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Registration No. 33-82060
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 1
to
Form S-6
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A. Exact name of Trust: MML Bay State Variable Life Separate
Account I
B. Name of Depositor: MML Bay State Life Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph
- ----------- (b) of rule 485.
X on May 1, 1996 pursuant to paragraph (b) of Rule 485.
- ---------- -----------
60 days after filing pursuant to paragraph (a) of Rule 485.
- -----------
on (date) pursuant to paragraph (a) of Rule 485.
- -----------
- --------------------------------------------------------------------------------
STATEMENT PURSUANT TO RULE 24F-2
The Registrant has registered an indefinite number or amount of its variable
life insurance contracts under the Securities Act of 1933 pursuant to Rule 24F-2
under the Investment Company Act of 1940. The Rule 24F-2 Notice for
Registrant's fiscal year ending December 31, 1995 was filed on February 22,
1996.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
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1 Cover Page; Glossary; The Separate Account
2 Cover Page; MML Bay State and the Separate Account
3 Investment Advisors and the Portfolio Managers
4 Sales and Other Agreements
5 MML Bay State and the Separate Account
6 MML Bay State and the Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Cover Page; Summary of the Policy; Detailed
Information about the Policy; Flexibility to
Adjust the Amount of Death Benefit; Transfers;
Surrender of the Policy; Withdrawal of Cash
Surrender Value; Death Benefit; Voting Rights
11 MML Bay State and the Separate Account
12 MML Bay State and the Separate Account; Sales and
Other Agreements
13 MML Bay State and the Separate Account; Charges
and Deductions
14 Summary of the Policy; MML Bay State and the
Separate Account; Detailed Information About the
Policy; The Investment Advisors and Portfolio
Managers; MML Bay State and the Separate Account;
Surrender Charges; Other Charges; Sales and Other
Agreements
15 Summary of the Policy; Detailed Information About
the Policy
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
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16 Summary of the Policy; MML Bay State and the
Separate Account; Detailed Information About the
Policy
17 Summary of the Policy; Account Value and Cash
Surrender Value; Withdrawal Fee
18 MML Bay State and the Separate Account
19 Service Agreement; Records and Reports
20 Not Applicable
21 Summary of the Policy; Policy Loan Privilege
22 Not Applicable
23 Bonding Arrangement
24 Limits on Our Right to Challenge the Policy;
Suicide; Misstatement of Age or Sex; Assignment;
Beneficiary; Our Rights; MML Bay State and the
Separate Account
25 Detailed Information About the Policy
26 Not Applicable
27 Detailed Information About the Policy
28 Directors and Executive Officers of MML Bay State
29 MML Bay State and the Separate Account
30 Not Applicable
31 Not Applicable
32 Not Applicable
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
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33 Not Applicable
34 Not Applicable
35 Detailed Information about the Policy
36 Not Applicable
37 Not Applicable
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Sales and Other Agreements
44 MML Bay State and the Separate Account; Charges
for Federal Income Tax;
45 Not Applicable
46 MML Bay State and the Separate Account
47 MML Bay State and the Separate Account
48 MML Bay State and the Separate Account
49 Not Applicable
50 MML Bay State and the Separate Account
51 Cover Page; Detailed Information About the Policy
52 MML Bay State and the Separate Account;
Reservation of Rights
53 Federal Income Tax Considerations
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
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54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Report of Independent Accountants and Financial
Statements
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FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICIES*
ISSUED BY
MML BAY STATE LIFE INSURANCE COMPANY
This Prospectus describes a flexible premium variable whole life insurance
policy (the "Policy") offered by MML Bay State Life Insurance Company ("MML Bay
State"). The Policy, for so long as it remains in force, provides lifetime
insurance protection on the Insured named in the Policy. The Policy is designed
to provide maximum flexibility in connection with premium payments and Death
Benefits by permitting the Policyowner, subject to certain restrictions, to vary
the frequency and amount of Planned Premium Payments and to increase or decrease
the Death Benefit payable under the Policy. This flexibility allows a
Policyowner to provide for changing insurance needs under a single insurance
policy. A Policy may also be surrendered for its Cash Surrender Value.
The Policyowner may allocate Net Premiums and Account Value among the divisions
(the "Divisions") of the designated segment of MML Bay State Variable Life
Separate Account I (the "Separate Account") and a Guaranteed Principal Account
(the "GPA"). The assets of each Division will be used to purchase, at net asset
value, shares of a designated investment fund. Currently, the available funds
include the following funds of either MML Series Investment Fund (the "MML
Trust") or Oppenheimer Variable Account Funds (the "Oppenheimer Trust"):
MML Trust: Oppenheimer Trust:
--------- -----------------
MML Equity Fund Oppenheimer Capital Appreciation Fund
MML Money Market Fund Oppenheimer Global Securities Fund
MML Managed Bond Fund Oppenheimer Growth Fund
MML Blend Fund Oppenheimer Strategic Bond Fund
The Policyowner bears the investment risk of any Account Value allocated to the
Separate Account. The Death Benefit may, and the Cash Surrender Value will,
vary up and down depending on the investment performance of the Divisions.
While there is no guaranteed minimum Cash Surrender Value for funds invested in
the Separate Account, a Policy's Death Benefit will never be less than the
Selected Face Amount less any Policy Debt and any unpaid Monthly Charges.
Furthermore, the Policy will not lapse provided there are sufficient funds
available to pay certain monthly charges.
All Policies are serviced through MML Bay State's Principal Administrative
Office, located at 1295 State Street, Springfield, Massachusetts 01111-0001.
The telephone number is (413) 788-8411. MML Bay State's Home Office is located
in Jefferson City, Missouri.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE PROSPECTUSES FOR MML
SERIES INVESTMENT FUND AND OPPENHEIMER VARIABLE ACCOUNT FUNDS.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FURTHER REFERENCE.
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
THE BENEFICIARY OF A POLICY. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY
SIMILAR TO OR COMPARABLE WITH A MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
REPLACING EXISTING INSURANCE WITH THE POLICY DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE.
This Prospectus does not constitute an offer of, or solicitation of, an offer to
acquire any interest or participation in the flexible premium variable life
insurance policies offered by this Prospectus in any jurisdiction to anyone to
whom it is unlawful to make such an offer or solicitation in such jurisdiction.
The date of this Prospectus is May 1, 1996.
*Title may vary in some jurisdictions
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Table Of Contents
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Definition Of Terms.......................................................... 5
I. SUMMARY OF THE POLICY.................................................... 7
The Policy............................................................... 7
The Separate Account and the Guaranteed Principal Account................ 7
Availability of the Policy............................................... 7
The Death Benefit........................................................ 7
Flexibility to Adjust the Amount of Death Benefit........................ 7
Premium Features......................................................... 8
Transfers................................................................ 8
Charges and Deductions................................................... 8
Deductions from Premiums............................................... 8
Monthly Charges........................................................ 8
Surrender Charge....................................................... 8
Administrative Surrender Charge...................................... 8
Sales Load Surrender Charge.......................................... 8
Mortality and Expense Risk Charge...................................... 9
Other Charges.......................................................... 9
Policy Loan Privilege.................................................... 9
Surrender of the Policy.................................................. 9
Withdrawal of Cash Surrender Value....................................... 9
II. INFORMATION ABOUT MML BAY STATE AND THE SEPARATE ACCOUNT................. 9
MML Bay State and MassMutual............................................. 9
OppenheimerFunds, Inc.................................................... 10
The Separate Account..................................................... 10
MML Trust and Oppenheimer Trust.......................................... 10
- MML Equity Fund...................................................... 11
- MML Money Market Fund................................................ 11
- MML Managed Bond Fund................................................ 11
- MML Blend Fund....................................................... 11
- Oppenheimer Capital Appreciation Fund................................ 11
- Oppenheimer Global Securities Fund................................... 11
- Oppenheimer Growth Fund.............................................. 11
- Oppenheimer Strategic Bond Fund...................................... 11
The Investment Advisers and Portfolio Managers........................... 12
- Rates of Return...................................................... 12
- Table I.............................................................. 12
- Tables II and III.................................................... 13
- Table IV............................................................. 14
Performance Illustration................................................. 14
- Table V.............................................................. 14
- Tables VI and VII.................................................... 15
- Tables VIII and IX................................................... 16
- Tables X through XII................................................. 17
III.DETAILED INFORMATION ABOUT THE POLICY
Availability of Policy................................................... 18
Unisex Policies.......................................................... 18
Death Benefit............................................................ 18
- Death Benefit Options................................................ 18
- Minimum Face Amount.................................................. 18
- Changes in Death Benefit Option...................................... 18
- Changes in Selected Face Amount...................................... 19
- Increases in Selected Face Amount.................................... 19
- Decreases in Selected Face Amount.................................... 19
Premiums................................................................. 19
- Premium Flexibility.................................................. 19
- Planned Annual Premium............................................... 19
- Premium Limitations.................................................. 19
Allocation of Net Premium Payments....................................... 20
Transfers................................................................ 20
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Dollar Cost Averaging.................................................... 20
Policy Lapse and Reinstatement........................................... 20
- Policy Lapse......................................................... 20
- Reinstatement Option................................................. 20
Charges and Deductions................................................... 21
Deductions from Premiums............................................... 21
- Sales Charge......................................................... 21
- Premium Tax Charge................................................... 21
- Monthly Charge....................................................... 21
- Administrative Charge................................................ 21
- Mortality Charge..................................................... 21
- Rider Charge......................................................... 21
Daily Charges against Separate Account................................... 21
- Mortality and Expense Risk Charge.................................... 21
- Charges for Federal Taxes............................................ 22
- Investment Management Fee and Other Expenses......................... 22
Surrender Charges........................................................ 22
- General.............................................................. 22
- Administrative Surrender Charge...................................... 22
- Sales Load Surrender Charge.......................................... 22
- Surrender Charge Upon Decrease in Selected Face Amount............... 22
- Other Charges........................................................ 22
- Withdrawal Fee....................................................... 22
- Charge for Increase in Selected Face Amount.......................... 22
- Charge for Change from Option 1 to Option 2.......................... 22
Account Value and Cash Surrender Value................................... 22
- Account Value........................................................ 22
- Investment Return.................................................... 23
- Cash Surrender Value................................................. 23
- Withdrawals.......................................................... 23
Policy Loan Privilege.................................................... 23
- General.............................................................. 23
- Source of Loan....................................................... 23
- Interest Charged..................................................... 23
- Repayment............................................................ 23
- Interest on Loaned Value............................................. 24
- Effect of Loan....................................................... 24
Free Look Provision...................................................... 24
The Guaranteed Principal Account......................................... 24
Federal Income Tax Considerations........................................ 24
- MML Bay State's Tax Status........................................... 25
- Policy Proceeds, Premiums and Loans.................................. 25
- Modified Endowment Contracts......................................... 26
- Qualified Plans...................................................... 26
- Diversification Standards............................................ 26
Your Voting Rights....................................................... 27
Reservation of Rights.................................................... 27
Additional Provisions of the Policy...................................... 27
Additional Benefits You Can Get by Rider................................. 27
Disability Benefit Rider.............................................. 27
Accidental Death Benefit Rider........................................ 27
Insurability Protection Rider......................................... 27
Death Benefit Guarantee Rider......................................... 27
Accelerated Death Benefit Rider....................................... 28
Right to Exchange Insured Endorsement................................. 28
Exchange Privilege....................................................... 28
Beneficiary.............................................................. 28
Assignment............................................................... 28
Limits on Our Right to Challenge the Policy.............................. 28
Error of Age or Sex...................................................... 28
Suicide.................................................................. 28
When We Pay Proceeds..................................................... 28
Payment Options.......................................................... 29
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Records and Reports...................................................... 29
Sales and Other Agreements............................................... 29
Commission Schedule...................................................... 30
Service Agreement........................................................ 30
Bonding Arrangement...................................................... 30
Directors and Officers of MML Bay State.................................. 30
Legal Proceedings........................................................ 32
Experts.................................................................. 32
Financial Statements..................................................... 32
Appendix A
Illustrations of Death Benefits,
Cash Surrender Values, Account Values
and Accumulated Premiums............................................... 52
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Definition Of Terms
Account Value: The sum of the Variable Account Value and the Fixed Account
Value of the Policy.
Attained Age: The Issue Age of the Insured plus the number of completed Policy
Years since the Policy Date.
Beneficiary(ies): The person or persons specified by the Policyowner to receive
some or all of the Death Benefit when the Insured dies.
Cash Surrender Value: The amount payable to a Policyowner upon surrender of the
Policy. It is equal to the Account Value less any surrender charges and less
any Policy Debt and any unpaid Monthly Charges.
Death Benefit: The net amount paid to a Beneficiary following receipt of due
proof of the death of the Insured. The Death Benefit is equal to the benefit
provided by the Death Benefit Option less any Policy Debt and any unpaid Monthly
Charges.
Death Benefit Option: The Policy offers two Death Benefit Options for
determination of the amount of the Death Benefit. The amount of benefit
provided under Option 1 is the greater of the Selected Face Amount or Minimum
Face Amount on the date of death. The amount of benefit provided under Option 2
is the greater of the Selected Face Amount plus the Account Value on the date of
death and the Minimum Face Amount on the date of death. The Death Benefit
Option is elected at time of application and, subject to certain limitations,
may be changed at a later date.
Effective Annual Rate of Return: The interest rate which, if applied to the
value of an investment at the beginning of a stated period and compounded
annually, would result in the value of that investment at the end of the period.
Fixed Account Value: The current Account Value which is allocated to the GPA.
Guaranteed Principal Account ("GPA"): A fixed account to which a Policyowner
may make allocations.
Insured: The person whose life this Policy insures.
Issue Age: The age of the Insured at his or her birthday nearest the Policy
Date. The Issue Age is shown on the schedule page of the Policy.
Minimum Face Amount: An amount equal to the applicable percentage times the
Account Value. The applicable percentage depends on the sex, smoking
classification, and Attained Age of the Insured. The applicable percentages are
shown in the Policy.
Monthly Calculation Date: The monthly date on which the Monthly Charges for the
Policy are deducted from the Account Value. The first Monthly Calculation Date
will be the Policy Date, and subsequent Monthly Calculation Dates will be on the
same day of each succeeding calendar month.
Monthly Charges: The charges assessed against the Policy's Account Value on
each Monthly Calculation Date. Each Monthly Charge includes an administrative
charge, a mortality charge, and a rider charge (if any).
Net Premium: The remainder of the premium after the deduction of the Premium
Expense Charge.
Policy: The flexible premium variable life insurance policy offered by MML Bay
State that is described in this Prospectus.
Policy Anniversary: An anniversary of the Policy Date.
Policyowner: The person or entity that owns the Policy.
Policy Date: The date shown on the Policy that is the starting point for
determining Policy Anniversary Dates, Policy Years, and Monthly Calculation
Dates.
Policy Debt: The amount of the obligation owed by the Policyowner to MML Bay
State from outstanding loans made to the Policyowner under the Policy. This
amount includes any loan interest accrued.
Policy Year: The twelve-month period commencing with the Policy Date, and each
twelve-month period thereafter.
Premium Expense Charge: The amount deducted from a premium payment consisting of
the premium tax charge and the sales charge.
Principal Administrative Office: MML Bay State's Principal Administrative
Office is located at 1295 State Street, Springfield, Massachusetts 01111-0001.
Register Date: The date when a completed Part 1 of the Application is received
or when the first Net Premium is allocated to the Divisions and/or GPA. The
Register Date cannot be prior to the Policy Date.
Selected Face Amount: The amount of insurance coverage issued under the Policy.
Subject to certain limitations, the Policyowner may change the Selected Face
Amount after issue.
Separate Account: The segregated asset account called "MML Bay State Variable
Life Separate Account I" established by MML Bay State under the laws of Missouri
and registered as a unit investment trust with the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940, as amended ("1940
Act"). The Separate Account is used to receive and invest premiums for this
Policy.
Valuation Date: A date on which the net asset value of the shares of the
Divisions is determined. Generally, this will
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be any date on which the New York Stock Exchange (or its successor) is open for
trading.
Valuation Period: The period, consisting of one or more days, from one Valuation
Time to the next succeeding Valuation Time.
Valuation Time: The time of the close of the New York Stock Exchange (currently
4:00 p.m. eastern time) on a Valuation Date. All actions which are to be
performed on a Valuation Date will be performed as of the Valuation Time.
Variable Account Value: The value equal to the number of Accumulation Units
multiplied by the number of units in the Division that the Policyowner owns.
We or Us: Refers to MML Bay State.
You or Yours: Refers to the Policyowner.
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I. Summary Of The Policy
This summary is intended to provide a brief overview of the more significant
aspects of the Policy. Further detail is provided elsewhere in this Prospectus.
Additionally, You should consult Your Policy for a further understanding of its
terms and conditions.
The Policy
The Policy is a life insurance contract providing a death benefit, cash values,
surrender rights, policy loan privileges, and other features traditionally
associated with life insurance. It provides that the Policyowner may, subject
to certain limitations, make premium payments in any amount and at any frequency
while the Insured is living.
The Policy is a "flexible premium" policy because, unlike traditional insurance
policies, there is no fixed schedule of premium payments. Although the
Policyowner may establish a schedule of premium payments ("Planned Premium
Payments"), failure to make a Planned Premium Payment will not necessarily cause
a Policy to lapse nor will making the Planned Premium payments guarantee that a
Policy will remain in force. Thus, a Policyowner may, but is not required to,
pay additional premiums after making an initial premium payment. This
flexibility permits a Policyowner to provide for changing insurance needs within
a single insurance policy.
The Policy is "variable" because, unlike the fixed benefits of traditional
insurance policies, the Death Benefits may, and the Cash Surrender Value most
likely will, vary in relation to the investment experience of the Divisions to
which a Policyowner has allocated Net Premiums. Additionally, the GPA's
crediting rate, although it will not go below 3%, may be adjusted periodically.
The Policy will enter a grace period when the Account Value less any Policy Debt
is insufficient to pay the Monthly Charges on a particular Monthly Calculation
Date. At the beginning of the grace period, We will mail You a notice stating
the amount of premium needed to cover the difference between the Account Value,
less any Policy Debt, and the Monthly Charges. During the grace period, the
Policy remains in force. The grace period ends the later of 61 days after the
Monthly Calculation Date on which the Account Value, less any Policy Debt is
insufficient to pay the Monthly Charges, or 30 days after We mail the notice.
If the required premium is not paid within the grace period, the Policy will
lapse and terminate without value.
The Separate Account And The Guaranteed Principal Account
The Policyowner may allocate Net Premiums to one or more Divisions and to the
GPA. Each Division invests in shares of a designated fund. Currently these
funds include the following MML Trust and Oppenheimer Trust Funds:
MML Trust Oppenheimer Trust
- --------- -----------------
MML Equity Fund Oppenheimer Capital Appreciation
MML Money Market Fund Fund
MML Managed Bond Fund Oppenheimer Global Securities
MML Blend Fund Fund
Oppenheimer Growth Fund
Oppenheimer Strategic Bond Fund
Although a Policy has no guaranteed minimum Cash Surrender Value for amounts
invested in the Separate Account, the Death Benefit will not be less than the
Selected Face Amount so long as the Policy has not lapsed. Furthermore, the
Policy will not lapse while there is sufficient value to cover applicable
Monthly Charges.
Availability Of The Policy
The Policy may be issued on an Insured up to (or through) Issue Age 80. The
minimum Selected Face Amount is $50,000. Before issuing the Policy, MML Bay
State will require satisfactory evidence of insurability, which may include a
medical examination.
The Death Benefit
While the Policy remains in force, MML Bay State will pay the Death Benefit of
the Policy to the Beneficiary upon receipt of due proof of the death of the
Insured. The Death Benefit will be the amount of the benefit provided under the
Death Benefit Option then in effect, reduced by any Policy Debt and any unpaid
Monthly Charges.
The Policy provides a choice of two Death Benefit Options. The benefit provided
under Option 1 is the Policy's Selected Face Amount or, if greater, the Policy's
Minimum Face Amount. The benefit provided under Option 2 is the sum of the
Policy's Selected Face Amount and the Account Value or, if greater, the Policy's
Minimum Face Amount.
In order for the Policy to qualify as life insurance under current federal tax
laws, the Policy must have a Minimum Face Amount. The Minimum Face Amount is
equal to an applicable percentage of the Account Value. The applicable
percentages depend on the sex, smoking classification, and Attained Age of the
Insured, and are set forth in the Policy.
Flexibility To Adjust The Amount Of Death Benefit
Subject to certain restrictions, the Policyowner may request a change in the
Death Benefit Option or an increase or decrease in the Selected Face Amount of
the Policy.
After the first Policy Year, the Policyowner may change the Death Benefit
Option. Changes from Option 2 to Option 1 may be made without submitting
satisfactory evidence of insurability. Changes from Option 1 to Option 2,
however, will require evidence of insurability satisfactory to MML Bay State.
To cover the cost of processing this type of change, a $75 charge is deducted on
a pro rata basis among the Divisions and the GPA (MML Bay State currently does
not charge the $75 fee for this change, but it reserves the right to do
so.)
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The Policyowner may not change from Option 1 to Option 2 after reaching Attained
Age 80.
Additional evidence of insurability is required for an increase in the Selected
Face Amount. An increase cannot be for less than $15,000 and will not be
permitted after the Insured reaches an Attained Age of 80. To cover the cost of
processing a requested increase, a $75 charge is deducted, on a pro rata basis
among the Divisions and the GPA, from the Account Value.
Decreases in coverage are allowed after the first Policy Year, although MML Bay
State believes such decreases are not in the best interest of a Policyowner. A
decrease will not be allowed if the Death Benefit Option amount would fall below
$50,000. A decrease may result in the imposition of surrender charges applied
on a pro-rata basis among the Divisions and the GPA on the effective date of the
increase.
Premium Features
MML Bay State requires You to pay a minimum initial premium. Thereafter, subject
to certain limitations, You may pay premiums at any time and in any amount.
When applying for a Policy, You select a planned annual premium and a payment
frequency. According to this schedule, MML Bay State will send You a premium
notice. You may change the Planned Premium and payment frequency by sending a
written notice requesting such change to our Principal Administrative Office.
There is no penalty if the Planned Premium is not paid, nor does payment of the
Planned Premium guarantee coverage for any period of time. Instead, the
duration of the Policy depends upon the Policy's Account Value. Even if Planned
Premiums are paid, the Policy will lapse whenever the Account Value less Policy
Debt becomes insufficient to pay current Monthly Charges and a grace period
expires without sufficient payment.
Transfers
By written request, You may transfer all or part of the value of Your
Accumulation Units in a Division to one or more other Divisions or to the GPA.
Although under current practice we impose no limitations on your right to make
transfers, we reserve the right to limit transfers to not more than one every 90
days to comply with Section 404(c) of ERISA. Any limitation would not apply to
a transfer of the entire Variable Account Value to the GPA and to automated
transfers in connection with any program we have put in place.
Transfers of values from the GPA to the Separate Account are limited to one per
Policy Year. Any transfer from the GPA to a Division cannot exceed 25% of the
Fixed Account Value (less any Policy Debt) at the time of the transfer.
Charges and Deductions
Deductions from Premiums. A Sales Charge and a Premium Tax Charge will be
deducted from each premium payment prior to allocation to the Separate Account
and GPA. The Sales Charge is 2.0% of premium payments and the Premium Tax
Charge is 2.0% of premium payments. The Premium Tax Charge is intended to
compensate MML Bay State for taxes imposed by various states and local
jurisdictions on MML Bay State's receipt of premiums from Policyowners. Premium
taxes vary from state to state, and, in some instances, among localities; the
range of premium taxes is .75% to 3.5%. The 2.0% rate approximates the average
tax rate expected to be paid on premiums from all states. The Premium Tax
Charge may be higher or lower than the actual premium tax imposed by the
jurisdiction in which the Policy is written. MML Bay State does not expect to
make a profit from this charge. MML Bay State currently intends to waive both
charges after Policy Year 20; however, MML Bay State reserves the right not to
waive the charge(s), or to reimpose such charge(s) after initially waiving such
charges. During 1995, the aggregate amount of such deductions from premiums was
$157,675 for sales charges and $157,675 for state premium tax charges.
Monthly Charges. On each Monthly Calculation Date, the Account Value will be
reduced by a Monthly Charge, consisting of an Administrative Charge, a Mortality
Charge and a charge for any additional benefits added by Rider. The
Administrative Charge is currently $6 and it is guaranteed not to exceed $9.
During 1995, the aggregate amount of such charges was $80,886.
The Mortality Charge will be determined by multiplying the "amount at risk under
the Policy" (that is, the Death Benefit, discounted at the monthly equivalent
rate of 3% per year, less the Account Value) by the monthly mortality rate,
which will depend on the sex, rate class and Issue Age of the Insured, the
duration of the Policy, and MML Bay State's expectations as to future mortality
and expense experience. The monthly mortality rates will not exceed the
guaranteed maximum monthly mortality rates set forth in the Policy which are
based on the sex, rate class, and Attained Age of the Insured and the "1980
Commissioners Standard Ordinary Mortality Table." During 1995, the aggregate
mortality charges were $650,014.
Surrender Charge. During the first 15 Policy Years and during the first 15
years following any increase in the Selected Face Amount, MML Bay State will
impose a Surrender Charge if the Policyowner surrenders the Policy or decreases
the Selected Face Amount under the Policy. The surrender charge has two
parts -- an Administrative Surrender Charge and a Sales Load Surrender Charge.
Administrative Surrender Charge. This charge is $5 for each $1,000 of Selected
Face Amount. It remains level for the first five Policy Years, then grades down
to zero over the next five policy years. This charge reimburses MML Bay State
for expenses incurred in issuing the Policy (or increase in the Selected Face
Amount), such as processing the applications (including underwriting) and
setting up computer records. It is not designed to produce a profit.
Sales Load Surrender Charge. This charge is equal to 26% of the premiums paid
up to the Surrender Charge Band, plus 4% of premiums paid in excess of the
Surrender Charge Band but less than three times the Surrender Charge Band. The
Surrender Charge Band is set forth in the Policy and is an amount generally
calculated on the basis of the Selected
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Face Amount and varies by the age and sex of the Insured at the time of
purchase.
Example of Surrender Charge Bands per $1,000
Age 25 Age 40 Age 55
$6.26 $9.91 $28.49
The Sales Load Surrender Charge remains level for the first 10 years, then
grades down to zero over the next five Policy Years in accordance with the
percentages set forth in the Policy.
Mortality and Expense Risk Charge. MML Bay State assesses a charge against each
of the Divisions for the mortality and expense risk it assumes. Currently, the
charge is equal, on an annual basis, to 0.55% of the daily net asset value of
the Separate Account. MML Bay State reserves the right to increase the charge
up to a maximum effective annual rate of 0.90%. This charge is not deducted
from the GPA. The aggregate amount of such charges, which are paid quarterly
against the Separate Account divisions, in 1995 was $5,455.
Other Charges. If the Policyowner requests and MML Bay State accepts an
increase in Selected Face Amount or a change in the Death Benefit Option from
Option 1 to Option 2, a charge of $75 will be deducted from the Account Value on
the effective date of the increase or option change to cover processing costs.
(MML Bay State currently does not charge a $75 fee for a change in the Death
Benefit Option, but it reserves the right to do so.)
Policy Loan Privilege
After the first Policy Year (or sooner if required by law), the Policyowner may
at any time borrow from the Policy an amount up to 90% of the Account Value less
any Surrender Charge, reduced by any outstanding Policy Debt.
At time of application, the Policyowner may elect a fixed loan rate of 6% or (in
all jurisdictions except Arkansas) an adjustable loan rate, based on the monthly
average of the corporate yield on seasoned corporate bonds as published by
Moody's Investors Service, Inc.
If interest is not paid when due, it will be added to the outstanding loan
balance. The capitalization of unpaid loan interest may have tax consequences
upon surrender or lapse of the Policy (See Policy Proceeds, Premiums and Loans,
page 25). Policy loans may be repaid at any time while the Insured is
living.
Surrender Of The Policy
The Policyowner may at any time fully surrender the Policy and receive its Cash
Surrender Value. The Cash Surrender Value will equal the Account Value less any
applicable Surrender Charge and less any Policy Debt and any unpaid Monthly
Charges. Surrender of the Policy with outstanding Policy Debt may have tax
consequences. (See Policy Proceeds, Premiums and Loans, page 25.)
Withdrawal Of Cash Surrender Value
After the first Policy Year, the Policyowner may, subject to certain
restrictions, request a withdrawal of up to 75% of the Policy's Cash Surrender
Value. For each withdrawal, a fee of $25 (or 2% of the amount withdrawn, if
less) is deducted from the amount withdrawn. This fee is guaranteed not to
increase for the duration of the Policy and is intended to compensate MML Bay
State for processing associated with the withdrawal. MML Bay State does not
intend to make a profit from this fee. The minimum amount of a withdrawal is
$100 (before deducting the withdrawal fee). If Death Benefit Option 1 is in
effect, MML Bay State will reduce the Selected Face Amount by the amount of the
withdrawal unless satisfactory evidence of insurability is provided. A
surrender charge is not assessed if a withdrawal is taken. Withdrawal of the
Cash Surrender Value may have tax consequences. (See Policy Proceeds, Premiums
and Loans, page 25.)
II. Information About MML Bay State And The Separate Account
MML Bay State And MassMutual
MML Bay State Life Insurance Company ("MML Bay State") is a life insurance
company incorporated under the laws of Missouri in 1894. It is currently
licensed to transact life, accident, and health insurance business in all states
except New York. In addition to the Policy described in this Prospectus, MML
Bay State offers other life insurance products and variable annuity contracts.
MML Bay State's Financial Statements are included in this Prospectus.
