consent. Substitution may be made with respect to both existing investments and investment of future Purchase Payments and associated credits. However, no such substitution will be made without notice to the Certificate Owner and without prior approval of the Securities and Exchange Commission, to the extent required by law. TERMINATION We reserve the right to terminate any Certificate on any Valuation Date if the Certificate Value is less than the Termination Amount stated on the Certificate Specifications page. Termination will not occur until 31 days after We have mailed notice of Termination to the Certificate Owner at his/her last known address. If a Certificate is terminated, We will pay the Certificate Owner the Certificate Cash Surrender Value, if any, no later than five business days following Our mailing the written notice of Termination to the Certificate Owner at the most current address available on Our records. Termination of a Certificate will not affect payments We are making under any Annuity options which began before the Termination date. REQUIRED REPORTS We will furnish a report to the Certificate Owner as often as required by law, but at least once in each Certificate Year before the due date of the first Annuity payment. The report will show the number of Accumulation Units credited to the Certificate in each Funding Option and the corresponding Accumulation Unit Value as of the date of the report. VOTING RIGHTS If required by federal law, the Certificate Owner may have the right to vote at the meetings of the shareholders of the Underlying Funds. If the Certificate Owner has voting rights, We will send a notice to the Certificate Owner telling him/her the time and place of a meeting. The notice will also explain matters to be voted upon and how many votes the Certificate Owner may exercise. MORTALITY AND EXPENSES Our actual mortality and expense experience will not affect the amount of any Annuity payments or any other values under this Contract. NON-PARTICIPATING 14 15 This Contract and related Certificates do not share in Our surplus earnings, so the Contract and Certificate Owners will receive no dividends under them. TAXES BASED UPON PREMIUM OR VALUE If there is a law or change in law assessing taxes against Us based upon the premium or value of the Certificates, We reserve the right to charge the Certificate Owner proportionately for that tax. This would include, but is not limited to, a tax based upon Our realized net capital gains in the Funding Options, 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. A Certificate is governed by the law of the state in which it is delivered. Any paid-up Annuity, Certificate Cash Surrender Value or death benefits that are available under related Certificates are not less than the minimum benefits required by the statutes of the state in which the Certificates are delivered. Upon receiving appropriate state approval, We may at any time make any changes, including retroactive changes, in this Contract and related Certificates to the extent that the change is required to meet the requirements of any law or regulation issued by a governmental agency to which We, You, or the Certificate Owner are subject. 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 Funding Options is not reasonably practicable or it is not reasonably practicable to determine the value of the Funding Option'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 related Certificates which specifies a Valuation Date will be superseded by this Emergency Procedure. RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNT AND FUNDING OPTIONS We will have exclusive and absolute ownership and control of the assets of Our Separate Account and the Funding Options. That portion of the assets of a Separate Account or Funding Option equal to the reserves and other Contract liabilities with respect to such Separate Account or Funding Option 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. REDUCTION OR ELIMINATION OF CERTIFICATE CHARGES All charges and fees under the Certificates may be reduced or eliminated when certain sales or administration of the Certificates result in savings or reduction of expenses, and/or risks. 15 16 FIXED LIFE ANNUITY TABLES & VARIABLE LIFE ANNUITY TABLES AT 3% ASSUMED NET INVESTMENT FACTOR (A.N.I.F.) GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTIONS 1, AND 2- SINGLE LIFE ANNUITIES
UNISEX NUMBER OF MONTHLY PAYMENTS GUARANTEED ADJUSTED NONE 120 180 240 AGE 45 3.44 3.43 3.42 3.40 46 3.48 3.47 3.46 3.44 47 3.53 3.52 3.50 3.48 48 3.58 3.57 3.55 3.53 49 3.63 3.61 3.60 3.57 50 3.68 3.67 3.65 3.62 51 3.74 3.72 3.70 3.67 52 3.80 3.78 3.75 3.72 53 3.86 3.84 3.81 3.77 54 3.93 3.90 3.87 3.83 55 4.00 3.97 3.94 3.88 56 4.07 4.04 4.00 3.94 57 4.15 4.12 4.07 4.01 58 4.24 4.20 4.15 4.07 59 4.33 4.28 4.22 4.14 60 4.42 4.37 4.30 4.20 61 4.52 4.47 4.39 4.28 62 4.63 4.57 4.48 4.35 63 4.75 4.67 4.57 4.42 64 4.87 4.78 4.67 4.49 65 5.01 4.90 4.77 4.57 66 5.15 5.03 4.87 4.65 67 5.30 5.16 4.98 4.72 68 5.46 5.30 5.09 4.80 69 5.64 5.45 5.20 4.87 70 5.83 5.60 5.31 4.94 71 6.04 5.76 5.43 5.01 72 6.26 5.93 5.55 5.07 73 6.50 6.11 5.66 5.13 74 6.75 6.29 5.78 5.19 75 7.03 6.49 5.89 5.24
Dollar amounts of the monthly Annuity payments for the first and second options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 3% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 16 17 FIXED LIFE ANNUITY TABLES & VARIABLE LIFE ANNUITY TABLES AT 3% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY
UNISEX ADJUSTED AGES 45 50 55 60 65 70 75 45 3.17 3.23 3.29 3.34 3.37 3.39 3.41 50 3.23 3.33 3.42 3.50 3.56 3.60 3.63 55 3.29 3.42 3.55 3.67 3.77 3.85 3.91 60 3.34 3.50 3.67 3.85 4.01 4.15 4.25 65 3.37 3.56 3.77 4.01 4.25 4.47 4.66 70 3.39 3.60 3.85 4.15 4.47 4.81 5.13 75 3.41 3.63 3.91 4.25 4.66 5.13 5.62
OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY REDUCED BY 50% ON DEATH OF PRIMARY PAYEE
UNISEX ADJUSTED AGE OF PRIMARY AND SECONDARY PAYEE DOLLAR AMOUNT 45 3.30 50 3.50 55 3.76 60 4.12 65 4.60 70 5.27 75 6.25
Dollar amounts of the monthly Annuity payments for the third and fourth options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 3% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 17 18 FIXED ANNUITY TABLE & VARIABLE ANNUITY TABLE AT 3% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 5 - PAYMENTS FOR A PERIOD CERTAIN .
MONTHLY MONTHLY NUMBER OF PAYMENT NUMBER OF PAYMENT YEARS AMOUNT YEARS AMOUNT 10 9.61 21 5.32 11 8.86 22 5.15 12 8.24 23 4.99 13 7.71 24 4.84 14 7.26 25 4.71 15 6.87 26 4.59 16 6.53 27 4.47 17 6.23 28 4.37 18 5.96 29 4.27 19 5.73 30 4.18 20 5.51
The dollar amounts of the monthly Annuity payments for the fifth option are based on a net investment rate of 3% per annum. 18 19 VARIABLE LIFE ANNUITY TABLES AT 5% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTIONS 1, AND 2- SINGLE LIFE ANNUITIES
UNISEX NUMBER OF MONTHLY PAYMENTS GUARANTEED ADJUSTED AGE NONE 120 180 240 45 4.71 4.70 4.68 4.66 46 4.75 4.73 4.71 4.69 47 4.79 4.77 4.75 4.73 48 4.83 4.81 4.79 4.76 49 4.88 4.86 4.83 4.80 50 4.93 4.90 4.88 4.84 51 4.98 4.95 4.92 4.88 52 5.03 5.00 4.97 4.92 53 5.09 5.06 5.02 4.97 54 5.15 5.12 5.07 5.02 55 5.22 5.18 5.13 5.07 56 5.29 5.24 5.19 5.12 57 5.36 5.31 5.25 5.17 58 5.44 5.39 5.32 5.23 59 5.53 5.46 5.39 5.29 60 5.62 5.55 5.46 5.35 61 5.72 5.64 5.54 5.41 62 5.82 5.73 5.62 5.47 63 5.94 5.83 5.70 5.54 64 6.06 5.94 5.79 5.61 65 6.19 6.05 5.88 5.67 66 6.33 6.17 5.98 5.74 67 6.48 6.29 6.08 5.81 68 6.64 6.42 6.18 5.87 69 6.82 6.57 6.28 5.94 70 7.00 6.71 6.39 6.00 71 7.21 6.87 6.49 6.06 72 7.43 7.03 6.60 6.12 73 7.67 7.20 6.71 6.17 74 7.93 7.38 6.82 6.22 75 8.21 7.56 6.92 6.27
Dollar amounts of the monthly Annuity payments for the first and second options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 5% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 19 20 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 VARIABLE LIFE ANNUITY TABLES AT 5% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY
UNISEX ADJUSTED AGE 45 50 55 60 65 70 75 45 4.44 4.50 4.55 4.59 4.62 4.65 4.67 50 4.50 4.58 4.65 4.72 4.78 4.82 4.86 55 4.55 4.65 4.76 4.87 4.96 5.04 5.10 60 4.59 4.72 4.87 5.02 5.17 5.30 5.41 65 4.62 4.78 4.96 5.17 5.39 5.60 5.79 70 4.65 4.82 5.04 5.30 5.60 5.92 6.23 75 4.67 4.86 5.10 5.41 5.79 6.23 6.71
OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY REDUCED BY 50% ON DEATH OF PRIMARY PAYEE
UNISEX ADJUSTED AGE OF PRIMARY AND SECONDARY PAYEE DOLLAR AMOUNT 45 4.57 50 4.74 55 4.98 60 5.30 65 5.76 70 6.42 75 7.39
Dollar amounts of the monthly Annuity payments for the third and fourth options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 5% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 20 21 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 VARIABLE ANNUITY TABLE AT 5% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 5 - PAYMENTS FOR A PERIOD CERTAIN .
