AETNA INC.
                           2001 ANNUAL INCENTIVE PLAN
                       (EFFECTIVE AS OF JANUARY 1, 2001)
 
SECTION 1. PURPOSE.
 
     The purpose of this Plan is to provide a general incentive for designated
key executive employees of the Companies in order to improve operating results
of the Companies and to reward such employees for the accomplishment of
financial and strategic objectives of the Companies.
 
SECTION 2. DEFINITIONS.
 
     Unless the context requires otherwise, the following words as used in the
Plan shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably and that each
comprehends the others.
 
     (a) "Aetna" means Aetna Inc., a Pennsylvania corporation.
 
     (b) "Board" means the Board of Directors of Aetna.
 
     (c) "Change in Control" means the happening of any of the following:
 
          (i) When any "person" as defined in Section 3(a)(9) of the Securities
     Exchange Act of 1934, as amended (the "Exchange Act") and as used in
     Sections 13(d) and 14(d) thereof, including a "group" as defined in Section
     13(d) of the Exchange Act but excluding Aetna and any subsidiary thereof
     and any employee benefit plan sponsored or maintained by Aetna or any
     subsidiary (including any trustee of such plan acting as trustee), directly
     or indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
     under the Exchange Act, as amended from time to time), of securities of
     Aetna representing 20 percent or more of the combined voting power of
     Aetna's then outstanding securities;
 
          (ii) When, during any period of 24 consecutive months, the individuals
     who, at the beginning of such period, constitute the Board (the "Incumbent
     Directors") cease for any reason other than death to constitute at least a
     majority thereof, provided that a director who was not a director at the
     beginning of such 24-month period shall be deemed to have satisfied such
     24-month requirement (and be an Incumbent Director) if such director was
     elected by, or on the recommendation of or with the approval of, at least
     two-thirds of the directors who then qualified as Incumbent Directors
     either actually (because they were directors at the beginning of such
     24-month period) or by prior operation of this paragraph (ii); or
 
          (iii) The occurrence of a transaction requiring stockholder approval
     for the acquisition of Aetna by an entity other than Aetna or a Subsidiary
     through purchase of assets, or by merger, or otherwise.
 
     (d) "Committee" means the Committee on Compensation and Organization of the
Board (or such other committee of the Board that the Board shall designate from
time to time) or any subcommittee thereof consisting of two or more directors
each of whom is an "outside director" within the meaning of Section 162(m) and a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended.
 
     (e) "Common Stock" means the common stock, $.01 par value, of Aetna.
 
     (f) "Companies" means one or more of Aetna, any of Aetna's affiliated
companies, and any other entity as to which (i) Aetna or any of Aetna's
affiliated companies holds or is seeking to acquire an ownership interest, and
(ii) has been included in the Plan by the Committee.
 
     (g) "Covered Employee" shall have the meaning set forth in Section 162(m).
 
     (h) "Deferral Period" means the period of time during which payment of any
amount otherwise payable under the Plan is deferred (i) at the direction of the
Committee pursuant to Section 6(b) or (ii) at the election of a Participant
pursuant to Section 6(c), but in either case subject to the right of the
Committee to terminate the Deferral Period as provided in Section 6(g).
 
     (i) "Disability" means the occurrence of an event that would entitle a
Participant to the payment of disability income under a specific long-term
disability income plan approved by the Companies and under which the Participant
is enrolled, as such plan may be amended from time to time, or if such
Participant is not enrolled in a specific plan, as defined in a plan covering
similarly situated executive officers of Aetna.
 
     (j) "Fair Market Value" means on any date, with respect to a share of
Common Stock, the closing price of a share of Common Stock as reported by the
Consolidated Tape of New York Stock Exchange Listed Shares on such date, or, if
no shares were traded on such Exchange on such date, on the next date on which
the Common Stock is traded.
 
     (k) "Participant" means (i) each Covered Employee and (ii) each other
executive officer of Aetna as defined in Rule 3b-7 of the Securities Exchange
Act of 1934 whom Aetna designates as a participant under the Plan.
 
     (1) "Performance Period" means the calendar year or such other period as
may be designated by the Committee.
 
