<PAGE>
Registration No. 33-32361
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 9 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:
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to
--------- paragraph (b) of Rule 485.
X on May 1, 1997 pursuant to paragraph (b) of
--------- Rule 485.
60 days after filing pursuant to paragraph
--------- (a) of Rule 485
on (date) pursuant to paragraph (a) of
--------- Rule 485.
*STATEMENT PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
registered an indefinite amount of securities being offered. The Rule 24f-2
Notice for the fiscal year ending December 31, 1996 was filed on February 28,
1997.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
1 Cover Page; Basic Questions and Answers
About Us and Us and Our Policy
2 Cover Page; The Separate Account
3 Not Applicable
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 General Provisions of the Policy; Death
Benefits Under the Policies; Free Look
Provision; Account Value and Cash Surrender
Value; Policy Loan Privilege; The Separate
Account; The Guaranteed Principal 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
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
16 The Separate Account; Investment Return
17 Cash Surrender Value; Withdrawal
18 The Separate Account
19 Service Agreement; Records and Reports
20 Not Applicable
21 Policy Loan Privilege
22 Not Applicable
23 Bonding Arrangement
24 Limits on our Right to Challenge the Policy; Suicide;
Misstatement of Age or Sex; Assignment; Beneficiary; Our
Rights; 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
33 Not Applicable
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
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
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
51 Cover Page; Basic Questions and Answers About Us and Our
Policy
52 The Separate Account
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
<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 Policyholder
may allocate the premium for his or her Policy among a Guaranteed Principal
Account ("GPA") and one or more of eight Separate Account divisions of a
designated segment of MassMutual Variable Life Separate Account I (the "Separate
Account") after certain deductions have been made. The Separate Account
divisions consist of four divisions which invest in the MML Series Investment
Fund (the "MML Divisions"), three divisions which invest in three funds of the
Oppenheimer Variable Account Funds (the "Oppenheimer Divisions"), and one
division which invests in the Dreyfus Stock Index Fund (the "Dreyfus Index
Division").
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 Separate Account
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 are sufficient funds
available to pay certain monthly charges.
The existing divisions of the Separate Account have distinct investment
portfolios. The Equity Division of the Separate Account invests in shares of MML
Equity Fund, which invests primarily in common stocks and other equity
securities. The Money Market Division invests in shares of MML Money Market
Fund, which invests primarily in short-term debt instruments. The Managed Bond
Division invests in shares of MML Managed Bond Fund, which invests primarily in
publicly issued, readily marketable, fixed-income securities. The 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 High Income Division invests in shares of the Oppenheimer High
Income Fund which invests primarily in high yield fixed-income securities. The
Capital Appreciation Division invests in shares of the Oppenheimer Capital
Appreciation Fund which invests primarily in securities of growth-type
companies. The Global Securities Division invests in shares of the 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 Dreyfus Index Division invests in shares
of the Dreyfus Stock Index Fund which seeks to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"). (Collectively, these eight Funds are referred
to as the "Funds.")
All Policies are serviced through the Home Office. MassMutual's Home Office is
located in Springfield, Massachusetts. The mailing address is Massachusetts
Mutual Life Insurance Company, Springfield, Massachusetts 01111. The telephone
number is (413) 788-8411.
May 1, 1997
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, OPPENHEIMER VARIABLE ACCOUNT FUNDS, AND DREYFUS STOCK INDEX
FUND.
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.
1
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Table Of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions Of Terms................................................... 4
Basic Questions And Answers About Us And Our Policy.................... 5
What is MassMutual?................................................. 5
What variable life insurance policy are we offering?................ 5
Availability........................................................ 5
Underwriting........................................................ 5
What is the Account Value of the Policy?............................ 5
What are the divisions of the Separate Account?..................... 5
What is the Guaranteed Principal Account?........................... 6
Is the level of the Death Benefit guaranteed?....................... 6
Is the Death Benefit subject to income taxes?....................... 6
Does the Policy have a Cash Surrender Value?........................ 6
What is a modified endowment contract?.............................. 6
Can this Policy become a modified endowment contract?............... 6
What about Premiums?................................................ 6
When are Premiums put into the Guaranteed Principal Account or the
Separate Account?................................................. 6
How can the Net Premium and the Account Value of the Policy be
allocated among the Guaranteed Principal Account and the Separate
Account divisions?................................................ 7
How long will the Policy remain in force?........................... 7
Are there charges against the Policy?............................... 7
What is the loan privilege and how does a loan affect the Policy's
Death Benefit and Cash Surrender Value?........................... 7
Are there dividends?................................................ 7
Do I have a right to cancel?........................................ 7
Charges Under The Policy............................................... 7
Deductions from Premiums............................................ 7
Sales Load........................................................ 7
State Premium Tax Charge.......................................... 8
Account Value Charges............................................... 8
Monthly Administrative Charge..................................... 8
Charge for Cost of Insurance Protection........................... 9
Face Amount Charge................................................ 9
Separate Account Charges............................................ 9
Charges for Mortality and Expense Risks........................... 9
Charges for Federal Income Taxes.................................. 9
The Separate Account................................................... 9
Investment of the Separate Account.................................. 9
Rates of Return..................................................... 11
General Provisions Of The Policy....................................... 13
Premiums............................................................ 13
Planned Premiums.................................................... 13
The Minimum Initial Premium......................................... 13
Minimum and Maximum Premium Payments................................ 13
Termination......................................................... 13
Grace Period........................................................ 13
Death Benefit Under The Policy......................................... 13
Account Value And Cash Surrender Value................................. 14
Account Value....................................................... 14
Investment Return................................................... 14
Cash Surrender Value................................................ 14
Withdrawals......................................................... 14
Policy Loan Privilege.................................................. 15
Source of Loan...................................................... 15
If Loans Exceed the Policy Account Value............................ 15
Interest............................................................ 15
Repayment........................................................... 15
Interest on Loaned Value............................................ 15
Effect of Loan...................................................... 15
Free Look Provision ................................................... 15
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exchange Privilege..................................................... 16
Your Voting Rights..................................................... 16
Our Rights............................................................. 16
Directors And Executive Vice Presidents Of MassMutual.................. 16
The Guaranteed Principal Account....................................... 17
Federal Income Tax Considerations...................................... 18
MassMutual - Tax Status............................................. 18
Policy Proceeds, Premiums and Loans................................. 18
Modified Endowment Contracts........................................ 19
Diversification Standards........................................... 19
Additional Provisions Of The Policy.................................... 20
Reinstatement Option................................................ 20
Payment Options..................................................... 20
Fixed Amount Payment Option......................................... 20
Fixed Time Payment Option........................................... 20
Interest Payment Option............................................. 20
Lifetime Payment Option............................................. 20
Joint Lifetime Payment Option....................................... 20
Joint Lifetime Payment Option with Reduced Payments................. 20
Withdrawal Rights under Payment Options............................. 20
Beneficiary......................................................... 20
Changing the Owner or Beneficiary................................... 21
Right to Substitute Insured......................................... 21
Assignment.......................................................... 21
Dividends........................................................... 21
Limits on Our Right to Challenge the Policy......................... 21
Misstatement of Age or Sex.......................................... 21
Suicide............................................................. 21
When We Pay Proceeds................................................ 21
Records And Reports.................................................... 22
Sales And Other Agreements............................................. 22
Commissions Schedule................................................ 22
Bonding Arrangement................................................. 22
Legal Proceedings...................................................... 22
Experts................................................................ 22
Financial Statements................................................... 23
Appendix A............................................................. 49
Appendix B............................................................. 56
</TABLE>
3
<PAGE>
Definition Of Terms
Account Value: The sum of the Variable Account Value and the Fixed Account Value
of the Policy.
Beneficiary: The person or persons specified by the Policyowner 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.
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 of the
Separate Account.
Home Office: The Home Office of MassMutual is located 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.
Policy: The flexible premium variable whole 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 in the Policy which is 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 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
twelve month period thereafter.
Policyowner: The firm, trust, entity or individual who owns the Policy.
Premiums: 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
Company Act of 1940, as amended. The Separate Account will be used to receive
and invest premiums for this Policy and for other variable life insurance
policies issued by MassMutual, 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 day on which the New York Stock Exchange is open for
trading.
Valuation Period: The period, consisting of one or more days, from one Valuation
Time to the next succeeding Valuation Time.
Valuation Time: The time 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 of the Separate Account.
Withdrawal: A withdrawal of Account Value by the Policyowner.
4
<PAGE>
Basic Questions And Answers
About Us And Our Policy
What is MassMutual? MassMutual was organized under the laws of Massachusetts in
1851. We are currently licensed to transact life, accident, and health insurance
business in all fifty states, the District of Columbia, Puerto Rico and certain
provinces of Canada. MassMutual is a Massachusetts life insurance company that
has its home office in Springfield, Massachusetts. As of December 31, 1996,
MassMutual had total contingency reserves in excess of $2.6 billion and
consolidated assets of $55.8 billion.
On February 29, 1996, the merger of Connecticut Mutual Life Insurance Company
("Connecticut Mutual") with and into MassMutual was completed. The separate
existence of Connecticut Mutual has ceased. MassMutual continues its corporate
existence under its current name.
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, Cash Surrender Value, 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 Benefits may, and Cash Surrender
Values most likely will, vary to the extent that the Account Value under the
Policy is allocated to the division(s) of the Separate Account. 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")
and the Policy and any amendments or riders added thereto.
Availability. The Policy is available only to Cases which purchased it prior to
the date it was replaced by Strategic Variable Life. "Case" 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 the
individual Insureds are the owners, they 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 20-85. The minimum
initial 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 under 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 Separate Account divisions but also may benefit from any appreciation in
value.
What are the Divisions of the Separate Account? The Separate Account has eight
divisions - the Equity Division, the Money Market Division, the Managed Bond
Division, the Blend Division, the High Income Division, the Capital Appreciation
Division, the Global Securities Division, and the Dreyfus Index Division. Each
Separate Account 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.
The Equity Division invests in shares of MML Equity Fund. The Money Market
Division invests in shares of MML Money Market Fund. The Managed Bond Division
invests in shares of MML Managed Bond Fund. The Blend Division invests in shares
of MML Blend Fund. The High Income, Capital Appreciation and Global Securities
Divisions invest in shares of the Oppenheimer High Income Fund, Oppenheimer
Capital Appreciation Fund and Oppenheimer Global Securities Fund, respectively.
The Dreyfus Index Division invests in shares of Dreyfus Stock Index Fund.
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend Fund
(the "MML Funds") are separate series of shares of MML Series Investment Fund
(the "MML Trust"), a no-load, open-end, management investment company.
MassMutual acts as investment manager to each of the MML Funds. Concert Capital
Management, Inc. ("Concert") served as the investment sub-adviser to the MML
Equity Fund and the Equity Sector of the MML Blend Fund from 1993-1996. Concert
merged with and into David L. Babson & Company, Inc. ("Babson") effective
December 31, 1996. At such time, Concert and Babson were wholly-owned
subsidiaries of Babson Acquisition Corporation, which is a controlled subsidiary
of MassMutual. Effective January 1, 1997, Babson serves as the investment
sub-adviser to MML Equity Fund and the Equity Sector of the MML Blend Fund. Both
MassMutual and Babson are registered under the Investment Advisers Act of 1940.
OppenheimerFunds, Inc. ("OFI") supervises the investment operations of the
Oppenheimer Variable Account 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
5
<PAGE>
advisory agreement with each Fund. The Oppenheimer High Income Fund, Oppenheimer
Capital Appreciation Fund and Oppenheimer Global Securities 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. OFI is registered as an investment adviser under the
Investment Advisers Act of 1940.
The Dreyfus Stock Index Fund (the "Index Fund"), an open-end, non-diversified,
management investment company, is managed by The Dreyfus Corporation
("Dreyfus"), a wholly-owned subsidiary of Mellon Bank, N.A. ("Mellon"). Dreyfus
has engaged Mellon Equity Associates, ("Mellon Equity"), an indirect
wholly-owned subsidiary of Mellon, to serve as the manager of the Index Fund.
Both Dreyfus and Mellon Equity are registered investment advisers under the
Investment Advisers Act of 1940.
What is the Guaranteed Principal Account ("GPA")? As an alternative to the
Separate Account, the Policyowner may allocate or transfer all or part of the
funds to the GPA. Such amounts 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 (a) 4%, or (b) the greater of (1) 4% and (2) the rate determined
by the Treasury Bill Index. The interest rate credited to the GPA account value
will be affected by the option selected. This rate must be selected at time of
issue. Policies issued prior to April, 1994, will be offered a one-time
opportunity to change the guaranteed rate of return from option (b) to option
(a). 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.
Is the level of the Death Benefit guaranteed? There are two Death Benefit
options. (Policies issued prior to May 1, 1991 will be amended upon request to
add the choice of Death Benefit Option 2.) So long as the Policy remains in
force, the Death Benefit you have selected will be available. 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.
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.
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. For details see Withdrawals. The Cash Surrender Value of a Policy
fluctuates with the investment performance of the Separate Account 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. However,
in connection with certain Withdrawals of Account Value and loans on the Policy,
the Policyowner may be taxed on all or a part of the amount distributed.
For details see Cash Surrender Value and Federal Income Tax Considerations -
Policy Proceeds, Premiums and Loans.
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 the policy can
subject it to retesting for a new seven-year period. During the 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 policy owner is not
59 1/2.
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. This at-issue test
examines the Policy for the first seven contract years, based on the Policy
application and the initial premium requested, and based on the assumption that
there were no increases in premium during the period. The Company has further
safe-guards 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.
What about Premiums? There are two concepts which are important to the
discussion of premiums for this Policy: the minimum initial premium; and the
planned premium. These terms are used throughout this Prospectus.
A minimum initial premium is payable either at the time you submit
your Application or at some time prior to the delivery of the Policy. The
planned premium is elected on the Application and becomes the basis for the
Policy's premium billing. The amount and timing of planned 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 administrative 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.
When are Premiums put into the Guaranteed Principal Account or the Separate
Account? The initial Net Premium (i.e., premium paid less the deductions
described in Are there charges against the Policy?) will be allocated to the MML
Money Market Division, which invests in the MML Money Market Fund. At the end of
the Free
6
<PAGE>
Look Period, the Account Value will be allocated to the GPA and/or the
divisions of the designated segment of the Separate Account 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 Separate Account divisions? When you
apply for a Policy you choose the percentages of your premiums to be allocated
to the divisions of the Separate Account and the GPA. You may choose any whole
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 or divisions
of the Separate Account by written request. The Account Value may be transferred
by dollar amount or by whole-number percentage, subject to restrictions.
How long will the Policy remain in force? The Policy does not automatically
terminate for failure to pay planned 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.
Are there charges against the Policy? Certain charges are made against the
Policy. Before allocation 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 vary depending on the total
Initial Case Premium Paid for all Policies in the Case at issue. First year
sales loads vary according to the cumulative amount of premiums paid under the
Policy in that year. Thereafter, sales loads are a level percentage of each
Premium paid. A deduction of 2.0%, or the applicable state rate, if greater, is
also made for state premium taxes. Each premium, net of these charges, is
allocated to the GPA or the divisions of the Separate Account and becomes a part
of the Account Value.
For details see Deductions From Premium.
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 a face amount
charge. The face amount 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 Separate
Account divisions. A daily charge calculated at an annual rate of .40% of the
value of the assets of each division is charged for mortality and expense risks.
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
Separate Account 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 and Federal Income Tax
Considerations.
What is the loan privilege and how does a loan affect the Policy's Death Benefit
and Cash Surrender Value? For Policies issued prior to May 1, 1991, while the
Policy is in force, a loan may be made on the Policy, provided that total Policy
Debt including the new loan does not exceed 90% of the Policy's Account Value.
For Policies issued on or after May 1, 1991, 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;
and (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.
Are there dividends? The Policy is participating, therefore, it may share in any
dividends paid by MassMutual. 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.
Do I have a right to cancel? Under the Free Look Provision, you, the
Policyowner, have 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 we mail you 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.
Charges Under The Policy
Certain charges are deducted to compensate for providing the insurance benefits
under the Policy, for 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 Account Value, a deduction
as a percentage of premium is made for the sales load and premium taxes. 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; the sales load will
not change. Please note that premiums are tracked on a cumulative basis for each
policy, and that the year 1 sales load will be higher on premium payments made
below the specified policy minimum planned premium.
7
<PAGE>
For Policies issued on or after May 1, 1993:
<TABLE>
<CAPTION>
Initial Case Premium
Paid
--------------------------
Below $1,000,000
$1,000,000 & Up
------------ ------------
<S> <C> <C>
Year 1:
Up to the Minimum
Planned Premium 22.0% 4.0%
Above the Minimum
Planned Premium 6.5% 3.0%
Year 2+
Up to the Minimum
Planned Premium 6.5% 3.0%
Above the Minimum
Planned Premium 6.5% 3.0%
</TABLE>
For Policies issued on or before May 1, 1992:
<TABLE>
<CAPTION>
Expected Aggregate
Annual Planned Case
Premium
-------------------------
Below $1,000,000
$1,000,000 & Up
----------- ------------
<S> <C> <C>
Year 1:
Up to the Minimum
Planned Premium 22.0% 4.0%
Above the Minimum
Planned Premium 6.5% 3.0%
Year 2+
Up to the Minimum
Planned Premium 6.5% 3.0%
Above the Minimum
Planned Premium 6.5% 3.0%
</TABLE>
For Policies issued from May 1, 1991 to May 1, 1992:
<TABLE>
<CAPTION>
Expected Aggregate
Annual Planned Case
Premium
--------------------------
Below $5,000,000
$5,000,000 & Up
----------- -------------
<S> <C> <C>
Year 1:
Up to the Minimum
Planned Premium 22.0% 4.0%
Above the Minimum
Planned Premium 6.5% 3.0%
Year 2+
Up to the Minimum
Planned Premium 6.5% 3.0%
Above the Minimum
Planned Premium 6.5% 3.0%
For Policies issued before May 1, 1991:
<CAPTION>
Expected Aggregate
Annual Planned Case
Premium
--------------------------
Below $5,000,000
$5,000,000 & Up
----------- -------------
<S> <C> <C>
Year 1:
Up to the Minimum
Planned Premium 21.0% 3.0%
Above the Minimum
Planned Premium 5.5% 2.0%
Year 2+
Up to the Minimum
Planned Premium 5.5% 2.0%
Above the Minimum
Planned Premium 5.5% 2.0%
</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. We deduct 2.0%, or the applicable state rate, if
greater (pending state approval), of each premium to cover premium taxes
assessed against MassMutual. This charge may increase or decrease to reflect
either any change in the tax or change 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.