MONTHLY MONTHLY NUMBER OF PAYMENT NUMBER OF PAYMENT YEARS AMOUNT YEARS AMOUNT 10 10.51 21 6.33 11 9.77 22 6.17 12 9.16 23 6.02 13 8.64 24 5.88 14 8.20 25 5.76 15 7.82 26 5.65 16 7.49 27 5.54 17 7.20 28 5.45 18 6.94 29 5.36 19 6.71 30 5.28 20 6.51
The dollar amounts of the monthly Annuity payments for the fifth option are based on a net investment rate of 5% per annum. 21 22 This page has been left intentionally blank. 23 DEFERRED FLEXIBLE PREMIUMVARIABLE ANNUITY MASTER GROUP CONTRACT TAX QUALIFIED ELECTIVE OPTIONS NON-PARTICIPATING 24 This page has been left intentionally blank. 25 THE TRAVELERS LIFE AND ANNUITY COMPANY - ONE TOWER SQUARE - HARTFORD, CONNECTICUT - 06183 A STOCK COMPANY Please read Your Certificate and all attached forms carefully. IF YOU HAVE ANY QUESTIONS CONCERNING YOUR CERTIFICATE, PLEASE CONTACT US AT 1-800-842-9406. RIGHT TO EXAMINE IF THIS CERTIFICATE IS RETURNED TO US AT OUR OFFICE OR TO OUR AGENT TO BE CANCELED WITHIN 10 DAYS AFTER ITS DELIVERY TO YOU, WE WILL REFUND TO YOU THE FULL AMOUNT OF ANY PURCHASE PAYMENTS PAID, WITHOUT ADJUSTMENT FOR ANY PREMIUM TAX OR CERTIFICATE CHARGES PAID, AFTER WE RECEIVE THE REQUEST AT OUR OFFICE. AFTER THE CERTIFICATE IS RETURNED, IT WILL BE CONSIDERED AS NEVER IN EFFECT. This Certificate is issued in consideration of the initial Purchase Payment. It is subject to the terms and conditions stated on the attached pages, all of which are made a part of it. It is made effective as stated in the Certificate. Executed at Hartford, Connecticut /s/ M. A. CARPENTER President This is a legal contract between You and Us. READ YOUR CERTIFICATE CAREFULLY. CERTIFICATE OF PARTICIPATION UNDER A DEFERRED FLEXIBLE PREMIUM VARIABLE ANNUITY GROUP CONTRACT TAX QUALIFIED ELECTIVE OPTIONS NON-PARTICIPATING ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CERTIFICATE, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. 26 TABLE OF CONTENTS Right to Examine Cover Page Contract Specifications Page 3 Definitions Page 5 Owner, Beneficiary and Annuitant Provisions Page 7 Purchase Payment, Credits and Valuation Provisions Page 8 Death Benefit Provisions Page 10 Settlement Provisions Page 11 General Provisions Page 14 Annuity Tables Page 16
Any Amendments, Riders or Endorsements follow the Annuity Tables. The provisions of any rider or endorsement supersede any contrary provisions in the Certificate. 2 27 ================================================================================ DEFINITIONS ================================================================================ ACCUMULATION UNIT - an accounting unit of measure used to calculate the value of a Certificate before Annuity payments begin. AGE - age last birthday. ANNUITANT - the person on whose life the Maturity Date and Annuity payments depend. ANNUITY UNIT - an accounting unit of measure used to calculate the amount of Annuity Payments. CERTIFICATE - the individual Certificate provided to You, which describes the benefits, rights and obligations of You and Us. CERTIFICATE DATE - the date on which this Certificate is issued. CERTIFICATE OWNER - the person indicated in the Certificate Specifications. CERTIFICATE YEAR(S) - the twelve month period(s) beginning with the Certificate Date. CODE - the Internal Revenue Code of 1986, as amended, and all related laws and regulations which are in effect during the term of this Certificate. CONTRACT - a Contract which describes the benefits, rights and obligations of the Contract Owner and Us. CONTRACT OWNER - the party indicated in the Certificate Specifications or any party subsequently named. 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 Certificate. 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. FUNDING OPTIONS - subsections of the Separate Account which invest in the Underlying Funds for this Certificate. MATURITY DATE - the date on which the Annuity payments are to begin. 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 Certificate. PREMIUM TAX - the amount of tax, if any, charged by a state or municipality. We will deduct any applicable Premium Tax from the Certificate Value either upon surrender, annuitization, death, or at the time a Purchase Payment is made, but no earlier than when We have the liability under state law. PURCHASE PAYMENTS - payments of premium You make to Us under this Certificate. QUALIFIED CERTIFICATE - a Certificate used in a retirement plan or program whereby the Purchase Payments and any gains are intended to qualify under Sections 401, 403, 408, 414(d) or 457 of the Code. RECORDED - a Written Request is Recorded when the information is noted in Our file for this Certificate. SEPARATE ACCOUNT- the Separate Account indicated in the Certificate Specifications which We established for this class of Certificates and certain other Certificates. 5 28 TERMINATION - discontinuance of this Certificate by Us or by Your Written Request. UNDERLYING FUND - an open-end diversified management investment company or portfolio thereof, indicated in the Certificate Specifications, which serves as a variable investment option under the Separate Account. VALUATION DATE -a date on which a Funding Option is valued, which is every day the New York Stock Exchange is open for trading (except for when trading is restricted due to an emergency as defined by the Securities and Exchange Commission.) VALUATION PERIOD - the period beginning at the close of business of the New York Stock Exchange on each Valuation Date and ending at the close of business for the next succeeding Valuation Date. Also referred to as the period between successive valuations. WE, US, OUR - The Travelers Life and Annuity Company. WRITTEN REQUEST - written information including requests for Contract/Certificate changes sent to Us in a form and content satisfactory to Us and received at Our Office. YOU, YOUR - The Certificate Owner. 6 29 ================================================================================ OWNER, BENEFICIARY AND ANNUITANT PROVISIONS ================================================================================ OWNER The Contract belongs to the Contract Owner shown in the Certificate Specifications or to any person subsequently named in a Written Request. The Certificate belongs to the Certificate Owner. As Certificate Owner, You have sole power during the Annuitant's lifetime to exercise any rights and to receive all benefits given in the Certificate. 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 Certificate 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 Certificate Owner or Beneficiary under this Certificate 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 has the right to receive any remaining Certificate benefits upon the death of the Annuitant, or under certain circumstances, upon Your death. 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. 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 Certificate continues. 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 to: a) You or to Your estate, or b) to the trustee or plan administrator of a trusteed Tax Qualified plan certificate for further distribution in accord with the plan. ANNUITANT The Annuitant is the individual shown in the Certificate Specifications on whose life Annuity payments are based. The Annuitant may not be changed after the Certificate Date. 7 30 ================================================================================ PURCHASE PAYMENT, CREDITS AND VALUATION PROVISIONS ================================================================================ PURCHASE PAYMENT PURCHASE PAYMENT A Purchase Payment is any payment You make for this Certificate and the benefits it provides. An initial lump sum Purchase Payment must be made to the Certificate and is due and payable before the Certificate becomes effective. Each Purchase Payment is payable as shown in the Certificate Specifications to Us at Our Office or to one of Our authorized representatives. No Purchase Payment after the initial Purchase Payment is required to continue a Certificate in force, except as provided in the Termination provision. Net Purchase Payments are that part of Your Purchase Payments applied to the Certificate Value. A net Purchase Payment is equal to the Purchase Payment less any applicable Premium Tax. ALLOCATION OF PURCHASE PAYMENT We will apply any net Purchase Payment to provide Accumulation Units in selected Funding Options. The Purchase Payment will be applied within two business days following its receipt at Our Office. The net Purchase Payment will be allocated to the Funding Options in the proportion specified by You. The available Underlying Funds to which Funding Option assets are allocated are shown in the Certificate Specifications; Underlying Funds may be subsequently added or deleted. CONSERVATION CREDITS We may apply conservation credits under this Certificate to funds received as Purchase Payments where such funds originated from other contracts/certificates issued by Us or Our affiliates. Any such credits will be computed as decided by Us. FUNDING OPTION VALUATION NUMBER OF ACCUMULATION UNITS The number of Accumulation Units to be credited to each Funding Option once a Purchase Payment has been received by Us will be determined by dividing the net Purchase Payment applied to that Funding Option by the then Accumulation Unit Value of that Funding Option. ACCUMULATION UNIT VALUE We determine the value of an Accumulation Unit in each Funding Option on each Valuation Date by multiplying the value on the preceding Valuation Date by the net investment factor for that Funding Option 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 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 1.0000 plus the net investment rate. Each Funding Option's net investment rate for a Valuation Period is equal to the gross investment rate for that Funding Option, less the applicable Funding Option deduction for the Valuation Period. All Funding Option deductions are shown in the Certificate Specifications and the applicable attached riders. The gross investment rate of a Funding Option 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 Underlying Funds; and (2) is the value of the net assets at the beginning of the Valuation Period. 8 31 The gross investment rate is based on the net asset value of the Underlying Fund and may be either positive or negative. Investment income includes any distribution whose ex-dividend date occurs during the Valuation Period. TRANSFER AMONG FUNDING OPTIONS You may transfer all or any part of the Certificate Value from one Funding Option to any other Funding Option at any time up to [30] days before the due date of the first Annuity payment. We reserve the right to limit the number of transfers from one Funding Option to any other Funding Option. We will always allow at least one transfer in any six month period. Transfers among Funding Options 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 Funding Option. The number of Accumulation Units will be determined by using the Accumulation Unit Value of the Funding Options involved as of the next Valuation Date after We receive notification of request for transfer. Transfers will be subject to any applicable Transfer Charge stated in the Certificate Specifications. CERTIFICATE VALUES PRIOR TO MATURITY DATE CERTIFICATE VALUE Before the Maturity Date, the Certificate Value on any date equals the sum of the accumulated values in the Funding Options. The accumulated value in a Funding Option equals the number of outstanding Accumulation Units credited to that Funding Option, multiplied by the then current Accumulation Unit Value for that Funding Option. CERTIFICATE FEE A Certificate Fee in the amount and for the period shown in the Certificate Specifications will be deducted from the Certificate Value to reimburse Us for administrative expenses relating to the Contract and Certificates. The Certificate Fee will be deducted by surrendering on a pro rata basis Accumulation Units from all Funding Options in which You have an interest. We will deduct the charge on a pro rata basis if the Certificate has been in effect for less than a full period on the date a Certificate Fee is deducted. The Certificate Fee will also be pro rated upon full surrender or Termination of the Certificate. CERTIFICATE CASH SURRENDER VALUE Before the Maturity Date, the Certificate Cash Surrender Value is equal to the Certificate Value less any applicable charges, fees or taxes deducted upon surrender. CASH SURRENDER You may elect by Written Request to receive the Cash Surrender Value at or before the due date of the first Annuity payment and without the consent of any Beneficiary unless irrevocably named. In the case of a full surrender, the Certificate will be canceled. A partial surrender will reduce the Certificate Value. If You have a balance in more than one Funding Option, Your Certificate Value will be reduced from all of Your Funding Options on a pro rata basis, unless You request otherwise. The Certificate Cash Surrender Value will be determined as of the next Valuation Date following receipt of Your Written Request. We may delay payment of the Certificate Cash Surrender Value of the Funding Options for a period of not more than five business days after We receive Your Written Request. CERTIFICATE CONTINUATION Except as provided in the Termination provision, this Certificate does not require continuing Purchase Payments and will automatically continue as a paid-up Certificate during the lifetime of the Annuitant until the Maturity Date, or until it is surrendered. 9 32 ================================================================================ DEATH BENEFIT PROVISIONS ================================================================================ DEATH OF ANNUITANT 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 Certificate be applied to a Settlement Option subject to the provisions of this Certificate and the current tax laws. DEATH OF CERTIFICATE OWNER WITH ANNUITANT SURVIVING If You are not the Annuitant, and You die before the Maturity Date with the Annuitant surviving, We will recalculate the value of the death benefit under the provisions of Death Proceeds Prior To The Maturity Date below; by replacing all references to "Annuitant" with " Certificate Owner." 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 laws. The party must take distributions no later than under the applicable elections of that provision. DEATH PROCEEDS PRIOR TO THE MATURITY DATE If the Annuitant is Age 80 or younger on the Certificate Date and dies before the Maturity Date, We will pay the Beneficiary the greater of a) or b) below, less any applicable Premium Tax as of the Death Report Date: a) the Certificate Value on the Death Report Date; or b) the total Purchase Payments less the total amount of any partial surrenders (including associated charges, if any) made under this Certificate. We must be notified of the Annuitant's death no later than six months from the Annuitant's date of death in order for Us to make payment of death proceeds as described above. If notification is received more than six months after the Annuitant's death, We will make payment of death proceeds equal to the Certificate Value on the Death Report Date less any applicable Premium Tax. If the Annuitant is older than Age 80 on the Certificate Date and dies before the Maturity Date, We will pay the Beneficiary the Certificate Value on the Death Report Date less any applicable Premium Tax. 