MML Bay State is a wholly-owned subsidiary of Massachusetts Mutual Life
Insurance Company ("MassMutual"), a mutual life insurance company chartered in
Massachusetts in 1851. MassMutual's home office is located in Springfield,
Massachusetts. It is authorized to do business in all states and the District
of Columbia. MassMutual serves as investment adviser to the MML Trust.
MassMutual has entered into investment sub-advisery agreements with Concert
Capital Management, Inc. ("Concert Capital"), a wholly-owned subsidiary of
MassMutual. These agreements provide that Concert Capital manages the investment
and reinvestment of the assets of the MML Equity Fund and the Equity Sector of
the MML Blend Fund. Both MassMutual and Concert Capital are registered as
investment advisers under the Investment Advisers Act of 1940.
On February 29, 1996, the merger of Connecticut Mutual Life Insurance Company
("Connecticut Mutual") with and into MassMutual was completed. The separate
existence of Connecticut Mutual has ceased. MassMutual continues its corporate
existence under its current name. The merger does not affect any provisions of,
or rights or obligations under, policies or contracts previously issued by
MassMutual. As a result of the merger, MassMutual has estimated statutory assets
in excess
9
<PAGE>
of $50 billion, and estimated total assets under management in excess of $103
billion.
OppenheimerFunds, Inc.
OppenheimerFunds, Inc. ("OFI") is an investment advisor organized under the laws
of Colorado as a corporation; it was originally organized in 1959. (Prior to
January 5, 1996, OFI was known as Oppenheimer Management Corporation.) It
(including a subsidiary) currently advises U.S. investment companies with assets
aggregating over $42 billion as of December 31, 1995, with 2.8 million
shareholder accounts. OFI is owned by Oppenheimer Acquisition Corporation, a
holding company owned in part by senior management of OFI and ultimately
controlled by MassMutual. OFI serves as investment adviser to the Oppenheimer
Trust. OFI is registered as an investment adviser under the Investment Advisers
Act of 1940.
The Separate Account
The Separate Account was established on June 9, 1982, as a separate investment
account of MML Bay State by MML Bay State's Board of Directors in accordance
with the provisions of Chapter 376 of the Missouri Statutes. The Separate
Account is registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940. Registration does not involve supervision of the management or investment
practices of either the Separate Account or of MML Bay State. Under Missouri
law, however, both MML Bay State and the Separate Account are subject to
regulation by the Division of Insurance of the State of Missouri. The Separate
Account meets the definition of a "Separate Account" under the federal
securities laws.
MML Bay State owns the assets in the Separate Account and is required to
maintain sufficient assets in the Separate Account to meet anticipated
obligations of the Policies funded by the Separate Account. The Separate
Account is divided into subaccounts called Divisions. The income, gains, or
losses, realized or unrealized, of each Division are credited to or charged
against the assets held in the Division without regard to the other income,
gains, or losses of MML Bay State. Assets in the Separate Account attributable
to the reserves and other liabilities under the Policies are not chargeable with
liabilities arising from any other business conducted by MML Bay State. MML Bay
State may transfer to its General Account, however, any assets which exceed
anticipated obligations of the Separate Account. All obligations arising under
the Policy are general corporate obligations of MML Bay State. MML Bay State
may accumulate in the Separate Account proceeds from various Policy charges and
investment results applicable to those assets.
The Separate Account is currently divided into eight Divisions. Each Division
invests in a corresponding series of shares of a designated Fund of either MML
Trust or Oppenheimer Trust. MML Bay State may in the future establish
additional divisions within the Separate Account, which may invest in other
investment funds, including those of MML Trust or Oppenheimer Trust, or in any
other investment fund MML Bay State deems to be appropriate.
MML Trust And Oppenheimer Trust
The MML Trust and the Oppenheimer Trust are open-end, diversified, management
investment companies registered under the Investment Company Act of 1940.
MassMutual established the MML Trust for the purpose of providing a vehicle for
the investment of assets of various separate investment accounts, including the
Separate Account, established by MassMutual and other life insurance company
subsidiaries of MassMutual. Similarly, OFI established the Oppenheimer Trust to
provide an investment vehicle for the separate investment accounts of variable
life and variable annuity contracts offered by companies such as MassMutual.
Shares of the MML Trust and the Oppenheimer Trust are not offered to the general
public.
The assets of certain variable annuity separate accounts for which MassMutual or
an affiliate is the depositor are invested in shares of the MML Trust's Funds.
Because these separate accounts are invested in the same underlying MML Funds,
it is possible that material irreconcilable conflicts could arise between
Policyowners and owners of the variable annuity contracts. Possible conflicts
could arise if: (i) state insurance regulators should disapprove or require
changes in investment policies, investment advisors or principal underwriters or
if MML Bay State should be permitted to act contrary to actions approved by
holders of the Policies under rules of the Securities and Exchange Commission;
(ii) adverse tax treatment of the Policies or the variable annuity contracts
would result from utilizing the same underlying funds; (iii) different
investment strategies would be more suitable for the variable annuity contracts
than for the Policies; or (iv) state insurance laws or regulations or other
applicable laws would prohibit the funding of both the Separate Account and
other investment accounts by the same Funds. The Board of Trustees of the Trust
will follow monitoring procedures which have been developed to determine whether
material conflicts have arisen. Such Board will have a majority of trustees who
are not interested persons of the Trust or MassMutual and determinations whether
or not a material conflict exists will be made by a majority of such
disinterested trustees. If a material irreconcilable conflict exists,
MassMutual and MML Bay State will take such action at their own expense as may
be required to cause the Separate Account to be invested solely in shares of
mutual funds which offer their shares exclusively to variable life insurance
separate accounts unless, in certain cases, the holders of both the Policies and
the variable annuity contracts vote not to effect such segregation.
The Oppenheimer Trust was established for use as an investment vehicle by
variable contract separate accounts such as the Separate Account. Accordingly,
it is possible that a material irreconcilable conflict may develop between the
interests of contract owners and other separate accounts investing in the
Oppenheimer Trust. The Board of Trustees of the Oppenheimer Trust (the
"Trustees") will monitor the Oppenheimer Funds for the existence of any such
conflicts. If it is determined that a conflict exists, the Trustees will notify
MassMutual, and appropriate action will be taken to eliminate such
irreconcilable conflicts. Such steps may include: (i) withdrawing the assets
allocable to some or all of the separate accounts from
10
<PAGE>
the particular Oppenheimer Fund and reinvesting such assets in a different
investment medium, including (but not limited to) another Oppenheimer Fund; (ii)
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners; and (iii) establishing a new registered
management investment company or managed separate account.
MML Bay State purchases the shares of each Fund for the corresponding Division
at net asset value. All dividends and capital gain distributions received from
a Fund are automatically reinvested in such Fund at net asset value, unless MML
Bay State, on behalf of the Separate Account, elects otherwise. Shares of the
MML Trust and the Oppenheimer Trust will be redeemed by MML Bay State at their
net asset value to the extent necessary to make payments under the Policies.
The following is a summary of the investment objective of each Fund. Please
note that there can be no assurance that any Fund will achieve its objectives.
More detailed information concerning these investment objectives is contained in
the accompanying prospectuses of the MML Trust and Oppenheimer Trust, including
information on the risks associated with the investments and investment
techniques of each of the Funds.
THE PROSPECTUSES FOR MML TRUST AND OPPENHEIMER TRUST ACCOMPANYING THIS
PROSPECTUS SHOULD BE READ CAREFULLY BEFORE INVESTING.
MML Equity Fund
MML Equity Fund seeks to achieve a superior total rate of return over an
extended period of time from both capital appreciation and current income. A
secondary objective is the preservation of capital when business and economic
conditions indicate that investing for defensive purposes is appropriate. This
Fund normally invests primarily in equity-type securities, including common
stocks, securities convertible into common stocks, and warrants.
MML Money Market Fund
MML Money Market Fund seeks to achieve high current income, while preserving
capital, and liquidity. This Fund invests in short-term debt instruments,
including but not limited to commercial paper, certificates of deposit, bankers'
acceptances, and obligations of the United States government, its agencies and
instrumentalities.
MML Managed Bond Fund
MML Managed Bond Fund seeks to achieve as high a total rate of return on an
annual basis as is considered consistent with the preservation of capital
values. This Fund invests primarily in publicly issued, readily marketable,
fixed income securities of such maturities as MassMutual deems appropriate from
time to time in light of market conditions and prospects.
MML Blend Fund
MML Blend Fund seeks to achieve as high a level of total rate of return over an
extended period of time as is considered consistent with prudent investment risk
and the preservation of capital values. This Fund invests in a portfolio of
common stocks and other equity-type securities, bonds and other debt securities
with maturities generally exceeding one year, and money market instruments and
other debt securities with maturities generally not exceeding one year.
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Appreciation Fund seeks capital appreciation. The type of
securities in which this Fund invests will be primarily common stocks, as well
as securities having the investment characteristics of common stocks, such as
convertible preferred stock and convertible bonds. In seeking this objective
the Fund will emphasize investment in securities of "growth-type" companies.
Such companies are believed to have relatively favorable long-term prospects for
an increased demand for the particular companies, products or services.
Oppenheimer Global Securities Fund
Oppenheimer Global Securities Fund seeks long-term capital appreciation through
investing a substantial portion of its invested assets in securities of foreign
issuers, growth-type companies and special investment opportunities, such as
anticipated acquisitions, mergers or other unusual developments, which are
considered by OFI, in its capacity as investment manager of the Funds, to have
appreciation possibilities. The type of securities in which this Fund invests
will be primarily common stocks, as well as securities having the investment
characteristics of common stocks, such as convertible preferred stock,
convertible bonds and American Depository Receipts. Current income is not an
investment objective of the Oppenheimer Global Securities Fund.
Oppenheimer Growth Fund
Oppenheimer Growth Fund seeks to achieve capital appreciation by investing in
securities of well-known established companies (securities which have a history
of earnings and dividends, and are issued by seasoned companies, namely those
having an operating history of at least five years, including predecessors).
The type of securities in which this Fund invests will be primarily common
stocks, as well as securities having the investment characteristics of common
stocks, such as convertible preferred stock and convertible bonds.
Oppenheimer Strategic Bond Fund
Oppenheimer Strategic Bond Fund seeks a high level of current income principally
derived from interest on debt securities; and seeks to enhance such income by
writing covered call options on debt securities. The Fund invests principally
in: (i) foreign government and corporate debt securities; (ii) U.S. Government
securities; and (iii) lower-rated, high-risk high-yield debt securities. This
Fund's investments may be considered to be speculative.
11
<PAGE>
For information concerning the risks associated with this Fund's investments,
please refer to the accompanying prospectus for the Oppenheimer Trust.
The Investment Advisers And Portfolio Managers
MassMutual serves as investment manager of each of the MML Funds pursuant to
investment management agreements. Pursuant to such agreements, MassMutual is
paid a quarterly fee at the annual rate of 0.50% of the first $100,000,000 of
the Fund's average daily net asset value, 0.45% of the next $200,000,000, 0.40%
of the next $200,000,000 and 0.35% of any excess over $500,000,000. Concert
Capital, pursuant to investment sub-advisery agreements manages the investment
and reinvestment of the assets of the MML Equity Fund and the Equity Sector of
MML Blend Fund.
During 1995, MassMutual earned the following investment management fee from
each of the following funds:
MML Equity Fund................. $4,178,204
MML Money Market Fund........... 501,924
MML Managed Bond Fund........... 681,807
MML Blend Fund.................. $6,344,373
OFI receives a monthly management fee in its capacity as investment adviser to
the Oppenheimer Funds. This fee is computed separately on the net assets of
each Fund as of the close of each business day. Except as stated below, the
management fee rate is .75% of the first $200 million of net assets, .72% of the
next $200 million, .69% of the next $200 million, .66% of the next $200 million
and .60% of net assets in excess of $800 million. Strategic Bond Fund's
management fee rate is .75% on the first $200 million of net assets, .72% on the
next $200 million, .69% on the next $200 million, .66% on the next $200 million,
.60% on the next $200 million, and .50% of net assets in excess of
$1 billion.
During 1995, OFI earned the following investment management fee from each of the
following funds.
Oppenheimer Capital
Appreciation Fund..................... $1,790,785
Oppenheimer Growth Fund................. $ 664,977
Oppenheimer Global
Securities Fund....................... $2,451,556
Oppenheimer Strategic Bond Fund......... $ 281,335
Citibank N.A., with its home office located at 111 Wall Street, New York, NY,
10005, acts as custodian for the MML Trust. Bank of New York, with its home
office at One Wall Street, New York, NY 10015, acts as custodian for the
Oppenheimer Trust.
MassMutual is also the investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors, closed-end investment companies, certain
wholly-owned subsidiaries of MassMutual, and various employee benefit plans.
MassMutual is the investment sub-adviser to Oppenheimer Investment Grade Bond
Fund and Oppenheimer Value Stock Fund, open-end management investment
companies.
Rates of Return. The following tables show the Effective Annual Rates of Return
based on the actual investment performance (after deduction of investment
management fees and direct operating expenses) of the Fund underlying each
Division of the Separate Account. Tables I and II show figures for periods
ended December 31, 1995, while Tables III and IV show annualized figures. These
rates do not reflect the mortality and expense risk charges assessed against the
Separate Account. Also, they do not reflect deductions from premiums or Monthly
Charges assessed against the Account Value of the Policies, nor do they reflect
the Policy's Surrender Charges. (For a discussion of these charges, please see
CHARGES AND DEDUCTIONS.) Therefore, these rates are not illustrative of how
actual investment performance will affect the benefits under the Policy (see,
however, Performance Illustration). The rates of return shown are not
necessarily indicative of future performance. These rates of return may be
considered, however, in assessing the competence and performance of MassMutual
and OFI as investment advisers. An individualized hypothetical illustration may
be available. An individualized hypothetical illustration is a document that
shows how Death Benefits and Cash Surrender Values will develop based on certain
assumptions. The assumptions used are the sex, Issue Age, rate class and
contract state of the applicant, and the Death Benefit Option and premium
frequency proposed by the registered representative or the applicant. The
individualized hypothetical illustrations reflect both current and guaranteed
charges and all basic policy charges are reflected (rider charges may also be
reflected if so requested). These illustrations will also assume certain
interest rates within the limits prescribed by federal and state law. An
applicant or Policyowner may obtain an individualized hypothetical illustration
at no charge by requesting one from his/her registered representative or from
MML Bay State at its Principal Administrative Office.
<TABLE>
<CAPTION>
TABLE I -- MML FUNDS
EFFECTIVE ANNUAL RATES OF RETURN
- --------------------------------------------------------------------------------
Fund 20 Years 15 Years 10 Years 5 Years 1 Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity 14.93% 15.09% 13.77% 15.71% 31.13%
- --------------------------------------------------------------------------------
Money Market -- 6.97* 5.92 4.32 5.58
- --------------------------------------------------------------------------------
Managed Bond -- 10.93* 9.46 9.92 19.14
- --------------------------------------------------------------------------------
Blend -- 13.07* 12.31 13.45 23.28
- --------------------------------------------------------------------------------
</TABLE>
*The figures shown are from inception of the Funds. The MML Equity Fund
received initial funding September 15, 1971 (performance information prior to
1974 is not available). The MML Money Market and MML Managed Bond Funds
commenced operations on December 16, 1981. The MML Blend Fund commenced
operations on February 3, 1984.
12
<PAGE>
<TABLE>
<CAPTION>
TABLE II -- OPPENHEIMER FUNDS
EFFECTIVE ANNUAL RATES OF RETURN
- --------------------------------------------------------------------------------
Fund Since Inception 5 Years 1 Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Oppenheimer Capital Appreciation 15.20%* 22.73% 32.52%
- --------------------------------------------------------------------------------
Oppenheimer Global Securities 9.36%* 9.53 2.24
- --------------------------------------------------------------------------------
Oppenheimer Growth 13.57* 16.30 36.65
- --------------------------------------------------------------------------------
Oppenheimer Strategic Bond 5.63* -- 15.33
- --------------------------------------------------------------------------------
</TABLE>
*The Oppenheimer Capital Appreciation Fund commenced operations on August 15,
1986. The Oppenheimer Global Securities Fund commenced operations on November
12, 1990. The Oppenheimer Strategic Bond Fund and the Oppenheimer Growth Fund
commenced operations on May 3, 1993 and April 3, 1985, respectively.
TABLE III
MML FUNDS
ANNUALIZED ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
For the MML Equity MML Money MML Managed MML Blend
Year Ended Fund Market Fund Bond Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 31.13% 5.58% 19.14% 23.28%
1994 4.10% 3.84% (3.76)% 2.48%
1993 9.52% 2.75% 11.81% 9.70%
1992 10.48% 3.48% 7.31% 9.36%
1991 25.56% 6.01% 16.66% 24.00%
1990 (0.51)% 8.12% 8.38% 2.37%
1989 23.04% 9.16% 12.83% 19.96%
1988 16.68% 7.39% 7.13% 13.40%
1987 2.10% 6.49% 2.60% 3.12%
1986 20.15% 6.60% 14.46% 18.30%
1985 30.54% 8.03% 19.94% 24.88%
1984 5.40% 10.39% 11.69% 8.24%*
1983 22.85% 8.97% 7.26% --
1982 25.67% 11.12%* 22.79%* --
1981 6.67% -- -- --
1980 27.62% -- -- --
1979 19.54% -- -- --
1978 3.71% -- -- --
1977 (0.52)% -- -- --
1976 24.77% -- -- --
1975 32.85% -- -- --
1974 (17.61)%* -- -- --
- --------------------------------------------------------------------------------
</TABLE>
*The figures shown are from inception of the Funds. The MML Equity Fund
received initial funding September 15, 1971 (performance information prior to
1974 is not available). The MML Money Market and MML Managed Bond Funds
received initial funding on December 16, 1981. The MML Blend Fund received
initial funding on February 3, 1984.
13
<PAGE>
TABLE IV
OPPENHEIMER TRUST FUNDS
ANNUALIZED ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Oppenheimer
Oppenheimer Capital Oppenheimer
For the Oppenheimer Strategic Appreciation Global
Year Ended Growth Fund Bond Fund Fund Securities
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 36.65% 15.33% 32.52% 2.24%
1994 .98% (5.85)% (7.50)% (5.72)%
1993 7.25% 4.25%* 27.32% 70.32%
1992 14.53% -- 15.42% (7.11)%
1991 25.54% -- 54.72% 3.39%
1990 (8.21)% -- (16.32)% 0.40%*
1989 23.59% -- 27.39% --
1988 22.09% -- 13.41% --
1987 3.32% -- 14.34% --
1986 17.76% -- (1.65)%* --
1985 9.50%* -- -- --
- --------------------------------------------------------------------------------
</TABLE>
*The figures shown are from inception of the Oppenheimer Funds. The Capital
Appreciation Fund commenced operations on August 15, 1986. The Global
Securities Fund commenced operations on November 12, 1990. The Strategic Bond
Fund and the Growth Fund commenced operations on May 3, 1993 and April 3, 1985,
respectively.
Performance Illustration
The following tables show how the actual investment performance of the Funds
would have affected the Death Benefits and Cash Surrender Values of hypothetical
Policies. Each table illustrates a Policy as of the earliest date for which
performance figures are available for the illustrated Fund. Each table assumes
that the illustrated Policy was issued for a Selected Face Amount of $100,000
and Issue Age 35 male, using Death Benefit Option 1, with annual premiums of
$1,200 paid at the beginning of each year and the full Account Value
continuously reinvested in the Division corresponding with the particular Fund
illustrated. One set of figures reflects the current schedule of charges; the
other set of figures reflects guaranteed mortality and expense charges and
current fund level charges.
TABLE V
MML EQUITY FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1974 $ 1,200 0 100,000 0 100,000
1975 2,400 $ 1,181 100,000 $ 1,059 100,000
1976 3,600 2,663 100,000 2,452 100,000
1977 4,800 3,388 100,000 3,121 100,000
1978 6,000 4,297 100,000 3,959 100,000
1979 7,200 6,254 100,000 5,777 100,000
1980 8,400 9,184 100,000 8,486 100,000
1981 9,600 10,612 100,000 9,775 100,000
1982 10,800 14,371 100,000 13,206 100,000
1983 12,000 18,584 100,000 17,022 100,000
1984 13,200 20,187 100,000 18,406 100,000
1985 14,400 27,197 100,000 24,704 100,000
1986 15,600 33,378 100,000 30,194 100,000
1987 16,800 34,575 100,000 31,137 100,000
1988 18,000 40,941 100,000 36,712 100,000
1989 19,200 50,844 115,417 45,436 103,140
1990 20,400 50,785 112,235 45,253 100,009
1991 21,600 64,023 137,648 56,870 122,270
1992 22,800 70,700 147,763 62,553 130,737
1993 24,000 77,263 157,616 68,047 138,816
1994 25,200 80,191 159,581 70,218 139,734
1995 26,400 104,736 203,188 91,188 176,904
- ----------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
TABLE VI
MML MONEY MARKET FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1982 $ 1,200 $ 170 $100,000 $ 115 100,000
1983 2,400 1,096 100,000 982 100,000
1984 3,600 2,146 100,000 1,965 100,000
1985 4,800 3,209 100,000 2,955 100,000
1986 6,000 4,255 100,000 3,922 100,000
1987 7,200 5,421 100,000 5,000 100,000
1988 8,400 6,695 100,000 6,166 100,000
1989 9,600 8,163 100,000 7,501 100,000
1990 10,800 9,617 100,000 8,807 100,000
1991 12,000 10,910 100,000 9,949 100,000
1992 13,200 11,864 100,000 10,760 100,000
1993 14,400 12,719 100,000 11,468 100,000
1994 15,600 13,714 100,000 12,291 100,000
1995 16,000 14,964 100,000 13,330 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
TABLE VII
MML BLEND FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1984 $ 1,200 $ 142 $100,000 $ 87 100,000
1985 2,400 1,364 100,000 1,237 100,000
1986 3,600 2,688 100,000 2,480 100,000
1987 4,800 3,575 100,000 3,302 100,000
1988 6,000 5,007 100,000 4,632 100,000
1989 7,200 7,130 100,000 6,604 100,000
1990 8,400 8,088 100,000 7,470 100,000
1991 9,600 11,107 100,000 10,244 100,000
1992 10,800 12,954 100,000 11,905 100,000
1993 12,000 14,971 100,000 13,706 100,000
1994 13,200 15,907 100,000 14,489 100,000
1995 14,400 20,370 100,000 18,474 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
TABLE VIII
MML MANAGED BOND FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1982 $ 1,200 $ 285 $100,000 $ 226 100,000
1983 2,400 1,186 100,000 1,069 100,000
1984 3,600 2,283 100,000 2,097 100,000
1985 4,800 3,840 100,000 3,554 100,000
1986 6,000 5,366 100,000 4,972 100,000
1987 7,200 6,327 100,000 5,854 100,000
1988 8,400 7,646 100,000 7,059 100,000
1989 9,600 9,536 100,000 8,784 100,000
1990 10,800 11,129 100,000 10,216 100,000
1991 12,000 13,834 100,000 12,654 100,000
1992 13,200 15,465 100,000 14,076 100,000
1993 14,400 17,923 100,000 16,235 100,000
1994 15,600 17,686 100,000 15,930 100,000
1995 16,800 21,694 100,000 19,444 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
TABLE IX
OPPENHEIMER GROWTH FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1986 $ 1,200 $ 235 $100,000 $ 178 100,000
1987 2,400 1,055 100,000 944 100,000
1988 3,600 2,432 100,000 2,237 100,000
1989 4,800 4,171 100,000 3,866 100,000
1990 6,000 4,402 100,000 4,064 100,000
1991 7,200 6,749 100,000 6,248 100,000
1992 8,400 8,718 100,000 8,059 100,000
1993 9,600 10,174 100,000 9,377 100,000
1994 10,800 10,964 100,000 10,064 100,000
1995 12,000 16,090 100,000 14,732 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
TABLE X
OPPENHEIMER CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1987 $ 1,200 $ 202 $100,000 $ 145 100,000
1988 2,400 1,216 100,000 1,097 100,000
1989 3,600 2,785 100,000 2,573 100,000
1990 4,800 2,791 100,000 2,562 100,000
1991 6,000 6,004 100,000 5,572 100,000
1992 7,200 7,972 100,000 7,397 100,000
1993 8,400 11,345 100,000 10,516 100,000
1994 9,600 11,094 100,000 10,239 100,000
1995 10,800 15,833 100,000 14,579 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
TABLE XI
OPPENHEIMER GLOBAL SECURITIES FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1990 $1,200 $ 65 100,000 $ 13 100,000
1991 2,400 881 100,000 776 100,000
1992 3,600 1,448 100,000 1,301 100,000
1993 4,800 4,471 100,000 4,146 100,000
1994 6,000 4,832 100,000 4,464 100,000
1995 7,200 5,756 100,000 5,313 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
TABLE XII
OPPENHEIMER STRATEGIC BOND FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Using Guaranteed Mortality and
Using Current Schedule of Charges Expense Charges and Current Fund
Level Charges
- ----------------------------------------------------------------------------------------------------------
Cash Cash
Total Annual Surrender Death Surrender Death
Calendar Year Premiums Value Benefit Value Benefit
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993 $1,200 $ 103 100,000 $ 50 100,000
1994 2,400 751 100,000 652 100,000
1995 3,600 1,891 100,000 1,721 100,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
These illustrations are not indicative of future performance. They assume the
Policies were issued based on full underwriting and that there have been no
increases or decreases in Selected Face Amounts, no Policy loans and no
transaction charges incurred. Further, they assume that Death Benefit Option 1
was selected. The Cash Surrender Values shown reflect all Deductions from
Premiums, Charges, Surrender Charges, and Mortality and Expense Risk Charges.
Illustrations of Death Benefits, Cash Surrender Values and Accumulated Premiums
based on assumed hypothetical gross annual investment returns of 0%, 6% and 12%
are shown in APPENDIX A. APPENDIX A also describes, in more detail, the
assumptions underlying these illustrations.
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<PAGE>
III. Detailed Information About The Policy
Availability of Policy
Individuals wishing to purchase a Policy must send a completed application to
MML Bay State's Principal Administrative Office. Under our current rules, the
minimum Selected Face Amount of a Policy is $50,000. The Policy can be issued
for Insureds with Issue Ages 0 through 80. Before issuing a Policy, however,
MML Bay State will require satisfactory evidence of insurability, which may
include a medical examination.
The Policy is available to Policyowners who are purchasing a Policy in
connection with employee benefit plans which qualify for tax benefits under the
Internal Revenue Code (the "qualified market") and other Policyowners (the
"nonqualified market").
Unisex Policies
Policies issued in states requiring "unisex" policies (currently Montana; MML
Bay State has retained "unisex" rates in Massachusetts where they were
previously required) provide for policy values which do not vary by the sex of
the Insured. In addition, Policies issued in conjunction with employee benefit
plans provide for policy values which do not vary by the sex of the insured.
Thus, references in this Prospectus to sex-distinct policy values which vary by
the sex of the Insured are not applicable to Policies issued in Montana or
Massachusetts, or issued in conjunction with employee benefit plans.
Illustrations showing the effect of these unisex rates on premiums, Cash
Surrender Values, and Death Benefits are available from MML Bay State on
request.
Death Benefit
As long as the Policy remains in force, MML Bay State will, upon due proof of
the Insured's death, pay the Death Benefit of the Policy to the named
Beneficiary. Although MML Bay State will normally pay the Death Benefit within
seven days of receiving satisfactory proof of the Insured's death, the Company
may delay payments under certain circumstances. All or part of the Death
Benefit can be paid in cash or under one or more of the payment options set
forth in the Policy.
The Death Benefit is the amount of the benefit provided under Death Benefit
Option 1 or Death Benefit Option 2, whichever is in effect on the date of the
Insured's death, less any outstanding Policy Debt and less any unpaid Monthly
Deduction.
Death Benefit Options. The Policyowner may choose one of two Death Benefit
Options: Option 1 (a level amount option) and Option 2 (a variable amount
option). The Policyowner designates the Death Benefit Option in the application
and may subsequently change the option subject to certain restrictions described
in CHANGES IN THE DEATH BENEFIT OPTION.
Options 1 and 2 provide the following benefits:
Option 1 - Under Option 1, the Account Value is included in the Selected Face
Amount. The benefit provided under Option 1 is the greater of: (a) the Selected
Face Amount on the date of death; and (b) the Minimum Face Amount on the date of
death of the Insured.
Option 2 - Under Option 2, the Account Value is not included in the Selected
Face Amount. The benefit provided under Option 2 is the greater of: (a) the
Selected Face Amount plus the Account Value on the date of death; and (b) the
Minimum Face Amount on the date of death of the Insured.
Minimum Face Amount. In order to qualify as life insurance under current federal
tax laws, the Policy has a Minimum Face Amount. The Minimum Face Amount is equal
to an applicable percentage of the Account Value. This applicable percentage
depends on the sex, smoking classification and Attained Age of the Insured. The
applicable percentages are set forth in the Policy.
The following examples illustrate how changes in the Account Value may affect
the Death Benefits under Options 1 and 2.
Example I
Assume that the Policyowner has selected Option 1 with a Selected Face Amount of
$100,000 and that the Account Value equals $5,000. The Death Benefit in this
case is $100,000. If the Account Value increases to $8,000, the Death Benefit
remains at $100,000. If the Account Value decreases to $3,000, the Death
Benefit still remains at $100,000.
Under Option 1, the Death Benefit will remain at the Selected Face Amount, in
this example $100,000, until the applicable percentage of the Account Value
exceeds the Selected Face Amount.
Example II
Assume the Policyowner has selected Option 2 with a Selected Face Amount of
$100,000 and the Account Value is equal to $5,000. The Death Benefit in this
case is $105,000 (Selected Face Amount plus Account Value). If the Account Value
increases to $8,000, the Death Benefit will increase to $108,000. If the
Account Value decreases to $3,000, the Death Benefit will decrease to $103,000.
