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Registration No. 33-82060
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 2
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, 1997 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, 1996 was filed on February 28, 1997.
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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
- ----------- -------
<S> <C>
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
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
</TABLE>
2
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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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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
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
</TABLE>
3
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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<CAPTION>
Item No. of
Form N-8B-2 Caption
- ----------- -------
<S> <C>
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
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Report of Independent Accountants and Financial Statements
</TABLE>
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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"):
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
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, 1997.
*Title may vary in some jurisdictions
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<TABLE>
<CAPTION>
Table Of Contents
<S> <C>
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
- Tables I, 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
- Examples ........................................................................ 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 ............................................................. 20
Allocation of Net Premium Payments .................................................. 20
Transfers ........................................................................... 20
</TABLE>
2
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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 Charges ..................................................................... 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 .............................................. 23
- Account Value ................................................................... 23
- Investment Return ............................................................... 23
- Cash Surrender Value ............................................................ 23
- Withdrawals ..................................................................... 23
Policy Loan Privilege ............................................................... 23
- General ......................................................................... 23
- Source of Loan .................................................................. 23
- Interest Charged ................................................................ 23
- Repayment ....................................................................... 24
- 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
</TABLE>
3
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<TABLE>
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Fixed Account Payment Option ..................................................... 29
Fixed Time Payment Option ........................................................ 29
Interest Payment Option .......................................................... 29
Lifetime Payment Option .......................................................... 29
Joint Lifetime Payment Option .................................................... 29
Joint Lifetime Payment Option with Reduced Payments .............................. 29
Withdrawal Rights Under Payment Option ........................................... 29
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 ................................................................... 31
Experts ............................................................................. 31
Financial Statements ................................................................ 31
Appendix A
Illustrations of Death Benefits,
Cash Surrender Values, Account Values
and Accumulated Premiums ......................................................... 53
</TABLE>
4
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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
5
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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.
6
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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 of the
Separate Account 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:
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
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.)
7
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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 of the Separate Account 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 of the Separate Account 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 of the Separate
Account 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 of the Separate Account
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 4%. 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 1996, the aggregate amount of such
deductions from premiums was $1,228,703 for sales charges and $1,228,703 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 1996, the aggregate amount of such charges was $956,094.
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 1996, the aggregate
mortality charges were $7,714,445.
Surrender Charges. 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
8
<PAGE>
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
<TABLE>
<CAPTION>
<S> <C> <C>
Age 25 Age 40 Age 55
$6.26 $9.91 $28.49
</TABLE>
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 1996 was $161,490.
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.)
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.)
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.)
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 the
District of Columbia and all states except New York.
MassMutual currently plans to redomesticate MML Bay State from the State of
Missouri to the State of Connecticut. MassMutual believes that the proposed
redomestication will not adversely affect Policyowners. The Company will notify
Policyowners that the redomestication has occurred by sending Policyowners an
endorsement to their Policy reflecting the redomestication.
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, the District of
Columbia, Puerto Rico and certain provinces of Canada.
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. As of December 31, 1996, MassMutual had
estimated statutory assets in excess of $55 billion, and estimated total assets
under management in excess of $130 billion.
9
<PAGE>
OppenheimerFunds, Inc.
OppenheimerFunds, Inc. ("OFI") is an investment adviser organized under the laws
of Colorado as a corporation; it was originally organized in 1959. It (including
a subsidiary) currently advises U.S. investment companies with assets
aggregating over $62 billion as of December 31, 1996, with over 3 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 is a no-load, open-end, management investment company that is
registered under the Investment Company Act of 1940. The Oppenheimer Trust is an
open-end, diversified, management investment company 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 advisers 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
irreconcil-
10
<PAGE>
able conflicts. Such steps may include: (i) withdrawing the assets allocable to
some or all of the separate accounts from 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 objectives 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. The
assets of this Fund are normally expected to be invested primarily in common
stocks and other equity-type securities.
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 (such securities generally 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 Management, Inc. ("Concert") served as the investment
sub-adviser to MML Equity Fund and the Equity Sector of the MML Blend Fund from
1993-1996. Concert merged with and into David L. Babson & Company, Inc.
("Babson") effective December 31, 1996. Both Concert and Babson are wholly-owned
subsidiaries of Babson Acquisition Corporation, which is a controlled subsidiary
of MassMutual. Thus, effective January 1, 1997, Babson serves as the investment
sub-adviser to MML Equity Fund and the Equity Sector of the MML Blend Fund. Both
MassMutual and Babson are registered investment advisers under the Investment
Advisers Act of 1940.
During 1996, MassMutual earned the following investment management fee from each
of the following funds:
<TABLE>
<CAPTION>
<S> <C>
MML Equity Fund......................................$5,787,673
MML Money Market Fund................................ 612,946
MML Managed Bond Fund................................ 820,434
MML Blend Fund.......................................$7,525,674
</TABLE>
OFI serves as Investment Adviser to the Oppenheimer Funds. 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. The management fee rate for the Capital Appreciation
Fund, the Growth Fund, and the Global Securities Fund 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 1996, OFI earned the following investment management fee from each of the
following funds.
<TABLE>
<CAPTION>
<S> <C>
Oppenheimer Capital
Appreciation Fund...................................$3,382,840
Oppenheimer Growth Fund..............................$1,139,255
Oppenheimer Global
Securities Fund.....................................$3,395,740
Oppenheimer Strategic Bond Fund......................$ 618,338
</TABLE>
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, 1996, 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,
Babson 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.
12
<PAGE>
TABLE I -- MML FUNDS
EFFECTIVE ANNUAL RATES OF RETURN
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Fund 20 Years 15 Years 10 Years 5 Years 1 Year
- --------------------------------------------------------------------------------------------------
Equity 14.72% 16.01% 13.78% 14.71% 20.25%
- --------------------------------------------------------------------------------------------------
Money Market -- 6.83 5.76 4.13 5.01
- --------------------------------------------------------------------------------------------------
Managed Bond -- 10.54 8.34 7.27 3.25
- --------------------------------------------------------------------------------------------------
Blend -- 13.13* 11.89 11.55 13.95
- --------------------------------------------------------------------------------------------------
</TABLE>
*The figures shown are from inception of the MML Blend Fund, which commenced
operations on February 3, 1984.
TABLE II -- OPPENHEIMER FUNDS
EFFECTIVE ANNUAL RATES OF RETURN
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Fund Since Inception 5 Years 1 Year
- ------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation 15.66%* 16.68% 20.16%
- ------------------------------------------------------------------------------------------------
Oppenheimer Global Securities 10.65* 12.38 17.80
- ------------------------------------------------------------------------------------------------
Oppenheimer Growth 14.52* 16.24 25.20
- ------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond 7.35* -- 12.07
- ------------------------------------------------------------------------------------------------
</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>
1996 20.25% 5.01% 3.25% 13.95%
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>
1996 25.20% 12.07% 20.16% 17.80%
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 I, 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 Current Schedule of Charges Using Guaranteed Mortality and 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
1996 27,600 124,958 236,171 108,161 204,425
- ----------------------------------------------------------------------------------------------------------------------------------
</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 16,800 14,964 100,000 13,330 100,000
1996 18,000 16,151 100,000 14,295 100,000
- ----------------------------------------------------------------------------------------------------------------------------------
</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
1996 15,600 23,834 100,000 21,517 100,000
- ----------------------------------------------------------------------------------------------------------------------------------
</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
1996 18,000 22,841 100,000 20,360 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
</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
1996 13,200 20,974 100,000 19,128 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
</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
1996 12,000 19,920 100,000 18,280 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
</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
1996 8,400 7,823 100,000 7,218 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
</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
1996 4,800 3,082 100,000 2,833 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
</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
18
<PAGE>
change from Option 1 to Option 2, however, will require evidence of insurability
satisfactory to MML Bay State. In addition, 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 of the
Separate Account 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)
of the Separate Account 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.)
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.
19
<PAGE>
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 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.) 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.)
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 of the Separate Account 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
20
<PAGE>
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.)
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 Charges
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) of the Separate
Account 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 Charges. 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
21
<PAGE>
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.
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 of the
Separate Account 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
<TABLE>
<S> <C> <C>
Age 25 Age 40 Age 55
$6.26 $9.91 $28.49
</TABLE>
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.)
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<PAGE>
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 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 of the Separate Account 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 of the Separate Account 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 of the
Separate Account 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.
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<PAGE>
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 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.)
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) of the Separate Account 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.
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<PAGE>
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 adviser
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.
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. Where the
provisions of Code Section 7702(f) do not cause a taxable event, a withdrawal is
taxable only to the extent that it exceeds the Policyowner's unrecovered
premiums. 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 adviser 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 adviser 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
25
<PAGE>
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 adviser
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, 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 adviser
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 adviser. 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 cer-
26
<PAGE>
tain 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.
