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Registration No. 333-22557
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NUMBER 1 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A. Exact name of Trust: Massachusetts Mutual
Variable Life Separate
Account I
B. Name of Depositor: Massachusetts Mutual Life
Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b) of Rule 485.
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X on May 1, 1998 pursuant to paragraph (b) of Rule 485.
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60 days after filing pursuant to paragraph (a) of Rule 485
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on May 1, 1998 pursuant to paragraph (a) of Rule 485.
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*STATEMENT PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
registered an indefinite amount of securities being offered. The Rule 24f-2
Notice for the fiscal year ending December 31, 1997 was filed on March 20, 1998.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of Caption
- ----------- -------
Form N-8B-2
- -----------
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
2
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of Caption
- ----------- -------
Form N-8B-2
- -----------
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
3
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of Caption
- ----------- -------
Form N-8B-2
- -----------
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
4
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of Caption
- ----------- -------
Form N-8B-2
- -----------
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
5
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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 seeks to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. The 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 debt 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 Growth Fund
which invests primarily in securities of well-known established companies. The
Oppenheimer Capital Appreciation Division invests in shares of Oppenheimer
Aggressive Growth Fund (Prior to May 1, 1998, this Fund was named 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
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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.
May 1, 1998
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.
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.
2
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<TABLE>
<CAPTION>
Table Of Contents
Page
<S> <C>
Definitions Of Terms......................................................................................................... 5
Basic Questions and Answers About Us And Our Policy.......................................................................... 7
What is MassMutual........................................................................................................... 7
What variable life insurance policy are We offering?......................................................................... 7
Availability................................................................................................................. 7
Initial Minimum Premium Requirements......................................................................................... 7
Underwriting................................................................................................................. 7
What is the Account Value of the Policy?..................................................................................... 7
What are the Divisions of the Separate Account?.............................................................................. 7
What is the Guaranteed Principal Account ("GPA")?............................................................................ 7
Is the level of the Death Benefit guaranteed?................................................................................ 8
Is the Death Benefit subject to income taxes?................................................................................ 8
Does the Policy have a Cash Surrender Value?................................................................................. 8
What is modified endowment contract?......................................................................................... 8
Can this Policy become a modified endownment contract?....................................................................... 8
What about Premiums?......................................................................................................... 8
When are Initial Premiums allocated to the Guaranteed Principal Account or the Separate Account?............................. 8
How can the Net Premium and the Account Value of the Policy be allocated among the
Guaranteed Principal Account and the Separate Account Divisions?............................................................ 9
How long will the Policy remain in force?.................................................................................... 9
Are there charges against the Policy?........................................................................................ 9
What is the loan privilege and how does a loan affect the Policy's Death Benefit and Cash Surrender Value?................... 9
Are dividends paid on the Policy?............................................................................................ 9
Do I have a right to cancel?................................................................................................. 9
Charges Under The Policy..................................................................................................... 10
Deductions from Premiums..................................................................................................... 10
Sales Load.................................................................................................................. 10
State Premium Tax Charge.................................................................................................... 10
Deferred Acquisition Cost ("DAC") Tax Charge................................................................................ 10
Account Value Charges........................................................................................................ 10
Administrative Charge....................................................................................................... 10
Charge for Cost of Insurance Protection..................................................................................... 10
Separate Account Charges..................................................................................................... 10
Charges for Mortality and Expense Risks..................................................................................... 10
Charges for Federal Income Taxes............................................................................................ 11
Fund Charges................................................................................................................ 11
The Separate Account......................................................................................................... 14
Investment of the Separate Account........................................................................................... 14
Investment Objectives........................................................................................................ 15
Rates of Return.............................................................................................................. 17
General Provisions Of The Policy............................................................................................. 22
Premiums..................................................................................................................... 22
Planned Policy Premiums - Modal Term Premiums................................................................................ 22
Minimum and Maximum Premium Payments......................................................................................... 22
Termination.................................................................................................................. 22
Grace Period................................................................................................................. 22
Death Benefit Under The Policy............................................................................................... 22
Account Value And Cash Surrender Value....................................................................................... 23
Account Value................................................................................................................ 23
Transfers.................................................................................................................... 23
Automated Account Re-Balancing............................................................................................... 24
Automated Account Value Transfer............................................................................................. 24
Investment Return............................................................................................................ 24
Cash Surrender Value......................................................................................................... 24
Withdrawals.................................................................................................................. 25
</TABLE>
3
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Policy Loan Privilege..................................................... 25
Source of Loan............................................................ 25
If Loans Exceed the Policy Account Value.................................. 25
Interest.................................................................. 25
Repayment................................................................. 26
Interest on Loaned Value.................................................. 26
Effect of Loan............................................................ 26
Free Look Provision....................................................... 26
Exchange Privilege........................................................ 26
Your Voting Rights........................................................ 26
Our Rights................................................................ 26
Directors And Executive Vice Presidents Of MassMutual..................... 28
The Guaranteed Principal Account.......................................... 29
Federal Income Tax Considerations......................................... 30
MassMutual - Tax Status................................................... 30
Policy Proceeds, Premiums, and Loans...................................... 30
Modified Endowment Contracts.............................................. 31
Diversification Standards................................................. 31
Additional Provisions Of The Policy....................................... 32
Paid-up Policy Date....................................................... 32
Reinstatement Option...................................................... 32
Payment Options........................................................... 32
Fixed Amount Payment Option............................................... 32
Fixed Time Payment Option................................................. 32
Interest Payment Option................................................... 32
Lifetime Payment Option................................................... 32
Joint Lifetime Payment Option............................................. 32
Joint Lifetime Payment Option with Reduced Payments....................... 33
Withdrawal Rights under Payment Options................................... 33
Beneficiary............................................................... 33
Changing the Policyowner or Beneficiary................................... 33
Assignment................................................................ 33
Dividends................................................................. 33
Limits on Our Right to Challenge the Policy............................... 33
Misstatement of Age....................................................... 33
Suicide................................................................... 33
When We Pay Proceeds...................................................... 33
Optional Benefits Obtainable by Rider..................................... 34
Waiver of Monthly Charges Rider........................................... 34
Accelerated Benefits Rider................................................ 34
Accidental Death and Dismemberment Rider.................................. 34
Records And Reports....................................................... 34
Sales And Other Agreements................................................ 34
Commissions Schedule...................................................... 34
Bonding Arrangement....................................................... 35
Legal Proceedings......................................................... 35
Experts................................................................... 35
Financial Statements...................................................... 35
Appendix A................................................................ A-1
Appendix B................................................................ B-1
4
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Definition Of Terms
Account Value: The sum of the Variable Account Value and the Fixed Account Value
of the Policy.
Application: The form used to apply for the initial Selected Face Amount when
underwriting is involved and 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 Master application is used by the employer to initially
apply for the program. 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 and no
underwriting is involved.
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.
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
5
<PAGE>
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.
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 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.
6
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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.
As of December 31, 1997, MassMutual had total contingency reserves in excess of
$2.8 billion and unconsolidated assets of $57.6 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 Group Contract evidences a legal contract between the Group Contract Owner
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.
In connection with the offering and sale of the Policy, MassMutual reserves the
right, in its sole and absolute discretion, to reject any purchase application.
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.")
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.")
7
<PAGE>
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 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 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.
8
<PAGE>
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.
Some deductions are made on a daily basis against the assets of the Divisions. A
daily charge calculated at a current annual rate of 0.75% 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.")
9
<PAGE>
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 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.") During 1997, no sales load charges were incurred.
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.
During 1997, no state premium tax charges were incurred.
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. During 1997, no DAC tax charges were incurred.
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. During 1997, no administrative
charges were incurred.
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. During 1997, no cost of insurance charges were incurred.
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 0.75% 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 aggregate amount of such charges, which are paid
quarterly, against the Separate Account divisions in 1997 was $32.00.
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.
10
<PAGE>
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-advisory 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-advisory
agreement with MassMutual, Mellon Equity receives a monthly fee, computed daily
at an annual rate based on the collective daily net assets 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.
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.
OppenheimerFunds, 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 Aggressive
Growth Fund (Prior to May 1, 1998, this Fund was named Oppenheimer Capital
Appreciation Fund.), Growth Fund, Growth & Income Fund, Multiple Strategies
Fund, and Global Securities Fund: 0.75% of the first $200 million of net assets,
0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the
next $200 million, and 0.60% of net assets over $800 million; and (iii) for High
Income Fund, Bond Fund, and Strategic Bond Fund: 0.75% of the first $200 million
of net assets, 0.72% of the next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, 0.60% of the next $200 million, and 0.50% of net
assets over $1 billion. During 1997 OFI earned investment management fees of
$601,698 from the Money Fund, $5,324,309, from the Aggressive Growth Fund (Prior
to May 1, 1998, this Fund was named Oppenheimer Capital Appreciation Fund.),
$2,859,202 from the Growth Fund, $709,577 from the Growth & Income Fund,
$709,577 from the Multiple Strategies Fund, $5,615,606 from the Global
Securities Fund, $1,667,490 from the High Income Fund, $3,281,556 from the Bond
Fund and $1,197,613 from the Strategic Bond Fund. During 1997, MassMutual earned
investment management fees of $61,760 from MML Equity Index Fund. During 1997,
Mellon Equity earned investment management fees of $13,959 from the MML Equity
Index 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 1997, OFI earned investment management fees of $6,482,637 from
the Total Return Portfolio, $3,818,977 from the Growth Portfolio, $732,642 from
the International Equity Portfolio, $437,070 from the LifeSpan Capital
Appreciation Portfolio, $504,390 from the LifeSpan Balanced Portfolio and
$213,594 from 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 $75 billion as of December 31,
1997, and having more than 3.5 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-advisory 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-
advisory 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
11
<PAGE>
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-advisory agreement
with OFI, Babson-Stewart receives a monthly fee from OFI, computed daily at an
annual rate based on the average daily net assets 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-advisory 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 1997, Babson-Stewart
received $666,697 for managing the assets of the International Equity Portfolio
and the international equity component of the LifeSpan Capital Appreciation
Portfolio and the LifeSpan Balanced Portfolio.
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 receives a monthly fee from OFI, computed daily at an
annual rate based on the collective average daily net assets 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 assets of the portion of the LifeSpan Portfolios allocated to the high yield
bond component are aggregated with that portion of the net assets of the
Oppenheimer Series Fund, Inc. managed by BEA. During 1997, BEA earned investment
management fees of $160,466.
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 receives a monthly fee from OFI,
computed daily at an annual rate based on the collective average daily net
assets 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 assets of the portion of
the LifeSpan Portfolios allocated to the small cap component are aggregated with
that portion of the net assets of the Oppenheimer Series Fund, Inc. managed by
Pilgrim Baxter. During 1997, Pilgrim Baxter earned investment management fees of
$251,753.
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<PAGE>
MML Series Investment Fund Annual Expenses for 1997
(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 0.27% 0.16% 0.43%
</TABLE>
Oppenheimer Variable Account Funds Annual Expenses for 1997
(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 0.70% 0.06% 0.76%
Oppenheimer Aggressive Growth Fund /(1)/ 0.71% 0.02% 0.73%
Oppenheimer Growth Fund 0.73% 0.02% 0.75%
Oppenheimer Growth & Income Fund 0.75% 0.08% 0.83%
Oppenheimer Multiple Strategies Fund 0.72% 0.03% 0.75%
Oppenheimer High Income Fund 0.75% 0.07% 0.82%
Oppenheimer Strategic Bond Fund 0.75% 0.08% 0.83%
Oppenheimer Bond Fund 0.73% 0.05% 0.78%
Oppenheimer Money Fund 0.44% 0.04% 0.48%
</TABLE>
(1) Prior to May 1, 1998, this Fund was named Oppenheimer Capital Appreciation
Fund.
Panorama Series Fund, Inc. Annual Expenses for 1997
(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 0.54% 0.01% 0.55%
Panorama Growth Portfolio 0.53% 0.01% 0.54%
Panorama International Equity Portfolio 1.00% 0.12% 1.12%
Panorama LifeSpan Diversified Income Portfolio 0.75% 0.09% 0.84%
Panorama LifeSpan Balanced Portfolio 0.85% 0.12% 0.97%
Panorama LifeSpan Capital Appreciation Portfolio 0.85% 0.14% 0.99%
</TABLE>
13
<PAGE>
Additional and more detailed information concerning the MML Equity Index Fund,
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 Equity Index Fund, 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.
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 Equity Index Fund, 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 Aggressive Growth Fund, or
its successor. (Prior to May 1, 1998, this Fund was named Oppenheimer
Capital Appreciation Fund.)
.. 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.
14
<PAGE>
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 MML Trust consists of six MML Funds, each of which has
its own investment objectives and policies. MassMutual 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-advisory
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, 1997, Mellon Equity and its employees managed approximately $11
billion and served as the investment adviser or sub-adviser of 10 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 Trust consists of ten Oppenheimer
Funds, each of which has its own investment objectives and policies. 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 Aggressive Growth
Fund (Prior to May 1, 1998, this Fund was named 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 companies.
The Panorama Fund consists of seven Panorama Portfolios, each of which has its
own investment objectives and policies. 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
Fund, 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-advisory 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.
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 and Panorama Fund 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
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" are
trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use.
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's or
The McGraw-Hill Companies, Inc.)
The investment objective of the Oppenheimer Money Fund is to maximize current
income from investments in "money
15
<PAGE>
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 by investing primarily in debt securities. 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, lower rated 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). Current
income is a secondary consideration in the selection of Growth Fund's portfolio
securities.
The investment objective of the Oppenheimer Aggressive Growth Fund is capital
appreciation. (Prior to May 1, 1998, this Fund was named Oppenheimer Capital
Appreciation Fund.) 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,
cyclical industries 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 but which may be considered to be speculative. The type of
securities in which this Fund invests will be primarily common stocks, as well
as securities having the investment characteristics of common stocks, such as
convertible preferred stock, convertible bonds and American Depository Receipts.
Current income is not an investment objective of the Oppenheimer Global
Securities Fund.
The investment objective of the 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 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 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
16
<PAGE>
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 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 of the Separate Account, 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 returns in Tables 1, 2, and 3 do not reflect deductions from premiums for
Sales Load, State Premium Tax Charge, Deferred Acquisition Cost ("DAC") Tax
Charge, Administrative Charge, or Charge for Cost of Insurance Protection.
Therefore, these rates are not illustrative of how actual investment performance
will affect the benefits under the Policy. If these charges were included, the
return figures would be lower. 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.