Under Option 2, the Death Benefit will be the Selected Face Amount plus the
Account Value (if greater than $0.00), until the Minimum Face Amount exceeds the
sum of the Selected Face Amount plus the Account Value.
If the Policyowner seeks to have premium payments and favorable investment
performance reflected partly in the form of an increasing Death Benefit, the
Policyowner should choose Option 2. If a Policyowner is satisfied with the
amount of the Insured's existing insurance coverage and instead seeks to have
premium payments and investment performance reflected to the maximum extent in
the Policy's Account Value, the Policyowner should choose Option 1.
Changes in Death Benefit Option. After the first Policy Year, the Policyowner
may change the Death Benefit Option. A change from Option 2 to Option 1 may be
made without submitting satisfactory evidence of insurability. A change from
Option 1 to Option 2, however, will require evidence of insurability
satisfactory to MML Bay State. In addi-
18
<PAGE>
tion, a charge of $75 will be deducted from the Account Value on the effective
date of the change. This charge will be deducted from the Division(s) and the
GPA in proportion to the non-loaned values in each Division(s) and the GPA. (MML
Bay State currently does not charge the $75 fee for this change, but it reserves
the right to do so.) The Policyowner may not change from Option 1 to Option 2
after reaching Attained Age 80. The effective date of any change will be the
Monthly Calculation Date on or which next follows the date MML Bay State
approves the change.
A change in the Death Benefit Option will not in and of itself result in an
immediate change in the amount of a Policy's Death Benefit. For a change from
Option 2 to Option 1, the Selected Face Amount is increased by the amount of the
Account Value on the effective date of the change. For a change from Option 1
to Option 2, the Selected Face Amount will be decreased by the amount of Account
Value on the effective date of the change. This change will not be permitted if
it would reduce the Selected Face Amount below $50,000.
An increase or decrease in Selected Face Amount resulting from a change in the
Death Benefit Option will affect the Monthly Charges, as the monthly mortality
charge depends on the Selected Face Amount. The charge for certain additional
benefits may also be affected. The Surrender Charge, however, will not be
affected by an increase or decrease in Selected Face Amount resulting from a
change in the Death Benefit Option.
Changes in Selected Face Amount. The Policyowner may request an increase or
decrease in the Selected Face Amount subject to the approval of MML Bay State.
Any request for an increase or decrease must be submitted in writing to MML Bay
State's Principal Administrative Office. It will become effective on the
Monthly Calculation Date on or which next follows MML Bay State's acceptance of
the request.
Increases in Selected Face Amount. For an increase in the Selected Face Amount,
MML Bay State requires satisfactory evidence of insurability. An increase may
not be less than $15,000, and no increase will be permitted after Attained Age
80. To cover the cost of processing the request, a charge of $75 will be
deducted from the Account Value on the effective date of the increase in the
Selected Face Amount. The charge will be deducted from the Divisions and the
GPA in proportion to the non-loaned value in each Division(s) and the GPA.
Decreases in Selected Face Amount. Decreases in coverage are allowed after the
first Policy Year, although MML Bay State believes such decreases generally are
not in the best interests of a Policyowner. A decrease will not generally be
permitted if the Death Benefit Option amount would fall below $50,000. No
processing charge is applied to decreases in coverage.
A decrease may result in the imposition of Surrender Charges. (For a discussion
of the Surrender Charges associated with a decrease, see Surrender Charges).
Any Surrender Charge applicable to a decrease will be deducted from the
Division(s) and the GPA in proportion to the non-loaned values in each.
For purpose of determining Surrender Charges and mortality charges, a decrease
will reduce the Selected Face Amount in the following order: (a) the Selected
Face Amount provided by the most recent increase; (b) the Selected Face Amounts
provided by the next most recent increases successively; and finally (c) the
initial Selected Face Amount.
A decrease may result in the Policy becoming a "modified endowment contract".
(See Policy Proceeds, Premiums and Loans, page 25.)
Premiums
Subject to certain limitations, the Policyowner has flexibility in determining
the frequency and amount of premium payments.
Premium Flexibility
Unlike traditional insurance policies, this Policy frees the Policyowner from
the requirement that premiums be paid in accordance with a rigid and inflexible
premium schedule. Instead, MML Bay State requires a Policyowner to pay a
minimum initial premium at the time of application or at any time before
delivery of the Policy. After the first premium has been paid, subject to
certain limitations, premiums may be paid in any amount and at any interval.
The minimum initial premium depends on the planned frequency of premium
payments, and the Issue Age, sex, and rating class of the Insured, as well as
the initial Death Benefit Option and Selected Face Amount of the Policy.
Planned Annual Premium
When applying for a Policy, the Policyowner will select a planned annual premium
and payment frequency (annual, semiannual, quarterly, or monthly). The planned
annual premium is shown on the schedule page of the Policy. MML Bay State will
send premium notices for the planned premium according to the amount and
frequency selected. The Policyowner may change the amount and frequency of
planned premiums at any time by sending written notice to MML Bay State's
Principal Administrative Office.
A Policyowner may elect to pay premiums by means of a pre-authorized check
procedure called MassMutual Monthly ("Triple M"). Under Triple M, premium
payments are deducted automatically on a monthly basis from a designated bank
account. A Policyowner does not receive a "bill" for these payments, and
confirmation of payments is provided in the Policy's quarterly statement.
There is no penalty if the planned premium is not paid, nor does payment of this
amount guarantee coverage for any period of time. Instead, the duration of the
Policy depends upon the Policy's Account Value. Even if planned premiums are
paid, the Policy terminates when the Account Value becomes insufficient to pay
the Monthly Charges and the grace period expires without sufficient payment.
Premium Limitations
The minimum premium payment is $10. The maximum premium which may be paid in any
Policy Year without evidence of insurability is the greater of: (a) the premium
which will not increase the net amount at risk under the Policy; (b) twice
19
<PAGE>
the Policy's basic premium plus $100; (c) the annual premium paid in the
preceding Policy Year; and (d) the minimum annual premium under a Death Benefit
Guarantee Rider, if part of the Policy. Premium payments should be sent either
to MML Bay State's Principal Administrative Office or to the address indicated
on the billing notice.
Allocation of Net Premium Payments
The Net Premium equals the premium paid less the Premium Expense Charge. (See
Deductions from Premiums, page 21.) In the Application, the Policyowner
indicates how Net Premiums are to be allocated among the Divisions and the GPA.
The allocation percentages must be in whole numbers and the sum of the
allocation percentages must equal 100%. During the Free Look Provision, New
Premiums are allocated as requested by the Policyowner. (See, Free Look
Provision, page 24.)
The allocation percentages may be changed without charge at any time by
providing written notice to MML Bay State's Principal Administrative Office.
Transfers
By written request, the Policyowner may transfer all or part of the Variable
Value of a Division to any other Division or to the GPA. Although MML Bay State
currently imposes no limitation of the right of the Insured to make transfers,
we reserve the right to limit transfers to not more than one every 90 days in
connection with compliance with Section 404(c) of ERISA. Any limitation would
not apply to a transfer of all funds in the Separate Account to the GPA and to
automated transfers made in connection with any program MML Bay State has in
place.
Transfers of values from the GPA to the Separate Account are limited to one each
Policy Year. Any transfer from the GPA cannot exceed 25% of the Fixed Account
Value (less any Policy Debt) at the time of the transfer.
Any transfer is effective on the Valuation Date on next or following the date we
receive a written request in good order at our Principal Administrative Office.
There are no charges for transfers.
Dollar Cost Averaging
The Policyowner may specify a specific dollar amount to be periodically
transferred from any Division of the Separate Account to any combination of
Divisions and the GPA. Once elected, these transfers occur automatically. The
Policyowner will specify the specific dollar amounts to be transferred and the
Division to transfer money from, the Division(s) and/or GPA to transfer money
to, the date on which transfers will be made (subject to MML Bay State rules),
the frequency of transfers, which may be either monthly, quarterly, semiannually
or annually, and the amount of time that such dollar cost averaging will
continue. The minimum allowable transfer to any Division or the GPA is $50.
This process is called Dollar Cost Averaging. Dollar Cost Averaging transfers
are not available for transfers from the GPA, but these transfers may be made
into the GPA. To elect Dollar Cost Averaging transfers, the Account Value in
the Division from which transfers will be made must be at least $5,000.
The main objective of Dollar Cost Averaging is to shield the Policyowner's
investment from short-term price fluctuations. Since the same dollar amount is
transferred to a Division with each transfer, more units are purchased in a
Division if the value per unit is low and fewer units are purchased if the value
per unit is high. Therefore, a lower than average cost per unit may be achieved
over the long term. This plan of investing allows investors to take advantage
of market fluctuations but does not assure a profit or protect against a loss in
declining markets.
MML Bay State will make all Dollar Cost Averaging transfers either on the day of
each calendar month specified by the Policyowner, or on the next business day.
The Policyowner may specify any day of the month up through the 28th day. In
order to process a Dollar Cost Averaging transfer, MML Bay State must have
received a request in writing no later than one week prior to the date Dollar
Cost Averaging transfers are to commence.
The Dollar Cost Averaging option can be started, changed or canceled at any
time; however, we must be given seven business days notice to change any
transfer arrangement. If the value of the Division from which transfers are
being made falls below the total transfer amount, the remaining value in that
Division will be transferred on a pro rata basis to all the designated Divisions
and the GPA, and no more automated transfers will be processed.
Dollar Cost Averaging transfers are not subject to any transfer charges or any
limitations on the number of transfers in a Policy Year.
Policy Lapse And Reinstatement
Policy Lapse
This Policy does not lapse for failure to pay premiums since payments, other
than the initial premium, are not specifically required. Rather, if the Account
Value less any Policy Debt is not enough to cover the Monthly Charges on a
Monthly Calculation Date, the Policy will enter a 61-day grace period.
At the beginning of the grace period, MML Bay State will mail a notice, to the
Policyowner's last known address, stating the amount of premium needed to cover
the shortfall in Account Value. During the grace period, the Policy remains in
force. If the required premium is not paid within 61 days after the Monthly
Calculation Date (or, if later, within 30 days after we mail the written
notice), the Policy terminates without value.
Reinstatement Option
For a period of five years after a Policy terminates, the Policyowner can
request that We reinstate the Policy during the lifetime of the Insured. The
Policy cannot be reinstated if it has been surrendered for its Cash Surrender
Value. Please note that a termination or reinstatement may cause the Policy to
become a modified endowment contract. (See, Modified Endowment Contracts, page
25.)
20
<PAGE>
Before We will reinstate the Policy, We must receive the following:
(a) Evidence of insurability satisfactory to MML Bay State;
(b) A premium payment at least equal to the amount necessary to produce an
Account Value equal to three times the Monthly Charges on the Monthly
Calculation Date on or next following the date of reinstatement; and
(c) Where applicable, a signed acknowledgement that the Policy has become a
modified endowment contract.
If We do reinstate the Policy, the Selected Face Amount for the reinstated
Policy will be the same as it would have been if the Policy had not terminated.
Charges And Deductions
Charges will be deducted in connection with the Policy to compensate MML Bay
State for: (a) providing the insurance benefits under the Policy (including any
riders); (b) administering the Policy; (c) assuming certain risks in connection
with the Policy (including any riders); and (d) expenses incurred in
distributing the Policy.
Deductions from Premiums
MML Bay State deducts a Sales Charge and a Premium Tax Charge from each Premium
Payment. The total of these charges is called the Premium Expense Charge. The
amount remaining after MML Bay State has deducted the Premium Expense Charge is
referred to as the Net Premium. The Net Premium is allocated to the Division(s)
and the GPA according to the allocation instructions of the Policyowner.
Sales Charge. A Sales Charge of 2.0% of each premium payment made will be
deducted to partially compensate MML Bay State for the expenses relating to the
distribution of the Policy, including commissions, advertising, and the printing
of the prospectuses and sales literature. MML Bay State currently intends to
waive this charge after Policy Year 20; however, MML Bay State reserves the
right not to waive the charge, or to reimpose it once it has been waived.
Premium Tax Charge. A Premium Tax Charge of 2.0% of each premium payment will
be deducted to pay applicable state and local premium taxes. The Premium Tax
Charge is intended to compensate MML Bay State for taxes imposed by various
states and local jurisdictions on MML Bay State's receipt of premiums from
Policyowners. Premium taxes vary from state to state, and, in some instances,
among localities. The 2.0% rate approximates the average tax rate expected to
be paid on premiums from all states. The Premium Tax Charge may be higher or
lower than the actual premium tax imposed by the jurisdiction in which the
contract is written. MML Bay State does not expect to make a profit from this
charge. MML Bay State currently intends to waive this charge after Policy Year
20; however, MML Bay State reserves the right not to waive the charge, or to
reimpose it once it has been waived.
Monthly Charge. Charges will be deducted from the Account Value on each Monthly
Calculation Date. The Monthly Charge consists of: (a) an administrative charge;
(b) a mortality charge; and (c) a rider charge for any additional benefits
provided by rider. The Monthly Charges will be deducted from the Division(s) and
the GPA in proportion to the non-loaned values in the Division(s) and the GPA.
Administrative Charge. This monthly charge is currently $6. This charge
reimburses MML Bay State for expenses incurred in administering the Policy, such
as processing claims, maintaining records and communicating with Policyowners.
This charge is not designed to make a profit. MML Bay State reserves the right
to change this charge in the future, but guarantees it will never exceed $9 per
month.
Mortality Charge. The mortality charge for a Policy is equal to the "amount at
risk" under the Policy, multiplied by the monthly mortality charge rate for that
Policy month. The amount at risk is determined on the first day of the Policy
month and is the amount by which the Death Benefit (discounted at the monthly
equivalent of 3% per year) exceeds the Account Value.
Monthly mortality rates will be based on the sex, Issue Age, and rate class of
the Insured, and the length of time the Policy has been in force. The actual
monthly mortality rates will be based on MML Bay State's expectations as to
future mortality and expense experience. They will not, however, be greater
than the guaranteed mortality rates set forth in the Policy. These guaranteed
rates are based on the 1980 Standard Commissioners Standard Ordinary (CSO)
Mortality Tables, and the sex, Attained Age, and rate class of the Insured. For
standard rate classes, these will not exceed the rates contained in the 1980 CSO
Tables.
The rate class of an Insured will affect the monthly mortality rates. MML Bay
State currently places Insureds into the following three standard rate classes:
Preferred Nonsmoker, Nonsmoker, and Smoker; as well as substandard rate classes
involving a higher mortality risk. In an otherwise identical Policy, the
monthly mortality rate is generally higher for smokers than for nonsmokers and
higher for nonsmokers than for preferred nonsmokers.
Rider Charge. The Monthly Charge will include charges for any additional
benefits provided by Rider.
Daily Charges Against The Separate Account
Mortality and Expense Risk Charge. MML Bay State assesses a daily charge
against net asset value of the Separate Account for the mortality and expense
risks it assumes. Currently, the charge is at the rate of 0.55% on an annual
basis. MML Bay State reserves the right to increase the charge rate, up to a
maximum equivalent annual rate of 0.90%. This charge is not deducted from the
assets in the GPA.
The mortality risk we assume is that the group of lives insured under our
Policies may, on average, live for shorter periods of time than we estimated.
The expense risk we assume is that our costs of issuing and administering
Policies may be more than we estimated.
21
<PAGE>
If all the money MML Bay State collects from this charge is not needed to cover
death benefits and expenses, it will be our gain and will be used for any proper
purpose, including payment of sales commissions. Conversely, even if the money
we collect is insufficient, we will provide for all death benefits and expenses.
Charges for Federal Taxes. MML Bay State does not currently make any charge
against the Separate Account for federal income taxes attributable to them. We
may make such a charge eventually in order to provide for the future federal
income tax liability of the Separate Account.
Investment Management Fee and Other Expenses. Because the Divisions purchase
shares of either MML Trust or Oppenheimer Trust, the value of Accumulation Units
of the Divisions will reflect the investment management fee and other expenses
incurred by MML Trust and Oppenheimer Trust. The Prospectuses of MML Trust and
Oppenheimer Trust contain additional information concerning such fees and
expenses.
Surrender Charges
General. The Surrender Charge has two parts -- an Administrative Surrender
Charge and a Sales Load Surrender Charge. The Administrative Surrender Charge
will be imposed by MML Bay State during the first 10 Policy Years, and during
the first 10 Policy Years following any requested increase in the Selected Face
Amount if the Policyowner surrenders the Policy or decreases the Selected Face
Amount. The Sales Load Surrender Charge will be imposed by MML Bay State for
the first 15 Policy Years, and during the first 15 years following any requested
increase in the Selected Face Amount if the Policyowner surrenders or decreases
the Selected Face Amount.
Administrative Surrender Charge. This charge is $5 for each $1,000 of Selected
Face Amount. It remains level for five years, then grades down to zero over the
next five years. This charge reimburses MML Bay State for expenses incurred in
issuing the Policy, such as processing the applications (including underwriting)
and setting up computer records. It is not designed to generate a profit.
Sales Load Surrender Charge. This charge is equal to 26% of the premiums paid
up to the Surrender Charge Band, plus 4% of premiums paid in excess of the
Surrender Charge Band, but less than three times the Surrender Charge Band. The
Surrender Charge Band is set forth in the Policy and is an amount generally
calculated on the basis of the Selected Face Amount and varies by the age and
sex of the Insured at the time of purchase.
Example of Surrender Charge Bands per $1,000
Age 25 Age 40 Age 55
$6.26 $9.91 $28.49
The Sales Load Surrender Charge remains level for the first 10 years, then
grades down to zero over the next five years in accordance with the percentages
set forth in the Policy.
Surrender Charges are calculated separately for the initial Selected Face Amount
and for each increase in the Selected Face Amount. Premiums are allocated to
the original Selected Face Amount and any subsequent increases in Selected Face
Amount in proportion to the respective guideline annual premiums.
Surrender Charge Upon Decrease in Selected Face Amount. A Surrender Charge may
be deducted on a decrease in the Selected Face Amount. In the event of a
decrease in Selected Face Amount, the Surrender Charge deducted is a fraction of
the charge that would apply to a full surrender of the Policy. If there have
been no increases in the Selected Face Amount, the fraction will be determined
by dividing the amount of the decrease by the current Selected Face Amount and
multiplying the result by the Surrender Charge. If more than one Surrender
Charge is in effect (pursuant to one or more increases in the Selected Face
Amount), the Surrender Charge will be applied in the following order: (1) the
most recent increase followed by (2) the next most recent increases,
successively, and (3) the initial Selected Face Amount. Where a decrease causes
a partial reduction in an increase or in the initial Selected Face Amount, a
proportionate share of the Surrender Charge for that increase or for the initial
Selected Face Amount will be deducted from the Account Value.
Other Charges
Withdrawal Fee. For each Withdrawal, a charge of $25 (or 2% of the amount
withdrawn, if less) will be deducted from the amount withdrawn. This fee is
guaranteed not to increase for the duration of the Policy. MML Bay State does
not anticipate making a profit on this fee.
Charge for Increase in Selected Face Amount. For each increase in Selected Face
Amount, a charge of $75 will be deducted from the Account Value. The charge is
designed to reimburse us for underwriting and administrative costs associated
with the increase. This fee is guaranteed not to increase for the duration of
the Policy. MML Bay State does not expect to make a profit on this charge.
Charge for Change from Option 1 to Option 2. For each change in the Death
Benefit Option from Option 1 to Option 2, a charge of $75 will be deducted from
the Account Value. The charge is designed to reimburse MML Bay State for the
underwriting and administrative costs associated with the change. This fee is
guaranteed not to increase for the duration of the Policy. MML Bay State does
not expect to make a profit on this charge. (MML Bay State currently does not
charge the $75 fee for this change, but it reserves the right to do so.)
Account Value And Cash Surrender Value
Account Value. The Account Value of the Policy is the sum of all Net Premium
payments adjusted by periodic charges and credits and by Withdrawals. The
Account Value of the Policy is held in one or more Divisions and the GPA.
Initially, this value equals the net amount of the first premium paid under the
Policy. This amount is allocated among the Divisions
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and the GPA according to the allocation requested in the Application.
Investment Return. The investment return of a Policy is based on:
(a) The Account Value held in each Division for that Policy;
(b) The investment experience of each Division as measured by its actual net
rate of return; and
(c) The interest rate credited on Account Values held in the GPA.
The investment experience of a Division reflects increases and decreases in the
net asset value of the shares of the underlying Fund, any dividend or capital
gains distributions declared by the Fund, and any charges assessed against
assets of the Division. The investment experience is determined each day on
which the net asset value of the underlying Fund is determined -- that is, on
each Valuation Date. The actual net rate of return for a Division measures the
investment experience from the end of one Valuation Date to the end of the next
Valuation Date.
Cash Surrender Value. The Policy may be fully surrendered for its Cash
Surrender Value at any time during the life of the Insured. The Cash Surrender
Value is equal to the Account Value less any applicable Surrender Charges and
less any Policy Debt.
A Policyowner may surrender a Policy by sending a written request together with
the Policy to MML Bay State's Principal Administrative Office. The proceeds
will be determined as of the end of the Valuation Period during which the
request for surrender is received.
Withdrawals. After the first Policy Year, the Policyowner may, subject to
certain restrictions, withdraw up to 75% of the Cash Surrender Value. For each
Withdrawal, a fee of $25 (or 2% of the amount withdrawn, if less) is deducted
from the amount withdrawn. The minimum amount of a partial Withdrawal is $100
(before deducting the Withdrawal fee). We reserve the right to prohibit
Withdrawals that would cause Selected Face Amount to be reduced to an amount
less than $25,000. The Policyowner specifies the GPA or the Division(s) from
which the Withdrawal is to be made. The Withdrawal amount attributable to a
Division or the GPA may not exceed the non-loaned Account Value of the Division
or GPA. If Death Benefit Option 1 is in effect, MML Bay State will reduce the
Selected Face Amount by the amount of the Withdrawal unless satisfactory
evidence of insurability is provided. A Surrender Charge is not assessed for a
Withdrawal.
Policy Loan Privilege
General. After the first Policy Year (or sooner if required by law), the
Policyowner may obtain a loan from the Policy by sending a written request in a
form satisfactory to us. The maximum amount that can be borrowed at any time is
90% (unless a greater amount is required by law) of the Policy's Account Value
less any Surrender Charge, reduced by any outstanding Policy Debt. The Policy
must be assigned to MML Bay State as collateral for the loan.
Source of Loan. The loan amount requested is taken from Divisions and the GPA
in proportion to the non-loaned Account Value of each Division and the GPA on
the date of the loan. Shares taken from the Divisions are liquidated and the
resulting dollar amounts are transferred to the GPA. The Policy loan is then
taken against the value in the GPA. We may delay the granting of any loan
attributable to the GPA for up to six months. We may also delay the granting of
any loan attributable to the Separate Account during any period that: (1) the
New York Stock Exchange is closed (other than customary weekend and holiday
closings); or (ii) trading is restricted; or (iii) the SEC determines that a
state of emergency exists; or (iv) during any period in which the Securities and
Exchange Commission permits MML Bay State to delay payment for the protection of
our Policyowners.
Whenever total Policy Debt (which includes accrued interest) exceeds the Account
Value less Surrender Charges, MML Bay State will send a notice to the
Policyowner. This notice will state the amount necessary to bring the Policy
Debt back within the limit. If we do not receive payment of that amount within
31 days after the date we mailed the notice, and if Policy Debt exceeds the
Account Value less any Surrender Charges at the end of those 31 days, the Policy
terminates without value.
Interest Charged. At time of Application, the Policyowner may select a loan
interest rate of 6% or (in all jurisdictions except Arkansas) an adjustable loan
rate. MML Bay State each year will set the adjustable rate that will apply for
the next Policy Year. The maximum loan rate is based on the monthly average of
the composite yield on seasoned corporate bonds as published by Moody's
Investors Service, Inc., or, if it is no longer published, a substantially
similar average. The maximum rate is the published monthly average for the
calendar month ending two months before the Policy Year begins, or 4%, whichever
is higher. If the maximum limit is not at least 1/2% higher than the rate in
effect for the previous year, we will not increase the rate. If the maximum
limit is at least 1/2% lower than the rate in effect for the previous year, we
will decrease the rate.
Interest accrues daily and becomes part of the Policy Debt as it accrues. It is
due on each Policy Anniversary. If not paid when due, the interest will be
added to the loan and, as part of the loan, will bear interest at the same rate.
Any interest capitalized on a Policy Anniversary will be treated the same as a
new loan and will be taken from the Divisions and the GPA in proportion to the
non-loaned Account Value in each.
Repayment. All or part of any Policy Debt may be repaid at any time while the
Insured is living and while the Policy is in force. Any loan repayment will
first be allocated to the GPA until the Policyowner has repaid all loan amounts
that originated from the GPA. Any additional loan repayments will be allocated
according to the premium allocation factors in effect.
Any outstanding Policy Debt will be deducted from the proceeds payable upon the
death of the Insured or the surrender of the Policy.
Interest on Loaned Value. Any loaned amount is held in the GPA and earns
interest at a rate determined by MML
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Bay State, equal to the greater of 3% and Policy loan rate less not more than
2%. (The current rate is .90%.)
Effect of Loan. A Policy loan affects the Policy since the Death Benefit and
Cash Surrender Value under a Policy are reduced by the amount of the loan.
Repayment of the loan increases the Death Benefit and Cash Surrender Value under
the Policy by the amount of the repayment. Surrender of a Policy with
outstanding Policy Debt may have tax consequences. (See Policy Proceeds,
Premiums and Loans, page 25.)
As long as a loan is outstanding, a portion of the Policy's Account Value equal
to the loan is held in the GPA. This amount is not affected by the Separate
Account's investment performance. The Account Value is also affected because
the portion of the Account Value equal to the Policy loan is credited with an
interest rate declared by MML Bay State rather than a rate of return reflecting
the investment performance of the Separate Account.
Free Look Provision
The Policyowner may cancel the Policy within 10 days (or longer if required by
state law) after the Policyowner receives it, or 10 days after MML Bay State
mails or delivers a written notice of withdrawal right to the Policyowner, or
within 45 days after signing Part I of the Application, whichever is latest.
The Policyowner may cancel increases in the Selected Face Amount under the same
time limitations.
The Policyowner should mail or deliver the Policy and Policy delivery receipt
either to MML Bay State's Principal Administrative Office or to the agent who
sold the Policy or to one of our agency offices. If the Policy is canceled in
this fashion, a refund will be made to the Policyowner. The refund equals the
sum of: (i) the difference between the premiums paid and the amounts allocated
to any Division(s) and the GPA under the Policy; (ii) the total amount of
monthly deductions made and any other charges imposed on amounts allocated to
the Division(s) and the GPA; and (iii) the value of amounts allocated to the
Division(s) or the GPA on the date we receive the returned Policy. For canceled
increases in the Selected Face Amount, the refund equals the sum of: (i) the
difference between the premiums paid attributable to the increase and the
amounts allocated to any Division(s) and the GPA under the Policy; (ii) the
total amount of monthly deductions and any other charges imposed on amounts
attributable to the increase allocated to the Division(s) and the GPA; and (iii)
the value on the day we receive the returned Policy of any amounts attributable
to the increase allocated to the Division(s) for the GPA. If state law does not
authorize the calculation above, the refund equals the total of all premiums
paid for the Policy or increase, reduced by any amounts borrowed or withdrawn.
The Guaranteed Principal Account
A Policyowner may allocate some or all of the Net Premium and transfer some or
all of the Account Value, to the Guaranteed Principal Account ("GPA"). Because
of exemptive and exclusionary provisions, interests in MML Bay State's general
account (which include interests in the Guaranteed Principal Account) are not
registered under the Securities Act of 1933 and the general account is not
registered as an investment company under the Investment Company Act of 1940.
Accordingly, neither the general account nor any interests therein are subject
to the provisions of these Acts, and MML Bay State has been advised that the
staff of the Securities and Exchange Commission has not reviewed the disclosures
in the Prospectus relating to the general account. Disclosures regarding the
general account may, however, be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
Amounts allocated to the Guaranteed Principal Account become part of the General
Account of MML Bay State, which consists of all assets owned by MML Bay State
other than those in the Separate Account and other separate accounts of MML Bay
State. Subject to applicable law, MML Bay State has sole discretion over the
investment of the assets of its General Account.
The Policyowner may allocate some or all of the Net Premium to the Guaranteed
Principal Account. MML Bay State guarantees that those amounts allocated to the
GPA in excess of any Policy Debt (which includes accrued interest) will accrue
interest daily at an effective annual rate at least equal to 3%. For amounts in
the GPA equal to any Policy Debt, the guaranteed minimum interest rate is an
effective annual rate of 3% or, if greater, the Policy loan rate less an MML Bay
State declared charge for expenses and taxes. This charge will not be greater
than 2% per year. Such interest will be paid regardless of the actual investment
experience of the GPA. Although MML Bay State is not obligated to credit
interest at a rate higher than the guaranteed minimum, it may declare a higher
rate applicable for such periods as it deems appropriate.
Federal Income Tax Considerations
The ultimate effect of federal income taxes on values under this Policy and on
the economic benefit to the Policyowner or Beneficiary depends on MML Bay
State's tax status and upon the tax status of the individual concerned. The
discussion contained herein is general in nature and is not an exhaustive
discussion of all tax questions that might arise under the Policy, and is not
intended as tax advice. Moreover, no representation is made as to the
likelihood of continuation of current federal income tax laws and Treasury
Regulations or of the current interpretations of the Internal Revenue Service.
MML Bay State reserves the right to make changes in the Policy to assure that it
continues to qualify as life insurance for tax purposes. For complete
information on federal and state tax law considerations, a qualified tax advisor
should be consulted. No attempt is made herein to consider any applicable state
or other tax laws.