During 1996, the aggregate amount of such deductions from premiums was
$699,689 for sales loads and $259,503 for state premium tax charges.
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 a
face amount 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.
Monthly 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 determined by the ratio of the Consumer Price Index for
September of the year preceding the date of the charge to the Consumer Price
Index for September, 1985, multiplied by $5. Such charges will not exceed the
actual cost for such services. In no event will the charge exceed $8 per month.
During 1996, the aggregate amount of such charges was $93,537.
8
<PAGE>
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 age
and sex of the Insured, 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 Case. During 1996, the
aggregate amount of deductions for the charge for cost of insurance protection
was $2,216,114.
Face Amount Charge. A monthly face amount charge is deducted from Policies that
were issued under a regular underwriting approach. The charge is based on the
initial Selected Face Amount of the Policy, the issue age of the Insured, and
the Policy Year in which the deduction is made. This charge is fixed for a set
number of Policy Years and is shown in the Other Information section of the
Schedule Page. During 1996, the aggregate amount of deductions for the monthly
face amount charge was $16,705.
SEPARATE ACCOUNT CHARGES
Charges for Mortality and Expense Risks. We charge the Separate Account
divisions for the mortality and expense risks we assume. We deduct a daily
charge at an effective annual rate of 0.40% of the value of each division's
assets that come from the Policy. The aggregate amount of such charges, which
are paid quarterly, against the Separate Account divisions in 1996 was $188,438.
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 Separate Account divisions for federal income taxes attributable to them.
However, we may make such a charge eventually in order to provide for the future
federal income tax liability of the Separate Account 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 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.
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 are funded by the Separate Account. 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 of the Separate Account 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 eight divisions attributable to the Policy. The particular divisions
invest in shares of MML Trust, Oppenheimer Trust or Index Fund. 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 Money Market Division - Amounts credited to this division
are invested in shares of MML Money Market Fund, or its successor.
. The MML Managed Bond Division - Amounts credited to this division are invested
in shares of MML Managed Bond 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 Oppenheimer High Income Division - Amounts credited to this division are
invested in shares of Oppenheimer High Income 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 Global Securities Division - Amounts credited to this
division are invested in shares of Oppenheimer Global Securities Fund, or
its successor.
. The Dreyfus Index Division - Amounts credited to this division are
invested in shares of the Index Fund, or its successor.
The shares of the underlying Fund purchased by each division of the Separate
Account will be held by MassMutual as custodian of the Separate Account.
9
<PAGE>
The MML Trust is a no-load, open-end, management investment company. The
Oppenheimer Trust is a no-load open-end, diversified management investment
company, and the Index Fund is a no-load open-end, non-diversified, management
investment company. The MML Trust, Oppenheimer Trust and Index Fund are
registered under the Investment Company Act of 1940, as amended. The MML Trust
includes the four MML Funds described above, each of which has its own
investment objectives and policies. The Oppenheimer Trust includes the three
Oppenheimer Funds, each of which also has its own investment objectives and
policies. The Index Fund also 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. OFI established the Oppenheimer Trust and
Dreyfus established the Index Fund 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 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 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 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 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 and
preferred stock issues believed by OFI, 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 rating services, and unrated services.
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 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 OFI, in its capacity as investment
manager of the Funds, to have appreciation possibilities. The type of securities
in which this Fund invests will be primarily common stocks, 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 Index Fund is to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. ("Standard & Poor's 500" and "S&P 500(R)" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use. The Fund is not
sponsored, endorsed, sold or promoted by Standard & Poor's or The McGraw-Hill
Companies., Inc.)
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, with its home office located in New York, NY, acts as custodian for
each of the MML Funds. The Bank of New York, with its home office located in New
York, NY, acts as custodian for each of the Oppenheimer Funds. Boston Safe
Deposit and Trust Company (the "Custodian"), an indirect subsidiary of Mellon
Bank Corporation, is located at One Boston Place, Boston, Massachusetts 02108,
and serves as the custodian of the Index Fund. Under its Custody Agreement with
the Index Fund, the Custodian holds the Index Fund's portfolio securities and
keeps all necessary accounts and records. The Custodian's fees for its services
to the Fund are paid by Mellon Equity.
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. Babson
manages the investment and
10
<PAGE>
reinvestment of the assets of the MML Equity Fund and the Equity Sector of the
MML Blend Fund.
The monthly management fee payable to OFI in its capacity as investment adviser
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 Capital Appreciation 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 (ii) for High Income 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.
The Index Fund has agreed to pay Dreyfus a monthly fee at the annual rate of
.245 of 1% of the value of the Fund's average daily net assets. All fees and
expenses are accrued daily and deducted before declaration of dividends to
shareholders.
During 1996, MassMutual earned investment management fees of $5,787,673 from MML
Equity Fund, $612,946 from MML Money Market Fund, $820,434 from MML Managed Bond
Fund and $7,525,674 from MML Blend Fund. 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, 1998.
Additional and more detailed information concerning the MML Funds, the
Oppenheimer Funds and the Index Fund, including information about the other
expenses of such Funds, may be found in the accompanying Prospectuses for the
MML Trust, the Oppenheimer Trust and the Index Fund.
MassMutual is also the investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors, closed-end investment companies; certain
wholly-owned subsidiaries of MassMutual; and various employee benefit plans.
MassMutual is the investment sub-adviser to Oppenheimer Investment Grade Bond
Fund and Oppenheimer Value Stock Fund, open end management investment companies.
MassMutual also serves as the collateral co-manager for MassMutual Carlson CBO,
N.V.
OFI has operated as an investment adviser since April 30, 1959. It and its
affiliates currently advise U.S. investment companies with assets aggregating
over $62 billion as of December 31, 1996, and with more than 3 million
shareholder accounts. OFI is owned by Oppenheimer Acquisition Corp., a holding
company owned in part by senior management of OFI, and ultimately controlled by
MassMutual.
Mellon Equity was organized in 1987. Pursuant to an Index Management Agreement
with Dreyfus, Mellon Equity manages the investment of the Index Fund's assets.
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 advisers 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 and Index Fund were established for use as an investment
vehicle by variable contract separate accounts such as the Separate Account.
Accordingly, it is possible that a material irreconcilable conflict may develop
between the interests of contract owners and other separate accounts investing
in the Oppenheimer Trust and Index Fund. The Board of Trustees of the
Oppenheimer Trust (the "Trustees") and the Board of Directors of the Index Fund
(the "Board") will monitor the Oppenheimer Funds and the Index Fund for the
existence of any such conflicts. If it is determined that a conflict exists, the
Trustees and the Board 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 the Index Fund and reinvesting such assets
in a different investment medium; (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 Annualized One Year Total Returns and
Effective Annual Rates of Return, respectively, of the Funds based on the actual
investment performance (after deduction of investment management fees and direct
operation expenses).
Table 1 shows December 31 annualized figures for the Funds. Table 2 shows
figures for periods ended December 31, 1996, for the 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 face amount 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.
However, they may be considered in assessing the competence
11
<PAGE>
and performance of MassMutual and Babson as the MML Funds' investment advisers,
OFI as the Oppenheimer Funds' investment adviser and Mellon Equity as the Index
Fund's investment adviser.
Appendix B illustrates the Account Value and Death Benefit of a hypothetical
Policy. These figures do reflect the deduction of mortality and expense risk
charges, deductions from premiums and Account Value charges.
<TABLE>
<CAPTION>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1996
Fund Since 20 15 10 5 3 1
Inception Years Years Years Years Years Year
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
MML Equity 14.22% 14.72% 16.01% 13.78% 14.71% 17.97% 20.25%
MML Blend 13.13% ---- ---- 11.89% 11.55% 12.90% 13.95%
MML Managed Bond 10.40% ---- 10.54% 8.34% 7.27% 5.79% 3.25%
MML Money Market 6.84% ---- 6.83% 5.76% 4.13% 4.82% 5.01%
Oppenheimer Global Securities 10.65% ---- ---- ---- 12.38% 4.25% 17.80%
Oppenheimer Capital Appreciation 15.66% ---- ---- 16.50% 16.68% 13.74% 20.16%
Oppenheimer High Income 13.46% ---- ---- 13.89% 14.88% 10.34% 15.26%
Index 9.61% ---- ---- ---- ---- ---- 6.93%
</TABLE>
<TABLE>
<CAPTION>
TABLE 2
ONE YEAR TOTAL RETURNS
MML Oppenheimer Oppenheimer Oppenheimer
For the year MML MML Managed MML Money Global Capital High Index
ended Equity Blend Bond Market Securities Appreciation Income Fund
----- ------ ----- ---- ------ ---------- ------------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 20.25% 13.95% 3.25% 5.01% 17.80% 20.16% 15.26% 6.93%
1995 31.13% 23.28% 19.14% 5.58% 2.24% 32.52% 20.37% 36.78%
1994 4.10% 2.48% (3.76)% 3.84% (5.72)% (7.59)% (3.18)% 0.88%
1993 9.52% 9.70% 11.81% 2.75% 70.32% 27.32% 26.34% 9.33%
1992 10.48% 9.36% 7.31% 3.48% (7.11)% 15.42% 17.92% 7.11%
1991 25.56% 24.00% 16.66% 6.01% 3.39% 54.72% 33.91% 29.85%
1990 (0.51)% 2.37% 8.38% 8.12% 0.40%* (16.82)% 4.65% (3.49)%
1989 23.04% 19.96% 12.83% 9.16% - 27.57% 4.84% 2.16%*
1988 16.68% 13.40% 7.13% 7.39% - 13.41% 15.58% -
1987 2.10% 3.12% 2.60% 6.49% - 14.34% 8.07% -
1986 20.15% 18.30% 14.46% 6.60% - (1.65)%* 4.73%* -
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 Funds and are not annualized. 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). The Oppenheimer High Income Fund
commenced operations on April 30, 1986. The Oppenheimer Capital Appreciation
Fund commenced operations on August 15, 1986. The Oppenheimer Global
Securities Fund commenced operations on November 12, 1990. The Index Fund
commenced operations on September 29, 1989.
12
<PAGE>
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. You 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. Two premium concepts are
very important under the Policy: the planned premium and minimum initial
premium.
Planned Premiums. Planned premiums are elected at the time of application and
may be changed at any time. Planned premiums are the basis for the Policy's
premium billing. The planned premium may be subject to minimum and maximum
amounts which depend upon 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 premium is not paid, nor does payment of this
amount guarantee coverage for any period of time. Instead, the duration of the
Policy depends upon the Policy's Account Value. Even if planned premiums are
paid, the Policy terminates when the Account Value becomes insufficient to pay
certain monthly charges and a grace period expires without sufficient payment.
For details see Termination.
The following table shows the minimum annual planned 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).
<TABLE>
<CAPTION>
MINIMUM ANNUAL PLANNED PREMIUM
LEVEL $100,000 SELECTED FACE AMOUNT
(DEATH BENEFIT OPTION 1)
Issue Age
--------------------------------------------
Class Age 25 Age 40 Age 55
----- ------ ------ ------
<S> <C> <C> <C>
MALE
Nonsmoker................. $ 293 $ 652 $ 1,663
Smoker.................... $ 488 $ 1,099 $ 2,842
FEMALE
Nonsmoker................. $ 229 $ 511 $ 1,231
Smoker.................... $ 368 $ 853 $ 2,028
UNISEX
Nonsmoker................. $ 284 $ 632 $ 1,601
Smoker.................... $ 471 $ 1,065 $ 2,727
</TABLE>
The Minimum Initial Premium. A minimum initial premium must be paid along with
your Application or at any time prior to the delivery of the Policy. The amount
of the minimum initial premium is the amount which, after the deductions for
sales load and premium tax (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, you may make unscheduled premium
payments at any time and in any amount.
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 $10.00. The maximum premium which
may be paid in any year without evidence of insurability is: (a) the largest
premium which will not increase the net amount at risk under the Policy; or (b)
the greater of (i) the largest premium which will not increase the net amount at
risk under the Policy; or (ii) twice the Policy's minimum planned premium for
the Selected Face Amount in that year. Option (a) will be applicable when state
approval is received. 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. You 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 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. (Policies issued prior to May 1, 1991
will be amended upon request to add the choice of Death Benefit Option 2.) 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 on page 4 of 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.
13
<PAGE>
The Selected Face Amount may be increased after issue 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.
Example: The following examples show how the Death Benefit varies as a result of
investment performance:
<TABLE>
<CAPTION>
Policy A Policy B
-------------- -------------
<S> <C> <C>
Selected Face Amount $100,000 $100,000
Account Value on Date $ 50,000 $ 40,000
of Death
Minimum Face Amount Percentage
on Date of Death 240% 240%
</TABLE>
Option 1. For Policy A, the Death Benefit will equal $120,000 which is the
greater of the $100,000 Selected Face Amount or the Account Value times the
Minimum Face Amount percentage. For Policy B, the Death Benefit would equal the
$100,000 Selected Face Amount.
Option 2. For Policy A, the Death Benefit will equal $150,000, which is the
$100,000 Selected Fact Amount plus the $50,000 Account Value (the Account Value
times the Minimum Face Amount percentage is $120,000). For Policy B, the Death
Benefit would equal $140,000, which again is the Selected Face Amount plus the
Account Value (the Account Value times the Minimum Face Amount percentage is
$96,000). (Examples assume no additions or deductions to 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 the sum of all premium
payments adjusted by periodic charges and credits. It is the amount provided for
investment in the Separate Account and the GPA. The Account Value of the Policy
is held in one or more divisions of the Separate Account 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 received the Policy. Subject to the allocation rules in
the Policy, the Account Value is then allocated among the Separate Account
divisions and the GPA in accordance with the Policyowner's instructions in the
application.
All or part of the Account Value may be transferred among divisions by written
request. Transfers between divisions of the Separate Account may be by dollar
amount or by whole-number percentage. There is no limit on the number of
transfers a Policyowner may make, 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. However, Policyowners 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 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 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. Any transfer is effective as of
the Valuation Date and all transfers made on one Valuation Date are considered
one transfer.
Investment Return. The investment return of a
Policy is based on:
. The Account Value held in each division of the Separate Account 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 of the Separate Account 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 you 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. The Account Value remaining after a
Withdrawal must be at least equal to the following, whichever is applicable: if
the Withdrawal is made before the Policy Anniversary 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.
14
<PAGE>
(Policies issued prior to May 1, 1991 will be amended on request to substitute
this minimum Account Value limit for the Table of Amounts issued with the
Policy.) 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 (or divisions) 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 that division or GPA. A charge equal to 2.0% of the
Withdrawal, not to exceed $25.00, is deducted from each Withdrawal. 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.
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 until the next Policy Anniversary Date. The Policy must be
properly assigned as collateral for the loan.
Source of Loan. The loan amount requested is taken from the divisions of the
designated segment of the Separate Account 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 a
state of 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 contributions.
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 of the designated segment of the
Separate Account and the GPA in proportion to the non-loaned Account Value in
each.
Repayment. All or part of any Policy Debt may be repaid at any time while the
Insured is living and while the Policy is in force. Any 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 divisions of the designated segment of
the Separate Account. The transfer is made in proportion to the non-loaned value
in each investment account 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
4% 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.
Free Look Provisions
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 MassMutual mails
or delivers a written notice of withdrawal right to the Policyowner 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 total of all premiums paid
15
<PAGE>
for the Policy (or the Account Value where approved by state law), reduced by
any amounts borrowed or withdrawn.
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, signed by the Policyowner.
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 Trust.
Those persons entitled to give voting instructions are determined as of the
record date for the meeting.
The number of shares of the Funds held in the Separate Account deemed
attributable to the Policy during the lifetime of the Insured are determined by
dividing the Policy's Account Value held in each division of the designated
segment of the Separate Account, if any, by $100. Fractional votes are counted.
Policyowners receive proxy material and a form with which such instructions may
be given. Shares of the Funds held by the Separate Account as to which no
effective instructions have been received are voted for or against any
proposition in the same proportion as the shares as to which instructions have
been received.
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 of the Separate Account investing in
additional investment companies;
. Invest the assets of the Separate Account in securities other than shares of
the Funds as a substitute for such shares already purchased or as the
securities to be purchased in the future;
. Operate the Separate Account as a management investment company under the
Investment Company Act of 1940, 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, Director
Chairman and Chief Executive Officer, Corning, Inc., since 1996, President
and Chief Operating Officer 1990-1996, One Riverfront Plaza - HQE 2, Corning
NY 14831.
James R. Birle, Director
President and Founder, Resolute Partners, LLC, since 1994, 2 Greenwich
Plaza - Suite 100, Greenwich CT 06830,; General Partner, Blackstone Group,
1988-1994.
Frank C. Carlucci, III, Director
Chairman, The Carlyle Group, Inc., since 1989, 1001 Pennsylvania Avenue,
N.W. - Suite 220S, Washington DC 20004.
Gene Q. Chao, Director
Chairman, President and CEO, Computer Projections, Inc., since 1991, 733 SW
Vista Avenue, Portland OR 97205-1203.
Patricia Diaz Dennis, Director
Senior Vice President and Assistant General Counsel, SBC Communications Inc.
since 1995, 175 East Houston, Room 4-A-70, San Antonio TX 87205; Special
Counsel, Sullivan & Cromwell, 1993-1995; Assistant Secretary of State for
Human Rights and Humanitarian Affairs, U.S. Department of State, 1992-1993.
Anthony Downs, Director
Senior Fellow, The Brookings Institution, since 1977, 1775 Massachusetts
Ave., N.W., Washington DC 20036-2188.
James L. Dunlap, Director
President and Chief Operating Officer, United Meridian Corporation, since
1996, 1201 Louisiana - Suite 1400, Houston TX 77002-5603; Senior Vice
President, Texaco, Inc. 1987-1996.
William B. Ellis, Director
Senior Fellow, Yale University School of Forestry and Environmental Studies,
since 1995, 31 Pound Foolish Lane, Glastonbury, CT 06033; Chairman and Chief
Executive Officer, Northeast Utilities, 1983-1995.
16
<PAGE>
Robert M. Furek, Director
President and Chief Executive Officer, Heublein, Inc., 1987-1996, 100 Pearl
Street - 14th Floor, Hartford CT 06103-4506.
Charles K. Gifford, Director
Chief Executive Officer, First National Bank of Boston and The Bank of
Boston Corporation, since 1996, Chairman, President and CEO 1995-1996,
President and CEO 1989-1995, 100 Federal Street, Boston MA 02110.
William N. Griggs, Director
Managing Director, Griggs & Santow, Inc., since 1983, 75 Wall Street - 20th
Floor, New York NY 10005.