Table 4 illustrates the performance information pertaining to a hypothetical
Policy. These figures reflect deductions from premiums for Sales Load, State
Premium Tax Charge, DAC Tax Charge, Administrative Charge, Charge for Cost of
Insurance Protection, plus deduction from the Separate Account of current
mortality and expense risk charges and Fund Operating Expenses.
17
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1997
<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>
MML Equity Index *21.93% -- -- -- -- -- --
(date of inception - 05/01/97)
Oppenheimer Money 5.94% -- -- 5.79% 4.70% 5.35% 5.31%
(date of inception - 04/03/85)
Oppenheimer Bond 9.89% -- -- 9.50% 8.23% 10.23% 9.25%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 7.64% -- -- -- -- 12.00% 8.71%
(date of inception - 05/03/93)
Oppenheimer High Income 13.35% -- -- 14.32% 13.75% 15.90% 12.21%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 37.24% -- -- -- -- -- 32.48%
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 12.04% -- -- 12.74% 13.31% 18.00% 17.22%
(date of inception 02/09/87)
Oppenheimer Growth 15.43% -- -- 16.67% 18.61% 29.42% 26.68%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation** 15.31% -- -- 16.23% 15.92% 21.17% 11.67%
(date of inception - 08/15/86)
Oppenheimer Global Securities 12.26% -- -- -- 18.81% 13.82% 22.42%
(date of inception - 11/20/90)
Panorama Total Return 14.05% -- 13.72% 13.80% 13.21% 17.72% 18.81%
(date of inception - 09/30/82)
Panorama Growth 18.31% -- 17.31% 18.66% 20.12% 27.52% 26.37%
(date of inception - 01/21/82)
Panorama International Equity 8.66% -- -- -- 10.78% 10.53% 8.11%
(date of inception - 05/13/92)
Panorama LifeSpan Capital 16.07% -- -- -- -- -- 12.53%
Appreciation
(date of inception -09/01/95)
Panorama LifeSpan Balanced 13.71% -- -- -- -- -- 12.20%
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income 10.84% -- -- -- -- -- 12.51%
(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
rates of return also do not reflect deduction from premiums for Sales Load,
State Premium Tax Charge, DAC Tax Charge, Administrative Charge, or Charge for
Cost of Insurance Protection.
* This is the return for the period May 1, 1997 to December 31, 1997.
** Effective May 1, 1998, this Fund is called the Oppenheimer Aggressive Growth
Fund.
18
<PAGE>
TABLE 2
ONE YEAR TOTAL RETURNS*
<TABLE>
<CAPTION>
For the year ended 1997 1996 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MML Equity Index
(date of inception - 05/01/97) **21.93% -- -- -- -- -- -- --
Oppenheimer Money
(date of inception - 04/03/85) 5.31% 5.13% 5.62% (4.20)% 3.12% 3.76% 5.97% 7.80%
Oppenheimer Bond
(date of inception - 04/03/85) 9.25% 4.80% 17.00% (1.94)% 13.04% 6.50% 17.63% 7.92%
Oppenheimer Strategic Bond
(date of inception - 05/03/93) 8.71% 12.07% 15.33% (3.78)% 4.25% -- -- --
Oppenheimer High Income
(date of inception - 04/30/86) 12.21% 15.26% 20.37% (3.18)% 26.34% 17.92% 33.91% 4.65%
Oppenheimer Growth & Income
(date of inception - 07/05/95) 32.48% 32.51% 23.52% -- -- -- -- --
Oppenheimer Multiple Strategies
(date of inception - 02/09/87) 17.22% 15.50% 21.36% (1.95)% 15.95% 8.99% 17.48% (1.91)%
Oppenheimer Growth
(date of inception - 04/03/85) 26.68% 25.20% 36.65% 0.97% 7.25% 14.53% 25.54% (8.21)%
Oppenheimer Capital Appreciation***
(date of inception - 08/15/86) 11.67% 20.16% 32.52% (7.59)% 27.32% 15.42% 54.72% (16.82)%
Oppenheimer Global Securities
(date of inception - 11/20/90) 22.42% 17.80% 2.24% (5.72)% 70.32% (7.11)% 3.39% 0.40%
Panorama Total Return
(date of inception - 09/30/82) 18.81% 10.14% 24.66% (1.97)% 16.28% 10.21% 28.79% 0.50%
Panorama Growth
(date of inception - 01/21/82) 26.37% 18.87% 38.06% (0.51)% 21.22% 12.36% 37.53% (7.90)%
Panorama International Equity
(date of inception - 05/13/92) 8.11% 13.26% 10.30% 1.44% 21.80% (4.32)% -- --
Panorama LifeSpan Capital
Appreciation (date of inception -
09/01/95) 12.53% 17.97% 6.65% -- -- -- -- --
Panorama LifeSpan Balanced
(date of inception - 09/01/95) 12.20% 13.38% 6.08% -- -- -- -- --
Panorama LifeSpan Diversified
Income
(date of inception - 09/01/95) 12.51% 6.93% 5.69% -- -- -- -- --
<CAPTION>
For the year ended 1989 1988 1987 1986 1985 1984 1983 1982
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
MML Equity Index
(date of inception - 05/01/97) -- -- -- -- -- -- -- --
Oppenheimer Money
(date of inception - 04103/85) 8.82% 7.31% 6.33% 5.68% 7.25% -- -- --
Oppenheimer Bond
(date of inception - 04/03/85) 13.32% 8.97% 2.52% 10.12% 18.82% -- -- --
Oppenheimer Strategic Bond
(date of inception - 05/03/93) -- -- -- -- -- -- -- --
Oppenheimer High Income
(date of inception - 04/30/86) 4.84% 15.58% 8.07% 4.73% -- -- -- --
Oppenheimer Growth & Income
(date of inception - 07/05/95) -- -- -- -- -- -- -- --
Oppenheimer Multiple Strategies
(date of inception - 02/09/87) 15.76% 22.15% 3.97% -- -- -- -- --
Oppenheimer Growth
(date of inception - 04/03/85) 23.59% 22.09% 3.32% 17.76% 9.50% -- -- --
Oppenheimer Capital Appreciation***
(date of inception - 08/15/86) 27.57% 13.41% 14.34% (1.65)% -- -- -- --
Oppenheimer Global Securities
(date of inception - 11/20/90) -- -- -- -- -- -- -- --
Panorama Total Return
(date of inception - 09/30/82) 22.98% 11.64% 4.26% 12.58% 25.43% 6.68% 20.20% 8.10%
Panorama Growth
(date of inception - 01/21/82) 35.81% 14.46% 0.25% 11.58% 27.31% 4.89% 32.72% 33.00%
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.
** This is the return for the period May 1, 1997 to December 31, 1997.
*** Effective May 1, 1998, this Fund is called the Oppenheimer Aggressive
Growth Fund.
NOTE: This Table 2 shows the one year total returns of the Funds based on the
actual investment performance (after deduction of the 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
rates of return also do not reflect deduction from premiums for Sales Load,
State Premium Tax Charge, DAC Tax Charge, Administrative Charge or Charge for
Cost of Insurance Protection.
19
<PAGE>
TABLE 3
AVERAGE ANNUAL TOTAL RETURN OF EACH DIVISION OF THE SEPARATE ACCOUNT
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
1 5 10 Since Inception
Year Years Years
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MML Equity Index -- -- -- 21.43%
(date of inception - 05/01/97)
Oppenheimer Money 4.56% 3.95% 5.04% 5.19%
(date of inception - 04/03/85)*
Oppenheimer Bond 8.50% 7.48% 8.75% 9.14%
(date of inception - 04/03/85)
Oppenheimer Strategic Bond 7.96% -- -- 6.89%
(date of inception - 05/03/93)
Oppenheimer High Income 11.46% 13.00% 13.57% 12.60%
(date of inception - 04/30/86)
Oppenheimer Growth & Income 31.73% -- -- 36.49%
(date of inception - 07/05/95)
Oppenheimer Multiple Strategies 16.47% 12.56% 11.99% 11.29%
(date of inception 02/09/87)
Oppenheimer Growth 25.93% 17.86% 15.92% 14.68%
(date of inception - 04/03/85)
Oppenheimer Capital Appreciation(**) 10.92% 15.17% 15.48% 14.56%
(date of inception - 08/15/86)
Oppenheimer Global Securities 21.67% 18.06% -- 11.51%
(date of inception - 11/20/90)
Panorama Total Return 18.06% 12.46% 13.05% 13.30%
(date of inception - 09/30/82)
Panorama Growth 25.62% 19.37% 17.91% 17.56%
(date of inception - 01/21/82)
Panorama International Equity 7.36% 10.03% -- 7.91%
(date of inception - 05/13/92)
Panorama LifeSpan Capital Appreciation 11.78% -- -- 15.32%
(date of inception - 09/01/95)
Panorama LifeSpan Balanced 11.45% -- -- 12.96%
(date of inception - 09/01/95)
Panorama LifeSpan Diversified Income 11.76% -- -- 10.09%
(date of inception - 09/01/95)
</TABLE>
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 Fund operating expenses, plus or minus
capital gains and losses, realized or unrealized, and net of the current
mortality and expense risk charge. The rates of return do not reflect deduction
from premiums for Sales Load, State Premium Tax Charge, DAC Tax Charge,
Administrative Charge, or Charge for Cost of Insurance Protection.
As of the date of this prospectus, the Separate Account Divisions had not
commenced operations and therefore have no performance history. The performance
figures for the Separate Account Divisions are historical and provide returns
which would have been achieved assuming that each Division of the Separate
Account had been in operation for the same periods as the corresponding Fund and
investing in the corresponding Fund during such period. 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 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 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.
** Effective May 1, 1998, this Fund is called Oppenheimer Aggressive Growth
Fund.
20
<PAGE>
TABLE 4
POLICY PERFORMANCE
This table illustrates the Account Value and Death Benefit of a hypothetical
Policy assuming the following:
.. The Policy is in force for the period illustrated;
.. Current Fund Investment Management Fees and Direct Operation Expenses,
Separate Account Mortality and Expense Risk Charge, Sales Load, State
Premium Tax Charge of 2%, DAC Tax Charge, Administrative Charge for Cost of
Insurance Protection, and Underwriting Charge*,
.. An annual premium of $4,000, plus the Modal Term Premium, for 20 years;
.. Modal Term Premium allocated to the CPA assuming a 3% crediting rate;
.. 100% allocation (above the Modal Term Premium), to the respective Fund for
each period;
.. The Insured is issue age 45;
.. Mandatory participation assumed, unismoker rates;
.. A Selected Face Amount of $250,000; and
.. Guaranteed Issue Underwriting and Death Benefit Option A.
The Cash Surrender Value is not illustrated because there is no surrender charge
and we assume no Policy Debt.
HISTORICAL RESULTS* - AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MML Opp.*** Opp. Opp. Opp.
Equity Opp. Glob. Capital Opp. Growth & Multiple Opp. High Strategic
Index Sec. Appreciation Growth Income Strategies Income Bond
(5/1/97) (11/12/90) (8/15/86) (4/3/85) (7/5/95) (2/9/87) (4/30/86) (5/3/93)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For a Policy In Force One Year
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium -- $4,382 $4,382 $4,382 $4,382 $4,382 $4,382 $4,382
Account Value -- $4,732 $4,308 $4,886 $5,109 $4,521 $4,327 $4,192
Death Benefit -- $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000
- ------------------------------------------------------------------------------------------------------------------------------------
For a Policy In Force Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium -- $26,705 $26,705 $26,705 -- $26,705 $26,705 --
Account Value -- $30,064 $30,351 $36,349 -- $29,113 $28,104 --
Death Benefit -- $250,000 $250,000 $250,000 -- $250,000 $250,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
For a Policy In Force Ten Years
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium -- -- $72,887 $72,887 -- $72,887 $72,887 --
Account Value -- -- $96,067 $101,738 -- $76,651 $85,698 --
Death Benefit -- -- $250,000 $250,000 -- $250,000 $250,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
For a Policy In Force Since
Inception of the Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $13,147 $63,080 $129,303 $134,583 $17,639 $124,135 $129,303 $26,705
Account Value $4,856 $52,418 $121,612 $153,761 $18,805 $86,750 $111,488 $24,534
Death Benefit $250,000 $250,000 $262,682 $322,899 $250,000 $250,000 $250,000 $250,000
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Pan. Pan.
Opp. Lifespan Pan. LifeSpan
Opp. Money Pan. Inter. Pan. Pan. Total Capital LifeSpan Div.
Bond Mkt.** Equity Growth Return Appr. Bal. Income
(4/3/85) (4/3/85) (5/13/92) (1/21/82) (9/30/82) (9/1/95) (9/1/95) (9/1/95)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For a Policy In Force One Year
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $4,382 $4,382 $4,382 $4,382 $4,382 $4,382 $4,382 $4,382
Account Value $4,213 $4,060 $4,169 $4,873 $4,582 $4,303 $4,289 $4,259
Death Benefit $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000
- ------------------------------------------------------------------------------------------------------------------------------------
For a Policy In Force Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $26,705 $26,705 $26,705 $26,705 $26,705 -- -- --
Account Value $24,287 $22,130 $25,498 $35,775 $28,882 -- -- --
Death Benefit $250,000 $250,000 $250,000 $250,000 $250,000 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
For a Policy In Force Ten Years
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $72,887 $72,887 -- $72,887 $72,887 -- -- --
Account Value $62,257 $50,443 -- $112,032 $81,743 -- -- --
Death Benefit $250,000 $250,000 -- $255,433 $250,000 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
For a Policy In Force Since
Inception of the Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $134,583 $124,135 $53,635 $151,243 $151,243 $17,639 $17,639 $17,639
Account Value $92,693 $57,395 $30,340 $301,293 $186,557 $14,184 $13,830 $13,599
Death Benefit $250,000 $250,000 $250,000 $584,508 $361,921 $250,000 $250,000 $250,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Historical investment results and current charges are used to determine
values; if guaranteed charges were used the results would be lower. The
Account Value reflects premiums paid, plus investment earnings; less all
charges. You may obtain a personalized illustration which reflects charges
based on your individual characteristics.
** Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the Historical Results is available only
for the year 1987 and subsequent periods.
*** Effective May 1, 1998, this Fund is called Oppenheimer Aggressive Growth
Fund.
21
<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.
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 or Application. 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
22
<PAGE>
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 different
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.
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.
Policy A Policy B
-------- --------
(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 (b x c): $ 84,000 $140,000
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
and (ii) d): $130,000 $150,000
(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 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. 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. Policyowners, however, may transfer all funds in
the
23
<PAGE>
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 or canceled at any time.
Allocation percentages may only be changed by the Policyowner once each Policy
Year under the Automated Account Re-Balancing Program. In addition, a
Policyowner may only reduce his or her allocation to the GPA by up to 25% once
each Policy Year under the Program. 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.