MML Bay State's Tax Status. MML Bay State is taxed as a life insurance company
under Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The
Separate Account is not a separate entity from MML Bay State and its operations
form a part of MML Bay State.
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Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining Account Value. The
investment income and realized capital gains are automatically applied to
increase book reserves associated with the Policy. Under existing federal
income tax law, the Separate Account's investment income, including net capital
gains, is not taxed to MML Bay State to the extent applied to increase reserves
associated with the Policy. The reserve items taken into account at the close
of the taxable year for purposes of determining net increases and net decreases
must be adjusted for tax purposes by subtracting an amount attributable to
appreciation in the value of assets and by adding any amount attributable to
depreciation. MML Bay State's basis in the Policy's share of the assets
underlying the Separate Account will be adjusted for appreciation or
depreciation, to the extent the reserves are adjusted. Thus, corporate-level
capital gains and losses, and the tax effect thereof, are eliminated.
Due to MML Bay State's current tax status, no charge is made to the Separate
Account for MML Bay State's federal income taxes that may be attributable to the
Separate Account. Periodically, MML Bay State reviews the question of a charge
to the Separate Account for MML Bay State's federal income taxes. A charge may
be made for any federal income taxes incurred by MML Bay State that are
attributable to the Separate Account. Depending on the method of calculating
interest on Policy values allocated to the Guaranteed Principal Account (see
preceding section), a charge may be imposed for the Policy's share of MML Bay
State's federal income taxes attributable to that account.
Under current laws, MML Bay State may incur state or 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, MML Bay
State reserves the right to charge the Separate Account for such taxes, if any,
attributable to the Separate Account.
Policy Proceeds, Premiums and Loans. MML Bay State believes that the Policy
meets the statutory definition of life insurance under Code Section 7702 and
hence receives the same tax treatment as that accorded to fixed benefit life
insurance. Thus, the Death Benefit under the Policy is generally excludible
from the gross income of the Beneficiary under Section 101(a)(1) of the Code.
As an exception to this general rule, where a Policy has been transferred for
value, only the portion of the Death Benefit which is equal to the total
consideration paid for the Policy may be excluded from gross income. The
Policyowner is not deemed to be in constructive receipt of the cash values,
including increments thereon, under the Policy until a full surrender or partial
withdrawal is made (unless the Policy is a "modified endowment contract," as
discussed below).
Upon a full surrender of a Policy for its Cash Surrender Value, the Policyowner
may recognize ordinary income for federal income tax purposes. Ordinary income
is computed to be the amount by which the Account Value, unreduced by any
outstanding Policy Debt but less any Surrender Charges assessed, exceeds the
premiums paid but not previously recovered and any other consideration paid for
the Policy.
Decreases in Selected Face Amount and Withdrawals may be taxable depending on
the circumstances. Code Section 7702(f)(7) provides that where a reduction of
future benefits occurs during the first 15 years after a Policy is issued and
where there is a cash distribution associated with that reduction, the
Policyowner may be taxed on all or a part of the amount distributed. After 15
years, such cash distributions are not subject to federal income tax, except to
the extent they exceed the total amount of premiums paid but not previously
recovered. MML Bay State suggests that you consult with your tax advisor in
advance of a proposed decrease in Selected Face Amount or withdrawal as to the
portion, if any, which would be subject to federal income tax.
A change of the Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances.
MML Bay State also believes that under current law any loan received under the
Policy will be treated as Policy Debt of a Policyowner, and that no part of any
loan under a Policy will constitute income to the Policyowner unless the Policy
has become a "modified endowment contract." If the Policy is a modified
endowment contract under Code Section 7702A, loans will be fully taxable to the
extent of income in the Policy and could be subject to an additional 10 percent
tax. See the discussion on modified endowment contracts below. Under the
"personal" interest limitation provisions of the Tax Reform Act of 1986,
interest on Policy loans used for personal purposes, which otherwise meet the
requirements of Code Section 264, will no longer be tax-deductible. However,
other rules may apply to allow all or part of the interest expense as a
deduction if the loan proceeds are used for "trade or business" or "investment"
purposes. See your tax advisor for further guidance.
If the Policy is owned by a business or corporation, the 1986 Act may impose
additional restrictions. The Act limits the interest deduction available for
loans against a business-owned Policy. It imposes an indirect tax upon the gain
in corporate-owned life insurance policies by way of the corporate alternative
minimum tax, for those corporations subject to the alternative minimum tax. The
corporate alternative minimum tax could also apply to a portion of the amount by
which Death Benefits received exceed the Policy's date-of-death cash surrender
value.
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 Policyowner or Beneficiary.
MML Bay State cannot make any guarantee regarding the future tax treatment of
any Policy. For complete information on the impact of changes with respect to
the Policy and federal and state tax considerations, a qualified tax advisor
should be consulted.
Modified Endowment Contracts. Contrary to the rules described above, loans,
collateral assignments, and other amounts distributed under a "modified
endowment contract" are taxable to the extent of any accumulated income in the
Policy. In general, the amount which may be subject to taxation is the excess
of the Account Value (both loaned and unloaned) over the previously unrecovered
premiums paid. Death benefits paid under a modified endowment contract,
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however, are not taxed any differently from death benefits payable under other
life insurance contracts.
A Policy is a modified endowment contract if it satisfies the definition of life
insurance set out in the Internal Revenue Code but fails the additional "7-pay
test." A Policy fails this test if the accumulated amount paid under the
contract at any time during the first seven contract years exceeds the total
premiums that would have been payable under a policy providing for guaranteed
benefits upon the payment of seven level annual premiums. A Policy which would
otherwise satisfy the 7-pay test will still be taxed as a modified endowment
contract if it is received in exchange for a modified endowment contract.
Certain changes will require a Policy to be retested to determine whether it has
become a modified endowment contract. For example, a reduction in death benefits
during the first seven contract years will cause the Policy to be retested as if
it had originally been issued with the reduced death benefit. If the premiums
actually paid into the Policy exceed the limits under the 7-pay test for a
policy with the reduced death benefit, the Policy will become a modified
endowment contract. This change is effective retroactively to the Policy Year
in which the actual premiums paid exceed the new 7-pay limits.
In addition, a "material change" occurring at any time while the Policy is in
force will require the Policy to be retested to determine whether it continues
to meet the 7-pay test.
A material change starts a new 7-pay test period. The term "material change"
includes many increases in death benefits. A material change does not include
an increase in death benefits which is attributable to the payment of premiums
necessary to fund the lowest level of death benefits payable during the first
seven contract years, or which is attributable to the crediting of interest with
respect to such premiums.
Since the Policy provides for flexible premium payments, the Company has
instituted procedures to monitor whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will have to be considered.
If any amount is taxable as a distribution of income under a modified endowment
contract, it will also be subject to a 10% penalty tax. Limited exceptions from
the additional penalty tax are available for individual Policyowners. The
penalty tax will not apply to distribution: (i) that are made on or after the
date the taxpayer attains age 59 1/2; or (ii) that are attributable to the
taxpayer's becoming disabled; or (iii) that are part of a series of
substantially equal periodic payments (made not less frequently than annually)
made for the life or life expectancy of the taxpayer. For complete information
with respect to modified endowment contract status, a qualified tax advisor
should be consulted.
Once a Policy fails the 7-pay test, loans and distributions occurring in the
year of failure and thereafter become subject to the rules for modified
endowment contracts. In addition, a recapture provision applies to loans and
distributions received in anticipation of failing the 7-pay test. Any
distribution or loan made within two years prior to failing the 7-pay test is
considered to have been made in anticipation of the failure.
Under certain circumstances, a loan, collateral assignment, or other
distribution under a modified endowment contract may be taxable even though it
exceeds the amount of income accumulated in the Policy. For purposes of
determining the amount of income received from a modified endowment contract,
the law requires the aggregation of all modified endowment contracts issued to
the same Policyowner by an insurer and its affiliates within the same calendar
year. Therefore, loans, collateral assignments, and distributions from any one
such Policy are taxable to the extent of the income accumulated in all the
Policies required to be aggregated.
Qualified Plans. The Policy may be used in conjunction with certain tax-
qualified employee benefit plans. Since the rules governing such use are
complex, a purchaser should not use the Policy in conjunction with any such
qualified plan until he has consulted a competent tax advisor. The Policy may
not be used in conjunction with an Individual Retirement Account (IRA).
Diversification Standards. To comply with final regulations under Code Section
817(h) ("Final Regulations"), each Fund of the Trusts is required to diversify
its investments. The Final Regulations generally require that on the last day
of each quarter of a calendar year no more than 55% of the value of a Fund's
assets is represented by any one investment, no more than 70% is represented by
any two investments, no more than 80% is represented by any three investments,
and no more than 90% is represented by any four investments. A "look-through"
rule applies to treat a pro-rata portion of each asset of a Fund as an asset of
the Separate Account. All securities of the same issuer are treated as a single
investment. However, each government agency or instrumentality is treated as a
separate issuer.
With respect to variable life insurance contracts, the general diversification
requirements are modified if any of the assets of the Separate Account are
direct obligations of the United States Treasury. In this case, there is no
limit on the investment that may be made in United States Treasury securities,
and for purposes of determining whether assets other than United States Treasury
securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the Separate Account's
investment in United States Treasury securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the
Trusts will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with the general standards.
In connection with the issuance of the temporary regulations prior to the Final
Regulations, the Treasury announced that such temporary regulations did not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular Divisions of a separate account. Regulations in this
regard were not issued in connection with the Final Regulations, however. It is
not clear, at this time, what future regulations might provide. It is possible
that, if future regulations are issued, the Policy may need to be modified to
comply with such regulations. For these reasons, MML Bay State reserves the
right to modify the Policy, as necessary, to prevent the Policyowner from being
considered the owner of the assets of the Separate Account.
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MML Bay State intends to comply with the Final Regulations to assure that the
Policy continues to qualify as life insurance for federal income tax purposes.
Your Voting Rights
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, the Policyowner is entitled to give
instructions as to how shares of the Funds held in the Separate Account (or
other securities held in lieu of such shares) deemed attributable to the Policy
shall be voted at meetings of shareholders of the Funds or the Trusts. Those
persons entitled to give voting instructions are determined as of the record
date for the meeting.
The number of shares of the Funds held in the Separate Account deemed
attributable to the Policy during the lifetime of the Insured are determined by
dividing the Policy's Account Value held in each Division of the Separate
Account, if any, by $100. Fractional votes are counted.
Policyowners receive proxy material and a form with which such instructions may
be given. Shares of the Funds held by the Separate Account as to which no
effective instructions have been received are voted for or against any
proposition in the same proportion as the shares as to which instructions have
been received.
Reservation Of Rights
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. These actions will be taken in
accordance with applicable laws (including obtaining any required approval of
the Securities and Exchange Commission). If necessary, we will seek approval by
Policyowners.
Specifically, we reserve the right to:
. Create new Divisions of the Separate Account;
. Create new Separate Accounts;
. Combine any two or more Separate Accounts;
. Make available additional Divisions of the Separate Account investing in
additional investment companies;
. Invest the assets of the Separate Account in securities other than shares of
the Funds as a substitute for such shares already purchased or as the
securities to be purchased in the future;
. Operate the Separate Account as a management investment company under the
Investment Company Act of 1940 or in any other form permitted by law; and
. De-register the Separate Account under the Investment Company Act of 1940 in
the event such registration is no longer required.
MML Bay State also reserves the right to change the name of the Separate
Account.
We have reserved all rights to the name MML Bay State Life Insurance Company or
any part of it. We may allow the Separate Account and other entities to use our
name or part of it, but we may also withdraw this right.
Additional Provisions Of The Policy
Additional Benefits You Can Get by Rider
The Policy can include additional benefits that we approve based on our
standards and limits for issuing insurance and classifying risks. An additional
benefit is provided by rider and is subject to the terms of both the rider and
the Policy. The cost of any rider is deducted as part of the Monthly Charges.
Subject to state availability, the following riders are available.
Disability Benefit Rider. This rider provides that, in the event of the
Insured's total disability that begins before Attained Age 65 and continues for
at least six months, MML Bay State will apply a premium payment to the Policy on
each Monthly Calculation Date while the Insured remains totally disabled (but
not after Attained Age 70 if the disability occurred after Attained Age 60).
At the time of application, a Specified Monthly Amount is selected by the
Policyowner. In the event of the Insured's total disability, the amount of the
premium payment applied on each Monthly Calculation Date will be the greater of:
(a) the Specified Monthly Amount; or (b) the Monthly Charge (increased by the
current Premium Expense Charge) on that Monthly Calculation Date.
Accidental Death Benefit Rider. This rider provides for an addition to the
Death Benefit in the event the Insured's death was caused by accidental bodily
injury occurring within six months before the Insured's death. No benefit is
provided under this rider if the Insured dies before his or her first birthday
or after Attained Age 70.
Insurability Protection Rider. This rider allows the Policyowner to increase
the Selected Face Amount of the Policy for a specified amount on specified
dates, without evidence of insurability.
Death Benefit Guarantee Rider. Until Attained Age 70 or 40 years from the
Policy Date, whichever is sooner, the Policy will not terminate when the Account
Value is insufficient to cover the Monthly Charge on a Monthly Calculation Date
if (a) exceeds (b) where:
(a) is the sum of all premiums paid, minus any withdrawals, and minus any Policy
Debt; and
(b) is the sum of Minimum Monthly Premiums, for this rider since the Policy
Date.
Minimum Monthly Premiums may be paid on other than a monthly basis as long as
the sum of premiums paid is at least equal to the total required Minimum Monthly
Premiums on each Monthly Calculation Date. The Minimum Monthly Policy Premium
may change if the Policy's Selected Face Amount is increased or decreased or if
riders are added, changed, or terminated. The new Minimum Monthly Premium will
apply from the effective date of the change.
If, on a Monthly Calculation Date, the Policy premium requirement has not been
met, the Policyowner will be given an additional 61 days to pay a premium
sufficient to maintain the death benefit guarantee. The required payment will
be equal
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to (a) the smallest amount needed to meet the Policy premium requirement as of
that date, plus (b) two times the Minimum Monthly Premium for that date. If the
required payment is not received within this period, the rider will terminate
and the death benefit guarantee will be lost. Once the rider is terminated, it
cannot be reinstated.
Accelerated Death Benefit Rider. This rider advances the Policyowner a portion
of the Death Benefit when MML Bay State receives proof, satisfactory to Us, the
insured is terminally ill and is not expected to live more than 12 months. In
return for the advanced payment, a lien is established against the Policy, equal
to the amount of the Death Benefit accelerated under the Policy. Interest is
not charged on the Lien.
Right to Exchange Insured Endorsement. Upon request, the Policy may include a
Right to Exchange Insured Endorsement. Under this endorsement, the Policy may
be exchanged for a new Policy on the life of a new Insured, subject to certain
conditions and satisfactory evidence of insurability.
Exchange Privilege
The Policyowner may transfer the entire Account Value held in the Separate
Account to the GPA at any time. The transfer will take effect following receipt
by MML Bay State of a written request.
Beneficiary
A Beneficiary is any person named on our records to receive insurance proceeds
after the Insured dies. The Policyowner names the Beneficiary in the
application for the Policy. There may be different classes of beneficiaries,
such as primary and secondary. These classes set the order of payment. There
may be more than one Beneficiary in a class.
Any Beneficiary may be named an irrevocable Beneficiary. An irrevocable
Beneficiary is one whose consent is needed to change that Beneficiary. The
consent of any irrevocable Beneficiary is needed to exercise any Policy right
except the right to:
Change the frequency of Planned Premiums;
Change the premium payment plan; and
Reinstate the Policy after termination.
The Beneficiary may be changed during the Insured's lifetime by writing to our
Principal Administrative Office. Generally, the change will take effect as of
the date of the request. If no Beneficiary is living when the Insured dies,
unless provided otherwise the Death Benefit is paid to the Policyowner or, if
deceased, to the Policyowner's estate.
Assignment
The Policy may be assigned as collateral for a loan or other obligation. For
any assignment to be binding on MML Bay State, however, We must receive a signed
copy of it at our Principal Administrative Office. We are not responsible for
the validity of any assignment.
Limits on Our Right to Challenge the Policy
Except for any increases in Selected Face Amount, we must bring any legal action
to contest the validity of a Policy within two years from its Issue Date. After
that We cannot contest its validity, except for failure to pay premiums. For
any increase in the Selected Face Amount, We must bring legal action to contest
that increase within two years after the effective date of the increase or
within two years after the Issue Date of the Insurability Protection Rider, if
the increase is provided by that rider.
Error of Age or Sex
If the Insured's age or sex is misstated in the Policy application, the Death
Benefit payable under the Policy will be adjusted based on what the Policy would
provide according to the most recent Monthly Charge for the correct date of
birth and correct sex.
Suicide
Suicide within two years of the Policy Date is not covered by the Policy. If
the Insured dies by suicide, while sane or insane, within two years from the
Issue Date (or less where required by law), the amount payable to the
Beneficiary will be limited to premiums paid, less any withdrawals and Policy
Debt. If the Insured, while sane or insane, dies by suicide within two years
after the effective date of any increase in the Selected Face Amount, the death
benefit for that increase will be limited to the amount of the Monthly Charges
for that increase.
When We Pay Proceeds
If the Policy has not terminated, payment of the Cash Surrender Value, loan
proceeds, or the Death Benefit are made within 7 days after we receive all
required documents in a form satisfactory to us at our Principal Administrative
Office. But we can delay payment of the Cash Surrender Value or any withdrawal
from the Separate Account, loan proceeds attributable to the Separate Account,
or the Death Benefit during any period that: it is not reasonably practicable
to determine the amount because the New York Stock Exchange is closed (other
than customary week-end and holiday closings), trading is restricted by the SEC,
or the SEC declares that an emergency exists; or the SEC, by order, permits us
to delay payment in order to protect our policyowners.
In addition, a premium payment is not available to satisfy a surrender request
until the check, or other instrument by which the premium payment was made, has
been honored.
We may delay paying any Cash Surrender Value, any withdrawal, or any loan
proceeds based on the GPA for up to 6 months from the date the request is
received at our Principal Administrative Office.
We can delay payment of the entire Death Benefit if payment is contested. We
investigate all death claims arising within the two-year contestable period.
Upon receiving the information from a completed investigation, we generally make
a determination within five days as to whether the claim should
28
<PAGE>
be authorized for payment. Payments are made promptly after authorization.
If payment of a Death Benefit, Cash Surrender Value, or withdrawal is delayed
for 30 days or more, we add interest to the date of payment at the same rate as
is paid under the interest payment option.
Payment Options
The Policy proceeds can be paid in cash, or if elected, all or part of these
proceeds can be placed under one or more of the following payment options. The
minimum amount that can be applied under a payment option is $2,000. If the
periodic payment under any option is less than $20, we reserve the right to make
payments at less-frequent intervals. None of these benefits depends on the
performance of the Separate Account or the GPA. For additional information
concerning these options, see the Policy. The following payment options are
currently available.
Fixed Amount Payment Option. Each monthly payment is for an agreed fixed amount
not less than $10 for each $1,000 applied under the option. Interest of at
least 2.5% per year is credited each month on the unpaid balance and added to
it. Payments continue until the amount We hold runs out.
Fixed Time Payment Option. Equal monthly payments are made for any period
selected, up to 30 years. The amount of each payment depends on the total
amount applied, the period selected, and the rate We credit interest to the
unpaid balance. This interest rate will not be less than 2.5% per year.
Interest Payment Option. We hold amounts under this option and pay interest on
the unpaid balance of at least 2.5% per year.
Lifetime Payment Option. Equal monthly payments are based on the life of a
named person. Payments continue for the lifetime of that person. Three
variations are available:
. Payments for life only;
. Payments guaranteed for five, ten or twenty years; and
. Payments guaranteed for the amount applied.
Joint Lifetime Payment Option. Equal monthly payments are based on the lives of
two named persons. While both named persons are living, one payment will be
made each month. When one of the named persons dies, the same payment continues
for the lifetime of the other. Two variations are available:
. Payments guaranteed for 10 years; and
. Payments for two lives only. No specific number of payments is guaranteed.
Under this option there may be one payment if the the two named persons die
prior to the second payment.
Joint Lifetime Payment Option with Reduced Payments. Monthly payments are based
on the lives of two named persons. While both named persons are living, one
payment will be made each month. When one dies, payments are reduced by one-
third and will continue for the lifetime of the other.
Withdrawal Rights Under Payment Options. If provided in the payment option
election, all or part of the unpaid balance under the Fixed Amount or Interest
payment option may be withdrawn or applied under any other option. Payments
which are based on a named person's life may not be withdrawn.
Records And Reports
All records and accounts relating to the Separate Account and the GPA are
maintained by MassMutual or MML Bay State. Each year within 30 days after the
Policy Anniversary, MML Bay State will mail you a report showing the Account
Value at the beginning of the previous Policy Year, all premiums paid since that
time, all additions to and deductions from the Account Value during the year,
and the Account Value, Death Benefit, Cash Surrender Value and Policy Debt as of
the latest Policy Anniversary. This report contains any additional information
required by any applicable law or regulation.
Sales And Other Agreements
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), 1414 Main
Street, Springfield, MA 01144-1013, is the principal underwriter of the Policy
pursuant to an Underwriting and Servicing Agreement to which MML Distributors,
MML Bay State and the Separate Account are parties. Prior to May 1, 1996, MML
Investors Services, Inc. ("MMLISI"), also located at 1414 Main Street,
Springfield, MA 01144-1013, served as the principal underwriter of the Policies.
Effective May 1, 1996, MMLISI serves as the co-underwriter of the Policy. Both
MML Distributors and MMLISI are registered with the Securities and Exchange
Commission (the "SEC") as broker-dealers under the Securities Exchange Act of
1934 and are members of the National Association of Securities Dealers, Inc.
(the "NASD").
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the SEC and are members of the NASD ("selling
brokers"). MML Bay State sells the Policy through agents who are licensed by
state insurance officials to sell the Policy. These agents are also registered
representatives of selling brokers or of MMLISI. The Policy is offered in all
states where MML Bay State is authorized to sell variable life insurance.
When an application for the Policy is completed, it is submitted to MML Bay
State. Under a service agreement between MML Bay State and MassMutual
(described below under Service Agreement), MassMutual performs suitability and
insurance underwriting and determines whether to accept or reject the
application for the Policy and the Insured's risk classification. If the
application is not accepted, MML Bay State will refund any premium that has been
paid.
Pursuant to the Underwriting and Servicing Agreement, both MML Distributors and
MMLISI will receive compensation for their activities as underwriters of the
Policy. No compensation was paid to MML Distributors or MMLISI during 1995.
Commissions will be paid through MMLISI and MML Distrib-
29
<PAGE>
utors to agents and selling brokers for selling the Policy. During 1995 such
payments amounted to $4,824,148.25.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
Commission Schedule
Writing agents will receive commissions based on a commission schedule and
rules. Some commissions are paid as a percentage of the premium payable in each
Policy Year. The maximum commission percentages are as follows:
For Policy Year 1, 50% for basic premium and 2% for amount paid above basic
premium; for Policy Years 2 through 5, 6% of basic premium and 2% for amounts
paid above basic premium; for Policy Years 6 and 7, 5% of basic premium and 2%
for amounts paid above basic premium; for Policy Years 8 through 10, 4% of basic
premium and 2% for amounts above basic premium, and 2% for basic premium and
amounts above basic premium for Policy Years 11 through 20. Thereafter, no
premium-based commissions are paid.
Basic premium is an amount established by MML Bay State for the purposes of
determining commissions payable on a Policy.
For Policy Years 2 through 20, writing agents will also receive a commission of
0.15% of the average monthly Account Value in each Policy Year. The 0.15%
percentage drops to 0.05% for Policy Years 21 and later.
Agents under financing agreements with a general agent of MassMutual may be
compensated differently. Agents who meet certain productivity and persistency
standards in selling MML Bay State and MassMutual policies are eligible for
additional compensation.
General agents and brokers receive commissions based on different schedules and
rules.
Service Agreement
In addition to acting as an investment manager for the funds underlying the
Divisions of the Separate Account, MassMutual performs certain investment and
administrative duties for MML Bay State. MassMutual does this according to a
written agreement. The agreement is automatically renewed each year, unless
either party terminates it. Under this agreement, MML Bay State pays MassMutual
for salary costs and other services and an amount for indirect costs incurred
through MML Bay State's use of MassMutual's personnel and facilities.
Bonding Arrangement
An insurance company blanket bond is maintained providing $25,000,000 coverage
for officers and employees of MassMutual and MML Bay State (subject to a
$350,000 deductible) and $25,000,000 for MassMutual's general agents and agents
(also subject to a $350,000 deductible).
DIRECTORS AND OFFICERS OF MML BAY STATE
Directors:
Paul D. Adornato
Director (since 1987), MML Bay State; Senior Vice President (since 1986),
MassMutual; Director (1987-1991), MML Life Insurance Company; Director (1987-
1994), MML Pension Insurance Company; Chief Executive Officer (since 1994) and
Director (since 1993), MML Insurance Agency, Inc.; Chief Executive Officer
(since 1994) and Director (since 1993), MML Insurance Agency of Ohio, Inc.;
Director (since 1989), MML Investors Services, Inc.
Donald D. Cameron
Director (since 1993) and Senior Vice President-Corporate Marketing (since
1991), MML Bay State; Senior Vice President (since 1987), MassMutual; Director
(since 1986), MML Investors Services, Inc.
Daniel J. Fitzgerald
Director (since 1994), President and Chief Executive Officer (1991-1993) and
President (1987-1990), MML Bay State; Executive Vice President (since 1994),
Senior Vice President (1991-1994), Vice President and Controller (1986-1991),
MassMutual; Vice President (since 1994) and Director (since 1993), MassMutual
Holding Company; Director (1987-1991) and President (1987-1990), MML Life
Insurance Company; Director (1992-1993), MML Life Insurance Agency, Inc.;
Director and President (1987-1990), Bay Colony of Arizona; Director and
President (1987-1990), Bay Colony of Vermont, Inc.; Director (since 1994),
Cornerstone Real Estate Advisers, Inc.; Director (since 1994), MML Investors
Services, Inc.; Director (1994-1995), MML Real Estate Corporation; Director
(since 1994), MML Realty Management Corporation; Director (since 1994),
MassMutual of Ireland, Inc.; Director and President (1987-1990), Mass Life
Insurance Company of New York; Director (since 1993), Concert Capital
Management, Inc.; Director (since 1995), DLB Acquisition Corporation; Director
(since 1994, 1987-1993), Chief Executive Officer (1991-1993), President (1987-
1990), MML Pension Insurance Company; Director and Vice President (since 1994),
MassMutual Holding Company Two, Inc.; Director and Vice President (since 1994),
MassMutual Holding Company Two MSC, Inc.
Arthur D. Foresi
Director (since 1994), MML Bay State; Vice President (since 1991) and Second
Vice President (1987-1991), MassMutual; Director (1993-1994), MML Pension
Insurance Company.
Gary T. Huffman
Director (since 1994), MML Bay State; Senior Vice President (since 1994),
General Agent (1981-1994), MassMutual; Director and Chief Executive Officer
(since
30
<PAGE>
1994), MML Investors Services, Inc.; Director (since 1994), MML Insurance
Agency, Inc.
Douglas J. Jangraw
Director (since 1992), MML Bay State; Second Vice President and Actuary (since
1988), MassMutual.
Isadore Jermyn
Chairman, Chief Executive Officer and President (since 1993) and Chief Executive
Officer and President (1990-1991), MML Bay State; Senior Vice President and
Actuary (since 1995) and Vice President and Actuary (1987-1995), MassMutual;
Director (1990-1991), MML Life Insurance Company; Chairman and President (1993-
1994) and Director (1990-1994), MML Pension Insurance Company;Director (since
1992), MML Investors Service, Inc.; Director (since 1993), MML Insurance Agency,
Inc.; Director (since 1993), MML Insurance Agency of Ohio, Inc.; Director (since
1994), Cornerstone Real Estate Advisers, Inc.
John J. Libera, Jr.
Director (since 1991), MML Bay State; Senior Vice President (since 1987),
MassMutual; Director (1987-1990), MML Life Insurance Company; Director (1987-
1990 and 1991-1994), MML Pension Insurance Company; Director (since 1993), MML
Investors Services, Inc.; Director (since 1992), MML Insurance Agency, Inc.;
Director (since 1994), MML Insurance Agency of Ohio, Inc.
William T. McElmurray
Director (since 1991), MML Bay State; Senior Vice President (since 1991), Vice
President (1979-1991), MassMutual; Director (1991-1994), MML Pension Insurance
Company; Director (since 1993), MML Investors Services, Inc.; Director (since
1993), MML Insurance Agency, Inc.; Director (since 1993), MML Insurance Agency
of Ohio, Inc.
Stuart H. Reese
Director (since 1994), MML Bay State; Senior Vice President (since 1993),
MassMutual; President (since 1993), MML Series Investment Funds; President
(since 1994), MassMutual Institutional Funds; Executive Vice President (since
1993), MassMutual Corporate Investors; Executive Vice President (since 1993),
MassMutual Participation Investors; Director (since 1994), MML Pension Insurance
Company; Director (since 1994), MassMutual/Corporate Value Partners, Ltd.;
Director (since 1994) MassMutual Corporate Value Ltd.; Director (since 1994),
MassMutual/Carlson CBO N.V.
Jeanne L. Stamant
Director (since 1990), MML Bay State; Vice President and Actuary (since 1980),
MassMutual; Director (1990-1991), MML Life Insurance Company; Director (1991-
1994), MML Pension Insurance Company; Director (since 1994), MML Investors
Services, Inc.
Officers (other than Directors):
Yek Soan S. Cheng
Vice President-Actuarial (since 1988), MML Bay State; Vice President (since
1995), Actuary (since 1986), MassMutual; Vice President-Actuarial (1988-1991),
MML Life Insurance Company; Vice President-Actuarial (1988-1994), MML Pension
Insurance Company.
