HANCOCK JOHN VARIABLE LIFE ACCOUNT U, 497, 1997-06-26

HANCOCK JOHN VARIABLE LIFE ACCOUNT U
497, 1997-06-26

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John Hancock Variable Life
Insurance Company
(JHVLICO)
[LOGO OF JOHN HANCOCK
APPEARS HERE]

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
JOHN HANCOCK VARIABLE LIFE ACCOUNT U

John Hancock Place
Boston, Massachusetts 02117

JOHN HANCOCK SERVICING OFFICE:
P.O. Box 111
Boston, Massachusetts 02117

TELEPHONE 1-800-REAL LIFE (1-800-732-5543):
FAX 617-572-5410

PROSPECTUS MAY 1, 1997

AS SUPPLEMENTED JUNE 18, 1997

The flexible premium variable life policy ("Policy") described in this
Prospectus can be funded, at the discretion of the Owner, by up to ten of the
variable subaccounts of John Hancock Variable Life Account U (the "Account"),
by a fixed subaccount (the "Fixed Account"), or by any combination of the
Fixed Account and up to nine of the variable subaccounts (collectively, the
"Subaccounts"). The assets of each variable Subaccount will be invested in a
corresponding investment portfolio ("Portfolio") of John Hancock Variable
Series Trust I, a "series type" mutual fund advised by John Hancock Mutual
Life Insurance Company ("John Hancock") or of M Fund, Inc., a "series type"
mutual fund advised by M Financial Investment Advisers, Inc. (collectively,
the "Funds"). The assets of the Fixed Account will be invested in the general
account of John Hancock Variable Life Insurance Company ("JHVLICO").

The prospectuses for the Funds, which are attached to this Prospectus,
describe the investment objectives, policies and risks of investing in the
Portfolios of Variable Series Trust I: Growth & Income, Large Cap Growth,
Sovereign Bond, Money Market, Managed, Real Estate Equity, International
Equities, Short-Term U.S. Government, Special Opportunities, Small Cap Growth,
Small Cap Value, Mid Cap Growth, Mid Cap Value, International Balanced,
International Opportunities, Large Cap Value, Strategic Bond and Equity Index
and in the Portfolios of M Fund Inc.: Edinburgh Overseas Equity, Turner Core
Growth, Frontier Capital Appreciation, and Enhanced U.S. Equity. (The Enhanced
U.S. Equity Portfolio is not currently available to Owners, but it is expected
to be made available sometime in the future.) Other variable Subaccounts and
Portfolios may be added in the future.

Replacing existing insurance with a Policy described in this Prospectus may
not be to your advantage.

THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
IT IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY................................................................... 1
JHVLICO and JOHN HANCOCK.................................................. 7
THE ACCOUNT AND THE SERIES FUNDS.......................................... 7
THE FIXED ACCOUNT......................................................... 10
POLICY PROVISIONS AND BENEFITS............................................ 11
Requirements for Issuance of Policy..................................... 11
Premiums................................................................ 11
Account Value and Surrender Value....................................... 13
Death Benefits.......................................................... 15
Transfers Among Subaccounts............................................. 16
Loan Provisions and Indebtedness........................................ 17
Default................................................................. 18
Exchange Privilege...................................................... 19
CHARGES AND EXPENSES...................................................... 19
Charges Deducted from Premiums.......................................... 19
Sales Charges........................................................... 20
Administrative Surrender Charge......................................... 22
Reduced Charges for Eligible Groups..................................... 22
Charges Deducted from Account Value or Assets........................... 22
Guarantee of Premiums and Certain Charges............................... 24
DISTRIBUTION OF POLICIES.................................................. 24
TAX CONSIDERATIONS........................................................ 25
Policy Proceeds......................................................... 25
Charge for JHVLICO's Taxes.............................................. 26
Corporate and H.R. 10 Plans............................................. 27
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO...................... 27
REPORTS................................................................... 27
VOTING PRIVILEGES......................................................... 28
CHANGES THAT JHVLICO CAN MAKE............................................. 28
STATE REGULATION.......................................................... 29
LEGAL MATTERS............................................................. 29
REGISTRATION STATEMENT.................................................... 29
EXPERTS................................................................... 29
FINANCIAL STATEMENTS...................................................... 30
APPENDIX--OTHER POLICY PROVISIONS......................................... 60
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES
AND ACCUMULATED PREMIUMS................................................. 62
</TABLE>

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
<PAGE>

INDEX OF DEFINED WORDS AND PHRASES

Below are listed certain words and phrases used in this Prospectus, together
with identification of the page on which each is defined or explained:

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Account....................................................... 7
Account Value................................................. 1
Age........................................................... 61
Base Policy Target Premium.................................... 19
DAC Tax....................................................... 19
Death Benefit................................................. 14
Fixed Account................................................. 10
Fund.......................................................... Front Cover
Guaranteed Death Benefit...................................... 12
Guaranteed Death Benefit Grace Period......................... 12
Guaranteed Death Benefit Premium.............................. 12
Servicing Office.............................................. Front Cover
Indebtedness.................................................. 17
Investment Rule............................................... 13
Loan Assets................................................... 18
Minimum First Premium......................................... 11
Modal Processing Date......................................... 12
Planned Premium............................................... 12
Policy Grace Period........................................... 12
Portfolio..................................................... Front Cover
Subaccount.................................................... Front Cover
Sum Insured................................................... 4
Surrender Value............................................... 13
Target Premium................................................ 2
Valuation Date................................................ 10
Valuation Period.............................................. 10
Variable Subaccounts.......................................... 10
7-Pay Premium Limit........................................... 13
</TABLE>
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SUMMARY

WHAT IS THE VARIABLE LIFE POLICY BEING OFFERED?

JHVLICO issues variable life insurance policies. The Policies described in
this Prospectus are flexible premium policies. JHVLICO issues other variable
life insurance policies. These other policies are offered by means of other
Prospectuses.

As explained below, the death benefit and Surrender Value under the Policy
may increase or decrease daily. The Policies differ from ordinary fixed-
benefit life insurance in the way they work. However, the Policies are like
fixed-benefit life insurance in providing lifetime protection against economic
loss resulting from the death of the insured. The Policies are primarily
insurance and not investments.

The Policies work generally as follows: A premium payment is periodically
made to JHVLICO. JHVLICO takes from each premium an amount for taxes and, from
certain premiums, sales expenses. JHVLICO then places the rest of the premium
into as many as ten Subaccounts as directed by the owner of the Policy (the
"Owner"). The assets allocated to each variable Subaccount are invested in
shares of the corresponding Portfolio of the Funds. The currently available
Portfolios are identified on the cover of this Prospectus. The assets
allocated to the Fixed Account are invested in the general account of JHVLICO.
During the year, JHVLICO takes charges from each Subaccount and credits or
charges each Subaccount with its respective investment performance. The
insurance charge, which is deducted from the invested assets attributable to
each Policy ("Account Value"), varies monthly with the then attained age of
the insured and with the amount of insurance provided at the start of each
month.

The Policy provides for payment of death benefit proceeds when the insured
dies. The death benefit proceeds will equal the death benefit, plus any
additional benefit included by rider and then due, minus any Indebtedness. The
death benefit may be either level or variable as elected by the Owner. The
level death benefit provides a death benefit that generally remains fixed in
amount and an Account Value that varies daily. Two versions of the level death
benefit are available. The variable death benefit provides for a death benefit
and Account Value that may vary daily. The Policy also increases the death
benefit if necessary to ensure that the Policy will continue to qualify as
life insurance under the Federal tax laws.

The initial Account Value is the amount of the premium that JHVLICO credits
to the Policy, after deduction of the initial charges. The Account Value
increases or decreases daily depending on the investment experience of the
Subaccounts to which the amounts are allocated at the direction of the Owner.
JHVLICO does not guarantee a minimum amount of Account Value. The Owner bears
the investment risk for that portion of the Account Value allocated to the
variable Subaccounts. The Owner may surrender a Policy at any time while the
insured is living. The Surrender Value is the Account Value less the sum of
any Administrative Surrender Charge, any Contingent Deferred Sales Charge and
any Indebtedness. The Owner may also make partial withdrawals from a Policy,
subject to certain restrictions and an administrative charge. If the Owner
surrenders in the early Policy years, the amount of Surrender Value would be
low (as compared with other investments without sales charges) and,
consequently, the insurance protection provided prior to surrender would be
costly.

The minimum Sum Insured at issue is $100,000. All persons insured must be
between ages 20 and 75 years at issue and meet certain health and other
criteria called "underwriting standards." An insured may be eligible for the
"preferred" class, which has the lowest insurance charges. The smoking status
of the insured is generally reflected in the insurance charges made. Policies
issued in certain jurisdictions or in connection with certain employee plans
will not directly reflect the sex of the insured in either the premium rates
or the charges and values under the Policy.

1
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The Owner of a Policy issued on a standard or preferred underwriting basis
may be eligible for the Guaranteed Death Benefit feature if he or she
satisfies certain other underwriting standards relating to health and
occupation. This provision is applicable at no additional cost only in the
first five Policy years and cannot be extended. Under this provision, the
Policy will be guaranteed not to lapse during the first five Policy years,
regardless of adverse investment performance, if the Owner pays the Guaranteed
Death Benefit Premiums on a cumulative basis over that period.

WHAT IS THE AMOUNT OF THE PREMIUMS?

Premiums are flexible and the Owner may choose the amount and frequency of
premium payments.

The minimum amount of premium required at the time of Policy issue is three
months of Guaranteed Death Benefit Premium. One year's Guaranteed Death
Benefit Premium equals the "Target Premium" of a Policy. Unless the Guaranteed
Death Benefit is in effect, if the Policy Account Value at the beginning of
any Policy month is insufficient to pay the monthly Policy charges then due,
JHVLICO will estimate the amount of additional premiums necessary to keep the
Policy in force for three months. The Owner will have a 61 day grace period to
pay at least that amount or the Policy will lapse.

The Target Premium is equal to the annual Guaranteed Death Benefit Premium.
The Target Premium is the sum of Base Policy Target Premium, an amount set
forth in the Policy at issue, plus any rider premium.

At the time of Policy issue, the Owner may designate the amount and
frequency of Planned Premium payments. The Owner may pay premiums other than
the Planned Premium payments, subject to certain limitations.

WHAT IS JOHN HANCOCK VARIABLE LIFE ACCOUNT U?

The Account is a separate investment account of JHVLICO, operated as a unit
investment trust, which supports benefits payable under the Policies. The
Account is subdivided into a number of variable Subaccounts each of which
corresponds to one of the Portfolios of the Funds. The assets of each variable
Subaccount within the Account is invested in a corresponding Portfolio of the
Funds. The Portfolios of the Funds which are currently available are Growth &
Income, Large Cap Growth, Sovereign Bond, Money Market, Managed, Real Estate
Equity, International Equities, Short-Term U.S. Government, Special
Opportunities, Small Cap Growth, Small Cap Value, Mid Cap Growth, Mid Cap
Value, International Balanced, International Opportunities, Large Cap Value,
Strategic Bond, Equity Index, Edinburgh Overseas Equity, Turner Core Growth
and Frontier Capital Appreciation. The Enhanced U.S. Equity Portfolio is
expected to be made available sometime in the future.

John Hancock Variable Series Trust I pays John Hancock a fee for providing
investment management services to each of its Portfolios. The Fund also pays
for certain non-advisory Fund expenses. The figures in the following chart are
expressed as a percentage of each Portfolio's average daily net assets. The
figures reflect the investment management fees currently payable and the 1996
non-advisory expenses that would have been allocated to the Fund under the
allocation rules currently in effect.

2
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<TABLE>
<CAPTION>
Other Total Fund
Investment Fund Operating Other Fund Expenses
Portfolio Management Fee Expenses Expenses Absent Reimbursement*
--------- -------------- -------- ---------- ---------------------
<S> <C> <C> <C> <C>
Managed................. 0.34% 0.03% 0.37% N/A
Growth & Income......... 0.25% 0.03% 0.28% N/A
Equity Index............ 0.20% 0.25% 0.45% 1.61%
Large Cap Value......... 0.75% 0.25% 1.00% 1.89%
Large Cap Growth........ 0.40% 0.05% 0.45% N/A
Mid Cap Value........... 0.80% 0.25% 1.05% 2.15%
Mid Cap Growth.......... 0.85% 0.25% 1.10% 2.34%
Special Opportunities... 0.75% 0.12% 0.87% N/A
Real Estate Equity...... 0.60% 0.11% 0.71% N/A
Small Cap Value......... 0.80% 0.25% 1.05% 2.06%
Small Cap Growth........ 0.75% 0.25% 1.00% 1.55%
International Balanced.. 0.85% 0.25% 1.10% 1.44%
International Equities.. 0.60% 0.18% 0.78% N/A
International
Opportunities.......... 1.00% 0.25% 1.25% 2.76%
Short-Term U.S.
Government............. 0.30% 0.25% 0.55% 0.79%
Sovereign Bond.......... 0.25% 0.06% 0.31% N/A
Strategic Bond.......... 0.75% 0.25% 1.00% 1.57%
Money Market............ 0.25% 0.07% 0.32% N/A
</TABLE>
- --------
* John Hancock reimburses a Portfolio when the Portfolio's Other Expenses
exceed 0.25% of the Portfolio's average daily net assets.

M Fund, Inc., pays M Financial Investment Advisers, Inc., ("M Financial") a
fee for providing investment management services to each of its Portfolios. M
Fund, Inc., also pays for certain non-advisory Fund expenses. The figures in
the following chart are expressed as a percentage of each Portfolio's average
daily net assets. The figures reflect the investment management fees currently
payable and the 1996 non-advisory expenses that would have been allocated to
the Fund under the allocation rules currently in effect.

For a full description of the Funds, see the Prospectuses for the Funds
attached to this Prospectus.

WHAT ARE THE CHARGES MADE BY JHVLICO?

State Premium Tax Charge and Federal DAC Tax Charge. Charges deducted from
each premium payment, currently 2.35% for state premium taxes and 1.25% as a
Federal deferred acquisition cost or "DAC Tax" charge.

3
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Sales Charge Deduction from Premium. A charge deducted from premium payments
equal to no more than 4% of the Target Premium received in any Policy year.
JHVLICO currently intends to waive this deduction from premiums received after
the first 10 Policy years.

Contingent Deferred Sales Charge. A charge deducted from Account Value if
the Policy lapses or is surrendered during the first 12 Policy years. The
amount of the charge depends upon the Policy year in which lapse or surrender
occurs. The charge will never be higher than 26% of Base Policy Target
Premiums paid to date. The total charges for sales expenses over the lesser of
20 years or the life expectancy of the insured will not exceed 9% of the
Target Premium payments under the Policy, assuming all Target Premiums are
paid.

Administrative Surrender Charge. A charge deducted from Account Value if the
Policy lapses or is surrendered in the first 9 Policy years. The amount of the
charge depends upon the Policy year in which lapse or surrender occurs and the
Policy's Sum Insured at that time. The maximum charge is $5 per $1,000 of
current Sum Insured.

Issue Charge. A charge deducted monthly from Account Value at the rate of
$20 per month for the first 12 Policy months.

Maintenance Charge. A charge deducted monthly from Account Value in an
amount equal to no more than $8 (currently $6) for all Policy years.

Insurance Charge. A charge based upon the amount for which JHVLICO is at
risk, considering the attained age and risk classification of the insured and
JHVLICO's then current monthly insurance rates (never to exceed rates set
forth in the Policy) deducted monthly from Account Value. JHVLICO currently
intends to reduce this charge beginning the tenth Policy year.

Charge for Mortality and Expense Risks. A charge deducted daily from the
variable Subaccounts at a maximum effective annual rate of .90% (currently
.60%) of the assets of each variable Subaccount.

Charge for Extra Mortality Risks. An additional charge, depending upon the
age of the insured and the degree of additional mortality risk, required if
the insured does not qualify for the standard or preferred underwriting class.
This additional charge is deducted monthly from Account Value.

Charge for Optional Rider Benefits. An additional charge required if the
Owner elects to purchase any optional insurance benefits by rider. Any such
additional charge is deducted monthly from Account Value.

Charge for Partial Withdrawal. A charge of $20 deducted from Account Value
at the time of withdrawal.

See "Charges and Expenses", for a fuller description of the charges under
the Policy.

IS THERE A CHARGE AGAINST THE ACCOUNT FOR FEDERAL INCOME TAX?

Currently no charge is made against any Subaccount for Federal income taxes,
but if JHVLICO incurs, or expects to incur, income taxes attributable to any
Subaccount or this class of Policies in future years, it reserves the right to
make a charge. JHVLICO expects that it will continue to be taxed as a life
insurance company. See "Charge for JHVLICO's Taxes".

WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?

The initial net premium is allocated by JHVLICO from its general account to
one or more of its Subaccounts on the date of issue of the Policy. The initial
net premium is the gross premium less the sales charge deducted

4
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from certain premium payments and less the charges deducted from all premiums
for state premium taxes and the Federal DAC Tax charge. These charges also
apply to subsequent premium payments. Net premiums derived from payments
received after the issue date are allocated, generally on the date of receipt,
to one or more of the Subaccounts as elected by the Owner.

HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?

At issue and subsequently thereafter, the Owner will provide us with the
rule ("Investment Rule") we will follow to invest net premiums or other
amounts in any one but not more than ten of the Subaccounts. The Owner may
change the Investment Rule under which JHVLICO will allocate amounts to
Subaccounts.

WHAT COMMISSIONS ARE PAID TO AGENTS?

The Policies are sold through agents who are licensed by state authorities
to sell JHVLICO's insurance policies. Commissions payable to agents are
described under "Distribution of Policies". Sales expenses in any year are not
equal to the deduction for sales expenses in that year. Rather, total sales
expenses under the Policies are intended to be recovered over the lifetimes of
the insureds covered by the Policies.

WHAT IS THE DEATH BENEFIT?

Three death benefit options are available at the time of application for a
Policy.

Option 1: Level Death Benefit. A level death benefit equal to the Sum
Insured or, if greater, the Account Value multiplied by the applicable
Corridor Factor.

Option 2: Variable Death Benefit. A variable death benefit equal to the Sum
Insured plus any Account Value, or, if greater, the Account Value multiplied
by the applicable Corridor Factor.

Option 3: Level Death Benefit With Greater Funding. A level death benefit
equal to the Sum Insured, or, if greater, the Account Value multiplied by the
applicable Death Benefit Factor. It differs from the level death benefit
option described above in that a greater amount of premium payments can
generally be made by the Owner.

Under each of the Options, an alternative death benefit is computed that is
equal to the Account Value multiplied by a Corridor Factor or a Death Benefit
Factor to increase the death benefit if necessary to ensure that the Policy
will continue to qualify as life insurance under the Federal tax law. See
"Death Benefits"; "Definition of Life Insurance" and "Tax Considerations".

Under the Guaranteed Death Benefit provision, the Policy is guaranteed not
to lapse during the first 5 Policy years, provided that, on each Modal
Processing Date, the amount of cumulative premiums paid, minus any
withdrawals, is at least equal to the cumulative amount of Guaranteed Death
Benefit Premiums due to date. This provision applies only if the insured is in
the preferred or standard underwriting risk class and satisfies certain other
underwriting standards relating to health and occupation.

HOW DOES THE ACCOUNT VALUE OF A POLICY VARY IN RELATION TO THE SUBACCOUNTS'
INVESTMENT EXPERIENCE?

In general, the Account Value for any day equals the Account Value for the
previous day, increased by any net premium placed in the Subaccounts for the
Policy, decreased by any charges made against the Account Value

5
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and by any partial withdrawal, and increased or decreased by the investment
experience of the Subaccounts. No minimum Account Value for the Policy is
guaranteed.

WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT,
ACCOUNT VALUE AND SURRENDER VALUE?

After the first Policy year the Owner may obtain a Policy loan. Assuming no
Indebtedness (see below), the maximum amount of any loan in Policy years two
and three is 75% of that portion of the Surrender Value attributable to
variable Subaccount investments, plus 100% of that portion of the Surrender
Value attributable to Fixed Account investments; thereafter the maximum is 90%
of that portion of Surrender Value attributable to variable Subaccount
investments, plus 100% of that portion of the Surrender Value attributable to
Fixed Account investments. Interest charged on any loan will accrue and
compound daily at an effective annual rate of 5.0% in the first 20 Policy
years and 4.50% thereafter. A loan plus accrued interest ("Indebtedness") may
be repaid at the discretion of the Owner in whole or in part in accordance
with the terms of the Policy.

While a loan is outstanding, the rate of interest credited to the Account
Value because of the loan will usually be different than the net investment
experience of the Subaccounts. Therefore, the Account Value, the Surrender
Value and any death benefit above the current Sum Insured are permanently
affected by any loan.

IS THERE A SHORT-TERM CANCELLATION RIGHT?

The Owner may surrender a Policy by delivering or mailing it within 45 days
after the date Part A of the application has been completed or within 10 days
after receipt of the Policy by the Owner, or within 10 days after mailing by
JHVLICO of a Notice of Withdrawal Right, whichever is latest, to JHVLICO's
Servicing Office, or to the agent or agency office through which it was
delivered. Coverage under the Policy will be cancelled immediately as of the
date of such mailing or delivery. Any premium paid on it will be refunded. If
required by state law, the refund will equal the Account Value at the end of
the Valuation Period in which the Policy is received plus all charges or
deductions made against premiums plus an amount reflecting charges against the
Subaccounts and the investment management fee of the Funds.

WHAT INVESTMENT TRANSFERS ARE ALLOWED AN OWNER?