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:
The Account Value held in each Division for that Policy; and
The investment experience of each Division as measured by its actual net rate of
return; and
The interest rate credited on Account Values held in the GPA.
The investment experience of a Division reflects increases or decreases in the
net asset value of the shares of the underlying Fund, any dividend or capital
gains distributions declared by the Fund, and any charges against the assets of
the Division. This investment experience is determined each day on which the net
asset value of the underlying Fund is determined that is, on each Valuation
Date. The actual net rate of return for a Division measures the investment
experience from the end of one Valuation Date to the end of the next Valuation
Date.
Cash Surrender Value. The Policy may be surrendered for its full Cash Surrender
Value at any time while the Insured is living and while the Policy is in force.
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
24
<PAGE>
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 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 Policyowner in writing. This notice states the amount necessary
to bring the Policy Debt back within the limit. If We do not receive a payment
within 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.
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.")
25
<PAGE>
Repayment. All or part of any Policy Debt may be repaid at any time while the
Insured is living and while the Policy is in force. Any 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
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 $100.00.
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;
.. 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
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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.
27
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Name and Position Principal Occupation(s) During Past Five Years
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Roger G. Ackerman, Director Chairman and Chief Executive Officer, since 1996, President and Chief Operating
One Riverfront Plaza, HQE 2 Officer, 1990-1996, Corning, Inc.
Corning, NY 14831
- -------------------------------------------------------------------------------------------------------------------
James R. Birle, Director Chairman, since 1997, and Founder, since 1994, President, 1994-1997, Resolute
2 Soundview Drive Partners, LLC; General Partner, Blackstone Group, 1988-1994
Greenwich, CT 06836
- -------------------------------------------------------------------------------------------------------------------
Gene Chao, Director Chairman, President and CEO, Computer Projections, Inc., since 1991
733 SW Vista Avenue
Portland, OR 97205
- -------------------------------------------------------------------------------------------------------------------
Patricia Diaz Dennis, Director Senior Vice President and Assistant General Counsel, SBC Communications Inc.,
175 East Houston, Room 4-A-70 since 1995: Special Counsel, Sullivan & Cromwell, 1993-1995; Assistant
San Antonio, TX 78205 Secretary of State for Human Rights and Humanitarian Affairs, U.S. Department
of State, 1992-1993
- -------------------------------------------------------------------------------------------------------------------
Anthony Downs, Director Senior Fellow, The Brookings Institution, since 1977
1775 Massachusetts Ave., N.W.
Washington, DC 20036-2188
- -------------------------------------------------------------------------------------------------------------------
James L. Dunlap, Director President and Chief Operating Officer, United Meridian Corporation, since 1996;
1201 Louisiana, Suite 1400 Senior Vice President, Texaco, Inc. 1987-1996
Houston, TX 77002-5603
- -------------------------------------------------------------------------------------------------------------------
William B. Ellis, Director Senior Fellow, Yale University School of Forestry and Environmental Studies,
31 Pound Foolish Lane since 1995; Chairman and Chief Executive Officer, Northeast Utilities, 1983-
Glastonbury, CT 06033 1995
- -------------------------------------------------------------------------------------------------------------------
Robert M. Furek, Director Chairman, State Board of Trustees for the Hartford School System, since 1997;
1 State Street, Suite 2310 President and Chief Executive Officer, Heublein, Inc., 1987-1996
Hartford, CT 06103
- -------------------------------------------------------------------------------------------------------------------
Charles K. Gifford, Director Chairman and Chief Executive Officer, since 1995, and President, 1989-1995,
100 Federal Street BankBoston, N.A. and Chairman, since 1998, and Chief Executive Officer, since
Boston, MA 02110 1985, BankBoston Corporation
- -------------------------------------------------------------------------------------------------------------------
William N. Griggs, Director Managing Director, Griggs & Santow, Inc., since 1983
75 Wall Street, 20th Floor
New York, NY 10005
- -------------------------------------------------------------------------------------------------------------------
George B. Harvey, Director Retired Chairman, President and CEO, Pitney Bowes, since 1996
One Landmark Square
Suite 1905, 19th Floor
Stamford, CT 06901
- -------------------------------------------------------------------------------------------------------------------
Barbara B. Hauptfuhrer, Director Director of various corporations, since 1972
1700 Old Welsh Road
Huntingdon Valley, PA 19006
- -------------------------------------------------------------------------------------------------------------------
Sheldon B. Lubar, Director Chairman, Lubar & Co. Incorporated, since 1977
700 North Water Street, Suite 1200
Milwaukee, WI 53202
- -------------------------------------------------------------------------------------------------------------------
William B. Marx, Jr., Director Retired Senior Executive Vice President, Lucent Technologies, since 1996;
5 Peacock Lane Executive Vice President and CEO Multimedia Products Group, AT&T, 1994-1996;
Village of Golf, FL 33436,5299 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 1998
55 Sandy Hook Road - North
Sarasota, FL 34242
- -------------------------------------------------------------------------------------------------------------------
John J. Pajak, Director, President President and Chief Operating Officer, since 1996, Vice Chairman and Chief
and Chief Operating Officer Administrative Officer, 1996-1996, Executive Vice President, 1987-1996,
1295 State Street MassMutual
Springfield, MA 01111
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------------------------------------------------------------------------
Thomas B. Wheeler, Director, Chairman Chairman and Chief Executive Officer, since 1996, President and Chief Executive
and Chief Executive Officer Officer, 1988-1996, MassMutual
1295 State Street
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
Alfred M. Zeien, Director Chairman and Chief Executive Officer, The Gillette Company, since 1991
Prudential Tower
Boston, MA 02199
----------------------------------------------------------------------------------------------------------------------------------
Executive Vice Presidents:
- ----------------------------------------------------------------------------------------------------------------------------------
Lawrence V. Burkett, Jr. Executive Vice President and General Counsel, since 1993, Senior Vice President and
1295 State Street Deputy General Counsel, 1992-1993, MassMutual
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
Peter J. Daboul Executive Vice President and Chief Information Officer, since 1997, Senior Vice
1295 State Street President, 1990-1997, MassMutual
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
John B. Davies Executive Vice President, since 1994, Associate Executive Vice President, 1994-1994,
1295 State Street General Agent, 1982-1993, MassMutual
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald Executive Vice President, since 1994, Corporate Financial Operations, 1994-1997,
1295 State Street Senior Vice President, 1991-1994
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
James E. Miller Executive Vice President, since 1997 and 1987-1996, MassMutual; Senior Vice
1295 State Street President, UniCare Life and Health Insurance Company, 1996-1997
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
John V. Murphy Executive Vice President, since 1997, MassMutual; Executive Vice President and
1295 State Street Chief Operating Officer, David L. Babson & Co., Inc., 1995-1997; Chief Operating
Springfield, MA 01111 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, since 1993, Executive Vice
1295 State Street President, 1992-1993, MassMutual
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
Joseph M. Zubretsky Executive Vice President and Chief Financial Officer, since 1997, MassMutual; Chief
1295 State Street Financial Officer, 1996, HealthSource; Coopers & Lybrand, 1990-1996
Springfield, MA 01111
- ----------------------------------------------------------------------------------------------------------------------------------
</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.
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.
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<PAGE>
Federal Income Tax Considerations
The ultimate effect of federal income taxes on values under this Policy and upon
the economic benefit to the Policyowner or Beneficiary depends on MassMutual's
tax status and upon the tax status of the individual concerned. The discussion
contained herein is general in nature and is not an exhaustive discussion of all
tax questions that might arise under the Policies, and is not intended as tax
advice. Moreover, no representation is made as to the likelihood of continuation
of current federal income tax laws and Treasury Regulations or of the current
interpretations of the Internal Revenue Service. MassMutual reserves the right
to make changes in the Policy to assure that it continues to qualify as life
insurance for tax purposes. For complete information on federal and state tax
considerations, a qualified tax adviser should be consulted. No attempt is made
to consider any applicable state or other tax laws.
MassMutual - Tax Status. MassMutual is taxed as a life insurance company under
Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The Separate
Account is not a separate entity from MassMutual and its operations form a part
of MassMutual.
Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining Account Values. The
investment income and realized capital gains are automatically applied to
increase book reserves associated with the Policies. Under existing federal
income tax law, the Separate Account's investment income, including net capital
gains, is not taxed to MassMutual to the extent applied to increase reserves
associated with the Policies. The reserve items taken into account at the close
of the taxable year for purposes of determining net increases or net decreases
must be adjusted for tax purposes by subtracting any amount attributable to
appreciation in the value of assets or by adding any amount attributable to
depreciation. MassMutual's basis in the assets underlying the Separate Account's
Policies will be adjusted for appreciation or depreciation, to the extent the
reserves are adjusted. Thus, corporate level gains and losses, and the tax
effect thereof, are eliminated.
Due to MassMutual's current tax status, no charge is made to the Separate
Account for MassMutual's federal income taxes that may be attributable to the
Separate Account. Periodically, MassMutual reviews the question of a charge to
the Separate Account for MassMutual's federal income taxes. A charge may be made
for any federal income taxes incurred by MassMutual that are attributable to the
Separate Account. Depending on the method of calculating interest on Policy
values allocated to the Guaranteed Principal Account (see preceding section), a
charge may be imposed for the Policy's share of MassMutual's federal income
taxes attributable to that account.
Under current state laws, MassMutual may incur state and local taxes (in
addition to premium taxes). At present, these taxes are not significant. If
there is a material change in state or local tax laws, MassMutual reserves the
right to charge the Separate Account for such taxes, if any, attributable to the
Separate Account.
Policy Proceeds, Premiums, and Loans. MassMutual believes that the Policy meets
the statutory definition of life insurance under Code Section 7702 and hence
receives the same tax treatment as that accorded to fixed benefit life
insurance. Thus, the Death Benefit under the Policy is generally excludable from
the gross income of the Beneficiary under Section 101(a)(1) of the Code. As an
exception to this general rule, where a Policy has been transferred for value,
only the portion of the Death Benefit which is equal to the total consideration
paid for the Policy may be excluded from gross income. The Policyowner is not
deemed to be in constructive receipt of the cash values, including increments
thereon, under the Policy until a full surrender or Withdrawal is made.
Upon a full surrender of a Policy for its Cash Surrender Value the Policyowner
may recognize ordinary income for federal tax purposes. Ordinary income is
computed to be the amount by which the Account Value, unreduced by any
outstanding Policy Debt (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 adviser for further
guidance.
If the Policy is owned by a business or corporation, the
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<PAGE>
Code may impose additional restrictions. The Act limits the interest deduction
available for loans against a business- owned Policy. It imposes an indirect tax
upon the inside build-up of gain in corporate-owned life insurance policies by
way of the corporate alternative minimum tax, for those corporations subject to
the alternative minimum tax. The corporate alternative minimum tax could also
apply to a portion of the amount by which Death Benefits received exceed the
Policy's date of death cash value.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
For complete information on the impact of changes with respect to the Policy and
federal and state tax considerations, a qualified tax adviser 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 adviser should
be consulted.
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
31
<PAGE>
diversification requirements are modified if any of the assets of the Separate
Account are direct obligations of the United States Treasury. In this case,
there is no limit on the investment that may be made in United States Treasury
Securities, and for purposes of determining whether assets other than United
States Treasury Securities are adequately diversified, the generally applicable
percentage limitations are increased based on the value of the Separate
Account's investment in United States Treasury Securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the
Trusts will be structured to comply with the general diversification standards
because they serve as an investment vehicle for certain variable annuity
contracts which must comply with the general standards.
In connection with the issuance of the temporary regulations prior to the Final
Regulations, the Treasury announced that such temporary regulations did not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular divisions of a separate account. Regulations in this
regard were not issued in connection with the Final Regulations, however. It is
not clear, at this time, what future regulations might provide. It is possible
that if future regulations are issued, the Policy may need to be modified to
comply with such regulations. For these reasons, MassMutual reserves the right
to modify the Policy, as necessary, to prevent the Policyowner from being
considered the owner of the assets of the Separate Account.
MassMutual intends to comply with the Final Regulations to assure that the
Policy continues to qualify as life insurance for federal income tax purposes.
Additional Provisions Of The Policy
Paid-up Policy Date. The Paid-up Policy Date is the Policy Anniversary Date
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:
.. 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.
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<PAGE>
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 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 or a different period if required by state law 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 in proper form 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 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
33
<PAGE>
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.
- --------------------------------------------------------------------------------
Percent of
Loss of Life Rider Face
Amount Payable
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Records And Reports
MassMutual maintains all records and accounts relating to the Separate Account
and the GPA. Each year within 30 days after the Policy Anniversary, We will mail
to the Policyowner a report showing the Account Value at the beginning of the
previous Policy Year, all premiums paid since that time, all additions to and
deductions from Account Value during the year, and the Account Value, Death
Benefit, Cash Surrender Value and Policy Debt as of the latest Policy
Anniversary. This report contains any additional information required by any
applicable law or regulation.
Sales And Other Agreements
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, a wholly-owned subsidiary of MassMutual 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"), a wholly-owned subsidiary of MassMutual 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, plus 3% of premiums paid in excess of the Modal Term Premium, plus
0.20% of the Policy's average annual Variable Account Value.
34
<PAGE>
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
$50,000,000 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
The financial statements of the Strategic Group Variable Universal Life segment
of the Separate Account and the financial statements of MassMutual included in
this Prospectus have been included herein in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
Coopers & Lybrand's report on the statutory financial statements of MassMutual
includes explanatory paragraphs relating to the use of statutory accounting
practices rather than generally accepted accounting principles.
Actuarial matters in this Prospectus have been examined by John M. Valencia,
FSA, MAAA, Assistant Vice President, for MassMutual. His opinion on actuarial
matters is filed as an exhibit to the registration statements we filed with the
SEC.
Financial Statements
The financial statement of MassMutual and the Strategic GVUL segment of the
Separate Account included herein should be considered only as bearing upon the
ability of MassMutual to meet its obligations under the Policy.