Thomas J. Finnegan, Jr.
Secretary (since 1991), Director (1990-1991), MML Bay State; Vice President,
Secretary and Associate General Counsel (since 1984), MassMutual; Director
(1990-1991), MML Life Insurance Company; Director (1990-1991), MML Pension
Insurance Company; Clerk (since 1994), Assistant Clerk (1992-1994) and Director
(1982-1992), Concert Capital Management, Inc.; Clerk (since 1994), Cornerstone
Real Estate Advisers, Inc.; Clerk (since 1991), MML Realty Management
Corporation; Secretary (since 1995), DLB Acquisition Corporation; Secretary
(1991-1995), MML Real Estate Corporation; Secretary (since 1991), MML
Reinsurance (Bermuda) Ltd.; Secretary (since 1984), MassMutual Holding Company;
Secretary (since 1994), Westheimer 335 Suites, Inc.; Secretary and Clerk (since
1994), MML Insurance Agency, Inc.; Secretary and Clerk (since 1994), MML
Investors Services, Inc.; Secretary and Clerk (since 1994), MassMutual Holding
Company Two, Inc.; Secretary and Clerk (since 1994), MassMutual Holding Company
Two MSC, Inc.; Associate Secretary (since 1990), MML Series Investment Fund;
Associate Secretary (since 1990), MassMutual Corporate Investors; Associate
Secretary (since 1994), MassMutual Institutional Funds; Associate Secretary
(since 1990), MassMutual Participation Investors; Secretary (1992-1993), Bedford
Hotel Company, Inc.; Secretary (since 1990), Crestwood Realty Investors, Inc.;
Secretary (1990-1991), MML Syndicate, Inc.
Ann Iseley
Treasurer (since 1996), MML Bay State; Treasurer (since 1996), MassMutual; Chief
Financial Officer and Operations Officer (1994-1996), Connecticut Mutual Life
Insurance Company; Corporate Controller (1993-1994), The Mack Company; Vice
President (1990-1993), Mutual of New York.
Efrem Marder
Vice President-Investments (since 1990), MML Bay State; Senior Managing Director
(since 1996), Vice President and Managing Director (1989-1996), Vice President
(1987-1989), MassMutual; Vice President-Investments (1990-1991), MML Life
Insurance Company; Vice President-Investments (1990-1994), MML Pension Insurance
Company.
Mary E. Wilson
Vice President-Investments (since 1990), MML Bay State; Senior Managing Director
(since 1996), Vice President and Managing Director (1991-1996), Vice President
(1990-1991), Second Vice President (1989-1990), MassMutual; Vice President-
Investments (1990-1991), MML Life Insurance Company; Vice President-Investments
(1990-1994), MML Pension Insurance Company; Senior
31
<PAGE>
Vice President (since 1993), Vice President (1991-1993) and Second Vice
President (1990-1991), MML Series Investment Fund; Vice President (since 1992),
MassMutual Corporate Investors; Vice President (since 1991), MassMutual
Participation Investors.
Legal Proceedings
We are not currently involved in any legal proceedings which would have a
material impact on the Policy.
Experts
The financial statements of the Separate Account and the financial statements of
MML Bay State included in this Prospectus have been included herein in reliance
on the reports of Coopers & Lybrand L.L.P., Springfield, Massachusetts 01101,
independent accountants, given on the authority of that firm as experts in
accounting and auditing. Coopers & Lybrand's report on the financial statements
of MML Bay State includes explanatory paragraphs relating to prior year
adjustments and the pending merger between MassMutual and Connecticut Mutual
Life Insurance Company.
Actuarial matters in the Prospectus have been examined by Peter C. Van Beaver,
FSA, MAAA. An opinion on actuarial matters is filed as an exhibit to the
registration statements we filed with the SEC.
Financial Statements
The financial statements of MML Bay State and the Variable Life Select segment
of the Separate Account included herein should be considered only as bearing
upon the ability of MML Bay State to meet its obligations under the Policy.
32
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
MML Bay State Life Insurance Company
We have audited the statement of assets and liabilities of the MML Equity
Division, MML Money Market Division, MML Managed Bond Division, MML Blend
Division, Oppenheimer Capital Appreciation Division, Oppenheimer Growth
Division, Oppenheimer Global Securities Division, and Oppenheimer Strategic Bond
Division of the Variable Life Select segment of MML Bay State Variable Life
Separate Account I as of December 31, 1995, and the related statements of
operations and changes in net assets for the period July 24, 1995 (date of
commencement of operations) to December 31, 1995. 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 audit.
We conducted our audit 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. Our procedures included
verification of investments owned as of December 31, 1995 by examination of the
records of MML Series Investment Fund and by confirmation with Oppenheimer
Variable Account Funds. 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the MML Equity Division, MML
Money Market Division, MML Managed Bond Division, MML Blend Division,
Oppenheimer Capital Appreciation Division, Oppenheimer Growth Division,
Oppenheimer Global Securities Division, and Oppenheimer Strategic Bond Division
of the Variable Life Select segment of MML Bay State Variable Life Separate
Account I as of December 31, 1995, the results of their operations and the
changes in their net assets for the period July 24, 1995 (date of commencement
of operations) to December 31, 1995, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 9, 1996
33
<PAGE>
MML Bay State Variable Life Separate Account I - Variable Life Select
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global
Equity Market Bond Blend Appreciation Growth Securities
Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2)...... 140,991 573,453 8,145 58,079 21,279 18,848 31,955
========== ======== ======== ========== ======== ======== ========
Identified cost (Note 3B)...... $3,675,415 $573,453 $100,933 $1,196,724 $692,434 $431,433 $478,388
========== ======== ======== ========== ======== ======== ========
Value (Note 3A)................ $3,655,032 $573,453 $101,396 $1,191,711 $727,942 $443,875 $479,325
Dividends receivable............. 138,669 2,143 1,569 35,272 -- -- --
Receivable from MML Bay State
Life Insurance Company......... -- -- -- -- -- -- --
---------- -------- -------- ---------- -------- -------- --------
Total assets................. 3,793,701 575,596 102,965 1,226,983 727,942 443,875 479,325
LIABILITIES
Payable to MML Bay State
Life Insurance Company......... 362,235 9,197 8,046 46,946 94,233 20,785 42,060
---------- -------- -------- ---------- -------- -------- --------
NET ASSETS....................... $3,431,466 $566,399 $ 94,919 $1,180,037 $633,709 $423,090 $437,265
========== ======== ======== ========== ======== ======== ========
Net Assets consist of:
For variable life
insurance policies............. $3,425,911 $561,292 $ 89,551 $1,174,613 $627,989 $417,554 $432,388
Retained in Variable Life
Separate Account I
by MML Bay State Life
Insurance Company.............. 5,555 5,107 5,368 5,424 5,720 5,536 4,877
---------- -------- -------- ---------- -------- -------- --------
Net assets................... $3,431,466 $566,399 $ 94,919 $1,180,037 $633,709 $423,090 $437,265
========== ======== ======== ========== ======== ======== ========
Accumulation units (Note 8)
Number of units:
Policyowners.................. 3,083,703 549,513 83,412 1,082,744 548,916 377,154 443,281
MML Bay State Life
Insurance Company............ 5,000 5,000 5,000 5,000 5,000 5,000 5,000
---------- -------- -------- ---------- -------- -------- --------
Total units:.................. 3,088,703 554,513 88,412 1,087,744 553,916 382,154 448,281
========== ======== ======== ========== ======== ======== ========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1995.............. $1.11 $1.02 $1.07 $1.08 $1.14 $1.11 $.98
<CAPTION>
Oppenheimer
Strategic
Bond
Division
----------
<S> <C>
ASSETS
Investments
Number of shares (Note 2)...... 23,159
========
Identified cost (Note 3B)...... $113,201
========
Value (Note 3A)................ $113,709
Dividends receivable............. --
Receivable from MML Bay State
Life Insurance Company......... 189
--------
Total assets................. 113,898
LIABILITIES
Payable to MML Bay State
Life Insurance Company......... --
--------
NET ASSETS....................... $113,898
========
Net Assets consist of:
For variable life
insurance policies............. $108,581
Retained in Variable Life
Separate Account I
by MML Bay State Life
Insurance Company.............. 5,317
--------
Net assets................... $113,898
========
Accumulation units (Note 8)
Number of units:
Policyowners.................. 102,117
MML Bay State Life
Insurance Company............ 5,000
--------
Total units:.................. 107,117
========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1995.............. $1.06
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
MML Bay State Variable Life Separate Account 1 - Variable Life Select
STATEMENT OF OPERATIONS
For the Period July 24, 1995 (Date of Commencement of Operations)
Through December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global
Equity Market Bond Blend Appreciation Growth Securities
Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends (Note 3B)............. $ 138,669 $ 5,021 $ 1,745 $ 36,940 $ -- $ -- $ --
Expenses
Mortality and expense risk
fee (Note 4)................... 2,656 524 77 864 482 413 359
--------- -------- --------- -------- -------- -------- ---------
Net investment income
(loss) (Note 3C)............... 136,013 4,497 1,668 36,076 (482) (413) (359)
--------- -------- --------- -------- -------- -------- ---------
Net realized and unrealized gain
(loss) on investments
Net realized gain on
investments
(Notes 3B, 3C and 6)........... 853 -- 335 818 577 382 22
Change in net unrealized
appreciation/depreciation of
investments.................... (20,383) -- 463 (5,013) 35,508 12,442 937
--------- -------- --------- -------- -------- -------- ---------
Net gain (loss) on
investments.................... (19,530) -- 798 (4,195) 36,085 12,824 959
--------- -------- --------- -------- -------- -------- ---------
Net increase in net assets
resulting from operations...... $ 116,483 $ 4,497 $ 2,466 $ 31,881 $ 35,603 $ 12,411 $ 600
========= ======== ========= ======== ======== ======== =========
<CAPTION>
Oppenheimer
Strategic
Bond
Division
----------
<S> <C>
Investment Income
Dividends (Note 3B)............. $ 2,189
Expenses
Mortality and expense risk
fee (Note 4)................... 80
----------
Net investment income
(loss) (Note 3C)............... 2,109
----------
Net realized and unrealized gain
(loss) on investments
Net realized gain on
investments
(Notes 3B, 3C and 6)........... 156
Change in net unrealized
appreciation/depreciation
of investments................. 508
----------
Net gain (loss) on
investments.................... 664
----------
Net increase in net assets
resulting from operations...... $ 2,773
==========
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
MML Bay State Variable Life Separate Account I - Variable Life Select
STATEMENT OF CHANGES IN NET ASSETS
For the Period July 24, 1995 (Date of Commencement of Operations)
Through December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global
Equity Market Bond Blend Appreciation Growth Securities
Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)........................ $ 136,013 $ 4,497 $ 1,668 $ 36,076 $ (482) $ (413) $ (359)
Net realized gain on
investments................... 853 -- 335 818 577 382 22
Change in net unrealized
appreciation/depreciation of
investments................... (20,383) -- 463 (5,013) 35,508 12,442 937
---------- -------- -------- ---------- -------- -------- --------
Net increase in net
assets resulting
from operations............... 116,483 4,497 2,466 31,881 35,603 12,411 600
----------- -------- -------- ---------- -------- -------- --------
Capital transactions:
(Note 8)
Transfer of net premium........ 3,719,720 653,591 95,661 1,212,040 659,113 441,054 477,873
Transfer from MML Bay
State Life Insurance Company.. 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Transfer due to death
benefits...................... (157) -- -- -- -- -- --
Transfer due to
reimbursement (payment)
of accumulation unit value
fluctuation.................. 13,659 57 194 1,040 730 2,930 (990)
Withdrawal due to charges
for administrative
and insurance costs........... (423,556) (37,246) (8,402) (111,747) (73,638) (41,080) (54,902)
Divisional transfers............ 317 (59,500) -- 41,823 6,901 2,775 9,684
----------- -------- -------- ---------- -------- -------- --------
Net increase in net
assets resulting
from capital transactions..... 3,314,983 561,902 92,453 1,148,156 598,106 410,679 436,665
----------- -------- -------- ---------- -------- -------- --------
Total increase.................. 3,431,466 566,399 94,919 1,180,037 633,709 423,090 437,265
NET ASSETS, at beginning
of the period.................. -- -- -- -- -- -- --
----------- -------- -------- ---------- -------- -------- --------
NET ASSETS, at end of the
year........................... $3,431,466 $566,399 $94,919 $1,180,037 $633,709 $423,090 $437,265
=========== ========= ========= =========== ========= ========= =========
<CAPTION>
Oppenheimer
Strategic
Bond
Division
----------
<S> <C>
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)........................ $ 2,109
Net realized gain on
investments................... 156
Change in net unrealized
appreciation/depreciation of
investments................... 508
---------
Net increase in net
assets resulting
from operations............... 2,773
---------
Capital transactions:
(Note 8)
Transfer of net premium........ 123,076
Transfer from MML Bay
State Life Insurance Company.. 5,000
Transfer due to death
benefits...................... --
Transfer due to
reimbursement (payment)
of accumulation unit value
fluctuation................... 98
Withdrawal due to charges
for administrative
and insurance costs........... (15,049)
Divisional transfers............ (2,000)
---------
Net increase in net
assets resulting
from capital transactions..... 111,125
---------
Total increase.................. 113,898
NET ASSETS, at beginning
of the period.................. --
---------
NET ASSETS, at end of the
year........................... $113,898
=========
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
MML Bay State Variable Life Separate Account I - Variable Life Select
Notes To Financial Statements
1. HISTORY
MML Bay State Variable Life Separate Account I ("Separate Account I") is a
separate investment account established on June 9, 1982 by MML Bay State
Life Insurance Company ("MML Bay State") in accordance with the provisions
of Chapter 376 of the Missouri statutes. MML Bay State is a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual").
MML Bay State maintains three segments within Separate Account I. The
initial segment ("Variable Life Segment") is used exclusively for MML Bay
State's limited payment variable whole life insurance policy.
On August 4, 1988, MML Bay State established a second segment ("Variable
Life Plus Segment") within Separate Account I to be used exclusively for
MML Bay State's flexible premium variable whole life insurance policy.
On July 24, 1995, MML Bay State established a third segment ("Variable Life
Select Segment") within Separate Account I to be used exclusively for MML
Bay State's flexible premium variable whole life insurance policy.
The Separate Account 1 operates as a registered unit investment trust
pursuant to the Investment Company Act of 1940 and the rules promulgated
thereunder. MML Bay State paid $40,000 to the Variable Life Select Segment
on July 24, 1995 to provide initial capital: 7,656 shares were purchased in
the two management investment companies described in Note 2 supporting the
eight divisions of the Variable Life Select Segment.
2. INVESTMENT OF THE VARIABLE LIFE SELECT SEGMENT'S ASSETS
The Variable Life Select Segment maintains eight divisions. The MML Equity
Division invests in shares of MML Equity Fund, the MML Money Market Division
invests in shares of MML Money Market Fund, the MML Managed Bond Division
invests in shares of MML Managed Bond Fund and the MML Blend Division
invests in shares of MML Blend Fund. The Oppenheimer Capital Appreciation
Division invests in shares of Oppenheimer Capital Appreciation Fund, the
Oppenheimer Growth Division invests in shares of Oppenheimer Growth Fund,
the Oppenheimer Global Securities Division invests in shares of Oppenheimer
Global Securities Fund and the Oppenheimer Strategic Bond Division invests
in shares of Oppenheimer Strategic Bond Fund.
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend
Fund are the four series of MML Series Investment Fund (the "MML Trust").
The MML Trust is a no-load, registered, open-end, diversified management
investment company for which MassMutual acts as investment manager. Concert
Capital Management, Inc. ("Concert Capital"), a wholly-owned subsidiary of
DLB Acquisition Corporation, which is a controlled subsidiary of MassMutual,
serves as investment sub-advisor to the MML Equity Fund and the Equity
Sector of the MML Blend Fund.
Oppenheimer Capital Appreciation Fund, Oppenheimer Growth Fund, Oppenheimer
Global Securities Fund and Oppenheimer Strategic Bond Fund are part of the
Oppenheimer Variable Account Funds (the "Oppenheimer Trust"). The
Oppenheimer Trust is a registered, open-end, diversified management
investment company for which Oppenheimer Management Corporation ("OMC") acts
as investment advisor (effective January 5, 1996, the name of OMC was
changed to OppenheimerFunds, Inc.).
In addition to the eight divisions of the Variable Life Select Segment, a
policyowner may also allocate funds to the Guaranteed Principal Account,
which is part of MML Bay State's general account. Because of exemptive and
exclusionary provisions, interests in the Guaranteed Principal Account,
which is part of MML Bay State's general account, are not registered under
the Securities Act of 1933 and the general account is not registered as an
investment company under the Investment Company Act of 1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Variable Life Select Segment in preparation of the
financial statements in conformity with generally accepted accounting
principles.
37
<PAGE>
Notes To Financial Statements (Continued)
A. Investment Valuation
The investments in the MML Trust and the Oppenheimer Trust are each stated
at market value which is the net asset value of each of the respective
underlying funds.
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the ex-dividend
date.
C. Federal Income Taxes
MML Bay State is taxed under federal law as a life insurance company under
the provisions of the 1986 Internal Revenue Code, as amended. The Variable
Life Select Segment is part of MML Bay State's total operation and is not
taxed separately. The Variable Life Select Segment will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains of the Variable Life Select Segment credited to
the policies. Accordingly, MML Bay State does not intend to make any charge
to the Variable Life Select Segment's divisions to provide for company
income taxes. MML Bay State may, however, make such a charge in the future
if an unanticipated change of current law results in a company tax liability
attributable to the Variable Life Select Segment.
D. Policy Loan
When a policy loan is made, the Variable Life Select Segment transfers the
amount of the loan to MML Bay State, thereby decreasing both the assets and
the reserves of the Variable Life Select Segment by an equal amount. The
interest rate charged on any loan is 6% per year or the policyowner may
select an adjustable loan rate, in all jurisdictions except Arkansas, at the
time of application. All loan repayments are allocated to the Guaranteed
Principal Account.
The policyowner earns interest at an annual rate determined by MML Bay
State, which will not be less than 3%, on any loaned amount.
E. 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.
4. CHARGES
MML Bay State charges the Variable Life Select Segment divisions for the
mortality and expense risks it assumes. The charge is made daily at an
effective annual rate of 0.55% of the value of each division's net assets.
MML Bay State makes certain deductions from the annual premium before
amounts are allocated to the Variable Life Select Segment and the Guaranteed
Principal Account. The deductions are for sales charges and state premium
taxes. No additional deductions are taken when money is transferred from the
Guaranteed Principal Account to the Variable Life Select Segment. MML Bay
State also makes certain charges for the cost of insurance and
administrative costs.
5. SALES AGREEMENTS
MML Investors Services, Inc. ("MMLISI"), a wholly-owned subsidiary of
MassMutual, acts as principal underwriter (as defined in the Investment
Company Act of 1940, as amended) of the policies pursuant to an agreement
among MMLISI, MML Bay State and Separate Account I. Registered
representatives of MMLISI, authorized as variable life insurance agents
under applicable state insurance laws, sell the policies.
Under the sales agreement among MMLISI, MML Bay State and Separate Account
I, agents receive commissions and service fees from MMLISI for selling and
servicing the policies. MassMutual reimburses MMLISI for such compensation
and for other expenses incurred in marketing and selling the policies.
38
<PAGE>
Notes To Financial Statements (Continued)
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
For the Period July 24, 1995 MML MML Oppenheimer Oppenheimer Oppenheimer
(Date of Commencement of MML Money Managed MML Capital Oppenheimer Global Strategic
Operations) Equity Market Bond Blend Appreciation Growth Securities Bond
Through December 31, 1995 Division Division Division Division Division Division Division Division
- --------------------------- ---------- -------- --------- ---------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of purchases.......... $3,688,199 $826,560 $127,522 $1,270,262 $700,467 $439,144 $488,744 $119,297
Proceeds from sales........ 13,637 253,107 26,924 74,356 8,610 8,093 10,378 6,252
Average monthly value of
securities............... 1,243,497 252,243 36,431 403,050 233,098 188,394 168,485 38,199
</TABLE>
7. NET INVESTMENT RETURN
The following table shows the net investment return for each Division in the
Variable Life Select Segment:
<TABLE>
<CAPTION>
For the Period July 24, 1995 MML MML Oppenheimer Oppenheimer Oppenheimer
(Date of Commencement of MML Money Managed MML Capital Oppenheimer Global Strategic
Operations) Equity Market Bond Blend Appreciation Growth Securities Bond
Through December 31, 1995 Division Division Division Division Division Division Division Division
- ------------------------- --------- -------- --------- --------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1995......... 9.84% 1.81% 7.03% 8.19% 16.64% 6.83% .38% 7.28%
</TABLE>
The net investment return for each Division of the Variable Life Select Segment
is computed using the net increase in net assets resulting from operations as
compared to the average monthly net assets. The net investment return figures
shown above do not reflect expenses related to insurance products. Inclusion of
such expenses would reduce the net investment return figures for all periods
shown.
Note: The amounts shown are not annualized.
8. NET INCREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
For the Period July 24, 1995 MML MML Oppenheimer Oppenheimer Oppenheimer
(Date of Commencement of MML Money Managed MML Capital Oppenheimer Global Strategic
Operations) Equity Market Bond Blend Appreciation Growth Securities Bond
Through December 31, 1995 Division Division Division Division Division Division Division Division
- -------------------------- ---------- -------- --------- -------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units transferred from MML
Bay State for initial
capital.................... 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Units purchased............. 3,474,603 643,486 91,227 1,148,237 608,905 411,919 488,685 118,112
Units withdrawn............. (391,348) (35,333) (7,815) (105,144) (66,529) (37,282) (55,393) (14,087)
Units transferred between
divisions.................. 448 (58,640) --- 39,651 6,540 2,517 9,989 (1,908)
--------- ------- ------ --------- ------- ------- ------- -------
Net increase................ 3,088,703 554,513 88,412 1,087,744 553,916 382,154 448,281 107,117
Units, at beginning of the
period..................... --- --- --- --- --- --- --- ---
--------- ------- ------ --------- ------- ------- ------- -------
Units, at end of the year... 3,088,703 554,513 88,412 1,087,744 553,916 382,154 448,281 107,117
========= ======== ====== ========= ======= ======= ======= =======
</TABLE>
39
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MML BAY STATE VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity of the
MML Bay State's Variable Life Select Segment. The combined net assets as of
December 31, 1995 for the Separate Account I, which includes the Variable Life,
the Variable Life Plus and Variable Life Select Segments, are as follows:
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global Strategic
Equity Market Bond Blend Appreciation Growth Securities Bond
Division Division Division Division Division Division Division Division
------------ ---------- ----------- ----------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Assets........... $101,184,837 $3,022,578 $5,010,558 $50,607,787 $727,942 $443,875 $479,325 $113,898
Total Liabilities...... 492,473 18,765 19,831 104,949 94,233 20,785 42,060 ---
------------ ---------- ----------- ----------- ---------- ---------- --------- -----------
Net Assets............. $100,692,364 $3,003,813 $4,990,727 $50,502,838 $633,709 $423,090 $437,265 $113,898
============ ========== =========== =========== ========== ========== ========= ===========
Net Assets:
For variable life
insurance policies.... $ 99,643,482 $2,791,341 $4,817,754 $49,683,462 $627,989 $417,554 $432,388 $108,581
Retained in Variable
Life Separate Account 1
by MML Bay State Life
Insurance Company..... 1,048,882 212,472 172,973 819,376 5,720 5,536 4,877 5,317
---------- --------- ----------- ----------- ---------- ---------- --------- ----------
Net Assets............. $100,692,364 $3,003,813 $4,990,727 $50,502,838 $633,709 $423,090 $437,265 $113,898
============ ========== =========== =========== ========== ========== ========= ==========
</TABLE>
Offered through MML Investors Services, Inc., Springfield, Massachusetts and
Oppenheimer Funds Distributor, Inc., Denver, Colorado.
40
<PAGE>
Report Of Independent Accountants
To the Board of Directors
MML Bay State Life Insurance Company
We have audited the statement of financial position of MML Bay State Life
Insurance Company as of December 31, 1995 and 1994, and the related statements
of operations, changes in shareholder's equity, and cash flows for each of the
years in the three year period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MML Bay State Life Insurance
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the years in the three year period ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in Notes 2 and 3 to the financial statements, during 1995 and 1994
the Company recorded prior year adjustments through the Statement of Changes in
Shareholder's Equity.
As discussed in Note 7 to the financial statements, the parent company of MML
Bay State Life Insurance Company, Massachusetts Mutual Life Insurance Company,
has entered into a definitive agreement to merge with Connecticut Mutual Life
Insurance Company.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of selected financial data
on page 51 is not a required part of the basic financial statements but is
supplementary information required by the National Association of Insurance
Commissioners. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 23, 1996
41
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
------ -----
(In Thousands)
<S> <C> <C>
Assets:
Bonds............................................. $ 41,260.6 $ 52,336.9
Policy loans...................................... 6,444.9 3,918.0
Cash and short-term investments................... 490.5 950.0
Investment and insurance amounts
receivable....................................... 1,268.0 1,245.3
Receivable from separate account.................. 29,015.6 21,108.0
Federal income tax receivable..................... 215.5 0.0
Other assets...................................... 109.8 80.1
Separate account assets........................... 265,188.5 151,057.9
---------- ----------
$343,993.4 230,696.2
========== ==========
Liabilities:
Policyholders' reserves and funds................. $ 19,095.9 $ 11,826.7
Policy claims and other benefits.................. 1,507.6 166.0
Payable to parent................................. 3,165.2 4,368.2
Federal income taxes.............................. 0.0 803.2
Asset valuation reserve........................... 153.8 106.8
Other liabilities................................. 6,894.2 8,369.6
Separate account reserves and
liabilities...................................... 262,833.9 149,092.7
---------- ----------
293,650.6 174,733.2
---------- ----------
Shareholder's equity:
Common stock, $200 par value
25,000 shares authorized
10,001 shares issued and outstanding............. 2,000.2 2,000.2
Paid-in capital and contributed surplus........... 46,736.9 46,736.9
Surplus........................................... 1,605.7 7,225.9
---------- ----------
50,342.8 55,963.0
---------- ----------
$343,993.4 $230,696.2
========== ==========
</TABLE>
See notes to financial statements.
42
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income......................... $ 92,732.8 $54,481.4 $ 43,469.2
Net investment and other income........ 4,305.8 3,531.8 2,898.8
Expense allowance on reinsurance ceded. 526.5 132.4 3,776.2
---------- --------- ----------
97,565.1 58,145.6 50,144.2
---------- --------- ----------
Benefits and expenses:
Policy benefits and payments........... 5,691.0 2,939.9 2,178.5
Addition to policyholders' reserves,
funds and separate accounts........... 66,974.4 30,422.1 27,192.4
Operating expenses..................... 11,222.9 11,960.6 8,956.8
Commissions............................ 15,072.4 10,747.5 8,264.8
State taxes, licenses and fees......... 2,546.8 1,405.1 1,603.4
---------- --------- ----------
101,507.5 57,475.2 48,195.9
---------- --------- ----------
Net gain (loss) from operations before
federal income taxes.................. (3,942.4) 670.4 1,948.3
Federal income taxes (benefit)......... 632.8 (934.8) 1,283.1
---------- --------- ----------
Net gain (loss) from operations........ (4,575.2) 1,605.2 665.2
Net realized capital loss.............. (42.8) (24.4) (19.3)
---------- --------- ----------
Net income (loss)...................... $ (4,618.0) $ 1,580.8 $ 645.9
========== ========= ==========
</TABLE>
See notes to financial statements.
43
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year... $55,963.0 $ 33,396.9 $32,774.5
--------- ---------- ---------
Increases (decreases) due to:
Net income (loss)........................ (4,618.0) 1,580.8 645.9
Additions to asset valuation reserve..... (47.0) (43.3) (29.4)
Change in separate account surplus....... 344.2 108.6 5.9
Surplus contribution..................... 0.0 25,000.0 0.0
Prior year adjustment.................... (1,299.4) (4,101.5) 0.0
Change in accounting for
mortgage-backed securities.............. 0.0 21.5 0.0
--------- ---------- ---------
(5,620.2) 22,566.1 622.4
--------- ---------- ---------
Shareholder's equity, end of year......... $50,342.8 $ 55,963.0 $33,396.9
========= ========== =========
</TABLE>
See notes to financial statements.
44
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss)........................ $(4,618.0) $ 1,580.8 $ 645.9
Additions to policyholders' reserves,
funds and
Net of transfers to separate accounts... 8,610.8 2,064.6 2,001.9
Net realized capital (gain) loss........ 42.8 24.4 19.3
Change in receivable from separate
accounts............................... (7,907.6) (6,456.2) (6,148.2)
Change in receivable (payable) from
parent................................. (1,203.0) 5,145.0 1,352.4
Change in federal taxes receivable
(payable).............................. (1,018.7) (910.3) (1,335.4)
Other changes............................ (2,543.9) (1,178.9) 1,898.4
--------- ---------- ---------
Net cash provided by (used in)
operating activities.................... (8,637.6) 269.4 (1,565.7)
--------- ---------- ---------
Investing activities:
Loans and purchases of investments...... 28,440.1 43,275.8 20,020.2
Sales or maturities of investments
and receipts from repayments of loans.. 36,618.2 18,455.4 20,711.1
--------- ---------- ---------
Net cash provided by (used in)
investing activities.................... 8,178.1 (24,820.4) 690.9
--------- ---------- ---------
Financing activity:
Surplus contribution................... 0.0 25,000.0 0.0
--------- ---------- ---------
Net cash provided by financing
activities.............................. 0.0 25,000.0 0.0
--------- ---------- ---------
Increase (decrease) in cash and
short-term investments.................. (459.5) 449.0 (874.8)
Cash and short-term investments,
beginning of year....................... 950.0 501.0 1,375.8
--------- ---------- ---------
Cash and short-term investments, end
of year................................. $ 490.5 $ 950.0 $ 501.0
========= ========== =========
</TABLE>
See notes to financial statements.