The Owner may transfer the Account Value among the variable Subaccounts or
into the Fixed Account at any time. Transfers out of the Fixed Account,
however, are subject to restrictions.

ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?

The benefits under Policies described in this Prospectus are expected to
receive the same tax treatment under the Internal Revenue Code of 1986 as
benefits under traditional fixed-benefit life insurance policies. Thus, death
benefits payable under the Policies will not be included in the beneficiary's
gross income. Also, the Owner is not taxed on interest and gains under the
Policy unless and until values are actually received through withdrawal,
surrender, or other distributions.

Under Federal tax law, distributions from Policies on which premiums greater
than a "7-pay" premium limit (as defined in the law) have been paid, will be
subject to special taxation. See "Premiums--7-Pay Premium Limit" and "Policy
Proceeds" for a discussion of how the "7-pay" premium limit may be exceeded
under a Policy. A distribution on such a Policy (called a "modified
endowment") will be taxed to the extent there is any income (gain) to the
Owner and an additional penalty tax may be imposed on the taxable amount.

6
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JHVLICO AND JOHN HANCOCK

JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law, is authorized to transact a life insurance and annuity
business in Massachusetts and all states other than New York. JHVLICO began
selling variable life insurance policies in 1980.

JHVLICO is a wholly-owned subsidiary of John Hancock, a company chartered in
Massachusetts in 1862. Its Home Office is at John Hancock Place, Boston,
Massachusetts 02117. John Hancock's assets are approximately $59 billion and
it has invested over $380 million in JHVLICO in connection with JHVLICO's
organization and operations. It is anticipated that John Hancock will from
time to time make additional capital contributions to JHVLICO to enable it to
meet its reserve requirements and expenses in connection with its business,
and John Hancock is committed to make additional capital contributions if
necessary to ensure that JHVLICO maintains a positive net worth.

THE ACCOUNT AND THE SERIES FUNDS

THE ACCOUNT

The Account, a separate account established under Massachusetts law, meets
the definition of "separate account" under the Federal securities laws and is
registered as a unit investment trust under the Investment Company Act of 1940
("1940 Act").

The Account's assets are the property of JHVLICO. Each Policy provides that
the portion of the Account's assets equal to the reserves and other
liabilities under the Policy shall not be chargeable with liabilities arising
out of any other business JHVLICO may conduct. In addition to the assets
attributable to variable life policies, the Account's assets include assets
derived from charges made by JHVLICO. From time to time these additional
assets may be transferred in cash by JHVLICO to its general account. Before
making any such transfer, JHVLICO will consider any possible adverse impact
the transfer might have on any Subaccount.

The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve
supervision by the Commission of the management or policies of the Account,
JHVLICO or John Hancock.

The assets in each variable Subaccount are invested in the corresponding
Portfolio of the Funds, but the assets of one variable Subaccount are not
necessarily legally insulated from liabilities associated with another
variable Subaccount. New variable Subaccounts may be added or existing
variable Subaccounts may be deleted as new Portfolios are added to or deleted
from the Funds and made available to Owners.

THE SERIES FUNDS

Each Fund is a "series" type of mutual fund registered with the Commission
under the 1940 Act as an open-end diversified management investment company.
Each Fund serves as the investment medium for the Account and other unit
investment trust separate accounts established for other variable life
insurance policies and variable annuity contracts. (See the attached Fund
Prospectuses for a description of a need to monitor for possible conflicts and
other consequences.) A very brief summary of the investment objectives of each
Portfolio is set forth below.

7
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Growth & Income Portfolio. The investment objective of this Portfolio is to
achieve intermediate and long-term growth of capital, with income as a
secondary consideration. This objective will be pursued by investments
principally in common stocks (and securities convertible into or with rights
to purchase common stocks) of companies believed to offer growth potential
over both the intermediate and long-term.

Large Cap Growth Portfolio. The investment objective of this Portfolio is to
achieve above-average capital appreciation through the ownership of common
stocks (and securities convertible into or with rights to purchase common
stocks) of companies believed to offer above-average capital appreciation
opportunities. Current income is not an objective of the Portfolio.

Sovereign Bond Portfolio. The investment objective of this Portfolio is to
provide as high a level of long-term total rate of return as is consistent
with prudent investment risk, through investment primarily in a diversified
portfolio of freely marketable debt securities. Total rate of return consists
of current income, including interest and discount accruals, and capital
appreciation.

Money Market Portfolio. The investment objective of this Portfolio is to
provide maximum current income consistent with capital preservation and
liquidity. It seeks to achieve this objective by investing in a managed
portfolio of high quality money market instruments.

Managed Portfolio. The investment objective of this Portfolio is to achieve
maximum long-term total return consistent with prudent investment risk.
Investments will be made in common stocks, convertibles and other equity
investments, in bonds and other fixed income securities and in money market
instruments.

Real Estate Equity Portfolio. The investment objective of this Portfolio is
to provide above-average income and long-term growth of capital by investment
principally in equity securities of companies in the real estate and related
industries.

International Equities Portfolio. The investment objective of this Portfolio
is to achieve long-term growth of capital by investing primarily in foreign
equity securities.

Special Opportunities Portfolio. The investment objective of this Portfolio
is to achieve long-term capital appreciation by emphasizing investments in
equity securities of issuers in various economic sectors.

Short-Term U.S. Government Portfolio. The investment objective of this
Portfolio is to provide a high level of current income consistent with the
maintenance of principal, through investment in a portfolio of short-term U.S.
Treasury securities and U.S. Government agency securities.

Equity Index Portfolio: The investment objective of this Portfolio is to
provide investment results that correspond to the total return of the U.S.
market as represented by the S&P 500 utilizing common stocks that are publicly
traded in the United States.

Large Cap Value Portfolio: The investment objective of this Portfolio is to
provide substantial dividend income, as well as long-term capital
appreciation, through investment in the common stocks of established companies
believed to offer favorable prospects for increasing dividends and capital
appreciation.

Mid Cap Growth Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital through a non-diversified portfolio
investing largely in common stocks of medium capitalization companies.

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Mid Cap Value Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital primarily through investment in the common
stocks of medium capitalization companies believed to sell at a discount to
their intrinsic value.

Small Cap Growth Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital through a diversified portfolio investing
primarily in common stocks of small capitalization emerging growth companies.

Small Cap Value Portfolio: The investment objective of this Portfolio is to
provide long-term growth of capital by investing in a well diversified
portfolio of equity securities of small capitalization companies exhibiting
value characteristics.

Strategic Bond Portfolio: The investment objective of this Portfolio is to
provide a high total return consistent with moderate risk of capital and
maintenance of liquidity, from a portfolio of domestic and international fixed
income securities.

International Opportunities Portfolio: The investment objective of this
Portfolio is to provide capital appreciation through investment in common
stocks of primarily well-established, non-United States companies.

International Balanced Portfolio: The investment objective of this Portfolio
is to maximize total U.S. dollar return, consisting of capital appreciation
and current income, through investment in non-U.S. equity and fixed income
securities.

John Hancock acts as the investment manager for the Portfolios described
above, and John Hancock's indirectly owned subsidiary, Independence Investment
Associates, Inc., with its principal place of business at 53 State Street,
Boston, MA 02109, provides sub-investment advice with respect to the Growth &
Income, Large Cap Growth, Managed, Real Estate Equity and Short-Term U.S.
Government Portfolios. Another indirectly owned subsidiary, John Hancock
Advisers, Inc., located at 101 Huntington Avenue, Boston, MA 02199, and its
subsidiary, John Hancock Advisers International, Limited, located at 34 Dover
Street, London, England, provide sub-investment advice with respect to the
International Portfolio, and John Hancock Advisers, Inc. does likewise with
respect to the Sovereign Bond, Small Cap Growth and Special Opportunities
Portfolios.

T. Rowe Price Associates, Inc., located at 100 East Pratt St., Baltimore, MD
21202, provides sub-investment advice with respect to the Large Cap Value
Portfolio and its subsidiary, Rowe Price-Fleming International, Inc., also
located at 100 East Pratt St., Baltimore, MD 21202, provides sub-investment
advice with respect to the International Opportunities Portfolio.

State Street Bank & Trust, N.A., at Two International Place, Boston, MA
02100 , is sub-investment adviser to the Equity Index Portfolio. INVESCO
Management and Research located at 101 Federal Street, Boston, MA 02110, is
the sub-investment adviser to the Small Cap Value Portfolio. Janus Capital
Corporation, with its principal place of business at 100 Filmore Street,
Denver, CO 80206, is the sub-investment adviser to the Mid Cap Growth
Portfolio. Neuberger & Berman, LLC, of 605 Third Avenue, New York, NY 10158,
provides sub-investment advice to the Mid Cap Value Portfolio. J.P. Morgan
Investment Management Inc., located at 522 Fifth Avenue, New York, NY 10036,
provides sub-investment advice with respect to the Strategic Bond Portfolio
and Brinson Partners, Inc., of 209 S. LaSalle Street, Chicago, IL 60604, does
likewise with respect to the International Balanced Portfolio.

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Edinburgh Overseas Equity Portfolio. The investment objective of this
Portfolio is to provide long-term capital appreciation with reasonable
investment risk through active management and investment in common stock and
common stock equivalents of foreign issuers. Current income, if any, is
incidental.

Turner Core Growth Portfolio. The investment objective of this Portfolio is
to seek long-term capital appreciation through a diversified portfolio of
common stocks that show strong earnings potential with reasonable market
prices.

Frontier Capital Appreciation Portfolio. The investment objective of this
Portfolio is to seek maximum capital appreciation through investment in common
stock of companies of all sizes, with emphasis on stocks of small- to medium-
capitalization companies. Importance is placed on growth and price
appreciation, rather than income.

Enhanced U.S. Equity Portfolio. The investment objective of this Portfolio
is to provide above market total return through investment in common stock of
companies perceived to provide a return higher than that of the S&P 500 at
approximately the same level of investment risk as the S&P 500.

M Financial Investment Advisers, Inc., acts as the investment manager for
the three Portfolios described above. Edinburgh Fund Managers PLC, provides
sub-investment advise to the Edinburgh Overseas Equity Portfolio; Turner
Investment Partners, Inc. provides sub-investment advise to the Turner Core
Growth Portfolio; Frontier Capital Management Company, Inc., provides sub-
investment advice to the Frontier Capital Appreciation Portfolio; and Franklin
Portfolio Associates Trust provides sub-investment advice to the Enhanced U.S.
Equity Portfolio.

JHVLICO will purchase and redeem Fund shares for the Account at their net
asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios of the Fund which corresponds
to a variable Subaccount of the Account. Any dividend or capital gains
distributions received by the Account will be reinvested in Fund shares at
their net asset value as of the dates paid.

On each Valuation Date, shares of each Portfolio are purchased or redeemed
by JHVLICO for each variable Subaccount based on, among other things, the
amount of net premiums allocated to the variable Subaccount, distributions
reinvested, transfers to, from and among variable Subaccounts, all to be
effected as of that date. Such purchases and redemptions are effected at the
net asset value per Fund share for each Portfolio determined on that same
Valuation Date. A Valuation Date is any date on which the New York Stock
Exchange is open for trading and on which the Fund values its shares. A
Valuation Period is that period of time from the beginning of the day
following a Valuation Date to the end of the next following Valuation Date.

A full description of each Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached Prospectuses and the statement of additional
information referred to therein, which should be read together with this
Prospectus.

THE FIXED ACCOUNT

An Owner may allocate premiums to the Fixed Account or transfer all or a
part of the Account Value under a Policy to the Fixed Account. The amount so
allocated or transferred will become a part of JHVLICO's general account
assets. JHVLICO's general account consists of assets owned by JHVLICO other
than those in the Account and in other separate accounts that have been or may
be established by JHVLICO. Subject to applicable

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<PAGE>

law, JHVLICO has sole discretion over the investment of assets of the general
account and Owners do not share in the investment experience of those assets.
Instead, JHVLICO guarantees that the Account Value allocated to the Fixed
Account will accrue interest daily at an effective annual rate of at least 4%
without regard to the actual investment experience of the general account.
Consequently, if an Owner pays the Required Premiums, allocates all net
premiums only to the Fixed Account, and makes no transfers, partial
withdrawals, or policy loans, the minimum amount and duration of the death
benefit will be determinable and guaranteed. Transfers from the Fixed Account
are subject to certain limitations (see "Transfers Among Subaccounts"), and
charges will vary somewhat for Account Value allocated to the Fixed Account.
See "Charges Deducted From Account Value".

The Account Value in the Fixed Account is equal to the portion of the net
premiums allocated to it, plus any amounts transferred to it and interest
credited to it, minus any charges deducted from it or partial withdrawals or
amounts transferred from it. JHVLICO guarantees that interest credited to the
Account Value in the Fixed Account will not be less than an effective annual
rate of 4%. JHVLICO may, in its sole discretion, credit higher rates although
it is not obligated to do so. The Owner assumes the risk that interest
credited will not exceed 4% per year. Upon request and in the annual
statement, JHVLICO will inform Owners of the then-applicable rates.

Because of exemptive and exclusionary provisions, interests in JHVLICO's
general account have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein
are subject to the provisions of these Acts, and JHVLICO has been advised that
the staff of the Commission has not reviewed the disclosure in this Prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses.

POLICY PROVISIONS AND BENEFITS

REQUIREMENTS FOR ISSUANCE OF POLICY

The Policy is generally available with a minimum Sum Insured at issue of
$100,000. At the time of issue, the insured must be age 20 through 75. All
persons insured must meet certain health and other criteria called
"underwriting standards". The smoking status of each insured is reflected in
the insurance charges made.

Policies issued in certain jurisdictions or in connection with certain
employee plans will not directly reflect the sex of the insured in either the
premium rates or the charges or values under the Policy. The illustrations set
forth in this Prospectus are sex-distinct and, therefore, do not reflect the
sex-neutral rates, charges, or values that would apply to such Policies.

PREMIUMS

Payment Flexibility. Premiums are flexible. The Owner may choose the amount
and frequency of premium payments, so long as each premium payment meets the
requirements described below.

Minimum First Premium. The amount of premium required at the time of issue
is determined by JHVLICO, and depends on the age, sex, smoking status, and
underwriting class of the insured at issue, the Policy's Sum Insured at issue,
and any additional benefits selected. The Minimum First Premium must be
received by JHVLICO at its Servicing Office in order for the Policy to be in
full force and effect. See "Death Benefits". There is no grace period for the
payment of the Minimum First Premium. The minimum amount of

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<PAGE>

premium required at the time of Policy issue is three months of Guaranteed
Death Benefit Premium. However, an automatic check writing program
("premiumatic") may be available to an Owner interested in making monthly
premium payments and, if utilized by an Owner, only one month of Guaranteed
Death Benefit Premium need be paid to satisfy the minimum amount.

Minimum Premiums. If the Policy's Surrender Value at the beginning of any
Policy month is insufficient to pay the monthly Policy charges then due,
JHVLICO will notify the Owner and the Policy will enter a Policy grace period,
unless the Guaranteed Death Benefit is in effect. If premiums sufficient to
pay at least three months' estimated charges are not paid by the end of the
grace period, the Policy will lapse. The estimated charges will equal three
times the monthly Policy charges then due. See "Default".

Planned Premium Schedule. At the time of issue, the Owner may designate a
Planned Premium schedule for the amount and frequency of premium payments.
JHVLICO will send billing statements for the amount chosen at the frequency
chosen, whether quarterly, monthly, semi-annually or annually. The Owner may
change the Planned Premium after issue. The Owner may also pay a premium in
excess of the Planned Premium, subject to the limitations described below. At
the time of Policy issuance, JHVLICO will determine whether the Planned
Premium schedule will exceed the 7-Pay limit discussed below. If so, JHVLICO's
standard procedures prohibit issuance of the Policy unless the Owner signs a
form acknowledging that fact.

Other Premium Limitations. Federal tax law requires a minimum death benefit
in relation to Account Value. See "Death Benefits--Definition of Life
Insurance". The death benefit of the Policy will be increased if necessary to
ensure that the Policy will continue to satisfy this requirement. If the
payment of a given premium will cause the Account Value to increase to such an
extent that an increase in death benefit is necessary to satisfy Federal tax
law requirements, JHVLICO has the right to not accept the excess portion of
that premium payment, or to require evidence of insurability before that
portion is accepted. In no event, however, will JHVLICO refuse to accept any
premium necessary to prevent the Policy from lapsing. Also, if an Owner has
elected to use the "guideline premium and cash value corridor" test for
Federal income tax purposes, JHVLICO will not accept the portion of any
premium that exceeds the maximum amount prescribed under that test.

Guaranteed Death Benefit Premiums. A Guaranteed Death Benefit feature may
apply during the first five Policy years. See "Death Benefits". The Guaranteed
Death Benefit Premiums required to maintain this benefit in force depend on
the issue age, sex, smoking status, and underwriting class of the insured at
issue, the Sum Insured at issue and any additional benefits selected. This
premium will equal 1/12th of the Target Premium for Owners electing a monthly
premium payment mode; 1/4 of the Target Premium for Owners electing the
quarterly mode; 1/2 of the Target Premium for owners electing the semi-annual
mode; and the Target Premium for Owners electing the annual mode. The due date
for each premium is referred to as the Modal processing date. To keep the
Guaranteed Death Benefit in effect, the amount of actual premiums paid minus
any withdrawals must at each Modal processing date be at least equal to the
Guaranteed Death Benefit Premiums due to date. If this test is not satisfied
on any Modal processing date, JHVLICO will notify the Owner of the shortfall
immediately and a Guaranteed Death Benefit grace period will commence as of
that anniversary. The Guaranteed Death Benefit grace period will end on the
second monthly processing date after the determination of the shortfall. This
notice will be mailed to the Owner's last-known address at least 31 days prior
to the end of the Guaranteed Death Benefit grace period. If JHVLICO does not
receive payment for the amount of the deficiency by the end of the Guaranteed
Death Benefit grace period, the Guaranteed Death Benefit feature will
permanently lapse with no possibility of restoration. The Guaranteed Death
Benefit is only available if the insured's underwriting class is standard or
preferred and the insured meets certain other underwriting standards relating
to health and occupation.

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<PAGE>

Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by JHVLICO for a Planned Premium other than the
Guaranteed Death Benefit Premium. The Owner may also elect to be billed for
premiums on an annual, semi-annual, quarterly or monthly basis. An automatic
check-writing program ("premiumatic") may be available to an Owner interested
in making monthly premium payments. All premiums are payable at JHVLICO's
Servicing Office.

Any premium payment will be processed by JHVLICO as of the end of the
Valuation Period in which it is received, unless one of the three exceptions
noted below is applicable. Each premium payment will be reduced by the state
premium tax charge, any sales charge, and the Federal DAC Tax charge. See
"Charges and Expenses". The remainder is the net premium.

The Owner at the time of application must elect an Investment Rule which
will allocate net premiums and any credits to as many as ten of the
Subaccounts. The Owner must select allocation percentages in whole numbers,
and the total allocated must equal 100%. The Owner may thereafter change the
Investment Rule prospectively at any time. The change will be effective as to
any net premiums and credits applied after receipt at JHVLICO's Servicing
Office of notice satisfactory to JHVLICO.

There are three exceptions to the normal practice of processing a premium
payment as of the end of the Valuation Period in which it is received:

(1) A payment received prior to a Policy's date of issue will be
processed as if received on the Valuation Date immediately
preceding the date of issue.

(2) If the Minimum First Premium is not received prior to the date of
issue, each payment received thereafter will be processed as if
received on the Valuation Date immediately preceding the date of
issue until all of the Minimum First Premium is received.

(3) That portion of any premium that we delay accepting as described
under "Other Premium Limitations" above, or "7-Pay Premium Limit"
below, will be processed as of the end of the Valuation Period in
which we accept that amount.

7-Pay Premium Limit. Federal tax law modifies the tax treatment of certain
Policy distributions such as loans, surrenders, partial surrenders, and
withdrawals. The application of this modified treatment to any Owner depends
upon whether premiums have been paid at any time during the first 7 Policy
years that exceed a "7-pay" premium limit as defined in the law. The 7-pay
limit is the total of net level premiums that would have been payable at any
time for the Policy to be fully paid-up after the payment of 7 level annual
premiums. If the total premiums paid exceed the 7-pay limit, the Policy will
be treated as a "modified endowment", which means that the Owner will be
subject to tax to the extent of any income (gain) on any distributions made
from the Policy. A material change in the Policy will result in a new 7-pay
limit and test period. A reduction in the Policy's benefits within the 7-year
period following issuance of, or reinstatement or other material change in,
the Policy may also result in the application of the modified endowment
treatment. See "Policy Proceeds" under "Tax Considerations". If JHVLICO
receives any premium payment that will cause a Policy to become a modified
endowment, the excess portion of that premium payment will not be accepted
unless the Owner signs an acknowledgment of that fact. When it identifies such
an excess premium, JHVLICO sends the Owner immediate notice and refunds the
excess premium if it has not received notice of the acknowledgement by the
time the premium payment check has had a reasonable time to clear the banking
system, but in no case longer than two weeks.

ACCOUNT VALUE AND SURRENDER VALUE

Amount of Account Value. The Account Value increases or decreases depending
upon a number of factors, such as the applicable Subaccount's investment
experience, the proportion of the Account Value invested in each

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<PAGE>

Subaccount and the interest credited to any Loan Account established upon the
making of a Policy loan. In general the Account Value for any day equals the
Account Value for the previous day, decreased by charges against the Account
Value and by any partial withdrawal, increased or decreased by the investment
experience of the Subaccounts and increased by net premiums received. No
minimum amount of Account Value is guaranteed.

