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Registration No. 33-32361
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 10 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A. Exact name of Trust: Massachusetts Mutual
Variable Life Separate
Account I
B. Name of Depositor: Massachusetts Mutual Life
Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to
------- paragraph (b) of Rule 485.
X on May 1, 1998 pursuant to paragraph (b)
------- of Rule 485.
60 days after filing pursuant to paragraph
------- (a) of Rule 485
on (date) pursuant to paragraph (a) of
------- Rule 485.
(*)STATEMENT PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
registered an indefinite amount of securities being offered. The Rule 24f-2
Notice for the fiscal year ending December 31, 1997 was filed on March 20, 1998.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
1 Cover Page; Basic Questions and Answers
About Us and Us and Our Policy
2 Cover Page; The Separate Account
3 Not Applicable
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 General Provisions of the Policy; Death Benefits Under the
Policies; Free Look Provision; Account Value and Cash
Surrender Value; Policy Loan Privilege; The Separate Account;
The Guaranteed Principal Account; Charges Under the Policy;
Sales and Other Agreements; When We Pay Proceeds; Payment
Options; Our Rights; Your Voting Rights; Basic Questions and
Answers About Us and Our Policy
11 The Separate Account
12 The Separate Account; Sales and Other Agreements
13 The Separate Account; Charges Under the Policy
14 Basic Questions and Answers About Us and Our Policy; The
Separate Account; Sales and Other Agreements
15 Basic Questions and Answers About Us and Our Policy; General
Provisions of the Policy
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
16 The Separate Account; Investment Return
17 Cash Surrender Value; Withdrawal
18 The Separate Account
19 Service Agreement; Records and Reports
20 Not Applicable
21 Policy Loan Privilege
22 Not Applicable
23 Bonding Arrangement
24 Limits on our Right to Challenge the Policy; Suicide;
Misstatement of Age or Sex; Assignment; Beneficiary; Our
Rights; The Separate Account
25 Basic Questions and Answers About Us and Our Policy
26 Not Applicable
27 Basic Questions and Answers About Us and Our Policy
28 Directors and Executive Officers of MassMutual
29 Basic Questions and Answers About Us and Our Policy
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
34 Not Applicable
35 Basic Questions and Answers About Us and Our Policy
36 Not Applicable
37 Not Applicable
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Sales and Other Agreements
44 The Separate Account; Investment return; Charges for Federal
Income Tax; General Provisions of the Policy
45 Not Applicable
46 The Separate Account; Investment Return
47 The Separate Account
48 The Separate Account; Investment Return
49 Not Applicable
50 The Separate Account
3
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
51 Cover Page; Basic Questions and Answers About Us and Our
Policy
52 The Separate Account
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
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MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
Flexible Premium Variable Whole Life Insurance
This Prospectus describes a flexible premium variable whole life insurance
policy being offered by Massachusetts Mutual Life Insurance Company
("MassMutual"). The Policy provides lifetime insurance protection and has
flexibility with respect to premium payments, the amount of which payments is
based upon the table of Selected Face Amounts chosen in the application.
Policyowners have several investment alternatives. An individual Policyholder
may allocate the premium for his or her Policy among a Guaranteed Principal
Account ("GPA") and one or more of eight Separate Account divisions of a
designated segment of MassMutual Variable Life Separate Account I (the "Separate
Account") after certain deductions have been made. The Separate Account
divisions consist of four divisions which invest in four funds of the MML Series
Investment Fund (the "MML Divisions"), three divisions which invest in three
funds of the Oppenheimer Variable Account Funds (the "Oppenheimer Divisions"),
and one division which invests in the Dreyfus Stock Index Fund (the "Dreyfus
Index Division").
The Death Benefit may, and Cash Surrender Value of a Policy most likely will,
vary up or down depending on the investment performance of the Separate Account
divisions. While there is no guaranteed minimum Cash Surrender Value for a
Policy invested in the Separate Account, a Policy's Death Benefit will never be
less than its Selected Face Amount. This amount can increase, decrease or remain
level each year based upon the Selected Face Amount and Death Benefit Option
chosen by the Policyowner, subject to certain rules established by MassMutual.
Furthermore, the Policy will not lapse provided there are sufficient funds
available to pay certain monthly charges.
The existing divisions of the Separate Account have distinct investment
portfolios. The Equity Division of the Separate Account invests in shares of MML
Equity Fund, which invests primarily in common stocks and other equity
securities. The Money Market Division invests in shares of MML Money Market
Fund, which invests primarily in short-term debt instruments. The Managed Bond
Division invests in shares of MML Managed Bond Fund, which invests primarily in
investment grade, publicly traded, fixed-income securities. The Blend Division
invests in shares of MML Blend Fund, which invests in a portfolio that may
include common stocks and other equity-type securities, bonds and other debt
securities with maturities generally exceeding one year, and money market
instruments and other debt securities with maturities generally not exceeding
one year. The High Income Division invests in shares of the Oppenheimer High
Income Fund which invests primarily in high yield fixed-income securities. The
Capital Appreciation Division invests in shares of the Oppenheimer 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 Global Securities Division invests in shares of the Oppenheimer
Global Securities Fund which invests primarily in securities of foreign issuers,
growth type companies, cyclical industries and other securities which are
believed will appreciate in value. The Dreyfus Index Division invests in shares
of the Dreyfus Stock Index Fund which seeks to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"). (Collectively, these eight Funds are referred
to as the "Funds.")
All Policies are serviced through the Home Office. MassMutual's Home Office is
located in Springfield, Massachusetts. The mailing address is Massachusetts
Mutual Life Insurance Company, Springfield, Massachusetts 01111. The telephone
number is (413) 788-8411.
May 1, 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 MML SERIES
INVESTMENT FUND, OPPENHEIMER VARIABLE ACCOUNT FUNDS, AND DREYFUS STOCK INDEX
FUND.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FURTHER REFERENCE.
THE PURPOSE OF THE POLICY WE ARE OFFERING IS TO PROVIDE INSURANCE PROTECTION FOR
A POLICY'S BENEFICIARY. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR TO
OR COMPARABLE TO A MUTUAL FUND'S SYSTEMATIC INVESTMENT PLAN.
REPLACING EXISTING INSURANCE WITH THE POLICY DESCRIBED IN THIS PROSPECTUS
MAY NOT BE TO YOUR ADVANTAGE.
This Prospectus does not constitute an offer of, or solicitation of an offer to
acquire, any interest or participation in the flexible premium variable whole
life insurance policies offered by this Prospectus in any jurisdiction to anyone
to whom it is unlawful to make such an offer or solicitation in such
jurisdiction.
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Table Of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions Of Terms ........................................................... 4
Basic Questions And Answers About Us And Our Policy ............................ 5
What is MassMutual? ......................................................... 5
What variable life insurance policy are we offering? ........................ 5
Availability ................................................................ 5
Underwriting ................................................................ 5
What is the Account Value of the Policy? .................................... 5
What are the Divisions of the Separate Account? ............................. 5
What is the Guaranteed Principal Account? ................................... 6
Is the level of the Death Benefit guaranteed? ............................... 6
Is the Death Benefit subject to income taxes? ............................... 6
Does the Policy have a Cash Surrender Value? ................................ 6
What is a modified endowment contract? ...................................... 6
Can this Policy become a modified endowment contract? ....................... 6
What about Premiums? ........................................................ 6
When are Premiums put into the Guaranteed Principal Account or the
Separate Account? ........................................................ 7
How can the Net Premium and the Account Value of the Policy be allocated
among the Guaranteed Principal Account and the Separate Account divisions? 7
How long will the Policy remain in force? ................................... 7
Are there charges against the Policy? ....................................... 7
What is the loan privilege and how does a loan affect the Policy's Death
Benefit and Cash Surrender Value? .......................................... 7
Are there dividends? ........................................................ 7
Do I have a right to cancel? ................................................ 8
Charges Under The Policy ....................................................... 8
Deductions from Premiums .................................................... 8
Sales Load ................................................................ 8
State Premium Tax Charge ................................................. 9
Account Value Charges ....................................................... 9
Monthly Administrative Charge ............................................ 9
Charge for Cost of Insurance Protection .................................. 10
Face Amount Charge ....................................................... 10
Separate Account Charges .................................................... 10
Charges for Mortality and Expense Risks .................................. 10
Charges for Federal Income Taxes ......................................... 10
The Separate Account ........................................................... 10
Investment of the Separate Account .......................................... 10
Rates of Return ............................................................. 13
General Provisions Of The Policy ............................................... 15
Premiums .................................................................... 15
Planned Premiums ............................................................ 15
The Minimum Initial Premium ................................................. 15
Minimum and Maximum Premium Payments ........................................ 15
Termination ................................................................. 15
Grace Period ................................................................ 15
Death Benefit Under The Policy ................................................. 15
Account Value And Cash Surrender Value ......................................... 16
Account Value ............................................................... 16
Investment Return ........................................................... 16
Cash Surrender Value ........................................................ 17
Withdrawals ................................................................. 17
</TABLE>
2
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Policy Loan Privilege ..................................................... 17
Source of Loan ......................................................... 17
If Loans Exceed the Policy Account Value ............................... 17
Interest ............................................................... 17
Repayment .............................................................. 18
Interest on Loaned Value ............................................... 18
Effect of Loan ......................................................... 18
Free Look Provisions ...................................................... 18
Exchange Privilege ........................................................ 18
Your Voting Rights ........................................................ 18
Our Rights ................................................................ 18
Directors And Executive Vice Presidents Of MassMutual ..................... 19
The Guaranteed Principal Account .......................................... 21
Federal Income Tax Considerations ......................................... 21
MassMutual - Tax Status ................................................ 21
Policy Proceeds, Premiums and Loans .................................... 21
Modified Endowment Contracts ........................................... 22
Diversification Standards .............................................. 23
Additional Provisions Of The Policy ....................................... 23
Reinstatement Option ................................................... 23
Payment Options ........................................................ 24
Fixed Amount Payment Option ............................................ 24
Fixed Time Payment Option .............................................. 24
Interest Payment Option ................................................ 24
Lifetime Payment Option ................................................ 24
Joint Lifetime Payment Option .......................................... 24
Joint Lifetime Payment Option with Reduced Payments .................... 24
Withdrawal Rights under Payment Options ................................ 24
Beneficiary ............................................................ 24
Changing the Owner or Beneficiary ...................................... 24
Right to Substitute Insured ............................................ 24
Assignment ............................................................. 25
Dividends .............................................................. 25
Limits on Our Right to Challenge the Policy ............................ 25
Misstatement of Age or Sex ............................................. 25
Suicide ................................................................ 25
When We Pay Proceeds ................................................... 25
Records And Reports ....................................................... 25
Sales And Other Agreements ................................................ 25
Commissions Schedule ................................................... 26
Bonding Arrangement .................................................... 26
Legal Proceedings ......................................................... 26
Experts ................................................................... 26
Financial Statements ...................................................... 26
Appendix A ................................................................ A-1
Appendix B ................................................................ B-1
</TABLE>
3
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Definition Of Terms
Account Value: The sum of the Variable Account Value and the Fixed Account Value
of the Policy.
Beneficiary: The person or persons specified by the Policyowner to receive
insurance proceeds after the Insured dies.
Case: A group of Policies sold to individuals with a common employment or other
non-insurance motivated relationship. All Policies in a Case are aggregated for
purposes of determining the Policy Date or Issue Date, underwriting requirements
and sales load percentages.
Cash Surrender Value: The amount payable to a Policyowner upon surrender of the
Policy. It is equal to the Account Value less any Policy Debt.
Death Benefit: The amount payable to the named Beneficiary when the Insured
dies. A choice of Death Benefits is available under the Policy (referred to as
"Option 1" and "Option 2"). The Death Benefit equals the greater of the Selected
Face Amount (plus the Account Value, under Option 2), or the Minimum Face Amount
in effect on the date of death, less Policy Debt, plus unearned or minus unpaid
monthly deductions.
Fixed Account Values: Account Values which are allocated to the GPA.
Free Look Period: The period during which a Policyowner may return the Policy.
It must be within 10 days of receipt of the Policy, or within 10 days after the
Policyowner receives the notice of a right to withdraw, or within 45 days after
the date of Part I of the application, whichever is latest (unless a different
period is mandated under applicable state law). Until the expiration of the Free
Look Period, amounts will be held in the MML Money Market Division of the
Separate Account.
Home Office: The Home Office of MassMutual is located in Springfield,
Massachusetts.
Initial Case Premium Paid: The total dollar amount paid for all Policies in a
Case before the Case is installed on the administrative system.
Insured: Person whose life this Policy insures.
Issue Date: The date shown on the Schedule Page. It is the start date of the
suicide and contestability periods. It is also the date from which the Policy is
in force if the first premium has been paid.
Minimum Face Amount: An amount equal to Account Value times the Minimum Face
Amount percentage. This percentage depends upon the Insured's age, sex and
smoking classification.
Monthly Calculation Date: The date on which the monthly deductions under the
Policy are deducted from the Account Value. The first Monthly Calculation Date
will be the Policy Date, and subsequent monthly deductions will be on the same
date of each succeeding calendar month.
Net Premium: Premium paid less sales expense and premium tax charges.
Policy: The flexible premium variable whole life insurance policy with table of
Selected Face Amounts offered by MassMutual that is described in this
Prospectus.
Policy Anniversary: The anniversary of the Policy Date.
Policy Date: The date shown in the Policy which is the starting point for
determining Policy Anniversary Dates, Policy Years and Monthly Calculation
Dates.
Policy Debt: The amount of obligation from a Policyowner to MassMutual from
outstanding loans to the Policyowner under the Policy. This amount includes any
loan interest accrued to date.
Policy Year: The twelve month period commencing with the Policy Date, and each
twelve month period thereafter.
Policyowner: The firm, trust, entity or individual who owns the Policy.
Premiums: The total dollar amount paid for the Policy.
Premium Tax: The amount of premium tax, if any, charged by a state or other
governmental authority.
Register Date: The date the Company allocates the initial premium less certain
deductions to the Separate Account. It is the Valuation Date which is on, or
next follows the later of the date on which we receive a completed Part I of the
application for this Policy at our Home Office or the date we receive the first
premium payment for the Policy at our Home Office.
Selected Face Amount: The amount of insurance coverage chosen by the
Policyowner.
Separate Account: The segregated asset account called "Massachusetts Mutual
Variable Life Separate Account I" established by MassMutual under the laws of
Massachusetts and registered as a unit investment trust under the Investment
Company Act of 1940, as amended. The Separate Account will be used to receive
and invest premiums for this Policy and for other variable life insurance
policies issued by MassMutual, and for each such policy there will be a
designated segment of the Separate Account.
Surrender: A surrender by the Policyowner of all rights under the Policy in
exchange for the entire Cash Surrender Value under the Policy.
Valuation Date: Any day on which the New York Stock Exchange is open for
trading.
Valuation Period: The period, consisting of one or more days, from one Valuation
Time to the next succeeding Valuation Time.
Valuation Time: The time the New York Stock Exchange (or its successor) closes
on a Valuation Date (currently 4:00 p.m. New York time). All actions which are
to be performed on a Valuation Date will be performed as of the Valuation Time.
Variable Account Values: Account Values which are allocated to any of the
divisions of the Separate Account.
Withdrawal: A withdrawal of Account Value by the Policyowner.
4
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Basic Questions And Answers About Us And Our Policy
What is MassMutual? MassMutual was organized under the laws of Massachusetts in
1851. We are currently licensed to transact life, accident, and health insurance
business in all fifty states, the District of Columbia, Puerto Rico and certain
provinces of Canada. MassMutual is a Massachusetts life insurance company that
has its home office in Springfield, Massachusetts. As of December 31, 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 Flexible Premium Variable Whole Life Insurance Policy With Table Of
Selected Face Amounts (the "Policy"). We issue this Policy to provide for a
Death Benefit, Cash Surrender Value, loan privileges and flexible premiums. It
is called "flexible" because the Policyowner may select the timing and amount of
premium payments. It is called "variable" because, unlike the fixed benefits of
a traditional whole life policy, the Death Benefits may, and Cash Surrender
Values most likely will, vary to the extent that the Account Value under the
Policy is allocated to the division(s) of the Separate Account. Certain
provisions of the Policy as described herein may be somewhat different in any
particular state because of specific state requirements.
The Policy is a legal contract between the Policyowner and MassMutual. The
entire contract consists of the application to the Policy (the "Application")
and the Policy and any amendments or riders added thereto.
Availability. The Policy is available only to Cases which purchased it prior to
the date it was replaced by Strategic Variable Life. "Case" means that the
Insureds share a common employment or other institutional relationship and that
all Policies in the Case are aggregated for purposes of determining Issue Dates,
Policy Dates, underwriting requirements and sales load percentages. If the
individual Insureds are the owners, they may exercise all rights and privileges
under the Policy through their Employer or other sponsoring entity acting as
Case administrator. After termination of the employment or other relationship,
an individual who owns the Policy may exercise such rights and privileges
directly with MassMutual.
The minimum Selected Face Amount is $25,000 per life for ages 20-85. The minimum
initial Case premium is $250,000 of first year annualized premium. The Insured
may not be younger than age 20 nor older than age 85 as of the Policy Date for
Policies issued on a regular underwriting basis. For Policies underwritten on a
guaranteed issue underwriting basis or on a simplified issue underwriting basis,
the Insured may not be younger than age 20 nor older than age 65 as of the
Policy Date. Before issuing any Policy we will require satisfactory evidence of
insurability, except under a guaranteed issue underwriting approach if the
Insured is under age 65 as of the Policy Date.
Underwriting. The Policies within a Case are underwritten on the same basis,
i.e. a regular underwriting, simplified issue underwriting, or guaranteed issue
underwriting approach is used for all Policies in a Case. Availability of a
regular underwriting approach is subject to state approval. Mortality charges
vary depending on the type of underwriting used.
What is the Account Value of the Policy? The Account Value is determined by the
amount and frequency of premium payments, the investment experience of the
divisions chosen by the Policyowner (the Variable Account Value), the interest
earned on Account Value allocated to the GPA (the Fixed Account Value), and any
Withdrawals or charges imposed in connection with the Policy. The Policyowner
bears the investment risk of any depreciation in value of the underlying assets
of the Separate Account divisions but also may benefit from any appreciation in
value.
What are the Divisions of the Separate Account? The Separate Account has eight
divisions - the Equity Division, the Money Market Division, the Managed Bond
Division, the Blend Division, the High Income Division, the Capital Appreciation
Division, the Global Securities Division, and the Dreyfus Index Division. Each
Separate Account division invests only in shares of a single investment company
or a single series of an investment company. The divisions are intended to
provide money to pay benefits under the policy but do not guarantee a minimum
interest rate or guarantee against asset depreciation.
The Equity Division invests in shares of MML Equity Fund. The Money Market
Division invests in shares of MML Money Market Fund. The Managed Bond Division
invests in shares of MML Managed Bond Fund. The Blend Division invests in shares
of MML Blend Fund. The High Income, Capital Appreciation and Global Securities
Divisions invest in shares of the Oppenheimer High Income Fund, Oppenheimer
Aggressive Growth Fund (Prior to May 1, 1998, this Fund was named Oppenheimer
Capital Appreciation Fund.) and Oppenheimer Global Securities Fund,
respectively. The Dreyfus Index Division invests in shares of Dreyfus Stock
Index Fund.
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend Fund
(collectively the "MML Funds") are separate series of shares of MML Series
Investment Fund (the "MML Trust"), a no-load, open-end, management investment
company. MassMutual acts as investment manager to each of the MML Funds.
Effective January 1, 1997, David L. Babson & Company Inc. ("Babson") serves as
the investment sub-adviser to MML Equity Fund and the Equity Sector of the MML
Blend Fund. Both MassMutual and Babson are registered under the Investment
Advisers Act of 1940.
OppenheimerFunds, Inc. ("OFI") supervises the investment operations of the
Oppenheimer Variable Account Funds (the "Oppenheimer Trust"), defines the
composition of each respective portfolio, and furnishes advice and
recommendations with respect to the investments,
5
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investment policies and purchase and sale of securities, pursuant to an
investment advisory agreement with each Fund. The Oppenheimer High Income Fund,
Oppenheimer Aggressive Growth Fund (Prior to May 1, 1998, this Fund was named
Oppenheimer Capital Appreciation Fund.) and Oppenheimer Global Securities Fund
(collectively the "Oppenheimer Funds") are part of the Oppenheimer Trust, an
open-end diversified management investment company, which is available to act as
the investment vehicle for separate accounts for variable insurance policies
offered by insurance companies. OFI is registered as an investment adviser under
the Investment Advisers Act of 1940.
The Dreyfus Stock Index Fund (the "Index Fund"), an open-end, non-diversified,
management investment company, is managed by The Dreyfus Corporation
("Dreyfus"), a wholly-owned subsidiary of Mellon Bank, N.A. ("Mellon"). Dreyfus
has engaged Mellon Equity Associates, ("Mellon Equity"), an indirect
wholly-owned subsidiary of Mellon, to serve as the manager of the Index Fund.
Both Dreyfus and Mellon Equity are registered investment advisers under the
Investment Advisers Act of 1940.
What is the Guaranteed Principal Account ("GPA")? As an alternative to the
Separate Account, the Policyowner may allocate net premium or transfer all or
part of the Account Value to the GPA. Such amounts become part of MassMutual's
general account assets. The Policyowner is not entitled to share in the
investment experience of those assets. Rather, MassMutual guarantees a rate of
return on the allocated amount equal to (a) 4%, or (b) the greater of (1) 4% and
(2) the rate determined by the Treasury Bill Index. The interest rate credited
to the GPA account value will be affected by the option selected. This rate must
be selected at time of issue. Policies issued prior to April, 1994, will be
offered a one-time opportunity to change the guaranteed rate of return from
option (b) to option (a). Although MassMutual is not obligated to credit
interest at a rate higher than this minimum, it may declare a higher rate
applicable for such periods as it deems appropriate. For details see The
Guaranteed Principal Account.
Is the level of the Death Benefit guaranteed? There are two Death Benefit
options. (Policies issued prior to May 1, 1991 will be amended upon request to
add the choice of Death Benefit Option 2.) So long as the Policy remains in
force, the Death Benefit you have selected will be available. The Death Benefit
equals the greater of the Policy's Selected Face Amount for the Policy Year of
death (plus the Account Value on the date of death if Death Benefit Option 2 is
elected) or the Minimum Face Amount in effect on the date of death of the
Insured. Death Benefit proceeds under either Option will be reduced by any
outstanding Policy Debt, plus or minus unearned or unpaid monthly
deductions.
Is the Death Benefit subject to income taxes? A Death Benefit paid under our
Policies is usually fully excludable from the gross income of the Beneficiary
for federal income tax purposes.
For details see Federal Income Tax Considerations Policy Proceeds, Premiums and
Loans.
Does the Policy have a Cash Surrender Value? The Policyowner may surrender the
Policy at any time and receive its Account Value less any Policy Debt. There is
no surrender charge. Withdrawals are allowed subject to certain restrictions and
are subject to a withdrawal charge of 2.0% of the Account Value not to exceed
$25.00. For details see Withdrawals. The Cash Surrender Value of a Policy
fluctuates with the investment performance of the Separate Account divisions in
which the Policy has Account Value, and with the interest rate on the amount
held in the GPA. It may increase or decrease daily.
For federal income tax purposes, the Policyowner usually is not taxed on
increases in the Cash Surrender Value until the Policy is surrendered. However,
in connection with certain Withdrawals of Account Value and loans on the Policy,
the Policyowner may be taxed on all or a part of the amount distributed.
For details see Cash Surrender Value and Federal Income Tax Considerations -
Policy Proceeds, Premiums and Loans.
What is a modified endowment contract? A modified endowment contract (as defined
by the Internal Revenue Code) is a life insurance policy under which the
premiums paid during the first seven contract years exceed the cumulative
premiums payable under a policy providing for guaranteed benefits upon the
payment of seven level annual premiums. Certain changes to the policy can
subject it to retesting for a new seven-year period. During the insured's
lifetime, distributions from a modified endowment contract, including collateral
assignments, loans and withdrawals, are taxable to the extent of any income in
the contract and may also incur a penalty tax if the policy owner is not 59 1/2.
Can this Policy become a modified endowment contract? Since this Policy permits
flexible premium payments, it may become a modified endowment contract. The
Company has the systems capacity to test a Policy at issue to determine whether
it will be classified as a modified endowment contract. This at-issue test
examines the Policy for the first seven contract years, based on the Policy
application and the initial premium requested, and based on the assumption that
there were no increases in premium during the period. The Company has further
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? There are two concepts which are important to the
discussion of premiums for this Policy: the minimum initial premium; and the
planned premium. These terms are used throughout this Prospectus.
6
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A minimum initial premium is payable either at the time you submit your
Application or at some time prior to the delivery of the Policy. The planned
premium is elected on the Application and becomes the basis for the Policy's
premium billing. The amount and timing of planned premiums originally selected
in the Application may be changed at any time upon written request.
The minimum Case premium is $250,000 of first year annualized premium for all
Policies in a Case. The Initial Case Premium Paid is the amount of premium for
all Policies in a Case on deposit with MassMutual at the time the Policies are
installed on the administrative system. The Initial Case Premium Paid determines
sales load percentages for all Policies in that Case.
For details see General Provisions Of The Policy - Premiums.
When are Premiums put into the Guaranteed Principal Account or the Separate
Account? The initial Net Premium (i.e., premium paid less the deductions
described in Are there charges against the Policy?) will be allocated to the MML
Money Market Division, which invests in the MML Money Market Fund. At the end of
the Free Look Period, the Account Value will be allocated to the GPA and/or the
divisions of the designated segment of the Separate Account according to the
Policyowner's instructions in the application and subject to MassMutual's
allocation rules.
How can the Net Premium and the Account Value of the Policy be allocated among
the Guaranteed Principal Account and the Separate Account divisions? When you
apply for a Policy you choose the percentages of your premiums to be allocated
to the divisions of the Separate Account and the GPA. You may choose any whole
percentages as long as the total is 100%. The allocation of future net premiums
may be changed at any time without charge.
The Account Value of the Policy may be transferred between the GPA or divisions
of the Separate Account by written request. The Account Value may be transferred
by dollar amount or by whole-number percentage, subject to restrictions.
How long will the Policy remain in force? The Policy does not automatically
terminate for failure to pay planned premiums. Payment of these amounts does not
guarantee the Policy will remain in force. The Policy terminates only when the
Account Value less any Policy Debt is insufficient to pay the monthly deduction,
and a grace period expires without sufficient payment.
Are there charges against the Policy? Certain charges are made against the
Policy. Before allocation to the Account Value, a percentage of each premium
paid is deducted for expenses related to the sale and distribution of the
Policies. These charges are called sales loads and vary depending on the total
Initial Case Premium Paid for all Policies in the Case at issue. First year
sales loads vary according to the cumulative amount of premiums paid under the
Policy in that year. Thereafter, sales loads are a level percentage of each
Premium paid. A deduction of 2.0%, or the applicable state rate, if greater, is
also made for state premium taxes. Each premium, net of these charges, is
allocated to the GPA or the divisions of the Separate Account and becomes a part
of the Account Value.
For details see Deductions From Premium.
Certain monthly charges are deducted directly from the Policy's Account Value on
each Monthly Calculation Date. These monthly deductions are equal to the sum of
a mortality charge, an administrative charge, and a face amount charge. The face
amount charge is only applicable for Policies issued under a regular
underwriting approach.
Some deductions are made on a daily basis against the assets of the Separate
Account divisions. A daily charge calculated at an annual rate of .40% of the
value of the assets of each division is charged for mortality and expense risks.
Similarly, tax assessments are calculated daily. Currently, we are not making
any charges for income taxes, but we may make charges in the future against the
Separate Account divisions for federal income taxes attributable to them.
Withdrawals of Account Value are permitted subject to certain restrictions. A
charge equal to the lesser of $25 or 2.0% of the amount withdrawn is imposed for
each Withdrawal.
For details see Charges Under The Policy and Federal Income Tax Considerations.
What is the loan privilege and how does a loan affect the Policy's Death Benefit
and Cash Surrender Value? For Policies issued prior to May 1, 1991, while the
Policy is in force, a loan may be made on the Policy, provided that total Policy
Debt including the new loan does not exceed 90% of the Policy's Account Value.
For Policies issued on or after May 1, 1991, while the Policy is in force, a
loan may be made on the Policy, in a maximum amount equal to the Account Value
on the date the loan is to be made reduced by: (i) any outstanding Policy Debt;
and (ii) interest on the loan being made and on any outstanding Policy Debt to
the next Policy Anniversary Date; and (iii) an amount equal to the most recent
monthly charge for the Policy multiplied by the number of Monthly Calculation
Dates from the date the loan is made, up to and including the next Policy
Anniversary Date.
Are there dividends? The Policy is participating, therefore, it may share in any
dividends paid by MassMutual. Dividends are based on the Policy's contribution
to any divisible surplus of MassMutual. Any dividends will be payable on the
Policy Anniversary Date. MassMutual does not expect that any dividends will be
paid under the Policies. For details see Dividends.
7
<PAGE>
Do I have a right to cancel? Under the Free Look Provision, you, the
Policyowner, have a limited right to return the Policy and receive a refund.
This right expires on the latest of the following:
. Ten days after you receive the Policy; or
. Ten days after we mail you a Notice of Withdrawal Right; or
. 45 days after Part 1 of the Policy Application was signed.
The Policy may be returned to our Home Office, to any of our agency offices, or
to the agent who sold you the Policy. For details see Free Look Provision.
Charges Under The Policy
Certain charges are deducted to compensate for providing the insurance benefits
under the Policy, for administering the Policy, for assuming certain risks, and
for incurring certain expenses in distributing the Policy.