George B. Harvey, Director
Chairman, President and CEO, Pitney Bowes, 1983-1996, 663 Ponus Ridge, New
Canaan CT 06840.
Barbara B. Hauptfuhrer, Director
Director of various corporations, since 1972, 1700 Old Welsh Road,
Huntington Valley PA 19006.
Sheldon B. Lubar, Director
Chairman, Lubar & Co. Incorporated, since 1977, 777 East Wisconsin Avenue -
Suite 3380, Milwaukee WI 53202.
William B. Marx, Jr., Director
Senior Executive Vice President, Lucent Technologies 1996-1996, 600 Mountain
Avenue - Room 6A-502, Murray Hill NJ 07974; Executive Vice President and CEO
Multimedia Products Group, AT&T, 1994-1996; Executive Vice President and
CEO, Network Systems Group, 1993-1994; Group Executive and President, AT&T
Network Systems, 1989-1993.
John F. Maypole, Director
Managing Partner, Peach State Real Estate Holding Company, since 1984, PO
Box 1223, Toccoa GA 30577.
Donald F. McCullough, Director
Retired Chairman and Chief Executive Officer, Collins & Aikman Corp., since
1988, 210 Madison Avenue, New York NY 10016.
John J. Pajak, Director, President and
Chief Operating Officer
President and Chief Operating Officer, MassMutual, since 1996, Vice Chairman
and Chief Administrative Officer, 1996-1996, Executive Vice President,
1987-1996, 1295 State Street, Springfield MA 01111.
Thomas B. Wheeler, Director, Chairman and
Chief Executive Officer
Chairman and Chief Executive Officer, MassMutual, since 1996, President and
Chief Executive Officer, 1988-1996, 1295 State Street, Springfield MA 01111.
Alfred M. Zeien, Director
Chairman and Chief Executive Officer, The Gillette Company, since 1991,
Prudential Tower, Boston MA 02199.
Executive Vice Presidents
Lawrence V. Burkett, Jr.
Executive Vice President and General Counsel, MassMutual, since 1993, Senior
Vice President and Deputy General Counsel 1992-1993, 1295 State Street,
Springfield MA 01111.
John B. Davies
Executive Vice President, MassMutual, since 1994; Associate Executive Vice
President 1994-1994; General Agent, 1982-1993, 1295 State Street,
Springfield MA 01111.
Daniel J. Fitzgerald
Executive Vice President, Corporate Financial Operations, MassMutual, since
1994, Senior Vice President, 1991-1994, 1295 State Street, Springfield MA
01111.
John V. Murphy
Executive Vice President, MassMutual, since 1997, Executive Vice President
and Chief Operating Officer, David L. Babson & Co., Inc., 1995-1997; Chief
Operating Officer, Concert Capital Management, Inc., 1993-1995, 1295 State
Street, Springfield MA 01111; Senior Vice President and Chief Financial
Officer, Liberty Financial Companies, 1977-1993.
Gary E. Wendlandt
Executive Vice President and Chief Investment Officer, MassMutual, since
1993, Executive Vice President, 1992-1993, Senior Vice President, 1983-1992,
1295 State Street, Springfield MA 01111.
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
17
<PAGE>
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 an effective annual rate equal to (a)
4%, or (b) the greater of (1) 4% and (2) the rate determined by the Treasury
Bill Index less any tax charge which reflects the Policy's share of our federal
income tax liability. The interest rate credited to the GPA account value will
be affected by the option selected. This rate is selected at time of issue.
Policies issued prior to April, 1994, will be offered a one-time opportunity to
change the guaranteed rate from option (b) to option (a). For amounts equal to
any Policy loans, the guaranteed rate is the greater of (a) 4% and (b) the
Policy loan rate less a MassMutual declared charge for expenses and taxes. This
charge cannot exceed 2% (or 0.75% in some states). 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 adviser 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 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, 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 cause a taxable
event, a Withdrawal is taxable only to the extent that it exceeds the
Policyowner's as yet unrecovered premium contributions. MassMutual suggests that
you consult with your tax adviser in advance of a proposed decrease in Selected
Face Amount or Withdrawal as to the portion, if any, which would be subject to
federal income tax.
A change of 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
18
<PAGE>
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 Tax Reform Act of 1986, interest on Policy loans used for personal
purposes, which otherwise meet the requirements of Code Section 264, will no
longer be tax deductible. However, other rules may apply to allow all or part of
the interest expense as a deduction if the loan proceeds are used for "trade or
business" or "investment" purposes. See your tax adviser for further guidance.
If the Policy is owned by a business or corporation, the 1986 Act may impose
additional restrictions. The Act limits the interest deduction available for
loans against a business-owned Policy. It imposes an indirect tax upon the
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 adviser should be
consulted.
MassMutual cannot make any guarantee regarding the future tax treatment of any
Policy.
Modified Endowment Contracts. Contrary to the rules described above, loans 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.
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 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 adviser should be
consulted.
Once a Policy fails the 7-pay test, loans and distributions occurring in the
year of failure and thereafter become subject to the rules for modified
endowment contracts. In addition, a recapture provision applies to loans and
distributions received in anticipation of failing the 7-pay test. Any
distribution or loan made within two years prior to failing the 7-pay test is
considered to have been made in anticipation of the failure.
Under certain circumstances, a loan 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 Trust 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 the 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. However, each
19
<PAGE>
Government agency or instrumentality is treated as a separate issuer.
With respect to variable life insurance contracts, the general diversification
requirements are modified if any of the assets of the Separate Account are
direct obligations of the United States Treasury. In this case, there is no
limit on the investment that may be made in United States Treasury Securities,
and for purposes of determining whether assets other than United States Treasury
Securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the Separate Account's
investment in United States Treasury Securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the Trust
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
Reinstatement Option. For a period of five (5) years after termination, you, as
Policyowner, can request that we reinstate the Policy during the Insured's
lifetime. We will not reinstate the 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 Separate Account 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:
. 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.
. Payments guaranteed for 10 years.
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. You name the Beneficiary when you
apply 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
20
<PAGE>
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 which is on,
or next follows, 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:
. 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.
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. But 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. 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 from the Issue Date 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 within 7 days after
we receive any required documents at our Home Office. But we can delay payment
of the Cash Surrender Value or any Withdrawal from the Separate Account, loan
proceeds attributable to the Separate Account, or the Death Benefit during any
period that:
. It is not reasonably practicable to determine the amount because the New York
Stock Exchange (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 a
state of 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.
21
<PAGE>
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. The minimum amount of such interest
is $25.
Records And Reports
All records and accounts relating to the Separate Account and the GPA are
maintained by MassMutual. Each year within 30 days after the Policy Anniversary,
we will mail you a report showing the Account Value at the beginning of the
previous Policy Year, all premiums paid since that time, all additions to and
deductions from Account Value during the year, and the Account Value, Death
Benefit, Cash Surrender Value and Policy Debt as of the latest Policy
Anniversary. This report contains any additional information required by any
applicable law or regulation.
Sales And Other Agreements
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, is the principal underwriter of the Policy pursuant to an
Underwriting and Servicing Agreement to which MML Distributors, MassMutual and
the Separate Account are parties. Also located at 1414 Main Street, Springfield,
MA 01144-1013, MML Investors Services, Inc. ("MMLISI") serves as the co-
underwriter of the Policies. Both MML Distributors and MMLISI are registered
with the Securities and Exchange Commission (the "SEC") as broker-dealers under
the Securities Exchange Act of 1934 and are members of the National Association
of Securities Dealers, Inc. (the "NASD").
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the SEC and are members of the NASD ("selling
brokers"). We sell the Policies through agents who are licensed by state
insurance officials to sell the Policies. These agents are also registered
representatives of selling brokers or of MMLISI.
When an application for one of the Policies is completed, it is submitted to us.
The selling broker or co-underwriter 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.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies of the Separate Account. Compensation paid to
MMLISI in 1996 was $19,800. Compensation paid to MML Distributors in 1996 was
$10,000. Commissions are paid through MMLISI and MML Distributors to agents and
selling brokers for selling the Policies. During 1996 such payments amounted to
$380,674.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
Commissions Schedule. Agents or selling brokers receive commissions as a
percentage of the premium payable in each Policy Year. This percentage is set
based on the total annual planned premium for all Policies in a Case as shown in
the applications. It is not affected by subsequent changes under the Case. The
maximum commission percentage for the first Policy Year is 10% of the premiums
paid in the first Policy Year up to the Policy's minimum annual planned premium,
plus 2.35% of any additional premiums paid. The maximum commission percentage in
each future Policy Year is 3.8% of all premiums paid in that year.
Agents may receive commissions at lower rates on Policies sold to replace
existing insurance issued by MassMutual or any of its subsidiaries.
Agents under financing agreement with a general agent of MassMutual may be
compensated differently.
Agents who meet certain productivity and persistency standards in selling
MassMutual policies are eligible for added compensation.
General agents receive commissions based on different schedules.
Bonding Arrangement. An insurance company blanket bond is maintained providing
$25,000,000 coverage for officers and employees of MassMutual (subject to a
$350,000 deductible) and $25,000,000 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.
Experts
The financial statements of the Large Case Variable Life Plus segment of the
Separate Account and the financial statements of MassMutual included in this
Prospectus have been included herein in reliance on the reports of Coopers &
Lybrand L.L.P., Springfield, Massachusetts 01101, independent accountants, given
on the authority of that firm as experts in accounting and auditing. Coopers &
Lybrand's report on the statutory financial statements of MassMutual includes
explanatory paragraphs relating to the use of statutory accounting practices
rather than generally accepted accounting principles.
Actuarial matters in this Prospectus have been examined by C. Dale Games,
F.S.A., M.A.A.A., Vice President for MassMutual. His opinion on actuarial
matters is filed as an exhibit to the registration statements we filed with the
SEC.
22
<PAGE>
Financial Statements
The financial statements of MassMutual and the Large Case Variable Life Plus
segment of the Separate Account included herein should be considered only as
bearing upon the ability of MassMutual to meet its obligations under the Policy.
23
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
Massachusetts Mutual Life Insurance Company
We have audited the statements of assets and liabilities of the MML Equity
Division, MML Money Market Division, MML Managed Bond Division, MML Blend
Division, Oppenheimer High Income Division, Oppenheimer Capital Appreciation
Division, Oppenheimer Global Securities Division, and Dreyfus Index Division of
the Large Case Variable Life Plus Segment of Massachusetts Mutual Variable Life
Separate Account I as of December 31, 1996, and the related statements of
operations for the year then ended, and the statements of changes in net assets
for the periods indicated thereon. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our 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. Our procedures included
verification of investments owned as of December 31, 1996, by examination of the
records of MML Series Investment Fund and by confirmation with Oppenheimer
Variable Account Funds and Dreyfus Stock Index Fund. 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 the MML Equity Division, MML
Money Market Division, MML Managed Bond Division, MML Blend Division,
Oppenheimer High Income Division, Oppenheimer Capital Appreciation Division
Oppenheimer Global Securities Division, and Dreyfus Index Division of the Large
Case Variable Life Plus Segment of Massachusetts Mutual Variable Life Separate
Account I as of December 31, 1996, the results of their operations for the year
then ended, and the changes in net assets for the periods indicated thereon, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 4, 1997
24
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -- Large Case Variable
Life Plus
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML High Capital
Equity Market Bond Blend Income Appreciation
Division Division Division Division Division Division
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments --
Number of shares (Note 2) ......... 358,340 990,401 925,348 135,582 161,582 97,068
============= ============= ============= ============= ============= =============
Identified cost (Note 6) .......... $ 9,895,009 $ 990,402 $ 10,998,294 $ 2,686,945 $ 1,766,992 $ 3,763,440
============= ============= ============= ============= ============= =============
Value (Note 3A) ................... $ 10,673,634 $ 990,401 $ 11,148,921 $ 2,979,186 $ 1,798,411 $ 3,755,572
Dividends receivable ............... 497,122 4,492 177,157 101,763 -- --
------------- ------------- ------------- ------------- ------------- -------------
Total assets ..................... 11,170,756 994,893 11,326,078 3,080,949 1,798,411 3,755,572
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company ............ 124 12 124 34 19 41
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS ......................... $ 11,170,632 $ 994,881 $ 11,325,954 $ 3,080,915 $ 1,798,392 $ 3,755,531
============= ============= ============= ============= ============= =============
Net Assets:
For variable life insurance policies $ 11,154,203 $ 981,477 $ 11,314,268 $ 3,066,482 $ 1,791,760 $ 3,748,139
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company ................. 16,429 13,404 11,686 14,433 6,632 7,392
------------- ------------- ------------- ------------- ------------- -------------
Net assets ....................... $ 11,170,632 $ 994,881 $ 11,325,954 $ 3,080,915 $ 1,798,392 $ 3,755,531
============= ============= ============= ============= ============= =============
Accumulation units
Policyowners ...................... 4,539,806 732,152 6,444,688 1,421,800 1,351,056 2,535,490
Massachusetts Mutual Life
Insurance Company ................ 6,687 10,000 6,656 6,692 5,000 5,000
------------- ------------- ------------- ------------- ------------- -------------
Total units (Note 8) ............. 4,546,493 742,152 6,451,344 1,428,492 1,356,056 2,540,490
============= ============= ============= ============= ============= =============
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1996 ................. $ 2.46 $ 1.34 $ 1.76 $ 2.16 $ 1.33 $ 1.48
December 31, 1995 ................. 2.05 1.28 1.71 1.90 1.16 1.23
December 31, 1994 ................. 1.57 1.22 1.44 1.55 0.96 0.94
December 31, 1993 ................. 1.51 1.18 1.50 1.52 -- --
December 31, 1992 ................. 1.39 1.15 1.35 1.39 -- --
<CAPTION>
Oppenheimer
Global Dreyfus
Securities Index
Division Division Total
-------- -------- -----
<S> <C> <C> <C>
ASSETS
Investments --
Number of shares (Note 2) ......... 128,257 1,026,836 3,823,414
============= ============= =============
Identified cost (Note 6) .......... $ 1,980,447 $ 19,039,355 $ 51,120,884
============= ============= =============
Value (Note 3A) ................... $ 2,261,164 $ 20,824,238 $ 54,431,527
Dividends receivable ............... -- 279,813 1,060,347
------------- ------------- -------------
Total assets ..................... 2,261,164 21,104,051 55,491,874
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company ............ 25 232 611
------------- ------------- -------------
NET ASSETS ......................... $ 2,261,139 $ 21,103,819 $ 55,491,263
============= ============= =============
Net Assets:
For variable life insurance policies $ 2,255,596 $ 21,098,092 $ 55,410,017
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company ................. 5,543 5,727 81,246
------------- ------------- -------------
Net assets ....................... 2,261,139 $ 21,103,819 $ 55,491,263
============= ============= =============
Accumulation units
Policyowners ...................... 2,034,838 18,406,572
Massachusetts Mutual Life
Insurance Company ................ 5,000 5,000
------------- -------------
Total units (Note 8) ............. 2,039,838 18,411,572
============= =============
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1996 ................. $ 1.11 $ 1.15
December 31, 1995 ................. 0.95 --
December 31, 1994 ................. 0.93 --
December 31, 1993 ................. -- --
December 31, 1992 ................. -- --
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -- Large Case Variable
Life Plus
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1996
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML High Capital Global
Equity Market Bond Blend Income Appreciation Securities
Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B)............ $ 497,438 $ 98,425 $ 402,986 $ 179,650 $ 97,384 $ 524,287 $ --
Expenses
Mortality and expense risk fee
(Note 4)...................... 63,177 8,012 21,779 10,728 4,287 23,287 27,051
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)
(Note 3C)..................... 434,261 90,413 381,207 168,922 93,097 501,000 (27,051)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net realized and unrealized
gain on investments
Net realized gain on
investments (Notes 3 and 6)... 2,609,509 -- 7,784 56,686 142,387 750,281 567,458
Change in net unrealized
appreciation/depreciation
of investments................ (619,361) -- 98,857 120,120 (44,813) (739,508) 180,936
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net gain on investments........ 1,990,148 -- 106,641 176,806 97,574 10,773 748,394
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations..... $ 2,424,409 $ 90,413 $ 487,848 $ 345,728 $ 190,671 $ 511,773 $ 721,343
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
*Dreyfus
Index
Division Total
-------- -----
<S> <C> <C>
Investment income
Dividends (Note 3B)............ $ 546,557 $ 2,346,727
Expenses
Mortality and expense risk fee
(Note 4)...................... 30,117 188,438
------------ ------------
Net investment income (loss)
(Note 3C)..................... 516,440 2,158,289
------------ ------------
Net realized and unrealized
gain on investments
Net realized gain on
investments (Notes 3 and 6)... 5,903 4,140,008
Change in net unrealized
appreciation/depreciation
of investments................ 1,784,882 781,113
------------ ------------
Net gain on investments........ 1,790,785 4,921,121
------------ ------------
Net increase in net assets
resulting from operations..... $ 2,307,225 $ 7,079,410
============ ============
</TABLE>
*For the Period August 1, 1996 (Date of Commencement of Operations) through
December 31, 1996.
See Notes to Financial Statements.