45
<PAGE>
Notes To Financial Statements
1. OPERATIONS
MML Bay State Life Insurance Company ("the Company") is a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"). The
Company's insurance operation consists primarily of flexible and limited premium
variable whole life insurance and variable annuities distributed through career
agents.
2. SUMMARY OF ACCOUNTING PRACTICES
The accompanying financial statements, except as to form, have been prepared in
conformity with the practices of the National Association of Insurance
Commissioners and the accounting practices prescribed or permitted by the
Division of Insurance of the State of Missouri which are currently considered
generally accepted accounting principles for stock life insurance subsidiaries
of a mutual life insurance company.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices, issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards No. 120, Accounting
and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises
for Certain Long-Duration Participating Contracts. The American Institute of
Certified Public Accountants, which also has no role in establishing regulatory
accounting practices, issued Statement of Position 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. These pronouncements
will require mutual life insurance companies to modify their financial
statements in order to continue to be in accordance with generally accepted
accounting principles, effective for 1996 financial statements. The manner in
which policy reserves, new business acquisition costs, asset valuations and
related tax effects are recorded will change. Management has not determined the
impact of such changes on the Company's Statement of Operations, but believes
implementation of these pronouncements will cause shareholders' equity to
increase.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities at the date of the
financial statements. Management must also make estimates and assumptions that
affect the amounts of revenues and expenses during the reporting period.
Future events, including the levels of mortality, morbidity, interest rates and
asset valuations, could cause actual results to differ from the estimates used
in these financial statements.
The following is a description of the Company's current principal accounting
policies and practices.
a. Investments
Bonds are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at
amortized cost.
As promulgated by the National Association of Insurance Commissioners, the
Company adopted the retrospective method of accounting for amortization of
premium and discount on mortgage backed securities as of December 31, 1994.
Prepayment assumptions for mortgage backed securities were obtained from a
prepayment model, which factors in mortgage type, seasoning, coupon, current
interest rate and the economic environment. The effect of this change, $21.5
thousand, was recorded as of December 31, 1994 as an increase to shareholders'
equity on the Statement of Financial Position and had no material effect on 1995
net income. Through December 31, 1994, premium and discount on bonds were
amortized into investment income over the stated lives of the securities.
Policy loans are carried at the outstanding loan balance less amounts unsecured
by the cash surrender value of the policy. Short-term investments are stated at
amortized cost, which approximates fair value.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve stabilizes the shareholders' equity against declines in the value of
bonds.
The Interest Maintenance Reserve captures after-tax realized capital gains and
losses which result from changes in the overall level of interest rates for all
types of fixed income investments and amortizes these capital gains and losses
into income using the grouped method over the remaining life of the investment
sold or over the remaining life of the underlying asset. Net realized after tax
capital gains of $250.2 thousand in 1995 and net realized after tax capital
losses of $7.0 thousand in 1994 and net realized after-tax capital gains of
$53.5 thousand in 1993 were charged to the Interest Maintenance Reserve.
Amortization of the Interest Maintenance Reserve into net investment income
amounted to $42.1 thousand in 1995, $86.9 thousand in 1994 and $99.8 thousand in
1993. The Interest Maintenance Reserve is included in other liabilities on the
Statement of Financial Position.
Realized capital gains and losses, less taxes, not includable in the Interest
Maintenance Reserve, are recognized in net income. Realized capital gains and
losses are determined using the specific identification method. Unrealized
capital gains and losses are included in shareholders' equity.
46
<PAGE>
Notes To Financial Statements (Continued)
b. Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of variable life insurance
policyholders. Assets, consisting of holdings in an open-end series investment
fund affiliated with MassMutual, bonds, common stocks, and short-term
investments, are reported at fair value. Separate account reserves and
liabilities are determined based upon the performance of the related assets
within the separate account. Premiums, benefits and expenses of the separate
accounts are reported on the Statement of Operations. The Company receives
compensation for providing administrative services to the separate account and
for assuming mortality and expense risks in connection with the policies. The
Company had $2,354.6 thousand and $1,965.3 thousand of its assets invested in
the separate account as of December 31, 1995 and 1994, respectively.
The net transfers to separate accounts of $59,792.6 thousand, $28,141.7 thousand
and $25,216.2 thousand in 1995, 1994 and 1993, respectively, are included in
addition to policyholders' reserves, funds and separate accounts.
c. Policyholders' Reserves
Policyholders' reserves for life contracts were developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the 1958 and 1980
Commissioners' Standard Ordinary mortality tables with assumed interest rates
ranging from 3.5 to 5.5 percent. Reserves for individual annuities are based on
accepted actuarial methods, principally at interest rates ranging from 5.5 to
6.0 percent.
During 1994, actuarial guidelines became effective, requiring additional
reserves for immediate payment of claims. While the Company's aggregate
reserves were sufficient, the reserves for certain products were not recorded.
The effect of correctly recording these reserves was $1,299.4 thousand at
December 31, 1994 and was recorded as an adjustment to shareholders' equity
during 1995.
d. Premium and Related Expense Recognition
Premium revenue is recognized annually on the anniversary date of the policy.
Commissions and other costs related to issuance of new policies, maintenance and
settlement costs are charged to current operations.
e. Cash and Short-term Investments
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid short-term investments purchased with a maturity of three months or less
to be cash equivalents.
3. RELATED PARTY TRANSACTIONS
Investment and administrative services are provided to the Company pursuant to a
management services agreement with MassMutual. Service fees are accrued based
upon estimated costs and are billed the following period, when actual costs are
available. Fees incurred under the terms of this agreement were $6,588.1
thousand, $7,762.9 thousand and $5,941.6 thousand in 1995, 1994 and 1993,
respectively.
The Company had reinsurance agreements with MassMutual in which MassMutual
assumed specific plans of insurance on a coinsurance basis and on a yearly
renewal term basis. The coinsurance agreement was terminated in 1995. A
termination fee of $6,200.0 thousand was recorded as an expense and paid to
MassMutual for the rights to retain future fees and charges on the reinsurance
business. While the agreement was in effect, the Company ceded premiums
amounting to $29,597.0 thousand, $26,115.1 thousand and $21,862.4 thousand in
1995, 1994 and 1993, respectively. Additionally, the Company ceded
administrative and insurance charges of $4,310.3 thousand in 1995, $4,208.3
thousand in 1994 and $1,845.0 thousand in 1993 for policies issued in those
years. The Company received $4,836.8 thousand, $8,434.7 thousand and $5,621.2
thousand in 1995, 1994 and 1993, respectively, as commissions and an expense
allowance. Reserves on all business ceded amounted to $8,027.9 thousand in
1995, immediately preceding the termination, which reduced policyholders'
reserves and funds. The Company's separate accounts retained the assets
applicable to variable life reserves of the policies reinsured under the
agreement with MassMutual. Premium income and the expense allowance on
reinsurance ceded differ from annual statement presentation.
A provision in the Company's coinsurance agreement with MassMutual required
surrender charge offsets to be included in the ceding provisions of the
reinsurance contract with MassMutual. This surrender charge offset, inherent in
the reserve calculations of the separate account liabilities, is considered
funds which would be due to the general account of MassMutual if the life
policies were surrendered. During 1993, this provision was incorrectly excluded
from amounts recorded for the contract. The effect of correctly recording this
provision was $4,101.5 thousand at December 31, 1993 and was recorded as an
adjustment to shareholders' equity during 1994. The effects of this adjustment
in 1994 were included in the expense allowance on reinsurance ceded and all
related tax benefits were recorded in 1995 and 1994 on the Statement of
Operations in accordance with the accounting practices of the National
Association of Insurance Commissioners.
During 1994, MassMutual contributed additional paid in capital of $25,000.0
thousand to the Company.
47
<PAGE>
Notes To Financial Statements (Continued)
4. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best estimate of
its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of equity tax, using most current information, and
other miscellaneous temporary differences, such as reserves and acquisition
costs, resulted in an effective tax rate which is other than the statutory tax
rate.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1989, and is currently examining the years 1990 through
1992. The Company believes any adjustments resulting from such examinations
will not materially affect its financial statements.
The Company plans to file its 1995 federal income tax return on a consolidated
basis with MassMutual and MassMutual's other life and non-life affiliates. The
Company and its life and non-life affiliates are subject to a written tax
allocation agreement which allocates tax liability in a manner permitted under
Treasury regulations. Generally, the agreement provides that loss members shall
be compensated for the use of their losses and credits by other members.
The Company made federal tax payments of $1,892.0 thousand during 1995 and
$2,696.5 thousand during 1993. No federal tax payments were made during 1994.
At December 31, 1995 and 1994, the Company established a recoverable for
federal income taxes of $215.5 thousand and a liability of $803.2 thousand,
respectively.
5. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment.
a. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1995
---------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and
Obligations of U.S.
Government Corporations and
Agencies $ 7,929.3 $ 107.8 $ 1.0 $ 8,036.1
Mortgage-backed securities 11,979.4 114.9 35.9 12,058.4
Industrial securities 21,351.9 684.2 1.7 22,034.4
--------- -------- -------- ---------
TOTAL $41,260.6 $ 906.9 $ 38.6 $42,128.9
<CAPTION>
December 31, 1994
---------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and
Obligations of U.S.
Government Corporations and
Agencies $36,162.6 $ 1.7 $ 974.3 $35,190.0
Debt Securities issued by Foreign
Governments 494.4 0.0 68.6 425.8
Industrial securities 15,179.9 0.0 439.9 14,740.0
Utilities 500.0 0.0 4.7 495.3
--------- -------- -------- ---------
TOTAL $52,336.9 $ 1.7 $1,487.5 $50,851.1
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1995 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
48
<PAGE>
Notes To Financial Statements (Continued)
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 2,065.0 $ 2,076.4
Due after one year through five years 9,637.9 10,010.1
Due after five years through ten years 7,140.6 7,301.7
Due after ten years 7,000.0 7,216.3
--------- ---------
25,843.5 26,604.5
Mortgage-backed securities, including securities
guaranteed by the U.S. Government 15,417.1 15,524.4
--------- ---------
TOTAL $41,260.6 $42,128.9
</TABLE>
Proceeds from sales of investments in bonds were $36,584.5 thousand during 1995,
$17,742.4 thousand during 1994 and $20,374.8 thousand during 1993. Gross
capital gains of $535.0 thousand in 1995, $44.5 thousand in 1994 and $154.5
thousand in 1993 and gross capital losses of $87.0 thousand in 1995, $52.3
thousand in 1994 and $42.5 thousand in 1993 were realized on those sales, as
portion of which were included in the Interest Maintenance Reserve. The
estimated fair value of non-publicly traded bonds is determined by the Company
using a pricing matrix.
b. Other
It is not practicable to determine the fair value of policy loans which do not
have a stated maturity.
6. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1995 are illustrated below:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C> <C>
Total policyholders' reserves and funds and separate account liabilities $281,929.8
Policy loans (6,444.9)
----------
Subject to discretionary withdrawal $275,484.9
----------
Total invested assets, including separate investment accounts $313,384.4
Policy loans and other invested assets (6,444.9)
----------
Readily marketable investments $306,939.5
----------
</TABLE>
7. SUBSEQUENT EVENT
The Company's parent, MassMutual, entered into a definitive agreement to merge
with Connecticut Mutual Life Insurance Company. This merger has been approved
by the Boards of Directors and policyholders of MassMutual and Connecticut
Mutual Life Insurance Company, as well as by the insurance regulatory
authorities in Massachusetts and Connecticut. This merger will be effective
March 1, 1996.
49
<PAGE>
Notes To Financial Statements (Continued)
8. AFFILIATED COMPANIES
The relationship of the Company, its parent and affiliated companies as of
December 31, 1995 is illustrated below.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries
- ------------
MML Bay State Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc.
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
Subsidiaries of MassMutual Holding Company
------------------------------------------
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
MML Investors Services, Inc.
MML Real Estate Corporation (liquidated in 1995)
MML Realty Management Corporation
MML Reinsurance (Bermuda) Ltd.
Mass Seguros De Vida S. A. (Chile)
MassLife Seguros De Vida S. A. (Argentina)
MassMutual/Carlson CBO N.V.
MassMutual Corporate Value Limited
MassMutual International (Bermuda) Limited
Oppenheimer Acquisition Corporation
Westheimer 335 Suites, Inc.
Subsidiaries of DLB Acquisition Corporation
-------------------------------------------
Concert Capital Management, Inc.
Subsidiaries of MassMutual Corporate Value Limited
--------------------------------------------------
MassMutual Corporate Value Partners Limited
Subsidiaries of MassMutual Holding Company Two, Inc.
----------------------------------------------------
MassMutual Holding Company Two MSC, Inc.
Subsidiaries of MassMutual Holding Company Two MSC, Inc.
--------------------------------------------------------
Benefit Panel Services, Inc.
MML Pension Insurance Company
MassMutual of Ireland, Limited
National Capital Health Plan, Inc.
National Capital Preferred Provider Organization
Sloans Lake Management Corporation
Affiliates
----------
MassMutual Corporate Investors
MassMutual Participation Investors
50
<PAGE>
MML Bay State Life Insurance Company
Annual Statement for the Year Ended December 31, 1995
Schedule of Selected Financial Data
<TABLE>
<S> <C>
Investment Income Earned:
Government bonds $ 2,025,039
Other bonds (unaffiliated) 1,203,885
Premium notes, policy loans and liens 308,753
Short-term investments 100,168
Aggregate write-ins for investment income 4,337
-----------
Gross investment income $ 3,642,182
===========
Bonds and short-term investments by class and maturity:
Bonds and short-term investments by maturity - statement value:
Due within one year $10,974,222
Over 1 year through 5 years 16,440,536
Over 5 years through 10 years 10,158,347
Over 10 years through 20 years 3,987,412
-----------
Total by maturity $41,560,517
===========
Bonds and short-term investments by class - statement value:
Class 1 $37,908,001
Class 2 3,652,516
-----------
Total by class $41,560,517
===========
Total bonds and short-term investments publicly traded $40,560,517
===========
Total bonds and short-term investments privately placed $ 1,000,000
===========
Short-term investments - book value $ 299,938
===========
Cash on deposit $ 190,522
===========
Life insurance in force (in thousands):
Ordinary $ 6,553,122
===========
Group Life $ 383,725
===========
Life insurance policies with disability provisions in force (in thousands):
Ordinary $ 2,535,574
===========
Supplementary contracts in force:
Ordinary - not involving life contingencies:
Amount on deposit $ 67,712
===========
</TABLE>
51
<PAGE>
Appendix A
Illustration Of Death Benefits, Cash Surrender
Values And Accumulated Premiums
The following tables illustrate the way in which a Policy operates. They show
how the Death Benefit and Cash Surrender Value could vary over an extended
period of time, assuming the Funds experience hypothetical gross 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 annual premium of $1,200 for a nonsmoker male
and female age 35 both issued standard based on full underwriting. Separate
tables are shown for the current and guaranteed schedule of charges. These
tables will assist in comparison of Death Benefits and Cash Surrender Values for
the Policy with those under other variable life policies which may be issued by
MML Bay State or other companies.
1. The illustration on page 53 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000 using Death Benefit Option 1. The
premium payment is $1,200 using a current schedule of charges.
2. The illustration on page 54 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000 using Death Benefit Option 1. The
premium payment is $1,200 using guaranteed schedules of mortality and
expense charges and current fund level charges.
3. The illustration on page 55 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000 using Death Benefit Option 2. The
premium payment is $1,200 using a current schedule of charges.
4. The illustration on page 56 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000 using Death Benefit Option 2. The
premium payment is $1,200 using guaranteed schedules of mortality and
expense charges and current fund level charges.
5. The illustration on page 57 is for a Policy issued to a female nonsmoker
age 35 for a Selected Face Amount of $100,000 using Death Benefit Option 1.
The premium payment is $1,200 using a current schedule of charges.
6. The illustration on page 58 is for a Policy issued to a female nonsmoker
age 35 for a Selected Face Amount of $100,000 using Death Benefit Option 1.
The premium payment is $1,200 using guaranteed schedules of mortality and
expense charges and current fund level charges.
7. The illustration on page 59 is for a Policy issued to a female nonsmoker
age 35 for a Selected Face Amount of $100,000 using Death Benefit Option 2.
The premium payment is $1,200 using a current schedule of charges.
8. The illustration on page 60 is for a Policy issued to a female nonsmoker
age 35 for a Selected Face Amount of $100,000 using Death Benefit Option 2.
The premium payment is $1,200 using guaranteed schedules of mortality and
expense charges and current fund level charges.
The Death Benefits and Cash Surrender Values for a Policy would be different
from the amount shown if the rates of return averaged 0%, 6%, and 12% over a
period of years but varied above and below that average in individual Policy
Years. They would differ if any Policy loan were made during the period of time
illustrated. They would also be different depending upon the allocation of
investment value to each Division. They would also be different depending upon
the allocation of investment value to each Division, if the rates of return for
all the Funds averaged 0%, 6%, and 12 % but varied above or below that average
for particular Funds.
The Death Benefits and Cash Surrender Values should, in illustrations 1, 3, 5
and 7, reflect the following current charges:
1. Administrative Charges equal to $6.00 per Policy charge for nonqualified
policies.
2. Cost of Insurance Charge, based on the current rates being charged by the
Company for standard, fully underwritten risks.
3. Mortality and Expense Risk Charge, which is equal to .55% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
4. Fund level expenses of .65% on an annual basis, of the net assets value of
the Fund shares held by the Separate Account. These fund level expenses
represent the unweighted average of all fund expenses.
The Death Benefits and Cash Surrender Values show in illustrations 2, 4, 6 and 8
reflect the following guaranteed maximum charges as well as the current fund
level expenses.
1. Administrative Charges equal to $9.00 per Policy.
2. Cost of Insurance Charge based on 1980 CSO Mortality Table.
3. Mortality and Expense Risk Charge, which is equal to .90% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
Cash Surrender Values shown in the tables reflect the deduction of the
applicable Administrative Surrender Charge (during the first 15 Policy Years)
and the applicable Sales Load Surrender Charge (also during the first 15 Policy
Years.) Taking into account the current Mortality and Expense Risk Charge and
the Fund level expenses, the effect is that for gross annual rates of return of
0%, 6%, and 12%, the actual rate of return would be -1.192, 4.737 and 10.666%
respectively.
MassMutual has agreed to bear the expenses of the Funds (other than the
management fee, interest taxes, brokerage commissions and extraordinary
expenses) in excess of .11% of average daily net assets value of each MML Fund
through April 30, 1997.
Currently no charge is made against the Separate Account for federal income
taxes but the Company reserves the right to charge the Separate Account for
federal income taxes attributable to the Separate Account if such taxes are
imposed in the future.
The second column of each table shows the amount which would accumulate if an
amount equal to the annual premium were invested to earn interest after taxes of
5% per year, compounded annually.
The tables are based on the assumptions that the Policyowner has not requested
an increase or decrease in the Selected Face Amount, that no Policy loans have
been made, and no transaction charges have been incurred, and that the entire
Account Value under the Policy is allocated to the Funds.
52
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 1
$1,200 Annual Premium
Using Current Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $ 100,000 $ 100,000 $ 148.60 $ 209.73 $ 271.01
2 2,583 100,000 100,000 100,000 995.97 1,175.25 1,362.07
3 3,972 100,000 100,000 100,000 1,849.54 2,205.68 2,591.59
4 5,431 100,000 100,000 100,000 2,706.59 3,300.04 3,968.96
5 6,982 100,000 100,000 100,000 3,543.62 4,436.74 5,484.19
6 8,570 100,000 100,000 100,000 4,452.68 5,709.73 7,244.26
7 10,259 100,000 100,000 100,000 5,348.03 7,035.44 9,180.17
8 12,032 100,000 100,000 100,000 6,220.90 8,407.15 11,301.48
9 13,893 100,000 100,000 100,000 7,070.81 9,826.65 13,628.24
10 15,848 100,000 100,000 100,000 7,897.31 11,295.87 16,182.84
15 27,189 100,000 100,000 100,000 11,512.23 19,316.76 33,211.46
20 41,663 100,000 100,000 143,094.94 14,268.08 28,770.06 60,633.45
25 60,136 100,000 100,000 214,068.44 16,528.60 40,682.55 104,935.51
30 83,713 100,000 100,000 312,557.20 17,199.47 55,044.80 174,612.96
35 113,804 100,000 114,150.70 447,142.20 15,383.48 72,247.28 283,001.39
40 152,208 100,000 131,603.59 643,165.48 9,376.38 92,030.48 449,706.07
45 201,222 0 149,874.86 921,713.25 0 114,408.29 703,397.90
50 263,778 0 171,204.47 1,334,090.91 0 139,190.63 1,084,626.76
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 914.62 $ 975.75 $ 1,037.03
2 1,809.99 1,989.27 2,176.09
3 2,686.48 3,042.62 3,428.53
4 3,543.53 4,136.98 4,805.90
5 4,380.56 5,273.68 6,321.13
6 5,197.97 6,455.02 7,989.55
7 5,993.32 7,680.73 9,825.46
8 6,766.19 8,952.44 11,846.77
9 7,516.10 10,271.94 14,073.53
10 8,242.60 11,641.16 16,528.13
15 11,520.65 19,325.18 33,219.88
</TABLE>
For years following Policy Year 15, Account Value equals Cash Surrender Value
assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
53
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 1
$1,200 Annual Premium
Using Guaranteed Schedules of Mortality and Expense Charges as well as
Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $ 100,000 $ 100,000 $ 95.58 $ 154.94 $ 214.44
2 2,583 100,000 100,000 100,000 889.61 1,061.77 1,241.27
3 3,972 100,000 100,000 100,000 1,686.65 2,026.28 2,394.55
4 5,431 100,000 100,000 100,000 2,484.05 3,047.04 3,682.04
5 6,982 100,000 100,000 100,000 3,257.52 4,100.94 5,090.85
6 8,570 100,000 100,000 100,000 4,098.27 5,280.53 6,724.80
7 10,259 100,000 100,000 100,000 4,920.74 6,501.54 8,512.29
8 12,032 100,000 100,000 100,000 5,707.18 7,757.57 10,460.88
9 13,893 100,000 100,000 100,000 6,485.38 9,047.87 12,585.59
10 15,848 100,000 100,000 100,000 7,225.98 10,374.55 14,905.93
15 27,189 100,000 100,000 100,000 10,282.23 17,380.62 30,042.13
20 41,663 100,000 100,000 126,600.29 11,987.04 24,928.43 53,644.19
25 60,136 100,000 100,000 182,901.20 12,043.30 33,104.19 89,657.45
30 83,713 100,000 100,000 256,558.59 9,420.78 41,582.90 143,328.82
35 113,804 100,000 100,000 349,562.71 1,807.10 49,657.16 221,242.22
40 152,208 0 100,000 473,572.13 0.00 56,202.29 331,169.32
45 201,222 0 100,000 629,466.04 58,442.76 480,508.43
50 263,778 0 100,000 833,797.97 48,809.60 677,884.53
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 861.60 $ 920.96 $ 980.46
2 1,703.63 1,875.79 2,055.29
3 2,523.59 2,863.22 3,231.49
4 3,320.99 3,883.98 4,518.98
5 4,094.46 4,937.88 5,927.79
6 4,843.56 6,025.82 7,470.09
7 5,566.03 7,146.83 9,157.58
8 6,262.47 8,302.86 11,006.17
9 6,930.67 9,493.16 13,030.88
10 7,571.27 10,719.84 15,251.22
15 10,290.65 17,389.04 30,050.55
</TABLE>
For policy years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
54
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 2
$1,200 Annual Premium
Using Current Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,912.96 $100,974.00 $ 101,035.17 $ 146.94 $ 207.95 $ 269.15
2 2,583 101,805.12 101,983.91 102,170.22 991.10 1,169.89 1,356.20
3 3,972 102,676.77 103,031.46 103,415.82 1,839.83 2,194.52 2,578.88
4 5,431 103,527.05 104,117.30 104,782.61 2,690.11 3,280.36 3,945.67
5 6,982 104,355.29 105,242.29 106,282.62 3,518.35 4,405.35 5,445.68
6 8,570 105,161.84 106,408.38 107,929.95 4,416.55 5,663.09 7,184.66
7 10,259 105,943.89 107,614.32 109,737.11 5,298.60 6,969.03 9,091.82
8 12,032 106,700.64 108,860.94 111,720.11 6,155.35 8,315.65 11,174.82
9 13,893 107,431.56 110,149.22 113,896.65 6,986.27 9,703.93 13,451.36
10 15,848 108,135.89 111,480.07 116,286.33 7,790.60 11,134.78 15,941.04
15 27,189 111,247.70 118,823.09 132,292.22 11,239.28 18,814.67 32,283.80
20 41,663 113,729.67 127,552.49 158,246.32 13,729.67 27,552.49 58,246.32
25 60,136 115,566.13 137,008.42 205,483.10 15,566.13 38,008.82 100,727.01
30 83,713 115,473.85 149,092.97 300,597.71 15,473.85 49,097.97 167,931.68
35 113,804 112,464.17 159,719.57 430,567.71 12,464.17 59,719.57 272,511.21
40 152,208 105,011.67 167,803.98 619,910.66 5,011.67 67,803.98 433,503.54
45 201,222 0 169,698.00 889,173.20 0 69,698.00 678,758.17
50 263,778 0 159,074.54 1,288,313.97 0 59,074.54 1,047,409.73
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 912.96 $ 974.00 $ 1,035.17
2 1,805.12 1,983.91 2,170.22
3 2,676.77 3,031.46 3,415.82
4 3,527.05 4,117.30 4,782.61
5 4,355.29 5,242.29 6,282.62
6 5,161.84 6,408.38 7,929.95
7 5,943.89 7,614.32 9,737.11
8 6,700.64 8,860.94 11,720.11
9 7,431.56 10,149.22 13,896.05
10 8,135.89 11,480.07 16,286.33
15 11,247.70 18,823.09 32,292.22
</TABLE>
For Policy Years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
55
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 2
$1,200 Annual Premium
Using Guaranteed Schedules of Mortality and Expense Charges as well as
Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,859.92 $ 100,919.13 $ 100,978.54 $ 93.90 $ 153.11 $ 212.52
2 2,583 101,698.67 101,870.25 102,049.22 884.65 1,056.23 1,235.20
3 3,972 102,513.71 102,851.79 103,218.48 1,676.77 2,014.85 2,381.54
4 5,431 103,304.35 103,863.99 104,495.31 2,467.41 3,027.05 3,658.37
5 6,982 104,068.94 104,906.09 105,888.60 3,232.00 4,069.15 5,051.66
6 8,570 104,806.92 105,978.42 107,409.34 4,061.63 5,233.13 6,664.05
7 10,259 105,515.73 107,079.23 109,067.46 4,870.44 6,433.94 8,422.17
8 12,032 106,195.82 108,209.75 110,877.18 5,650.53 7,664.46 10,331.89
9 13,893 106,844.65 109,368.22 112,850.86 6,399.36 8,922.93 12,405.57
10 15,848 107,462.70 110,555.87 115,005.34 7,117.41 10,210.58 14,660.05
15 27,189 110,007.88 116,868.85 129,090.40 9,999.46 16,860.43 29,081.98
20 41,663 111,384.25 123,567.19 150,785.14 11,384.25 23,567.19 50,785.14
25 60,136 110,893.02 129,839.53 183,857.58 10,893.02 29,839.53 83,857.58
30 83,713 107,480.60 134,221.41 239,692.55 7,480.60 34,221.41 133,906.45
35 113,804 0 133,756.16 327,384.64 0 33,756.16 207,205.47
40 152,208 0 123,296.98 444,367.95 0 23,296.98 310,746.82
45 201,222 0 0 591,718.54 0 0 451,693.54
50 263,778 0 0 785,442.37 0 0 638,571.03
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 859.92 $ 919.12 $ 978.54
2 1,698.67 1,870.25 2,049.22
3 2,513.71 2,851.79 3,218.48
4 3,304.35 3,863.99 4,495.31
5 4,068.94 4,906.09 5,888.60
6 4,806.92 5,978.42 7,409.34
7 5,512.73 7,079.23 9,067.46
8 6,195.82 8,209.75 10,877.18
9 6,844.65 9,368.22 12,850.86
10 7,462.70 10,555.87 15,005.34
15 10,007.88 16,868.85 29,090.40
</TABLE>
For Policy Years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
56
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 1
$1,200 Annual Premium
Using Current Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $ 100,000 $ 100,000 $ 195.88 $ 257.48 $ 319.25
2 2,583 100,000 100,000 100,000 1,056.70 1,237.76 1,426.45
3 3,972 100,000 100,000 100,000 1,940.30 2,300.33 2,690.48
4 5,431 100,000 100,000 100,000 2,808.41 3,408.65 4,085.23
5 6,982 100,000 100,000 100,000 3,654.41 4,557.87 5,617.53
6 8,570 100,000 100,000 100,000 4,570.40 5,842.08 7,394.47
7 10,259 100,000 100,000 100,000 5,477.26 7,184.21 9,353.70
8 12,032 100,000 100,000 100,000 6,365.99 8,577.63 11,505.34
9 13,893 100,000 100,000 100,000 7,236.10 10,024.32 13,869.93
10 15,848 100,000 100,000 100,000 8,087.92 11,527.23 16,471.30
15 27,189 100,000 100,000 105,455.68 11,920.43 19,838.68 33,901.40
20 41,663 100,000 100,000 165,687.78 15,202.96 29,985.62 62,055.35
25 60,136 100,000 100,000 248,207.97 18,269.45 42,988.66 107,916.51
30 83,713 100,000 117,233.63 360,714.56 20,460.01 58,911.37 181,263.60
35 113,804 100,000 135,862.77 518,798.37 21,504.07 78,082.05 298,159.98
40 152,208 100,000 154,421.34 739,206.71 20,679.48 100,928.98 483,141.64
45 201,222 100,000 175,743.74 1,063,464.71 15,873.13 127,350.55 770,626.60
50 263,778 100,000 198,000.03 1,209,913.28 2,341.39 157,142.88 1,209,913.28
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 929.34 $ 990.94 $ 1,052.71
