<PAGE>
As Filed with the Securities and Exchange Commission on August 4, 1997
Registration No. 333-22557
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NUMBER 2
TO
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
Massachusetts Mutual Variable Life Separate Account I
-----------------------------------------------------
(Exact Name of Registrant)
Massachusetts Mutual Life Insurance Company
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1295 State Street
Springfield, Massachusetts 01111
(Address of Principal Executive Office)
Thomas Finnegan, Corporate Secretary
------------------------------------
1295 State Street
Springfield, Massachusetts 01111
(Name and Address of Agent for Service of Process)
GROUP FLEXIBLE PREMIUM VARIABLE LIFE
Approximate date of proposed public offering: As soon as possible after the
effective date of this Registration Statement.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
hereby declares that an indefinite amount of its securities is being registered
under the Securities Act of 1933.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date as
the Commission, acting pursuant to said section, may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of Caption in Prospectus
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Form N-8B-2
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1 Cover Page; Glossary; The Separate Account
2 Cover Page; What is MassMutual; The
Separate Account
3 Investment of the Separate Account
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Cover Page; Basic Questions and Answers
About Us and Our Policy; Initial Minimum Premium
Requirements; Death Benefits
Under the Policy; Free Look Provision;
Account Value and Cash Surrender Value; Policy
Loan Privilege; The Separate Account; Charges
Under the Policy; Modal Term Premiums;
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
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of Caption in Prospectus
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Form N-8B-2
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15 Basic Questions and Answers About Us and Our
Policy; General Provisions of the Policy
16 The Separate Account; Investment Return
17 The Separate Account; Account Value and Cash Surrender
Value; Withdrawal Rights and Payment Options
18 The Separate Account
19 Records and Reports
20 Not Applicable
21 What is the loan privilege and how does a
loan affect the Policy's Death Benefit and
Cash Surrender Value; Policy Loan 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; Optional Benefits Obtainable
by Rider
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
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of Caption in Prospectus
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Form N-8B-2
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31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Basic Questions and Answers About Us and
Our Policy
36 Not Applicable
37 Not Applicable
Sales and Other Agreements
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
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of Caption in Prospectus
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Form N-8B-2
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50 The Separate Account
51 Cover Page; Basic Questions and Answers
About Us and Our Policy
52 The Separate Account; Your Voting Rights; Our Rights
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
Variable Rider
to
Group Flexible Premium Adjustable Life Insurance Certificate
This prospectus describes a variable rider issued in connection with
certificates issued to individuals participating under group flexible premium
adjustable life insurance policies issued by Massachusetts Mutual Life Insurance
Company ("MassMutual"). The group policies allow individual owners to elect
certificates offering participation in MassMutual's fixed account and to elect a
rider to the certificate offering additional participation in a separate account
of MassMutual. The certificates issued to individuals who also elect the
variable rider are referred to herein as "Policies" or "Policy." The Policy
provides lifetime insurance protection and has flexibility with respect to
premium payments. Payments are based upon the Selected Face Amounts chosen in
the Enrollment Form or Application. Policyowners have several investment
alternatives from which to choose. An individual Policyowner may generally
allocate the premium for his or her Policy among a Guaranteed Principal Account
("GPA") and the sixteen Separate Account divisions of a designated segment (the
"GVUL Segment") of Massachusetts Mutual Variable Life Separate Account I (the
"Separate Account") after certain deductions have been made. (For details see
"Deductions From Premiums.") At any one time, only eight divisions of the
Separate Account plus the GPA are available to a Policyowner. The GVUL Segment
of the Separate Account is divided into sixteen divisions (the "Divisions"). One
division, (the "MML Equity Index Division") invests in one fund of the MML
Series Investment Fund (the "MML Trust"); nine divisions, (the "Oppenheimer
Divisions") invest in nine funds of Oppenheimer Variable Account Funds (the
"Oppenheimer Trust"); and six divisions, (the "Panorama Divisions") invest in
six series of the Panorama Series Fund, Inc. (the "Panorama Fund").
The Death Benefit may, and Cash Surrender Value of a Policy most likely will,
vary up or down depending on the investment performance of the Divisions of the
Separate Account. 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. The Cash Surrender Value can increase,
decrease, or remain level each year based upon the Selected Face Amount and
Death Benefit Option chosen by the Policyowner, subject to certain rules
established by MassMutual. Furthermore, the Policy will not lapse provided there
is sufficient Account Value available to pay applicable monthly charges. (For
details see "Account Value Charges" and "Separate Account Charges.")
The Divisions have distinct investment portfolios. The MML Equity Index Division
invests in shares of MML Equity Index Fund, which invests substantially all its
assets, to the extent practicable, in the stocks that compose the Standard &
Poor's 500 Composite Stock Price Index. The Oppenheimer Money Division invests
in shares of Oppenheimer Money Fund which invests primarily in "money market"
securities consistent with low capital risk and maintenance of liquidity. The
Oppenheimer Bond Division invests in shares of Oppenheimer Bond Fund which
invests primarily in high yield fixed-income securities. The Oppenheimer
Strategic Bond Division invests in shares of Oppenheimer Strategic Bond Fund
which invests primarily in: (i) foreign government and corporate debt
securities; (ii) U.S. government securities; and (iii) lower-rated high yield,
high-risk debt securities. The Oppenheimer High Income Division invests in
shares of Oppenheimer High Income Fund which invests primarily in lower-rated,
high yield, high risk income securities. The Oppenheimer Growth & Income
Division invests in shares of Oppenheimer Growth & Income Fund which invests
primarily in equity and debt securities. The Oppenheimer Multiple Strategies
Division invests in shares of Oppenheimer Multiple Strategies Fund which invests
primarily in common stocks and other equity securities, bonds, other debt
securities and "money market securities." The Oppenheimer Growth Division
invests in shares of Oppenheimer
<PAGE>
Growth Fund which invests primarily in securities of well-known companies. The
Oppenheimer Capital Appreciation Division invests in shares of Oppenheimer
Capital Appreciation Fund which invests primarily in securities of growth-type
companies. The Oppenheimer Global Securities Division invests in shares of
Oppenheimer Global Securities Fund which invests primarily in securities of
foreign issuers, growth type companies, cyclical industries and special
situations which are believed will appreciate in value. The Panorama Total
Return Division invests in shares of the Panorama Total Return Portfolio which
invests primarily in stocks, corporate bonds, U.S. Government securities, and
money market instruments. The Panorama Growth Division invests in shares of the
Panorama Growth Portfolio which invests primarily in common stocks with low
price-earnings ratios and better than anticipated earnings. The Panorama
International Equity Division invests in shares of the Panorama International
Equity Portfolio which invests primarily in equity securities of companies based
outside of the United States. The Panorama LifeSpan Capital Appreciation
Division invests in shares of the Panorama LifeSpan Capital Appreciation
Portfolio which invests in a strategically allocated portfolio consisting
primarily of equity securities. The Panorama LifeSpan Balanced Division invests
in shares of the Panorama LifeSpan Balanced Portfolio which invests in a
strategically allocated portfolio of equity securities and fixed income
securities with a slightly stronger focus on equity securities. The Panorama
LifeSpan Diversified Income Division invests in shares of the Panorama LifeSpan
Diversified Income Portfolio which invests in a strategically allocated
portfolio with a focus on fixed income securities. (Collectively, these sixteen
funds are referred to as the "Funds.") The shares of the underlying Funds
purchased by the Divisions are held by MassMutual as custodian of the Separate
Account. (For details regarding the charges against the Separate Account, see
"Separate Account Charges.")
All Policies are serviced through MassMutual's Home Office which is located in
Springfield, Massachusetts. The mailing address is Massachusetts Mutual Life
Insurance Company, Springfield, Massachusetts 01111. The telephone number is
(413) 788-8411.
SUBJECT TO COMPLETION - JULY 31, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALES OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
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 THE MML
EQUITY INDEX FUND, OPPENHEIMER VARIABLE ACCOUNT FUNDS, AND PANORAMA SERIES FUND,
INC.
<PAGE>
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 VARIABLE RIDER TO GROUP FLEXIBLE
PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE OFFERED BY THIS PROSPECTUS IN ANY
JURISDICTION TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION IN SUCH JURISDICTION.
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents Page
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<S> <C> <C>
Definitions Of Terms
Basic Questions And Answers About Us And Our Policy
What is MassMutual?
What variable life insurance policy are We offering?
Availability
Initial Minimum Premium Requirements
Underwriting
What is the Account Value of the Policy?
What are the Divisions of the Separate Account?
What is the Guaranteed Principal Account ("GPA")?
Is the level of the Death Benefit guaranteed?
Is the Death Benefit subject to income taxes?
Does the Policy have a Cash Surrender Value?
What is a modified endowment contract?
Can this Policy become a modified endowment contract?
What about Premiums?
When are Initial Premiums allocated to the Guaranteed Principal Account
or the Separate Account?
How can the Net Premium and the Account Value of the Policy be allocated
among the Guaranteed Principal Account and the Separate Account
Divisions?
How long will the Policy remain in force?
Are there charges against the Policy?
What is the loan privilege and how does a loan affect the Policy's
Death Benefit and Cash Surrender Value?
Are dividends paid on the Policy?
Do I have a right to cancel?
Charges Under The Policy
Deductions from Premiums
Sales Load
State Premium Tax Charge
Deferred Acquisition Cost ("DAC") Tax Charge
Account Value Charges
Administrative Charge
Charge for Cost of Insurance Protection
Separate Account Charges
Charges for Mortality and Expense Risks
Charges for Federal Income Taxes
Fund Charges
The Separate Account
Investment of the Separate Account
Investment Objectives
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents Page
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<S> <C> <C>
Rates of Return
General Provisions Of The Policy
Premiums
Planned Policy Premiums - Modal Term Premiums
Minimum and Maximum Premium Payments
Termination
Grace Period
Death Benefit Under The Policy
Account Value And Cash Surrender Value
Account Value
Transfers
Automated Account Re-Balancing
Investment Return
Cash Surrender Value
Withdrawals
Policy Loan Privilege
Source of Loan
If Loans Exceed the Policy Account Value
Interest
Repayment
Interest on Loaned Value
Effect of Loan
Free Look Provision
Exchange Privilege
Your Voting Rights
Our Rights
Directors And Executive Vice Presidents Of MassMutual
The Guaranteed Principal Account
Federal Income Tax Considerations
MassMutual - Tax Status
Policy Proceeds, Premiums, and Loans
Modified Endowment Contracts
Diversification Standards
Additional Provisions Of The Policy
Paid-up Policy Date
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents Page
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<S> <C> <C>
Reinstatement Option
Payment Options
Fixed Amount Payment Option
Fixed Time Payment Option
Interest Payment Option
Lifetime Payment Option
Joint Lifetime Payment Option
Joint Lifetime Payment Option with Reduced Payments
Withdrawal Rights under Payment Options
Beneficiary
Changing the Policyowner or Beneficiary
Right to Substitute Insured
Assignment
Dividends
Limits on Our Right to Challenge the Policy
Misstatement of Age or Sex
Suicide
When We Pay Proceeds
Optional Benefits Obtainable By Rider
Waiver of Monthly Charges Rider
Accelerated Benefits Rider
Accidental Death and Dismemberment Rider
Records And Reports
Sales And Other Agreements
Commissions Schedule
Bonding Arrangement
Legal Proceedings
Experts
Financial Statements
Appendix A
Appendix B
</TABLE>
<PAGE>
DEFINITION OF TERMS
Account Value: The sum of the Variable Account Value and the Fixed Account
- -------------
Value of the Policy.
Application: The form used to apply for an increase in the Selected Face Amount
- -----------
of the Policy after the Policyowner ceases to be associated with an Employer.
Enrollment Forms are used to apply for the initial Selected Face Amount and any
subsequent increases when the Policyowner remains associated with the Employer.
A supplement to the Application is used to apply for the variable rider.
Beneficiary: The person or persons that the Policyowner specifies to Us in
- -----------
writing to receive insurance proceeds after the Insured dies.
Cash Surrender Value: The amount payable to a Policyowner upon Surrender of the
- --------------------
Policy. It is equal to the Account Value less any Policy Debt.
Certificate: A document issued by Us under a group flexible premium adjustable
- -----------
life insurance contract to Certificate owners, setting forth or summarizing the
Certificate owner's rights and benefits.
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 A" and "Option B"). The Death Benefit under Option A equals the greater
of the Selected Face Amount or the Minimum Face Amount in effect on the date of
death, with possible additions and deductions. The Death Benefit under Option B
equals the greater of the Selected Face Amount plus the Account Value or the
Minimum Face Amount in effect on the date of death, with possible additions and
deductions. Possible additions include the portion of the Monthly Deduction
attributable to death benefit coverage after the Insured's death. Possible
deductions include Policy Debt and unpaid Monthly Deductions.
Divisions: The subaccounts of the Separate Account, each of which invests in
- ---------
shares of the MML Series Investment Fund (the "MML Trust"), the Oppenheimer
Variable Account Funds (the "Oppenheimer Trust"), or the Panorama Series Fund,
Inc. (the "Panorama Fund").
Employee: A person who is associated with an Employer and the spouse of such
- --------
person.
Employer: The employer, association, sponsoring organization or trust which has
- --------
executed a Participation Agreement electing participation in a Group
Contract.
Enrollment Form: A document used by potential Certificate owners to apply for
- ---------------
the Certificates and to apply for an increase in the Selected Face Amount of the
Certificate when the Certificate owner is associated with an Employer.
Fixed Account Value: The Account Value which is allocated to the GPA.
- -------------------
Free Look Period: The period during which a Certificate owner may return the
- ----------------
Certificate. It must be within 10 days of receipt of the Certificate (unless a
different period is mandated under applicable state law). If You have added the
variable rider to the Certificate prior to the expiration of Your Certificate's
Free Look Period, amounts will be held in the Guaranteed Principal Account until
the period's expiration.
<PAGE>
Group Contract: A group flexible premium adjustable life insurance contract in
- --------------
which the Employer elects to participate and which is issued by MassMutual.
Guaranteed Principal Account ("GPA"): A fixed account to which a Policyowner may
- ------------------------------------
allocate Net Premium or Account Value, which guarantees both the principal and a
minimum interest rate. The GPA is part of Our General Account and its investment
performance has no bearing upon the investment performance of the Separate
Account.
Home Office: The Home Office of MassMutual is located at 1295 State Street in
- -----------
Springfield, Massachusetts.
Insured: Person whose life the Policy insures.
- -------
Issue Age: The Insured's Age at his or her last birthday as of the date the
- ---------
Certificate is issued.
Issue Date: The date shown on the Policy schedule page. It is the start date of
- ----------
the suicide and contestability periods. It is also the date from which the
Certificate is in force if the first premium has been paid.
Minimum Face Amount: An amount equal to Account Value times the applicable
- -------------------
Minimum Face Amount percentage. This percentage depends upon the Insured's age.
The Minimum Face Amount in any event may not be less than $50,000.
Modal Term: A period selected by the Employer for which Modal Term Premiums will
- ----------
be paid in advance by the Employer. This period may be monthly, quarterly,
semi-annual or annual. Your Modal Term is specified in Your Policy schedule
page.
Modal Term Premium: The estimated premium amount sufficient to pay the Premium
- ------------------
Deduction and Monthly Deduction(s) under the Policy during one Modal Term. For
example, if a Policy has a monthly Modal Term, the Modal Term Premium would be
one estimated Monthly Deduction plus one estimated Premium Deduction. If a
Policy maintains a yearly Modal Term, the Modal Term Premium would be twelve
estimated Monthly Deductions plus one estimated Premium Deduction. The Monthly
Deduction necessary under any Policy varies by initial Selected Face Amount,
issue age, underwriting classification, and rider(s) selected.
Monthly Calculation Date: The monthly date on which the Monthly Deductions under
- ------------------------
the Policy are generally 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. Monthly Deductions from
Your Policy are made on the Monthly Calculation Date. However, if the Monthly
Calculation Date does not fall on a Valuation Date, the Monthly Deduction will
occur on the next succeeding Valuation Date. Monthly Deductions will occur on a
date other than the Monthly Calculation Date when: 1) We receive the initial
premium for Your Certificate; and 2) We receive a premium amount sufficient to
prevent termination of the Policy in accordance with the Grace Period and
Termination provisions of the Policy. (See "Grace Period" and "Termination.").
All Policies issued to the same group are generally aggregated for purposes of
maintaining the same monthly date. The Policies are Certificates to which
variable account riders have been added. Therefore, the monthly calculation date
and policy date remain the same in Your Certificate even after You have elected
the variable account rider.
<PAGE>
Monthly Deduction: The deductions from the Account Value under the Policy which
- -----------------
are generally deducted on the Monthly Calculation Date. The deductions are equal
to the sum of the charge for cost of insurance protection, plus the
Administrative Charge, plus a charge for the cost of any additional benefits
provided by rider.
Net Premium: Premium paid less sales load, state premium tax charges and
- -----------
deferred acquisition cost tax charges.
Paid-up Policy Date: The Policy Anniversary Date succeeding the Insured's 100th
- -------------------
birthday.
Participation Agreement: An agreement executed by the Employer requesting
- -----------------------
participation in a Group Contract issued by MassMutual.
Policy: The Certificate, as amended by the variable rider, offered by MassMutual
- ------
and described in this Prospectus.
Policy Anniversary: The anniversary of the Policy Date.
- ------------------
Policy Date: The date shown on the Policy schedule page used as the starting
- -----------
point for determining Policy Anniversary Dates, Policy Years and Monthly
Calculation Dates. The Policies are Certificates to which variable account
riders have been added. Therefore, the policy dates, anniversary dates, policy
years, and monthly calculation dates remain the same in Your Policy even after
You have elected the variable account rider.
Policy Debt: The amount of obligation from a Policyowner to MassMutual from
- -----------
outstanding loans made to the Policyowner under the Policy. This amount includes
any loan interest accrued to date.
Policy Year: The twelve month period commencing with the Policy Date, and each
- -----------
successive twelve month period thereafter.
Policyowner: The owner of a Policy, as designated in the Enrollment Form or
- -----------
Application, or as subsequently changed.
Premium: The payment that may be paid to Us to purchase life insurance and to
- -------
increase the Account Value of the Policy.
Premium Deduction: The deductions We make from premiums prior to the allocation
- -----------------
of such premiums to the GPA or the selected Divisions. The deductions are equal
to the sum of the charges for sales load, state premium tax, and deferred
acquisition ("DAC") tax.
Premium Tax: The amount of premium tax, if any, charged by a state or other
- -----------
governmental authority.
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
<PAGE>
receive and invest premiums for this Policy and for other variable life
insurance policies MassMutual issues. For each class of policy there will be a
designated segment of the Separate Account.
Surrender: A surrender by the Policyowner of all rights under the Policy while
- ---------
the Policy is in force in exchange for the entire Account Value minus any Policy
Debt under the Policy.
Valuation Date: Any date on which the net asset value of the shares of the Funds
- --------------
is determined. Generally, this will be any date on which the New York Stock
Exchange (or its successor) is open for trading.
Valuation Period: The period of time from the end of one Valuation Date to the
- ----------------
end of the next Valuation Date.
Valuation Time: The time the New York Stock Exchange (or its successor) closes
- --------------
on a Valuation Date (currently 4:00 p.m. New York time). All actions which are
to be performed on a Valuation Date will be performed as of the Valuation Time.
Variable Account Values: Account Values which are allocated to any of the
- -----------------------
Divisions of the GVUL Segment of the Separate Account.
We, Us, or Our: Refers to MassMutual.
- --------------
Withdrawal: A withdrawal of Account Value by the Policyowner.
- ----------
You or Yours: Refers to the Policyowner.
- ------------
<PAGE>
BASIC QUESTIONS AND ANSWERS ABOUT US AND OUR POLICY
What is MassMutual? MassMutual is a mutual life insurance company chartered in
- ------------------
1851 under the laws of Massachusetts. Its Home Office is located at 1295 State
Street in Springfield, Massachusetts. MassMutual is licensed to transact life,
accident and health business in all fifty states of the United States, the
District of Columbia, Puerto Rico, and certain provinces of Canada.
On February 29, 1996, MassMutual and Connecticut Mutual Life Insurance Company
("Connecticut Mutual") merged. As a result, the separate existence of
Connecticut Mutual ceased and MassMutual continues its corporate existence under
its current name. As of December 31, 1996, MassMutual had total contingency
reserves in excess of $2.6 billion and consolidated assets of $55.8 billion.
What variable life insurance policy are We offering? In this Prospectus We are
- ---------------------------------------------------
offering a variable account rider to a Certificate (the "Policy") which provides
the Policyowner the opportunity to allocate Account Value to the Separate
Account. The Policy is evidence of individual insurance containing a variable
accumulation option. We issue the Policy to provide for a Death Benefit and Cash
Surrender Value, as well as loan privileges and flexible premiums. The
Policyowner may select the timing and amount of premium payments. The Policy is
considered "variable" because, unlike the fixed benefits of a traditional whole
life policy, the Death Benefit may, and Cash Surrender Value most likely will,
vary to the extent that the Account Value under the Policy is allocated to the
Division(s). Certain provisions of the Policy as described herein may be
somewhat different in any particular state because of specific state
requirements.
The Policy evidences a legal contract between the Employer, Policyowner and
MassMutual. The entire contract consists of the Group Contract, the Enrollment
Form, the Application, the Policy and any amendments, supplements, or riders
added thereto. In the event of a conflict between the contract, as evidenced by
the aforementioned documents, and this prospectus, the terms of the contract
shall apply.
Availability. The variable rider may only be elected by Certificate owners. The
- ------------
Certificates are only available to individuals who are members of a group
acceptable to MassMutual where the group sponsor such as an employer,
association, sponsoring organization or trust executes a Participation Agreement
requesting participation in a Group Contract issued by MassMutual. Each
individual in a group accepted by MassMutual is aggregated for purposes of
determining Issue Dates, Policy Dates, underwriting classification, and sales
load percentages. The Group Contract and the Participation Agreement specify the
rights and privileges of the group sponsor ("Employer"). The Policy is evidence
of coverage under the Group Contract and Individuals may exercise all rights and
privileges under the Policy through the Employer. After termination of the
employment or other relationship, an individual who has been issued the Policy
may exercise all rights and privileges directly with MassMutual.
Initial Minimum Premium Requirements. The minimum initial premium for the
- ------------------------------------
variable rider to Your Certificate is a $500 lump sum premium payment. Your
election of the variable rider activates the minimum premium requirement.
Underwriting. MassMutual does not require underwriting prior to issuance of the
- ------------
variable rider. However, before issuing any Certificate We will require
satisfactory evidence of insurability, except under a guaranteed issue
underwriting approach. (For details see "Death Benefit Under The Policy.")
<PAGE>
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 reduction in value of the underlying assets of
the Divisions but also may benefit from any appreciation in value. (For details
see "Account Value.")
What are the Divisions of the Separate Account? The Separate Account has sixteen
- ----------------------------------------------
Divisions: the MML Equity Index Division, the Oppenheimer Money Division, the
Oppenheimer Bond Division, the Oppenheimer Strategic Bond Division, the
Oppenheimer High Income Division, the Oppenheimer Growth & Income Division, the
Oppenheimer Multiple Strategies Division, the Oppenheimer Growth Division, the
Oppenheimer Capital Appreciation Division, the Oppenheimer Global Division, the
Panorama Total Return Division, the Panorama Growth Division, the Panorama
International Equity Division, the Panorama LifeSpan Capital Appreciation
Division, the Panorama LifeSpan Balanced Division, and the Panorama LifeSpan
Diversified Income Division. Each Division invests only in shares of a single
investment company or a single series of an investment company. The Divisions
are intended to provide money to pay benefits under the Policy but do not
guarantee a minimum interest rate or guarantee against asset depreciation. (For
details see "The Separate Account.")
What is the Guaranteed Principal Account ("GPA")? As an alternative to the
- ------------------------------------------------
Separate Account, the Policyowner may allocate Net Premium or transfer Account
Value to the GPA. Amounts so allocated or transferred become part of
MassMutual's general account assets. The Policyowner is not entitled to share in
the investment experience of those assets. Rather, MassMutual guarantees a rate
of return on the allocated amount equal to 3%. Although MassMutual is not
obligated to credit interest at a rate higher than this minimum, it may declare
a higher rate applicable for such periods as it deems appropriate. (For details
see "The Guaranteed Principal Account.")
Is the level of the Death Benefit guaranteed? There are two Death Benefit
- --------------------------------------------
options - Death Benefit Option A and Death Benefit Option B. 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 B 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 and unpaid Monthly Deductions and increased by the
portion of the Monthly Deduction attributable to death benefit coverage after
the Insured's death. So long as the Policy remains in force, the Death Benefit
You have selected will be available. (For details see "Death Benefit Under The
Policy.")
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 on full surrenders. Partial withdrawals are allowed subject
to certain restrictions and are subject to a withdrawal charge of the lesser of
2% of the Account Value or $25.00 which is deducted from each Withdrawal. (For
details see "Withdrawals.") The Cash Surrender Value of a Policy fluctuates with
the investment performance of the Divisions in which the Policy has Account
Value, and with the interest rate on the amount held in the GPA. It may increase
or decrease daily. For federal income tax purposes, the Policyowner usually is
not taxed on increases in the Cash Surrender Value until the Policy is
surrendered. In connection with certain
<PAGE>
Withdrawals of Account Value and loans on the Policy, however, the Policyowner
may be taxed on all or a part of the amount distributed. (For details see "Cash
Surrender Value" 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 a life insurance
policy can subject it to re-testing for a new seven-year period. During an
insured's lifetime, distributions from a modified endowment contract, including
collateral assignments, loans, and withdrawals, are taxable to the extent of any
income in the contract and may also incur a penalty tax if the Policyowner is
not 59-1/2. (For details see "Modified Endowment Contracts.")
Can this Policy become a modified endowment contract? Since this Policy permits
- ----------------------------------------------------
flexible premium payments, it may become a modified endowment contract. The
Company has the systems capacity to test a Policy at issue to determine whether
it will be classified as a modified endowment contract ("MEC"). This test
examines the Policy for MEC status at the time of issue. The Company has further
safeguards in place to monitor whether a Policy may become a modified endowment
contract after issue. (For details see "Federal Income Tax Considerations" -
"Modified Endowment Contracts.")
What about Premiums? The minimum initial premium for the variable rider to the
- -------------------
Certificate is $500 which must be paid by You in a lump sum. Since the Policy is
a "flexible premium policy" You may choose to pay more or less than the planned
premium.