DEDUCTIONS FROM PREMIUMS
Prior to the allocation of the premium payment to the Account Value, a deduction
as a percentage of premium is made for the sales load and premium taxes. The
sales load percentage varies depending on the total Initial Case Premium Paid
for all Policies in the Case.
Sales Load. The sales load component of the premium deduction is based on the
total Initial Case Premium Paid for all Policies in a Case; the sales load will
not change. Please note that premiums are tracked on a cumulative basis for each
policy, and that the year 1 sales load will be higher on premium payments made
below the specified policy minimum planned premium.
8
<PAGE>
For Policies issued on or after May 1, 1993:
Initial Case Premium
Paid
----------------------
Below $1,000,000
$1,000,000 & Up
---------- ----------
Year 1:
Up to the Minimum
Planned Premium 22.0% 4.0%
Above the Minimum
Planned Premium 6.5% 3.0%
Year 2+
Up to the Minimum
Planned Premium 6.5% 3.0%
Above the Minimum
Planned Premium 6.5% 3.0%
For Policies issued on or after May 1, 1992:
Expected Aggregate
Annual Planned Case
Premium
----------------------
Below $1,000,000
$1,000,000 & Up
---------- ----------
Year 1:
Up to the Minimum
Planned Premium 22.0% 4.0%
Above the Minimum
Planned Premium 6.5% 3.0%
Year 2+
Up to the Minimum
Planned Premium 6.5% 3.0%
Above the Minimum
Planned Premium 6.5% 3.0%
For Policies issued from May 1, 1991 to May 1, 1992:
Expected Aggregate
Annual Planned Case
Premium
----------------------
Below $5,000,000
$5,000,000 & Up
---------- ----------
Year 1:
Up to the Minimum
Planned Premium 22.0% 4.0%
Above the Minimum
Planned Premium 6.5% 3.0%
Year 2+
Up to the Minimum
Planned Premium 6.5% 3.0%
Above the Minimum
Planned Premium 6.5% 3.0%
For Policies issued before May 1, 1991:
Expected Aggregate
Annual Planned Case
Premium
----------------------
Below $5,000,000
$5,000,000 & Up
---------- ----------
Year 1:
Up to the Minimum
Planned Premium 21.0% 3.0%
Above the Minimum
Planned Premium 5.5% 2.0%
Year 2+
Up to the Minimum
Planned Premium 5.5% 2.0%
Above the Minimum
Planned Premium 5.5% 2.0%
The amount of the sales load in a Policy Year is not necessarily related to our
actual sales expenses for that particular year. To the extent that sales
expenses are not covered by the sales load, they will be recovered from
MassMutual surplus, including any amounts derived from the mortality and expense
risk charge or the cost of insurance charge. For a discussion of the commissions
paid under the Policy, see Sales And Other Agreements - Commission Schedule.
State Premium Tax Charge. We deduct 2.0%, or the applicable state rate, if
greater (pending state approval), of each premium to cover premium taxes
assessed against MassMutual. This charge may increase or decrease to reflect
either any change in the tax or change of residence. The Policyowner should
notify MassMutual of any change of residence. Any change in this charge would be
effective immediately. MassMutual does not expect to make a profit from this
charge.
During 1997, the aggregate amount of such deductions from premiums was $825,860
for sales loads and $408,409 for state premium tax charges.
ACCOUNT VALUE CHARGES
On each Monthly Calculation Date, a monthly administrative charge, a cost of
insurance charge (also referred to as the Mortality Charge in the Policy) and a
face amount charge (if applicable) are deducted from the Variable Account Value
and Fixed Account Value in proportion to the non-loaned Account Value in the
Separate Account and the GPA.
Monthly Administrative Charge. A monthly charge is deducted to compensate
MassMutual for costs incurred in providing certain administrative services
including premium collection, recordkeeping, processing claims and communicating
with Policyowners. Currently, the charge is $5.25 per month, or $63 annually,
for each Policy. While this charge may increase or decrease, the maximum monthly
administrative charge is determined by the ratio of the
9
<PAGE>
Consumer Price Index for September of the year preceding the date of the charge
to the Consumer Price Index for September, 1985, multiplied by $5. Such charges
will not exceed the actual cost for such services. In no event will the charge
exceed $8 per month. During 1997, the aggregate amount of such charges was
$94,151.
Charge for Cost of Insurance Protection. A charge for the cost of insurance
protection is deducted on each Monthly Calculation Date and is based on the age
and sex of the Insured, the Policy Year in which the deduction is made, the
smoker and rating class of the Policy and the type of underwriting used for the
Case. The charge varies monthly because it is determined by multiplying the
applicable cost of insurance rates by the amount at risk each Policy month. The
maximum monthly cost of insurance charge for each $1,000 of insurance for which
a charge applies is shown in the Table of Maximum Monthly Mortality Charges in
the Policy. MassMutual may charge less than these maximum charges. Any change in
these charges will apply to all Policies in the same Case. During 1997, the
aggregate amount of deductions for the charge for cost of insurance protection
was $2,407,361.
Face Amount Charge. A monthly face amount charge is deducted from Policies that
were issued under a regular underwriting approach. The charge is based on the
initial Selected Face Amount of the Policy, the issue age of the Insured, and
the Policy Year in which the deduction is made. This charge is fixed for a set
number of Policy Years and is shown in the Other Information section of the
Schedule Page. During 1997, the aggregate amount of deductions for the monthly
face amount charge was $10,039.
SEPARATE ACCOUNT CHARGES
Charges for Mortality and Expense Risks. We charge the Separate Account
divisions for the mortality and expense risks we assume. We deduct a daily
charge at an effective annual rate of 0.40% of the value of each division's
assets that come from the Policy. The aggregate amount of such charges, which
are paid quarterly, against the Separate Account divisions in 1997 was
$294,052.
The mortality risk we assume is that the group of lives insured under our
Policies may, on average, live for shorter periods of time than we estimated.
The expense risk we assume is that our costs of issuing and administering
Policies may be more than we estimated.
If all the money we collect from this charge is not needed to cover Death
Benefits and expenses, it will be our gain and will be used for any proper
purpose, including payment of sales commissions. Conversely, even if the money
we collect is insufficient, we will provide for all Death Benefits and expenses.
Charges for Federal Income Taxes. We do not currently make any charge against
the Separate Account divisions for federal income taxes attributable to them.
However, we may make such a charge eventually in order to provide for the future
federal income tax liability of the Separate Account divisions. For more
information on charges for federal income taxes, see FEDERAL INCOME TAX
CONSIDERATIONS - MassMutual - Tax Status.
The Separate Account
The Separate Account was established on July 13, 1988 as a separate investment
account of MassMutual by MassMutual's Board of Directors in accordance with the
provisions of Section 132G of Chapter 175 of the Massachusetts General Laws. The
Separate Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. Registration does not involve supervision
of the management or investment practices or policies of the Separate Account or
of MassMutual. Under Massachusetts law, however, both MassMutual and the
Separate Account are subject to regulation by the Division of Insurance of the
Commonwealth of Massachusetts. Designated segments of the Separate Account will
be used to receive and invest premiums for other variable life insurance
policies issued by MassMutual.
Although the assets of the Separate Account are assets of MassMutual, that
portion of the Separate Account assets equal to the reserves and other
liabilities of the Separate Account attributable to the Policies may not be used
to satisfy any obligations that may arise out of any other business we may
conduct. They may, however, become subject to liabilities arising from other
variable life insurance policies which are funded by the Separate Account. In
addition, we may from time to time at our discretion transfer to our general
account those assets which exceed the reserves and other liabilities of the
Separate Account. Such transfers will not adversely affect the Separate Account.
Income, realized gains or losses and unrealized gains or losses from each
division of the Separate Account are credited to or charged against that
division without regard to any of our other income, gains or losses.
MassMutual may accumulate in the Separate Account the charge for expense and
mortality risks, monthly charges assessed against the Policy and investment
results applicable to those assets that are in excess of net assets supporting
the Policies.
Investment of the Separate Account. The designated segment of the Separate
Account has eight divisions attributable to the Policy. The particular divisions
invest in shares of MML Trust, Oppenheimer Trust or Index Fund. The divisions of
the Separate Account are:
. The MML Equity Division - Amounts credited to this division are invested in
shares of MML Equity Fund, or its successor.
. The MML Money Market Division - Amounts credited to this division are
invested in shares of MML Money Market Fund, or its successor.
10
<PAGE>
. The MML Managed Bond Division - Amounts credited to this division are
invested in shares of MML Managed Bond Fund, or its successor.
. The MML Blend Division - Amounts credited to this division are invested in
shares of MML Blend Fund, or its successor.
. The Oppenheimer High Income Division - Amounts credited to this division are
invested in shares of Oppenheimer High Income Fund, or its successor.
. The Oppenheimer Capital Appreciation Division - Amounts credited to this
division are invested in shares of Oppenheimer 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 Dreyfus Index Division - Amounts credited to this division are invested
in shares of the Index Fund, or its successor.
The shares of the underlying Fund purchased by each division of the Separate
Account will be held by MassMutual as custodian of the Separate Account.
The MML Trust is a no-load, open-end, management investment company. The
Oppenheimer Trust is a no-load open-end, diversified management investment
company, and the Index Fund is a no-load open-end, non-diversified, management
investment company. The MML Trust, Oppenheimer Trust and Index Fund are
registered under the Investment Company Act of 1940, as amended. The MML Trust
includes the four MML Funds described above, each of which has its own
investment objectives and policies. The Oppenheimer Trust includes the three
Oppenheimer Funds, each of which also has its own investment objectives and
policies. The Index Fund also has its own investment objectives and policies.
MassMutual established the MML Trust for the purpose of providing vehicles for
the investment of assets held in various separate investment accounts, including
the Separate Account, established by MassMutual or by life insurance companies
which are subsidiaries of MassMutual. The Oppenheimer Trust and Index Fund were
established for the purpose of providing investment vehicles for investment only
by variable life insurance contracts and variable annuities contracts. Shares of
the MML Funds are not offered to the general public, but solely to separate
investment accounts established by MassMutual and life insurance company
subsidiaries of MassMutual. Shares of the Oppenheimer Funds are not offered to
the general public, but soley to insurance company separate accounts affiliated
and unaffiliiated with MassMutual, which fund variable annuity and variable life
insurance contracts.
The primary investment objective of MML Equity Fund is to achieve a superior
total rate of return over an extended period of time from both capital
appreciation and current income. A secondary investment objective is the
preservation of capital when business and economic conditions indicate that
investing for defensive purposes is appropriate. The assets of this Fund are
normally expected to be invested primarily in common stocks and other
equity-type securities.
The investment objectives of MML Money Market Fund are to achieve high current
income, the preservation of capital, and liquidity. These objectives are of
equal importance. The assets of this Fund will be invested in short-term debt
instruments, including but not limited to commercial paper, certificates of
deposit, bankers' acceptances, and obligations of the United States government,
its agencies and instrumentalities.
The investment objective of MML Managed Bond Fund is to achieve as high a total
rate of return on an annual basis as is considered consistent with the
preservation of capital. The assets of this Fund will be invested primarily in
investment grade, publicly traded fixed income securities of such maturities as
MassMutual deems appropriate from time to time in light of market conditions and
prospects.
The investment objective of MML Blend Fund is to achieve as high a level of
total rate of return over an extended period of time as is considered consistent
with prudent investment risk and the preservation of capital. This Fund may
invest in a portfolio that may include common stocks and other equity-type
securities, bonds and other debt securities with maturities generally exceeding
one year, and money market instruments and other debt securities with maturities
generally not exceeding one year.
The investment objective of the Oppenheimer High Income Fund is to earn a high
level of current income by investing primarily in a diversified portfolio of
high yield, fixed-income securities, including long-term debt obligations and
preferred stock issues believed by OFI, in its capacity as investment manager of
the Fund, not to involve undue risk. This Fund's investment policy is to assume
certain risks (described more fully in the attached prospectus for the
Oppenheimer Trust) in seeking high yield, which is ordinarily associated with
high risk securities, commonly known as "junk bonds," in the lower rating
categories of the established securities rating services, and unrated services.
The investment objective of the Oppenheimer 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
11
<PAGE>
possibilities. The type of securities in which this Fund invests will be
primarily common stocks, such as convertible preferred stock, convertible bonds
and American Depository Receipts. Current income is not an investment objective
of the Oppenheimer Global Securities Fund.
The investment objective of the Index Fund is to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. ("Standard & Poor's 500" and "S&P 500(R)" are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use. The Fund is not
sponsored, endorsed, sold or promoted by Standard & Poor's or The McGraw-Hill
Companies., Inc.)
The Separate Account purchases and redeems shares of the Funds at their net
asset value which is determined at the time of the receipt of the purchase order
or redemption request without the imposition of any sales or redemption
charge.
Citibank, with its home office located in New York, NY, acts as custodian for
each of the MML Funds. The Bank of New York, with its home office located in New
York, NY, acts as custodian for each of the Oppenheimer Funds. Boston Safe
Deposit and Trust Company (the "Custodian"), an indirect subsidiary of Mellon
Bank Corporation, is located at One Boston Place, Boston, Massachusetts 02108,
and serves as the custodian of the Index Fund. Under its Custody Agreement with
the Index Fund, the Custodian holds the Index Fund's portfolio securities and
keeps all necessary accounts and records. The Custodian's fees for its services
to the Fund are paid by Mellon Equity.
MassMutual serves as investment manager of each of the MML Funds pursuant to
Investment Management Agreements, each of which provides for the MML Fund to pay
MassMutual a quarterly fee at the annual rate of .50% of the first $100,000,000
of the MML Fund's average daily net asset value, .45% of the next $200,000,000,
.40% of the next $200,000,000 and .35% of any excess over $500,000,000.
MassMutual has entered into sub-advisory agreements with Babson whereby Babson
manages the investment and reinvestment of the assets of the MML Equity Fund and
the Equity Sector of the MML Blend Fund. During 1997, Babson earned investment
management fees from MassMutual of $1,905,294 for sub-advisory services to the
MML Equity Fund and $2,835,066 for providing sub-advisory services to the Equity
Sector of the MML Blend Fund.
The monthly management fee payable to OFI in its capacity as investment adviser
to the Oppenheimer Funds is computed separately on the net assets of each Fund
as of the close of business each day. The management fee rates are as follows:
(i) for Aggressive Growth Fund (Prior to May 1, 1998, this Fund was named
Oppenheimer Capital Appreciation Fund.) and Global Securities Fund: 0.75% of the
first $200 million of net assets, 0.72% of the next $200 million, 0.69% of the
next $200 million, 0.66% of the next $200 million, and 0.60% of net assets over
$800 million; and (ii) for High Income Fund: 0.75% of the first $200 million of
net assets, 0.72% of the next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, 0.60% of the next $200 million, and 0.50% of net
assets over $1 billion.
The Index Fund has agreed to pay Dreyfus a monthly fee at the annual rate of
.245 of 1% of the value of the Fund's average daily net assets. All fees and
expenses are accrued daily and deducted before declaration of dividends to
shareholders.
During 1997, MassMutual earned investment management fees of $8,082,863 from MML
Equity Fund, $703,344 from MML Money Market Fund, $913,026 from MML Managed Bond
Fund and $8,933,947 from MML Blend Fund. MassMutual has agreed to bear the
expenses of each of the MML Funds (other than the management fee, interest,
taxes, brokerage commissions and extraordinary expenses) in excess of .11% of
average daily net asset value through April 30, 1999.
Additional and more detailed information concerning the MML Funds, the
Oppenheimer Funds and the Index Fund, including information about the other
expenses of such Funds, may be found in the accompanying Prospectuses for the
MML Trust, the Oppenheimer Trust and the Index Fund.
MassMutual is also the investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors, closed-end investment companies; certain
wholly-owned subsidiaries of MassMutual; and various employee benefit plans.
MassMutual is the investment sub-adviser to Oppenheimer Investment Grade Bond
Fund and Oppenheimer Value Stock Fund, open end management investment companies.
MassMutual also serves as the collateral co-manager for MassMutual Carlson CBO,
N.V.
OFI has operated as an investment adviser since April 30, 1959. It and its
affiliates currently advise U.S. investment companies with assets aggregating
over $75 billion as of December 31, 1997, and with 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.
Mellon Equity was organized in 1987. Pursuant to an Index Management Agreement
with Dreyfus, Mellon Equity manages the investment of the Index Fund's assets.
During 1997, management fees earned by Mellon Equity Associates was $13,959.
The assets of certain variable annuity separate accounts for which MassMutual or
an affiliate is the depositor are invested in shares of the MML Funds. Because
these separate accounts are invested in the same underlying MML Funds it is
possible that material conflicts could arise between owners of the Policies and
owners of the variable annuity contracts. Possible conflicts could arise if: (i)
state insurance regulators should disapprove or require changes in investment
policies, investment advisers or principal underwriters or if MassMutual should
be permitted to act contrary to actions approved by holders of the Policies
under rules of the Securities and Exchange Commission; (ii)
12
<PAGE>
adverse tax treatment of the Policies or the variable annuity contracts would
result from utilizing the same underlying MML Funds; (iii) different investment
strategies would be more suitable for the variable annuity contracts than for
the Policies; or (iv) state insurance laws or regulations or other applicable
laws would prohibit the funding of both the Separate Account and other
investment accounts by the same MML Funds. The Board of Trustees of the MML
Trust will follow monitoring procedures which have been developed to determine
whether material conflicts have arisen. Such Board will have a majority of
Trustees who are not interested persons of the MML Trust or MassMutual and
determinations whether or not a material conflict exists will be made by a
majority of such disinterested Trustees. If a material irreconcilable conflict
exists, MassMutual will take such action at its own expense as may be required
to cause the Separate Account to be invested solely in shares of mutual funds
which offer their shares exclusively to variable life insurance separate
accounts unless, in certain cases, the holders of both the Policies and the
variable annuity contracts vote not to effect such segregation.
The Oppenheimer Trust and Index Fund were established for use as an investment
vehicle by variable contract separate accounts such as the Separate Account.
Accordingly, it is possible that a material irreconcilable conflict may develop
between the interests of contract owners and other separate accounts investing
in the Oppenheimer Trust and Index Fund. The Board of Trustees of the
Oppenheimer Trust (the "Trustees") and the Board of Directors of the Index Fund
(the "Board") will monitor the Oppenheimer Funds and the Index Fund for the
existence of any such conflicts. If it is determined that a conflict exists, the
Trustees and the Board will notify MassMutual, and appropriate action will be
taken to eliminate such irreconcilable conflicts. Such steps may include: (i)
withdrawing the assets allocable to some or all of the separate accounts from
the particular Oppenheimer Fund and the Index Fund and reinvesting such assets
in a different investment medium; (ii) submitting the question whether such
segregation should be implemented to a vote of all affected contract owners; and
(iii) establishing a new registered management investment company or managed
separate account.
Rates of Return. Tables 1 and 2 show Annualized One Year Total Returns and
Effective Annual Rates of Return, respectively, of the Funds based on the actual
investment performance (after deduction of investment management fees and direct
operation expenses).
Table 1 shows December 31 annualized figures for the Funds. Table 2 shows
figures for periods ended December 31, 1997, for the Funds. These rates of
return do not reflect the mortality and expense risk charges assessed against
the Separate Account. Also, they do not reflect deduction from premiums or
administrative, cost of insurance and face amount charges assessed against the
Account Value of the Policies. See Charges Under The Policy - Deductions From
Premiums and Account Value Charges. Therefore, these rates are not illustrative
of how actual investment performance will affect the benefits under the Policy
(see, however, Account Value And Cash Surrender Value Investment Return). The
rates of return shown are not necessarily indicative of future performance.
However, they may be considered in assessing the competence and performance of
MassMutual and Babson as the MML Funds' investment adviser and sub-adviser, OFI
as the Oppenheimer Funds' investment adviser and Mellon Equity as the Index
Fund's investment adviser.
Appendix B illustrates the Account Value and Death Benefit of a hypothetical
Policy. These figures do reflect the deduction of mortality and expense risk
charges, deductions from premiums and Account Value charges.
13
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
20 15 10 5 3 1
Fund Since Inception Years Years Years Years Years Year
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MML Equity 14.78% 14.72% 16.19% 16.44% 18.25% 26.57% 14.78%
MML Blend 13.67% --- --- 13.68% 13.81% 19.29% 20.89%
MML Managed Bond 10.37% --- 9.73% 9.08% 7.79% 10.58% 9.91%
MML Money Market 6.73% --- 6.44% 5.63% 4.47% 5.27% 5.18%
Oppenheimer Global Securities 12.26% --- --- --- 18.81% 13.82% 22.42%
Oppenheimer Capital Appreciation** 15.31% --- --- 16.23% 15.92% 21.17% 11.67%
Oppenheimer High Income 13.35% --- --- 14.32% 13.75% 15.90% 12.21%
Index 15.85% --- --- --- 19.70% 30.62% 32.96%
</TABLE>
TABLE 2
ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer
For the year MML MML Managed MML Money Global Capital High Index
ended Equity Blend Bond Market Securities Appreciation** Income Fund
----- ------ ----- ---- ------ ---------- -------------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 14.78% 20.89% 9.91% 5.18% 22.42% 11.67% 12.21% 32.96%
1996 20.25% 13.95% 3.25% 5.01% 17.80% 20.16% 15.26% 6.93%
1995 31.13% 23.28% 19.14% 5.58% 2.24% 32.52% 20.37% 36.78%
1994 4.10% 2.48% (3.76)% 3.84% (5.72)% (7.59)% (3.18)% 0.88%
1993 9.52% 9.70% 11.81% 2.75% 70.32% 27.32% 26.34% 9.33%
1992 10.48% 9.36% 7.31% 3.48% (7.11)% 15.42% 17.92% 7.11%
1991 25.56% 24.00% 16.66% 6.01% 3.39% 54.72% 33.91% 29.85%
1990 (0.51)% 2.37% 8.38% 8.12% 0.40%* (16.82)% 4.65% (3.49)%
1989 23.04% 19.96% 12.83% 9.16% - 27.57% 4.84% 2.16%*
1988 16.68% 13.40% 7.13% 7.39% - 13.41% 15.58% -
1987 2.10% 3.12% 2.60% 6.49% - 14.34% 8.07% -
1986 20.15% 18.30% 14.46% 6.60% - (1.65)%* 4.73%* -
1985 30.54% 24.88% 19.94% 8.03% - - - -
1984 5.40% 8.24%* 11.69% 10.39% - - - -
1983 22.85% - 7.26% 8.97% - - - -
1982 25.67% - 22.79%* 11.12%* - - - -
1981 6.67% - - - - - - -
1980 27.62% - - - - - - -
1979 19.54% - - - - - - -
1978 3.71% - - - - - - -
1977 (0.52)% - - - - - - -
1976 24.77% - - - - - - -
1975 32.85% - - - - - - -
1974 (17.61)%* - - - - - - -
</TABLE>
The figures shown are from inception of the Funds and are not annualized. The
MML Money Market and MML Managed Bond Funds commenced operations on December 16,
1981. The MML Blend Fund commenced operations on February 3, 1984. The MML
Equity Fund commenced operations on September 15, 1971 (performance information
prior to 1974 is not available). The Oppenheimer High Income Fund commenced
operations on April 30, 1986. The Oppenheimer Capital Appreciation Fund**
commenced operations on August 15, 1986. The Oppenheimer Global Securities Fund
commenced operations on November 12, 1990. The Index Fund commenced operations
on September 29, 1989.
**Effective May 1, 1998, this Fund is called Oppenheimer Aggressive Growth Fund.
14
<PAGE>
General Provisions Of The Policy
This section of the Prospectus describes the general provisions of the Policy,
and is subject to the terms of the Policy. You may review a copy of the Policy
upon request.
Premiums. The Policyowner selects a premium payment schedule in the Application
and is not bound by an inflexible premium schedule. Two premium concepts are
very important under the Policy: the planned premium and minimum initial
premium.
Planned Premiums. Planned premiums are elected at the time of application and
may be changed at any time. Planned premiums are the basis for the Policy's
premium billing. The planned premium may be subject to minimum and maximum
amounts which depend upon the Selected Face Amount of the Policy, the Insured's
age, sex and smoking class and the amount of the initial premium paid.
There is no penalty if the planned premium is not paid, nor does payment of this
amount guarantee coverage for any period of time. Instead, the duration of the
Policy depends upon the Policy's Account Value. Even if planned premiums are
paid, the Policy terminates when the Account Value becomes insufficient to pay
certain monthly charges and a grace period expires without sufficient payment.
For details see Termination.
The following table shows the minimum annual planned premium (also referred to
as the "cut-off" premium) at certain ages for a Policy with a Selected Face
Amount of $100,000 in all years, under Death Benefit Option 1 (see Death
Benefits Under The Policy).
MINIMUM ANNUAL PLANNED PREMIUM
LEVEL $100,000 SELECTED FACE AMOUNT
(DEATH BENEFIT OPTION 1)
Issue Age
------------------------------------------------------------
Class Age 25 Age 40 Age 55
----- ------ ------ ------
MALE
Nonsmoker $ 293 $ 652 $1,663
Smoker $ 488 $1,099 $2,842
FEMALE
Nonsmoker $ 229 $ 511 $1,231
Smoker $ 368 $ 853 $2,028
UNISEX
Nonsmoker $ 284 $ 32 $1,601
Smoker $ 471 $1,065 $2,727
The Minimum Initial Premium. A minimum initial premium must be paid along with
your Application or at any time prior to the delivery of the Policy. The amount
of the minimum initial premium is the amount which, after the deductions for
sales load and premium tax (see Deductions From Premiums), is sufficient
(disregarding investment performance) to pay twelve times the first Monthly
Deduction (see Account Value Charges). Thereafter, subject to the minimum and
maximum premium limitations described below, you may make unscheduled premium
payments at any time and in any amount.
Minimum and Maximum Premium Payments. While the Policy is in force, premiums may
be paid at any time before the death of the Insured subject to certain
restrictions. The minimum premium payment is $10.00. The maximum premium which
may be paid in any year without evidence of insurability is: (a) the largest
premium which will not increase the net amount at risk under the Policy; or (b)
the greater of (i) the largest premium which will not increase the net amount at
risk under the Policy; or (ii) twice the Policy's minimum planned premium for
the Selected Face Amount in that year. Option (a) will be applicable when state
approval is received. Premium payments should be sent to our Home Office or to
the address indicated for payment on the notice.
Termination. This Policy does not terminate for failure to pay premiums since
payments, other than the initial premium, are not specifically required. Rather,
if on a Monthly Calculation Date, the Account Value less any Policy Debt is
insufficient to cover the total monthly deduction, the Policy enters a 61-day
grace period.
Grace Period. We allow 61 days to pay any premium necessary to cover the overdue
monthly deduction. You will receive a notice from us which sets forth this
amount. During the grace period, the Policy remains in force. If the payment is
not made by the later of the 61 days or 30 days after we have mailed the written
notice, the Policy terminates without value.
Death Benefit Under The Policy
The Death Benefit is the amount payable to the named Beneficiary when the
Insured dies. Upon receiving due proof of death, we pay the Beneficiary the
Death Benefit amount determined as of the date the Insured dies. All or part of
the benefit can be paid in cash or applied under one or more of our payment
options as described under Additional Provisions Of The Policy - Payment
Options.
In the Application, the applicant may select a Selected Face Amount for each
Policy Year. Under Death Benefit Option 1, the Death Benefit is the greater of
the Selected Face Amount in effect on the date of death or the Minimum Face
Amount in effect on the date of death, with possible additions or deductions.
Under Death Benefit Option 2, the Death Benefit is the greater of the sum of the
Selected Face Amount in effect on the date of death plus the Account Value on
the date of death, or the Minimum Face Amount in effect on the date of death,
with possible additions or deductions. (Policies issued prior to May 1, 1991
will be amended upon request to add the choice of Death Benefit Option 2.) The
Minimum Face Amount is equal to Account
15
<PAGE>
Value times the Minimum Face Amount percentage. The percentages depend upon the
Insured's age, sex and smoking classification. The percentages are set forth on
page 4 of the Policy. Added to the greater of the Selected Face Amount or
Minimum Face Amount is that part of any monthly deduction applicable for the
period beyond the date of death. Any Policy Debt outstanding on the date of
death and any monthly charges unpaid as of the date of death are deducted from
the Death Benefit. If the Insured dies after the first Policy Year, we will also
include a pro rata share of any dividend allocated to the Policy for the year
death occurs. We pay interest on the Death Benefit from the date of death to the
date the Death Benefit is paid or a payment option becomes effective. The
interest rate equals the rate determined under the Interest Payment Option as
described in Additional Provisions Of The Policy - Payment Options.
The Selected Face Amount may be increased after issue upon request by the
Policyowner, subject to receipt by MassMutual of adequate evidence of
insurability. Additionally, any increase in the Selected Face Amount will be
effective on the Monthly Calculation Date which is on, or next follows, the
later of: (i) the date 15 days after a written request for such change has been
received and approved by us; or (ii) the requested effective date of the change.
Any increase must be for at least $5,000. Under Death Benefit Option 1, the
Death Benefit is unaffected by investment experience unless the Death Benefit is
based on the Minimum Face Amount. Under Option 2, the Death Benefit may be
increased or decreased by investment experience.
Example: The following examples show how the Death Benefit varies as a result of
investment performance:
Policy A Policy B
------------ -------------
Selected Face Amount $100,000 $100,000
Account Value on Date $ 50,000 $ 40,000
of Death
Minimum Face Amount 240% 240%
Percentage on Date
of Death
Option 1. For Policy A, the Death Benefit will equal $120,000 which is the
greater of the $100,000 Selected Face Amount or the Account Value times the
Minimum Face Amount percentage. For Policy B, the Death Benefit would equal the
$100,000 Selected Face Amount.