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 insuffi-
27
<PAGE>
cient 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 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
28
<PAGE>
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 be authorized
for payment. Payments are made promptly after authorization.
If payment of a Cash Surrender 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. Interest is paid on the Death Benefit from the date of
death to the date of payment.
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
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. MML Investors Services, Inc. ("MMLISI"),
also located at 1414 Main Street, Springfield, MA 01144-1013, 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").
29
<PAGE>
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. Compensation paid to MML Distributors and MMLISI during 1996 totaled
$46,541. Commissions will be paid through MMLISI and MML Distributors to agents
and selling brokers for selling the Policy. During 1996 such payments amounted
to $18,953,285.
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 and Senior Vice President-Operations
Director (since 1987) and Senior Vice President-Operations, MML Bay State,
since 1996; Senior Vice President, MassMutual, since 1986.
Lawrence V. Burkett, Jr., Director, President and Chief Executive Officer
Director, President and Chief Executive Officer, MML Bay State, since 1996;
Executive Vice President and General Counsel, MassMutual, since 1993; Senior
Vice President and Deputy General Counsel, 1992-1993.
John B. Davies, Director
Director, MML Bay State, since 1996; Executive Vice President, MassMutual,
since 1994; Associate Executive Vice President, 1994-1994; General Agent,
1982-1993.
Anne Melissa Dowling, Director and Senior Vice President-Large Corporate
Marketing
Director and Senior Vice President-Large Corporate Marketing, MML
Bay State, since 1996; Senior Vice President, MassMutual, since 1996; Chief
Investment Officer, Connecticut Mutual Life Insurance Company, 1994-1996;
Senior Vice President-International, Travelers Insurance Co., 1987-1993.
30
<PAGE>
Thomas J. Finnegan, Jr., Director and Secretary
Director, since 1997, and Secretary, MML Bay State, since 1990; Vice
President, Secretary and Associate General Counsel, MassMutual, since
1984.
Daniel J. Fitzgerald, Director
Director, MML Bay State, since 1994; Executive Vice President, Corporate
Financial Operations, MassMutual, since 1994; Senior Vice President,
1991-1994.
Maureen R. Ford, Director and Senior Vice President-Annuity Marketing
Director and Senior Vice President-Annuity Marketing, MML Bay State, since
1996; Senior Vice President, MassMutual, since 1996; Marketing Officer,
Connecticut Mutual Life Insurance Company, 1989-1996.
Isadore Jermyn, Director and Senior Vice President and Actuary
Director (since 1990) and Senior Vice President and Actuary, MML Bay State,
since 1996; Senior Vice President and Actuary, MassMutual, since 1995; Vice
President and Actuary, 1980-1995.
Stuart H. Reese, Director and Senior Vice President-Investments
Director (since 1994) and Senior Vice President-Investments, MML Bay State,
since 1996; Senior Vice President, MassMutual, since 1993; Investment
Manager, Aetna Life and Casualty and Affiliates, 1979-1993.
PRINCIPAL OFFICERS (other than those who are also Directors):
Ann Iseley
Treasurer, MML Bay State, since 1996; Vice President and Treasurer,
MassMutual, since 1996; Chief Financial and Operations Officer, Connecticut
Mutual Financial Services, 1994-1996; Controller, The Mack Company,
1993-1994; Vice President-Finance, Mutual of New York, 1988-1993.
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 Variable Life Select segment 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 includes explanatory paragraphs relating to the use
of statutory accounting practices rather than generally accepted accounting
principles.
Actuarial matters in the Prospectus have been examined by Craig Waddington, 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.
31
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
MML Bay State Life Insurance Company
We have audited the statements 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, 1996, and the related statements of
operations and statements of changes in net assets for the periods indicated
thereon. 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, 1996 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, 1996, the results of their operations and the
changes in their net assets for the periods indicated thereon, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 4, 1997
32
<PAGE>
MML Bay State Variable Life Separate Account I - Variable Life Select
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2).............. 1,025,995 2,181,902 80,410 421,792
=========== =========== =========== ===========
Identified cost (Note 3B).............. $28,925,650 $ 2,181,902 $ 963,222 $ 9,097,539
=========== =========== =========== ===========
Value (Note 3A)........................ $30,560,644 $ 2,181,902 $ 968,813 $ 9,268,171
Dividends receivable.................... 1,423,354 8,384 15,394 316,581
----------- ----------- ----------- -----------
Total assets.......................... 31,983,998 2,190,286 984,207 9,584,752
LIABILITIES
Payable to MML Bay State
Life Insurance Company................. 251,840 111,532 2,492 27,449
----------- ----------- ----------- -----------
NET ASSETS.............................. $31,732,158 $ 2,078,754 $ 981,715 $ 9,557,303
=========== =========== =========== ===========
Net Assets:
For variable life
insurance policies..................... $31,725,512 $ 2,073,418 $ 976,202 $ 9,551,149
Retained in Variable Life
Separate Account I by MML Bay
State Life Insurance Company........... 6,646 5,336 5,513 6,154
----------- ----------- ----------- -----------
Net assets............................ $31,732,158 $ 2,078,754 $ 981,715 $ 9,557,303
=========== =========== =========== ===========
Accumulation units (Note 8)
Number of units:
Policyowners.......................... 23,875,507 1,943,137 885,467 7,768,168
MML Bay State Life
Insurance Company.................... 5,000 5,000 5,000 5,000
----------- ----------- ----------- -----------
Total units:.......................... 23,880,507 1,948,137 890,467 7,773,168
=========== =========== =========== ===========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1996...................... $ 1.33 $ 1.07 $ 1.10 $ 1.23
December 31, 1995...................... $ 1.11 $ 1.02 $ 1.07 $ 1.08
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2)............. 186,929 174,805 228,255 201,309
=========== ============ ============ ============
Identified cost (Note 3B)............. $ 6,912,346 $ 4,353,242 $ 3,695,253 $ 1,015,650
=========== ============ ============ ============
Value (Note 3A)....................... $ 7,232,280 $ 4,761,677 $ 4,024,134 $ 1,024,663
Dividends receivable -- -- -- --
----------- ------------ ------------ ------------
Total assets......................... 7,232,280 4,761,677 4,024,134 1,024,663
LIABILITIES
Payable to MML Bay State
Life Insurance Company................ 136,308 68,220 33,626 3,188
----------- ------------ ------------ ------------
NET ASSETS............................. $ 7,095,972 $ 4,693,457 $ 3,990,508 $ 1,021,475
=========== ============ ============ ============
Net Assets:
For variable life
insurance policies.................... $ 7,089,132 $ 4,686,562 $ 3,984,803 $ 1,015,547
Retained in Variable Life
Separate Account I by MML Bay
State Life Insurance Company......... 6,840 6,895 5,705 5,928
----------- ------------ ------------ ------------
Net assets........................... $ 7,095,972 $ 4,693,457 $ 3,990,508 $ 1,021,475
=========== ============ ============ ============
Accumulation units (Note 8)
Number of units:
Policyowners......................... 5,184,994 3,399,303 3,494,543 856,826
MML Bay State Life
Insurance Company................... 5,000 5,000 5,000 5,000
----------- ------------ ------------ ------------
Total units:......................... 5,189,994 3,404,303 3,499,543 861,826
=========== ============ ============ ============
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1996..................... $ 1.37 $ 1.38 $ 1.14 $ 1.19
December 31, 1995..................... $ 1.14 $ 1.11 $ .98 $ 1.06
</TABLE>
See Notes to Financial Statements
33
<PAGE>
MML Bay State Variable Life Separate Account I - Variable Life Select
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
MML MML
d MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B)........................... $ 1,423,504 $ 54,551 $ 40,725 $ 441,371
Expenses
Mortality and expense risk fee (Note 4)....... 85,458 6,099 2,866 24,369
------------ ----------- ----------- -----------
Net investment income (loss) (Note 3C)........ 1,338,046 48,452 37,859 417,002
------------ ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments
Net realized gain (loss) on investments
(Notes 3B, 3C and 6)......................... 38,361 -- (5,115) 16,801
Change in net unrealized
appreciation/depreciation of investments..... 1,655,378 -- 5,128 175,645
------------ ----------- ----------- -----------
Net gain on investments....................... 1,693,739 -- 13 192,446
------------ ----------- ----------- -----------
Net increase in net assets resulting
from operations.............................. $ 3,031,785 $ 48,452 $ 37,872 $ 609,448
============ =========== =========== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B)........................... $ 88,672 $ 72,624 $ -- $ 45,775
