<PAGE>
Registration No. 33-87904
---------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A. Exact name of Trust: Massachusetts Mutual Variable Life Separate
Account I
B. Name of Depositor: Massachusetts Mutual Life Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
D. Name and Address for Lawrence V. Burkett, Jr.
Agent for Service:
It is proposed that this filing will become effective (check appropriate box)
___________ immediately upon filing pursuant to paragraph
(b) of Rule 486.
___________ on __________ pursuant to paragraph (b) of Rule
486.
___________ 60 days after filing pursuant to paragraph (a)
of Rule 486.
___________ on (date) pursuant to paragraph (a) of Rule
486.
______________ this post-effective amendment designates
a new effective date for a previously filed
amendment
E. Title and amount of Flexible Premium Variable Whole
Securities being Life Insurance*
registered:
F. Proposed maximum Not Applicable*
aggregate offering price
to the public of
securities being
registered:
G. Amount of filing fee $0
H. Approximate date of As soon as practicable after the proposed
effectiveness of this public offering Registration Statement.
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* STATEMENT PURSUANT TO RULE 24F-2
----------------------------------
The Registrant plans to register 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.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
- ----------- -------
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1 Cover Page; Glossary; The Separate Account
2 Cover Page; What is MassMutual; The Separate Account
3 Investment of the Separate Account
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Cover Page; Basic Questions and Answers About Us and
Our Policy; Death Benefits Under the Policy; Free
Look Provision; Account Value and Cash Surrender
Value; Policy Loan Privilege; The Separate Account;
Charges Under the Policy; Sales and Other Agreements;
When We Pay Proceeds; Payment Options; Our Rights;
Your Voting Rights; Basic Questions and Answers About
Us and Our Policy
11 The Separate Account
12 The Separate Account; Sales and Other Agreements
13 The Separate Account; Charges Under the Policy
14 Basic Questions and Answers About Us and Our Policy;
The Separate Account; Sales and Other Agreements
15 Basic Questions and Answers About Us and Our Policy;
General Provisions of the Policy
</TABLE>
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
- ----------- -------
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16 The Separate Account; Investment Return
17 The Separate Account Value and Cash Surrender Value;
Withdrawal Rights and Payment Options
18 The Separate Account
19 Records and Reports
20 Not Applicable
21 What is the loan privilege and how does a loan affect
the Policy's Death Benefit and Cash Surrender Value;
Policy Loan
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; The Separate Account
25 Basic Questions and Answers About Us and Our Policy
26 Not Applicable
27 Basic Questions and Answers About Us and Our Policy
28 Directors and Executive Officers of MassMutual
29 Basic Questions and Answers About Us and Our Policy
30 Not Applicable
31 Not Applicable
32 Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
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Item No. of
Form N-8B-2 Caption
- ----------- -------
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33 Not Applicable
34 Not Applicable
35 Basic Questions and Answers About Us and Our Policy
36 Not Applicable
37 Not Applicable
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Sales and Other Agreements
44 The Separate Account; Investment Return; Charges for
Federal Income Tax; General Provisions of the Policy
45 Not Applicable
46 The Separate Account; Investment Return
47 The Separate Account
48 The Separate Account; Investment Return
49 Not Applicable
50 The Separate Account
</TABLE>
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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>
51 Cover Page; Basic Questions and Answers About Us and
Our Policy
52 The Separate Account; Our Rights
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
</TABLE>
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CONTENTS OF REGISTRATION STATEMENT
This Registration Statement is comprised of the following documents:
The Facing Sheet.
The Prospectus consisting of 50 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 Dale Games, Actuary.* C.
The following Exhibits:
1.The following Exhibits correspond to those required by
Paragraph A of the instructions as to Exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of MassMutual
establishing the Separate Account.*
(2) Not applicable.
(3) Form of Distribution Contracts:
(a) Form of Distribution Servicing Agreement between MML
Investor Services, Inc., and MassMutual.*
(b) Not applicable.
(c) Not applicable.
(4) Not applicable.
(5) Form of Flexible Premium Variable Whole Life Insurance
Policy.*
<PAGE>
(6) (a) Certificate of Incorporation of
MassMutual.*
(b) By-Laws of MassMutual.*
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Application for a Flexible Premium Variable Whole Life
insurance policy.*
(11) Memorandum describing MassMutual's issuance, transfer, and
redemption procedures for the Policy.*
2. Opinion of Counsel as to the legality of the securities being
registered.*
3. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of C. Dale Games opining as to actuarial
matters pertaining to the securities being registered. *
6. Consent of Coopers & Lybrand L.L.P.
7. Consent of Counsel opining as to the legality of securities being
registered.
* Incorporated by reference to Registration Statement 33-87904 filed with the
Commission on December 23, 1994.
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE
This Prospectus describes a flexible premium variable whole life insurance
policy being offered by Massachusetts Mutual Life Insurance Company
(``MassMutual"). The Policy provides lifetime insurance protection and has
flexibility with respect to premium payments, the amount of which payments is
based upon the table of Selected Face Amounts chosen in the Application.
Policyowners have several investment alternatives. An individual Policyowner
may allocate the premium for his or her Policy among a Guaranteed Principal
Account (``GPA") and the thirteen Separate Account divisions of a designated
segment of MassMutual Variable Life Separate Account I (the ``Separate Account")
after certain deductions have been made. (For details see DEDUCTIONS FROM
PREMIUMS on page 9.) At any one time, only eight divisions are available to a
Policyowner. The Separate Account divisions consist of four divisions (the
``MML Divisions") which invest in MML Series Investment Fund and nine divisions,
(the ``Oppenheimer Divisions"), which invest in nine funds of Oppenheimer
Variable Account Funds.
The Death Benefit may, and Cash Surrender Value of a Policy most likely will,
vary up or down depending on the investment performance of the divisions of the
Separate Account (the ``Divisions"). While there is no guaranteed minimum Cash
Surrender Value for a Policy invested in the Separate Account, a Policy's Death
Benefit will never be less than its Selected Face Amount. This amount can
increase, decrease, or remain level each year based upon the Selected Face
Amount and Death Benefit Option chosen by the Policyowner, subject to certain
rules established by MassMutual. Furthermore, the Policy will not lapse
provided there is sufficient Account Value available to pay applicable monthly
charges. (For details see ACCOUNT VALUE CHARGES on page 9.)
The Divisions have distinct investment portfolios. The MML Equity Division
invests in shares of MML Equity Fund, which invests primarily in common stocks
and other equity securities. The MML Blend Division invests in shares of MML
Blend Fund, which invests in a portfolio that may include 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. The MML Managed
Bond Division invests in shares of MML Managed Bond Fund, which invests
primarily in publicly issued, readily marketable, fixed-income securities. The
MML Money Market Division invests in shares of MML Money Market Fund, which
invests primarily in short-term debt instruments. The Oppenheimer Global
Securities Division invests in shares of Oppenheimer Global Securities Fund
which invests primarily in securities of foreign issuers, growth type companies,
cyclical industries and other securities which are believed will appreciate in
value. The Oppenheimer Capital Appreciation Division invests in shares of
Oppenheimer Capital Appreciation Fund which invests primarily in securities of
growth-type companies. The Oppenheimer Growth Division invests in shares of
Oppenheimer Growth Fund which invests primarily in securities of well-known
companies. The Oppenheimer Growth & Income Division invests in shares of
Oppenheimer Growth & Income Fund which invests primarily in equity and debt
securities. The Oppenheimer Multiple Strategies Division invests in shares of
Oppenheimer Multiple Strategies Fund which invests primarily in common stocks
and other equity securities, bonds, other debt securities and ``money market"
securities. The Oppenheimer High Income Division invests in shares of
Oppenheimer High Income Fund which invests primarily in lower rated, high yield,
high risk income securities. The Oppenheimer Strategic Bond Division invests in
shares of Oppenheimer Strategic Bond Fund which invests primarily in: (i)
foreign government and corporate debt securities; (ii) U.S. government
securities; and (iii) lower-rated high yield, high-risk debt securities. The
Oppenheimer Bond Division invests in shares of Oppenheimer Bond Fund which
invests primarily in high yield fixed-income securities. The Oppenheimer Money
Division invests in shares of Oppenheimer Money Fund which invests primarily in
``money market" securities consistent with low capital risk and maintenance of
liquidity. (Collectively, these thirteen funds are referred to as the
``Funds.") The shares of the underlying Funds purchased by the Divisions are
held by MassMutual as custodian of the Separate Account. (For details regarding
the charges against the Separate Account, see SEPARATE ACCOUNT CHARGES on page
9.)
All Policies are serviced through MassMutual's Home Office which is located in
Springfield, Massachusetts. The mailing address is Massachusetts Mutual Life
Insurance Company, Springfield, Massachusetts 01111. The telephone number is
(413) 788-8411.
[Date]
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 OF MML SERIES
INVESTMENT FUND AND OF 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
A POLICY'S BENEFICIARY. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR
TO OR COMPARABLE TO 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 whole
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
DEFINITIONS OF TERMS........................................................................................................ 4
BASIC QUESTIONS AND ANSWERS ABOUT US AND OUR POLICY......................................................................... 6
What is MassMutual?........................................................................................................ 6
What variable life insurance policy are We offering?....................................................................... 6
Availability............................................................................................................... 6
Underwriting............................................................................................................... 6
What is the Account Value of the Policy?................................................................................... 6
What are the Divisions of the Separate Account?............................................................................ 6
What is the Guaranteed Principal Account (``GPA'')?........................................................................ 7
Is the level of the Death Benefit guaranteed?.............................................................................. 7
Is the Death Benefit subject to income taxes?.............................................................................. 7
Does the Policy have a Cash Surrender Value?............................................................................... 7
What is a modified endowment contract?..................................................................................... 7
Can this Policy become a modified endowment contract?...................................................................... 7
What about Premiums?....................................................................................................... 7
When are Initial Premiums allocated to the Guaranteed Principal Account or the Separate Account?........................... 8
How can the Net Premium and the Account Value of the Policy be allocated among the
Guaranteed Principal Account and the Separate Account Divisions?........................................................... 8
How long will the Policy remain in......................................................................................... 8
Are there charges against the Policy?...................................................................................... 8
What is the loan privilege and how does a loan affect the Policy's Death Benefit and Cash
Surrender Value?........................................................................................................... 8
Are there dividends?....................................................................................................... 8
Do I have a right to cancel?............................................................................................... 8
Can the Policy be exchanged for a fixed benefit policy?.................................................................... 8
CHARGES UNDER THE POLICY.................................................................................................... 8
Deductions from Premiums................................................................................................... 9
Sales Load................................................................................................................ 9
State Premium Tax Charge.................................................................................................. 9
Deferred Acquisition Cost (``DAC'') Tax Charge............................................................................ 9
Account Value Charges...................................................................................................... 9
Administrative Charge..................................................................................................... 9
Charge for Cost of Insurance Protection................................................................................... 9
Underwriting Charge....................................................................................................... 9
Separate Account Charges................................................................................................... 9
Charges for Mortality and Expense Risks................................................................................... 9
Charges for Federal Income Taxes.......................................................................................... 10
THE SEPARATE ACCOUNT........................................................................................................ 10
Investment of the Separate Account......................................................................................... 10
Rates of Return............................................................................................................ 12
GENERAL PROVISIONS OF THE POLICY............................................................................................ 14
Premiums................................................................................................................... 14
Planned Policy Premiums.................................................................................................... 14
Minimum Initial Policy Premium............................................................................................. 14
Minimum Case Premium....................................................................................................... 14
Initial Case Premium Paid.................................................................................................. 15
Minimum and Maximum Premium Payments....................................................................................... 15
Termination................................................................................................................ 15
Grace Period............................................................................................................... 15
DEATH BENEFIT UNDER THE POLICY.............................................................................................. 15
ACCOUNT VALUE AND CASH SURRENDER VALUE...................................................................................... 15
Account Value.............................................................................................................. 16
Automated Account Value Transfer........................................................................................... 16
Investment Return.......................................................................................................... 16
Cash Surrender Value....................................................................................................... 16
Withdrawals................................................................................................................ 16
</TABLE>
2
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<TABLE>
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POLICY LOAN PRIVILEGE.................................................................................................... 17
Source of Loan.......................................................................................................... 17
If Loans Exceed the Policy Account Value................................................................................ 17
Interest................................................................................................................ 17
Repayment............................................................................................................... 17
Interest on Loaned Value................................................................................................ 17
Effect of Loan.......................................................................................................... 17
FREE LOOK PROVISION...................................................................................................... 17
EXCHANGE PRIVILEGE....................................................................................................... 18
YOUR VOTING RIGHTS....................................................................................................... 18
OUR RIGHTS............................................................................................................... 18
DIRECTORS AND EXECUTIVE VICE PRESIDENTS OF MASSMUTUAL.................................................................... 18
THE GUARANTEED PRINCIPAL ACCOUNT......................................................................................... 20
FEDERAL INCOME TAX CONSIDERATIONS........................................................................................ 20
MassMutual - Tax Status................................................................................................. 20
Policy Proceeds, Premiums, and Loans.................................................................................... 21
Modified Endowment Contracts............................................................................................ 21
Diversification Standards............................................................................................... 22
ADDITIONAL PROVISIONS OF THE POLICY...................................................................................... 22
Paid-up Policy Date..................................................................................................... 22
Reinstatement Option.................................................................................................... 22
Payment Options......................................................................................................... 23
Fixed Amount Payment Option............................................................................................. 23
Fixed Time Payment Option............................................................................................... 23
Interest Payment Option................................................................................................. 23
Lifetime Payment Option................................................................................................. 23
Joint Lifetime Payment Option........................................................................................... 23
Joint Lifetime Payment Option with Reduced Payments..................................................................... 23
Withdrawal Rights under Payment Options................................................................................. 23
Beneficiary............................................................................................................. 23
Changing the Owner or Beneficiary....................................................................................... 23
Right to Substitute Insured............................................................................................. 23
Assignment.............................................................................................................. 24
Dividends............................................................................................................... 24
Limits on Our Right to Challenge the Policy............................................................................. 24
Misstatement of Age or Sex.............................................................................................. 24
Suicide................................................................................................................. 24
When We Pay Proceeds.................................................................................................... 24
RECORDS AND REPORTS...................................................................................................... 24
SALES AND OTHER AGREEMENTS............................................................................................... 24
Commissions Schedule.................................................................................................... 25
Bonding Arrangement..................................................................................................... 25
LEGAL PROCEEDINGS........................................................................................................ 25
EXPERTS.................................................................................................................. 25
FINANCIAL STATEMENTS..................................................................................................... 25
APPENDIX A............................................................................................................... 44
</TABLE>
3
<PAGE>
DEFINITION OF TERMS
ACCOUNT VALUE: The sum of the Variable Account Value and the Fixed Account Value
of the Policy.
AUTOMATED ACCOUNT VALUE TRANSFER: The automated transfer process which allows a
Policyowner to specify, subject to applicable transfer rules, a specific dollar
amount or a whole-number percentage of a Division's Account Value to be
transferred monthly from that Division to any other Division(s) and/or the
Guaranteed Principal Account.
BENEFICIARY: The person or persons that the Policyowner specifies to receive
insurance proceeds after the Insured dies.
CASE: A group of Policies sold to individuals with a common employment or other
non-insurance motivated relationship. All Policies in a Case are aggregated for
purposes of determining the Policy Date or Issue Date, underwriting requirements
and sales load percentages.
CASH SURRENDER VALUE: The amount payable to a Policyowner upon Surrender of the
Policy. It is equal to the Account Value less any Policy Debt.
DEATH BENEFIT: The amount payable to the named Beneficiary when the Insured
dies. A choice of Death Benefits is available under the Policy (referred to as
``Option 1" and ``Option 2"). The Death Benefit equals the greater of the
Selected Face Amount (plus the Account Value, under Option 2), or the Minimum
Face Amount in effect on the date of death, less Policy Debt, plus unearned or
minus unpaid monthly deductions.
DIVISIONS: The subaccounts of the Separate Account, each of which invests in
shares of either the MML Trust or the Oppenheimer Trust.
FIXED ACCOUNT VALUES: Account Values which are allocated to the GPA.
FREE LOOK PERIOD: The period during which a Policyowner may return the Policy.
It must be within 10 days of receipt of the Policy, or within 10 days after the
Policyowner receives the notice of a right to withdraw, or within 45 days after
the date of Part I of the Application, whichever is latest (unless a different
period is mandated under applicable state law). Until the expiration of the
Free Look Period, amounts will be held in the MML Money Market Division.
GUARANTEED PRINCIPAL ACCOUNT (``GPA"): A fixed account to which a Policyowner
may allocate Net Premium or Account Value, which guarantees both the principal
and a minimum interest rate.
HOME OFFICE: The Home Office of Massachusetts Mutual Life Insurance Company,
located at 1295 State Street in Springfield, Massachusetts.
INITIAL CASE PREMIUM PAID: The total dollar amount paid for all Policies in a
Case before the Case is installed on the administrative system.
INSURED: Person whose life this Policy insures.
ISSUE DATE: The date shown on the Schedule Page. It is the start date of the
suicide and contestability periods. It is also the date from which the Policy
is in force if the first premium has been paid.
MINIMUM FACE AMOUNT: An amount equal to Account Value times the Minimum Face
Amount percentage. This percentage depends upon the Insured's age, sex and
smoking classification.
MONTHLY CALCULATION DATE: The date on which the monthly deductions under the
Policy are deducted from the Account Value. The first Monthly Calculation Date
will be the Policy Date, and subsequent monthly deductions will be on the same
date of each succeeding calendar month.
NET PREMIUM: Premium paid less sales expense and premium tax charges.
PAID-UP POLICY DATE: The Policy Anniversary Date nearest the Insured's 100th
birthday.
POLICY: The Flexible Premium Variable Life Insurance Policy With Table Of
Selected Face Amounts offered by MassMutual that is described in this
Prospectus.
POLICY ANNIVERSARY: The anniversary of the Policy Date.
POLICY DATE: The date shown on the Schedule Page of the Policy used as the
starting point for determining Policy Anniversary Dates, Policy Years and
Monthly Calculation Dates.
POLICY DEBT: The amount of obligation from a Policyowner to MassMutual from
outstanding loans made to the Policyowner under the Policy. This amount
includes any loan interest accrued to date.
POLICY YEAR: The twelve month period commencing with the Policy Date, and each
successive twelve month period thereafter.
POLICYOWNER: The corporation, partnership, trust, individual, or other entity
who owns the Policy.
PREMIUM: The total dollar amount paid for the Policy.
PREMIUM TAX: The amount of premium tax, if any, charged by a state or other
governmental authority.
REGISTER DATE: The date the Company allocates the initial premium less certain
deductions to the Separate Account. It is the Valuation Date which is on, or
next follows the later of the date on which We receive a completed Part I of the
Application for this Policy at our Home Office or the date We receive the first
premium payment for the Policy at our Home Office.
SELECTED FACE AMOUNT: The amount of insurance coverage chosen by the
Policyowner.
SEPARATE ACCOUNT: The segregated asset account called ``Massachusetts Mutual
Variable Life Separate Account I" established by MassMutual under the laws of
Massachusetts and registered as a unit investment trust under the Investment
4
<PAGE>
Company Act of 1940, as amended (the ``1940 Act"). The Separate Account will
be used to receive and invest premiums for this Policy and for other variable
life insurance policies MassMutual issues, and for each such policy there will
be a designated segment of the Separate Account.
SURRENDER: A surrender by the Policyowner of all rights under the Policy in
exchange for the entire Cash Surrender Value under the Policy.
VALUATION DATE: Any date on which the net asset value of the shares of the Funds
is determined. Generally, this will be any date on which the New York Stock
Exchange (or its successor) is open for trading.
VALUATION PERIOD: The period of time from the end of one Valuation Date to the
end of the next Valuation Date.
VALUATION TIME: The time the New York Stock Exchange (or its successor) closes
on a Valuation Date (currently 4:00 p.m. New York time). All actions which are
to be performed on a Valuation Date will be performed as of the Valuation Time.
VARIABLE ACCOUNT VALUES: Account Values which are allocated to any of the
Divisions.
WE OR US: Refers to MassMutual.
WITHDRAWAL: A withdrawal of Account Value by the Policyowner.