Your Employer is not required to pay a minimum initial premium for Your Policy.
However, the Employer must pay the estimated premium amount sufficient to pay
the Premium Deduction and Monthly Deduction(s) under Your Policy for the term
selected by Your Employer. The term selected by Your Employer can be one month,
one quarter, or semi-annual or annual and is called a Modal Term. Your Modal
Term is specified in Your Policy's schedule page. The premium paid for the Modal
Term is called a Modal Term Premium. The Modal Term Premium for a Policy is
based upon its cost of insurance rates, Sales Load, State Premium Tax Charge,
DAC Tax Charge, and the Administrative Charge. The method of calculating the
Modal Term Premium is shown in Appendix B. The planned Employer paid premium is
the Modal Term Premium for Your Policy.
Once the Policy is in force, the Modal Term selected by the Employer becomes the
basis for the Policy's premium billing. We will forward billing statements to
the Employer for each Modal Term. The Employer may change the Modal Term at any
time upon written request; however, it may not be changed to a term of less than
one month.
Once the Policyowner leaves his or her association with the Employer, the
Policyowner may choose to continue the Policy. If the Policyowner chooses to
continue the Policy, all of the rights and obligations previously held by the
Employer will be vested in the Policyowner. In this event, MassMutual will
discontinue billing for Your Modal Term premium. (For details see "General
Provisions Of The Policy" - "Premiums.")
When are Initial Premiums allocated to the Guaranteed Principal Account or the
- ------------------------------------------------------------------------------
Separate Account? If Your Certificate has an unexpired Free Look Period at the
- ----------------
time You elect the variable account rider, the initial Net Premium (i.e.,
premium paid less the Premium Deduction) will be initially allocated to the
Guaranteed Principal Account during the Free Look Period (see "Free Look
Provision"). At the end of the
<PAGE>
Free Look Period, the Net Premium paid by You is allocated to the GPA and/or
Divisions according to Your instructions in the Application and subject to
MassMutual's then current allocation rules. Billed Modal Term Premiums are
always initially allocated to the GPA.
How can the Net Premium and the Account Value of the Policy be allocated among
- ------------------------------------------------------------------------------
the Guaranteed Principal Account and the Divisions? Premiums paid by You under
- --------------------------------------------------
the Policy may be allocated to the Divisions (maximum of eight at one time) and
the GPA. You choose the percentages of Your premiums to be allocated to the
Divisions and/or the GPA when You elect the variable rider to Your Certificate.
A Policyowner may choose any whole-number percentages as long as the total is
100%. The allocation of future Net Premiums may be changed at any time without
charge. Billed Modal Term Premiums payable by Your Employer are always allocated
to the GPA. Transfers from the GPA are subject to certain restrictions. (For
details see "Transfers.")
The Account Value of the Policy may be transferred between the GPA and/or the
Divisions by written request. Account Value may be transferred by dollar amount
or by whole-number percentage, subject to restrictions. Only eight Divisions
plus the GPA are available to a Policyowner at any one time. To allocate Net
Premiums or to transfer Account Value to a ninth Division, the Policyowner must
transfer 100% of the Account Value from one or more of the eight Divisions to
which allocations are currently made. Transfers from the GPA are also subject to
certain restrictions. (For details see "The Separate Account" and "Account Value
and Cash Surrender Value - Account Value.") Automated Account Re-Balancing and
Automated Account Value Transfer is also available. (For details see "Automated
Account Re-Balancing" and "Automated Account Value Transfer.")
How long will the Policy remain in force? The Policy does not automatically
- ----------------------------------------
terminate for failure of the Employer or You to pay planned Policy premiums or
Modal Term Premiums. Conversely, payment of these amounts does not guarantee the
Policy will remain in force. The Policy terminates only when the Account Value
less any Policy Debt is insufficient to pay the Monthly Deduction, and a grace
period expires without sufficient payment. (For details see "Termination and
Grace Period.")
Are there charges against the Policy? Certain charges are made against the
- ------------------------------------
Policy. Before allocation of any premium to the Account Value, a percentage of
each premium paid is deducted for expenses related to the sale and distribution
of the Policies. These charges are called sales loads and the percentages may
vary depending on group enrollment procedures selected by the Employer, total
group premium paid by the Employer, the size of the Employer group, and other
factors. This charge is specified on the schedule page to your Policy and is
computed as a percentage of premiums paid by either You or the Employer. The
charge is guaranteed not to exceed 5% of premiums. Once the charge is set, it
will never change for any of the Policies issued to individuals under the same
group.
There are two additional deductions from gross premiums: (1) for state premium
taxes; and (2) for Deferred Acquisition Cost ("DAC") tax expense. Each premium,
net of these charges, is allocated to the GPA or the Divisions and becomes a
part of the Account Value. (For details see "Deductions From Premium.")
Certain monthly charges are generally deducted directly from the Policy's
Account Value on each Monthly Calculation Date. These Monthly Deductions are
equal to the sum of a charge for cost of insurance protection, the
Administrative Charge, and a charge for the cost of any additional benefits
provided by rider.
<PAGE>
Some deductions are made on a daily basis against the assets of the Divisions. A
daily charge calculated at a current annual rate of 0.55% of the value of the
assets of each Division is charged for mortality and expense risks. In no event
will this rate exceed 1.00%. Similarly, tax assessments are calculated daily.
Currently, We are not making any charges for income taxes, but We may make
charges in the future against the Divisions for federal income taxes
attributable to them.
Withdrawals of Account Value are permitted subject to certain restrictions. A
charge equal to the lesser of $25 or 2% 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? While the Policy is in force, a loan may be made on
- ------------------------
the Policy, in a maximum amount equal to; 1) 90% of Your Account Value at the
time of the loan; less 2) any outstanding Policy Debt before the new loan; less
3) interest on the loan being made and on other outstanding loan(s) to Your next
Policy Anniversary Date; less 4) an amount equal to one plus the number of
Monthly Calculation Dates remaining in Your Modal Term multiplied by Your most
recent Monthly Deduction. (The maximum loan amount may be different if required
by state law.) (For details see "Policy Loan Privilege.")
Are dividends paid on the Policy? The Policy is participating, therefore, it may
- --------------------------------
share in any dividends that MassMutual pays. Dividends are based on the Policy's
contribution to any divisible surplus of MassMutual. Any dividends will be
payable on the Policy Anniversary Date. MassMutual does not expect that any
dividends will be paid under the Policies. (For details see "Dividends.")
Do I have a right to cancel? Under the Free Look Provision, the owner of a
- ---------------------------
Certificate has a limited right to return the Certificate and receive a refund.
This right expires ten days after You receive the Certificate (or a longer
period if required by state law). The Certificate may be returned to Our Home
Office, to any of Our agency offices, or to the agent who sold You the
Certificate. Your Policy is a Certificate to which a variable account rider has
been added. Therefore, Your election of the rider does not affect the duration
of the Certificate's Free Look Period. (For details see "Free Look Provision.")
CHARGES UNDER THE POLICY
Certain charges are deducted to compensate MassMutual 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 GPA or the selected
Divisions, a deduction as a percentage of premium is made for the sales load,
state premium taxes, and the DAC tax expense ("Premium Deduction").
Sales Load. The sales load component of the premium varies for each Employer
- ----------
group depending on group enrollment procedures selected by the Employer, total
group premium paid by the Employer, the size of the Employer group, and other
factors. The sales load is generally 0.75% of premiums and is guaranteed not to
exceed 5% of premiums. All Policies within an Employer group will have the same
sales load expressed as a percentage of premiums paid. The charge applies to
premiums paid under the Policy by either You or Your Employer. Once the charge
is set, it will never change for any of the Policies issued
<PAGE>
to individuals under the same group. The sales load percentage appears on your
Policy schedule page. There are no back-end surrender charges or contingent
deferred sales loads applicable to the Policies.
The amount of the sales load in a Policy Year is not necessarily related to our
actual sales expenses for that particular year. To the extent that sales
expenses are not covered by the sales load, they will be recovered from
MassMutual surplus, including any amounts derived from the mortality and expense
risk charge or the cost of insurance charge. (For a discussion of the
commissions paid under the Policy, see "Sales And Other Agreements - Commission
Schedule.")
State Premium Tax Charge. Various states apply premium taxes at various rates.
- ------------------------
We currently deduct a percentage equal to the applicable state rate of each
premium to cover premium taxes assessed against MassMutual by the various
states. The applicable state rate will be either the Massachusetts rate or a
higher rate. The current state premium tax charge ranges from 2.0% to 4% of each
premium. This charge may increase or decrease to reflect either any change in
the tax or changes of residence. The Policyowner should notify MassMutual of any
change of residence. Any change in this charge would be effective immediately.
Deferred Acquisition Cost ("DAC") Tax Charge. We currently deduct 0.25% of each
- --------------------------------------------
premium to cover a federal premium tax assessed against MassMutual. This charge
relates to MassMutual's federal income tax burden, under Internal Revenue Code
Section 848, resulting from the receipt of premiums. This charge may be
increased or decreased by Us.
ACCOUNT VALUE CHARGES
A monthly Administrative Charge and a cost of insurance charge are generally
deducted from the Fixed Account Value on each Monthly Calculation Date. If the
Fixed Account Value is less than the Administrative Charge and cost of insurance
charge, then the deficiency is deducted from the Variable Account Value.
Administrative Charge. A monthly fee is deducted to compensate MassMutual for
- ---------------------
costs incurred in providing certain administrative services including premium
collection, record keeping, processing claims, and communicating with
Policyowners. Currently, the charge is $5.25 per month for each Policy. While
this charge may increase or decrease, the maximum monthly Administrative Charge
is $9 per month. (The maximum charge may be different if required by state law.)
We deduct this charge from Your Policy's Fixed Account Value each month. If
there are insufficient Fixed Account Values to pay the charge, We will deduct
the deficiency from Your Policy's Variable Account Value pro rata according to
Your Variable Account Value in the Divisions.
Charge for Cost of Insurance Protection. A charge for the cost of insurance
- ---------------------------------------
protection (also called a Mortality Charge in the Policy) is generally deducted
on each Monthly Calculation Date and is based on the Insured's age and group
rating. We deduct this charge from Your Policy's Fixed Account Value. If there
are insufficient Fixed Account Values to pay the charge, We will deduct the
deficiency from Your Policy's Variable Account Value pro rata according to Your
Variable Account Value in the Divisions. 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 protection provided 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
group and class.
<PAGE>
SEPARATE ACCOUNT CHARGES
Charges for Mortality and Expense Risks. We charge the Divisions for the
- ---------------------------------------
mortality and expense risks We assume. We deduct a daily charge at a current
effective annual rate of 0.55% of the value of each Division's assets that come
from the Policy. While this charge may increase or decrease, the maximum charge
is 1.00% annually. The charges are deducted daily and paid quarterly against the
Separate Account divisions.
The mortality risk We assume is that the group of lives insured under our
Policies may, on average, live for shorter periods of time than We estimated.
The expense risk We assume is that our costs of issuing and administering
Policies may be more than We estimated.
If all the money We collect from this charge is not needed to cover Death
Benefits and expenses, it will be our gain and will be used for any proper
purpose, including payment of sales commissions. Conversely, even if the money
We collect is insufficient, We will provide for all Death Benefits and expenses.
Charges for Federal Income Taxes. We do not currently make any charge against
- --------------------------------
the Divisions for federal income taxes attributable to them. We may make such a
charge eventually, however, in order to provide for the future federal income
tax liability of the Divisions. (For more information on charges for federal
income taxes, see "Federal Income Tax Considerations" - "MassMutual" - "Tax
Status.")
Fund Charges. MassMutual serves as investment manager of the MML Equity Index
- ------------
Fund pursuant to an investment management agreement which provides for the Fund
to pay MassMutual a quarterly fee at the annual rate of 0.40% of the first $100
million of net assets, 0.38% of the next $150 million, and 0.36% of net assets
in excess of $250 million. MassMutual has entered into a sub-advisery agreement
with Mellon Equity Associates ("Mellon Equity"), an indirect wholly owned
subsidiary of Mellon Bank Corporation, whereby Mellon Equity manages the
investment and reinvestment of the assets of the MML Equity Index Fund as
sub-adviser to the Fund. For providing its services under the sub-advisery
agreement with MassMutual, Mellon Equity will receive a monthly fee, computed
daily at an annual rate based on the collective daily net asset value of the MML
Equity Index Fund. The annual fee paid to Mellon Equity is as follows: 0.09% for
the first $100 million of net assets, 0.07% of the next $150 million of net
assets, and 0.05% of net assets over $250 million. No fees were paid to either
MassMutual or Mellon Equity by the MML Equity Index Fund during 1996 because the
Fund did not commence operations until 1997.
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 also serves as the collateral co-manager for MassMutual Carlson CBO,
N.V.
Oppenheimer Funds, Inc. ("OFI") serves as investment manager of each of the
Oppenheimer Funds pursuant to Investment Management Agreements, each of which
provides for the Oppenheimer Fund to pay OFI a monthly management fee computed
separately on the net assets of each Fund as of the close of business each day.
The management fee rates are as follows: (i) for Money Fund: 0.450% of the first
$500 million of net assets, 0.425% of the next $500 million, 0.400% of the next
$500 million, and 0.375% of net assets over $1.5 billion; (ii) for Capital
Appreciation Fund, Growth Fund, Growth & Income Fund, Multiple Strategies Fund,
and Global Securities Fund: 0.75% of the first $200 million of net assets, 0.72%
of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, and 0.60% of net assets over $800 million; and (iii) for High Income
Fund, Bond Fund, and Strategic Bond Fund: 0.75% of the first $200 million of net
assets, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of
the next $200 million, 0.60% of
<PAGE>
the next $200 million, and 0.50% of net assets over $1 billion. During 1996 OFI
earned investment management fees of $445,899 from the Money Fund, $3,382,840
from the Capital Appreciation Fund, $1,139,255 from the Growth Fund, $160,819
from the Growth & Income Fund, $3,132,569 from the Multiple Strategies Fund,
$3,395,740 from the Global Securities Fund, $1,177,754 from the High Income
Fund, $2,188,350 from the Bond Fund, and $618,338 from the Strategic Bond Fund.
OFI also serves as investment manager of each of the Portfolios of the Panorama
Fund pursuant to Investment Management Agreements, each of which provides for
the Portfolio to pay OFI a monthly management fee 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 the Total Return Portfolio: 0.625% of the first
$600 million of net assets, 0.45% of net assets over $600 million; and (ii) for
the Growth Portfolio: 0.625% of the first $300 million of net assets, 0.500% of
the next $100 million, and 0.450% of net assets over $400 million; and (iii) for
the International Equity Portfolio: 1.00% of the first $250 million of net
assets and 0.90% of net assets over $250 million; and (iv) for the LifeSpan
Capital Appreciation Portfolio and LifeSpan Balanced Portfolio: 0.85% of the
first $250 million of net assets and 0.75% of net assets in excess of $250
million, and (v) for the LifeSpan Diversified Income Portfolio: 0.75% of the
first $250 million of net assets and 0.65% of net assets in excess of $250
million. During 1996 OFI earned investment management fees of $5,817,245 for the
Total Return Portfolio, $2,801,667 for the Growth Portfolio, $569,471 for the
International Equity Portfolio, $281,564 for the LifeSpan Capital Appreciation
Portfolio, $355,893 for the LifeSpan Balanced Portfolio, and $171,569 for the
LifeSpan Diversified Income Portfolio.
OFI, located at Two World Trade Center, New York, NY 10048-0203, 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 having 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.
OFI has entered into sub-advisery agreements with other investment advisers
under which the sub-adviser manages the investments of one or more of the
underlying Portfolios of the Panorama Fund. OFI has entered into investment
sub-advisery agreements with three-sub advisers to assist in the selection of
portfolio investments for the Panorama Fund's International Equity Portfolio,
LifeSpan Diversified Income Portfolio, LifeSpan Balanced Portfolio, and LifeSpan
Capital Appreciation Portfolio.
Babson-Stewart Ivory International ("Babson-Stewart") located in Cambridge,
Massachusetts is the sub-adviser to the Panorama Fund's International Equity
Portfolio and the international stock components of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio. Babson-Stewart is a
partnership formed in 1987 between David L. Babson & Company, Inc., an indirect
wholly-owned subsidiary of MassMutual, and Stewart Ivory & Company, Ltd.,
located in Edinburgh, Scotland. For providing its services under the
sub-advisery agreement with OFI, Babson-Stewart will receive a monthly fee from
OFI, computed daily at an annual rate based on the average daily net asset value
of the International Equity Fund and the portion of the LifeSpan Capital
Appreciation Portfolio and LifeSpan Balanced Portfolio allocated to the
international equity component. The annual fee paid to Babson-Stewart by OFI is
as follows: 0.75% for the first $10 million of net assets, 0.625% of the next
$15 million of net assets, 0.50% of the next $25 million of net assets, and
0.375% of net assets over $50 million. For purposes of determining the
break-points in the sub-advisery fee, the assets of the International Equity
Portfolio, the international equity component of the LifeSpan Capital
Appreciation Portfolio and the International Equity component of the LifeSpan
Balanced Portfolio are not aggregated. In 1996, Babson-Stewart received $486,204
for managing the assets of the International Equity Portfolio.
<PAGE>
BEA Associates ("BEA"), located in New York, New York is the sub-adviser to the
high yield bond component of the Panorama Fund's LifeSpan Diversified Income
Portfolio, the LifeSpan Balanced Portfolio, and the LifeSpan Capital
Appreciation Portfolio. For providing its services under the sub-advisory
agreement with OFI, BEA will receive a monthly fee from OFI, computed daily at
an annual rate based on the collective average daily net asset value of the
portion of the LifeSpan Diversified Income LifeSpan Capital Appreciation, and
LifeSpan Balanced Portfolios allocated to the high yield bond component. The
annual fee paid to BEA is as follows: 0.45% for the first $25 million of
collective net assets, 0.40% of the next $25 million of collective net assets,
35% of the next $50 million of collective net assets, and 0.25% of collective
net assets over $100 million. For purposes of calculating the fee payable to
BEA, the collective net asset values of the portion of the LifeSpan Portfolios
allocated to the high yield bond component are aggregated with that portion of
the net asset value of the assets of Oppenheimer Series Fund, Inc. managed by
BEA.
Pilgrim, Baxter & Associates ("Pilgrim Baxter") is the sub-adviser to the small
cap component of the Panorama Fund's LifeSpan Balanced Portfolio and the
LifeSpan Capital Appreciation Portfolio. For providing its services under the
sub-advisory agreement with OFI, Pilgrim Baxter will receive a monthly fee from
OFI, computed daily at an annual rate based on the collective average daily net
asset value of the portion of the LifeSpan Balanced Portfolio and LifeSpan
Capital Appreciation Portfolio allocated to the small cap component. The annual
fee paid to Pilgrim Baxter is 0.60% of collective net assets. For purposes of
calculating the fee payable to Pilgrim Baxter, the collective net asset values
of the portion of the LifeSpan Portfolios allocated to the small cap component
are aggregated with that portion of the net asset value of the assets of
Oppenheimer Series Fund, Inc. managed by Pilgrim Baxter.
MML Series Investment Fund Annual Expenses for 1996
(as a percentage of the average net assets of a Fund)
<TABLE>
<CAPTION>
Total Fund
----------
Management Fees Other Expenses Operating
--------------- -------------- ---------
Expenses
--------
<S> <C> <C> <C>
MML Equity Index Fund 0.0%(1) 0.0%(1) 0.0%(1)
</TABLE>
(1) The MML Equity Index Fund had no operating expenses in 1996 since it had not
yet commenced operations. 1997 estimated fees are 0.40% Management Fees plus
0.11% Other Expenses which would equal 0.51% of Total Fund Operating Expenses.
MassMutual has agreed to bear the expenses of the MML Equity Index Fund (other
than the management fee, interest, taxes, brokerage commissions and
extraordinary expenses) in excess of 0.11% of average daily net asset value of
the Fund through April 30, 1998. MassMutual expects that it will be required to
reimburse the expenses of the MML Equity Index Fund pursuant to this undertaking
in 1997.
Oppenheimer Variable Account Funds Annual Expenses for 1996
(as a percentage of the average net assets of a Fund)
<TABLE>
<CAPTION>
Total Fund
----------
Management Fees Other Expenses Operating
--------------- -------------- ---------
Expenses
--------
<S> <C> <C> <C>
Oppenheimer Global Securities Fund 0.73% 0.08% 0.81%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Oppenheimer Capital Appreciation Fund 0.72% 0.03% 0.75%
Oppenheimer Growth Fund 0.75% 0.04% (1) 0.79% (1)
Oppenheimer Growth & Income Fund 0.75% 0.25% 1.00%
Oppenheimer Multiple Strategies Fund 0.73% 0.04% 0.77%
Oppenheimer High Income Fund 0.75% 0.06% 0.81%
Oppenheimer Strategic Bond Fund 0.75% 0.10% 0.85%
Oppenheimer Bond Fund 0.74% 0.04% 0.78%
Oppenheimer Money Fund 0.45% 0.04% 0.49%
</TABLE>
(1) In 1996, OFI, on a voluntary one-time basis, agreed to reimburse the
Oppenheimer Growth Fund an amount equal to 0.02% of average daily net asset
value due to non-recurring expenses incurred in connection with the Jefferson
Pilot Appreciation Fund, Inc. acquisition. Absent this reimbursement, the Other
Expenses for this Fund would have been 0.06% and the Total Operating Expenses
would have been 0.81%. OFI does not anticipate making any expense reimbursements
to this Fund in 1997.
Panorama Series Fund, Inc. Annual Expenses for 1996
(as a percentage of the average net assets of a Portfolio)
<TABLE>
<CAPTION>
Total Fund
----------
Management Fees Other Expenses Operating
--------------- -------------- ---------
Expenses
--------
<S> <C> <C> <C>
Panorama Total Return Portfolio 0.55% 0.0% 0.55%
Panorama Growth Portfolio 0.57% 0.01% 0.58%
Panorama International Equity Portfolio 1.00% 0.21% 1.21%
Panorama LifeSpan Diversified Income Portfolio 0.75% 0.32% 1.07%
Panorama LifeSpan Balanced Portfolio 0.85% 0.32% 1.17%
Panorama LifeSpan Capital Appreciation Portfolio 0.85% 0.45% 1.30%
</TABLE>
Additional and more detailed information concerning the MML Funds, the
Oppenheimer Funds, and the Panorama Fund's Portfolios, including information
about the other expenses of such Funds and Portfolios, may be found in the
accompanying Prospectuses for the MML Trust, the Oppenheimer Trust, and the
Panorama Fund.
THE SEPARATE ACCOUNT
The Separate Account was established on July 13, 1988 as a separate investment
account of MassMutual by MassMutual's Board of Directors in accordance with the
provisions of Section 132G of Chapter 175 of the Massachusetts General Laws.
The Separate Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. Registration does not involve supervision
of the management or investment practices or policies of either the Separate
Account or of MassMutual. Under Massachusetts law, however, both MassMutual and
the Separate Account are subject to regulation by the Division of Insurance of
the Commonwealth of Massachusetts. Designated segments of the Separate Account
will be used to receive and invest premiums for other variable life insurance
policies issued by MassMutual. Such a segment, the GVUL Segment, has been
established for the Policy.
<PAGE>
Although the assets of the Separate Account are assets of MassMutual, that
portion of the Separate Account assets equal to the reserves and other
liabilities of the Separate Account attributable to the Policies may not be used
to satisfy any obligations that may arise out of any other business We may
conduct. They may, however, become subject to liabilities arising from other
variable life insurance policies which the Separate Account funds. In addition,
We may from time to time, at our discretion, transfer to Our general account
those assets which exceed the reserves and other liabilities of the Separate
Account. Such transfers will not adversely affect the Separate Account.
Income, realized gains or losses, and unrealized gains or losses from each
Division are credited to or charged against that Division without regard to any
of our other income, gains, or losses.
MassMutual may accumulate in the Separate Account the charge for expense and
mortality risks, the Monthly Deduction 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 sixteen Divisions attributable to the Policy. Each Division invests
in shares of either the MML Trust, the Oppenheimer Trust, or the Panorama Fund.
The Divisions of the Separate Account are:
The MML Equity Index Division - Amounts credited to this Division are invested
in shares of MML Equity Index Fund, or its successor.
The Oppenheimer Money Division - Amounts credited to this Division are invested
in shares of Oppenheimer Money Fund, or its successor.
The Oppenheimer Bond Division - Amounts credited to this Division are invested
in shares of Oppenheimer Bond Fund, or its successor.
The Oppenheimer Strategic Bond Division - Amounts credited to this Division are
invested in shares of Oppenheimer Strategic Bond Fund, or its successor.
The Oppenheimer High Income Division - Amounts credited to this Division are
invested in shares of Oppenheimer High Income Fund, or its successor.
The Oppenheimer Growth & Income Division - Amounts credited to this Division are
invested in shares of Oppenheimer Growth & Income Fund, or its successor.
The Oppenheimer Multiple Strategies Division - Amounts credited to this Division
are invested in shares of Oppenheimer Multiple Strategies Fund, or its
successor.
The Oppenheimer Growth Division - Amounts credited to this Division are invested
in shares of Oppenheimer Growth 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.
<PAGE>
The Oppenheimer Global Securities Division - Amounts credited to this Division
are invested in shares of Oppenheimer Global Securities Fund, or its successor.
The Panorama Total Return Division - Amounts credited to this Division are
invested in shares of the Panorama Total Return Portfolio, or its successor.
The Panorama Growth Division - Amounts credited to this Division are invested in
shares of the Panorama Growth Portfolio, or its successor.
The Panorama International Equity Division - Amounts credited to this Division
are invested in shares of the Panorama International Equity Portfolio, or its
successor.
The Panorama LifeSpan Capital Appreciation Division - Amounts credited to this
Division are invested in shares of the Panorama LifeSpan Capital Appreciation
Portfolio, or its successor.
The Panorama LifeSpan Balanced Division - Amounts credited to this Division are
invested in shares of the Panorama LifeSpan Balanced Portfolio, or its
successor.
The Panorama LifeSpan Diversified Income Division - Amounts credited to this
Division are invested in shares of the Panorama LifeSpan Diversified Income
Portfolio, or its successor.
The shares of the underlying Fund purchased by each Division will be held by
MassMutual as custodian of the Separate Account.
Although there are currently sixteen Divisions available to a Policyowner, a
Policyowner may allocate Account Value to no more than eight Divisions at any
one time. To allocate Net Premium or to transfer Account Value to a ninth
Division which does not have Account Value allocated to it, a Policyowner must
transfer 100% of the Account Value from one or more of the eight "active"
Divisions to which allocations are currently made.