------------ ------------ ------------ ------------
Expenses
Mortality and expense risk fee (Note 4)....... 17,908 11,706 10,479 2,605
------------ ------------ ------------ ------------
Net investment income (loss) (Note 3C)........ 70,764 60,918 (10,479) 43,170
------------ ------------ ------------ ------------
Net realized and unrealized gain (loss)
on investments
Net realized gain (loss) on investments
(Notes 3B, 3C and 6)......................... 13,931 9,715 3,188 1,575
Change in net unrealized
appreciation/depreciation of investments..... 284,426 395,992 327,944 8,504
------------ ------------ ------------ ------------
Net gain on investments....................... 298,357 405,707 331,132 10,079
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations.............................. $ 369,121 $ 466,625 $ 320,653 $ 53,249
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
MML Bay State Variable Life Separate Account I - Variable Life Select
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................. $ 1,338,046 $ 48,452 $ 37,859 $ 417,002
Net realized gain on investments............. 38,361 -- (5,115) 16,801
Change in net unrealized
appreciation/depreciation of investments.... 1,655,378 -- 5,128 175,645
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations............................. 3,031,785 48,452 37,872 609,448
----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Transfer of net premium...................... 29,910,433 2,644,110 973,885 8,924,889
Transfer of surrender values................. (99,769) -- (26,686) (74,239)
Transfer due to death benefits............... (8,937) -- (981) (1,994)
Transfer due to policy loans................. (13,345) -- -- (6,322)
Transfer due to reimbursement (payment) of
accumulation unit value fluctuation......... 9,677 (221) 132 21,221
Withdrawal due to charges for
administrative and insurance costs.......... (4,966,530) (234,736) (142,715) (1,271,356)
Divisional transfers......................... 437,378 (945,250) 45,289 175,619
----------- ----------- ----------- -----------
Net increase in net assets resulting
from capital transactions................... 25,268,907 1,463,903 848,924 7,767,818
----------- ----------- ----------- -----------
Total increase................................ 28,300,692 1,512,355 886,796 8,377,266
NET ASSETS, at beginning of the year.......... 3,431,466 566,399 94,919 1,180,037
----------- ----------- ----------- -----------
NET ASSETS, at end of the year................ $31,732,158 $ 2,078,754 $ 981,715 $ 9,557,303
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................. $ 70,764 $ 60,918 $ (10,479) $ 43,170
Net realized gain on investments............. 13,931 9,715 3,188 1,575
Change in net unrealized
appreciation/depreciation of investments.... 284,426 395,992 327,944 8,504
----------- ------------ ------------ ------------
Net increase in net assets resulting
from operations............................. 369,121 466,625 320,653 53,249
----------- ------------ ------------ ------------
Capital transactions: (Note 8)
Transfer of net premium...................... 7,016,705 4,377,763 3,782,940 1,053,635
Transfer of surrender values................. (7,461) (4,953) (4,781) (1,588)
Transfer due to death benefits............... (973) (244) (837) (230)
Transfer due to policy loans................. (1,328) (1,344) (2,948) --
Transfer due to reimbursement (payment) of
accumulation unit value fluctuation......... 3,582 5,113 5,187 121
Withdrawal due to charges for
administrative and insurance costs.......... (1,129,387) (636,020) (635,695) (120,419)
Divisional transfers......................... 212,004 63,427 88,724 (77,191)
----------- ------------ ------------ ------------
Net increase in net assets resulting
from capital transactions................... 6,093,142 3,803,742 3,232,590 854,328
----------- ------------ ------------ ------------
Total increase................................ 6,462,263 4,270,367 3,553,243 907,577
NET ASSETS, at beginning of the year.......... 633,709 423,090 437,265 113,898
----------- ------------ ------------ ------------
NET ASSETS, at end of the year................ $ 7,095,972 $ 4,693,457 $ 3,990,508 $ 1,021,475
=========== ============ ============ ============
</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
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................ $ 136,013 $ 4,497 $ 1,668 $ 36,076
Net realized gain on investments............ 853 -- 335 818
Change in net unrealized appreciation/
depreciation of investments................ (20,383) -- 463 (5,013)
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations............................ 116,483 4,497 2,466 31,881
----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Transfer of net premium..................... 3,719,720 653,591 95,661 1,212,040
Transfer from MML Bay State
Life Insurance Company..................... 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
Withdrawal due to charges for administrative
and insurance costs........................ (423,556) (37,246) (8,402) (111,747)
Divisional transfers........................ 317 (59,500) -- 41,823
----------- ----------- ----------- -----------
Net increase in net assets resulting
from capital transactions.................. 3,314,983 561,902 92,453 1,148,156
----------- ----------- ----------- -----------
Total increase............................... 3,431,466 566,399 94,919 1,180,037
NET ASSETS, at beginning of the period....... -- -- -- --
----------- ----------- ----------- -----------
NET ASSETS, at end of the year............... $ 3,431,466 $ 566,399 $ 94,919 $ 1,180,037
=========== =========== =========== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................ $ (482) $ (413) $ (359) $ 2,109
Net realized gain on investments............ 577 382 22 156
Change in net unrealized appreciation/
depreciation of investments................ 35,508 12,442 937 508
---------- ---------- ---------- ----------
Net increase in net assets resulting
from operations............................ 35,603 12,411 600 2,773
---------- ---------- ---------- ----------
Capital transactions: (Note 8)
Transfer of net premium..................... 659,113 441,054 477,873 123,076
Transfer from MML Bay State
Life Insurance Company..................... 5,000 5,000 5,000 5,000
Transfer due to death benefits.............. -- -- -- --
Transfer due to reimbursement (payment) of
accumulation unit value fluctuation........ 730 2,930 (990) 98
Withdrawal due to charges for administrative
and insurance costs........................ (73,638) (41,080) (54,902) (15,049)
Divisional transfers........................ 6,901 2,775 9,684 (2,000)
---------- ---------- ---------- ----------
Net increase in net assets resulting
from capital transactions.................. 598,106 410,679 436,665 111,125
---------- ---------- ---------- ----------
Total increase............................... 633,709 423,090 437,265 113,898
NET ASSETS, at beginning of the period....... -- -- -- --
---------- ---------- ---------- ----------
NET ASSETS, at end of the year............... $ 633,709 $ 423,090 $ 437,265 $ 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 serves as investment
manager. Concert Capital Management, Inc. ("Concert") served as the
investment sub-advisor to MML Equity Fund and the Equity Sector of the MML
Blend Fund from 1993-1996. Concert merged with and into David L. Babson &
Company, Inc. ("Babson") effective December 31, 1996. At such time, both
Concert and Babson were wholly-owned subsidiaries of Babson Acquisition
Corporation, which is a controlled subsidiary of MassMutual. Thus,
effective January 1, 1997, Babson serves as the investment sub-advisor to
MML Equity Fund and the Equity Sector of the MML Blend Fund. MassMutual
paid Concert a quarterly fee equal to an annual rate of .13% of the
average daily net asset value of MML Equity Fund and the Equity Sector of
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 OppenheimerFunds, Inc. ("OFI"), a controlled
subsidary of MassMutual, serves as investment advisor (prior to January 5,
1996, OFI was known as Oppenheimer Management Corporation).
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.
38
<PAGE>
Notes To Financial Statements (Continued)
5. SALES AGREEMENTS
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), a
wholly-owned subsidiary of MassMutual, serves as principal underwriter of
the policies pursuant to an underwriting and servicing agreement among MML
Distributors, MML Bay State and Separate Account I. MML Distributors is
registered with the Securities and Exchange Commission (the "SEC") as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"). MML
Distributors may enter into selling agreements with other broker-dealers
who are registered with the SEC and are members of the NASD in order to
sell the policies.
Prior to May 1, 1996, MML Investors Services, Inc. ("MMLISI") a
wholly-owned subsidiary of MassMutual, served as principal underwriter of
the policies. Effective May 1, 1996, MMLISI serves as co-underwriter of
the policies pursuant to underwriting and servicing agreements among
MMLISI, MML Bay State and Separate Account I, MMLISI is registered with
the SEC as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the NASD. Registered representatives of MMLISI sell the
policies as authorized variable life insurance agents under applicable
state insurance laws.
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.