YOU OR YOURS: Refers to the Policyowner.
5
<PAGE>
BASIC QUESTIONS AND ANSWERS
ABOUT US AND OUR POLICY
WHAT IS MASSMUTUAL? Massachusetts Mutual Life Insurance Company
(``MassMutual'') is a mutual life insurance company chartered in 1851 under the
laws of Massachusetts. Its Home Office is located in Springfield,
Massachusetts. MassMutual is licensed to transact life, accident and health
business in all fifty states of the United States, the District of Columbia and
certain provinces of Canada. As of December 31, 1994, MassMutual had total
contingency reserves in excess of $1.9 billion and consolidated assets of $35.7
billion.
WHAT VARIABLE LIFE INSURANCE POLICY ARE WE OFFERING? In this Prospectus We are
offering a Flexible Premium Variable Whole Life Insurance Policy With Table Of
Selected Face Amounts (the ``Policy"). We issue this Policy to provide for a
Death Benefit and Cash Surrender Value, as well as loan privileges and flexible
premiums. It is called ``flexible" because the Policyowner may select the
timing and amount of premium payments. It is called ``variable" because, unlike
the fixed benefits of a traditional whole life policy, the Death Benefit may,
and Cash Surrender Value most likely will, vary to the extent that the Account
Value under the Policy is allocated to the Division(s). Certain provisions of
the Policy as described herein may be somewhat different in any particular state
because of specific state requirements.
The Policy is a legal contract between the Policyowner and MassMutual. The
entire contract consists of the application to the Policy (the ``Application"),
the Policy and any amendments or riders added thereto.
AVAILABILITY. The Policy is available on a ``Case" or, state law permitting, on
an individual basis. ``Case basis" means that the Insureds share a common
employment or other institutional relationship and that all Policies in the Case
are aggregated for purposes of determining Issue Dates, Policy Dates,
underwriting requirements and sales load percentages. If an individual Insured
owns the Policy, he or she may exercise all rights and privileges under the
Policy through their Employer or other sponsoring entity acting as Case
administrator. After termination of the employment or other relationship, an
individual who owns the Policy may exercise such rights and privileges directly
with MassMutual.
The minimum Selected Face Amount is $25,000 per life for ages 20 through 85 (age
nearest birthday). The minimum Case premium is $250,000 of first year
annualized premium. The Insured may not be younger than age 20 nor older than
age 85 as of the Policy Date for Policies issued on a regular underwriting
basis. For Policies underwritten on a guaranteed issue underwriting basis or on
a simplified issue underwriting basis, the Insured may not be younger than age
20 nor older than age 65 as of the Policy Date. Before issuing any Policy We
will require satisfactory evidence of insurability, except under a guaranteed
issue underwriting approach if the Insured is not older than age 65 as of the
Policy Date.
UNDERWRITING. The Policies within a Case are underwritten on the same basis,
i.e., a regular underwriting, simplified issue underwriting, or guaranteed issue
underwriting approach is used for all Policies in a Case. Availability of a
regular underwriting approach is subject to state approval. Mortality charges
vary depending on the type of underwriting used.
WHAT IS THE ACCOUNT VALUE OF THE POLICY? The Account Value is determined by the
amount and frequency of premium payments, the investment experience of the
Divisions chosen by the Policyowner (the Variable Account Value), the interest
earned on Account Value allocated to the GPA (the Fixed Account Value), and any
Withdrawals or charges imposed in connection with the Policy. The Policyowner
bears the investment risk of any depreciation in value of the underlying assets
of the Divisions but also may benefit from any appreciation in value. For
details see ACCOUNT VALUE on page 15.
WHAT ARE THE DIVISIONS OF THE SEPARATE ACCOUNT? The Separate Account has
thirteen Divisions - the MML Equity Division, the MML Blend Division, the MML
Managed Bond Division, the MML Money Market Division, the Oppenheimer Global
Securities Division, the Oppenheimer Capital Appreciation Division, the
Oppenheimer Growth Division, the Oppenheimer Growth & Income Division, the
Oppenheimer Multiple Strategies Division, the Oppenheimer High Income Division,
the Oppenheimer Strategic Bond Division,the Oppenheimer Bond Division, and the
Oppenheimer Money Division. Each Division invests only in shares of a single
investment company or a single series of an investment company. The Divisions
are intended to provide money to pay benefits under the Policy but do not
guarantee a minimum interest rate or guarantee against asset depreciation. For
details see THE SEPARATE ACCOUNT on page 10.
The MML Equity Division invests in shares of MML Equity Fund. The MML Blend
Division invests in shares of MML Blend Fund. The MML Managed Bond Division
invests in shares of MML Managed Bond Fund. The MML Money Market Division
invests in shares of MML Money Market Fund. Oppenheimer Global Securities,
Capital Appreciation, Growth, Growth & Income, Multiple Strategies, High Income,
Strategic Bond, Bond and Money Divisions invest in shares of Oppenheimer Global
Securities Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Growth Fund,
Oppenheimer Growth & Income Fund, Oppenheimer Multiple Strategies Fund,
Oppenheimer High Income Fund, Oppenheimer Strategic Bond Fund, Oppenheimer Bond
Fund, Oppenheimer Money Fund, respectively.
MML Equity Fund, MML Blend Fund, MML Managed Bond Fund and MML Money Market Fund
(the ``MML Funds") are separate series of shares of MML Series Investment Fund
(the ``MML Trust"), an open-end diversified management investment company.
MassMutual acts as investment manager for MML Money Market Fund, MML Managed
Bond Fund and the Bond and Money Market Sectors of MML Blend Fund. Pursuant to
an investment sub-advisory agreement, Concert Capital Management, Inc.
(``Concert Capital"), a wholly-owned subsidiary of MassMutual, serves as
investment sub-advisor to MML Equity Fund and the Equity Sector of MML Blend
Fund. Both MassMutual and Concert Capital are registered as investment advisors
under the Investment Advisors Act of 1940.
Oppenheimer Management Company (``OMC") supervises the investment operations of
the Oppenheimer Variable Account
6
<PAGE>
Funds (the ``Oppenheimer Trust"), defines the composition of each respective
portfolio, and furnishes advice and recommendations with respect to the
investments, investment policies and purchase and sale of securities, pursuant
to an investment advisory agreement with each Oppenheimer Fund. Oppenheimer
Global Securities Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer
Growth Fund, Oppenheimer Growth & Income Fund, Oppenheimer Multiple Strategies
Fund, Oppenheimer High Income Fund, Oppenheimer Strategic Bond Fund, Oppenheimer
Bond Fund, and Oppenheimer Money Fund (the ``Oppenheimer Funds") are part of the
Oppenheimer Trust, an open-end, diversified, management investment company,
which is available to act as the investment vehicle for separate accounts for
variable insurance policies offered by insurance companies. OMC is registered as
an investment advisor under the Investment Advisors Act of 1940.
WHAT IS THE GUARANTEED PRINCIPAL ACCOUNT (``GPA")? As an alternative to the
Separate Account, the Policyowner may allocate Net Premium or transfer Account
Value to the GPA. Amounts so allocated or transferred become part of
MassMutual's general account assets. The Policyowner is not entitled to share
in the investment experience of those assets. Rather, MassMutual guarantees a
rate of return on the allocated amount equal to 3%. Although MassMutual is not
obligated to credit interest at a rate higher than this minimum, it may declare
a higher rate applicable for such periods as it deems appropriate. For details
see THE GUARANTEED PRINCIPAL ACCOUNT on page 20.
IS THE LEVEL OF THE DEATH BENEFIT GUARANTEED? There are two Death Benefit
options. The Death Benefit equals the greater of the Policy's Selected Face
Amount for the Policy Year of death (plus the Account Value on the date of
death if Death Benefit Option 2 is elected) or the Minimum Face Amount in effect
on the date of death of the Insured. Death Benefit proceeds under either Option
will be reduced by any outstanding Policy Debt, plus or minus unearned or unpaid
monthly deductions. So long as the Policy remains in force, the Death Benefit
You have selected will be available. For details see DEATH BENEFIT UNDER THE
POLICY on page 15.
IS THE DEATH BENEFIT SUBJECT TO INCOME TAXES? A Death Benefit paid under our
Policies is usually fully excludable from the gross income of the Beneficiary
for federal income tax purposes.
For details see FEDERAL INCOME TAX CONSIDERATIONS - POLICY PROCEEDS, PREMIUMS
AND LOANS on page 21.
DOES THE POLICY HAVE A CASH SURRENDER VALUE? The Policyowner may surrender the
Policy at any time and receive its Account Value less any Policy Debt. There is
no surrender charge. Withdrawals are allowed subject to certain restrictions
and are subject to a withdrawal charge of 2.0% of the Account Value not to
exceed $25.00 deducted from each Withdrawal. For details see WITHDRAWALS. The
Cash Surrender Value of a Policy fluctuates with the investment performance of
the Divisions in which the Policy has Account Value, and with the interest rate
on the amount held in the GPA. It may increase or decrease daily.
For federal income tax purposes, the Policyowner usually is not taxed on
increases in the Cash Surrender Value until the Policy is surrendered. In
connection with certain Withdrawals of Account Value and loans on the Policy,
however, the Policyowner may be taxed on all or a part of the amount
distributed.
For details see CASH SURRENDER VALUE on page 16 and FEDERAL INCOME TAX
CONSIDERATIONS - POLICY PROCEEDS, PREMIUMS AND LOANS on page 21.
WHAT IS A MODIFIED ENDOWMENT CONTRACT? A modified endowment contract (as defined
by the Internal Revenue Code) is a life insurance policy under which the
premiums paid during the first seven contract years exceed the cumulative
premiums payable under a policy providing for guaranteed benefits upon the
payment of seven level annual premiums. Certain changes to a life insurance
policy can subject it to retesting for a new seven-year period. During an
insured's lifetime, distributions from a modified endowment contract, including
collateral assignments, loans, and withdrawals, are taxable to the extent of any
income in the contract and may also incur a penalty tax if the Policyowner is
not 59/1//\\2\\. For details see MODIFIED ENDOWMENT CONTRACTS on page 21.
CAN THIS POLICY BECOME A MODIFIED ENDOWMENT CONTRACT? Since this Policy permits
flexible premium payments, it may become a modified endowment contract. The
Company has the systems capacity to test a Policy at issue to determine whether
it will be classified as a modified endowment contract (``MEC''). This test
examines the Policy for MEC status at the time of issue. The Company has
further safeguards in place to monitor whether a Policy may become a modified
endowment contract after issue.
For details see FEDERAL INCOME TAX CONSIDERATIONS - MODIFIED ENDOWMENT CONTRACTS
on page 21.
WHAT ABOUT PREMIUMS? There are five concepts which are important to the
discussion of premiums for this Policy: the minimum initial Policy premium; the
minimum annual planned Policy premium; the planned Policy premium; the minimum
Case premium; and the Initial Case Premium Paid.
A minimum initial Policy premium is payable either at the time You submit Your
Application or at some time prior to the delivery of the Policy. The minimum
annual planned Policy premium is a level amount used in determining the sales
load percentage breakpoint and varies by initial Selected Face Amount, issue
age, and sex. The planned Policy premium is elected on the Application and
becomes the basis for the Policy's premium billing. The amount of planned Policy
premiums originally selected in the Application may be changed at any time upon
written request.
The minimum Case premium is $250,000 of first year annualized premium for all
Policies in a Case. The Initial Case Premium Paid is the amount of premium for
all Policies in a Case on deposit with MassMutual at the time the Policies are
installed on the administration system. The Initial Case Premium Paid
determines sales load percentages for all Policies in that Case.
For details see GENERAL PROVISIONS OF THE POLICY - PREMIUMS on page 14.
7
<PAGE>
WHEN ARE INITIAL PREMIUMS ALLOCATED TO THE GUARANTEED PRINCIPAL ACCOUNT OR THE
SEPARATE ACCOUNT? The initial Net Premium (i.e., premium paid less the
deductions described in DEDUCTIONS FROM PREMIUMS) will be allocated to the MML
Money Market Division, which invests in the MML Money Market Fund (see FREE LOOK
PROVISION on page 17). At the end of the Free Look Period, the Account Value
will be allocated to the GPA and/or Divisions according to the Policyowner's
instructions in the Application and subject to MassMutual's allocation
rules.
HOW CAN THE NET PREMIUM AND THE ACCOUNT VALUE OF THE POLICY BE ALLOCATED AMONG
THE GUARANTEED PRINCIPAL ACCOUNT AND THE DIVISIONS? When You apply for a Policy
You choose the percentages of Your premiums to be allocated to the Divisions
(maximum of eight at one time) and the GPA. A Policyowner may choose any
whole-number percentages as long as the total is 100%. The allocation of future
Net Premiums may be changed at any time without charge.
The Account Value of the Policy may be transferred between the GPA and/or the
Divisions by written request. Account Value may be transferred by dollar amount
or by whole-number percentage, subject to restrictions. Only eight Divisions
are available to a Policyowner at any one time. To allocate Net Premiums or to
transfer Account Value to a ninth Division, the Policyowner must transfer 100%
of the Account Value from one or more of the eight Divisions to which
allocations are currently made. For details, see The Separate Account.
Automated Account Value Transfer is also available. For details, see Automated
Account Value Transfer. For details see ACCOUNT VALUE on page 15.
HOW LONG WILL THE POLICY REMAIN IN FORCE? The Policy does not automatically
terminate for failure to pay planned Policy premiums. Payment of these amounts
does not guarantee the Policy will remain in force. The Policy terminates only
when the Account Value less any Policy Debt is insufficient to pay the monthly
deduction, and a grace period expires without sufficient payment. For details
see TERMINATION and GRACE PERIOD on page 15.
ARE THERE CHARGES AGAINST THE POLICY? Certain charges are made against the
Policy. Before allocation of any premium to the Account Value, a percentage of
each premium paid is deducted for expenses related to the sale and distribution
of the Policies. These charges are called sales loads and the percentages vary
depending on the total Initial Case Premium Paid for all Policies in the Case
before installation on the administration on system. There are two additional
deductions from gross premiums: (i) for state premium taxes; and (ii) for
Deferred Acquisition Cost (``DAC") tax expense. Each premium, net of these
charges, is allocated to the GPA or the Divisions and becomes a part of the
Account Value. For details see DEDUCTIONS FROM PREMIUM on page 8.
Certain monthly charges are deducted directly from the Policy's Account Value on
each Monthly Calculation Date. These monthly deductions are equal to the sum of
a mortality charge, an administrative charge, and an underwriting charge. The
underwriting charge is only applicable for Policies issued under a regular
underwriting approach.
Some deductions are made on a daily basis against the assets of the Divisions.
A daily charge calculated at a current annual rate of .30% of the value of the
assets of each Division is charged for mortality and expense risks. In no event
will this rate exceed .60%. Similarly, tax assessments are calculated daily.
Currently, We are not making any charges for income taxes, but We may make
charges in the future against the Divisions for federal income taxes
attributable to them.
Withdrawals of Account Value are permitted subject to certain restrictions. A
charge equal to the lesser of $25 or 2.0% of the amount withdrawn is imposed for
each Withdrawal.
For details see CHARGES UNDER THE POLICY on page 8 and FEDERAL INCOME TAX
CONSIDERATIONS on page 20.
WHAT IS THE LOAN PRIVILEGE AND HOW DOES A LOAN AFFECT THE POLICY'S DEATH BENEFIT
AND CASH SURRENDER VALUE? While the Policy is in force, a loan may be made on
the Policy, in a maximum amount equal to the Account Value on the date the loan
is to be made reduced by: (i) any outstanding Policy Debt; (ii) interest on the
loan being made and on any outstanding Policy Debt to the next Policy
Anniversary Date; and (iii) an amount equal to the most recent monthly charge
for the Policy multiplied by the number of Monthly Calculation Dates from the
date the loan is made, up to and including the next Policy Anniversary Date.
(The maximum loan amount may be different if required by state law.) For
details see POLICY LOAN PRIVILEGE on page 17.
ARE DIVIDENDS PAID ON THE POLICY? The Policy is participating, therefore, it may
share in any dividends that MassMutual pays. Dividends are based on the
Policy's contribution to any divisible surplus of MassMutual. Any dividends
will be payable on the Policy Anniversary Date. MassMutual does not expect that
any dividends will be paid under the Policies. For details see DIVIDENDS on
page 24.
DO I HAVE A RIGHT TO CANCEL? Under the Free Look Provision, the Policyowner has
a limited right to return the Policy and receive a refund. This right expires
on the latest of the following:
. Ten days after You receive the Policy; or
. Ten days after You receive a Notice of Withdrawal Right; or
. 45 days after Part 1 of the Policy Application was signed.
The Policy may be returned to our Home Office, to any of our agency offices, or
to the agent who sold You the Policy. For details see FREE LOOK PROVISION on
page 17.
CAN THE POLICY BE EXCHANGED FOR A FIXED BENEFIT POLICY? You have the right to
transfer all of Your Account Value into the GPA at any time after issue. The
transfer will take effect when We receive a written request for the transfer
signed by the Policyowner.
For details see ACCOUNT VALUE on page 15 and EXCHANGE PRIVILEGE on page 18.
CHARGES UNDER THE POLICY
Certain charges are deducted to compensate MassMutual for providing the
insurance benefits under the Policy, for
8
<PAGE>
administering the Policy, for assuming certain risks, and for incurring certain
expenses in distributing the Policy.
DEDUCTIONS FROM PREMIUMS
Prior to the allocation of the premium payment to the GPA or the selected
Divisions, a deduction as a percentage of premium is made for the sales load,
state premium taxes, and the DAC tax charge. The sales load percentage varies
depending on the total Initial Case Premium Paid for all Policies in the Case.
SALES LOAD. The sales load component of the premium deduction is based on the
total Initial Case Premium Paid for all Policies in a Case before installation
on the administration system. For Policies issued in a Case with an Initial
Case Premium Paid of less than $1,000,000, the sales load percentages will
decrease after the fifth Policy Year. For Policies issued in a Case with an
Initial Case Premium Paid of $1,000,000 or more, the sales load will not change
after the fifth Policy Year. Given the lower sales load associated with a
larger initial Case premium payment, it is in the best interest of the
Policyowner to pay the largest possible initial Case premium. Please note for
Policies issued in a Case with an Initial Case Premium Paid of less than
$1,000,000, that premiums are tracked on an annual cumulative basis for each
policy, and that the year 1 through 5 sales load percentages will be higher on
premium payments made below the specified minimum annual planned Policy premium.
SALES LOAD
<TABLE>
<CAPTION>
Initial Case Premium Paid Years 1-5 Years 6+
<S> <C> <C>
Less than $1,000,000
Less than or equal to the
Minimum Planned Policy
Premium 18.00% 6.00%
Greater than the Minimum
Planned Policy Premium 6.00% 6.00%
Greater than or equal to
$1,000,000 but less than
$2,500,000 7.00% 7.00%
Greater than or equal to
$2,500,000but less than
$5,000,000 5.50% 5.50%
Greater than or equal to
$5,000,000 but less than
$10,000,000 4.00% 4.00%
Greater than or equal to
$10,000,000 3.25% 3.25%
</TABLE>
The amount of the sales load in a Policy Year is not necessarily related to our
actual sales expenses for that particular year. To the extent that sales
expenses are not covered by the sales load, they will be recovered from
MassMutual surplus, including any amounts derived from the mortality and expense
risk charge or the cost of insurance charge. For a discussion of the
commissions paid under the Policy, see SALES AND OTHER AGREEMENTS - COMMISSION
SCHEDULE.
STATE PREMIUM TAX CHARGE. Various states apply premium taxes at various rates.
We currently deduct a percentage equal to the applicable state rate of each
premium to cover premium taxes assessed against MassMutual by the various
states. The applicable state rate will be either the Massachusetts rate or a
higher rate. This charge may increase or decrease to reflect either any change
in the tax or changes of residence. The Policyowner should notify MassMutual of
any change of residence. Any change in this charge would be effective
immediately. MassMutual does not expect to make a profit from this charge.
DEFERRED ACQUISITION COST (``DAC") TAX CHARGE. We deduct 1.0% of each premium
to cover a federal premium tax assessed against MassMutual. This charge is
reasonable in relation to MassMutual's federal income tax burden, under Internal
Revenue Code Section 848, resulting from the receipt of premiums.