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 option then in effect. INTEREST ON DEATH PROCEEDS Any interest on death proceeds will be paid in accordance with rules in effect in the state of issue of the Certificate Owner at the time of death. 10 33 ================================================================================ SETTLEMENT PROVISIONS ================================================================================ MATURITY DATE The Maturity Date is shown in the Certificate Specifications. This is the date on which We will begin paying to You the first of a series of Annuity payments in accordance with an Annuity Option elected by You. Annuity payments will begin under this Certificate on the Maturity Date unless the Certificate 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 later of when the Annuitant reaches Age 90 or ten years after the Certificate 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 90th 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 Certificate to You in one lump sum or in accordance with an Annuity Option elected. While the Annuitant is alive, You may change Your Settlement Option election by Written Request, but only before the Maturity Date. 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 Annuity Option. During the Annuitant's lifetime, if no election has been made on the Maturity Date, We will pay You the first of a series of periodic Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. Once Annuity payments have commenced, no election changes are allowed. 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, We reserve the right to change the frequency to an interval resulting in a payment of at least $100.00. ALLOCATION OF ANNUITY At the time an election of one of the Annuity Options is made, the person electing the option may elect to have all or part of the Certificate 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 Funding Option will be applied when Annuity payments start to provide an Annuity which varies with the investment experience of that same Funding Option. You may elect to transfer Certificate Value from one Funding Option to another, as described in the provision Transfer Between Funding Options, in order to reallocate the basis on which Annuity payments will be determined. After Annuity payments start, You may, with Our consent, change the allocation of Your values in each Funding Option. Transfers among Funding Options will result in the addition or deletion of Annuity Units having a total value equal to the dollar amount being transferred to or from a particular Funding Option. The number of Annuity Units will be determined by using the Annuity Unit Value of the Funding Options involved as of the next Valuation Day after We receive notification of request for transfer. Transfers will be subject to any applicable Transfer Charge stated in the Certificate Specifications. VARIABLE ANNUITY AMOUNT OF FIRST PAYMENT You may select one of the Assumed Net Investment Factors shown on the Certificate Specifications. The Life Annuity Tables for the Assumed Net Investment Factor selected are used to determine the first monthly Annuity payment. They show the dollar amount of the first monthly Annuity payment which can be purchased with each $1,000 applied. The amount applied to a Variable Annuity will be the Certificate Value as of 14 days before the date Annuity payments start. If it would produce a larger 11 34 first Annuity payment, the Variable Annuity payment will be determined using the Variable Life Annuity tables in effect on the Maturity Date. ANNUITY UNIT VALUE On any Valuation Date, the Annuity Unit Value for a Funding Option equals the Funding Option Annuity Unit Value on the preceding Valuation Date, multiplied by the net investment factor for that Funding Option for the Valuation Period just ended, divided by the Assumed Net Investment Factor chosen by You. The Assumed Net Investment Factors are shown in the Certificate Specifications. The Value of an Annuity Unit on any date other than a Valuation Date will be equal to its value as of the next Valuation Date. NUMBER OF ANNUITY UNITS We determine the number of Annuity Units credited to this Certificate in each Funding Option by dividing the first monthly Annuity payment attributable to that Funding Option by the Funding Option's Unit Value as of 14 days before the due date of the first Annuity payment. AMOUNT OF SECOND AND SUBSEQUENT PAYMENTS The dollar amount of the second and subsequent payments may change from month to month. The amount of the Annuity payment for each Funding Option is found by multiplying the number of Annuity Units credited to the Certificate for that Funding Option by the Annuity Unit Value for that Funding Option. The total amount of each Annuity Payment will be equal to the sum of the payments in each Funding Option. FIXED ANNUITY A Fixed Annuity is an Annuity with payments which do not vary with the investment performance of an underlying fund. The Fixed Life Annuity Tables are used to determine level monthly Annuity payments. They show the dollar amount of level monthly Annuity payments which can be purchased with each $1,000 applied. The amount applied to a Fixed Annuity will be the Certificate Value applied to the Fixed Annuity as of the day Fixed Annuity payments begin. If it would produce a larger payment, the Fixed Annuity payment will be determined using the Fixed Life Annuity Tables in effect on the Maturity Date. ANNUITIZATION CREDIT Upon each election of one of the Annuity Options described below, an annuitization credit will be applied to the Certificate Value used to purchase the Fixed or Variable Annuity. The credit will be calculated as a percentage of the Certificate Value applied to the Fixed or Variable Annuity. The credit will be : For Certificate Years 2-5 0.5% For Certificate Years 6-10 1.0% For Certificate Years 11+ 2.0% There is no annuitization credit during Certificate Year 1. ANNUITY OPTIONS Subject to conditions stated in Elections Of Settlement Options and Minimum Amounts, all or any part of the Certificate Value may be applied to one or more of the Annuity Options below. We may offer additional options. Option 1 - 5 below may be applied to either a Fixed or Variable Annuity. If a Fixed Annuity is elected, the periodic Annuity payments may be either level (except after the primary payee's death in Option 4) or increasing. If increasing payments are elected, the payments will increase on each Certificate Date anniversary by the percentage You choose. You may choose a whole number percentage from 1 to 4%. If payments are received more frequently than on an annual basis, payments will remain level between Certificate Date anniversaries. If increasing payments are elected, the initial payment will be less than the corresponding level payment for the same Annuity Option. The Fixed Life Annuity tables are used to determine the level monthly annuity payments. The equivalent values for initial increasing payments will be less than the values shown for level payments. The difference will be calculated in an actuarially equivalent manner. 12 35 OPTION 1. LIFE ANNUITY - NO REFUND We will make periodic Annuity payments during the lifetime of the person on whose life the payments are based, ending with the last payment preceding death. OPTION 2. LIFE ANNUITY WITH PERIOD CERTAIN We will make periodic Annuity payments during the lifetime of the person on whose life the payments are based. 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 periodic 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 periodic 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 periodic 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 periodic 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. PERIOD CERTAIN ANNUITY We will make periodic payments for the period selected. OPTION 6 . OTHER ANNUITY OPTIONS We will make any other arrangements for Annuity payments as may be mutually agreed upon by You and Us. 13 36 ================================================================================ GENERAL PROVISIONS ================================================================================ CONTRACT The entire Contract between the Contract Owner and Us consists of the Contract, together with the application, if a copy of such application is attached to the Contract when isssued and any Amendments, Riders or Endorsements. CERTIFICATE You will receive an individual Certificate stating in substance the benefits You are entitled to under the Certificate. The Certificate does not constitute a part of the Contract. The entire Certificate consists of the Certificate, together with the data collection form, if a copy of such data collection form is attached to the Certificate when issued and any Amendments, Riders or Endorsements. CERTIFICATE CHANGES The only way this Certificate may be changed is by a written Amendment, Rider or Endorsement signed by one of Our officers. INCONTESTABILITY We will not contest this Certificate from its Certificate Date. MISSTATEMENT If an Annuitant's date of birth was misstated, all benefits of this Certificate are what the Purchase Payment(s) paid would have purchased at the correct Age. Proof of the Annuitant's Age may be filed at any time at Our Office. SUBSTITUTION OF UNDERLYING FUNDS If it is not possible to continue to offer an Underlying Fund, or in Our judgment becomes inappropriate for the purposes of a Certificate, We may substitute another Underlying Fund without Your consent. Substitution may be made with respect to both existing investments and investment of future Purchase Payments and associated credits. 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. TERMINATION We reserve the right to terminate this Certificate on any Valuation Date if the Certificate Value is less than the Termination Amount stated on the Certificate Specifications page. Termination will not occur until 31 days after We have mailed notice of Termination to You at Your last known address. If this Certificate is terminated, We will pay You the Certificate Cash Surrender Value, if any of the Certificate no later than five business days following Our mailing the written notice of Termination to You at the most current address available on Our records. Termination of this Certificate will not affect payments We are making under any Annuity options which began before the Termination date. REQUIRED REPORTS We will furnish a report to You as often as required by law, but at least once in each Certificate Year before the due date of the first Annuity payment. The report will show the number of Accumulation Units credited to the Certificate in each Funding Option 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 Underlying Funds. 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 payments or any other values under this Certificate. NON-PARTICIPATING This Certificate does not share in Our surplus earnings, so You will receive no dividends under it. 14 37 TAXES BASED UPON PREMIUM OR VALUE If there is a law or change in law assessing taxes against Us based upon the premium or value of the Certificate, We reserve the right to charge You proportionately for that tax. This would include, but is not limited to, a tax based upon Our realized net capital gains in the Funding Options, on which We are not currently taxed. CONFORMITY WITH STATE AND FEDERAL LAWS This Certificate is governed by the law of the state in which it is delivered. Any paid-up Annuity, Certificate Cash Surrender Value or death benefits that are available under this Certificate is not less than the minimum benefits required by the statutes of the state in which the Certificate is delivered. Upon receiving appropriate state approval, We may at any time make any changes, including retroactive changes, in this Certificate to the extent that the change is required to meet the requirements of any law or regulation issued by a governmental agency to which We or You are subject. 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 Funding Options is not reasonably practicable or it is not reasonably practicable to determine the value of the Funding Option'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 Certificate which specifies a Valuation Date will be superseded by this Emergency Procedure. RELATION OF THIS CERTIFICATE TO THE SEPARATE ACCOUNT AND FUNDING OPTIONS We will have exclusive and absolute ownership and control of the assets of Our Separate Account and the Funding Options. That portion of the assets of a Separate Account or Funding Option equal to the reserves and other Certificate liabilities with respect to such Separate Account or Funding Option 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 Certificate will be conclusive. REDUCTION OR ELIMINATION OF CERTIFICATE CHARGES All charges and fees under the Certificate may be reduced or eliminated when certain sales or administration of the Certificate result in savings or reduction of expenses, and/or risks. 15 38 FIXED LIFE ANNUITY TABLES & VARIABLE LIFE ANNUITY TABLES AT 3% ASSUMED NET INVESTMENT FACTOR (A.N.I.F.) GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTIONS 1, AND 2- SINGLE LIFE ANNUITIES
UNISEX NUMBER OF MONTHLY PAYMENTS GUARANTEED ADJUSTED NONE 120 180 240 AGE 45 3.44 3.43 3.42 3.40 46 3.48 3.47 3.46 3.44 47 3.53 3.52 3.50 3.48 48 3.58 3.57 3.55 3.53 49 3.63 3.61 3.60 3.57 50 3.68 3.67 3.65 3.62 51 3.74 3.72 3.70 3.67 52 3.80 3.78 3.75 3.72 53 3.86 3.84 3.81 3.77 54 3.93 3.90 3.87 3.83 55 4.00 3.97 3.94 3.88 56 4.07 4.04 4.00 3.94 57 4.15 4.12 4.07 4.01 58 4.24 4.20 4.15 4.07 59 4.33 4.28 4.22 4.14 60 4.42 4.37 4.30 4.20 61 4.52 4.47 4.39 4.28 62 4.63 4.57 4.48 4.35 63 4.75 4.67 4.57 4.42 64 4.87 4.78 4.67 4.49 65 5.01 4.90 4.77 4.57 66 5.15 5.03 4.87 4.65 67 5.30 5.16 4.98 4.72 68 5.46 5.30 5.09 4.80 69 5.64 5.45 5.20 4.87 70 5.83 5.60 5.31 4.94 71 6.04 5.76 5.43 5.01 72 6.26 5.93 5.55 5.07 73 6.50 6.11 5.66 5.13 74 6.75 6.29 5.78 5.19 75 7.03 6.49 5.89 5.24
Dollar amounts of the monthly Annuity payments for the first and second options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 3% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 16 39 FIXED LIFE ANNUITY TABLES & VARIABLE LIFE ANNUITY TABLES AT 3% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY
UNISEX ADJUSTED AGES 45 50 55 60 65 70 75 45 3.17 3.23 3.29 3.34 3.37 3.39 3.41 50 3.23 3.33 3.42 3.50 3.56 3.60 3.63 55 3.29 3.42 3.55 3.67 3.77 3.85 3.91 60 3.34 3.50 3.67 3.85 4.01 4.15 4.25 65 3.37 3.56 3.77 4.01 4.25 4.47 4.66 70 3.39 3.60 3.85 4.15 4.47 4.81 5.13 75 3.41 3.63 3.91 4.25 4.66 5.13 5.62
OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY REDUCED BY 50% ON DEATH OF PRIMARY PAYEE
UNISEX ADJUSTED AGE OF PRIMARY AND SECONDARY PAYEE DOLLAR AMOUNT 45 3.30 50 3.50 55 3.76 60 4.12 65 4.60 70 5.27 75 6.25
Dollar amounts of the monthly Annuity payments for the third and fourth options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 3% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 17 40 FIXED ANNUITY TABLE & VARIABLE ANNUITY TABLE AT 3% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 5 - PAYMENTS FOR A PERIOD CERTAIN .