A Policy loan will not affect the total amount of Account Value at the time
the loan is made but will result in a different rate of return being credited
to the Loan Account portion of the Account Value.

Amount of Surrender Value. The Surrender Value will be the Account Value
less the sum of any Administrative Surrender Charge, any Contingent Deferred
Sales Charge, and any Indebtedness.

When Policy May Be Surrendered. A Policy may be surrendered for its
Surrender Value at any time while the insured is living and the Policy is not
in a Policy grace period. Surrender takes effect and the Surrender Value is
determined as of the end of the Valuation Period in which occurs the later of
receipt at JHVLICO's Servicing Office of a signed request and the surrendered
Policy.

A portion of the Contingent Deferred Sales Charge, equal to 20% of premiums
paid in the second Policy year up to one Base Policy Target Premium, will be
waived in calculating the second Policy year's Surrender Value.

Partial Withdrawal of Surrender Value. The Owner may request withdrawal of
part of the Surrender Value in accordance with JHVLICO's rules then in effect.
Any withdrawal must be at least $1,000 and is subject to an administrative
charge of $20.

An Owner may request a partial withdrawal of Surrender Value at any time
provided that the Policy is not in a Policy grace period. This privilege,
which reduces the Account Value by the amount of the withdrawal and the
associated charge, may not be used to reduce the Account Value below the
amount JHVLICO estimates will be required to pay three months' charges under
the Policy as they fall due. The withdrawal will be effective as of the end of
the Valuation Period in which JHVLICO receives written notice satisfactory to
it at its Servicing Office.

An amount equal to the Account Value withdrawn will be removed from each
Subaccount in the same proportion as the Account Value is then allocated among
the Subaccounts. A withdrawal is not a loan and, once made, cannot be repaid.

The effect of a withdrawal, including its associated charge, upon the death
benefit depends upon the death benefit option in effect.

Option 1. Level Death Benefit. Any withdrawal will first be deducted from
Account Value until the Account Value, multiplied by the appropriate Corridor
Factor, is no higher than the Sum Insured. Thereafter, both the Sum Insured
and the Account Value will be reduced by the remaining amount of the
withdrawal. If the Account Value multiplied by the appropriate Corridor Factor
does not exceed the Sum Insured at the time of the withdrawal, the withdrawal
will reduce both the Sum Insured and the Account Value.

Option 2. Variable Death Benefit. Any withdrawal will be deducted from
Account Value and will not affect the Sum Insured. Nonetheless, because
Account Value will be reduced, the death benefit under this option also will
be reduced.

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<PAGE>

Option 3. Level Death Benefit with Greater Funding. Any withdrawal will
first be deducted from Account Value until the Account Value, multiplied by
the appropriate Death Benefit Factor, is no higher than the Sum Insured.
Thereafter, both the Sum Insured and the Account Value will be reduced by any
remaining amount of the withdrawal. If the Account Value multiplied by the
appropriate Death Benefit Factor does not exceed the Sum Insured at the time
of the withdrawal, the withdrawal will reduce both the Sum Insured and the
Account Value.

A surrender or withdrawal may have significant tax consequences. See "Tax
Considerations".

JHVLICO reserves the right to refuse any withdrawal request that would cause
the Policy's Sum Insured to fall below $100,000.

DEATH BENEFITS

The death benefit proceeds will equal the death benefit of the Policy, plus
any additional rider benefits then due, minus any Indebtedness. If the insured
dies during a Policy grace period, JHVLICO will also deduct any overdue
monthly deductions.

The death benefit payable depends on the current Sum Insured and the death
benefit option selected by the Owner. At the time of application for a Policy,
the Owner must select from among three death benefit options. After issue of
the Policy the Owner may change the selection from Option 1 to Option 2 or
vice versa, subject to such evidence of insurability as JHVLICO may require.
The three options are:

Option 1: Level Death Benefit: Under this option, the death benefit will
equal the Sum Insured, unless the Account Value multiplied by the Corridor
Factor produces a higher death benefit. The Corridor Factor depends upon the
attained age of the insured. The Corridor Factor decreases slightly (or
remains the same at older and younger ages) from year to year as the attained
age of the insured increases. A complete list of Corridor Factors is set forth
in the Policy. The Policy will be subject under this option to the "guideline
premium and cash value corridor" test as defined by Internal Revenue Code
("Code") Section 7702. This option will offer the best opportunity for the
Account Value under a Policy to increase without increasing the death benefit
as quickly as it might under the other options. When the Account Value
multiplied by the Corridor Factor exceeds the Sum Insured, the death benefit
will increase whenever there is an increase in the Account Value and will
decrease whenever there is a decrease in the Account Value, but never below
the Sum Insured.

Option 2: Variable Death Benefit: Under this option, the death benefit will
equal the Sum Insured plus any Account Value, unless the Account Value
multiplied by the Corridor Factor produces a higher death benefit. The
Corridor Factor depends upon the then attained age of the insured. The
Corridor Factor decreases slightly (or remains the same at older and younger
ages) from year to year as the attained age of the insured increases. A
complete list of Corridor Factors is set forth in the Policy. Under this
option the Policy will be subject to the "guideline premium and cash value
corridor" test as defined by Code Section 7702. This option will offer the
best opportunity for the Owner who would like to have an increasing death
benefit as early as possible. The death benefit will increase whenever there
is an increase in the Account Value and will decrease whenever there is a
decrease in the Account Value, but never below the Sum Insured.

Option 3: Level Death Benefit With Greater Funding: Under this option, the
death benefit will equal the Sum Insured, unless the Account Value, multiplied
by the Death Benefit Factor, gives a higher death benefit. The Death Benefit
Factor depends upon the sex, smoking status and then attained age of the
insured. The Death Benefit Factor decreases slightly from year to year as the
attained age of the insured increases. A complete list of Death Benefit
Factors is set forth in the Policy. Under this option, the death benefit will
be subject to the

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<PAGE>

"cash value accumulation" test as defined by Code Section 7702. This option
will offer the best opportunity for the Owner who is looking for an increasing
death benefit in later Policy years and/or would like to fund the policy at
the "7-pay" limit for the full 7 years. When the Account Value multiplied by
the Death Benefit Factor exceeds the Sum Insured, the death benefit will
increase whenever there is an increase in the Account Value and will decrease
whenever there is a decrease in the Account Value, but never below the Sum
Insured.

Definition of Life Insurance. Federal tax law requires a minimum death
benefit in relation to cash value for a Policy to qualify as life insurance.
The death benefit of a Policy will be increased if necessary to ensure that
the Policy will continue to qualify as life insurance. One of two tests under
current Federal tax law can be used to determine if a Policy complies with the
definition of life insurance in Section 7702 of the Code.

The "guideline premium and cash value corridor" test limits the amount of
premiums payable under a Policy to a certain amount for an insured of a
particular age and sex. The test also applies a prescribed "Corridor Factor"
to determine a minimum ratio of death benefit to Account Value.

The "cash value accumulation test" also limits the amount of premiums
payable under a Policy to a prescribed amount, using a minimum ratio of death
benefit to Account Value, but employs as a standard a "net single premium"
computed in compliance with the Code. If the Account Value under a Policy is
at any time greater than the net single premium at the insured's age and sex
for the proposed death benefit, the death benefit will be increased
automatically by multiplying the Account Value by a "Death Benefit Factor"
computed in compliance with the Code.

Guaranteed Death Benefit. During the first 5 Policy years the Policy is
guaranteed not to lapse, provided that (1) the amount of premiums paid through
each Modal Processing Date minus any withdrawals is at least equal to the sum
of the cumulative Guaranteed Death Benefit Premiums due to date and (2) the
insured is in the standard or preferred underwriting class and satisfies
certain other underwriting standards relating to health and occupation. At any
time when this feature is not in force, the death benefit of the Policy is not
guaranteed and the Policy may lapse if the Account Value falls to a low level.

TRANSFERS AMONG SUBACCOUNTS

The Owner may reallocate the amounts held for the Policy in the Subaccounts
with no charge at any time, except as noted below. The Owner may either (1)
use percentages (in whole numbers) to be transferred among Subaccounts or (2)
designate the dollar amount of funds to be transferred among Subaccounts. The
reallocation must be such that the total in the Subaccounts after reallocation
equals 100% of Account Value. Transfers out of a variable Subaccount will be
effective at the end of the Valuation Period in which JHVLICO receives at its
Servicing Office notice satisfactory to JHVLICO.

Transfers out of the Fixed Account to the variable Subaccounts are permitted
only once each Policy year and only during the 31-day period beginning on the
Policy anniversary. Transfers out of the Fixed Account may be requested from
60 days before to 30 days after the Policy anniversary. If received on or
before the Policy anniversary, requests for transfer out of the Fixed Account
will be processed on the Policy anniversary (or the next Valuation Date if the
Policy anniversary does not occur on a Valuation Date); if received after the
Policy anniversary, they will be processed at the end of the Valuation Period
in which JHVLICO receives the request at its Servicing Office. (JHVLICO
reserves the right to defer such Fixed Account transfers for six months.) If
an Owner requests a transfer out of the Fixed Account 61 days or more prior to
the Policy anniversary, that portion of the reallocation will not be processed
and the Owner's confirmation statement will not reflect a transfer out of the
Fixed Account as to such request. Transfers among variable Subaccounts and
transfers into the Fixed Account

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<PAGE>

may be requested at any time. A maximum of 20% of Fixed Account assets or, if
greater, $500 may be transferred out of the Fixed Account in any Policy year.
Currently, there is no minimum amount limit on transfers out of the Fixed
Account, but JHVLICO reserves the right to impose such a limit in the future.
No transfers among Subaccounts may be made while the Policy is in a grace
period.

If the Owner requests a reallocation which would result in amounts being
held in more than ten Subaccounts, such reallocation will not be effective and
a revised reallocation may be chosen in order that amounts will be reallocated
to no more than ten Subaccounts.

Dollar Cost Averaging. A scheduled monthly transfer option is available to
Owners seeking to take advantage of "dollar cost averaging". This option
provides for the automatic transfer on a monthly basis of a dollar amount
chosen by the Owner from the Money Market Subaccount to any of the other
variable Subaccounts.

Eligibility for this option is limited to an Owner who has $2,500 or more in
the Money Market Subaccount on the day the transfer is scheduled to begin.
Scheduled transfers may be made to any one or more but not more than nine of
any other variable Subaccounts but the amount to be transferred monthly to any
Subaccount must be $100 or more.

Once the election is received in form satisfactory to JHVLICO at its
Servicing Office, transfers will begin on the second monthly processing date
following its receipt. To make an election or if you have any questions with
respect to this provision, call 1-800-732-5543.

Once elected, the scheduled monthly transfer option will remain in effect
until the receipt of written notice from the Owner by JHVLICO at its Servicing
Office of cancellation of the option or receipt of notice of the death of the
insured, whichever first occurs.

Telephone Transfers and Policy Loans. Once a written authorization is
completed by the Owner, the Owner may request a transfer or policy loan by
telephoning 1-800-732-5543 or by sending a written request via fax to 1-800-
621-0448. Any fax request should include the Owner's name, daytime telephone
number, Policy number and, in the case of transfers, the names of the
Subaccounts from which and to which money will be transferred. The right to
discontinue telephone transactions at any time without notice to Owners is
specifically reserved. If the fax request option becomes unavailable, another
means of telecommunication will be substituted.

An Owner who authorizes telephone transactions will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which JHVLICO reasonably believes to be genuine, unless such
loss, expense or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide safeguards against the execution of
unauthorized transactions, and which are reasonably designed to confirm that
instructions received by telephone are genuine. These procedures include
requiring personal identification, tape recording calls, and providing written
confirmation to the Owner. If JHVLICO does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, it may be
liable for any loss due to unauthorized or fraudulent instructions.

LOAN PROVISIONS AND INDEBTEDNESS

Loan Provision. Loans may be made at any time a Loan Value is available
after the first Policy year. The Owner may borrow money, assigning the Policy
as the only security for the loan, by completion of a form satisfactory to
JHVLICO or, if the telephone transaction authorization form has been
completed, by telephone.

17
<PAGE>

Assuming no outstanding Indebtedness, in Policy years two and three the Loan
Value will be 75% of that portion of the Surrender Value attributable to the
variable Subaccount investments, plus 100% of that portion of the Surrender
Value attributable to Fixed Account investments and, in later Policy years,
90% of that portion of the Surrender Value attributable to variable Subaccount
investments, plus 100% of that portion of the Surrender Value attributable to
Fixed Account investments. Interest charged on any loan will accrue and
compound daily at an effective annual rate of 5.0% in the first 20 Policy
years, and 4.50% thereafter.

The amount of any outstanding loan plus accrued interest is called the
"Indebtedness". A loan will not be permitted unless it is at least $300. The
Owner may repay all or a portion of any Indebtedness while the insured is
living and the Policy is not in a grace period. When a loan is made, an amount
equal to the loan proceeds will be transferred out of the Account and the
Fixed Account, as applicable. This amount is allocated to a portion of
JHVLICO's general account called "Loan Assets". Each Subaccount will be
reduced in the same proportion as the Account Value is then allocated among
the Subaccounts. Upon each loan repayment, the same proportionate amount of
the entire loan as was borrowed from the Fixed Account will be repaid to the
Fixed Account. The remainder of the loan repayment will be allocated to the
appropriate Subaccounts as stipulated in the then current Investment Rule. For
example, if the entire loan outstanding is $3,000 of which $1,000 was borrowed
from the Fixed Account, then upon a repayment of $1,500, $500 would be
allocated to the Fixed Account and the remaining $1,000 would be allocated to
the appropriate Subaccounts as stipulated in the then current Investment Rule.
If an Owner wishes any payment to constitute a loan repayment (rather than a
premium payment), the Owner must so specify.

Effect of Loan and Indebtedness. While the Indebtedness is outstanding, that
portion of the Account Value that is in Loan Assets is credited interest at a
rate that is 1% less than the loan interest rate for the first 20 Policy years
and, thereafter, .5% less than the loan interest rate. This rate will usually
be different than the net return for the Subaccounts. Since the Loan Account
and the remaining portion of the Account Value will generally have different
rates of investment return, the Account Value, the Surrender Value, and any
death benefit above the Sum Insured are permanently affected by any
Indebtedness, whether or not it is repaid in whole or in part. The amount of
any Indebtedness is subtracted from the amount otherwise payable when the
Policy proceeds become payable.

Whenever the Indebtedness equals or exceeds the Surrender Value, the Policy
terminates 31 days after notice has been mailed by JHVLICO to the Owner and
any assignee of record at their last known addresses, unless a repayment of
the excess Indebtedness is made within that period.

If a Policy is a modified endowment at the time a loan is made, that loan
may have significant tax consequences. See "Tax Considerations".

DEFAULT

Grace Period, Default and Lapse. Unless the 5 Year Guaranteed Death Benefit
is in force, at the beginning of each Policy month JHVLICO determines whether
the Account Value, net of any Indebtedness, is sufficient to pay all monthly
charges then due under the Policy. If not, the Policy is in default and
JHVLICO will notify the Owner of the amount estimated to be necessary to pay
three months' deductions, and a Policy grace period will be in effect until 61
days after the date the notice was mailed. If JHVLICO does not receive payment
of at least this amount by the end of the Policy grace period, the Policy will
lapse, and any remaining amount owed to the Owner as of the date of lapse will
be paid to the Owner.

Lapse can have significant tax consequences. See "Tax Considerations--Policy
Proceeds". If the Guaranteed Death Benefit has been in effect and lapses at
the end of a Guaranteed Death Benefit grace period

18
<PAGE>

(as described in "Premiums--Guaranteed Death Benefit Premiums"), the usual
default, Policy grace period and lapse procedures described in the preceding
paragraph will be applied commencing with the first day of the Policy month in
which the lapse of the Guaranteed Death Benefit occurs.

The insurance under the Policy continues in full force during any grace
period but, if the insured dies during the Policy grace period, the amount in
default is deducted from the death benefit otherwise payable.

Written notice will be furnished to the Owner at his or her last known
address, at least 31 days prior to the end of any grace period. If in the
Policy grace period, the notice will specify the minimum amount which must be
paid to continue the Policy in force on a premium paying basis after the end
of the Policy grace period. If in the Guaranteed Death Benefit grace period,
the notice will specify the amount which must be paid to continue the
Guaranteed Death Benefit feature in force.

Reinstatement. A lapsed Policy may be reinstated in accordance with the
Policy's terms. Evidence of insurability satisfactory to JHVLICO will be
required and payment of the required premium and charges. The request must be
received at JHVLICO's Servicing Office within 1 year after the beginning of
the applicable grace period. A reinstatement of the Policy may be treated as a
material change for Federal income tax purposes. See "Premiums--7-Pay Premium
Limit" and "Tax Considerations".

EXCHANGE PRIVILEGE

The Owner may transfer the entire Account Value under the Policy to the
Fixed Account at any time, creating a non-variable policy. The exchange will
be effective at the end of the Valuation Period in which JHVLICO receives at
its Servicing Office notice of the transfer satisfactory to JHVLICO.

-------------------------

The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.

CHARGES AND EXPENSES

CHARGES DEDUCTED FROM PREMIUMS

In addition to part of the sales charges (see "Sales Charges" below), the
following charges are deducted from premiums:

State Premium Tax Charge. A charge currently equal to 2.35% of each premium
payment will be deducted from each premium payment. The 2.35% rate is the
average state premium tax rate currently expected to be paid on premiums
received in all states over the lifetimes of the insureds covered by the
Policies. JHVLICO will not increase this charge under outstanding Policies,
but reserves the right to change this charge for Policies not yet issued in
order to correspond with changes in the state premium tax levels.

Federal DAC Tax Charge. A charge currently equal to 1.25% of each premium
payment will be deducted from each premium payment to cover the estimated cost
to JHVLICO of the Federal income tax treatment of the Policies' deferred
acquisition costs--commonly referred to as the "DAC Tax". JHVLICO has
determined that this charge is reasonable in relation to JHVLICO's increased
Federal income tax burden under the Internal Revenue Code resulting from the
receipt of premiums. JHVLICO will not increase this charge under outstanding
Policies, but reserves the right, subject to any required regulatory approval,
to change this charge for Policies not

19
<PAGE>

yet issued in order to correspond with changes in the Federal income tax
treatment of the Policies' deferred acquisition costs.

SALES CHARGES

Charges are made to compensate JHVLICO for the cost of selling the Policy.
This cost includes agents' commissions, commission overrides, advertising, and
the printing of Prospectuses and sales literature. The amount of the charge in
any Policy year cannot be specifically related to sales expenses for that
year. JHVLICO expects to recover its total sales expenses over the period the
Policies are in effect. To the extent that sales charges are insufficient to
cover total sales expenses, the sales expenses may be recovered from other
sources, including gains from the charge for mortality and expense risks and
other gains with respect to the Policies, or from JHVLICO's general assets.
See "Distribution of Policies".

From Premiums. Part of the sales charge is deducted from premiums received.
The amount is 4% of the premiums received in any Policy year that do not
exceed that year's total Target Premium. The Target Premium is established at
issue and is the sum of Base Policy Target Premium and any rider premium. The
Base Policy Target Premium is set forth in the Policy. Target Premiums will
vary based on the issue age, sex, smoking status and underwriting class of the
insured. JHVLICO currently intends to make this deduction only in the first 10
Policy years, but this is not contractually guaranteed and the right is
reserved to continue deductions over a longer period. Because the Policies
were first offered for sale in 1994, no Policies have yet been outstanding for
more than 10 years.

JHVLICO will waive a portion of the sales charge (it is currently waiving a
portion equal to 2% of all premiums from which sales charges are deducted)
otherwise to be deducted from premiums under a Policy with a current Sum
Insured of $250,000 or higher. The continuation of this waiver is not
contractually guaranteed and the waiver may be withdrawn or modified by
JHVLICO in the future.

No sales charge is deducted from a premium payment received in excess of one
Target Premium in any Policy year.

Contingent Deferred Sales Charge. The remainder of the sales charge will be
deducted only if the Policy is surrendered or stays in default past its grace
period. This second part is the Contingent Deferred Sales Charge. The
Contingent Deferred Sales Charge, however, will not be deducted for a Policy
that lapses or is surrendered on or after the Policy's twelfth anniversary,
and it will be reduced for a Policy that lapses or is surrendered between the
end of the seventh Policy year and the end of the twelfth Policy year.

20
<PAGE>

The Contingent Deferred Sales Charge is computed as a percentage of Base
Policy Target Premiums paid in accordance with the following schedule:

<TABLE>
<CAPTION>
Maximum Contingent
For Surrenders or Lapses Effective During: Deferred Sales Charge
------------------------------------------ ---------------------
<S> <C>
Policy Year 1 26% of premiums received in Policy
Year 1 up to 1 Base Policy Target
Premium*
Policy Year 2 26% of premiums received in Policy
Years 1 and 2 up to 1 Base Policy
Target Premium in each year
Policy Years 3-7 26% of premiums received in Policy
Years 1, 2 and 3 up to to 1 Base
Policy Target Premium in each year
Policy Year 8 83.33% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 9 66.67% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 10 50% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 11 33.33% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 12 16.67% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 13 and later 0
</TABLE>
- --------
*The amount of the Contingent Deferred Sales Charge is calculated on the
basis of the Base Policy Target Premium for the age of the insured at the time
of issue of the Policy.