35
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statements of assets and liabilities of the MML
Equity Index Division, Oppenheimer Money Division, Oppenheimer High Income
Division, Oppenheimer Bond Division, Oppenheimer Capital Appreciation Division,
Oppenheimer Growth Division, Oppenheimer Multiple Strategies Division,
Oppenheimer Global Securities Division, Oppenheimer Strategic Bond Division,
Oppenheimer Growth & Income Division, Panorama Total Return Division, Panorama
Growth Division, Panorama International Equity Division, Panorama LifeSpan
Diversified Income Division, Panorama LifeSpan Balanced Division and Panorama
LifeSpan Capital Appreciation Division of the Strategic Group Variable Universal
Life Segment of Massachusetts Mutual Variable Life Separate Account I as of
December 31, 1997, and the related statement of operations and statements of
changes in net assets for the period from October 1, 1997 (Commencement of
Operations) through December 31, 1997. These financial statements are the
responsibility of the Separate Account's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
verification of investments owned as of December 31, 1997, by examination of the
records of MML Series Investment Fund, by confirmation with Oppenheimer Variable
Account Funds and the Panorama Series Fund, Inc. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the MML Equity Index Division,
Oppenheimer Money Division, Oppenheimer High Income Division, Oppenheimer Bond
Division, Oppenheimer Capital Appreciation Division, Oppenheimer Growth
Division, Oppenheimer Multiple Strategies Division, Oppenheimer Global
Securities Division, Oppenheimer Strategic Bond Division, Oppenheimer Growth &
Income Division, Panorama Total Return Division, Panorama Growth Division,
Panorama International Equity Division, Panorama LifeSpan Diversified Income
Division, Panorama LifeSpan Balanced Division and Panorama LifeSpan Capital
Appreciation Division of the Strategic Group Variable Universal Life Segment of
Massachusetts Mutual Variable Life Separate Account I as of December 31, 1997,
the results of their operations and the changes in their net assets for the
period from October 1, 1997 (Commencement of Operations) through December 31,
1997, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 3, 1998
F-1
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
Index Money Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division Division Division
-------------- ----------- ---------- ------------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 83 1,011 88 86 23 30 58 45
============== =========== ========== ============= ========== ============ ============ =========
Identified cost (Note 3B) $ 1,000 $ 1,011 $ 1,017 $ 1,015 $ 1,000 $ 1,000 $ 1,009 $ 1,000
============== =========== ========== ============= ========== ============ ============ =========
Value (Note 3A) $ 1,008 $ 1,011 $ 1,015 $ 1,025 $ 923 $ 975 $ 992 $ 971
Dividends receivable 10 2 - - - - - -
-------------- ----------- ---------- ------------- ---------- ------------ ------------ ---------
Total assets 1,018 1,013 1,015 1,025 923 975 992 971
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 2 2 2 2 2 2 2 2
-------------- ----------- ---------- ------------- ---------- ------------ ------------ ---------
NET ASSETS: $ 1,016 $ 1,011 $ 1,013 $ 1,023 $ 921 $ 973 $ 990 $ 969
============== =========== ========== ============= ========== ============ ============ =========
Net Assets:
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company $ 1,016 $ 1,011 $ 1,013 $ 1,023 $ 921 $ 973 $ 990 $ 969
-------------- ----------- ---------- ------------- ---------- ------------ ------------ ---------
Net assets $ 1,016 $ 1,011 $ 1,013 $ 1,023 $ 921 $ 973 $ 990 $ 969
============== =========== ========== ============= ========== ============ ============ =========
Accumulation units (Note 8)
Policyowners - - - - - - - -
Massachusetts Mutual Life
Insurance Company 1,000 1,000 1,000 1,000 1,000 1 ,000 1,000 1,000
-------------- ----------- ---------- ------------- ---------- ------------ ------------ ---------
Total units 1,000 1,000 1,000 1,000 1,000 1 ,000 1,000 1,000
============== =========== ========== ============= ========== ============ ============ =========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1997 $ 1.02 $ 1.01 $ 1.01 $ 1.02 $ 0.92 $ 0.97 $ 0.99 $ 0.97
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF ASSETS AND LIABILITIES (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
Bond Income Total Return Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 197 50 500 286 704 870 763 719
========== ========== ========== ========== ========== ========== ========== ==========
Identified cost (Note 3B) $ 1,019 $ 1,002 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
========== ========== ========== ========== ========== ========== ========== ==========
Value (Note 3A) $ 1,010 $ 1,019 $ 1,000 $ 986 $ 958 $ 1,026 $ 977 $ 971
Dividends receivable - - - - - - - -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 1,010 1,019 1,000 986 958 1,026 977 971
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 2 2 2 2 2 2 2 2
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS: $ 1,008 $ 1,017 $ 998 $ 984 $ 956 $ 1,024 $ 975 $ 969
========== ========== ========== ========== ========== ========== ========== ==========
Net Assets:
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company $ 1,008 $ 1,017 $ 998 $ 984 $ 956 $ 1,024 $ 975 $ 969
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets $ 1,008 $ 1,017 $ 998 $ 984 $ 956 $ 1,024 $ 975 $ 969
========== ========== ========== ========== ========== ========== ========== ==========
Accumulation units (Note 8)
Policyowners - - - - - - - -
Massachusetts Mutual Life
Insurance Company 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total units 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
========== ========== ========== ========== ========== ========== ========== ==========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 3l, 1997 $ 1.01 $ 1.02 $ 1.00 $ 0.98 $ 0.96 $ 1.02 $ 0.98 $ 0.97
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF OPERATIONS
For The Period October 1,1997 (Commencement of Operations) Through December 31,
1997
<TABLE>
<CAPTION>
MML Oppenheimer
Equity Oppenheimer High Oppenheimer
Index Money Income Bond
Division Division Division Division
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 10 $ 13 $ 18 $ 16
Expenses
Mortality and expense risk fees
(Note 4) 2 2 2 2
-------- ----------- -------- -----------
Net investment income (loss)
(Note 3C) 8 11 16 14
-------- ----------- -------- -----------
Net realized and unrealized gain
(loss) on investments
Change in net unrealized
appreciation/depreciation
of investments 8 - (3) 9
-------- ----------- -------- -----------
Net gain (loss) on investments 8 - (3) 9
-------- ----------- -------- -----------
Net increase (decrease) in net
assets resulting from operations $ 16 $ 11 $ 13 $ 23
======== =========== ======== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Multiple Global
Appreciation Growth Strategies Securities
Division Division Division Division
<S> ------------ ----------- ----------- -----------
Investment income <C> <C> <C> <C>
Dividends (Note 3B) $ - $ - $ 9 $ -
------------ ----------- ----------- -----------
Expenses
Mortality and expense risk fees
(Note 4) 2 2 2 2
------------ ----------- ----------- -----------
Net investment income (loss)
(Note 3C) (2) (2) 7 (2)
------------ ----------- ----------- -----------
Net realized and unrealized gain
(loss) on investments
Change in net unrealized
appreciation/depreciation
of investments (77) (25) (17) (29)
------------ ----------- ----------- -----------
Net gain (loss) on investments (77) (25) (17) (29)
------------ ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations $ (79) $ (27) $ (10) $ (31)
============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF OPERATIONS (Continued)
For The Period October 1, 1997 (Commencement of Operations) Through December 31,
1997
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer
Strategic Growth & Panorama Panorama
Bond Income Total Return Growth
Division Division Division Division
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 19 $ 3 $ - $ -
Expenses
Mortality and expense risk fees
(Note 4) 2 2 2 2
------------ ------------ ------------ ------------
Net investment income (loss)
(Note 3C) 17 1 (2) (2)
------------ ------------ ------------ ------------
Net realized and unrealized gain
(loss) on investments
Change in net unrealized
appreciation/depreciation
of investments (9) 16 - (14)
------------ ------------ ------------ ------------
Net gain (loss) on investments (9) 16 - (14)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations $ 8 $ 17 $ (2) $ (16)
============ ============ ============ ============
<CAPTION>
Panorama Panorama
Panorama LifeSpan Panorama LifeSpan
International Diversified LifeSpan Capital
Equity Income Balanced Appreciation
Division Division Division Division
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ - $ - $ - $ -
Expenses
Mortality and expense risk fees
(Note 4) 2 2 2 2
------------ ------------ ------------ ------------
Net investment income (loss)
(Note 3C) (2) (2) (2) (2)
------------ ------------ ------------ ------------
Net realized and unrealized gain
(loss) on investments
Change in net unrealized
appreciation/depreciation
of investments (42) 26 (23) (29)
------------ ------------ ------------ ------------
Net gain (loss) on investments (42) 26 (23) (29)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations $ (44) $ 24 $ (25) $ (31)
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS
For The Period October 1,1997 (Commencement of Operations) Through
December 31, 1997
<TABLE>
<CAPTION>
MML Oppenheimer
Equity Oppenheimer High Oppenheimer
Index Money Income Bond
Division Division Division Division
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operatons:
Net investment income (loss) $ 8 $ 11 $ 16 $ 14
Change in net unrealized
appreciation/depreciation
of investments 8 - (3) 9
------------ ----------- ----------- ------------
Net increase (decrease) in net
assets resulting from operations 16 11 13 23
------------ ----------- ----------- ------------
Capital transactions: (Note 8)
Investment by Massachusetts Mutual
Life Insurance Company 1,000 1,000 1,000 1,000
------------ ----------- ----------- ------------
Net increase in net assets resulting
from capital transactions 1,000 1,000 1,000 1,000
------------ ----------- ----------- ------------
Total increase 1,016 1,011 1,013 1,023
NET ASSETS, at beginning of the year - - - -
------------ ----------- ----------- ------------
NET ASSETS, at end of the year $ 1,016 $ 1,011 $ 1,013 $ 1,023
============ =========== =========== ============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Multiple Global
Appreciation Growth Strategies Securities
Division Division Division Division
-------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operatons:
Net investment income (loss) $ (2) $ (2) $ 7 $ (2)
Change in net unrealized
appreciation/depreciation
of investments (77) (25) (17) (29)
-------------- --------------- ------------ --------------
Net increase (decrease) in net
assets resulting from operations (79) (27) (10) (31)
-------------- --------------- ------------ --------------
Capital transactions: (Note 8)
Investment by Massachusetts Mutual
Life Insurance Company 1,000 1,000 1,000 1,000
-------------- --------------- ------------ --------------
Net increase in net assets resulting
from capital transactions 1,000 1,000 1,000 1,000
-------------- --------------- ------------ --------------
Total increase 921 973 990 969
NET ASSETS, at beginning of the year - - - -
-------------- --------------- ------------ --------------
NET ASSETS, at end of the year $ 921 $ 973 $ 990 $ 969
============== =============== ============ ==============
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS (Continued)
For The Period October 1, 1997 (Commencement of Operations) Through
December 31, 1997
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer
Strategic Growth & Panorama Panorama
Bond Income Total Return Growth
Division Division Division Division
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 17 $ 1 $ (2) $ (2)
Change in net unrealized
appreciation/depreciation
of investments (9) 16 - (14)
----------- ----------- ------------ ----------
Net increase (decrease) in net
assets resulting from operations 8 17 (2) (16)
----------- ----------- ------------ ----------
Capital transactions: (Note 8)
Investment by Massachusetts Mutual
Life Insurance Company 1,000 1,000 1,000 1,000
----------- ----------- ------------ ----------
Net increase in net assets resulting
from capital transactions 1,000 1,000 1,000 1,000
----------- ----------- ------------ ----------
Total increase 1,008 1,017 998 984
NET ASSETS, at beginning of the year - - - -
----------- ----------- ------------ ----------
NET ASSETS, at end of the year $ 1,008 $ 1,017 $ 998 $ 984
=========== =========== ============ ==========
<CAPTION>
Panorama Panorama
Panorama LifeSpan Panorama LifeSpan
International Diversified LifeSpan Capital
Equity Income Balanced Appreciation
Division Division Division Division
------------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ (2) $ (2) $ (2) $ (2)
Change in net unrealized
appreciation/depreciation
of investments (42) 26 (23) (29)
------------- ----------- ---------- ------------
Net increase (decrease) in net
assets resulting from operations (44) 24 (25) (31)
------------- ----------- ---------- ------------
Capital transactions: (Note 8)
Investment by Massachusetts Mutual
Life Insurance Company 1,000 1,000 1,000 1,000
------------- ----------- ---------- ------------
Net increase in net assets resulting
from capital transactions 1,000 1,000 1,000 1,000
------------- ----------- ---------- ------------
Total increase 956 1,024 975 969
NET ASSETS, at beginning of the year - - - -
NET ASSETS, at end of the year $ 956 $ 1,024 $ 975 $ 969
============= =========== ========== ============
</TABLE>
See Notes to Financial Statements.
F-7
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
Notes To Financial Statements
1. HISTORY
Massachusetts Mutual Variable Life Separate Account I ("Separate Account I")
is a separate investment account established on July 13, 1988 by
Massachusetts Mutual Life Insurance Company ("MassMutual") in accordance
with the provisions of Section 132G of Chapter 175 of the Massachusetts
General Laws.
MassMutual maintains six segments within Separate Account I. The initial
segment ("Variable Life Plus Segment") is used exclusively for MassMutual's
flexible premium variable whole life insurance policy, known as Variable
Life Plus.
On March 30, 1990, MassMutual established a second segment ("Large Case
Variable Life Plus Segment") within Separate Account I to be used
exclusively for MassMutual's flexible premium variable whole life insurance
policy with table of selected face amounts, known as Large Case Variable
Life Plus.
On July 5, 1995, MassMutual established a third segment ("Strategic Variable
Life Segment") within Separate Account I to be used exclusively for
MassMutual's flexible premium variable whole life insurance policy with
table of selected face amounts, known as Strategic Variable Life.
On July 24, 1995, MassMutual established a fourth segment ("Variable Life
Select Segment") within Separate Account I to be used exclusively for
MassMutual's flexible premium variable whole life insurance policy, known as
Variable Life Select.
On February 11, 1997, MassMutual established a fifth segment ("Strategic
GVUL Segment") within Separate Account I to be used exclusively for
MassMutual's group variable universal life insurance product known as
Strategic Group Variable Universal Life ("Strategic GVUL").
On November 12, 1997, MassMutual established a sixth segment ("SVUL
Segment") within Separate Account I to be used exclusively for MassMutual's
survivorship variable universal life insurance product known as SVUL.
The Separate Account I operates as a registered unit investment trust
pursuant to the Investment Company Act of 1940 and the rules promulgated
thereunder. MassMutual paid $16,000 to the Strategic Group Variable
Universal Life Segment on October 1, 1997 to provide initial capital: 5,513
shares were purchased in the three management investment companies described
in Note 2 supporting the sixteen divisions of Strategic Group Variable
Universal Life Segment.
2. INVESTMENT OF STRATEGIC GVUL SEGMENT'S ASSETS
Strategic GVUL Segment maintains sixteen divisions. Each division invests in
corresponding shares of either the MML Series Investment Fund ("MML Trust"),
Oppenheimer Variable Account Funds ("Oppenheimer Trust"), or the Panorama
Series Fund, Inc. ("Panorama Fund"). At any time, only eight divisions of
the Separate Account plus the Guaranteed Principal Account ("GPA") are
available to a policyowner.