2 1,838.16 2,019.22 2,207.91
3 2,726.92 3,086.95 3,477.10
4 3,595.03 4,195.27 4,871.85
5 4,441.03 5,344.49 6,404.15
6 5,265.37 6,537.05 8,089.44
7 6,072.23 7,779.18 9,948.67
8 6,860.96 9,072.60 12,000.31
9 7,631.07 10,419.29 14,264.90
10 8,382.89 11,822.20 16,766.27
15 11,927.60 19,845.85 33,908.58
</TABLE>
For Policy Years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
57
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 1
$1,200 Annual Premium
Using Guaranteed Schedules of Mortality and Expense Charges as well as Current
Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $ 149.72 $ 209.77 $ 269.95
2 2,583 100,000 100,000 100,000 963.89 1,138.67 1,320.88
3 3,972 100,000 100,000 100,000 1,798.40 2,143.84 2,518.28
4 5,431 100,000 100,000 100,000 2,615.08 3,188.31 3,834.65
5 6,982 100,000 100,000 100,000 3,407.39 4,266.83 5,275.06
6 8,570 100,000 100,000 100,000 4,266.60 5,471.92 6,943.67
7 10,259 100,000 100,000 100,000 5,107.15 6,719.41 8,769.13
8 12,032 100,000 100,000 100,000 5,921.32 8,002.92 10,759.35
9 13,893 100,000 100,000 100,000 6,709.68 9,324.55 12,932.46
10 15,848 100,000 100,000 100,000 7,472.82 10,686.54 15,308.57
15 27,189 100,000 100,000 100,000 10,677.94 17,937.01 30,860.40
20 41,663 100,000 100,000 146,963.45 12,806.55 26,082.83 55,042.49
25 60,136 100,000 100,000 212,154.51 13,916.17 35,578.73 92,241.09
30 83,713 100,000 100,000 296,773.95 13,656.81 46,739.70 149,132.64
35 113,804 100,000 103,662.07 407,216.74 10,677.64 59,575.90 234,032.61
40 152,208 100,000 112,828.11 549,041.86 2,887.97 73,743.86 358,850.89
45 201,222 0 121,246.76 736,440.97 0 87,859.97 533,652.88
50 263,778 0 127,476.12 971,812.03 0 101,171.52 771,279.39
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 883.18 $ 943.23 $ 1,003.41
2 1,745.35 1,920.13 2,102.34
3 2,585.02 2,930.46 3,304.90
4 3,401.70 2,974.93 4,621.27
5 4,194.01 5,053.45 6,061.68
6 4,961.57 6,166.89 7,638.64
7 5,702.12 7,314.38 9,364.10
8 6,416.29 8,497.89 11,254.32
9 7,104.65 9,719.52 13,327.43
10 7,767.79 10,981.51 15,603.54
15 10,685.11 17,944.18 30,867.57
</TABLE>
For Policy Years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
58
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 2
$1,200 Annual Premium
Using Current Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,927.84 $ 100,989.37 $ 101,051.00 $ 194.38 $ 255.91 $ 317.54
2 2,583 101,833.78 102,014.40 102,202.60 1,052.32 1,232.94 1,421.14
3 3,972 102,717.95 103,076.67 103,465.34 1,931.33 2,290.05 2,678.72
4 5,431 103,579.67 104,176.67 104,850.08 2,793.05 3,390.35 4,063.46
5 6,982 104,417.29 105,315.10 106,367.80 3,630.67 4,528.48 5,581.18
6 8,570 105,230.98 106,492.76 108,032.56 4,536.01 5,797.79 7,337.59
7 10,259 106,025.08 107,715.99 109,864.34 5,430.11 7,121.02 9,269.42
8 12,032 106,798.75 108,985.84 111,879.88 6,303.78 8,490.87 11,385.01
9 13,893 107,551.27 110,303.66 114,097.94 7,156.30 9,908.69 13,702.97
10 15,848 108,282.91 111,671.61 116,539.77 7,987.94 11,376.64 16,247.80
15 27,189 111,690.66 119,408.91 133,102.29 11,683.49 19,401.74 33,095.12
20 41,663 114,774.40 129,013.68 161,327.11 14,774.40 29,013.68 60,422.14
25 60,136 117,548.86 140,994.51 242,134.75 17,548.86 40,994.51 105,275.98
30 83,713 119,228.95 155,020.74 352,282.32 19,228.95 55,020.74 177,026.29
35 113,804 119,451.84 171,137.78 507,030.83 19,451.84 71,137.78 291,397.03
40 152,208 117,338.17 188,797.70 722,818.93 17,338.17 88,797.70 472,430.67
45 201,222 110,577.83 205,621.40 1,040,412.18 10,577.83 105,621.40 753,921.87
50 263,778 0 216,632.11 1,492,407.62 0 116,632.11 1,184,450.49
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 927.84 $ 989.37 $ 1,051.00
2 1,833.78 2,014.40 2,202.60
3 2,717.95 3,076.67 3,465.34
4 3,579.67 4,176.97 4,850.08
5 4,417.29 5,315.10 6,367.80
6 5,230.98 6,492.76 8,032.56
7 6,023.08 7,715.99 9,864.39
8 6,798.75 8,985.84 11,879.98
9 7,551.27 10,303.66 14,097.94
10 8,282.91 11,671.61 16,539.77
15 11,690.66 19,408.91 33,102.29
</TABLE>
For Policy Years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
59
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount,
Death Benefit Option 2
$1,200 Annual Premium
Using Guaranteed Schedules of Mortality and Expense Changes as well as
Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Assuming Hypothetical Gross Assuming Hypothetical Gross
Premiums Annual Investment Return of Annual Investment Return of
End Of Accumulated --------------------------- ---------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ -------------- ------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,881.68 $ 100,941.63 $ 101,001.70 $ 148.22 $ 208.17 $ 268.24
2 2,583 101,740.91 101,915.22 102,096.91 959.45 1,133.76 1,315.45
3 3,972 102,576.13 102,920.23 103,293.25 1,789.51 2,133.61 2,506.63
4 5,431 103,386.63 103,956.91 104,599.92 2,600.01 3,170.29 3,813.30
5 6,982 104,170.79 105,024.55 106,026.12 3,384.17 4,237.93 5,239.50
6 8,570 104,928.04 106,123.55 107,583.15 4,233.07 5,428.58 6,888.18
7 10,259 105,655.82 107,252.19 109,281.28 5,060.85 6,657.22 8,686.31
8 12,032 106,354.58 108,411.77 111,135.17 5,859.61 7,916.80 10,640.20
9 13,893 107,024.77 109,603.65 113,160.68 6,629.80 9,208.68 12,765.71
10 15,848 107,666.83 110,829.23 115,375.45 7,371.86 10,534.26 15,080.48
15 27,189 110,427.04 117,470.09 129,993.31 10,419.87 17,462.92 29,986.14
20 41,663 112,272.52 124,882.09 152,906.76 12,272.52 24,882.09 52,906.76
25 60,136 112,942.86 132,863.89 204,165.30 12,942.86 32,863.89 88,767.52
30 83,713 112,038.91 141,012.87 286,141.50 12,038.91 41,012.87 143,789.70
35 113,804 108,146.33 147,597.17 393,130.28 8,146.33 47,597.17 225,936.94
40 152,208 0 150,061.03 530,580.64 0 50,061.03 346,784.73
45 201,222 0 141,081.43 712,412.29 0 41,081.43 516,240.79
50 263,778 0 8,946.57 941,376.88 0 8,946.57 747,124.51
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 881.68 $ 941.63 $ 1,001.70
2 1,740.91 1,915.22 2,096.91
3 2,576.13 2,920.23 3,293.25
4 3,386.63 3,956.91 4,599.92
5 4,170.79 5,024.55 6,026.12
6 4,928.04 6,123.55 7,583.15
7 5,655.82 7,252.19 9,281.28
8 6,354.58 8,411.77 11,135.17
9 7,024.77 9,603.65 13,160.68
10 7,666.83 10,829.23 15,375.45
15 10,427.04 17,470.09 29,993.31
</TABLE>
For Policy Years following Policy Year 15, Account Value equals Cash Surrender
Value assuming no increase in Selected Face Amount.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MML BAY STATE OR THE TRUST THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
60
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING
The Bylaws of MML Bay State provide for indemnification of directors and
officers as follows:
MML Bay State directors and officers are indemnified under its by-laws. No
indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the Investment Company Act of 1940 or
to the security holders thereof, where the basis for such liability is willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of MML Bay
State pursuant to the foregoing provisions, or otherwise, MML Bay State has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by MML Bay
State of expenses incurred or paid by a director, officer or controlling person
of MML Bay State in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, MML Bay State will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
<PAGE>
REPRESENTATIONS, DESCRIPTION AND UNDERTAKING PURSUANT TO
PARAGRAPH (b)(13)(iii)(F) or RULE 6e-3(T) UNDER
THE INVESTMENT COMPANY ACT OF 1940
Registrant makes the following representations:
1. Rule 6e-3(T)(b)(13)(iii)(F) is being relied upon.
2. The level of the mortality and expense risk charge is within the range of
industry practice for comparable flexible contracts.
3. MML Bay State has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the MML Bay State Variable Life
Separate Account 1 (the "Separate Account") will benefit the Separate
Account and the Policyowners.
4. The Separate Account is organized as a unit investment trust which will
only invest in management companies which have undertaken to have a board
of directors, a majority of whom are not interested persons of the Separate
Account, formulate and approve any plan under the Rule 12b-1 to finance
distribution expenses.
The methodology used to support the representation made in paragraph (2) above
was to compare similar flexible premium products currently being offered. MML
Bay State will maintain and make available to the Commission on request, a
memorandum setting forth the basis for the representations in paragraphs (2) and
(3) above.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 1
This Post-Effective Amendment is comprised of the following documents:
The Facing Sheet.
The Prospectus consisting of 59 pages.
The Undertaking to File Reports.
The Signatures.
Written Consents of the Following Persons:
1. Coopers & Lybrand L.L.P., independent accountants.
2. Counsel opining as to the legality of securities being registered.
3. Opinion opining as to actuarial matters contained in the
registration statement by Peter C. Van Beaver, Assistant Vice
President & Actuary.
The following Exhibits:
1. The following Exhibits correspond to those required by Paragraph A
of the instructions as to Exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of MML Bay State
establishing the Separate Account.
(a) Resolution of the Board of Directors authorizing
issuance of Policy.*
(2) Not applicable.
(3) Form of Distribution Agreements:
(a)(1) Form of Distribution Servicing Agreement
between MML Distributors, LLC and MML Bay State.
(a)(2) Form of Co-Underwriting Agreement between MML
Investors Services, Inc. and MML Bay State.
(b) Not applicable.
(c) Not applicable.
<PAGE>
(4) Servicing Agreement between MML Bay State Life
Insurance Company and Massachusetts Mutual Life
Insurance Company.*
(5) Form of Flexible Premium Variable Whole Life Insurance
Policy.*
(6) (a) Certificate of Incorporation of MML Bay State.*
(b) By-Laws of MML Bay State.*
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Application for a Flexible Premium Variable Whole Life
insurance policy.*
(11) Memorandum describing MML Bay State's issuance,
transfer, and redemption procedures for the Policy.*
2. Opinion and Consent of Counsel as to the legality of the
securities being registered.
3. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of Peter C. Van Beaver as to actuarial
matters pertaining to the securities.
6. Consent of Coopers & Lybrand L.L.P.
7. Powers of Attorney.
27. Financial Data Schedule.
*Incorporated by reference to pre-effective Amendment No. 1 and Registration
Statement No. 33-82060 filed with the Commission on July 28, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, MML
Bay State Variable Life Separate Account I, certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment No. 1 pursuant
to rule 485(b) under the Securities Act of 1933 and has caused this Post-
Effective Amendment No. 1 to Registration Statement No. 33-82060 to be signed on
its behalf by the undersigned thereunto duly authorized, all in the city of
Springfield and the Commonwealth of Massachusetts, on the 24th day of April,
1996.
MML BAY STATE VARIABLE LIFE SEPARATE ACCOUNT I
MML BAY STATE LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Isadore Jermyn*
-----------------------------------------------------
Isadore Jermyn, President and Chief Executive Officer
MML Bay State Life Insurance Company
/s/ Richard M. Howe On April 24, 1996, as Attorney-in-Fact
- ------------------- pursuant to powers of attorney filed herewith.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 1 to Registration Statement No. 33-82060 has been signed by the following
persons in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Isadore Jermyn* President, Chief April 24, 1996
- --------------------------- Executive Officer &
Isadore Jermyn Chairman of the Board
/s/ Ann Iseley* Treasurer (Principal April 24, 1996
- --------------------------- Financial Officer)
Ann Iseley
/s/ Paul D. Adornato* Director April 24, 1996
- ---------------------------
Paul D. Adornato
/s/ Donald D. Cameron* Director April 24, 1996
- ---------------------------
Donald D. Cameron
/s/ Daniel F. Fitzgerald* Director April 24, 1996
- ---------------------------
Daniel F. Fitzgerald
/s/ Arthur D. Foresi Director April 24, 1996
- ---------------------------
Arthur D. Foresi
/s/ Gary T. Huffman* Director April 24, 1996
- ---------------------------
Gary T. Huffman
/s/ Douglas J. Jangraw* Director April 24, 1996
- ---------------------------
Douglas J. Jangraw
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ John J. Libera, Jr.* Director April 24, 1996
- ----------------------------
John J. Libera, Jr.
/s/ William T. McElmurray* Director April 24, 1996
- ----------------------------
William T. McElmurray
/s/ Stuart H. Reese* Director April 24, 1996
- ----------------------------
Stuart H. Reese
/s/ Jeanne M. Stamant* Director April 24, 1996
- ----------------------------
Jeanne M. Stamant
</TABLE>
/s/ Richard M. Howe On April 24, 1996, as Attorney-in-Fact
- ------------------------- pursuant to powers of attorney filed herewith.
*Richard M. Howe
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
--------------------------------------
As Counsel to the Registrant, I, James M. Rodolakis, have reviewed this Post-
Effective Amendment No. 1 to Registration Statement No. 33-82060, and represent,
pursuant to the requirement of paragraph (e) of Rule 485 under the Securities
Act of 1933, that this Amendment does not contain disclosures which would render
it ineligible to become effective pursuant to paragraph (b) of said Rule 485.
/s/ James M. Rodolakis
-------------------------
James M. Rodolakis
Attorney
MML Bay State Life
Insurance Company
<PAGE>
EXHIBIT LIST
99.A(3)(a)(1) Form of Distribution Agreement
99.A(3)(a)(2) Form of Co-Underwriting Agreement
99.2 Opinion and Consent of James M. Rodolakis
99.C.1 Consent of Coopers & Lybrand, L.L.P.
99.C.6 Opinion and Consent of Peter Van Beaver
99.5 Powers of Attorney
(27) Financial Data Schedule
<PAGE>
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of May, 1996, by
and between MML Distributors, LLC ("MML DISTRIBUTORS") and MML Bay State Life
Insurance Company ("Bay State"), on its own behalf and on behalf of
___________________ Separate Account (the "Separate Account"), a separate
account of Bay State, as follows:
WHEREAS, the Separate Account was established on _____________ pursuant to
authority of the Board of Directors of Bay State in order to set aside and
invest assets attributable to certain variable life insurance contracts (the
"Contracts") issued by Bay State; and
WHEREAS, Bay State has registered the Separate Account under the Investment
Company Act of 1940, as amended, (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, Bay State will continue the effectiveness of the registrations of the
Separate Account under the 1940 Act and the Contracts under the 1933 Act; and
WHEREAS, Bay State intends for the Contracts to be sold by agents and brokers
who are required to be registered representatives of a broker-dealer that is
registered with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Bay State desires to engage MML DISTRIBUTORS, a broker-dealer
registered with the SEC under the 1934 Act and a member of the NASD, to act as
the principal underwriter ("Underwriter") of the Contracts, and to otherwise
perform certain duties and functions that are necessary and proper for the
distribution of the Contracts as required under applicable federal and state
securities laws and NASD regulations, and MML DISTRIBUTORS desires to act as
Underwriter for the sale of the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. Bay State hereby appoints MML DISTRIBUTORS as, and MML
DISTRIBUTORS agrees to serve as, Underwriter of the Contracts during the
term of this Agreement for purposes of federal and state securities laws.
Bay State reserves the right, however, to refuse at any time or times to
sell any Contracts hereunder for any reason, and Bay State maintains
ultimate responsibility for the sales of the Contracts.
<PAGE>
MML DISTRIBUTORS shall use reasonable efforts to sell the Contracts but does
not agree hereby to sell any specific number of Contracts and shall be free
to act as underwriter of other securities. MML DISTRIBUTORS agrees to offer
the Contracts for sale in accordance with the prospectus then in effect for
the Contracts.
2. Services. MML DISTRIBUTORS agrees, on behalf of Bay State and the Separate
Account, and in its capacity as Underwriter, to undertake at its own expense
except as otherwise provided herein, to provide certain sales,
administrative and supervisory services relative to the Contracts as
described below, and otherwise to perform all duties that are necessary and
proper for the distribution of the Contracts as required under applicable
federal and state securities laws and NASD regulations.
3. Selling Group. MML DISTRIBUTORS may enter into sales agreements for the sale
of the Contracts with independent broker-dealer firms ("Independent
Brokers") whose registered representatives have been or shall be licensed
and appointed as life insurance agents of Bay State. All such agreements
shall be in a form agreed to by Bay State. All such agreements shall provide
that the Independent Brokers must assume full responsibility for continued
compliance by itself and its associated persons with the NASD Rules of Fair
Practice (the "Rules") and all applicable federal and state securities and
insurance laws. All associated persons of such Independent Brokers
soliciting applications for the Contracts shall be duly and appropriately
licensed and appointed for the sale of the Contracts under the Rules and
applicable federal and state securities and insurance laws.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MML DISTRIBUTORS and Bay State in connection
with the offer or sale of the Contracts shall be considered a "person
associated" with MML DISTRIBUTORS as defined in Section 3(a)(18) of the 1934
Act. MML DISTRIBUTORS shall have full responsibility for the securities
activities of each such person as contemplated by Section 15 of the 1934
Act.
MML DISTRIBUTORS shall be fully responsible for carrying out all compliance,
supervisory and other obligations hereunder with respect to the activities
of its registered representatives as required by the Rules and applicable
federal and state securities laws. Without limiting the generality of the
foregoing, MML DISTRIBUTORS agrees that it shall be fully responsible for:
(a) ensuring that no representative of MML DISTRIBUTORS
<PAGE>
shall offer or sell the Contracts until such person is appropriately
licensed, registered, or otherwise qualified to offer and sell such
Contracts under the federal securities laws and any applicable securities
laws of each state or other jurisdiction in which such Contracts may be
lawfully sold, in which Bay State is licensed to sell the Contracts, and in
which such person shall offer or sell the Contracts; and
(b) training and supervising Bay State's agents and brokers who are also
registered representatives of MML DISTRIBUTORS for purposes of complying on
a continuous basis with the Rules and with federal and state securities laws
applicable in connection with the offering and sale of the Contracts. In
this connection, MML DISTRIBUTORS shall:
(i) jointly conduct with Bay State such training (including the
preparation and utilization of training materials) as in the
opinion of MML DISTRIBUTORS and Bay State is necessary to
accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of
MML DISTRIBUTORS who sell the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the
responsibilities as set forth herein;
(iv) take reasonable steps to ensure that Bay State agents and
brokers who are also registered representatives of MML
DISTRIBUTORS recommend the purchase of the Contracts only upon
reasonable grounds to believe that the purchase of the Contracts
is suitable for such applicant; and
(v) impose disciplinary measures on agents of Bay State who are also
registered representatives of MML DISTRIBUTORS as required.
The parties hereto recognize that any registered representative of MML
DISTRIBUTORS or Independent Broker selling the Contracts as contemplated by this
Agreement shall also be acting as an insurance agent of Bay State or as an
insurance broker, and that the rights of MML DISTRIBUTORS and Independent Broker
to supervise such persons shall be limited to the extent specifically described
herein or required under applicable federal or state securities laws or NASD
regulations.
<PAGE>
5. Registration and Qualification of Contracts. Bay State has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the
"Prospectus") for the Contracts.
Bay State agrees to execute such papers and to do such acts and things as
shall from time-to-time be reasonably requested by MML DISTRIBUTORS for the
purpose of qualifying and maintaining qualification of the Contracts for
sale under applicable state law and for maintaining the registration of the
Separate Account and interests therein under the 1933 Act and the 1940 Act,
to the end that there will be available for sale from time-to-time such
amounts of the Contracts as MML DISTRIBUTORS may reasonably request. Bay
State shall advise MML DISTRIBUTORS promptly of any action of the SEC or any
authorities of any state or territory, of which it is aware, affecting
registration or qualification of the Separate Account, or rights to offer
the Contracts for sale.
If any event shall occur as a result of which it is necessary to amend or
supplement the Registration Statement in order to make the statements
therein, in light of the circumstances under which they were or are made,
true, complete or not misleading, Bay State will forthwith prepare and
furnish to MML DISTRIBUTORS, without charge, amendments or supplements to
the Registration Statement sufficient to make the statements made in the
Registration Statement as so amended or supplemented true, complete and not
misleading in light of the circumstances under which they were made.
6. Representations of Bay State. Bay State represents and warrants to MML
DISTRIBUTORS and to the Independent Brokers as follows:
(a) Bay State is an insurance company duly organized under the laws of the
State of Missouri and is in good standing and is authorized to conduct
business under the laws of each state in which the Contracts are sold,
that the Separate Account was legally and validly established as a
segregated asset account under the Insurance Code of Missouri, and that
the Separate Account has been properly registered as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts
will be authorized insurance agents of Bay State.
(c) The Registration Statement does not and will not contain any
misstatements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of
<PAGE>
the circumstances under which they were or are made, not materially
misleading.
(d) Bay State shall make available to MML DISTRIBUTORS copies of all
financial statements that MML DISTRIBUTORS reasonably requests for use
in connection with the offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration
Statement, or of any part thereof, with respect to the sale of the
Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or
if necessary, is registered, under the Blue Sky laws of the states in
which the Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable
state insurance laws in those states in which the Contracts shall be
offered for sale. In each state where such qualification is effected,
Bay State shall file and make such statements or reports as are or may
be required by the laws of such state.
(h) This Agreement has been duly authorized, executed and delivered by Bay
State and constitutes the valid and legally binding obligation of Bay
State. Neither the execution and delivery of this Agreement by Bay State
nor the consummation of the transactions contemplated herein will result
in a breach or violation of any provision of the state insurance laws
applicable to Bay State, any judicial or administrative orders in which
it is named or any material agreement or instrument to which it is a
party or by which it is bound.
7. Representations of MML DISTRIBUTORS. MML DISTRIBUTORS represents and
warrants to Bay State as follows:
(a) MML DISTRIBUTORS is duly registered as a broker-dealer under the 1934
Act and is a member in good standing of the NASD and, to the extent
necessary to perform the activities contemplated hereunder, is duly
registered, or otherwise qualified, under the applicable securities laws
of every state or other jurisdiction in which the Contracts are
available for sale.
(b) This Agreement has been duly authorized, executed and delivered by MML
DISTRIBUTORS and constitutes the valid and legally binding obligation of
MML DISTRIBUTORS. Neither the execution and delivery of this Agreement
by MML DISTRIBUTORS nor the consummation of the transactions
contemplated herein will result in a breach or violation of any
provision of the federal or state securities laws or the Rules,
applicable to MML DISTRIBUTORS, or any judicial or administrative orders
in which it is named or any material agreement or instrument to which it
is a party or by which it is bound.
<PAGE>
(c) MML DISTRIBUTORS shall comply with the Rules and the securities laws of
any jurisdiction in which it sells, directly or indirectly, any
Contracts.
8. Expenses. MML DISTRIBUTORS shall be responsible for all expenses incurred
in connection with its provision of services and the performance of its
obligations hereunder, except as otherwise provided herein.
Bay State shall be responsible for all expenses of printing and distributing
the Prospectuses, and all other expenses of preparing, printing and
distributing all other sales literature or material for use in connection
with offering the Contracts for sale.
9. Sales Literature and Advertising. MML DISTRIBUTORS agrees to ensure that it
uses and distributes only the Prospectus, statements of additional
information, or other applicable and authorized sales literature then in
effect in selling the Contracts. MML DISTRIBUTORS is not authorized to give
any information or to make any representations concerning the Contracts
other than those contained in the current Registration Statement filed with
the SEC or in such sales literature as may be authorized by Bay State.
MML DISTRIBUTORS agrees to make timely filings with the SEC, the NASD, and
such other regulatory authorities as may be required of any sales literature
or advertising materials relating to the Contracts and intended for
distribution to prospective investors. Bay State shall review and approve
all advertising and sales literature concerning the Contracts utilized by
MML DISTRIBUTORS. MML DISTRIBUTORS also agrees to furnish to Bay State
copies of all agreements and plans it intends to use in connection with any
sales of the Contracts.
10. Applications. All applications for Contracts shall be made on application
forms supplied by Bay State, and shall be remitted by MML DISTRIBUTORS or
Independent Brokers promptly, together with such forms and any other
required documentation, directly to Bay State at the address indicated on
such application or to such other address as Bay State may, from time to
time, designate in writing. All applications are subject to acceptance or
rejection by Bay State at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts, whether
as premiums, purchase payments or otherwise, and whether paid by, or on
behalf of any applicant or Contract owner, is the property of Bay State and
shall be transmitted immediately in accordance with the
<PAGE>
administrative procedures of Bay State without any deduction or offset for
any reason, including by example but not limitation, any deduction or offset
for compensation claimed
by MML DISTRIBUTORS. Checks or money orders as payment on any Contract shall
be drawn to the order of "Massachusetts Mutual Life Insurance Company." No
cash payments shall be accepted by MML DISTRIBUTORS in connection with the
Contracts. Unless otherwise agreed to by Bay State in writing, neither MML
DISTRIBUTORS nor any of Bay State's agents nor any broker shall have an
interest in any surrender charges, deductions or other fees payable to Bay
State as set forth herein.
12. Insurance Licenses. Bay State shall apply for and maintain the proper
insurance licenses and appointments for each of the agents and brokers
selling the Contracts in all states or jurisdictions in which the Contracts
are offered for sale by such person. Bay State reserves the right to refuse
to appoint any proposed agent or broker, and to terminate an agent or broker
once appointed. Bay State agrees to be responsible for all licensing or
other fees required under pertinent state insurance laws to properly
authorize agents or brokers for the sale of the Contracts; however, the
foregoing shall not limit Bay State's right to collect such amount from any
person or entity other than MML DISTRIBUTORS.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and
agents in connection with the sale of Contracts shall be paid by Bay State,
on behalf of MML DISTRIBUTORS, to the persons entitled thereto in accordance
with the applicable agreement between each such broker or agent and Bay
State or a general agent thereof. MML DISTRIBUTORS shall assist Bay State in
the payment of such amounts as Bay State shall reasonably request, provided
that MML DISTRIBUTORS shall not be required to perform any acts that would
subject it to registration under the insurance laws of any state. The
responsibility of MML DISTRIBUTORS shall include the performance of all
activities by MML DISTRIBUTORS necessary in order that the payment of such
amounts fully complies with all applicable federal and state securities
laws. Unless applicable federal or state securities law shall require, Bay
State retains the ultimate right to determine the commission rate paid to
its agents.
14. MML DISTRIBUTORS Compensation. As payment for its services hereunder, MML
DISTRIBUTORS shall receive an annual fee that has the following components:
(1) a fixed fee in the amount of $_____ per year, and (2) a variable fee in
the amount of __ basis points (.000x) per year of new sales of the
Contracts. Payments shall commence and be made no later than December 31 of
the year in which a Contract is issued. The variable component of the fee
shall be paid to MML DISTRIBUTORS's affiliate, MML Insurance Agency, Inc.
("MMLIAI"). The fixed component shall be renegotiated annually commencing in
1997. The last agreed-to amounts for each of these fees shall remain in
effect until the new fees
<PAGE>
are mutually agreed upon and are set forth in schedules attached hereto.
15. Books and Records. MML DISTRIBUTORS and Bay State shall each cause to be
maintained and preserved for the period prescribed such accounts, books, and
other documents as are required of it by the 1934 Act and any other
applicable laws and regulations. In particular, without limiting the
foregoing, MML DISTRIBUTORS shall cause all the books and records in
connection with the offer and sale of the Contracts by its registered
representatives to be maintained and preserved in conformity with the
requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to the extent that
such requirements are applicable to the Contracts. The books, accounts, and
records of MML DISTRIBUTORS and Bay State as to all transactions hereunder
shall be maintained so as to disclose clearly and accurately the nature and
details of the transactions. The payment of premiums, purchase payments,
commissions and other fees and payments in connection with the Contracts by
its registered representatives shall be reflected on the books and records
of MML DISTRIBUTORS as required under applicable NASD regulations and
federal and state securities laws requirements.