The Contingent Deferred Sales Charge reaches its maximum at the end of the
third Policy year, stays level through the seventh Policy year, and is reduced
by an equal amount at the beginning of each Policy year thereafter until it
reaches zero in Policy year 13. At issue ages higher than age 54, the maximum
is reached at an earlier Policy year, and may be reduced to zero over a
shorter number of years.

Effect of Premium Payment Pattern. An Owner may structure the timing and
amount of premium payments to minimize the sales charges, although doing so
involves certain risks. Paying less than one Target Premium in the first
Policy year or paying more than one Target Premium in any Policy year could
reduce the Owner's total sales charges over time. For example, an Owner,
paying ten Target Premiums of $1,000 each would pay total premium sales
charges of $400 and be subject to a maximum Contingent Deferred Sales Charge
of $780 if he paid $1,000 in each of the first ten Policy years, but would pay
only a $200 premium sales charge and $520 Contingent Deferred Sales Charge if
he paid $2,000 (i.e., two times the Target Premium amount) in every other
Policy year up to the tenth Policy year. However, delaying the payment of
Target Premiums to later Policy years could increase the risk that the Account
Value will be insufficient to pay monthly Policy charges as they come due and
that, as a result, the Policy will lapse and eventually terminate. See
"Default". Conversely, accelerating the payment of Target Premiums to earlier
Policy years could cause aggregate premiums paid to exceed the Policy's 7-pay
premium limit and, as a result, cause the Policy to become a modified
endowment,

21
<PAGE>

with adverse tax consequences to the Owner upon receipt of Policy
distributions. See "Premiums--7-Pay Premium Limit".

ADMINISTRATIVE SURRENDER CHARGE

A charge is made if the Policy is surrendered or lapses in the first nine
Policy years to recover administrative expenses relating to the Policy which
would not otherwise be recouped. The maximum charge in Policy years 1 through
7 is $5 per $1,000 of current Sum Insured, in Policy year 8 is $4 per $1,000
of current Sum Insured and in Policy year 9 is $3 per $1,000 of current Sum
Insured.

This charge is made to compensate JHVLICO for expenses incurred in
connection with the underwriting, issuance and maintenance of the Policy which
may not be recovered upon the early surrender or lapse of the Policy.

REDUCED CHARGES FOR ELIGIBLE GROUPS

The sales charges, Administrative Surrender Charge and Issue Charge
(described below) otherwise applicable may be reduced with respect to Policies
issued to a class of associated individuals or to a trustee, employer or
similar entity where JHVLICO anticipates that the sales to the members of the
class will result in lower than normal sales or administrative expenses. These
reductions will be made in accordance with JHVLICO's rules in effect at the
time of the application for a Policy. The factors considered by JHVLICO in
determining the eligibility of a particular group for reduced charges, and the
level of the reduction, are as follows: the nature of the association and its
organizational framework; the method by which sales will be made to the
members of the class; the facility with which premiums will be collected from
the associated individuals and the association's capabilities with respect to
administrative tasks; the anticipated persistency of the Policies; the size of
the class of associated individuals and the number of years it has been in
existence; and any other such circumstances which justify a reduction in sales
or administrative expenses. Any reduction will be reasonable and will apply
uniformly to all prospective Policy purchasers in the class and will not be
unfairly discriminatory to the interests of any owner.

CHARGES DEDUCTED FROM ACCOUNT VALUE OR ASSETS

The following charges are deducted from Account Value or assets:

Issue Charge. JHVLICO will deduct monthly from Account Value an Issue Charge
equal to $20 per month for the first 12 Policy months to compensate JHVLICO
for expenses incurred in connection with the issuance of the Policy, other
than sales expenses. Such expenses include medical examinations, insurance
underwriting costs and costs incurred in processing applications and
establishing permanent Policy records.

Maintenance charge. JHVLICO will deduct from the Account Value a monthly
charge not to exceed $8 for all Policy years. The current monthly charge is
$6.

This charge is to compensate JHVLICO for administrative expenses, including
recordkeeping, processing death claims and surrenders, making Policy changes,
reporting and other communications to Owners and other similar expense and
overhead costs.

Insurance Charge. The insurance charge deducted monthly from Account Value
is based on the attained age of the insured and the amount at risk. The amount
at risk is the difference between the current death benefit

22
<PAGE>

and the Account Value. The amount of the insurance charge is determined by
multiplying JHVLICO's then current monthly rate for insurance by the amount at
risk.

Current monthly rates for insurance are based on the sex, age, smoking
status and underwriting class of the insured and the length of time the Policy
has been in effect. JHVLICO will review these rates at least every 5 years,
and may change these rates from time to time based on JHVLICO's expectations
of future experience. However, these rates will never be more than the
guaranteed maximum rates based on the 1980 Commissioners' Standard Ordinary
Mortality Tables set forth in the Policy.

A reduction in the insurance charge may be made to a Policy beginning on the
first day of the first month in the tenth Policy year. This reduction is not
guaranteed but it is JHVLICO's present intention to effect this reduction in
the tenth and following Policy years as long as the Policy is in force.

The amount of the reduction will depend upon the length of time the Policy
has been in force. In the tenth Policy year the monthly insurance charge will
be reduced by an amount equal to a percentage of the then Account Value. This
percentage will begin at an effective annual rate of .20% in the tenth Policy
year and increase annually by .01% through and including the thirtieth Policy
year. Thereafter the percentage reduction each year the Policy remains in
force will be at an effective annual rate of .40%.

For example, it is expected that the reduction percentage in Policy year 11
would be at an effective annual rate of .21%, in Policy year 20 would be .30%
and in Policy year 30 would be .40%.

JHVLICO reserves the right to modify or discontinue this reduction. Because
the Policies were first offered for sale in 1994, no reductions have yet been
made.

Lower current insurance rates are offered at most ages for insureds who are
eligible for the preferred underwriting class of the Policy.

JHVLICO also charges lower current insurance rates under a Policy with a
current Sum Insured of $250,000 or higher, but these lower rates are not
contractually guaranteed and may be withdrawn at some future date.

Charge for Mortality and Expense Risks. A daily charge is deducted from the
variable Subaccounts for mortality and expense risks assumed by JHVLICO at a
maximum effective annual rate of .90% of the value of the assets of each
variable Subaccount attributable to the Policy. The current charge is at an
effective annual rate of .60%. This charge begins when amounts under a Policy
are first allocated to the Account. The mortality risk assumed is that
insureds may live for a shorter period of time than estimated and, therefore,
a greater amount of death benefit than expected will be payable in relation to
the amount of premiums received. The expense risk assumed is that expenses
incurred in issuing and administering the Policies will be greater than
estimated. JHVLICO will realize a gain from this charge to the extent it is
not needed to provide for benefits and expenses under the Policies.

Charges for Extra Mortality Risks. An insured who does not qualify for the
standard or preferred underwriting class must pay an additional charge because
of the extra mortality risk. The level of the charge depends upon the age of
the insured and the degree of extra mortality risk. This additional charge is
deducted monthly from Account Value. Alternatively, the charge may take the
form of an additional insurance charge as described above.

23
<PAGE>

Charges for Optional Rider Benefits. An additional charge must be paid if
the Owner elects to purchase any optional insurance benefit by Policy rider.
Any such additional charge is deducted monthly from Account Value.

Charges for Taxes. Currently no charge is made against Account Value for
JHVLICO's Federal income taxes but if JHVLICO incurs, or expects to incur,
income taxes attributable to the Account or this class of Policies in future
years, it reserves the right to make a charge, and any charge would affect
what the Subaccounts earn. Charges for other taxes, if any, attributable to
the Subaccounts may also be made.

Charge for Partial Withdrawal. JHVLICO will deduct a charge in the amount of
$20 on a partial withdrawal of Surrender Value, as described under "Account
Value and Surrender Value". The charge will be deducted from Account Value.
The charge is to compensate JHVLICO for the administrative expenses of
effecting the withdrawal.

Fund Investment Management Fees and Other Fund Expenses. The Account
purchases shares of the Funds at net asset value, a value which reflects the
deduction from the assets of each Fund of its investment management fees and
certain non-advisory Fund operating expenses, which are described briefly in
the Summary of this Prospectus. For a full description of these deductions,
see the attached Prospectuses for the Funds.

The monthly deductions from Account Value described above are deducted on
the date of issue and on each monthly processing date thereafter. These
deductions are made from the Subaccounts in proportion to the amount of
Account Value in each. For each month that JHVLICO is unable to deduct any
charge because there is insufficient Account Value, the uncollected charges
will accumulate and be deducted when and if sufficient Account Value is
available.

GUARANTEE OF PREMIUMS AND CERTAIN CHARGES

The Policy's Guaranteed Death Benefit Premium is guaranteed not to increase.
The state premium tax charge, the Federal DAC Tax charge, the Administrative
Surrender Charge, the Issue Charge and the charge for partial withdrawals are
guaranteed not to increase over the life of the Policy. The maintenance
charge, the sales charges, the mortality and expense risk charge, and the
insurance charge are guaranteed not to exceed the maximums set forth in the
Policy.

DISTRIBUTION OF POLICIES

Applications are solicited by agents who are licensed by state insurance
authorities to sell JHVLICO's Policies and who are also registered
representatives ("representatives") of John Hancock Distributors, Inc.
("Distributors"), an indirect wholly-owned subsidiary of John Hancock located
at 197 Clarendon Street, Boston, MA 02117, or other broker-dealer firms, as
discussed below. John Hancock performs insurance underwriting and determines
whether to accept or reject the application for a Policy and each insured's
risk classification. Pursuant to a sales agreement among John Hancock,
Distributors, JHVLICO, and the Account, Distributors acts as the principal
underwriter of the Policies. The sales agreement will remain in effect until
terminated upon sixty days' written notice by any party. JHVLICO will make the
appropriate refund if a Policy ultimately is not issued or is returned under
the short-term cancellation provision. Officers and employees of John Hancock
and JHVLICO are covered by a blanket bond by a commercial carrier in the
amount of $25 million.

Distributors' representatives are compensated for sales of the Policies on a
commission and service fee basis by Distributors, and JHVLICO reimburses
Distributors for such compensation and for other direct and indirect

24
<PAGE>

expenses (including agency expense allowances, general agent, district manager
and supervisor's compensation, agent's training allowances, deferred
compensation and insurance benefits of agents, general agents, district
managers and supervisors, agency office clerical expenses and advertising)
actually incurred in connection with the marketing and sale of the Policies.

The maximum commission payable to a John Hancock representative for selling
a Policy is 45% of the Target Premium paid in the first Policy year, 7.5% of
the Target Premium paid in the second Policy year, and 5% of the Target
Premium paid in each year thereafter. The maximum commission on any premium
paid in any year in excess of the Target Premium is 3%.

In addition, Distributors' representatives may earn "credits" toward
qualification for attendance at certain business meetings sponsored by John
Hancock.

Representatives with less than four years of service with Distributors and
those compensated on salary plus bonus or level commission programs may be
paid on a different basis. Representatives who meet certain productivity and
persistency standards with respect to the sale of policies issued by JHVLICO
and John Hancock will be eligible for additional compensation.

Distributors is registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer, is a member of the National Association of
Securities Dealers, Inc., and is a member of the Securities Investor
Protection Corporation. The Policies are also sold through other registered
broker-dealers that have entered into selling agreements with Distributors and
whose representatives are authorized by applicable law to sell variable life
insurance policies. The commissions which will be paid by such broker-dealers
to their representatives will be in accordance with their established rules.
The commission rates may be more or less than those set forth above for
Distributors' representatives. In addition, their qualified registered
representatives may be reimbursed by the broker-dealers under expense
reimbursement allowance programs in any year for approved voucherable expenses
incurred. Distributors will compensate the broker-dealers as provided in the
selling agreements, and JHVLICO will reimburse Distributors for such amounts
and for certain other direct expenses in connection with marketing the
Policies through other broker-dealers.

Distributors serves as principal underwriter for other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V, John Hancock Mutual Variable Life Insurance Account UV and John Hancock
Variable Life Accounts V and S. Distributors is also the principal underwriter
for John Hancock Variable Series Trust I.

TAX CONSIDERATIONS

The below description of Federal income tax consequences is only a brief
summary and is not intended as tax advice. For further information consult a
qualified tax advisor. Federal, state and local tax laws can change from time
to time and, as a result, the tax consequences to the Owner and beneficiary
may be altered.

POLICY PROCEEDS

Although the Policy contains provisions not found in fixed benefit life
insurance policies, JHVLICO believes the Policy will receive the same Federal
income and estate tax treatment. Section 7702 of the Internal Revenue Code
("Code") defines life insurance for Federal tax purposes. See "Death
Benefits--Definition of Life Insurance". If certain standards are met at issue
and over the life of the Policy, the Policy will come within

25
<PAGE>

that definition. JHVLICO will monitor compliance with these standards.
Furthermore, JHVLICO reserves the right to make any changes in the Policy
necessary to ensure the Policy is within the definition of life insurance.

If the Policy complies with the definition of life insurance, JHVLICO
believes the death benefit under the Policy will be excludable from the
beneficiary's gross income under Section 101 of the Code. In addition,
increases in Account Value as a result of interest or investment experience
will not be subject to Federal income tax unless and until values are actually
received through withdrawal, surrender or other distributions.

A surrender, lapse or partial withdrawal may have tax consequences. For
example, the Owner will be taxed on a surrender to the extent that the Account
Value exceeds the premiums paid under the Policy, ignoring premiums paid for
riders. But under certain circumstances within the first 15 Policy years, the
Owner may be taxed on a withdrawal of Policy values even if total withdrawals
do not exceed total premiums paid.

JHVLICO also believes that, except as noted below, loans received under the
Policy will be treated as indebtedness of an Owner and that no part of any
loan will constitute income to the Owner. However, the amount of any loan
outstanding will be taxed to the Owner if the Policy lapses.

Distributions under Policies on which premiums greater than the "7-pay"
limit (see "Premiums--7-Pay Premium Limit") have been paid will be treated as
distributions from a "modified endowment," which are subject to special
taxation based on Federal tax law. The Owner of such a Policy will be taxed on
distributions such as loans, surrenders and partial withdrawals to the extent
of any income (gain) to the Owner (income-first basis). The distributions
affected will be those made on or after, and within the two year period prior
to, the time the Policy becomes a modified endowment. Additionally, a 10%
penalty tax may be imposed on affected income distributed before the Owner
attains age 59 1/2.

Furthermore, any time there is a "material change" in a Policy (such as the
addition of certain other Policy benefits after issue, or reinstatement of a
lapsed Policy), the Policy will be subject to a new "7-pay" test, with the
possibility of a tax on distributions if it were subsequently to become a
modified endowment. Moreover, if benefits under a Policy are reduced (such as
a reduction in the Sum Insured or death benefit or the reduction or
cancellation of certain rider benefits, or Policy termination) during the 7
years in which the 7-pay test is being applied, the 7-pay limit will be
recalculated based on the reduced benefits. If the premiums paid to date are
greater than the recalculated 7-pay limit, the Policy will become a modified
endowment.

All modified endowments issued by the same insurer (or affiliates) to the
Owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. Your tax advisor should
be consulted if you have questions regarding the possible impact of the 7-pay
limit on your Policy.

Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary.

CHARGE FOR JHVLICO'S TAXES

Except for the DAC Tax charge, JHVLICO currently makes no charge for Federal
income taxes that may be attributable to this class of Policies. If JHVLICO
incurs, or expects to incur, income taxes attributable to this class of
Policies or any Subaccount in the future, it reserves the right to make a
charge for those taxes.

Under current laws, JHVLICO may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, charges
for such taxes may be made.

26
<PAGE>

CORPORATE AND H.R. 10 PLANS

The Policy may be acquired in connection with the funding of retirement
plans satisfying the qualification requirements of Section 401 of the Code. If
so, the Code provisions relating to such plans and life insurance benefits
thereunder should be carefully scrutinized.

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO

The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:

<TABLE>
<CAPTION>
Directors Principal Occupations
--------- ---------------------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief Executive Officer of
JHVLICO; Senior Executive Vice President and Direc-
tor, John Hancock Mutual Life Insurance Company.
Henry D. Shaw Vice Chairman of the Board and President of JHVLICO;
Senior Vice President, John Hancock Mutual Life In-
surance Company.
Thomas J. Lee Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Michele G. Van Leer Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Ronald J. Bocage Director, Vice President and Counsel of JHVLICO;
Vice President and Counsel, John Hancock Mutual Life
Insurance Company.
Joseph A. Tomlinson Director and Vice President of JHVLICO; Vice Presi-
dent, John Hancock Mutual Life Insurance Company.
Robert R. Reitano Director of JHVLICO; Vice President, John Hancock
Mutual Life Insurance Company.
Robert S. Paster Director of JHVLICO; Second Vice President, John
Hancock Mutual Life Insurance Company.
Barbara L. Luddy Director and Actuary of JHVLICO; Second Vice Presi-
dent, John Hancock Mutual Life Insurance Company.
Daniel L. Ouellette Vice President, Marketing, of JHVLICO; Vice Presi-
dent, John Hancock Mutual Life Insurance Company.
Patrick F. Smith Controller of JHVLICO; Assistant Controller, John
Hancock Mutual Life Insurance Company.
</TABLE>

The business address of all Directors and officers of JHVLICO is John
Hancock Place, Boston, Massachusetts 02117.

REPORTS

At least once each Policy year a statement will be sent to the Owner setting
forth the amount of the death benefit, Account Value, the portion of the
Account Value in each Subaccount, Surrender Value, premiums received and
charges deducted from premiums since the last report, and any outstanding
Policy loan (and interest charged for the preceding Policy year) as of the
last day of such year. Moreover, confirmations will be furnished

27
<PAGE>

to Owners of premium payments, transfers among Subaccounts, Policy loans,
partial withdrawals and certain other Policy transactions.

Owners will be sent semiannually a report containing the financial
statements of the Funds, including a list of securities held in each
Portfolio.

VOTING PRIVILEGES

All of the assets in the variable Subaccounts of the Account are invested in
shares of the corresponding Portfolios of the Funds. JHVLICO will vote the
shares of each of the Portfolios of the Funds which are deemed attributable to
qualifying variable life insurance policies and variable annuity contracts at
regular and special meetings of the Funds' shareholders in accordance with
instructions received from owners of such policies or contracts. Shares of the
Funds held in the Account which are not attributable to such policies or
contracts and shares for which instructions from owners are not received will
be represented by JHVLICO at the meeting and will be voted for and against
each matter in the same proportions as the votes based upon the instructions
received from the owners of all such policies and contracts.

The number of Fund shares held in each variable Subaccount deemed
attributable to each owner is determined by dividing the amount of a Policy's
Account Value held in the variable Subaccount by the net asset value of one
share in the corresponding Fund Portfolio in which the assets of that variable
Subaccount are invested. Fractional votes will be counted. The number of
shares as to which the owner may give instructions will be determined as of
the record date for the Funds' meetings.

Owners of Policies may give instructions regarding the election of the Board
of Trustees of each Fund, ratification of the selection of independent
auditors, approval of Fund investment advisory agreements and other matters
requiring a vote under the 1940 Act. Owners will be furnished information and
forms by JHVLICO in order that voting instructions may be given.

JHVLICO may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to change the investment objectives of the Portfolios or to
approve or disapprove an investment advisory or underwriting contract for a
Fund. JHVLICO also may disregard voting instructions in favor of changes
initiated by an owner or a Fund's Board of Trustees in an investment policy,
investment adviser or principal underwriter of the Fund, if JHVLICO (i)
reasonably disapproves of such changes and (ii) in the case of a change of
investment policy or investment adviser, makes a good-faith determination that
the proposed change is contrary to state law or prohibited by state regulatory
authorities or that the change would be inconsistent with a variable
Subaccount's investment objectives or would result in the purchase of
securities which vary from the general quality and nature of investments and
investment techniques utilized by other separate accounts of JHVLICO or of an
affiliated life insurance company, which separate accounts have investment
objectives similar to those of the variable Subaccount. In the event JHVLICO
does disregard voting instructions, a summary of that action and the reasons
for such action will be included in the next semi-annual report to owners.

CHANGES THAT JHVLICO CAN MAKE

The voting privileges described in this Prospectus are afforded based on
JHVLICO's understanding of applicable Federal securities law requirements. To
the extent that applicable law, regulations or interpretations

28
<PAGE>

change to eliminate or restrict the need for such voting privileges, JHVLICO
reserves the right to proceed in accordance with any such revised
requirements. JHVLICO also reserves the right, subject to compliance with
applicable law, including approval of owners if so required, (1) to transfer
assets determined by JHVLICO to be associated with the class of policies to
which the Policies belong from the Account to another separate account or
variable Subaccount by withdrawing the same percentage of each investment in
the Account with appropriate adjustments to avoid odd lots and fractions, (2)
to operate the Account as a "management-type investment company" under the
1940 Act, or in any other form permitted by law, the investment adviser of
which would be JHVLICO, an affiliate or John Hancock, (3) to deregister the
Account under the 1940 Act, (4) to substitute for the Portfolio shares held by
a Subaccount any other investment permitted by law, and (5) to take any action
necessary to comply with or obtain any exemptions from the 1940 Act. JHVLICO
would notify owners of any of the foregoing changes and, to the extent legally
required, obtain approval of owners and any regulatory body prior thereto.
Such notice and approval, however, may not be legally required in all cases.

STATE REGULATION

JHVLICO is subject to regulation and supervision by the Massachusetts
Commissioner of Insurance who periodically examines its affairs. It also is
subject to the applicable insurance laws and regulations of all jurisdictions
in which it is authorized to do business.