MONTHLY MONTHLY NUMBER OF PAYMENT NUMBER OF PAYMENT YEARS AMOUNT YEARS AMOUNT 10 9.61 21 5.32 11 8.86 22 5.15 12 8.24 23 4.99 13 7.71 24 4.84 14 7.26 25 4.71 15 6.87 26 4.59 16 6.53 27 4.47 17 6.23 28 4.37 18 5.96 29 4.27 19 5.73 30 4.18 20 5.51
The dollar amounts of the monthly Annuity payments for the fifth option are based on a net investment rate of 3% per annum. 18 41 VARIABLE LIFE ANNUITY TABLES AT 5% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTIONS 1, AND 2- SINGLE LIFE ANNUITIES
UNISEX NUMBER OF MONTHLY PAYMENTS GUARANTEED ADJUSTED AGE NONE 120 180 240 45 4.71 4.70 4.68 4.66 46 4.75 4.73 4.71 4.69 47 4.79 4.77 4.75 4.73 48 4.83 4.81 4.79 4.76 49 4.88 4.86 4.83 4.80 50 4.93 4.90 4.88 4.84 51 4.98 4.95 4.92 4.88 52 5.03 5.00 4.97 4.92 53 5.09 5.06 5.02 4.97 54 5.15 5.12 5.07 5.02 55 5.22 5.18 5.13 5.07 56 5.29 5.24 5.19 5.12 57 5.36 5.31 5.25 5.17 58 5.44 5.39 5.32 5.23 59 5.53 5.46 5.39 5.29 60 5.62 5.55 5.46 5.35 61 5.72 5.64 5.54 5.41 62 5.82 5.73 5.62 5.47 63 5.94 5.83 5.70 5.54 64 6.06 5.94 5.79 5.61 65 6.19 6.05 5.88 5.67 66 6.33 6.17 5.98 5.74 67 6.48 6.29 6.08 5.81 68 6.64 6.42 6.18 5.87 69 6.82 6.57 6.28 5.94 70 7.00 6.71 6.39 6.00 71 7.21 6.87 6.49 6.06 72 7.43 7.03 6.60 6.12 73 7.67 7.20 6.71 6.17 74 7.93 7.38 6.82 6.22 75 8.21 7.56 6.92 6.27
Dollar amounts of the monthly Annuity payments for the first and second options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 5% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 19 42 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 VARIABLE LIFE ANNUITY TABLES AT 5% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY
UNISEX ADJUSTED AGE 45 50 55 60 65 70 75 45 4.44 4.50 4.55 4.59 4.62 4.65 4.67 50 4.50 4.58 4.65 4.72 4.78 4.82 4.86 55 4.55 4.65 4.76 4.87 4.96 5.04 5.10 60 4.59 4.72 4.87 5.02 5.17 5.30 5.41 65 4.62 4.78 4.96 5.17 5.39 5.60 5.79 70 4.65 4.82 5.04 5.30 5.60 5.92 6.23 75 4.67 4.86 5.10 5.41 5.79 6.23 6.71
OPTION 4 - JOINT AND LAST SURVIVOR LIFE ANNUITY REDUCED BY 50% ON DEATH OF PRIMARY PAYEE
UNISEX ADJUSTED AGE OF PRIMARY AND SECONDARY PAYEE DOLLAR AMOUNT 45 4.57 50 4.74 55 4.98 60 5.30 65 5.76 70 6.42 75 7.39
Dollar amounts of the monthly Annuity payments for the third and fourth options are based on the Annuity 2000 Table (blended 80%/20% female/male). The above tables assume a year 2000 issue, and project mortality improvements into the future using Projection Scale G. These tables assume a net investment rate of 5% per Annum. Calendar Year in which 1st payment is due: Adjusted Age is Actual Age: 1998-2000 2001-2005 2006-2010 2011-2015 2016-2020 minus 0 minus 1 minus 2 minus 3 minus 4 20 43 2021-2025 2026-2030 2031-2035 2036 AND LATER minus 5 minus 6 minus 7 minus 8 VARIABLE ANNUITY TABLES AT 5% A.N.I.F. GUARANTEED AMOUNT OF MONTHLY ANNUITY PAYMENTS PURCHASED WITH EACH $1,000 OF PROCEEDS APPLIED OPTION 5 - PAYMENTS FOR A PERIOD CERTAIN .
MONTHLY MONTHLY NUMBER OF PAYMENT NUMBER OF PAYMENT YEARS AMOUNT YEARS AMOUNT 10 10.51 21 6.33 11 9.77 22 6.17 12 9.16 23 6.02 13 8.64 24 5.88 14 8.20 25 5.76 15 7.82 26 5.65 16 7.49 27 5.54 17 7.20 28 5.45 18 6.94 29 5.36 19 6.71 30 5.28 20 6.51
The dollar amounts of the monthly Annuity payments for the fifth option are based on a net investment rate of 5% per annum. 21 44 This page has been left intentionally blank. 45 This page has been left intentionally blank. 46 CERTIFICATE OF PARTICIPATION UNDER A DEFERRED FLEXIBLE PREMIUMVARIABLE ANNUITY GROUP CONTRACT TAX QUALIFIED ELECTIVE OPTIONS NON-PARTICIPATING 47 OPTIONAL DEATH BENEFIT AND CREDIT ENDORSEMENT This rider is made a part of the Contract/Certificate to which it is attached and is effective as of the date it is attached to the Contract/Certificate. This rider supersedes any existing language contained in the Contract/Certificate or any attached rider/endorsement. The Contract/Certificate is hereby endorsed as follows: I. The section entitled "Funding Option Deductions" on the Contract/Certificate Specifications is deleted and replaced with the following: FUNDING OPTION DEDUCTIONS The annual mortality and expense risk deduction is 1.25% for all Funding Options listed on the Contract/Certificate Specifications and is deducted on a pro rata basis from all Underlying Funds in a Certificate. This amounts to a daily deduction of 0.00003425. II. A new section is added to the "PURCHASE PAYMENT" provision of the Contract/Certificate as follows: CREDITS We will add a credit to a Certificate with each Purchase Payment. Each credit is added to the Certificate Value when the applicable Purchase Payment is applied to a Certificate. The credit will be equal to 2% of each Purchase Payment. Credits are applied pro rata to the Funding Options in the same ratio as the applicable Purchase Payment. III. The section entitled "DEATH PROCEEDS PRIOR TO THE MATURITY DATE" is deleted from the Contract/Certificate and replaced with the following: DEATH PROCEEDS PRIOR TO THE MATURITY DATE WHERE THE ANNUITANT WAS YOUNGER THAN AGE 70 ON THE CERTIFICATE DATE 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: (a) the Certificate Value on the Death Report Date; (b) the total Purchase Payments made under a Certificate, 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 Certificate Date anniversaries beginning with the fifth Certificate Date anniversary, and ending with the last Certificate 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 Certificate Value on the Death Report Date, less any applicable premium tax. WHERE THE ANNUITANT WAS AGE 70 THROUGH 75 ON THE CERTIFICATE DATE 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: (a) the Certificate Value on the Death Report Date; 48 (b) the total Purchase Payments made under a Certificate, 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 associated with the fifth Certificate 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 Certificate Value on the Death Report Date, less any applicable premium tax. WHERE THE ANNUITANT WAS AGE 76 THROUGH 80 ON THE CERTIFICATE DATE The death benefit payable as of the Death Report Date will be the greatest of (a) or (b) below, less any applicable premium tax: (a) the Certificate Value on the Death Report Date; (b) the total Purchase Payments made under a Certificate, less the total amount of any partial surrenders. 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 Certificate Value on the Death Report Date, less any applicable premium tax. WHERE THE ANNUITANT WAS OLDER THAN AGE 80 ON THE CERTIFICATE DATE The death benefit payable as of the Death Report Date will be Certificate Value on the Death Report Date less any applicable premium tax. STEP-UP DEATH BENEFIT VALUE A separate Step-Up Death Benefit Value will be established on the fifth Certificate Date anniversary, and on each Certificate Date anniversary thereafter which occurs on or prior to the Death Report Date, and will initially equal the Certificate 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 Certificate Value immediately prior to the partial surrender. THE TRAVELERS LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER President 49 ANNUITY BENEFITS RIDER This rider is made part of the Contract/Certificate to which it is attached and is effective as of the date it is attached to the Contract/Certificate. The following Annuity benefits are available in conjunction with the Annuity options as described in the Settlement Provisions of the Contract/Certificate. VARIABLE ANNUITIZATION FLOOR BENEFIT We reserve the right to not offer this benefit if market conditions dictate. Upon a variable annuitization, we guarantee that regardless of the performance of the Underlying Fund(s), the Certificate Owner's periodic Annuity payments associated with such annuitization will never be less than a percentage of the first Annuity payment associated with such annuitization. For each annuitization, this percentage will be set at the time of annuitization, and will not change throughout the term of the annuitization. From time to time, this percentage may vary for new annuitizations based upon the market cost of offering this benefit, but this percentage will never be less than 50%. For any annuitization where the Certificate Owner has elected this benefit, he/she may allocate the amount applied to the Annuity only among Underlying Funds which are available with the Floor Benefit. Once Annuity payments have begun, the Certificate Owner may transfer all or any part of his/her Annuity Units only among Underlying Funds which are available with the Floor Benefit. Upon election of this benefit, the Funding Option Deduction for each Underlying Fund available with the Floor Benefit will be increased by a Floor Benefit Charge. For each annuitization, this charge will be set at the time of annuitization for each Underlying Fund and will not change throughout the term of the annuitization. From time to time, this charge may vary for new annuitizations based upon the market cost of offering this benefit, but the Floor Benefit Charge will never increase the Funding Option Deduction for each Underlying Fund by more than 3% when expressed on an annualized basis. We reserve the right to: 1. make available more or fewer Underlying funds with this benefit at Our discretion; 2. not offer this benefit in conjunction with various Annuity Options available in the Contract/Certificate; 3. restrict the choice of Assumed Net Investment Factor available for this benefit; 4. limit the availability of this benefit based on the Annuitant's age at the time of annuitization; and 5. restrict the amount of Certificate Value to be annuitized under this benefit. VARIABLE LIQUIDITY BENEFIT This benefit is only offered with Annuity Options with period certain payments. This benefit is not offered in conjunction with the Variable Annuitization Floor Benefit. At any time after the first Certificate Year, the Certificate Owner may receive a payment equal to a portion of, or all of, the present value of the remaining period certain payments, less a surrender charge of 5% of the amount withdrawn. The interest rate used to calculate the present value is the Assumed Net Investment Factor chosen by the Certificate Owner for that annuitization. The remaining period certain payments are assumed to be level payments equal to the most recent period certain payment prior to the request for this liquidity benefit. If the Certificate Owner requests a percentage of the total amount available, then the remaining period certain payments will be reduced by that percentage for the remainder of the certain period. After the certain period expires, any remaining payments, if applicable, will not be affected by the utilization of this benefit. FIXED LIQUIDITY BENEFIT This benefit is only offered with Annuity Options with period certain payments. 