MML Equity Index Fund (the "MML Fund") is a separate series of shares of MML
Series Investment Fund (the "MML Trust"), a no load, open-end management
investment company. The Company acts as investment manager to each of the MML
Funds which are part of the MML Trust, including the MML Equity Index Fund.
MassMutual has entered into an investment sub-advisery agreement with Mellon
Equity Associates ("Mellon Equity") providing for Mellon Equity to manage the
investment and reinvestment of assets with respect to the management of the MML
Equity Index Fund. Mellon Equity is an indirect subsidiary of Mellon Bank
Corporation and is located in Pittsburgh, Pennsylvania. As of December 31, 1996,
Mellon Equity and its employees managed approximately $11 billion and served as
the investment adviser or sub-adviser of 9 other investment companies.
MassMutual and Mellon Equity are registered as investment advisers under the
Investment Advisers Act of 1940.
OppenheimerFunds, Inc. ("OFI") acts as investment manager to the Oppenheimer
Variable Account Funds (the "Oppenheimer Trust") and the Panorama Series Fund,
Inc. (the "Panorama Fund"). The Oppenheimer Money Fund, Oppenheimer Bond Fund,
Oppenheimer Strategic Bond Fund, Oppenheimer High Income Fund, Oppenheimer
Growth & Income Fund, Oppenheimer Multiple Strategies Fund, Oppenheimer Growth
Fund, Oppenheimer Capital Appreciation Fund, and Oppenheimer Global Fund 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
<PAGE>
companies. The Panorama Total Return Portfolio, Panorama Growth Portfolio,
Panorama International Equity Portfolio, Panorama LifeSpan Capital Appreciation
Portfolio, Panorama LifeSpan Balanced Portfolio, and Panorama LifeSpan
Diversified Income Portfolio are part of the Panorama Series Fund, Inc., 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 has entered into investment sub-advisery agreements with three sub-advisers
to assist in the selection of portfolio investments for the Panorama Fund's
International Equity Portfolio, LifeSpan Diversified Income Portfolio, LifeSpan
Balanced Portfolio, and LifeSpan Capital Appreciation Portfolio. Babson-Stewart
Ivory International ("Babson-Stewart") located in Cambridge, Massachusetts is
the sub-adviser to the International Equity Portfolio and the international
stock components of the LifeSpan Balanced Portfolio and the LifeSpan Capital
Appreciation Portfolio. Babson-Stewart is a partnership formed in 1987 between
David L. Babson & Company, Inc., an indirect wholly-owned subsidiary of
MassMutual, and Stewart Ivory & Company, Ltd., located in Edinburgh, Scotland.
BEA Associates located in New York, New York is the sub-adviser to the high
yield bond component of the LifeSpan Diversified Income Portfolio, the LifeSpan
Balanced Portfolio, and the LifeSpan Capital Appreciation Portfolio. Pilgrim,
Baxter & Associates ("Pilgrim Baxter") is the sub-adviser to the small cap
component of the LifeSpan Balanced Portfolio and the LifeSpan Capital
Appreciation Portfolio. With respect to the Oppenheimer Trust Funds and those
Panorama Fund portfolios which do not utilize sub-advisers, OFI defines the
composition of each respective fund and portfolio, and furnishes advice and
recommendations with respect to the investments, investment policies and
purchase and sale of securities. OFI, Babson-Stewart, BEA Associates, and
Pilgrim Baxter are registered as investment advisers under the Investment
Advisers Act of 1940.
The MML Trust is a no load, open end management investment company registered
under the 1940 Act. The Oppenheimer Trust and the Panorama Fund are open-end,
diversified management investment companies registered under the 1940 Act. The
MML Trust consists of five MML Funds each of which has its own investment
objectives and policies. The Oppenheimer Trust consists of nine Oppenheimer
Funds, each of which has its own investment objectives and policies. The
Panorama Fund consists of seven portfolios, each of which has its own investment
objectives and policies. MassMutual maintains 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. The
Oppenheimer Trust and Panorama Fund were established for the purpose of
providing investment vehicles for investment only by variable life insurance
contracts and variable annuity 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.
Shares of the Oppenheimer Trust and Panorama Fund are not offered to the general
public, but solely to insurance company separate accounts affiliated and
unaffiliated with MassMutual which fund variable annuities and variable life
insurance contracts.
INVESTMENT OBJECTIVES
The investment objective of MML Equity 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(C)" 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.)
<PAGE>
The investment objective of the Oppenheimer Money Fund is to maximize current
income from investments in "money market" securities consistent with low capital
risk and maintenance of liquidity.
The investment objective of the Oppenheimer Bond Fund is to seek a high level of
current income from investment in high yield fixed-income securities rated "Baa"
or better by Moody's or "BBB" or better by Standard & Poor's. Secondarily, the
Fund seeks capital growth when consistent with its primary objective.
The investment objective of the Oppenheimer Strategic Bond Fund is to seek a
high level of current income principally derived from interest income from
investments in U.S. government securities, high yield fixed-income securities,
and foreign fixed income securities and to seek to enhance such income by
writing covered call options on debt securities.
The investment objective of the Oppenheimer High Income Fund is to earn a high
level of current income by investing primarily in a diversified portfolio of
high yield, fixed-income securities, including long-term debt obligations 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 ratings services, and unrated
securities.
The investment objective of the Oppenheimer Growth & Income Fund is to seek a
high total return (which includes growth in the value of its shares as well as
current income) from equity and debt securities. From time to time this Fund may
focus on small to medium capitalization common stocks, bonds and convertible
securities.
The investment objective of the Oppenheimer Multiple Strategies Fund is to seek
a total investment return (which includes current income and capital
appreciation in the value of its shares) from investments in common stocks and
other equity securities, bonds and other debt securities, and "money market"
securities.
The investment objective of the Oppenheimer Growth Fund is to seek to achieve
capital appreciation by investing in securities of well-known established
companies (companies which have a history of earnings and dividends). The type
of securities in which this Fund invests will be primarily common stocks, as
well as securities having the investment characteristics of common stocks, such
as convertible preferred stock and convertible bonds.
The investment objective of the Oppenheimer 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, as well as
securities having the investment characteristics of common stocks, such as
convertible
<PAGE>
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 Panorama Total Return Portfolio is to seek to
maximize total investment return (including both capital appreciation and
income) principally by allocating its asset among stocks, corporate bonds, U.S.
Government securities and money market instruments according to changing market
conditions.
The investment objective of the Panorama Growth Portfolio is to seek long-term
growth of capital by investing primarily in common stocks with low
price-earnings ratios and better-than-anticipated earnings. Realization of
current income is a secondary consideration.
The investment objective of the Panorama International Equity Portfolio is to
seek long-term growth of capital by investing primarily in equity securities of
companies wherever located, the primary stock market of which is outside the
United States.
The investment objective of the Panorama LifeSpan Capital Appreciation Portfolio
is to seek long-term capital appreciation by investing in a strategically
allocated portfolio of equities and fixed income securities consisting primarily
of stocks. Current income is not a primary consideration.
The investment objective of the Panorama LifeSpan Balanced Portfolio is to seek
a blend of capital appreciation and income by investing in a strategically
allocated portfolio of stocks and bonds with a slightly stronger emphasis on
stocks.
The investment objective of the Panorama LifeSpan Diversified Income Portfolio
is to seek high current income, with opportunities for capital appreciation by
investing in a strategically allocated portfolio of equities and fixed income
securities consisting primarily of bonds.
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.
Boston Safe Deposit and Trust Company, with its home office located at One
Boston Place, Boston, Massachusetts 02108 acts as custodian for the MML Equity
Index Fund. The Bank of New York, with its home office located at One Wall
Street, New York, NY 10015, acts as custodian for each of the Oppenheimer Funds.
State Street Bank and Trust Company, with its home office located at 225
Franklin Street, Boston, Massachusetts, 02110, acts as custodian for the
Panorama Fund and each of its Portfolios.
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 Policyowners and owners of
the variable annuity contracts. Possible conflicts could arise if: (i) state
insurance regulators should disapprove or require changes in investment
policies, investment advisers or principal underwriters or if 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
<PAGE>
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 the Panorama 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 Policyowners and other separate accounts
investing in the Oppenheimer Trust or Panorama Fund. The Board of Trustees of
the Oppenheimer Trust (the "Trustees") and the Board of Directors of the
Panorama Fund (the "Directors") will monitor their respective investment company
for the existence of any such conflicts. If it is determined that a conflict
exists, the Trustees or the Directors, as the case may be, 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 or Panorama Fund Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Oppenheimer
Fund or Panorama Fund Portfolio; (ii) submitting the question whether such
segregation should be implemented to a vote of all affected Policyowners; and
(iii) establishing a new registered management investment company or managed
separate account.
Rates of Return. Tables 1 and 2 show the Effective Annual Rates of Return and
- ---------------
One Year Total Returns, respectively, of the Funds based on the actual
investment performance (after deduction of investment management fees and direct
operation expenses). These rates of return do not reflect the mortality and
expense risk charges assessed against the Separate Account.
Table 3 shows the return, after deduction of investment management fees and
direct operation expenses of the fund, and deduction of the mortality and
expense risk charges assessed against the Separate Account.
The rates of return shown are not necessarily indicative of future performance.
They may be considered in assessing the competence and performance of
MassMutual, OFI, Mellon Equity, Babson-Stewart, BEA, and Pilgrim Baxter as
investment advisers to the Funds.
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fund Since 20 15 10 5 3 1
Inception Years Years Years Years Years Year
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Money 5.98% --- --- 5.92% 4.42% 5.00% 5.13%
(date of inception - 04/03/85)
Oppenheimer Bond 9.94% --- --- 8.81% 7.68% 6.33% 4.80%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 7.35% --- --- --- --- 7.54% 12.07%
(date of inception - 05/03/93)
Oppenheimer High Income 13.46% --- 13.89% 14.88% 10.34% 15.26%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 40.54% --- --- --- --- --- 32.51%
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 11.52% --- --- --- 11.67% 11.18% 15.50%
(date of inception - 02/09/87)
Oppenheimer Growth 14.52% --- --- 14.32% 16.24% 19.99% 25.20%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 15.66% --- --- 16.50% 16.68% 13.74% 20.22%
(date of inception - 08/15/86)
Oppenheimer Global Securities 10.65% --- --- --- 12.38% 4.25% 17.80%
(date of inception - 11/20/90)
Panorama Total Return 13.73% --- --- 12.32% 11.52% 10.41% 10.14%
(date of inception - 09/30/82)
Panorama Growth 17.79% --- --- 15.94% 17.33% 17.75% 18.87%
(date of inception - 01/21/82)
Panorama International Equity 8.78% --- --- --- --- 8.21% 13.26%
(date of inception - 05/13/92)
Panorama LifeSpan Capital 18.80% --- --- --- --- 17.97%
Appreciation (date of inception -
09/01/95)
Panorama LifeSpan Balanced 14.85% --- --- --- --- --- 13.38%
(date of inception - 09/01/95)
Panorama LifeSpan Diversified 9.61% --- --- --- --- --- 6.93%
Income
(date of inception - 09/01/95)
</TABLE>
NOTE: This Table 1 shows the effective annual rates of return of the
Funds based on the actual investment performance (after deduction of
investment management fees and direct operation expenses). These rates
of return do not reflect the mortality and expense risk charges
assessed against the Separate Account. The MML Equity Index Fund did
not commence operations until April 30, 1997. Therefore, historical
investment results for the 1, 3, 5, 10, 15, and 20 year periods listed
above do not exist for this Fund.
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
ONE YEAR TOTAL RETURNS
For the year ended 1996 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Money 5.13% 5.62% 4.20% 3.12% 3.76% 5.97% 7.80%
(date of inception - 04/03/85)
Oppenheimer Bond 4.80% 17.00% (1.94)% 13.04% 6.50% 17.63% 7.92%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 12.07% 15.33% (3.78)% 4.25%* -- -- --
(date of inception - 05/03/93)
Oppenheimer High Income 15.26% 20.37% (3.18)% 26.34% 17.92% 33.91% 4.65%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 32.51% 23.52%* -- -- -- -- --
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 15.50% 21.36% (1.95)% 15.95% 8.99% 17.48% (1.91)%
(date of inception - 02/09/87)
Oppenheimer Growth 25.20% 36.65% 0.97% 7.25% 14.53% 25.54% (8.21)%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 20.16% 32.52% (7.59)% 27.32% 15.42% 54.72% (16.82)%
(date of inception - 08/15/86)
Oppenheimer Global Securities 17.80% 2.24% (5.72)% 70.32% (7.11)% 3.39% 0.40%*
(date of inception - 11/20/90)
Panorama Total Return 10.14% 24.66% (1.97)% 16.28% 10.21% 28.79% 0.50%
(date of inception - 09/30/82)
Panorama Growth 18.87% 38.06% (0.51)% 21.22% 12.36% 37.53% (7.90)%
(date of inception - 01/21/82)
Panorama International Equity 13.26% 10.30% 1.44% 21.80% (4.32)%* -- --
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation 17.97% 6.65%* -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Balanced 13.38% 6.08%* -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income 6.93% 5.69%* -- -- -- -- --
(date of inception - 09/01/95)
<CAPTION>
TABLE 2
ONE YEAR TOTAL RETURNS
For the year ended 1989 1988 1987 1986 1985 1984 1983 1982
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Money 8.82% 7.31% 6.33% 5.68% 7.25%* -- -- --
(date of inception - 04/03/85)
Oppenheimer Bond 13.32% 8.97% 2.52% 10.12% 18.82%* -- -- --
(date of inception - 04/03/85)
Oppenheimer Strategic Bond -- -- -- -- -- -- -- --
(date of inception - 05/03/93)
Oppenheimer High Income 4.84% 15.58% 8.07% 4.73%* -- -- -- --
(date of inception - 04/30/86)
Oppenheimer Growth & Income -- -- -- -- -- -- -- --
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 15.76% 22.15% 3.97%* -- -- -- -- --
(date of inception - 02/09/87)
Oppenheimer Growth 23.59% 22.09% 3.32% 17.76% 9.50%* -- -- --
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 27.57% 13.41% 14.34% (1.65)%* -- -- -- --
(date of inception - 08/15/86)
Oppenheimer Global Securities -- -- -- -- -- -- -- ---
(date of inception - 11/20/90)
Panorama Total Return 22.98% 11.64% 4.26% 12.58% 25.43% 6.68% 20.20% 8.10%*
(date of inception - 09/30/82)
Panorama Growth 35.81% 14.46% 0.25% 11.58% 27.31% 4.89% 32.72% 33.00%*
(date of inception - 01/21/82)
Panorama International Equity -- -- -- -- -- -- -- --
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation -- -- -- -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Balanced -- -- -- -- -- -- -- --
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income -- -- -- -- -- -- -- --
(date of inception - 09/01/95)
</TABLE>
* The figures shown are one year total returns from inception of the Funds.
NOTE: This Table 2 shows the One Year Total Returns of the Funds based on the
actual investment performance (after deduction of investment management fees and
direct operation expenses). These rates of return do not reflect the mortality
and expense risk charges assessed against the Separate Account. The MML Equity
Index Fund did not commence operations until April 30, 1997. Therefore,
historical investment results for the above periods do not exist for this Fund.
<PAGE>
TABLE 3
AVERAGE ANNUAL TOTAL RETURN OF EACH DIVISION OF THE SEPARATE ACCOUNT
AS OF DECEMBER 31, 1996
The following performance information of the Divisions of the Separate Account
assumes that the Divisions have been in operation for the same periods as the
underlying Funds in which they invest. The returns reflect the total of the
income generated by the Fund net of total Fund operating expenses, plus or minus
capital gains and losses, realized or unrealized, and net of the current
mortality and expense risk charge.
<TABLE>
<CAPTION>
Fund 1 5 10 Since Inception
Year Years Years
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oppenheimer Money* 4.58% 3.87% 5.37% 5.43%
(date of inception - 04/03/85)
Oppenheimer Bond 4.25% 7.13% 8.26% 9.39%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 11.52% -- -- 6.80%
(date of inception - 05/03/93)
Oppenheimer High Income 14.71% 14.33% 13.34% 12.91%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 31.96% -- -- 39.99%
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 14.95% 11.12% -- 10.97%
(date of inception - 02/09/87)
Oppenheimer Growth 24.65% 15.69% 13.77% 13.97%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation 19.67% 16.13% 15.95% 15.11%
(date of inception - 08/15/86)
Oppenheimer Global Securities 17.25% 11.83% -- 10.10%
(date of inception - 11/20/90)
Panorama Total Return 9.59% 10.97% 11.77% 13.18%
(date of inception - 09/30/82)
Panorama Growth 18.32% 16.78% 15.39% 17.24%
(date of inception - 01/21/82)
Panorama International Equity 12.71% -- -- 8.23%
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation 17.42% -- -- 18.25%
(date of inception - 09/01/95)
Panorama LifeSpan Balanced 12.83% -- -- 14.30%
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income 6.38% -- -- 9.06%
(date of inception - 09/01/95)
</TABLE>
Performance information assumes current mortality and expense risk charges. If
guaranteed mortality and risk expense charges were used, the performance results
would be lower. Performance information for any Division of the Separate Account
reflects only the performance of a hypothetical investment in the Division
during the particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the Fund in which the
Division invests and the market conditions during the given time period, and
should not be considered as a representation of what may be achieved in the
future. Actual returns may be more or less than those shown and will depend on a
number of
<PAGE>
factors, including the investment allocations by a Policyowner and the different
investment rates of return for the Divisions.
* Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the performance information is available only
for the year 1987 and subsequent periods.
NOTE: The MML Equity Index Fund did not commence operations until April 30,
1997. Therefore, historical investment results for the 1, 5, and 10 year periods
for this Fund do not exist.
<PAGE>
GENERAL PROVISIONS OF THE POLICY
Premiums. The minimum initial premium payable by You when electing the variable
- --------
rider to the Certificate is $500. This amount must be paid in one lump sum. A
Policy is a Certificate to which a variable rider has been added. Your Employer
pays the estimated premium amount sufficient to pay the Premium Deduction and
Monthly Deduction(s) under the Policy during a selected term. This estimated
premium amount is called a Modal Term Premium. The term selected by Your
Employer can be one month, one quarter, a six month period or one year and is
called a Modal Term. The Modal Term Premium for a Policy is based upon cost of
insurance rates plus the Sales Load, State Premium Tax Charge, DAC Tax Charge,
the Monthly Administrative Charge, and any applicable rider charges. The method
of calculating the Modal Term Premium is shown in Appendix B. The planned
Employer paid premium is the Modal Term Premium for Your Policy. Subject to the
minimum and maximum premium limitations described below, You and Your Employer
may make unscheduled premium payments at any time and in any amount.
Planned Policy Premiums - Modal Term Premiums. The Modal Term selected by the
- ---------------------------------------------
Employer in the Participation Agreement forms the basis for the billing cycle
for your Policy. If the Employer selects a monthly Modal Term, then We will send
Your Employer a monthly premium invoice for your Policy. If the Employer selects
a yearly Modal Term, then We will send Your Employer an annual premium invoice.
The Employer may change the selected Modal Term at any time by written request
to Us. Your Modal Term is specified in Your Policy's schedule page. If You
become disassociated with the Employer, You may elect to continue the Policy on
Your own. If You choose to continue the Policy, You will become vested in all
Policy rights previously held by Your Employer, including the right to change
the Modal Term to any mode but monthly. In this event, MassMutual will
discontinue billing for Your Modal Term premium.
The Modal Term Premium for the Policy may be subject to minimum and maximum
amounts depending on the Selected Face Amount of the Policy, the Insured's age,
and the Employer group.
There is no penalty if the Modal Term 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 Modal Term 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.")
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. There are no minimum or maximum premium payments under the Policy.
However, We have the right to refund all or a portion of a premium paid in any
year if it will increase the amount of insurance which requires a charge under
the Policy. Premium payments should be sent to our Home Office or to the address
indicated for payment on any billing notice.
Termination. This Policy does not terminate for failure to pay premiums since
- -----------
payments, other than the initial premium for the variable account rider, are not
specifically required. Rather, if on a Monthly Calculation Date, the Account
Value less any Policy Debt is insufficient to cover the Monthly Deduction, the
Policy enters a 61-day grace period.
<PAGE>
Grace Period. We allow 61 days to pay any premium necessary to cover the overdue
- ------------
Monthly Deduction. An Employer (or the Policyowner if the Policyowner has
disassociated from the Employer) 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 will terminate without value and insurance
coverage will cease.
DEATH BENEFIT UNDER THE POLICY
The Death Benefit is the amount payable to the named Beneficiary(ies) when the
Insured dies. We pay the Beneficiary the Death Benefit amount determined as of
the date of death upon receipt of proof of death in good order. 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."
A potential Certificate owner indicates the selected initial Face Amount in the
Enrollment Form. Increases in the Selected Face Amount may be requested by the
Policyowner by sending Us a new Enrollment Form, or if the Policyowner is no
longer associated with the Employer, an Application. Under Death Benefit Option
A, 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 B, the Death
Benefit is the greater of the sum of the Selected Face Amount in effect on the
date of death plus the Account value on the date of death, or the Minimum Face
Amount in effect on the date of death, with possible additions or deductions.
The Minimum Face Amount is equal to Account Value times the Minimum Face Amount
Percentage. The percentages depend upon the Insured's age. The percentages are
set forth in the Table Of Minimum Face Amount Percentages in the Policy. Added
to the greater of the Selected Face Amount or Minimum Face Amount is that part
of any Monthly Deduction applicable for the period beyond the date of death. Any
Policy Debt outstanding on the date of death and any Monthly Deduction 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" (or a higher rate if required by
state law.)
The Selected Face Amount may be increased upon request by the Policyowner,
subject to MassMutual's then current guidelines regarding guaranteed issue,
simplified issue, and regular underwriting. Guaranteed issue is only available
to Employees of an Employer group. For those Policyowners subject to simplified
or regular underwriting, We will require adequate evidence of insurability prior
to approving an increase in the Selected Face Amount. A request for a decrease
in the Selected Face Amount will be honored by Us once each Policy Year provided
the Policy maintains a minimum Death Benefit of $50,000. Decreases in the
Selected Face Amount may have tax consequences. (For details see "Federal Income
Tax Considerations" - "Policy Proceeds, Premiums, and Loans.")
Any requested 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
requested decrease 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; (ii) the one year period following the effective date of the previously
requested decrease; or (iii) the requested effective date of the change.
<PAGE>
The Policyowner may change Death Benefit Option by written request subject to
Our current guidelines regarding proof of insurability. There is no charge for a
change in Death Benefit Option. The effective date of any such change will be on
the Policyowner's Policy Anniversary following the date the written request is
received by Us in good order, or if We receive the written request within the 15
day period prior to a Policy Anniversary, the change will be effective on the
second Policy Anniversary following the date of the request. MassMutual will
honor a request for a later effective date provided the date coincides with the
Policyowner's Policy Anniversary.
Any increase for Policyowners no longer associated with the Employer must be at
least $5,000. Under Death Benefit Option A, the Death Benefit is unaffected by
investment experience unless the Death Benefit is based on the Minimum Face
Amount. Under Option B, the Death Benefit may be increased or decreased by
investment experience. (No increase will be allowed after the Policy Anniversary
Date succeeding the Insured's 75th birthday.)
Example: The following example shows how the Death Benefit may vary as a result
of investment performance and Death Benefit Option in effect on the date of
death.
<TABLE>
<CAPTION>
Policy A Policy B
-------- --------
<S> <C> <C>
(a) Selected Face Amount: $100,000 $100,000
(b) Account Value on Date of Death $30,000 $50,000
(c) Minimum Face Amount Percentage
on Date of Death: 280% 280%
(d) Minimum Face Amount $84,000 $140,000
(b x c):
Death Benefit if
Option A in effect
(greater of a or d) $100,000 $140,000
Death Benefit if
Option B in effect
(greater of (i) a + b
or (ii) d): $130,000 $150,000
</TABLE>
(Examples assume no additions to or deductions from the Selected Face Amount or
Minimum Face Amount are applicable.)
ACCOUNT VALUE AND CASH SURRENDER VALUE
Account Value. The Account Value of the Policy is equal to the Variable Account
- -------------
Value plus the Fixed Account Value. The Account Value of the Policy is held in
one or more Divisions and the GPA. Initially, this value equals the net amount
of the first premium paid (combined Employer and Policyowner premium) under the
Policy. If Your Policy has an unexpired Free Look Period, this amount will be
allocated to the Guaranteed Principal Account until the expiration of the Free
Look Period. Thereafter, Account Value
<PAGE>
attributable to Net Premiums paid by You will be allocated to the GPA and/or
Divisions according to Your instructions. Billed Modal Term Premiums payable by
the Employer are always allocated to the GPA.
Transactions with respect to the Account Value are effected by the purchase and
sale of accumulation units. Purchases and sales are made at the unit value as of
the Valuation Time on the Valuation Date if the premium or transaction request
for such purchase or sale is received by Us before the Valuation Time.
Otherwise, purchases and sales will be made as of the next following Valuation
Date or a later date requested by the Policyowner. Unit values are determined on
each Valuation Date.
Transfers. All or part of the Account Value may be transferred among Divisions
- ---------
by written request. Transfers between Divisions may be by dollar amount or by
whole-number percentage. There is no limit on the number of transfers a
Policyowner may make. MassMutual does not currently charge a fee for transfers
in excess of six (6) during any one Policy Year (twelve (12) for Policies issued
in New York). However, the Company reserves the right to charge a fee not to
exceed $10 per transfer if there are more than six (6) transfers in a Policy
Year (twelve (12) for Policies issued in New York). Policyowners, however, may
transfer all funds in the Separate Account to the GPA at any time regardless of
the number of transfers previously made.
Transfers from the GPA to the Separate Account may be made only once during each
Policy Year. Each such transfer may not exceed (at the time of the transfer) the
lesser of (i) 25% of Your Policy's Fixed Account Value (excluding Policy Debt),
or (ii) Fixed Account Value (excluding Policy Debt) less an amount equal to one
plus the number of Monthly Calculation Dates remaining in Your Modal Term
multiplied by Your most recent Monthly Deduction. However, restriction (i) does
not apply if in each of the previous three Policy Years, 25% of the Account
Value in the GPA has been transferred and there have been no premium payments or
transfers (except as a result of a policy loan) to the GPA. All transfers made
on one Valuation Date are considered one transfer.