ACCOUNT VALUE CHARGES
On each Monthly Calculation Date, a monthly administrative charge, a cost of
insurance charge (also referred to as the Mortality Charge in the Policy) and an
underwriting charge (if applicable) are deducted from the Variable Account Value
and Fixed Account Value in proportion to the non-loaned Account Value in the
Separate Account and the GPA.
ADMINISTRATIVE CHARGE. A monthly charge is deducted to compensate MassMutual
for costs incurred in providing certain administrative services including
premium collection, recordkeeping, processing claims, and communicating with
Policyowners. Currently, the charge is $5.25 per month, or $63 annually, for
each Policy. While this charge may increase or decrease, the maximum monthly
administrative charge is $9 per month. (The maximum charge may be different if
required by state law.) Such charges will not exceed the actual cost for such
services.
CHARGE FOR COST OF INSURANCE PROTECTION. A charge for the cost of insurance
protection is deducted on each Monthly Calculation Date and is based on the
Insured's sex, attained age, the Policy Year in which the deduction is made, the
smoker and rating class of the Policy, and the type of underwriting used for the
Case. The charge varies monthly because it is determined by multiplying the
applicable cost of insurance rates by the amount at risk each Policy month. The
maximum monthly cost of insurance charge for each $1,000 of insurance for which
a charge applies is shown in the Table of Maximum Monthly Mortality Charges in
the Policy. MassMutual may charge less than these maximum charges. Any change
in these charges will apply to all Policies in the same class.
UNDERWRITING CHARGE. A monthly underwriting charge is deducted from Policies
that are issued under a regular underwriting basis. The charge is based on the
amount of insurance underwritten before the Case is installed on the
administrative system. This charge is fixed for a set number of Policy Years
and is shown in the Other Information section of the Policy's Schedule Page.
SEPARATE ACCOUNT CHARGES
CHARGES FOR MORTALITY AND EXPENSE RISKS. We charge the Divisions for the
mortality and expense risks We assume. We deduct a daily charge at a current
effective annual rate of 0.30% of the value of each Division's assets that come
9
<PAGE>
from the Policy. While this charge may increase or decrease, the maximum charge
is 0.60% annually.
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 We collect 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 INCOME TAXES. We do not currently make any charge against
the Divisions for federal income taxes attributable to them. We may make such a
charge eventually, however, in order to provide for the future federal income
tax liability of the Divisions. For more information on charges for federal
income taxes, see FEDERAL INCOME TAX CONSIDERATIONS - MASSMUTUAL - TAX STATUS.
THE SEPARATE ACCOUNT
The Separate Account was established on July 13, 1988 as a separate investment
account of MassMutual by MassMutual's Board of Directors in accordance with the
provisions of Section 132G of Chapter 175 of the Massachusetts General Laws.
The Separate Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. Registration does not involve supervision
of the management or investment practices or policies of either the Separate
Account or of MassMutual. Under Massachusetts law, however, both MassMutual and
the Separate Account are subject to regulation by the Division of Insurance of
the Commonwealth of Massachusetts. Designated segments of the Separate Account
will be used to receive and invest premiums for other variable life insurance
policies issued by MassMutual. Such a segment has been established for the
Policy.
Although the assets of the Separate Account are assets of MassMutual, that
portion of the Separate Account assets equal to the reserves and other
liabilities of the Separate Account attributable to the Policies may not be used
to satisfy any obligations that may arise out of any other business We may
conduct. They may, however, become subject to liabilities arising from other
variable life insurance policies which the Separate Account funds. In addition,
We may from time to time, at our discretion, transfer to our general account
those assets which exceed the reserves and other liabilities of the Separate
Account. Such transfers will not adversely affect the Separate Account.
Income, realized gains or losses, and unrealized gains or losses from each
Division are credited to or charged against that Division without regard to any
of our other income, gains, or losses.
MassMutual may accumulate in the Separate Account the charge for expense and
mortality risks, monthly charges assessed against the Policy and investment
results applicable to those assets that are in excess of net assets supporting
the Policies.
INVESTMENT OF THE SEPARATE ACCOUNT. The designated segment of the Separate
Account has thirteen Divisions attributable to the Policy. Each Division
invests in shares of either MML Trust or Oppenheimer Trust. The Divisions of
the Separate Account are:
. THE MML EQUITY DIVISION - Amounts credited to this Division are invested in
shares of MML Equity Fund, or its successor.
. THE MML BLEND DIVISION - Amounts credited to this Division are invested in
shares of MML Blend Fund, or its successor.
. THE MML MANAGED BOND FUND - Amounts credited to this Division are invested
in shares of MML Managed Bond Fund, or its successor.
. THE MML MONEY MARKET DIVISION - Amounts credited to this Division are
invested in shares of MML Money Market Fund, or its successor.
. THE OPPENHEIMER GLOBAL SECURITIES DIVISION - Amounts credited to this
Division are invested in shares of Oppenheimer Global Securities Fund, or
its successor.
. THE OPPENHEIMER CAPITAL APPRECIATION DIVISION - Amounts credited to this
Division are invested in shares of Oppenheimer Capital Appreciation Fund,
or its successor.
. THE OPPENHEIMER GROWTH DIVISION - Amounts credited to this Division are
invested in shares of Oppenheimer Growth Fund, or its successor.
. THE OPPENHEIMER GROWTH & INCOME DIVISION - Amounts credited to this
Division are invested in shares of Oppenheimer Growth & Income Fund, or its
successor.
. THE OPPENHEIMER MULTIPLE STRATEGIES DIVISION - Amounts credited to this
Division are invested in shares of Oppenheimer Multiple Strategies Fund, or
its successor.
. THE OPPENHEIMER HIGH INCOME DIVISION - Amounts credited to this Division
are invested in shares of Oppenheimer High Income Fund, or its successor.
. THE OPPENHEIMER STRATEGIC BOND DIVISION - Amounts credited to this Division
are invested in shares of Oppenheimer Strategic Bond Fund, or its
successor.
. THE OPPENHEIMER BOND DIVISION - Amounts credited to this Division are
invested in shares of Oppenheimer Bond Fund, or its successor.
. THE OPPENHEIMER MONEY DIVISION - Amounts credited to this Division are
invested in shares of Oppenheimer Money Fund, or its successor.
The shares of the underlying Fund purchased by each Division will be held by
MassMutual as custodian of the Separate Account.
Although there are currently thirteen Divisions available to a Policyowner, a
Policyowner may allocate Account Value to no more than eight Divisions at any
one time. To allocate Net Premium or to transfer Account Value to a ninth
Division which does not have Account Value allocated to it, a Policyowner must
transfer 100% of the Account Value from one or more of the eight ``active"
Divisions to which allocations are currently made.
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<PAGE>
The MML Trust and the Oppenheimer Trust are open-end, diversified management
investment companies registered under the 1940 Act. The MML Trust consists of
the four MML Funds described above, each of which has its own investment
objectives and policies. Similarly, the Oppenheimer Trust consists of nine
Oppenheimer Funds, each of which has its own investment objectives and policies.
MassMutual established the MML Trust for the purpose of providing vehicles for
the investment of assets held in various separate investment accounts, including
the Separate Account, established by MassMutual or by life insurance companies
which are subsidiaries of MassMutual. OMC established the Oppenheimer Trust for
the purpose of providing investment vehicles for investment only by variable
life insurance contracts and variable annuities contracts. Shares of the MML
Funds are not offered to the general public, but solely to separate investment
accounts established by MassMutual and life insurance company subsidiaries of
MassMutual.
The primary investment objective of MML Equity Fund is to achieve a superior
total rate of return over an extended period of time from both capital
appreciation and current income. A secondary investment 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.
The investment objective of MML Blend Fund is 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
may invest in a portfolio that may include 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.
The investment objective of MML Managed Bond Fund is to achieve as high a total
rate of return on an annual basis as is considered consistent with the
preservation of capital values. The assets of this Fund will be invested
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.
The investment objectives of MML Money Market Fund are to achieve high current
income, the preservation of capital, and liquidity. These objectives are of
equal importance. The assets of this Fund will be invested 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.
The investment objective of the Oppenheimer Global Securities Fund is to seek
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 (anticipated acquisitions, mergers or other
unusual developments) which are considered by OMC, 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.
The investment objective of the Oppenheimer Capital Appreciation Fund is 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
investments in securities of ``growth-type" companies. Such companies are
believed to have relatively favorable long-term prospects for an increased
demand for the particular company's products or services.
The investment objective of the Oppenheimer Growth Fund is to seek to achieve
capital appreciation by investing in securities of well-known established
companies (companies which have a history of earnings and dividends). 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.
The investment objective of the Oppenheimer Growth & Income Fund is to seek a
high total return (which includes growth in the value of its shares as well as
current income) from equity and debt securities. From time to time this Fund
may focus on small to medium capitalization common stocks, bonds and convertible
securities.
The investment objective of the Oppenheimer Multiple Strategies Fund is to seek
a total investment return (which includes current income and capital
appreciation in the value of its shares) from investments in common stocks and
other equity securities, bonds and other debt securities, and ``money market"
securities.
The investment objective of the Oppenheimer High Income Fund is to earn a high
level of current income by investing primarily in a diversified portfolio of
high yield, fixed-income securities, including long-term debt obligations,
preferred stock issues believed by OMC, in its capacity as investment manager of
the Fund, not to involve undue risk. This Fund's investment policy is to assume
certain risks (described more fully in the attached prospectus for the
Oppenheimer Trust) in seeking high yield, which is ordinarily associated with
high risk securities, commonly known as "junk bonds", in the lower rating
categories of the established securities ratings services, and unrated
securities.
The investment objective of the Oppenheimer Strategic Bond Fund is to seek a
high level of current income principally derived from interest income from
investments in high yield fixed-income securities and to seek to enhance such
income by writing covered call options on debt securities.
The investment objective of the Oppenheimer Bond Fund is to seek a high level of
current income from investment in high yield fixed-income securities rated
``Baa" or better by Moody's or ``BBB" or better by Standard & Poor's.
Secondarily, the Fund seeks capital growth when consistent with its primary
objective.
The investment objective of the Oppenheimer Money Fund is to maximize current
income from investments in ``money
11
<PAGE>
market" securities consistent with low capital risk and maintenance of
liquidity.
The Separate Account purchases and redeems shares of the Funds at their net
asset value which is determined at the time of the receipt of the purchase order
or redemption request without the imposition of any sales or redemption charge.
Citibank, N.A., with its home office located at 111 Wall Street, New York, NY
10005, acts as custodian for each of the MML Funds. The Bank of New York, with
its home office located at One Wall Street, New York, NY 10015, acts as
custodian for each of the Oppenheimer Funds.
MassMutual serves as investment manager of each of the MML Funds pursuant to
Investment Management Agreements, each of which provides for the MML Fund to pay
MassMutual a quarterly fee at the annual rate of .50% of the first $100,000,000
of the MML Fund's average daily net asset value, .45% of the next $200,000,000,
.40% of the next $200,000,000 and .35% of any excess over $500,000,000. Concert
Capital provides investment sub-advisory functions for MML Equity Fund and the
Equity Sector of MML Blend Fund.
The monthly management fee payable to OMC in its capacity as investment advisor
to the Oppenheimer Funds is computed separately on the net assets of each Fund
as of the close of business each day. The management fee rates are as follows:
(i) for Money Fund: 0.450% of the first $500 million of net assets, 0.425% of
the next $500 million, 0.400% of the next $500 million, and 0.375% of net
assets over $1.5 billion; (ii) for Capital Appreciation Fund, Growth Fund,
Growth & Income Fund, Multiple Strategies Fund, and Global Securities Fund:
0.75% of the first $200 million of net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60% of net
assets over $800 million; and (iii) for High Income Fund, Bond Fund, and
Strategic Bond Fund: 0.75% of the first $200 million of net assets, 0.72% of the
next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, 0.60% of the next $200 million, and 0.50% of net assets over $1
billion.
MassMutual has agreed to bear the expenses of each of the MML Funds (other than
the management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of .11% of average daily net asset value through April 30,
1996.
Additional and more detailed information concerning the MML Funds and the
Oppenheimer Funds, including information about the other expenses of such Funds,
may be found in the accompanying Prospectuses for both the MML Trust and the
Oppenheimer Trust.
MassMutual is also the investment advisor 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-advisor to Oppenheimer Investment Grade Bond
Fund and Oppenheimer Value Stock Fund, open end management investment companies.
MassMutual also serves as the collateral co-manager for MassMutual Carlson CBO,
N.V.
OMC, located at Two World Trade Center, New York, NY 10048-0203, has operated as
an investment advisor since April 30, 1959. It and its affiliates currently
advise U.S. investment companies with assets aggregating over $29.6 billion as
of December 31, 1994, and having more than 2.5 million shareholder accounts.
OMC is owned by Oppenheimer Acquisition Corp., a holding company owned in part
by senior management of OMC, and ultimately controlled by Massachusetts Mutual
Life Insurance Company.
The assets of certain variable annuity separate accounts for which MassMutual or
an affiliate is the depositor are invested in shares of the MML Funds. Because
these separate accounts are invested in the same underlying MML Funds it is
possible that material conflicts could arise between owners of the Policies and
owners of the variable annuity contracts. Possible conflicts could arise if:
(i) state insurance regulators should disapprove or require changes in
investment policies, investment advisors or principal underwriters or if
MassMutual 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 MML 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 MML Funds. The Board of Trustees of the MML
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 MML 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 will take such action at its 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 Policyowners and other separate accounts investing in the
Oppenheimer Trust. The Board of Trustees of the Oppenheimer Trust (the
``Trustees") will monitor the Oppenheimer Funds for the existence of any such
conflicts. If it is determined that a conflict exists, the Trustees will notify
MassMutual, and appropriate action will be taken to eliminate such
irreconcilable conflicts. Such steps may include: (i) withdrawing the assets
allocable to some or all of the separate accounts from 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.
RATES OF RETURN. Tables 1 and 2 show the Effective Annual Rates of Return and
Annualized One Year Total Returns, respectively, of the MML Funds based on the
actual investment performance (after deduction of investment management fees and
direct operation expenses). Tables 3 and 4 show the
12
<PAGE>
Effective Annual Rates of Return and the Annualized One Year Total Returns,
respectively, of the Oppenheimer Funds based on the actual investment
performance (after deduction of investment management fees and direct operation
expenses).
Table 1 shows figures for periods ended December 31, 1994, for the MML Funds;
Table 2 shows December 31 annualized figures for the MML Funds. Table 3 shows
figures for periods ended December 31, 1994, for the Oppenheimer Funds; Table 4
shows December 31 annualized figures for the Oppenheimer Funds. These rates of
return do not reflect the mortality and expense risk charges assessed against
the Separate Account. Also, they do not reflect deduction from premiums or
administrative, cost of insurance, and underwriting charges assessed against the
Account Value of the Policies. See CHARGES UNDER THE POLICY - DEDUCTIONS FROM
PREMIUMS and ACCOUNT VALUE CHARGES. Therefore, these rates are not illustrative
of how actual investment performance will affect the benefits under the Policy
(see, however, ACCOUNT VALUE AND CASH SURRENDER VALUE - INVESTMENT RETURN). The
rates of return shown are not necessarily indicative of future performance.
They may be considered in assessing the competence and performance of
MassMutual and Concert Capital as the MML Funds' investment advisor and OMC as
the Oppenheimer Fund's investment advisor.
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
20 15 10 5 1
FUND YEARS YEARS YEARS YEARS YEAR
----- ------ ----- ----- ----
<S> <C> <C> <C> <C> <C>
Equity 15.00% 14.88% 13.72% 9.49% 4.10%
Blend - 12.17* 12.46 9.31 2.48
Managed Bond - 10.32* 9.53 7.86 (3.76)
Money Market - 7.07* 6.17 4.82 3.84
</TABLE>
* The figures shown are from inception of the MML Funds. The MML Money Market
and MML Managed Bond Funds commenced operations on December 16, 1981. The MML
Blend Fund commenced operations on February 3, 1984.
ANNUALIZED ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
MML MML
MML MML MANAGED MONEY
FOR THE EQUITY BLEND BOND MARKET
YEAR ENDED FUND FUND FUND FUND
---------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1994 4.10 % 2.48% (3.76)% 3.84%
1993 9.52 % 9.70% 11.81% 2.75%
1992 10.48 % 9.36% 7.31% 3.48%
1991 25.56 % 24.00% 16.66% 6.01%
1990 (0.51)% 2.37% 8.38% 8.12%
1989 23.04 % 19.96% 12.83% 9.16%
1988 16.68 % 13.40% 7.13% 7.39%
1987 2.10 % 3.12% 2.60% 6.49%
1986 20.15 % 18.30% 14.46% 6.60%
1985 30.54 % 24.88% 19.94% 8.03%
1984 5.40 % 8.24%* 11.69% 10.39%
1983 22.85 % - 7.26% 8.97%
1982 25.67 % - 22.79%* 11.12%*
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 MML Funds. The MML Money Market
and MML Managed Bond Funds commenced operations on December 16, 1981. The MML
Blend Fund commenced operations on February 3, 1984. The MML Equity Fund
commenced operations on September 15, 1971 (performance information prior to
1974 is not available).
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
SINCE 5 1
FUND INCEPTION YEARS YEAR
--------- ----- ----
<S> <C> <C> <C>
Oppenheimer Global
Securities 11.15% - (5.72)%
Oppenheimer Capital
Appreciation 13.28 11.81% (7.59)
Oppenheimer Growth 11.44 7.40 0.97
Oppenheimer Multiple
Strategies 9.85 7.38 (1.95)
Oppenheimer High
Income 12.47 15.09 (3.18)
Oppenheimer Strategic
Bond 0.19 - (3.78)
Oppenheimer Bond 9.78 8.43 (1.94)
Oppenheimer Money 6.10 5.05 4.20
</TABLE>
Oppenheimer Growth & Income Fund is not listed because it had not commenced
operations on December 31, 1994.
13
<PAGE>
ANNUALIZED ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
OPPENHEIMER CAPITAL OPPENHEIMER MULTIPLE OPPENHEIMER STRATEGIC OPPENHEIMER OPPENHEIMER
FOR THE GLOBAL APPRECIATION GROWTH STRATEGIES HIGH INCOME BOND BOND MONEY
YEAR ENDED SECURITIES FUND FUND FUND FUND FUND FUND FUND FUND
---------- --------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 (5.72)% (7.59)% 0.97% (1.95)% (3.18)% (3.78)%* (1.94)% 4.20%
1993 70.32% 27.32% 7.25% 15.95% 26.34% 4.25%* 13.04% 3.12%
1992 (7.11)% 15.42% 14.53% 8.99% 17.92% 6.50% 3.76%
1991 3.39% 54.72% 25.54% 17.48% 33.91% 17.63% 5.97%
1990 0.40%* (16.82)% (8.21)% (1.91)% 4.65% 7.92% 7.80%
1989 27.57% 23.59% 15.76% 4.84% 13.32% 8.82%
1988 13.41% 22.09% 22.15% 15.58% 8.97% 7.31%
1987 14.34% 3.32% 3.97%* 8.07% 2.52% 6.33%
1986 (1.65)%* 17.76% 4.73%* 10.12% 5.68%
1985 9.50%* 18.82%* 7.25%*
</TABLE>
* The figures shown are from inception of the Oppenheimer Funds. The
Oppenheimer Money Fund, Oppenheimer Bond Fund and Oppenheimer Growth Fund
commenced operations on April 3, 1985. The Oppenheimer High Income Fund
commenced operations on April 30, 1986. The Oppenheimer Capital Appreciation
Fund commenced operations on August 15, 1986. The Oppenheimer Multiple
Strategies Fund commenced operations on February 9, 1987. The Oppenheimer
Global Securities Fund commenced operations on November 12, 1990. The
Oppenheimer Strategic Bond Fund commenced operations on May 3, 1993.
Oppenheimer Growth & Income Fund is not listed because it had not commenced
operations on as of December 31, 1994.
GENERAL PROVISIONS OF
THE POLICY
This section of the Prospectus describes the general provisions of the Policy,
and is subject to the terms of the Policy. A Policyowner may review a copy of
the Policy upon request.