39
<PAGE>
Notes To Financial Statements (Continued)
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Capital
For the Year Ended Equity Market Bond Blend Appreciation
December 31, 1996 Division Division Division Division Division
----------------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Cost of purchases...................... $25,502,071 $ 2,604,258 $ 1,050,280 $ 8,153,889 $ 6,300,673
Proceeds from sales.................... 290,197 995,809 182,876 269,875 94,692
Average monthly value of securities.... 33,927,244 2,451,457 1,121,288 9,728,447 7,079,714
<CAPTION>
Oppenheimer Oppenheimer
Oppenheimer Global Strategic
For the Year Ended Growth Securities Bond
December 31, 1996 Division Division Division
----------------- ------------ ---------- -----------
<S> <C> <C> <C>
Cost of purchases...................... $ 4,044,016 $3,274,666 $ 1,154,156
Proceeds from sales.................... 131,922 60,989 253,282
Average monthly value of securities.... 4,595,374 4,265,095 1,029,819
</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 Year Ended December 31, 1996 and MML MML Oppenheimer
*For the Period July 24, 1995 MML Money Managed MML Capital
(Date of Commencement of Operations) Equity Market Bond Blend Appreciation
Through December 31, 1995 Division Division Division Division Division
------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
December 31, 1996......................... 10.18% 2.00% 3.40% 4.88% 5.23%
*December 31, 1995........................ 9.84% 1.81% 7.03% 8.19% 16.64%
<CAPTION>
For the Year Ended December 31, 1996 and Oppenheimer Oppenheimer
*For the Period July 24, 1995 Oppenheimer Global Strategic
(Date of Commencement of Operations) Growth Securities Bond
Through December 31, 1995 Division Division Division
------------------------- -------- -------- --------
<S> <C> <C> <C>
December 31, 1996......................... 10.34% 7.90% 5.45%
*December 31, 1995........................ 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 for the period July 24, 1995 through December 31,
1995 are not annualized.
8. NET INCREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Capital
For the Year Ended Equity Market Bond Blend Appreciation
December 31, 1996 Division Division Division Division Division
----------------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Units purchased........................ 24,547,089 2,522,550 916,330 7,676,118 5,328,925
Units withdrawn........................ (4,108,686) (253,952) (157,673) (1,137,726) (851,432)
Units transferred between divisions.... 353,401 (874,974) 43,398 147,032 158,585
---------- --------- ------- --------- ---------
Net increase........................... 20,791,804 1,393,624 802,055 6,685,424 4,636,078
Units, at beginning of the year........ 3,088,703 554,513 88,412 1,087,744 553,916
---------- --------- ------- --------- ---------
Units, at end of the year.............. 23,880,507 1,948,137 890,467 7,773,168 5,189,994
========== ========= ======= ========= =========
<CAPTION>
Oppenheimer Oppenheimer
Oppenheimer Global Strategic
For the Year Ended Growth Securities Bond
December 31, 1996 Division Division Division
----------------- ---------- --------- --------
<S> <C> <C> <C>
Units purchased........................ 3,469,793 3,561,525 910,499
Units withdrawn........................ (500,556) (597,901) (81,759)
Units transferred between divisions.... 52,912 87,638 (74,031)
--------- --------- -------
Net increase........................... 3,022,149 3,051,262 754,709
Units, at beginning of the year........ 382,154 448,281 107,117
--------- --------- -------
Units, at end of the year.............. 3,404,303 3,499,543 861,826
========= ========= =======
</TABLE>
40
<PAGE>
Notes To Financial Statements (Continued)
<TABLE>
<CAPTION>
MML MML Oppenheimer
For the Period July 24, 1995 MML Money Managed MML Capital
(Date of Commencement of Operations) Equity Market Bond Blend Appreciation
Through December 31, 1995 Division Division Division Division Division
------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Units transferred from MML Bay State
for initial capital..................... 5,000 5,000 5,000 5,000 5,000
Units purchased.......................... 3,474,603 643,486 91,227 1,148,237 608,905
Units withdrawn.......................... (391,348) (35,333) (7,815) (105,144) (66,529)
Units transferred between divisions...... 448 (58,640) -- 39,651 6,540
--------- ------- ------ --------- -------
Net increase............................. 3,088,703 554,513 88,412 1,087,744 553,916
Units, at beginning of the period........ -- -- -- -- --
--------- ------- ------ --------- -------
Units, at end of the year................ 3,088,703 554,513 88,412 1,087,744 553,916
========= ======= ====== ========= =======
<CAPTION>
Oppenheimer Oppenheimer
For the Period July 24, 1995 Oppenheimer Global Strategic
(Date of Commencement of Operations) Growth Securities Bond
Through December 31, 1995 Division Division Division
------------------------- --------- -------- --------
<S> <C> <C> <C>
Units transferred from MML Bay State
for initial capital..................... 5,000 5,000 5,000
Units purchased.......................... 411,919 488,685 118,112
Units withdrawn.......................... (37,282) (55,393) (14,087)
Units transferred between divisions...... 2,517 9,989 (1,908)
--------- -------- --------
Net increase............................. 382,154 448,281 107,117
Units, at beginning of the period........ -- -- --
--------- -------- --------
Units, at end of the year................ 382,154 448,281 107,117
========= ======== ========
</TABLE>
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, 1996 for the Separate Account I, which includes
the Variable Life, Variable Life Plus and Variable Life Select Segments,
are as follows:
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Capital
Equity Market Bond Blend Appreciation
Division Division Division Division Division
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Total assets........................... $164,236,513 $ 5,162,759 $ 6,347,145 $ 69,888,083 $ 7,232,280
Total liabilities...................... 401,924 128,811 15,731 92,495 136,308
------------ ------------ ----------- ------------ -----------
Net assets............................. $163,834,589 $ 5,033,948 $ 6,331,414 $ 69,795,588 $ 7,095,972
============ ============ =========== ============ ===========
Net assets:
For variable life insurance policies... $162,482,920 $ 4,802,758 $ 6,113,815 $ 68,757,536 $ 7,089,132
Retained in Variable Life Separate
Account 1 by MML Bay State Life
Insurance Company..................... 1,351,669 231,190 217,599 1,038,052 6,840
------------ ------------ ----------- ------------ -----------
Net assets............................. $163,834,589 $ 5,033,948 $ 6,331,414 $ 69,795,588 $ 7,095,972
============ ============ =========== ============ ===========
<CAPTION>
Oppenheimer Oppenheimer
Oppenheimer Global Strategic
Growth Securities Bond
Division Division Division
------------ ------------ -----------
<S> <C> <C> <C>
Total assets........................... $ 4,761,677 $ 4,024,134 $ 1,024,663
Total liabilities...................... 68,220 33,626 3,188
------------ ------------ -----------
Net assets............................. $ 4,693,457 $ 3,990,508 $ 1,021,475
============ ============ ===========
Net assets:
For variable life insurance policies... $ 4,686,562 $ 3,984,803 $ 1,015,547
Retained in Variable Life Separate
Account I by MML Bay State Life
Insurance Company..................... 6,895 5,705 5,928
------------ ------------ -----------
Net assets............................. $ 4,693,457 $ 3,990,508 $ 1,021,475
============ ============ ===========
</TABLE>
Offered through MML Investors Services, Inc., Springfield, Massachusetts.
41
<PAGE>
Report Of Independent Accountants
To the Board of Directors of
MML Bay State Life Insurance Company
We have audited the accompanying statutory financial statements and financial
position of MML Bay State Life Insurance Company as of December 31, 1996 and
1995, and the related statutory statements of income, changes in shareholder's
equity, and cash flows for each of the three years in the period ended December
31, 1996. 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.
As described in Note 2 to the financial statements, the Company prepared these
financial statements using statutory accounting practices of the National
Association of Insurance Commissioners and the accounting practices prescribed
or permitted by the Department of Insurance of the State of Missouri, which
practices differ from generally accepted accounting principles. The effects on
the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
determinable at this time, are presumed to be material.
In our report dated February 23, 1996, we expressed our opinion that the 1995
and 1994 financial statements, prepared using statutory accounting practices,
presented fairly, in all material respects, the financial position of the MML
Bay State Life Insurance Company as of December 31, 1995, and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles
("GAAP"). As described in Note 2 to the financial statements, financial
statements of stock life insurance subsidiaries of mutual life insurance
enterprises issued or reissued after 1996, and prepared in accordance with
statutory accounting principles, are no longer considered to be presentations in
conformity with GAAP. Accordingly, our present opinion on the 1995 and 1994
statutory financial statements as presented herein is different from that
expressed in our previous report.
In our opinion, because of the effects of the matter discussed in the third
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of MML Bay State Life Insurance Company at December 31, 1996 and 1995, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996.
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 at December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, on
the statutory basis of accounting described in Note 2.
Springfield, Massachusetts Coopers & Lybrand, L.L.P.