Automated Account Re-Balancing. Automated Account Re-Balancing permits the
- ------------------------------
Policyowner to specify specific whole-number percentages of a Policyowner's
Account Value to be maintained in any combination of Divisions and the GPA. Once
We have received a written request in proper form for Automated Account
Re-Balancing, We will make transfers once a quarter to and from the Divisions
and the GPA to re-adjust a Policyowner's Account Value to the percentages
specified. This enables the Policyowner to maintain a specific portfolio
allocation. Quarterly re-balancing is based upon the Policy Year instead of a
calendar year. The Automated Account Re-Balancing is considered one transfer per
Policy Year.
Automated Account Re-Balancing can be started, changed or canceled at any time.
Re-balancing will only be made on a quarterly basis on the Monthly Calculation
Date. The effective date of the first automated re-balancing will be the first
Monthly Calculation Date after the request is received by the Home Office. If
the request is received before the end of the Free Look Period, the effective
date of the first re-balancing will be coincident with the end of this Period.
Automated Account Re-Balancing is not subject to the restrictions on transfers
from the GPA to the Separate Account. (For details see "Transfers.")
Policyowners who utilize Automated Account Re-Balancing may not simultaneously
utilize Automated Account Value Transfers.
Automated Account Value Transfer. Automated Account Value Transfer permits the
- --------------------------------
Policyowner to specify transfers of a specific dollar amount or a whole-number
percentage of a Division's Account Value to be transferred monthly from that
Division to any combination of Divisions and the GPA. Automated Account Value
Transfers are not available from more than one Division or from the GPA. This
process is considered one transfer per Policy Year.
<PAGE>
The main objective of Automated Account Value Transfer is to shield the
Policyowner's investment from short term price fluctuations. Theoretically, a
lower than average cost per unit may or may not be achieved over the long term.
This plan of investing allows investors to take advantage of market fluctuations
but does not assure a profit or protect against a loss in declining markets.
Automated Account Value Transfer can be started, changed or canceled at any
time. Transfers will only be made on a monthly basis on the Monthly Calculation
Date. The effective date of the first automated transfer will be the first
Monthly Calculation Date after the request is received by the Home Office. If
the request is received before the end of the Free Look Period, the effective
date of the first automated transfer will be coincident with the end of this
Period.
Transfers will occur automatically. The Policyowner will specify the specific
dollar amounts or whole-number percentages to be transferred and the Division
from which the transfers will be made, the Division(s) and/or GPA to which the
automated transfer is to be made and the number of months during which transfers
will continue.
If the value of the Division from which transfers are being made falls below the
total transfer amount, the remaining value in that Division will be transferred
to the designated receiving Division(s) and/or GPA and no more automated
transfers will be processed. Automated Account Value Transfer is subject to the
restrictions on transfers from the GPA to the Separate Account. (For details see
"Transfers.") Policyowners who utilize Automated Account Value Transfers may not
simultaneously utilize Automated Account Re-Balancing.
Investment Return. The investment return of a Policy is based on:
- -----------------
1. The Account Value held in each Division for that Policy; and
2. The investment experience of each Division as measured by its actual
net rate of return; and
3. The interest rate credited on Account Values held in the GPA.
The investment experience of a Division reflects increases or decreases in the
net asset value of the shares of the underlying Fund, any dividend or capital
gains distributions declared by the Fund, and any charges against the assets of
the Division. This investment experience is determined each day on which the net
asset value of the underlying Fund is determined - that is, on each Valuation
Date. The actual net rate of return for a Division measures the investment
experience from the end of one Valuation Date to the end of the next Valuation
Date.
Cash Surrender Value. The Policy may be surrendered for its full 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 in
proper form 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 full Cash Surrender Value is the Account Value less any outstanding
Policy Debt.
Withdrawals. Subject to certain conditions, after the Policy has been in force
- -----------
for six months a Policyowner can make a Withdrawal from the Policy on any
Monthly Calculation Date by sending a
<PAGE>
written request to our Home Office. The minimum amount of a Withdrawal is $500
(before deducting the withdrawal charge); the maximum amount is the Cash
Surrender Value minus an amount equal to one plus the number of Monthly
Calculation Dates remaining in Your Modal Term multiplied by Your most recent
Monthly Deduction. The amount of the Withdrawal is deducted from the Policy's
Account Value at the end of the Valuation Period applicable to the Monthly
Calculation Date on which the Withdrawal is made. The Policyowner must specify
the GPA or the Division(s) from which the Withdrawal is to be made. The
withdrawal amount attributable to a Division or the GPA may not exceed the non-
loaned Account Value of that Division or GPA. A Withdrawal from the GPA may not
exceed an amount equal to one plus the number of Monthly Calculation Dates
remaining in Your Modal Term multiplied by Your most recent Monthly Deduction. A
withdrawal charge equal to the lesser of 2.0% of the Withdrawal or $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 of insurance which
requires a charge, unless satisfactory evidence of insurability is provided to
MassMutual. Withdrawals may have tax consequences. (For details see "FEDERAL
INCOME TAX CONSIDERATIONS" - "Policy Proceeds," "Premiums and Loans.")
POLICY LOAN PRIVILEGE
The Policy provides a loan privilege which becomes effective six months after
the Policy Date. After such effective date, loans can be made on the Policy at
any time while the Insured is living. The maximum loan is an amount equal to: 1)
90% of Your Account Value at the time of the loan; less 2) any outstanding
Policy Debt before the new loan; less 3) interest on the loan being made and on
other outstanding loan(s) to Your next Policy Anniversary Date; less 4) an
amount equal to one plus the number of Monthly Calculation Dates remaining in
Your Modal Term multiplied by Your most recent Monthly Deduction. The Policy
must be properly assigned as collateral for the loan. (The maximum loan amount
may be different if required by state law.)
Source of Loan. The loan amount requested is taken from the Divisions and the
- --------------
GPA (excluding Policy Debt plus an amount equal to one plus the number of
Monthly Calculation Dates remaining in Your Modal Term multiplied by Your most
recent Monthly Deduction) in proportion to the non-loaned Account Value of each
on the date of the loan. Shares taken from the Divisions are liquidated and the
resulting dollar amounts are transferred to the GPA. We may delay the granting
of any loan attributable to the GPA for up to six months. We may also delay the
granting of any loan attributable to the Separate Account during any period that
the New York Stock Exchange (or its successor) is closed except for normal
weekend and holiday closings, or trading is restricted, or the Securities and
Exchange Commission (or its successor) determines that an emergency exists, or
the Securities and Exchange Commission (or its successor) permits Us to delay
payment for the protection of our policy owners.
If Loans Exceed the Policy Account Value. Policy Debt (which includes accrued
- ----------------------------------------
interest) must not equal or exceed the Account Value under the Policy. If this
limit is reached, We may terminate the Policy. To terminate for this reason We
will notify the Employer (or Policyowner if no longer associated with the
Employer) 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 30 days
after the date We mailed the notice, the Policy terminates without value at the
end of those 30 days.
Termination of a policy under these circumstances could cause the Policyowner to
recognize gross income in the amount of any excess of the Policy Debt over the
sum of the Policyowner's previously unrecovered premium payments.
<PAGE>
Interest. The Employer elects either a fixed loan interest rate or, where
- --------
permitted, an adjustable loan interest rate to apply to the Policies. All
Certificates issued to the same group will have the same fixed or variable loan
interest rate. The fixed loan interest rate is 6% per year. When an adjustable
rate has been selected, MassMutual sets the rate each year that will apply for
the next Policy Year. The maximum rate is based on the monthly average of the
composite yield on seasoned corporate bonds as published by Moody's Investors
Service or, if it is no longer published, a substantially similar average. The
maximum rate is the published monthly average for the calendar month ending two
months before the Policy Year begins, or 5%, whichever is higher. If the maximum
limit is not at least 1/2% higher than the rate in effect for the previous year,
We will not increase the rate. If the maximum limit is at least 1/2% lower than
the rate in effect for the previous year, We will decrease the rate.
Interest accrues daily and becomes part of the Policy Debt as it accrues. It is
due on each Policy Anniversary. If not paid when due, the interest will be added
to the loan and, as part of the loan, will bear interest at the same rate. Any
interest capitalized on a Policy Anniversary will be treated the same as a new
loan and will be taken from the Divisions and the GPA in proportion to the
non-loaned Account Value in each. The inclusion of unpaid interest to
outstanding Policy Debt may result in tax consequences upon surrender or lapse
of the Policy. (For details see "FEDERAL INCOME TAX CONSIDERATIONS - Policy
Proceeds, Premiums and Loans.")
Repayment. All or part of any Policy Debt may be repaid at any time while the
- ---------
Insured is living and while the Policy is in force. Any repayment results in the
transfer of values equal to the repayment from the loaned portion of the GPA to
the non-loaned portion of the GPA and the applicable Division(s). The transfer
is made in proportion to the non-loaned value in each Division at the time of
repayment. If the loan is not repaid, We deduct the amount due from any amount
payable from a full surrender or upon the death of the Insured.
Interest on Loaned Value. The amount equal to any outstanding Policy loans is
- ------------------------
held in the GPA and is credited with interest at a rate which is the greater of
3% and the Policy loan rate less a MassMutual declared charge (currently 0.75%,
guaranteed not to exceed a maximum of 1.25%) for expenses and taxes.
Effect of Loan. A Policy loan affects the Policy since the Death Benefit and
- --------------
Cash Surrender Value under a Policy are reduced by the amount of the loan.
Repayment of the loan increases the Death Benefit and Cash Surrender Value under
the Policy by the amount of the repayment.
As long as a loan is outstanding, a portion of the Policy's Account Value equal
to the loan is held in the GPA. This amount is not affected by the Separate
Account's investment performance. The Account Value is also affected because the
portion of the Account Value equal to the Policy loan is credited with an
interest rate declared by MassMutual rather than a rate of return reflecting the
investment performance of the Separate Account. If the Policy is surrendered
with outstanding Policy Debt, tax consequences may result. (For details see
"FEDERAL INCOME TAX CONSIDERATIONS - Policy Proceeds, Premiums and Loans.")
FREE LOOK PROVISION
The Certificate owner may cancel the Certificate within 10 days (or longer if
required by state law) after the owner has received the Certificate. The
election of the variable account rider does not increase or decrease the
duration of this Free Look Period. If the Certificate owner chooses to cancel
the Certificate within the Free Look Period, the owner should mail or deliver
the Certificate and Certificate delivery receipt (if applicable) either to
MassMutual or to the agent who sold the Certificate or to one of our agency
<PAGE>
offices. If the Certificate is canceled in this fashion, a refund will be made
to the owner. The refund equals either: 1) the Account Value plus any Premium
Deduction(s) and Monthly Deduction(s) reduced by any amounts borrowed or
withdrawn; or, where required by state law, 2) all premiums paid, reduced by any
amounts borrowed or withdrawn. During the Free Look Period, the initial Net
Premium We receive under Certificates to which a variable rider has been added
will be allocated to the Guaranteed Principal Account. If You elect the variable
account rider after the Free Look Period applicable to Your Policy has expired,
the Net Premiums You pay will be allocated among the Guaranteed Principal
Account and the Divisions of the Separate Account in accordance with Your
instructions.
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
Trusts. Those persons entitled to give voting instructions are determined as of
the record date for the meeting.
The number of shares of the Funds held in the Separate Account deemed
attributable to the Policy during the lifetime of the Insured are determined by
dividing the Policy's Account Value held in each Division, if any, by the net
asset value of one share in the underlying Fund in which the assets of the
Division are invested. 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, and attributable to
the Policies, 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. We reserve the right to vote shares of the
Funds not attributable to the Policies in Our discretion to the extent allowed
by applicable law.
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;
<PAGE>
. Make available additional Divisions investing in additional investment
companies;
. Substitute or merge two or more Divisions or Separate Accounts;
. Eliminate one or more Divisions;
. 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
. De-register 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
The directors and executive vice presidents of MassMutual, their positions and
their other business affiliations and business experience for the past five
years are listed below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name and Position Principal Occupation(s) During Past Five Years
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Roger G. Ackerman, Director Chairman and Chief Executive Officer, Corning, Inc., since 1996,
President and Chief Operating Officer 1990-1996
- ----------------------------------------------------------------------------------------------------------------
James R. Birle, Director President and Founder, Resolute Partners, LLC, since 1994; General
Partner, Blackstone Group, 1988-1994
- ----------------------------------------------------------------------------------------------------------------
Frank C. Carlucci, III, Director Chairman, The Carlyle Group, Inc., since 1989
- ----------------------------------------------------------------------------------------------------------------
Gene Chao, Director Chairman, President and CEO, Computer Projections, Inc. since 1991
- ----------------------------------------------------------------------------------------------------------------
Patricia Diaz Dennis, Director Senior Vice President and Assistant General Counsel, SBC Communications
Inc. since 1995; 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
- ----------------------------------------------------------------------------------------------------------------
James L. Dunlap, Director President and Chief Operating Officer, United Meridian Corporation,
since 1996; Senior Vice President, Texaco, Inc. 1987-1996
- ----------------------------------------------------------------------------------------------------------------
William B. Ellis, Director Senior Fellow, Yale University School of Forestry and Environmental
Studies, since 1995; Chairman and Chief Executive Officer, Northeast
Utilities, 1983-1995
- ----------------------------------------------------------------------------------------------------------------
Robert M. Furek, Director President and Chief Executive Officer, Heublein, Inc., 1987-1996
- ----------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------
William N. Griggs, Director Managing Director, Griggs & Santow, Inc., since 1983
- ----------------------------------------------------------------------------------------------------------------
George B. Harvey, Director Chairman, President and CEO, Pitney Bowes, 1983-1996
- ----------------------------------------------------------------------------------------------------------------
Barbara B. Hauptfuhrer, Director of various corporations, since 1972
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
Director
- ----------------------------------------------------------------------------------------------------------------
Sheldon B. Lubar, Director Chairman, Lubar & Co. Incorporated, since 1977
- ----------------------------------------------------------------------------------------------------------------
William B. Marx, Jr., Director Senior Executive Vice President, Lucent Technologies 1996-1996;
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
- ----------------------------------------------------------------------------------------------------------------
Donald F. McCullough, Director Retired Chairman and Chief Executive Officer, Collins & Aikman Corp.,
since 1988
- ----------------------------------------------------------------------------------------------------------------
John J. Pajak, Director, President President and Chief Operating Officer, MassMutual, since 1996, Vice
and Chief Operating Officer Chairman and Chief Administrative Officer, 1996-1996, Executive Vice
President, 1987-1996
- ----------------------------------------------------------------------------------------------------------------
Thomas B. Wheeler, Director, Chairman and Chief Executive Officer, MassMutual, since 1996, President
Chairman and Chief Executive Officer and Chief Executive Officer, 1988-1996
- ----------------------------------------------------------------------------------------------------------------
Alfred M. Zeien, Director Chairman and Chief Executive Officer, The Gillette Company, since 1991
- ----------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------
John B. Davies Executive Vice President, MassMutual, since 1994; Associate Executive
Vice President 1994-1994; General Agent, 1982-1993
- ----------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald Executive Vice President, MassMutual, since 1994, Senior Vice President,
1991-1994
- ----------------------------------------------------------------------------------------------------------------
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; 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
- ----------------------------------------------------------------------------------------------------------------
Joseph Zubretsky Executive Vice President and Chief Financial Officer, MassMutual, since
1997, Chief Financial Officer, Healthsource, Inc. 1996-1997, Partner,
Coopers & Lybrand L.L.P., 1990-1996
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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.
<PAGE>
A Policyowner may allocate or transfer all or part of the Net Premium to the
GPA, and such amounts shall become part of MassMutual's general account assets.
The allocation or transfer of amounts to the GPA does not entitle a Policyowner
to share in the investment experience of those assets. Instead, MassMutual
guarantees that those amounts allocated to the GPA which are in excess of any
Policy loans will accrue interest daily at a minimum effective annual rate equal
to 3%. For amounts equal to any Policy loans, the guaranteed rate is the greater
of: (a) 3%; and (b) the Policy loan rate less a MassMutual declared charge for
expenses and taxes. This charge is currently 0.75% and will not exceed 1.25%.
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.
<PAGE>
Under current state laws, MassMutual may incur state and local taxes (in
addition to premium taxes). At present, these taxes are not significant. If
there is a material change in state or local tax laws, MassMutual reserves the
right to charge the Separate Account for such taxes, if any, attributable to the
Separate Account.
Policy Proceeds, Premiums, and Loans. MassMutual believes that the Policy meets
- ------------------------------------
the statutory definition of life insurance under Code Section 7702 and hence
receives the same tax treatment as that accorded to fixed benefit life
insurance. Thus, the Death Benefit under the Policy is generally excludable from
the gross income of the Beneficiary under Section 101(a)(1) of the Code. As an
exception to this general rule, where a Policy has been transferred for value,
only the portion of the Death Benefit which is equal to the total consideration
paid for the Policy may be excluded from gross income. The Policyowner is not
deemed to be in constructive receipt of the cash values, including increments
thereon, under the Policy until a full surrender or Withdrawal is made.
Upon a full surrender of a Policy for its Cash Surrender Value the Policyowner
may recognize ordinary income for federal tax purposes. Ordinary income is
computed to be the amount by which the Account Value, unreduced by any
outstanding Policy Debt (which may include unpaid interest), exceeds the
premiums paid but not previously recovered and any other consideration paid for
the Policy.
Decreases in Selected Face Amount and Withdrawals may be taxable depending on
the circumstances. Code Section 7702(f)(7) provides that where a reduction of
future benefits occurs during the first 15 years after a Policy is issued and
where there is a cash distribution associated with that reduction, the
Policyowner may be taxed on all or part of the amount distributed. After 15
years, such cash distributions are not subject to federal income tax, except to
the extent they exceed the total amount of premiums paid but not previously
recovered. Where the provisions of Code Section 7702(f) do not 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
a Policyowner consult with his or her tax adviser in advance of a proposed
decrease in Selected Face Amount or Withdrawal as to the portion, if any, which
would be subject to federal income tax.
A change of Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances.
MassMutual also believes that under current law any loan received under the
Policy will be treated as Policy Debt of a Policyowner, and that no part of any
loan under a Policy will constitute income to the Policyowner. Under the
"personal" interest limitation provisions of the Code, interest on Policy loans
used for personal purposes, which otherwise meet the requirements of Code
Section 264, will no longer be tax deductible. Other rules may apply to allow
all or part of the interest expense as a deduction if the loan proceeds are used
for "trade or business" or "investment" purposes. See a tax advisor for further
guidance.
If the Policy is owned by a business or corporation, the Code may impose
additional restrictions. The Act limits the interest deduction available for
loans against a business-owned Policy. It imposes an indirect tax upon the
inside build-up of gain in corporate-owned life insurance policies by way of the
corporate alternative minimum tax, for those corporations subject to the
alternative minimum tax. The corporate alternative minimum tax could also apply
to a portion of the amount by which Death Benefits received exceed the Policy's
date of death cash value.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
<PAGE>
For complete information on the impact of changes with respect to the Policy and
federal and state tax considerations, a qualified tax advisor should be
consulted.
MassMutual makes no guarantee regarding the future tax treatment of any Policy.
Modified Endowment Contracts. Contrary to the rules described above, loans,
- ----------------------------
collateral assignments, withdrawals, 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 re-tested 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
re-tested 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 re-tested to determine whether it continues
to meet the 7-pay test.
A material change starts a new 7-pay test period. The term "material change"
includes many increases in death benefits. A material change does not include an
increase in death benefits which is attributable to the payment of premiums
necessary to fund the lowest level of death benefits payable during the first
seven contract years, or which is attributable to the crediting of interest or
dividends with respect to such premiums.
Since the Policy provides for flexible premium payments, We will carefully
monitor the Policy to determine whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will be considered.
If any amount is taxable as a distribution of income under a modified endowment
contract, it will also be subject to a 10% penalty tax. Limited exceptions from
the additional penalty tax are available for individual Policyowners. The
penalty tax will not apply to distributions: (i) that are made on or after the
date the taxpayer attains age 59 1/2; or (ii) that are attributable to the
taxpayer's becoming disabled; or (iii) that are part of a series of
substantially equal periodic payments (made not less frequently than annually)
made for the life or life expectancy of the taxpayer. For complete information
with respect to modified endowment contract status, particularly where a Policy
is owned by other than an individual Policyowner, a qualified tax advisor should
be consulted.
<PAGE>
Once a Policy fails the 7-pay test, loans, collateral assignments, withdrawals,
and other 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 all other 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 or Portfolio of the MML Trust,
Oppenheimer Trust, and Panorama Fund is required to diversify its investments.
The Final Regulations generally require that on the last day of each quarter of
a calendar year no more than 55% of the value of a Trust's assets is represented
by any one investment, no more than 70% is represented by any two investments,
no more than 80% is represented by any three investments, and no more than 90%
is represented by any four investments. A "look-through" rule applies to treat a
pro-rata portion of each asset of the Trust as an asset of the Separate Account.
All securities of the same issuer are treated as a single investment. Each
Government agency or instrumentality, however, is treated as a separate issuer.
With respect to variable life insurance contracts, the general diversification
requirements are modified if any of the assets of the Separate Account are
direct obligations of the United States Treasury. In this case, there is no
limit on the investment that may be made in United States Treasury Securities,
and for purposes of determining whether assets other than United States Treasury
Securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the Separate Account's
investment in United States Treasury Securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the
Trusts will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with the general standards.
In connection with the issuance of the temporary regulations prior to the Final
Regulations, the Treasury announced that such temporary regulations did not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular divisions of a separate account. Regulations in this
regard were not issued in connection with the Final Regulations, however. It is
not clear, at this time, what future regulations might provide. It is possible
that if future regulations are issued, the Policy may need to be modified to
comply with such regulations. For these reasons, MassMutual reserves the right
to modify the Policy, as necessary, to prevent the Policyowner from being
considered the owner of the assets of the Separate Account.
MassMutual intends to comply with the Final Regulations to assure that the
Policy continues to qualify as life insurance for federal income tax purposes.
ADDITIONAL PROVISIONS OF THE POLICY
<PAGE>
Paid-up Policy Date. The Paid-up Policy Date is the Policy Anniversary Date
- -------------------
after the Insured's 100th birthday. On this Date and at all times thereafter,
the Selected Face Amount will equal the Account Value, and the Death Benefit
Option will be Death Benefit Option A. As of this Date, the charge for cost of
insurance will be equal to $0 and premium payments will no longer be accepted.
The Policy does not lapse after the Paid-up Policy Date. The payment of planned
Policy premiums does not guarantee that the Policy will continue in force to the
Paid-up Policy Date.
Reinstatement Option. For a period of five (5) years after termination, a
- --------------------
Policyowner can request that We reinstate the Policy during the Insured's
lifetime. We will not reinstate the 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 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 acknowledgment that the Policy has become a
modified endowment contract.
If We do reinstate the Policy, the Selected Face Amounts for the reinstated
Policy will be the same as it would have been if the Policy had not terminated.
Payment Options. All or part of the Death Benefit or Cash Surrender Value may be
- ---------------
taken in cash or as a series of level payments. Proceeds applied will no longer
be affected by the investment experience of the Divisions or the GPA.
To receive payments, the proceeds to be applied must be at least $2,000. If the
payments under any option are less than $20 each, We reserve the right to make
payments at less frequent intervals or to make a lump sum payment in
satisfaction of Our obligation. 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:
<PAGE>
Payments for life only;
Payments guaranteed for five, ten or twenty years; or
Payments guaranteed for the amount applied.
Joint Lifetime Payment Option. Equal monthly payments are based on the lives of
- -----------------------------
two named persons. While both named persons are living, one payment is made each
month. When one of the named persons dies, the same payment continues for the
lifetime of the other. Two variations are available:
. Payments guaranteed for 10 years; and
. Payment for two lives only. No specific number of payments is
guaranteed. Under this option there may be one payment if the two
named persons die prior to the second payment.
Joint Lifetime Payment Option with Reduced Payments. Monthly payments are based
- ---------------------------------------------------
on the lives of two named persons. While both named persons are living, one
payment will be made each month. When one dies, payments are reduced by
one-third and will continue for the lifetime of the other.
Withdrawal Rights under Payment Options. If provided in the payment option
- ---------------------------------------
election, all or part of the unpaid balance may be withdrawn or applied under
any other option. Payments which are based on a named person's life may not be
withdrawn.
Beneficiary. A Beneficiary is any person named on our records to receive
- -----------
insurance proceeds after the Insured dies. A Policyowner names the Beneficiary
when he or she or it applies for the Policy. There may be different classes of
beneficiaries, such as primary and secondary. These classes set the order of
payment. There may be more than one Beneficiary in a class.
Any Beneficiary may be named an irrevocable beneficiary. An irrevocable
beneficiary is one whose consent is needed to change that Beneficiary. The
consent of any irrevocable beneficiary is needed to exercise any Policy right
except the right to:
. Change the frequency of premium payments.
. Change the premium payment plan.
. Reinstate the Policy after termination.
If no Beneficiary is living when the Insured dies, unless provided otherwise,
the Death Benefit is paid to the Policyowner or, if deceased, the Policyowner's
estate.
Changing the Policyowner or Beneficiary. The Policyowner 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.
Assignment. The Policy may be assigned as collateral for a loan or other
- ----------
obligation, subject to any outstanding Policy Debt. We will not effectuate the
assignment unless We receive a signed copy of it at
<PAGE>
our Home Office and We consent to the assignment. 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 cannot contest the validity of a
- -------------------------------------------
Certificate after it has been in force during the lifetime of the Insured for a
period of two years from its Issue Date. This same two year period applies to
any increase in the Selected Face Amount. After that We cannot contest its
validity, except for failure to pay premiums.
Misstatement of Age. If the Insured's date of birth as given in the Enrollment
- -------------------
Form 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. If the adjustment is made
before the Insured dies, then future Monthly Deductions will be based on the
correct age.
Suicide. If the Insured commits suicide within two years (or different period if
- -------
required by state law) from the Issue Date or an increase in the Selected Face
Amount and while the Policy is in force, We pay a limited Death Benefit in one
sum to the Beneficiary. The limited Death Benefit is the amount of premiums paid
for the Policy, less any Policy Debt or amounts withdrawn.
When We Pay Proceeds. If the Policy has not terminated, payment of the Cash
- --------------------
Surrender Value, loan proceeds or the Death Benefit are made normally within 7
days after We receive all required documents at our Home Office. We can delay
payment of the Cash Surrender Value or any Withdrawal from the Separate Account,
loan proceeds attributable to the Separate Account, or the Death Benefit during
any period that:
It is not reasonably practicable to determine the amount because the New York
Stock Exchange (or its successor) is closed, except for normal weekend or
holiday closings, or trading is restricted; or
the Securities and Exchange Commission (or its successor) determines that an
emergency exists; or
the Securities and Exchange Commission (or its successor) permits Us to delay
payment for the protection of our policy owners; or
We are permitted by state law to delay such payment.