MML Trust, a registered, no-load, open-end, management investment company
with one of its five funds, MML Equity Index Fund, available to the
Strategic Group Variable Universal Life policyowners. MassMutual serves as
investment manager. MassMutual has entered into a sub-advisory agreement
with Mellon Equity Associates ("Mellon Equity") whereby Mellon Equity serves
as the sub-advisor to the MML Equity Index Fund.
Oppenheimer Trust is a registered, open-end, diversified management
investment company with nine of its funds currently available to the
Strategic Group Variable Universal Life policyowners: Oppenheimer Money
Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer
Capital Appreciation Fund, Oppenheimer Growth Fund, Oppenheimer Multiple
Strategies Fund, Oppenheimer Global Securities Fund, Oppenheimer Strategic
Bond Fund and Oppenheimer Growth & Income Fund.
F-8
<PAGE>
Notes To Financial Statements (Continued)
Panorama Fund is a registered, open-end, diversified management investment
company with six of its portfolios currently available to the Strategic
Group Variable Universal Life policyowners: Panorama Total Return Portfolio,
Panorama Growth Portfolio, Panorama International Equity Portfolio, Panorama
LifeSpan Diversified Income Portfolio, Panorama LifeSpan Balanced Portfolio
and Panorama LifeSpan Capital Appreciation Portfolio.
OppenheimerFunds, Inc. ("OFI"), a controlled subsidiary of MassMutual,
serves as investment advisor to the Oppenheimer Trust and Panorama Fund,
(prior to January 5, 1996, OFI was known as Oppenheimer Management
Corporation). OFI has entered into investment sub-advisory agreements with
three sub-advisors to assist in the selection of portfolio investments for
the Panorama Fund's three LifeSpan Portfolios and Panorama Fund's
International Equity Portfolio. Babson-Stewart Ivory International
("Babson-Stewart") is the sub-advisor to the International Equity Portfolio
and international stock components of the LifeSpan Balanced Portfolio and
the LifeSpan Capital Appreciation Portfolio. BEA Associates ("BEA") is the
sub-advisor to the high yield bond component of the LifeSpan Diversified
Income Portfolio, LifeSpan Balanced Portfolio, and LifeSpan Capital
Appreciation Portfolio. Pilgrim, Baxter & Associates ("Pilgrim Baxter") is
the sub-advisor to the small cap component of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio. For providing its
services under the sub- advisory agreements, OFI pays the three sub-advisors
a monthly fee calculated daily at an annual rate based on the average daily
net assets of the portion of their respective components of the Panorama
LifeSpan Portfolios.
In addition to the sixteen divisions of Strategic GVUL Segment, a
policyowner may also allocate funds to the Guaranteed Principal Account
("GPA"), which is part of MassMutual's general account. Because of exemptive
and exclusionary provisions, interests in the GPA, are not registered under
the Securities Act of 1933 and the general account is not registered as an
investment company under the Investment Company Act of 1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by Strategic GVUL Segment in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
Investments in the MML Trust, the Oppenheimer Trust and the Panorama Fund
are each stated at market value which is the net asset value per share of
each of the respective underlying funds.
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the ex-dividend
date.
C. Federal Income Taxes
MassMutual is taxed under federal law as a life insurance company under the
provisions of the 1986 Internal Revenue Code, as amended. Strategic GVUL
Segment is part of MassMutual's total operation and is not taxed separately.
Strategic GVUL Segment will not be taxed as a "regulated investment company"
under Subchapter M of the Internal Revenue Code. Under existing federal law,
no taxes are payable on investment income and realized capital gains of
Strategic GVUL Segment credited to the policies. Accordingly, MassMutual
does not intend to make any charge to Strategic GVUL Segment divisions to
provide for company income taxes. MassMutual may, however, make such a
charge in the future if an unanticipated change of current law results in a
company tax liability attributable to Strategic GVUL Segment.
D. Policy Loan
When a policy loan is made, Strategic GVUL Segment transfers the amount of
the loan to MassMutual, thereby decreasing both the investments and net
assets of Strategic GVUL Segment by an equal amount. The interest rate
charged on any loan is 6% per year or the policyowner may select an
adjustable loan rate at the time of application. All loan repayments are
allocated to the Guaranteed Principal Account.
The policyowner earns interest at a rate which is the greater of 3% or the
policy loan rate less a MassMutual declared charge (maximum 1.25%) for
expenses and taxes.
F-9
<PAGE>
Notes To Financial Statements (Continued)
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. CHARGES
MassMutual charges the Strategic GVUL Segment divisions for the mortality
and expense risks it assumes. The charge is made daily at a current
effective annual rate of 0.75% of the value of each division's net assets.
MassMutual makes certain deductions from the annual premium before amounts
are allocated to the Strategic GVUL Segment or the Guaranteed Principal
Account ("GPA"). A deduction as a percentage of premium is made for sales
charges, state premium taxes and the Deferred Acquisition Cost tax expense.
No additional deductions are taken when money is transferred from the GPA
to the Strategic GVUL Segment. MassMutual also makes certain charges for
the cost of insurance and administrative costs.
5. SALES AGREEMENTS
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), a
wholly-owned subsidiary of MassMutual, serves as principal underwriter of
the policies pursuant to an underwriting and servicing agreement among MML
Distributors, MassMutual and Separate Account I. MML Distributors is
registered with the Securities and Exchange Commission (the "SEC") as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"). MML
Distributors may enter into selling agreements with other broker-dealers
who are registered with the SEC and are members of the NASD in order to
sell the policies.
Prior to May 1, 1996, MML Investors Services, Inc. ("MMLISI") a
wholly-owned subsidiary of MassMutual, served as principal underwriter of
the policies. Effective May 1, 1996, MMLISI serves as co-underwriter of the
policies pursuant to underwriting and servicing agreements among MMLISI,
MassMutual and Separate Account I, MMLISI is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the NASD. Registered representatives of MMLISI sell the policies as
authorized variable life insurance agents under applicable state insurance
laws.
Pursuant to the underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
policies are paid by MassMutual on behalf of MML Distributors or MMLISI.
MML Distributors and MMLISI also receive compensation for their activities
as underwriters of the policies.
6. PURCHASES AND SALES OF INVESTMENT
<TABLE>
<CAPTION>
MML Oppenheimer
Equity Oppenheimer High Oppenheimer
For The Year Ended Index Money Income Bond
December 31, 1997 Division Division Division Division
- ------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cost of purchases $ 1,000 $ 1,011 $ 1,017 $ 1,015
Proceeds from sales $ - $ - $ - $ -
Average monthly value of securities $ 989 $ 1,007 $ 1,005 $ 1,016
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Multiple Global
For The Year Ended Appreciation Growth Strategies Securities
December 31, 1997 Division Division Division Division
- ------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cost of purchases $ 1,000 $ 1,000 $ 1,009 $ 1,000
Proceeds from sales $ - $ - $ - $ -
Average monthly value of securities $ 931 $ 972 $ 983 $ 959
<CAPTION>
Oppenheimer Oppenheimer
Strategic Growth & Panorama Panorama
For The Year Ended Bond Income Total Return Growth
December 31, 1997 Division Division Division Division
- ------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cost of purchases $ 1,019 $ 1,002 $ 1,000 $ 1,000
Proceeds from sales $ - $ - $ - $ -
Average monthly value of securities $ 1,002 $ 994 $ 988 $ 971
<CAPTION>
Panorama Panorama
Panorama LifeSpan Panorama Lifespan
International Diversified LifeSpan Capital
For The Year Ended Equity Income Balanced Appreciation
December 31, 1997 Division Division Division Division
- ------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cost of purchases $ 1,000 $ 1,000 $ 1,000 $ 1,000
Proceeds from sales $ - $ - $ - $ -
Average monthly value of securities $ 941 $ 1,012 $ 969 $ 959
</TABLE>
F-10
<PAGE>
Notes To Financial Statements (Continued)
7. NET INVESTMENT RETURN
The following table shows the net investment return for each division in
Strategic Group Variable Universal Life Segment:
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
Index Money Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division Division Division
---------- ----------- ----------- ---------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*For the Period October 1, 1997
(Commencement of Operations)
through December 31, 1997 1.61% 1.12% 1.29% 2.24% (8.52%) (2.79%) (0.99%) (3.23%)
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
Bond Income Total Retum Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
----------- ---------- ----------- --------- ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*For the Period October 1, 1997
(Commencement of Operations)
through December 31, 1997 0.79% 1.72% (0.18%) (1.66%) (4.69%) 2.40% (2.55%) (3.19%)
</TABLE>
The net investment return for each division of the Strategic Group Variable
Universal Life Account is computed using the net increase in net assets
resulting from operations as compared to the average monthly net assets.
The net investment return figures shown above do not reflect expenses
related to insurance products. Inclusion of such expenses would reduce the
net investment return figures for all periods shown.
*Note: The amounts shown for the period October 1, 1997 through December
31, 1997 are not annualized.
8. NET INCREASE (DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML Oppenheimer
For the Period October 1, 1997 Equity Oppenheimer High Oppenheimer
(Commencement of Operations) Index Money Income Bond
through December 31, 1997 Division Division Division Division
------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Units purchased 1,000 1,000 1,000 1,000
Units withdrawn and transferred to
Guaranteed Principal Account - - - -
-------------- -------------- -------------- --------------
Net Increase 1,000 1,000 1,000 1,000
Units, at beginning of the period - - - -
-------------- -------------- -------------- --------------
Units, at end of the year 1,000 1,000 1,000 1,000
============== ============== ============== ==============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
For the Period October 1, 1997 Capital Oppenheimer Multiple Global
(Commencement of Operations) Appreciation Growth Strategies Securities
through December 31, 1997 Division Division Division Division
------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Units purchased 1,000 1,000 1,000 1,000
Units withdrawn and transferred to
Guaranteed Principal Account - - - -
-------------- -------------- -------------- --------------
Net Increase 1,000 1,000 1,000 1,000
Units, at beginning of the period - - - -
-------------- -------------- -------------- --------------
Units, at end of the year 1,000 1,000 1,000 1,000
============== ============== ============== ==============
<CAPTION>
Oppenheimer Oppenheimer
For the Period October 1, 1997 Strategic Growth & Panorama Panorama
(Commencement of Operations) Bond Income Total Retum Growth
through December 31, 1997 Division Division Division Division
------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Units purchased 1,000 1,000 1,000 1,000
Units withdrawn and transferred to
Guaranteed Principal Account - - - -
-------------- -------------- -------------- --------------
Net Increase 1,000 1,000 1,000 1,000
Units, at beginning of the period - - - -
-------------- -------------- -------------- --------------
Units, at end of the year 1,000 1,000 1,000 1,000
============== ============== ============== ==============
<CAPTION>
Panorama Panorama
Panorama LifeSpan Panorama LifeSpan
For the Period October 1, 1997 International Diversified LifeSpan Capital
(Commencement of Operations) Equity Income Balanced Appreciation
through December 31, 1997 Division Division Division Division
------------------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Units purchased 1,000 1,000 1,000 1,000
Units withdrawn and transferred to
Guaranteed Principal Account - - - -
-------------- -------------- -------------- --------------
Net Increase 1,000 1,000 1,000 1,000
-------------- -------------- -------------- --------------
Units, at beginning of the period - - - -
-------------- -------------- -------------- --------------
Units, at end of the year 1,000 1,000 1,000 1,000
============== ============== ============== ==============
</TABLE>
F-11
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity of
MassMutual's Strategic Group Variable Universal Life Segment. The combined
net assets as of December 31, 1997 for Separate Account I, which includes
the Variable Life Plus, Large Case Variable Life Plus, Strategic Variable
Life, Variable Life Select and Strategic Group Variable Universal Life
Segments are as follows:
<TABLE>
<CAPTION>
MML MML MML
MML Equity Money Managed MML Oppenheimer
Equity Index Market Bond Blend Money
Division Division Division Division Division Division
--------------- ------------- ------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 47,535,472 $ 24,804 $ 4,783,018 $ 19,916,629 $ 13,024,523 $ 83,483
Total liabilities 80,176 9 7,225 17,985 23,892 64
--------------- ------------- ------------- ---------------- --------------- --------------
Net assets $ 47,455,296 $ 24,795 $ 4,775,793 $ 19,898,644 $ 13,000,631 $ 83,419
=============== ============= ============= ================ =============== ==============
Net assets:
For variable life insurance
policies 47,351,808 17,670 4,724,501 19,838,205 12,915,916 76,766
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 103,488 7,125 51,292 60,439 84,715 6,653
--------------- ------------- ------------- ---------------- --------------- --------------
Net assets $ 47,455,296 $ 24,795 $ 4,775,793 $ 19,898,644 $ 13,000,631 $ 83,419
=============== ============= ============= ================ =============== ==============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
High Oppenheimer Capital Oppenheimer Multiple
Income Bond Appreciation Growth Strategies
Division Division Division Division Division
--------------- -------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Total assets $ 3,203,079 $ 142,182 $ 9,010,163 $ 5,093,866 $ 417,797
Total liabilities 2,031 91 17,407 24,158 207
--------------- -------------- ------------ --------------- --------------
Net assets $ 3,201,048 $ 142,091 $ 8,992,756 $ 5,069,708 $ 417,590
=============== ============== ============ =============== ==============
Net assets:
For variable life insurance
policies 3,185,681 135,056 8,968,173 5,051,141 409,425
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 15,367 7,035 24,583 18,567 8,165
--------------- -------------- ------------ --------------- --------------
Net assets $ 3,201,048 $ 142,091 $ 8,992,756 $ 5,069,708 $ 417,590
=============== ============== ============ =============== ==============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Global Strategic Growth & Panorama Panorama
Securities Bond Income Total Return Growth
Division Division Division Division Division
-------------- ----------------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Total assets $ 5,356,495 $ 355,712 $ 773,396 $ 1,000 $ 986
Total liabilities 10,408 1,323 350 2 2
-------------- ----------------- ----------------- ----------------- --------------
Net assets $ 5,346,087 $ 354,389 $ 773,046 $ 998 $ 984
============== ================= ================= ================= ==============
Net assets:
For variable life insurance
policies 5,324,187 340,514 761,112 - -
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 21,900 13,875 11,934 998 984
-------------- ----------------- ----------------- ----------------- --------------
Net assets $ 5,346,087 $ 354,389 $ 773,046 $ 998 $ 984
============== ================= ================= ================= ==============
<CAPTION>
Panorama Panorama
Panorama LifeSpan Panorama LifeSpan Dreyfus
International Diversified LifeSpan Capital Stock
Equity Income Balanced Appreciation Index
Division Division Division Division Division
--------------- --------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Total assets $ 958 $ 6,534 $ 6,684 $ 6,783 $ 34,164,819
Total liabilities 2 6 6 6 35,667
--------------- --------------- -------------- ---------------- --------------
Net assets $ 956 $ 6,528 $ 6,678 $ 6,777 $ 34,129,152
=============== =============== ============== ================ ==============
Net assets:
For variable life insurance
policies - - - - 34,121,562
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 956 6,528 6,678 6,777 7,590
--------------- --------------- -------------- ---------------- --------------
Net assets $ 956 $ 6,528 $ 6,678 $ 6,777 $ 34,129,152
=============== =============== ============== ================ ==============
</TABLE>
F-12
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
STATUTORY FINANCIAL STATEMENTS
as of December 31, 1997 and 1996
and for the years ended December 31, 1997, 1996 and 1995
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statements of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1997 and 1996,
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, 1997. 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 statutory
financial statements of Connecticut Mutual Life Insurance Company ("Connecticut
Mutual") for the year ended December 31, 1995, which statements reflect total
revenue and net gain from operations constituting 26% and 22% of the related
Company totals after restatement for the merger of the two companies. 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, is based solely on the report of the 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 more fully in Note 1, these financial statements were prepared in
conformity with 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, for the
pre-merger balances of Connecticut Mutual, the Department of Insurance of the
State of Connecticut (collectively "statutory accounting practices"), 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 reasonably
determinable at this time, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
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, 1997 and 1996, or
the results of its operations or its cash flows for each of the three years in
the period ended December 31, 1997.