26
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -- Large Case Variable
Life Plus
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1996
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML High Capital Global
Equity Market Bond Blend Income Appreciation Securities
Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)......$ 434,261 $ 90,413 $ 381,207 $ 168,922 $ 93,097 $ 501,000 $ (27,051)
Net realized gain
on investments.................... 2,609,509 -- 7,784 56,686 142,387 750,281 567,458
Change in net unrealized
appreciation/depreciation
of investments.................... (619,361) -- 98,857 120,120 (44,813) (739,508) 180,936
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations......... 2,424,409 90,413 487,848 345,728 190,671 511,773 721,343
------------ ------------ ------------ ------------ ------------ ------------ ------------
Capital transactions: (Note 8)
Transfer of net premium........... 2,416,720 3,155,511 2,894,471 678,896 179,652 1,127,005 826,409
Transfer to Guaranteed
Principal Account................. -- (43,469) -- -- -- -- --
Transfer of surrender values...... (52,901) (627,614) (8,007) (145,960) -- -- (4,223)
Transfer due to death benefits.... (33,820) (12,683) (12,801) (5,494) -- (9,759) (29,607)
Transfer due to policy loan,
net of repayment.................. (13,366) -- (18) (18,902) -- (1,270) (7,471)
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation................ (54,633) 3,796 15,423 309 (3,277) 49,430 74,345
Withdrawal due to charges for
administrative and insurance costs (541,666) (359,358) (132,291) (159,224) (34,070) (156,514) (125,757)
Divisional transfers.............. (8,794,810) (3,177,869) 6,796,962 206,124 (433,861) (3,842,405) (9,511,078)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from
capital transactions............. (7,074,476) (1,061,686) 9,553,739 555,749 (291,556) (2,833,513) (8,777,382)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total increase (decrease).......... (4,650,067) (971,273) 10,041,587 901,477 (100,885) (2,321,740) (8,056,039)
NET ASSETS, at beginning
of the period/year................ 15,820,699 1,966,154 1,284,367 2,179,438 1,899,277 6,077,271 10,317,178
------------ ------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, at end of the year.....$ 11,170,632 $ 994,881 $ 11,325,954 $ 3,080,915 $ 1,798,392 $ 3,755,531 $ 2,261,139
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
*Dreyfus
Index
Division Total
-------- -----
<S> <C> <C>
Increase (decrease)in net assets
Operations:
Net investment income (loss)......$ 516,440 $ 2,158,289
Net realized gain
on investments.................... 5,903 4,140,008
Change in net unrealized
appreciation/depreciation
of investments.................... 1,784,882 781,113
------------ ------------
Net increase in net assets
resulting from operations......... 2,307,225 7,079,410
------------ ------------
Capital transactions: (Note 8)
Transfer of net premium........... 42,058 11,320,722
Transfer to Guaranteed
Principal Account................. -- (43,469)
Transfer of surrender values...... -- (838,705)
Transfer due to death benefits.... -- (104,164)
Transfer due to policy loan,
net of repayment.................. -- (41,027)
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation................ 54,612 140,005
Withdrawal due to charges for
administrative and insurance costs (57,013) (1,565,893)
------------ ------------
Divisional transfers.............. 18,756,937 --
------------ ------------
Net increase (decrease) in
net assets resulting from
capital transactions............. 18,796,594 8,867,469
------------ ------------
Total increase (decrease).......... 21,103,819 15,946,879
NET ASSETS, at beginning
of the period/year................ -- 39,544,384
------------ ------------
NET ASSETS, at end of the year.....$ 21,103,819 $ 55,491,263
============ ============
</TABLE>
*For the Period August 1, 1996 (Date of Commencement of Operations) through
December 31, 1996.
See Notes to Financial Statements.
27
<PAGE>
Massachusetts Mutual Variable Life Separate Account I --
Large Case Variable Life Plus
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML High Capital
Equity Market Bond Blend Income Appreciation
Division Division Division Division Division Division
---------- ------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................. $ 549,099 $ 167,377 $ 93,395 $ 1 31,856 $ 202,322 $ (3,925)
Net realized gain (loss)
on investments.............................. 54,476 -- 46,215 91,039 38,996 13,381
Change in net unrealized
appreciation/depreciation
of investments.............................. 1,427,884 -- 105,076 286,499 117,329 726,097
------------ ------------ ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations................... 2,031,459 167,377 244,686 509,394 358,647 735,553
------------ ------------ ----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Transfer of net premium...................... 2,702,545 21,618,465 752,770 374,328 648,684 783,313
Transfer to Guaranteed Principal Account..... -- (69,895) -- (3,791) -- --
Transfer of surrender values................. (244,457) (4,395,665) (102,318) (97,216) (26,113) (102,266)
Withdrawal due to death benefits............. (2,894) (300) -- -- -- --
Transfer due to policy loan,
net of repayment............................ (797) -- (2,689) (3,656) -- (292)
Transfer due to reimbursement (payment) of
accumulation unit value fluctuation......... (16,996) 13,984 (1,364) 2,788 (315) (5,623)
Withdrawal due to charges for
administrative and insurance costs.......... (264,094) (267,040) (74,281) (156,704) (49,826) (63,084)
Divisional transfers......................... 8,096,573 (17,960,607) (695,780) (1,041,522) 440,525 4,141,688
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from capital transactions......... 10,269,880 (1,061,058) (123,662) (925,773) 1,012,955 4,753,736
------------ ------------ ----------- ----------- ----------- -----------
Total increase (decrease)..................... 12,301,339 (893,681) 121,024 (416,379) 1,371,602 5,489,289
NET ASSETS, at beginning of the year.......... 3,519,360 2,859,835 1,163,343 2,595,817 527,675 587,982
------------ ------------ ----------- ----------- ----------- -----------
NET ASSETS, at end of the year................ $ 15,820,699 $ 1,966,154 $ 1,284,367 $ 2,179,438 $ 1,899,277 $ 6,077,271
============ ============ =========== =========== =========== ===========
<CAPTION>
Oppenheimer
Global
Securities
Division Total
----------- -----------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)................ $ 33,151 $ 1,173,275
Net realized gain (loss)
on investments.............................. (5,647) 238,460
Change in net unrealized
appreciation/depreciation
of investments.............................. 162,287 2,825,172
------------ -----------
Net increase in net assets
resulting from operations................... 189,791 4,236,907
------------ -----------
Capital transactions: (Note 8)
Transfer of net premium..................... 1,672,425 28,552,530
Transfer to Guaranteed Principal Account.... -- (73,686)
Transfer of surrender values................ (60,532) (5,028,567)
Withdrawal due to death benefits............ -- (3,194)
Transfer due to policy loan,
net of repayment............................ (503) (7,937)
Transfer due to reimbursement (payment) of
accumulation unit value fluctuation......... (12,352) (19,878)
Withdrawal due to charges for
administrative and insurance costs.......... (104,191) (979,220)
Divisional transfers........................ 7,019,123 --
------------ -----------
Net increase (decrease) in net assets
resulting from capital transactions......... 8,513,970 22,440,048
------------ -----------
Total increase (decrease).................... 8,703,761 26,676,955
NET ASSETS, at beginning of the year......... 1,613,417 12,867,429
------------ -----------
NET ASSETS, at end of the year............... $ 10,317,178 $39,544,384
============ ===========
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
Massachusetts Mutual Variable Life Separate Account I --
Large Case Variable Life Plus
Notes To Financial Statements
1. HISTORY
Massachusetts Mutual Variable Life Separate Account I ("Separate Account
I") is a separate investment account established on July 13, 1988 by
Massachusetts Mutual Life Insurance Company ("MassMutual") in accordance
with the provisions of Section 132G of Chapter 175 of the Massachusetts
General Laws.
MassMutual maintains four segments within Separate Account I. The initial
segment ("Variable Life Plus Segment") is used exclusively for
MassMutual's flexible premium variable whole life insurance policy, known
as Variable Life Plus.
On March 30, 1990, MassMutual established a second segment ("Large Case
Variable Life Plus Segment") within Separate Account I to be used
exclusively for MassMutual's flexible premium variable whole life
insurance policy with table of selected face amounts, known as Large Case
Variable Life Plus.
On July 5, 1995, MassMutual established a third segment ("Strategic
Variable Life Segment") within Separate Account I to be used exclusively
for MassMutual's flexible premium variable whole life insurance policy
with tables of selected face amounts, known as Strategic Variable Life.
On July 24, 1995, MassMutual established a fourth segment ("Variable Life
Select Segment") within Separate Account I to be used exclusively for
MassMutual's flexible premium variable whole life insurance policy, known
as Variable Life Select.
The Separate Account I operates as a registered unit investment trust
pursuant to the Investment Company Act of 1940 and the rules promulgated
thereunder. MassMutual paid $40,000 to the Large Case Variable Life Plus
Segment on March 30, 1990 to provide initial capital: 12,146 shares were
purchased in the four series of shares of the management investment
company described in Note 2 supporting the divisions of the Large Case
Variable Life Plus Segment. On January 3, 1994, MassMutual removed $15,000
of the initial capital from three of the four series of shares of the
management investment company supporting the divisions of the Large Case
Variable Life Plus Segment. On January 3, 1994, MassMutual paid $15,000 to
provide the initial capital for the Large Case Variable Life Plus
Segment's three new divisions: 918 shares were purchased in the management
investment company described in Note 2 supporting the three new divisions
of the Large Case Variable Life Plus Segment. On August 1, 1996,
MassMutual paid $5,000 to provide initial capital for the Large Case
Variable Life Plus Segment's new Dreyfus Index Division.
2. INVESTMENT OF THE LARGE CASE VARIABLE LIFE PLUS
SEGMENT'S ASSETS
The Large Case Variable Life Plus Segment maintains eight divisions. The
MML Equity Division invests in shares of MML Equity Fund, the MML Money
Market Division invests in shares of MML Money Market Fund, the MML
Managed Bond Division invests in shares of MML Managed Bond Fund and the
MML Blend Division invests in shares of MML Blend Fund. The Oppenheimer
High Income Division invests in shares of Oppenheimer High Income Fund,
the Oppenheimer Capital Appreciation Division invests in shares of
Oppenheimer Capital Appreciation Fund, and the Oppenheimer Global
Securities Division invests in shares of Oppenheimer Global Securities
Fund. The Dreyfus Index Division invests in shares of Dreyfus Stock Index
Fund.
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML
Blend Fund are the four series of MML Series Investment Fund (the "MML
Trust"). The MML Trust is a no-load, registered, open-end, diversified
management investment company for which MassMutual acts as investment
manager. Concert Capital Management, Inc. ("Concert") served as the
investment sub-adviser to MML Equity Fund and the Equity Sector of the MML
Blend Fund from 1993-1996. Concert merged with and into David L. Babson &
Company, Inc. ("Babson") effective December 31, 1996. Both Concert and
Babson are wholly-owned subsidiaries of Babson Acquisition Corporation,
which is a controlled subsidiary of MassMutual. Thus, effective January 1,
1997, Babson serves as the investment sub-adviser to MML Equity Fund and
the Equity Sector of the MML Blend Fund. MassMutual paid Concert a
quarterly fee equal to an annual rate of .13% of the average daily net
asset value of MML Equity Fund and the Equity Sector of MML Blend Fund.
29
<PAGE>
Notes To Financial Statements (Continued)
Oppenheimer High Income Fund, Oppenheimer Capital Appreciation Fund and
Oppenheimer Global Securities Fund (the "Oppenheimer Funds") are part of
the Oppenheimer Variable Account Funds (the "Oppenheimer Trust"). The
Oppenheimer Trust is a registered, open-end, diversified management
investment company, which is available to act as the investment vehicle
for separate accounts for variable insurance policies. OppenheimerFunds,
Inc. ("OFI"), a controlled subsidiary of MassMutual, serves as investment
adviser to the Oppenheimer Trust, (prior to January 5, 1996, OFI was known
as Oppenheimer Management Corporation).
The Dreyfus Stock Index Fund, an open-end, non-diversified management
investment company is managed by the Dreyfus Corporation. Mellon Equity
Associates serves as the sub-adviser to the Dreyfus Stock Index Fund.
In addition to the eight divisions of the Large Case Variable Life Plus
Segment, a policyowner may also allocate funds to the Guaranteed Principal
Account, which is part of MassMutual's general account. Because of
exemptive and exclusionary provisions, interests in the Guaranteed
Principal Account, which is part of MassMutual's general account, are not
registered under the Securities Act of 1933 and the general account is not
registered as an investment company under the Investment Company Act of
1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Large Case Variable Life Plus Segment in the
preparation of the financial statements in conformity with generally
accepted accounting principles.
A. Investment Valuation
The investments in MML Trust, the Oppenheimer Trust and the Dreyfus Stock
Index Fund are each stated at market value which is the net asset value of
each of the respective underlying funds.
B. Accounting For Investments
Investment transactions are accounted for on trade date and identified
cost is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the ex-
dividend date.
C. Federal Income Taxes
MassMutual is taxed under federal law as a life insurance company under
the provisions of the 1986 Internal Revenue Code, as amended. The Large
Case Variable Life Plus Segment is part of MassMutual's total operation
and is not taxed separately. The Large Case Variable Life Plus Segment
will not be taxed as a "regulated investment company" under Subchapter M
of the Internal Revenue Code. Under existing federal law, no taxes are
payable on investment income and realized capital gains of the Large Case
Variable Life Plus Segment credited to the policies. Accordingly,
MassMutual does not intend to make any charge to the Large Case Variable
Life Plus Segment's divisions to provide for company income taxes.
MassMutual may, however, make such a charge in the future if an
unanticipated change of current law results in a company tax liability
attributable to the Large Case Variable Life Plus Segment.
D. Policy Loan
When a policy loan is made, the Large Case Variable Life Plus Segment
transfers the amount of the loan to MassMutual, thereby decreasing both
the assets and the reserves of the Large Case Variable Life Plus Segment
by an equal amount. The interest rate charged on any loan is 6% per year,
or where permitted, the policyowner may select an adjustable loan rate, in
all jurisdictions except Arkansas, at the time of application. Loan
repayments result in the transfer of values equal to the repayment from
the loaned portion of the Guaranteed Principal Account to the non-loaned
portion of the Guaranteed Principal Account and the divisions of the Large
Case Variable Life Plus Segment.
The policyowner earns interest at a rate which is the greater of 4% or the
policy loan rate less a MassMutual declared charge (maximum .75%) for
expenses and taxes.
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
30
<PAGE>
Notes To Financial Statements (Continued)
4. CHARGES
MassMutual charges the Large Case Variable Life Plus Segment's divisions
for the mortality and expense risks it assumes. The charge is made daily
at an effective annual rate of 0.40% of the value of each division's net
assets.
MassMutual makes certain deductions from the annual premium before amounts
are allocated to the Large Case Variable Life Plus Segment and the
Guaranteed Principal Account. The deductions are for sales charges and
state premium taxes. No additional deductions are taken when money is
transferred from the Guaranteed Principal Account to the Large Case
Variable Life Plus Segment. MassMutual also makes certain charges for the
cost of insurance and administrative costs.
5. SALES AGREEMENTS
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), a
wholly-owned subsidiary of MassMutual, serves as principal underwriter of
the policies pursuant to an underwriting and servicing agreement among MML
Distributors, MassMutual and Separate Account I. MML Distributors is
registered with the Securities and Exchange Commission (the "SEC") as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"). MML
Distributors may enter into selling agreements with other broker-dealers
who are registered with the SEC and are members of the NASD in order to
sell the policies.
Prior to May 1, 1996, MML Investors Services, Inc. ("MMLISI") a
wholly-owned subsidiary of MassMutual, served as principal underwriter of
the policies. Effective May 1, 1996, MMLISI serves as co-underwriter of
the policies pursuant to underwriting and servicing agreements among
MMLISI, MassMutual and Separate Account I, MMLISI is registered with the
SEC as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the NASD. Registered representatives of MMLISI sell the policies
as authorized variable life insurance agents under applicable state
insurance laws.
Pursuant to the underwriting and servicing agreements, commissions or
other fees due to registered representatives for selling and servicing the
policies are paid by MassMutual on behalf of MML Distributors or MMLISI.
MML Distributors and MMLISI also receive compensation for their activities
as underwriters of the policies.
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML High Capital
For The Year Ended Equity Market Bond Blend Income Appreciation
December 31, 1996 Division Division Division Division Division Division
------------------- ----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cost of purchases...................... $11,735,768 $6,405,539 $9,905,418 $1,076,226 $1,620,003 $5,955,523
Proceeds from sales.................... 18,295,194 7,372,770 127,969 390,624 1,818,505 8,288,189
Average monthly value of securities.... $15,491,204 $1,938,642 $5,487,881 $2,670,281 $1,204,539 $5,795,296
<CAPTION>
Oppenheimer
Global Dreyfus
For The Year Ended Securities Index
December 31, 1996 Division Division
----------------- ---------- -----------
<S> <C> <C>
Cost of purchases...................... $1,042,567 $19,120,348
Proceeds from sales.................... 9,847,313 86,896
Average monthly value of securities.... $6,844,065 $19,730,374
</TABLE>
7. NET INVESTMENT RETURN
The following table shows the net investment return for each division in
the Large Case Variable Life Plus Segment:
<TABLE>
<CAPTION>
MML MML *Oppenheimer *Oppenheimer
MML Money Managed MML High Capital
Equity Market Bond Blend Income Appreciation
Division Division Division Division Division Division
-------- --------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
For the Year Ended December 31, 1996 and
**For the Period August 1, 1996
(Date of Commencement of Operations)
Through December 31, 1996................... 15.48% 5.34% 8.52% 12.77% 14.61% 8.77%
For the Year Ended December 31, 1995......... 26.63% 5.81% 16.87% 21.35% 19.26% 34.64%
For the Year Ended December 31, 1994 and
*For the Period January 3, 1994
(Date of Commencement of Operations)
Through December 31, 1994................... 4.58% 3.33% (1.23)% 2.14% *(2.72)% *0.81%
For the Year Ended December 31, 1993......... 8.28% 2.33% 4.07% 8.54% -- --
For the Year Ended December 31, 1992......... 9.74% 2.72% 6.76% 8.73% -- --
*Oppenheimer
Global **Dreyfus
Securities Index
Division Division
------------ ---------
<S> <C> <C>
For the Year Ended December 31, 1996 and
**For the Period August 1, 1996
(Date of Commencement of Operations)
Through December 31, 1996................... 10.49% **11.27%
For the Year Ended December 31, 1995......... 4.69% --
For the Year Ended December 31, 1994 and
*For the Period January 3, 1994
(Date of Commencement of Operations)
Through December 31, 1994................... *(6.17)% --
For the Year Ended December 31, 1993......... -- --
For the Year Ended December 31, 1992......... -- --
</TABLE>
The net investment return for each division of the Large Case Variable
Life Plus Segment is computed using the net increase in net assets
resulting from operations as compared to the average monthly net assets.
The net investment return figures shown above do not reflect expenses
related to insurance products. Inclusion of such expenses would reduce the
net investment return figures for all periods shown.