PREMIUMS. The Policyowner selects a premium payment schedule in the Application
and is not bound by an inflexible premium schedule. Five premium concepts are
very important under the Policy: the minimum annual planned Policy premium,
planned Policy premium, minimum initial Policy premium, minimum Case premium,
and Initial Case Premium Paid.
PLANNED POLICY PREMIUMS. The minimum annual planned Policy premium is
determined by the initial Selected Face Amount, issue age and sex classification
of the Policy. For a Policy in a Case with an Initial Case Premium Paid of less
than $1,000,000, the sales load percentage is greater in each of the first ten
Policy Years up to the minimum annual planned Policy premium.
Planned Policy premiums are elected in the Application and may be changed at any
time. Planned Policy premiums are the basis for the Policy's premium billing.
The planned Policy premium may be subject to minimum and maximum amounts
depending on the Selected Face Amount of the Policy, the Insured's age, sex and
smoking class and the amount of the initial premium paid.
There is no penalty if the planned Policy 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 Policy
premiums are paid, the Policy terminates when the Account Value becomes
insufficient to pay certain monthly charges and a grace period expires without
sufficient payment. For details see TERMINATION.
The following table shows the minimum annual planned Policy premium (also
referred to as the ``Cut-Off" premium) at certain ages for a Policy with a
Selected Face Amount of $100,000 in all years, under Death Benefit Option 1.
(See DEATH BENEFITS UNDER THE POLICY.)
MINIMUM ANNUAL PLANNED POLICY PREMIUM
LEVEL $100,000 SELECTED FACE AMOUNT
(DEATH BENEFIT OPTION 1)
<TABLE>
<CAPTION>
ISSUE AGE
------------------------------------
CLASS AGE 25 AGE 40 AGE 55
----- ------ ------ ------
<S> <C> <C> <C>
MALE $792 $1,590 $3,486
FEMALE $640 $1,259 $2,616
UNISEX $762 $1,521 $3,294
</TABLE>
MINIMUM INITIAL POLICY PREMIUM. A minimum initial Policy premium must be paid
along with an Application or at any time prior to the delivery of the Policy.
The amount of the minimum initial Policy premium is the amount which, after the
deductions for sales load, state premium tax, and DAC tax charge (see DEDUCTIONS
FROM PREMIUMS), is sufficient (disregarding investment performance) to pay
twelve times the first monthly deduction (see ACCOUNT VALUE CHARGES).
Thereafter, subject to the minimum and maximum premium limitations described
below, a Policyowner may make unscheduled premium payments at any time and in
any amount.
MINIMUM CASE PREMIUM. The minimum Case premium is $250,000 of first year
annualized premium for all Policies in a Case.
14
<PAGE>
INITIAL CASE PREMIUM PAID. The Initial Case Premium Paid is the amount of
premium for all Policies in a Case on deposit with MassMutual before the Case is
installed on the administrative system. The Initial Case Premium Paid
determines sales load percentages for all Policies in that Case.
MINIMUM AND MAXIMUM PREMIUM PAYMENTS. While the Policy is in force, premiums
may be paid at any time before the death of the Insured subject to certain
restrictions. The minimum premium payment is $100.00. We have the right to
refund a premium paid in any year if it will increase the net amount at risk
under the Policy. Premium payments should be sent to our Home Office or to the
address indicated for payment on the notice.
TERMINATION. This Policy does not terminate for failure to pay premiums since
payments, other than the initial premium, are not specifically required.
Rather, if on a Monthly Calculation Date, the Account Value less any Policy Debt
is insufficient to cover the total monthly deduction, the Policy enters a 61-day
grace period.
GRACE PERIOD. We allow 61 days to pay any premium necessary to cover the
overdue monthly deduction. A Policyowner will receive a notice from Us which
sets forth this amount. During the grace period, the Policy remains in force.
If the payment is not made by the later of the 61 days or 30 days after We have
mailed the written notice, the Policy terminates without value.
DEATH BENEFIT UNDER THE POLICY
The Death Benefit is the amount payable to the named Beneficiary(ies) when the
Insured dies. Upon receiving due proof of death, We pay the Beneficiary the
Death Benefit amount determined as of the date the Insured dies. All or part of
the benefit can be paid in cash or applied under one or more of our payment
options as described under ADDITIONAL PROVISIONS OF THE POLICY - PAYMENT
OPTIONS.
In the Application, the applicant may select a Selected Face Amount for each
Policy Year. Under Death Benefit Option 1, the Death Benefit is the greater of
the Selected Face Amount in effect on the date of death or the Minimum Face
Amount in effect on the date of death, with possible additions or deductions.
Under Death Benefit Option 2, the Death Benefit is the greater of the sum of the
Selected Face Amount in effect on the date of death plus the Account value on
the date of death, or the Minimum Face Amount in effect on the date of death,
with possible additions or deductions. The Minimum Face Amount is equal to
Account Value times the Minimum Face Amount percentage. The percentages depend
upon the Insured's age, sex and smoking classification. The percentages are set
forth in the Table Of Minimum Face Amount Percentages in the Policy. Added to
the greater of the Selected Face Amount or Minimum Face Amount is that part of
any monthly deduction applicable for the period beyond the date of death. Any
Policy Debt outstanding on the date of death and any monthly charges unpaid as
of the date of death are deducted from the Death Benefit. If the Insured dies
after the first Policy Year, We will also include a pro-rata share of any
dividend allocated to the Policy for the year death occurs. We pay interest on
the Death Benefit from the date of death to the date the Death Benefit is paid
or a payment option becomes effective. The interest rate equals the rate
determined under the Interest Payment Option as described in ADDITIONAL
PROVISIONS OF THE POLICY - PAYMENT OPTIONS.
The Selected Face Amount may be increased six months after issue or a previous
increase upon request by the Policyowner, subject to receipt by MassMutual of
adequate evidence of insurability. Additionally, any increase in the Selected
Face Amount will be effective on the Monthly Calculation Date which is on, or
next follows, the later of: (i) the date 15 days after a written request for
such change has been received and approved by us; or (ii) the requested
effective date of the change. Any increase must be for at least $5,000. Under
Death Benefit Option 1, the Death Benefit is unaffected by investment experience
unless the Death Benefit is based on the Minimum Face Amount. Under Option 2,
the Death Benefit may be increased or decreased by investment experience. (No
increase will be allowed after the Policy Anniversary Date nearest the Insured's
85th birthday.)
Example: The following example shows how the Death Benefit may vary as a result
of investment performance and Death Benefit Option in effect on the date of
death.
<TABLE>
<CAPTION>
POLICY A POLICY B
-------- --------
<S> <C> <C>
(a) Selected Face Amount: $100,000 $100,000
(b) Account Value on
Date of Death: $40,000 $50,000
(c) Minimum Face Amount
Percentage on
Date of Death: 240% 240%
(d) Minimum Face
Amount (b x c): $ 96,000 $120,000
Death Benefit if
Option #1 in effect
(greater of a and d): $100,000 $120,000
Death Benefit if
Option #2 in effect
(greater of (i) a + b
and (ii) d): $140,000 $150,000
</TABLE>
(Examples assume no additions to or deductions from the Selected Face Amount or
Minimum Face Amount are applicable.)
ACCOUNT VALUE AND CASH SURRENDER VALUE
ACCOUNT VALUE. The Account Value of the Policy is equal to the Variable Account
Value plus the Fixed Account Value. 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 to the MML
Money Market Division until the later of: (1) the expiration of the Free Look
Period, or (2) receipt by MassMutual of notice that the Owner has received the
Policy. Subject to the allocation rules described in the Policy, the Account
Value is then allocated among the Divisions and the
15
<PAGE>
GPA in accordance with the Policyowner's instructions in the Application,
subject to applicable restrictions.
Transactions with respect to the Account Value are effected by the purchase and
sale of accumulation units. Purchases and sales are made at the unit value as
of the Valuation Time on the Valuation Date if the premium or transaction
request for such purchase or sale is received by Us before the Valuation Time.
Otherwise, purchases and sales will be made as of the next following Valuation
Date or a later date requested by the Policyowner. Unit values are determined
on each Valuation Date.
All or part of the Account Value may be transferred among Divisions by written
request. Transfers between Divisions may be by dollar amount or by whole-number
percentage. There is no limit on the number of transfers a Policyowner may
make. MassMutual currently does not intend to charge a fee for transfers,
however, MassMutual reserves the right to charge a fee not to exceed $10 per
transfer if there are more than six transfers in a Policy Year to compensate
MassMutual for the cost of processing transfers. MassMutual does not expect to
make a profit on this charge. Policyowners, however, may transfer all funds in
the Separate Account to the GPA at any time regardless of the number of
transfers previously made.
Transfers from the GPA to the Separate Account may be made only once during each
Policy Year. Each such transfer may not exceed 25% of the Account Value in the
GPA (excluding Policy Debt) at the time of the transfer. However, if in each of
the previous three policy years, 25% of the account value in the GPA has been
transferred and there have been no premium payments or transfers (except as a
result of a policy loan) to the GPA, 100% of the account value in the GPA
(excluding policy loans) may be transferred to the Separate Account. The
Account Value in the GPA equal to any Policy Debt cannot be transferred to the
Separate Account. All transfers made on one Valuation Date are considered one
transfer.
AUTOMATED ACCOUNT VALUE TRANSFER. Automated Account Value Transfer permits the
Policyowner to specify transfers of a specific dollar amount or a whole-number
percentage of a Division's Account Value to be transferred monthly from that
Division to any combination of Divisions and the GPA. A number of transfer
options are available. Automated Account Value Transfer transfers are not
available from more than one Division or from the GPA. This process is
considered one transfer per Policy Year.
The main objective of Automated Account Value Transfer is to shield the
Policyowner's investment from short term price fluctuations. Theoretically, a
lower than average cost per unit may or may not 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.
Automated Account Value Transfer can be started, changed or canceled at any
time. Transfers will only be made on a monthly basis on the Monthly Calculation
Date. The effective date of the first automated transfer will be the first
Monthly Calculation Date after the request is received by the Home Office. If
the request is received before the end of the Free Look Period, the effective
date of the first automated transfer will be coincident with the end of this
Period.
Transfers will occur automatically. The Policyowner will specify the specific
dollar amounts or whole-number percentages to be transferred and the Division
from which the transfers will be made, the Division(s) and/or GPA to which the
automated transfer is to be made and the length of time during which transfers
will continue.
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. No more
automated transfers will be processed.
INVESTMENT RETURN. The investment return of a Policy is based on:
. The Account Value held in each Division for that Policy;
. The investment experience of each Division as measured by its actual net
rate of return; and
. The interest rate credited on Account Values held in the GPA.
The investment experience of a Division reflects increases or 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 against the assets of
the Division. This 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 surrendered for its Cash Surrender
Value at any time while the Insured is living. Unless a later effective date is
selected, surrender is effective on the date We receive the Policy and a written
request in proper form at our Home Office. The Policy and a written request for
surrender are deemed received on the date on which they are received by mail at
MassMutual's Home Office. If, however, the date on which they are received is
not a Valuation Date, or if they are received other than through the mail after
a Valuation Time, they are deemed received on the next Valuation Date. The Cash
Surrender Value is the Account Value less any outstanding Policy Debt.
WITHDRAWALS. Subject to certain conditions, after the Policy has been in force
for six months a Policyowner can make a Withdrawal from the Policy on any
Monthly Calculation Date by sending a written request to our Home Office. The
minimum amount of a Withdrawal is $100 (before deducting the withdrawal charge);
the maximum amount is the Cash Surrender Value less an amount equal to the
following, whichever is applicable: if the Withdrawal is made before the Policy
Anniversary Date nearest the Insured's 65th birthday, twelve multiplied by the
most recent Account Value Charges for the Policy; if on or after such Date,
sixty multiplied by the most recent Account Value Charges. The amount of the
Withdrawal is deducted from the Policy's Account Value at the end of the
Valuation Period applicable to the Monthly Calculation Date on which the
Withdrawal is made. The Policyowner must specify the GPA or the Division(s)
from which the Withdrawal is to be made. The Withdrawal amount attributable to
a Division or the GPA may not exceed the non-loaned Account Value of
16
<PAGE>
of that Division or GPA. A charge of 2.0% of the Withdrawal, not to exceed
$25.00, is deducted from each Withdrawal. The withdrawal charge is assessed for
each Withdrawal and is intended to compensate MassMutual for the cost of
processing the Withdrawals. MassMutual does not anticipate making a profit from
this charge. The Account Value will automatically be reduced by the amount of
the Withdrawal. The Selected Face Amount of the Policy will be reduced as
needed to prevent an increase in the amount at risk, unless satisfactory
evidence of insurability is provided to MassMutual. Withdrawals may have tax
consequences. For details see FEDERAL INCOME TAX CONSIDERATIONS - POLICY
PROCEEDS, PREMIUMS AND LOANS.
POLICY LOAN PRIVILEGE
The Policy provides a loan privilege. Loans can be made on the Policy at any
time while the Insured is living. The maximum loan is an amount equal to the
Account Value at the time of the loan less any outstanding Policy Debt before
the new loan, interest on the loan being made and on any outstanding Policy Debt
to the next Policy Anniversary Date and an amount equal to the most recent
monthly charge for the Policy multiplied by the number of Monthly Calculation
Dates remaining up to including the next Policy Anniversary Date. The Policy
must be properly assigned as collateral for the loan. (The maximum loan amount
may be different if required by state law.)
SOURCE OF LOAN. The loan amount requested is taken from the Divisions and the
GPA in proportion to the non-loaned Account Value of each on the date of the
loan. Shares taken from the Divisions are liquidated and the resulting dollar
amounts are transferred to 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 the New
York Stock Exchange (or its successor) is closed except for normal weekend and
holiday closings, or trading is restricted, or the Securities and Exchange
Commission (or its successor) determines that an emergency exists, or the
Securities and Exchange Commission (or its successor) permits Us to delay
payment for the protection of our policy owners.
IF LOANS EXCEED THE POLICY ACCOUNT VALUE. Policy Debt (which includes accrued
interest) must not equal or exceed the Account Value under the Policy. If this
limit is reached, We may terminate the Policy. To terminate for this reason We
will notify the Policyowner in writing. This notice states the amount necessary
to bring the Policy Debt back within the limit. If We do not receive a payment
within 31 days after the date We mailed the notice, the Policy terminates
without value at the end of those 31 days.
Termination of a policy under these circumstances could cause the Policyowner to
recognize gross income in the amount of any excess of the Policy Debt over the
sum of the Policyowner's previously unrecovered premium payments.
INTEREST. On the Application, the Policyowner may select a loan interest rate
of 6% per year or, where permitted, an adjustable loan rate. When an adjustable
rate is selected, MassMutual sets the rate each year that will apply for the
next Policy Year. The maximum rate is based on the monthly average of the
composite yield on seasoned corporate bonds as published by Moody's Investors
Service 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 5%, 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. The inclusion of unpaid interest to
outstanding Policy Debt may result in tax consequences upon surrender or lapse
of the Policy. For details see FEDERAL INCOME TAX CONSIDERATIONS - POLICY
PROCEEDS, PREMIUMS AND LOANS.
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 repayment results in
the transfer of values equal to the repayment from the loaned portion of the GPA
to the non-loaned portion of the GPA and the applicable Division(s). The
transfer is made in proportion to the non-loaned value in each Division at the
time of repayment. If the loan is not repaid, We deduct the amount due from any
amount payable from a full surrender or upon the death of the Insured.
INTEREST ON LOANED VALUE. The amount equal to any outstanding Policy loans is
held in the GPA and is credited with interest at a rate which is the greater of
3% and the Policy loan rate less a MassMutual declared charge (maximum 0.75%)
for expenses and taxes.
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.
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 MassMutual rather than a rate of return reflecting the
investment performance of the Separate Account. If the Policy is surrendered
with outstanding Policy Debt, tax consequences may result. For details see
FEDERAL INCOME TAX CONSIDERATIONS - POLICY PROCEEDS, PREMIUMS AND LOANS.
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 the Policyowner
receives a written notice
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of withdrawal right or within 45 days after signing Part 1 of the Application,
whichever is latest. The Policyowner should mail or deliver the Policy and
Policy delivery receipt either to MassMutual or to the agent who sold the Policy
or to one of our agency offices. If the Policy is cancelled in this fashion, a
refund will be made to the Policyowner. The refund equals the Account Value (or
all premiums paid where required by state law), reduced by any amounts borrowed
or withdrawn. During the Free Look Period, the initial Net Premium will be
allocated to the MML Money Market Division, which invests in the MML Money
Market Fund.
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 when We receive a
written request.
YOUR VOTING RIGHTS
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, as amended, 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, 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.
OUR 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 segments of the Separate Account;
. Create new Separate Accounts;
. Combine any two or more Separate Accounts;
. Make available additional Divisions 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, as amended, or in any other form permitted
by law; and
. Deregister the Separate Account under the Investment Company Act of 1940,
as amended, in the event such registration is no longer required.
MassMutual also reserves the right to change the name of the Separate Account.
We have reserved all rights to the name MassMutual and Massachusetts Mutual 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.
DIRECTORS AND EXECUTIVE VICE PRESIDENTS OF MASSMUTUAL
DIRECTORS:
ROGER G. ACKERMAN
President and Chief Operating Officer (since 1990), Corning Incorporated, a
manufacturer of specialty materials, communication equipment and consumer
products; Group President, Corning Incorporated (1987 - 1990); Director,
Pittson Company; Director, Dow Corning Corporation; Member of the Executive
Committee, National Association of Manufacturers.
JACK F. BENNETT
Retired (since 1989), Senior Vice President of Exxon Corporation, producer of
petroleum products; Director, Phillips Electronics N.V.; Dean Witter Mutual
Funds; Tandem Computers, Inc; and Discount Corporation of New York (1983 -
1991).
WILLIAM J. CLARK
Chairman of the Board (since 1987); Chairman of the Board and Chief Executive
Officer of the Company (1987 - 1988), President and Chief Executive Officer
(1980 - 1987); President (1974 - 1980), MassMutual.
ANTHONY DOWNS
Senior Fellow, The Brookings Institution (since 1977); Member of the Boards of
Directors, Pittway Corporation, Bedford Property Investors, Inc., General
Growth Properties, Inc., NAACP Legal and Education Defense Fund, Inc.,
National Housing Partnerships Foundation; Trustee, Urban Institute, and Urban
Land Institute.
JAMES L. DUNLAP
Senior Vice President, Texaco, Inc. (since 1987); President, Texaco U.S.A.
(1987 - 1994).
RICHARD N. FRANK
Chief Executive Officer, Lawry's Restaurants, Inc. (since 1957); Chairman of
the Board, Lawry's Restaurants, Inc.
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(since 1992); Trustee of PIC Growth Fund and PIC Balanced Pinnacle, two mutual
funds managed by Provident Investment Counsel.
CHARLES K. GIFFORD
President, Bank of Boston Corporation (since 1989); President, First National
Bank of Boston (since 1989). Member of the Board of Directors, Boston Edison
Company.
WILLIAM N. GRIGGS
Managing Director, Griggs & Santow, Inc. (since 1983); Director, T/SF
Communications, a diversified publishing and communications company.
JAMES G. HARLOW, JR.
Chairman of the Board (since 1982) and President (since 1973), Oklahoma Gas
and Electric Company; Member of the Boards of Directors, Fleming Companies, an
Oklahoma-based wholesale food distribution company, and Associated Electric &
Gas Insurance Services Limited.
BARBARA B. HAUPTFUHRER
Director, Vanguard Group of Investment Companies; Raytheon Company; Alco
Standard Corp.; The Great Atlantic and Pacific Tea Company; and Knight-Ridder,
Inc.
SHELDON B. LUBAR
Chairman (since 1977), Lubar & Co., Incorporated, Milwaukee, Wisconsin
investment management and venture capital company; Chairman and Director,
Christiana Companies, Inc.; Director, Firstar Corporation, Briggs & Stratton
Corporation, MGIC Investment Corporation, Prideco, Inc., Ameritech, Inc.,
Schwitzer, Inc. (1989 - 1994); Square D Company (1986 - 1991); Milwaukee
Insurance Group, Inc. (1986 - 1991); Marshall Erdman and Associates, Inc.;
Grey Wolf Drilling Co.; SLX Energy, Inc.; Firstar Bank; President (1987 -
1991), Lubar Management, Inc.