JHVLICO is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various
jurisdictions in which it does business for purposes of determining solvency
and compliance with local insurance laws and regulations.

LEGAL MATTERS

Legal matters in connection with the Policies described in this Prospectus
have been passed on by Ronald J. Bocage, Vice President and Counsel for
JHVLICO. Messrs. Freedman, Levy, Kroll & Simonds, Washington, D.C., have
advised JHVLICO on certain Federal securities law matters in connection with
the Policies.

REGISTRATION STATEMENT

This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Commission. More details may be
obtained from the Securities and Exchange Commission upon payment of the
prescribed fee.

EXPERTS

The financial statements of JHVLICO and the Account included in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, for
the periods indicated in their reports thereon which appear elsewhere herein
and have been included in reliance on their reports given on their authority
as experts in accounting and auditing.

Actuarial matters included in this Prospectus have been examined by Randi M.
Sterrn, F.S.A., an Actuary of JHVLICO.

29
<PAGE>

FINANCIAL STATEMENTS

The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the Policies.

30
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1996

<TABLE>
<CAPTION>
Large Cap Sovereign International Small Cap International Mid Cap Large Cap Money Mid Cap
Growth Bond Equities Growth Balanced Growth Value Market Value
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ------------ ------------- ---------- ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $65,826,786 $216,724,318 $15,676,880 $1,203,845 $217,329 $567,251 $2,924,101 $50,801,546 $359,228
Investments in
shares of
portfolios of M
Fund Inc., at
value........... -- -- -- -- -- -- -- -- --
Policy loans and
accrued interest
receivable...... 13,529,134 52,294,393 2,268,378 12,867,387
Receivable from:
John Hancock
Variable Series
Trust I........ 23,279 147,825 8,055 409 261 111 2,355 77,379 377
M Fund Inc. .... -- -- -- -- -- -- -- -- --
----------- ------------ ----------- ---------- -------- -------- ---------- ----------- --------
TOTAL ASSETS..... 79,379,199 269,166,536 17,953,313 1,204,254 217,590 567,362 2,926,456 63,746,312 359,605
Liabilities
Payable to John
Hancock Variable
Life Insurance
Company......... 22,075 143,762 7,784 389 258 102 2,307 76,413 371
Asset charges
payable......... 1,204 4,063 271 20 3 9 48 966 6
----------- ------------ ----------- ---------- -------- -------- ---------- ----------- --------
TOTAL
LIABILITIES..... 23,279 147,825 8,055 409 261 111 2,355 77,379 377
----------- ------------ ----------- ---------- -------- -------- ---------- ----------- --------
Net Assets....... $79,355,920 $269,018,711 $17,945,258 $1,203,845 $217,329 $567,251 $2,924,101 $63,668,933 $359,228
=========== ============ =========== ========== ======== ======== ========== =========== ========
<CAPTION>
Special Real Estate
Opportunities Equity
Subaccount Subaccount
------------- -----------
<S> <C> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $6,900,122 $ 9,861,910
Investments in
shares of
portfolios of M
Fund Inc., at
value........... -- --
Policy loans and
accrued interest
receivable...... 1,788,166
Receivable from:
John Hancock
Variable Series
Trust I........ 11,505 8,058
M Fund Inc. .... -- --
------------- -----------
TOTAL ASSETS..... 6,911,627 11,658,134
Liabilities
Payable to John
Hancock Variable
Life Insurance
Company......... 11,392 7,883
Asset charges
payable......... 113 175
------------- -----------
TOTAL
LIABILITIES..... 11,505 8,058
------------- -----------
Net Assets....... $6,900,122 $11,650,076
============= ===========
</TABLE>

See accompanying notes.

31
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 1996

<TABLE>
<CAPTION>
Short-Term Edinburgh
Growth & U.S. Small Cap International Equity Strategic Turner Core International
Income Managed Government Value Opportunities Index Bond Growth Equity
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
------------ ------------ ---------- ---------- ------------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $624,414,237 $300,159,311 $328,711 $891,733 $1,306,509 $343,746 $677,446 $ -- $ --
Investments in
portfolios of
M Fund Inc., at
value........... -- -- -- -- -- -- -- 12,490 44,456
Policy loans and
accrued interest
receivable...... 131,830,597 62,263,515
Receivable from:
John Hancock
Variable Series
Trust I........ 71,816 142,881 68 1,824 96 468 1,624 -- --
M Fund Inc...... -- -- -- -- -- -- -- -- 1
------------ ------------ -------- -------- ---------- -------- -------- ------- -------
TOTAL ASSETS..... 756,316,650 362,565,707 328,779 893,557 1,306,605 344,214 679,070 12,490 44,457
Liabilities
Payable to John
Hancock Variable
Life Insurance
Company......... 60,388 137,434 63 1,810 75 462 1,613 -- --
Asset charges
payable......... 11,428 5,447 5 14 21 6 11 -- 1
------------ ------------ -------- -------- ---------- -------- -------- ------- -------
TOTAL
LIABILITIES..... 71,816 142,881 68 1,824 96 468 1,624 -- 1
------------ ------------ -------- -------- ---------- -------- -------- ------- -------
Net Assets....... $756,244,834 $362,422,826 $328,711 $891,733 $1,306,509 $343,746 $677,446 $12,490 $44,456
============ ============ ======== ======== ========== ======== ======== ======= =======
<CAPTION>
Frontier
Capital
Appreciation
Subaccount
------------
<S> <C>
Assets
Investments in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $ --
Investments in
portfolios of
M Fund Inc., at
value........... 43,177
Policy loans and
accrued interest
receivable......
Receivable from:
John Hancock
Variable Series
Trust I........ --
M Fund Inc...... 1
------------
TOTAL ASSETS..... 43,178
Liabilities
Payable to John
Hancock Variable
Life Insurance
Company......... --
Asset charges
payable......... 1
------------
TOTAL
LIABILITIES..... 1
------------
Net Assets....... $43,177
============
</TABLE>

See accompanying notes.

32
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF OPERATIONS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
International Equities
Large Cap Growth Subaccount Sovereign Bond Subaccount Subaccount
------------------------------------ ------------------------------------- -----------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Income:
Distributions
received from:
John Hancock
Variable Series
Trust I........ $ 9,763,606 $ 3,899,925 $ 1,782,463 $15,986,241 $16,214,565 $ 13,598,258 $ 166,193 $114,316 $ 150,711
M Fund Inc. .... -- -- -- -- -- -- -- -- --
Interest income
on policy
loans.......... 881,144 755,070 571,576 3,908,756 3,820,851 3,640,202 161,938 146,076 103,567
----------- ----------- ----------- ----------- ----------- ------------ ---------- -------- ---------
TOTAL INVESTMENT
INCOME.......... 10,644,750 4,654,995 2,354,039 19,894,997 20,035,416 17,238,460 328,131 260,392 254,278
Expenses:
Mortality and
expense
risks.......... 381,331 278,461 216,050 1,444,137 1,372,266 1,302,570 85,694 65,044 51,915
----------- ----------- ----------- ----------- ----------- ------------ ---------- -------- ---------
NET INVESTMENT
INCOME (LOSS)... 10,263,419 4,376,534 2,137,989 18,450,860 18,663,150 15,935,890 242,437 195,348 202,363
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized
gain (loss).... 840,044 465,096 549,396 690,912 331,252 301,782 254,188 294,206 146,459
Net unrealized
appreciation
(depreciation)
during the
year........... (889,487) 6,578,435 (2,618,550) (8,059,332) 18,687,187 (18,898,104) 676,006 353,155 (863,194)
----------- ----------- ----------- ----------- ----------- ------------ ---------- -------- ---------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS..... (49,443) 7,043,531 (2,069,154) (7,368,420) 19,018,439 (18,596,322) 930,194 647,361 (716,735)
----------- ----------- ----------- ----------- ----------- ------------ ---------- -------- ---------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS...... $10,213,976 $11,420,065 $ 68,835 $11,082,440 $37,681,589 $ (2,660,432) $1,172,631 $842,709 $(514,372)
=========== =========== =========== =========== =========== ============ ========== ======== =========
<CAPTION>
Small Cap International
Growth Balanced
Subaccount Subaccount
----------- -------------
1996* 1996*
----------- -------------
<S> <C> <C>
Investment
Income:
Distributions
received from:
John Hancock
Variable Series
Trust I........ $ 1,207 $2,850
M Fund Inc. .... -- --
Interest income
on policy
loans.......... -- --
----------- -------------
TOTAL INVESTMENT
INCOME.......... 1,207 2,850
Expenses:
Mortality and
expense
risks.......... 2,956 301
----------- -------------
NET INVESTMENT
INCOME (LOSS)... (1,749) 2,549
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized
gain (loss).... (2,047) 65
Net unrealized
appreciation
(depreciation)
during the
year........... (24,023) 3,632
----------- -------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS..... (26,070) 3,697
----------- -------------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS...... $(27,819) $6,246
=========== =============
</TABLE>

* From May 1, 1996 (commencement of operations).

See accompanying notes.

33
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Mid Cap Growth Large Cap Value Mid Cap Value Special Opportunities
Subaccount Subaccount Money Market Subaccount Subaccount Subaccount
-------------- --------------- -------------------------------- ------------- ------------------------
1996* 1996* 1996 1995 1994 1996* 1996 1995 1994**
-------------- --------------- ---------- ---------- ---------- ------------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Income:
Distributions
received from:
John Hancock
Variable Series
Trust I........ $ 1,635 $ 72,511 $2,527,378 $2,690,892 $1,862,712 $ 7,418 $265,602 $ 39,684 $ 25
M Fund Inc...... -- -- -- -- -- -- -- -- --
Interest income
on policy loans. -- -- 929,499 952,455 935,777 -- -- -- --
------- -------- ---------- ---------- ---------- ------- -------- -------- ------
TOTAL INVESTMENT
INCOME........... 1,635 72,511 3,456,877 3,643,347 2,798,489 7,418 265,602 39,684 25
Expenses:
Mortality and
expense risks.. 814 8,169 342,603 340,195 331,873 580 23,603 3,373 12
------- -------- ---------- ---------- ---------- ------- -------- -------- ------
NET INVESTMENT
INCOME.......... 821 64,342 3,114,274 3,303,152 2,466,616 6,838 241,999 36,311 13
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized
gain (loss).... 1,295 11,265 -- -- -- 1,099 125,955 11,582 (2)
Net unrealized
appreciation
(depreciation)
during the
year........... (3,899) 197,424 -- -- -- 23,234 615,079 124,460 1,019
------- -------- ---------- ---------- ---------- ------- -------- -------- ------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS..... (2,604) 208,689 -- -- -- 24,333 741,034 136,042 1,017
------- -------- ---------- ---------- ---------- ------- -------- -------- ------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS...... $(1,783) $273,031 $3,114,274 $3,303,152 $2,466,616 $31,171 $983,033 $172,353 $1,030
======= ======== ========== ========== ========== ======= ======== ======== ======
</TABLE>

*From May 1, 1996 (commencement of operations).
**From May 6, 1994 (commencement of operations).

See accompanying notes.

34
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Real Estate Equity Subaccount Growth & Income Subaccount Managed Subaccount
----------------------------- -------------------------------------- --------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
---------- -------- --------- ------------ ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Income:
Distributions
received from:
John Hancock
Variable Series
Trust I......... $ 477,763 $409,525 $ 353,259 $ 78,415,408 $ 51,822,706 $ 28,013,646 $ 37,103,617 $26,974,536 $ 10,625,950
M Fund Inc...... -- -- -- -- -- -- -- -- --
Interest income
on policy loans. 117,955 121,494 99,709 9,420,070 8,594,774 7,780,984 4,337,281 3,999,425 3,637,463
---------- -------- --------- ------------ ------------ ------------ ------------ ----------- ------------
TOTAL INVESTMENT
INCOME........... 595,718 531,019 452,968 87,835,478 60,417,480 35,794,630 41,440,898 30,973,961 14,263,413
Expenses:
Mortality and
expense risks... 50,069 41,982 40,183 3,854,562 3,246,229 2,876,205 1,886,000 1,677,243 1,541,565
---------- -------- --------- ------------ ------------ ------------ ------------ ----------- ------------
NET INVESTMENT
INCOME........... 545,649 489,037 412,785 83,980,916 57,171,251 32,918,425 39,554,898 29,296,718 12,721,848
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized
gain (loss)..... 9,177 97,602 148,913 15,416,898 6,161,063 5,831,652 3,870,923 2,658,955 2,204,918
Net unrealized
appreciation
(depreciation)
during the year. 1,862,071 184,090 (354,296) 12,987,718 81,121,360 (36,174,705) (11,548,110) 30,787,175 (18,206,145)
---------- -------- --------- ------------ ------------ ------------ ------------ ----------- ------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS...... 1,871,248 281,692 (205,383) 28,404,616 87,282,423 (30,343,053) (7,677,187) 33,446,130 (16,001,227)
---------- -------- --------- ------------ ------------ ------------ ------------ ----------- ------------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS.. $2,416,897 $770,729 $ 207,402 $112,385,532 $144,453,674 $ 2,575,372 $ 31,877,711 $62,742,848 $ (3,279,379)
========== ======== ========= ============ ============ ============ ============ =========== ============
<CAPTION>
Short-Term U.S.
Government Subaccount
----------------------
1996 1995 1994**
-------- ------ ------
<S> <C> <C> <C>
Investment
Income:
Distributions
received from:
John Hancock
Variable Series
Trust I......... $11,196 $2,910 $ 25
M Fund Inc...... -- -- --
Interest income
on policy loans. -- -- --
-------- ------ ------
TOTAL INVESTMENT
INCOME........... 11,196 2,910 25
Expenses:
Mortality and
expense risks... 1,201 312 1
-------- ------ ------
NET INVESTMENT
INCOME........... 9,995 2,598 24
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Net realized
gain (loss)..... (922) 945 --
Net unrealized
appreciation
(depreciation)
during the year. (1,542) 1,166 (27)
-------- ------ ------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS...... (2,464) 2,111 (27)
-------- ------ ------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS.. $ 7,531 $4,709 $ (3)
======== ====== ======
</TABLE>

*From May 1, 1996 (commencement of operations).
**From May 1, 1994 (commencement of operations).

See accompanying notes.

35
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Edinburgh Frontier
Small Cap International Turner International Capital
Value Opportunities Equity Index Strategic Bond Core Growth Equity Appreciation
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ------------- ------------ -------------- ----------- ------------- ------------
1996* 1996* 1996* 1996* 1996* 1996* 1996*
---------- ------------- ------------ -------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Distributions received
from:
John Hancock Variable
Series Trust I........ $23,766 $ 5,965 $ 7,847 $29,029 $ -- $ -- $ --
M Fund Inc............. -- -- -- -- 415 255 --
Interest income on
policy loans.......... -- -- -- -- -- -- --
------- ------- ------- ------- ----- ------- -------
TOTAL INVESTMENT INCOME. 23,766 5,965 7,847 29,029 415 255 --
Expenses:
Mortality and expense
risks................. 2,451 3,038 575 1,782 31 122 112
------- ------- ------- ------- ----- ------- -------
NET INVESTMENT INCOME
(LOSS)................. 21,315 2,927 7,272 27,247 384 133 (112)
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss)................ 891 304 3,982 1,518 (238) (1,091) (1,199)
Net unrealized
appreciation
(depreciation) during
the year.............. 49,892 57,387 13,544 6,688 456 (345) 2,105
------- ------- ------- ------- ----- ------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS......... 50,783 57,691 17,526 8,206 218 (1,436) 906
------- ------- ------- ------- ----- ------- -------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $72,098 $60,618 $24,798 $35,453 $ 602 $(1,303) $ 794
======= ======= ======= ======= ===== ======= =======
</TABLE>

* From May 1, 1996 (commencement of operations).

See accompanying notes.

36
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Large Cap Growth Subaccount Sovereign Bond Subaccount
------------------------------------- ----------------------------------------
1996 1995 1994 1996 1995 1994
----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in Net
Assets
From operations:
Net investment
income (loss)... $10,263,419 $ 4,376,534 $ 2,137,989 $ 18,450,860 $ 18,663,150 $ 15,935,890
Net realized
gains (losses).. 840,044 465,096 549,396 690,912 331,252 301,782
Net unrealized
appreciation
(depreciation)
during the year. (889,487) 6,578,435 (2,618,550) (8,059,332) 18,687,187 (18,898,104)
----------- ----------- ----------- ------------ ------------ ------------
Net increase
(decrease) in
net assets
resulting from
operations...... 10,213,976 11,420,065 68,835 11,082,440 37,681,589 (2,660,432)
From policyholder
transactions:
Net premiums from
policyholders... 20,123,261 12,618,748 14,995,398 34,090,208 31,560,554 33,964,744
Net benefits to
policyholders... (11,910,005) (9,566,825) (13,285,350) (40,719,213) (39,010,974) (45,032,511)
Net increase in
policy loans.... 2,044,193 1,614,283 2,229,978 897,069 2,053,700 928,620
----------- ----------- ----------- ------------ ------------ ------------
Net increase
(decrease) in
net assets from
policyholder
transactions.... 10,257,449 4,666,206 3,940,026 (5,731,936) (5,396,720) (10,139,147)
----------- ----------- ----------- ------------ ------------ ------------
Net increase
(decrease) in
net assets..... 20,471,425 16,086,271 4,008,861 5,350,504 32,284,869 (12,799,579)
Net Assets at
beginning of
year............ 58,884,495 42,798,224 38,789,363 263,668,207 231,383,338 244,182,917
----------- ----------- ----------- ------------ ------------ ------------
Net Assets at end
of year......... $79,355,920 $58,884,495 $42,798,224 $269,018,711 $263,668,207 $231,383,338
=========== =========== =========== ============ ============ ============
<CAPTION>
Small Cap International
Growth Balanced
International Equities Subaccount Subaccount Subaccount
-------------------------------------- ----------- -------------
1996 1995 1994 1996* 1996*
------------ ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Increase
(Decrease) in Net
Assets
From operations:
Net investment
income (loss)... $ 242,437 $ 195,348 $ 202,363 $ (1,749) $ 2,549
Net realized
gains (losses).. 254,188 294,206 146,459 (2,047) 65
Net unrealized
appreciation
(depreciation)
during the year. 676,006 353,155 (863,194) (24,023) 3,632
------------ ------------ ------------ ----------- -------------
Net increase
(decrease) in
net assets
resulting from
operations...... 1,172,631 842,709 (514,372) (27,819) 6,246
From policyholder
transactions:
Net premiums from
policyholders... 8,485,184 4,546,347 8,974,098 1,361,402 216,486
Net benefits to
policyholders... (4,391,767) (4,766,724) (4,180,134) (129,738) (5,403)
Net increase in
policy loans.... 287,879 192,805 735,457 -- --
------------ ------------ ------------ ----------- -------------
Net increase
(decrease) in
net assets from
policyholder
transactions.... 4,381,296 (27,572) 5,529,421 1,231,664 211,083
------------ ------------ ------------ ----------- -------------
Net increase
(decrease) in
net assets..... 5,553,927 815,137 5,015,049 1,203,845 217,329
Net Assets at
beginning of
year............ 12,391,331 11,576,194 6,561,145 -- --
------------ ------------ ------------ ----------- -------------
Net Assets at end
of year......... $17,945,258 $12,391,331 $11,576,194 $1,203,845 $217,329
============ ============ ============ =========== =============
</TABLE>

* From May 1, 1996 (commencement of operations).

See accompanying notes.

37
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Mid Cap Large Cap Mid Cap
Growth Value Value
Subaccount Subaccount Money Market Subaccount Subaccount
---------- ---------- ---------------------------------------- ----------
1996* 1996* 1996 1995 1994 1996*
---------- ---------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in
Net Assets
From operations:
Net investment
income......... $ 821 $ 64,342 $ 3,114,274 $ 3,303,152 $ 2,466,616 $ 6,838
Net realized
gains (losses). 1,295 11,265 -- -- -- 1,099
Net unrealized
appreciation
(depreciation)
during the
year........... (3,899) 197,424 -- -- -- 23,234
-------- ---------- ------------ ------------ ------------ --------
Net increase
(decrease) in
net assets
resulting from
operations..... (1,783) 273,031 3,114,274 3,303,152 2,466,616 31,171
From
policyholder
transactions:
Net premiums
from
policyholders.. 599,576 2,999,086 15,561,906 11,104,365 11,955,284 337,092
Net benefits to
policyholders.. (30,542) (348,016) (16,132,881) (12,775,695) (14,818,286) (9,035)
Net increase
(decrease) in
policy loans... -- -- (260,051) (323,666) 124,027 --
-------- ---------- ------------ ------------ ------------ --------
Net increase
(decrease) in
net assets from
policyholder
transactions... 569,034 2,651,070 (831,026) (1,994,996) (2,738,975) 328,057
-------- ---------- ------------ ------------ ------------ --------
Net increase
(decrease) in
net assets.... 567,251 2,924,101 2,283,248 1,308,156 (272,359) 359,228
Net Assets at
beginning of
year............ -- -- 61,385,685 60,077,529 60,349,888 --
-------- ---------- ------------ ------------ ------------ --------
Net Assets at end
of year......... $567,251 $2,924,101 $ 63,668,933 $ 61,385,685 $ 60,077,529 $359,228
======== ========== ============ ============ ============ ========
<CAPTION>
Special Opportunities Subaccount
------------------------------------
1996 1995 1994**
------------- ------------ ---------
<S> <C> <C> <C>
Increase
(Decrease) in
Net Assets
From operations:
Net investment
income......... $ 241,999 $ 36,311 $ 13
Net realized
gains (losses). 125,955 11,582 (2)
Net unrealized
appreciation
(depreciation)
during the
year........... 615,079 124,460 1,019
------------- ------------ ---------
Net increase
(decrease) in
net assets
resulting from
operations..... 983,033 172,353 1,030
From
policyholder
transactions:
Net premiums
from
policyholders.. 5,492,467 1,682,424 37,133
Net benefits to
policyholders.. (1,284,991) (182,908) (419)
Net increase
(decrease) in
policy loans... -- -- --
------------- ------------ ---------
Net increase
(decrease) in
net assets from
policyholder
transactions... 4,207,476 1,499,516 36,714
------------- ------------ ---------
Net increase
(decrease) in
net assets.... 5,190,509 1,671,869 37,744
Net Assets at
beginning of
year............ 1,709,613 37,744 --
------------- ------------ ---------
Net Assets at end
of year......... $ 6,900,122 $ 1,709,613 $ 37,744
============= ============ =========
</TABLE>

*From May 1, 1996 (commencement of operations).
**From May 6, 1994 (commencement of operations).