We may delay paying any Cash Surrender Value or loan proceeds based on the GPA
for up to 6 months from the date the request was received at our Home Office. We
can delay payment of the entire Death Benefit if payment is contested. We
investigate all death claims arising within the two-year contestable period.
Upon receiving the information from a completed investigation, We generally make
a determination
<PAGE>
within five working days as to whether the claim should be authorized for
payment. Payments are made promptly after authorization. If payment is delayed
for 10 working days or more from the effective date of surrender or Withdrawal,
We add interest at the same rate as is paid under the Interest Payment Option
for the same period of time (but not less than required by state law). The
minimum amount of such interest is $25.
OPTIONAL BENEFITS OBTAINABLE BY RIDER
This Section is intended to provide only a very brief overview of additional
insurance benefits available by rider. For more information, contact Your
Employer or Your agent.
Your Employer may chose the following supplemental benefits to be available by
Rider under Your Policy.
Waiver of Monthly Charges Rider. With this rider We will waive the Monthly
- -------------------------------
Deduction on each Monthly Calculation Date for at least two years in the event
of the Insured's total disability which begins before age 65 and such total
disability continues for at least 6 months. The waiver will continue up to the
Insured's attained age 65, but in any event will never be less than two years.
Your Employer determines whether this Rider becomes available under Your Policy.
Accelerated Benefits Rider. This rider permits part of the proceeds of the
- --------------------------
Policy to be available before death if the Insured becomes terminally ill.
MassMutual will require proof, satisfactory to Us, that the Insured is
terminally ill and is not expected to live longer than 12 months prior to
activation of the rider. In return for the advanced payment, a lien is
established against the Policy, equal to the amount of the accelerated benefit.
No interest is charged against the lien. This Rider is available under all
Policies.
Accidental Death and Dismemberment Rider. With this rider We will pay a benefit
- ----------------------------------------
equal to a percentage of the Accidental Death and Dismemberment Rider Face
Amount specified in the following table if the Insured dies or becomes
dismembered due to accidental causes prior to attaining age 65. The Rider's
Selected Face Amount will be the lesser of the Policy's Selected Face Amount or
$500,000. Your Employer determines whether this Rider becomes available under
Your Policy.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Loss of Life Percent of Rider Face
------------ ---------------------
Amount Payable
--------------
----------------------------------------------------------------------
<S> <C>
Life 100
----------------------------------------------------------------------
Both Limbs 100
----------------------------------------------------------------------
Both Arms 100
----------------------------------------------------------------------
Sight of Both Eyes 100
----------------------------------------------------------------------
One Limb and Sight of One Eye 100
----------------------------------------------------------------------
One Arm and Sight of One Eye 100
----------------------------------------------------------------------
One Limb or One Arm 50
----------------------------------------------------------------------
Vision of One Eye 50
----------------------------------------------------------------------
</TABLE>
RECORDS AND REPORTS
MassMutual maintains all records and accounts relating to the Separate Account
and the GPA. Each year within 30 days after the Policy Anniversary, We will mail
to the Policyowner a report showing the Account Value at the beginning of the
previous Policy Year, all premiums paid since that time, all additions to and
<PAGE>
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. MML Investors Services, Inc. ("MMLISI"), also
located at 1414 Main Street, Springfield, MA 01144-1013, 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 a supplement to the Application requesting one of the Policies is
completed, it is submitted to us. We or the selling broker perform suitability
review and, in some cases, We perform insurance underwriting. We determine
whether to accept or reject the application for the Policy and the Insured's
risk classification. If the application is not accepted, We will refund any
premium that has been paid.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies of the Separate Account. 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 paid. General Agents may also receive compensation as
a percentage of premium paid. Commissions paid will not exceed 24% of Modal Term
Premiums and 3% of premiums paid in excess of the Modal Term Premium.
Agents and General Agents may receive commissions at lower rates on Policies
sold to replace existing insurance issued by MassMutual or any of its
subsidiaries.
Bonding Arrangement. An insurance company blanket bond is maintained providing
- -------------------
$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 that adversely
impact the Policy.
EXPERTS
<PAGE>
The audited statutory financial statements of MassMutual as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996
included in this Prospectus, have been so included in reliance on the reports,
which include explanatory paragraphs relating to the use of statutory accounting
practices rather than generally accepted accounting principles and the change in
their opinion for the prior years presented, of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
FINANCIAL STATEMENTS
SEPARATE ACCOUNT FINANCIAL STATEMENTS
No financial statements of the GVUL Segment of the Separate Account have been
included herein because as of the date of this prospectus, the GVUL Segment had
not commenced operation.
MASSMUTUAL FINANCIAL STATEMENTS
The financial statements of MassMutual included herein should be considered only
as bearing upon the ability of MassMutual to meet its obligations under the
Policy.
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
INTERIM FINANCIAL STATEMENTS
for the period ended March 31, 1997 and 1996
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1997 1996
-------- --------
(In Millions)
<S> <C> <C>
Assets:
Bonds $24,049.0 $25,255.0
Common stocks 280.2 336.6
Mortgage loans 4,741.5 3,897.1
Real estate 1,838.1 1,840.9
Other investments 1,557.8 1,425.6
Policy loans 4,788.0 4,752.3
Cash and short-term investments 1,194.0 1,075.4
Investment and insurance amounts receivable 1,011.4 1,102.4
Separate account assets 13,772.9 13,563.5
Other assets 156.2 97.9
--------- ---------
$53,389.1 $53,346.7
========= =========
</TABLE>
See notes to statutory financial statements
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION, continued
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1997 1996
-------- --------
(In Millions)
<S> <C> <C>
Liabilities:
Policyholders' reserves and funds $33,379.8 $33,341.5
Policyholders' dividends 893.0 885.3
Policy claims and other benefits 369.6 373.8
Federal income taxes 445.7 440.7
Asset valuation reserve 717.5 689.2
Investment reserves 189.3 208.4
Separate account reserves and liabilities 13,772.9 13,563.1
Amounts due on investments purchased and
other liabilities 929.9 1,206.1
--------- ---------
50,697.7 50,708.1
Policyholders' contingency reserves 2,691.4 2,638.6
--------- ---------
$53,389.1 $53,346.7
========= =========
</TABLE>
See notes to statutory financial statements
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
For the Period Ending
March 31,
1997 1996
---- ----
(In Millions)
<S> <C> <C>
Income:
Premium income $1,625.2 $1,451.8
Net investment and other income 710.4 733.2
-------- --------
2,335.6 2,185.0
-------- --------
Benefits and expenses:
Policy benefits and payments 1,584.0 1,470.5
Addition to policyholders' reserves and funds 187.0 138.7
Commissions and operating expenses 164.9 196.1
State taxes, licenses and fees 19.0 28.7
Merger restructuring costs 0.0 21.6
-------- --------
1,954.9 1,855.6
-------- --------
Net gain before federal income taxes and dividends 380.7 329.4
Federal income taxes 85.0 78.5
Net gain from operations before dividends 295.7 250.9
Dividends to policyholders 212.3 203.5
-------- --------
Net gain from operations 83.4 47.4
Net realized capital gain (loss) (16.9) 145.8
-------- --------
Net income $ 66.5 $ 193.2
======== ========
</TABLE>
See notes to statutory financial statements
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
(Unaudited)
For the Period Ending
March 31,
1997 1996
---- ----
(In Millions)
<S> <C> <C>
Policyholders' contingency reserves, beginning
of year $2,638.6 $2,600.9
-------- --------
Increases (decreases) due to:
Net income 66.5 193.2
Net unrealized capital gain (loss) 2.2 (23.8)
Change in asset valuation reserve (28.3) (104.7)
Change in general investment reserve 18.0 (50.8)
Change in non-admitted assets 1.7 (4.4)
Prior year reserve changes 0.4 (77.6)
Other changes (7.7) 27.9
-------- --------
Policyholders' contingency reserves, end of period $2,691.4 $2,560.7
======== ========
</TABLE>
See notes to statutory financial statements
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
SCHEDULE OF TOTAL ADJUSTED CAPITAL
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1997 1996
---- ----
(In Millions)
<S> <C> <C>
Contingency reserves $2,691.4 $2,638.6
AVR 717.5 689.2
1/2 Dividend liability (page 3, line 7.1) 441.3 437.4
-------- --------
Total capital $3,850.2 $3,765.2
======== ========
</TABLE>
See notes to statutory financial statements
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the Periods Ending,
March 31,
1997 1996
---- ----
(In Millions)
<S> <C> <C>
Operating activities:
Net income $ 66.5 $ 193.2
Addition to policyholders' reserves and funds,
net of transfers to separate accounts 34.1 2.6
Net realized capital (gain) loss 16.9 (145.8)
Other changes (66.3) 132.6
--------- ---------
Net cash provided by operating activities 51.2 182.6
--------- ---------
Investing activities:
Purchases of investments and loans (4,938.1) (2,701.5)
Sales or maturities of investments and receipts
from repayment of loans 5,005.5 2,492.8
--------- ---------
Net cash provided by (used in) investing activities 67.4 (208.7)
--------- ---------
Increase (decrease) in cash and short-term investments 118.6 (26.1)
Cash and short-term investments, beginning of year 1,075.4 2,342.8
--------- ---------
Cash and short-term investments, end of period
$ 1,194.0 $ 2,316.7
========= =========
</TABLE>
See notes to statutory financial statements
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying interim financial statements of Massachusetts Mutual Life
Insurance Company (the "Company") 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 ("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.
The accompanying statutory financial statements are different in some
respects from GAAP financial statements. The more significant differences
are as follows: (a) acquisition costs, such as commissions and other costs
in connection with acquiring new business, are charged to current
operations as incurred, whereas under GAAP these expenses would be
capitalized and recognized over the life of the policies; (b) policy
reserves are based upon statutory mortality and interest requirements
without consideration of withdrawals, whereas GAAP reserves would be based
upon reasonably conservative estimates of mortality, morbidity, interest
and withdrawals; (c) bonds are generally carried at amortized cost whereas
GAAP would value bonds at fair value and (d) deferred income taxes are not
provided for book-tax timing differences whereas GAAP would record deferred
income taxes.
The accompanying interim financial statements reflect, in the opinion of
the Company's management, all adjustments (consisting of normal, recurring
accruals) necessary for a fair presentation of the interim financial
position and results of operations. Such statements should be read in
conjunction with the annual financial statements.
2. Material Transactions
Effective February 29, 1996, the Company merged its operations with
Connecticut Mutual Life Insurance Company. The effects of this business
combination have been accounted for as a pooling of Interest. Cumulative
effects of all accounting changes have been recorded as a direct charge to
the Company's policyholders contingency reserves.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly owned subsidiary, and its subsidiaries, including Mirus Life
Insurance company, which comprised the Company's group life and health
business, to WellPoint Health Networks, Inc. The Company received total
consideration of $402.2 million and recognized a before tax gain of $187.9
million.
3. Asset Valuation Reserve
In compliance with regulatory requirements, the Company maintains the Asset
Valuation Reserve. The balances as of March 31, 1997 and 1996, reflect the
year-to-date activity and a pro rata share of the annual contribution or
amortization, respectively. The Asset Valuation Reserve and other
investment reserves stabilize the policyholders' contingency reserves
against fluctuations in the value of stocks, as well as declines in the
value of bonds, mortgage loans and real estate investments. These other
investment reserves for both periods are established each quarter based on
the Company's best estimate at those dates and realized losses are taken
after a complete analysis is performed during the fourth quarter.
<PAGE>
4. Policyholders' Dividends
In October, the Board of Directors annually approve dividends to be paid in
the following year. The dividend liability recorded as of March 31, 1997
and 1996 is based on the dividend scales approved for those years in
October 1996 and 1995, respectively, and reflects the dividends to be
credited for the subsequent twelve months. In the fourth quarter of each
year, the dividend liability is adjusted to reflect the dividend scale
approved in October of that year.
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS
as of December 31, 1996 and 1995
and for the years ended December 31, 1996, 1995 and 1994
<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
<PAGE>
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.
Coopers & Lybrand, L.L.P.
Springfield, Massachusetts
February 7, 1997
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1996 1995
-------- -------
(In Millions)
Assets:
<S> <C> <C>
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
========= =========
</TABLE>
See notes to statutory financial statements.
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY STATEMENT OF FINANCIAL POSITION, continued
<TABLE>
<CAPTION>
December 31,
1996 1995
--------- -------
(In Millions)
<S> <C> <C>
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.
<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.
<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.
<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.
<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
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
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.
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
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
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
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
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
<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.
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
<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 $ 8,042.6 $ 344.0 $ 56.3 $ 8,330.3
and Obligations of U. S.
Government Corporations
and Agencies
Debt Securities issued by 95.2 10.2 .5 104.9
Foreign Governments
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
========= ======== ====== =========
</TABLE>
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
<TABLE>
<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 $ 9,391.5 $837.0 $ 43.3 $10,185.2
and Obligations of U. S.
Government Corporations
and Agencies
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>
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.
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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.
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.
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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>
(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>
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
<PAGE>
NOTES TO STATUTORY FINANCIAL STATEMENTS, Continued
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%
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
<PAGE>
APPENDIX A
Illustrations of Death Benefits (Option A & Option B), Cash Surrender Values and
Accumulated Premiums
The following tables illustrate the way in which a Policy operates. They show
how the Death Benefit and cash surrender value could vary over an extended
period of time, assuming the Funds experience hypothetical gross rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized), equivalent to constant gross annual rates of 0%, 6% and
12%. Table 1 shows Death Benefit Option A using the current schedule of charges.
Table 2 shows Death Benefit Option A using the guaranteed schedule of charges.
Table 3 shows Death Benefit Option B using the current schedule of charges.
Table 4 shows Death Benefit Option B using the guaranteed schedule of
charges.
The tables are based on the following assumptions: 1) the Policyowner is issue
age 45; 2) the Policyowner has requested a level Selected Face Amount of
$250,000; 3) no Policy loans have been made, 4) the Employer has selected an
Annual Modal Term; 5) the Modal Term Premium is always allocated to the
Guaranteed Principal Account; 6) the Guaranteed Principal Account credits the
Modal Term Premium interest at an annual rate of 3%; and 7) and the Policyowner
makes annual Premium payments of $4,000 in excess of the Modal Term Premium for
20 years which are allocated to the Separate Account.
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.
The death benefits and cash surrender values for a Policy would be different
from the amount shown if the rates of return of the Funds averaged 0%, 6% and
12% over a period of years but varied above and below that average in individual
Policy Years. They would also differ if any Policy loan were made during the
period of time illustrated. They would also be different depending upon the
allocation of investment value to each Division, if the rates of return for all
the Funds averaged 0%, 6% or 12% but varied above or below that average for
particular Funds.
The tables assume that the Modal Term Premium is credited interest at a
guaranteed rate of 3%. The current credited rate is higher than 3%. Therefore,
if current rates were used, the cash surrender values for the policy illustrated
in the tables would be higher.
The death benefits and cash surrender values shown in Table 1 & 3 reflect a
State Premium Tax deduction of 2% and a DAC Tax deduction of 0.25%, MML Trust,
Oppenheimer Trust, and Panorama Fund level expenses of 0.83% on an annual basis,
of the net asset value of the MML Trust, Oppenheimer Trust, and Panorama Fund
shares held by the Separate Account (This unweighted average reflects current
Fund level expenses), plus the following current charges:
1. A Sales Load of 0.75% of Premium.
2. Administrative Charge, equal to a monthly $5.25 per Policy.
3. Cost of Insurance Protection, based on the current guaranteed issue rates
being charged by the Company.
<PAGE>
4. Mortality and Expense Risk Charge, which is equal to 0.55% 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 Table 2 & 4 reflect a
State Premium Tax deduction of 2% and a DAC Tax deduction of 0.25%, MML Trust,
Oppenheimer Trust, and Panorama Fund level expenses of 0.83% on an annual basis,
of the net asset value of the MML Trust, Oppenheimer Trust, and Panorama Fund
shares held by the Separate Account (This unweighted average reflects current
Fund level expenses), plus the following guaranteed charges:
1. A Sales Load of 5% of Premium (MassMutual will establish a Sales Load
between 0.75% to 5% of Premium for a Policy upon its issuance. However,
once the Sales Load is established, it will not change for the life of the
Policy.)
2. Administrative Charge, equal to $9.00 per month.
3. Cost of Insurance Charge, based on 125% of the 1980 CSO Mortality
Table.
4. Mortality and Expense Risk Charge, which is equal to 1.00% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
MassMutual has agreed to bear expenses of the MML Equity Index Fund (other than
the management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of 0.11% of average daily net asset value of the Fund
through April 30, 1998. MassMutual expects that it will be required to reimburse
the expenses of the MML Equity Index Fund pursuant to this undertaking in
1997.
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 fifth 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.
<PAGE>
TABLE 1
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Current Schedule of Charges
Illustrating Death Benefit Option A
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option A) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical
Gross Annual Investment Growth Annual Investment
Return of Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 250000 250000 250000 3834 4063 4293
2 502 4000 4502 9652 250000 250000 250000 7622 8319 9044
3 535 4000 4535 14896 250000 250000 250000 11368 12778 14301
4 605 4000 4605 20476 250000 250000 250000 15074 17453 20122
5 641 4000 4641 26373 250000 250000 250000 18743 22353 26566
6 707 4000 4707 32634 250000 250000 250000 22377 27494 33704
7 742 4000 4742 39245 250000 250000 250000 25978 32886 41608
8 811 4000 4811 46259 250000 250000 250000 29551 38547 50367
9 915 4000 4915 53733 250000 250000 250000 33104 44500 60082
10 989 4000 4989 61658 250000 250000 250000 36638 50757 70853
11 1051 4000 5051 70044 250000 250000 250000 40153 57333 82793
12 1164 4000 5164 78968 250000 250000 250000 43662 64260 96049
13 1259 4000 5259 88439 250000 250000 250000 47167 71555 110760
14 1404 4000 5404 98535 250000 250000 260563 50682 79258 127104
15 1542 4000 5542 109281 250000 250000 290258 54213 87395 145129
16 1744 4000 5744 120776 250000 250000 320123 57781 96019 165012
17 1921 4000 5921 133032 250000 250000 355102 61390 105158 186896
18 2137 4000 6137 146127 250000 250000 390350 65058 114867 211000
19 2372 4000 6372 160124 250000 250000 427585 68801 125201 237547
20(age 65) 2603 4000 6603 175064 250000 250000 469485 72631 136208 266753
21 0 0 0 183817 250000 250000 502066 69903 141027 291899
22 0 0 0 193008 250000 250000 536672 66835 145975 319448
23 0 0 0 202658 250000 250000 573524 63438 151097 349710
24 0 0 0 212791 250000 251805 616481 59660 156401 382908
25 0 0 0 223431 250000 254169 658448 55444 161891 419394
26 0 0 0 234602 250000 258028 707535 50722 167551 459438
27 0 0 0 246332 250000 261782 760133 45420 173365 503399
28 0 0 0 258649 250000 265427 816491 39452 179343 551683
29 0 0 0 271581 250000 268964 876865 32711 185493 604734
30 0 0 0 285160 250000 272392 941531 25066 191826 663050
31 0 0 0 299418 250000 277622 1017797 16375 198302 726998
32 0 0 0 314389 250000 282756 1099893 6366 204895 797024
33 0 0 0 330109 0 285724 1179726 0 211648 873871
34 0 0 0 346614 0 290589 1274007 0 218488 957900
35 0 0 0 363945 0 295296 1375233 0 225417 1049796
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 0 0 0 464496 0 321953 2039672 0 261750 1658270
45 0 0 0 592828 0 351623 3059037 0 300533 2614561
50 0 0 0 756615 0 382817 4611190 0 344880 4154225
</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 FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
TABLE 2
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Guaranteed Schedule of Charges
Illustrating Death Benefit Option A
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option A) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical
Gross Annual Investment Gross Annual Investment
Return of Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 250000 250000 250000 2615 2771 2927
2 502 4000 4502 9652 250000 250000 250000 5123 5591 6078
3 535 4000 4535 14896 250000 250000 250000 7522 8458 9470
4 605 4000 4605 20476 250000 250000 250000 9841 11403 13158
5 641 4000 4641 26373 250000 250000 250000 12041 14386 17127
6 707 4000 4707 32634 250000 250000 250000 14140 17424 21423
7 742 4000 4742 39245 250000 250000 250000 16094 20476 26030
8 811 4000 4811 46259 250000 250000 250000 17923 23558 31001
9 915 4000 4915 53733 250000 250000 250000 19640 26685 36387
10 989 4000 4989 61658 250000 250000 250000 21202 29814 42186
11 1051 4000 5051 70044 250000 250000 250000 22592 32925 48421
12 1164 4000 5164 78968 250000 250000 250000 23849 36059 55185
13 1259 4000 5259 88439 250000 250000 250000 24952 39194 62513
14 1404 4000 5404 98535 250000 250000 250000 25940 42373 70512
15 1542 4000 5542 109281 250000 250000 250000 26785 45571 79234
16 1744 4000 5744 120776 250000 250000 250000 27516 48825 88804
17 1921 4000 5921 133032 250000 250000 250000 28076 52082 99271
18 2137 4000 6137 146127 250000 250000 250000 28443 55339 110757
19 2372 4000 6372 160124 250000 250000 250000 28566 58575 123402
20(age65) 2603 4000 6603 175064 250000 250000 250000 28376 61755 137362
21 0 0 0 183817 250000 250000 251294 21074 58126 146101
22 0 0 0 193008 250000 250000 261716 12642 53713 155783
23 0 0 0 202658 250000 250000 272803 2916 48410 166343
24 0 0 0 212791 0 250000 286231 0 42076 177783
25 0 0 0 223431 0 250000 298712 0 34519 190262
26 0 0 0 234602 0 250000 313841 0 25479 203793
27 0 0 0 246332 0 250000 329865 0 14606 218454
28 0 0 0 258649 0 250000 346807 0 1443 234329
29 0 0 0 271581 0 0 364707 0 0 251522
30 0 0 0 285160 0 0 383646 0 0 270173
31 0 0 0 299418 0 0 406349 0 0 290249
32 0 0 0 314389 0 0 430435 0 0 311910
33 0 0 0 330109 0 0 453143 0 0 335662
34 0 0 0 346614 0 0 480753 0 0 361468
35 0 0 0 363945 0 0 510325 0 0 389561
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 0 0 0 464496 0 0 700181 0 0 569253
45 0 0 0 592828 0 0 979596 0 0 837262
50 0 0 0 756615 0 0 1397295 0 0 1258824
</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 FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
TABLE 3
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Current Schedule of Charges
Illustrating Death Benefit Option B
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option B) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical
Gross Annual Investment Gross Annual Investment
Return of Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 253827 254056 254286 3827 4056 4286
2 502 4000 4502 9652 257601 258298 259021 7601 8298 9021
3 535 4000 4535 14896 261324 262732 264251 11324 12732 14251
4 605 4000 4605 20476 264996 267367 270029 14996 17367 20029
5 641 4000 4641 26373 268618 272214 276412 18618 22214 26142
6 707 4000 4707 32634 272190 277281 283463 22190 27281 33463
7 742 4000 4742 39245 275713 282579 291252 25713 32579 41252
8 811 4000 4811 46259 279188 288118 299856 29188 38118 49856
9 915 4000 4915 53733 282616 293908 309361 32616 43908 59361
10 989 4000 4989 61658 285997 299963 319861 35997 49963 69861
11 1051 4000 5051 70044 289331 306293 331460 39331 56293 81460
12 1164 4000 5164 78968 292620 312910 344273 42620 62910 94273
13 1259 4000 5259 88439 295864 319830 358427 45864 69830 108427
14 1404 4000 5404 98535 299064 327063 374064 49064 77063 124064
15 1542 4000 5542 109281 302220 334627 391337 52220 84627 141337
16 1744 4000 5744 120776 305334 342534 410419 55334 92534 160419
17 1921 4000 5921 133032 308404 350802 431498 58404 100802 181498
18 2137 4000 6137 146127 311433 359446 454784 61433 109446 204784
19 2372 4000 6372 160124 314421 368483 480509 64421 118483 230509
20(age65) 2603 4000 6603 175064 317368 377933 508927 67368 127933 258927
21 0 0 0 183817 313722 381029 533307 63722 131029 283307
22 0 0 0 193008 309638 383941 560075 59638 133941 310075
23 0 0 0 202658 305149 386711 589561 55149 136711 339561
24 0 0 0 212791 300205 389306 622044 50205 139306 372044
25 0 0 0 223431 294756 391685 657835 44756 141685 407835
26 0 0 0 234602 288744 393808 697280 38744 143808 447280
27 0 0 0 246332 282111 395629 741051 32111 145629 490762
28 0 0 0 258649 274796 397103 797253 24796 147103 538685
29 0 0 0 271581 266723 398171 857604 16723 148171 591451
30 0 0 0 285160 257807 398764 922312 7807 148764 649516
31 0 0 0 299418 0 398818 998506 0 148818 713219
32 0 0 0 314389 0 398162 1080547 0 148162 783005
33 0 0 0 330109 0 396561 1160482 0 146561 859616
34 0 0 0 346614 0 393858 1254744 0 143858 943417
35 0 0 0 363945 0 389879 1355971 0 139879 1035092
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 0 0 0 464496 0 347193 2020369 0 97193 1642577
45 0 0 0 592828 0 0 3039798 0 0 2598118
50 0 0 0 756615 0 0 4592237 0 0 4137150
</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 FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
TABLE 4
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
. Modal Term Premium, plus
. $4,000 Premium
Using Guaranteed Schedule of Charges
Illustrating Death Benefit Option B
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option B) Cash Surrender Value
Assuming Hypothetical Assuming Hypothetical Gross
Gross Annual Investment Annual Investment Return of
Return of
End of Modal Term Additional Total Premiums
Policy Premium Premium Premium Accumulated 0% 6% 12% 0% 6% 12%
Year Paid at 5%
Interest
Per Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 467 4000 4467 4690 252595 252751 252906 2595 2751 2906
2 502 4000 4502 9652 255065 255531 256016 5065 5531 6016
3 535 4000 4535 14896 257406 258335 259339 7406 8335 9339
4 605 4000 4605 20476 259642 261188 262926 9642 11188 12926
5 641 4000 4641 26373 261734 264047 266754 11734 14047 16754
6 707 4000 4707 32634 263694 266923 270857 13694 16923 20857
7 742 4000 4742 39245 265475 269765 275211 15475 19765 25211
8 811 4000 4811 46259 267092 272583 279850 17092 22583 29850
9 915 4000 4915 53733 268552 275380 284809 18552 25380 34809
10 989 4000 4989 61658 269809 278104 290065 19809 28104 40065
11 1051 4000 5051 70044 270839 280724 295617 20839 30724 45617
12 1164 4000 5164 78968 271678 283267 301529 21678 33267 51529
13 1259 4000 5259 88439 272299 285700 307804 22299 35700 57804
14 1404 4000 5404 98535 272738 288050 314514 22738 38050 64514
15 1542 4000 5542 109281 272960 290275 321658 22960 40275 71658
16 1744 4000 5744 120776 272985 292387 329301 22985 42387 79301
17 1921 4000 5921 133032 272749 294308 337414 22749 44308 87414
18 2137 4000 6137 146127 272220 296000 346017 22220 46000 96017
19 2372 4000 6372 160124 271337 297405 355129 21337 47405 105129
20(age 65) 2603 4000 6603 175064 270025 298451 364764 20025 48451 114764
21 0 0 0 183817 261691 292548 368422 11691 42548 118422
22 0 0 0 193008 252387 285752 372262 2387 35752 122262
23 0 0 0 202658 0 277998 376331 0 27998 126331
24 0 0 0 212791 0 269203 380670 0 19203 130670
25 0 0 0 223431 0 259247 385294 0 9247 135294
26 0 0 0 234602 0 0 390198 0 0 140198
27 0 0 0 246332 0 0 395341 0 0 145341
28 0 0 0 258649 0 0 400666 0 0 150666
29 0 0 0 271581 0 0 406119 0 0 156119
30 0 0 0 285160 0 0 411684 0 0 161684
31 0 0 0 299418 0 0 417389 0 0 167389
32 0 0 0 314389 0 0 423311 0 0 173311
33 0 0 0 330109 0 0 429573 0 0 179573
34 0 0 0 346614 0 0 436295 0 0 186295
35 0 0 0 363945 0 0 443545 0 0 193545
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 0 0 0 464496 0 0 485986 0 0 235986
45 0 0 0 592828 0 0 540828 0 0 290828
50 0 0 0 756615 0 0 622869 0 0 372869
</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 FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
APPENDIX B
----------
MODAL TERM PREMIUM CALCULATION
The Modal Term Premium is an estimate of the premium that will be sufficient to
cover the Premium Deduction and the Monthly Deduction for the Modal Term. It
equals the Monthly Deduction(s) during the Modal Term divided by 1 less the
Premium Deduction discounted at a rate no lower than the monthly equivalent of
the minimum annual interest rate for the Guaranteed Principal Account.