     (m) "Plan" means the Aetna Inc. Annual Incentive Plan, as set forth herein
and as may be amended from time to time.
 
     (n) "Retirement" means the retirement of a Participant from active service
with the Companies at or after the age at which full pension benefits are
provided under a specific retirement plan maintained or contributed to by any of
the Companies and under which the Participant has an accrued benefit, as such
plan may be amended from time to time, or if such Participant does not have an
accrued benefit under any such plan, the age at which full pension benefits are
provided under a retirement plan covering similarly situated executive officers
of Aetna.
 
     (o) "Section 162(m)" means Section 162 (m) of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder.
 
     (p) "Share" means a share of Common Stock.
 
     (q) "Stock Unit" means a unit representing the contractual right to receive
the value of one Share.
 
     (r) "Stock Unit Account" means, with respect to any Participant who has
elected to have deferred amounts deemed invested in Stock Units, a bookkeeping
account established to record such Participant's interest under the Plan related
to such Stock Units.
 
     (s) "Subsidiary" means any entity of which the Company possesses directly
or indirectly fifty percent (50%) or more of the total combined voting power of
all classes of stock of such entity.
 
SECTION 3. ADMINISTRATION.
 
     The Plan shall be administered by the Committee. The Committee shall have
the responsibility of construing and interpreting the Plan, provided that, in no
event, shall the Plan be interpreted in a manner which would cause any award to
a Covered Employee to fail to qualify as performance-based compensation under
Section 162(m). The Committee shall establish the performance objectives for any
Performance Period in accordance with Section 4 and certify whether such
performance objectives have been obtained. Any determination made or decision or
action taken or to be taken by the Committee, arising out of or in connection
with the construction, administration, interpretation and effect of the Plan and
of its rules and regulations, shall, to the fullest extent permitted by law (but
subject to the limitations on the discretion of the Committee applicable to
awards intended to be qualified as performance-based compensation under Section
162(m)), be within the Committee's absolute discretion and shall be conclusive
and binding on any and all Participants, any person claiming under or through a
Participant and each of the Companies. The
 
Committee may employ such legal counsel, consultants and agents (including
counsel or agents who are employees of any Company) as it may deem desirable for
the administration of the Plan and may rely upon any opinion received from any
such counsel or consultant or agent and any computation received from such
consultant or agent. All expenses incurred in the administration of the Plan,
including, without limitation, for the engagement of any counsel, consultant or
agent, shall be paid by the Companies. No member or former member of the Board
or the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan other than as a
result of such individual's willful misconduct.
 
SECTION 4. DETERMINATION OF PARTICIPANTS.
 
     In addition to the Covered Employees, the Committee may designate as a
Participant in the Plan any executive officer of Aetna as defined in Rule 3b-7
of the Securities Exchange Act of 1934. Members of the Board who are not
employees of any of the Companies shall not be eligible to participate in the
Plan.
 
SECTION 5. BONUSES.
 
     (a) Performance Criteria.  On or before the end of the first three months
of each Performance Period (or such other date as may be required or permitted
under Section 162(m)), the Committee shall establish the performance objective
or objectives that must be satisfied in order for a Participant to receive a
bonus for such Performance Period. Any such performance objectives will be based
upon the relative or comparative achievement of one or more of the following
criteria, as determined by the Committee: (i) net income, (ii) earnings before
income taxes, (iii) earnings per share, (iv) return on shareholders equity, (v)
expense management, (vi) profitability of an identifiable business unit or
product, (vii) ratio of claims to revenues, (viii) revenue growth, (ix) earnings
growth, (x) total shareholder return, (xi) cash flow, (xii) return on assets,
(xiii) pretax operating income, (xiv) net economic profit (operating earnings
minus a charge for capital), (xv) customer satisfaction, (xvi) provider
satisfaction, (xvii) employee satisfaction, (xviii) quality of networks, (xix)
strategic innovation or (xx) any combination of the foregoing.
 