See accompanying notes.

38
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Real Estate Equity Subaccount Growth & Income Subaccount
----------------------------------- ----------------------------------------
1996 1995 1994 1996 1995 1994
----------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in Net
Assets
From operations:
Net investment
income.......... $ 545,649 $ 489,037 $ 412,785 $ 83,980,916 $ 57,171,251 $ 32,918,425
Net realized
gains (losses).. 9,177 97,602 148,913 15,416,898 6,161,063 5,831,652
Net unrealized
appreciation
(depreciation)
during the year. 1,862,071 184,090 (354,296) 12,987,718 81,121,360 (36,174,705)
----------- ---------- ---------- ------------ ------------ ------------
Net increase
(decrease) in
net assets
resulting from
operations...... 2,416,897 770,729 207,402 112,385,532 144,453,674 2,575,372
From policyholder
transactions:
Net premiums from
policyholders... 3,620,035 2,176,970 3,275,364 76,046,396 73,672,198 72,117,431
Net benefits to
policyholders... (2,413,828) (2,711,578) (2,843,516) (102,757,132) (90,829,678) (89,384,442)
Net increase in
policy loans.... 156,802 30,224 350,970 11,816,577 10,173,483 5,694,330
----------- ---------- ---------- ------------ ------------ ------------
Net increase
(decrease) in
net assets from
policyholder
transactions.... 1,363,009 (504,384) 782,818 (14,894,159) (6,983,997) (11,572,681)
----------- ---------- ---------- ------------ ------------ ------------
Net increase
(decrease) in
net assets..... 3,779,906 266,345 990,220 97,491,373 137,469,677 (8,997,309)
Net Assets at
beginning of
year............ 7,870,170 7,603,825 6,613,605 658,753,461 521,283,784 530,281,093
----------- ---------- ---------- ------------ ------------ ------------
Net Assets at end
of year......... $11,650,076 $7,870,170 $7,603,825 $756,244,834 $658,753,461 $521,283,784
=========== ========== ========== ============ ============ ============
<CAPTION>
Short-Term U.S.
Managed Subaccount Government Subaccount
----------------------------------------- ---------------------------
1996 1995 1994 1996 1995 1994*
------------- ------------- ------------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in Net
Assets
From operations:
Net investment
income.......... $ 39,554,898 $ 29,296,718 $ 12,721,848 $ 9,995 $ 2,598 $ 24
Net realized
gains (losses).. 3,870,923 2,658,955 2,204,918 (922) 945 --
Net unrealized
appreciation
(depreciation)
during the year. (11,548,110) 30,787,175 (18,206,145) (1,542) 1,166 (27)
------------- ------------- ------------- --------- --------- -------
Net increase
(decrease) in
net assets
resulting from
operations...... 31,877,711 62,742,848 (3,279,379) 7,531 4,709 (3)
From policyholder
transactions:
Net premiums from
policyholders... 40,512,423 38,619,260 39,071,265 328,192 94,623 6,405
Net benefits to
policyholders... (52,043,620) (47,824,820) (51,322,737) (90,988) (21,753) (5)
Net increase in
policy loans.... 4,766,548 5,387,424 2,529,492 -- -- --
------------- ------------- ------------- --------- --------- -------
Net increase
(decrease) in
net assets from
policyholder
transactions.... (6,764,649) (3,818,136) (9,721,980) 237,204 72,870 6,400
------------- ------------- ------------- --------- --------- -------
Net increase
(decrease) in
net assets..... 25,113,062 58,924,712 (13,001,359) 244,735 77,579 6,397
Net Assets at
beginning of
year............ 337,309,764 278,385,052 291,386,411 83,976 6,397 --
------------- ------------- ------------- --------- --------- -------
Net Assets at end
of year......... $362,422,826 $337,309,764 $278,385,052 $328,711 $ 83,976 $6,397
============= ============= ============= ========= ========= =======
</TABLE>

* From May 1, 1994 (commencement of operations).

See accompanying notes.

39
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
Frontier
Small Cap International Turner Core Edinburgh Capital
Value Opportunities Equity Index Strategic Bond Growth International Appreciation
Subaccount Subaccount Subaccount Subaccount Subaccount Equity Subaccount Subaccount
---------- ------------- ------------ -------------- ----------- ----------------- ------------
1996* 1996* 1996* 1996* 1996* 1996* 1996*
---------- ------------- ------------ -------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets
From operations:
Net investment income
(loss)............... $ 21,315 $ 2,927 $ 7,272 $ 27,247 $ 384 $ 133 $ (112)
Net realized gains
(losses)............. 891 304 3,982 1,518 (238) (1,091) (1,199)
Net unrealized
appreciation
(depreciation) during
the year............. 49,892 57,387 13,544 6,688 456 (345) 2,105
--------- ---------- -------- -------- -------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations........... 72,098 60,618 24,798 35,453 602 (1,303) 794
From policyholder
transactions:
Net premiums from
policyholders........ 925,601 1,364,628 350,310 718,958 26,825 68,170 58,477
Net benefits to
policyholders........ (105,966) (118,737) (31,362) (76,965) (14,937) (22,411) (16,094)
Net increase
(decrease) in policy
loans................ -- -- -- -- -- -- --
--------- ---------- -------- -------- -------- -------- --------
Net increase in net
assets from
policyholder
transactions......... 819,635 1,245,891 318,948 641,993 11,888 45,759 42,383
--------- ---------- -------- -------- -------- -------- --------
Net increase in net
assets.............. 891,733 1,306,509 343,746 677,446 12,490 44,456 43,177
Net Assets at beginning
of year............... -- -- -- -- -- -- --
--------- ---------- -------- -------- -------- -------- --------
Net Assets at end of
year.................. $ 891,733 $1,306,509 $343,746 $677,446 $ 12,490 $ 44,456 $ 43,177
========= ========== ======== ======== ======== ======== ========
</TABLE>

* From May 1, 1996 (commencement of operations).

See accompanying notes.

40
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

NOTE 1--ORGANIZATION

John Hancock Variable Life Account U (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a wholly-
owned subsidiary of John Hancock Mutual Life Insurance Company (John Hancock).
The Account was formed to fund variable life insurance policies (Policies)
issued by JHVLICO. The Account is operated as a unit investment trust
registered under the Investment Company Act of 1940, as amended, and currently
consists of twenty-one subaccounts. The assets of each subaccount are invested
exclusively in shares of a corresponding Portfolio of John Hancock Variable
Series Trust I (the Fund) or of M Fund Inc. (M Fund). New subaccounts may be
added as new Portfolios are added to the Fund or to M Fund, or as other
investment options are developed and made available to policyholders. The
twenty-one Portfolios of the Fund and of M Fund which are currently available
are the Large Cap Growth, Sovereign Bond, International Equities, Small Cap
Growth, International Balanced, Mid Cap Growth, Large Cap Value, Money Market,
Mid Cap Value, Special Opportunities, Real Estate Equity, Growth & Income,
Managed, Short-Term U.S. Government, Small Cap Value, International
Opportunities, Equity Index, Strategic Bond, Turner Core Growth, Edinburgh
International Equity and Frontier Capital Appreciation Subaccounts. Each
Portfolio has a different investment objective.

The net assets of the Account may not be less than the amount required under
state insurance law to provide for death benefits (without regard to the
minimum death benefit guarantee) and other policy benefits. Additional assets
are held in JHVLICO's general account to cover the contingency that the
guaranteed minimum death benefit might exceed the death benefit which would
have been payable in the absence of such guarantee.

The assets of the Account are the property of JHVLICO. The portion of the
Account's assets applicable to the policies may not be charged with
liabilities arising out of any other business JHVLICO may conduct.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

Estimates: 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 expenses during the
reporting period. Actual results could differ from those estimates.

Valuation of Investments: Investment in shares of the Fund and of M Fund are
valued at the reported net asset values of the respective Portfolios.
Investment transactions are recorded on the trade date. Dividend income is
recognized on the ex-dividend date. Realized gains and losses on sales of fund
shares are determined on the basis of identified cost.

Federal Income Taxes: The operations of the Account are included in the
federal income tax return of JHVLICO, which is taxed as a life insurance
company under the Internal Revenue Code. JHVLICO has the right to charge the
Account any federal income taxes, or provision for federal income taxes,
attributable to the operations of the Account or to the policies funded in the
Account. Currently, JHVLICO does not make a charge for income or other taxes.
Charges for state and local taxes, if any, attributable to the Account may
also be made.

Expenses: JHVLICO assumes mortality and expense risks of the variable life
insurance policies for which asset charges are deducted at an annual rate of
.50% of net assets (excluding policy loans) of the Account.

41
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

NOTES TO FINANCIAL STATEMENTS--CONTINUED

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

Additionally, a monthly charge at varying levels for the cost of extra
insurance is deducted from the net assets of the Account and an administrative
charge, at an annual rate of .75%, is charged to the Account on a daily basis
for policy loans.

JHVLICO makes certain deductions for administrative expenses and state premium
taxes from premium payments before amounts are transferred to the Account.
With respect to the single premium policy, during the first nine years after
policy issue, JHVLICO assesses a contingent deferred sales charge at varying
levels in the event of early surrender of the variable life insurance policy.

Policy Loans: Policy loans represent outstanding loans plus accrued interest.
Interest is accrued (net of a charge for policy loan administration determined
at an annual rate of .75% of the aggregate amount of policyowner indebtedness)
and compounded daily.

NOTE 3--TRANSACTIONS WITH AFFILIATES

John Hancock acts as the distributor, principal underwriter and investment
advisor for the Fund.

Certain officers of the Account are officers and directors of JHVLICO, the
Fund or John Hancock.

NOTE 4--DETAILS OF INVESTMENTS

The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1996, are as follows:

<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
--------- ------------ ------------ ------------
<S> <C> <C> <C>
Large Cap Growth........................ 3,763,308 $ 57,762,003 $ 65,826,786
Sovereign Bond.......................... 22,181,035 211,556,712 216,724,318
International Equities.................. 931,429 14,580,491 15,676,880
Small Cap Growth........................ 121,181 1,227,869 1,203,845
International Balanced.................. 20,911 213,697 217,329
Mid Cap Growth.......................... 55,491 571,150 567,251
Large Cap Value......................... 263,683 738,803 2,924,101
Money Market............................ 5,080,155 50,801,546 50,801,546
Mid Cap Value........................... 31,654 335,995 359,228
Special Opportunities................... 417,635 6,159,564 6,900,122
Real Estate Equity...................... 673,843 7,988,690 9,861,910
Growth & Income......................... 42,609,332 517,230,305 624,414,237
Managed................................. 22,479,957 273,052,564 300,159,311
Short-Term U.S. Government.............. 32,717 329,114 328,711
Small Cap Value......................... 83,106 841,840 891,733
International Opportunities............. 123,289 1,249,122 1,306,509
Equity Index............................ 30,976 330,202 343,746
Strategic Bond.......................... 66,689 670,758 677,446
Turner Core Growth...................... 1,077 12,034 12,490
Edinburgh International Equity.......... 4,500 44,801 44,456
Frontier Capital Appreciation........... 3,449 41,073 43,177
</TABLE>

42
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT U

NOTES TO FINANCIAL STATEMENTS--CONTINUED

NOTE 4--DETAILS OF INVESTMENTS--CONTINUED

Purchases, including reinvestment of dividend distributions and proceeds from
the sales of shares in the Portfolios of the Fund and of M Fund during 1996,
were as follows:

<TABLE>
<CAPTION>
Portfolio Purchases Sales
--------- ----------- -----------
<S> <C> <C>
Large Cap Growth....................................... $20,381,233 $ 1,953,846
Sovereign Bond......................................... 24,860,291 13,011,482
International Equities................................. 5,571,003 1,244,347
Small Cap Growth....................................... 1,337,858 107,942
International Balanced................................. 216,981 3,349
Mid Cap Growth......................................... 616,784 46,929
Large Cap Value........................................ 3,116,439 401,027
Money Market........................................... 11,059,956 8,498,091
Mid Cap Value.......................................... 344,956 10,060
Special Opportunities.................................. 4,859,191 409,716
Real Estate Equity..................................... 2,354,165 607,463
Growth & Income........................................ 98,572,585 41,588,875
Managed................................................ 43,447,544 15,641,073
Short-Term U.S. Government............................. 346,257 99,058
Small Cap Value........................................ 954,995 114,046
International Opportunities............................ 1,376,296 127,478
Equity Index........................................... 366,782 40,562
Strategic Bond......................................... 755,947 86,707
Turner Core Growth..................................... 25,144 12,872
Edinburgh International Equity......................... 68,089 22,197
Frontier Capital Appreciation.......................... 55,645 13,373
</TABLE>

43
<PAGE>

REPORTS OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Policyholders
John Hancock Variable Life Account U
of John Hancock Variable Life Insurance Company

We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Life Account U (the Account) (comprising, respectively, the
Large Cap Growth, Sovereign Bond, International Equities, Small Cap Growth,
International Balanced, Mid Cap Growth, Large Cap Value, Money Market, Mid Cap
Value, Special Opportunities, Real Estate Equity, Growth & Income, Managed,
Short-Term U.S. Government, Small Cap Value, International Opportunities,
Equity Index, Strategic Bond, Turner Core Growth, Edinburgh International
Equity and Frontier Capital Appreciation Subaccounts) as of December 31, 1996,
and the related statements of operations and statements of changes in net
assets for each of the periods indicated therein. These financial statements
are the responsibility of the Account'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 each of the respective
subaccounts constituting John Hancock Variable Life Account U at December 31,
1996, and the results of their operations and the changes in their net assets
for each of the periods indicated, in conformity with generally accepted
accounting principles.

Ernst & Young LLP
Boston, Massachusetts
February 7, 1997

44
<PAGE>

Board of Directors
John Hancock Variable Life Insurance Company

We have audited the accompanying statutory-basis statements of financial
position of John Hancock Variable Life Insurance Company as of December 31,
1996 and 1995, and the related statutory-basis statements of operations and
unassigned deficit and cash flows for the years then ended. 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.

As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Commonwealth of Massachusetts Division of Insurance, which
practices differ from generally accepted accounting principles. The variances
between such practices and generally accepted accounting principles also are
described in Note 1. The effects on the financial statements of these
variances are not reasonably determinable but are presumed to be material.

In our report dated February 7, 1996, we expressed an opinion that the 1995
financial statements of the Company fairly present, in all material respects,
the Company's financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles for a stock life
insurance company wholly-owned by a mutual life insurance company and with
reporting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance. As described in Note 1, the accompanying
statutory-basis financial statements are no longer considered to be prepared
in conformity with generally accepted accounting principles. Accordingly, our
present opinion on the 1995 financial statements, as presented in the
following paragraph, is different from that expressed in our previous report.

In our opinion, because of the effects of the matter described in the second
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of John Hancock Variable Life Insurance Company at December
31, 1996 and 1995, or the results of its operations or its cash flows for the
years then ended.

Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of John Hancock
Variable Life Insurance Company at December 31, 1996 and 1995, and the results
of its operations and its cash flows for the years then ended in conformity
with accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.

Ernst & Young LLP
Boston, Massachusetts
February 14, 1997

45
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
December 31
------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Assets
Bonds--Note 7.............................................. $ 753.5 $ 552.8
Preferred stocks........................................... 9.6 5.0
Common stocks.............................................. 1.4 1.7
Investment in affiliates................................... 72.0 65.3
Mortgage loans on real estate--Note 7...................... 212.1 146.7
Real estate................................................ 38.8 36.4
Policy loans............................................... 80.8 61.8
Cash items:
Cash in banks............................................ 26.7 11.6
Temporary cash investments............................... 5.2 65.0
-------- --------
31.9 76.6
Premiums due and deferred.................................. 36.8 39.6
Investment income due and accrued.......................... 22.6 18.6
Other general account assets............................... 17.8 20.8
Assets held in separate accounts........................... 3,290.5 2,421.0
-------- --------
TOTAL ASSETS............................................... $4,567.8 $3,446.3
======== ========
Obligations and Stockholder's Equity
OBLIGATIONS
Policy reserves.......................................... $ 877.8 $ 612.3
Federal income and other taxes payable--Note 1........... 29.4 14.2
Other accrued expenses................................... 75.1 138.7
Asset valuation reserve--Note 1.......................... 16.6 15.4
Obligations related to separate accounts................. 3,285.8 2,417.0
-------- --------
TOTAL OBLIGATIONS.......................................... 4,284.7 3,197.6
Stockholder's Equity--Notes 2 and 6
Common Stock, $50 par value; authorized 50,000 shares;
issued and
outstanding 50,000 shares............................... 2.5 2.5
Paid-in capital.......................................... 377.5 377.5
Unassigned deficit....................................... (96.9) (131.3)
-------- --------
TOTAL STOCKHOLDER'S EQUITY................................. 283.1 248.7
-------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY................. $4,567.8 $3,446.3
======== ========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

46
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT

<TABLE>
<CAPTION>
Year ended December 31
------------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Income
Premiums............................................ $ 820.6 $ 570.9
Net investment income--Note 4....................... 76.1 62.1
Other, net.......................................... 406.0 85.7
----------- ----------
1,302.7 718.7
Benefits and Expenses
Payments to policyholders and beneficiaries......... 236.1 213.4
Additions to reserves to provide for future payments
to policyholders and beneficiaries................. 790.1 282.4
Expenses of providing service to policyholders and
obtaining new insurance--Note 6.................... 183.8 150.7
State and miscellaneous taxes....................... 17.3 12.7
----------- ----------
1,227.3 659.2
----------- ----------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME TAXES
AND NET REALIZED CAPITAL GAINS (LOSSES).......... 75.4 59.5
Federal income taxes--Note 1.......................... 38.6 28.4
----------- ----------
GAIN FROM OPERATIONS BEFORE NET REALIZED CAPITAL
GAINS (LOSSES)................................... 36.8 31.1
Net realized capital gains (losses)--Note 5........... (1.5) 0.5
----------- ----------
NET INCOME........................................ 35.3 31.6
Unassigned deficit at beginning of year............... (131.3) (162.1)
Net unrealized capital gains (losses) and other
adjustments--Note 5.................................. 2.5 (3.0)
Other reserves and adjustments........................ (3.4) 2.2
----------- ----------
UNASSIGNED DEFICIT AT END OF YEAR................. $ (96.9) $ (131.3)
=========== ==========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

47
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year ended December 31
----------------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Cash flows from operating activities:
Insurance premiums................................. $ 824.2 $ 574.0
Net investment income.............................. 73.4 59.2
Benefits to policyholders and beneficiaries........ (212.7) (198.3)
Dividends paid to policyholders.................... (15.7) (13.2)
Insurance expenses and taxes....................... (196.6) (161.5)
Net transfers to separate accounts................. (524.2) (257.4)
Other, net......................................... 386.7 55.1
----------- -----------
NET CASH PROVIDED FROM OPERATIONS.............. 335.1 57.9
----------- -----------
Cash flows used in investing activities:
Bond purchases..................................... (489.9) (172.5)
Bond sales......................................... 228.3 18.9
Bond maturities and scheduled redemptions.......... 27.8 36.0
Bond prepayments................................... 31.9 20.6
Stock purchases.................................... (6.5) (1.7)
Proceeds from stock sales.......................... 0.4 1.4
Real estate purchases.............................. (10.5) (16.2)
Real estate sales.................................. 8.5 9.3
Other invested assets purchases.................... 0.0 (0.4)
Proceeds from the sale of other invested assets.... 1.5 0.3
Mortgage loans issued.............................. (84.4) (19.8)
Mortgage loan repayments........................... 17.7 21.1
Other, net......................................... (104.6) 45.7
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES.......... (379.8) (57.3)
----------- -----------
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH IN-
VESTMENTS........................................... (44.7) 0.6
Cash and temporary cash investments at beginning of
year................................................ 76.6 76.0
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR... $ 31.9 $ 76.6
=========== ===========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

48
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES

John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company (John Hancock). The
Company, domiciled in the Commonwealth of Massachusetts, principally writes
variable and universal life insurance policies. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of company-owned, unionized branch offices and
independent general agencies. Policies also are sold through various
unaffiliated securities broker-dealers and certain other financial
institutions. Currently, the Company writes business in all states except New
York.

The preparation of the financial statements requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions could change
in the future as more information becomes known, which could impact the
amounts reported and disclosed herein.