Example:
a. Modal Term: 3 Months
b. Premium Deduction: 0.75%
c. Annual Interest Rate
Used For Discounting
Monthly Deduction(s): 5%
d. Monthly Deduction In Month 1: $100
e. Monthly Deduction In Month 2: $110
f. Monthly Deduction In Month 3: $120
g. Sum of Monthly Charges
Discounted At Monthly
Equivalent Of 5%: $328.58
h. Modal Term Premium
(g. divided by 1 less Premium
Deduction): $331.06
-------
<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 Bylaws of MassMutual provide for indemnification of directors
and officers as follows:
Article V. Subject to limitations of law, the Company shall indemnify:
(a) each director, officer or employee;
(b) any individual who serves at the request of the Company as a
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 any
employee benefit plan; from and against all loss, liability and expense
imposed upon or incurred by such person in connection with any action,
claim or proceeding of any nature whatsoever, in which such person may
be involved or with which he or she may be threatened, by reason of any
alleged act, omission or otherwise while serving in any such capacity.
Indemnification shall be provided although the person no longer serves in such
capacity and shall include protection for the person's heirs and legal
representatives. Indemnities hereunder shall include, but not be limited to, all
costs and reasonable counsel fees, fines, penalties, judgments or awards of any
kind, and the amount of reasonable settlements, whether or not payable to the
Company or to any of the other entities described in the preceding paragraph, or
to the policyholders or security holders thereof
Notwithstanding the foregoing, no indemnification shall be provided with respect
to:
(1) any matter as to which the person shall have been adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that
his or her action was in the best interests of the Company or, to the
extent that such matter relates to service with respect to any employee
benefit plan, in the best interests of the participants or beneficiaries
of such employee benefit plan;
(2) any liability to any entity which is registered as an investment
company under the Federal Investment Company Act of 1940 or to the
security holders thereof, where the
<PAGE>
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 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 Variable Account Rider to the Group Universal Life
Insurance Policy Certificate described in this Registration Statement and
deducted under the Rider, 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 THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consists of 51 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.
2. Actuarial consent.
3. Counsel opining as to the legality of securities being registered.
4. Opinion opining as to actuarial matters contained in the Registration
Statement by John Valencia, Assistant Vice President.
The following exhibits:
1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1) (a) Resolution of the Board of Directors of Massachusetts Mutual
Life Insurance Company authorizing the establishment of the
Separate Account.*
(b) Resolution of the Board of Directors of Massachusetts Mutual
Life Insurance Company authorizing the establishment of the
GVUL Segment of Massachusetts Mutual Variable Life Separate
Account I.*
(2) Not Applicable.
(3) (a) Form of Distribution Servicing Agreement between MML
Distributors, LLC, and MassMutual.*
(b) Form of Co-Underwriting Agreement between MML Investors
Services, Inc. and MassMutual.*
<PAGE>
(c) Form of Broker Dealer Selling Agreement.*
(4) Not Applicable.
(5) Form of Group Flexible Premium Adjustable Life Insurance
Certificate To Age 95 with Variable Rider.*
(6) Organizational documents of the Company.
(a) Certificate of Incorporation of MassMutual.*
(b) By-Laws of MassMutual.*
(7) Not Applicable.
(8) (a) Form of Participation Agreement with Oppenheimer Variable
Account Funds.*
(b) Form of Participation Agreement with Panorama Series Fund,
Inc.*
(9) Not Applicable.
(10) (a) Form of Enrollment Form.**
(b) Form of Application.**
(c) Form of Variable Account Rider is included in Exhibit 1 above.
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 John Valencia opining as to actuarial matters
pertaining to the securities being registered.**
6. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
Investment Company Act of 1940.**
7. Consent of Independent Accountants.**
8. Powers of Attorney.* (the Power of Attorney for Joseph Zubretsky is
filed herewith)
<PAGE>
27. Financial Data Schedule. [to be filed after GVUL Segment of Separate
Account commences operation].
*Filed with Registrant's Initial Registration Statement on February 28, 1997.
**Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I has caused this Pre-
Effective Amendment Number 2 to the Registration Statement 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 31st day of July,
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 July 31, 1997, as Attorney-in-Fact pursuant to powers of
attorney previously filed and filed herewith.
As required by the Securities Act of 1933, this Pre-Effective Amendment Number 2
to the Registration Statement has been signed by the following person in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Thomas B. Wheeler* Chief Executive Officer and July 31, 1997
--------------------- Chairman of the Board
Thomas B. Wheeler
/s/ John J. Pajak* President and Chief Operating July 31, 1997
----------------- Officer
John J. Pajak
/s/ Joseph Zubretsky* Chief Financial Officer & Chief July 31, 1997
-------------------- Accounting Officer
Joseph Zubretsky
/s/ Roger G. Ackerman* Director July 31, 1997
---------------------
Roger G. Ackerman
/s/ James R. Birle* Director July 31, 1997
------------------
James R. Birle
/s/ Frank C. Carlucci, III* Director July 31, 1997
--------------------------
Frank C. Carlucci, III
/s/ Gene Chao* Director July 31, 1997
-------------
Gene Chao
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Patricia Diaz Dennis* Director July 31, 1997
------------------------
Patricia Diaz Dennis
/s/ Anthony Downs* Director July 31, 1997
-----------------
Anthony Downs
/s/ James L. Dunlap* Director July 31, 1997
-------------------
James L. Dunlap
/s/ William B. Ellis* Director July 31, 1997
--------------------
William B. Ellis
/s/ Robert M. Furek* Director July 31, 1997
-------------------
Robert M. Furek
/s/ Charles K. Gifford* Director July 31, 1997
----------------------
Charles K. Gifford
/s/ William N. Griggs* Director July 31, 1997
---------------------
William N. Griggs
/s/ George B. Harvey* Director July 31, 1997
--------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director July 31, 1997
--------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director July 31, 1997
--------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director July 31, 1997
------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director July 31, 1997
-------------------
John F. Maypole
/s/ Donald F. McCullough* Director July 31, 1997
------------------------
Donald F. McCullough
/s/ Alfred M. Zeien* Director July 31, 1997
-------------------
Alfred M. Zeien
</TABLE>
/s/ Richard M. Howe
- -------------------
*Richard M. Howe - On July 31, 1997, as Attorney-in-Fact pursuant to powers of
attorney previously filed and filed herewith.
<PAGE>
EXHIBIT LIST
1(10)(a) Form of Enrollment Form.
1(10)(b) Form of Application
2 Opinion and Consent of Counsel as to the legality of the securities
being registered.
5 Opinion and consent of John Valencia opining as to actuarial matters
pertaining to the securities being registered.
6 Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
Investment Company Act of 1940.
7 Consent of Independent Accountants.
8 Power of Attorney for Joseph Zubretsky
<PAGE>
EXHIBIT
1(10)(a)
Form of Enrollment Form.
<PAGE>
Insurance Enrollment Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
<TABLE>
<S> <C>
To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co.
Home and Principal Administrative Office: Principal Administrative Office:
Springfield, Massachusetts 01111-0001 Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plan Group Number
------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1.) Employer Name:
-----------------------------------------------------------------------------------------------------------------
2.) Employer Address:
--------------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
3.) Proposed Insured's Name (Last, First, MI):
-------------------------------------------------------------------------------------
4.) Proposed Insured's Address:
----------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
5.) Sex M F 6.) Date of Birth: (Mo./Day/Yr.) 7.) Social Security No.
-------- -------- ------------------- ------------------
8.) Citizenship, if not USA Type of Visa: Permanent Temporary
--------------------------------- ---------- ----------
9.) Selected Face Amount
-------------------------------------
10.) Variable Rider Option Yes No; If "Yes," a Supplement to Application/Enrollment Form must be completed.
-------- --------
11.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s) to the Proposed Insured.)
Death benefit proceeds will be paid in one sum unless otherwise requested.
a.) Primary
------------------------------------------------------------------------------------------------------------------------
b.) Secondary (optional)
-----------------------------------------------------------------------------------------------------------
c.) Tertiary (optional)
------------------------------------------------------------------------------------------------------------
</TABLE>
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
<TABLE>
<S> <C>
12.) a.) Full Name and Address of the Owner (if not the Insured):
-----------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
------------------------------
Has the Proposed Insured been actively-at-work on a full-time basis during the 90 days prior to his/her participation in the plan?
(Disregard vacation days or absences that total less than seven days.) Yes No; If "No," explain in Remarks (below)
------ ------
Is the Insured receiving or applying to receive disability benefits? Yes No; If "Yes," explain in Remarks (below)
------ ------
Has the Proposed Insured smoked cigarettes in the last 12 months? Yes No; If "Yes," specify in Remarks (below)
------ ------
</TABLE>
Remarks:
------------------------------------------------------------------------
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in no. 7 of this Part 1B is his/her correct Taxpayer
Identification Number (or he/she is waiting for a number to be issued); and (ii)
he/she is not subject to backup witholding either because he/she has not been
notified by the Internal Revenue Service (IRS) that he/she is subject to backup
witholding as a result of a failure to report all interest or dividends, or
because the IRS has notified him/her that he/she is no longer subject to backup
witholding. If the IRS has notified the Proposed Insured that he/she is subject
to backup witholding and he/she has not received notice from the IRS that backup
witholding has terminated, he/she should strike out language above in (ii) that
he/she is not subject to backup witholding due to notified payee underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines an confinement in
prison.
- ------------------------------------------------------------------- ----------
Signature of Proposed Insured Date
- ------------------------------------------------------------------- ----------
Signature of Owner (if different from Proposed Insured) Date
- ------------------------------------------------------------------- ----------
Signature of Registered Representative/Agent or Authorized Enroller Date
<PAGE>
Insurance Enrollment Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
To: [_] Massachusetts Mutual Life Insurance Co.
Home and Principal Administrative Office:
Springfield, Massachusetts 01111-0001
[_] MML Bay State Life Insurance Co.
Principal Administrative Office:
Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plan Group Number
---------
- --------------------------------------------------------------------------------
1.) Employer Name:
------------------------------------------------------------
2.) Employer Address:
--------------------------------------------------------
Street & No. City State Zip Code
3.) Proposed Insured's Name (Last, First , MI):
-------------------------------
4.) Proposed Insured's Address:
-----------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
---- ---- --------
7.) Social Security No.
------------------------
8.) Citizenship, if not USA
--------------------------
Type of Visa: Permanent Temporary
---------- ----------
9.) Selected Face Amount
---------
10.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s)
to the Proposed Insured.) Death benefit proceeds will be paid in one sum unless
otherwise requested.
a.) Primary
-------------------------------------------------------------------
b.) Secondary (optional)
------------------------------------------------------
c.) Tertiary (optional)
------------------------------------------------------
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
11.) a.) Full Name and Address of the Owner (if not the Insured):
-------------
- --------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
-------------------------
Has the Proposed Insured been actively-at-work on a full-time basis during the
90 days prior to his/her participation in the plan? (Disregard vacation days or
absences that total less than seven days.) Yes No; If "No,"
explain in Remarks (below). ---- ----
Is the Proposed Insured receiving or applying to receive disability benefits?
Yes No; If "Yes," explain in Remarks (below).
- ---- ----
Has the Proposed Insured smoked cigarettes in the last 12 months?
Yes No; If "Yes," specify in Remarks (below).
- ---- ----
Remarks:
- --------------------------------------------------------------------------------
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in no. 7 of this Part 1B is his/her correct Taxpayer
Identification Number (or he/she is waiting for a number to be issued); and (ii)
he/she is not subject to backup withholding either because he/she has not been
notified by the Internal Revenue Service (IRS) that he/she is subject to backup
withholding as a result of a failure to report all interest or dividends, or
because the IRS has notified him/her that he/she is no longer subject to backup
withholding. If the IRS has notified the Proposed Insured that he/she is subject
to backup withholding and he/she has not received notice from the IRS that
backup withholding has terminated, he/she should strike out language above in
(ii) that he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines an confinement in
prison.
- ------------------------------------------------------------------- ---------
Signature of Proposed Insured Date
- ------------------------------------------------------------------- ---------
Signature of Owner (if different from Proposed Insured) Date
- ------------------------------------------------------------------- ---------
Signature of Registered Representative/Agent or Authorized Enroller Date
<PAGE>
Employer or Spouse Application Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
To: [_] Massachusetts Mutual Life Insurance Co.
Home and Principal Administrative Office:
Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plan
[_] MML Bay State Life Insurance Co.
Principal Administrative Office:
Springfield, Massachusetts 01111-0001
Group Number
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION 1
1.) Employer Name:
---------------------------------------------------------
2.) Employer Address:
---------------------------------------------------------
Street & No. City State Zip Code
- --------------------------------------------------------------------------------
[_] Employee Coverage (select only one) Spouse Coverage
Fill out either the Employee Information or Spouse Information section below
based on box checked above:
Employee Information:
3.) Proposed Insured's Name (Last, First, MI):
---------------------------------
4.) Proposed Insured's Address:
-----------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
---- ---- ---------
7.) Social Security No.
---------------------------------
Spouse Information:
3.a.) Spouse's Name (Last, First, MI):
-----------------------------------------
3.b.) Employee's Name: (Last, First, MI):
--------------------------------------
4.) Spouse's Address:
----------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
---- ---- ---------
7.a.) Spouse's Social Security No.
-----------------------
7.b.) Employee's Social Security No.
---------------------
- --------------------------------------------------------------------------------
8.) Citizenship, if not USA Type of Visa: Permanent Temporary
-------- ---- ----
9.) Selected Face Amount
------------
10.) Variable Rider Option Yes No; If "Yes," a Supplement to
---- ----
Application/Enrollment Form must be completed.
11.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s)
to the Proposed Insured.)
Death benefit proceeds will be paid in one sum unless otherwise requested.
a.) Primary
---------------------------------------------------------------------
b.) Secondary (optional)
--------------------------------------------------------
c.) Tertiary (optional)
---------------------------------------------------------
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
12.) a.) Full Name and Address of the Owner (if not the Insured):
-------------
- --------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
------------------
<TABLE>
<S> <C> <C>
13.) a.) Has the Proposed Insured been actively-at-work on a full-time basis
during the 90 days prior to his/her participation in the plan?
(Disregard vacation days or absences that total less than seven days.) Yes No
If "No," explain in Remarks (below). ---- ----
b.) Is the Proposed Insured receiving or applying to receive disability benefits? Yes No
If "Yes," explain in Remarks (below). ---- ----
c.) Has the Proposed Insured smoked cigarettes in the last 12 months? Yes No
If "Yes," specify in Remarks (below). ---- ----
</TABLE>
- --------------------------------------------------------------------------------
-1-
<PAGE>
SECTION II
Simplified Issue Questions
14.) Name and Address of personal physician: ___________________________________
________________________________________________________________________________
________________________________________________________________________________
14.a.) List date and reason last consulted personal physician: _________________
________________________________________________________________________________
________________________________________________________________________________
15.) Name and address of physician last consulted, if different than above: ____
________________________________________________________________________________
________________________________________________________________________________
15.a.) List date and reason consulted physician in no. 15: _____________________
________________________________________________________________________________
________________________________________________________________________________
Diagnosis and Treatment: ______________________________________________________
________________________________________________________________________________
16.) Current height and weight: ____ ft. ____ in. ____ lbs.
17.) Have you ever been diagnosed as having or received treatment for any of the
following: cardiovascular disorder, high blood pressure, stroke, diabetes,
Acquired Immune Deficiency Syndrome (AIDS), cancer or tumor, psychiatric
disorder, alcohol or drug abuse? ____ Yes ____No
18.) Other than above, within the past 5 years have you had any illness,
infection, injury or surgery, physical examination, electrocardiogram, X-Ray,
or laboratory study, or been a patient in a hospital or other medical facility?
____ Yes ____No
19.) Have you ever requested or received a pension, benefits or payment because
of injury, sickness or disability? ____ Yes ____No
20.) Within the past 3 years, have you flown as a pilot or crew member?
If yes, submit Aviation Supplement A3310.
____ Yes ____No
Remarks: Include diagnosis, dates, duration, names and addresses of all
attending physicians and medical facilities.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
-2-
<PAGE>
SECTION III
Full Underwriting Questions
(Submit with completed Part 2)
21.) Insured's net worth: $ _____ 22.) Insured's income: $ _____
23.) Spouse's income: $ _____
24.) Do you plan any foreign residence or travel? If "Yes," provide details
below. _____ Yes _____ No
25.) In the past three years, have you taken part in any avocation such as
motor vehicle racing, parachute jumping, hang gliding, skin or scuba
diving? Is such activity planned? _____ Yes _____ No
If "Yes," submit Avocation Supplement A3320
26.) Within the past three years have you flown as a pilot or crew member?
_____ Yes _____ No
If "Yes," submit Aviation Supplement A3310
27.) Amount of insurance currently applied for, or now in force, on the
Proposed Insured in other companies. If none, check here _________
<TABLE>
<CAPTION>
- ------------------------------------ ------------------------------------- ---------------------------------------------
Company Name Face Amount Year of Issue
- ------------------------------------ ------------------------------------- ---------------------------------------------
<S> <C> <C>
- ------------------------------------ ------------------------------------- ---------------------------------------------
- ------------------------------------ ------------------------------------- ---------------------------------------------
- ------------------------------------ ------------------------------------- ---------------------------------------------
</TABLE>
28.a.) In the last three years have you been involved in a motor vehicle
accident, been charged with a "moving" violation of any motor vehicle law
or has your driver's license ever been suspended? If "Yes," provide dates
and details below. _____ Yes _____ No
28.b.) State: _____________ Operator's license number: _________________________
29. Remarks: (give question no. & details):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
Agreement and Signature
To the best of my knowledge and belief, all answers and statements are full,
complete and true and were correctly recorded before I signed my name below.
Authorization to Obtain and Disclose Information - I have received the Notice
regarding the Medical Information Bureau, Inc. and the Fair Credit Reporting
Act. I understand that an investigative consumer report may be made regarding my
character, general reputation, personal characteristics and mode of living, and
authorize that report to be made. I hereby authorize any licensed physician,
medical practitioner, hospital, clinic, other medical or medically related
facility, insurance company, the Medical Information Bureau, Inc., or other
organization that has any records or knowledge of me and my health, to make such
information available to the life insurance company or its reinsurers. A copy of
this authorization shall be as valid as the original. (This authorization is
only valid where permitted by law.)
-3-
<PAGE>
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in no. 7 of this Part 1B is his/her correct Taxpayer
Identification Number (or he/she is waiting for a number to be issued); and (ii)
he/she is not subject to backup withholding either because he/she has not been
notified by the Internal Revenue Service (IRS) that he/she is subject to backup
withholding as a result of a failure to report all interest or dividends, or
because the IRS has notified him/her that he/she is no longer subject to backup
withholding. If the IRS has notified the Proposed Insured that he/she is subject
to backup withholding and he/she has not received notice from the IRS that
backup withholding has terminated, he/she should strike out language above in
(ii) that he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines an confinement in
prison.
___________________________________ ____________________________________
Signature of Proposed Insured Signature of Soliciting Agent/
Registered Representative
Signed at _______________________________ on ___________________________________
City State Date
_______________________________________________________
Signature of Owner (if different from Proposed Insured)
-4-
<PAGE>
Notice To Insured and/Or Applicant For Insurance
Thank you for applying for insurance with us. We will give your application
prompt consideration and will notify you of our action as soon as possible.
In addition to your answers on the application, we must also consider
information from other sources. These sources may include results of a physical
examination, an investigative consumer report, and reports from doctors who have
attended you or from hospitals where you have been treated.
MEDICAL INFORMATION BUREAU NOTICE - Information regarding your insurability will
be treated as confidential. We or our reinsurers may, however, make a brief
report thereon to the Medical Information Bureau, Inc. a non-profit membership
organization of life insurance companies, which operates an information exchange
on behalf of its members. If you apply to another Bureau member company for life
or health insurance coverage, or a claim for benefits is submitted to such a
company, the Bureau, upon request, will supply that company with the information
it may have in its files.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. Unless the Medical Director feels that it
is in your best interest to disclose this information to your physician, it will
be disclosed directly to you. If you question the accuracy of information in the
Bureau=s file, you may contact the Bureau and seek a correction in accordance
with the procedures set forth in the federal Fair Credit Reporting Act. The
address of the Bureau=s information office is Post Office Box 105, Essex
Station, Boston, Massachusetts 02112, telephone number (617) 426-3660. We or our
reinsurers may also release information in our file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a claim
for benefits may be submitted.
The purpose of the Bureau is to protect its member companies and their
policyholders from the costs created by people who try to hide facts about their
insurability. Information furnished by the Bureau cannot be used as a basis for
evaluating risks. However it may be used to alert us to the possible need for
further investigation. THE BUREAU DOES NOT HAVE MEDICAL REPORTS FROM HOSPITALS
AND DOCTORS. THE INFORMATION IN ITS FILES DOES NOT SHOW WHETHER AN INSURANCE
APPLICATION WAS ACCEPTED, PLACED IN AN INCREASED PREMIUM CLASS OR DECLINED.
(This Notice is only valid where permitted by law).
FAIR CREDIT REPORTING ACT NOTICE - As previously noted, an investigative
consumer report may be made on you. It will cover information about your
insurability, including information regarding your character, general
reputation, personal characteristics and mode of living, The information may be
obtained through personal interviews with you, an adult family member, friends,
neighbors and associates. You may send us a written request for a complete and
accurate disclosure of the nature and scope of any report that is made.
If requested, we will be happy to let you know whether or not we asked for an
investigative consumer report to be made. If we did, we will also tell you the
name and address of the consumer reporting agency that furnished the report. By
contacting that agency, you may inspect and receive a copy of the report.
OUR PURPOSE - Part of our basic Company purpose is to provide insurance at the
lowest possible cost. The underwriting process is necessary both to assure this
low cost and to make sure that each policyholder contributes his or her fair
share of the cost. The procedures described above benefit you as a policyholder,
because they assist us in providing your insurance at the lowest possible cost.
<PAGE>
Employee or Spouse Application Form (Part 1B)
Group Flexible Premium Adjustable Life Insurance
To: [_] Massachusetts Mutual Life [_] MML Bay State Life
Insurance Co. Insurance Co.
Home and Principal Principal Administrative
Administrative Office: Office
Springfield, Springfield,
Massachusetts 01111-0001 Massachusetts 01111-0001
For New Life Insurance Under Employer
- - Sponsored Plan Group Number
----------------------
- --------------------------------------------------------------------------------
SECTION 1
1.) Employer Name:
--------------------------------------------------------------
2.) Employer Address:
-----------------------------------------------------------
Street & No. City State Zip Code
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[_] Employee Coverage (select only one) [_] Spouse Coverage
Fill out either the Employee Information or Spouse Information section below
based on box checked above:
Employee Information:
3.) Proposed Insured's Name (Last, First , MI):
---------------------------------
4.) Proposed Insured's Address:
-------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
------- ------- -----------------
7.) Social Security No.
--------------------------
Spouse Information:
3.a.) Spouse's Name (Last, First , MI):
------------------------------------------
3.b.) Employee's Name: (Last, First , MI):
--------------------------------------
4.) Spouse's Address:
-----------------------------------------------------------
Street & No. City State Zip Code
5.) Sex: M F 6.) Date of Birth: (Mo./Day/Yr.)
------ ------ -------------------
7.a.) Spouse's Social Security No.
----------------------------
7.b.) Employee's Social Security No.