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, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, on the
statutory basis of accounting described in Note 1.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 6, 1998
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1997 1996
---- ----
(In Millions)
Assets:
Bonds............................................. $23,890.3 $24,299.3
Common stocks..................................... 354.7 336.6
Mortgage loans.................................... 4,863.7 4,852.8
Real estate....................................... 1,697.7 1,840.9
Other investments................................. 1,963.8 1,425.6
Policy loans...................................... 4,950.4 4,752.3
Cash and short-term investments................... 1,941.2 1,075.4
--------- ---------
39,661.8 38,582.9
Investment and insurance amounts receivable....... 1,064.9 1,102.4
Other assets...................................... 104.8 97.9
--------- ---------
40,831.5 39,783.2
Separate account assets........................... 16,803.1 13,563.5
--------- ---------
$57,634.6 $53,346.7
========= =========
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1997 1996
---- ----
(In Millions)
Liabilities:
Policyholders' reserves and funds................. $33,783.2 $33,341.5
Policyholders' dividends.......................... 954.1 885.3
Policyholders' claims and other benefits.......... 353.4 373.8
Federal income taxes.............................. 436.5 440.7
Asset valuation reserve........................... 840.6 689.2
Investment reserves............................... 132.8 208.4
Amounts due on investments puchased and
other liabilities................................ 1,457.9 1,206.1
--------- ---------
37,958.5 37,145.0
Separate account reserves and liabilities......... 16,802.8 13,563.1
--------- ---------
54,761.3 50,708.1
Policyholders' contingency reserves............... 2,873.3 2,638.6
--------- ---------
$57,634.6 $53,346.7
========= =========
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income............................................ $6,764.8 $6,328.6 $5,727.7
Net investment and other income........................... 2,904.4 2,861.1 2,898.4
-------- -------- --------
9,669.2 9,189.7 8,626.1
-------- -------- --------
Benefits and expenses:
Policy benefits and payments.............................. 6,597.3 6,048.2 5,152.2
Addition to policyholder's reserves and funds............. 720.8 854.7 1,205.4
Commissions and operating expenses........................ 766.1 763.5 833.7
State taxes, licenses and fees............................ 81.5 96.4 89.4
Merger restructuring costs................................ - 66.1 44.0
-------- -------- --------
8,165.7 7,828.9 7,324.7
-------- -------- --------
Net gain before federal income taxes and dividends........ 1,503.5 1,360.8 1,301.4
Federal income taxes...................................... 284.4 276.7 206.2
-------- -------- --------
Net gain from operations before dividends................. 1,219.1 1,084.1 1,095.2
Dividends to policyholders................................ 919.5 859.9 819.0
-------- -------- --------
Net gain from operations.................................. 299.6 224.2 276.2
Net realized capital gain (loss).......................... (42.5) 40.3 (85.8)
-------- -------- --------
Net income................................................ $ 257.1 $ 264.5 $ 190.4
======== ======== ========
</TABLE>
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Policyholder's contingency reserves, beginning of year.... $2,638.6 $2,600.9 $2,569.1
-------- -------- --------
Increases (decreases) due to:
Net income............................................... 257.1 264.5 190.4
Net unrealized capital gain (loss)....................... 119.1 (1.7) 88.7
Merger restructuring costs, net of fax................... - - (45.4)
Change in asset valuation and investment reserves........ (76.0) (142.4) (75.6)
Change in prior year policyholders' reserves............. (55.4) (72.2) (108.2)
Change in non-admitted assets and other.................. (10.1) (10.5) (18.1)
-------- -------- --------
234.7 37.7 31.8
-------- -------- --------
Policyholders' contingency reserves, end of year.......... $2,873.3 $2,638.6 $2,600.9
======== ======== ========
</TABLE>
See notes to statutory financial statements.
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Operating acitivites:
Net income............................................... $ 257.1 $ 264.5 $ 190.4
Addition to policyholders' reserves and funds,
net of transfers to separate accounts................... 421.3 426.7 575.8
Net realized capital (gain) loss......................... 42.5 (40.3) 85.8
Other changes............................................ (58.1) (232.8) (25.2)
--------- --------- ---------
Net cash provided by operating activities................ 662.8 418.1 826.8
--------- --------- ---------
Investing activities:
Purchases of investments and loans....................... (12,292.7) (10,171.5) (10,364.2)
Sales or maturities of investments and receipts
from repayment of loans................................. 12,545.7 8,539.3 9,671.1
--------- --------- ---------
Net cash provided by (used in) investing activities...... 253.0 (1,632.2) (693.1)
--------- --------- ---------
Financing activities:
Repayments of long-term debt............................. (50.0) (53.3) (46.4)
--------- --------- ---------
Net cash used by financing activities.................... (50.0) (53.3) (46.4)
--------- --------- ---------
Increase (decrease) in cash and short-term investments... 865.8 (1,267.4) 87.3
Cash and short-term investments, beginning of year....... 1,075.4 2,342.8 2,255.5
--------- --------- ---------
Cash and short-term investments, end of year............. $ 1,941.2 $ 1,075.4 $ 2,342.8
========= ========= =========
</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,
1995 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. 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, policyholders' 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 with all adjustments reflected as a
change to policyholders' contingency reserves. The separate results of each
company prior to the merger for the year ended December 31, 1995, were as
follows: (a) revenue 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
included a $41.0 million dividend received from MIRUS in 1995. Additionally,
this investment produced an unrealized gain of $13.9 million in 1995.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the statutory accounting practices of the National
Association of Insurance Commissioners ("NAIC") and the accounting practices
prescribed or permitted by the Division of Insurance of the Commonwealth of
Massachusetts and, for the pre-merger balances of Connecticut Mutual, the
Department of Insurance of the State of Connecticut (collectively "statutory
accounting practices"), which practices were at one time also considered to be
in conformity with generally accepted accounting principles ("GAAP").
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 directly related to
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 generally requests they be valued at fair value; (d)
deferred income taxes are not provided for book-tax timing differences as would
be required by GAAP, and (e) payments received for universal and variable life
products, variable annuities and investment related products are reported as
premium revenue, whereas under GAAP, these payments would be recorded as
deposits to policyholders' account balances.
The NAIC is currently engaged in an extensive project ("Codification") to codify
statutory accounting principles with a goal of providing a comprehensive guide
of statutory accounting principles for use by insurers in all states. This
comprehensive guide, which has not been approved by the NAIC or any state
insurance department, includes seventy-two Statements of Statutory Accounting
Principles ("SSAPs") and is expected to be effective no earlier than January 1,
1999. The effect of adopting these SSAPs shall be reported as an adjustment to
surplus on the effective date. Management is currently reviewing the impact of
Codification. However, since the SSAPs have not been finalized, the ultimate
impact cannot be determined at this time.
<PAGE>
Notes To Statutory Financial Statements (Continued)
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 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.
Mortgage loans are valued at unpaid principal less unamortized discount. Real
estate is valued at cost less accumulated depreciation, impairment allowances
and mortgage encumbrances. Encumbrances totaled $14.2 million in 1997 and $27.3
million in 1996. Depreciation on investment real estate is calculated using the
straight-line and constant yield methods.
Policy loans are carried at the outstanding loan balance less amounts unsecured
by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
Investments in unconsolidated subsidiaries and affiliates, 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 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 $95.4 million in 1997,
$73.1 million in 1996, and net realized after tax capital losses of $130.7
million in 1995 were charged to the Interest Maintenance Reserve. Amortization
of the Interest Maintenance Reserve into net investment income amounted to $31.0
million in 1997, $26.9 million in 1996, and $5.0 million in 1995.
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.
<PAGE>
Notes To Statutory Financial Statements (Continued)
D. Policyholders' Reserves and Funds
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
the 1941, 1958 and 1980 Commissioners' Standard Ordinary mortality tables with
assumed interest rates ranging from 2.5 to 6.0 percent.
Reserves for individual annuities, guaranteed investment contracts and deposit
administration and immediate participation guarantee funds are based on accepted
actuarial methods principally at interest rates ranging from 2.25 to 11.25
percent. Reserves for policies and contracts considered investment contracts
have a carrying value of $8,077.9 million and $9,073.8 million at December 31,
1997 and 1996, respectively (fair value of $8,250.0 million and $9,324.6 million
at December 31, 1997 and 1996, respectively 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.
The Company made certain changes in the valuation of policyholders' reserves of
$55.4 million in 1997 and $72.2 million in 1996. The effects of these changes
were recorded as a decrease 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 when incurred.
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. The liability
for policyholders' dividends is equal to the estimated amount of dividends to be
paid in the following calendar year.
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 cash and 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.
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, 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, to holders of record on the
preceding May 1 or November 1, respectively. Interest expense is not recorded
until approval for payment is received from the Commissioner. Interest of $26.6
million was approved and paid in 1997, 1996 and 1995.
<PAGE>
Notes To Statutory Financial Statements (Continued)
The proceeds of the notes, less a $28.3 million reserve in 1997, and a $32.2
million reserve in 1996 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. Employees
previously covered by the Connecticut Mutual pension plans will continue
coverage under these plans. All other employees, including employees hired after
the merger date, will be covered by the Massachusetts Mutual benefit plans.
A. Pension
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes employees previously
employed by Connecticut Mutual; the other includes all other eligible employees.
Benefits are based on the employees' years of service, compensation during the
last five years of employment and estimated social security retirement benefits.
The Company accounts for these plans following Financial Accounting Standards
Board Statement No. 87, "Employers' Accounting for Pensions." Accordingly, as
permitted by the Massachusetts Division of Insurance, the Company has recognized
a pension asset of $157.4 million and $97.2 million at December 31, 1997 and
1996, respectively. On the merger date, the accounting for Connecticut Mutual
pension plans was conformed to the Company's 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, 1997, 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:
1997 1996
---- ----
(In Millions)
Accumulated benefit obligation $ 663.1 $ 611.5
Vested benefit obligation 653.8 606.5
Projected benefit obligation 713.9 665.5
Plan assets at fair value 1,154.2 1,201.7
The following assumptions were used in determining the actuarial present value
of both the accumulated and projected benefit obligations.
MassMutual Connecticut Mutual
Plan Plan
---- ----
Discount rate - 1997 7.25% 7.25%
Discount rate - 1996 7.75 7.75
Increase in future compensation levels 4.00 5.00
Long-term rate of return on assets 10.00 9.00
In 1997, there was a significant reduction in plan participants in the
Connecticut Mutual Plan which resulted in recognition of a pension plan
curtailment gain of $10.7 million.
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 $38.9 million in 1997,
$32.7 million in 1996 and $10.9 million in 1995.
<PAGE>
Notes To Statutory Financial Statements (Continued)
B. Life and Health
Certain life and health insurance benefits are provided to retired employees and
agents through group insurance contracts. Substantially all of the Company's
employees may become eligible for these benefits if they reach retirement age
while working for the Company. The Company adopted the National Association of
Insurance Commissioners' accounting standard for post-retirement 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.
The following assumptions were used in determining the accumulated
postretirement benefit liability.
MassMutual Connecticut Mutual
Plan Plan
---- ----
Discount - 1997 7.25% 7.25%
Discount - 1996 7.75 7.75
Assumed increases in medical cost
rates in the first year 6.25 - 6.75 9.50
declining to 4.75 5.00
within 5 years 5 years
The initial transition obligation of $137.9 million is being amortized over
twenty years through 2012. At December 31, 1997 and 1996, the net unfunded
accumulated benefit obligation was $124.2 million and $124.1 million,
respectively, for employees and agents eligible to retire or currently retired
and $34.7 million and $33.8 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
$21.7 million and $23.0 million at December 31, 1997 and 1996, respectively.
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 1997, 1996 and 1995 was $16.5 million, $17.6 million, and $22.9
million, respectively. A one percent increase in the annual assumed increase in
medical cost rates would increase the 1997 accumulated postretirement benefit
liability and benefit expense by $10.9 million and $1.4 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 $41.0 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 75% of the premiums on certain universal life policies issued by C.M.
Life. 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 current 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 (essentially a reduction in the
deduction for policyholder dividends) and miscellaneous temporary differences,
such as reserves, acquisition costs and restructuring costs, resulted in
effective tax rates which differ from the statutory tax rate.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1991 for Connecticut
Mutual, and is currently examining Massachusetts Mutual for the years 1993 and
1994, and Connecticut Mutual for the years 1992 through 1995. The Company
believes any adjustments resulting from such examinations will not materially
affect its financial statements.
<PAGE>
Notes to Statutory Financial Statements (Continued)
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for 1997
or 1996. The Company records the estimated effects of anticipated revisions in
the Statutory Statement of Income.
The Company plans to file its 1997 federal income tax return on a consolidated
basis with its life and non-life affiliates with the exception of C.M. Life
Insurance Company. The Company and its eligible life and non-life affiliates
are subject to a written tax allocation agreement, which allocates the group's
consolidated tax liability for payment purposes. Generally, the agreement
provides that members with losses shall be compensated for the use of their
losses and credits by other members.
The Company made federal tax payments of $353.4 million in 1997, $330.7 million
in 1996 and $147.3 million in 1995.