February 7, 1997
42
<PAGE>
<TABLE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION
December 31,
1996 1995
---- ----
(In Thousands)
<S> <C> <C>
Assets:
Bonds ........................................................... $ 44,929.6 $ 41,260.6
Policy loans .................................................... 9,988.3 6,444.9
Cash and short-term investments ................................. 7,013.9 490.5
Investment and insurance amounts receivable ..................... 2,277.8 1,268.0
Transfer due from separate account .............................. 50,186.8 29,015.6
Federal income tax receivable ................................... 1,139.4 215.5
Other assets .................................................... 4,034.9 109.8
Separate account assets ......................................... 706,668.9 265,188.5
---------- ----------
$826,239.6 $343,993.4
========== ==========
Liabilities:
Policyholders' reserves and funds ............................... $ 26,533.5 $ 19,095.9
Policy claims and other benefits ................................ 1,074.1 1,507.6
Payable to parent ............................................... 2,929.9 3,165.2
Accrued insurance expenses and taxes ............................ 6,905.3 4,693.5
Asset valuation reserve ......................................... 228.8 153.8
Other liabilities ............................................... 7,235.6 2,200.7
Separate account reserves and liabilities ....................... 703,670.1 262,833.9
---------- ----------
748,577.3 293,650.6
========== ==========
Shareholder's equity:
Common stock, $200 par value
25,000 shares authorized
12,501 shares issued and outstanding ........................... 2,500.2 2,000.2
Paid-in capital and contributed surplus ......................... 71,736.9 46,736.9
Surplus ......................................................... 3,425.2 1,605.7
---------- ----------
77,662.3 50,342.8
---------- ----------
$826,239.6 $343,993.4
========== ==========
</TABLE>
See notes to statutory financial statements.
43
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income ............................................................... $441,212.1 $ 92,732.8 $ 54,481.4
Net investment and other income .............................................. 8,430.6 4,305.8 3,531.8
Expense allowance on reinsurance ceded ....................................... 0.0 526.5 132.4
--------- ---------- ---------
449,642.7 97,565.1 58,145.6
--------- ---------- ---------
Benefits and expenses:
Policy benefits and payments ................................................. 11,035.0 5,691.0 2,939.9
Addition to policyholders' reserves, funds and separate accounts ............. 363,526.2 66,974.4 30,422.1
Operating expenses ........................................................... 24,032.2 11,222.9 11,960.6
Commissions .................................................................. 28,133.3 15,072.4 10,747.5
State taxes, licenses and fees ............................................... 9,051.1 2,546.8 1,405.1
--------- ---------- ---------
435,777.8 101,507.5 57,475.2
--------- ---------- ---------
Net gain (loss) from operations before federal income taxes .................. 13,864.9 (3,942.4) 670.4
Federal income taxes (benefit) ............................................... 11,829.0 632.8 (934.8)
--------- ---------- ---------
Net gain (loss) from operations .............................................. 2,035.9 (4,575.2) 1,605.2
Net realized capital loss .................................................... (58.1) (42.8) (24.4)
--------- ---------- ---------
Net income (loss) ............................................................ $ 1,977.8 $ (4,618.0) $ 1,580.8
========= ========== =========
</TABLE>
See notes to statutory financial statements.
44
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year .................................. $ 50,342.8 $ 55,963.0 $ 33,396.9
--------- --------- ---------
Increases (decrease) due to:
Net income (loss) ...................................................... 1,977.8 (4,618.0) 1,580.8
Additions to asset valuation reserve ................................... (75.0) (47.0) (43.3)
Change in separate account surplus ..................................... 35.0 344.2 108.6
Surplus contribution ................................................... 25,500.0 0.0 25,000.0
Prior year adjustment .................................................. 0.0 (1,299.4) (4,101.5)
Change in accounting for mortgage-backed securities .................... 0.0 0.0 21.5
Change in non-admitted assets and other ................................ (118.3) 0.0 0.0
--------- --------- ---------
27,319.5 (5,620.2) 22,566.1
--------- --------- ---------
Shareholder's equity, end of year $ 77,662.3 $ 50,342.8 $ 55,963.0
========= ========= =========
</TABLE>
See notes to statutory financial statements.
45
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss) ............................................................ $ 1,977.8 $ (4,618.0) $ 1,580.8
Additions to policyholders' reserves, funds,
and net of transfers to separate accounts .................................. 7,004.1 8,610.8 2,064.6
Net realized capital loss ................................................... 58.1 42.8 24.4
Change in receivable from separate accounts ................................. (21,171.1) (7,907.6) (6,456.2)
Change in receivable (payable) to parent .................................... (235.4) (1,203.0) 5,145.0
Change in federal taxes receivable (payable) ................................ (923.9) (1,018.7) (910.3)
Other changes ............................................................... 1,536.8 (2,543.9) (1,178.9)
----------- ---------- ----------
Net cash provided by (used in) operating activities ......................... (11,753.6) (8,637.6) 269.4
----------- ---------- ----------
Investing activities:
Purchases of investments and loans .......................................... (35,959.1) (28,440.1) (43,275.8)
Sales or maturities of investments and receipts
from repayments of loans .................................................... 28,736.1 36,618.2 18,455.4
----------- ---------- ----------
Net cash provided by (used in) investing activities ......................... (7,223.0) 8,178.1 (24,820.4)
----------- ---------- ----------
Financing activities:
Capital and Surplus contribution ............................................ 25,500.0 0.0 25,000.0
----------- ---------- ----------
Net cash provided by financing activities ................................... 25,500.0 0.0 25,000.0
----------- ---------- ----------
Increase (decrease) in cash and short-term investments ....................... 6,523.4 (459.5) 449.0
Cash and short-term investments, beginning of year ........................... 490.5 950.0 501.0
----------- ---------- ----------
Cash and short-term investments, end of year ................................. $ 7,013.9 $ 490.5 $ 950.0
=========== ========== ==========
</TABLE>
See notes to statutory financial statements.
46
<PAGE>
Notes To Statutory 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. On March 1, 1996, the operations of Connecticut Mutual Life Insurance
Company were merged into MassMutual.
2. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory 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 State of Missouri ("statutory accounting practices"), which practices were
also considered to be in conformity with generally accepted accounting
principles ("GAAP"). In 1993, the Financial Accounting Standards Board ("FASB")
issued interpretations No. 40 ("Fin. 40"), "Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises", which
clarified that mutual life insurance companies issuing financial statements
described as prepared in conformity with GAAP after 1995 are required to apply
all applicable GAAP pronouncements in preparing those financial statements. In
January 1995, the FASB issued Statement No. 120 ("SFAS 120"), Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts," which among other things,
extended the applicability of certain FASB statements to mutual life insurance
companies and deferred the effective date of Fin. 40 to financial statements
issued or reissued after 1996. As required by generally accepted auditing
standards, the opinion expressed by our independent accountants on the 1995 and
1994 financial statements is different from that expressed in their previous
report.
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs in connection with
acquiring new business, are charged to current operations as incurred, whereas
under GAAP these expenses would be capitalized and recognized over the life of
the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP would value bonds at fair value and (d) deferred
income taxes are not provided for book-tax timing differences whereas GAAP would
record deferred income taxes.
The preparation of statutory 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 statutory financial statements. Management must also make estimates
and assumptions that affect the amounts of revenues and expenses during the
reporting period. Future events, including changes in the levels of mortality,
morbidity, interest rates and asset valuations, could cause actual results to
differ from the estimates used in the statutory 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. This
method considers prepayment assumptions for mortgage backed securities, which
were obtained from a prepayment model, that 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 Statutory Statement of Financial Position and had no
material effect for 1996 and 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.
47
<PAGE>
Notes To Statutory Financial Statements (Continued)
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves as prescribed by the regulatory
authorities, stabilize 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 losses of $33.7 thousand in 1996 and 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 were charged to the Interest Maintenance
Reserve. Amortization of the Interest Maintenance Reserve into net investment
income amounted to $85.8 thousand in 1996, $42.1 thousand in 1995 and $86.9
thousand in 1994. The Interest Maintenance Reserve is included in other
liabilities on the statutory 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.
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. Transfer due from separate account
represents the separate account assets in excess of statutory benefit reserves.
Premiums, benefits and expenses of the separate accounts are reported on the
Statutory Statement of Income. 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 $2,998.8 thousand
and $2,354.6 thousand of its assets invested in the separate account as of
December 31, 1996 and 1995, respectively.
The net transfers to separate accounts of $356,088.6 thousand, $59,792.6
thousand and $28,141.7 thousand in 1996, 1995 and 1994, 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 method and the
Commissioners' Reserve Valuation Method 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 requiring additional reserves for immediate
payment of claims became effective. 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 Statutory Statement of Cash Flows, the Company considers all
highly liquid short-term investments purchased with a maturity of twelve months
or less to be cash and short-term investments.
3. STOCKHOLDER'S EQUITY
The Board of Directors of MassMutual has authorized the contribution of funds to
the Company sufficient to meet the capital requirements of all states in which
the Company is licensed to do business. Substantially all of the statutory
stockholder's equity is subject to dividend restrictions relating to various
state regulations which limit the payment of dividends without prior approval.
Under these regulations, $3,425.2 thousand of stockholder's equity is available
for distribution to shareholders in 1997 without prior regulatory approval.