WILLIAM B. MARX, JR.
Executive Vice President and Chief Executive Officer, Multimedia Products
Group of AT&T (since 1994); Chief Executive Officer, Network Systems Group of
AT&T (1993 - 1994); Group Executive and President, Network Systems Group of
AT&T (1989 - 1993).
DONALD F. MCCULLOUGH
Chairman Emeritus, Collins & Aikman Corp., a manufacturer of textile products
(retired since 1988); Member of the Boards of Directors, Bankers Trust
Company, Bankers Trust New York Corp., and Melville Corporation.
BARBARA SCOTT PREISKEL
An attorney-at-law (since 1983); Director, American Stores Company, Textron,
Inc., General Electric Company and The Washington Post Company.
THOMAS B. WHEELER
President and Chief Executive Officer (since 1988), President (1987 - 1988),
Director (since 1987), MassMutual; Chairman of the Board, Oppenheimer
Acquisition Corp.; Chairman and Director, Concert Capital Management, Inc.;
Chairman, MML Pension Insurance Company; Member of the Boards of Directors,
Bank of Boston Corporation, The First National Bank of Boston, and Textron,
Inc.; Member of the Executive Committee, Massachusetts Capital Resource
Company.
ALFRED M. ZEIEN
Chairman and Chief Executive Officer (since 1991); President, Chief Operating
Officer and Director (1991); Vice Chairman and Director (1981 - 1991), The
Gillette Company; Trustee, University Hospital of Boston; Director, Polaroid
Corporation, Bank of Boston Corporation, Repligen Corporation and Raytheon
Company.
EXECUTIVE VICE PRESIDENTS (OTHER THAN DIRECTORS):
LAWRENCE V. BURKETT, JR.
Executive Vice President and General Counsel (since 1993), Senior Vice
President and Deputy General Counsel (1992 - 1993), Senior Vice President and
Associate General Counsel (1988 - 1992), MassMutual; Member of the Boards of
Directors, Sargasso Mutual Insurance Company, Ltd.; Cornerstone Real Estate
Advisers, Inc.; MML Pension Insurance Company; MML Reinsurance (Bermuda) Ltd.;
MassMutual Holding Company; MassMutual Holding Company Two, Inc.; MassMutual
Holding Company Two MSC, Inc.; MassMutual of Ireland, Ltd.
JOHN B. DAVIES
Executive Vice President (since 1994), Associate Executive Vice President
(1994); General Agent (1982 - 1993), MassMutual; Member of the Boards of
Directors, Cornerstone Real Estate Advisers, Inc., MML Investors Services,
Inc., MML Insurance Agency, Inc. and MML Insurance Agency of Ohio, Inc.; Life
Underwriter Training Counsel.
DANIEL J. FITZGERALD
Executive Vice President (since 1994); Senior Vice President (1991 - 1994);
Vice President and Controller (1986 - 1991), MassMutual; Member of the Boards
of Directors, Concert Capital Management, Inc.; Cornerstone Real Estate
Services, Inc.; MML Investors Services, Inc.; MML Real Estate Corporation; MML
Realty Management Corporation; MassMutual of Ireland, Inc.; Director (since
1994), President (1987 - 1993), Chief Executive Officer (1991 - 1993), MML Bay
State Life Insurance Company; Director (since 1994), President (1987 - 1990),
Chief Executive Officer (1991 - 1993), MML Pension Insurance Company; Director
(since 1993), Vice President (since 1994), MassMutual Holding Company;
Director and Vice President (since 1994), MassMutual Holding Company Two,
Inc.; Director and Vice President (since 1994), MassMutual Holding Company Two
MSC, Inc.
LAWRENCE L. GRYPP
Executive Vice President (since 1991), Senior Vice President (1990 - 1991),
General Agent (1980 - 1990), MassMutual; Member of the Boards of Directors,
Concert Capital Management, Inc., Oppenheimer Acquisition Corporation, MML
Insurance Agency, Inc. (1991 - 1993); Chairman (since 1991), MML Investors
Services, Inc.
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JAMES E. MILLER
Executive Vice President (since 1987), Senior Vice President (1985 - 1986),
MassMutual; Vice President and Treasurer, Dental Learning Systems, New York,
New York; Director, Benefit Panel Services, Inc., National Capital Preferred
Provider Organization, Inc.; The Ethix Corporation; and Sloan's Lake
Management Corp.; President, Chief Executive Officer and Director (since
1994), MML Pension Insurance Company; Chairman (since 1994), Director (since
1990), MassMutual of Ireland, Ltd.
JOHN M. NAUGHTON
Executive Vice President (since 1984), Senior Vice President (1981 - 1984),
MassMutual; Chairman (since 1995) and Trustee (since 1990), Springfield
Institution for Savings; Trustee, University of Massachusetts; Member of the
Boards of Directors, Colebrook Group, Oppenheimer Acquisition Corp., Concert
Capital Management, Inc., Association of Private Pension and Welfare Plans;
Trustee (since 1994), MassMutual Institutional Funds.
JOHN J. PAJAK
Executive Vice President (since 1987); Member of the Boards of Directors, MML
Pension Insurance Company, MassMutual Holding Company, Inc., MassMutual
Holding Company Two, Inc., MassMutual Holding Company Two MSC, Inc.
GARY E. WENDLANDT
Executive Vice President (since 1992), Chief Investment Officer (since 1993),
Senior Vice President (1983 - 1992), MassMutual; Director, Oppenheimer
Acquisition Corp., Merrill Lynch Derivative Products, Inc.; MassMutual
Corporate Value Partners, Ltd; MassMutual Corporate Value, Ltd; Director
(since 1992), President and Chief Executive Officer (since 1994), Vice
Chairman (1983 - 1991), Concert Capital Management, Inc.; Chairman and Chief
Executive Officer (since 1994), Cornerstone Real Estate Advisers, Inc.;
Chairman (since 1994), Director (since 1993), MML Real Estate Corporation;
Chairman (since 1994), Director (since 1993), MML Realty Management
Corporation; Vice Chairman and Trustee (since 1993), President (1988 - 1993),
MML Series Investment Fund; Chairman and Chief Executive Officer (since 1994),
President (since 1993), Director (since 1991), MassMutual Holding Company;
Chairman and President (since 1994), MassMutual Holding Company Two, Inc.;
Chairman and President (since 1994), MassMutual Holding Company Two MSC, Inc.;
Chairman and Chief Executive Officer (since 1994), MassMutual Institutional
Funds; President and Trustee (since 1988), MassMutual Participation Investors;
Supervisory Director (since 1991) MassMutual/Carlson CBO.
THE GUARANTEED PRINCIPAL ACCOUNT
Because of the exemptive and exclusionary provisions, interests in MassMutual'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, as amended. Accordingly, neither the general account nor any interests
therein are subject to the provisions of these Acts, and MassMutual 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.
A Policyowner may allocate or transfer all or part of the Net Premium to the
GPA, and such amounts shall become part of MassMutual's general account assets.
The allocation or transfer of amounts to the GPA does not entitle a Policyowner
to share in the investment experience of those assets. Instead, MassMutual
guarantees that those amounts allocated to the GPA which are in excess of any
Policy loans will accrue interest daily at a minimum effective annual rate equal
to 3%. For amounts equal to any Policy loans, the guaranteed rate is the
greater of: (a) 3%; and (b) the Policy loan rate less a MassMutual declared
charge for expenses and taxes. This charge cannot exceed 0.75%. Although
MassMutual is not obligated to credit interest at a rate higher than this
minimum, it may declare a higher rate applicable for such periods as it deems
appropriate. Upon request, MassMutual will inform Policyowners of the then
applicable rate. Since MassMutual takes into account the need to provide for
its expenses and guarantees, the crediting rate declared by MassMutual shall be
net of charges it imposes against the earnings of the GPA.
FEDERAL INCOME TAX CONSIDERATIONS
The ultimate effect of federal income taxes on values under this Policy and upon
the economic benefit to the Policyowner or Beneficiary depends on MassMutual'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 Policies, 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. MassMutual
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 considerations, a qualified tax advisor should be consulted. No
attempt is made to consider any applicable state or other tax laws.
MASSMUTUAL - TAX STATUS. MassMutual 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 MassMutual and its operations form a part
of MassMutual.
Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining Account Values.
The investment income and realized capital gains are automatically applied to
increase book reserves associated with the Policies. Under existing federal
income tax law, the Separate Account's investment income, including net capital
gains, is not taxed to MassMutual to the
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extent applied to increase reserves associated with the Policies. The reserve
items taken into account at the close of the taxable year for purposes of
determining net increases or net decreases must be adjusted for tax purposes by
subtracting any amount attributable to appreciation in the value of assets or by
adding any amount attributable to depreciation. MassMutual's basis in the assets
underlying the Separate Account's Policies will be adjusted for appreciation or
depreciation, to the extent the reserves are adjusted. Thus, corporate level
gains and losses, and the tax effect thereof, are eliminated.
Due to MassMutual's current tax status, no charge is made to the Separate
Account for MassMutual's federal income taxes that may be attributable to the
Separate Account. Periodically, MassMutual reviews the question of a charge to
the Separate Account for MassMutual's federal income taxes. A charge may be
made for any federal income taxes incurred by MassMutual 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 MassMutual's federal
income taxes attributable to that account.
Under current state laws, MassMutual may incur state and local taxes (in
addition to premium taxes). At present, these taxes are not significant. If
there is a material change in state or local tax laws, MassMutual reserves the
right to charge the Separate Account for such taxes, if any, attributable to the
Separate Account.
POLICY PROCEEDS, PREMIUMS, AND LOANS. MassMutual 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 excludable
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
Withdrawal is made.
Upon a full surrender of a Policy for its Cash Surrender Value the Policyowner
may recognize ordinary income for federal tax purposes. Ordinary income is
computed to be the amount by which the Account Value, unreduced by any
outstanding Policy Debt (which may include unpaid interest), 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 part of the amount distributed. After 15
years, such cash distributions are not subject to federal income tax, except to
the extent they exceed the total amount of premiums paid but not previously
recovered. Where the provisions of Code Section 7702(f) do not apply, a
Withdrawal is taxable only to the extent that it exceeds the Policyowner's as
yet unrecovered premium contributions. MassMutual suggests that a Policyowner
consult with his or her 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 Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances.
MassMutual 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. Under the
``personal" interest limitation provisions of the Code, interest on Policy
loans used for personal purposes, which otherwise meet the requirements of Code
Section 264, will no longer be tax deductible. 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 a tax advisor for
further guidance.
If the Policy is owned by a business or corporation, the Code 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
inside build-up of 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 value.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
For complete information on the impact of changes with respect to the Policy and
federal and state tax considerations, a qualified tax advisor should be
consulted.
MassMutual makes no guarantee regarding the future tax treatment of any Policy.
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 tax 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.
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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
contract 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 or dividends with respect to such premiums.
Since the Policy provides for flexible premium payments, We will carefully
monitor the Policy to determine 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 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 distributions: (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, particularly where a Policy
is owned by other than an individual Insured, a qualified tax advisor should be
consulted.
Once a Policy fails the 7-pay test, loans, collateral assignments, 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 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 and
distributions from any one such Policy are taxable to the extent of the income
accumulated in all the contracts required to be aggregated.
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 Trust'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 the Trust as an asset
of the Separate Account. All securities of the same issuer are treated as a
single investment. Each Government agency or instrumentality, however, is
treated as a separate issuer.
With respect to variable life insurance contracts, the general diversification
requirements are modified if any of the assets of the Separate Account are
direct obligations of the United States Treasury. In this case, there is no
limit on the investment that may be made in United States Treasury Securities,
and for purposes of determining whether assets other than United States Treasury
Securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the Separate Account's
investment in United States Treasury Securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the
Trusts will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with the general standards.
In connection with the issuance of the temporary regulations prior to the Final
Regulations, the Treasury announced that such temporary regulations did not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular divisions of a separate account. Regulations in this
regard were not issued in connection with the Final Regulations, however. It is
not clear, at this time, what future regulations might provide. It is possible
that if future regulations are issued, the Policy may need to be modified to
comply with such regulations. For these reasons, MassMutual 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.
MassMutual intends to comply with the Final Regulations to assure that the
Policy continues to qualify as life insurance for federal income tax purposes.
ADDITIONAL PROVISIONS OF
THE POLICY
PAID-UP POLICY DATE. The Paid-up Policy Date is the Policy Anniversary Date
nearest the Insured's 100th birthday. On this Date and at all times thereafter,
the Selected Face Amount will equal the Account Value, and the Death Benefit
Option will be Death Benefit Option 1. As of this Date, the charge for cost of
insurance will be equal to $0 and premium payments will no longer be accepted.
The Policy does not lapse after the Paid-up Policy Date. The payment of planned
Policy premiums does not guarantee that the Policy will continue in force to the
Paid-up Policy Date.
REINSTATEMENT OPTION. For a period of five (5) years after termination, a
Policyowner can request that We reinstate the Policy during the Insured's
lifetime. We will not reinstate the
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Policy if it has been returned for its Cash Surrender Value. Note that a
termination or reinstatement may cause the Policy to become a modified endowment
contract.
Before We will reinstate the Policy, We must receive the following:
. A premium payment equal to the amount necessary to produce an Account Value
equal to 3 times the total monthly deduction for the Policy on the Monthly
Calculation Date on or next following the date of reinstatement;
. Evidence of insurability satisfactory to us; and
. Where necessary, a signed acknowledgement that the Policy has become a
modified endowment contract.
If We do reinstate the Policy, the Selected Face Amounts for the reinstated
Policy will be the same as it would have been if the Policy had not terminated.
PAYMENT OPTIONS. All or part of the Death Benefit or Cash Surrender Value may
be taken in cash or as a series of level payments. Proceeds applied will no
longer be affected by the investment experience of the Divisions or the GPA.
To receive payments, the proceeds to be applied must be at least $2,000. If the
payments under any option are less than $20 each, We reserve the right to make
payments at less frequent intervals. Payment options are as described below.
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 3% 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 interest rate We credit to the
unpaid balance. This interest rate will not be less than 3% per year.
INTEREST PAYMENT OPTION. We hold amounts applied under this option and pay
interest on the unpaid balance of at least 3% 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; or
. 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 is 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
. Payment for two lives only. No specific number of payments is guaranteed.
Under this option there may be one payment if the two named persons die
prior to the second payments.
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 may be withdrawn or applied under
any other option. Payments which are based on a named person's life may not be
withdrawn.
BENEFICIARY. A Beneficiary is any person named on our records to receive
insurance proceeds after the Insured dies. A Policyowner names the Beneficiary
when he or she or it applies 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 premium payments.
. Change the premium payment plan.
. Reinstate the Policy after termination.
If no Beneficiary is living when the Insured dies, unless provided otherwise,
the Death Benefit is paid to the Owner or, if deceased, the Owner's estate.
CHANGING THE OWNER OR BENEFICIARY. The Owner or any Beneficiary may be changed
during the Insured's lifetime by writing to our Home Office. The change takes
effect as of the date of the request, even if the Insured dies before We receive
it. Each change is subject to any payment We made or other action by MassMutual
prior to receipt of the request.
RIGHT TO SUBSTITUTE INSURED. Upon written Application to MassMutual, the Policy
may be transferred to the life of a substitute Insured. The transfer becomes
effective upon the transfer date, which is the Policy Anniversary on or next
following, the latter of the date We approve the Application for transfer; and
the date any required cost associated with the transfer is paid, subject to the
following conditions (the ``Transfer Date"):
. This Policy must be in force on the Transfer Date.
. A written Application for the transfer and payment of any required cost to
transfer must be approved by Us at our Home Office.
. Evidence of insurability of the substitute Insured, satisfactory to us, is
required.
. The substitute Insured must not have been under 20 years of age on the
birthday nearest the Policy Date of this Policy.
. The substitute Insured must not be over 65 years of age on the birthday
nearest the Transfer Date.
. The Owner of this Policy after it has been transferred must have an
insurable interest in the life of the substitute Insured.
23
<PAGE>
The Selected Face Amount for the substitute Insured will be determined as for a
new Insured. The Account Value immediately after transfer will be equal to: (i)
the Account Value immediately before the transfer, plus (ii) any Net Premium
necessary to make the cash surrender value, immediately before the monthly
charges are deducted on the Transfer Date, at least 12 times the monthly
charges, minus (iii) any amount which must be refunded (so that the amount at
risk is not greater than the Selected Face Amount), minus (iv) the monthly
charges on the Transfer Date. Future charges against the Policy will be based
on the life of the substitute Insured.
The costs to transfer are an administrative fee of $75, plus any premium
necessary to effect the transfer, plus any excess Policy Debt not repaid prior
to transfer. Excess Policy Debt is the amount by which Policy Debt exceeds the
maximum loan available after transfer. Any such excess must be repaid on or
before the Transfer Date.
The incontestability and suicide periods begin to run anew from the Transfer
Date. Any assignments existing on the Transfer Date will continue to apply.
The Internal Revenue Service has ruled that a substitution of Insureds is an
exchange of contracts which does not qualify for the tax deferral available
under Code Section 1035. Therefore upon a substitution of Insureds, the
Policyowner must include in current gross income all the previously unrecognized
gain in the Policy.
ASSIGNMENT. The Policy may be assigned as collateral for a loan or other
obligation, subject to any outstanding Policy Debt. For any assignment to be
binding on us, We must receive a signed copy of it at our Home Office. We are
not responsible for the validity of any assignment.
Any amounts due to an assignee of the Policy which is assigned will be paid in
one sum.
DIVIDENDS. Each year MassMutual determines the divisible surplus, or the money
available to pay dividends. Each Policy may receive a dividend based upon its
contribution to this divisible surplus. MassMutual does not expect that any
dividends will be paid under the Policies.
Any dividend will be payable on the Policy Anniversary Date.
If the Insured dies after the first Policy Year, the Death Benefit includes a
pro-rata share of any dividend allocated to the Policy for the year death
occurs.
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY. We must bring any legal action to
contest the validity of a Policy within two years from its Issue Date or an
increase in the Selected Face Amount. After that We cannot contest its validity,
except for failure to pay premiums.
MISSTATEMENT OF AGE OR SEX. If the Insured's date of birth or sex as given in
the Application is not correct, an adjustment will be made. If the adjustment
is made when the Insured dies, the Death Benefit will reflect the amount
provided by the most recent mortality charge according to the correct age and
sex. If the adjustment is made before the Insured dies, then future monthly
deductions will be based on the correct age and sex.
SUICIDE. If the Insured commits suicide within two years (or different period
if required by state law) from the Issue Date or an increase in the Selected
Face Amount and while the Policy is in force, We pay a limited Death Benefit in
one sum to the Beneficiary. The limited Death Benefit is the amount of premiums
paid for the Policy, less any Policy Debt or amounts withdrawn.
WHEN WE PAY PROCEEDS. If the Policy has not terminated, payment of the Cash
Surrender Value, loan proceeds or the Death Benefit are made normally within 7
days after We receive any required documents at our Home Office. 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 (or its successor) is closed, except for normal weekend
or holiday closings, or trading is restricted; or
. the Securities and Exchange Commission (or its successor) determines that
an emergency exists; or
. the Securities and Exchange Commission (or its successor) permits Us to
delay payment for the protection of our policy owners.
We may delay paying any Cash Surrender Value or loan proceeds based on the GPA
for up to 6 months from the date the request was received at our Home 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 is
delayed for 10 working days or more from the effective date of surrender or
Withdrawal, We add interest at the same rate as is paid under the Interest
Payment Option for the same period of time (but not less than required by state
law). The minimum amount of such interest is $25.
RECORDS AND REPORTS
MassMutual maintains all records and accounts relating to the Separate Account
and the GPA. Each year within 30 days after the Policy Anniversary, We will
mail to the Policyowner 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 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 Investors Services, Inc., 1 Financial Plaza, 1350 Main Street, Springfield,
MA 01103-1686 (``MMLISI") acts as the principal underwriter of the Policies
pursuant to a Servicing Agreement to which MMLISI, MassMutual, and the Separate
Account are parties. MMLISI is registered with the Securities and Exchange
Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the
24
<PAGE>
National Association of Securities Dealers, Inc. MMLISI may enter into selling
agreements with other broker-dealers which are registered with the Securities
and Exchange Commission and are members of the National Association of
Securities Dealers, Inc. (``selling brokers").