Option 2. For Policy A, the Death Benefit will equal $150,000, which is the
$100,000 Selected Fact Amount plus the $50,000 Account Value (the Account Value
times the Minimum Face Amount percentage is $120,000). For Policy B, the Death
Benefit would equal $140,000, which again is the Selected Face Amount plus the
Account Value (the Account Value times the Minimum Face Amount percentage is
$96,000). (Examples assume no additions or deductions to the Selected Face
Amount or Minimum Face Amount are applicable.)
Account Value And Cash Surrender Value
Account Value. The Account Value of the Policy is the sum of all premium
payments adjusted by periodic charges and credits. It is the amount provided for
investment in the Separate Account and the GPA. The Account Value of the Policy
is held in one or more divisions of the Separate Account and the GPA. Initially,
this value equals the net amount of the first premium paid under the Policy.
This amount is allocated to the MML Money Market Division until the later of:
(1) the expiration of the Free Look Period or (2) receipt by MassMutual of
notice that the Owner received the Policy. Subject to the allocation rules in
the Policy, the Account Value is then allocated among the Separate Account
divisions and the GPA in accordance with the Policyowner's instructions in the
application.
All or part of the Account Value may be transferred among divisions by written
request. Transfers between divisions of the Separate Account may be by dollar
amount or by wholenumber percentage. There is no limit on the number of
transfers a Policyowner may make, however, MassMutual reserves the right to
charge a fee not to exceed $10 per transfer if there are more than six transfers
in a Policy Year. However, Policyowners may transfer all funds in the Separate
Account to the GPA at any time regardless of the number of transfers previously
made.
Transfers from the GPA to the Separate Account may be made only once during each
Policy Year. Each such transfer may not exceed 25% of the Account Value in the
GPA (excluding Policy Debt) at the time of the transfer. However, if in the
previous three policy years, 25% of the Account Value in the GPA has been
transferred and there have been no premium payments or transfers to the GPA,
100% of the Account Value in the GPA (excluding policy loans) may be transferred
to the Separate Account. The Account Value in the GPA equal to any Policy Debt
cannot be transferred to the Separate Account. Any transfer is effective as of
the Valuation Date and all transfers made on one Valuation Date are considered
one transfer.
Investment Return. The investment return of a Policy is based on:
. The Account Value held in each division of the Separate Account for that
Policy,
. The investment experience of each division as measured by its actual net rate
of return, and
. The interest rate credited on Account Values held in the GPA.
The investment experience of a division of the Separate Account reflects
increases or decreases in the net asset value of the shares of the underlying
Fund, any dividend or capital gains distributions declared by the Fund, and any
charges against the assets of the division. This investment experience is
determined each day on which the net asset value of the underlying Fund is
determined-that is, on each
16
<PAGE>
Valuation Date. The actual net rate of return for a division measures the
investment experience from the end of one Valuation Date to the end of the next
Valuation Date.
Cash Surrender Value. The Policy may be surrendered for its Cash Surrender Value
at any time while the Insured is living. Unless a later effective date is
selected, surrender is effective on the date we receive the Policy and a written
request in proper form at our Home Office. The Policy and a written request for
surrender are deemed received on the date on which they are received by mail at
MassMutual's Home Office. If, however, the date on which they are received is
not a Valuation Date, or if they are received other than through the mail after
a Valuation Time, they are deemed received on the next Valuation Date. The Cash
Surrender Value is the Account Value less any outstanding Policy Debt.
Withdrawals. Subject to certain conditions, after the Policy has been in force
for six months you can make a Withdrawal from the Policy on any Monthly
Calculation Date by sending a written request to our Home Office. The minimum
amount of a Withdrawal is $100 (before deducting the withdrawal charge); the
maximum amount is the Cash Surrender Value. The Account Value remaining after a
Withdrawal must be at least equal to the following, whichever is applicable: if
the Withdrawal is made before the Policy Anniversary nearest the Insured's 65th
birthday, twelve multiplied by the most recent Account Value Charges for the
Policy; if on or after such date, sixty multiplied by the most recent Account
Value Charges. (Policies issued prior to May 1, 1991 will be amended on request
to substitute this minimum Account Value limit for the Table of Amounts issued
with the Policy.) The amount of the Withdrawal is deducted from the Policy's
Account Value at the end of the Valuation Period applicable to the Monthly
Calculation Date on which the Withdrawal is made. The Policyowner must specify
the GPA or the division (or divisions) from which the Withdrawal is to be made.
The Withdrawal amount attributable to a division or the GPA may not exceed the
non-loaned Account Value of that division or GPA. A charge equal to 2.0% of the
Withdrawal, not to exceed $25.00, is deducted from each Withdrawal. The Account
Value will automatically be reduced by the amount of the Withdrawal. The
Selected Face Amount of the Policy will be reduced as needed to prevent an
increase in the amount at risk, unless satisfactory evidence of insurability is
provided to MassMutual.
Policy Loan Privilege
The Policy provides a loan privilege. Loans can be made on the Policy at any
time while the Insured is living. The maximum loan is an amount equal to the
Account Value at the time of the loan less any outstanding Policy Debt before
the new loan, interest on the loan being made and on any outstanding Policy Debt
to the next Policy Anniversary Date and an amount equal to the most recent
monthly charge for the Policy multiplied by the number of Monthly Calculation
Dates remaining until the next Policy Anniversary Date. The Policy must be
properly assigned as collateral for the loan.
Source of Loan. The loan amount requested is taken from the divisions of the
designated segment of the Separate Account and the GPA in proportion to the
non-loaned Account Value of each on the date of the loan. Shares taken from the
divisions are liquidated and the resulting dollar amounts are transferred to the
GPA. We may delay the granting of any loan attributable to the GPA for up to six
months. We may also delay the granting of any loan attributable to the Separate
Account during any period that the New York Stock Exchange (or its successor) is
closed except for normal weekend and holiday closings, or trading is restricted,
or the Securities and Exchange Commission (or its successor) determines that a
state of emergency exists, or the Securities and Exchange Commission (or its
successor) permits us to delay payment for the protection of our policy owners.
If Loans Exceed the Policy Account Value. Policy Debt (which includes accrued
interest) must not equal or exceed the Account Value under the Policy. If this
limit is reached, we may terminate the Policy. To terminate for this reason we
will notify the Policyowner in writing. This notice states the amount necessary
to bring the Policy Debt back within the limit. If we do not receive a payment
within 31 days after the date we mailed the notice, the Policy terminates
without value at the end of those 31 days.
Termination of a policy under these circumstances could cause the Policyowner to
recognize gross income in the amount of any excess of the Policy Debt over the
sum of the Policyowner's previously unrecovered premium contributions.
Interest. On the Application, the Policyowner may select a loan interest rate of
6% per year or, where permitted, an adjustable loan rate. When an adjustable
rate is selected, MassMutual sets the rate each year that will apply for the
next Policy Year. The maximum rate is based on the monthly average of the
composite yield on seasoned corporate bonds as published by Moody's Investors
Service or, if it is no longer published, a substantially similar average. The
maximum rate is the published monthly average for the calendar month ending two
months before the Policy Year begins, or 5%, whichever is higher. If the maximum
limit is not at least 1/2% higher than the rate in effect for the previous year,
we will not increase the rate. If the maximum limit is at least 1/2% lower than
the rate in effect for the previous year, we will decrease the rate.
Interest accrues daily and becomes part of the Policy Debt as it accrues. It is
due on each Policy Anniversary. If not paid when due, the interest will be added
to the loan and, as part of the loan, will bear interest at the same rate. Any
interest capitalized on a Policy Anniversary will be treated the same as a new
loan and will be taken from the divisions of the designated segment of the
Separate Account and the GPA in proportion to the non-loaned Account Value in
each.
17
<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 divisions of the designated segment of
the Separate Account. The transfer is made in proportion to the non-loaned value
in each investment account at the time of repayment. If the loan is not repaid,
we deduct the amount due from any amount payable from a full surrender or upon
the death of the Insured.
Interest on Loaned Value. The amount equal to any outstanding Policy loans is
held in the GPA and is credited with interest at a rate which is the greater of
4% and the Policy loan rate less a MassMutual declared charge (maximum 0.75%)
for expenses and taxes.
Effect of Loan. A Policy loan affects the Policy since the Death Benefit and
Cash Surrender Value under a Policy are reduced by the amount of the loan.
Repayment of the loan increases the Death Benefit and Cash Surrender Value under
the Policy by the amount of the repayment.
As long as a loan is outstanding, a portion of the Policy's Account Value equal
to the loan is held in the GPA. This amount is not affected by the Separate
Account's investment performance. The Account Value is also affected because the
portion of the Account Value equal to the Policy loan is credited with an
interest rate declared by MassMutual rather than a rate of return reflecting the
investment performance of the Separate Account.
Free Look Provisions
The Policyowner may cancel the Policy within 10 days (or longer if required by
state law) after the Policyowner receives it, or 10 days after MassMutual mails
or delivers a written notice of withdrawal right to the Policyowner or within 45
days after signing Part 1 of the application, whichever is latest. The
Policyowner should mail or deliver the Policy and Policy delivery receipt either
to MassMutual or to the agent who sold the Policy or to one of our agency
offices. If the Policy is cancelled in this fashion, a refund will be made to
the Policyowner. The refund equals the total of all premiums paid for the Policy
(or the Account Value where approved by state law), reduced by any amounts
borrowed or withdrawn.
Exchange Privilege
The Policyowner may transfer the entire Account Value held in the Separate
Account to the GPA at any time. The transfer will take effect when we receive a
written request, signed by the Policyowner.
Your Voting Rights
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, as amended, the Policyowner is
entitled to give instructions as to how shares of the Funds held in the Separate
Account (or other securities held in lieu of such shares) deemed attributable to
the Policy shall be voted at meetings of shareholders of the Funds or the Trust.
Those persons entitled to give voting instructions are determined as of the
record date for the meeting.
The number of shares of the Funds held in the Separate Account deemed
attributable to the Policy during the lifetime of the Insured are determined by
dividing the Policy's Account Value held in each division of the designated
segment of the Separate Account, if any, by $100. Fractional votes are counted.
Policyowners receive proxy material and a form with which such instructions may
be given. Shares of the Funds held by the Separate Account as to which no
effective instructions have been received are voted for or against any
proposition in the same proportion as the shares as to which instructions have
been received.
Our Rights
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. These actions will be taken in
accordance with applicable laws (including obtaining any required approval of
the Securities and Exchange Commission). If necessary, we will seek approval by
Policyowners.
Specifically, we reserve the right to:
. Create new segments of the Separate Account;
. Create new Separate Accounts;
. Combine any two or more Separate Accounts;
. Make available additional divisions of the Separate Account investing in
additional investment companies;
. Invest the assets of the Separate Account in securities other than shares of
the Funds as a substitute for such shares already purchased or as the
securities to be purchased in the future;
. Operate the Separate Account as a management investment company under the
Investment Company Act of 1940, as amended, or in any other form permitted
by law; and
. Deregister the Separate Account under the Investment Company Act of 1940, as
amended, in the event such registration is no longer required.
MassMutual also reserves the right to change the name of the Separate Account.
We have reserved all rights to the name MassMutual and Massachusetts Mutual Life
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use our name or part of it, but we may also withdraw this right.
18
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Name and Position Principal Occupation(s) During Past Five Years
- --------------------------------------------------------------------------------
Roger G. Ackerman, Director Chairman and Chief Executive Officer, since
One Riverfront Plaza, HQE 2 1996, President and Chief Operating Officer,
Corning, NY 14831 1990-1996, Corning, Inc.
- --------------------------------------------------------------------------------
James R. Birle, Director Chairman, since 1997, and Founder, since 1994,
2 Soundview Drive President, 1994-1997, Resolute Partners, LLC;
Greenwich, CT 06836 General Partner, Blackstone Group, 1988-1994
- --------------------------------------------------------------------------------
Gene Chao, Director Chairman, President and CEO, Computer
733 SW Vista Avenue Projections, Inc., since 1991
Portland, OR 97205
- --------------------------------------------------------------------------------
Patricia Diaz Dennis, Director Senior Vice President and Assistant General
175 East Houston, Room 4-A-70 Counsel, SBC Communications Inc., since 1995;
San Antonio, TX 78205 Special Counsel, Sullivan & Cromwell,
1993-1995; Assistant Secretary of State for
Human Rights and Humanitarian Affairs, U.S.
Department of State, 1992-1993
- --------------------------------------------------------------------------------
Anthony Downs, Director Senior Fellow, The Brookings Institution,
1775 Massachusetts Ave., N.W. since 1977
Washington, DC 20036-2188
- --------------------------------------------------------------------------------
James L. Dunlap, Director President and Chief Operating Officer, United
1201 Louisiana, Suite 1400 Meridian Corporation, since 1996; Senior Vice
Houston, TX 77002-5603 President, Texaco. Inc. 1987-1996
- --------------------------------------------------------------------------------
William B. Ellis, Director Senior Fellow, Yale University School of
31 Pound Foolish Lane Forestry and Environmental Studies, since
Glastonbury, CT 06033 1995; Chairman and Chief Executive Officer,
Northeast Utilities, 1983-1995
- --------------------------------------------------------------------------------
Robert M. Furek, Director Chairman, State Board of Trustees for the
1 State Street, Suite 2310 Hartford School System, since 1997; President
Hartford, CT 06103 and Chief Executive Officer, Heublein, Inc.,
1987-1996
- --------------------------------------------------------------------------------
Charles K. Gifford, Director Chairman and Chief Executive Officer, since
100 Federal Street 1995, and President, 1989-1995, BankBoston,
Boston, MA 02110 N.A. and Chairman, since 1998, and Chief
Executive Officer, since 1985, BankBoston
Corporation
- --------------------------------------------------------------------------------
William N. Griggs, Director Managing Director, Griggs & Santow, Inc.,
75 Wall Street, 20th Floor since 1983
New York, NY 10005
- --------------------------------------------------------------------------------
George B. Harvey, Director Retired Chairman, President and CEO, Pitney
One Landmark Square Bowes, since 1996
Suite 1905, 19th Floor
Stamford, CT 06901
- --------------------------------------------------------------------------------
Barbara B. Hauptfuhrer, Director of various corporations, since 1972
Director
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,
5 Peacock Lane Lucent Technologies, since 1996; Executive
Village of Golf, FL 33436-5299 Vice President and CEO Multimedia Products
Group, AT&T, 1994-1996; Executive Vice
President and CEO, Network Systems Group,
1993-1994; Group Executive and President, AT&T
Network Systems, 1989-1993
- --------------------------------------------------------------------------------
John F. Maypole, Director Managing Partner, Peach State Real Estate
55 Sandy Hook Road -- North Holding Company, since 1984
Sarasota, FL 34242
- --------------------------------------------------------------------------------
John J. Pajak, Director, President and Chief Operating Officer, since
President and Chief Operating 1996, Vice Chairman and Chief Administrative
Officer Officer, 1996-1996, Executive Vice President,
1295 State Street 1987-1996, MassMutual
Springfield, MA 01111
- --------------------------------------------------------------------------------
Thomas B. Wheeler, Director, Chairman and Chief Executive Officer, since
Chairman 1996, President and Chief Executive
- --------------------------------------------------------------------------------
19
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
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
1295 State Street President and Deputy General Counsel, 1992-1993, MassMutual
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------
Peter J. Daboul Executive Vice President and Chief Information Officer, since 1997,
1295 State Street Senior Vice President, 1990-1997, MassMutual
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------
John B. Davies Executive Vice President, since 1994, Associate Executive Vice President,
1295 State Street 1994-1994, General Agent, 1982-1993, MassMutual
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald Executive Vice President, since 1994, Corporate Financial Operations,
1295 State Street 1994-1997, Senior Vice President, 1991-1994
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------
James E. Miller Executive Vice President, since 1997 and 1987-1996. MassMutual; Senior
1295 State Street Vice President, UniCare Life and Health Insurance Company, 1996-1997
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------
John V. Murphy Executive Vice President, since 1997, MassMutual; Executive Vice President
1295 State Street and Chief Operating Officer, David L. Babson & Co., Inc., 1995-1997;
Springfield, MA 01111 Chief Operating Officer, Concert Capital Management, Inc., 1993-1995;
Senior Vice President and Chief Financial Officer, Liberty Financial
Companies, 1977-1993
- ---------------------------------------------------------------------------------------------------------------
Gary E. Wendlandt Executive Vice President and Chief Investment Officer, since 1993,
1295 State Street Executive Vice President, 1992-1993, MassMutual
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------
Joseph M. Zubretsky Executive Vice President and Chief Financial Officer, since 1997,
1295 State Street MassMutual; Chief Financial Officer, 1996, HealthSource; Coopers &
Springfield, MA 01111 Lybrand, 1990-1996
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
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 an effective annual rate equal to (a)
4%, or (b) the greater of (1) 4% and (2) the rate determined by the Treasury
Bill Index less any tax charge which reflects the Policy's share of our federal
income tax liability. The interest rate credited to the GPA Account Value will
be affected by the option selected. This rate is selected at time of issue.
Policies issued prior to April, 1994, will be offered a one-time opportunity to
change the guaranteed rate from option (b) to option (a). For amounts equal to
any Policy loans, the guaranteed rate is the greater of (a) 4% and (b) the
Policy loan rate less a MassMutual declared charge for expenses and taxes. This
charge cannot exceed 2% (or 0.75% in some states). Although MassMutual is not
obligated to credit interest at a rate higher than this minimum, it may declare
a higher rate applicable for such periods as it deems appropriate. Upon request,
MassMutual will inform Policyowners of the then applicable rate. Since
MassMutual takes into account the need to provide for its expenses and
guarantees, the crediting rate declared by MassMutual shall be net of charges it
imposes against the earnings of the GPA.
Federal Income Tax Considerations
The ultimate effect of federal income taxes on values under this Policy and upon
the economic benefit to the Policyowner or Beneficiary depends on MassMutual's
tax status and upon the tax status of the individual concerned. The discussion
contained herein is general in nature and is not an exhaustive discussion of all
tax questions that might arise under the Policies, and is not intended as tax
advice. Moreover, no representation is made as to the likelihood of continuation
of current federal income tax laws and Treasury Regulations or of the current
interpretations of the Internal Revenue Service. MassMutual reserves the right
to make changes in the Policy to assure that it continues to qualify as life
insurance for tax purposes. For complete information on federal and state tax
considerations, a qualified tax adviser should be consulted. No attempt is made
to consider any applicable state or other tax laws.
MassMutual - Tax Status. MassMutual is taxed as a life insurance company under
Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The Separate
Account is not a separate entity from MassMutual and its operations form a part
of MassMutual.
Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining Account Values. The
investment income and realized capital gains are automatically applied to
increase book reserves associated with the Policies. Under existing federal
income tax law, the Separate Account's investment income, including net capital
gains, is not taxed to MassMutual to the extent applied to increase reserves
associated with the Policies. The reserve items taken into account at the close
of the taxable year for purposes of determining net increases or net decreases
must be adjusted for tax purposes by subtracting any amount attributable to
appreciation in the value of assets or by adding any amount attributable to
depreciation. MassMutual's basis in the assets underlying the Separate Account's
Policies will be adjusted for appreciation or depreciation, to the extent the
reserves are adjusted. Thus, corporate level gains and losses, and the tax
effect thereof, are eliminated.
Due to MassMutual's current tax status, no charge is made to the Separate
Account for MassMutual's federal income taxes that may be attributable to the
Separate Account. Periodically, MassMutual reviews the question of a charge to
the Separate Account for MassMutual's federal income taxes. A charge may be made
for any federal income taxes incurred by MassMutual that are attributable to the
Separate Account. Depending on the method of calculating interest on Policy
values allocated to the Guaranteed Principal Account (see preceding section), a
charge may be imposed for the Policy's share of MassMutual's federal income
taxes attributable to that account.
Under current state laws, MassMutual may incur state and local taxes (in
addition to premium taxes). At present, these taxes are not significant. If
there is a material change in state or local tax laws, MassMutual reserves the
right to charge the Separate Account for such taxes, if any, attributable to the
Separate Account.
Policy Proceeds, Premiums and Loans. MassMutual believes that the Policy meets
the statutory definition of life insurance under Code Section 7702 and hence
receives the same tax treatment as that accorded to
21
<PAGE>
fixed benefit life insurance. Thus, the Death Benefit under the Policy is
generally excludable from the gross income of the Beneficiary under Section
101(a)(1) of the Code. As an exception to this general rule, where a Policy has
been transferred for value, only the portion of the Death Benefit which is equal
to the total consideration paid for the Policy may be excluded from gross
income. The Policyowner is not deemed to be in constructive receipt of the cash
values, including increments thereon, under the Policy until a full surrender or
Withdrawal is made.
Upon a full surrender of a Policy for its Cash Surrender Value the Policyowner
may recognize ordinary income for federal tax purposes. Ordinary income is
computed to be the amount by which the Account Value, unreduced by any
outstanding Policy Debt, exceeds the premiums paid but not previously recovered
and any other consideration paid for the Policy.
Decreases in Selected Face Amount and Withdrawals may be taxable depending on
the circumstances. Code Section 7702(f)(7) provides that where a reduction of
future benefits occurs during the first 15 years after a Policy is issued and
where there is a cash distribution associated with that reduction, the
Policyowner may be taxed on all or part of the amount distributed. After 15
years, such cash distributions are not subject to federal income tax, except to
the extent they exceed the total amount of premiums paid but not previously
recovered. Where the provisions of Code Section 7702(f) do not cause a taxable
event, a Withdrawal is taxable only to the extent that it exceeds the
Policyowner's as yet unrecovered premium contributions. MassMutual suggests that
you consult with your tax adviser in advance of a proposed decrease in Selected
Face Amount or Withdrawal as to the portion, if any, which would be subject to
federal income tax.
A change of Policyowner or the Insured or an exchange or assignment of the
Policy may have tax consequences depending on the circumstances.
MassMutual also believes that under current law any loan received under the
Policy will be treated as Policy Debt of a Policyowner, and that no part of any
loan under a Policy will constitute income to the Policyowner. Under the
"personal" interest limitation provisions of the Tax Reform Act of 1986,
interest on Policy loans used for personal purposes, which otherwise meet the
requirements of Code Section 264, will no longer be tax deductible. However,
other rules may apply to allow all or part of the interest expense as a
deduction if the loan proceeds are used for "trade or business" or "investment"
purposes. See your tax adviser for further guidance.
If the Policy is owned by a business or corporation, the 1986 Act may impose
additional restrictions. The Act limits the interest deduction available for
loans against a business-owned Policy. It imposes an indirect tax upon the
inside build-up of gain in corporate-owned life insurance policies by way of the
corporate alternative minimum tax, for those corporations subject to the
alternative minimum tax. The corporate alternative minimum tax could also apply
to a portion of the amount by which Death Benefits received exceed the Policy's
date of death cash value.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
For complete information on the impact of changes with respect to the Policy and
federal and state tax considerations, a qualified tax adviser should be
consulted.
MassMutual cannot make any guarantee regarding the future tax treatment of any
Policy.
Modified Endowment Contracts. Contrary to the rules described above, loans and
other amounts distributed under a "modified endowment contract" are taxable to
the extent of any accumulated income in the Policy. In general, the amount which
may be subject to tax is the excess of the Account Value (both loaned and
unloaned) over the previously unrecovered premiums paid. Death benefits paid
under a modified endowment contract, however, are not taxed any differently from
death benefits payable under other life insurance contracts.
A Policy is a modified endowment contract if it satisfies the definition of life
insurance set out in the Internal Revenue Code, but fails the additional "7-pay
test." A Policy fails this test if the accumulated amount paid under the
contract at any time during the first seven contract years exceeds the total
premiums that would have been payable under a policy providing for guaranteed
benefits upon the payment of seven level annual premiums. A Policy which would
otherwise satisfy the 7-pay test will still be taxed as a modified endowment
contract if it is received in exchange for a modified endowment contract.
Certain changes will require a Policy to be retested to determine whether it has
become a modified endowment contract. For example, a reduction in death benefits
during the first seven contract years will cause the Policy to be retested as if
it had originally been issued with the reduced death benefit. If the premiums
actually paid into the Policy exceed the limits under the 7-pay test for a
policy with the reduced death benefit, the Policy will become a modified
endowment contract. This change is effective retroactively to the contract year
in which the actual premiums paid exceed the new 7-pay limits.
In addition, a "material change" occurring at any time while the Policy is in
force will require the policy to be retested to determine whether it continues
to meet the 7-pay test. A material change starts a new 7-pay test period. The
term "material change" includes many increases in death benefits. A material
change does not include an increase in death benefits which is attributable to
the payment of premiums necessary to fund the lowest level of death benefits
payable during the first seven contract years, or which is attributable to the
crediting of interest or dividends with respect to such premiums.
22
<PAGE>
Since the Policy provides for flexible premium payments, we will carefully
monitor to determine whether increases in death benefits or additional premium
payments cause either the start of a new seven-year test period or the taxation
of distributions and loans. All additional premium payments will be considered.
If any amount is taxable as a distribution of income under a modified endowment
contract, it will also be subject to a 10% penalty tax. Limited exceptions from
the additional penalty tax are available for individual Policyowners. The
penalty tax will not apply to distributions: (i) that are made on or after the
date the taxpayer attains age 59 1/2; or (ii) that are attributable to the
taxpayer's becoming disabled; or (iii) that are part of a series of
substantially equal periodic payments (made not less frequently than annually)
made for the life or life expectancy of the taxpayer. For complete information
with respect to modified endowment contract status, particularly where a Policy
is owned by other than an individual Insured, a qualified tax adviser should be
consulted.
Once a Policy fails the 7-pay test, loans and distributions occurring in the
year of failure and thereafter become subject to the rules for modified
endowment contracts. In addition, a recapture provision applies to loans and
distributions received in anticipation of failing the 7-pay test. Any
distribution or loan made within two years prior to failing the 7-pay test is
considered to have been made in anticipation of the failure.
Under certain circumstances, a loan or other distribution under a modified
endowment contract may be taxable even though it exceeds the amount of income
accumulated in the Policy. For purposes of determining the amount of income
received from a modified endowment contract, the law requires the aggregation of
all modified endowment contracts issued to the same Policyowner by an insurer
and its affiliates within the same calendar year. Therefore, loans and
distributions from any one such Policy are taxable to the extent of the income
accumulated in all the contracts required to be aggregated.
Diversification Standards. To comply with final regulations under Code Section
817(h) ("Final Regulations"), each Fund of the Trust is required to diversify
its investments. The Final Regulations generally require that on the last day of
each quarter of a calendar year no more than 55% of the value of the Trust's
assets is represented by any one investment, no more than 70% is represented by
any two investments, no more than 80% is represented by any three investments,
and no more than 90% is represented by any four investments. A "look-through"
rule applies to treat a pro-rata portion of each asset of the Trust as an asset
of the Separate Account. All securities of the same issuer are treated as a
single investment. However, each Government agency or instrumentality is treated
as a separate issuer.
With respect to variable life insurance contracts, the general diversification
requirements are modified if any of the assets of the Separate Account are
direct obligations of the United States Treasury. In this case, there is no
limit on the investment that may be made in United States Treasury Securities,
and for purposes of determining whether assets other than United States Treasury
Securities are adequately diversified, the generally applicable percentage
limitations are increased based on the value of the Separate Account's
investment in United States Treasury Securities. Notwithstanding this
modification of the general diversification requirements, the Funds of the Trust
will be structured to comply with the general diversification standards because
they serve as an investment vehicle for certain variable annuity contracts which
must comply with the general standards.
In connection with the issuance of the temporary regulations prior to the Final
Regulations, the Treasury announced that such temporary regulations did not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular divisions of a separate account. Regulations in this
regard were not issued in connection with the Final Regulations, however. It is
not clear, at this time, what future regulations might provide. It is possible
that if future regulations are issued, the Policy may need to be modified to
comply with such regulations. For these reasons, MassMutual reserves the right
to modify the Policy, as necessary, to prevent the Policyowner from being
considered the owner of the assets of the Separate Account.
MassMutual intends to comply with the Final Regulations to assure that the
Policy continues to qualify as life insurance for federal income tax purposes.
Additional Provisions Of The Policy
Reinstatement Option. For a period of five (5) years after termination, you, as
Policyowner, can request that we reinstate the Policy during the Insured's
lifetime. We will not reinstate the Policy if it has been returned for its Cash
Surrender Value. Note that a termination or reinstatement may cause the Policy
to become a modified endowment contract.
Before we will reinstate the Policy, we must receive the following:
. A premium payment equal to the amount necessary to produce an Account Value
equal to 3 times the total monthly deduction for the Policy on the Monthly
Calculation Date on or next following the date of reinstatement;
. Evidence of insurability satisfactory to us; and
. Where necessary, a signed acknowledgement that the Policy has become a
modified endowment contract.
If we do reinstate the Policy, the Selected Face Amounts for the reinstated
Policy will be the same as it would have been if the Policy had not terminated.
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<PAGE>
Payment Options. All or part of the Death Benefit or Cash Surrender Value may be
taken in cash or as a series of level payments. Proceeds applied will no longer
be affected by the investment experience of the Separate Account divisions or
the GPA.
To receive payments, the proceeds to be applied must be at least $2,000. If the
payments under any option are less than $20 each, we reserve the right to make
payments at less frequent intervals. Payment options are as described below.
Fixed Amount Payment Option. Each monthly payment is for an agreed fixed amount
not less than $10 for each $1,000 applied under the option. Interest of at least
3% per year is credited each month on the unpaid balance and added to it.
Payments continue until the amount we hold runs out.
Fixed Time Payment Option. Equal monthly payments are made for any period
selected, up to 30 years. The amount of each payment depends on the total amount
applied, the period selected and the interest rate we credit to the unpaid
balance. This interest rate will not be less than 3% per year.