48
<PAGE>
Notes To Statutory Financial Statements (Continued)
4. 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 $16,429.2
thousand, $6,588.1 thousand and $7,762.9 thousand in 1996, 1995 and 1994,
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 and $26,115.1 thousand in 1995 and 1994,
respectively. Additionally, the Company ceded administrative and insurance
charges of $4,310.3 thousand in 1995 and $4,208.3 thousand in 1994 for policies
issued in those years. The Company received $4,836.8 thousand and $8,434.7
thousand and 1995 and 1994, 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 Statutory Statement
of Income in accordance with the accounting practices of the National
Association of Insurance Commissioners.
During 1996 and 1994, MassMutual contributed additional paid in capital of
$25,000.0 thousand cash to the Company.
5. FEDERAL INCOME TAXES
The 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 federal tax provision, using the most current information
available, and adjusting for miscellaneous temporary differences, primarily
reserves and acquisition costs, resulted in an effective tax rate which is other
than the statutory tax rate.
The Internal Revenue Service is currently examining the Company's income tax
returns through the year 1992. Federal income tax returns for the years 1995,
1994 and 1993 are open to examination by the Internal Revenue Service. The
Company believes any adjustments resulting from such examinations will not
materially affect its statutory financial statements.
The Company plans to file its 1996 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 $12,811.7 thousand and $1,892.0
thousand in 1996 and 1995, respectively. No federal tax payments were made
during 1994.
6. 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.
49
<PAGE>
Notes To Statutory Financial Statements (Continued)
a. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-------------------------
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 $ 7,767.8 $ 79.5 $ 41.1 $ 7,806.2
Mortgage-backed securities 8,265.9 42.1 64.6 8,243.4
Industrial securities 28,895.9 293.6 146.1 29,043.4
-------- ---------- ---------- ----------
TOTAL $44,929.6 $ 415.2 $ 251.8 $ 45,093.0
======== ========== ========== ==========
<CAPTION>
December 31, 1995
-------------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ---------- ----------
(In Thousands)
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
========= ========== ========== ==========
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1996 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.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 6,383.8 $ 6,423.7
Due after one year through five years 13,043.8 13,203.9
Due after five years through ten years 12,929.9 12,865.2
Due after ten years 1,510.1 1,503.1
--------- ---------
33,867.6 33,995.9
Mortgage-backed securities, including securities guaranteed
by the U.S. Government 11,062.0 11,097.1
--------- ---------
TOTAL $44,929.6 $45,093.0
========= =========
</TABLE>
Proceeds from sales and maturities of investments in bonds were $28,736.1
thousand during 1996, $36,584.5 thousand during 1995 and $17,742.4 thousand
during 1994. Gross capital gains of $33.2 thousand in 1996, $535.0 thousand in
1995 and $44.5 thousand in 1994 and gross capital losses of $65.2 thousand in
1996, $87.0 thousand in 1995 and $52.3 thousand in 1994 were realized on those
sales, a 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.
50
<PAGE>
Notes To Statutory Financial Statements (Continued)
7. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1996 are illustrated below:
<TABLE>
<CAPTION>
<S> <C>
(In Thousands)
Total policyholders' reserves and funds and separate account liabilities $730,203.6
Not subject to discretionary withdrawal (143.3)
Policy loans (9,988.3)
----------
Subject to discretionary withdrawal $720,072.0
----------
Total invested assets, including separate investment accounts $768,600.7
Policy loans and other invested assets (9,988.3)
----------
Readily marketable investments $758,612.4
----------
</TABLE>
8. BUSINESS RISKS AND CONTINGENCIES
Approximately 52% of the Company's premium revenue is derived from two
customers.
The Company is subject to insurance guaranty fund laws in the states in which it
does business. These laws assess insurance companies amounts to be used to pay
benefits to policyholders and claimants of insolvent insurance companies. Many
states allow these assessments to be credited against future premiums. The
Company believes such assessments in excess of amounts accrued will not
materially affect its financial position, results of operations or liquidity. In
1996, the Company elected not to admit $83.3 thousand of guaranty fund premium
tax offset receivables relating to prior assessments.
The Company is involved in litigation arising out of the normal course of its
business. Management intends to defend these actions vigorously. While the
outcome of litigation cannot be foreseen with certainty, it is the opinion of
management, after consultation with legal counsel, that the ultimate resolution
of these matters will not materially affect its financial position, results of
operations or liquidity.
9. AFFILIATED COMPANIES
The relationship of the Company, its parent and affiliated companies as of
December 31, 1996 is illustrated below. Subsidiaries are wholly-owned by the
parent, except as noted.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investors Services, Inc.
State House One (Liquidated in December 1996)
51
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation
Charter Oak Capital Management, Inc.
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
Oppenheimer Acquisition Corporation - 86.15%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A.
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 50%
MassMutual Corporate Value Limited - 46%
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
52
<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 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 a current schedule of charges.
2. 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 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 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 a current schedule of charges.
4. The illustration on page 57 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 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 a current schedule of charges.
6. 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 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 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 a current schedule of charges.
8. The illustration on page 61 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 .62% 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 -1.162, 4.768 and 10.699%
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, 1998.
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.
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 Current Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
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 $ 210 $ 271
2 2,583 100,000 100,000 100,000 997 1,176 1,363
3 3,972 100,000 100,000 100,000 1,851 2,208 2,594
4 5,431 100,000 100,000 100,000 2,709 3,303 2,973
5 6,982 100,000 100,000 100,000 3,548 4,442 5,491
6 8,570 100,000 100,000 100,000 4,458 5,717 7,254
7 10,259 100,000 100,000 100,000 5,355 7,046 9,194
8 12,032 100,000 100,000 100,000 6,230 8,421 11,320
9 13,893 100,000 100,000 100,000 7,082 9,844 13,653
10 15,848 100,000 100,000 100,000 7,911 11,318 16,216
15 27,189 100,000 100,000 100,000 11,541 19,371 33,314
20 41,663 100,000 100,000 143,694 14,316 28,882 60,887
25 60,136 100,000 100,000 215,213 16,599 40,887 105,497
30 83,713 100,000 100,000 314,620 17,295 55,399 175,765
35 113,804 100,000 114,995 450,683 15,507 72,782 285,242
40 152,208 100,000 132,704 649,139 9,529 92,800 453,943
45 201,222 0 151,279 931,571 0 115,480 711,123
50 263,778 0 172,991 1,350,276 0 140,643 1,097,785
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
--------- --------- ---------
<S> <C> <C> <C>
1 $ 915 $ 976 $ 1,037
2 1,811 1,990 2,177
3 2,688 3,045 3,431
4 3,546 4,140 4,810
5 4,385 5,279 6,327
6 5,204 6,462 7,999
7 6,001 7,691 9,839
8 6,776 8,966 11,865
9 7,528 10,289 14,098
10 8,257 11,663 16,561
15 11,549 19,380 33,323
</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.