We sell the Policies through agents who are licensed by state insurance
officials to sell the Policies. These agents are also registered representatives
of MMLISI or of selling brokers.
When an Application for one of the Policies is completed, it is submitted to Us.
We or the selling broker perform suitability review and, in some cases, We
perform insurance underwriting. We determine whether to accept or reject the
Application for the Policy and the Insured's risk classification. If the
Application is not accepted, We will refund any premium that has been paid.
Under the Servicing Agreement among MMLISI, MassMutual, and the Separate
Account, MMLISI receives compensation for its activities as principal
underwriter of the Policies.
COMMISSIONS SCHEDULE. Agents or selling brokers receive commissions as a
percentage of the premium paid. This percentage is based on the Initial Case
Premium Paid for all Policies in a Case. It is not affected by subsequent
changes under the Case. For a Case with an Initial Case Premium Paid of less
than $1,000,000, the maximum commission percentage for Policy Years 1-5 is 15%
of premiums paid up to the minimum annual planned Policy premium, plus 3% of any
excess premiums paid. The maximum commission percentage in each future Policy
Year is 3% of all premiums paid in that year. For a Case with an Initial Case
Premium Paid of greater than or equal to $1,000,000, the maximum commission
percentage is 5% of premiums paid.
Agents may receive commissions at lower rates on Policies sold to replace
existing insurance issued by MassMutual or any of its subsidiaries.
BONDING ARRANGEMENT. An insurance company blanket bond is maintained providing
$20,000,000 coverage for officers and employees of MassMutual (subject to a
$350,000 deductible) and $15,000,000 coverage for MassMutual's general agents
and agents (also subject to a $350,000 deductible).
LEGAL PROCEEDINGS
We are currently not involved in any material legal proceedings that adversely
impact the Policy.
EXPERTS
The financial statements of MassMutual as found in this Prospectus have been
included herein in reliance upon the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
Actuarial matters in this Prospectus have been examined by C. Dale Games, FSA,
MAAA, Second Vice President, for MassMutual. His opinion on actuarial matters
is filed as an exhibit to the registration statements We filed with the SEC.
FINANCIAL STATEMENTS
The financial statements of MassMutual included herein should be considered only
as bearing upon the ability of MassMutual to meet its obligations under the
Policy.
No financial statements are included for the Separate Account because, as of the
date of this Prospectus, the Divisions of the Separate Account offered by this
Prospectus had not commenced operations and therefore had no assets or
liabilities.
25
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(IN MILLIONS)
(DERIVED
FROM AUDITED
FINANCIAL
(UNAUDITED) STATEMENTS)
MARCH 31, DECEMBER 31,
1995 1994
----------- ------------
<S> <C> <C>
ASSETS:
Bonds .................................................................................... $18,329.7 $17,684.4
Common stocks ............................................................................ 182.5 197.0
Mortgage loans ........................................................................... 2,880.1 2,979.6
Real Estate............................................................................... 1,345.0 1,345.8
Other investments......................................................................... 719.0 741.5
Policy loans.............................................................................. 2,741.6 2,700.8
Cash and short-term investments........................................................... 1,144.1 2,189.6
Investment and insurance amounts receivable............................................... 693.2 751.8
Separate account assets................................................................... 7,044.2 6,507.7
Other assets.............................................................................. 109.1 75.9
---------- ----------
TOTAL ASSETS.............................................................................. $35,188.5 $35,174.1
========== ==========
LIABILITIES:
Policyholders' reserves and funds......................................................... $24,131.2 $24,156.3
Policyholders' dividends.................................................................. 549.8 540.2
Policy claims and other benefits.......................................................... 382.2 363.9
Federal income taxes...................................................................... 255.6 229.9
Asset valuation reserve................................................................... 348.8 347.5
Investment reserves....................................................................... 113.4 130.8
Separate account reserves and liabilities................................................. 7,042.7 6,506.7
Other liabilities......................................................................... 353.9 969.5
---------- ----------
TOTAL LIABILITIES......................................................................... $33,177.6 $33,244.8
---------- ----------
Policyholders' contingency reserves....................................................... 2,010.9 1,929.3
---------- ----------
TOTAL LIABILITIES AND POLICYHOLDERS'
CONTINGENCY RESERVES..................................................................... $35,188.5 $35,174.1
========== ==========
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF INCOME
<TABLE>
<CAPTION>
(IN MILLIONS)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(UNAUDITED) (UNAUDITED)
----------- ----------
<S> <C> <C>
REVENUE:
Premium income .......................................................................... $1,029.7 $1,150.4
Net investment and other income ......................................................... 552.0 549.6
---------- ----------
TOTAL REVENUE............................................................................ 1,581.7 1,700.0
---------- ---------
DISPOSITION OF REVENUE:
Policy benefits and payments............................................................. 1,046.5 1,093.2
Addition to policyholders' reserves...................................................... 159.0 228.4
Operating expenses....................................................................... 73.8 80.5
Commissions.............................................................................. 59.6 60.4
Taxes, licenses and fees................................................................. 17.4 17.4
---------- ---------
TOTAL DISPOSITION OF REVENUE............................................................. 1,356.3 1,479.9
---------- ---------
Net gain before dividends and federal income taxes....................................... 225.4 220.1
Dividends to policyholders............................................................... 132.8 129.4
---------- ---------
Net gain from operations before federal income taxes..................................... 92.6 90.7
Federal income taxes..................................................................... 43.0 34.1
---------- ---------
NET GAIN FROM OPERATIONS................................................................. 49.6 56.6
NET REALIZED CAPITAL LOSS................................................................ (10.6) (17.8)
----------- ---------
NET INCOME............................................................................... $ 39.0 $ 38.8
=========== =========
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
(IN MILLIONS)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Policyholders' contingency reserves
beginning of the period ............................................. $1,929.3 $1,817.6
--------- ---------
Increases (decrease) due to:
Net income ........................................................... 39.0 38.8
Surplus notes......................................................... 0.0 100.0
Net unrealized capital gain........................................... 22.7 8.4
Change in asset valuation and investment reserves..................... 16.1 (48.8)
Other................................................................. 3.9 (4.8)
--------- ---------
Net increase........................................................ 81.7 93.6
--------- ---------
Policyholders' contingency reserves, end of
the period............................................................ $2,011.0 $1,911.2
========= =========
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(IN MILLIONS)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(UNAUDITED) (UNAUDITED)
----------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ....................................................................... $ 39.0 $ 38.8
Additions to policyholders' reserves and funds.................................... (6.8) 68.8
Net realized capital loss......................................................... 10.6 17.7
Other changes.................................................................... 115.4 (60.4)
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES............................................. 158.2 64.9
---------- ----------
INVESTING ACTIVITIES:
Loans and purchases of investments................................................ (1,911.9) (1,042.2)
Sales or maturities of investments and receipt
from repayments of loans......................................................... 708.2 1,086.9
----------- ----------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES............................... (1,203.7) 44.7
----------- ----------
Financing activity:
Surplus notes..................................................................... 0.0 100.0
----------- ----------
(DECREASE) INCREASE IN CASH AND SHORTTERM INVESTMENTS.............................. (1,044.5) 209.6
Cash and shortterm investments, beginning of
the period........................................................................ 2,189.6 2,209.2
----------- ----------
CASH AND SHORTTERM INVESTMENTS, END OF THE PERIOD.................................. $ 1,144.1 $2,418.8
=========== ==========
</TABLE>
29
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying interim financial statements of Massachusetts Mutual Life
Insurance Company (the "Company") have been prepared on the basis of
accounting practices prescribed or permitted by the Division of Insurance
of the Commonwealth of Massachusetts and in conformity with the practices
of the National Association of Insurance Commissioners which are currently
considered generally accepted accounting principles for mutual life
insurance companies and their life insurance subsidiaries. In April, 1993,
the Financial Accounting Standards Board, which has no role in
establishing regulatory accounting practices, issued Interpretation 40,
Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises, regarding the applicability of generally
accepted accounting principles to mutual life insurance companies. This
interpretation requires mutual life insurance companies to modify their
financial statements to continue to be in accordance with generally
accepted accounting principles, effective for 1996 financial statements.
The manner in which policy reserves, new business acquisition costs, asset
valuation and the related tax effects are determined and recorded will
change. The effects of modifications to existing accounting practices
which may be necessary have not been defined by the American Institute of
Certified Public Accountants nor determined by the Company.
The accompanying interim financial statements reflect, in the opinion of
the Company's management, all adjustments (consisting of normal, recurring
accruals) necessary for a fair presentation of the interim financial
position and results of operations. Such statements should be read in
conjunction with the annual financial statements.
2. ASSET VALUATION RESERVE
In compliance with regulatory requirements, the Company maintains the
Asset Valuation Reserve. The balances as of March 31, 1995 and 1994,
reflect the year-to-date activity and a pro rata share of the annual
contribution or amortization, respectively. The Asset Valuation Reserve
and other investment reserves stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines
in the value of bonds, mortgage loans and real estate investments. These
other investment reserves for both periods are established each quarter
based on the Company's best estimate at those dates and realized losses
are taken after a complete analysis is performed during the fourth
quarter.
3. SURPLUS NOTES
The Company issued surplus notes of $100 million in February, 1994. These
notes are unsecured and subordinate to all present and future indebtedness
of the Company, policy claims and prior claims against the Company as
provided by the Massachusetts General Laws. Issuance was approved by the
Commissioner of Insurance of the Commonwealth of Massachusetts ("the
Commissioner").
4. INVESTMENTS
As promulgated by the National Association of Insurance Commissioners, the
Company adopted the retrospective method of accounting for amortization of
premium and discount on mortgage backed securities as of December 31,
1994. Prepayment assumptions for mortgage backed securities were obtained
from a prepayment model, which factors in mortgage type, seasoning,
coupon, current interest rate and the economic environment. The effect of
this change, $44.5 million, was recorded as an increase to policyholders'
contingency reserves at December 31, 1994.
5. POLICYHOLDERS' DIVIDENDS
In October, the Board of Directors annually approve dividends to be paid
in the following year. The dividend liability recorded as of March 31,
1995 and 1994 is based on the dividend scales approved for those years in
October 1994 and 1993, respectively, and reflects the dividends to be
credited for the subsequent twelve months. In the fourth quarter of each
year, the dividend liability is adjusted to reflect the dividend scale
approved in October of that year.
30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND POLICYHOLDERS OF
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
We have audited the accompanying statement of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1994 and 1993,
and the related statements of income, changes in policyholders' contingency
reserves, and cash flows for the years ended December 31, 1994, 1993 and 1992.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Massachusetts Mutual Life
Insurance Company at December 31, 1994 and 1993, and the results of its
operations and its cash flows for the years ended December 31, 1994, 1993 and
1992 in conformity with generally accepted accounting principles.
Springfield, Massachusetts
February 6, 1995, except for Note 12
as to which the date is June 16, 1995.
31
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
-------- --------
(IN MILLIONS)
<S> <C> <C>
ASSETS:
Bonds............................................................... $ 17,684.4 $ 16,950.7
Common stocks....................................................... 197.0 142.8
Mortgage loans...................................................... 2,979.6 3,732.4
Real estate:
Investment........................................................ 1,283.6 1,218.7
Other............................................................. 62.2 78.4
Other investments................................................... 741.5 596.6
Policy loans........................................................ 2,700.8 2,532.8
Cash and short-term investments..................................... 2,189.6 2,209.2
Investment and insurance amounts receivable......................... 751.8 927.2
Separate account assets............................................. 6,507.7 5,891.5
Other assets........................................................ 75.9 34.0
---------- ----------
TOTAL ASSETS........................................................ $ 35,174.1 $ 34,314.3
========== ==========
LIABILITIES:
Policyholders' reserves and funds................................... $ 24,156.3 $ 23,661.0
Policyholders' dividends............................................ 540.2 537.1
Policy claims and other benefits.................................... 363.9 555.5
Federal income taxes................................................ 229.9 208.1
Asset valuation reserve............................................. 347.5 301.0
Investment reserves................................................. 130.8 130.9
Separate account reserves and liabilities........................... 6,506.7 5,890.1
Amounts due on investments purchased and other liabilities.......... 969.5 1,213.0
---------- ----------
TOTAL LIABILITIES................................................... 33,244.8 32,496.7
Policyholders' contingency reserves................................. 1,929.3 1,817.6
---------- ----------
TOTAL LIABILITIES AND
POLICYHOLDERS' CONTINGENCY RESERVES............................... $ 35,174.1 $ 34,314.3
========== ==========
</TABLE>
See Notes to Financial Statements
32
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUE:
Premium income................................................ $ 4,522.3 $ 4,784.4 $ 4,776.0
Net investment and other income............................... 2,179.1 2,252.6 2,231.2
---------- ---------- ----------
TOTAL REVENUE................................................. 6,701.4 7,037.0 7,007.2
---------- ---------- ----------
DISPOSITION OF REVENUE:
Policy benefits and payments.................................. 4,169.4 4,017.9 4,329.3
Addition to policyholders' reserves and funds................. 927.8 1,421.5 1,195.5
Operating expenses............................................ 375.5 360.5 382.6
Commissions................................................... 261.6 253.2 248.1
State taxes, licenses and fees................................ 75.1 82.3 74.0
---------- ---------- ----------
TOTAL DISPOSITION OF REVENUE.................................. 5,809.4 6,135.4 6,229.5
---------- ---------- ----------
Net gain before dividends and federal income taxes............ 892.0 901.6 777.7
Dividends to policyholders.................................... 523.5 526.9 486.6
---------- ---------- ----------
Net gain from operations before federal income taxes.......... 368.5 374.7 291.1
Federal income taxes.......................................... 144.7 164.4 100.9
---------- ---------- ----------
NET GAIN FROM OPERATIONS...................................... 223.8 210.3 190.2
NET REALIZED CAPITAL LOSS..................................... (135.1) (76.7) (80.4)
---------- ---------- ----------
NET INCOME.................................................... $ 88.7 $ 133.6 $ 109.8
========== ========== ==========
</TABLE>
See Notes to Financial Statements
33
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Policyholders' contingency reserves, beginning of year.......... $ 1,817.6 $ 1,524.3 $ 1,359.3
---------- ---------- ----------
Increases (decreases) due to:
Net income.................................................... 88.7 133.6 109.8
Net unrealized capital gain................................... 22.7 22.2 12.6
Surplus notes................................................. 100.0 250.0 0.0
Change in asset valuation and investment reserves............. (46.4) (110.5) (20.0)
Change in valuation bases of policyholders' reserves.......... (45.3) 0.0 32.6
Change in non-admitted assets................................. (57.1) (2.8) 24.1
Change in accounting for mortgage backed securities........... 44.5 0.0 0.0
Other......................................................... 4.6 0.8 5.9
---------- ---------- ----------
Net increase................................................ 111.7 293.3 165.0
---------- ---------- ----------
Policyholders' contingency reserves, end of year................ $ 1,929.3 $ 1,817.6 $ 1,524.3
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................................. $ 88.7 $ 133.6 $ 109.8
Addition to policyholders' reserves and funds,
net of transfers to separate accounts.................... 303.7 652.3 239.0
Net realized capital loss................................. 135.1 76.7 80.4
Other changes............................................. (29.3) (97.5) (136.9)
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES................. 498.2 765.1 292.3
---------- ---------- ----------
INVESTING ACTIVITIES:
Loans and purchases of investments........................ 6,667.8 6,668.1 10,152.9
Sales or maturities of investments and receipts
from repayment of loans.................................. 6,050.0 5,671.3 10,101.3
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES..................... 617.8 996.8 51.6
---------- ---------- ----------
FINANCING ACTIVITIES:
Issuance of surplus notes................................. 100.0 250.0 0.0
Repayments of long-term debt.............................. 0.0 (100.0) 0.0
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES................. 100.0 150.0 0.0
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS................................... (19.6) (81.7) 240.7
Cash and short-term investments, beginning of year.......... 2,209.2 2,290.9 2,050.2
---------- ---------- ----------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR................ $ 2,189.6 $ 2,209.2 $ 2,290.9
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying financial statements of Massachusetts Mutual Life
Insurance Company, except as to form, have been prepared in conformity with
the practices of the National Association of Insurance Commissioners and
the accounting practices prescribed or permitted by the Division of
Insurance of the Commonwealth of Massachusetts ("the Division of
Insurance") which are currently considered generally accepted accounting
principles for mutual life insurance companies and their life insurance
subsidiaries.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices, issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards No. 120,
Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating Contracts.
The American Institute of Certified Public Accountants, which also has no
role in establishing regulatory accounting practices, issued Statement of
Position 95-1, Accounting for Certain Insurance Activities of Mutual Life
Insurance Enterprises. These pronouncements will require mutual life
insurance companies to modify their financial statements in order to
continue to be in accordance with generally accepted accounting principles,
effective for 1996 financial statements. The manner in which policy
reserves, new business acquisition costs, asset valuations and the related
tax effects are recorded will change. Management has not determined the
impact of such changes on the Company's Statements of Financial Position or
Income.
The following is a description of the Company's current principal
accounting policies and practices.
A. INVESTMENTS
Bonds and stocks are valued in accordance with rules established by the
National Association of Insurance Commissioners. Generally, bonds are
valued at amortized cost, preferred stocks in good standing at cost, and
common stocks, except for unconsolidated subsidiaries, at fair value.
Premium and discount on bonds are amortized into investment income over the
stated lives of the securities through December 31, 1994.
As promulgated by the National Association of Insurance Commissioners, the
Company adopted the retrospective method of accounting for amortization of
premium and discount on mortgage backed securities as of December 31, 1994.
Prepayment assumptions for mortgage backed securities were obtained from a
prepayment model, which factors in mortgage type, seasoning, coupon,
current interest rate and the economic environment. The effect of this
change, $44.5 million, is recorded as an increase to policyholders'
contingency reserves.
Mortgage loans are valued at principal less unamortized discount. Real
estate is valued at cost less accumulated depreciation, impairments and
mortgage encumbrances. Encumbrances totaled $14.8 million in 1994 and $15.7
million in 1993. Depreciation on investment real estate is calculated using
the straight-line and constant yield methods.
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.
Investments in unconsolidated subsidiaries, joint ventures and other forms
of partnerships are included in other investments on the Statement of
Financial Position and are accounted for using the equity method.
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 and permitted by the
Division of Insurance, stabilize the policyholders' contingency reserves
against fluctuations in the value of stocks, as well as declines in the
value of bonds, mortgage loans and real estate investments.
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, as well as other financial
instruments, including financial futures, U.S. Treasury purchase
commitments, options, interest rate swaps, interest rate caps and interest
rate floors. These interest rate related gains and losses are amortized
into income over the remaining life of the investment sold or over the
remaining life of the underlying asset. Net realized after-tax capital
losses of $155.6 million in 1994 and net realized after-tax capital gains
of $152.6 million in 1993 and $82.5 million in 1992 were charged to the
Interest Maintenance Reserve. The gains credited for certain government
securities were limited by regulation to 75 percent of the gains realized
in 1993 and 50 percent of the gains realized in 1992. The remaining portion
of the realized capital gains and losses on other financial
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
instruments relating to income earned during the year is fully recognized.
Amortization of the Interest Maintenance Reserve into net income amounted
to $45.0 million in 1994, $66.6 million in 1993 and $27.4 million in 1992.
In 1993, the Interest Maintenance Reserve resulted in a net gain deferral
which was included in other liabilities on the Statement of Financial
Position. In 1994, the Interest Maintenance Reserve resulted in a net loss
deferral. In accordance with the practices of the National Association of
Insurance Commissioners, the 1994 balance was recorded as a reduction of
policyholders' contingency reserves.
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 policyholders'
contingency reserves.
B. SEPARATE ACCOUNTS
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of pension,
variable annuity and variable life insurance contract holders. Assets
consist principally of marketable securities reported at fair value.
Premiums, benefits and expenses of the separate accounts are reported in
the Statement of Income. The Company receives administrative and investment
advisory fees from these accounts.