50 At any time after the first Certificate Year, the Certificate Owner may receive a payment equal to a portion of, or all of, the present value of the remaining period certain payments, less a surrender charge of 5% of the amount withdrawn. The interest rate used to calculate the present value is the then current annual rate of return offered by Us on new Fixed Annuity period certain only annuitizations for a period of time equal to the number of days remaining in the Certificate Owner's certain period at the time of request for this benefit. If the number of days remaining is less than the minimum length of time for which We offer a new Fixed Annuity period certain only annuitization, then the interest rate will be the rate of return for that minimum length of time. The current rate of return offered by Us is the implicit rate of return based upon the amount applied to annuitization, and the periodic payments paid by Us. The formula for calculating the present value is as follows: n Present Value = (SIGMA) [Payment(s) x (1/1 + ic) (t/365)] s=1 where: ic = the interest rate described above, and n = the number of payments remaining in the Certificate Owner's certain period at the time of request for this benefit t = the number of days remaining until that payment is made, adjusting for leap years. If the Certificate Owner requests a percentage of the total amount available, then the remaining period certain payments will be reduced by that percentage for the remainder of the certain period. After the certain period expires, any remaining payments, if applicable, will not be affected by the utilization of this benefit. THE TRAVELERS LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER President 51 RIDER WAIVER OF WITHDRAWAL OR SURRENDER CHARGE FOR NURSING HOME CONFINEMENT This rider is made a part of the Contract/Certificate to which it is attached. The effective date of this Rider is one year after the Certificate Date shown on the Certificate Specifications page of the Certificate. This Rider supersedes any existing language contained in the Contract/ Certificate or any attached rider/endorsement. If after the effective date of this Rider, and prior to the Maturity Date of the Certificate, the Annuitant begins confinement in an Eligible Nursing Home, and remains confined for the Qualifying Period, the Certificate Owner may make a total or partial withdrawal, subject to the Maximum Withdrawal Amount, without incurring a Withdrawal or Surrender Charge. We will waive the Withdrawal or Surrender Charge only for withdrawals made during continued confinement in an Eligible Nursing Home after the Qualifying Period has been satisfied, or within sixty (60) days after such confinement ends. We will require proof of confinement in a form satisfactory to Us. Part of the proof may be certification by a licensed physician that such confinement is medically necessary. DEFINITIONS: An ELIGIBLE NURSING HOME is an institution or special nursing unit of a hospital which: (a) Is Medicare approved as a provider of skilled nursing care services; and (b) Is not, other than in name only, an acute care hospital, a home for the aged, a retirement home, a rest home, a community living center, or a place mainly for the treatment of alcoholism, mental illness or drug abuse. OR Meets all of the following standards: (a) It is licensed as a Nursing Care Facility by the state in which it is located; (b) It is either a freestanding facility or a distinct part of another facility such as a ward, wing, unit or swing-bed of a hospital or other facility; (c) It provides nursing care to individuals who are not able to care for themselves and who require nursing care; (d) Its primary function is to provide nursing care and room and board; and the facility charges for these services. The care must be performed under the direction of a licensed physician, or registered nurse (RN), or licensed practical nurse (LPN); (e) It may include care provided by a licensed physical, respiratory, occupational or speech therapist; and (f) It is not, other than in name only, an acute care hospital, a home for the aged, a retirement home, a rest home, a community living center, or a place mainly for the treatment of alcoholism, mental illness or drug abuse. QUALIFYING PERIOD is confinement in an Eligible Nursing Home for 90 consecutive days. 52 MAXIMUM WITHDRAWAL AMOUNT The Maximum Withdrawal Amount available without incurring a Withdrawal or Surrender Charge is the Certificate Value on the next Valuation Date following written proof of claim, minus any Purchase Payments and associated credits made within a one year period prior to the date confinement in an Eligible Nursing Home begins, minus any additional Purchase Payments and associated credits made on or after the Annuitant's 71st birthday. NOTICE OF CLAIM Written notice of claim must be given to Us following completion of the Qualifying Period, and either while the Annuitant continues to be confined or within 60 days after discharge from the Eligible Nursing Home. If notice cannot be given to Us within 60 days, it must be given as soon as reasonably possible. PAYMENT OF CLAIMS Benefits payable under this Rider will be paid as soon as We receive proper written proof of claim. The portion of the Certificate Value that is surrendered will be paid in a lump sum to the Certificate Owner. TAX IMPLICATIONS Receipt of any portion of the Certificate Value may be taxable. The Certificate Owner should consult with his/her tax advisor. THE TRAVELERS LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER President 53 INDIVIDUAL RETIREMENT ANNUITY QUALIFICATION RIDER As requested by the Contract/Certificate Owner (hereinafter referred to as You or Your), this Contract/Certificate (hereinafter referred to as Certificate) is amended as follows to qualify as an Individual Retirement Annuity (IRA) under Section 408(b) of the Code of 1986, as amended. The provisions of this rider supersede any contrary provisions in the Certificate. EXCLUSIVE BENEFIT This Certificate is established for the exclusive benefit of You or Your Beneficiaries. OWNER This Certificate belongs to the Certificate Owner shown on the CERTIFICATE SPECIFICATIONS. As Certificate Owner, You have the sole power to exercise rights and receive benefits under this Certificate during the Annuitant's lifetime. In order to maintain tax qualification, this Certificate 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 Certificate only as an Individual Retirement Annuity. 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 Certificate Owner. A payment direction is revocable by You at any time by Written Request giving 30 days advance notice. Joint ownership is not permitted under this Certificate. TRANSFER OF OWNERSHIP/ASSIGNMENT This Certificate shall not be pledged or otherwise encumbered and it shall not be sold, assigned, or otherwise transferred to any other person or entity other than us. No loans shall be made under this Certificate. CREDITOR CLAIMS To the extent permitted by law, no right or benefit of the Certificate Owner, Annuitant or Beneficiary under this Certificate shall be subject to the claims or 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 Certificate continues. Once a change of Beneficiary is Recorded by Us, it will be 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 to the estate of the Certificate Owner. ANNUITANT/CONTINGENT ANNUITANT The Annuitant is the individual shown on the CERTIFICATE SPECIFICATIONS on whose life the first Annuity payment is made. The Annuitant may not be changed after the Certificate Date except as may be provided hereunder. No contingent annuitant is permitted under this Certificate. DEATH OF ANNUITANT/DEATH OF CERTIFICATE OWNER WITH ANNUITANT SURVIVING 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 Certificate be applied to a Settlement Option subject to the provisions of this Certificate. 54 ELECTION OF SETTLEMENT OPTIONS On the Maturity Date, or other agreed upon date, We will pay the amount payable under this Certificate 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 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 Fixed level 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 Fixed level monthly Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. LIMITATION ON PURCHASE PAYMENTS Notwithstanding the provisions of the Certificate 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 $4,000 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 Certificate 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 Certificate 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 Certificate. Purchase payments after the first will not be required to continue this Certificate in force. We reserve the right, however, to terminate this Certificate when no purchase payments have been made for at least two consecutive years and the Certificate Value is less than the Termination amount of $2,000 or the paid up Annuity benefit at maturity would be less than $20 per month. If this Certificate is terminated, We will pay You the Certificate Cash Surrender Value, if any. 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 includable 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. DISTRIBUTION OF BENEFITS Notwithstanding any provision of this Certificate 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; 55 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 Certificate Owner's life expectancy may be recalculated no more frequently than annually; however, the life expectancy of a non-spouse 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. 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. 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. NONFORFEITABILITY Your entire interest in this Certificate is nonforfeitable. 56 ROLLOVERS A. Subject to subparagraphs (B) and (C) hereof, and the limitations stated in the Certificate, You may transfer to this Certificate 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. Distributions You roll over from retirement plans or arrangements described in A.2. and A.3. above to this Certificate must be completed by means of a direct transfer or rollover in accordance with Code Section 401(a)(31) in order to avoid the 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. 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 Certificate. REPORTS As the issuer of this Certificate, we will furnish reports concerning the status of the Annuity at least annually. DISABILITY PAYMENTS If the Certificate contains a Rider for waiver of premium and disability payment benefits, any disability payments provided for in the CERTIFICATE SPECIFICATIONS will be applied as purchase payments under the Certificate. AMENDMENT This Certificate 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 LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER President 57 TAX-SHELTERED ANNUITY QUALIFICATION RIDER If the Certificate/Contract Owner (hereinafter referred to as You or Your) of this Certificate/Contract (hereinafter referred to as Certificate) requested that it be issued to comply with Section 403(b) of the Code, the following conditions, restrictions and limitations to this Certificate. The provisions in this rider supersede any contrary provisions in the Certificate. OWNER This Certificate belongs to the Certificate Owner shown on the CERTIFICATE SPECIFICATIONS. As Certificate Owner, You have the sole power to exercise rights and receive benefits under this Certificate during the Annuitant's lifetime. In order to maintain tax qualification, this Certificate 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 Certificate only as a Tax Qualified Certificate under Section 403(b) of the Code. 