MML DISTRIBUTORS and Bay State, from time to time during the term of this
Agreement, shall divide the administrative responsibility for maintaining
and preserving the books, records and accounts kept in connection with the
Contracts; provided, however, in the case of books, records and accounts
kept pursuant to a requirement of applicable law or regulation, the ultimate
and legal responsibility for maintaining and preserving such books, records
and accounts shall be that of the party which is required to maintain or
preserve such books, records and accounts under the applicable law or
regulation, and such books, records and accounts shall be maintained and
preserved under the supervision of that party. MML DISTRIBUTORS and Bay
State shall each cause the other to be furnished with such reports as it may
reasonably request for the purpose of meeting its reporting and
recordkeeping requirements under such regulations and laws, and under the
insurance laws of the Commonwealth of Massachusetts and any other applicable
states or jurisdictions.
MML DISTRIBUTORS and Bay State each agree and understand that all documents,
reports, records, books, files and other materials required under applicable
Rules and federal and state securities laws shall be the property of MML
DISTRIBUTORS, unless such documents, reports, records, books, files and
other materials are required by applicable regulation or law to be also
maintained by Bay State, in which case such material shall be the joint
property of MML DISTRIBUTORS and Bay State. All other documents, reports,
records, books, files and other materials maintained relative to this
Agreement shall be the property of Bay
<PAGE>
State. Upon termination of this Agreement, all said material shall be
returned to the applicable party.
MML DISTRIBUTORS and Bay State shall establish and maintain facilities and
procedures for the safekeeping of all books, accounts, records, files, and
other materials related to this Agreement. Such books, accounts, records,
files, and other materials shall remain confidential and shall not be
voluntarily disclosed to any other person or entity except as described
below in section 16..
16. Availability of Records. MML DISTRIBUTORS and Bay State shall each submit to
all regulatory and administrative bodies having jurisdiction over the sales
of the Contracts, present or future, any information, reports, or other
material that any such body by reason of this Agreement may request or
require pursuant to applicable laws or regulations. In particular, without
limiting the foregoing, Bay State agrees that any books and records it
maintains pursuant to paragraph 15 of this Agreement which are required to
be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be subject to
inspection by the SEC in accordance with Section 17(a) of the 1934 Act and
Sections 30 and 31 of the 1940 Act.
17. Confirmations. Bay State agrees to prepare and mail a confirmation for each
transaction in connection with the Contracts at or before the completion
thereof as required by the 1934 Act and applicable interpretations thereof,
including Rule 10b-10 thereunder. Each such confirmation shall reflect the
facts of the transaction, and the form thereof will show that it is being
sent on behalf of MML DISTRIBUTORS or Independent Broker acting in the
capacity of agent for Bay State.
18. Indemnification. Bay State shall indemnify MML DISTRIBUTORS, Independent
Brokers, their registered representatives, officers, directors, employees,
agents and controlling persons and hold such persons harmless, from and
against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees and disbursements) resulting or
arising out of or based upon an allegation or finding that: (i) the
Registration Statement or any application or other document or written
information provided by or on behalf of Bay State includes any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to Bay
State by MML DISTRIBUTORS, Independent Brokers, or their
<PAGE>
registered representatives specifically for use in the preparation thereof,
or (ii) there is a misrepresentation, breach of warranty or failure to
fulfill any covenant or warranty made or undertaken by Bay State hereunder.
MML DISTRIBUTORS will indemnify Bay State, its officers, directors,
employees, agents and controlling persons and hold such persons harmless,
from and against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees and disbursements) resulting or
arising out of or based upon an allegation or finding that: (i) MML
DISTRIBUTORS or its registered representatives offered or sold or engaged in
any activity relating to the offer and sale of the Contracts which was in
violation of any provision of the federal securities laws or, (ii) there is
a material misrepresentation, material breach of warranty or material
failure to fulfill any covenant or warranty made or undertaken by MML
DISTRIBUTORS hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of
notice of the commencement of any action by a third party, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 18, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party
will not relieve the indemnifying party from liability which the
indemnifying party may have to any indemnified party otherwise than under
this paragraph. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
19. Independent Contractor. MML DISTRIBUTORS shall be an independent contractor.
MML DISTRIBUTORS is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to such
agents or employees or to others through its agents or employees. MML
DISTRIBUTORS assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this Agreement
shall remain in full force and
<PAGE>
effect for the initial term of the Agreement, which shall be for a two year
period commencing on the date first above written, and this Agreement shall
continue in full force and effect from year to year thereafter, until
terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days written
notice to the other party, or at any time upon the mutual written consent of
the parties hereto. This Agreement shall automatically be terminated in the
event of its assignment. Subject to Bay State's approval, however, MML
DISTRIBUTORS may delegate any duty or function assigned to it in this
agreement provided that such delegation is permissible under applicable law.
Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the the obligations to settle accounts
hereunder, including the settlement of monies due in connection with the
Contracts in effect at the time of termination or issued pursuant to
applications received by Bay State prior to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule, or otherwise,
the remainder of this Agreement shall not be affected thereby. This
Agreement shall be interpreted in accordance with the laws of the
Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MML DISTRIBUTORS and Bay State to the
Separate Account hereunder are not to be deemed exclusive and MML
DISTRIBUTORS and Bay State shall be free to render similar services to
others so long as their services hereunder are not impaired or interfered
with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument
executed by all parties hereto.
24. Interests in and of MML DISTRIBUTORS. It is understood that any of the
policyholders, directors, officers, employees and agents of Bay State may be
a shareholder, director, officer, employee, or agent of, or be otherwise
interested in, MML DISTRIBUTORS, any affiliated person of MML DISTRIBUTORS,
any organization in which MML DISTRIBUTORS may have an interest, or any
organization which may have an interest in MML DISTRIBUTORS; that MML
DISTRIBUTORS, any such affiliated person or any such organization may have
an interest in Bay
<PAGE>
State; and that the existence of any such dual interest shall not affect the
validity hereof or of any transaction hereunder except as otherwise provided
in the Charter, Articles of Incorporation, or By-Laws of Bay State and MML
DISTRIBUTORS, respectively, or by specific provision of applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized and seals to
be affixed, as of the day and year first above written.
ATTEST: MML BAY STATE LIFE INSURANCE COMPANY,
on its behalf and on behalf of
-------------------
SEPARATE ACCOUNT
By:
-------------------------
ATTEST: MML INVESTORS SERVICES, INC.
By:
-------------------------
<PAGE>
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of May,
1996, by and between MML Investors Services, Inc. ("MMLISI") and MML Bay State
Life Insurance Company ("Bay State"), on its own behalf and on behalf of
________________________ Separate Account (the "Separate Account"), a separate
account of Bay State, as follows:
WHEREAS, the Separate Account was established on ____________________,
pursuant to authority of the Board of Directors of Bay State in order to set
aside and invest assets attributable to certain variable annuity contracts (the
"Contracts") issued by Bay State; and
WHEREAS, Bay State has registered the Separate Account under the Investment
Company Act of 1940, as amended, (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, Bay State will continue the effectiveness of the registrations of
the Separate Account under the 1940 Act and the Contracts under the 1933 Act;
and
WHEREAS, Bay State intends for the Contracts to be sold by its agents and
brokers who are required to be registered representatives of a broker-dealer
that is registered with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Bay State desires to engage MMLISI, a broker-dealer registered
with the SEC under the 1934 Act and a member of the NASD, to act as a co-
underwriter ("Co-underwriter") in connection with the distribution of the
Contracts by the full-time career contracted agents of Bay State ("Agents") and
certain other brokers, and in connection therewith, to provide certain services
and supervision to such Agents and brokers who are also registered
representatives of MMLISI and who sell the Contracts, and to otherwise perform
certain duties and functions that are necessary and proper for the distribution
of the Contracts as required under applicable federal and state securities laws
and NASD regulations, and MMLISI desires to act as Co-underwriter for the sale
of the Contracts and to assume such responsibilities;
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. Bay State hereby appoints MMLISI as, and MMLISI agrees to
serve as, Co-underwriter of the Contracts during the term of this Agreement for
purposes of federal and state securities laws. Bay State reserves the right,
however, to refuse at any time or times to sell any Contracts hereunder for any
reason, and Bay State maintains ultimate responsibility for the sales of the
Contracts.
2. Services. MMLISI agrees, on behalf of Bay State and in its capacity as Co-
underwriter, to undertake at its own expense except as otherwise provided
herein, to provide certain sales, administrative and supervisory services
relative to the Contracts as described below, and otherwise to perform all
duties that are necessary and proper for the distribution of the Contracts as
required under applicable federal and state securities laws and NASD
regulations.
3. Best Efforts. MMLISI shall use reasonable efforts to sell the Contracts but
does not agree hereby to sell any specific number of Contracts and shall be free
to act as underwriter of other securities. MMLISI agrees to offer the Contracts
for sale in accordance with the prospectus then in effect for the Contracts.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MMLISI and Bay State in connection with the
offer or sale of the Contracts shall be considered a "person associated" with
MMLISI as defined in Section 3(a)(18) of the 1934 Act. MMLISI shall have full
responsibility for the securities activities of each such person as contemplated
by Section 15 of the 1934 Act.
MMLISI shall be fully responsible for carrying out all compliance,
supervisory and other obligations hereunder with respect to the activities of
its registered representatives as required by the NASD Rules of Fair Practice
(the "Rules") and applicable federal and state securities laws. Without
limiting the generality of the foregoing, MMLISI agrees that it shall be fully
responsible for:
(a) ensuring that no representative of MMLISI shall offer or sell the
Contracts until such person is appropriately licensed, registered, or otherwise
qualified to offer and sell such Contracts under the federal securities laws and
any applicable securities laws of each state or other jurisdiction in which such
Contracts may be lawfully sold, in which Bay State is licensed to sell the
Contracts, and in which such person shall offer or sell the Contracts; and
<PAGE>
(b) training and supervising Bay State's Agents and brokers who are also
registered representatives of MMLISI for purposes of complying on a continuous
basis with the Rules and with federal and state securities laws applicable in
connection with the offering and sale of the Contracts. In this connection,
MMLISI shall:
(i) jointly conduct with Bay State such training (including the
preparation and utilization of training materials) as in the opinion of MMLISI
and Bay State is necessary to accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of MMLISI who sell
the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the responsibilities as
set forth herein;
(iv) take reasonable steps to ensure that Bay State Agents and
brokers who are also registered representatives of MMLISI recommend the purchase
of the Contracts only upon reasonable grounds to believe that the purchase of
the Contracts is suitable for such applicant; and
(v) impose disciplinary measures on agents of Bay State who are also
registered representatives of MMLISI as required.
The parties hereto recognize that any registered representative of MMLISI
selling the Contracts as contemplated by this Agreement shall also be acting as
an insurance agent of Bay State or as an insurance broker, and that the rights
of MMLISI to supervise such persons shall be limited to the extent specifically
described herein or required under applicable federal or state securities laws
or NASD regulations. Such persons shall not be considered employees of MMLISI
and shall be considered agents of MMLISI only as and to the extent required by
such laws and regulations. Further, it is intended by the parties hereto that
such persons are and shall continue to be considered to have a common law
independent contractor relationship with Bay State and not to be common law
employees of Bay State.
5. Registration and Qualification of Contracts. Bay State has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the
"Prospectus")
<PAGE>
for the Contracts.
Bay State agrees to execute such papers and to do such acts and things as shall
from time-to-time be reasonably requested by MMLISI for the purpose of
qualifying and maintaining qualification of the Contracts for sale under
applicable state law and for maintaining the registration of the Separate
Account and interests therein under the 1933 Act and the 1940 Act, to the
end that there will be available for sale from time-to-time such amounts of the
Contracts as MMLISI may reasonably be expected to sell. Bay State shall advise
MMLISI promptly of any action of the SEC or any authorities of any state or
territory, of which it is aware, affecting registration or qualification of the
Separate Account, or rights to offer the Contracts for sale.
If any event shall occur as a result of which it is necessary to amend or
supplement the Registration Statement in order to make the statements therein,
in light of the circumstances under which they were or are made, true, complete
or not misleading, Bay State will forthwith prepare and furnish to MMLISI,
without charge, amendments or supplements to the Registration Statement
sufficient to make the statements made in the Registration Statement as so
amended or supplemented true, complete and not misleading in light of the
circumstances under which they were made.
6. Representations of Bay State. Bay State represents and warrants to MMLISI
as follows:
(a) Bay State is an insurance company duly organized under the laws of
the State of Missouri and is in good standing and is authorized to conduct
business under the laws of each state in which the Contracts are sold, that the
Separate Account was legally and validly established as a segregated asset
account under the Insurance Code of Missouri, and that the Separate Account has
been properly registered as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts.
(b) All persons that will be engaging in the offer or sale of the
Contracts will be authorized insurance agents of Bay State.
(c) The Registration Statement does not and will not contain any
misstatements of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were or are made, not materially misleading.
<PAGE>
(d) Bay State shall make available to MMLISI copies of all financial
statements that MMLISI reasonably requests for use in connection with the offer
and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing
or suspending the offer of the Contracts or the use of the Registration
Statement, or of any part thereof, with respect to the sale of the Contracts.
(f) The offer and sale of the Contracts is not subject to registration,
or if necessary, is registered, under the Blue Sky laws of the states in which
the Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable
state insurance laws in those states in which the Contracts shall be offered for
sale. In each state where such qualification is effected, Bay State shall file
and make such statements or reports as are or may be required by the laws of
such state.
(h) This Agreement has been duly authorized, executed and delivered by
Bay State and constitutes the valid and legally binding obligation of Bay State.
Neither the execution and delivery of this Agreement by Bay State nor the
consummation of the transactions contemplated herein will result in a breach or
violation of any provision of the state insurance laws applicable to Bay State,
any judicial or administrative orders in which it is named or any material
agreement or instrument to which it is a party or by which it is bound.
7. Representations of MMLISI. MMLISI represents and warrants to Bay State as
follows:
(a) MMLISI is duly registered as a broker-dealer under the 1934 Act and
is a member in good standing of the NASD and, to the extent necessary to perform
the activities contemplated hereunder, is duly registered, or otherwise
qualified, under the applicable securities laws of every state or other
jurisdiction in which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by
MMLISI and constitutes the valid and legally binding obligation of MMLISI.
Neither the execution and delivery of this Agreement by MMLISI nor the
consummation of the transactions contemplated herein will result in a breach or
violation of any provision of the federal or state securities laws or the Rules,
applicable to MMLISI, or any judicial or administrative orders in which it is
named or any material agreement or instrument to which it is a party or by which
it is bound.
<PAGE>
(c) MMLISI shall comply with the Rules and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MMLISI shall be responsible for all expenses incurred in
connection with its provision of services and the performance of its obligations
hereunder, except as otherwise provided herein.
Bay State shall be responsible for all expenses of printing and
distributing the Prospectuses, and all other expenses of preparing, printing and
distributing all other sales literature or material for use in connection with
offering the Contracts for sale.
9. Sales Literature and Advertising. MMLISI agrees to ensure that its
registered representatives use only the Prospectus, statements of additional
information, or other applicable and authorized sales literature then in effect
in selling the Contracts. MMLISI is not authorized to give any information or
to make any representations concerning the Contracts other than those contained
in the current Registration Statement filed with the SEC or in such sales
literature as may be authorized by Bay State.
MMLISI agrees to make timely filings with the SEC, the NASD, and such other
regulatory authorities as may be required of any sales literature or advertising
materials relating to the Contracts and intended for distribution to prospective
investors. Bay State shall review and approve all advertising and sales
literature concerning the Contracts utilized by MMLISI. MMLISI also agrees to
furnish to Bay State copies of all agreements and plans it intends to use in
connection with any sales of the Contracts.
10. Applications. All applications for Contracts shall be made on application
forms supplied by Bay State, and shall be remitted by MMLISI promptly, together
with such forms and any other required documentation, directly to Bay State at
the address indicated on such application or to such other address as Bay State
may, from time to time, designate in writing. All applications are subject to
acceptance or rejection by Bay State at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts,
whether as premiums, purchase payments or otherwise, and whether paid by, or on
behalf of any applicant or Contract owner, is the property of Bay State and
shall be transmitted immediately in accordance with the administrative
procedures of Bay State without any deduction or offset for any reason,
including by example but not limitation, any deduction or offset for
compensation claimed by MMLISI. Checks or money orders as payment on any
Contract shall be drawn to the order of "MML Bay
<PAGE>
State Life Insurance Company." No cash payments shall be accepted by MMLISI in
connection with the Contracts. Unless otherwise agreed to by Bay State in
writing, neither MMLISI nor any of Bay State's Agents nor any broker shall have
an interest in any surrender charges, deductions or other fees payable to Bay
State as set forth herein.
12. Insurance Licenses. Bay State shall apply for and maintain the proper
insurance licenses and appointments for each of the Agents and brokers selling
the Contracts in all states or jurisdictions in which the Contracts are offered
for sale by such person. Bay State reserves the right to refuse to appoint any
proposed Agent or broker, and to terminate an Agent or broker once appointed.
Bay State agrees to be responsible for all licensing or other fees required
under pertinent state insurance laws to properly authorize Agents or brokers for
the sale of the Contracts; however, the foregoing shall not limit Bay State's
right to collect such amount from any person or entity other than MMLISI.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and
Agents in connection with the sale of Contracts shall be paid by Bay State, on
behalf of MMLISI, to the persons entitled thereto in accordance with the
applicable agreement between each such broker or Agent and Bay State or a
general agent thereof. MMLISI shall assist Bay State in the payment of such
amounts as Bay State shall reasonably request, provided that MMLISI shall not be
required to perform any acts that would subject it to registration under the
insurance laws of any state. The responsibility of MMLISI shall include the
performance of all activities by MMLISI necessary in order that the payment of
such amounts fully complies with all applicable federal and state securities
laws. Unless applicable federal or state securities law shall require, Bay
State retains the ultimate right to determine the commission rate paid to its
Agents.
14. MMLISI Compensation. As payment for its services hereunder, MMLISI shall
receive an annual fee in the amount of $______ per year. Payments shall
commence and be made no later than December 31 of the year in which a Contract
is issued.
15. Books and Records. MMLISI and Bay State shall each cause to be maintained
and preserved for the period prescribed such accounts, books, and other
documents as are required of it by the 1934 Act and any other applicable laws
and regulations. In particular, without limiting the foregoing, MMLISI shall
cause all the books and records in connection with the offer and sale of the
Contracts by its registered representatives to be maintained and preserved in
conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to
the extent that such
<PAGE>
requirements are applicable to the Contracts. The books, accounts, and records
of MMLISI and Bay State as to all transactions hereunder shall be maintained so
as to disclose clearly and accurately the nature and details of the
transactions. The payment of premiums, purchase payments, commissions and other
fees and payments in connection with the Contracts by its registered
representatives shall be reflected on the books and records of MMLISI as
required under applicable NASD regulations and federal and state securities laws
requirements.
MMLISI and Bay State, from time to time during the term of this Agreement,
shall divide the administrative responsibility for maintaining and preserving
the books, records and accounts kept in connection with the Contracts; provided,
however, in the case of books, records and accounts kept pursuant to a
requirement of applicable law or regulation, the ultimate and legal
responsibility for maintaining and preserving such books, records and accounts
shall be that of the party which is required to maintain or preserve such books,
records and accounts under the applicable law or regulation, and such books,
records and accounts shall be maintained and preserved under the supervision of
that party. MMLISI and Bay State shall each cause the other to be furnished
with such reports as it may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under such regulations and laws, and
under the insurance laws of the Commonwealth of Massachusetts and any other
applicable states or jurisdictions.
MMLISI and Bay State each agree and understand that all documents, reports,
records, books, files and other materials required under applicable Rules and
federal and state securities laws shall be the property of MMLISI, unless such
documents, reports, records, books, files and other materials are required by
applicable regulation or law to be also maintained by Bay State, in which case
such material shall be the joint property of MMLISI and Bay State. All other
documents, reports, records, books, files and other materials maintained
relative to this Agreement shall be the property of Bay State. Upon termination
of this Agreement, all said material shall be returned to the applicable party.
MMLISI and Bay State shall establish and maintain facilities and procedures
for the safekeeping of all books, accounts, records, files, and other materials
related to this Agreement. Such books, accounts, records, files, and other
materials shall remain confidential and shall not be voluntarily disclosed to
any other person or entity except as described below in section 16..
16. Availability of Records. MMLISI and Bay State shall each submit to all
regulatory and administrative bodies having
<PAGE>
jurisdiction over the sales of the Contracts, present or future, any
information, reports, or other material that any such body by reason of this
Agreement may request or require pursuant to applicable laws or regulations. In
particular, without limiting the foregoing, Bay State agrees that any books and
records it maintains pursuant to paragraph 15 of this Agreement which are
required to be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be
subject to inspection by the SEC in accordance with Section 17(a) of the 1934
Act and Sections 30 and 31 of the 1940 Act.
17. Confirmations. Bay State agrees to prepare and mail a confirmation for
each transaction in connection with the Contracts at or before the completion
thereof as required by the 1934 Act and applicable interpretations thereof,
including Rule 10b-10 thereunder. Each such confirmation shall reflect the
facts of the transaction, and the form thereof will show that it is being sent
on behalf of MMLISI acting in the capacity of agent for Bay State.
18. Indemnification. Bay State shall indemnify MMLISI, its registered
representatives, officers, directors, employees, agents and controlling persons
and hold such persons harmless, from and against any and all losses, damages,
liabilities, claims, demands, judgments, settlements, costs and expenses of any
nature whatsoever (including reasonable attorneys' fees and disbursements)
resulting or arising out of or based upon an allegation or finding that: (i) the
Registration Statement or any application or other document or written
information provided by or on behalf of Bay State includes any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to Bay State by MMLISI or its
registered representatives specifically for use in the preparation thereof, or
(ii) there is a misrepresentation, breach of warranty or failure to fulfill any
covenant or warranty made or undertaken by Bay State hereunder.
MMLISI will indemnify Bay State, its officers, directors, employees, agents
and controlling persons and hold such persons harmless, from and against any and
all losses, damages, liabilities, claims, demands, judgments, settlements, costs
and expenses of any nature whatsoever (including reasonable attorneys' fees and
disbursements) resulting or arising out of or based upon an allegation or
finding that: (i) MMLISI or its registered representatives offered or sold or
engaged in any activity relating to the offer and sale of the Contracts which
was in violation of any provision of the federal securities laws
<PAGE>
or, (ii) there is a material misrepresentation, material breach of warranty or
material failure to fulfill any covenant or warranty made or undertaken by
MMLISI hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of
notice of the commencement of any action by a third party, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this paragraph 18, notify the indemnifying party of the commencement
thereof; but the omission to notify the indemnifying party will not relieve the
indemnifying party from liability which the indemnifying party may have to any
indemnified party otherwise than under this paragraph. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
19. Independent Contractor. MMLISI shall be an independent contractor. MMLISI
is responsible for its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or employees or to others
through its agents or employees. MMLISI assumes full responsibility for its
agents and employees under applicable statutes and agrees to pay all employer
taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this
Agreement shall remain in full force and effect for the initial term of the
Agreement, which shall be for a two year period commencing on the date first
above written, and this Agreement shall continue in full force and effect from
year to year thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days
written notice to the other party, or at any time upon the mutual written
consent of the parties hereto. This Agreement shall automatically be terminated
in the event of its assignment. Subject to Bay State's approval, however, MMLISI
may delegate any duty or function assigned to it in this agreement provided that
such delegation is permissible under applicable law. Upon termination of this
Agreement, all authorizations, rights and obligations shall cease except the
obligations to settle accounts hereunder, including the settlement of monies due
in connection with the Contracts in effect at the time of termination or issued
pursuant to applications received by Bay State prior to termination.
<PAGE>
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be interpreted in accordance with the laws of the Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MMLISI and Bay State to the Separate
Account hereunder are not to be deemed exclusive and MMLISI and Bay State shall
be free to render similar services to others so long as their services hereunder
are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument executed
by all parties hereto.
24. Interests in and of MMLISI. It is understood that any of the
policyholders, directors, officers, employees and agents of Bay State may be a
shareholder, director, officer, employee, or agent of, or be otherwise
interested in, MMLISI, any affiliated person of MMLISI, any organization in
which MMLISI may have an interest, or any organization which may have an
interest in MMLISI; that MMLISI, any such affiliated person or any such
organization may have an interest in Bay State; and that the existence of any
such dual interest shall not affect the validity hereof or of any transaction
hereunder except as otherwise provided in the Charter, Articles of
Incorporation, or By-Laws of Bay State and MMLISI, respectively, or by specific
provision of applicable law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized and seals to be
affixed, as of the day and year first above written.
ATTEST: MML BAY STATE LIFE
INSURANCE COMPANY, on its
behalf and on behalf of
__________SEPARATE ACCOUNT
By:_______________________
ATTEST: MML INVESTORS SERVICES, INC.
By: ________________________
<PAGE>
April 15, 1996
MML Bay State Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Post-Effective Amendment No. 1 to Registration Statement No. 33-82060 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 1 to Registration Statement No. 33-82060 under the Securities Act
of 1933 for MML Bay State Life Insurance Company's ("MML Bay State") Flexible
Premium Variable Whole Life Insurance Policies (the "Policies"). MML Bay State
Variable Life Separate Account I issues the Policies.
As Attorney for MML Bay State, I provide legal advice to MML Bay State in
connection with the operation of its variable products. In such role I am
familiar with the registration statement for the Policies. In so acting, I have
made such examination of the law and examined such records and documents as in
my judgment are necessary or appropriate to enable me to render the opinion
expressed below. I am of the following opinion:
1. MML Bay State is a valid and subsisting corporation, organized and operated
under the laws of the State of Missouri and is subject to regulation by the
Missouri Commissioner of Insurance.
2. MML Bay State Variable Life Separate Account I is a separate account
validly established and maintained by MML Bay State in accordance with Missouri
law.
3. All of the prescribed corporate procedures for the issuance of the Policies
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
James M. Rodolakis
Attorney
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MML Bay State Life Insurance Company
We consent to the inclusion in Post-Effective Amendment No. 1 to the
Registration Statement of MML Bay State Variable Life Separate Account I
(Variable Life Select segment) on Form N-8B-2 (Registration No. 33-82060), of
our report dated February 23, 1996 on our audits of the financial statements of
MML Bay State Life Insurance Company, which include explanatory paragraphs
relating to prior year adjustments and the pending merger between Massachusetts
Mutual Life Insurance Company and Connecticut Mutual Life Insurance Company, and
our report dated February 9, 1996 on our audit of MML Bay State Variable Life
Separate Account I (Variable Life Select segment). We also consent to the
reference to our Firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 26, 1996
<PAGE>
April 1, 1996
MML Bay State Life Insurance Company
1295 State Street
Springfield, MA 01111
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 1 to
Registration Statement No. 33-82060 for MML Bay State Life Insurance Company's
Flexible Premium Variable Whole Life Insurance Policies (the "Policies") under
the Securities Act of 1933. The prospectus included in the post-effective
amendment describes the Policies. I am familiar with the forms of the Policies
and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix A of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 1 to Registration Statement No. 33-82060, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ Peter Van Beaver
Peter Van Beaver, FSA, MAAA
Assistant Vice President
and Actuary
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Isadore Jermyn, President, Chief Executive Officer and
Chairman of the Board of Directors of MML Bay State Life Insurance Company ("MML
Bay State"), does hereby constitute and appoint Lawrence V. Burkett, Thomas F.
English, Richard M. Howe, and Michael Berenson, and each of them individually,
as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Isadore Jermyn
- ------------------------------------- ---------------------
Isadore Jermyn Witness
President, Chief Executive Officer
and Chairman of the Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Ann Iseley, Chief Financial Officer of MML Bay State Life
Insurance Company ("MML Bay State"), does hereby constitute and appoint Lawrence
V. Burkett, Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 15th day of March,
1996.
/s/ Ann Iseley
- -------------------------- ------------------------
Ann Iseley Witness
Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Paul D. Adornato, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 20th day of March,
1996.
/s/ Paul D. Adornato
- --------------------------- ----------------------
Paul D. Adornato Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Donald D. Cameron, Senior Vice President and a member of the
Board of Directors of MML Bay State Life Insurance Company ("MML Bay State"),
does hereby constitute and appoint Lawrence V. Burkett, Thomas F. English,
Richard M. Howe, and Michael Berenson, and each of them individually, as his
true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Donald D. Cameron
- -------------------------------- -------------------------
Donald D. Cameron Witness
Senior Vice President and a
member of the Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Daniel J. Fitzgerald, a member of the Board of Directors of
MML Bay State Life Insurance Company ("MML Bay State"), does hereby constitute
and appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 18th day of March,
1996.
/s/ Daniel J. Fitzgerald
- ---------------------------------- -----------------------------
Daniel J. Fitzgerald Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Arthur D. Foresi, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 18th day of March,
1996.
/s/ Arthur D. Foresi
- -------------------------------- --------------------------
Arthur D. Foresi Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Gary T. Huffman, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 25th day of March,
1996.
/s/ Gary T. Huffman
- ------------------------------ ---------------------------
Gary T. Huffman Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Douglas J. Jangraw, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Douglas J. Jangraw
- ------------------------------- ---------------------------
Douglas J. Jangraw Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, John J. Libera, Jr., a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 21st day of March,
1996.
/s/ John J. Libera, Jr.
- --------------------------------- ---------------------------
John J. Libera, Jr. Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, William T. McElmurray, a member of the Board of Directors of
MML Bay State Life Insurance Company ("MML Bay State"), does hereby constitute
and appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 19th day of March,
1996.
/s/ William T. McElmurray
- -------------------------------- --------------------------
William T. McElmurray Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Stuart H. Reese, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Stuart H. Reese
- ---------------------------- -----------------------
Stuart H. Reese Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Jeanne M. Stamant, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 19th day of March,
1996.
/s/ Jeanne M. Stamant
- ---------------------------- --------------------------
Jeanne M. Stamant Witness
Member, Board of Directors
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 7,261,981
<INVESTMENTS-AT-VALUE> 7,286,443
<RECEIVABLES> 177,842
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,464,285
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
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</TABLE>