C. NON-ADMITTED ASSETS
Assets designated as "non-admitted" (principally certain fixed assets,
receivables and Interest Maintenance Reserve, when in a net loss deferral
position) are excluded from the Statement of Financial Position by an
adjustment to policyholders' contingency reserves. In accordance with
provisions permitted by the Commonwealth of Massachusetts, the Company
elected to admit electronic data processing equipment totalling $20.0
million in 1992.
D. POLICYHOLDERS' RESERVES AND FUNDS
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience
and the 1941, 1958 and 1980 Commissioners' Standard Ordinary mortality
tables with assumed interest rates ranging from 2.5 to 6.0 percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee funds are
based on accepted actuarial methods principally at interest rates ranging
from 2.25 to 11.25 percent. Reserves for policies and contracts considered
investment contracts have a carrying value of $10,001.8 million (fair value
of $9,672.3 million as determined by discounted cash flow projections).
Accident and health policy reserves are generally calculated using the
two-year preliminary term, net level premium and fixed net premium methods
and various morbidity tables.
During 1994, the Company changed its valuation basis for certain contracts.
The effect on the beginning of the year reserves, $45.3 million, was
recorded as a decrease to policyholders' contingency reserves. The effect
of changes in valuation bases for previously established policyholders'
reserves, approved by the Division of Insurance were included as
adjustments to policyholders' contingency reserves as of January 1, 1992.
E. PREMIUM AND RELATED EXPENSE RECOGNITION
Life premium revenue is recognized annually on the anniversary date of the
policy. Annuity premium is recognized when received. Accident and health
premiums are recognized as revenue when due. Commissions and other costs
related to issuance of new policies, maintenance and settlement costs are
charged to current operations.
F. POLICYHOLDERS' DIVIDENDS
The Board of Directors annually approves dividends to be paid in the
following year. These dividends are allocated to reflect the relative
contribution of each group of policies to policyholders' contingency
reserves and consider investment and mortality experience, expenses and
federal income tax charges.
G. CASH AND SHORT-TERM INVESTMENTS
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid short-term investments purchased with a maturity of twelve
months or less to be cash equivalents.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
2. POLICYHOLDERS' CONTINGENCY RESERVES
Policyholders' contingency reserves represent surplus of the Company as
reported to regulatory authorities and are intended to protect
policyholders against possible adverse experience.
A. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7 1/2 percent and
$250.0 million at 7 5/8 percent in 1994 and 1993, respectively. These notes
are unsecured and subordinate to all present and future indebtedness of the
Company, policy claims and prior claims against the Company as provided by
the Massachusetts General Laws. Issuance was approved by the Commissioner
of Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of
the Commissioner. Sinking fund payments are due as follows: $62.5 million
in 2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in
2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, beginning on September 1, 1994, to holders of
record on the preceding February 15 or August 15, respectively. Interest on
the notes issued in 1993 is scheduled to be paid on May 15 and November 15
of each year, beginning on May 15, 1994, to holders of record on the
preceding May 1 or November 1, respectively. In accordance with regulations
of the National Association of Insurance Commissioners, interest expense is
not recorded until approval for payment is received from the Commissioner.
In 1994, interest of $22.8 million was approved and paid.
The proceeds of the notes, less a $35 million reserve in 1994 and a $25
million reserve in 1993 for contingencies associated with the issuance of
the notes, are recorded as a component of the Company's policyholders'
contingency reserves as approved by the Commissioner. These reserves, as
permitted by the Division of Insurance, are included in investment reserves
on the Statement of Financial Position.
B. OTHER POLICYHOLDERS' CONTINGENCY RESERVES
As required by regulatory authorities, contingency reserves established to
protect group life and annuity policyholders are $36.3 million in 1994 and
$34.7 million in 1993.
3. EMPLOYEE BENEFIT PLANS
A. PENSION
The Company has a non-contributory defined benefit plan covering
substantially all of its employees. Benefits are based on the employees'
years of service, compensation during the last five years of employment and
estimated social security retirement benefits. The Company accounts for
this plan following Financial Accounting Standards Board Statement No. 87,
Employers' Accounting for Pensions. Accordingly, as permitted by the
Division of Insurance, the Company has recognized a pension asset of $25.3
million and $31.0 million in 1994 and 1993, respectively. Company policy is
to fund pension costs in accordance with the requirements of the Employee
Retirement Income Security Act of 1974 and, based on such requirements, no
funding was required for the years ended December 31, 1994, 1993 and 1992.
The assets of the Plan are invested in the Company's general account and
separate accounts.
The benefit status of the defined benefit plan as of December 31 is as
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(IN MILLIONS)
<S> <C> <C>
Accumulated benefit obligation $271.1 $261.9
Projected benefit obligation 321.1 316.0
Plan assets at fair value 421.7 430.5
</TABLE>
The discount rate used in determining the actuarial present value of both
the accumulated and projected benefit obligation was 8.0 percent and 7.5
percent at December 31, 1994 and 1993, respectively. The increase in future
compensation levels used was 5.0 percent. The long-term rate of return on
assets is projected to be 10.0 percent.
The Company also has defined contribution plans for employees and agents.
The expense charged to operations for all pension plans is $10.8 million in
1994, as compared to $5.5 million in 1993 and $6.9 million in 1992.
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
B. LIFE AND HEALTH
Certain life and health insurance benefits are provided to retired
employees and agents through group insurance contracts. Substantially all
of the Company's employees may become eligible for these benefits if they
reach retirement age while working for the Company. In 1993, the Company
adopted the National Association of Insurance Commissioners' accounting
standard for postretirement benefit costs, requiring these benefits to be
accounted for using the accrual method for employees and agents eligible to
retire and current retirees. The discount rate used to determine the
accumulated postretirement benefit liability was 8.0 percent in 1994 and
7.5 percent in 1993. The assumed increases in medical cost rates were 8.0
percent for the first year, declining to 5.0 percent within 6 years at
December 31, 1994 and 13.0 percent for the first year, declining to 6.0
percent within 7 years at December 31, 1993. The net unfunded accumulated
benefit obligation for these benefits was $97.2 million and $87.5 million
at January 1, 1994 and 1993, respectively. The initial transition
obligation of $100.4 million is being amortized over twenty years through
2012. At December 31, 1994, the net unfunded accumulated benefit obligation
was $66.8 million for employees and agents eligible to retire or currently
retired and $24.0 million for participants not eligible to retire. A
Retired Lives Reserve Trust was funded to pay life insurance premiums for
certain retired employees. Trust assets available for benefits were $12.9
million in 1994.
The expense for 1994 and 1993 under the new standard was $12.2 million and
$15.8 million, respectively. In 1992, $4.3 million of retiree life and
health benefits were charged to income when paid. A one percent increase in
the annual assumed increase in medical cost rates would increase the 1994
accumulated postretirement benefit liability and benefit expense by $4.9
million and $0.7 million, respectively.
4. RELATED PARTY TRANSACTIONS
At the end of 1994, the Company executed two reinsurance agreements with
its subsidiary, MML Pension Insurance Company ("MML Pension"). In the first
of these contracts, the Company assumed all of the single premium immediate
annuity business written by MML Pension through either an assumption
provision or a coinsurance provision. The second contract ceded the
Company's group life, accident and health business to MML Pension.
Additionally, a reinsurance agreement previously in place, ceding all of
the Company's single premium annuity business, was terminated. These
contracts were concurrently executed at the end of business on December 31,
1994 and were accounted for as a bulk reinsurance transaction. Accordingly,
assets were transferred at fair value and liabilities were transferred at
statutory carrying value. These transfers did not impact the Summary of
Operations of either company. The net effect of these transactions
decreased the Company's assets and liabilities by $174.6 million in 1994.
5. FEDERAL INCOME TAXES
Provision for unpaid federal income taxes is based upon the Company's best
estimate of its tax liability. The Internal Revenue Service has completed
examining the Company's income tax returns through the year 1989, and is
currently examining the years 1990 through 1992. The Company believes any
adjustments resulting from such examinations will not materially affect its
financial statements.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for
1993 and 1994. The Company records the estimated effects of anticipated
revisions in the Statement of Income.
The Company intends to file its 1994 federal income tax return on a
consolidated basis with its 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 and provides that loss members shall be compensated
for the use of their losses and credits by other members.
No deferred tax effect is recognized for temporary differences that may
exist between financial reporting and taxable income. The Company made
federal tax payments of $13.3 million in 1994, $206.6 million in 1993 and
$119.3 million in 1992. At December 31, 1994 and 1993, the Company
established a liability for federal income taxes of $229.9 and $208.1
million, respectively.
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.
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
A. BONDS
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and Obligations of U.S.
Government Corporations and Agencies $ 5,511.2 $ 147.3 $ 253.3 $ 5,405.2
Debt Securities issued by Foreign Governments 35.0 1.7 2.2 34.5
Mortgage-backed securities 3,410.5 55.6 176.7 3,289.4
State and local governments 124.1 4.9 5.3 123.7
Industrial securities 7,570.7 165.9 294.6 7,442.0
Utilities 908.5 68.9 17.8 959.6
Affiliates 124.4 9.7 8.6 125.5
--------- --------- --------- ---------
TOTAL $17,684.4 $12,454.0 $12,758.5 $17,379.9
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and Obligations of U.S.
Government Corporations and Agencies $ 6,496.4 $ 537.4 $ 55.3 $ 6,978.5
Debt Securities issued by Foreign Governments 91.9 11.4 0.0 103.3
Mortgage-backed securities 1,911.2 138.6 0.7 2,049.1
State and local governments 53.9 4.1 1.1 56.9
Industrial securities 7,386.4 683.1 107.2 7,962.3
Utilities 938.9 168.4 3.1 1,104.2
Affiliates 72.0 17.7 1.7 88.0
--------- --------- --------- ---------
TOTAL $16,950.7 $21,560.7 $12,169.1 $18,342.3
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1994
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 MILLIONS)
<S> <C> <C>
Due in one year or less $ 2,477.6 $ 2,467.8
Due after one year through five years 3,167.3 3,140.9
Due after five years through ten years 3,320.5 3,274.4
Due after ten years 2,636.3 2,518.7
--------- ---------
11,601.7 11,401.8
Mortgage-backed securities, including securities guaranteed
by the U.S. Government 6,082.7 5,978.1
--------- ---------
TOTAL $17,684.4 $17,379.9
</TABLE>
Proceeds from sales of investments in bonds were $4,880.2 million during
1994, $4,136.6 million during 1993 and $9,026.4 million during 1992. Gross
capital gains of $78.9 million in 1994, $271.1 million in 1993 and $231.1
million in 1992 and gross capital losses of $189.3 million in 1994, $88.3
million in 1993 and $92.9 million in 1992 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.
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
B. STOCKS
Preferred stocks in good standing had fair values of $136.3 million in
1994, $121.1 million in 1993, using a pricing matrix for non-publicly
traded stocks and quoted market prices for publicly traded stocks. Common
stocks, except for unconsolidated subsidiaries, had a cost of $181.1
million in 1994, $122.6 million in 1993.
C. MORTGAGES
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for
non-performing loans, approximated carrying value less valuation reserves
held.
The Company acts as mortgage servicing agent and guarantor for $91.3
million of mortgage loans sold in 1985. As guarantor, the Company is
obligated to advance unpaid principal and interest on any delinquent loans
and to repurchase mortgage loans under certain circumstances including
mortgagor default.
D. OTHER
The carrying value of investments which were non-income producing for the
preceding twelve months was $82.9 million and $96.1 million at December 31,
1994 and 1993, respectively. The Company had restructured loans with book
values of $371.0 million and $437.1 million at December 31, 1994 and 1993,
respectively. The Company made voluntary contributions to the Asset
Valuation Reserve of $52.7 million in 1994, $51.5 million in 1993 and $38.4
million in 1992 for these restructured loans. The loans typically have been
modified to defer a portion of the contracted interest payments to future
periods. Interest deferred to future periods totaled $2.2 million in 1994,
$3.0 million in 1993 and $4.8 million in 1992.
It is not practicable to determine the fair value of policy loans as they
do not have a stated maturity.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks to reduce interest rate and
duration imbalances determined in asset/liability analyses. The fair values
of these instruments, which are not recorded in the financial statements,
are based upon market prices or prices obtained from brokers. The Company
does not hold or issue financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the
parties and, thus, are not a measure of the exposure of the Company. The
amounts exchanged are calculated on the basis of the notional amounts and
the other terms of the instruments, which relate to interest rates,
exchange rates, security prices or financial or other indexes.
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to financial instruments. This exposure is
limited to contracts with a positive fair value. The amounts at risk in a
net gain position were $88.4 million and $120.1 million at December 31,
1994 and 1993, respectively. The Company monitors exposure to ensure
counterparties are credit worthy and concentration of exposure is
minimized.
The Company enters into financial futures contracts for the purpose of
managing interest rate exposure. The Company's futures contracts are
exchange traded with minimal credit risk. Margin requirements are met with
the deposit of securities. Futures contracts are generally settled with
offsetting transactions. Gains and losses on financial futures contracts
are recorded when the contract is closed and amortized through the Interest
Maintenance Reserve over the remaining life of the underlying asset. As of
December 31, 1994, the Company had entered into financial futures contracts
with contractual amounts of $558.9 million and a fair value of $559.1
million.
The Company enters into interest rate swap agreements, options, and
purchased caps and floors to reduce interest rate exposures arising from
mismatches between assets and liabilities and to modify portfolio profiles
to manage other risks identified.
Under interest rate swaps, the Company agrees to exchange, at specified
intervals, the difference between fixed and floating interest rates
calculated by reference to an agreed-upon notional principal amount. Net
amounts receivable and payable are accrued as adjustments to interest
income and included in investment and insurance amounts receivable on the
Statement of Financial Position. At December 31, 1994 and 1993, the Company
had swaps with notional amounts of $2,799.1 million and $1,910.1 million,
respectively. The fair values of these instruments were $49.6 million and
$9.9 million at December 31, 1994 and 1993, respectively.
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Options grant the purchaser the right to buy or sell a security at a stated
price within a stated period. The Company's option contracts have terms of
up to two years. The amounts paid for options purchased are included in
other investments on the Statement of Financial Position. Gains and losses
on these contracts are recorded at the expiration or termination date and
are amortized through the Interest Maintenance Reserve over the remaining
life of the underlying asset. At December 31, 1994 and 1993, the Company
had option contracts with notional amounts of $2,187.5 million and $2,647.5
million, respectively. The Company's exposure was limited to the
unamortized costs of $24.4 million and $30.0 million, which had fair values
of $10.4 million and $73.3 million at December 31, 1994 and 1993,
respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a given rate. Interest rate floor
agreements grant the purchaser the right to receive the excess of a given
rate over a referenced interest rate. Amounts paid for interest rate caps
and floors are amortized into interest income over the life of the asset on
a straight-line basis. Unamortized costs are included in other investments
on the Statement of Financial Position. Amounts receivable and payable are
accrued as adjustments to interest income and included in the Statement of
Financial Position as investment and insurance amounts receivable. Gains
and losses on these contracts, including any unamortized cost, are
recognized upon termination and are amortized through the Interest
Maintenance Reserve over the remaining life of the associated cap or floor
agreement. The company has agreements with notional amounts of $2,617.0
million and $1,712.0 million at December 31, 1994 and 1993, respectively.
The Company's exposure on these agreements is limited to the unamortized
costs of $12.1 million and $10.1 million at December 31, 1994 and 1993,
respectively. The fair values of these instruments were $6.0 million and
$29.0 million at December 31, 1994 and 1993, respectively.
The Company enters into asset swap agreements to reduce exposures, such as
currency risk and prepayment risk, built into certain assets acquired.
Cross-currency interest rate swaps allow investment in foreign currencies,
increasing access to additional investment opportunities, while limiting
foreign exchange risk. Notional amounts relating to asset and currency
swaps totalled $220.0 million and $249.8 million at December 31, 1994 and
1993, respectively. The fair values of these instruments were an
unrecognized gain of $2.8 million at December 31, 1994 and an unrecognized
loss of $14.9 million at December 31, 1993.
The Company enters into forward U.S. Treasury commitments for the purpose
of managing interest rate exposure. The Company generally does not take
delivery on forward commitments. These commitments are instead settled with
offsetting transactions. Gains and losses on forward commitments are
recorded when the commitment is closed and amortized through the Interest
Maintenance Reserve over the remaining life of the asset. At December 31,
1994 and 1993, the Company had U. S. Treasury purchase commitments which
will settle during the following year with contractual amounts of $1,000.0
million and $1,161.8 million and fair values of $989.2 million and $1,159.1
million, respectively.
8. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1994 are illustrated below:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
Total policyholders' reserves and funds and separate account liabilities $30,933.9
Not subject to discretionary withdrawal (6,462.2)
Policy loans (2,700.8)
---------
Subject to discretionary withdrawal $21,770.9
---------
Total invested assets, including separate investment accounts $34,346.4
Policy loans and other invested assets (8,983.7)
---------
Readily marketable investments $25,362.7
---------
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
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 premium taxes. The Company believes such assessments in excess of
amounts accrued will not materially affect its financial position, results
of operations or liquidity.
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.
42
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
10. RECLASSIFICATION
Certain 1993 and 1992 balances have been reclassified to conform to current
year presentation.
11. SUBSIDIARY AND AFFILIATED COMPANIES
Summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1994 is illustrated below. The
Company provides management or advisory services to these companies.
Subsidiaries
------------
MML Bay State Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc.
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
Oppenheimer Investment Grade Bond Fund
Subsidiaries of MassMutual Holding Company
------------------------------------------
Concert Capital Management, Inc.
Cornerstone Real Estate Advisors, Inc.
MML Investors Services, Inc.
MML Real Estate Corporation
MML Realty Management Corporation
Oppenheimer Acquisition Corporation
MML Reinsurance (Bermuda) Ltd.
MassMutual/Carlson CBO N.V.
MassMutual Corporate Value Limited
Subsidiaries of MassMutual Corporate Value Limited
--------------------------------------------------
MassMutual Corporate Value Partners Limited
Subsidiaries of MassMutual Holding Company Two, Inc.
----------------------------------------------------
MassMutual Holding Company Two MSC, Inc.
Subsidiaries of MassMutual Holding Company Two MSC, Inc.
--------------------------------------------------------
MML Pension Insurance Company
MassMutual of Ireland, Limited
Sloan's Lake Management Corporation
Affiliates
----------
MassMutual Corporate Investors
MassMutual Participation Investors
12. SUBSEQUENT EVENT
On June 16, 1995, the Company and Connecticut Mutual Life Insurance Company
announced the commencement of a feasibility study to determine whether a
merger of the two companies could be mutually beneficial to the companies
and their policyholders. A decision as to whether to proceed will be made
later in 1995.
43
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS (OPTION 1), CASH SURRENDER VALUES AND
ACCUMULATED PREMIUMS
The following tables illustrate the way in which a Policy operates. They show
how the Death Benefit Option 1 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 premiums of $1,200 for a male, female and
unisex nonsmoker age 35 and an Initial Case Premium Paid of $1,000,000. Separate
tables are shown for the current simplified issue and guaranteed schedule of
charges. These tables will assist in the comparison of death benefits and cash
surrender values for the Policy with those under other variable life policies
which may be issued by MassMutual or other companies.
1. The illustration on page 45 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200
using a current simplified issue schedule of charges.
2. The illustration on page 46 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200
using a guaranteed schedule of charges.
3. The illustration on page 47 is for a Policy issued to a female nonsmoker
age 35 for a Selected Face Amount of $100,000. The premium payment is
$1,200 using a current simplified issue schedule of charges.
4. The illustration on page 48 is for a Policy issued to a female nonsmoker
age 35 for a Selected Face Amount of $100,000. The premium payment is
$1,200 using a guaranteed schedule of charges.
5. The illustration on page 49 is for a Policy issued to a unisex nonsmoker
age 35 for a Selected Face Amount of $100,000. The premium payment is
$1,200 using a current simplified issue schedule of charges.
6. The illustration on page 50 is for a Policy issued to a unisex nonsmoker
age 35 for a Selected Face Amount of $100,000. The premium payment is
$1,200 using a guaranteed schedule of 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 also 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, if the rates of return for all the Funds
averaged 0%, 6% or 12% but varied above or below that average for particular
Funds.