     (b) Maximum Amount Payable.  If the Committee certifies in writing that any
one of the performance objectives established for the relevant Performance
Period under Section 5(a) has been satisfied, each Participant who is employed
by the Companies on the last day of the Performance Period for which the bonus
is payable shall be entitled to receive a bonus in an amount not to exceed
$3,000,000.
 
     (c) Negative Discretion.  Notwithstanding anything else contained in
Section 5(b) to the contrary, the Committee shall have the right, in its
discretion, (i) to reduce or eliminate the amount otherwise payable to any
Participant under Section 5(b) and (ii) to establish rules or procedures that
have the effect of limiting the amount payable to each Participant to an amount
that is less than the maximum amount otherwise authorized under Section 5(b).
 
     (d) Affirmative Discretion.  Notwithstanding any other provision in the
Plan to the contrary, (i) the Committee shall have the right, in its discretion,
to pay to any Participant who is not a Covered Employee a bonus for a
Performance Period in an amount up to the maximum bonus payable under Section
5(b), based on individual performance or any other criteria that the Committee,
in its discretion, deems to warrant the payment of such a bonus, and (ii) in
connection with the hiring of any person who is or becomes a Covered Employee,
the Committee may provide for a minimum bonus amount for such Covered Employee
with respect to the Performance Period in which such Covered Employee is hired
and/or for the next following Performance Period, which would be payable to such
Covered Employee regardless of whether the relevant performance objectives are
attained with respect to the relevant Performance Period.
 
     (e) Methodology for Determinations.  In making any determination under
Section 5(c) or 5(d), the Committee shall give consideration to such factors as
it deems appropriate, including, without limitation, the degree to which the
established performance objectives have been obtained and whether the
Participant has materially contributed to the overall results of the Companies.
To assist it in making its determination under such Sections, the Chairman of
Aetna will furnish the Committee with specific recommendations (except with
respect to the Chairman's own award) and the Committee may request such other
advice and recommendations as it deems appropriate.
 
SECTION 6. PAYMENT OF AWARDS.
 
     (a) General Rule.  Except as otherwise expressly provided hereunder,
payment of any bonus amount determined under Section 4 shall be made to each
Participant as soon as practicable after the Committee certifies that one or
more of the applicable performance objectives have been attained (or, in the
case of any bonus payable under the provisions of Section 5(d), after the
Committee determines the amount of any such bonus). Any such payments shall be
made in cash or, at the discretion of the Committee in awards under the Aetna
Inc. 1996 Stock Incentive Plan.
 
     (b) Mandatory Deferral.  Notwithstanding Section 6(a), the Committee may
specify that a percentage of the bonus payable with respect to any Participant,
all Participants or any class of Participants for any Performance Period be
mandatorily deferred for a Deferral Period specified by the Committee. The
percentage to be so deferred shall be determined by the Committee in its
discretion. Unless otherwise determined by the Committee at or after the date of
such deferral, any amount payable in respect of an amount mandatorily deferred
pursuant to this Section 6(b) shall be forfeited by the Participant if
 
          (i) the Participant's employment with each of the Companies is
     terminated for cause (as determined in the discretion of the Committee
     under the generally applicable practices and policies of whichever of the
     Companies employs the Participant);
 
          (ii) the Participant voluntarily terminates employment, other than by
     reason of death, Disability or Retirement, prior to the end of the Deferral
     Period specified by the Committee with respect to such mandatorily deferred
     amount; or
 
          (iii) the Participant engages in any activity or conduct which, in the
     reasonable opinion of the Committee, is inimical to the best interest of
     the Companies.
 
     (c) Voluntary Deferral.  Notwithstanding Section 6(a), the Committee may
permit a Participant to defer payment of any portion of an award that is not
mandatorily deferred pursuant to Section 6(b) or to defer payment of an amount
mandatorily deferred to a date or event later than that specified by the
Committee. Any such election shall be made at such time or times, and subject to
such terms and conditions, as the Committee shall determine.
 