54
<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
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
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 $ 96 $ 155 $ 215
2 2,583 100,000 100,000 100,000 890 1,063 1,242
3 3,972 100,000 100,000 100,000 1,688 2,028 2,397
4 5,431 100,000 100,000 100,000 2,487 3,050 3,686
5 6,982 100,000 100,000 100,000 3,261 4,106 5,097
6 8,570 100,000 100,000 100,000 4,104 5,287 6,734
7 10,259 100,000 100,000 100,000 4,928 6,511 8,525
8 12,032 100,000 100,000 100,000 5,726 7,770 10,478
9 13,893 100,000 100,000 100,000 6,496 9,064 12,609
10 15,848 100,000 100,000 100,000 7,239 10,394 14,936
15 27,189 100,000 100,000 100,000 10,308 17,430 30,135
20 41,663 100,000 100,000 127,136 12,209 25,028 53,871
25 60,136 100,000 100,000 183,884 12,103 33,284 90,139
30 83,713 100,000 100,000 258,251 9,498 41,890 144,274
35 113,804 100,000 100,000 352,320 1,899 50,175 222,987
40 152,208 0 100,000 477,942 0 57,105 334,225
45 201,222 0 100,000 636,143 0 60,189 485,605
50 263,778 0 100,000 843,816 0 52,907 686,029
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
------- ------ ------
<S> <C> <C>
1 $ 862 $ 921 $ 981
2 1,704 1,877 2,056
3 2,525 2,865 3,234
4 3,324 3,887 4,523
5 4,098 4,943 5,934
6 4,849 6,033 7,479
7 5,573 7,156 9,170
8 6,271 8,315 11,023
9 6,941 9,509 13,054
10 7,584 10,740 15,281
15 10,317 17,439 30,144
</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 Current Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
Policy at 5% Interest --------------------------- ---------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ ---------- ---- ---- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,913 $100,974 $101,036 $ 147 $ 208 $ 270
2 2,583 101,806 101,985 102,171 992 1,171 1,357
3 3,972 102,678 103,033 103,418 1,842 2,196 2,581
4 5,431 103,530 104,121 104,787 2,693 3,284 3,950
5 6,982 104,359 105,247 106,289 3,522 4,410 5,452
6 8,570 105,167 106,416 107,939 4,422 5,670 7,194
7 10,259 105,951 107,624 109,750 5,306 6,979 9,105
8 12,032 106,710 108,874 111,738 6,165 8,329 11,193
9 13,893 107,443 110,166 113,921 6,998 9,721 13,476
10 15,848 108,150 111,501 116,318 7,804 11,156 15,973
15 27,189 111,276 118,876 132,391 11,267 18,867 32,383
20 41,663 113,775 127,658 158,496 13,775 27,658 58,496
25 60,136 115,631 138,198 206,631 15,631 38,198 101,290
30 83,713 115,559 149,411 302,647 15,559 49,411 169,077
35 113,804 112,566 160,207 434,066 12,566 60,207 274,725
40 152,208 105,122 168,528 625,790 5,122 68,528 437,615
45 201,222 0 170,731 898,853 0 70,731 686,148
50 263,778 0 160,491 1,304,186 0 60,491 1,060,314
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
------ ------ ------
<S> <C> <C> <C>
1 $ 913 $ 974 $ 1,036
2 1,806 1,985 2,171
3 2,678 3,033 3,418
4 3,530 4,121 4,787
5 4,359 5,247 6,289
6 5,167 6,416 7,939
7 5,951 7,624 9,750
8 6,710 8,874 11,738
9 7,443 10,166 13,921
10 8,150 11,501 16,318
15 11,276 18,876 32,391
</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
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
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
Policy at 5% Interest --------------------------- ---------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ ---------- ---- ---- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,860 $100,919 $100,979 $ 94 $ 153 $ 213
2 2,583 101,700 101,871 102,050 885 1,057 1,236
3 3,972 102,515 102,854 103,221 1,678 2,017 2,384
4 5,431 103,307 103,867 104,499 2,470 3,030 3,662
5 6,982 104,073 104,911 105,895 3,236 4,074 5,058
6 8,570 104,812 105,985 107,418 4,067 5,240 6,673
7 10,259 105,523 107,089 109,080 4,877 6,443 8,435
8 12,032 106,205 108,222 110,894 5,659 7,677 10,349
9 13,893 106,855 109,384 112,874 6,410 8,939 12,428
10 15,848 107,476 110,575 115,035 7,130 10,230 14,690
15 27,189 110,033 116,917 129,180 10,025 16,908 29,172
20 41,663 111,424 123,661 151,007 11,424 23,661 51,007
25 60,136 110,947 130,001 184,347 10,947 30,001 84,347
30 83,713 107,545 134,477 241,466 7,545 34,477 134,897
35 113,804 0 134,132 330,217 0 34,132 208,998
40 152,208 0 123,814 448,796 0 23,814 313,844
45 201,222 0 0 598,420 0 0 456,809
50 263,778 0 0 795,434 0 0 646,694
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
------- ------- -------
<S> <C> <C> <C>
1 $ 860 $ 919 $ 979
2 1,700 1,871 2,050
3 2,515 2,854 3,221
4 3,307 3,867 4,499
5 4,073 4,911 5,895
6 4,812 5,985 7,418
7 5,523 7,089 9,080
8 6,205 8,222 10,894
9 6,855 9,384 12,874
10 7,476 10,575 15,035
15 10,033 16,917 29,180
</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 Current Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
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 $ 196 $ 258 $ 320
2 2,583 100,000 100,000 100,000 1,058 1,239 1,428
3 3,972 100,000 100,000 100,000 1,942 2,302 2,693
4 5,431 100,000 100,000 100,000 2,811 3,412 4,089
5 6,982 100,000 100,000 100,000 3,659 4,563 5,624
6 8,570 100,000 100,000 100,000 4,576 5,850 7,404
7 10,259 100,000 100,000 100,000 5,485 7,195 9,367
8 12,032 100,000 100,000 100,000 6,376 8,591 11,524
9 13,893 100,000 100,000 100,000 7,248 10,042 13,895
10 15,848 100,000 100,000 100,000 8,102 11,549 16,504
15 27,189 100,000 100,000 105,777 11,950 19,894 34,005
20 41,663 100,000 100,000 166,371 15,252 30,099 62,311
25 60,136 100,000 100,000 249,524 18,342 43,197 108,488
30 83,713 100,000 117,911 363,081 20,560 59,252 182,453
35 113,804 100,000 136,782 522,891 21,634 78,610 300,512
40 152,208 100,000 155,627 746,056 20,844 101,717 487,618
45 201,222 100,000 177,308 1,074,824 16,077 128,484 778,858
50 263,778 100,000 199,987 1,542,976 2,595 158,720 1,224,584
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
-------- -------- --------
<S> <C> <C> <C>
1 $ 930 $ 991 $ 1,053
2 1,839 2,020 2,209
3 2,729 3,089 3,479
4 3,598 4,199 4,876
5 4,445 5,350 6,411
6 5,271 6,545 8,099
7 6,080 7,789 9,962
8 6,871 9,086 12,019
9 7,643 10,437 14,290
10 8,397 11,844 16,799
15 11,957 19,901 34,012
</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 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
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
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 $ 150 $ 210 $ 270
2 2,583 100,000 100,000 100,000 965 1,140 1,322
3 3,972 100,000 100,000 100,000 1,800 2,146 2,520
4 5,431 100,000 100,000 100,000 2,618 3,192 3,839
5 6,982 100,000 100,000 100,000 3,411 4,272 5,281
6 8,570 100,000 100,000 100,000 4,272 5,479 6,953
7 10,259 100,000 100,000 100,000 5,114 6,729 8,782
8 12,032 100,000 100,000 100,000 5,930 8,016 10,777
9 13,893 100,000 100,000 100,000 6,721 9,341 12,956
10 15,848 100,000 100,000 100,000 7,486 10,707 15,339
15 27,189 100,000 100,000 100,000 10,705 17,988 30,956
20 41,663 100,000 100,000 147,573 12,850 26,185 55,271
25 60,136 100,000 100,000 213,279 13,979 35,763 92,730
30 83,713 100,000 100,000 298,714 13,739 47,051 150,107
35 113,804 100,000 104,511 410,408 10,780 60,064 235,867
40 152,208 100,000 113,846 554,087 3,009 74,409 362,149
45 201,222 0 122,450 744,232 0 88,732 539,299
50 263,778 0 128,859 983,473 0 102,269 780,534
</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 $ 944 $ 1,004
2 1,746 1,921 2,103
3 2,587 2,932 3,307
4 3,404 3,978 4,625
5 4,198 5,058 6,068
6 4,967 6,174 7,648
7 5,709 7,324 9,477
8 6,425 8,511 11,272
9 7,116 9,736 13,351
10 7,781 11,002 15,634
15 10,712 17,995 30,963
</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 Current Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit Cash Surrender Value
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross
End Of Accumulated Annual Investment Return of Annual Investment Return of
Policy at 5% Interest --------------------------- ---------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- ------ ---------- ---- ---- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,928 $100,990 $ 101,051 $ 195 $ 256 $ 318
2 2,583 101,835 102,015 102,204 1,053 1,234 1,422
3 3,972 102,720 103,079 103,468 1,933 2,292 2,681
4 5,431 103,582 104,180 104,854 2,796 3,394 4,067
5 6,982 104,421 105,320 106,374 3,635 4,534 5,588
6 8,570 105,237 106,500 108,042 4,542 5,805 7,347
7 10,259 106,033 107,726 109,878 5,438 7,131 9,283
8 12,032 106,808 108,999 111,899 6,313 8,504 11,404
9 13,893 107,563 110,321 114,123 7,168 9,926 13,728
10 15,848 108,297 111,693 116,572 8,002 11,398 16,277
15 27,189 111,719 119,463 133,203 11,712 19,455 33,196
20 41,663 114,821 129,123 162,009 14,821 29,123 60,678
25 60,136 117,618 141,191 243,440 17,618 41,191 105,843
30 83,713 119,322 155,350 354,622 19,322 55,350 178,202
35 113,804 119,568 171,660 511,068 19,568 71,660 293,717
40 152,208 117,476 189,593 729,566 17,476 89,593 476,841
45 201,222 110,730 206,790 1,051,595 10,730 106,790 762,025
50 263,778 0 218,296 1,510,601 0 118,296 1,198,890
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
----------- -----------------------------------------
0% 6% 12%
-------- ------- -------
<S> <C> <C> <C>
1 $ 928 $ 990 $ 1,051
2 1,835 2,015 2,204
3 2,720 3,079 3,468
4 3,582 4,180 4,854
5 4,421 5,320 6,374
6 5,237 6,500 8,042
7 6,033 7,726 9,878
8 6,808 8,999 11,899
9 7,563 10,321 14,123
10 8,297 11,693 16,572
15 11,719 19,463 33,203
</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>
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 $100,882 $100,942 $101,002 $ 149 $ 208 $ 269
2 2,583 101,742 101,916 102,098 960 1,135 1,316
3 3,972 102,578 102,922 103,295 1,791 2,136 2,509
4 5,431 103,389 103,960 104,604 2,603 3,174 3,817
5 6,982 104,175 105,030 106,032 3,388 4,243 5,246
6 8,570 104,933 106,131 107,592 4,238 5,436 6,897
7 10,259 105,663 107,262 109,294 5,068 6,667 8,699
8 12,032 106,363 108,424 111,153 5,868 7,929 10,658
9 13,893 107,036 109,620 113,184 6,641 9,225 12,789
10 15,848 107,680 110,849 115,406 7,385 10,554 15,111
15 27,189 110,453 117,519 130,086 10,446 17,512 30,078
20 41,663 112,314 124,979 153,135 12,314 24,979 53,135
25 60,136 113,000 133,033 205,301 13,000 33,033 89,261
30 83,713 112,111 141,285 288,081 12,111 41,285 144,764
35 113,804 108,229 148,010 396,301 8,229 48,010 227,759
40 152,208 0 150,656 535,572 0 50,656 350,047
45 201,222 0 141,900 720,099 0 41,900 521,811
50 263,778 0 110,010 952,866 0 10,010 756,243
</TABLE>
<TABLE>
<CAPTION>
End Of Account Value Assuming Hypothetical Gross
Policy Year Annual Investment Return of
------------- -------------------------------------------
0% 6% 12%
------ ------ -------
<S> <C> <C> <C>
1 $ 882 $ 942 $ 1,002
2 1,742 1,916 2,098
3 2,578 2,922 3,295
4 3,389 3,960 4,604
5 4,175 5,030 6,032
6 4,933 6,131 7,592
7 5,663 7,262 9,294
8 6,363 8,424 11,153
9 7,036 9,620 13,184
10 7,680 10,849 15,406
15 10,453 17,519 30,086
</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.