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:
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(In Millions)
U.S. Treasury securities $ 6,241.0 $ 470.5 $10.3 $ 6,701.2
and obligations of U.S.
government corporations
and agencies
Debt securities issued by
foreign governments 83.5 4.4 3.0 84.9
Mortgage-backed securities 3,390.8 187.9 9.0 3,569.7
State and local governments 361.9 23.9 .6 385.2
Corporate debt securities 12,148.9 765.2 46.9 12,867.2
Utilities 871.8 100.1 2.2 969.7
Affiliates 792.4 2.8 1.0 794.2
--------- -------- ----- ---------
TOTAL $23,890.3 $1,554.8 $73.0 $25,372.1
========= ======== ===== =========
December 31, 1996
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(In Millions)
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 8,042.6 $ 344.0 $ 56.3 $ 8,330.3
Debt securities issued by 95.2 10.2 .5 104.9
foreign governments
Mortgage-backed securities 3,014.0 119.0 43.3 3,089.6
State and local governments 173.2 13.1 2.1 184.2
Corporate debt 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 $24,299.3 $1,105.6 $257.5 $25,147.3
========= ======== ====== =========
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1997 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.
Estimated
Carrying Fair
Value Value
----- -----
(In Millions)
Due in one year or less $ 519.7 $ 523.0
Due after one year through five years 3,972.1 4,104.6
Due after five years through ten years 7,423.3 7,838.1
Due after ten years 5,254.9 5,888.1
--------- ---------
17,170.0 18,353.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,720.3 7,018.3
--------- ---------
TOTAL $23,890.3 $25,372.1
========= =========
Proceeds from sales of investments in bonds were $11,427.8 million during 1997,
$6,390.7 million during 1996 and $8,068.8 million during 1995. Gross capital
gains of $200.7 million in 1997, $188.8 million in 1996 and $255.5 million in
1995 and gross capital losses of $68.8 million in 1997, $255.5 million in 1996
and $67.1 million in 1995 were realized on those sales, portions 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 $145.5 million in 1997 and
$150.8 million in 1996, 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 $250.3 million in 1997 and $249.2
million in 1996.
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.
The Company had restructured loans with book values of $202.3 million, and
$383.5 million at December 31, 1997 and 1996, respectively. These loans
typically have been modified to defer a portion of the contracted interest
payments to future periods. Interest deferred to future periods totaled $5.1
million in 1997, $2.2 million in 1996 and $2.5 million in 1995.
D. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $5.7 million and $23.1 million at December 31, 1997
and 1996, respectively. The Company made voluntary contributions to the Asset
Valuation Reserve of $6.8 million 1996. No additional voluntary contribution to
the Asset Valuation Reserve was made in 1997.
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
these 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 these financial instruments for trading purposes.
<PAGE>
Notes To Statutory Financial Statements (Continued)
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, 1997 and
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, 1997 and 1996, the
Company had swaps with notional amounts of $3,220.2 million and $2,090.3
million, respectively. The fair values of these instruments were $20.9 million
at December 31, 1997 and $14.8 million at December 31, 1996.
Options grant the purchaser the right to buy or sell a security or enter into a
derivative transaction at a stated price within a stated period. The Company's
option contracts have terms of up to fifteen years. The amounts paid for options
purchased are included in other investments on the Statutory Statement of
Financial Position. Gains and losses on these contracts are recorded at the
expiration or termination date and are amortized through the Interest
Maintenance Reserve over the remaining life of the option contract. At December
31, 1997 and 1996, the Company had option contracts with notional amounts of
$5,388.2 million and $1,928.4 million, respectively. The Company's credit risk
exposure was limited to the unamortized costs of $59.0 million and $18.1
million, which had fair values of $99.6 million and $19.2 million at December
31, 1997 and 1996, respectively.
Interest rate cap agreements grant the purchaser the right to receive the excess
of a referenced interest rate over a given rate calculated by reference to an
agreed upon notional amount. Interest rate floor agreements grant the purchaser
the right to receive the excess of a given rate over a referenced interest rate
calculated by reference to an agreed upon notional amount. 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, 1997 and 1996, the company had agreements with
notional amounts of $3,348.6 million and $3,859.6 million, respectively. The
Company's credit risk exposure on these agreements is limited to the unamortized
costs of $18.2 million and $22.0 million at December 31, 1997 and 1996,
respectively. The fair values of these instruments were $23.4 million and $15.2
million at December 31, 1997 and 1996, 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. The
net cash flows from asset and currency swaps are recognized as adjustments to
the underlying assets' interest income. Gains and losses realized on the
termination of these contracts adjusts the bases of the underlying asset.
Notional amounts relating to asset and currency swaps totaled $225.6 million and
$364.7 million at December 31, 1997 and 1996, respectively. The fair values of
these instruments were an unrecognized loss of $1.7 million at December 31, 1997
and an unrecognized gain of $7.8 million at December 31, 1996.
<PAGE>
Notes To Statutory Financial Statements (Continued)
Equity swap agreements are utilized to hedge exposure to market risk on public
and private equity positions held in the Company's investment portfolio. Under
equity swaps, the Company agrees to an exchange, at points in time specified in
each contract, between streams of variable or fixed rate interest payments and
the change in an underlying index, equity or basket of equities. The change in
the underlying item is calculated by reference to the level of such item
specified in the agreement. 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. Changes in the
value of these contracts are recorded as realized gains and losses in the
Statutory Statement of Income when contracts are closed. At December 31, 1997
and 1996, the Company had equity swap contracts with notional amounts of $160.0
million and $149.2 million, respectively. The fair values of these instruments
were an unrealized loss of $5.1 million at December 31, 1997 and an unrealized
gain of $11.9 million at December 31, 1996.
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, 1997 and 1996, the Company had
U. S. Treasury purchase commitments which will settle during the following year
with contractual amounts of $1,100.7 million and $1,639.4 million with fair
values of $1,117.6 million and $1,627.4 million, respectively including net
unrealized gains of $16.9 million at December 31, 1997 and net unrealized losses
of $12.0 million at December 31, 1996.
The Company is exposed to credit-related losses in the event of nonperformance
by counterparties to derivative financial instruments. This exposure is limited
to contracts with a positive fair value. The amounts at risk in a net gain
position were $146.7 million and $53.9 million at December 31, 1997 and 1996,
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 $294.6 million in 1997,
$793.5 million in 1996 and $904.1 million in 1995.
9. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1997 are illustrated below:
(In Millions)
Total policyholders' reserves and funds and
separate account liabilities $50,804.2
Not subject to discretionary withdrawal (5,283.7)
Policy loans (4,950.4)
---------
Subject to discretionary withdrawal $40,570.1
=========
Total invested assets, including separate $56,464.7
Policy loans and other invested assets (14,823.3)
---------
Marketable investments $41,641.4
=========
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
1997 and 1996, the Company elected not to admit $21.4 million and $15.3 million,
respectively, of guaranty fund premium tax offset receivables relating to prior
assessments.
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company is involved in litigation arising in and 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 1996 and 1995 amounts have been reclassified to conform with the current
year presentation.
12. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries and
affiliated companies as of December 31, 1997 is illustrated below. The Company
provides management or advisory services to these companies. Subsidiaries are
wholly-owned, except as noted.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
- -----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation -- 98.5%
Charter Oak Capital Management, Inc. -- 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation -- 84.8%
Oppenheimer Acquisition Corporation -- 88.55%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc. -- (Liquidated in December 1997)
CM International, Inc.
CM Property Management, Inc. -- (Liquidated in December 1997)
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
<PAGE>
Notes To Statutory Financial Statements (Continued)
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. -- 100%
MassMutual Corporate Value Limited -- 46%
9048 -- 5434 Quebec, Inc.
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 0.76% on an annual basis,
of the net assets 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 $5.25 per month.
3. Cost of Insurance Protection, based on the current guaranteed select issue
rates being charged by the Company.
4. Mortality and Expense Risk Charge, which is equal to 0.75% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
The select cost of insurance rates are applicable to new business where the
insureds meet our current underwriting guidelines. The standard cost of
insurance rates are applicable to new business where insureds do not meet our
current underwriting guidelines. The standard rates are higher than the select
rates but in no event will they exceed the guaranteed cost of insurance rates.
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 0.76% on an annual basis,
of the net assets 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.
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.
Cash surrender values show in the tables reflect the deduction of applicable
premium taxes for a Case with an Initial Case Premium Paid of $250,000. Taking
into account the Mortality and Expense Risk Charge and the Fund level expenses,
the effect is that for gross annual rates of return of 0%, 6% and 12%, the
actual net annual rate of return on a current basis would be --1.496%, 4.416%
and 10.325%, respectively, on a guaranteed basis would be --1.740%, 4.156% and
10.052%, respectively.
A-1
<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
Premiums -------------------------------- ------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest -------------------------------- ------------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
------ ---------- ---------- -------- ----------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 475 $ 4,000 $ 4,467 $ 4,690 $250,000 $250,000 $250,000 $ 3,827 $ 4,057 $ 4,286
2 502 4,000 4,502 9,652 250,000 250,000 250,000 7,603 8,299 9,021
3 535 4,000 4,535 14,896 250,000 250,000 250,000 11,331 12,736 14,254
4 605 4,000 4,605 20,476 250,000 250,000 250,000 15,012 17,380 20,038
5 641 4,000 4,641 26,373 250,000 250,000 250,000 18,650 22,241 26,431
6 707 4,000 4,707 32,634 250,000 250,000 250,000 22,247 27,331 33,501
7 742 4,000 4,742 39,245 250,000 250,000 250,000 25,808 32,667 41,324
8 811 4,000 4,811 46,259 250,000 250,000 250,000 29,338 38,262 49,982
9 915 4,000 4,915 53,733 250,000 250,000 250,000 32,841 44,135 59,571
10 989 4,000 4,989 61,658 250,000 250,000 250,000 36,323 50,304 70,194
11 1,051 4,000 5,051 70,044 250,000 250,000 250,000 39,791 56,790 81,969
12 1,164 4,000 5,164 78,968 250,000 250,000 250,000 43,246 63,612 95,023
13 1,259 4,000 5,259 88,439 250,000 250,000 250,000 46,697 70,793 109,500
14 1,404 4,000 5,404 98,535 250,000 250,000 257,400 50,151 78,361 125,561
15 1,542 4,000 5,542 109,281 250,000 250,000 286,531 53,617 86,347 143,266
16 1,744 4,000 5,744 120,776 250,000 250,000 315,742 57,106 94,786 163,753
17 1,921 4,000 5,921 133,032 250,000 250,000 349,971 60,640 103,733 184,196
18 2,137 4,000 6,137 146,127 250,000 250,000 384,394 64,226 113,223 207,780
19 2,372 4,000 6,372 160,124 250,000 250,000 420,697 67,876 123,302 233,721
20 (age 65) 2,603 4,000 6,603 175,064 250,000 250,000 461,522 71,609 134,030 262,228
21 0 0 0 183,817 250,000 250,000 492,884 68,774 138,548 286,560
22 0 0 0 193,008 250,000 250,000 526,155 65,604 143,173 313,187
23 0 0 0 202,658 250,000 250,000 561,550 62,133 147,947 342,408
24 0 0 0 212,791 250,000 250,000 602,725 58,406 152,879 374,364
25 0 0 0 223,431 250,000 250,000 642,455 54,395 157,981 409,207
26 0 0 0 234,602 250,000 251,429 688,571 50,059 163,265 447,124
27 0 0 0 246,332 250,000 254,764 737,454 45,355 168,718 488,380
28 0 0 0 258,649 250,000 257,985 789,242 40,232 174,314 533,272
29 0 0 0 271,581 250,000 261,065 844,073 34,630 180,045 582,120
30 0 0 0 285,160 250,000 264,001 902,096 28,472 185,916 635,279
31 0 0 0 299,418 250,000 268,558 969,841 21,502 191,827 692,743
32 0 0 0 314,389 250,000 272,952 1,041,749 13,647 197,792 754,891
33 0 0 0 330,109 250,000 275,187 1,109,986 4,631 203,843 822,212
34 0 0 0 346,614 0 279,175 1,190,083 0 209,906 894,799
35 0 0 0 363,945 0 282,928 1,274,638 0 215,976 973,006
40 0 0 0 464,496 0 303,178 1,800,696 0 246,486 1,463,980
45 0 0 0 592,828 0 323,105 2,529,814 0 276,158 2,162,234
50 0 0 0 756,615 0 340,404 3,513,282 0 306,671 3,165,119
</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.
A-2
<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 (except fund level charges which are
reflected on a current basis)
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
Premiums -------------------------------- ------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest -------------------------------- ------------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
- -------- ---------- ---------- --------- ---------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 467 $ 4,000 $ 4,467 $ 4,690 $250,000 $250,000 $250,000 $ 2,507 $ 2,698 $ 2,889
2 502 4,000 4,502 9,652 250,000 250,000 250,000 4,908 5,445 6,007
3 535 4,000 4,535 14,896 250,000 250,000 250,000 7,202 8,244 9,377
4 605 4,000 4,605 20,476 250,000 250,000 250,000 9,403 11,109 13,041
5 641 4,000 4,641 26,373 250,000 250,000 250,000 11,481 14,013 16,999
6 707 4,000 4,707 32,634 250,000 250,000 250,000 13,441 16,964 21,292
7 742 4,000 4,742 39,245 250,000 250,000 250,000 15,285 19,966 25,961
8 811 4,000 4,811 46,259 250,000 250,000 250,000 17,004 23,013 31,042
9 915 4,000 4,915 53,733 250,000 250,000 250,000 18,582 26,095 36,572
10 989 4,000 4,989 61,658 250,000 250,000 250,000 20,014 29,210 42,603
11 1,051 4,000 5,051 70,044 250,000 250,000 250,000 21,298 32,361 49,202
12 1,164 4,000 5,164 78,968 250,000 250,000 250,000 22,416 35,537 56,428
13 1,259 4,000 5,259 88,439 250,000 250,000 250,000 23,368 38,743 64,370
14 1,404 4,000 5,404 98,535 250,000 250,000 250,000 24,156 41,989 73,134
15 1,542 4,000 5,542 109,281 250,000 250,000 250,000 24,767 45,275 82,833
16 1,744 4,000 5,744 120,776 250,000 250,000 250,000 25,182 48,593 93,596
17 1,921 4,000 5,921 133,032 250,000 250,000 250,000 25,416 51,977 105,618
18 2,137 4,000 6,137 146,127 250,000 250,000 250,000 25,391 55,370 119,042
19 2,372 4,000 6,372 160,124 250,000 250,000 250,000 25,061 58,750 134,080
20 (age 65) 2,603 4,000 6,603 175,064 250,000 250,000 265,492 24,389 62,109 150,848
21 0 0 0 183,817 250,000 250,000 279,125 16,901 58,644 162,282
22 0 0 0 193,008 250,000 250,000 293,096 8,623 54,341 174,462
23 0 0 0 202,658 0 250,000 307,419 0 49,078 187,451
24 0 0 0 212,791 0 250,000 323,988 0 42,698 201,235
25 0 0 0 223,431 0 250,000 339,027 0 34,986 215,941
26 0 0 0 234,602 0 250,000 356,540 0 25,656 231,519
27 0 0 0 246,332 0 250,000 374,456 0 14,321 247,984
28 0 0 0 258,649 0 250,000 392,707 0 478 265,343
29 0 0 0 271,581 0 0 411,240 0 0 283,613
30 0 0 0 285,160 0 0 430,038 0 0 302,844
31 0 0 0 299,418 0 0 452,013 0 0 322,867
32 0 0 0 314,389 0 0 474,325 0 0 343,714
33 0 0 0 330,109 0 0 493,824 0 0 365,796
34 0 0 0 346,614 0 0 517,248 0 0 388,908
35 0 0 0 363,945 0 0 541,184 0 0 413,118
40 0 0 0 464,496 0 0 673,911 0 0 547,895
45 0 0 0 592,828 0 0 820,807 0 0 701,544
50 0 0 0 756,615 0 0 980,630 0 0 883,450
</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.
