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SUPPLEMENT TO PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A
DATED JULY 23, 1998
CLINTON ADMINISTRATION'S FISCAL YEAR 1999 BUDGET PROPOSAL
The Clinton administration's Fiscal Year 1999 Budget Proposal dated
February 2, 1998 (the "Budget Proposal") contains proposals to change the
taxation of non-qualified annuity contracts. The Budget Proposal proposes to tax
exchanges of variable contracts for fixed contracts, exchanges of fixed
contracts for variable contracts, exchanges of variable contracts for variable
contracts and reallocation within variable contracts. Currently, owners of
annuity contracts may exchange their contracts for another annuity without
currently incurring tax, and reallocations among investment options are not
treated as a taxable exchange. In addition, the Budget Proposal proposes that
the contract owner's basis in annuity contracts be reduced annually by 1.25% of
the cash value for purposes of determining the taxable gain on surrenders,
withdrawals, and all annuity payments except those made for life at the rates
guaranteed in the contract. Currently, basis in annuity contracts is not reduced
by this amount. The Budget Proposal states that it generally would apply only to
contracts issued after the date of first congressional committee action, but
that the new exchange and reallocation rules would also apply to any existing
contract that was materially changed.
While it is uncertain whether the Budget Proposal will become law, if
the Budget Proposal is enacted substantially as proposed, withdrawal charges
will be waived on purchase payments made on or after February 2, 1998, provided
such amounts are withdrawn within 60 days of the date that the Budget Proposal
becomes law. The Company reserves the right to terminate this withdrawal charge
waiver at any time. If the waiver is terminated, purchase payments made from
February 2, 1998 to the termination date of the waiver will not be subject to
withdrawal charge as provided above.
This waiver does not affect a contract owner's right to cancel a
contract within the ten day right to review period. See "OTHER CONTRACT
PROVISIONS -- Ten Day Right to Review."
Payment enhancements attributable to purchase payments received on or
after February 2, 1998 will be forfeited if such purchase payments are withdrawn
without assessment of a withdrawal charge as provided above.
Withdrawals may be subject to income tax to the extent of earnings
under the contract and, if made prior to age 59 1/2, generally will be subject
to a 10% IRS penalty tax.
SUPPLEMENT DATED FEBRUARY 4, 1998
VTG20.SUPP.298