     (d) Accounting for Deferrals.  Any amount deferred under this Section 6
shall be credited to one or more bookkeeping accounts for the benefit of such
Participant on the books and records of whichever of the Companies employees the
Participant. Unless a Participant otherwise elects to have such amounts deemed
invested in Stock Units in accordance with Section 6(e), such amounts shall be
deemed held in cash and shall be credited with such rate of interest or such
deemed rate of earnings as the Committee shall specify from time to time;
provided that, unless the Committee otherwise determines, no interest or
earnings shall be credited during the Deferral Period specified by the Committee
in respect of amounts mandatorily deferred.
 
     (e) Stock Units.  The Committee may permit any Participant, all
Participants or any class of Participants to elect that any or all amounts
deferred under the Plan (including amounts mandatorily deferred pursuant to
Section 6(b)) be deemed invested, in whole or in part, in a number of whole or
fractional Stock Units. Any such Stock Units shall be credited to a Stock Unit
Account for the benefit of such Participant. The number of whole and fractional
Stock Units credited to a Stock Unit Account in respect of any amount deferred
under this Section 6 shall be equal to the quotient of (i) the amount deferred
divided by (ii) the Fair Market Value of a Share on the date such amount would
have been paid under the Plan but for such deferral. Whenever a dividend other
than a dividend payable in the form of Shares is declared with respect to the
Shares, the number of Stock Units in the Participant's Stock Unit Account shall
be increased by the number of Stock Units determined by dividing (i) the product
of (A) the number of Stock Units in the Participant's Stock Unit Account on the
related dividend record date and (B) the amount of any cash dividend declared by
the Company on a Share (or, in the case of any dividend distributable in
property other than Shares, the per share value of such dividend, as determined
by the Company for purposes of income tax reporting) by (ii) the Fair Market
Value on the related dividend payment date. In the case of any dividend declared
on Shares which is payable in Shares, each Participant's Stock Unit Account
shall be increased by the number of Stock Units equal to the product of (i) the
number of Units credited to the Participant's Stock Unit Account on the
 
related dividend record date and (ii) the number of Shares (including any
fraction thereof) distributable as a dividend on a Share. In the event of any
stock split, recapitalization, reorganization or other corporate transaction
affecting the capital structure of Aetna, the Committee shall make such
adjustments to the number of Stock Units credited to each Participant's Stock
Unit Account as the Committee shall deem necessary or appropriate to prevent the
dilution or enlargement of such Participant's rights.
 
     (f) Payment of Deferred Amounts.  Amounts attributable to any amount
deferred under the Plan, regardless of whether deferred pursuant to Section 6(b)
or 6(c), shall be paid or commence to be paid, at the election of the
Participant, at the end of the applicable Deferral Period or as of the first
business day of the calendar year next following the end of the Deferral Period.
Payment of such amounts shall be made, at the Participant's election, in a lump
sum or in five, ten or such other number of annual installments as shall be
permitted by the Committee. If a Participant does not timely elect the time at
which or the form in which such amounts shall be paid, such amounts shall be
paid immediately following the end of the Deferral Period and in a lump sum,
unless the Committee shall specify a different time or method of payment. The
Committee may, in its discretion, accelerate the payment of all or any portion
of any Participant's deferred amounts (regardless of whether the applicable
Deferral Period or period have terminated) in order to alleviate a financial
hardship incurred by the Participant due to an unforeseeable emergency beyond
the Participant's control.
 
     Any payment to be made in respect of deferred amounts shall be made in
cash. For purposes of any cash distribution in respect of a Participant's Stock
Units, the cash payable shall equal the product of (i) the number of whole and
fractional Stock Units being distributed and (ii) the Fair Market Value of a
Share on the date as of which the distribution is to be made.
 
     (g) Termination of Deferral Period.  Notwithstanding anything else
contained in the Plan to the contrary, the Committee may, in its discretion,
terminate any Deferral Period in respect of any Participant. Such elective
termination will be deemed to be the end of the Deferral Period for purposes of
determining when payment of the Participant's interest is to commence under
Section 6(f).
 
     (h) Change in Control.  Upon the occurrence of a Change in Control, all
performance objectives for the then current Performance Period shall be deemed
to have been achieved at target levels of performance and the Committee shall
cause each Participant to be paid an amount in cash based on such assumed
performance for the entire Performance Period as soon as practicable but in no
event later than 10 business days following the occurrence of such Change in
Control.
 