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 Certificate Owner. A payment direction is revocable by You at any time by Written Request giving 30 days advance notice. Joint ownership is not permitted under this Certificate. TRANSFER OF OWNERSHIP/ASSIGNMENT This Certificate shall not be pledged or otherwise encumbered and it shall not be sold, assigned, pledged as collateral for a loan, or otherwise transferred to any other person or entity other than Us. CREDITOR CLAIMS To the extent permitted by law, no right or benefit of the Certificate Owner, Annuitant or Beneficiary under this Certificate 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 Certificate continues, subject to the Annuitant's provided in this rider. Once a change of Beneficiary is Recorded by Us, it will be 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 Your estate; or b) to the trustee or plan administrator of a trusteed Tax Qualified plan certificate for further distribution in accordance with the plan. ANNUITANT/CONTINGENT ANNUITANT The Annuitant is the individual shown on the CERTIFICATE SPECIFICATIONS on whose life the first Annuity payment is made. The Annuitant may not be changed after the Certificate Date except as may be provided hereunder. No contingent Annuitant is permitted under this Certificate. DEATH OF ANNUITANT/DEATH OF CERTIFICATE OWNER WITH ANNUITANT SURVIVING 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 Certificate be applied to a Settlement Option subject to the provisions of this Certificate. 58 ELECTION OF SETTLEMENT OPTIONS On the Maturity Date, or other agreed upon date, We will pay the amount payable under this Certificate 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 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 Fixed level 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 Fixed level monthly Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. 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 Certificate 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 contributions 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 Certificate, 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 Certificate, 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. Certificate surrender penalties may apply to all rollovers. 59 Previously taxed amounts in this Certificate 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 Certificate 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 below under "MANDATORY DISTRIBUTION REQUIREMENTS." 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 later of (1) the calendar year in which the employee attains age 70 1/2, or (2) the calendar year in which the employee retires, except that in the event that the employee is a 5% owner, the "required beginning date" is April 1 of 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 Certificate qualified under the Code, we will administer the Certificate in accordance with these laws, regulations and rulings. We will provide You with a revised rider describing any necessary changes, following all regulatory approvals. AMENDMENT Notwithstanding any provision in this Certificate or in the 403(b) plan of which this Certificate is a part, we reserve the right to amend or modify the Certificate or any rider or any endorsement thereto, to the extent necessary to comply with any law, regulation or other requirement in order to establish or maintain the qualified status of such plan. Any such amendment or modification may be made retroactively to conform to the requirements of such law, regulation or other requirement. THE TRAVELERS LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER President 60 PENSION/PROFIT SHARING PLAN QUALIFICATION RIDER If the Certificate/Contract Owner (hereinafter referred to as You or Your) of this Certificate/Contract (hereinafter referred to as Certificate) requested that it be issued to comply with Section 401(a) of the Code, the following conditions, restrictions and limitations apply to this Certificate. The Certificate shall constitute an asset of the qualified pension or profit-sharing plan established under Code Section 401(a) and the regulations thereunder and the Certificate shall be subject to the provisions, terms and conditions of such qualified plan. The amounts held under this Certificate will be used for the exclusive benefit of the employees and their beneficiaries. The provisions in this rider supersede any contrary provisions in the Certificate. OWNER This Certificate belongs to the Certificate Owner shown on the CERTIFICATE SPECIFICATIONS. As Certificate Owner, You have the sole power to exercise rights and receive benefits under this Certificate during the Annuitant's lifetime. In order to maintain tax qualification, this Certificate 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 Certificate only as a Tax Qualified Certificate. 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 Certificate Owner. A payment direction is revocable by You at any time by Written Request giving 30 days advance notice. Joint ownership is not permitted under this Certificate. TRANSFER OF OWNERSHIP ASSIGNMENT This Certificate shall not be pledged or otherwise encumbered and it shall not be sold, assigned, or otherwise transferred to any other person or entity other than Us. CREDITOR CLAIMS To the extent permitted by law, no right or benefit of the Certificate Owner, Annuitant or Beneficiary under this Certificate 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 Certificate continues, subject to the limitations provided in this rider. Once a change of Beneficiary is Recorded by Us, it will be 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 Your estate; or b) to the trustee or plan administrator of a trusteed Tax Qualified plan certificate for further distribution in accordance with the plan. ANNUITANT/CONTINGENT ANNUITANT The Annuitant is the individual shown on the CERTIFICATE SPECIFICATIONS on whose life the first Annuity payment is made. The Annuitant may not be changed after the Certificate Date except as may be provided hereunder. No contingent annuitant is permitted under this Certificate. DEATH OF ANNUITANT/DEATH OF CERTIFICATE OWNER WITH ANNUITANT SURVIVING 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 Certificate be applied to a Settlement Option subject to the provisions of this Certificate. 61 ELECTION OF SETTLEMENT OPTIONS On the Maturity Date, or other agreed upon date, We will pay the amount payable under this Certificate 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 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 Fixed level 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 Fixed level monthly Annuity payments based on the life of the Annuitant, in accordance with Annuity Option 2, with 120 monthly payments assured. 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 later of (1) the calendar year in which the employee attains age 70 1/2, or (2) the calendar year in which the employee retires, except that in the event the employee is a 5% owner, the "required beginning date" is 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 Certificate requested that it be issued to comply with Section 401(a) of the Code, and this Certificate has subsequently been transferred to the Annuitant, the following conditions, restrictions and limitations apply to this Certificate in addition to the above. SPOUSAL CONSENT Death Benefit - If the Annuitant dies while the Certificate 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 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 Certificate Cash Surrender Value upon receipt of Your Written Request for it. 62 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. AMENDMENT Notwithstanding any provision to the contrary in this Certificate or the qualified pension or profit-sharing plan of which this Certificate is a part, we reserve the right to amend or modify the Certificate or any rider or endorsement thereto, to the extent necessary to comply with any law, regulation or other requirement in order to establish or maintain the qualified status of the plan. Any such amendment or modification may be made retroactively effective if necessary or appropriate to conform to the conditions imposed by such law, regulation or other requirement. THE TRAVELERS LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER President 63 IRC SECTION 457 PLAN RIDER This Rider modifies the contract/certificate to which it is attached for use in connection with a deferred compensation plan (the "Plan") qualified under Section 457 of the Internal Revenue Code of 1986, as amended (the "IRC"). In the case of a conflict with any provision in the contract/certificate, the provisions of this Rider will control. This Rider applies and is made a part of the contract/certificate as of the earliest date permitted by applicable law. The contract/certificate is modified as follows: 1. The contract/certificate shall constitute an asset of the Plan qualified under IRC Section 457. 2. The amounts held under this contract/certificate will be used for the exclusive benefit of the participants and their beneficiaries, and no portion of the amounts held under this contract/certificate or the proceeds thereof, nor any interests or rights under this contract/certificate shall be subject to the claims of the general creditors of the contract/certificate owner. 3. All distributions under this contract/certificate shall be made in accordance with the requirements of IRC Sections 457 and 401(a)(9), including the incidental death benefit requirements of IRC Section 401(a)(9)(G) and Treasury Regulations thereunder, and shall be subject to the provisions, terms and conditions of such Plan regarding distributions. THE TRAVELERS LIFE AND ANNUITY COMPANY /s/ M.A. CARPENTER PRESIDENT EX-99.5 4 APPLICATION 1 Exhibit 5 [TRAVELERS LIFE & ANNUITY LOGO] MASTER APPLICATION FOR GROUP DEFERRED VARIABLE ANNUITY One Tower Square - Annuity Services - Hartford, CT 06183-5030 [ ] The Travelers Insurance Company [ ] The Travelers Life and Annuity Company - -------------------------------------------------------------------------------- 1. NAME OF OWNER (PLEASE PRINT) 2. TAXPAYER I.D. NUMBER - -------------------------------------------------------------------------------- 3. ADDRESS (NUMBER, STREET, CITY, STATE, ZIP CODE) - -------------------------------------------------------------------------------- 4. MARKETING PROGRAM (CHECK ONE) [ ] PENSION/PROFIT SHARING PLAN [ ] IRA ROLLOVER [ ] TSA [ ] OTHER: ------------------ [ ] TSA ERISA - -------------------------------------------------------------------------------- 5. IS RECORD KEEPING BY THE TRAVELERS REQUESTED? [ ] YES [ ] NO - -------------------------------------------------------------------------------- 6. ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- 7. REPLACEMENT INFORMATION Will this annuity replace any existing life insurance or annuity contract? [ ] YES [ ] NO If yes, please give name of company and contract number. - -------------------------------------------------------------------------------- 8. ACKNOWLEDGEMENT I understand that the contract will take effect when the first premium is received, and the application is approved in the Home Office of The Travelers. All payments and values provided by the contract applied for, when based on investment experience of a separate account, are variable and are not guaranteed as to a fixed dollar. No agent is authorized to make changes to the contract or application. I understand that The Travelers may amend this contract to comply with changes in the Internal Revenue Code and related regulations. PLEASE NOTE: Any person who, knowingly and with intent to defraud any insurance company or other person, files an application for insurance or statement of claim containing any materially false information or conceals, for the purpose of misleading, information concerning any fact material thereto, commits a fradulent act which may be a crime subjecting such person to criminal and civil penalties. [ ] I ACKNOWLEDGE THE RECEIPT OF A CURRENT PROSPECTUS. - -------------------------------------------------------------------------------- SIGNATURE OF OWNER - -------------------------------------------------------------------------------- APPLICATION SIGNED AT (CITY & STATE) DATE - -------------------------------------------------------------------------------- [ ] I acknowledge that all data representations and signatures recorded by me or in my presence in response to my request and all such presentations and signatures are accurate and valid to the best of my knowledge and belief. Will the contract applied for replace any existing annuity contract or life insurance policy? [ ] YES [ ] NO - -------------------------------------------------------------------------------- SIGNATURE OF AGENT/REPRESENTATIVE SS# TELEPHONE# - -------------------------------------------------------------------------------- PRINT NAME OF AGENT/REPRESENTATIVE DATE LICENSE# - -------------------------------------------------------------------------------- L-22212 Rev. 7-98 2 [TRAVELERS LIFE & ANNUITY LOGO] GROUP DEFERRED ANNUITY DATA COLLECTION FORM One Tower Square - Annuity Services - Hartford, CT 06183-5030 [ ] The Travelers Insurance Company [ ] The Travelers Life and Annuity Company - -------------------------------------------------------------------------------- CERTIFICATE OWNER/ANNUITANT INFORMATION - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Date of Birth (DOB) - -------------------------------------------------------------------------------- SS# Sex [ ]M [ ]F - -------------------------------------------------------------------------------- U.S. Citizen [ ] Y [ ] N Telephone (Daytime) ( ) - -------------------------------------------------------------------------------- BENEFICIARY INFORMATION - -------------------------------------------------------------------------------- Full Name SS# DOB Relationship % to Receive - -------------------------------------------------------------------------------- Primary - -------------------------------------------------------------------------------- Primary [ ] Contingent [ ] - -------------------------------------------------------------------------------- Primary [ ] Contingent [ ] - -------------------------------------------------------------------------------- MATURITY DATE: / / . ---- ---- ---- - -------------------------------------------------------------------------------- MARKETING PROGRAM REPLACEMENT INFORMATION - -------------------------------------------------------------------------------- [ ] PENSION/PROFIT SHARING Will the certificate applied for replace any existing annuity contract or life insurance policy [ ] TSA [ ] Y [ ] N [ ] TSA ERISA If Yes, specify company name and contract number in the "Remarks" section on the next page. [ ] IRA ROLLOVER [ ] OTHER: ------------- - -------------------------------------------------------------------------------- Please check the following if choosing the Optional Death Benefit and Credit Endorsement: [ ] Yes, I elect the Optional Death Benefit (if not, you will receive the Standard Death Benefit) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------ ALLOCATION SCHEDULE - ------------------------------------------------------------------------------------------------------ INVESTMENT SELECTION PERCENTAGE INVESTMENT SELECTION PERCENTAGE (Total must equal 100%) (Total must equal 100%) - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ % % - ------------------------------------------------------------------------------------------------------ TOTAL 100% TOTAL 100% - ------------------------------------------------------------------------------------------------------
L-22213 Rev. 7-98 EX-99.10 5 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 10 Consent of Independent Certified Public Accountants The Board of Directors The Travelers Life and Annuity Company We consent to the use of our report included herein and to the reference to our firm as experts under the heading "Independent Accountants." KPMG Peat Marwick LLP Hartford, Connecticut November 2, 1998 EX-99.13 6 SCHEDULE FOR COMPUTATION OF TOTAL RETURN 1 EXHIBIT 13 THE TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS The standardized and nonstandardized average annual total returns are computed according to the formula described below. A hypothetical initial investment of $1,000 is applied to the Funding Option, and then related to ending reedemable values as of the most recent fiscal year end, for the calendar year-to-date (nonstandardized only), and over a 1-year, 3-year (nonstandardized only), 5-year, and 10-year period, or since inception if a Funding Option has not been in existence for one of the prescribed periods. 1/n T = (ERV/P) -1 where: T = average annual total return P = a hypothetical initial payment of $1,000 n = the applicable year (1, 3, 5, 10) or portion thereof ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of each of the periods Both the standardized and nonstandardized performance returns reflect the deduction for the management fees and other expenses for a Funding Option, the mortality and expense risk charge and the administrative expense charge. For Funding Options that were in existence prior to the date they became available under the Separate Account, the standardized average total return quotations may be accompanied by returns showing the investment performance that such Fund Options would have achieved (reduced by applicable charges/fees had they been held under the Contract for the period quoted. The total return quotations are based on historical earnings and are not necessarily representative of future performance. Standardized Method The standardized returns take into consideration all fees and/or charges applicable to the Funding Option or contract, for both the standard death benefit and the enhanced death benefit. Nonstandardized Method Nonstandardized returns do not reflect the deduction of any fees or charges, except the contingent deferred sales charge, which, if reflected, would decrease the level of performance shown. For a Schedule of the Computation of the Historical Total Return Quotations, see attached. 2 EXHIBIT 13 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date High Yield Bond Trust 12/31/87 1.292111434 1983 0.0000% 1 12/31/88 1.462544815 1988 0.0000% 1.131903005 12/31/89 1.464464665 1989 0.0000% 1.133388828 12/31/90 1.305169565 1990 0.0000% 1.01010604 12/31/91 1.644605451 1991 0.0000% 1.272804657 12/31/92 1.837571906 1992 0.0000% 1.422146618 12/31/93 2.068910059 1993 0.0000% 1.601185474 12/31/94 2.017230742 1994 0.0000% 1.561189452 12/31/95 2.301535522 1995 0.0000% 1.781220614 12/31/96 2.637498432 1996 0.0000% 2.0412314 12/31/97 3.036176126 1997 0.0000% 2.349778854 Account Value $1,151 $1,652 $2,350 Surrender Value $1,101 $1,642 $2,350 Returns 10.12% 10.42% 8.91% 12/31/87 Managed Assets Trust 12/31/87 1.233795827 1983 0.0000% 1 12/31/88 1.330979406 1988 0.0000% 1.078767959 12/31/89 1.671332188 1989 0.0000% 1.354626229 12/31/90 1.683831439 1990 0.0000% 1.364756958 12/31/91 2.034542645 1991 0.0000% 1.649010801 12/31/92 2.112243871 1992 0.0000% 1.711988179 12/31/93 2.281506772 1993 0.0000% 1.849176924 12/31/94 2.202156273 1994 0.0000% 1.784862799 12/31/95 2.764770757 1995 0.0000% 2.240865706 12/31/96 3.106548636 1996 0.0000% 2.517879027 12/31/97 3.721122518 1997 0.0000% 3.015995384 Account Value $1,198 1,762 $3,016 Surrender Value $1,148 1,752 $3,016 Returns 14.78% 11.86% 11.66% 12/31/87 Money Market Portfolio 12/31/87 1 1987 0.0000% 1 12/31/88 1.0577583 1988 0.0000% 1.0577583 12/31/89 1.124811424 1989 0.0000% 1.124811424 12/31/90 1.200203675 1990 0.0000% 1.200203675 12/31/91 1.264203102 1991 0.0000% 1.264203102 12/31/92 1.289070166 1992 0.0000% 1.289070166 12/31/93 1.301106581 1993 0.0000% 1.301106581 12/31/94 1.346384626 1994 0.0000% 1.346384626 12/31/95 1.385992559 1995 0.0000% 1.385992559 12/31/96 1.425765925 1996 0.0000% 1.425765925 12/31/97 1.479319651 1997 0.0000% 1.479319651 Account Value $1,038 1,148 $1,479 Surrender Value $988 1,138 $1,479 Returns -1.24% 2.61% 3.99% 12/31/87 - ---------------------------------------------------------------------------------------------------------------------------------- American Odyssey Funds 1. Core Equity Fund 5/1/93 1 1993 0.0000% 1 12/31/93 1.012381323 1993 0.0000% 1.012381323 12/31/94 0.989669139 1994 0.0000% 0.989669139 12/31/95 1.354532914 1995 0.0000% 1.354532914 12/31/96 1.647371135 1996 0.0000% 1.647371135 12/31/97 2.146049653 1997 0.0000% 2.146049653 Account Value $1,303 $2,146 Surrender Value $1,253 $2,126 Returns 25.27% 17.52% 5/1/93
1 3 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date Emerging Opportunities Fund 5/1/93 1 1993 0.0000% 1 12/31/93 1.07883153 1993 0.0000% 1.07883153 12/31/94 1.168544316 1994 0.0000% 1.168544316 12/31/95 1.526376468 1995 0.0000% 1.526376468 12/31/96 1.460035427 1996 0.0000% 1.460035427 12/31/97 1.543368887 1997 0.0000% 1.543368887 Account Value $1,057 $1,543 Surrender Value $1,007 $1,523 Returns 0.71% 9.43% 5/1/93 Global High-Yield Bond Fund * 5/1/98 - - - 5/1/98 Intermediate-Term Bond Fund 5/1/93 1 1993 0.0000% 1 12/31/93 1.034787102 1993 0.0000% 1.034787102 12/31/94 0.992819712 1994 0.0000% 0.992819712 12/31/95 1.127829494 1995 0.0000% 1.127829494 12/31/96 1.157584094 1996 0.0000% 1.157584094 12/31/97 1.229034395 1997 0.0000% 1.229034395 Account Value $1,062 $1,229 Surrender Value $1,012 $1,209 Returns 1.17% 4.15% 5/1/93 International Equity Fund 5/1/93 1 1993 0.0000% 1 12/31/93 1.180445504 1993 0.0000% 1.180445504 12/31/94 1.084352304 1994 0.0000% 1.084352304 12/31/95 1.274484489 1995 0.0000% 1.274484489 12/31/96 1.534043962 1996 0.0000% 1.534043962 12/31/97 1.591401076 1997 0.0000% 1.591401076 Account Value $1,037 $1,591 Surrender Value $987 $1,571 Returns -1.26% 10.16% 5/1/93 Long-Term Bond Fund 5/1/93 1 1993 0.0000% 1 12/31/93 1.084797668 1993 0.0000% 1.084797668 12/31/94 1.009605722 1994 0.0000% 1.009605722 12/31/95 1.221077239 1995 0.0000% 1.221077239 12/31/96 1.221574612 1996 0.0000% 1.221574612 12/31/97 1.351696456 1997 0.0000% 1.351696456 Account Value $1,107 $1,352 Surrender Value $1,057 $1,332 Returns 5.65% 6.32% 5/1/93 - ----------------------------------------------------------------------------------------------------------------------------------- American Odyssey Funds 2. Core Equity Fund w/chart fee 5/1/93 1 1993 0.0000% 1 12/31/93 1.003966218 1993 0.0000% 1.003966218 12/31/94 0.969221016 1994 0.0000% 0.969221016 12/31/95 1.310477153 1995 0.0000% 1.310477153 12/31/96 1.574104505 1996 0.0000% 1.574104505 12/31/97 2.025163744 1997 0.0000% 2.025163744 Account Value $1,287 $2,025 Surrender Value $1,237 $2,005 Returns 23.65% 16.06% 5/1/93 Emerging Opportunities Fund w/chart fee 5/1/93 1 1993 0.0000% 1 12/31/93 1.069930181 1993 0.0000% 1.069930181 12/31/94 1.14458642 1994 0.0000% 1.14458642 12/31/95 1.476883839 1995 0.0000% 1.476883839 12/31/96 1.395171258 1996 0.0000% 1.395171258 12/31/97 1.456483702 1997 0.0000% 1.456483702 Account Value $1,044 $1,456 Surrender Value $994 $1,436 Returns -0.61% 8.06% 5/1/93