----------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
8.) Citizenship, if not USA
----------------------------------------------------
Type of Visa: Permanent Temporary
----------- -----------
9.) Selected Face Amount
-------------------------------------------------------
10.) Beneficiary (for all beneficiaries, print full name(s) and relationship(s)
to the Proposed Insured.) Death benefit proceeds will be paid in one sum unless
otherwise requested.
a.) Primary
---------------------------------------------------------------------
b.) Secondary (optional)
--------------------------------------------------------
c.) Tertiary (optional)
---------------------------------------------------------
If two or more persons are the beneficiaries in any class, payment shall be made
equally to them or equally to the surviving beneficiaries in that class unless
otherwise requested. If percentages or fractions are indicated and any
beneficiary dies before the Proposed Insured, any share due that beneficiary
will be paid proportionately to the surviving beneficiaries in that class. If
payment is made in one sum and there is no beneficiary entitled to payment when
the Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured; but if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
11.) a.) Full Name and Address of the Owner (if not the Insured):
---------------
- --------------------------------------------------------------------------------
Street & No. City State Zip Code
b.) Owner's Tax ID Number/Social Security Number:
------------------------
12.) a.) Has the Proposed Insured been actively-at-work on a full-time basis
during the 90 days prior to his/her participation in the plan?
(Disregard vacation days or absences that total less than seven days.)
Yes No
----- -----
If "No," explain in Remarks (below).
b.) Is the Proposed Insured receiving or applying to receive disability
benefits?
Yes No
----- -----
If "Yes," explain in Remarks (below).
c.) Has the Proposed Insured smoked cigarettes in the last 12 months?
Yes No
----- -----
If "Yes," specify in Remarks (below).
- --------------------------------------------------------------------------------
-1-
<PAGE>
SECTION II
Simplified Issue Questions
13.) Name and Address of personal physician:
------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13.a.) List date and reason last consulted personal physician:
------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14.) Name and address of physician last consulted, if different than above:
-----
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14.a.) List date and reason consulted physician in no. 15:
----------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Diagnosis and Treatment:
--------------------------------------------------------
- --------------------------------------------------------------------------------
15.) Current height and weight: ft. in. lbs.
------ ------ ------
16.) Have you ever been diagnosed as having or received treatment for any of the
following: cardiovascular disorder, high blood pressure, stroke, diabetes,
Acquired Immune Deficiency Syndrome (AIDS), cancer or tumor, psychiatric
disorder, alcohol or drug abuse?
Yes No
----- -----
17.) Other than above, within the past 5 years have you had any illness,
infection, injury or surgery, physical examination, electrocardiogram, X-Ray, or
laboratory study, or been a patient in a hospital or other medical facility?
Yes No
----- -----
18.) Have you ever requested or received a pension, benefits or payment because
of injury, sickness or disability?
Yes No
----- -----
19.) Within the past 3 years, have you flown as a pilot or crew member? If yes,
submit Aviation Supplement A3310.
Yes No
----- -----
Remarks: Include diagnosis, dates, duration, names and addresses of all
attending physicians and medical facilities.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<PAGE>
SECTION III
Full Underwriting Questions
(Submit with completed Part 2)
20.) Insured's net worth: $ 21.) Insured's income: $
---------------- ------------
22.) Spouse's income: $
------------------
23.) Do you plan any foreign residence or travel? Yes No
If "Yes," provide details below. ----- -----
24.) In the past three years, have you taken part in any avocation such as motor
vehicle racing, parachute jumping, hang gliding, skin or scuba diving? Is
such activity planned? Yes No
If "Yes," submit Avocation Supplement A3320 ----- -----
25.) Within the past three years have you flown as a pilot or crew member?
If "Yes," submit Aviation Supplement A3310 Yes No
----- -----
26.) Amount of insurance currently applied for, or now in force, on the Proposed
Insured in other companies. If none, check here
--------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Name Face Amount Year of Issue
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
27.a.) In the last three years have you been involved in a motor vehicle
accident, been charged with a "moving" violation of any motor vehicle law
or has your driver's license ever been suspended? If "Yes," provide dates
and details below.
Yes No
----- -----
27.b.) State: Operator's license number:
----------------- ---------------------
28. Remarks: (give question no. & details):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agreement and Signature
To the best of my knowledge and belief, all answers and statements are full,
complete and true and were correctly recorded before I signed my name below.
Authorization to Obtain and Disclose Information - I have received the Notice
regarding the Medical Information Bureau, Inc. and the Fair Credit Reporting
Act. I understand that an investigative consumer report may be made regarding my
character, general reputation, personal characteristics and mode of living, and
authorize that report to be made. I hereby authorize any licensed physician,
medical practitioner, hospital, clinic, other medical or medically related
facility, insurance company, the Medical Information Bureau, Inc., or other
organization that has any records or knowledge of me and my health, to make such
information available to the life insurance company or its reinsurers. A copy of
this authorization shall be as valid as the original. (This authorization is
only valid where permitted by law.)
-3-
<PAGE>
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in no. 7 of this Part 1B is his/her correct Taxpayer
Identification Number (or he/she is waiting for a number to be issued); and (ii)
he/she is not subject to backup withholding either because he/she has not been
notified by the Internal Revenue Service (IRS) that he/she is subject to backup
withholding as a result of a failure to report all interest or dividends, or
because the IRS has notified him/her that he/she is no longer subject to backup
withholding. If the IRS has notified the Proposed Insured that he/she is subject
to backup withholding and he/she has not received notice from the IRS that
backup withholding has terminated, he/she should strike out language above in
(ii) that he/she is not subject to backup withholding due to notified payee
underreporting.
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines an confinement in
prison.
- ----------------------------------------- ----------------------------------
Signature of Proposed Insured Signature of Soliciting Agent/
Registered Representative
Signed at on
----------------------------------------------- ----------------------
City State Date
- ------------------------------------------------------
Signature of Owner (if different from Proposed Insured)
-4-
<PAGE>
SUPPLEMENT TO APPLICATION/ENROLLMENT FORM
Group Flexible Premium Adjustable Life Insurance With Variable Rider
To: [_] Massachusetts Mutual Life [_] MML Bay State Life
Insurance Co. Insurance Co.
Springfield, Massachusetts 01111-0001
Group Number Dated (Mo/Day/Yr)
--------------------------- --------------------
A minimum initial premium of $500.00 is required to activate the variable rider.
- --------------------------------------------------------------------------------
1. Owner's Name:
----------------------------------------------------------------
The Owner's Taxpayer Identification No. and address are shown on Part 1B of the
Application.
- --------------------------------------------------------------------------------
2. Net Premium Allocation (Whole percentages only. Only 8 divisions and the
Guaranteed Principal Account allowable at one time.):
<TABLE>
<S> <C> <C> <C>
MML Equity Index % Panorama Growth %
- --------- ------ ---------- ------
Oppenheimer Global Securities % Panorama Total Return %
- --------- ------ ---------- ------
Oppenheimer Capital Appreciation % Panorama Lifespan Capital Appreciation %
- --------- ------ ---------- ------
Oppenheimer Growth % Panorama Lifespan Balanced %
- --------- ------ ---------- ------
Oppenheimer Growth & Income % Panorama Lifespan Diversified Income %
- --------- ------ ---------- ------
Oppenheimer Multiple Strategies % Guaranteed Principal Account %
- --------- ------ ---------- ------
Oppenheimer High Income % %
- --------- ------ ---------- ------------------------------------- ------
Oppenheimer Strategic Bond % %
- --------- ------ ---------- ------------------------------------- ------
Oppenheimer Bond % %
- --------- ------ ---------- ------------------------------------- ------
Oppenheimer Money % %
- --------- ------ ---------- ------------------------------------- ------
Panorama International Equity % 100%
- --------- ------
</TABLE>
The initial net premium will be allocated to the Guaranteed Principal Account.
At the end of the Right to Return period, the account value in excess of one
billed Modal Term Premium will be allocated to the Guaranteed Principal Account
and/or the Divisions of the Separate Account as specified by the Owner.
Subsequent net premium payments attributable to the billed Modal Term Premium
will be allocated to the Guaranteed Principal Account. Any net premium amounts
other than the billed Modal Term Premium will be allocated to the Guaranteed
Principal Account and/or the Divisions of the Separate Account as specified by
the Owner.
- --------------------------------------------------------------------------------
Complete the following:
3.) Has the Owner received an Offering Memorandum or Prospectus for the
certificate(s) being applied for?
Yes No;
- ---- ----
If "Yes," give date shown on the Offering Memorandum or Prospectus:
-------------
Circle One: Offering Memorandum Prospectus (printed)
Prospectus (electronic via http:\\www.massmutual.com)
4.) Does the Owner understand that:
- The death benefit and the duration of insurance may be variable or
fixed under specified conditions? Yes No
----- -----
- The variable account value of the certificate may increase or decrease
in accordance with the experience of the Separate Account?
(there are no minimum guarantees as to the variable account value)
Yes No
----- -----
- The fixed account value of the certificate earns interest at a rate no
less than a minimum specified rate? Yes No
----- -----
5. In view of the above, does the Owner believe that this certificate will
meet his/her insurance needs and financial objectives? Yes No
----- -----
- --------------------------------------------------------------------------------
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the certificate(s) applied for to be suitable for my objectives.
- ------------------------------------------ ---------------
Signature of Owner Date
-1-
<PAGE>
The following information is required to determine if this product is suitable
for the Owner (as indicated in item 1 of page 1).
1.a.) If the Owner is not an individual, a copy of the Authorization Document
(i.e. Corporate Resolution, Trust Instrument, or Partnership Agreement) must be
supplied. Have you attached or previously provided us with this?
Yes No
----- -----
1.b.) Is the Owner:
(i) a bank, savings and loan association, insurance company, or registered
investment company?
Yes No
----- -----
(ii) an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940?
Yes No
----- -----
(iii) any other entity (whether a natural person, corporation, partnership,
trust or otherwise) with total assets of at least $50 million?
Yes No
----- -----
IF THE OWNER ANSWERED (YES) TO 1b (i), (ii) or (iii), SKIP 2 THROUGH 12.
- --------------------------------------------------------------------------------
2.) Number of Owner's Dependents:
-------------------------------------
3.) Age of Owner's Dependents:
----------------------------------------
4.) Owner's Occupation:
-----------------------------------------------
5.) Owner's Estimated Earned Annual Income: $
-------------------------
6.) Owner's Estimated Unearned Annual Income: $
-----------------------
7.) Owner's Estimated Net Worth: $
-----------------------------------
- --------------------------------------------------------------------------------
8.) Investment Objectives (check all that apply):
Tax-Exempt Income Capital Preservation Income
- ---- ---- ----
Growth Tax Reduction
- ---- ---- ---- ------------
8.a.) Risk Tolerance (check only one): High Medium Low
----- ----- -----
9.) Investment Strategy (check only one):
Growth without Risk Growth with Risk
- ---- ---- ---- -------------------
10.) Sources of Payments
Current Income Surrender or Loan on Life
- ---- ---- Insurance or Annuity
Plan Sponsor Contribution Sale of Personal Property
- ---- ---- or Real Estate
Sale of Mutual Funds Sale of Other Securities
- ---- Presently Held ---- Presently Held
Savings
- ---- ---- -----------------------------
11.) Is Owner or Owner's Employer a member of the National Association of
Securities Dealers (NASD)?
Yes No
----- -----
12.) Owner's estimated Federal Income Tax Bracket:
15% 28% 31% %
-------- -------- -------- --------
- --------------------------------------------------------------------------------
13.) Does the Owner currently own any other contracts issued by MassMutual or
its affiliates? Yes No; If "Yes," please list below.
---- -----
14.) Remarks
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the life insurance certificate(s) applied for to be suitable for my
objectives. I acknowledge that, for purposes of this transaction, I have not
received any services from MML Investors Services, Inc., in its capacity as a
registered investment adviser.
- -------------------------------- --------------
Signature of Owner Date
- --------------------------------------------------------------------------------
Attestation of Agent / Registered Representative
------------------------------------------------
The Owner of the certificate(s) applied for has been informed of the risks
involved in this investment, and I certify that I have reasonable grounds for
believing the certificate(s) to be suitable for the Owner's objectives.
- ---------------------------------------------- --------------
Signature Agent / Registered Representative Date
- ---------------------------------------------- --------------
Authorized Principal Date
-2-
<PAGE>
EXHIBIT
1(10)(b)
Form of Application
<PAGE>
EMPLOYER MASTER APPLICATION (Part 1A) and TEMPORARY LIFE INSURANCE
AGREEMENT
Group Flexible Premium Adjustable Life Insurance
<TABLE>
<S> <C>
To: [_] Massachusetts Mutual Life Insurance Co. [_] MML Bay State Life Insurance Co.
Home and Principal Administrative Office: Principal Administrative Office:
Springfield, Massachusetts 01111-0001 Springfield, Massachusetts 01111-0001
For New Life Insurance Under Employer - Sponsored Plans
</TABLE>
Employer Data
1.) Name:
- -------------------------------------------------------------------------------
2.) Business Address:
- -------------------------------------------------------------------------------
Street & No. City State Zip Code
3.) Payroll Administrator:
----------------------------------------------------
4.) Primary Contact (include telephone number):
-------------------------------
5.) Taxpayer ID No.:
----------------------------------------------------------
6.) Nature of Business:
-------------------------------------------------------
- -------------------------------------------------------------------------------
Proposed Insured Data
For each Proposed Insured, the attached census lists: Full Name, Social Security
Number, Date Of Birth, Sex and, for the first Certificate Year, Selected Face
Amount
7.) Number of Eligible Participants:
-----------------------------------
8.) Have all eligible participants been actively-at-work on a full-time basis
during the 90 days prior to their participation in the plan for the Employer or
its affiliate(s)? (disregard vacations and absences of less than 7 days)
Yes No; If "No," give detailed explanation in no. 21.
- ------ ------
9.) Are any eligible participants receiving or applying to receive disability
benefits as of the date they become eligible to participate in the plan?
Yes No
----- -----
10.) Is every Proposed Insured a citizen of and resident in the USA?
Yes No
----- -----
If "No," is citizenship and residence of each Proposed Insured indicated on the
census? Yes No
----- -----
- -------------------------------------------------------------------------------
Life Insurance Data (Please check (X) on the appropriate line if you desire the
specified feature.)
11.) Variable Rider Option: Yes No
----- -----
12.) Other Electable Riders:
Waiver of Monthly Charges Rider
- -----
Accidental Death & Dismemberment (AD&D)
- -----
13.) Death Benefit Option:
Option A - Selected Face Amount
- -----
Option B - Selected Face Amount plus Account Value
- -----
-1-
<PAGE>
14.) Loan Interest Rate:
Adjustable 6% Fixed
----- -----
15.) Formula for Determining Benefit Schedule:
1 - % of Salary (Specify. Salaries must be included with census data)
-----
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2 - Flat or Class Plan (specify)
----- -------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3 - Other (specify)
----- --------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
16.) Plan Effective Date (for all certificates on Proposed Insureds listed on
attached census):
----------------------
17.) Modal Term:
a.) Annual Semi-annual Quarterly Monthly
----- ----- ----- -----
b.) Amount of Employer additional premium (if any):
-------------------
Frequency for Employer additional premium:
Annual Semi-annual Quarterly Monthly
----- ----- ----- -----
18.) Owner: as designated by the Proposed Insured on the Part 1B
19.) Beneficiary: as designated by the Proposed Insured on the Part 1B
20.) Will the insurance now being applied for replace or change, or is it
intended to replace or change, any insurance or annuity, in whole or in part,
issued by this or any other company? Yes No
----- -----
If "Yes," give company name, policy number, amount and plans in no. 21.
21.) Remarks:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
22.) Premium remitted with this Application $ .
---------------------
- -------------------------------------------------------------------------------
Temporary Insurance Agreement
23.) The Employer applies for temporary life insurance on the life of each
Proposed Insured listed in the attached census:
Yes No; If "No,"the following provisions of this section do not apply.
- ----- -----
24.) The effective date of the temporary insurance agreement is the latest of:
(i) The date we receive from the Employer an amount of premium not
less than one-fourth of the sum of the annual modal term premiums
for the certificates applied for;
(ii) The date this Application (Part 1A) is signed by one of our
Officers; or
-2-
<PAGE>
(iii) The date chosen by the Employer (please specify date) .
-----------
During the temporary insurance period, the amount of premium received will be
held in a suspense account.
25.) The amount of temporary insurance on the life of a Proposed Insured is:
The Selected Face Amount for the first Certificate Year, as shown
----- in the census; or
Other - (Provide formula) .
----- ------------------------------------------
In no event however, may the amount of temporary insurance be greater than our
Guaranteed Issue limits.
26.) Any temporary insurance on the life of a Proposed Insured will terminate at
the earliest of:
(i) The date the permanent life insurance applied for in this
application takes effect on the life of that Proposed Insured;
(ii) The date the Proposed Insured fails to meet any requirements to
qualify for the permanent insurance applied for;
(iii) The date 90 days after the effective date of the temporary
insurance; or
(iv) The date the Employer's written notice of termination of the
insurance is received by us at our Principal Administrative
Office.
27.) Temporary Insurance Beneficiary Designation:
------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If the temporary insurance on the life of a Proposed Insured terminates for the
reason specified above in no. 26(i), the amount of premium paid with this
Application that was allocated to the certificate on the life of that Proposed
Insured will be applied as premiums under that permanent life insurance
certificate. If the temporary insurance on the life of a Proposed Insured
terminates for any other reason, we will refund the amount of premium paid with
this Application that was allocated to the certificate on the life of that
Proposed Insured, less a mortality charge. This mortality charge will be for the
period from the effective date of the temporary insurance to, but not including,
the termination date. The mortality charge for that Proposed Insured will be
based on the amount of temporary insurance on the Proposed Insured's life, and
the term rate from the attached Table of Temporary Insurance Rates for the
Proposed Insured's age.
- --------------------------------------------------------------------------------
Acknowledgment and Signature
The person(s) signing below acknowledge and agree that:
The Application - This is part of an application for permanent life insurance.
The application includes this Part 1A and its attached census and Table of
Temporary Insurance Rates, the Part 1B (which has been or which will be
completed by the Proposed Insured), any Part 2 that may be required, and any
amendments or supplements to either Part. To the best of the knowledge and
belief of the person(s) signing below, all statements in this application are
complete and true and were truly recorded. Each person signing below adopts all
the statements made in the application and agrees to be bound by them. This
Application (Part 1A) is valid until withdrawn by the Employer by written notice
to us at our Principal Administrative Office. Withdrawal of this Application
(Part 1A) shall not necessarily affect its use with applications submitted prior
to the date we receive such notice.
-3-
<PAGE>
Our Liability - A minimum amount of premium may be paid to the agent in exchange
for temporary life insurance as discussed above in the Temporary Insurance
Agreement section. If this is done, we shall be liable only as set forth in that
Agreement. If that amount of premium is not paid, we shall have no liability
unless and until:
- The application has been approved by us at our Principal Administrative
Office; and
- The first premium has been paid during the lifetime of the
Proposed Insured; and
- The Proposed Insured is actively working during the 90 days prior to
their participation in the plan for the Employer or its affiliate(s); and
- The policy, contract or certificate of coverage has been delivered to the
person named as Owner in the certificate; and
- At the time of payment and delivery, all statements in the application
which are material to the risk are complete and true as though they were
made at that time.
If any of these conditions are not met, the policy, contract or certificate of
coverage and rider(s) applied for shall not take effect.
Authority of Agents - No agent can change the terms of this application or any
policy, contract or certificate issued by us. No agent can waive any of our
rights or requirements, or extend any time for payment.
Changes and Corrections - Any change or correction of the application will be
shown on an Amendment of Application attached to the policy, contract or
certificate. Acceptance of any policy, contract or certificate of coverage
issued shall be acceptance of any change or correction of the application we
made. However, unless otherwise indicated in this application, any correction or
change of amount, classification, plan of insurance or riders must be agreed to
in writing.
- --------------------------------------------------------------------------------
Any person who knowingly presents a false or fraudulent claim for payment of a
loss or benefit or knowingly presents false information in an application for
insurance is guilty of a crime and may be subject to fines or confinement in
prison.
<TABLE>
<CAPTION>
For the Employer:
<S> <C>
- ------------------------------------------------------ ------------------------------------------------------------
Print Name and Title of Person Signature of Authorized Person
Authorized to Sign for the Employer
Signed at on
--------------------------------------------------------------- ----------------------------------
City State Date
- ----------------------------------------------------------------------------------------------------------------------------
For the Life Insurance Company specified above
(if temporary insurance applied for):
- ------------------------------------------------------ ------------------------------------------------------------
Print Name and Title of Officer Authorized Officer's Signature Date
to Sign for Life Insurance Company
- ----------------------------------------------------------------------------------------------------------------------------
Will the Insurance now being applied for replace, or change, or is it intended to replace or change, any insurance or
annuity, in whole or in part, issued by this or any other company? If "yes," I have complied with all state replacement
requirements. Yes No
----- -----
- ------------------------------------------------------ ------------------------------------------------------------
General Agent Submitting Application Signature of Soliciting Registered Representative / Agent
</TABLE>
-4-
<PAGE>
EXHIBIT
2
Opinion and Consent of Counsel as to the legality of the securities being
registered.
<PAGE>
[MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
July 25, 1997
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 06154
Dear Sirs/Madame:
In my capacity as Counsel of Massachusetts Mutual Life Insurance Company (the
"Company"), I have participated in the preparation of this Pre-Effective
Amendment Number 2 to the Registration Statement on Form S-6 under the
Securities Act of 1933 of the Company's Variable Riders to Group Flexible
Premium Adjustable Life Insurance Certificate (the "Policies") and in the
registration of Massachusetts Mutual Variable Life Separate Account I under the
Investment Company Act of 1940.
I am of the following opinion:
1. Massachusetts Mutual Variable Life Separate Account I is a separate account
of the Company validly existing pursuant to the Massachusetts Insurance Code and
regulations issued thereunder.
2. The assets held in Massachusetts Mutual Variable Life Separate Account I
equal to the reserves and other policy liabilities of the Policies which are
supported by Massachusetts Mutual Variable Life Separate Account I are not
chargeable with liabilities arising out of any other business the Company may
conduct.
3. The Variable Rider to Group Flexible Premium Adjustable Life Insurance
Certificate, when issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable state law, are
legally issued and binding obligations of the Company in accordance with their
terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to this amendment
to the Registration Statement filed under the Securities Act of 1933.
Sincerely,
/S/ JAMES RODOLAKIS
- -------------------
James Rodolakis
Counsel
<PAGE>
EXHIBIT
5
Opinion and consent of John Valencia
opining as to actuarial matters pertaining to the securities being registered.
<PAGE>
[MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
July 25, 1997
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 06154
Dear Sirs/Madame:
This opinion is furnished in connection with the filing by Massachusetts Mutual
Life Insurance Company (the "Company") of the Pre-Effective Amendment Number 2
to the Registration Statement on Form S-6 (filed on or about July 25, 1997) of
its Variable Rider to Group Flexible Premium Adjustable Life Insurance
Certificate (the "Policy"). The prospectus included in the Pre-Effective
Amendment Number 2 describes the Policy.
I am familiar with the above named Registration Statement and the Pre-Effective
Amendment thereto, including the exhibits.
In my opinion, the illustration of death benefits and cash values included in
the Appendix A of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Policy and the group
flexible premium adjustable life insurance certificate (the "Certificate") which
the Policy amends. The rate structure of the Policy (and the Certificate) has
not been designed so as to make the relationship between premiums and benefits,
as shown in the illustrations, appear more favorable to a prospective purchaser
of the Policy for a person age 45 than to prospective purchasers of Policies for
people at other ages or underwriting classes.
I hereby consent to the use of this opinion as an exhibit to this amendment to
Pre-Effective Amendment Number 2 to the Registration Statement filed under the
Securities Act of 1933.
Sincerely,
/S/ JOHN VALENCIA
- -----------------
John Valencia, FSA
Assistant Vice President
<PAGE>
EXHIBIT
6
Procedures Memorandum
pursuant to Rule 6e-3(T)(b)(12)(iii)
under the Investment Company Act of 1940.
<PAGE>
Description of Issuance, Transfer, and Redemption Procedures for Policies
Offered by
Massachusetts Mutual Variable Life Separate Account I
of Massachusetts Mutual Life Insurance Company
Pursuant to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940
A designated segment of Massachusetts Mutual Variable Life Separate Account I
(the "Separate Account") of Massachusetts Mutual Life Insurance Company
("MassMutual") is registered under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. Within the designated segment of the Separate
Account are sixteen Divisions. Procedures apply equally to each Division and
for purposes of this description are defined in terms of the Separate Account,
except where a discussion of both the Separate Account and the individual
Division is necessary. Each Division invests in shares of a corresponding
investment division of the MML Series Investment Fund (the "MML Trust"), the
Oppenheimer Variable Account Funds (the "Oppenheimer Trust"), and the Panorama
Series Fund, Inc. (the "Panorama Fund"), each of which is a "series" type of
mutual fund registered under the 1940 Act. The investment experience of a
Division of the Separate Account depends on the market performance of its
corresponding investment division of the MML Trust, Oppenheimer Trust, or
Panorama Fund. MassMutual will issue a Group Flexible Premium Adjustable Life
Insurance Policy to a trust in which an employer, association, sponsoring
organization or trust ("Employer") will participate. Group Flexible Premium
Adjustable Life Insurance Certificates (the "Certificates") will be issued to
employees affiliated with Employers who elect to participate in the trust.
Certificate owners who wish to participate in the Divisions offered by the
Separate Account must elect the variable rider to the Certificate (the `Variable
Rider"). A "Policy" is a Certificate to which a Variable Rider has been added.
Although a Policy provides for fixed benefits supported by MassMutual's General
Account, this description assumes that net premiums are allocated exclusively to
the Separate Account and that all transactions involve only the Divisions of the
Separate Account, except as otherwise explicitly stated herein. MassMutual
believes the Variable Riders, and not the Certificates, are subject to the 1940
Act. However, in the event the Certificates, as amended by the Variable Rider,
are considered subject to the 1940 Act by virtue of the election of the Variable
Rider by Certificate owners, MassMutual provides the following information
regarding the Policies.
1. "Public Offering Price": Purchase and Related Transactions - Section 22(d)
--------------------------------------------------------------------------
and Rule 22c-1
--------------
This section outlines Policy provisions and administrative procedures which
might be deemed to constitute, either directly or indirectly, a "purchase"
transaction. Because of the insurance nature of the Policies, the procedures
involved necessarily differ in certain significant respects from the
purchase procedures for mutual funds and annuity plans. The chief
differences revolve around the structure of the cost of insurance charges
and the insurance underwriting process. Certain Policy provisions, such as
reinstatement and loan repayment, do not result in the issuance of a Policy
but require certain payments by the Policyowner and involve a transfer of
assets supporting Policy reserves into the Separate Account.
a. Insurance Charges and Underwriting Standards
--------------------------------------------
Premium payments are not limited as to frequency and number, but there are
limitations as to amount. The minimum initial premium payable when electing
the Variable Rider is $500 which must be paid in one lump sum. While the
Policy is in force, premiums may be paid at any time before the death of the
Insured subject to certain restrictions. There are no minimum or maximum
premium payments under the Policy. However, MassMutual has the right to
refund all or a portion of a premium paid in any year if it will increase
the amount of insurance which requires a charge under the Policy.