SECTION 7. AMENDMENT AND TERMINATION.
 
     Notwithstanding Section 8(a), the Board or the Committee may at any time
amend, suspend, discontinue or terminate the Plan; provided, however, that no
such action shall be effective without approval by the shareholders of Aetna to
the extent necessary to continue to qualify the amounts payable to Covered
Employees as performance-based compensation under Section 162(m).
Notwithstanding the foregoing, no amendment, suspension, discontinuance or
termination of the Plan shall adversely affect the rights of any Participant or
beneficiary in respect of any award that the Committee has determined to be
payable to a Participant in accordance with the terms hereof or as to any
amounts awarded, but payment of which has been deferred, in accordance with
Section 6.
 
SECTION 8. GENERAL PROVISIONS.
 
     (a) Effectiveness of the Plan.  Subject to the approval of Aetna's
shareholders and the shareholders of Aetna Inc., a Connecticut corporation, the
Plan shall be effective with respect to calendar years beginning on or after
January 1, 2001 and ending on or before December 31, 2010, unless the term
hereof is extended by action of the Board or the Committee.
 
     (b) Designation of Beneficiary.  Each Participant may designate a
beneficiary or beneficiaries (which beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant's death. Such designation may be changed or canceled at any time
without the
 
consent of any such beneficiary. Any such designation, change or cancellation
must be made in a form approved by the Committee and shall not be effective
until received by the Committee. If no beneficiary has been named, or the
designated beneficiary or beneficiaries shall have predeceased the Participant,
the beneficiary shall be the Participant's spouse or, if no spouse survives the
Participant, the Participant's estate. If a Participant designates more than one
beneficiary, the rights of such beneficiaries shall be payable in equal shares,
unless the Participant has designated otherwise.
 
     (c) No Right of Continued Employment.  Nothing contained in this Plan shall
create any rights of employment in any Participant or in any way affect the
right and power of any of the Companies to discharge any Participant or
otherwise terminate the Participant's employment at any time with or without
cause or to change the terms of employment in any way.
 
     (d) No Limitation on Corporate Actions.  Nothing contained in the Plan
shall be construed to prevent any of the Companies from taking any corporate
action (including, without limitation, making provision for the payment of other
incentive compensation, whether payable in cash or otherwise, or whether
pursuant to a plan or otherwise) which is deemed by it to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
any awards made under the Plan. No employee, beneficiary or other person shall
have any claim against any of the Companies as a result of any such action.
 
     (e) No Right to Specific Assets.  Nothing contained in the Plan (including,
without limitation, the provisions of Section 6 hereof) shall be construed to
create in any Participant or beneficiary any claim against, right to or lien on
any particular assets of any of the Companies or to require any of the Companies
to segregate or otherwise set aside any assets or create any fund to meet any of
its obligations hereunder.
 
     (f) No Contractual Right to Bonus.  Nothing in this Plan shall be construed
to give any Participant any right, whether contractual or otherwise, to receive
any bonus with respect to any Performance Period unless and until the Committee
shall have expressly determined that such a Participant is entitled to receive
such an award pursuant to the terms of the Plan.
 
     (g) Nonalienation of Benefits.  Except as expressly provided herein, no
Participant or beneficiary shall have the power or right to transfer,
anticipate, or otherwise encumber the Participant's interest under the Plan.
 
     (h) Withholding.  Any amount payable to a Participant or a beneficiary
under this Plan shall be subject to any applicable Federal, state and local
income and employment taxes and any other amounts that any of the Companies is
required at law to deduct and withhold from such payment.
 
     (i) Severability.  If any provision of this Plan is held unenforceable, the
remainder of the Plan shall continue in full force and effect without regard to
such unenforceable provision and shall be applied as though the unenforceable
provision were not contained in the Plan.
 
     (j) Governing Law.  The Plan shall be construed in accordance with and
governed by the laws of the State of Pennsylvania, without reference to the
principles of conflict of laws.
 
     (k) Headings.  Headings are inserted in this Plan for convenience of
reference only and are to be ignored in a construction of the provisions of the
Plan.