The death benefits and cash surrender values shown in illustrations 1, 3 and 5
reflect the following current charges:
1. Administrative Charge, equal to a monthly $5.25 per Policy charge for
nonqualified policies.
2. Cost of Insurance Charge, based on the current simplified issue rates being
charged by the Company.
3. Mortality and Expense Risk Charge, which is equal to .30% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
4. MML Trust and Oppenheimer Trust level expenses of .71% on an annual basis,
of the net asset value of the MML Trust and Oppenheimer Trust shares held
by the Separate Account.
The death benefits and cash surrender values shown in illustrations 2, 4 and 6
reflect these guaranteed maximum charges:
1. Administrative Charge, equal to $9.00 per month.
2. Cost of Insurance Charge, based on the 1980 CSO Mortality Table.
3. Mortality and Expense Risk Charge, which is equal to .60% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
4. MML Trust and Oppenheimer Trust level expenses of .75% on an annual basis,
of the net asset value of the MML Trust and Oppenheimer Trust shares held
by the Separate Account. (The Oppenheimer Trust does not have a guaranteed
maximum for other expenses so this figure reflects current expenses.)
Cash surrender values shown in the tables reflect the deduction of the
applicable sales loads and premium taxes for a Case with an Initial Case Premium
Paid of $1,000,000. Taking into account the 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 net annual rate of return on a current basis would
be -1.004%, 4.935%, and 10.875%, respectively, and on a guaranteed basis would
be -1.339%, 4.581%, and 10.501%, respectively.
MassMutual has agreed to bear expenses of the MML Trust (other than the
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of .11% of average daily net asset value of each MML Fund
through April 30, 1996.
Currently no charge is made against the Separate Account for federal income
taxes but MassMutual 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 tables are based on the assumptions that the Policyowner has requested a
level Selected Face Amount, that no Policy loans, or additional premium payments
have been made, and no transaction charges have been incurred, and that the
entire Account Value under the Policy is allocated to the Funds.
The second column of each table shows the amounts which would accumulate if an
amount equal to the annual premium were invested to earn interest after taxes,
of 5% per year, compounded annually.
44
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Male Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) 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 $ 947 $ 1,008 $ 1,068
2 2,583 100,000 100,000 100,000 1,884 2,064 2,251
3 3,972 100,000 100,000 100,000 2,807 3,168 3,559
4 5,431 100,000 100,000 100,000 3,720 4,325 5,007
5 6,963 100,000 100,000 100,000 4,618 5,535 6,608
6 8,571 100,000 100,000 100,000 5,504 6,801 8,380
7 10,260 100,000 100,000 100,000 6,372 8,120 10,337
8 12,033 100,000 100,000 100,000 7,220 9,495 12,497
9 13,895 100,000 100,000 100,000 8,049 10,927 14,882
10 15,850 100,000 100,000 100,000 8,860 12,420 17,519
15 27,192 100,000 100,000 100,000 12,571 20,857 35,520
20 41,668 100,000 100,000 153,555 15,594 31,156 65,066
25 60,142 100,000 100,000 230,042 17,704 43,767 112,765
30 (Age 65) 83,720 100,000 106,110 338,317 18,433 59,280 189,004
35 113,812 100,000 123,033 489,350 17,003 77,869 309,715
40 152,219 100,000 142,550 713,658 11,968 99,685 499,062
45 201,237 0 162,781 1,033,256 0 124,260 788,745
50 263,797 0 184,896 1,496,457 0 150,322 1,216,632
</TABLE>
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 MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
45
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Guaranteed Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) 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 $ 792 $ 848 $ 903
2 2,583 100,000 100,000 100,000 1,568 1,727 1,894
3 3,972 100,000 100,000 100,000 2,323 2,638 2,980
4 5,431 100,000 100,000 100,000 3,059 3,581 4,170
5 6,963 100,000 100,000 100,000 3,772 4,555 5,474
6 8,571 100,000 100,000 100,000 4,464 5,561 6,903
7 10,260 100,000 100,000 100,000 5,130 6,599 8,468
8 12,033 100,000 100,000 100,000 5,773 7,669 10,184
9 13,895 100,000 100,000 100,000 6,389 8,772 12,066
10 15,850 100,000 100,000 100,000 6,980 9,910 14,133
15 27,192 100,000 100,000 100,000 9,469 16,099 27,960
20 41,668 100,000 100,000 118,619 10,958 23,088 50,262
25 60,142 100,000 100,000 172,953 10,802 30,597 84,781
30 (Age 65) 83,720 100,000 100,000 244,844 7,916 38,191 136,785
35 113,812 0 100,000 336,752 0 44,914 213,134
40 152,219 0 100,000 460,674 0 48,989 322,149
45 201,237 0 100,000 618,604 0 45,596 472,216
50 263,797 0 100,000 828,371 0 19,653 673,472
</TABLE>
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 MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
46
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) 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 $ 967 $ 1,028 $ 1,089
2 2,583 100,000 100,000 100,000 1,923 2,105 2,294
3 3,972 100,000 100,000 100,000 2,864 3,230 3,626
4 5,431 100,000 100,000 100,000 3,791 4,406 5,098
5 6,963 100,000 100,000 100,000 4,703 5,634 6,724
6 8,571 100,000 100,000 100,000 5,600 6,918 8,522
7 10,260 100,000 100,000 100,000 6,482 8,258 10,509
8 12,033 100,000 100,000 100,000 7,345 9,655 12,704
9 13,895 100,000 100,000 100,000 8,193 11,115 15,131
10 15,850 100,000 100,000 100,000 9,024 12,639 17,817
15 27,192 100,000 100,000 112,565 12,900 21,321 36,195
20 41,668 100,000 100,000 177,328 16,317 32,152 66,415
25 60,142 100,000 105,060 265,940 19,141 45,678 115,626
30 (Age 65) 83,720 100,000 124,080 388,916 21,209 62,352 195,435
35 113,812 100,000 143,940 564,592 22,279 82,724 324,478
40 152,219 100,000 164,323 813,750 21,716 107,401 531,863
45 201,237 100,000 187,670 1,181,868 16,852 135,993 856,426
50 263,797 100,000 210,882 1,698,427 834 167,367 1,347,958
</TABLE>
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 MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
47
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Guaranteed Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) 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 $ 814 $ 870 $ 926
2 2,583 100,000 100,000 100,000 1,610 1,772 1,941
3 3,972 100,000 100,000 100,000 2,385 2,706 3,054
4 5,431 100,000 100,000 100,000 3,140 3,672 4,273
5 6,963 100,000 100,000 100,000 3,873 4,671 5,609
6 8,571 100,000 100,000 100,000 4,583 5,703 7,073
7 10,260 100,000 100,000 100,000 5,268 6,768 8,676
8 12,033 100,000 100,000 100,000 5,929 7,867 10,436
9 13,895 100,000 100,000 100,000 6,565 9,002 12,367
10 15,850 100,000 100,000 100,000 7,179 10,175 14,491
15 27,192 100,000 100,000 100,000 9,871 16,667 28,799
20 41,668 100,000 100,000 138,296 11,795 24,277 51,796
25 60,142 100,000 100,000 201,424 12,719 33,168 87,576
30 (Age 65) 83,720 100,000 100,000 284,307 12,264 43,611 142,868
35 113,812 100,000 100,000 393,719 9,027 55,554 226,275
40 152,219 100,000 106,060 535,903 826 69,320 350,263
45 201,237 0 115,014 725,968 0 83,344 526,064
50 263,797 0 122,013 968,088 0 96,836 768,324
</TABLE>
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 MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
48
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Unisex (85% Male), Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) 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 $ 950 $ 1,011 $ 1,071
2 2,583 100,000 100,000 100,000 1,890 2,070 2,257
3 3,972 100,000 100,000 100,000 2,816 3,177 3,569
4 5,431 100,000 100,000 100,000 3,730 4,337 5,020
5 6,963 100,000 100,000 100,000 4,631 5,550 6,626
6 8,571 100,000 100,000 100,000 5,518 6,818 8,402
7 10,260 100,000 100,000 100,000 6,388 8,141 10,363
8 12,033 100,000 100,000 100,000 7,239 9,519 12,528
9 13,895 100,000 100,000 100,000 8,071 10,955 14,920
10 15,850 100,000 100,000 100,000 8,884 12,453 17,564
15 27,192 100,000 100,000 100,813 12,620 20,926 35,623
20 41,668 100,000 100,000 157,905 15,703 31,306 65,250
25 60,142 100,000 100,000 236,381 17,921 44,058 113,101
30 (Age 65) 83,720 100,000 108,753 345,205 18,856 59,755 189,673
35 113,812 100,000 126,426 500,876 17,817 78,525 311,103
40 152,219 100,000 145,847 727,627 13,504 100,584 501,811
45 201,237 100,000 166,792 1,055,427 1,564 125,407 793,554
50 263,797 0 188,090 1,518,049 0 151,686 1,224,233
</TABLE>
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 MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
49
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Unisex (85% Male), Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Guaranteed Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) 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 $ 797 $ 853 $ 908
2 2,583 100,000 100,000 100,000 1,576 1,737 1,904
3 3,972 100,000 100,000 100,000 2,337 2,653 2,996
4 5,431 100,000 100,000 100,000 3,076 3,600 4,192
5 6,963 100,000 100,000 100,000 3,793 4,579 5,502
6 8,571 100,000 100,000 100,000 4,488 5,590 6,938
7 10,260 100,000 100,000 100,000 5,158 6,633 8,511
8 12,033 100,000 100,000 100,000 5,805 7,710 10,237
9 13,895 100,000 100,000 100,000 6,426 8,820 12,129
10 15,850 100,000 100,000 100,000 7,021 9,965 14,208
15 27,192 100,000 100,000 100,000 9,551 16,216 28,134
20 41,668 100,000 100,000 122,432 11,129 23,332 50,592
25 60,142 100,000 100,000 178,368 11,194 31,126 85,343
30 (Age 65) 83,720 100,000 100,000 251,033 8,822 39,326 137,930
35 113,812 100,000 100,000 346,933 1,869 47,225 215,486
40 152,219 0 100,000 474,080 0 53,772 326,951
45 201,237 0 100,000 639,949 0 56,179 481,165
50 263,797 0 100,000 854,526 0 47,195 689,134
</TABLE>
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 MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
50
<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
Article V of the Bylaws of MassMutual provide for indemnification of directors
and officers as follows:
Article V. Subject to limitations of law, the Company shall indemnify:
(a) each director, officer or employee;
(b) any individual who serves at the request of the Company as a
director, board member, committee member, officer or
employee of any organization or any separate investment
account; or
(c) any individual who serves in any capacity with respect to
any employee benefit plan, from and against all loss,
liability and expense imposed upon or incurred by such
person in connection with any action, claim or proceeding of
any nature whatsoever, in which such person may be involved
or with which he or she may be threatened, by reason of any
alleged act, omission or otherwise while serving in any such
capacity. Indemnification shall be provided although the
person no longer serves in such capacity and shall include
protection for the person's heirs and legal representatives.
<PAGE>
Indemnities hereunder shall include, but not be limited to, all
costs and reasonable counsel fees, fines, penalties, judgments or
awards of any kind, and the amount of reasonable settlements,
whether or not payable to the Company or to any of the other
entities described in the preceding paragraph, or to the
policyholders or security holders thereof.
Notwithstanding the foregoing, no indemnification shall be
provided with respect to:
(1) any matter as to which the person shall have been
adjudicated in any proceeding not to have acted in good
faith in the reasonable belief that his or her action was in
the best interests of the Company or, to the extent that
such matter relates to service with respect to any employee
benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan;
(2) any liability to any entity which is registered as an
investment company under the Federal 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; and
(3) any action, claim or proceeding voluntarily initiated by any
person seeking indemnification, unless such action, claim or
proceeding had been authorized by the Board of Directors or
unless such person's indemnification is awarded by vote of
the Board of Directors.
In any matter disposed of by settlement or in the event of an
adjudication which in the opinion of the General Counsel or his
delegate does not make a sufficient determination of conduct
which could preclude or permit indemnification in accordance with
the preceding paragraphs (1), (2) and (3), the person shall be
entitled to indemnification unless, as determined by the majority
of the disinterested directors or in the opinion of counsel (who
may be an officer of the Company or outside counsel employed by
the Company), such person's conduct was such as precludes
indemnification under any of such paragraphs.
The Company may at its option indemnify for expenses incurred in
connection with any action or proceeding in advance of its final
disposition, upon receipt of a satisfactory undertaking for
repayment if it be subsequently determined that the person thus
indemnified is not entitled to indemnification under this Article
V.
<PAGE>
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant 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, the registrant 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 Act and will
be governed by the final adjudication of such issue.
<PAGE>
REPRESENTATIONS, DESCRIPTION AND UNDERTAKING PURSUANT TO
PARAGRAPH (b)(13)(iii)(F) or RULE 6e-3(T) UNDER
THE INVESTMENT COMPANY ACT OF 1940
Registrant makes the following representations:
1. Rule 6e-3(T)(b)(13)(iii)(F) is being relied upon.
2. The level of the mortality and expense risk charge is within
the range of industry practice for comparable flexible
contracts.
3. MassMutual has concluded that there is a reasonable
likelihood that the distribution financing arrangement of
the Massachusetts Mutual Variable Life Separate Account 1
(the "Separate Account") will benefit the Separate Account
and the Policyowners.
4. The Separate Account is organized as a unit investment trust
which will only invest in management companies which have
undertaken to have a board of directors, a majority of whom
are not interested persons of the Separate Account,
formulate and approve any plan under the Rule 12b-1 to
finance distribution expenses.
The methodology used to support the representation made in
paragraph (2) above was to compare similar flexible premium products currently
being offered. MassMutual will maintain and make available to the Commission on
request, a memorandum setting forth the basis for the representations in
paragraphs (2) and (3) above.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, has duly caused this Pre-
Effective Amendment No. 1 to Registration Statement No. 33-87904 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Springfield and Commonwealth of Massachusetts, on the 20th day of June, 1995.
MASSACHUSETTS MUTUAL VARIABLE
LIFE SEPARATE ACCOUNT I
BY: MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
BY: /s/ Donald D. Cameron
---------------------
Donald D. Cameron
Senior Vice President
Attest: /s/Mary Katherine Johnson
--------------------------
Mary Katherine Johnson
Attorney
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, has duly caused this Pre-
Effective Amendment No. 1 to Registration Statement No. 33-87904 to be signed on
its behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Springfield and Commonwealth
of Massachusetts, on the 20th day of June, 1995. Pursuant to the requirements of
paragraph (e) of Rule 485 under the Securities Act of 1933, the Registrant
hereby certifies that this Amendment meets all of the requirements for
effectiveness pursuant to paragraph (b) of said Rule 485.
MASSACHUSETTS MUTUAL VARIABLE
LIFE SEPARATE ACCOUNT I
-----------------------------
(Registrant)
BY; Massachusetts Mutual Life
Insurance Company
--------------------------
(Depositor)
BY: /s/Donald D. Cameron
-------------------------
Donald D. Cameron
Senior Vice President
Attest:/s/Mary K. Johnson
--------------------
Mary K.Johnson
Attorney
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, has duly caused this
Pre-Effective Amendment No. 1 to Registration Statement No. 33-87904 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Springfield and Commonwealth of Massachusetts, on the 20th day of June, 1995.
MASSACHUSETTS MUTUAL VARIABLE
LIFE SEPARATE ACCOUNT I
-----------------------
(Registrant)
BY: MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
-------------------------
(Depositor)
BY: /s/ Donald D. Cameron
-------------------------
Donald D. Cameron
Senior Vice President
ATTEST: /s/ Mary Katherine Johnson
---------------------------
Mary Katherine Johnson
Attorney
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment No. 1 to Registration Statement No. 33-87904 had been signed below by
the following persons in the capacities and on the dates indicated.
Signature and Title Date
------------------- ----
/s/ William J. Clark* )
- ---------------------------------------- )
William J. Clark - Chairman of the Board )
of Directors )
) June 20, 1995
)
/s/ Thomas B. Wheeler* )
- ---------------------------------------- )
Thomas B. Wheeler - President, Chief )
Executive Officer and Director )
<PAGE>
Signature and Title Date
------------------- ----
/s/ Daniel J. Fitzgerald* Executive Vice President)
- --------------------------------- Corporate Financial )
Daniel J. Fitzgerald Operations (Principal )
(Accounting and )
Financial Officer )
)
)
/s/ Roger G. Ackerman* Director )
- --------------------------------- )
Roger G. Ackerman )
)
)
)
)
/s/ Jack F. Bennett* Director )
- --------------------------------- )
Jack F. Bennett )
)
)
/s/ Anthony Downs* Director )
- --------------------------------- )
Anthony Downs )
)
)
/s/ James L. Dunlap* Director )
- --------------------------------- )
James L. Dunlap )
)June 20, 1995
)
/s/ Richard N. Frank* Director )
- --------------------------------- )
Richard N. Frank )
)
)
/s/ Charles K. Gifford* Director )
- --------------------------------- )
Charles K. Gifford )
)
)
/s/ William N. Griggs* Director )
- --------------------------------- )
William N. Griggs )
)
)
/s/ James G. Harlow, Jr.* Director )
- --------------------------------- )
James G. Harlow, Jr. )
)
<PAGE>
Signature Title Date
--------- ----- ----
)
)
/s/ Barbara B. Hauptfuhrer* Director )
- ---------------------------------- )
Barbara B. Hauptfuhrer )
)
)
/s/ Sheldon B. Lubar* Director )
- ---------------------------------- )
Sheldon B. Lubar )
)
)
/s/ William B. Marx, Jr.* Director )
- ---------------------------------- )
William B. Marx, Jr. )
)
)
/s/ Donald F. McCullough* Director )
- ---------------------------------- )
Donald F. McCullough )
) June 20, 1995
)
/s/ Barbara S. Preiskel* Director )
- ---------------------------------- )
Barbara S. Preiskel )
)
)
/s/ Alfred M. Zeien* Director )
- ---------------------------------- )
Alfred M. Zeien )
By: /s/ Thomas F. English June 20, 1995
------------------------------ ---------------
Thomas F. English Date
Attorney-In-Fact
* Signed pursuant to a Power of Attorney filed with Registration Statement
33-87904 on December 23, 1994.
<PAGE>
EXHIBIT LIST
23A Consent of Coopers & Lybrand, L.L.P.
23B Opinion and Consent Counsel.
<PAGE>
EXHIBIT 23A
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in Pre-Effective Amendment No. 1 to the Registration
Statement No. 33-87904 of Massachusetts Mutual Variable Life Separate Account I
(Strategic Variable Life segment) on Form N-8B-2, of our report dated February
6, 1995, except for Note 12 as to which the date is June 16, 1995, on our audits
of the financial statements of Massachusetts Mutual Life Insurance Company as of
December 31, 1994 and 1993 and for the years ended December 31, 1994, 1993 and
1992. We also consent to the reference to our Firm under the caption "Experts."
Springfield, Massachusetts
June 28, 1995
<PAGE>
[LOGO OF MASSMUTUAL APPEARS HERE] EXHIBIT 23B
July 7, 1995
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Massachusetts Mutual Variable Life Insurance
registered on Form S-6; Commission File No. 33-87904
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Pre-Effective
Amendment No. 1 under the Securities Act of 1933 for Flexible Premium
Variable Whole Life Insurance Policy With Table of Selected Face Amounts
(the "Product"). Massachusetts Mutual Variable Life Separate Account I
issues the Product.
As Attorney for Massachusetts Mutual Life Insurance Company,
("MassMutual"), I provide legal advice to MassMutual in connection with the
operation of its variable products. In such role I have worked on the Pre-
Effective Amendment for the Product. 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. MassMutual is a valid and subsisting corporation, organized and
operated under the laws of the Commonwealth of Massachusetts and is subject
to regulation by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Life Separate Account I is a separate
account validly established and maintained by MassMutual in accordance with
Massachusetts General Laws.
3. All of the prescribed corporate procedures for the issuance of the
Product have been followed, and all applicable state laws will have been
complied with.
<PAGE>
July 7, 1995
Page 2
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Mary Katherine Johnson
Mary Katherine Johnson
Attorney