2 4 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date Global High-Yield Bond Fund w/chart fee * 5/1/98 1 1998 0.0000% 1 - - - 5/1/98 Intermediate-Term Bond Fund w/chart fee 5/1/93 1 1993 0.0000% 1 12/31/93 1.02620843 1993 0.0000% 1.02620843 12/31/94 0.972310996 1994 0.0000% 0.972310996 12/31/95 1.090947522 1995 0.0000% 1.090947522 12/31/96 1.105783465 1996 0.0000% 1.105783465 12/31/97 1.159455486 1997 0.0000% 1.159455486 Account Value $1,049 $1,159 Surrender Value $999 $1,139 Returns -0.15% 2.83% 5/1/93 International Equity Fund w/chart fee 5/1/93 1 1993 0.0000% 1 12/31/93 1.170812605 1993 0.0000% 1.170812605 12/31/94 1.062040389 1994 0.0000% 1.062040389 12/31/95 1.232944515 1995 0.0000% 1.232944515 12/31/96 1.465701278 1996 0.0000% 1.465701278 12/31/97 1.501617751 1997 0.0000% 1.501617751 Account Value $1,025 $1,502 Surrender Value $975 $1,482 Returns -2.55% 8.78% 5/1/93 Long-Term Bond Fund w/chart fee 5/1/93 1 1993 0.0000% 1 12/31/93 1.075856975 1993 0.0000% 1.075856975 12/31/94 0.988767267 1994 0.0000% 0.988767267 12/31/95 1.181241491 1995 0.0000% 1.181241491 12/31/96 1.166958629 1996 0.0000% 1.166958629 12/31/97 1.27522801 1997 0.0000% 1.27522801 Account Value $1,093 $1,275 Surrender Value $1,043 $1,255 Returns 4.28% 4.99% 5/1/93 - ---------------------------------------------------------------------------------------------------------------------------------- Delaware Group Premium Fund, Inc. Investments REIT Series * 5/6/98 - - - 5/6/98 Small Cap Value Series 12/23/93 1 1993 0.0000% 1 12/31/93 1.020726027 1993 0.0000% 1.020726027 12/31/94 1.015981391 1994 0.0000% 1.015981391 12/31/95 1.2161941 1995 0.0000% 1.2161941 12/31/96 1.471988529 1996 0.0000% 1.471988529 12/31/97 1.932703638 1997 0.0000% 1.932703638 Account Value $1,313 $1,933 Surrender Value $1,263 $1,913 Returns 26.30% 17.48% 12/23/93 - ---------------------------------------------------------------------------------------------------------------------------------- Dreyfus Variable Investment Funds Capital Appreciation Portfolio 4/5/93 1 1993 0.0000% 1 12/31/93 1.057605574 1993 0.0000% 1.057605574 12/31/94 1.076244656 1994 0.0000% 1.076244656 12/31/95 1.419564038 1995 0.0000% 1.419564038 12/31/96 1.760562942 1996 0.0000% 1.760562942 12/31/97 2.226875581 1997 0.0000% 2.226875581 Account Value $1,265 $2,227 Surrender Value $1,215 $2,207 Returns 21.49% 18.17% 4/5/93
3 5 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date Small Cap Portfolio 8/31/90 1 1990 0.0000% 1 12/31/90 1.01676291 1990 0.0000% 1.01676291 12/31/91 2.610309949 1991 0.0000% 2.610309949 12/31/92 4.417307076 1992 0.0000% 4.417307076 12/31/93 7.345977124 1993 0.0000% 7.345977124 12/31/94 7.817394349 1994 0.0000% 7.817394349 12/31/95 9.990805728 1995 0.0000% 9.990805728 12/31/96 11.50464188 1996 0.0000% 11.50464188 12/31/97 13.26602042 1997 0.0000% 13.26602042 Account Value $1,153 $3,003 $13,266 Surrender Value $1,103 $2,993 $13,266 Returns 10.31% 24.50% 42.22% 8/31/90 - ---------------------------------------------------------------------------------------------------------------------------------- Greenwich Street Series Fund Equity Index Portfolio 11/30/91 1 1991 0.0000% 1 12/31/91 1.0994 1991 0.0000% 1.0994 12/31/92 1.173538337 1992 0.0000% 1.173538337 12/31/93 1.275065479 1993 0.0000% 1.275065479 12/31/94 1.285899234 1994 0.0000% 1.285899234 12/31/95 1.746194511 1995 0.0000% 1.746194511 12/31/96 2.124423698 1996 0.0000% 2.124423698 12/31/97 2.792791986 1997 0.0000% 2.792791986 Account Value $1,315 $2,380 $2,793 Surrender Value $1,265 $2,370 $2,793 Returns 26.46% 18.82% 18.37% 11/30/91 - ---------------------------------------------------------------------------------------------------------------------------------- Montgomery Variable Series Growth Fund 2/9/96 1 1996 0.0000% 1 12/31/96 1.258404431 1996 0.0000% 1.258404431 12/31/97 1.598117769 1997 0.0000% 1.598117769 Account Value $1,270 $1,598 Surrender Value $1,220 $1,548 Returns 22.00% 25.97% 2/9/96 - ---------------------------------------------------------------------------------------------------------------------------------- OCC Accumulation Trust Equity Portfolio 8/1/88 1 1988 0.0000% 1 12/31/88 1.013726708 1988 0.0000% 1.013726708 12/31/89 1.228334684 1989 0.0000% 1.228334684 12/31/90 1.206571963 1990 0.0000% 1.206571963 12/31/91 1.56395777 1991 0.0000% 1.56395777 12/31/92 1.821241825 1992 0.0000% 1.821241825 12/31/93 1.939923172 1993 0.0000% 1.939923172 12/31/94 1.988912996 1994 0.0000% 1.988912996 12/31/95 2.728245611 1995 0.0000% 2.728245611 12/31/96 3.324377909 1996 0.0000% 3.324377909 12/31/97 4.158263461 1997 0.0000% 4.158263461 Account Value $1,251 $2,283 $4,158 Surrender Value $1,201 $2,273 $4,158 Returns 20.08% 17.84% 16.33% 8/1/88 - ---------------------------------------------------------------------------------------------------------------------------------- Salomon Brothers Variable Series Funds, Inc. Capital Fund * 2/17/98 - - - Investors Fund * 2/17/98 - - - Total Return Fund * 2/17/98 - - - - ---------------------------------------------------------------------------------------------------------------------------------- Strong Schafer Trust Strong Schafer Value Fund II 10/10/97 1 1997 0.0000% 1 12/31/97 0.987226041 1997 0.0000% 0.987226041 Account Value $987 Surrender Value $938 Returns -6.21% 10/10/97 - ----------------------------------------------------------------------------------------------------------------------------------
4 6 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date The Travelers Series Trust Disciplined Mid Cap Stock Portfolio 4/1/97 1 1997 0.0000% 1 12/31/97 1.331461867 1997 0.0000% 1.331461867 Account Value $1,331 Surrender Value $1,281 Returns 28.15% 4/1/97 Disciplined Small Cap Stock Portfolio * 5/1/98 - - - Equity Income Portfolio 8/30/96 1 1996 0.0000% 1 12/31/96 1.112177358 1996 0.0000% 1.112177358 12/31/97 1.446486368 1997 0.0000% 1.446486368 Account Value $1,301 $1,446 Surrender Value $1,251 $1,396 Returns 25.06% 28.37% 8/30/96 Federated Stock Portfolio 8/30/96 1 1996 0.0000% 1 12/31/96 1.121273566 1996 0.0000% 1.121273566 12/31/97 1.47765291 1997 0.0000% 1.47765291 Account Value $1,318 $1,478 Surrender Value $1,268 $1,428 Returns 26.78% 30.51% 8/30/96 Large Cap Portfolio 8/30/96 1 1996 0.0000% 1 12/31/96 1.128198358 1996 0.0000% 1.128198358 12/31/97 1.359367432 1997 0.0000% 1.359367432 Account Value $1,205 $1,359 Surrender Value $1,155 $1,309 Returns 15.49% 22.34% 8/30/96 Lazard International Stock Portfolio 8/1/96 1 1996 0.0000% 1 12/31/96 1.07503649 1996 0.0000% 1.07503649 12/31/97 1.149119735 1997 0.0000% 1.149119735 Account Value $1,069 $1,149 Surrender Value $1,019 $1,099 Returns 1.89% 6.90% 8/1/96 MFS Mid Cap Growth Portfolio * 3/23/98 - - - MFS Research Portfolio * 3/23/98 - - - Quality Bond Portfolio 8/30/96 1 1996 0.0000% 1 12/31/96 1.031140842 1996 0.0000% 1.031140842 12/31/97 1.091029277 1997 0.0000% 1.091029277 Account Value $1,058 $1,091 Surrender Value $1,008 $1,041 Returns 0.81% 3.05% 8/30/96 Social Awareness Stock Portfolio 5/1/92 1 1992 0.0000% 1 12/31/92 1.085941607 1992 0.0000% 1.085941607 12/31/93 1.153068335 1993 0.0000% 1.153068335 12/31/94 1.10889801 1994 0.0000% 1.10889801 12/31/95 1.461127016 1995 0.0000% 1.461127016 12/31/96 1.731243192 1996 0.0000% 1.731243192 12/31/97 2.176600522 1997 0.0000% 2.176600522 Account Value $1,257 $2,004 $2,177 Surrender Value $1,207 $1,994 $2,167 Returns 20.72% 14.80% 14.61% 5/1/92
5 7 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date Strategic Stock Portfolio * 5/1/98 - - - U.S. Government Securities Portfolio 1/24/92 1 1992 0.0000% 1 12/31/92 1.066307108 1992 0.0000% 1.066307108 12/31/93 1.153156828 1993 0.0000% 1.153156828 12/31/94 1.074454734 1994 0.0000% 1.074454734 12/31/95 1.321046115 1995 0.0000% 1.321046115 12/31/96 1.323444527 1996 0.0000% 1.323444527 12/31/97 1.472167899 1997 0.0000% 1.472167899 Account Value $1,112 $1,381 $1,472 Surrender Value $1,062 $1,371 $1,462 Returns 6.24% 6.50% 6.61% 1/24/92 Utilities Portfolio (Smith Barney) 2/4/94 1 1994 0.0000% 1 12/31/94 1.005518814 1994 0.0000% 1.005518814 12/31/95 1.284105577 1995 0.0000% 1.284105577 12/31/96 1.362844677 1996 0.0000% 1.362844677 12/31/97 1.686422304 1997 0.0000% 1.686422304 Account Value $1,237 $1,686 Surrender Value $1,187 $1,656 Returns 18.74% 13.79% 2/4/94 - ---------------------------------------------------------------------------------------------------------------------------------- Travelers Series Fund, Inc. Alliance Growth Portfolio 6/20/94 1 1994 0.0000% 1 12/31/94 1.046755656 1994 0.0000% 1.046755656 12/31/95 1.394301259 1995 0.0000% 1.394301259 12/31/96 1.781439328 1996 0.0000% 1.781439328 12/31/97 2.270099623 1997 0.0000% 2.270099623 Account Value $1,274 $2,270 Surrender Value $1,224 $2,240 Returns 22.43% 25.63% 6/20/94 MFS Total Return Portfolio 6/20/94 1 1994 0.0000% 1 12/31/94 0.978329645 1994 0.0000% 0.978329645 12/31/95 1.214526097 1995 0.0000% 1.214526097 12/31/96 1.373488094 1996 0.0000% 1.373488094 12/31/97 1.643986977 1997 0.0000% 1.643986977 Account Value $1,197 $1,644 Surrender Value $1,147 $1,614 Returns 14.69% 14.50% 6/20/94 Putnam Diversified Income Portfolio 6/20/94 1 1994 0.0000% 1 12/31/94 1.008069678 1994 0.0000% 1.008069678 12/31/95 1.168727598 1995 0.0000% 1.168727598 12/31/96 1.249232516 1996 0.0000% 1.249232516 12/31/97 1.328639001 1997 0.0000% 1.328639001 Account Value $1,064 $1,329 Surrender Value $1,014 $1,299 Returns 1.36% 7.67% 6/20/94 Smith Barney High Income Portfolio 6/22/94 1 1994 0.0000% 1 12/31/94 0.987153991 1994 0.0000% 0.987153991 12/31/95 1.161002742 1995 0.0000% 1.161002742 12/31/96 1.29738242 1996 0.0000% 1.29738242 12/31/97 1.459099751 1997 0.0000% 1.459099751 Account Value $1,125 $1,459 Surrender Value $1,075 $1,429 Returns 7.46% 10.65% 6/22/94
6 8 Travelers Retirement Product Nonstandardized Performance (Minus Fees and Deferred Sales Charge)
Cummulative Performance plus 1, minus Inception M & E Charge 1.25% Date Unit Value yyyy Admin Fee Amin Fee 1 Year 5 Year 10 Year Date Smith Barney International Equity Portfolio 6/20/94 1 1994 0.0000% 1 12/31/94 0.954490255 1994 0.0000% 0.954490255 12/31/95 1.048977625 1995 0.0000% 1.048977625 12/31/96 1.219462605 1996 0.0000% 1.219462605 12/31/97 1.237075768 1997 0.0000% 1.237075768 Account Value $1,014 $1,237 Surrender Value $964 $1,207 Returns -3.56% 5.47% 6/20/94 Smith Barney Large Cap Growth Portfolio * 5/1/98 - - - - ---------------------------------------------------------------------------------------------------------------------------------- Warburg Pincus Trust Emerging Markets Portfolio * 12/31/97 - - -
* Fund with an inception date on or after 12/31/97 does not have performance Information Returns for periods one year or less are cumulative. 7 -----END PRIVACY-ENHANCED MESSAGE-----