Basis of Presentation: The financial statements have been prepared using
accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of
the National Association of Insurance Commissioners (NAIC), which practices
differ from generally accepted accounting principles (GAAP). The 1995
financial statements presented for comparative purposes were previously
described as being prepared in accordance with GAAP for stock life insurance
companies wholly-owned by a mutual life insurance company. Pursuant to
Financial Accounting Standards Board Interpretation 40, "Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises" (FIN 40), as amended, which is effective for 1996 financial
statements, financial statements based on statutory accounting practices can
no longer be described as prepared in conformity with GAAP. Furthermore,
financial statements prepared in conformity with statutory accounting
practices for periods prior to the effective date of FIN 40 are not considered
GAAP presentations when presented in comparative form with financial
statements for periods subsequent to the effective date. Accordingly, the 1995
financial statements are no longer considered to be presented in conformity
with GAAP.

The significant differences from GAAP include: (1) policy acquisition costs
are charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances
are provided when there has been a decline in value deemed other than
temporary; (7) investments in affiliates are carried at their net equity value
with changes in value being recorded directly to unassigned deficit rather
than consolidated in the financial statements; and (8) no provision is made
for the deferred income tax effects of temporary differences between book and
tax basis reporting. The effects of the foregoing variances from GAAP have not
been determined but are presumed to be material.

49
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED

The significant accounting practices of the Company are as follows:

Pending Statutory Standards: The NAIC currently is in the process of
recodifying statutory accounting practices, the result of which is expected to
constitute the only source of prescribed statutory accounting practices.
Accordingly, that project, which is expected to be completed in 1999 will
likely change, to some extent, prescribed statutory accounting practices, and
may result in changes to the accounting practices that the Company uses to
prepare its statutory-basis financial statements. The impact of any such
changes on the Company's unassigned deficit cannot be determined at this time
and could be material.

Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of
new business, are charged to operations as incurred and policyholder dividends
are provided as paid or accrued.

Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-
term, highly-liquid investments both readily convertible to known amounts of
cash and so near maturity that there is insignificant risk of changes in value
because of changes in interest rates.

Valuation of Assets: General account investments are carried at amounts
determined on the following bases:

Bond and stock values are carried as prescribed by the NAIC; bonds
generally at amortized amounts or cost, preferred stocks generally at cost
and common stocks at market. The discount or premium on bonds is amortized
using the interest method.

Investments in affiliates are included on the statutory equity method.

Goodwill is amortized on a straight-line basis over a ten year period.

Mortgage loans are carried at outstanding principal balance or amortized
cost.

Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line
basis. Accumulated depreciation amounted to $1.2 million in 1996 and $0.5
million in 1995.

Real estate acquired in satisfaction of debt and held for sale is carried
at the lower of cost or market as of the date of foreclosure.

Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.

Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and
represents a provision for possible fluctuations in the value of bonds, equity
securities, mortgage loans, real estate and other invested assets. Changes to
the AVR are charged or credited directly to the unassigned deficit.

The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated
unamortized realized capital gains and losses on sales of fixed income
securities,

50
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED

principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1996, the IMR, net of 1996 amortization of $1.2 million, amounted to $5.9
million, which is included in policy reserves. The corresponding 1995 amounts
were $1.2 million and $6.9 million, respectively.

Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered and for which the contractholder, rather than the
Company, generally bears the investment risk. Separate account contractholders
have no claim against the assets of the general account of the Company.
Separate account assets are reported at market value. The operations of the
separate accounts are not included in the summary of operations; however,
income earned on amounts initially invested by the Company in the formation of
new separate accounts is included in other income.

Fair Values of Financial Instruments: Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, whether or not recognized in the statement of financial position,
for which it is practicable to estimate the value. In situations where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company.

The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:

The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.

Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded
bonds not provided by the independent pricing service are estimated by the
Company by discounting expected future cash flows using current market
rates applicable to the yield, credit quality and maturity of the
investments. The fair values for common and preferred stocks, other than
its subsidiary investments, which are carried at equity values, are based
on quoted market prices.

The fair value of interest rate swaps and currency rate swaps is estimated
using a discounted cash flow method adjusted for the difference between the
rate of the existing swap and the current swap market rate. Discounted cash
flows in foreign currencies are converted to U.S. dollars using current
exchange rates.

The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.

The carrying amount in the statement of financial position for policy loans
approximates their fair value.

The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow
method incorporating adjustments for the difference in the level of
interest rates between the dates the commitments were made and December 31,
1996. The fair value for commitments to purchase real estate approximates
the amount of the initial commitment.

51
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED

Capital Gains and Losses: Realized capital gains and losses are determined
using the specific identification basis. Realized capital gains and losses,
net of taxes and amounts transferred to the IMR, are included in net gain or
loss. Unrealized gains and losses, which consist of market value and book
value adjustments, are shown as adjustments to the unassigned deficit.

Policy Reserves: Life reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest
rates and valuation methods that will provide, in the aggregate, reserves that
are greater than or equal to the minimum or guaranteed policy cash values or
the amounts required by the Commonwealth of Massachusetts Division of
Insurance. Reserves for variable life insurance policies are maintained
principally on the modified preliminary term method using the 1958 and 1980
Commissioner's Standard Ordinary (CSO) mortality tables, with an assumed
interest rate of 4% for policies issued prior to May 1, 1983 and 4 1/2% for
policies issued on or thereafter. Reserves for single premium policies are
determined by the net single premium method using the 1958 CSO mortality
table, with an assumed interest rate of 4%. Reserves for universal life
policies issued prior to 1985 are equal to the gross account value which at
all times exceeds minimum statutory requirements. Reserves for universal life
policies issued from 1985 through 1988 are maintained at the greater of the
Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO mortality
table, with 4 1/2% interest or the cash surrender value. Reserves for
universal life policies issued after 1988 and for flexible variable policies
are maintained using the greater of the cash surrender value or the CRVM
method with the 1980 CSO mortality table and 5 1/2% interest for policies
issued from 1988 through 1992; 5% interest for policies issued in 1993 and
1994; and 4 1/2% interest for policies issued in 1995 and 1996.

Federal Income Taxes: Federal income taxes are reported in the financial
statements based on amounts determined to be payable as a result of operations
within the current accounting period. The operations of the Company are
consolidated with John Hancock in filing a consolidated federal income tax
return for the affiliated group. The federal income taxes of the Company are
allocated on a separate return basis with certain adjustments. The Company
made payments of $33.5 million in 1996 and $32.2 million in 1995.

Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy
reserves for tax return and financial statement purposes, capitalization of
policy acquisition expenses for tax purposes and other adjustments prescribed
by the Internal Revenue Code.

No provision is generally recognized for temporary differences that may exist
between financial reporting and taxable income or loss.

Reinsurance: Premiums, commissions, expense reimbursements, benefits and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms
of the reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premium income. Amounts applicable to reinsurance
ceded for future policy benefits, unearned premium reserves and claim
liabilities have been reported as reductions of these items.

Reclassifications: Certain 1995 amounts have been reclassified to permit
comparison with the corresponding 1996 amounts.

52
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 2--CAPITALIZATION

In prior years, the Company received capital contributions from John Hancock,
with a portion of the contributed capital being credited to common stock,
although no additional shares were issued. This practice, which is acceptable
to statutory authorities, has the effect of stating the carrying value of
issued shares of common stock at amounts other than $50 per share par value
with the offset reflected in paid-in capital.

At December 31, 1994, the Company had 50,000 shares authorized with 20,000
shares issued and outstanding. On February 16, 1995, the Company issued the
remaining 30,000 shares to John Hancock and transferred $22.5 million from
common stock to paid-in capital. The par value per share is $50.

NOTE 3--ACQUISITION

On June 23, 1993, the Company acquired all of the outstanding shares of stock
of Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn
Life Insurance Company for an aggregate purchase price of approximately $42.5
million. At the date of acquisition, assets of CPAL were approximately $648.5
million, consisting principally of cash and temporary cash investments and
liabilities were approximately $635.2 million, consisting principally of
reserves related to a block of interest sensitive single-premium whole life
insurance business assumed by CPAL from Charter National Life Insurance
Company (Charter). The purchase price includes contingent payments of up to
approximately $7.3 million payable between 1994 and 1998 based on the actual
lapse experience of the business in force on June 23, 1993. The Company made
contingent payments to CPAL of $1.5 million during each of 1996 and 1995.
Unamortized goodwill at December 31, 1996 was $15.2 million and is being
amortized over ten years on a straight-line basis.

On June 24, 1993, the Company contributed $24.6 million in additional capital
to CPAL. CPAL was renamed John Hancock Life Insurance Company of America
(JHLICOA) on July 7, 1993. JHLICOA manages the business assumed from Charter
and does not currently issue new business.

NOTE 4--NET INVESTMENT INCOME

Investment income has been reduced by the following amounts:

<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Investment expenses............................................... $ 7.0 $ 5.1
Depreciation expense.............................................. 0.9 1.0
Investment taxes.................................................. 0.5 0.5
------ ------
$ 8.4 $ 6.6
====== ======
</TABLE>

53
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS

Net realized capital gains (losses) consist of the following items:

<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from asset sales............................. $ (0.2) $ 4.0
Capital gains tax............................................... (1.0) (2.5)
Net capital gains transferred to IMR............................ (0.3) (1.0)
------ ------
Realized Capital Gains (Losses)............................... $ (1.5) $ 0.5
====== ======
</TABLE>

Net unrealized capital gains (losses) and other adjustments consist of the
following items:

<TABLE>
<CAPTION>
1996 1995
---- ----
(In millions)
<S> <C> <C>
Net gains (losses) from changes in security values and book
value adjustments.............................................. $ 3.7 $ (0.2)
Increase in asset valuation reserve............................. (1.2) (2.8)
------ ------
Net Unrealized Capital Gains (Losses) and Other Adjustments... $ 2.5 $ (3.0)
====== ======
</TABLE>

NOTE 6--TRANSACTIONS WITH PARENT

The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a number
of criteria which were revised in 1996 and 1995 to reflect continuing changes
in the Company's operations. The amount of the service fee charged to the
Company was $111.7 million and $97.9 million in 1996 and 1995, respectively,
which has been included in insurance and investment expenses. The Parent has
guaranteed that, if necessary, it will make additional capital contributions
to prevent the Company's stockholder's equity from declining below $1.0
million.

The service fee charged to the Company by the Parent includes $1.6 million and
$1.8 million in 1996 and 1995, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being
amortized over twenty years, that was allocated to the Company.

Effective January 1, 1994, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1996, 1995 and 1994 issues of
flexible premium variable life insurance and scheduled premium variable life
insurance policies. In connection with this agreement, John Hancock
transferred $24.5 million and $32.7 million of cash for tax, commission, and
expense allowances to the Company, which increased the Company's net gain from
operations by $15.7 million and $20.3 million in 1996 and 1995, respectively.

Effective January 1, 1996, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1995 and 1996 issues of retail
annuity contracts (Independence Preferred and Declaration). In connection with
this agreement, John Hancock transferred $23.2 million of cash for surrender
benefits, tax, reserve increase, commission, expense allowances and premium to
the Company, which increased the Company's net gain from operations by $15.1
million in 1996.

54
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 7--INVESTMENTS

The statement value and fair value of bonds are shown below:

<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1996 Value Gains Losses Value
---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 44.4 $ 0.2 $0.2 $ 44.4
Obligations of states and political
subdivisions........................... 12.6 0.4 0.0 13.0
Debt securities issued by foreign
governments............................ 0.8 0.1 0.0 0.9
Corporate securities.................... 623.2 29.8 3.4 649.6
Mortgage-backed securities.............. 72.5 10.2 0.1 82.6
------ ----- ---- ------
Total bonds........................... $753.5 $40.7 $3.7 $790.5
====== ===== ==== ======
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
Year ended December 31, 1995 Value Gains Losses Value
---------------------------- --------- ---------- ---------- -----
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 89.0 $ 0.5 $0.0 $ 89.5
Obligations of states and political
subdivisions........................... 11.4 1.1 0.0 12.5
Debt securities issued by foreign
governments............................ 1.3 0.2 0.0 1.5
Corporate securities.................... 445.6 44.1 1.6 488.1
Mortgage-backed securities.............. 5.5 0.3 0.1 5.7
------ ----- ---- ------
Total bonds........................... $552.8 $46.2 $1.7 $597.3
====== ===== ==== ======
</TABLE>

The statement value and fair value of bonds at December 31, 1996, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or
prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
Statement Fair
Value Value
--------- -----
(In millions)
<S> <C> <C>
Due in one year or less....................................... $ 51.6 $ 52.9
Due after one year through five years......................... 260.8 267.7
Due after five years through ten years........................ 244.3 253.7
Due after ten years........................................... 124.3 133.6
------ ------
681.0 707.9
Mortgage-backed securities.................................... 72.5 82.6
------ ------
$753.5 $790.5
====== ======
</TABLE>

55
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 7--INVESTMENTS--CONTINUED

Proceeds from sales of bonds during 1996 and 1995 were $228.3 million and
$18.9 million, respectively. Gross gains of $1.3 million in 1996 and $0.2
million in 1995 and gross losses of $2.1 million in 1996 and $0.1 million in
1995 were realized on these transactions.

The cost of common stocks was $0.0 million and $0.1 million at December 31,
1996 and 1995, respectively. Gross unrealized appreciation on common stocks
totaled $1.4 million, and gross unrealized depreciation totaled $0.0 million
at December 31, 1996. The fair value of preferred stock totaled $9.6 million
at December 31, 1996 and $5.2 million at December 31, 1995.

Bonds with amortized cost of $11.3 million were nonincome producing for the
twelve months ended December 31, 1996.

At December 31, 1996, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below.
The Company controls credit risk through credit approvals, limits and
monitoring procedures.

<TABLE>
<CAPTION>
Statement
Property Type Value
------------- ---------
(In millions)
<S> <C>
Apartments.............. $ 96.0
Industrial.............. 35.0
Office buildings........ 11.3
Retail.................. 29.0
Agricultural............ 28.9
Other................... 11.9
------
$212.1
======
</TABLE>
<TABLE>
<CAPTION>
Geographic Statement
Concentration Value
------------- ---------
(In millions)
<S> <C>
East North Central...... $ 31.1
Middle Atlantic......... 11.5
Mountain................ 7.6
New England............. 27.6
Pacific................. 49.9
South Atlantic.......... 58.8
West South Central...... 25.6
------
$212.1
======
</TABLE>

At December 31, 1996, the fair values of the commercial and agricultural
mortgage loans portfolios were $189.0 million and $30.4 million, respectively.
The corresponding amounts as of December 31, 1995 were approximately $132.1
million and $22.2 million, respectively.

The maximum and minimum lending rates for mortgage loans during 1996 were
8.69% and 7.04% for agricultural loans and 8.5% and 7.2% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured or guaranteed or purchase money
mortgages, is 75%. For city mortgages, fire insurance is carried on all
commercial and residential properties at least equal to the excess of the loan
over the maximum loan which would be permitted by law on the land without the
building, except as permitted by regulations of the Federal Housing Commission
on loans fully insured under the provisions of the National Housing Act. For
agricultural mortgage loans, fire insurance is not normally required on land
based loans except in those instances where a building is critical to the
farming operation. Fire insurance is required on all agri-business facilities
in an aggregate amount equal to the loan balance.

56
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 8--REINSURANCE

The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose
of reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers in 1996 were $384.3 million, $9.9 million, and $12.1 million,
respectively. The corresponding amounts in 1995 were $72.4 million, $8.7
million, and $12.1 million, respectively.

To the extent that an assuming reinsurance company is unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.

NOTE 9--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range through 2011. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statement
of financial position.

The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2006. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.

The Company enters into interest rate cap contracts to manage exposure on
underlying security values due to a rise in interest rates. Maturities of
current agreements range through 2006.

The Company also uses financial futures contracts to hedge public bonds
intended for future sale in order to lock in the market value at the date of
contract. The Company is subject to the risks associated with changes in the
value of the underlying securities; however, such changes in value generally
are offset by changes in the value of the hedged items. The contract or
notional amounts of the contracts represent the extent of the Company's
involvement but not in the future cash requirements, as the Company intends to
close the open positions prior to settlement.

The contract or notional amount of the foregoing financial instruments, which
indicates the Company's involvement and in certain instances, maximum credit
risk related to those instruments, is as follows:

<TABLE>
<CAPTION>
December 31
-------------
1996 1995
---- ----
(In millions)
<S> <C> <C>
Futures contracts to sell securities............................ $ 73.0 $ 0.0
======= =====
Notional amount of interest rate swaps, currency rate swaps, and
interest rate caps to:
Receive variable rates........................................ $ 215.9 $ 0.0
======= =====
Receive fixed rates........................................... $ 26.6 $ 5.0
======= =====
</TABLE>

57
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 9--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--CONTINUED

The Company continually monitors its positions and the credit ratings of the
counterparties to these financial instruments. The Company believes the risk
of incurring losses due to the nonperformance by its counterparties is remote
and that any such losses would be immaterial.

Based on the market rates in effect at December 31, 1996, the Company's
interest rate swaps, currency rate swaps and interest rate caps represented
(assets) liabilities to the Company with fair values of $2.3 million, $(8.2)
million and $(2.0) million, respectively. The corresponding amounts as of
December 31, 1995 were $0.0 million.

NOTE 10--POLICYHOLDERS' RESERVES AND BENEFICIARIES' FUND

The Company's annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal and subject to discretionary withdrawal (without
adjustment) are summarized as follows:

<TABLE>
<CAPTION>
December 31, 1996 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal at book value
less surrender charge............................... $441.9 89.3%
Subject to discretionary withdrawal at book value
(without adjustment)................................ 53.0 10.7
------ -----
Total annuity reserves and deposit liabilities....... $494.9 100.0%
====== =====
</TABLE>

NOTE 11--COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase long-term bonds and real
estate and issue real estate mortgages totalling $42.1 million, $0.1 million,
and $33.5 million, respectively, at December 31, 1996. The Company monitors
the creditworthiness of borrowers under long-term bond commitments and
requires collateral as deemed necessary. If funded, loans related to real
estate mortgages would be fully collateralized by the related properties. The
fair value of the commitments described above is $76.2 million at December 31,
1996. The majority of these commitments expire in 1997.

In the normal course of its business operations, the Company is involved in
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1996. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position of the Company.

58
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

<TABLE>
<CAPTION>
Year ended December 31
--------------------------------
1996 1995
--------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------ -------- ------
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 7............................... $753.5 $790.5 $552.8 $597.3
Preferred stocks--Note 7.................... 9.6 9.6 5.0 5.2
Common stocks--Note 7....................... 1.4 1.4 1.7 1.7
Mortgage loans on real estate--Note 7....... 212.1 219.4 146.7 154.3
Policy loans--Note 1........................ 80.8 80.8 61.8 61.8
Cash and cash equivalents--Note 1........... 31.9 31.9 76.6 76.6
Derivatives liabilities relating to:--Note 9
Interest rate swaps......................... -- 2.3 -- 0.0
Currency rate swaps......................... -- (8.2) -- 0.0
Interest rate caps.......................... -- (2.0) -- 0.0
Liabilities
Commitments--Note 11........................ -- 76.2 -- 23.8
</TABLE>

The carrying amounts in the table are included in the statutory-basis
statements of financial position. The method and assumptions utilized by the
Company in estimating its fair value disclosures are described in Note 1.

59
<PAGE>

APPENDIX--OTHER POLICY PROVISIONS

SETTLEMENT PROVISIONS

In place of a single payment, an amount of $1,000 or more payable under the
Policy as a benefit or as the Surrender Value, if any, may be left with
JHVLICO under the terms of a supplementary agreement. The agreement will be
issued when the proceeds are applied through the election of any one of the
options below.

The following options are subject to the restrictions and limitations stated
in the Policy.

Option 1--Interest Income at the declared rate but not less than 3 1/2% a
year on proceeds held on deposit.

Option 2A--Income of a Specified Amount, with payments each year totaling
at least 1/12th of the proceeds, until the proceeds, with interest credited
at the declared rate but not less than 3 1/2% a year on unpaid balances,
are fully paid.

Option 2B--Income for a Fixed Period, with each payment as declared.

Option 3--Life Income with Payments for a Guaranteed Period.

Option 4--Life Income without Refund at the death of the Payee of any
part of the proceeds applied. Only one payment is made if the Payee dies
before the second payment is due.

Option 5--Life Income with Cash Refund at the death of the Payee of the
amount, if any, equal to the proceeds applied less the sum of all income
payments made.

No election of an option may provide for income payments of less than $50.

Other options may be arranged with JHVLICO's approval including optional
methods of settlement available from John Hancock.

ADDITIONAL INSURANCE BENEFITS

On payment of an additional charge and subject to certain age and insurance
underwriting requirements, certain additional provisions, such as an
Accidental Death Benefit, which are subject to the restrictions and
limitations set forth therein, may be included in a Policy by rider.

GENERAL PROVISIONS

BENEFICIARY. The Beneficiary will be as shown in the application for the
Policy, unless thereafter changed by the Owner in accordance with the terms of
the Policy. In general, if the insured dies and there is no surviving
Beneficiary, the Owner will be the Beneficiary, but if the insured was the
Owner, the Owner's estate will be the Beneficiary.

OWNER AND ASSIGNMENT. The Owner's interest in the Policy may be assigned
without the consent of any revocable Beneficiary. JHVLICO will not be on
notice of any assignment unless it is in writing and until a duplicate of the
original assignment has been filed at JHVLICO's Home Office. JHVLICO assumes
no responsibility for the validity or sufficiency of any assignment.

MISSTATEMENT OF AGE OR SEX. If the age or sex of the insured has been
misstated, JHVLICO will adjust the benefits payable to those which would have
been purchased at the correct age or sex by the most recent insurance charge
deducted from Account Value.