Interest Payment Option. We hold amounts applied under this option and pay
interest on the unpaid balance of at least 3% per year.
Lifetime Payment Option. Equal monthly payments are based on the life of a named
person. Payments continue for the lifetime of that person. Three variations are
available:
. Payments for life only;
. Payments guaranteed for five, ten or twenty years; or
. Payments guaranteed for the amount applied.
Joint Lifetime Payment Option. Equal monthly payments are based on the lives of
two named persons. While both named persons are living, one payment is made each
month. When one of the named persons dies, the same payment continues for the
lifetime of the other. Two variations are available:
. Payment for two lives only. No specific number of payments is guaranteed.
Under this option there may be one payment if the two named persons die prior
to the second payments.
. Payments guaranteed for 10 years.
Joint Lifetime Payment Option with Reduced Payments. Monthly payments are based
on the lives of two named persons. While both named persons are living, one
payment will be made each month. When one dies, payments are reduced by
one-third and will continue for the lifetime of the other.
Withdrawal Rights under Payment Options. If provided in the payment option
election, all or part of the unpaid balance may be withdrawn or applied under
any other option. Payments which are based on a named person's life may not be
withdrawn.
Beneficiary. A Beneficiary is any person named on our records to receive
insurance proceeds after the Insured dies. You name the Beneficiary when you
apply for the Policy. There may be different classes of beneficiaries, such as
primary and secondary. These classes set the order of payment. There may be more
than one Beneficiary in a class.
Any Beneficiary may be named an irrevocable beneficiary. An irrevocable
beneficiary is one whose consent is needed to change that Beneficiary. The
consent of any irrevocable beneficiary is needed to exercise any Policy right
except the right to:
. Change the frequency of premium payments.
. Change the premium payment plan.
. Reinstate the Policy after termination.
If no Beneficiary is living when the Insured dies, unless provided otherwise the
Death Benefit is paid to the Owner or, if deceased, the Owner's estate.
Changing the Owner or Beneficiary. The Owner or any Beneficiary may be changed
during the Insured's lifetime by writing to our Home Office. The change takes
effect as of the date of the request, even if the Insured dies before we receive
it. Each change is subject to any payment we made or other action by MassMutual
prior to receipt of the request.
Right to Substitute Insured. Upon written application to MassMutual, the Policy
may be transferred to the life of a substitute Insured. The transfer becomes
effective upon the Transfer Date, which is the Policy Anniversary which is on,
or next follows, the latter of the date we approve the application for transfer;
and the date any required cost associated with the transfer is paid, subject to
the following conditions:
. This Policy must be in force on the Transfer Date.
. A written application for the transfer and payment of any required cost to
transfer must be approved by us at our Home Office.
. Evidence of insurability of the substitute Insured, satisfactory to us, is
required.
. The substitute Insured must not have been under 20 years of age on the
birthday nearest the Policy Date of this Policy.
. The substitute Insured must not be over 65 years of age on the birthday
nearest the Transfer Date.
. The Owner of this Policy after it has been transferred must have an insurable
interest in the life of the substitute Insured.
The Selected Face Amount for the substitute Insured will be determined as for a
new Insured. The Account Value immediately after transfer will be equal to: (i)
the Account Value immediately before the transfer, plus (ii) any net premium
necessary to make the Cash Surrender Value, immediately before the monthly
charges are deducted on the Transfer Date, at least 12 times the monthly
charges, minus (iii) any amount which must be refunded (so that the amount at
risk is not greater than the Selected Face Amount), minus
24
<PAGE>
(iv) the monthly charges on the Transfer Date. Future charges against the Policy
will be based on the life of the substitute Insured.
The costs to transfer are an administrative fee of $75, plus any premium
necessary to effect the transfer, plus any excess Policy Debt not repaid prior
to transfer. Excess Policy Debt is the amount by which Policy Debt exceeds the
maximum loan available after transfer. Any such excess must be repaid on or
before the Transfer Date.
The incontestability and suicide periods begin to run anew from the Transfer
Date. Any assignments existing on the Transfer Date will continue to apply.
The Internal Revenue Service has ruled that a substitution of Insureds is an
exchange of contracts which does not qualify for the tax deferral available
under Code Section 1035. Therefore upon a substitution of Insureds, the
Policyowner must include in current gross income all the previously unrecognized
gain in the Policy.
Assignment. The Policy may be assigned as collateral for a loan or other
obligation, subject to any outstanding Policy Debt. But for any assignment to be
binding on us, we must receive a signed copy of it at our Home Office. We are
not responsible for the validity of any assignment.
Any amounts due to an assignee of the Policy which is assigned will be paid in
one sum.
Dividends. Each year MassMutual determines the divisible surplus, or the money
available to pay dividends. Each Policy may receive a dividend based upon its
contribution to this divisible surplus. MassMutual does not expect that any
dividends will be paid under the Policies.
Any dividend will be payable on the Policy Anniversary Date.
If the Insured dies after the first Policy Year, the Death Benefit includes a
pro rata share of any dividend allocated to the Policy for the year death
occurs.
Limits on Our Right to Challenge the Policy. We must bring any legal action to
contest the validity of a Policy within two years from its Issue Date. After
that we cannot contest its validity, except for failure to pay premiums.
Misstatement of Age or Sex. If the Insured's date of birth or sex as given in
the application is not correct, an adjustment will be made. If the adjustment is
made when the Insured dies, the Death Benefit will reflect the amount provided
by the most recent mortality charge according to the correct age and sex. If the
adjustment is made before the Insured dies, then future monthly deductions will
be based on the correct age and sex.
Suicide. If the Insured commits suicide within two years from the Issue Date and
while the Policy is in force, we pay a limited Death Benefit in one sum to the
Beneficiary. The limited Death Benefit is the amount of premiums paid for the
Policy, less any Policy Debt or amounts withdrawn.
When We Pay Proceeds. If the Policy has not terminated, payment of the Cash
Surrender Value, loan proceeds or the Death Benefit are made within 7 days after
we receive any required documents in proper form at our Home Office. But we can
delay payment of the Cash Surrender Value or any Withdrawal from the Separate
Account, loan proceeds attributable to the Separate Account, or the Death
Benefit during any period that:
. It is not reasonably practicable to determine the amount because the New York
Stock Exchange (or its successor) is closed, except for normal weekend or
holiday closings, or trading is restricted; or
. the Securities and Exchange Commission (or its successor) determines that a
state of emergency exists; or
. the Securities and Exchange Commission (or its successor) permits us to delay
payment for the protection of our policy owners.
We may delay paying any Cash Surrender Value or loan proceeds based on the GPA
for up to 6 months from the date the request was received at our Home Office. We
can delay payment of the entire Death Benefit if payment is contested. We
investigate all death claims arising within the two-year contestable period.
Upon receiving the information from a completed investigation, we generally make
a determination within five days as to whether the claim should be authorized
for payment. Payments are made promptly after authorization. If payment is
delayed for 10 working days or more from the effective date of surrender or
Withdrawal, we add interest at the same rate as is paid under the Interest
Payment Option for the same period of time. The minimum amount of such interest
is $25.
Records And Reports
All records and accounts relating to the Separate Account and the GPA are
maintained by MassMutual. Each year within 30 days after the Policy Anniversary,
we will mail you a report showing the Account Value at the beginning of the
previous Policy Year, all premiums paid since that time, all additions to and
deductions from Account Value during the year, and the Account Value, Death
Benefit, Cash Surrender Value and Policy Debt as of the latest Policy
Anniversary. This report contains any additional information required by any
applicable law or regulation.
Sales And Other Agreements
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, is a wholly-owned subsidiary of MassMutual and is the principal
underwriter of the Policy pursuant to an Underwriting and Servicing Agreement to
which MML Distributors, MassMutual and the Separate Account are parties. Also
located at 1414 Main Street, Springfield, MA 01144-1013, is MML Investors
Services, Inc. ("MMLISI"), a wholly-owned subsidiary of MassMutual. MMLISI
serves as the co-underwriter of the
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<PAGE>
Policies. Both MML Distributors and MMLISI are registered with the Securities
and Exchange Commission (the "SEC") as broker-dealers under the Securities
Exchange Act of 1934 and are members of the National Association of Securities
Dealers, Inc. (the "NASD").
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the SEC and are members of the NASD ("selling
brokers"). We sell the Policies through agents who are licensed by state
insurance officials to sell the Policies. These agents are also registered
representatives of selling brokers or of MMLISI.
When an application for one of the Policies is completed, it is submitted to us.
The selling broker or co-underwriter perform suitability review and, in some
cases, we perform insurance underwriting. We determine whether to accept or
reject the application for the Policy and the Insured's risk classification. If
the application is not accepted, we will refund any premium that has been paid.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies of the Separate Account. Compensation paid to
MMLISI in 1997 was $19,800. Compensation paid to MML Distributors in 1997 was
$10,000. Commissions are paid through MMLISI and MML Distributors to agents and
selling brokers for selling the Policies. During 1997 such payments amounted to
$458,070.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
Commissions Schedule. Agents or selling brokers receive commissions as a
percentage of the premium payable in each Policy Year. This percentage is set
based on the total annual planned premium for all Policies in a Case as shown in
the applications. It is not affected by subsequent changes under the Case. The
maximum commission percentage for the first Policy Year is 10% of the premiums
paid in the first Policy Year up to the Policy's minimum annual planned premium,
plus 2.35% of any additional premiums paid. The maximum commission percentage in
each future Policy Year is 3.8% of all premiums paid in that year.
Agents may receive commissions at lower rates on Policies sold to replace
existing insurance issued by MassMutual or any of its subsidiaries.
Agents under financing agreement with a general agent of MassMutual may be
compensated differently.
Agents who meet certain productivity and persistency standards in selling
MassMutual policies are eligible for added compensation.
General agents receive commissions based on different schedules.
Bonding Arrangement. An insurance company blanket bond is maintained providing
$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.
Experts
The financial statements of the Large Case Variable Life Plus segment of the
Separate Account and the financial statements of MassMutual included in this
Prospectus have been included herein in reliance on the reports of Coopers &
Lybrand L.L.P., Springfield, Massachusetts 01101, independent accountants, given
on the authority of that firm as experts in accounting and auditing.
Coopers & Lybrand's report on the statutory financial statements of MassMutual
includes explanatory paragraphs relating to the use of statutory accounting
practices rather than generally accepted accounting principles.
Actuarial matters in this Prospectus have been examined by John M. Valencia,
F.S.A., M.A.A.A., 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 statements of MassMutual and the Large Case Variable Life Plus
segment of the Separate Account included herein should be considered only as
bearing upon the ability of MassMutual to meet its obligations under the Policy.
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<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
Massachusetts Mutual Life Insurance Company
We have audited the statements of assets and liabilities of the MML Equity
Division, MML Money Market Division, MML Managed Bond Division, MML Blend
Division, Oppenheimer High Income Division, Oppenheimer Capital Appreciation
Division, Oppenheimer Global Securities Division, and Dreyfus Stock Index
Division of the Large Case Variable Life Plus Segment of Massachusetts Mutual
Variable Life Separate Account I as of December 31, 1997, and the related
statements of operations for the year then ended, and the statements of changes
in net assets for the periods indicated thereon. These financial statements are
the responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
verification of investments owned as of December 31, 1997, by examination of the
records of MML Series Investment Fund and by confirmation with Oppenheimer
Variable Account Funds and Dreyfus Stock Index Fund. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the MML Equity Division, MML
Money Market Division, MML Managed Bond Division, MML Blend Division,
Oppenheimer High Income Division, Oppenheimer Capital Appreciation Division
Oppenheimer Global Securities Division, and Dreyfus Stock Index Division of the
Large Case Variable Life Plus Segment of Massachusetts Mutual Variable Life
Separate Account I as of December 31, 1997, the results of their operations for
the year then ended, and the changes in net assets for the periods indicated
thereon, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 3, 1998
F-1
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Large Case
Variable Life Plus
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML High Capital Global
Equity Market Bond Blend Income Appreciation Securities
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 383,646 2,993,023 1,422,773 140,387 102,358 106,529 140,423
=========== =========== =========== =========== =========== =========== ===========
Identified cost (Note 6) $11,129,862 $ 2,993,023 $17,111,084 $ 3,015,046 $ 1,156,292 $ 4,144,785 $ 2,549,039
=========== =========== =========== =========== =========== =========== ===========
Value (Note 3A) $13,597,618 $ 2,993,023 $17,655,151 $ 3,380,471 $ 1,179,166 $ 4,363,433 $ 3,000,843
Dividends receivable 1,096,396 11,537 283,874 253,412 - - -
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total assets 14,694,014 3,004,560 17,939,025 3,633,883 1,179,166 4,363,433 3,000,843
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 15,490 2,533 15,484 4,095 1,097 5,702 3,373
----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS: $14,678,524 $ 3,002,027 $17,923,541 $ 3,629,788 $ 1,178,069 $ 4,357,731 $ 2,997,470
=========== =========== =========== =========== =========== =========== ===========
Net Assets:
For variable life insurance
policies $14,657,478 $ 2,987,983 $17,910,748 $ 3,612,408 $ 1,170,657 $ 4,349,506 $2,990,695
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 21,046 14,044 12,793 17,380 7,412 8,225 6,775
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $14,678,524 $ 3,002,027 $17,923,541 $ 3,629,788 $ 1,178,069 $ 4,357,731 $ 2,997,470
=========== =========== =========== =========== =========== =========== ===========
Accumulation units (Note 8)
Policyowners 4,657,068 2,127,545 9,318,328 1,390,778 789,717 2,643,934 2,207,386
Massachusetts Mutual Life
Insurance Company 6,687 10,000 6,656 6,692 5,000 5,000 5,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total units 4,663,755 2,137,545 9,324,984 1,397,470 794,717 2,648,934 2,212,386
=========== =========== =========== =========== =========== =========== ===========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 3l, 1997 $ 3.15 $ 1.40 $ 1.92 $ 2.60 $ 1.48 $ 1.65 $ 1.36
December31, 1996 2.46 1.34 1.76 2.16 1.33 1.48 1.11
December31, 1995 2.05 1.28 1.71 1.90 1.16 1.23 0.95
December31, 1994 1.57 1.22 1.44 1.55 0.96 0.94 0.93
December31, 1993 1.51 1.18 1.50 1.52 - - -
<CAPTION>
Dreyfus
Stock
Index
Division Total
----------- -----------
<S> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 1,302,509 6,591,648
Identified cost (Note 6) =========== ===========
Value (Note 3A) $25,329,987 $67,429,118
Dividends receivable =========== ===========
$33,539,615 $79,709,320
Total assets 625,204 2,270,423
----------- -----------
34,164,819 81,979,743
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 35,667 83,441
----------- -----------
NET ASSETS: $34,129,152 $81,896,302
=========== ===========
Net Assets:
For variable life insurance
policies 34,121,562 $81,801,037
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 7,590 95,265
----------- -----------
Net assets $34,129,152 $81,896,302
=========== ===========
Accumulation units (Note 8)
Policyowners 22,475,130
Massachusetts Mutual Life
Insurance Company 5,000
-----------
Total units 22,480,130
===========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 3l, 1997 $ 1.52
December 31, 1996 1.15
December 31, 1995 -
December 31, 1994 -
December 31, 1993 -
</TABLE>
See Notes to Financial Statements
F-2
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Large Case
Variable Life Plus
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML High Capital Global
Equity Market Bond Blend Income Appreciation Securities
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
Investment income
Dividends (Note 3B) $ 1,096,564 $ 107,423 $ 981,171 $ 350,832 $ 105,395 $ 203,118 $ 32,076
Expenses
Mortality and expense risk
fee (Note 4) 55,783 8,477 55,122 14,783 5,128 19,005 12,153
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(Note 3C) 1,040,781 98,946 926,049 336,049 100,267 184,113 19,923
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized and unrealized
gain on investments
Net realized gain on
investments (Notes 3 and 6) 678,946 - 15,593 271,679 71,572 81,286 359,852
Change in net unrealized
appreciation/depreciation
of investments 1,689,131 - 393,439 73,184 (8,545) 226,516 171,088
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net gain on investments 2,368,077 - 409,032 344,863 63,027 307,802 530,940
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations $ 3,408,858 $ 98,946 $ 1,335,081 $ 680,912 $ 163,294 $ 491,915 $ 550,863
=========== =========== =========== =========== =========== ----------- -----------
<CAPTION>
Dreyfus
Stock
Index
Division Total
------------- ------------
<S> <C> <C>
Investment income
Dividends (Note 3B) $ 1,524,796 $ 4,401,375
Expenses
Mortality and expense risk fee
(Note 4) 123,601 294,052
----------- -----------
Net investment income
(Note 3C) 1,401,195 4,107,323
----------- -----------
Net realized and unrealized
gain on investments
Net realized gain on
investments (Notes 3 and 6) 941,241 2,420,169
Change in net unrealized
appreciation/depreciation
of investments 6,424,746 8,969,559
----------- -----------
Net gain on investments 7,365,987 11,389,728
----------- -----------
Net increase in net assets
resulting from operations $ 8,767,182 $15,497,051
=========== ===========
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Large Case
Variable Life Plus
STATEMENT OF CHANGES IN NET ASSETS
For The Year ended December 31, 1997
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML High Capital Global
Equity Market Bond Blend Income Appreciation Securities
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 1,040,781 $ 98,946 $ 926,049 $ 336,049 $ 100,267 $ 184,113 $ 19,923
Net realized gain
on investments 678,946 - 15,593 271,679 71,572 81,286 359,852
Change in net unrealized
appreciation/depreciation
of investments 1,689,131 - 393,439 73,184 (8,545) 226,516 171,088
------------- ----------- ----------- ----------- ----------- ----------- ----------
Net increase in net assets
resulting from operations 3,408,858 98,946 1,335,081 680,912 163,294 491,915 550,863
------------- ----------- ----------- ----------- ----------- ----------- ----------
Capital transactions: (Note 8)
Transfer of net premium 2,910,338 1,925,415 3,340,681 789,023 164,398 1,519,696 1,014,721
Transfer to Guaranteed
Principal Account - (42,111) - - (516,888) - -
Transfer of surrender values (2,086,847) (151,447) (864,206) (813,008) (143,789) (882,506) (147,788)
Transfer due to death benefits - (1,467) - - - - -
Transfer due to policy loan,
net of repayment 875 - (18) 14,625 - 1,393 (457)
Transfer due to reimbursement
(payments) of accumulation
unit value fluctuation 18,844 715 7,962 5,812 93 10,364 243
Withdrawal due to charges for
administrative and insurance
costs (479,869) (447,123) (202,534) (172,746) (45,084) (150,855) (91,627)
Divisional transfers (264,307) 624,218 2,980,621 44,255 (242,347) (387,807) (589,624)
------------- ----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net
assets resulting from capital
transactions 99,034 1,908,200 5,262,506 (132,039) (783,617) 110,285 185,468
------------- ----------- ----------- ----------- ----------- ----------- ----------
Total increase (decrease) 3,507,892 2,007,146 6,597,587 548,873 (620,323) 602,200 736,331
NET ASSETS, at beginning
of the year 11,170,632 994,881 11,325,954 3,080,915 1,798,392 3,755,531 2,261,139
------------- ----------- ----------- ----------- ----------- ----------- ----------
NET ASSETS, at end
of the year $ 14,678,524 $ 3,002,027 $17,923,541 $ 3,629,788 $ 1,178,069 $ 4,357,731 $2,997,470
============= =========== =========== =========== =========== =========== ==========
<CAPTION>
Dreyfus
Stock
Index
Division Total
------------- -----------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 1,401,195 $ 4,107,323
Net realized gain
on investments 941,241 2,420,169
Change in net unrealized
appreciation/depreciation
of investments 6,424,746 8,969,559
------------- -----------
Net increase in net assets
resulting from operations 8,767,182 15,497,051
------------- -----------
Capital transactions: (Note 8)
Transfer of net premium 6,716,157 18,380,429
Transfer to Guaranteed
Principal Account - (558,999)
Transfer of surrender values - (5,089,591)
Transfer due to death benefits- - (1,467)
Transfer due to policy loan,
net of repayment - 16,418
Transfer due to reimbursement
(payments) of accumulation
unit value fluctuation (72,347) (28,314)
Withdrawal due to charges for
administrative and insurance
costs (220,650) (1,810,488)
Divisional transfers (2,165,009) -
------------- -----------
Net increase (decrease) in net
assets resulting from capital
transactions 4,258,151 10,907,988
------------- -----------
Total increase (decrease) 13,025,333 26,405,039
NET ASSETS, at beginning
of the year 21,103,819 55,491,263
------------- -----------
NET ASSETS, at end
of the year $34,129,152 $81,896,302
============= ===========
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Large
Case Variable Life Plus
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1996
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML High Capital Global
Equity Market Bond Blend Income Appreciation Securities
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 434,261 $ 90,413 $ 381,207 $ 168,922 $ 93,097 $ 501,000 $ (27,051)
Net realized gain on investments 2,609,509 - 7,784 56,686 142,387 750,281 567,458
Change in net unrealized
appreciation/depreciation
of investments (619,361) - 98,857 120,120 (44,813) (739,508) 180,936
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 2,424,409 90,413 487,848 345,728 190,671 511,773 721,343
----------- ----------- ----------- ----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Transfer of net premium 2,416,720 3,155,511 2,894,471 678,896 179,652 1,127,005 826,409
Transfer to Guaranteed
Principal Account - (43,469) - - - - -
Transfer of surrender values (52,901) (627,614) (8,007) (145,960) - - (4,223)
Transfer due to death benefits (33,820) (12,683) (12,801) (5,494) - (9,759) (29,607)
Transfer due to policy loan,
net of repayment (13,366) - (18) (18,902) - (1,270) (7,471)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation (54,633) 3,796 15,423 309 (3,277) 49,430 74,345
Withdrawal due to changes for
administrative and insurance
costs (541,666) (359,358) (132,291) (159,224) (34,070) (156,514) (125,757)
Divisional transfers (8,794,810) (3,177,869) 6,796,962 206,124 (433,861) (3,842,405) (9,511,078)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from capital
transactions (7,074,476) (1,061,686) 9,553,739 555,749 (291,556) (2,833,513) (8,777,382)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total increase (decrease) (4,650,067) (971,273) 10,041,587 901,477 (100,885) (2,321,740) (8,056,039)
NET ASSETS, at beginning
of the period/year 15,820,699 1,966,154 1,284,367 2,179,438 1,899,277 6,077,271 10,317,178
----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS, at end
of the year $11,170,632 $ 994,881 $11,325,954 $ 3,080,915 $ 1,798,392 $ 3,755,531 $ 2,261,139
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
*Dreyfus
Stock
Index
Division Total
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 516,440 $ 2,158,289
Net realized gain on investments 5,903 4,140,008
Change in net unrealized
appreciation/depreciation
of investments 1,784,882 781,113
------------ ------------
Net increase in net assets
resulting from operations 2,307,225 7,079,410
------------ ------------
Capital transactions: (Note 8)
Transfer of net premium 42,058 11,320,722
Transfer to Guaranteed
Principal Account -- (43,469)
Transfer of surrender values -- (838,705)
Transfer due to death benefits -- (104,164)
Transfer due to policy loan,
net of repayment -- (41,027)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation 54,612 140,005
Withdrawal due to changes for
administrative and insurance
costs (57,013) (1,565,893)
Divisional transfers 18,756,937 --
------------ ------------
Net increase (decrease) in net
assets resulting from capital
transactions 18,796,594 8,867,469
------------ ------------
Total increase (decrease) 21,103,819 15,946,879
NET ASSETS, at beginning
of the period/year -- 39,544,384
------------ ------------
NET ASSETS, at end
of the year $ 21,103,819 $ 55,491,263
============ ============
</TABLE>
* For the Period August 1,1996 (Commencement of Operations) through
December 31,1996.
See Notes to Financial Statements.
F-5
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Large Case Variable Life
Plus
Notes To Financial Statements
1. HISTORY
Massachusetts Mutual Variable Life Separate Account I ("Separate Account I")
is a separate investment account established on July 13, 1988 by
Massachusetts Mutual Life Insurance Company ("MassMutual") in accordance
with the provisions of Section 132G of Chapter 175 of the Massachusetts
General Laws.
MassMutual maintains 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
tables of selected face amounts, known as Strategic Variable Life.
On July 24, 1995, MassMutual established a fourth segment ("Variable Life
Select Segment") within Separate Account I to be used exclusively for
MassMutual's flexible premium variable whole life insurance policy, known as
Variable Life Select.
On February 11, 1997, MassMutual established a fifth segment ("GVUL
Segment") within Separate Account I to be used exclusively for MassMutual's
group variable universal life insurance product known as 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 $40,000 to the Large Case Variable Life Plus
Segment on March 30, 1990 to provide initial capital: 12,146 shares were
purchased in the four series of shares of the management investment company
described in Note 2 supporting the divisions of the Large Case Variable Life
Plus Segment.
On January 3, 1994, MassMutual removed $15,000 of the initial capital from
three of the four series of shares of the management investment company
supporting the divisions of the Large Case Variable Life Plus Segment. On
January 3, 1994, MassMutual paid $15,000 to provide the initial capital for
the Large Case Variable Life Plus Segment's three new divisions: 918 shares
were purchased in the management investment company described in Note 2
supporting the three new divisions of the Large Case Variable Life Plus
Segment.
On August 1, 1996, MassMutual paid $5,000 to provide initial capital for the
Large Case Variable Life Plus Segment's new Dreyfus Stock Index Division.
2. INVESTMENT OF THE LARGE CASE VARIABLE LIFE PLUS SEGMENT'S ASSETS
The Large Case Variable Life Plus Segment maintains eight divisions. The MML
Equity Division invests in shares of MML Equity Fund, the MML Money Market
Division invests in shares of MML Money Market Fund, the MML Managed Bond
Division invests in shares of MML Managed Bond Fund and the MML Blend
Division invests in shares of MML Blend Fund. The Oppenheimer High Income
Division invests in shares of Oppenheimer High Income Fund, the Oppenheimer
Capital Appreciation Division invests in shares of Oppenheimer Capital
Appreciation Fund, and the Oppenheimer Global Securities Division invests in
shares of Oppenheimer Global Securities Fund. The Dreyfus Stock Index
Division invests in shares of Dreyfus Stock Index Fund.
F-6
<PAGE>
Notes To Financial Statements (Continued)
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend
Fund are four series of the MML Series Investment Fund (the "MML Trust").
The MML Trust is a registered, no-load, open-end, management investment
company for which MassMutual serves as investment manager. Concert Capital
Management, Inc. ("Concert") served as the investment sub-advisor to MML
Equity Fund and the Equity Sector of the MML Blend Fund from 1993-1996.
Concert merged with and into David L. Babson and Company, Inc. ("Babson")
effective December 31, 1996. Both Concert and Babson are wholly-owned
subsidiaries of DLB Acquisition Corporation, which is a controlled
subsidiary of MassMutual. Thus, effective January 1, 1997, Babson serves as
the investment sub-advisor to MML Equity Fund and the Equity Sector of the
MML Blend Fund.
Oppenheimer High Income Fund, Oppenheimer Capital Appreciation Fund and
Oppenheimer Global Securities Fund (the "Oppenheimer Funds") are part of the
Oppenheimer Variable Account Funds (the "Oppenheimer Trust"). The
Oppenheimer Trust is a registered, open-end, diversified management
investment company, which is available to act as the investment vehicle for
separate accounts for variable insurance policies. OppenheimerFunds, Inc.
("OFI"), a controlled subsidiary of MassMutual, serves as investment advisor
to the Oppenheimer Trust, (prior to January 5, 1996, OFI was known as
Oppenheimer Management Corporation).
The Dreyfus Stock Index Fund, a registered open-end, non-diversified
management investment company is managed by the Dreyfus Corporation. Mellon
Equity Associates serves as the sub-advisor to the Dreyfus Stock Index Fund.
In addition to the eight divisions of the Large Case Variable Life Plus
Segment, a policyowner may also allocate funds to the Guaranteed Principal
Account, which is part of MassMutual's general account. Because of exemptive
and exclusionary provisions, interests in the Guaranteed Principal Account,
which is part of MassMutual's general account, are not registered under the
Securities Act of 1933 and the general account is not registered as an
investment company under the Investment Company Act of 1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Large Case Variable Life Plus Segment in the preparation
of the financial statements in conformity with generally accepted accounting
principles.
A. Investment Valuation
The investments in MML Trust, the Oppenheimer Trust and the Dreyfus Stock
Index Fund are each stated at market value which is the net asset value 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. The Large Case
Variable Life Plus Segment is part of MassMutual's total operation and is
not taxed separately. The Large Case Variable Life Plus Segment will not be
taxed as a "regulated investment company" under Subchapter M of the Internal
Revenue Code. Under existing federal law, no taxes are payable on investment
income and realized capital gains of the Large Case Variable Life Plus
Segment credited to the policies. Accordingly, MassMutual does not intend to
make any charge to the Large Case Variable Life Plus Segment's divisions to
provide for company income taxes. MassMutual may, however, make such a
charge in the future if an unanticipated change of current law results in a
company tax liability attributable to the Large Case Variable Life Plus
Segment.
F-7
<PAGE>
Notes To Financial Statements (Continued)
D. Policy Loan
When a policy loan is made, the Large Case Variable Life Plus Segment
transfers the amount of the loan to MassMutual, thereby decreasing both the
investments and net assets of the Large Case Variable Life Plus Segment by
an equal amount. The interest rate charged on any loan is 6% per year, or
where permitted, the policyowner may select an adjustable loan rate, in all
jurisdictions except Arkansas, at the time of application. Loan repayments
result in the transfer of values equal to the repayment from the loaned
portion of the Guaranteed Principal Account to the non-loaned portion of the
Guaranteed Principal Account and the divisions of the Large Case Variable
Life Plus Segment.