61
<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.
REPRESENTATION UNDER SECTION 26(e)(2)(A) OF
THE INVESTMENT COMPANY ACT OF 1940
MML Bay State Life Insurance Company hereby represents that the fees and charges
deducted under the flexible premium variable whole life insurance policies
described in this Registration Statement in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by MML Bay State Life Insurance Company.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 2
This Post-Effective Amendment is comprised of the following documents:
The Facing Sheet.
The Prospectus consisting of 61 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 Craig Waddington, Vice President &
Actuary.
The following Exhibits:
99. 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.
(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.*
<PAGE>
(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.*
99.2 Opinion and Consent of Counsel as to the legality of the
securities being registered.***
99.C.1 Consent of Coopers & Lybrand L.L.P.***
3. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not applicable.
99.C.6 Opinion and consent of Craig Waddington as to actuarial
matters pertaining to the securities being registered.***
99.5 Powers of Attorney.***
27. Financial Data Schedule.***
*Incorporated by reference to pre-effective Amendment No. 2 and Registration
Statement No. 33-82060 filed with the Commission on July 28, 1994.
**Incorporated by reference to post-effective Amendment No. 1 to this
Registration Statement filed with the Commission on May 1, 1996.
***Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
caused this Post-Effective Amendment No. 2 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 21st day of April, 1997.
MML BAY STATE VARIABLE LIFE SEPARATE ACCOUNT I
MML BAY STATE LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Lawrence V. Burkett, Jr.*
-------------------------------------------------------
Lawrence V. Burkett, Jr., President and Chief Executive Officer
MML Bay State Life Insurance Company
/s/ Richard M. Howe On April 21, 1997, 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. 2
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/ Lawrence V. Burkett, Jr.* President, Chief Executive Officer April 21, 1997
- ------------------------------ and Director
Lawrence V. Burkett, Jr.
/s/ Ann Iseley* Treasurer (Principal Financial April 21, 1997
- ------------------------------ Officer)
Ann Iseley
/s/ John Miller, Jr.* Second Vice President and Comptroller April 21, 1997
- ------------------------------ (Principal Accounting Officer)
John Miller, Jr.
/s/ Paul D. Adornato* Director April 21, 1997
- ------------------------------
Paul D. Adornato
/s/ John B. Davies* Director April 21, 1997
- ------------------------------
John B. Davies
/s/ Anne Melissa Dowling* Director April 21, 1997
- ------------------------------
Anne Melissa Dowling
/s/ Thomas J. Finnegan, Jr.* Director April 21, 1997
- ------------------------------
Thomas J. Finnegan, Jr.
/s/ Daniel F. Fitzgerald* Director April 21, 1997
- ------------------------------
Daniel F. Fitzgerald
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Maureen R. Ford* Director April 21, 1997
- ------------------------------
Maureen R. Ford
/s/ Isadore Jermyn* Director April 21, 1997
- ------------------------------
Isadore Jermyn
/s/ Stuart H. Reese* Director April 21, 1997
- ------------------------------
Stuart H. Reese
</TABLE>
/s/ Richard M. Howe On April 21, 1997, 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. 2 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
Counsel
MML Bay State Life Insurance Company
<PAGE>
EXHIBIT LIST
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 Craig Waddington
99.5 Powers of Attorney
27 Financial Data Schedule
<PAGE>
EXHIBIT 99.2
April 21, 1997
MML Bay State Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Post-Effective Amendment No. 2 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. 2 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 Counsel 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
Counsel
<PAGE>
EXHIBIT 99.C.1
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. 2 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, which includes explanatory paragraphs relating to the use of
statutory accounting practices, which practices are no longer considered to be
in accordance with generally accepted accounting principles, and the change in
our opinion for prior years, dated February 7, 1997 on our audits of the
statutory financial statements of MML Bay State Life Insurance Company, and our
report dated February 4, 1997 on our audits 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 25, 1997
<PAGE>
EXHIBIT 99.C.6
April 1, 1997
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. 2 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. 2 to Registration Statement No. 33-82060, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ Craig Waddington
Craig Waddington, FSA, MAAA
Vice President and Actuary
<PAGE>
EXHIBIT 99.5
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Lawrence V. Burkett, Jr., President, Chief Executive Officer
and a member of the Board of Directors of MML Bay State Life Insurance Company
("MML Bay State"), does hereby constitute and appoint 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 President, Chief Executive Officer and 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 President, Chief
Executive Officer and 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
MML Bay State Variable Life Separate Account V
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 26th day of February,
1997.
/s/ Lawrence V. Burkett, Jr.
- ------------------------------ ------------------------------
Lawrence V. Burkett, Jr. Witness
President, Chief Executive Officer
and Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, John B. Davies, 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, Jr., 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
MML Bay State Variable Life Separate Account V
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 February,
1997.
/s/ John B. Davies
- -------------------------- ----------------------------
John B. Davies Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Maureen R. Ford, 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, Jr., Thomas F. English, Richard M. Howe, and
Michael Berenson, and each of them individually, as her 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
her 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
MML Bay State Variable Life Separate Account V
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 her hand this 28th day of February,
1997.
/s/ Maureen R. Ford
- -------------------------- ------------------------------
Maureen R. Ford Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Anne Melissa Dowling, 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, Jr., Thomas F. English, Richard M. Howe, and
Michael Berenson, and each of them individually, as her 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
her 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
MML Bay State Variable Life Separate Account V
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 her hand this 6th day of March, 1997.
/s/ Anne Melissa Dowling
- -------------------------- ----------------------------
Anne Melissa Dowling Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Isadore Jermyn, Chairman of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Jr., 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 Chairman 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 Chairman 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
MML Bay State Variable Life Separate Account V
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 February,
1997.
/s/ Isadore Jermyn
- ---------------------------------- -----------------------------
Isadore Jermyn Witness
Chairman of the Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, John Miller, Jr., Second Vice President and Comptroller of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Jr., 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 Second Vice President and Comptroller 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 Second Vice President and Comptroller 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
MML Bay State Variable Life Separate Account V
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 26th day of February,
1997.
/s/ John Miller, Jr.
- ----------------------- ------------------------------
John Miller, Jr. Witness
Second Vice President
and Comptroller
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Thomas J. Finnegan, 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, Jr., 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,
1997.
/s/ Thomas J. Finnegan, Jr.
- --------------------------- ------------------------
Thomas J. Finnegan, Jr. Witness
Member, Board of Directors
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