31
<PAGE>
Notes To Financial Statements (Continued)
8. NET INCREASE (DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996 MML MML Oppenheimer Oppenheimer
and *For the Period August 1, 1996 MML Money Managed MML High Capital
(Date of Commencement of Operations) Equity Market Bond Blend Income Appreciation
Through December 31, 1996 Division Division Division Division Division Division
------------------------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units purchased.......................... 1,176,765 3,121,090 1,731,646 352,844 159,639 880,690
Units withdrawn and transferred to
Guaranteed Principal Account............ (370,589) (1,459,166) (127,766) (178,125) (41,196) (215,745)
Units transferred between divisions...... (3,973,031) (2,454,243) 4,095,080 106,794 (406,523) (3,045,604)
--------- --------- --------- ---------- ---------- ---------
Net increase (decrease).................. (3,166,855) (792,319) 5,698,960 281,513 (288,080) (2,380,659)
Units, at beginning of the period/year... 7,713,348 1,534,471 752,384 1,146,979 1,644,136 4,921,149
--------- --------- --------- ---------- ---------- ---------
Units, at end of the year................ 4,546,493 742,152 6,451,344 1,428,492 1,356,056 2,540,490
========= ========= ========= ========== ========== =========
<CAPTION>
For the Year Ended December 31, 1996 Oppenheimer
and *For the Period August 1, 1996 Global *Dreyfus
(Date of Commencement of Operations) Securities Index
Through December 31, 1996 Division Division
------------------------- -------- ---------
<S> <C> <C>
Units purchased.......................... 840,126 39,735
Units withdrawn and transferred to
Guaranteed Principal Account............ (203,232) (47,429)
Units transferred between divisions...... (9,493,490) 18,419,266
---------- ----------
Net increase (decrease).................. (8,856,596) 18,411,572
Units, at beginning of the period/year... 10,896,434 --
---------- ----------
Units, at end of the year................ 2,039,838 18,411,572
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML High Capital
For The Year Ended Equity Market Bond Blend Income Appreciation
December 31, 1995 Division Division Division Division Division Division
----------------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units purchased.......................... 1,539,221 17,138,525 476,211 214,619 607,924 738,795
Units withdrawn and transferred to
Guaranteed Principal Account............ (287,636) (3,767,540) (116,379) (154,072) (71,573) (167,596)
Units transferred between divisions...... 4,220,389 (14,183,662) (416,191) (591,133) 560,099 3,721,390
--------- --------- --------- ---------- ---------- ---------
Net increase (decrease).................. 5,471,974 (812,677) (56,359) (530,586) 1,096,450 4,292,589
Units, at beginning of the year.......... 2,241,374 2,347,148 808,743 1,677,565 547,686 628,560
--------- --------- --------- ---------- ---------- ---------
Units, at end of the year................ 7,713,348 1,534,471 752,384 1,146,979 1,644,136 4,921,149
========= ========= ========= ========== ========= =========
<CAPTION>
Oppenheimer
Global
For The Year Ended Securities
December 31, 1995 Division
----------------- ---------
<S> <C>
Units purchased.......................... 1,771,180
Units withdrawn and transferred to
Guaranteed Principal Account............ (178,395)
Units transferred between divisions...... 7,568,397
---------
Net increase (decrease).................. 9,161,182
Units, at beginning of the year.......... 1,735,252
----------
Units, at end of the year................ 10,896,434
==========
</TABLE>
32
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity
of MassMutual's Large Case Variable Life Plus Segment. The combined net
assets as of December 31, 1996 for Separate Account I, which includes the
Variable Life Plus, Large Case Variable Life Plus, Strategic Variable Life
and Variable Life Select Segments, are as follows:
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Oppenheimer High Oppenheimer
Equity Market Bond Blend Money Income Bond
Division Division Division Division Division Division Division
----------- ---------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets................. $30,116,869 $1,981,154 $12,312,246 $ 8,919,296 $ 5,380 $ 3,064,566 $ 5,520
Total liabilities............ 132 1,346 234 15,515 4 29 --
----------- ---------- ----------- ----------- ---------- ----------- ----------
Net assets................... $30,116,737 $1,979,808 $12,312,012 $ 8,903,781 $ 5,376 $ 3,064,537 $ 5,520
=========== ========== =========== =========== ========== =========== ==========
Net assets:
For variable life insurance
policies.................... $30,035,948 $1,930,850 $12,256,804 $ 8,833,433 $ -- $ 3,051,700 $ --
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company........... 80,789 48,958 55,208 70,348 5,376 12,837 5,520
----------- ---------- ----------- ----------- ---------- ----------- ----------
Net assets................... $30,116,737 $1,979,808 $12,312,012 $ 8,903,781 $ 5,376 $ 3,064,537 $ 5,520
=========== ========== =========== =========== ========== =========== ==========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Multiple Global Strategic Growth & Dreyfus
Appreciation Growth Strategies Securities Bond Income Index
Division Division Division Division Division Division Division
----------- ---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets................. $ 5,385,758 $1,082,755 $ 6,139 $2,886,458 $ 151,526 $ 8,264 $21,104,051
Total liabilities............ 5,714 2,351 -- 2,403 -- -- 232
----------- ---------- ----------- ----------- ---------- ----------- -----------
Net assets................... $ 5,380,044 $1,080,404 $ 6,139 $2,884,055 $ 151,526 $ 8,264 $21,103,819
=========== ========== =========== =========== ========== =========== ===========
Net assets:
For variable life insurance
policies.................... $ 5,358,777 $1,066,459 $ -- $2,866,928 $ 139,640 $ -- $21,098,092
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company........... 21,267 13,945 6,139 17,127 11,886 8,264 5,727
----------- ---------- ----------- ----------- ---------- ----------- -----------
Net assets................... $ 5,380,044 $1,080,404 $ 6,139 $ 2,884,055 $ 151,526 $ 8,264 $21,103,819
=========== ========== =========== =========== ========== =========== ===========
</TABLE>
33
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statement of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1996 and 1995,
and the related statutory statements of income, changes in policyholders'
contingency reserves, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of Connecticut Mutual Life Insurance Company for the year ended
December 31, 1995 or for each of the two years in the period ended December 31,
1995, which, after restatement for the 1996 pooling of interests, reflect 25% of
assets as of December 31, 1995, 26% and 26% of revenue, and 22% and 6% of net
gain from operations for the years ended December 31, 1995 and 1994,
respectively. Those statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to the amounts
included for Connecticut Mutual Life Insurance Company, is based solely on the
report of other auditors.
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 and the report of the other auditors provide a
reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company prepared these
financial statements using statutory accounting practices of the National
Association of Insurance Commissioners and the accounting practices prescribed
or permitted by the Division of Insurance of the Commonwealth of Massachusetts
and, prior to 1996, the Department of Insurance of the State of Connecticut,
which practices differ from generally accepted accounting principles. The
effects on the financial statements of the variances between the statutory basis
of accounting and generally accepted accounting principles, although not
determinable at this time, are presumed to be material.
In our report dated February 5, 1996, we expressed our opinion that the 1995 and
1994 financial statements, prepared using statutory accounting practices,
presented fairly, in all material respects, the financial position of the
Massachusetts Mutual Life Insurance Company as of December 31, 1995, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1995 in conformity with generally accepted accounting
principles ("GAAP"). As described in Note 1 to the financial statements,
financial statements of mutual life insurance enterprises issued or reissued
after 1996, and prepared in accordance with statutory accounting principles, are
no longer considered to be presentations in conformity with GAAP. Accordingly,
our present opinion on the 1995 and 1994 statutory financial statements as
presented herein is different from that expressed in our previous report.
In our opinion, because of the effects of the matter discussed in the third
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company at December 31, 1996 and 1995,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996.
In our opinion, based upon our audits and the report of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Massachusetts Mutual Life Insurance Company at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, on the
statutory basis of accounting described in Note 1.
Springfield, Massachusetts Coopers & Lybrand, L.L.P.
February 7, 1997
34
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1996 1995
--------- ---------
(In Millions)
<S> <C> <C>
Assets:
Bonds............................................................. $25,255.0 $23,625.1
Common stocks..................................................... 336.6 416.1
Mortgage loans.................................................... 3,897.1 3,908.2
Real estate....................................................... 1,840.9 1,652.6
Other investments................................................. 1,425.6 1,489.9
Policy loans...................................................... 4,752.3 4,518.4
Cash and short-term investments................................... 1,075.4 2,342.8
Investment and insurance amounts receivable....................... 1,102.4 1,059.3
Separate account assets........................................... 13,563.5 11,309.5
Other assets...................................................... 97.9 174.6
--------- ---------
$53,346.7 $50,496.5
========= =========
Liabilities:
Policyholders' reserves and funds................................. $33,341.5 $32,893.1
Policyholders' dividends.......................................... 885.3 832.6
Policy claims and other benefits.................................. 373.8 395.5
Federal income taxes.............................................. 440.7 338.5
Asset valuation reserve........................................... 689.2 566.8
Investment reserves............................................... 208.4 188.4
Separate account reserves and liabilities......................... 13,563.1 11,309.6
Amounts due on investments purchased and
other liabilities............................................... 1,206.1 1,371.1
--------- ---------
50,708.1 47,895.6
Policyholders' contingency reserves............................... 2,638.6 2,600.9
--------- ---------
$53,346.7 $50,496.5
========= =========
</TABLE>
See notes to statutory financial statements.
35
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
--------- --------- ---------
(In Millions)
<S> <C> <C> <C>
Income:
Premium income........................................................ $ 6,328.6 $ 5,727.7 $ 6,177.2
Net investment and other income....................................... 2,861.1 2,898.4 2,803.1
--------- --------- ---------
9,189.7 8,626.1 8,980.3
--------- --------- ---------
Benefits and expenses:
Policy benefits and payments.......................................... 6,048.2 5,152.2 5,449.6
Addition to policyholders' reserves and funds......................... 854.7 1,205.4 1,263.2
Commissions and operating expenses.................................... 763.5 833.7 959.3
State taxes, licenses and fees........................................ 96.4 89.4 105.6
Merger restructuring costs............................................ 66.1 44.0 --
--------- --------- ---------
7,828.9 7,324.7 7,777.7
--------- --------- ---------
Net gain before federal income taxes and dividends.................... 1,360.8 1,301.4 1,202.6
Federal income taxes.................................................. 276.7 206.2 139.7
--------- --------- ---------
Net gain from operations before dividends............................. 1,084.1 1,095.2 1,062.9
Dividends to policyholders............................................ 859.9 819.0 824.7
--------- --------- ---------
Net gain from operations.............................................. 224.2 276.2 238.2
Net realized capital gain (loss)...................................... 40.3 (85.8) (164.3)
--------- --------- ---------
Net income............................................................ $ 264.5 $ 190.4 $ 73.9
========= ========= =========
</TABLE>
See notes to statutory financial statements.
36
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENT OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
--------- --------- ---------
(In Millions)
<S> <C> <C> <C>
Policyholders' contingency reserves, beginning of year......... $ 2,600.9 $ 2,569.1 $ 2,470.2
--------- --------- ---------
Increases (decreases) due to:
Net income................................................... 264.5 190.4 73.9
Net unrealized capital gain (loss)........................... (1.7) 88.7 29.5
Merger restructuring costs, net of tax....................... -- (45.4) --
Surplus notes................................................ -- -- 100.0
Change in asset valuation and investment reserves............ (142.4) (75.6) (38.2)
Change in valuation bases of policyholders' reserves......... (72.2) (108.2) (51.1)
Change in accounting for mortgage backed securities.......... -- -- 44.5
Change in non-admitted assets and other...................... (10.5) (18.1) (59.7)
--------- --------- ---------
37.7 31.8 98.9
--------- --------- ---------
Policyholders' contingency reserves, end of year............... $ 2,638.6 $ 2,600.9 $ 2,569.1
========= ========= =========
</TABLE>
See notes to statutory financial statements.
37
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
--------- --------- ---------
(In Millions)
<S> <C> <C> <C>
Operating activities:
Net income.................................................. $ 264.5 $ 190.4 $ 73.9
Addition to policyholders' reserves and funds,
net of transfers to separate accounts..................... 426.7 575.8 546.9
Net realized capital (gain) loss............................ (40.3) 85.8 164.3
Other changes............................................... (232.8) (25.2) 124.2
--------- --------- ---------
Net cash provided by operating activities................... 418.1 826.8 909.3
--------- --------- ---------
Investing activities:
Purchases of investments and loans.......................... (10,171.5) (10,364.2) (8,351.6)
Sales or maturities of investments and receipts
from repayment of loans.................................. 8,539.3 9,671.1 7,468.7
--------- --------- ---------
Net cash used in investing activities....................... (1,632.2) (693.1) (882.9)
--------- --------- ---------
Financing activities:
Issuance of surplus notes................................... -- -- 100.0
Repayments of long-term debt................................ (53.3) (46.4) (125.0)
--------- --------- ---------
Net cash used by financing activities....................... (53.3) (46.4) (25.0)
--------- --------- ---------
Increase (decrease) in cash and short-term investments...... (1,267.4) 87.3 1.4
Cash and short-term investments, beginning of year.......... 2,342.8 2,255.5 2,254.1
--------- --------- ---------
Cash and short-term investments, end of year................ $ 1,075.4 $ 2,342.8 $ 2,255.5
========= ========= =========
</TABLE>
See notes to statutory financial statements.
38
<PAGE>
Notes To Statutory Financial Statements
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability income products
distributed primarily through career agents. The Company also provides a wide
range of pension products and services, as well as investment services to
individuals, corporations and institutions in all 50 states and the District of
Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life Insurance
Company ("Connecticut Mutual") were merged into the Company. This merger was
accounted for under the pooling of interests method of accounting. For the
purposes of this presentation, these financial statements reflect historical
amounts giving retroactive effect as if the merger had occurred on January 1,
1994 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 and, prior to the
merger, the Department of Insurance of the State of Connecticut. In 1996,
merger-related expenses totaling $66.1 million were recorded in the Statutory
Statement of Income. In 1995, merger-related expenses incurred by Massachusetts
Mutual (the Company prior to the merger) of $44.0 million, were recorded in the
statutory statement of income and the expenses incurred by Connecticut Mutual of
$45.4 million, net of tax, were recorded as a component of changes in
policyholders' contingency reserves, as permitted by each company's regulatory
authority. On the merger date, policyholder reserves attributable to disability
income contracts were strengthened by $75.0 million, investment reserves for
real estate were increased by $49.8 million and net prepaid pension assets were
increased by $10.4 million. The separate results of each company prior to the
merger for the year ended December 31, 1995, are as follows: (a) income was
$6,443.8 million for Massachusetts Mutual and $2,182.3 million for Connecticut
Mutual; (b) net income was $160.7 million for Massachusetts Mutual and $29.6
million for Connecticut Mutual and (c) policyholders' contingency reserves
increased by $143.7 million for Massachusetts Mutual and decreased by $112.0
million for Connecticut Mutual.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life Insurance
Company (formerly the MML Pension Insurance Company; currently doing business as
"UniCARE"), which comprised the Company's group life and health business, to
WellPoint Health Networks, Inc. The Company received total consideration of
$402.2 million ($340.0 million in cash and $62.2 million in notes receivable)
and recognized a before tax gain of $187.9 million. The Company, pursuant to a
1994 reinsurance agreement, cedes its group life, accident and health business
to UniCARE. The Company's investment in MassMutual Holding Company Two, Inc.
amounted to $187.8 million at December 31, 1995; its gain from operations
reflected a $41 million dividend in 1995. Additionally, this investment produced
an unrealized gain of $13.9 million in 1995 and an unrealized loss of $12.6
million in 1994.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted by
the Division of Insurance of the Commonwealth of Massachusetts and, prior to the
merger, The Department of Insurance of the State of Connecticut ("statutory
accounting practices"), which practices were also considered to be in conformity
with generally accepted accounting principles ("GAAP"). In 1993, the Financial
Accounting Standards Board ("FASB") issued Interpretation No. 40 ("Fin. 40"),
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises", which clarified that mutual life insurance
companies issuing financial statements described as prepared in conformity with
GAAP after 1995 are required to apply all applicable GAAP pronouncements in
preparing those financial statements. In January 1995, the FASB issued Statement
No. 120 ("SFAS 120"), Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration Participating
Contracts," which among other things, extended the applicability of certain FASB
statements to mutual life insurance companies and deferred the effective date of
Fin. 40 to financial statements issued or reissued after 1996. As required by
generally accepted auditing standards, the opinion expressed by our independent
accountants on the 1995 and 1994 financial statements is different from that
expressed in their previous report.
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs in connection with
acquiring new business, are charged to current operations as incurred, whereas
GAAP would require these expenses to be capitalized and recognized over the life
of the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP would value bonds at fair value and (d) deferred
income taxes are not provided for book-tax timing differences whereas GAAP would
record deferred income taxes. Management has not yet completed GAAP financial
statements, but believes that policyholders' contingency reserves based upon
GAAP will be higher than policyholders' contingency reserves based upon
statutory accounting practices.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities at the date of the
financial statements. Management must also make estimates and assumptions that
affect the amounts of revenues and expenses during the reporting period. Future
events, including changes in the levels of mortality, morbidity, interest rates
and asset valuations, could cause actual results to differ from the estimates
used in these financial statements.
39
<PAGE>
Notes To Statutory Financial Statements (Continued)
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.
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 as of December 31, 1994, was recorded as an increase to policyholders'
contingency reserves on the Statutory Statement of Financial Position and had no
material effect on 1996 or 1995 net income. Through December 31, 1994, premium
and discount on bonds were amortized into investment income over the stated
lives of the securities.
Mortgage loans are valued at principal less unamortized discount. Real estate is
valued at cost less accumulated depreciation, impairments and mortgage
encumbrances. Encumbrances totaled $27.3 million in 1996 and $3.0 million in
1995. 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 Statutory 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 using the grouped method
over the remaining life of the investment sold or over the remaining life of the
underlying asset. Net realized after tax capital gains of $77.1 million in 1996,
$130.7 million in 1995, and net realized after tax capital losses of $152.6
million in 1994 were charged to the Interest Maintenance Reserve. Amortization
of the Interest Maintenance Reserve into net investment income amounted to $26.9
million in 1996, $5.0 million in 1995, and $45.8 million in 1994. 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 Statutory 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 Statutory Statement of Financial Position by an
adjustment to policyholders' contingency reserves.
40
<PAGE>
Notes To Statutory Financial Statements (Continued)
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 $9,073.8 million (fair value of $9,324.6 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 1996, 1995 and 1994, the Company changed its valuation basis for certain
disability income contracts. The effects of these changes, $75.0 million in
1996, $108.2 million in 1995, and $51.1 million in 1994 were recorded as
decreases to policyholders' contingency reserves.
E. Premium and Related Expense Recognition
Life insurance 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 Statutory Statement of Cash Flows, the Company considers all
highly liquid investments purchased with a maturity of twelve months or less to
be short-term investments.
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. Interest of $26.6
million was approved and paid in 1996 and 1995, and interest of $22.8 million
was approved and paid in 1994.
The proceeds of the notes, less a $32.2 million reserve in 1996 and a $35
million reserve in 1995 and 1994 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 Statutory Statement of Financial Position.
41
<PAGE>
Notes To Statutory Financial Statements (Continued)
3. EMPLOYEE BENEFIT PLANS
The Company's employee benefit plans include plans in place for the employees of
Massachusetts Mutual and Connecticut Mutual prior to the merger. These plans,
which were managed separately, reflect different assumptions for 1995. Employees
previously covered by the Connecticut Mutual pension plans will continue
coverage under these plans. All other employees, including employees hired after
the merger date, will be covered by the Massachusetts Mutual benefit plans.