The policyowner earns interest at a rate which is the greater of 4% or the
policy loan rate less a MassMutual declared charge (maximum .75%) for
expenses and taxes.
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
4. CHARGES
MassMutual charges the Large Case Variable Life Plus Segment's divisions for
the mortality and expense risks it assumes. The charge is made daily at an
effective annual rate of 0.40% of the value of each division's net assets.
MassMutual makes certain deductions from the annual premium before amounts
are allocated to the Large Case Variable Life Plus Segment and the
Guaranteed Principal Account. The deductions are for sales charges and state
premium taxes. No additional deductions are taken when money is transferred
from the Guaranteed Principal Account to the Large Case Variable Life Plus
Segment. MassMutual also makes certain charges for the cost of insurance and
administrative costs.
5. SALES AGREEMENTS
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), a
wholly-owned subsidiary of MassMutual, serves as principal underwriter of
the policies pursuant to an underwriting and servicing agreement among MML
Distributors, MassMutual and Separate Account I. MML Distributors is
registered with the Securities and Exchange Commission (the "SEC") as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"). MML
Distributors may enter into selling agreements with other broker-dealers who
are registered with the SEC and are members of the NASD in order to sell the
policies.
Prior to May 1, 1996, MML Investors Services, Inc. ("MMLISI") a wholly-owned
subsidiary of MassMutual, served as principal underwriter of the policies.
Effective May 1, 1996, MMLISI serves as co-underwriter of the policies
pursuant to underwriting and servicing agreements among MMLISI, MassMutual
and Separate Account I, MMLISI is registered with the SEC as a broker-dealer
under the Securities Exchange Act of 1934 and is a member of the NASD.
Registered representatives of MMLISI sell the policies as authorized
variable life insurance agents under applicable state insurance laws.
Pursuant to the underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
policies are paid by MassMutual on behalf of MML Distributors or MMLISI. MML
Distributors and MMLISI also receive compensation for their activities as
underwriters of the policies.
F-8
<PAGE>
Notes To Financial Statements (Continued)
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer Dreyfus
MML Money Managed MML High Capital Global Stock
For the Year Ended Equity Market Bond Blend Income Appreciation Securities Index
December 31, 1997 Division Division Division Division Division Division Division Division
- ----------------- ---------- --------- --------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of purchases $ 4,105,686 $ 4,237,663 $ 7,179,047 $ 1,042,028 $ 1,593,800 $ 2,071,193 $ 1,400,907 $ 8,756,662
Proceeds from sales $ 3,549,779 $ 2,235,041 $ 1,081,850 $ 985,606 $ 2,276,072 $ 1,771,135 $ 1,192,167 $ 3,407,272
Average monthly
value of securities $13,656,367 $ 2,080,185 $13,744,453 $ 3,630,085 $ 1,324,438 $ 4,644,568 $ 3,020,410 $30,146,110
</TABLE>
7. NET INVESTMENT RETURN
The following table shows the net investment return for each division in
the Large Case Variable Life Plus Segment:
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer Dreyfus
MML Money Managed MML High Capital Global Stock
Equity Market Bond Blend Income Appreciation Securities Index
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the Year Ended December 31, 1997 24.76% 4.74% 9.70% 18.63% 12.34% 10.60% 18.28% 29.02%
For the Year Ended December 31, 1996 and
**For the Period August 1, 1996
(Commencement of Operations)
Through December 31, 1996 15.48% 5.34% 8.52% 12.77% 14.61% 8.77% 10.49% **11.27%
For the Year Ended December 31, 1995 26.63% 5.81% 16.87% 21.35% 19.26% 34.64% 4.69% -
For the Year Ended December 31, 1994 and
*For the Period January 3, 1994
(Commencement of Operations)
Through December 31, 1994 4.58% 3.33% (1.23)% 2.14% *(2.72)% *0.81% *(6.17)% -
For the Year Ended December 31, 1993 8.28% 2.33% 4.07% 8.54% - - - -
</TABLE>
The net investment return for each division of the Large Case Variable Life Plus
Segment is computed using the net increase in net assets resulting from
operations as compared to the average monthly net assets. The net investment
return figures shown above do not reflect expenses related to insurance
products. Inclusion of such expenses would reduce the net investment return
figures for all periods shown.
F-9
<PAGE>
Notes To Financial Statements (Continued)
8. NET INCREASE (DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer Dreyfus
MML Money Managed MML High Capital Global Stock
For the Year Ended Equity Market Bond Blend Income Appreciation Securities Index
December 31, 1997 Division Division Division Division Division Division Division Division
- ----------------- --------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 2,268,289 1,519,296 2,139,104 479,517 200,529 1,740,481 1,603,435 5,863,621
Units withdrawn and transferred to
Guaranteed Principal Account (2,073,211) (533,141) (831,589) (530,542) (229,669) (1,401,300) (1,015,752) (388,895)
Units transferred between divisions (77,816) 409,238 1,566,125 20,003 (532,199) (230,737) (415,135) (1,406,168)
---------- --------- --------- --------- --------- ---------- ---------- ----------
Net increase (decrease) 117,262 1,395,393 2,873,640 (31,022) (561,339) 108,444 172,548 4,068,558
Units, at beginning of the
period/year 4,546,493 742,152 6,451,344 1,428,492 1,356,056 2,540,490 2,039,838 18,411,572
---------- --------- --------- --------- --------- ---------- ---------- ----------
Units, at end of the year 4,663,755 2,137,545 9,324,984 1,397,470 794,717 2,648,934 2,212,386 22,480,130
========== ========= ========= ========= ========= ========== ========== ==========
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer *Dreyfus
MML Money Managed MML High Capital Global Stock
For the Year Ended Equity Market Bond Blend Income Appreciation Securities Index
December 31, 1996 Division Division Division Division Division Division Division Division
- ----------------- ----------- ---------- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 1,176,765 3,121,090 1,731,646 352,844 159,639 880,690 840,126 39,735
Units withdrawn and transferred to
Guaranteed Principal Account (370,589) (1,459,166) (127,766) (178,125) (41,196) (215,745) (203,232) (47,429)
Units transferred between divisions (3,973,031) (2,454,243) 4,095,080 106,794 (406,523) (3,045,604) (9,493,490) 18,419,266
---------- --------- --------- --------- --------- ---------- ---------- ----------
Net increase (decrease) (3,166,855) (792,319) 5,698,960 281,513 (288,080) (2,380,659) (8,856,596) 18,411,572
Units, at beginning of the
period/year 7,713,348 1,534,471 752,384 1,146,979 1,644,136 4,921,149 10,896,434 -
---------- --------- --------- --------- --------- ---------- ---------- ----------
Units, at end of the year 4,546,493 742,152 6,451,344 1,428,492 1,356,056 2,540,490 2,039,838 18,411,572
========== ========= ========= ========= ========= ========== ========== ==========
</TABLE>
* For the period August 1, 1996 (Commencement of Operations) through
December 31, 1996.
F-10
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity of
MassMutual's Large Case Variable Life Plus Segment. The combined net assets
as of December 31, 1997 for Separate Account I, which includes the Variable
Life Plus, Large Case Variable Life Plus, Strategic Variable Life and
Variable Life Select Segments, are as follows:
<TABLE>
<CAPTION>
MML MML MML Oppenheimer
MML Equity Money Managed MML Oppenheimer High
Equity Index Market Bond Blend Money Income
Division Division Division Division Division Division Division
---------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $47,535,472 $ 24,804 $ 4,783,018 $19,916,629 $13,024,523 $ 83,483 $ 3,203,079
Total liabilities 80,176 9 7,225 17,985 23,892 64 2,031
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $47,455,296 $ 24,795 $ 4,775,793 $19,898,644 $13,000,631 $ 83,419 $ 3,201,048
=========== =========== =========== =========== =========== =========== ===========
Net assets:
For variable life
insurance policies 47,351,808 17,670 4,724,501 19,838,205 12,915,916 76,766 3,185,681
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 15,367
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $47,455,296 $ 24,795 $ 4,775,793 $19,898,644 $13,000,631 $ 83,419 $ 3,201,048
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Oppenheimer Oppenheimer
Oppenheimer Capital Oppenheimer Multiple
Bond Appreciation Growth Strategies
Division Division Division Division
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total assets $ 142,182 $ 9,010,163 $ 5,093,866 $ 417,797
Total liabilities 91 17,407 24,158 207
----------- ----------- ----------- -----------
Net assets $ 142,091 $ 8,992,756 $ 5,069,708 $ 417,590
=========== =========== =========== ===========
Net assets:
For variable life
insurance policies 135,056 8,968,173 5,051,141 409,425
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 7,035 24,583 18,567 8,165
----------- ----------- ----------- -----------
Net assets $ 142,091 $ 8,992,756 $ 5,069,708 $ 417,590
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Panorama
Oppenheimer Oppenheimer Oppenheimer Panorama Life Span
Global Strategic Growth & Panorama Panorama International Diversified
Securities Bond Income Total Return Growth Equity Income
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 5,356,495 $ 355,712 $ 773,396 $ 1,000 $ 986 $ 958 $ 6,534
Total liabilities 10,408 1,323 350 2 2 2 6
----------- ----------- ----------- ----------- ----------- --------- -----------
Net assets $ 5,346,087 $ 354,389 $ 773,046 998 $ 984 $ 956 $ 6,528
=========== =========== =========== =========== =========== ========= ===========
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 11,934 998 984 956 6,528
----------- ----------- ----------- ----------- ----------- --------- -----------
Net assets $ 5,346,087 $ 354,389 $ 773,046 $ 998 $ 984 $ 956 $ 6,528
=========== =========== =========== =========== =========== ========= ===========
<CAPTION>
Panorama
Panorama Life Span Dreyfus
Life Span Capital Stock
Balanced Appreciation Index
Division Division Division
----------- ----------- -----------
<S> <C> <C> <C>
Total assets $ 6,684 $ 6,783 $34,164,819
Total liabilities 6 6 35,667
----------- ----------- -----------
Net assets $ 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 6,678 6,777 7,590
----------- ----------- -----------
Net assets $ 6,678 $ 6,777 $34,129,152
=========== =========== ===========
</TABLE>
F-11
<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 1), Cash Surrender Values and
Accumulated Premiums
The following tables illustrate the way in which a Policy operates. They show
how the Death Benefit Option 1 and Cash Surrender Value could vary over an
extended period of time, assuming the Funds experience hypothetical gross rates
of investment return (i.e., investment income and capital gains and losses,
realized or unrealized), equivalent to constant gross annual rates of 0%, 6% and
12%. The tables are based on annual premiums of $1,200 for a male, female and
unisex nonsmoker age 35 and an Initial Case Premium Paid of $1,000,000. Separate
tables are shown for the current simplified issue and guaranteed schedule of
charges. These tables will assist in the comparison of death benefits and cash
surrender values for the Policy with those under other variable life policies
which may be issued by MassMutual or other companies.
1. The illustration on page A-3 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200 using a
current simplified issue schedule of charges.
2. The illustration on page A-4 is for a Policy issued to a male nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200 using a
guaranteed schedule of charges.
3. The illustration on page A-5 is for a Policy issued to a female nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200 using a
current simplified issue schedule of charges.
4. The illustration on page A-6 is for a Policy issued to a female nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200 using a
guaranteed schedule of charges.
5. The illustration on page A-7 is for a Policy issued to a unisex nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200 using a
current simplified issue schedule of charges.
6. The illustration on page A-8 is for a Policy issued to a unisex nonsmoker age
35 for a Selected Face Amount of $100,000. The premium payment is $1,200 using a
guaranteed schedule of charges.
The death benefits and cash surrender values for a Policy would be different
from the amount shown if the rates of return averaged 0%, 6% and 12% over a
period of years but varied above and below that average in individual Policy
Years. They would also differ if any Policy loan were made during the period of
time illustrated. They would also be different depending upon the allocation of
investment value to each division of the Separate Account, if the rates of
return for all the Funds averaged 0%, 6% or 12% but varied above or below that
average for particular Funds.
The death benefits and cash surrender values shown in illustrations 1, 3 and 5
reflect the following current charges:
1. Administrative Charge, equal to a monthly $5.25 per Policy charge for
nonqualified policies.
2. Cost of Insurance Charge, based on the current simplified issue rates being
charged by the Company.
3. Mortality and Expense Risk Charge, which is equal to .40% on an annual basis,
of the net asset value of the Fund shares held by the Separate Account.
4. Unweighted average Fund level expenses of .54% on an annual basis, of the net
asset value of the Fund shares held by the Separate Account.
The Death Benefits and Cash Surrender Values shown in illustrations 2, 4 and 6
reflect these guaranteed maximum charges:
1. Administrative Charge, equal to $8.00 per month.
2. Cost of Insurance Charge, based on the 1980 CSO Mortality Table.
3. Mortality and Expense Risk Charge, which is equal to .40% on an annual basis,
of the net asset value of the Fund shares held by the Separate Account.
4. Unweighted average Fund level expenses of .54% on an annual basis, of the net
asset value of the Fund shares held by the Separate Account. (This unweighted
average reflects current Fund level expenses.)
Cash Surrender Values shown in the tables reflect the deduction of the
applicable sales loads and premium taxes for a Case with an Initial Case Premium
Paid of $1,000,000. Taking into account the Mortality and Expense Risk Charge
and the Fund level expenses, the effect is that for gross annual rates of return
of 0%, 6% and 12%, the actual net annual rate of return on a current basis would
be -0.935%, 5.009% and 10.953%, respectively, and on a guaranteed basis would be
- -0.935%, 5.009% and 10.953%, respectively.
MassMutual has agreed to bear expenses of the MML Trust (other than the
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of .11% of average daily net asset value of each MML Fund
through April 30, 1999. During 1997 no expenses were required to be reimbursed
pursuant to this undertaking.
A-1
<PAGE>
Currently no charge is made against the Separate Account for federal income
taxes but MassMutual reserves the right to charge the Separate Account for
federal income taxes attributable to the Separate Account if such taxes are
imposed in the future.
The second column of each table shows the amounts which would accumulate if an
amount equal to the annual premium were invested to earn interest after taxes,
of 5% per year, compounded annually.
The tables are based on the assumptions that the Policyowner has requested a
level Selected Face Amount, that no Policy loans, or additional premium payments
have been made, and no transaction charges have been incurred, and that the
entire Account Value under the Policy is allocated to the Funds.
A-2
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and Initial Case Premium Paid of $1,000,000
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums -------------------------------- --------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest -------------------------------- --------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
------------ ---------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $ 1,003 $ 1,066 $ 1,130
2 2,583 100,000 100,000 100,000 2,000 2,190 2,388
3 3,972 100,000 100,000 100,000 2,984 3,366 3,780
4 5,431 100,000 100,000 100,000 3,956 4,599 5,323
5 6,963 100,000 100,000 100,000 4,916 5,890 7,031
6 8,571 100,000 100,000 100,000 5,862 7,242 8,922
7 10,260 100,000 100,000 100,000 6,791 8,653 11,013
8 12,033 100,000 100,000 100,000 7,701 10,125 13,323
9 13,895 100,000 100,000 100,000 8,591 11,660 15,877
10 15,850 100,000 100,000 100,000 9,463 13,263 18,704
15 27,192 100,000 100,000 105,054 13,485 22,362 38,063
20 41,668 100,000 100,000 164,906 16,826 33,566 69,875
25 60,142 100,000 100,000 247,696 19,268 47,432 121,420
30 (Age 65) 83,720 100,000 115,431 365,350 20,357 64,486 204,106
35 113,812 100,000 134,049 530,118 19,345 84,841 335,518
40 152,219 100,000 155,619 775,688 14,841 108,825 542,439
45 201,237 100,000 178,116 1,126,998 2,288 135,967 860,303
50 263,797 0 202,847 1,638,278 0 164,916 1,331,933
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-3
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and Initial Case Premium Paid of $1,000,000
Using Guaranteed Schedule Of Charges, except for Fund level expenses, which are
reflected on a current basis.
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ----------------------------------------- --------------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ----------------------------------------- --------------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- ---------------- -------------- ------------ ------------ ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $ 863 $ 922 $ 981
2 2,583 100,000 100,000 100,000 1,716 1,889 2,069
3 3,972 100,000 100,000 100,000 2,553 2,895 3,267
4 5,431 100,000 100,000 100,000 3,371 3,942 4,586
5 6,963 100,000 100,000 100,000 4,170 5,030 6,039
6 8,571 100,000 100,000 100,000 4,949 6,160 7,640
7 10,260 100,000 100,000 100,000 5,706 7,333 9,403
8 12,033 100,000 100,000 100,000 6,441 8,550 11,346
9 13,895 100,000 100,000 100,000 7,152 9,812 13,489
10 15,850 100,000 100,000 100,000 7,838 11,122 15,855
15 27,192 100,000 100,000 100,000 10,838 18,413 31,968
20 41,668 100,000 100,000 137,786 12,882 27,026 58,384
25 60,142 100,000 100,000 203,775 13,329 36,951 99,890
30 (Age 65) 83,720 100,000 100,000 293,152 11,111 48,254 163,772
35 113,812 100,000 100,000 410,241 3,868 61,086 259,646
40 152,219 0 108,340 571,545 0 75,762 399,682
45 201,237 0 118,659 782,195 0 90,580 597,096
50 263,797 0 128,894 1,068,186 0 104,792 868,444
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-4
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and Initial Case Premium Paid of $1,000,000
Using Current Simplified Issue Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1)
Premiums -------------------------------------------------------
Accumulated Assuming Hypothetical Gross
End of At 5% Annual Investment Return of
Policy Interest -------------------------------------------------------
Year Per Year 0% 6% 12%
- ------------- -------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000
2 2,583 100,000 100,000 100,000
3 3,972 100,000 100,000 100,000
4 5,431 100,000 100,000 100,000
5 6,963 100,000 100,000 100,000
6 8,571 100,000 100,000 100,000
7 10,260 100,000 100,000 100,000
8 12,033 100,000 100,000 100,000
9 13,895 100,000 100,000 100,000
10 15,850 100,000 100,000 100,000
15 27,192 100,000 100,000 120,426
20 41,668 100,000 100,000 190,157
25 60,142 100,000 113,253 285,955
30 (Age 65) 83,720 100,000 133,998 419,432
35 113,812 100,000 155,776 610,819
40 152,219 100,000 178,258 883,288
45 201,237 100,000 204,114 1,287,284
50 263,797 100,000 230,008 1,856,607
<CAPTION>
Cash Surrender Value
Premiums -------------------------------------------------------
Accumulated Assuming Hypothetical Gross
End of At 5% Annual Investment Return of
Policy Interest -------------------------------------------------------
Year Per Year 0% 6% 12%
- ------------- -------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
1 $ 1,260 $ 1,024 $ 1,088 $ 1,152
2 2,583 2,039 2,232 2,433
3 3,972 3,041 3,429 3,849
4 5,431 4,029 4,681 5,415
5 6,963 5,002 5,991 7,148
6 8,571 5,960 7,361 9,065
7 10,260 6,902 8,792 11,186
8 12,033 7,827 10,287 13,532
9 13,895 8,736 11,850 16,128
10 15,850 9,628 13,484 19,004
15 27,192 13,814 22,826 38,722
20 41,668 17,545 34,555 71,220
25 60,142 20,691 49,240 124,328
30 (Age 65) 83,720 23,095 67,336 210,770
35 113,812 24,526 89,526 351,045
40 152,219 24,376 116,508 577,313
45 201,237 20,088 147,908 932,815
50 263,797 5,116 182,546 1,473,498
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED
ABOVE OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE
DIFFERENT, DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF
THE SEPARATE ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6%
OR 12% BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY
WOULD ALSO DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-5
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and Initial Case Premium Paid of $1,000,000
Using Guaranteed Schedule of Charges, except Fund level charges which are
reflected on a current basis.
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premimums ------------------------------------- ---------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ------------------------------------- ---------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- ----------- ----------- ---------- ---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $ 100,000 $ 886 $ 945 $ 1,005
2 2,583 100,000 100,000 100,000 1,759 1,935 2,118
3 3,972 100,000 100,000 100,000 2,615 2,964 3,342
4 5,431 100,000 100,000 100,000 3,454 4,035 4,691
5 6,963 100,000 100,000 100,000 4,272 5,148 6,177
6 8,571 100,000 100,000 100,000 5,070 6,305 7,814
7 10,260 100,000 100,000 100,000 5,846 7,505 9,616
8 12,033 100,000 100,000 100,000 6,599 8,751 11,604
9 13,895 100,000 100,000 100,000 7,331 10,047 13,798
10 15,850 100,000 100,000 100,000 8,041 11,394 16,222
15 27,192 100,000 100,000 102,095 11,246 18,992 32,828
20 41,668 100,000 100,000 159,716 13,729 28,231 59,819
25 60,142 100,000 100,000 236,083 15,253 39,508 102,645
30 (Age 65) 83,720 100,000 106,299 338,740 15,443 53,417 170,221
35 113,812 100,000 121,006 477,406 12,936 69,544 274,371
40 152,219 100,000 134,191 661,877 5,615 87,706 432,599
45 201,237 0 147,094 913,881 0 106,590 662,233
50 263,797 0 157,925 1,242,845 0 125,337 986,385
</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 AVERAGES 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 AVERAGES 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 TRUST THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-6
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Unisex (85% Male), Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and Initial Case Premium Paid of $1,000,000
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums -------------------------------------- ---------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest -------------------------------------- ---------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------- ------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $ 1,006 $ 1,070 $ 1,133
2 2,583 100,000 100,000 100,000 2,006 2,196 2,395
3 3,972 100,000 100,000 100,000 2,992 3,376 3,790
4 5,431 100,000 100,000 100,000 3,967 4,612 5,337
5 6,963 100,000 100,000 100,000 4,929 5,906 7,048
6 8,571 100,000 100,000 100,000 5,877 7,260 8,944
7 10,260 100,000 100,000 100,000 6,808 8,674 11,039
8 12,033 100,000 100,000 100,000 7,720 10,149 13,355
9 13,895 100,000 100,000 100,000 8,613 11,688 15,915
10 15,850 100,000 100,000 100,000 9,488 13,296 18,749
15 27,192 100,000 100,000 108,002 13,534 22,431 38,163
20 41,668 100,000 100,000 169,535 16,934 33,715 70,056
25 60,142 100,000 100,000 254,461 19,483 47,717 121,752
30 (Age 65) 83,720 100,000 118,105 372,703 20,774 64,893 204,782
35 113,812 100,000 137,529 542,481 20,144 85,422 336,945
40 152,219 100,000 158,984 790,688 16,344 109,644 545,302
45 201,237 100,000 182,248 1,150,905 5,191 137,029 865,342
50 263,797 0 206,071 1,661,499 0 166,186 1,339,918
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT VARIED
ABOVE OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE
DIFFERENT, DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF
THE SEPARATE ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6%
OR 12% BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY
WOULD ALSO DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO
REPRESENTATIONS CAN BE MADE BY MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
A-7
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Unisex (85% Male), Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and Initial Case Premium Paid of $1,000,000
Using Guaranteed Schedule Of Charges, except Fund level charges, which are
reflected on a current basis.
<TABLE>
<S>
Death Benefit (Option 1) Cash Surrender Value
Premiums ----------------------------------------------- ---------------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ----------------------------------------------- ---------------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------- -------------- ----------- --------------- --------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $ 868 $ 927 $ 987
2 2,583 100,000 100,000 100,000 1,725 1,899 2,079
3 3,972 100,000 100,000 100,000 2,566 2,910 3,283
4 5,431 100,000 100,000 100,000 3,388 3,962 4,608
5 6,963 100,000 100,000 100,000 4,191 5,055 6,068
6 8,571 100,000 100,000 100,000 4,974 6,190 7,676
7 10,260 100,000 100,000 100,000 5,734 7,368 9,446
8 12,033 100,000 100,000 100,000 6,474 8,592 11,400
9 13,895 100,000 100,000 100,000 7,189 9,861 13,553
10 15,850 100,000 100,000 100,000 7,881 11,179 15,932
15 27,192 100,000 100,000 100,000 10,921 18,531 32,145
20 41,668 100,000 100,000 142,030 13,055 27,273 58,690
25 60,142 100,000 100,000 209,908 13,723 37,477 100,434
30 (Age 65) 83,720 100,000 100,000 300,230 12,014 49,349 164,961
35 113,812 100,000 101,760 422,198 5,831 63,205 262,235
40 152,219 0 113,991 587,573 0 78,615 405,223
45 201,237 0 125,233 808,364 0 94,160 607,793
50 263,797 0 135,388 1,100,787 0 109,184 887,731
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF
RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH BENEFITS AND CASH
SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THE AMOUNTS SHOWN IF THE
RATES OF RETURN AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE
OR BELOW THAT AVERAGE IN INDIVIDUAL POLICY YEARS. THEY WOULD ALSO BE DIFFERENT,
DEPENDING ON THE ALLOCATION OF INVESTMENT VALUE TO EACH DIVISION OF THE SEPARATE
ACCOUNT, IF THE RATES OF RETURN OVER ALL DIVISIONS AVERAGED 0%, 6% OR 12% BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. THEY WOULD ALSO
DIFFER IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE
MADE BY MASSMUTUAL OR THE TRUSTS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-8
<PAGE>
Appendix B
POLICY PERFORMANCE
This table illustrates the Account Value and Death Benefit of a hypothetical
Policy assuming the following:
. The Policy was owned for the period illustrated;
. 100% allocation to the respective Fund for the period illustrated;
. Current expenses and mortality charges;
. The Insured is a male, standard issue, age 50, nonsmoker;
. An annual premium of $30,000 for 15 years;
. A Selected Face Amount of $825,000;
. Initial Case Premium Paid of $250,000; and
. Full underwriting and Death Benefit Option 1.
. HISTORICAL-RESULTS* AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
====================================================================================================================================
MML Equity MML Blend MML Managed Bond MML Money Market
(9/15/71) (2/3/84) (12/16/81) (12/16/81)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR A POLICY IN FORCE FOR ONE YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $30,000 $30,000 $30,000 $30,000
Account Value $31,653 $29,711 $26,930 $25,756
Death Benefit $825,000 $825,000 $825,000 $825,000
- ------------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $150,000 $150,000 $150,000 $150,000
Account Value $236,602 $202,056 $161,251 $146,902
Death Benefit $825,000 $825,000 $825,000 $825,000
- ------------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR TEN YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $300,000 $300,000 $300,000 $300,000
Account Value $670,627 $553,162 $408,859 $331,227
Death Benefit $1,368,078 $1,128,451 $834,072 $825,000
- ------------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE SINCE INCEPTION OF THE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $450,000 $420,000 $450,000 $450,000
Account Value $4,858,480 $996,434 $889,332 $628,611
Death Benefit $7,044,795 $1,823,475 $1,511,864 $1,068,639
====================================================================================================================================
<CAPTION>
====================================================================================================================================
Oppenheimer Oppenheimer Oppenheimer Dreyfus Stock
Global Securities Capital Appreciation** High Income Index Fund
(11/12/90) (8/15/86) (4/30/86) (9/29/89)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR A POLICY IN FORCE FOR ONE YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $30,000 $30,000 $30,000 $30,000
Account Value $30,200 $27,378 $27,517 $32,775
Death Benefit $825,000 $825,000 $825,000 $825,000
- ------------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $150,000 $150,000 $150,000 $150,000
Account Value $200,719 $202,821 $187,871 $252,266
Death Benefit $825,000 $825,000 $825,000 $825,000
- ------------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE FOR TEN YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium -- $300,000 $300,000 --
Account Value -- $644,008 $575,161 --
Death Benefit -- $1,313,776 $1,173,329 --
- ------------------------------------------------------------------------------------------------------------------------------------
FOR A POLICY IN FORCE SINCE INCEPTION OF THE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Premium $240,000 $360,000 $360,000 $360,000
Account Value $348,515 $807,716 $741,772 $538,500
Death Benefit $825,000 $1,558,893 $1,431,620 $1,130,849
====================================================================================================================================
</TABLE>
* Historical investment results and current changes are used to determine value;
if guaranteed charges were used the results would be lower. The account value
reflects premiums paid, plus investment earnings, less all charges.
** Effective May 1, 1998, the Fund is called Oppenheimer Aggressive Growth Fund.
(The Cash Surrender Value is not illustrated because there is no surrender
charge and we assume no Policy Debt.
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 By-laws of MassMutual provide for indemnification of directors
and officers as follows:
Article V. Subject to limitations of law, the Company shall indemnify:
(a) each director, officer or employee;
(b) any individual who serves at the request of the Company as a
Secretary, a director, board member, committee member, officer
or employee of any organization or any separate investment
account, or;
(c) any individual who serves in any capacity with respect to
employee benefit plans;
from and against all loss, liability and expense imposed upon
or incurred by such person in connection with any action, claim or proceeding of
any nature whatsoever, in which such person may be involved or with which he or
she may be threatened, by reason of any alleged act, omission or otherwise while
serving in any such capacity.
Indemnification shall be provided although the person no longer serves in such
capacity and shall include protection for the person's heirs and legal
representatives. Indemnities hereunder shall include, but not be limited to, all
costs and reasonable counsel fees, fines, penalties, judgments or awards of any
kind, and the amount of reasonable settlements, whether or not payable to the
Company or to any of the other entities described in the preceding paragraph, or
to the policyholders or security holders thereof.
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.
1
<PAGE>
The Company may at its option indemnify for expenses incurred in connection with
any action or proceeding in advance of its final disposition, upon receipt of a
satisfactory undertaking for repayment if it be subsequently determined that the
person thus indemnified is not entitled to indemnification under this Article V.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Massachusetts Mutual Life Insurance Company hereby represents that fees and
charges deducted under the flexible premium variable whole life insurance
policies described in this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Massachusetts Mutual Life Insurance Company.