<PAGE>
The Policies do 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 Monthly Deduction, the Policy enters a 61-day
grace period. MassMutual does not require underwriting prior to issuance of
the Variable Rider. However, issuance of Certificates are subject to
MassMutual's then current guidelines regarding guaranteed issue, simplified
issue, and regular underwriting. Guaranteed issue is only available to
employees affiliated with an Employer group. For those proposed Certificate
owners subject to simplified or regular underwriting, MassMutual will
require adequate evidence of insurability prior to approving issuance of a
Certificate. MassMutual will not issue Certificates which maintain a death
benefit amount of less than $50,000.
Cost of insurance charges for the Certificates will not be the same for all
Certificate owners. The insurance principle of pooling and distribution of
mortality risks is based upon the assumption that each Certificate owner
pays a cost of insurance charge commensurate with the insured's mortality
risk, which is actuarially determined based on factors such as age, health,
and occupation. In the context of life insurance, a uniform mortality charge
(the "cost of insurance charge") for all insureds would discriminate
unfairly in favor of those insureds representing greater mortality risks to
the disadvantage of those representing lesser risks. Accordingly, there will
be different "prices" for each actuarial category of Certificate owners
because different costs of insurance rates will apply. While not all
Certificate owners will be subject to the same cost of insurance rates,
there will be a single "rate" for all Certificate owners in a given
actuarial category. The Certificates will be offered and sold pursuant to
MassMutual's underwriting standards and in accordance with state insurance
laws. Such laws prohibit unfair discrimination among insureds, but recognize
that premiums must be based upon factors such as age, health, and
occupation. Tables showing the maximum cost of insurance charges will be
delivered as part of the Certificate.
b. Application and Initial Premium Processing
------------------------------------------
The Variable Riders may only be elected by Certificate owners. Certificates
are only available to individuals who are members of a group acceptable to
MassMutual where the group sponsor such as an employer, association,
sponsoring organization or trust ("Employer") executes a participation
agreement requesting participation in a group flexible premium adjustable
life insurance policy issued by MassMutual. Subsequent to this agreement,
the Employer will submit enrollment forms on behalf of its employees to
MassMutual requesting individual insurance under the group contract. Once
MassMutual approves an enrollment form, a Certificate will be issued to the
approved employee. Employees who have been approved for issuance of
Certificate may then propose the election of the Variable Rider to the
Certificate. Each individual in a group accepted by MassMutual is aggregated
for purposes of determining Certificate issue dates, policy dates,
underwriting classification, and sales load percentages. The group contract
and the participation agreement specify the rights and privileges of the
Employer. The Policy is evidence of coverage under the Group Contract and
Individuals may exercise all rights and privileges under the Policy through
the Employer. After termination of the employment or other relationship, an
individual who has been issued the Policy may exercise all rights and
privileges directly with MassMutual.
A Certificate owner elects the Variable Rider by completing an enrollment
form and submitting the form to MassMutual along with the minimum premium of
$500. MassMutual then conducts a suitability review of the proposed
enrollment. If MassMutual determines the election of the Variable Rider is
not suitable for the Certificate owner, the minimum premium is sent back to
the Certificate owner without interest.
If the Variable Rider is issued by MassMutual, the net premium paid is
allocated among the Divisions of the Separate Account on the date of
issuance of the Variable Rider in accordance
<PAGE>
with the allocation instructions specified by the Certificate owner in the
enrollment form, unless the Certificate has an unexpired Free Look Period.
A Free Look Period under state law provides a Certificate owner the right to
cancel the Certificate within 10 days (or longer depending upon the state of
issuance) after the Certificate has been delivered to the Certificate owner.
The election of the Variable Rider does not increase or decrease the
duration of this Free Look Period. If the Certificate owner chooses to
cancel the Certificate within the Free Look Period, a refund will be made to
the owner. The refund equals either: 1) the Account Value plus any Premium
Deduction(s) and Monthly Deduction(s) reduced by any amounts borrowed or
withdrawn; or, where required by state law, 2) all premiums paid, reduced by
any amounts borrowed or withdrawn. During the Free Look Period, the initial
net premium received by MassMutual to which a Variable Rider has been added
will be allocated to the Guaranteed Principal Account ("GPA"). After the
Free Look Period applicable to the Certificate has expired, the net premiums
paid by the Certificate owner will be allocated among the GPA and the
Divisions of the Separate Account in accordance with the Certificate owner's
instructions.
Each individual in a group accepted by MassMutual is aggregated for purposes
of determining Certificate issue dates, policy dates, underwriting
classification, and sales load percentages. Generally, an Employer pays
MassMutual a premium which may cover a proposed Certificate owner prior to
the time MassMutual receives an enrollment form from the proposed
Certificate owner. In these situations, temporary insurance is provided to
the Certificate owner during the interim period. When the enrollment form is
submitted and approved by MassMutual, the Certificate may be backdated to
the date requested by the Employer. In no event will such backdating exceed
six months.
MassMutual will require the Certificate to be delivered to the
employee/Certificate owner within a specific time frame after the
Certificates have been generated at MassMutual's home offices. This period
is generally 10 days from the date the Certificates are delivered to the
Employer.
c. Premium Allocation
------------------
"Net Premiums" are credited to the Certificate as of the date the premium
payments are received by MassMutual, with the possible exception of the
first Net Premium received from the Employer. Net Premiums are equal to the
gross premium paid minus the sales load, state premium tax charges, and the
deferred acquisition cost ("DAC") tax charges. The sales load compensates
MassMutual for the cost of distributing and servicing the Policies, the
state premium tax charges compensates MassMutual for applicable state and
local taxes on premiums paid for the Policy, and the DAC tax charges
compensates MassMutual for federal taxes imposed for deferred acquisition
costs. Once the sales load for a Policy is established, it will never change
for the life of the Policy. The state premium tax charges and the DAC tax
charges may be increased or decreased by MassMutual to reflect changes in
the applicable tax or a change in the Policyowner's residence.
The Variable Riders are intended to be sold in the group employee benefit
market. The Employer must enter into a participation agreement with
MassMutual in order to participate in the group flexible premium adjustable
life insurance policy issued to a trust. Subsequent to this agreement, the
Employer will send premium payments on behalf of an employee/Policyowner to
MassMutual and the Certificates will be issued. Once the Certificates are
issued, the Certificate owner will have the ability to elect the Variable
Rider. In addition to the premium payments made by the Employer on behalf of
the employee, the Policies also allow the employee to send premium payments
directly to MassMutual. MassMutual will require a certain portion of the Net
Premium paid by the Employer to be allocated to MassMutual's GPA. Net
Premiums paid by the employee/Policyowner may be allocated among the GPA and
up to eight Divisions of the
<PAGE>
Separate Account. However, the portion of Net Premiums paid by the Employer
equal to the Modal Term Premium must be allocated to the GPA. The "Modal
Term Premium" is equal to the estimated premium amount sufficient to pay the
premium deduction and monthly deduction(s) under the Policy during one Modal
Term. For example, if a Policy has a monthly Modal Term, the Modal Term
Premium would be one estimated monthly deduction plus one estimated premium
deduction. If a Policy maintains a yearly Modal Term, the Modal Term Premium
would be twelve estimated monthly deductions plus one estimated premium
deduction. The premium deduction is equal to the sales load, state premium
tax charge, and the DAC tax charge. The monthly deduction is equal to the
charge for cost of insurance protection, administrative charge, and any
charges for the cost of any additional benefits provided by rider. The
Monthly Deduction necessary under any Policy varies by the initial death
benefit, issue age, underwriting classification, and rider(s) selected. Any
Net Premium paid by the Employer in excess of the Modal Term Premium may be
allocated to any Division of the Separate Account, subject to the
restriction that a Policyowner may not have allocations in more than eight
Divisions of the Separate Account.
A Policyowner may change the allocation of Net Premiums without charge at
any time by providing written notice to MassMutual. The change will be
effective as of the date of receipt of the notice at MassMutual's home
office. The Policyowner may transfer amounts among all of the Divisions of
the Separate Account and the GPA, subject to certain restrictions, including
the restriction that a Policyowner may not have allocations in more than
eight Divisions of the Separate Account.
d. Repayment of Loan
-----------------
The Policy provides a loan privilege which becomes effective six months
after the Policy date. After such effective date, loans can be made on the
Policy at any time while the Insured is living. The Policy must be properly
assigned as collateral for the loan. The loan must be repaid with an amount
equal to the original loan plus loan interest.
When a loan is made, MassMutual will take the loan amount requested from the
Divisions 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. MassMutual may delay the granting of any loan attributable to the
Separate Account during any period that the New York Stock Exchange (or its
successor) is closed except for normal weekend and holiday closings, or
trading is restricted, or the Securities and Exchange Commission (or its
successor) determines that an emergency exists, or the Securities and
Exchange Commission (or its successor) permits MassMutual to delay payment
for the protection of its policy owners. The amount equal to any outstanding
Policy loans is held in the GPA and is credited with interest at a rate
which is the greater of 3% and the Policy loan rate less a MassMutual
declared charge (currently 0.75%, guaranteed not to exceed a maximum of
1.25%) for expenses and taxes. As long as a loan is outstanding, a portion
of the Policy's account value equal to the loan is held in the GPA.
Policy Debt (which includes accrued interest) must not equal or exceed the
Policy's account value. If this limit is reached, MassMutual may terminate
the Policy. The Employer elects either a fixed loan interest rate or, where
permitted, an adjustable loan interest rate to apply to the Policies. All
Certificates issued to the same group will have the same fixed or variable
loan interest rate. The fixed loan interest rate is 6% per year. When an
adjustable rate has been 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
<PAGE>
limit is not at least 1/2% higher than the rate in effect for the previous
year, MassMutual will not increase the rate. If the maximum limit is at
least 1/2% lower than the rate in effect for the previous year, MassMutual
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 Separate
Account and the GPA in proportion to the non-loaned account value in each.
All or part of any Policy Debt may be repaid at any time while the Insured
is living and while the Policy is in force. Any repayment results in the
transfer of values equal to the repayment from the loaned portion of the GPA
to the non-loaned portion of the GPA and the applicable Division(s) of the
Separate Account. The transfer is made in proportion to the non-loaned value
in each Division at the time of repayment. If the loan is not repaid,
MassMutual will deduct the amount due from any amount payable from a full
surrender or upon the death of the Insured.
e. Policy Reinstatement
--------------------
For a period of five (5) years after termination, a Policyowner can request
MassMutual reinstate the Policy during the Insured's lifetime. MassMutual
will not reinstate the Policy if it has been returned for its Cash Surrender
Value. Before MassMutual will reinstate the Policy, it must receive the
following: 1) a premium payment equal to the amount necessary to produce an
account value equal to 3 times the monthly deduction for the Policy on the
monthly calculation date on or next following the date of reinstatement; 2)
evidence of insurability satisfactory to MassMutual; and 3) where necessary,
a signed acknowledgment that the Policy has become a modified endowment
contract.
If a Policy is reinstated, the death benefit amount for the reinstated
Policy will be the same as it would have been if the Policy had not
terminated.
f. Correction of Misstatement of Age
---------------------------------
If the Insured's date of birth as given in the enrollment form is not
correct, an adjustment will be made. If the adjustment is made when the
Insured dies, the Death benefit amount will reflect the amount provided by
the most recent mortality charge according to the correct age. If the
adjustment is made before the Insured dies, then future monthly deductions
under the Policy will be based on the correct age.
g. Contestability
--------------
MassMutual will not contest the validity of a Certificate after it has been
in force during the Insured's lifetime for two years from the date of issue.
MassMutual will not contest the validity of any increase in the death
benefit amount after such increase or rider has been in force during the
Insured's lifetime for two years from its effective date.
If the Certificate is reinstated, the amount insured cannot be contested
after the Certificate has been in force during the Insured's lifetime for
two years from the date of reinstatement. The Certificate can be contested
within the two-year period over statements made in the reinstatement
application.
h. Increase or change in Death Benefit option
------------------------------------------
<PAGE>
A Policy owner's selected death benefit amount may be increased upon
request by the Policy owner, subject to MassMutual's then current
guidelines regarding guaranteed issue, simplified issue, and regular
underwriting. Guaranteed issue is only available to employees affiliated
with an Employer group. For those Policy owners subject to simplified or
regular underwriting, MassMutual will require adequate evidence of
insurability prior to approving an increase in the death benefit amount. A
request for a decrease in the death benefit amount will be honored by
MassMutual once each Policy year provided the Policy maintains a minimum
death benefit amount of $50,000.
Any requested increase in the death benefit 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 MassMutual; or (ii) the requested effective date of the
change. Any requested decrease in the death benefit 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 MassMutual; (ii) the one year period
following the effective date of the previously requested decrease; or (iii)
the requested effective date of the change.
A Policyowner may change death benefit option by written request subject to
MassMutual's current guidelines regarding proof of insurability. The
effective date of any such change will be on the Policyowner's Policy
anniversary following the date the written request is received by
MassMutual in good order, or if MassMutual receives the written request
within the 15 day period prior to a Policy anniversary, the change will be
effective on the second Policy anniversary following the date of the
request. MassMutual will honor a request for a later effective date
provided the date coincides with the Policyowner's policy anniversary.
Any increase for Policyowners no longer associated with the Employer must
be at least $5,000. No increase will be allowed after the Policy
anniversary date succeeding the Insured's 75th birthday.
2. "Redemption Procedures", Surrender and Related Transactions
-----------------------------------------------------------
The Policies provide for the payment of moneys to a Policyowner or
beneficiary upon presentation of a Policy. Generally, except for the
payments of death benefits, the imposition of cost of insurance and
administrative charges, the payee will receive a pro rata or proportionate
share of the Separate Account's assets, within the meaning of the 1940 Act,
in any transaction involving "redemption procedures." The amount received
by the payee will depend upon the particular benefit for which the Policy
is presented, including, for example, the cash surrender value or death
benefit. There are also certain Policy provisions (e.g. partial
withdrawals or the loan privilege) under which the Policy will not be
presented to MassMutual, but which will affect the Policyowner's benefits
and may involve a transfer of the assets supporting the Policy reserve out
of the Separate Account. Any combined transactions on the same day which
counteract the effect of each other will be allowed. MassMutual will
assume the Policyowner is aware of the possible conflicting nature of the
transactions and desires their combined result. If a transactions is
requested which MassMutual will not allow (e.g. a request for a decrease in
death benefit which lowers the amount below the stated minimum) MassMutual
will reject the entire transaction and not just the portion which causes
the disallowance. The Policyowner will be informed of the rejection and
will have an opportunity to give new instructions.
a. Surrender for Cash Value
------------------------
The Policy may be surrendered for its full cash surrender value at any time
while the Insured is living. Unless a later effective date is selected,
surrender is effective on the date MassMutual receives the Policy and a
written request in proper form at its home office. The Policy and a
<PAGE>
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 day on
which they are received is not a day on which the net asset value of the
underlying funds in which the Divisions of the Separate Account invest is
determined (i.e. the New York Stock Exchange is not open for trading), or
if they are received other than through the mail after a certain time
(currently 4:00 p.m. New York time), then they are deemed received on the
next day the net asset value of the underlying funds is determined.
MassMutual will normally pay the full cash surrender value within seven
days after receipt of the Policy and written request in proper form. The
full cash surrender value is the account value less any outstanding Policy
debt. Computations with respect to the investment experience of each
Division of the Separate Account will be made at the close of any date on
which the net asset value of the underlying funds is determined. This will
enable MassMutual to pay the cash value on surrender based on the next
computed value after the surrender request is received.
The Policy value (equal to the value of all accumulations in the Separate
Account) may increase or decrease from day to day depending on the
investment experience of the Separate Account. Calculations of the Policy
value for any given day will reflect the actual premiums paid, expenses
charged, and deductions taken. MassMutual will deduct a charge for sales
load, premium taxes, and DAC taxes for each premium payment. The balance
(Net Premium) in excess of the Modal Term Premium is allocated to the
Separate Account in accordance with the Policyowner's instructions.
MassMutual will also make monthly deductions from a Policy to cover the
cost of insurance protections, administrative expenses, and the cost of any
additional benefits provided by rider for the following month. The monthly
administrative charge is currently $5.25 and is guaranteed not to exceed $9
and is designed to compensate MassMutual for administering and maintaining
the Policy. Other possible deductions from the Policy (which occur on a
Policy specific basis) include a charge for partial withdrawals, a charge
for transfers (there is currently no charge for transfers, but MassMutual
reserves the right to charge for certain transfers in the future), a charge
for loans, and increases in face amount which require simplified or full
underwriting.
b. Charges on Partial Withdrawal
-----------------------------
After a Certificate has been in force for six months a Certificate owner
can make a withdrawal from the Certificate on any monthly calculation date
by sending a written request to MassMutual's home office. Any withdrawal
is subject to the following: 1) the minimum amount of a withdrawal is $500
(before deducting the withdrawal charge); 2) the maximum amount of a
withdrawal is the cash surrender value minus an amount equal to one plus
the number of monthly calculation dates remaining in the Certificate's
Modal Term multiplied by its most recent monthly deduction; 3) a withdrawal
charge equal to the lesser of $25 or 2% of the total withdrawal will be
assessed against the amount withdrawn; 4) the amount of the withdrawal will
be 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; 5) the Policyowner must specify the GPA or the Division(s) of the
Separate Account from which the withdrawal is to be made; 6) the withdrawal
amount attributable to a Division of the Separate Account or the GPA may
not exceed the non-loaned Account Value of that Division or GPA; 7) a
withdrawal from the GPA is subject to certain restrictions; 8) the Policy's
account value will automatically be reduced by the amount of the
withdrawal; 9) the Policy's death benefit will be reduced as needed to
prevent an increase in the amount of insurance which requires a charge,
unless satisfactory evidence of insurability is provided to MassMutual.
c. Death Benefit
-------------
MassMutual will pay a death benefit to the beneficiary normally within
seven days after receipt, at its home office, of the Policy, due proof of
death of the Insured, and all other requirements to
<PAGE>
make payment. MassMutual may delay payments under circumstances as
described in the prospectus.
The death benefit amount is determined as of the date of death All or part
of the benefit can be paid in cash or applied under one or more of our
payment options described in the prospectus. The death proceeds payable
will depend on the option in effect at the time of death. Under death
benefit option A, 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 described
below. Under death benefit option B, 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 described below.
The minimum face amount is equal to account value times the minimum face
amount percentage. The percentages depend upon the Insured's age and are
specified under Internal Revenue Code Section 7702(d) and are set forth in
the Policy. Added to the greater of the selected face amount or minimum
face amount is that part of any monthly deduction applicable for the period
beyond the date of death. Any policy debt outstanding on the date of death
and any monthly deduction unpaid as of the date of death are deducted from
the death benefit. MassMutual pays interest on the death benefit from the
date of death to the date the death benefit is paid or a payment option
becomes effective.
d. Termination
-----------
The Policy will terminate if on a monthly calculation date, the account
value less any Policy debt is insufficient to cover the monthly deduction.
Thereafter, the Policy enters a 61-day grace period. MassMutual allows 61
days to pay any premium necessary to cover the overdue monthly deduction.
An Employer (or the Policyowner if the Policyowner has disassociated from
the Employer) will receive a notice from MassMutual 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 MassMutual
has mailed the written notice, the Policy will terminate and insurance
coverage will cease.
e. Policy Loan
-----------
The Policy provides a loan privilege which becomes effective six months
after the Policy Date. After such effective date, loans can be made on the
Policy at any time while the Insured is living. The maximum loan is an
amount equal to; 1) 90% of the Policy's account value at the time of the
loan; less 2) any outstanding Policy debt before the new loan; less 3)
interest on the loan being made and on other outstanding loan(s) to the
Policy's next Policy anniversary date; less 4) an amount equal to one plus
the number of monthly calculation dates remaining in the Policy's Modal
Term multiplied by its most recent monthly deduction. The Policy must be
properly assigned as collateral for the loan.
The loan amount requested is taken from the Divisions of the Separate
Account and the GPA (excluding Policy debt plus an amount equal to one plus
the number of monthly calculation dates remaining in the Policy's Modal
Term multiplied by its most recent monthly deduction) in proportion to the
non-loaned account value of each on the date of the loan. Shares taken
from the Divisions of the Separate Account are liquidated and the resulting
dollar amounts are transferred to the GPA. MassMutual may delay the
granting of any loan attributable to the GPA for up to six months.
MassMutual may also delay the granting of any loan attributable to the
Separate Account during any period that the New York Stock Exchange (or its
successor) is closed except for normal weekend and holiday closings, or
trading is restricted, or the Securities and Exchange Commission (or its
successor) determines that an emergency exists, or the Securities and
Exchange Commission (or its successor) permits MassMutual to delay payment
for
<PAGE>
the protection of its policy owners. As long as a loan is outstanding, a
portion of the Policy's account value equal to the loan is held in the GPA.
Policy debt (which includes accrued interest) must not equal or exceed the
account value under the Policy. If this limit is reached, MassMutual may
terminate the Policy. In this event, MassMutual will notify the Employer
(or Policyowner if no longer associated with the Employer) in writing. The
notice will state the amount necessary to bring the Policy debt back within
the limit. If MassMutual does not receive a payment within 30 days after
the date it mailed the notice, the Policy terminates without value at the
end of those 30 days.
The Employer elects either a fixed loan interest rate or, where permitted,
an adjustable loan interest rate to apply to the Policy. All Certificates
issued to the same group will have the same fixed or variable loan interest
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 Separate Account and the GPA in proportion to the non-
loaned account value in each.
All or part of any Policy debt may be repaid at any time while the Insured
is living and while the Policy is in force. Any repayment results in the
transfer of values equal to the repayment from the loaned portion of the
GPA to the non-loaned portion of the GPA and the applicable Division(s) of
the Separate Account. The transfer is made in proportion to the non-loaned
value in each Division of the Separate Account at the time of repayment.
If the loan is not repaid, MassMutual will deduct the amount due from any
amount payable from a full surrender or upon the death of the Insured.
The amount equal to any outstanding Policy loans is held in the GPA and is
credited with interest at a rate which is the greater of 3% and the Policy
loan rate less a MassMutual declared charge (currently 0.75%, guaranteed
not to exceed a maximum of 1.25%) for expenses and taxes.
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.
f. Transfers Among Divisions
-------------------------
All or part of a Policy's Account Value may be transferred among Divisions
by written request delivered to MassMutual's home office. Transfers
between Divisions may be by dollar amount or by whole-number percentage.
There is no limit on the number of transfers a Policyowner may make.
MassMutual does not currently charge a fee for transfers in excess of six
(6) during any one Policy year. 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. Policyowners, however, may transfer all funds
in the Separate Account to the GPA at any time regardless of the number of
transfers previously made. MassMutual also offers Policyowners a automated
account re-balancing option as well as an automated account value transfer
option. A Policyowner may only have one of these options active at any
given point in time. All transfers under these options during any Policy
year are considered one transfer for purposes of determining the number of
transfers made by a Policyowner during a Policy year.
Transfers from the GPA to the Separate Account are subject to certain
restrictions outlined in the prospectus. All transfers made on one
Valuation Date are considered one transfer.
g. Free Look Provisions
--------------------
<PAGE>
The Certificate owner may cancel the Certificate within 10 days (or longer
if required by state law) after the owner has received the Certificate.
The election of the Variable Rider does not increase or decrease the
duration of this Free Look Period. If the Certificate owner chooses to
cancel the Certificate within the Free Look Period, the owner must mail or
deliver the Certificate and Certificate delivery receipt (if applicable)
either to MassMutual or to the agent who sold the Certificate or to one of
MassMutual's agency offices. If the Certificate is canceled in this
fashion, a refund will be made to the owner. The refund equals either: 1)
the Policy account value plus any premium deduction(s) and monthly
deduction(s) reduced by any amounts borrowed or withdrawn; or, where
required by state law, 2) all premiums paid, reduced by any amounts
borrowed or withdrawn.
g. Payment Options
---------------
All or part of the death benefit or cash surrender value of a Policy may be
taken in cash or as a series of level payments. Proceeds applied will no
longer be affected by the investment experience of the Divisions or the
GPA.
To receive payments, the proceeds to be applied must be at least $2,000.
If the payments under any option are less than $20 each, MassMutual
reserves the right to make payments at less frequent intervals or to make a
lump sum payment in satisfaction of its obligation. Payment options are
described in the prospectus and include a Fixed Amount Payment Option,
Fixed Time Payment Option, Interest Payment Option, Lifetime Payment
Option, Joint Lifetime Payment Option, and Joint Lifetime Payment Option
with Reduced Payments.
<PAGE>
EXHIBIT
7
Consent of Independent Accountants.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in Pre-Effective Amendment No. 2 to the Registration
Statement of Massachusetts Mutual Variable Life Separate Account I (Group
Flexible Premium Variable Life segment) on Form S-6 (Registration No. 333-
22557), 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.
We also consent to the reference to our Firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
August 1, 1997
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EXHIBIT
8
Power of Attorney for Joseph Zubretsky
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POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
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The Undersigned, Joseph Zubretsky, Executive Vice President and Chief Financial
Officer of Massachusetts Mutual Life Insurance Company("MassMutual"), does
hereby constitute and appoint Lawrence V. Burkett, Jr., Thomas F. English,
Richard M. Howe, Stephen R. Bosworth, 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 Executive Vice President and Chief Financial 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 Securities Exchange Act
of 1934, as amended, the Investment Company Act of 1940, as amended
(collectively, the "Acts") and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This Power of Attorney authorizes such attorneys and agents to sign
the Undersigned's name on his behalf as Executive Vice President and Chief
Financial Officer of MassMutual to any and all registration statements and/or
amendments thereto, reports, instruments or documents filed or to be filed with
the Commission under the Acts. Without limiting the scope of this Power of
Attorney, it shall apply to filings by or on behalf of MassMutual separate
investment accounts currently in existence or established in the future,
including but not limited to those listed below.
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 Annuity Separate Account 4
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
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 1st day of August,
1997.
<PAGE>
/s/ Joseph Zubretsky
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Joseph Zubretsky Witness
Executive Vice President and Chief Financial Officer