A. Pension
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes employees previously
employed by Connecticut Mutual; the other includes all other eligible 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 these plans following Financial Accounting Standards
Board Statement No. 87, Employers' Accounting for Pensions. Accordingly, as
permitted by the Massachusetts Division of Insurance, the Company has recognized
a pension asset of $97.2 million and $37.7 million in 1996 and 1995,
respectively. In 1995, a pension asset of $70.9 million associated with the
Connecticut Mutual plan was non-admitted in the financial statements, in
accordance with Connecticut insurance regulations. On the merger date, the
accounting for Connecticut Mutual pension plans was conformed to the
Massachusetts Mutual policy of recording pension plan assets and liabilities,
resulting in a $10.4 million increase in policyholders' contingency reserves.
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, 1996 and
1995. The assets of the plans are invested in the Company's general account and
separate accounts.
The benefit status of the defined benefit plans as of December 31 is as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(In Millions)
<S> <C> <C>
Accumulated benefit obligation $ 611.5 $ 537.5
Vested benefit obligation 606.5 525.7
Projected benefit obligation 665.5 622.5
Plan assets at fair value 1,021.7 941.3
</TABLE>
The following assumptions were used in determining the actuarial present value
of both the accumulated and projected benefit obligation.
<TABLE>
<CAPTION>
MassMutual Connecticut Mutual
Plan Plan
---------- ------------------
<S> <C> <C>
Discount rate - 1996 7.75% 7.75%
Discount rate - 1995 7.50 7.75
Increase in future compensation levels 5.00 5.00
Long-term rate of return on assets 10.00 9.00
</TABLE>
As a result of the sale of Mirus Life Insurance Company, there was a significant
reduction in plan participants which resulted in recognition of a pension plan
curtailment gain of $15.3 million in 1996.
The Company also has defined contribution plans for employees and agents. The
expense credited to operations for all pension plans is $32.7 million in 1996,
$10.9 million in 1995 and $5.0 million in 1994.
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
life and health benefit costs, requiring these benefits to be accounted for
using the accrual method for employees and agents eligible to retire and current
retirees.
42
<PAGE>
Notes To Statutory Financial Statements (Continued)
The following rates were used in determining the accumulated postretirement
benefit liability.
<TABLE>
<CAPTION>
MassMutual Connecticut Mutual
Plan Plan
---------- ------------------
<S> <C> <C>
Discount rate - 1996 7.75% 7.75%
Discount rate - 1995 7.50 8.50
Assumed increases in medical cost
rates in the first year 7.25 11.00
declining to 5.25 6.00
within 5 years 5 years
</TABLE>
The initial transition obligation of $137.9 million is being amortized over
twenty years through 2012. At December 31, 1996 and 1995, the net unfunded
accumulated benefit obligation was $124.1 million and $109.2 million,
respectively, for employees and agents eligible to retire or currently retired
and $33.8 million and $42.7 million, respectively, 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
$23.0 million in 1996.
As a result of the sale of Mirus Life Insurance Company, there was a significant
reduction in plan participants which resulted in recognition of a life and
health plan curtailment loss of $13.9 million in 1996.
The expense for 1996, 1995 and 1994 was $17.6 million, $22.9 million, and $19.8
million, respectively. A one percent increase in the annual assumed increase in
medical cost rates would increase the 1996 accumulated postretirement benefit
liability and benefit expense by $9.9 million and $1.5 million, respectively.
4. RELATED PARTY TRANSACTIONS
Pursuant to two 1994 reinsurance agreements with Mirus Life Insurance Company
(Mirus) whereby the Company assumed all of the single premium immediate annuity
business written by Mirus and ceded all of its group life, accident and health
business to Mirus. A gain from operations of this business was reflected in 1995
as a $41 million dividend received from Mirus, which was recorded as net
investment income on the Statutory Statement of Income. As previously discussed,
on March 31, 1996, the Company sold MassMutual Holding Company Two, Inc. a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life Insurance
Company to WellPoint Health Networks, Inc.
The Company has a modified coinsurance quota-share reinsurance agreement with a
wholly-owned subsidiary, C.M. Life Insurance Company, whereby the Company
assumes 50% of the premiums on certain universal life policies issued by C.M.
Life in 1985 and 75% of the premiums with issue dates on or after January 1,
1986. The Company pays a stipulated expense allowance, death and surrender
benefits, and a modified coinsurance adjustment. Reserves for payment of future
benefits are retained by C.M. Life.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best estimate of
its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of equity tax, using the most current information,
and other miscellaneous temporary differences, such as reserves, acquisition
costs and restructuring costs, resulted in an effective tax rate which is other
than the statutory tax rate.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1991 for Connecticut
Mutual, and is currently examining Connecticut Mutual for the years 1992 through
1995. 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 1996
and 1995. The Company records the estimated effects of anticipated revisions in
the Statutory Statement of Income.
The Company plans to file its 1996 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.
Generally, the agreement provides that loss members shall be compensated for the
use of their losses and credits by other members.
The Company made federal tax payments of $330.7 million in 1996, $147.3 million
in 1995 and has a credit of $9.9 million in 1994. At December 31, 1996 and 1995,
the Company established a liability for federal income taxes of $440.7 million
and $338.6 million, respectively.
43
<PAGE>
Notes To Statutory Financial Statements (Continued)
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. In the
normal course of business, the Company enters into commitments to purchase
privately placed bonds and to issue mortgage loans.
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-------------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Millions)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and Obligations of U.S.
Government Corporations and Agencies $ 8,042.6 $ 344.0 $ 56.3 $ 8,330.3
Debt Securities issued by Foreign Governments 95.2 10.2 0.5 104.9
Mortgage-backed securities 3,969.7 125.5 43.3 4,051.9
State and local governments 173.2 13.1 2.1 184.2
Industrial securities 11,675.2 528.0 133.3 12,069.9
Utilities 975.0 87.0 18.5 1,043.5
Affiliates 324.1 4.3 3.5 324.9
--------- --------- --------- ---------
TOTAL $25,255.0 $ 1,112.1 $ 257.5 $26,109.6
========= ========= ========= =========
<CAPTION>
December 31, 1995
-------------------------
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 $ 9,391.5 $ 837.0 $ 43.3 $10,185.2
Debt Securities issued by Foreign Governments 261.9 27.9 0.1 289.7
Mortgage-backed securities 3,265.4 176.3 9.4 3,432.3
State and local governments 106.0 15.2 0.1 121.1
Industrial securities 9,030.7 762.8 57.8 9,735.7
Utilities 1,417.6 152.4 2.9 1,567.1
Affiliates 152.0 4.4 1.2 155.2
--------- --------- --------- ---------
TOTAL $23,625.1 $ 1,976.0 $ 114.8 $25,486.3
========= ========= ========= =========
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1996 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Millions)
<S> <C> <C>
Due in one year or less $ 680.0 $ 684.8
Due after one year through five years 5,128.8 5,219.7
Due after five years through ten years 6,879.6 7,112.6
Due after ten years 5,195.4 5,496.1
--------- ---------
17,883.8 18,513.2
Mortgage-backed securities, including securities guaranteed
by the U.S. Government 7,371.2 7,596.4
--------- ---------
TOTAL $25,255.0 $26,109.6
========= =========
</TABLE>
44
<PAGE>
Notes To Statutory Financial Statements (Continued)
Proceeds from sales of investments in bonds were $6,390.7 during 1996, $8,068.8
million during 1995 and $5,624.1 million during 1994. Gross capital gains of
$188.8 million in 1996, $255.5 million in 1995 and $100.3 million in 1994 and
gross capital losses of $79.9 million in 1996, $67.1 million in 1995 and $195.8
million in 1994 were realized on those sales, a portion of which were included
in the Interest Maintenance Reserve. The estimated fair value of non-publicly
traded bonds is determined by the Company using a pricing matrix.
B. Stocks
Preferred stocks in good standing had fair values of $150.8 million in 1996 and
$87.9 million in 1995, 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 $249.2 million in 1996 and $350.5
million in 1995.
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.
D. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $23.1 million and $113.9 million at December 31,
1996 and 1995, respectively. The Company had restructured loans with book values
of $383.5 million, and $415.0 million at December 31, 1996 and 1995,
respectively. 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 1996, $2.5 million in 1995 and $2.2 million in
1994. The Company made voluntary contributions to the Asset Valuation Reserve of
$6.8 million and $52.7 million in 1996 and 1994, respectively. No additional
voluntary contribution to the Asset Valuation Reserve was made in 1995.
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 primarily to reduce interest rate and
duration imbalances determined in asset/liability analyses. The fair values of
instruments described below, 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 enters into financial futures contracts for the purpose of managing
interest rate exposure. 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, 1996, the
Company did not have any open financial futures contracts.
The Company utilizes 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 an exchange, at
specified intervals, between streams of variable rate and fixed rate interest
payments 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 Statutory
Statement of Financial Position. Gains and losses realized on the termination of
contracts are amortized through the Interest Maintenance Reserve over the
remaining life of the associated contract. At December 31, 1996 and 1995, the
Company had swaps with notional amounts of $2,239.5 million and $1,819.8
million, respectively. The fair values of these instruments were $20.7 million
at December 31, 1996 and $9.2 million at December 31, 1995.
Options grant the purchaser the right to buy or sell a security or enter into a
derivative transaction at a stated price within a stated period. The Company's
option contracts have terms of up to fifteen years. The amounts paid for options
purchased are included in other investments on the Statutory 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, 1996 and 1995, the Company had option contracts with notional amounts of
$1,928.4 million and $1,819.8 million, respectively. The Company's credit risk
exposure was limited to the unamortized costs of $18.1 million and $21.7
million, which had fair values of $19.2 million and $63.5 million at December
31, 1996 and 1995, respectively.
45
<PAGE>
Notes To Statutory Financial Statements (Continued)
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 Statutory
Statement of Financial Position. Amounts receivable and payable are accrued as
adjustments to interest income and included in the Statutory 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. At December 31, 1996
and 1995, the company had agreements with notional amounts of $3,859.6 million
and $3,366.3 million, respectively. The Company's credit risk exposure on these
agreements is limited to the unamortized costs of $22.0 million and $14.0
million at December 31, 1996 and 1995, respectively. The fair values of these
instruments were $15.2 million and $30.8 million at December 31, 1996 and 1995,
respectively.
The Company utilizes 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 totaled $364.7 million and
$333.7 million at December 31, 1996 and 1995, respectively. The fair values of
these instruments were an unrecognized gain of $7.8 million at December 31, 1996
and $12.2 million at December 31, 1995.
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, 1996 and 1995, the Company had
U. S. Treasury purchase commitments which will settle during the following year
with contractual amounts of $1,639.4 million and $292.4 million and fair values
of $1,627.4 million and $298.8 million, respectively.
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 $53.9 million and $86.9 million at December 31, 1996 and 1995,
respectively. The Company monitors exposure to ensure counterparties are credit
worthy and concentration of exposure is minimized. Additionally, contingent
collateral positions have been obtained with counterparties when considered
prudent.
8. REINSURANCE
The Company cedes all of its group life and health business to UniCARE and has
other reinsurance agreements with other insurance companies in the normal course
of business. Premiums, benefits to policyholders and provisions for future
benefits are stated net of reinsurance. The Company remains liable to the
insured for the payment of benefits if the reinsurer cannot meet its obligations
under the reinsurance agreements. Premiums ceded were $793.5 million in 1996,
$904.1 million in 1995 and $151.4 million in 1994.
9. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1996 are illustrated below:
<TABLE>
<CAPTION>
(In Millions)
<S> <C> <C>
Total policyholders' reserves and funds and separate account liabilities $47,148
Not subject to discretionary withdrawal (6,010)
Policy loans (4,752)
--------
Subject to discretionary withdrawal $36,386
-------
Total invested assets, including separate investment accounts $52,146
Policy loans and other invested assets (13,458)
--------
Readily marketable investments $38,688
-------
</TABLE>
46
<PAGE>
Notes To Statutory Financial Statements (Continued)
10. BUSINESS RISKS 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. In
1996 and 1995, the Company elected not to admit $15.3 million and $17.6 million,
respectively, of guaranty fund premium tax offset receivables relating to prior
assessments.
The Company is involved in litigation arising out of the normal course of its
business. Management intends to defend these actions vigorously. While the
outcome of litigation cannot be foreseen with certainty, it is the opinion of
management, after consultation with legal counsel, that the ultimate resolution
of these matters will not materially affect its financial position, results of
operations or liquidity.
11. RECLASSIFICATIONS
Certain 1995 and 1994 amounts have been reclassified to conform with the current
year presentation.
12. SUBSIDIARIES AND AFFILIATED COMPANIES
Summary of ownership and relationship of the Company and its subsidiaries and
affiliated companies as of December 31, 1996 is illustrated below. The Company
provides management or advisory services to these companies. Subsidiaries are
wholly-owned, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation
Charter Oak Capital Management, Inc.
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
Oppenheimer Acquisition Corporation - 86.15%
47
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
Compensa de Seguros de Vida S.A. - 33.5%
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A. - 33.5%
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 50%
MassMutual Corporate Value Limited - 46%
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
48
<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 50 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 51 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 52 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 53 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 54 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 55 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 of the Separate Account, 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 .40% on an annual
basis, of the net asset value of the Fund shares held by the Separate Account.
4. Unweighted average Fund level expenses of .56% on an annual basis, of the
net asset value of the Fund 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 $8.00 per month.
2. Cost of Insurance Charge, based on the 1980 CSO Mortality Table.
3. Mortality and Expense Risk Charge, which is equal to .40% on an annual
basis, of the net asset value of the Fund shares held by the Separate Account.
4. Unweighted average Fund level expenses of .56% on an annual basis, of the net
asset value of the Fund shares held by the Separate Account. (This unweighted
average reflects current Fund level 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 -0.955%, 4.988% and 10.931%, respectively, and on a guaranteed basis would be
- -0.955%, 4.988% and 10.931%, 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, 1998. During 1996 no expenses were required to be reimbursed
pursuant to this undertaking.
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 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.
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.
49
<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 Initial Case Premium Paid of $1,000,000
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 $ 1,003 $ 1,066 $ 1,130
2 2,583 100,000 100,000 100,000 1,999 2,189 2,387
3 3,972 100,000 100,000 100,000 2,983 3,365 3,778
4 5,431 100,000 100,000 100,000 3,954 4,597 5,320
5 6,963 100,000 100,000 100,000 4,913 5,887 7,026
6 8,571 100,000 100,000 100,000 5,858 7,237 8,915
7 10,260 100,000 100,000 100,000 6,786 8,646 11,003
8 12,033 100,000 100,000 100,000 7,694 10,115 13,309
9 13,895 100,000 100,000 100,000 8,583 11,647 15,859
10 15,850 100,000 100,000 100,000 9,453 13,247 18,680
15 27,192 100,000 100,000 104,844 13,462 22,320 37,987
20 41,668 100,000 100,000 164,454 16,789 33,481 69,684
25 60,142 100,000 100,000 246,819 19,213 47,273 120,990
30 (Age 65) 83,720 100,000 114,966 363,747 20,282 64,227 203,211
35 113,812 100,000 133,417 527,323 19,247 84,441 333,749
40 152,219 100,000 154,776 770,891 14,718 108,235 539,085
45 201,237 100,000 177,019 1,118,979 2,135 135,129 854,182
50 263,797 0 201,443 1,625,074 0 163,775 1,321,198
</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>
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 Initial Case Premium Paid of $1,000,000
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 $ 863 $ 922 $ 981
2 2,583 100,000 100,000 100,000 1,716 1,888 2,068
3 3,972 100,000 100,000 100,000 2,551 2,894 3,265
4 5,431 100,000 100,000 100,000 3,369 3,940 4,584
5 6,963 100,000 100,000 100,000 4,167 5,027 6,035
6 8,571 100,000 100,000 100,000 4,946 6,155 7,634
7 10,260 100,000 100,000 100,000 5,701 7,326 9,394
8 12,033 100,000 100,000 100,000 6,435 8,541 11,334
9 13,895 100,000 100,000 100,000 7,144 9,801 13,473
10 15,850 100,000 100,000 100,000 7,829 11,108 15,834
15 27,192 100,000 100,000 100,000 10,819 18,378 31,902
20 41,668 100,000 100,000 137,400 12,851 26,953 58,220
25 60,142 100,000 100,000 203,047 13,285 36,817 99,533
30 (Age 65) 83,720 100,000 100,000 291,864 11,051 48,017 163,052
35 113,812 100,000 100,000 408,085 3,794 60,675 258,282
40 152,219 0 107,493 568,032 0 75,170 397,225
45 201,237 0 117,674 776,674 0 89,828 592,881
50 263,797 0 127,755 1,059,654 0 103,866 861,507
</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.
51
<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 Initial Case Premium Paid of $1,000,000
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 $ 1,024 $ 1,088 $ 1,152
2 2,583 100,000 100,000 100,000 2,039 2,231 2,432
3 3,972 100,000 100,000 100,000 3,040 3,427 3,847
4 5,431 100,000 100,000 100,000 4,026 4,679 5,412
5 6,963 100,000 100,000 100,000 4,999 5,987 7,144
6 8,571 100,000 100,000 100,000 5,956 7,355 9,059
7 10,260 100,000 100,000 100,000 6,897 8,784 11,176
8 12,033 100,000 100,000 100,000 7,820 10,277 13,518
9 13,895 100,000 100,000 100,000 8,727 11,837 16,110
10 15,850 100,000 100,000 100,000 9,618 13,468 18,980
15 27,192 100,000 100,000 120,189 13,792 22,784 38,646
20 41,668 100,000 100,000 189,639 17,507 34,468 71,026
25 60,142 100,000 112,893 284,945 20,634 49,084 123,889
30 (Age 65) 83,720 100,000 133,482 417,594 23,017 67,076 209,846
35 113,812 100,000 155,065 607,600 24,424 89,118 349,195
40 152,219 100,000 177,314 877,825 24,248 115,891 573,742
45 201,237 100,000 202,877 1,278,119 19,927 147,012 926,173
50 263,797 100,000 228,435 1,841,629 4,907 181,298 1,461,610
</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.