2
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 10
This Post-Effective Amendment is comprised of the following documents:
The Facing Sheet.
Cross-reference to items required by Form N-8B-2.
The Prospectus consisting of 69 pages.
The Undertaking to File Reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representation under Section 26(e)(2)(A) of the Investment Company Act of 1940.
The Signatures.
Written Consents of the Following Persons:
1. Coopers & Lybrand L.L.P., independent accountants;
2. Counsel opining as to the legality of securities being registered.
3. Opinion opining as to actuarial matters contained in the
Post-Effective Amendment by John M. Valencia, Assistant Vice
President.
The following Exhibits:
1. The following Exhibits correspond to those required by Paragraph A of
the instructions as to Exhibits in Form N-8B-2:
A. (1) Copy of the Resolution of Board of Directors of MassMutual
authorizing the establishment of the Registrant.*
(2) Not applicable.
(3) Form of Distribution Contracts:
(a)(1) Copy of the Form of Distribution Servicing Agreement
between MML Distributors, LLC, and Mass-Mutual.**
(a)(2) Copy of the Co-Underwriting Agreement between MML
Investors Services, Inc. and MassMutual.**
(b) Not applicable.
(c) Not applicable.
(4) Not applicable.
(5) Copy of the Form of Flexible Premium Variable Whole Life
Insurance Policy.***
(6) (a) Copy of the Certificate of Incorporation of MassMutual.*
(b) Copy of the By-Laws of MassMutual.*
3
<PAGE>
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(9) Not applicable.
(10) Copy of the Application for a Flexible Premium Variable Whole
Life Insurance Policy.***
(11) Copy of the Memorandum describing MassMutual's issuance,
transfer, and redemption procedures for the Policy.***
2. Opinion and Consent of Counsel as to the legality of the securities
being registered.***
3. No financial statement will be omitted from the Prospectus pursuant
to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of John M. Valencia opining as to actuarial
matters pertaining to the securities being registered.***
6. Consent of Coopers & Lybrand L.L.P.***
7. Copy of the Powers of Attorney for MassMutual.*
8. Copy of the Form of Participation Agreement between MassMutual, MML
Bay State Life Insurance Company, C.M. Life Insurance Company, OppenheimerFunds,
Inc. and Oppenheimer Variable Account Funds.*
*Incorporated by reference to Registration Statement File Number 333--22557,
filed February 28, 1997.
**Incorporated by reference to Post-Effective Amendment Number 8 to
Registration Statement 33-32361 filed with the Commission on April 30, 1996.
***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. 10
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No. 10 to Registration Statement No. 33-32361 to be
signed on its behalf by the undersigned thereunto duly authorized, all in the
city of Springfield and the Commonwealth of Massachusetts, on the 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. 10
to Registration Statement No. 33-32361 has been signed by the following persons
in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas B. Wheeler* Chief Executive Officer and April 10, 1998
- --------------------- Chairman of the Board
Thomas B. Wheeler
/s/ John J. Pajak* President, Chief Operating Officer April 10, 1998
- ------------------- and Director
John J. Pajak
/s/ Joseph M. Zubretsky* Executive Vice President, April 10, 1998
- ------------------------- Chief Financial Officer &
Joseph M. Zubretsky Chief Accounting Officer
/s/ Roger G. Ackerman Director --
- ---------------------
Roger G. Ackerman
/s/ James R. Birle* Director April 10, 1998
- ---------------------
James R. Birle
/s/ Gene Chao* Director April 10, 1998
- -------------------
Gene Chao, Ph.D.
/s/ Patricia Diaz Dennis* Director April 10, 1998
- --------------------------
Patricia Diaz Dennis
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Anthony Downs* Director April 10, 1998
- -------------------
Anthony Downs
/s/ James L. Dunlap* Director April 10, 1998
- ----------------------
James L. Dunlap
/s/ William B. Ellis* Director April 10, 1998
- -----------------------
William B. Ellis, Ph.D.
/s/ Robert M. Furek* Director April 10, 1998
- ---------------------
Robert M. Furek
/s/ Charles K. Gifford* Director April 10, 1998
- -------------------------
Charles K. Gifford
/s/ William N. Griggs* Director April 10, 1998
- ------------------------
William N. Griggs
/s/ George B. Harvey* Director April 10, 1998
- ----------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director April 10, 1998
- ----------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director April 10, 1998
- -----------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director April 10, 1998
- --------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director April 10, 1998
- -------------------
John F. Maypole
/s/ Alfred M. Zeien* Director April 10, 1998
- --------------------
Alfred M. Zeien
/s/ Richard M. Howe On April 10, 1998, as Attorney-in-Fact
- -------------------- pursuant to powers of attorney.
*Richard M. Howe
</TABLE>
6
<PAGE>
REPRESENTATION BY REGISTRANT's COUNSEL
--------------------------------------
As counsel to the Registrant, I, Lynn S. Mercier, have reviewed this
Post-Effective Amendment No. 10 to Registration Statement No. 33-32361 and I
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ Lynn S. Mercier
-----------------------------
Lynn S. Mercier
Attorney
Massachusetts Mutual Life Insurance Company
7
<PAGE>
EXHIBIT LIST
99.2 Opinion and Consent of Lynn S. Mercier
99.C.1 Consent of Coopers & Lybrand L.L.P.
99.C.6 Opinion and Consent of John M. Valencia
1(A)(11) Memorandum Describing MassMutual's Issuance, Transfer and
Redemption Procedures for the Policy
1(A)(5) Form of Flexible Premium Variable Whole Life Insurance Policy
1(A)(10) Application for a Flexible Premium Variable Whole Life Insurance
Policy
<PAGE>
EXHIBIT 99.2
Opinion and Consent of Lynn S. Mercier
[LETTERHEAD OF MASSMUTUAL]
April 24, 1998
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Post-Effective Amendment No. 10 to Registration Statement No. 33-32361 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 10 to Registration Statement No. 33-32361 under the Securities
Act of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Flexible Premium Variable Whole Life Insurance Policy With Tables of Selected
Face Amounts (the "Policy"). Massachusetts Mutual Variable Life Separate Account
I issues the Policy.
As Counsel for MassMutual, I provide legal advice to MassMutual in connection
with the operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Policy. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. MassMutual is a valid and subsisting corporation, organized and operated
under the laws of the Commonwealth of Massachusetts and is subject to regulation
by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Life Separate Account I is a separate account
validly established and maintained by MassMutual in accordance with
Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the Policy
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ Lynn S. Mercier
- -------------------------
Lynn S. Mercier
Attorney
<PAGE>
EXHIBIT 99.C.1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 10 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Large Case Variable Life Plus segment) on Form S-6 (Registration No. 33-32361),
of our report, dated February 3, 1998 on our audits of Massachusetts Mutual
Variable Life Separate Account I (Large Case Variable Life Plus segment), 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
<PAGE>
EXHIBIT 99.C.6
Opinion and Consent of John M. Valencia
[LETTERHEAD OF MASSMUTUAL]
April 24, 1998
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 10 to
Registration Statement No. 33-32361 for Massachusetts Mutual Life Insurance
Company's Flexible Premium Variable Whole Life Insurance Policies with Table of
Selected Face Amounts (the "Policies") under the Securities Act of 1933. The
prospectus included in the post-effective amendment describes the Policies. I am
familiar with the forms of the Policies and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix A of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 10 to Registration Statement No. 33-32361, and to the reference
of my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ John M. Valencia
- -----------------------------
John M. Valencia, FSA, MAAA
Assistant Vice President
<PAGE>
Exhibit 1(A)(11)
Memorandum Describing MassMutual's Issuance, Transfer and
Redemption Procedures for the Policy
Massachusetts Mutual Life Insurance Company's
Redemption and Transfer Procedures and Method
of Computing Adjustments on Payments and
Account Value Upon Conversion to Fixed Benefit Policies
-------------------------------------------------------
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by Massachusetts Mutual Life
Insurance Company ("MassMutual") in connection with the issuance of the Policy
described in this Registration Statement, the transfer of assets held
thereunder, and the redemption by Policyowners of their interests in the
Policies. This document also describes, as required by Rule
6e-3(T)(b)(13)(v)(B), the method that MassMutual will use in adjusting the
payments and account values when a Policy is exchanged for a fixed benefit
insurance policy.
3. "Public Offering Price":
Purchase and Related Transactions
- ---------------------------------
Set out below is a summary of the principal Policy provisions and administrative
procedures which might be deemed to constitute, either directly or indirectly, a
"purchase" transaction. The summary shows that, because of the insurance nature
of the Policies, the procedures involved necessarily differ in certain
significant respects from the purchase procedures for mutual funds and
contractual plans.
3. Premium Schedules and Underwriting Standards
--------------------------------------------
The minimum initial premium for a Policy depends on the minimum annual planned
premium for the Selected Face Amount of the Policy and the proposed frequency of
planned premiums. In some cases it may also depend on the total first monthly
deductions under the Policy.
A premium payment schedule may be selected at the time of application and may be
changed at any time. The planned premium may be subject to minimum and maximum
amounts which depend upon the Selected Face Amount of the Policy, the Insured's
age, sex and smoking class, and the amount of the initial premium paid. In
addition, the annual planned premium cannot be less than $300.
A Policyowner may make additional premium payments at any time before the death
of the Insured while the Policy is still in force, but such payments cannot be
less than $10.00 nor greater than the larger of 1) the premium which will not
increase the net amount at risk under the Policy, and 2) twice the Policy's
minimum planned premium for the Selected Face Amount in that year. The amount
and frequency of any additional premium payments will affect the Account Value
and may ultimately affect the amount of the Death Benefit and the period that
the Policy will remain in force.
The Policies will be offered and sold pursuant to established underwriting
standards and in accordance with state insurance laws. State insurance laws
prohibit unfair discrimination among Insureds but recognize that mortality
charges must be based upon factors such as age, sex, health and smoker status,
and occupation.
(b) Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application MassMutual will follow certain insurance
underwriting (i.e., evaluation of risks) procedures designed to determine
whether the applicant is insurable. This process may involve such verification
procedures as medical examinations and may require that further information be
provided by the proposed Insured before a determination can be made.
A Policy will not be issued until this underwriting procedure has been
completed.
The Register Date is the Policy Date, the day you pay the first premium under
the Policy, or the day you provide the Company with a completed Part I of
Application, whichever is latest. On the Register Date, MassMutual will allocate
the initial premium, less certain deductions, to the Money Market division until
the later of: (1) the expiration of the Free Look Period, or (2) receipt by
MassMutual of notice that the Policyowner received the Policy. Subject to the
allocation rules in the Policy, the Account Value is then allocated among the
Separate Account divisions and the GPA in accordance with the Policyowner's
instructions in the application. Subsequent premium payments will be similarly
allocated upon receipt. Allocation instructions can be changed for any future
premium payments. The allocation must be in whole percentage points.
1
<PAGE>
Insurance coverage begins when a completed application has been submitted, the
applicant has been judged to be insurable, and the initial premium has been
paid. Otherwise, coverage begins when the Policy has been issued and the Company
has received the first premium. This usually corresponds with the date the
Policy is delivered.
(c) Free Look Provision
-------------------
A Policy may be returned at the election of the Policyowner within 45 days after
the date Part 1 of Application for the Policy was completed, or within 10 days
after receipt of the issued Policy by the Policyowner, or within 10 days after
MassMutual mails or delivers to the Policyowner a written notice of right of
withdrawal, whichever is latest.
The Company will refund an amount equal to the total of all premiums paid for
the Policy. The Policy will then be deemed void from the beginning.
(d) Repayment of Indebtedness
-------------------------
A loan made under the Policy will bear interest at the rate of 6% per year or
the Policyowner may select an adjustable loan rate. For Policies under which an
adjustable loan rate is selected, MassMutual will set the rate 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. 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 Separate Account divisions and the GPA in proportion to
the non-loaned Account value in each. If the Policy Debt exceeds the Account
Value, we may terminate the Policy. Prior to termination we must notify the
Policyowner in writing of the amount necessary to bring the Policy Debt back
within the limit. If we do not receive payment within 31 days after the date we
mailed the notice, the Policy will terminate without value at the end of those
31 days.
Any Policy Debt may be repaid in full or in part at any time while the Insured
is living and the Policy is in force. Any repayments will result in the transfer
of values equal to the repayment from the loaned portion of the GPA to the
non-loaned portion of the GPA and the divisions of the Separate Account. The
transfer will be made in proportion to the non-loaned value in each investment
account at the time of repayment. If the loan is not repaid, we will deduct the
amount due from any amount payable from a full surrender or upon the death of
the Insured.
(e) Correction of Misstatement of Age or Sex
----------------------------------------
If MassMutual discovers that the Insured's date of birth or sex as given in the
application is not correct, an adjustment will be made. If the adjustment is
made when the Insured dies, the Death Benefit will reflect the amount provided
by the most recent mortality charge according to the correct age and sex. If the
adjustment is made before the Insured dies, then future monthly deductions will
be based on the correct age and sex.
3. "Redemption Procedures":
Surrender and Related Transactions
- ----------------------------------
This section outlines those procedures which might be deemed to constitute
redemptions under the Policy. These procedures differ in certain significant
respects from the redemption procedures for mutual funds and contractual plans.
3. Account Values
--------------
At any time while the Insured is still living the Policyowner may surrender the
Policy and receive the Cash Surrender Value. This value is equal to the Account
Value less any outstanding Policy Debt. At no time, however, will the Cash
Surrender Value be less than zero.
2
<PAGE>
In addition, subject to certain conditions after the Policy has been in force
for six months, Withdrawals may be made on any Monthly Calculation Date by
sending a written request to MassMutual. The minimum amount of any Withdrawal
will be that amount which, before any withdrawal charge is applied, equals $100.
The maximum amount of any Withdrawal is the Cash Surrender Value. The Account
Value remaining after a Withdrawal must be at least equal to an amount to be
determined at issue and shown in the Policy. The amount withdrawn will be
deducted from the Policy's Account Value at the end of the Valuation Period
applicable to the Monthly Calculation Date on which the withdrawal is made.
Withdrawals may be made from the GPA or from any division as the Policyowner
directs, but may not exceed the non-loaned Account Value of that division or
GPA. Withdrawals from the Separate Account will generally be paid within seven
days of receipt of the written request./(1)/
(b) Benefit Claims
--------------
As long as the Policy remains in force, MassMutual will pay a Death Benefit to
the named Beneficiary in accordance with the designated settlement option,
generally within seven days after MassMutual receives due proof of death of the
Insured and verifies the validity of the claim. Payment of Death Benefits may,
however, be postponed under certain circumstances./(2)/ In particular, during
the first two Policy Years, and in other circumstances in which MassMutual may
have a basis for contesting the claim, there can be a delay beyond the seven-day
period.
We will investigate all death claims arising within the two-year contestable
period. Upon receiving the information from a completed investigation, we will
generally make a determination within five days as to whether the claim should
be authorized for payment. Payments will be made promptly after authorization.
If payment is delayed 10 working days or more from the effective date of
surrender or Withdrawal, we will add interest at an annual rate of at least 3%.
The minimum amount of such interest is $25.
The Death Benefit is the greater of (a) the Selected Face Amount in effect on
the date of death, or (b) the Minimum Face Amount in effect on the date of death
with certain additions and deductions. The Minimum Face Amount is equal to
Account Value times the Minimum Face Amount percentage. These percentages depend
upon the Insureds age, sex and smoking classification. To this we will add that
part of any monthly deduction which applies to a period beyond the date of
death. The Death Benefit will be reduced by any Policy Debt outstanding on the
date of death and, if death occurs during a grace period, any unpaid monthly
charges under the Policy. If the Insured dies after the first Policy Year, we
will also include a pro rata share of any dividend allocated to the Policy for
the year death occurs.
(c) Policy Loans
------------
At any time after the first Policy Year, the Policyowner may borrow under the
Policy up to an amount equal to 90% of the total of the Account Value at the
time of the loan, less any outstanding Policy Debt before the new loan. Written
requests for a loan must be sent to the Home Office in a form acceptable to
MassMutual. The Policy must be properly assigned as collateral for the loan.
The Policy Debt is equal to the amount of all loans under the Policy plus
interest which accrues daily. Interest payments are due on each Policy
Anniversary. If not paid when due, interest will be added to the Policy Debt
and, as part of the loan, will bear interest on the same terms. The loan amount
requested will be secured by amounts taken from the Separate Account divisions
and the GPA in proportion to the non-loaned Account Value in each on the date of
the loan. Shares taken from the divisions will be liquidated and the resulting
dollar amounts will be transferred to the GPA. That portion of the Account Value
held in the GPA to secure a loan will accrue earnings at a rate which is the
greater of 4% and the Policy loan rate, less a charge for expenses and taxes
declared by MassMutual. If the Policy Debt exceeds the Account Value, we may
terminate the Policy. Prior to termination, we must notify the Policyowner in
writing of the amount necessary to bring the Policy Debt back within the limit.
If we do not receive payment within 31 days after the date we mailed the notice,
the Policy will then terminate without value at the end of those 31 days.
The Policy Debt will bear interest at the rate of 6% per year, or the
Policyowner may select an adjustable loan rate. For Policies under which an
adjustable loan rate is selected, MassMutual will set the rate that will apply
for the next year. The maximum rate
- ----------------------------
/1/ Payment from the Separate Account may be postponed whenever: (i) the New
York Stock Exchange is closed other than for customary weekend and holiday
closings, or trading on the New York Stock Exchange is restricted as determined
by the SEC, or (ii) an emergency exists, as determined by the SEC, as a result
of which disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's net
assets. Payments from the portion of the Account Value held in the GPA may be
postponed for up to six months. Payments under the Policy of any amount paid to
MassMutual by check may be postponed until such time as the check has cleared
the Policyowner's bank
/2/ See note 1, supra.
-----
3
<PAGE>
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.
Any Policy Debt may be repaid in full or in part at any time while the insured
is living and the Policy is in force. Any repayment will result in the transfer
of values equal to the repayment from the loaned portion of the GPA to the
non-loaned portion of the GPA and the divisions of the Separate Account. The
transfer will be made in proportion to the non-loaned value in each investment
account at the time of repayment. If the loan is not repaid, we will deduct the
amount due from any amount payable from a full surrender or upon the death of
the Insured.
A Policy loan, whether or not repaid, will have a permanent effect on the
Policyowner's Account Value to the extent that the investment results of the
division(s) or the rate of return on funds in the GPA not securing a loan differ
from the rate credited on funds which secure a loan. The longer a loan is
outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the division(s) or the GPA earn interest at a rate
greater than the rate credited on funds which secure a loan, a Policyowner's
Account Value will be less than it would have been had no loan been made. If the
division(s) earn interest at a rate less than the rate credited on funds which
secure a loan, the Policyowner's Account Value will be greater than it would
have been had no loan been made. A Policy loan, whether or not repaid, can also
have an effect on the Policy's Death Benefit during periods that an increase or
decrease in Account Value will result in an increase or decrease in the Policy's
Death Benefit.
(d) Policy Termination
------------------
If the Account Value less any Policy Debt is not sufficient to pay certain
monthly deductions under the Policy on the Monthly Calculation Date, the
remaining Account Value will be applied and the Policy will terminate after a
grace period of 61 days. The Policy will stay in force during the grace period.
Notice of the amount required to continue the Policy in force will be mailed to
the addressee of record at his last known address and, if required, to any
assignee of record. If a sufficient payment is not received by MassMutual during
the grace period, the Policy will terminate without value on the later of the 61
days or 30 days after the notice is mailed. If a sufficient payment is received
during the grace period, the payment will be allocated among the GPA and the
division(s) in accordance with the Policyowner's then current instructions.
If the Insured dies during a grace period, the Death Benefit proceeds
will be reduced by any due and unpaid monthly deductions to the date of death.
3. Transfers
---------
The Separate Account currently has four divisions, each of which
invests exclusively in shares of one of four Funds of the Trust, an open-end
diversified management investment company registered with the SEC. Policyowners
may effect up to 4 transfers per Policy Year among the divisions However,
Policyowners may transfer all funds in the Separate Account to the GPA at any
time regardless of the number of transfers previously made
Transfers from the GPA to the Separate Account may be made only once each Policy
Year. Each such transfer may not exceed 25% of the Account Value in the GPA at
the time of the transfer. The Account Value in the GPA equal to any Policy Debt
cannot be transferred to the Separate Account. Any transfer will be effective as
of the Valuation Date, and all transfers made on one Valuation Date will be
considered one transfer.
EXCHANGE PROCEDURE
- ------------------
The Policyowner may transfer the entire Account Value under the Policy to the
GPA at any time. This transfer converts the Policy into a fixed benefit policy.
The transfer will take effect when we receive a written request.
4
<PAGE>
Exhibit 1(A)(5)
Form of Flexible Premium Variable Whole Life Insurance Policy
Flexible Premium Variable Whole Life
Insurance Policy With Table Of Selected Face Amounts
- --------------------------------------------------------------------------------
Policy Number 0 000 000
Insured JOHN A DOE
Selected Face Amount SEE TABLE OF SELECTED FACE AMOUNTS
- --------------------------------------------------------------------------------
Dear Policy Owner:
READ YOUR POLICY CAREFULLY. It has been written in readable language to help you
understand its terms. We have used examples to explain some of its provisions.
These examples do not reflect the actual amounts or status of this policy. As
you read through the policy, remember the words "we", "us" and "our" refer to
Massachusetts Mutual Life Insurance Company.
We will, subject to the terms of this policy, pay the death benefit to
the Beneficiary when due proof of the Insured's death is received at our Home
Office. The terms of this policy are contained on this and the following pages.
For service or information on this policy, contact the agent who sold the
policy, any of our agency offices or our Home Office.
YOU HAVE A RIGHT TO RETURN THIS POLICY. If you decide not to keep this
policy, return it within 10 days after you receive it, or within 10 days after
you receive the notice of right to withdraw, or within 45 days after the date of
the Part 1 of the application for this policy, whichever is latest. It may be
returned by delivering or mailing it to our Home Office, to any of our agency
offices, or to the agent who sold the policy. Then, the policy will be as though
it had never been issued. We will promptly refund (a) any premium paid for this
policy, plus (b) interest credited to this policy under the Guaranteed Principal
Account, plus or minus (c) an amount that reflects the investment experience of
the investment divisions of the Separate Account under this policy to the date
the policy is received by us, minus any amounts borrowed or withdrawn.
Signed for Massachusetts Mutual Life Insurance Company.
Sincerely yours,
President Secretary
This Policy provides that: Insurance is payable when the Insured dies.
Within specified limits, flexible premiums may be
paid during the Insured's lifetime.
Annual dividends may be paid.
The amount of death benefit and the duration of insurance coverage may be fixed
or variable as described in Parts 3 and 5.
The variable account value of the policy may increase or decrease in accordance
with the experience of the Separate Account.
There are no minimum guarantees as to the variable account value.
The fixed account value of the policy earns interest at a rate not less than the
minimum described in the Interest On Fixed Account Value provision.
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Policy Summary
This Summary briefly describes some of the major policy provisions. Since it
does not go into detail, the actual provisions will control. See those
provisions for full information and any limits that may apply. The "Where To
Find It" on the inside of the back cover shows where these provisions may be
found.
This is a variable whole life insurance policy. We will pay a death benefit if
the Insured dies while the policy is in force. "In force" means that the
insurance has not terminated. "Variable" means that all values which depend on
the investment performance of the Separate Account shown on the Schedule Page
are not guaranteed as to dollar amount.
Premiums for this policy are flexible. After the first premium has been paid,
there is no requirement that any specific amount of premium be paid on any date.
Instead, within the limits stated in this policy, any amount may be paid on any
date before the death of the Insured.
Premiums are applied to increase the value of this policy. Monthly charges are
deducted from the value of this policy each month. If there is not enough value
to pay the monthly charges for a month, the policy will terminate at the end of
61 days. There is, however, a right to reinstate the policy.
There are other rights available while the Insured is living. These include:
. The right to assign this policy.
. The right to change the Owner or any Beneficiary.
. The right to surrender this policy.
. The right to make withdrawals.
. The right to make loans.
. The right to increase the Selected Face Amount.
. The right to allocate net premiums among the Guaranteed Principal Account
and the divisions of the Separate Account.
. The right to transfer values among the Guaranteed Principal Account and
the divisions of the Separate Account.
. The right to change the Death Benefit Option.
The policy also includes a number of Payment Options. These provide alternate
ways to pay the death benefit or the amount payable upon surrender of the
policy.
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THE SCHEDULE PAGE
THIS PAGE SHOWS SPECIFIC INFORMATION ABOUT THIS POLICY AND IS REFERRED TO
THROUGHOUT THE POLICY
POLICY NUMBER 0 000 000
INSURED JOHN A DOE
SELECTED FACE AMOUNT SEE TABLE OF SELECTED FACE AMOUNTS
ISSUE DATE DEC 01 1993
POLICY DATE DEC 01 1993
INSURED'S AGE ON POLICY DATE 35 MALE
- --------------------------------------------------------------------------------
BASIC POLICY INFORMATION
- ------------------------
SELECTED MINIMUM DEATH
PLAN FACE AMOUNT FACE AMOUNT BENEFIT OPTION
---- ----------- ----------- --------------
FLEXIBLE PREMIUM VARIABLE SEE TABLE OF SEE MINIMUM FACE 1
WHOLE LIFE WITH TABLE OF SELECTED FACE AMOUNT PROVISION
SELECTED FACE AMOUNTS AMOUNTS
- --------------------------------------------------------------------------------
PREMIUM INFORMATION AS OF DEC 01 1993
- -------------------
FIRST PREMIUM $1,000.00
PLANNED ANNUAL PREMIUM $1,000.00
FOR THE FIRST POLICY YEAR, NET PREMIUM WILL BE:
76.0% OF THE FIRST $486.00 OF PREMIUMS PAID IN THAT POLICY YEAR; AND
91.5% OF PREMIUMS OVER $486.00 PAID IN THAT POLICY YEAR.
FOR EACH SUBSEQUENT POLICY YEAR, NET PREMIUM WILL BE 91.5% OF PREMIUMS PAID IN
THAT POLICY YEAR.
- --------------------------------------------------------------------------------
NET PREMIUM ALLOCATION LIMITATIONS
- ----------------------------------
THERE ARE NO NET PREMIUM ALLOCATION LIMITATIONS OTHER THAN THOSE STATED IN THE
ALLOCATION OF NET PREMIUM PROVISION.
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT INFORMATION
- ----------------------------
THE SEPARATE ACCOUNT REFERRED TO IN THIS POLICY IS MASSACHUSETTS MUTUAL VARIABLE
LIFE SEPARATE ACCOUNT I.
SEPARATE ACCOUNT INFORMATION CONTINUED ON NEXT PAGE.
THE DIVISIONS OF THE SEPARATE ACCOUNT ARE:
3
<PAGE>
MML EQUITY DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN SHARES OF
MML EQUITY FUND, OR ITS SUCCESSOR. THIS FUND INVESTS PRIMARILY IN COMMON STOCKS
AND OTHER EQUITY SECURITIES.
MML MONEY MARKET DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN THE
MML MONEY MARKET FUND, OR ITS SUCCESSOR. THIS FUND INVESTS PRIMARILY IN SHORT-
TERM DEBT INSTRUMENTS.
MML MANAGED BOND DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN THE
MML MANAGED BOND FUND, OR ITS SUCCESSOR. THIS FUND INVESTS PRIMARILY IN FIXED-
INCOME SECURITIES.
MML BLEND DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN SHARES OF
MML BLEND FUND, OR ITS SUCCESSOR. THIS FUND INVESTS IN: COMMON STOCKS AND OTHER
EQUITY SECURITIES; MONEY MARKET INSTRUMENTS AND OTHER DEBT SECURITIES WITH
MATURITIES GENERALLY NOT EXCEEDING ONE YEAR; AND BONDS AND OTHER DEBT SECURITIES
WITH MATURITIES GENERALLY EXCEEDING ONE YEAR.
HIGH INCOME DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN SHARES
OF OPPENHEIMER HIGH INCOME FUND, OR ITS SUCCESSOR. THIS FUND INVESTS PRIMARILY
IN HIGH-YIELD FIXED-INCOME SECURITIES INCLUDING UNRATED OR HIGH-RISK SECURITIES.
CAPITAL APPRECIATION DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN
SHARES OF OPPENHEIMER CAPITAL APPRECIATION FUND, OR ITS SUCCESSOR. THIS FUND
INVESTS PRIMARILY IN SECURITIES OF "GROWTH-TYPE" COMPANIES.
GLOBAL SECURITIES DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN
SHARES OF OPPENHEIMER GLOBAL SECURITIES FUND, OR ITS SUCCESSOR. THIS FUND
INVESTS PRIMARILY IN SECURITIES OF FOREIGN ISSUERS, "GROWTH-TYPE" COMPANIES,
CYCLICAL INDUSTRIES AND SPECIAL SITUATIONS.
DREYFUS STOCK INDEX DIVISION. AMOUNTS CREDITED TO THIS DIVISION ARE INVESTED IN
SHARES OF THE DREYFUS STOCK INDEX FUND, OR ITS SUCCESSOR. THIS FUND 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.
- --------------------------------------------------------------------------------
LIMITATIONS ON TRANSFERS
- ------------------------
TRANSFERS MAY ONLY BE IN WHOLE-NUMBER PERCENTAGES OR DOLLAR AMOUNTS.