60
<PAGE>

SUICIDE. If the insured commits suicide within 2 years (except where state
law requires a shorter period) from the date of issue shown in the Policy, the
Policy will terminate and JHVLICO will pay in place of all other benefits an
amount equal to the premium paid less any Indebtedness on the date of death
and less any withdrawals. If the suicide is within 2 years (except where state
law requires a shorter period) from the date of any Policy change that
increases the death benefit, or the payment of any premium requiring evidence
of insurability, the death benefit will not include the increased benefit but
will include the excess premium.

AGE, POLICY ANNIVERSARIES AND MONTHLY PROCESSING DATE. For purpose of the
Policy, an insured's "age" is his or her age on his or her nearest birthday.
Policy months, Policy years and Policy anniversaries are calculated from the
date of issue. The monthly processing date is on or about the first Valuation
Date in each Policy month.

AVIATION ACTIVITY EXCLUSION. If the insured dies in an aviation accident
while a crew member on other than a commercial aircraft and the Policy
provides at the request of the Owner for a limited benefit in such situation,
JHVLICO will pay in place of all other benefits an amount equal to the greater
of the premium paid or the Surrender Value, less any Indebtedness.

INCONTESTABILITY. The Policy shall be incontestable, other than for
nonpayment of premiums, after it has been in force during the lifetime of an
insured for 2 years from its issue date. If, however, evidence of insurability
is required with respect to any increase in death benefit, such increase shall
be incontestable after the increase has been in force during the lifetime of
the insured for 2 years from the increase date.

DEFERRAL OF DETERMINATIONS AND PAYMENTS. Payment of any death, surrender,
partial withdrawal or loan proceeds will ordinarily be made within seven days
after receipt at JHVLICO's Home Office of all documents required for any such
payment. Approximately two-thirds of the claims for death proceeds which are
made within two years after the date of issue of the Policy will be
investigated to determine whether the claim should be contested and payment of
these claims will therefore be delayed.

JHVLICO may defer any transaction requiring a determination of Account Value
in any variable Subaccount for any period during which: (1) the disposal or
valuation of the Account's assets is not reasonably practicable because the
New York Stock Exchange is closed or conditions are such that, under the
Commission's rules and regulations, trading is restricted or an emergency is
deemed to exist or (2) the Commission by order permits postponement of such
actions for the protection of Owners.

The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.

61
<PAGE>

APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
SURRENDER VALUES AND ACCUMULATED PREMIUMS

The following tables illustrate the changes in death benefit, Account Value
and Surrender Value of the Policy, disregarding any Policy loans. Each table
separately illustrates the operation of a Policy for an identified issue age,
Planned Premium schedule and Sum Insured and shows how the death benefit,
Account Value and Surrender Value may vary over an extended period of time
assuming hypothetical rates of investment return (i.e., investment income and
capital gains and losses, realized or unrealized) equivalent to constant gross
annual rates of 0%, 6% and 12%. The tables are based on given annual Planned
Premiums paid at the beginning of each Policy year and will assist in a
comparison of the values set forth in the tables with those under other
variable life insurance policies which may be issued by JHVLICO or other
companies. Tables are provided for each of the three available death benefit
options. The values for a Policy would be different from those shown if
premiums are paid in different amounts or at different times or if the actual
gross rates of investment return average 0%, 6% or 12% over a period of years,
but nevertheless fluctuate above or below the average for individual Policy
years, or if the Policy were issued under circumstances in which no
distinctions are made based on the gender of the insureds.

The amounts shown for the death benefit, Account Value and Surrender Value
are as of the end of each Policy year. The tables headed "Using Current
Charges" assume that the current rates for insurance, sales, risk, and expense
charges (including JHVLICO's intended waiver after ten Policy years of the
sales charges deducted from certain premiums and its intended reduction in the
tenth Policy year in the insurance charge deducted monthly from Account Value)
will apply in each year illustrated. The tables headed "Using Maximum Charges"
assumes that the maximum (guaranteed) insurance, sales, risk, and expense
charges will be made in each year illustrated. The amounts shown in all tables
reflect an average asset charge for the daily investment advisory expense
charges to the Portfolios of the Fund (equivalent to an effective annual rate
of .61%) and an assumed average asset charge for the annual nonadvisory
operating expenses of each Portfolio of the Fund (equivalent to an effective
annual rate of .19%). For a description of expenses charged to the Portfolios,
including the reimbursement of any Portfolio for annual non-advisory operating
expenses in excess of an effective annual rate of .25%, a continuing
obligation of the Fund's investment adviser, see the attached Prospectus for
the Fund. The charges for the daily investment management fee and the annual
non-advisory operating expenses are based on the hypothetical assumption that
Policy values are allocated equally among the variable Subaccounts. The actual
Portfolio charges and expenses associated with any Policy will vary depending
upon the actual allocation of Policy values among Subaccounts.

The tables reflect that no charge is currently made to the Account for
Federal income taxes. However, JHVLICO reserves the right to make such a
charge in the future and any charge would require higher rates of investment
return in order to produce the same Policy values. All of the tables do,
however, reflect the imposition of a Federal DAC Tax charge in the amount of
1.25% of all premiums paid and a premium tax charge in the amount of 2.35% of
all premiums paid.

The tables assume that the Guaranteed Death Benefit feature was in effect
the first 5 Policy years.

The second column of each table shows the amount to which the total premiums
paid to the end of a Policy year during the premium paying period would
accumulate if an amount equal to those premiums were invested to earn
interest, after taxes, at 5% compounded annually.

JHVLICO will furnish upon request a comparable illustration reflecting the
proposed insureds' ages, sexes, underwriting risk classifications and the Sum
Insured at issue and Planned Premium amount requested, and assuming annual
Planned Premiums.

62
<PAGE>

DEATH BENEFIT OPTION 1: --LEVEL DEATH BENEFIT
ILLUSTRATION ASSUMES CURRENT CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 237 264 292 0 0 0
2 1,636 100,000 100,000 100,000 695 771 851 0 28 108
3 2,516 100,000 100,000 100,000 1,132 1,286 1,455 39 194 362
4 3,439 100,000 100,000 100,000 1,549 1,811 2,107 456 719 1,014
5 4,409 100,000 100,000 100,000 1,946 2,345 2,813 854 1,253 1,720
6 5,428 100,000 100,000 100,000 2,324 2,889 3,578 1,231 1,797 2,486
7 6,497 100,000 100,000 100,000 2,683 3,445 4,411 1,590 2,352 3,318
8 7,620 100,000 100,000 100,000 3,023 4,012 5,317 2,129 3,118 4,423
9 8,799 100,000 100,000 100,000 3,345 4,590 6,305 2,649 3,895 5,610
10 10,037 100,000 100,000 100,000 3,656 5,194 7,400 3,360 4,897 7,104
11 11,337 100,000 100,000 100,000 3,981 5,845 8,635 3,783 5,647 8,438
12 12,702 100,000 100,000 100,000 4,288 6,515 9,992 4,189 6,416 9,894
13 14,135 100,000 100,000 100,000 4,580 7,205 11,487 4,580 7,205 11,487
14 15,640 100,000 100,000 100,000 4,858 7,921 13,137 4,858 7,921 13,137
15 17,220 100,000 100,000 100,000 5,127 8,666 14,963 5,127 8,666 14,963
16 18,879 100,000 100,000 100,000 5,392 9,449 16,992 5,392 9,449 16,992
17 20,621 100,000 100,000 100,000 5,596 10,214 19,194 5,596 10,214 19,194
18 22,450 100,000 100,000 100,000 5,760 10,983 21,610 5,760 10,983 21,610
19 24,370 100,000 100,000 100,000 5,881 11,752 24,263 5,881 11,752 24,263
20 26,387 100,000 100,000 100,000 5,958 12,521 27,182 5,958 12,521 27,182
25 38,086 100,000 100,000 100,000 5,461 16,177 46,950 5,461 16,177 46,950
30 53,018 100,000 100,000 100,000 2,862 18,944 80,308 2,862 18,944 80,308
35 72,076 ** 100,000 157,383 ** 19,404 136,855 ** 19,404 136,855
40 96,398 ** 100,000 241,761 ** 14,595 230,249 ** 14,595 230,249
45 127,441 ** ** 405,009 ** ** 385,723 ** ** 385,723
</TABLE>
- --------
(*) If premiums are paid more frequently than annually, the above values shown
would be affected.
(**) Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

63
<PAGE>

DEATH BENEFIT OPTION 1: LEVEL DEATH BENEFIT ILLUSTRATION ASSUMES MAXIMUM
CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM *

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 191 216 242 0 0 0
2 1,636 100,000 100,000 100,000 609 680 754 0 0 10
3 2,516 100,000 100,000 100,000 1,010 1,152 1,306 0 59 214
4 3,439 100,000 100,000 100,000 1,393 1,634 1,904 301 541 811
5 4,409 100,000 100,000 100,000 1,757 2,122 2,548 664 1,029 1,456
6 5,428 100,000 100,000 100,000 2,101 2,618 3,245 1,009 1,525 2,152
7 6,497 100,000 100,000 100,000 2,423 3,118 3,995 1,331 2,025 2,902
8 7,620 100,000 100,000 100,000 2,723 3,622 4,805 1,829 2,728 3,911
9 8,799 100,000 100,000 100,000 2,998 4,128 5,678 2,303 3,433 4,983
10 10,037 100,000 100,000 100,000 3,250 4,637 6,622 2,954 4,341 6,325
11 11,337 100,000 100,000 100,000 3,474 5,145 7,639 3,277 4,948 7,442
12 12,702 100,000 100,000 100,000 3,669 5,650 8,737 3,570 5,551 8,638
13 14,135 100,000 100,000 100,000 3,834 6,149 9,922 3,834 6,149 9,922
14 15,640 100,000 100,000 100,000 3,968 6,643 11,203 3,968 6,643 11,203
15 17,220 100,000 100,000 100,000 4,066 7,126 12,587 4,066 7,126 12,587
16 18,879 100,000 100,000 100,000 4,128 7,597 14,084 4,128 7,597 14,084
17 20,621 100,000 100,000 100,000 4,148 8,048 15,701 4,148 8,048 15,701
18 22,450 100,000 100,000 100,000 4,118 8,473 17,445 4,118 8,473 17,445
19 24,370 100,000 100,000 100,000 4,036 8,865 19,329 4,036 8,865 19,329
20 26,387 100,000 100,000 100,000 3,890 9,215 21,360 3,890 9,215 21,360
25 38,086 100,000 100,000 100,000 2,001 10,020 34,283 2,001 10,020 34,283
30 53,018 ** 100,000 100,000 ** 7,937 53,994 ** 7,937 53,994
35 72,076 ** ** 100,000 ** ** 86,300 ** ** 86,300
40 96,398 ** ** 147,469 ** ** 140,447 ** ** 140,447
45 127,441 ** ** 238,444 ** ** 227,089 ** ** 227,089
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 5% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

64
<PAGE>

DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT
ILLUSTRATION ASSUMES CURRENT CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,237 100,264 100,291 237 264 291 0 0 0
2 1,636 100,693 100,769 100,849 693 769 849 0 26 106
3 2,516 101,128 101,282 101,449 1,128 1,282 1,449 35 189 356
4 3,439 101,542 101,802 102,097 1,542 1,802 2,097 449 710 1,004
5 4,409 101,935 102,331 102,795 1,935 2,331 2,795 842 1,238 1,703
6 5,428 102,307 102,867 103,551 2,307 2,867 3,551 1,214 1,775 2,458
7 6,497 102,660 103,413 104,369 2,660 3,413 4,369 1,567 2,321 3,277
8 7,620 102,992 103,968 105,257 2,992 3,968 5,257 2,098 3,074 4,363
9 8,799 103,304 104,532 106,222 3,304 4,532 6,222 2,609 3,837 5,527
10 10,037 103,606 105,118 107,287 3,606 5,117 7,287 3,309 4,821 6,990
11 11,337 103,918 105,747 108,483 3,918 5,747 8,483 3,721 5,549 8,285
12 12,702 104,212 106,391 109,792 4,212 6,391 9,792 4,114 6,292 9,693
13 14,135 104,489 107,052 111,226 4,489 7,052 11,226 4,489 7,052 11,226
14 15,640 104,751 107,732 112,802 4,751 7,732 12,802 4,751 7,732 12,802
15 17,220 105,003 108,438 114,540 5,003 8,438 14,540 5,003 8,438 14,540
16 18,879 105,250 109,175 116,463 5,250 9,175 16,463 5,250 9,175 16,463
17 20,621 105,431 109,884 118,528 5,431 9,884 18,528 5,431 9,884 18,528
18 22,450 105,569 110,585 120,772 5,569 10,585 20,772 5,569 10,585 20,772
19 24,370 105,662 111,275 123,211 5,662 11,275 23,211 5,662 11,275 23,211
20 26,387 105,707 111,951 125,866 5,707 11,951 25,866 5,707 11,951 25,866
25 38,086 104,999 114,839 143,015 4,999 14,839 43,015 4,999 14,839 43,015
30 53,018 102,157 116,038 168,955 2,157 16,038 68,955 2,157 16,038 68,955
35 72,076 ** 113,599 207,924 ** 13,599 107,924 ** 13,599 107,924
40 96,398 ** 104,185 265,994 ** 4,185 165,994 ** 4,185 165,994
45 127,441 ** ** 351,128 ** ** 251,128 ** ** 251,128
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
above would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

65
<PAGE>

DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT ILLUSTRATION ASSUMES MAXIMUM
CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE:
$100,000 $760 BASE POLICY TARGET PREMIUM*

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- ---------------------------------- ----------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- ---------------------------------- ----------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,190 100,216 100,241 190 216 241 0 0 0
2 1,636 100,607 100,677 100,751 607 677 751 0 0 8
3 2,516 101,006 101,148 101,301 1,006 1,148 1,301 0 55 208
4 3,439 101,386 101,625 101,894 1,386 1,625 1,894 293 532 801
5 4,409 101,746 102,108 102,532 1,746 2,108 2,532 653 1,015 1,439
6 5,428 102,085 102,597 103,219 2,085 2,597 3,219 993 1,504 2,126
7 6,497 102,401 103,088 103,956 2,401 3,088 3,956 1,308 1,995 2,863
8 7,620 102,694 103,581 104,749 2,694 3,581 4,749 1,800 2,687 3,855
9 8,799 102,961 104,073 105,599 2,961 4,073 5,599 2,265 3,378 4,904
10 10,037 103,202 104,565 106,514 3,202 4,565 6,514 2,906 4,269 6,218
11 11,337 103,415 105,052 107,495 3,415 5,052 7,495 3,218 4,855 7,297
12 12,702 103,597 105,532 108,546 3,597 5,532 8,546 3,498 5,433 8,447
13 14,135 103,748 106,022 109,672 3,748 6,002 9,672 3,748 6,002 9,672
14 15,640 103,865 106,460 110,880 3,865 6,460 10,880 3,865 6,460 10,880
15 17,220 103,946 106,902 112,173 3,946 6,902 12,173 3,946 6,902 12,173
16 18,879 103,988 107,325 113,558 3,988 7,325 13,558 3,988 7,325 13,558
17 20,621 103,986 107,720 115,036 3,986 7,720 15,036 3,986 7,720 15,036
18 22,450 103,934 108,079 116,609 3,934 8,079 16,609 3,934 8,079 16,609
19 24,370 103,826 108,396 118,281 3,826 8,396 18,281 3,826 8,396 18,281
20 26,387 103,654 108,658 120,052 3,654 8,658 20,052 3,654 8,658 20,052
25 38,086 101,630 108,801 130,489 1,630 8,801 30,489 1,630 8,801 30,489
30 53,018 ** 105,610 143,522 ** 5,610 43,522 ** 5,610 43,522
35 72,076 ** ** 157,896 ** ** 57,896 ** ** 57,896
40 96,398 ** ** 169,952 ** ** 69,952 ** ** 69,952
45 127,441 ** ** 170,313 ** ** 70,313 ** ** 70,313
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

66
<PAGE>

DEATH BENEFIT OPTION 3: LEVEL DEATH BENEFIT WITH GREATER FUNDING ILLUSTRATION
ASSUMES CURRENT CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE:
$100,000 $760 BASE POLICY TARGET PREMIUM *

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 237 264 292 0 0 0
2 1,636 100,000 100,000 100,000 695 771 851 0 28 108
3 2,516 100,000 100,000 100,000 1,132 1,286 1,455 39 194 362
4 3,439 100,000 100,000 100,000 1,549 1,811 2,107 456 719 1,014
5 4,409 100,000 100,000 100,000 1,946 2,345 2,813 854 1,253 1,720
6 5,428 100,000 100,000 100,000 2,324 2,889 3,578 1,231 1,797 2,486
7 6,497 100,000 100,000 100,000 2,683 3,445 4,411 1,590 2,352 3,318
8 7,620 100,000 100,000 100,000 3,023 4,012 5,317 2,129 3,118 4,423
9 8,799 100,000 100,000 100,000 3,345 4,590 6,305 2,649 3,895 5,610
10 10,037 100,000 100,000 100,000 3,656 5,194 7,400 3,360 4,897 7,104
11 11,337 100,000 100,000 100,000 3,981 5,845 8,635 3,783 5,647 8,438
12 12,702 100,000 100,000 100,000 4,288 6,515 9,992 4,189 6,416 9,894
13 14,135 100,000 100,000 100,000 4,580 7,205 11,487 4,580 7,205 11,487
14 15,640 100,000 100,000 100,000 4,858 7,921 13,137 4,858 7,921 13,137
15 17,220 100,000 100,000 100,000 5,127 8,666 14,963 5,127 8,666 14,963
16 18,879 100,000 100,000 100,000 5,392 9,449 16,992 5,392 9,449 16,992
17 20,621 100,000 100,000 100,000 5,596 10,214 19,194 5,596 10,214 19,194
18 22,450 100,000 100,000 100,000 5,760 10,983 21,610 5,760 10,983 21,610
19 24,370 100,000 100,000 100,000 5,881 11,752 24,263 5,881 11,752 24,263
20 26,387 100,000 100,000 100,000 5,958 12,521 27,182 5,958 12,521 27,182
25 38,086 100,000 100,000 100,000 5,461 16,177 46,950 5,461 16,177 46,950
30 53,018 100,000 100,000 134,782 2,862 18,944 79,190 2,862 18,944 79,190
35 72,076 ** 100,000 196,136 ** 19,404 129,583 ** 19,404 129,583
40 96,398 ** 100,000 283,835 ** 14,595 207,360 ** 14,595 207,360
45 127,441 ** ** 411,057 ** ** 325,564 ** ** 325,564
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

67
<PAGE>

DEATH BENEFIT OPTION 3: LEVEL DEATH BENEFIT WITH GREATER FUNDING ILLUSTRATION
ASSUMES MAXIMUM CHARGES

MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE:
$100,000 $760 BASE POLICY TARGET PREMIUM*

<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- -------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 191 216 242 0 0 0
2 1,636 100,000 100,000 100,000 609 680 754 0 0 10
3 2,516 100,000 100,000 100,000 1,010 1,152 1,306 0 59 214
4 3,439 100,000 100,000 100,000 1,393 1,634 1,904 301 541 811
5 4,409 100,000 100,000 100,000 1,757 2,122 2,548 664 1,029 1,456
6 5,428 100,000 100,000 100,000 2,101 2,618 3,245 1,009 1,525 2,152
7 6,497 100,000 100,000 100,000 2,423 3,118 3,995 1,331 2,025 2,902
8 7,620 100,000 100,000 100,000 2,723 3,622 4,805 1,829 2,728 3,911
9 8,799 100,000 100,000 100,000 2,998 4,128 5,678 2,303 3,433 4,983
10 10,037 100,000 100,000 100,000 3,250 4,637 6,622 2,954 4,341 6,325
11 11,337 100,000 100,000 100,000 3,474 5,145 7,639 3,277 4,948 7,442
12 12,702 100,000 100,000 100,000 3,669 5,650 8,737 3,570 5,551 8,638
13 14,135 100,000 100,000 100,000 3,834 6,149 9,922 3,834 6,149 9,922
14 15,640 100,000 100,000 100,000 3,968 6,643 11,203 3,968 6,643 11,203
15 17,220 100,000 100,000 100,000 4,066 7,126 12,587 4,066 7,126 12,587
16 18,879 100,000 100,000 100,000 4,128 7,597 14,084 4,128 7,597 14,084
17 20,621 100,000 100,000 100,000 4,148 8,048 15,701 4,148 8,048 15,701
18 22,450 100,000 100,000 100,000 4,118 8,473 17,445 4,118 8,473 17,445
19 24,370 100,000 100,000 100,000 4,036 8,865 19,329 4,036 8,865 19,329
20 26,387 100,000 100,000 100,000 3,890 9,215 21,360 3,890 9,215 21,360
25 38,086 100,000 100,000 100,000 2,001 10,020 34,283 2,001 10,020 34,283
30 53,018 ** 100,000 100,000 ** 7,937 53,994 ** 7,937 53,994
35 72,076 ** ** 127,657 ** ** 84,340 ** ** 84,340
40 96,398 ** ** 174,528 ** ** 127,504 ** ** 127,504
45 127,441 ** ** 236,057 ** ** 186,961 ** ** 186,961
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.

IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

68
<PAGE>

[LOGO OF JOHN HANCOCK APPEARS HERE]

POLICIES ISSUED BY JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, MASSACHUSETTS 02117

S8148-M 6/97