52
<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 Initial Case Premium Paid of $1,000,000
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 $100,000 100,000 100,000 885 945 1,005
2 2,583 100,000 100,000 100,000 1,759 1,934 2,117
3 3,972 100,000 100,000 100,000 2,614 2,963 3,341
4 5,431 100,000 100,000 100,000 3,452 4,033 4,689
5 6,963 100,000 100,000 100,000 4,269 5,145 6,173
6 8,571 100,000 100,000 100,000 5,067 6,300 7,807
7 10,260 100,000 100,000 100,000 5,841 7,499 9,607
8 12,033 100,000 100,000 100,000 6,593 8,743 11,592
9 13,895 100,000 100,000 100,000 7,323 10,035 13,782
10 15,850 100,000 100,000 100,000 8,032 11,380 16,201
15 27,192 100,000 100,000 101,886 11,227 18,956 32,761
20 41,668 100,000 100,000 159,276 13,697 28,156 59,654
25 60,142 100,000 100,000 235,250 15,206 39,371 102,283
30 (Age 65) 83,720 100,000 105,842 337,263 15,380 53,187 169,479
35 113,812 100,000 120,413 474,910 12,856 69,203 272,937
40 152,219 100,000 133,445 657,824 5,516 87,219 429,950
45 201,237 0 146,177 907,445 0 105,926 657,569
50 263,797 0 156,830 1,232,930 0 124,468 978,516
</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.
53
<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 Initial Case Premium Paid of $1,000,000
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 $ 1,006 $ 1,069 $ 1,133
2 2,583 100,000 100,000 100,000 2,005 2,195 2,394
3 3,972 100,000 100,000 100,000 2,991 3,374 3,789
4 5,431 100,000 100,000 100,000 3,965 4,609 5,334
5 6,963 100,000 100,000 100,000 4,926 5,902 7,044
6 8,571 100,000 100,000 100,000 5,873 7,255 8,937
7 10,260 100,000 100,000 100,000 6,802 8,667 11,029
8 12,033 100,000 100,000 100,000 7,713 10,140 13,341
9 13,895 100,000 100,000 100,000 8,604 11,676 15,897
10 15,850 100,000 100,000 100,000 9,477 13,280 18,725
15 27,192 100,000 100,000 107,786 13,512 22,390 38,087
20 41,668 100,000 100,000 169,070 16,897 33,630 69,864
25 60,142 100,000 100,000 253,559 19,428 47,559 121,320
30 (Age 65) 83,720 100,000 117,635 371,066 20,698 64,635 203,882
35 113,812 100,000 136,888 539,619 20,046 85,024 335,167
40 152,219 100,000 158,129 785,795 16,220 109,055 541,928
45 201,237 100,000 181,133 1,142,712 5,036 136,190 859,182
50 263,797 0 204,653 1,648,101 0 165,043 1,329,114
</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.
54
<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 Initial Case Premium Paid of $1,000,000
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 $ 868 $ 927 $ 986
2 2,583 100,000 100,000 100,000 1,725 1,898 2,079
3 3,972 100,000 100,000 100,000 2,565 2,909 3,282
4 5,431 100,000 100,000 100,000 3,387 3,960 4,606
5 6,963 100,000 100,000 100,000 4,189 5,051 6,064
6 8,571 100,000 100,000 100,000 4,970 6,185 7,670
7 10,260 100,000 100,000 100,000 5,730 7,361 9,438
8 12,033 100,000 100,000 100,000 6,468 8,583 11,388
9 13,895 100,000 100,000 100,000 7,181 9,850 13,537
10 15,850 100,000 100,000 100,000 7,871 11,165 15,911
15 27,192 100,000 100,000 100,000 10,902 18,496 32,079
20 41,668 100,000 100,000 141,632 13,024 27,200 58,526
25 60,142 100,000 100,000 209,158 13,678 37,342 100,076
30 (Age 65) 83,720 100,000 100,000 298,911 11,954 49,113 164,237
35 113,812 100,000 101,116 419,979 5,755 62,805 260,856
40 152,219 0 113,211 583,960 0 78,077 402,731
45 201,237 0 124,306 802,656 0 93,463 603,501
50 263,797 0 134,304 1,091,990 0 108,310 880,637
</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.
55
<PAGE>
Appendix B
POLICY PERFORMANCE
This table illustrates the Account Value and Death Benefit of a hypothetical
Policy assuming the following:
. The Policy was owned for the period illustrated;
. 100% allocation to the respective Fund for the period illustrated;
. Current expenses and mortality charges;
. The Insured is a male, standard issue, age 50, nonsmoker;
. An annual premium of $30,000 for 15 years;
. A Selected Face Amount of $825,000;
. Initial Case Premium Paid of $250,000; and
. Full underwriting and Death Benefit Option 1.
<TABLE>
<CAPTION>
HISTORICAL RESULTS* AS OF DECEMBER 31, 1996
================================================================================================================================
MML MML Oppenheimer Oppenheimer
MML MML Managed Money Global Capital Oppenheimer Dreyfus Stock
Equity Blend Bond Market Securities Appreciation High Income Index Fund
(9/15/71) (2/3/84) (12/16/81) (12/16/81) (11/12/90) (8/15/86) (4/30/86) (9/29/89)
- --------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR ONE YEAR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Premium $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000
Account Value $29,536 $27,949 $25,240 $25,720 $28,857 $29,585 $28,286 $30,127
Death Benefit $825,000 $825,000 $825,000 $825,000 $825,000 $825,000 $825,000 $825,000
- --------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
Account Value $208,944 $185,503 $157,350 $145,361 $184,041 $210,907 $192,938 $215,048
Death Benefit $825,000 $825,000 $825,000 $825,000 $825,000 $825,000 $825,000 $825,000
- --------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR TEN YEARS
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $300,000 $300,000 $300,000 $300,000 --- $300,000 $300,000 ---
Account Value $588,650 $510,121 $402,824 $333,813 --- $667,723 $579,907 ---
Death Benefit $1,200,847 $1,040,647 $825,000 $825,000 --- $1,362,155 $1,183,010 ---
- --------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE SINCE INCEPTION OF THE FUND
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $450,000 $390,000 $450,000 $450,000 $210,000 $330,000 $330,000 $240,000
Account Value $3,833,717 $805,867 $818,039 $604,276 $264,016 $705,385 $640,033 $388,419
Death Benefit $5,673,901 $1,515,029 $1,423,387 $1,051,440 $825,000 $1,403,715 $1,273,655 $838,986
================================================================================================================================
</TABLE>
*Historical investment results and current charges are used to determine values;
if guaranteed charges were used the results would be lower. The Account Value
reflects premiums paid, plus investment earnings, less all charges.
(The Cash Surrender Value is not illustrated because there is no surrender
charge and we assume no Policy Debt.)
56
<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 (the "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 By-laws 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 Secretary, 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 employee benefit plans;
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. 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.
<PAGE>
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.
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 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
<PAGE>
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.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Massachusetts Mutual Life Insurance Company hereby represents that fees and
charges deducted under the flexible premium variable whole life insurance
policies described in this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Massachusetts Mutual Life Insurance Company.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 9
This Post-Effective Amendment is comprised of the following documents:
The Facing Sheet.
Cross-reference to items required by Form N-8B-2.
The Prospectus consisting of [55] pages.
The Undertaking to File Reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representation under Section 26(e)(2)(A) of the Investment Company Act of 1940.
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
Post-Effective Amendment by C. Dale Games, Vice
President.
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)(1) Form of Distribution Servicing Agreement
between MML Distributors, LLC, and
MassMutual.***
(a)(2) Co-Underwriting Agreement between MML
Investors Services, Inc. and MassMutual.***
(a)(3) Broker-Dealer Selling Agreement.****
(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.
(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 and Consent of Counsel as to the legality of the
securities being registered.****
3. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of C. Dale Games opining as to actuarial
matters pertaining to the securities being registered.****
6. Consent of Coopers & Lybrand, L.L.P.****
7. Power of Attorney.***
27. Financial Data Schedule.***
*Incorporated by reference to Registration Statement 33-32361 filed with the
Commission on July 18, 1988.
**Incorporated by reference to Pre-Effective Amendment Number 1 to Registration
Statement 33-32361 filed with the Commission on April 26, 1988.
***Incorporated by reference to Post-Effective Amendment Number 8 to Statement
33-32361 filed with the Commission on April 30, 1996.
****Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No. 9
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No. 9 to Registration Statement No. 33-32361 to be
signed on its behalf by the undersigned thereunto duly authorized, all in the
city of Springfield and the Commonwealth of Massachusetts, on the 28th day of
April, 1997.
MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Thomas B. Wheeler*
----------------------
Thomas B. Wheeler, Chief Executive Officer
Massachusetts Mutual Life Insurance Company
/s/Richard M. Howe
- ------------------
*Richard M. Howe - On April 28, 1997, as Attorney-in-Fact pursuant to powers of
attorney previously filed.
As required by the Securities Act of 1933, this Post-Effective Amendment No. 9
to Registration Statement No. 33-32361 has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ Thomas B. Wheeler* Chief Executive Officer April 28, 1997
- --------------------- and Chairman of the Board
Thomas B. Wheeler
/s/ John J. Pajak* President and Chief April 28, 1997
- ----------------- Operating Officer
John J. Pajak
/s/ Daniel J. Fitzgerald* Chief Financial Officer & April 28, 1997
- ------------------------ Chief Accounting Officer
Daniel J. Fitzgerald
/s/ Roger G. Ackerman* Director April 28, 1997
- ---------------------
Roger G. Ackerman
/s/ James R. Birle* Director April 28, 1997
- ------------------
James R. Birle
/s/ Frank C. Carlucci, III* Director April 28, 1997
- --------------------------
Frank C. Carlucci, III
/s/ Gene Chao* Director April 28, 1997
- --------------
Gene Chao
/s/ Patricia Diaz Dennis* Director April 28, 1997
- ------------------------
Patricia Diaz Dennis
/s/ Anthony Downs* Director April 28, 1997
- ------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Anthony Downs
/s/ James L. Dunlap* Director April 28, 1997
- -------------------
James L. Dunlap
/s/ William B. Ellis* Director April 28, 1997
- --------------------
William B. Ellis
/s/ Robert M. Furek* Director April 28, 1997
- -------------------
Robert M. Furek
/s/ Charles K. Gifford* Director April 28, 1997
- ----------------------
Charles K. Gifford
/s/ William N. Griggs* Director April 28, 1997
- ---------------------
William N. Griggs
/s/ George B. Harvey* Director April 28, 1997
- --------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director April 28, 1997
- --------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director April 28, 1997
- --------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director April 28, 1997
- ------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director April 28, 1997
- -------------------
John F. Maypole
/s/ Donald F. McCullough* Director April 28, 1997
- ------------------------
Donald F. McCullough
/s/ Alfred M. Zeien* Director April 28, 1997
- -------------------
Alfred M. Zeien
/s/Richard M. Howe
------------------
*Richard M. Howe - On April 28, 1997, as Attorney-in-Fact pursuant to powers of attorney previously filed.
</TABLE>
<PAGE>
REPRESENTATION BY REGISTRANT's COUNSEL
As counsel to the Registrant, I, James M. Rodolakis, have reviewed this
Post-Effective Amendment No. 9 to Registration Statement No. 33-32361 and I
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ James M. Rodolakis
-------------------------------------------
James M. Rodolakis
Counsel
Massachusetts Mutual Life Insurance Company
<PAGE>
EXHIBIT LIST
99.A.3.A.3 Form of Broker-Dealer Selling Agreement
99.2 Opinion and Consent of James M. Rodolakis
99.C.1 Consent of Coopers & Lybrand, L.L.P.
99.C.6 Opinion and Consent of C. Dale Games
99.5 Powers of Attorney
27 Financial Data Schedule
<PAGE>
EXHIBIT A.3.A.3
Form of Broker-Dealer Selling Agreement
Broker-Dealer Selling Agreement
WHEREAS, MML Distributors, LLC ("Distributors) and the Broker-Dealer set forth
on Schedule "A" attached hereto and incorporated herein by reference are
registered with the Securities and Exchange Commission (the "SEC") as
broker-dealers under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and are members of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, Distributors has been appointed by Massachusetts Mutual Life Insurance
Company ("MassMutual"), MML Bay State Life Insurance Company ("MML Bay State"),
and C.M. Life Insurance Company ("CM Life") (collectively the "Insurance
Companies"; individually an "Insurance Company") to act as the principal
underwriter of certain variable annuity and variable life insurance products
that they issue; and
WHEREAS, Distributors has been authorized by the Insurance Companies to form
selling groups of duly licensed and registered broker-dealers to distribute
these variable annuity and variable life insurance products; and
WHEREAS, Broker-Dealer desires to sell the variable annuity and/or variable life
insurance products described on Schedule B, attached hereto and incorporated
herein by reference (the "Products"); and
WHEREAS, unless Broker-Dealer has insurance licenses in all states where it
offers and sells the Products, Broker-Dealer will consummate some of such sales
through one or more insurance agencies supervised and controlled by or under the
common control with Broker-Dealer (collectively, the "Agencies"; individually,
an "Agency").
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Authorization to Sell and Service. Subject to the terms and conditions of
this Agreement, the Insurance Companies and Distributors appoint and
authorize Broker-Dealer and (if applicable) the Agencies set forth on
Schedule "C" attached hereto and incorporated herein by reference, to
solicit sales of and provide service with respect to the Products in all
states in which Broker-Dealer and (if applicable) Agencies is or are
properly licensed to conduct business (hereinafter Broker-Dealer and all
applicable Agencies are collectively referred to as the "Producers").
Producers are also authorized to deliver or arrange for delivery any
contracts issued by the Insurance Companies and to collect initial premiums
on such contracts. Producers hereby accept such appointment on a
non-exclusive basis and agree to use their best efforts to find purchasers
for the Products acceptable to the Insurance Companies.
2. Commissions. Compensation for sale of the Products by the registered
representatives of Broker-Dealer (the "Registered Representatives") shall
be paid as follows. In all states where Broker-Dealer is insurance
licensed, the appropriate Insurance Company shall pay to Broker-Dealer the
commissions set forth on Schedule "B" (hereinafter referred to as the
"Commissions"). In all states where the Broker-Dealer is not insurance
licensed, Commissions related to sales by the Registered Representatives in
those states will be paid to the
<PAGE>
appropriate Agencies designated on Schedule "C". The appropriate Agency is
the Agency which is properly insurance licensed in the state where the
sales are made and for which Commissions are being paid.
Commissions will be paid only on premiums paid to and retained by an
Insurance Company on Products issued in accordance with applications
tendered pursuant to this Agreement. The Insurance Companies expressly
reserve the right to transfer future compensation on Products to other
broker-dealers or registered representatives in the event the owner of a
Product so requests.
The Insurance Companies reserve the unconditional right, upon thirty (30)
days notice, to change the Commissions payable for Products issued,
renewed, converted, exchanged or otherwise modified on or after the
effective date of such change, as set forth in the aforesaid notice of
change. No Commissions will be due and payable for any surrendered, lapsed
or canceled Products which are subsequently reinstated or rewritten through
efforts of representatives of an Insurance Company other than Registered
Representatives.
All Commissions, without regard to which of the Products are sold, shall be
subject to chargeback in accordance with the terms and conditions set forth
on Schedule "B" or any attachment thereto.
3. Product Availability. The Insurance Companies have qualified the Products
for offer and sale under the applicable insurance laws of various states
and other jurisdictions. Producers and Registered Representatives shall
solicit applications for the Products only in states and jurisdictions
where such Products have been so qualified. Producers shall, upon request,
be provided with a list of those states and jurisdictions in which the
Products have been qualified for sale. The Insurance Companies shall file
and make all statements or reports as are or may be required by the laws of
such state or jurisdiction to maintain these qualifications in effect.
4. Prospectuses. The Insurance Companies and Distributors have caused
registration statements to be prepared describing the material aspects of
the Products. The Insurance Companies represent and warrant for the
effective period of this Agreement that the prospectuses contained in the
registration statements for the Products (the "Prospectuses") do not and
will not contain any untrue statements of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were or
are made, not materially misleading. Distributors or its duly appointed
agent shall furnish Broker-Dealer, at no cost to Broker-Dealer, copies of
the Prospectuses in the number reasonably requested.
If any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus for any Product in order to make the statements
therein, in light of the circumstances under which they were or are made,
true, complete or not misleading, Distributors will promptly furnish to
Broker-Dealer, without charge, any amendments or supplements to the
Prospectuses prepared by the Insurance Companies and supplied to
Distributors sufficient to make the statements made in the Prospectus as so
amended or supplemented true, complete and not misleading in light of the
circumstances under which they were made.
<PAGE>
5. Sales literature and materials. In connection with the offer and sale of
the Products, Broker-Dealer is authorized to use both the Prospectuses
contained in the current registration statements for the Products and any
other sales materials relating to the Products that have been provided or
authorized by Distributors. Broker-Dealer shall not, and shall ensure that
Registered Representatives shall not: (i) print, publish, distribute or
utilize any advertising material, prospectuses, circulars, letters,
pamphlets, schedules, stationery, broadcasting or sales material of any
kind relating to the Products, Distributors or to the Insurance Companies
unless such material has been provided by Distributors for such use or
unless prior written approval of Distributors of such material is obtained,
or (ii) orally communicate any information or make representations other
than such information and representations contained in the Prospectuses,
the contracts for the Products, or in any written materials provided or
authorized by Distributors.
Producers are not authorized and are expressly forbidden on behalf of the
Insurance Companies to estimate future dividends or policy performance
except through the use of authorized projections or illustrations provided
by Distributors or an Insurance Company.
Upon termination of this Agreement, all Prospectuses, sales promotion
materials, advertising, circulars, and documents relating to the Products
shall be promptly returned to Distributors or, if requested by
Distributors, destroyed.
6. Producers' Representations and Responsibilities.
a. Insurance Licenses. Broker-Dealer and/or (if applicable)
Agencies shall be properly licensed as an insurance agency,
appointed with the appropriate Insurance Company, and
otherwise comply with all applicable insurance licensing
requirements in the jurisdictions where Registered
Representatives will be offering or selling the Products.
Broker-Dealer hereby represents that it is, and/or (if
applicable), the Agencies are, properly authorized under
applicable state law to receive insurance commissions
generated from sales of the Products.
Producers shall ensure that all Registered Representatives are
properly insurance licensed and are appointed by the appropriate
Insurance Company for the sale of the Products in the jurisdictions
where Registered Representatives will be offering or selling the
Products. In states where such licensing and appointment must occur
prior to Producers' and/or Registered Representatives' soliciting any
sales of the Products, Producers shall ensure that such licensing and
appointment occur in compliance with such requirements. The Insurance
Companies will process all insurance licenses and appointments in
accordance with their standard procedures, and may, in their sole
discretion, refuse, terminate or discontinue any such license or
appointment without cause.
b. Securities Licenses. Broker-Dealer represents that it is properly
licensed and registered as a broker-dealer under applicable state and
federal securities law and is a member in good standing of the NASD.
Broker-Dealer shall maintain its broker-dealer registration under the
Exchange Act and, where required, in all jurisdictions where
Registered Representatives will be offering and selling the
<PAGE>
Products, and shall always be a member in good standing of the NASD.