THERE IS NO LIMIT ON THE NUMBER OF TRANSFERS ALLOWED, BUT WE RESERVE THE RIGHT
TO CHARGE A MAXIMUM FEE OF $10 PER TRANSFER IF THERE ARE MORE THAN SIX TRANSFERS
IN A POLICY YEAR. ONLY ONE TRANSFER MAY BE MADE FROM THE GUARANTEED PRINCIPAL
ACCOUNT IN ANY POLICY YEAR AND ANY TRANSFER FROM THE GUARANTEED PRINCIPAL
ACCOUNT CANNOT BE MORE THAN 25% OF THE FIXED ACCOUNT VALUE OF THIS POLICY
(EXCLUDING POLICY LOANS) ON THE DATE THE TRANSFER IS MADE. HOWEVER, IF IN EACH
OF THE PREVIOUS THREE POLICY YEARS 25% OF THE FIXED ACCOUNT VALUE HAS BEEN
TRANSFERRED AND THERE HAVE BEEN NO PREMIUM PAYMENTS OR TRANSFERS TO THE
GUARANTEED PRINCIPAL ACCOUNT (EXCEPT AS THE RESULT OF A LOAN), 100% OF THE FIXED
ACCOUNT VALUE OF THIS POLICY (EXCLUDING POLICY LOANS) MAY BE TRANSFERRED TO THE
SEPARATE ACCOUNT.
LIMITATIONS ON TRANSFERS - CONTINUED
- ------------------------------------
ALL VALUES MAY BE TRANSFERRED TO THE GUARANTEED PRINCIPAL ACCOUNT AT ANY TIME,
REGARDLESS OF THE NUMBER OF TRANSFERS PREVIOUSLY MADE.
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<PAGE>
THESE LIMITATIONS DO NOT APPLY TO TRANSFERS RESULTING FROM A POLICY LOAN.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- -----------------
MONTHLY FACE AMOUNT CHARGE IS $0.00. SEE MONTHLY CHARGES IN PART 3.
THIS IS A NONSMOKER'S POLICY.
THIS POLICY WAS ISSUED ON A GUARANTEED-ISSUE UNDERWRITING BASIS.
OWNER AND BENEFICIARY - SEE APPLICATION ATTACHED TO THIS POLICY.
- --------------------------------------------------------------------------------
BASIS OF COMPUTATION - FOR MAXIMUM MONTHLY MORTALITY CHARGES, MINIMUM ANNUAL
- --------------------
INTEREST RATE FOR THE GUARANTEED PRINCIPAL ACCOUNT, AND MINIMUM CASH SURRENDER
VALUES.
MORTALITY TABLE -- COMMISSIONER'S 1980 STANDARD ORDINARY NONSMOKER MORTALITY
TABLE-MALE
INTEREST RATE -- 4% PER YEAR
5
<PAGE>
TABLE OF SELECTED FACE AMOUNTS
POLICY YEAR BEGINNING SELECTED FACE AMOUNT
--------------------- -------------------
DEC 01 1993 $100,000
DEC 01 1994 $100,000
DEC 01 1995 $100,000
DEC 01 1996 $100,000
DEC 01 1997 $100,000
DEC 01 1998 $100,000
DEC 01 1999 $100,000
DEC 01 2000 $100,000
DEC 01 2001 $100,000
DEC 01 2002 $100,000
DEC 01 2003 $110,000
DEC 01 2004 $110,000
DEC 01 2005 $110,000
DEC 01 2006 $110,000
DEC 01 2007 $110,000
DEC 01 2008 $110,000
DEC 01 2009 $110,000
DEC 01 2010 $110,000
DEC 01 2011 $110,000
DEC 01 2012 $110,000
DEC 01 2013 $120,000
AND LATER
6
<PAGE>
TABLE OF MAXIMUM MONTHLY MORTALITY CHARGES
THESE MAXIMUM MONTHLY MORTALITY CHARGES ARE FOR EACH $1,000 OF INSURANCE WHICH
REQUIRES A CHARGE.
POLICY MAXIMUM MONTHLY POLICY MAXIMUM MONTHLY
YEAR BEGINNING MORTALITY CHARGE YEAR BEGINNING MORTALITY CHARGE
-------------- ---------------- -------------- ----------------
DEC 01 1993 0.14096 DEC 01 2028 2.94130
DEC 01 1994 0.14764 DEC 01 2029 3.31274
DEC 01 1995 0.15683 DEC 01 2030 3.63093
DEC 01 1996 0.16685 DEC 01 2031 4.05839
DEC 01 1997 0.17854 DEC 01 2032 4.54126
DEC 01 1998 0.19107 DEC 01 2033 5.06274
DEC 01 1999 0.20611 DEC 01 2034 5.62182
DEC 01 2000 0.22115 DEC 01 2035 6.21387
DEC 01 2001 0.23870 DEC 01 2036 6.83324
DEC 01 2002 0.25626 DEC 01 2037 7.49616
DEC 01 2003 0.27717 DEC 01 2038 8.22966
DEC 01 2004 0.29975 DEC 01 2039 9.05445
DEC 01 2005 0.32401 DEC 01 2040 9.99708
DEC 01 2006 0.34996 DEC 01 2041 11.07332
DEC 01 2007 0.37927 DEC 01 2042 12.26712
DEC 01 2008 0.41026 DEC 01 2043 13.55591
DEC 01 2009 0.44713 DEC 01 2044 14.91787
DEC 01 2010 0.48989 DEC 01 2045 16.34412
DEC 01 2011 0.53771 DEC 01 2046 17.80841
DEC 01 2012 0.59311 DEC 01 2047 19.33267
DEC 01 2013 0.65444 DEC 01 2048 20.94168
DEC 01 2014 0.72255 DEC 01 2049 22.66794
DEC 01 2015 0.79493 DEC 01 2050 24.57677
DEC 01 2016 0.87327 DEC 01 2051 26.76407
DEC 01 2017 0.96182 DEC 01 2052 29.63735
DEC 01 2018 1.06061 DEC 01 2053 33.93112
DEC 01 2019 1.17052 DEC 01 2054 41.27938
DEC 01 2020 1.29585 DEC 01 2055 56.04155
DEC 01 2021 1.43921 DEC 01 2056 83.33333
DEC 01 2022 1.60155 AND LATER
DEC 01 2023 1.78129
DEC 01 2024 1.97513
DEC 01 2025 2.18574
DEC 01 2026 2.41241
DEC 01 2027 2.66044
7
<PAGE>
TABLE OF MINIMUM FACE AMOUNT PERCENTAGES
THE MINIMUM FACE AMOUNT ON ANY DATE IS A PERCENTAGE OF THE ACCOUNT VALUE ON THAT
DATE. THE PERCENTAGES WHICH APPLY ARE SHOWN BELOW.
POLICY YEAR MINIMUM FACE POLICY YEAR MINIMUM FACE
BEGINNING AMOUNT PERCENTAGE BEGINNING AMOUNT PERCENTAGE
--------- ----------------- --------- -----------------
DEC 01 1993 438% DEC 01 2028 155%
DEC 01 1994 424 DEC 01 2029 152
DEC 01 1995 410 DEC 01 2030 148
DEC 01 1996 396 DEC 01 2031 145
DEC 01 1997 383 DEC 01 2032 143
DEC 01 1998 370 DEC 01 2033 140
DEC 01 1999 358 DEC 01 2034 138
DEC 01 2000 347 DEC 01 2035 135
DEC 01 2001 335 DEC 01 2036 133
DEC 01 2002 324 DEC 01 2037 131
DEC 01 2003 314 DEC 01 2038 129
DEC 01 2004 304 DEC 01 2039 127
DEC 01 2005 294 DEC 01 2040 126
DEC 01 2006 285 DEC 01 2041 124
DEC 01 2007 276 DEC 01 2042 123
DEC 01 2008 268 DEC 01 2043 121
DEC 01 2009 259 DEC 01 2044 120
DEC 01 2010 251 DEC 01 2045 119
DEC 01 2011 244 DEC 01 2046 118
DEC 01 2012 236 DEC 01 2047 117
DEC 01 2013 229 DEC 01 2048 116
DEC 01 2014 223 DEC 01 2049 115
DEC 01 2015 216 DEC 01 2050 114
DEC 01 2016 210 DEC 01 2051 112
DEC 01 2017 204 DEC 01 2052 111
DEC 01 2018 199 DEC 01 2053 110
DEC 01 2019 193 DEC 01 2054 109
DEC 01 2020 188 DEC 01 2055 107
DEC 01 2021 183 DEC 01 2056 106
DEC 01 2022 179 DEC 01 2057 104
DEC 01 2023 174 DEC 01 2058 100
DEC 01 2024 170 AND LATER
DEC 01 2025 166
DEC 01 2026 162
DEC 01 2027 158
8
<PAGE>
Part l. The Basics Of This Policy
In this Part we discuss some insurance concepts that are necessary to understand
this policy.
The Parties Involved - Owner, Insured, Beneficiary, Irrevocable Beneficiary
The Owner is the person who owns this policy, as shown on our records.
The Insured is the person whose life this policy insures. The Insured may be the
Owner of this policy, or someone else may be the Owner.
Example: Your employer buys a policy that insures your life and names you as
Owner. In this case, you are both the Insured and Owner. If your employer names
itself as Owner, then the Insured and Owner are different people.
A Beneficiary is any person named on our records to receive insurance proceeds
after the Insured dies. 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.
Example: Debbie is named as primary (first) Beneficiary. Anne and Scott are
named as Beneficiaries in the secondary class. If Debbie is alive when the
Insured dies, she receives the death benefit. But if Debbie is dead and Anne and
Scott are alive when the Insured dies, Anne and Scott receive the death benefit.
Any Beneficiary may be named an Irrevocable Beneficiary. An Irrevocable
Beneficiary is one whose consent is needed to change that Beneficiary. Also,
this Beneficiary must consent to the exercise of certain other rights.
Dates - Policy Date, Policy Anniversary Date, Policy Year, Issue Date, Monthly
Calculation Date, Valuation Date, Valuation Period, Valuation Time, Register
Date
The Policy Date is shown on the Schedule Page. It is the starting point for
determining Policy Anniversary Dates and Policy Years. The first Policy
Anniversary Date is one year after the Policy Date. The period from the Policy
Date to the first Policy Anniversary Date, or from one Policy Anniversary Date
to the next, is called a Policy Year.
Example: The Policy Date is June 10, 19X1. The first Policy Anniversary Date is
June 10, 19X2. The period from June 10, 19X1 through June 9, 19X2 is a Policy
Year.
The Issue Date is also shown on the Schedule Page. The Issue Date is used to
determine the start of the suicide and contestability periods. We discuss
contestability below. See Part 5 for a discussion of the suicide exclusion. It
is the date from which the policy is in force if the first premium has been
paid.
The Monthly Calculation Date is the monthly date on which monthly charges for
this policy are due. The first Monthly Calculation Date is the Policy Date.
Subsequent Monthly Calculation Dates are the same day of each month thereafter.
A Valuation Date is any date on which the New York Stock Exchange (or its
successor) is open for trading. A Valuation Period is the period of time from
the end of one Valuation Date to the end of the next Valuation Date. A Valuation
Time is the time the New York Stock Exchange (or its successor) closes on a
Valuation Date. All actions which are to be performed on a Valuation Date will
be performed as of the Valuation Time.
The Register Date is the date on which the first net premium payment for this
policy is allocated to the Separate Account or the Guaranteed Principal Account.
It is the Valuation Date which is on, or next follows, the later of:
. The date on which we receive a completed Part 1 of the application for
this policy at our Home Office; and
. The date on which we receive the first premium for this policy at our
Home Office.
Policy A Legal Contract
This policy is a legal contract between the Owner and us. The entire contract
consists of the application and the policy, which includes any riders the policy
has. We have issued this policy in return for the application and the payment of
the first premium. Any changes or waiver of its
9
<PAGE>
terms must be in writing and signed by our Secretary or an Assistant Secretary
to be effective.
Representations And Contestability
We rely on all statements made by or for the Insured in the application(s).
Legally, those statements are considered to be representations and not
warranties. We can bring legal action to contest the validity of this policy, or
any increase in the Selected Face Amount applied for after the Issue Date, for
any material misrepresentation of a fact. To do so, however, the
misrepresentation must have been made in the application, or in a supplemental
application to increase the Selected Face Amount, and a copy of the application
must have been attached to this policy when issued, or made a part of the policy
when the increase in the Selected Face Amount became effective.
Except for any increase in the Selected Face Amount applied for after the Issue
Date, we can not contest the validity of this policy after it has been in force
during the lifetime of the Insured for a period of two years from its Issue
Date. We can not contest the validity of any increase in the Selected Face
Amount applied for after the Issue Date once it has been in effect during the
lifetime of the Insured for a period of two years.
Misstatement Of Age Or Sex
If the Insured's date of birth or sex as given in the application is not
correct, an adjustment will be made. If the adjustment is made when the Insured
dies, the death benefit will reflect the amount provided by the most recent
mortality charge according to the correct age and sex. If the adjustment is made
before the Insured dies, then future monthly deductions will be based on the
correct age and sex.
Meaning Of In Force
"In force" means that the insurance provided by this policy has not terminated.
This policy will be in force from its Issue Date or, if later, the date the
first premium is paid.
This policy will continue in force to the Insured's death if:
. The account value less any policy debt is sufficient to cover the
monthly charges due on each Monthly Calculation Date; and
. Policy debt does not exceed the account value; and
. This policy is not surrendered.
The factors which can affect this policy's account value include:
. The amount and timing of premium payments.
. Any withdrawals or transfers of values.
. Any changes in any riders.
. Any changes in the Selected Face Amount.
. Any outstanding policy debt.
. Any changes in the Death Benefit Option.
. The monthly charges deducted from the account value.
. The interest earned on the fixed account value.
. The net investment experience of the Separate Account for this policy.
. Any dividends allocated to this policy.
Each of these factors is discussed in detail elsewhere in this policy.
Home Office
Our Home Office is in Springfield, Massachusetts. The address is Massachusetts
Mutual Life Insurance Company, Springfield, Massachusetts 01111.
Part 2. Premium Payments
Premiums are the payments that may be paid to us to increase the account value
of this policy.
The First Premium
The first premium for this policy is shown on the Schedule Page. This premium is
due on the Policy Date. This policy will not be in force until the first premium
has been paid.
Planned Annual
The planned annual premium for this policy is shown on the Schedule Page. The
payment of
10
<PAGE>
Premiums
planned annual premiums does not guarantee that this policy will continue in
force.
Premium Flexibility And Premium Notices
After the first premium has been paid, there is no requirement that any amount
of premium be paid on any date. Subject to the Right To Refund Premiums
provision in this Part, while the policy is in force any amount of premium may
be paid at any time before the death of the Insured. However, each premium paid
must be at least $10 or, if greater, the amount needed to prevent termination,
as discussed in the Grace Period And Termination provision in Part 3.
We will send premium notices for the planned annual premium. We will stop
sending these notices if no premium has been paid for 36 consecutive months.
However, if a premium is paid after that time, we will send notices for the
planned annual premium again.
We will also send notice of any premium needed to prevent termination of this
policy. Premium notices will be sent only while this policy is in force.
Where To Pay Premiums
All premiums are payable to us at our Home Office or at the place shown for
payment on the premium notice. Upon request, a receipt signed by our Secretary
or an Assistant Secretary will be given for any premium payment.
Right To Refund Premiums
We have the right to promptly refund any amount of premium paid if application
of that premium to the account value would increase the amount of insurance
which requires a charge.
Part 3. Accounts, Values, And Charges
This policy provides that certain values (referred to as the variable account
values) are based on the investment performance of the Separate Account and are
not guaranteed as to dollar amount. This policy also provides that other values
(referred to as the fixed account values) are based on the interest credited to
the Guaranteed Principal Account. The account value of this policy is the
variable account value plus the fixed account value. This Part gives information
about the Separate Account, the Guaranteed Principal Account, and the values and
charges connected with them.
Net Premium
A net premium is a premium we receive for this policy less the charges we deduct
at that time. Net premium, expressed as a percentage of a premium we receive, is
shown on the Schedule Page.
Allocation Of Net Premiums
The allocation of each net premium we receive will be in whole percentages and
will be subject to any net premium allocation limitations stated on the Schedule
Page.
Each net premium we receive before the Right To Return period expires, or, if
later, the date we receive written notice that the Owner received this policy,
will be allocated to the MML Money Market Division of the Separate Account. The
Right To Return period is explained on the front cover of this policy.
Upon the later of the date we receive written notice that the Owner has received
this policy and the expiration of the Right To Return period, we will allocate
this policy's value among the Guaranteed Principal Account and the divisions of
the Separate Account. This allocation will be in accordance with the net premium
allocation in effect and subject to the allocation limitations stated on the
Schedule Page.
Each net premium we receive after the Right To Return period expires, or, if
later, the date we receive written notice that the Owner received this policy,
will be allocated among the Guaranteed Principal Account and the divisions of
the Separate Account. This allocation will be in accordance with the net premium
allocation in effect and subject to the allocation limitations stated on the
Schedule Page.
The net premium allocation specified in the application will remain in effect
until changed by any later written election satisfactory to us and received at
our Home Office. Any change in the allocation specified in the application will
be subject to the allocation limitations stated on the Schedule Page.
11
<PAGE>
We will allocate the first net premium payment as of the Register Date. The
amount of each net premium we receive for this policy for allocation to each
division of the Separate Account will be applied to purchase accumulation units
for this policy in that division.
The Separate Account
The Separate Account shown on the Schedule Page is a separate investment account
which we have established under Massachusetts law and is subject to the laws of
the jurisdiction in which this policy was delivered.
The Separate Account has several divisions. Each division invests in shares of
an investment fund. The divisions and investment funds are shown on the Schedule
Page.
The values of the assets in the divisions are variable and are not guaranteed.
They depend on the investment results of the Separate Account shown on the
Schedule Page.
We own the assets of the Separate Account. Those assets will only be used to
support variable life insurance policies. A portion of the assets equal to the
reserves and other liabilities of the Separate Account will not be charged with
liabilities that arise from any other business we may conduct. However, we may
transfer assets which exceed the reserves and other liabilities of the Separate
Account to our general account. Income, gains, and losses, whether or not
realized, from each division of the Separate Account are credited to or charged
against that division without regard to any of our other income, gains, or
losses.
Changes In The Separate Account
We have the right to establish additional divisions of the Separate Account from
time to time. Amounts credited to any additional divisions established would be
invested in shares of other Funds. For any division, we have the right to
substitute new Funds.
Subject to applicable provisions of federal securities laws, we have the right
to change the investment policy of any division of the Separate Account with the
approval of the Massachusetts Insurance Commissioner. If required, the process
for obtaining approval of a material change from the Massachusetts Insurance
Commissioner will be filed with the insurance supervisory official of the state
where this policy is delivered. We will notify the Owner if the Massachusetts
Insurance Commissioner approves any material change.
We have the right to operate the Separate Account as a unit investment trust
under the Investment Company Act of 1940 or in any other form permitted by law.
Accumulation Units
Accumulation units are used to measure the variable account value of this
policy. The value of a unit is determined as of the Valuation Time on each
Valuation Date for valuation of the Separate Account. The value of any unit can
vary from Valuation Date to Valuation Date. That value reflects the investment
performance of the division of the Separate Account applicable to that unit.
Purchase And Sale Of Accumulation Units
Accumulation units will be purchased or sold at the unit value as of the
Valuation Time on the Valuation Date of purchase or sale. Accumulation unit
value is discussed in Part 7.
Example: The amount applied is $550. The date of purchase is June 10, 19X4. The
accumulation unit value on that date is $10. The number of units purchased would
be 55 ($550 divided by $10 = 55). If, instead, the unit value was $11, then the
amount applied would purchase 50 units ($550 divided by $11 = 50).
If we receive a premium or a written request that causes us to purchase or sell
accumulation units, and we receive that premium or request before the Valuation
Time on a Valuation Date, accumulation units will be purchased or sold as of
that Valuation Date. Otherwise, accumulation units will be purchased or sold as
of the next following Valuation Date.
At the Owner's request, we will purchase or sell accumulation units as of a
later Valuation Date.
In no case will accumulation units be purchased before the Register Date.
Account Value Of Policy
The account value of this policy on any date is the variable account value of
this policy plus the
12
<PAGE>
fixed account value of this policy, both determined as of that date.
Variable Account Value Of Policy
The variable account value of this policy reflects:
. The net premiums allocated to the Separate Account for this policy;
. Any amounts transferred to the Separate Account for this policy from the
Guaranteed Principal Account;
. Any amounts transferred and withdrawn from the Separate Account for this
policy;
. Any monthly charges deducted from the Separate Account for this policy;
and
. The net investment experience of the Separate Account for this policy.
Net premiums, transfers, withdrawals, and monthly deductions are all reflected
in the variable account value through the purchase or sale of accumulation
units. The net investment experience is reflected in the value of the
accumulation units. Net premiums and monthly deductions are discussed in this
Part. Transfers and withdrawals are discussed in Part 4.
The value of this policy's accumulation units in a division of the Separate
Account is equal to the accumulation unit value in that division on the date the
value is determined, multiplied by the number of those units in that division.
How accumulation unit values are determined is discussed in Part 7.
The variable account value of this policy on any date is the total of the values
of this policy's accumulation units in each division of the Separate Account.
Fixed Account Value Of Policy
The fixed account value of this policy is the accumulation at interest of:
. The net premiums allocated to the Guaranteed Principal Account for this
policy; plus
. Any amounts transferred into the Guaranteed Principal Account for this
policy from the Separate Account; less
. Any amounts transferred and withdrawn from the Guaranteed Principal
Account for this policy; and less
. Any monthly charges deducted from the Guaranteed Principal Account for
this policy.
The Guaranteed Principal Account
Interest On Fixed Account Value
The fixed account value of this policy earns interest at a rate not less than
the minimum annual interest rate for the Guaranteed Principal Account shown in
the Basis Of Computation section on the Schedule Page. Interest is credited
daily to and including the date the fixed account value is determined.
For any fixed account value equal to any policy loan, the interest rate we use
will be the daily equivalent of the greater of:
. The minimum annual rate; and
. The annual loan interest rate in effect on the preceding Monthly
Calculation Date less not more than 0.75%.
For any fixed account value in excess of an amount equal to any policy loan, the
interest rate we use will be the daily equivalent of the greater of:
. The minimum annual rate; and
. An alternate annual rate established by us.
Monthly Charges
Charges will be deducted from the account value of this policy. The charges are
due on each Monthly Calculation Date.
The charges will be taken from the divisions of the Separate Account and from
the Guaranteed Principal Account in proportion to the values of this policy in
each of those divisions and in the Guaranteed Principal Account (excluding
outstanding policy loans). For each Monthly Calculation Date, deductions will be
made, and values will be determined, on the Valuation Date
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which is on, or next follows, the latest of:
. The Register Date;
. The Monthly Calculation Date; or
. The date we receive the amount of premium needed to prevent termination
in accordance with the Grace Period And Termination provision in this Part.
Deductions from the Separate Account are made by selling accumulation units at
their value on the Valuation Date determined above.
We assess monthly charges of four types:
1. Administrative Charge. The amount of this charge will be determined by us.
However, it will not be greater than a maximum determined as follows.
We determine the ratio of (1) the Consumer Price Index for September of the
calendar year preceding the date the charge is due to (2) the Consumer Price
Index for September, 1985. This ratio is multiplied by $5.00. The result of this
multiplication is the maximum administrative charge. In no case, however, will
the charge exceed $8.00 per month.
The Consumer Price Index we use in this calculation is the Consumer Price
Index for all Urban Consumers (U.S. city average - all items) published by the
U.S. Department of Labor. If this Index is no longer published or is changed, we
can use another index. The new index will be one that, in our judgment, is most
comparable to the index we were using. Then, the Consumer Price Index will mean
the new index.
2. Face Amount Charge. The amount of this charge is shown in the Other
Information section of the Schedule Page.
3. Mortality Charge. The maximum monthly mortality charges for each $1,000 of
insurance which requires a charge are shown in the Table Of Maximum Monthly
Mortality Charges.
We may charge less than the maximum charges shown in the Table. Any change
in these charges will apply to all policies in the same class as this policy.
The amount of insurance which requires a charge is determined as follows. This
computation is made as of the date the charge is due. All amounts are computed
as of that date.
a. We compute the account value after all additions and deductions other
than the deduction of the mortality charge.
b. We determine the amount of benefit under the Death Benefit Option in
effect (as discussed in the Death Benefit Options provision in Part 5). The
Minimum Face Amount used here is based on the account value computed in (a)
above.
c. We divide the amount of benefit determined in (b) above by 1 plus the
monthly equivalent (expressed as a decimal fraction) of the minimum annual
interest rate for the Guaranteed Principal Account shown in the Basis Of
Computation section on the Schedule Page.
d. We subtract the account value computed in (a) above from the amount
determined in (c) above. The result is the amount of insurance which requires a
charge.
4. Rider Charge. The monthly charges for any rider are shown in a table of
charges for that rider.
Grace Period And Termination
If the account value less any policy debt is not enough to cover the monthly
charges due on a Monthly Calculation Date, we allow a grace period for payment
of the amount of premium (not less than $10) needed to increase the account
value so that the monthly deduction can be made. This grace period begins on the
date the deduction is due. It ends 61 days after that date or, if later, 30 days
after we have mailed a written notice to the Owner at the last known address
shown on our records. This notice will state the amount required to increase the
account value to cover the charges.
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During the grace period, this policy will continue in force. It will terminate
without value if we do not receive payment of the required amount by the end of
the grace period.
Part 4. Life Benefits
A life insurance policy provides a death benefit if the Insured dies while the
policy is in force. There are also rights and benefits that are available before
the Insured dies. These "Life Benefits" are discussed in this Part.
Policy Ownership
Rights Of Owner
While the Insured is living, the Owner may exercise all rights given by this
policy or allowed by us. These rights include assigning this policy, changing
Beneficiaries, changing Ownership, enjoying all policy benefits and exercising
all policy options.
The consent of any Irrevocable Beneficiary is needed to exercise any policy
right except:
. The right to exercise dividend rights; and
. The right to reinstate this policy after termination.
Assigning This Policy
This policy may be assigned. But for any assignment to be binding on us, we must
receive a signed copy of it at our Home Office. We will not be responsible for
the validity of any assignment.
Once we receive a signed copy, the rights of the Owner and the interest of any
Beneficiary or any other person will be subject to the assignment. An assignment
is subject to any policy debt. See "Borrowing On This Policy" in this Part for a
discussion of policy debt.
Changing The Owner Or Beneficiary
The Owner or any Beneficiary may be changed during the Insured's lifetime. We do
not limit the number of changes that may be made. To make a change, a written
request satisfactory to us must be received at our Home Office. The change will
take effect as of the date the request is signed, even if the Insured dies
before we receive it. Each change will be subject to any payment we made or
other action we took before receiving the request.
Transfers Of Values
Transfers of values are subject to the limitations stated on the Schedule Page.
Subject to those limitations, transfers may be made upon written direction
satisfactory to us received at our Home Office. These transfers are:
. Transfers of values between divisions of the Separate Account. These
transfers will be made by selling all or part of the accumulation units in a
division and applying the value of the units sold to purchase units in any other
division.
. Transfers of values from one or more divisions of the Separate Account
to the Guaranteed Principal Account. These transfers will be made by selling all
or part of the accumulation units in a division and applying the value of the
units sold to the Guaranteed Principal Account.
. Transfers of values from the Guaranteed Principal Account to one or more
divisions of the Separate Account. These transfers will be made by applying all
or part of the value in the Guaranteed Principal Account to purchase
accumulation units in one or more divisions of the Separate Account.
Transfers will be as of the Valuation Date specified in the Purchase And Sale Of
Accumulation Units provision in Part 3. All transfers made on one Valuation Date
will be considered one transfer.
This Policy's Share In Dividends
Policy Is Participating
This policy is participating, which means it may share in any dividends we pay.
Each year we determine how much money can be paid as dividends. This is called
divisible surplus. We then determine how much of this divisible surplus is to be
allocated to this policy.
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This determination is based on this policy's contribution to divisible surplus.
Since we do not expect this policy to contribute to divisible surplus, we do not
expect that any of that surplus will be available for allocation to this policy.
If any dividends are allocated to this policy, they will be payable on Policy
Anniversary Dates.
How Dividends May be Used
Dividends may be used in a number of ways. These are called dividend options. A
dividend option may be elected in the application. It may be changed at a later
time. Although we do not expect that any dividends will be payable on this
policy, there are four basic dividend options.
Cash - Dividends will be paid in cash.
Dividend Accumulations - Dividends will be added to the account value.
Dividends will be allocated among the Guaranteed Principal Account and the
divisions of the Separate Account as directed for net premiums.
Paid-Up Additions - Dividends will be used to buy additional level paid-up
insurance.
Reduce Monthly Deductions - Dividends will be used to reduce the monthly
deductions we make from the account value to pay the monthly charges.
Dividends will be applied as paid-up additions if no option is elected.
Dividend After Death
If the Insured dies after the first Policy Year, the death benefit will include
a pro rata share of any dividend allocated to the policy for the Year death
occurs.
Surrendering This Policy And Making Withdrawals
Right To Surrender
This policy may be surrendered for its cash surrender value at any time while
the Insured is living. Surrender will be effective on the date we receive this
policy and a written surrender request satisfactory to us at our Home Office. A
later effective date may be elected in the surrender request.
Cash Surrender Value
The cash surrender value is equal to the account value less any policy debt.
Making Withdrawals
While the Insured is living, withdrawals may be made on any Monthly Calculation
Date after six months from the Policy Date. The request for a withdrawal must be
written and satisfactory to us. It must state the Account (or Accounts) from
which the withdrawal will be made. For any withdrawal from the Separate Account,
the request must also state the division (or divisions) from which the
withdrawal will be made.
The amount of a withdrawal includes the withdrawal charge that applies.