A-3
<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>
Premiums
Accumulated Death Benefit (Option B) Cash Surrender Value
---------------------------------- -----------------------------------
End of Total At 5% Assuming Hypothetical Gross Assuming Hypothetical Gross
Policy Modal Term Additional Premium Interest Annual Investment Return of Annual Investment Return of
---------------------------------- -----------------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
- ----------- ---------- ----------- ---------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 467 $ 4,000 $4,467 $ 4,690 $253,822 $254,051 $254,281 $ 3,822 $ 4,051 $ 4,281
2 502 4,000 4,502 9,652 257,587 258,281 259,003 7,587 8,281 9,003
3 535 4,000 4,535 14,896 261,295 262,699 264,213 11,295 12,699 14,213
4 605 4,000 4,605 20,476 264,948 267,311 269,962 14,948 17,311 19,962
5 641 4,000 4,641 26,373 268,547 272,126 276,303 18,547 22,126 26,303
6 707 4,000 4,707 32,634 272,091 277,154 283,300 22,091 27,154 33,300
7 742 4,000 4,742 39,245 275,583 282,405 291,019 25,583 32,405 41,019
8 811 4,000 4,811 46,259 279,022 287,887 299,535 29,022 37,887 49,535
9 915 4,000 4,915 53,733 282,411 293,611 308,930 32,411 43,611 58,930
10 989 4,000 4,989 61,658 285,748 299,589 319,296 35,748 49,589 69,296
11 1,051 4,000 5,051 70,044 289,036 305,830 330,732 39,036 55,830 80,732
12 1,164 4,000 5,164 78,968 292,274 312,347 343,349 42,274 62,347 93,349
13 1,259 4,000 5,259 88,439 295,465 319,151 357,269 45,465 69,151 107,269
14 1,404 4,000 5,404 98,535 298,607 326,257 372,626 48,607 76,257 122,626
15 1,542 4,000 5,542 109,281 301,703 333,676 389,569 51,703 83,676 139,569
16 1,744 4,000 5,744 120,776 304,753 341,423 408,262 54,753 91,423 158,262
17 1,921 4,000 5,921 133,032 307,757 349,512 428,886 57,757 99,512 178,886
18 2,137 4,000 6,137 146,127 310,716 357,959 451,639 60,716 107,959 201,639
19 2,372 4,000 6,372 160,124 313,632 366,779 476,742 63,632 116,779 226,742
20 (age 65) 2,603 4,000 6,603 175,064 316,504 375,989 504,438 66,504 125,989 254,438
21 0 0 0 183,817 312,826 378,783 527,860 62,826 128,783 277,860
22 0 0 0 193,008 308,851 381,338 553,328 58,851 131,338 303,328
23 0 0 0 202,658 304,633 383,695 581,106 54,633 133,695 331,106
24 0 0 0 212,791 300,146 385,813 611,399 50,146 135,813 361,399
25 0 0 0 223,431 295,358 387,645 644,433 45,358 137,645 394,433
26 0 0 0 234,602 290,239 389,143 680,451 40,239 139,143 430,451
27 0 0 0 246,332 284,758 390,255 719,726 34,758 140,255 469,726
28 0 0 0 258,649 278,883 390,927 762,555 28,883 140,927 512,555
29 0 0 0 271,581 272,573 391,089 810,920 22,573 141,089 559,255
30 0 0 0 285,160 265,782 390,665 866,419 15,782 140,665 610,154
31 0 0 0 299,418 0 389,376 931,433 8,271 139,376 665,309
32 0 0 0 314,389 0 387,170 1,000,490 37 137,170 724,992
33 0 0 0 330,109 0 383,786 1,066,020 0 133,786 789,645
34 0 0 0 346,614 0 379,032 1,142,942 0 129,032 859,355
35 0 0 0 363,945 0 372,701 1,224,143 0 122,701 934,461
40 0 0 0 464,496 0 312,155 1,729,342 0 62,155 1,405,969
45 0 0 0 592,828 0 0 2,429,551 0 0 2,076,539
50 0 0 0 756,615 0 0 3,374,026 0 0 3,039,663
</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 IN VESTMENT 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.
A-4
<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 (except fund level charges which are
reflected on a current basis)
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
Premiums -------------------------------- -------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest -------------------------------- -------------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
------ ---------- ---------- ------- ----------- -------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 467 $ 4,000 $ 4,467 $ 4,690 $252,488 $252,678 $252,868 $ 2,488 $ 2,678 $ 2,868
2 502 4,000 4,502 9,652 254,854 255,386 255,942 4,854 5,386 5,942
3 535 4,000 4,535 14,896 257,096 258,122 259,237 7,096 8,122 9,237
4 605 4,000 4,605 20,476 259,225 260,896 262,788 9,225 10,896 12,788
5 641 4,000 4,641 26,373 261,210 263,676 266,583 11,210 13,676 16,583
6 707 4,000 4,707 32,634 263,054 266,463 270,649 13,054 16,463 20,649
7 742 4,000 4,742 39,245 264,756 269,253 275,009 14,756 19,253 25,009
8 811 4,000 4,811 46,259 266,304 272,032 279,677 16,304 22,032 29,677
9 915 4,000 4,915 53,733 267,679 274,778 284,664 17,679 24,778 34,664
10 989 4,000 4,989 61,658 268,873 277,477 289,987 18,873 27,477 39,987
11 1,051 4,000 5,051 70,044 269,882 280,122 295,675 19,882 30,122 45,675
12 1,164 4,000 5,164 78,968 270,686 282,684 301,740 20,686 32,684 51,740
13 1,259 4,000 5,259 88,439 271,284 285,157 308,214 21,284 35,157 58,214
14 1,404 4,000 5,404 98,535 271,677 287,534 315,136 21,677 37,534 65,136
15 1,542 4,000 5,542 109,281 271,850 289,793 322,533 21,850 39,793 72,533
16 1,744 4,000 5,744 120,776 271,781 291,901 330,425 21,781 41,901 80,425
17 1,921 4,000 5,921 133,032 271,481 293,861 338,870 21,481 43,861 88,870
18 2,137 4,000 6,137 146,127 270,870 295,579 347,836 20,870 45,579 97,836
19 2,372 4,000 6,372 160,124 269,900 296,992 357,318 19,900 46,992 107,318
20 (age 65) 2,603 4,000 6,603 175,064 268,539 298,046 367,328 18,539 48,046 117,328
21 0 0 0 183,817 260,516 292,097 370,940 10,516 42,097 120,940
22 0 0 0 193,008 251,913 285,159 374,150 1,913 35,159 124,150
23 0 0 0 202,658 250,000 277,150 376,879 0 27,150 126,879
24 0 0 0 212,791 250,000 267,971 379,021 0 17,971 129,021
25 0 0 0 223,431 250,000 257,482 380,424 0 7,482 130,424
26 0 0 0 234,602 250,000 250,000 380,886 0 0 130,886
27 0 0 0 246,332 250,000 250,000 380,141 0 0 130,141
28 0 0 0 258,649 250,000 250,000 377,865 0 0 127,865
29 0 0 0 271,581 250,000 250,000 373,695 0 0 123,695
30 0 0 0 285,160 250,000 250,000 367,255 0 0 117,255
31 0 0 0 299,418 250,000 250,000 358,163 0 0 108,163
32 0 0 0 314,389 250,000 250,000 346,029 0 0 96,029
33 0 0 0 330,109 250,000 250,000 330,453 0 0 80,453
34 0 0 0 346,614 250,000 250,000 310,959 0 0 60,959
35 0 0 0 363,945 250,000 250,000 286,947 0 0 36,947
40 0 0 0 464,496 250,000 250,000 257,655 0 0 0
45 0 0 0 592,828 250,000 250,000 250,000 0 0 0
50 0 0 0 756,615 250,000 250,000 250,000 0 0 0
</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.
A-5
<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
-------
B-1
<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 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.
1
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforce- able. 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, 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.
2
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 1
This Post-Effective Amendment is comprised of the following papers and
documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consists of 77 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. Counsel opining as to the legality of securities being
registered.
3. 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.*
(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.
3
<PAGE>
(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(1)(5) 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.*
* Incorporated by reference to Registrant's Initial Registration Statement No.
333-22557, filed with the Commission on February 28, 1997.
** Incorporated by reference to Pre-Effective Amendment No. 2 to Registration
Statement No. 333-22557, filed with the Com-mission on August 4, 1997.
*** Filed herewith.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, certifies that it meets
all of the requirement for effectiveness of this Post-Effective Amendment No. 1
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No. 1 to Registration Statement No. 333-22557 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 10th day of
April, 1998.
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 On April 10, 1998, as Attorney-in-Fact pursuant to
- ------------------- powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment No. 1
to Registration Statement No. 333-22557 has been signed by the following persons
in the capacities and on the duties indicated.
Signature Title Date
--------- ----- ----
/s/ Thomas B. Wheeler* Chief Executive Officer and March 31, 1998
- ---------------------- Chairman of the Board
Thomas B. Wheeler
/s/ John J. Pajak* President, Chief Operating Officer March 31, 1998
- ------------------ and Director
John J. Pajak
/s/ Joseph M. Zubretsky* Executive Vice President, March 31, 1998
- ------------------------ Chief Financial Officer &
Joseph M. Zubretsky Chief Accounting Officer
/s/ Roger G. Ackerman Director --
- ---------------------
Roger G. Ackerman
/s/ James R. Birle* Director March 31, 1998
- -------------------
James R. Birle
/s/ Gene Chao* Director March 31, 1998
- --------------
Gene Chao, Ph.D.
/s/ Patricia Diaz Dennis* Director March 31, 1998
- -------------------------
Patricia Diaz Dennis
/s/ Anthony Downs* Director March 31, 1998
- ------------------
Anthony Downs
5
<PAGE>
/s/ James L. Dunlap* Director March 31, 1998
- --------------------
James L. Dunlap
/s/ William B. Ellis* Director March 31, 1998
- ---------------------
William B. Ellis, Ph.D.
/s/ Robert M. Furek* Director March 31, 1998
- --------------------
Robert M. Furek
/s/ Charles K. Gifford* Director March 31, 1998
- -----------------------
Charles K. Gifford
/s/ William N. Griggs* Director March 31, 1998
- ----------------------
William N. Griggs
/s/ George B. Harvey* Director March 31, 1998
- ---------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director March 31, 1998
- ---------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director March 31, 1998
- ---------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director March 31, 1998
- -------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director March 31, 1998
- --------------------
John F. Maypole
/s/ Alfred M. Zeien* Director March 31, 1998
- --------------------
Alfred M. Zeien
/s/ Richard M. Howe On March 31, 1998, as Attorney-in-Fact pursuant to
- ------------------- powers of attorney.
*Richard M. Howe
6
<PAGE>
EXHIBIT LIST
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.
7 Consent of Independent Accountants.
<PAGE>
EXHIBIT
2
Opinion and Consent of Counsel as to the legality of the securities being
registered.
[MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
April 24, 1998
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 06154
Dear Sirs/Madame:
RE: Post-Effective Amendment No. 1 to Registration Statement No. 333-22557 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 1 to Registration Statement No. 333- 22557 under the Securities
Act of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Variable Rider to Group Flexible Premium Adjustable Life Insurance Certificate
(the "Policies"). Massachusetts Mutual Variable Life Separate Account I issues
the Policies.
As Counsel for MassMutual, I provide legal advice to MassMutual in connection
with the operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Policies. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. MassMutual is a valid and subsisting corporation, organized and operated
under the laws of the Commonwealth of Massachusetts and is subject to regulation
by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Life Separate Account I is a separate account
validly established and maintained by MassMutual in accordance with
Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the Policies
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
- ----------------------
James M. Rodolakis
Counsel
8
<PAGE>
EXHIBIT
5
Opinion and consent of John Valencia
opining as to actuarial matters pertaining to the securities being registered.
[MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
April 24, 1998
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 06154
Dear Sirs/Madame:
This opinion is furnished in connection with Post-Effective Amendment Number 1
to Registration Statement 333-22557 for Massachusetts Mutual Life Insurance
Company's Variable Rider to Group Flexible Premium Adjustable Life Insurance
Certificate (the "Policy"). The prospectus included in the Post-Effective
Amendment Number 1 describes the Policies.
I am familiar with the forms of the Policies and the prospectus.
In my opinion, the illustrations 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
Post-Effective Amendment Number 1 to Registration Statement No. 333-22557, and
to the reference of my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ JOHN VALENCIA
- ------------------
John Valencia, FSA, MAAA
Assistant Vice President
9
<PAGE>
EXHIBIT
7
Consent of Independent Accountants
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 1 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Strategic Group Variable Universal Life Universal segment) on Form S-6
(Registration No. 333-22557), of our report, dated February 3, 1998 on our audit
of Massachusetts Mutual Variable Life Separate Account I (Strategic Group
Variable Universal Life segment), and of our report dated February 6, 1998 on
our audits of the statutory financial statement), and of our report dated
February 6, 1998 on our audits of the statutory financial statements of
Massachusetts Mutual Life Insurance Company, which includes explanatory
paragraphs relating to the use of statutory accounting practices, which differ
from generally accepted accounting principles. We also consent to the reference
to our Firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 24, 1998
10