Broker-Dealer will notify Distributors immediately if it ceases to be
so registered or licensed or a member of the NASD. Broker-Dealer
shall have all Registered Representatives who will be soliciting and
servicing the Products duly registered with the NASD as registered
representatives and, where required, licensed with applicable state
securities authorities.
c. Lack of Licenses. If a Registered Representative fails to
maintain the required licenses and appointments Producers
shall immediately notify the appropriate Insurance Company
and shall advise such Registered Representative that he or
she is no longer authorized to sell the Products. Producers
shall take all additional action necessary to terminate the
sales activities of such Registered Representatives
relating to the Products.
d. Background Investigations. Producers shall investigate all Registered
Representatives relative to their business reputation and competency
to sell the Products. Producers shall cause such Registered
Representatives' qualifications to be certified to the satisfaction
of Distributors and the appropriate Insurance Company.
e. Supervision. All Registered Representatives and Agencies are persons
associated with Broker-Dealer as defined in Section 3(a)(18) of the
Exchange Act. Accordingly, Broker-Dealer has full responsibility for
the sales activities of all Registered Representatives and Agencies
engaged directly or indirectly in the offer or sale of the Products.
Producers shall: (i) train and supervise all Registered
Representatives; (ii) establish such procedures as are necessary to
ensure that all Registered Representatives are properly insurance and
securities licensed; and (iii) upon request by an Insurance Company,
furnish such records as are necessary to establish that all
Registered Representatives are properly licensed, trained and
supervised. If a Registered Representative fails to meet the
supervisory standards imposed by Producers, Producers shall advise
the appropriate Insurance Company and such Registered Representative
that he/she is no longer authorized to sell the Products.
f. Suitability. Producers shall ensure that Registered Representatives
recommend the purchase of the Products only if the Registered
Representatives have reasonable grounds to believe that such purchase
is suitable for the applicant. A registered principal of Broker-
Dealer will make and record all such determinations.
g. Delivery of Prospectuses. Broker-Dealer shall, in compliance with
applicable federal and state securities laws, distribute a current
Prospectus to each person to whom a Product is offered or sold.
h. Delivery of Contracts. If an Insurance Company sends a
contract for a Product to a Producer, then Producers will
assure that: (1) the contract is delivered to the purchaser
no later than 5 business days after Producer's receipt of
the contract, and (2) appropriate evidence of such delivery
to the purchaser is
<PAGE>
maintained. Producers, in accordance with section 8 of this
Agreement, shall be fully responsible for any and all losses and
expenses incurred by an Insurance Company or Distributors as a result
of Producers' failure to satisfy the obligations set forth in this
section.
i. Books and Records. Producers shall maintain all books and records
required by applicable laws and regulations in connection with the
offer and sale of the Products. The books, accounts and records of
Producers relating to the sale of the Products shall be maintained so
as to clearly and accurately disclose the nature and details of the
transactions. Without limiting the foregoing, the receipt and payment
of Commissions by Producers pursuant to this Agreement shall be
reflected on Broker-Dealer's and Agencies' books and records.
j. Confidentiality. Producers shall keep confidential all information
obtained pursuant to this Agreement (including, without limitation,
names of the purchasers of the Products) and shall disclose such
information only if the appropriate Insurance Company has authorized
such disclosure in writing or if such disclosure is expressly
required by duly authorized federal or state regulatory authorities.
k. Compliance with Laws. Producers shall, and shall ensure that
Registered Representatives, comply with all requirements of the NASD,
the Exchange Act and all other federal and/or state laws applicable
to the solicitation, sale and service of the Products including,
without limitation, all insurance regulations pertaining to
replacements and the rebating of commissions.
l. Payment of Commissions to Agencies. If commission payments are to be
made to Agencies, as provided in Section 2 of this Agreement,
Producers certify that they have received appropriate "no action"
relief from the SEC, or will conduct the business operations of
Broker-Dealer and Agencies in a manner consistent with applicable
securities law requirements, such that Agencies need not be
registered as broker-dealers under the Exchange Act. Producers agree
to provide Distributors and the appropriate Insurance Company, upon
request, copies of their "no action" letter or with other evidence
that Agencies' receipt of commissions for Products is permissible
under the Exchange Act and NASD rules.
m. Payment of Commissions to Registered Representatives. Producers shall
pay compensation for the sale of the Products only to Registered
Representatives who, at the time of sale, are properly insurance
licensed and appointed with the appropriate Insurance Company and
registered with the NASD and, where required, properly licensed with
state securities authorities. Producers shall be solely responsible
for the payment of any commissions, payments or other consideration
of any kind whatsoever to the Registered Representatives in
connection with the sale of the Products. Registered Representatives
shall have no recourse against either the Insurance Companies or
Distributors in the event Producers fail to deliver such compensation
to Registered Representatives.
n. Unregistered Personnel. Producers shall ensure that their
unregistered personnel: are not involved in effecting securities
<PAGE>
transactions, do not recommend securities or provide other investment
advice, do not respond to questions that require knowledge of the
securities business, direct all securities-related questions to
Registered Representatives, provide only clerical or ministerial
assistance with respect to securities transactions, do not handle
customer funds or customer securities, and do not receive any
commissions or other transaction-related compensation for sales of
Products.
o. Authority. Producers represent that this Agreement has been duly
authorized, executed and delivered by Producers, constitutes a valid
and legally binding obligation, and that neither the execution and
delivery of this Agreement by Producers nor the consummation of the
transactions contemplated herein will result in a breach or violation
of any applicable provision of law or the NASD Conduct Rules, or any
judicial or administrative orders in which Producers are named or any
material agreement or instrument to which they are a party or by
which they are bound.
7. Investigations and Customer Complaints. Producers agree to cooperate fully
in any insurance, securities or other regulatory investigation, inquiry,
inspection or proceeding or in any judicial proceeding arising in
connection with the Products sold or attempted to be sold by the Producers
and/or the Registered Representatives. Producers shall permit applicable
federal and state securities, insurance and other regulatory authorities to
audit their records and shall furnish the foregoing authorities with any
information which such authorities may request in order to ascertain
whether Producers are complying with all applicable laws and/or regulations
with respect to sales of the Products. Producers agree to cooperate with
the Insurance Companies and Distributors in resolving all customer
complaints involving Producers and/or Registered Representatives with
respect to the Products.
Without limiting the foregoing: (1) an Insurance Company or Distributors
will promptly notify Producers of any customer complaint or notice of any
regulatory inspection, inquiry, investigation or proceeding or judicial
proceeding received by the Insurance Company or Distributors with respect
to the Producers or Registered Representatives concerning the Products; and
(2) Producers will promptly notify the appropriate Insurance Company or
Distributors of any customer complaint or notice of any regulatory
inspection, inquiry, investigation or proceeding or judicial proceeding
received by Producers with respect to the Insurance Company, Distributors,
Registered Representatives or Producers concerning the Products.
8. Indemnification. Each Insurance Company and Distributors hereby agree to
indemnify and hold harmless Producers and each of their employees,
controlling persons, officers or directors against any losses, expenses
(including reasonable attorneys' fees and court costs), damages or
liabilities to which Producers or such affiliates, controlling persons,
officers or directors become subject, under the Securities Act of 1933 or
otherwise, insofar as such losses, expenses, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the Insurance
Company's or Distributors' performance, non-performance or breach of this
Agreement, or are based upon any untrue statement contained in, or material
omission from, the Prospectus for a Product issued by that Insurance
Company.
<PAGE>
Producers shall indemnify and hold harmless the Insurance Companies and
Distributors, their officers, directors, employees, and controlling persons
from and against any damages, losses, liabilities, judgments, settlements,
costs and expenses of any nature whatsoever (including reasonable
attorneys' fees and court costs) or causes of action, asserted or brought
by anyone, resulting or arising out of or based upon an allegation or
finding of: (i) any act or omission of Producers, their employees,
Registered Representatives, associated persons or agents in connection with
the offer or sale of the Products; (ii) any misrepresentation, breach of
warranty or failure to fulfill any covenant, warranty, or obligation made
or undertaken by Producers hereunder; or (iii) any breach or violation of
any of the administrative policies communicated by an Insurance Company or
Distributors to Producers.
9. Payments by Customers. All money payable in connection with the Products,
whether as premium or otherwise, and whether paid by or on behalf of the
owner of any Product or anyone else having an interest in the Products, is
the exclusive property of the appropriate Insurance Company and shall be
drawn payable to Massachusetts Mutual Life Insurance Company, MML Bay State
Life Insurance Company, or C.M. Life Insurance Company, as appropriate.
Such payments shall be promptly transmitted to the appropriate Insurance
Company and shall not be commingled with Producers' personal funds.
Producers are not authorized to deduct commissions, service fees,
allowances or any other offset for compensation claimed by Producers from
such payments. No cash payments shall be accepted by Producers in
connection with the Products.
10. Submission of Applications. Broker-Dealer shall review all applications for
completeness and suitability to ensure that the application complies with
all requirements set forth in the current Prospectus and other
administrative rules established by the Insurance Companies before
submitting such applications to the Insurance Companies. Producers shall
make available to the appropriate Insurance Company all information,
whether favorable or unfavorable, which comes into Producers' possession
concerning the underwriting of any risks under a Product. Producers shall
follow established Insurance Company administrative procedures with regard
to the processing of applications and related documents. The Insurance
Companies will, as appropriate, advise Producers of these procedures.
All applications, enrollment forms, and other Insurance Company forms
received by Producers in connection with the Products shall be forwarded to
the appropriate Insurance Company's designated office promptly after
receipt by the Producers. All such documents shall be on forms supplied by
the appropriate Insurance Company and are subject to acceptance or
rejection by Distributors and the appropriate Insurance Company in their
sole discretion. If an application or payment is rejected by an Insurance
Company or Distributors and Broker-Dealer has received compensation based
on the rejected payment or application, Broker-Dealer shall promptly repay
such compensation to the appropriate Insurance Company.
11. Fidelity Bond. Producers represent that all of their directors, officers,
employees and Registered Representatives are and shall be continuously
covered by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall be
maintained at Producers' expense and shall be, at least, of the form, type
and amount required under the NASD Conduct Rules.
<PAGE>
Distributors may require evidence, satisfactory to it, that such coverage
is in force, and Producers shall give prompt written notice to Distributors
of any cancellation or change of coverage.
Producers hereby assign any proceeds received from the fidelity bonding
company to the Insurance Company and Distributors to the extent of the
Insurance Company's and Distributors' loss due to activities covered by the
bond. If there is any deficiency amount, whether due to a deductible or
otherwise, Producers shall promptly pay the Insurance Company or
Distributors such amount on demand. Producers hereby agree to indemnify and
hold harmless the Insurance Companies and Distributors from any such
deficiency and from the costs of collection (including reasonable
attorneys' fees).
12. Independent Contractors. Producers and their Registered Representatives are
independent contractors with respect to the Insurance Companies and
Distributors and shall not have the right to hold themselves out as
employees, partners, or joint venturers of the Insurance Companies or
Distributors in connection with the solicitation of the Products or
otherwise. Producers may exercise their own judgment as to the time and
manner and performance of their services, except that they shall conform
with the rules, regulations and policies of the Insurance Companies and
Distributors at all times.
13. Limitations on Authority. Producers and Registered Representatives are not
authorized and are expressly forbidden on behalf of the Insurance Companies
to make, alter, modify, waive or change any of the terms, rates or
conditions of any Insurance Company's forms, Products, contracts or
advertising materials. Producers shall not discharge any provision(s) of
the Products, waive any forfeitures, grant, permit, or extend the time of
making any payments, guarantee earnings, dividends or rates, alter or
substitute the forms which an Insurance Company may prescribe, incur
indebtedness on behalf of the Insurance Companies or Distributors, or enter
into any proceeding in a court of law or before a regulatory agency in the
name of or on behalf of an Insurance Company or Distributors.
14. Offsets. The Insurance Companies and Distributors may deduct from any
compensation due under this Agreement any debt, whether arising under
Sections 8 or 10 of this Agreement or otherwise, of Producers to an
Insurance Company or to Distributors or any of their affiliates or
subsidiaries. This right of offset is in addition to all other rights the
Insurance Companies and Distributors may have at law or in equity regarding
the collection of debts generally.
15. Notices. All notices or communications to an Insurance Company shall be
sent to: Massachusetts Mutual Life Insurance Company, 140 Garden Street,
Hartford, Connecticut 06154, Attn: Large Corporate Market Strategic
Business. All notices sent to Distributors shall be sent to: MML
Distributors, LLC, 1414 Main Street, Springfield, Ma. 01144, Attn: Chief
Legal Officer. All notices or communications to Producers shall be sent to
the addresses set forth on the applicable Schedule pages of this Agreement.
Any party may change the address to which notices or communications are to
be sent by giving written notice to the other parties.
16. Term of Agreement. This Agreement shall be effective as of the latest date
appearing on the signature page hereof and shall continue until terminated.
This Agreement shall be terminated immediately if Producers
<PAGE>
materially breach this Agreement or if Broker-Dealer shall cease to be
registered under the Exchange Act or be a member in good standing of the
NASD. Any party may terminate this Agreement at any time, without cause,
upon written notice to the other parties. Upon termination of this
Agreement, all authorizations, rights and obligations shall cease except
Sections 6(j), 7, 8, 10 and 14 of this Agreement shall survive the
termination of this Agreement, and Producers shall settle all accounts with
the Insurance Companies and shall continue to be responsible for all
applicable chargebacks. Upon termination of this Agreement, Producers shall
be entitled to receive all commissions on Products issued on applications
received by an Insurance Company prior to such termination subject to the
provisions of Section 14 of this Agreement.
17. Amendments. The Insurance Companies and Distributors reserve the
unconditional right to modify the Products, to amend this Agreement and the
Schedules attached hereto, and to suspend the sale of any of the Products
at any time. The submission of an application by Producers after notice of
any such amendment has been sent to Producers shall constitute the
Producers' agreement to any such amendment.
18. Miscellaneous.
a. This Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their respective heirs,
administrators, executors, estates, successors and assigns
provided that Producers may not assign or amend this
Agreement or any rights or obligations hereunder without
the prior written consent of Distributors and the Insurance
Companies.
b. This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts and constitutes the entire agreement and understanding
between the parties hereto with respect to the Products.
c. Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of
such conditions and no waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions.
d. This Agreement may be executed in one or more counterparts, each of
which shall be deemed in all respects an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: Date:
--------------------------------
Its:
MML BAY STATE LIFE INSURANCE COMPANY C.M. LIFE INSURANCE COMPANY
By: By:
-------------------------------
<PAGE>
MML DISTRIBUTORS, LLC.
By:
--------------------------------
- ----------------------------------- Date:
Print Name of BROKER-DEALER Above
- -----------------------------------
Authorized Officer Sign Above
- ----------------------------------- Date:
Print Name of AGENCY Above
- -----------------------------------
Authorized Officer Sign Above
<PAGE>
EXHIBIT 99.2
Opinion and Consent of James M. Rodolakis
[LETTERHEAD OF MASSMUTUAL]
April 28, 1997
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Post-Effective Amendment No. 9 to Registration Statement No. 33-32361 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 9 to Registration Statement No. 33-32361 under the Securities Act
of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Flexible Premium Variable Whole Life Insurance Policy With Tables of Selected
Face Amounts (the "Policy"). Massachusetts Mutual Variable Life Separate Account
I issues the Policy.
As Counsel for MassMutual, I provide legal advice to MassMutual in connection
with the operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Policy. 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 law.
3. All of the prescribed corporate procedures for the issuance of the Policy
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
James M. Rodolakis
Counsel
<PAGE>
EXHIBIT 99.C.1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in Post-Effective Amendment No. 9 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Large Case Variable Life Plus segment) on Form N-8B-2 (Registration No.
33-32361), of our report, which includes explanatory paragraphs relating to the
use of statutory accounting practices, which practices are no longer considered
to be in accordance with generally accepted accounting principles, and the
change in our opinion for prior years, dated February 7, 1997, on our audits of
the statutory financial statements of Massachusetts Mutual Life Insurance
Company, and of our reports dated February 4, 1997 on our audits of
Massachusetts Mutual Variable Life Separate Account I (Large Case Variable Life
Plus segment). We also consent to the reference to our Firm under the caption
"Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 25, 1997
<PAGE>
EXHIBIT 99.C.6
Opinion and Consent of C. Dale Games
[LETTERHEAD OF MASSMUTUAL]
April 28, 1997
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 9 to
Registration Statement No. 33-32361 for Massachusetts Mutual Life Insurance
Company's Flexible Premium Variable Whole Life Insurance Policies with Table of
Selected Face Amounts (the "Policies") under the Securities Act of 1933. The
prospectus included in the post-effective amendment describes the Policies. I am
familiar with the forms of the Policies and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix A of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 9 to Registration Statement No. 33-32361, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ C. Dale Games
C. Dale Games, FSA, MAAA
Vice President
<PAGE>
Power of Attorney
POWER OF ATTORNEY
MASSMUTUAL SEPARATE INVESTMENT ACCOUNTS
---------------------------------------
The Undersigned, John J. Pajak, President and Chief Operating Officer of
Massachusetts Mutual Life Insurance Company("MassMutual"), does hereby
constitute and appoint Lawrence V. Burkett, Jr., Thomas F. English, Richard M.
Howe, and Michael Berenson, and each of them individually, as his true and
lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as President and Chief Operating Officer of MassMutual that said attorneys and
agents may deem necessary or advisable to enable MassMutual to comply with the
Securities Act of 1933, as amended (the "1933 Act"), the Investment Company Act
of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MassMutual separate
investment accounts (the "MassMutual Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as President and Chief Operating Officer of MassMutual to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MassMutual Separate Account, including but not
limited to those listed below.
MassMutual Separate Investment Account C
Massachusetts Mutual Variable Annuity Fund 1
Massachusetts Mutual Variable Annuity Fund 2
Massachusetts Mutual Variable Annuity Separate Account 1
Massachusetts Mutual Variable Annuity Separate Account 2
Massachusetts Mutual Variable Annuity Separate Account 3
Massachusetts Mutual Variable Life Separate Account I
Massachusetts Mutual Variable Life Separate Account II
Panorama Separate Account
CML Variable Annuity Account A
CML Variable Annuity Account B
CML Accumulation Annuity Account E
Connecticut Mutual Variable Life Separate Account I
CML/OFFITBANK Separate Account
<PAGE>
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 17th day of February,
1997.
/s/ John J. Pajak
- -----------------
John J. Pajak Witness
President and Chief Operating Officer
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