Withdrawals from the Guaranteed Principal Account will be made by reducing the
value in that Account to provide the amount of the withdrawal. Withdrawals from
a division (or divisions) of the Separate Account will be made by selling a
sufficient number of accumulation units to provide the amount of the withdrawal.
Each withdrawal will be subject to the following rules:
. The minimum amount of a withdrawal is $100.
. A withdrawal charge of 2% of the amount of the withdrawal, but not more
than $25, will be deducted from the amount of the withdrawal.
. The amount of a withdrawal can never exceed the cash surrender value of
this policy, less an amount equal to:
. For a withdrawal made prior to the Policy Anniversary Date nearest the
Insured's 65th birthday, 12 multiplied by the most recent monthly charge made
for this policy; and
. For a withdrawal made on or after the Policy Anniversary Date nearest
the Insured's 65th birthday, 60 multiplied by the most recent monthly charge
made for this policy.
Unless we receive evidence of insurability satisfactory to us, the Selected Face
Amount for the current Policy Year will be reduced upon withdrawal as needed to
prevent an increase in the amount of insurance that requires a charge. The
Selected Face Amount for subsequent Policy Years may also be reduced for the
same reason. A new Table of Selected Face Amounts will be sent to the Owner to
reflect these changes.
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Example: You make a withdrawal without furnishing us satisfactory evidence of
insurability. Just before the withdrawal, your policy has a Selected Face Amount
of $50,000 and an account value of $20,000. The Minimum Face Amount Percentage
for the current Policy Year is 200%. Under Death Benefit Option #1, the amount
of insurance which requires a charge is $50,000 minus $20,000, or $30,000. If
you make a withdrawal of $5,000, the account value would be reduced to $15,000.
The amount of insurance which requires a charge would otherwise be increased to
$35,000 ($50,000 - $15,000). However, the Selected Face Amount will be reduced
instead to $45,000 and the amount of insurance which requires a charge will
remain at $30,000. (For simplicity, in this example the minimum annual interest
rate is assumed to be zero.)
How We Pay
Any withdrawal made will be paid in one sum. However, if the entire policy is
surrendered, the cash surrender value may be paid in one sum, or it may be
applied under any payment option elected. See Part 6.
We may delay paying any surrender or withdrawal value from the Guaranteed
Principal Account for up to six months from the date the request (and the
policy, if needed) is received at our Home Office.
We may delay paying any surrender or withdrawal value from the Separate Account
during any period that:
. The New York Stock Exchange (or its successor) is closed, except for
normal weekend or holiday closings, or trading is restricted;
. The Securities and Exchange Commission (or its successor) determines
that a state of emergency exists; or
. The Securities and Exchange Commission (or its successor) permits us to
delay payment for the protection of our policy owners.
We will add interest to the surrender or withdrawal value payment if:
. The payment is delayed for more than ten working days from the effective
date of surrender or withdrawal; and
. The reason for the delay is other than a reason stated in the third
paragraph of this provision; and
. The amount of such interest is at least $25.
If interest is added, the amount of interest will be the same as would be paid
under Option D for the same period of time. See Part 6 for a description of
Option D.
Borrowing On This Policy
Right To Make Loans
Loans can be made on this policy at any time while the Insured is living.
However, the policy must be properly assigned to us before the loan is made. No
other collateral is needed. We refer to all outstanding loans plus accrued
interest as "policy debt."
Effect Of Loan
A loan is attributed to each division of the Separate Account and to the
Guaranteed Principal Account in proportion to the values of this policy in each
of those divisions and in the Guaranteed Principal Account (excluding any
outstanding policy loans) on the date at the time of the loan. The amount of the
loan attributed to each division of the Separate Account will be transferred to
the Guaranteed Principal Account. Any such transfer is made by selling
accumulation units in the division and applying the value of those units to the
Guaranteed Principal Account on the date the loan is made. Any interest added to
the loan will be treated as a new loan under this provision.
The amount equal to any outstanding policy loans will be held in the Guaranteed
Principal Account, and will earn interest as described in the Interest On Fixed
Account Value provision.
Maximum Loan Available
There is a maximum amount that can be borrowed. It is the account value on the
date the loan is to be made reduced by:
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. Any outstanding policy debt; and
. Interest on the loan being made and on any outstanding policy debt to
the next Policy Anniversary Date; and
. An amount equal to the most recent monthly charge made for this policy,
multiplied by the number of Monthly Calculation Dates from the date the loan is
made to and including the next Policy Anniversary Date.
Interest
The interest rate on any loan is 6% per year. Interest is not due in advance.
This interest accrues (builds up) each day and becomes part of the policy debt
as it accrues.
Interest is due on each Policy Anniversary Date. If interest is not paid when
due, it will be added to the loan and will bear interest at the rate payable on
the loan.
Example: You have a loan of $1,000. The interest due on the Policy Anniversary
Date is $60. If it is not paid on that date, we will add it to the existing
loan. The loan will then be $1,060 and interest will be charged on this amount
from then on.
Policy Debt Limit
Policy debt (which includes accrued interest) may not equal or exceed the
account value. If this limit is reached, we can terminate this policy. To
terminate for this reason we must mail written notice to the Owner and any
assignee shown on our records at their last known addresses. This notice will
state an amount that will bring the policy debt back within the limit. If we do
not receive payment within 31 days after the date we mailed the notice, this
policy will terminate without value at the end of those 31 days.
Repayment Of Policy Debt
All or part of any policy debt may be repaid at any time while the policy is in
force and the Insured is living.
Any repayment of policy debt will result in the transfer of values equal to the
repayment out of the Guaranteed Principal Account and the application of those
values to each division of the Separate Account and to the Guaranteed Principal
Account in proportion to the values of this policy in each of those divisions
and in the Guaranteed Principal Account (excluding any outstanding policy loans)
at the time of the repayment.
Other Borrowing Rules
We may delay the granting of any loan attributable to the Guaranteed Principal
Account for up to six months.
We may delay the granting of any loan attributable to the Separate Account
during any period that:
. The New York Stock Exchange (or its successor) is closed, except for
normal weekend or holiday closings, or trading is restricted; or
. The Securities and Exchange Commission (or its successor) determines
that a state of emergency exists; or
. The Securities and Exchange Commission (or its successor) permits us to
delay payment for the protection of our policy owners.
Reinstating This Policy
When Reinstatement Can Be Made
After this policy has terminated, it may be reinstated - that is, put back in
force. However, the policy cannot be reinstated if it has been surrendered for
its cash surrender value. Reinstatement must be made within five years after the
date of termination and during the Insured's lifetime.
Requirements To Reinstate
Evidence of insurability satisfactory to us is required to reinstate. A premium
is also required as a cost to reinstate. That premium must be no less than the
amount necessary to produce an account value equal to three times the monthly
charges due on the Monthly Calculation Date which is on, or next follows, the
date of reinstatement.
Right To Increase Selected Face Amount
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Increases In The Selected
Face Amount
While this policy is in force, the Selected Face Amount may be increased upon
written application. Evidence of insurability, satisfactory to us, is required
for each increase. Any increase must be for at least $5,000, unless we adopt
rules that establish a lower minimum.
Any increase in the Selected Face Amount will be effective on the Monthly
Calculation Date which is on, or next follows, the later of:
. The date 15 days after a written request for such change has been
received and approved by us; or
. The requested effective date of the change.
Mortality charges for each increase are determined and deducted from the account
value in accordance with the Monthly Charges provision. These charges will be
deducted from the account value beginning on the effective date of the increase.
Limitations On Increases
No increase in the Selected Face Amount can become effective:
. Within six months after the Policy Date; or
. Within six months after any previous increase; or
. After the Policy Anniversary Date nearest the Insured's 75th birthday.
Evidence Of Increases
If the Selected Face Amount is increased we will send a copy of the application
for the increase and an amended Schedule Page reflecting that increase. We will
also send any Tables pages that may be required. However, we have the right to
require that the policy be sent to us so that the increase can be made.
Right To Transfer This Policy To A Substitute Insured
Transferring This Policy
This policy may be transferred to the life of a substitute insured. Transfer
will be effective on the Transfer Date discussed in the next provision. Transfer
will be subject to the following conditions.
. This policy must be in force on the Transfer Date;
. A written application for the transfer and payment of any required cost
to transfer must be received by us at our Home Office;
. Evidence of insurability of the substitute insured, satisfactory to us,
will be required;
. The substitute insured must not have been under 20 years of age on the
birthday nearest the Policy Date of this policy;
. The substitute insured must not be over 65 years of age on the birthday
nearest the Transfer Date; and
. The Owner of this policy after it has been transferred must have an
insurable interest in the life of the substitute insured.
After transfer, the Policy Date will be the same as it was before transfer.
Transfer Date
The Transfer Date will be the Policy Anniversary Date which is on, or next
follows, the later of:
. The date we approve the application for transfer; and
. The date any required cost to transfer is paid.
The insurance on the previous insured will continue to, but not including, the
Transfer Date. The insurance on the substitute insured will take effect on the
Transfer Date.
When this policy has been transferred, it will be modified to show that the
contestable and suicide periods, as they apply to the substitute insured, will
be measured from the Transfer Date.
Transfer Method
The Selected Face Amount for the substitute insured will be determined as for a
new Insured under a new policy.
Upon transfer, if the amount of insurance that requires a charge is greater than
the Selected Face Amount, we will adjust the amount of insurance that requires a
charge to equal the Selected Face
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Amount by refunding a portion of the account value.
The account value immediately after transfer will be equal to:
. The account value immediately before transfer; plus
. Any net premium necessary to make the cash surrender value, immediately
before the monthly charges are deducted on the Transfer Date, at least 12 times
the monthly charges; minus
. Any amount which must be refunded as discussed in the second paragraph
of this provision; minus
. The monthly charges deducted on the Transfer Date.
Any charges we deduct on or after the transfer will be based on the life of the
substitute insured.
Cost To Transfer
The cost to transfer is the sum of:
. An administrative fee of $75; and
. Any premium necessary to effect the transfer method described above;
and
. Any excess policy debt as discussed in the Policy Debt After Transfer
provision.
Policy Debt After Transfer
Any policy debt on the Transfer Date will, if not repaid at that time, remain
after transfer. However, if the amount of that debt is more than the maximum
loan available after transfer, the excess must be repaid on or before the
Transfer Date.
Assignment Upon Transfer
Any assignment of this policy which is in effect on the Transfer Date will
continue to apply after that Date.
Reports To Owner
Annual Report
Each year, within 30 days after the Policy Anniversary Date, we will mail a
report to the Owner. There will be no charge for this report. This report will
show the account value at the beginning of the previous Policy Year and all
premiums paid during that Year. It will also show the additions to, and
deductions from, the account value during that Year, and the account value,
death benefit, cash surrender value, and policy debt as of the last Policy
Anniversary Date.
This report will also include any additional information required by applicable
law or regulation.
Illustrative Report
In addition to the annual report, we will, upon request after the first Policy
Year, send an illustrative report of projected values to the Owner. We will not
charge a fee for providing an illustrative report on an annual basis. However,
if the Owner requests illustrative reports more frequently, we may charge a
reasonable fee, but only for those additional reports.
Part 5. The Death Benefit
The death benefit is the amount of money we will pay when we receive due proof
at our Home Office that the Insured died while the policy was in force. We
discuss the death benefit in this Part.
Amount Of Death Benefit
If the Insured dies while this policy is in force, the death benefit will be the
amount of benefit provided by the Death Benefit Option in effect on the date of
death, with these adjustments:
. We add the part of any monthly charge that applies to a period beyond
the date of death; and
. We deduct:
. Any policy debt outstanding on the date of death; and
. Any unpaid monthly charges to the date of death.
Death Benefit Options
Two Death Benefit Options, described below, are available under this policy. The
Death Benefit Option is shown on the Schedule Page and the Selected Face Amount
is shown in the Table of Selected Face Amounts. The Minimum Face Amount is
discussed in the next provision.
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Death Benefit Option #1 - Under this Option, the amount of benefit is the
greater of:
. The Selected Face Amount in effect on the date of death; and
. The Minimum Face Amount in effect on the date of death.
Death Benefit Option #2 - Under this Option, the amount of benefit is the
greater of:
. The Selected Face Amount in effect on the date of death plus the
account value on the date of death; and
. The Minimum Face Amount in effect on the date of death.
Minimum Face Amount
In order to qualify as life insurance under the federal tax laws in effect on
the Issue Date, this policy has a Minimum Face Amount. The Minimum Face Amount
on any date is a percentage of the account value on that date. The percentage
for each Policy Year is shown in the Table Of Minimum Face Amount Percentages in
this policy.
Example: The Minimum Face Amount is determined on June 10, 19X1. The account
value on that date is $50,000. The last Policy Anniversary Date was May 2, 19X1.
If the applicable Minimum Face Amount Percentage for the Policy Year beginning
May 2, 19X1 is 260%, then the Minimum Face Amount is 260% of $50,000, or
$130,000.
Changes In The Death
Benefit Option
While this policy is in force, the Death Benefit Option may be changed upon
written request. Any change from Death Benefit Option 1 to Death Benefit Option
2 will require evidence of insurability satisfactory to us.
Any change in the Death Benefit Option will take effect on the Policy
Anniversary Date on or next following the later of:
. The date 15 days after a written request for such change has been
received and approved by us; or
. The requested effective date of the change.
When We Pay
The death benefit will be paid within seven days after the date we receive due
proof of the Insured's death, and any other requirements necessary for us to
make payment, at our Home Office. However, we may delay payment of the death
benefit during any period that:
. The New York Stock Exchange (or its successor) is closed, except for
normal weekend or holiday closings, or trading is restricted; or
. The Securities and Exchange Commission (or its successor) determines
that a state of emergency exists; or
. The Securities and Exchange Commission (or its successor) permits us to
delay payment for the protection of our policy owners.
Interest On Death Benefit
If the death benefit is paid in one sum, we will add interest from the date of
death to the date of payment. The amount of interest will be the same as would
be paid under Option D of the payment options for that period of time but not
less than that required by law. See Part 6 for a description of Option D.
If the death benefit is applied under a payment option, interest will be paid
from the date of death to the effective date of that option. It will be paid in
one sum to the Beneficiary living on that effective date. The amount of interest
will be the same as would be paid under Option D for that period of time but not
less than that required by law.
Suicide Exclusion
Except for any increases in the Selected Face Amount applied for after the Issue
Date of this policy, we will pay a limited death benefit if the Insured commits
suicide, while sane or insane, within two years from the Issue Date and while
this policy is in force. The limited death benefit will be the amount of
premiums paid for this policy, less any policy debt and amounts withdrawn.
For any increases in the Selected Face Amount applied for after the Issue Date
of this policy, we will pay a limited death benefit if the Insured commits
suicide, while sane or insane, within two
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years from the effective date of the increase and while it is in force. The
limited death benefit will be the monthly deductions made for that increase.
However, if the limited death benefit as described in the preceding paragraph is
payable, there will be no death benefit for the increase.
Any limited death benefit will be paid in one sum to the Beneficiary.
Part 6. Payment Options
These are Optional Methods Of Settlement. They provide alternate ways in which
payment can be made.
Availability Of Options
All or part of the death benefit or cash surrender value may be applied under
any payment option. If this policy is assigned, any amount due to the assignee
will be paid in one sum. The balance, if any, may be applied under any payment
option.
Minimum Amounts
If the amount to be applied under any option for any one person is less than
$2,000, we may pay that amount in one sum instead. If the payments under any
option come to less than $20 each, we have the right to make payments at less
frequent intervals.
Description Of Options
Our payment options are described below. Any other payment option agreed to by
us may be elected. The payment options are described in terms of monthly
payments. Annual, semiannual, or quarterly payments may be requested instead.
The amount of these payments will be determined in a way which is consistent
with monthly payments and will be quoted on request.
If the Schedule Page shows that this policy was issued on a unisex rate basis,
the female rates shown in the Option C, E and F Tables apply in all cases. The
male rates in those tables do not apply to unisex rate policies.
Option A
Fixed Amount Payment Option. Each monthly payment will be for an agreed fixed
amount. The amount of each payment may not be less than $10 for each $1,000
applied. Interest will be credited each month on the unpaid balance and added to
it. This interest will be at a rate determined by us, but not less than the
equivalent of 3% per year. Payments continue until the amount we hold runs out.
The last payment will be for the balance only.
Option B
Fixed Time Payment Option. Equal monthly payments will be 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 monthly payment rates we are using when the
first payment is due. The rate of any payment will not be less than shown in the
Option B Table.
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Option B Table
Minimum Monthly Payment Rates For Each $1,000 Applied
Monthly Monthly
Years Payment Years Payment
1 $84.47 16 $6.53
2 42.86 17 6.23
3 28.99 18 5.96
4 22.06 19 5.73
5 17.91 20 5.51
6 15.14 21 5.32
7 13.16 22 5.15
8 11.68 23 4.99
9 10.53 24 4.84
10 9.61 25 4.71
11 8.86 26 4.59
12 8.24 27 4.47
13 7.71 28 4.37
14 7.26 29 4.27
15 6.87 30 4.18
For quarterly payment, multiply by 2.993. For semiannual payment, multiply
by 5.963. For annual payment, multiply by 11.839.
Option C
Lifetime Payment Option. Equal monthly payments are based on the life of a named
person. Payments will continue for the lifetime of that person. The three
variations are:
(1) Payments for life only. No specific number of payments is guaranteed.
Payments stop when the named person dies.
(2) Payments guaranteed for amount applied. Payments stop when they equal the
amount applied or when the named person dies, whichever is later.
(3) Payments guaranteed for 5, 10 or 20 years. Payments stop at the end of the
selected guaranteed period or when the named person dies, whichever is later.
The Option C Table shows the minimum monthly payment for each $1,000 applied.
The actual payments will be based on the monthly payment rates we are using when
the first payment is due. They will not be less than shown in the Table.
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Option C Table
Minimum Monthly Payment Rates For Each $1,000 Applied
Payments Payments Guaranteed For
Age* For Life Amount 5 10 20
Male Female Only Applied Years Years Years
35 40 $3.30 $3.25 $3.29 $3.28 $3.27
40 45 3.47 3.41 3.46 3.45 3.43
45 50 3.69 3.60 3.68 3.67 3.62
50 55 3.96 3.83 3.95 3.93 3.85
55 60 4.31 4.13 4.30 4.27 4.14
60 65 4.77 4.49 4.75 4.70 4.44
65 70 5.41 4.96 5.38 5.26 4.77
70 75 6.30 5.56 6.21 5.96 5.07
75 80 7.50 6.31 7.30 6.77 5.30
80 85 9.16 7.29 8.72 7.64 5.43
85 11.48 8.54 10.46 8.44 5.49
* Age on birthday nearest due date of the first payment. Monthly payment
rates for ages not shown will be furnished on request. Monthly payment rates for
ages over 85 are the same as those for 85.
Option D
Interest Payment Option. We will hold any amount applied under this option.
Interest on the unpaid balance will be paid each month at a rate determined by
us. This rate will be not less than the equivalent of 3% per year.
Option E
Joint Lifetime Payment Option. Equal monthly payments are based on the lives of
two named persons. While both are living, one payment will be made each month.
When one dies, the same payment will continue for the lifetime of the other. The
two variations are:
(1) Payments for two lives only. No specific number of payments is guaranteed.
Payments stop when both named persons have died.
(2) Payments guaranteed for 10 years. Payments stop at the end of 10 years, or
when both named persons have died, whichever is later.
The Option E Table shows the minimum monthly payment for each $1,000 applied.
The actual payments will be based on the monthly payment rates we are using when
the first payment is due. They will not be less than shown in the Table.
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Option E Table
Minimum Monthly Payment Rates For Each $1,000 Applied
Payments For Two Lives Only
M50 M55 M60 M65 M70 M75
Age*F55 F60 F65 F70 F75 F80 F85
M F
50 55 $3.53 $3.64 $3.72 $3.80 $3.85 $3.89
55 60 3.64 3.78 3.91 4.03 4.12 4.18
60 65 3.72 3.91 4.10 4.27 4.42 4.54
65 70 3.80 4.03 4.27 4.52 4.76 4.97
70 75 3.85 4.12 4.42 4.76 5.11 5.44
75 80 3.89 4.18 4.54 4.97 5.44 5.92
80 85 3.91 4.23 4.63 5.12 5.71 6.36
Payments Guaranteed For 10 Years
M50 M55 M60 M65 M70 M75
Age*F55 F60 F65 F70 F75 F80 F85
M F
50 55 $3.52 $3.63 $3.71 $3.79 $3.84 $3.88
55 60 3.63 3.77 3.90 4.02 4.11 4.17
60 65 3.71 3.90 4.09 4.26 4.41 4.53
65 70 3.79 4.02 4.26 4.51 4.75 4.94
70 75 3.84 4.11 4.41 4.75 5.08 5.38
75 80 3.88 4.17 4.53 4.94 5.38 5.82
80 85 3.90 4.22 4.61 5.08 5.62 6.19
* Age on birthday nearest the due date of the first payment. Monthly payment
rates for ages not shown will be furnished on request. Monthly payment rates for
ages over 85 are the same as those for 85.
Option F
Joint Lifetime Payment Option With Reduced Payments. Monthly payments are based
on the lives of two named persons. Payments will continue while both are living.
When one dies, payments are reduced by one-third and will continue for the
lifetime of the other. Payments stop when both persons have died.
The Option F Table shows the minimum monthly payment for each $1,000 applied.
The actual payments will be based on the monthly payment rates we are using when
the first payment is due. They will not be less than shown in the Table.
25
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Option F Table
Minimum Monthly Payment Rates For Each $1,000 Applied
M50 M55 M60 M65 M70 M75
Age*F55 F60 F65 F70 F75 F80 F85
M F
50 55 $3.80 $3.94 $4.10 $4.28 $4.47 $4.66
55 60 3.94 4.11 4.30 4.51 4.73 4.96
60 65 4.10 4.30 4.52 4.77 5.05 5.33
65 70 4.28 4.51 4.77 5.08 5.42 5.77
70 75 4.47 4.73 5.05 5.42 5.85 6.30
75 80 4.66 4.96 5.33 5.77 6.30 6.88
80 85 4.86 5.19 5.61 6.13 6.77 7.51
* Age on birthday nearest the due date of the first payment. Monthly
payment rates for ages not shown will be furnished on request. Monthly
payment rates for ages over 85 are the same as those for 85.
Electing A Payment
Option
To elect any option, we require that a written request, satisfactory to us, be
received at our Home Office. The Owner may elect an option during the Insured's
lifetime. If the death benefit is payable in one sum when the Insured dies, the
Beneficiary may elect an option with our consent. Options for any amount payable
to an association, corporation, partnership or fiduciary are available with our
consent. However, a corporation or partnership may apply any amount payable to
it under Option C, E, or F if the option payments are based on the life or lives
of the Insured, the Insured's spouse, any child of the Insured, or any other
person agreed to by us.
Effective Date And
Payment Dates
The effective date of an option is the date the amount is applied under that
option. For a death benefit, this is the date that due proof of the Insured's
death is received at our Home Office. For the cash surrender value, it is the
effective date of surrender.
The first payment is due on the effective date, except the first payment under
Option D is due one month later. A later date for the first payment may be
requested in the payment option election. All payment dates will fall on the
same day of the month as the first one. No payment will become due until a
payment date. No part payment will be made for any period shorter than the time
between payment dates.
Example: Monthly payments of $100 are being made to your son on the lst of each
month. He dies on the 10th. No part payment is due your son or his estate for
the period between the 1st and the 10th.
Withdrawals And
Changes
If provided in the payment option election, all or part of the unpaid balance
under Options A or D may be withdrawn or applied under any other option.
If the cash surrender value is applied under Option A or D, we may delay payment
of any withdrawal for up to six months. Interest at the rate in effect for
Option D during this period will be paid on the amount withdrawn.
Income Protection
To the extent permitted by law, each option payment and any withdrawal shall be
free from legal process and the claim of any creditor of the person entitled to
them. No option payment and no amount held under an option can be taken or
assigned in advance of its payment date, unless the Owner's written consent is
given before the Insured dies. This consent must be received at our Home Office.
Part 7. Notes On Our Computations
26
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This Part covers some technical points about this policy.
Net Investment Factor
For each division of the Separate Account, the Net Investment Factor for any
Valuation Period is the gross investment rate for that period plus 1.00000000
and minus an asset charge. This asset charge will be not more than .00001094 for
each day of a Valuation Period. The Net Investment Factor may be equal to,
greater, or less than 1.00000000.
For each division of the Separate Account, the gross investment rate for any
Valuation Period is equal to:
. The net earnings of that division during the Valuation Period, divided
by
. The value of the total assets of that division at the beginning of the
Valuation Period.
The net earnings of each division are equal to the accrued investment income and
capital gains and losses (realized and unrealized) of that division reduced by
any amount charged against that division for taxes paid or reserved for by us.
The gross investment rate will be determined by us in accordance with generally
accepted accounting principles and applicable laws, rules and regulations. This
determination shall be conclusive upon the Owner, the Insured, any Beneficiary
and any assignee and any other person under this policy.
Accumulation Unit Value
The value of an accumulation unit in each division was set at $1.00000000 on the
first Valuation Date selected by us. The value on any date thereafter is equal
to the product of the Net Investment Factor for that division for the Valuation
Period which includes that date and the accumulation unit value on the preceding
Valuation Date.
Adjustments Of Units
And Values
We have the right to split or consolidate the number of accumulation units
credited to the policy, with a corresponding increase or decrease in the unit
values. We may exercise this right whenever we consider an adjustment of units
to be desirable. However, strict equity will be preserved in making any
adjustment. No adjustment will have any material effect on the benefits,
provisions or investment return of this policy, or on the Owner, Insured, any
Beneficiary, any assignee or other person, or on us.
Basis Of Computation
The Basis Of Computation is the mortality table and interest rate we use to
determine:
. The minimum cash surrender values;
. The maximum monthly mortality charges;
. The minimum annual interest earned on the fixed account value of the
policy; and
. The minimum payments under Payment Options C, E, and F.
The Basis Of Computation for the minimum cash surrender values, for the maximum
monthly mortality charges, and for the minimum interest earned on the fixed
account value of the policy is shown on the Schedule Page. The mortality table
specified on the Schedule Page applies to amounts in a standard underwriting
classification. Appropriate modifications are made to this table for any amount
which is not in a standard underwriting classification.
In computing the minimum payments under Payment Options C, E, and F, we use
mortality rates from the 1983 Table "a" with Projection G for 30 years and with
female rates set back five years. The interest used is at an annual rate of 3%.
Method Of Computing
Values
When required by the state where this policy was delivered, we filed a detailed
statement of the method we use to compute the policy benefits and values. These
benefits and values are not less than those required by the laws of that state.
27
<PAGE>
WHERE TO FIND IT
Page No.
The Schedule Page....................................... 1
Table of Selected Face Amounts.......................... 2
Table of Maximum Monthly Mortality
Charges................................................ 3
Table of Minimum Face Amount
Percentages............................................ 4
Part l. - The Basics Of This Policy........................ 5
The Parties Involved - Owner, Insured,
Beneficiary, Irrevocable
Beneficiary............................................ 5
Dates - Policy Date, Policy Anniversary Date,
Policy Year, Issue Date, Monthly Calculation
Date, Valuation Date, Valuation Period,
Valuation Time, Register Date.......................... 5
Policy A Legal Contract................................. 6
Representations And Contestability...................... 6
Misstatement Of Age Or Sex.............................. 6
Meaning Of In Force..................................... 6
Home Office............................................. 7
Part 2. - Premium Payments................................. 7
The First Premium....................................... 7
Planned Annual Premiums................................. 7
Premium Flexibility And Premium Notices................. 7
Where To Pay Premiums................................... 7
Right To Refund Premiums................................ 7
Part 3. - Accounts, Values, And Charges.................... 7
Net Premium............................................. 7
Allocation Of Net Premiums.............................. 8
The Separate Account.................................... 8
Changes In The Separate Account......................... 8
Accumulation Units...................................... 9
Purchase And Sale Of Accumulation Units................. 9
Account Value Of Policy................................. 9
Variable Account Value Of Policy........................ 9
Fixed Account Value Of Policy........................... 10
The Guaranteed Principal Account........................ 10
Interest On Fixed Account Value......................... 10
Monthly Charges......................................... 10
Grace Period And Termination............................ 11
Part 4. - Life Benefits.................................... 12
Policy Ownership.......................................... 12
Rights Of Owner......................................... 12
Assigning This Policy................................... 12
Changing The Owner Or Beneficiary....................... 12
Transfers Of Values..................................... 12
This Policy's Share In Dividends.......................... 13
Policy Is Participating................................. 13
How Dividends May be Used............................... 13
Dividend After Death.................................... 13
Surrendering This Policy And Making
Withdrawals............................................. 13
Right To Surrender...................................... 13
Cash Surrender Value.................................... 13
Making Withdrawals......................................... 13
How We Pay................................................. 14
Borrowing On This Policy................................... 15
Right To Make Loans........................................ 15
Effect Of Loan............................................. 15
28
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Maximum Loan Available..................................... 15
Interest................................................... 15
Policy Debt Limit.......................................... 15
Repayment Of Policy Debt................................... 15
Other Borrowing Rules...................................... 16
Reinstating This Policy.................................... 16
When Reinstatement Can Be Made............................. 16
Requirements To Reinstate.................................. 16
Right To Increase Selected Face Amount..................... 16
Increases In The Selected Face Amount...................... 16
Limitations On Increases................................... 16
Evidence Of Increases...................................... 16
Right To Transfer This Policy To A Substitute Insured...... 17
Transferring This Policy................................... 17
Transfer Date.............................................. 17
Transfer Method............................................ 17
Cost To Transfer........................................... 18
Policy Debt After Transfer................................. 18
Assignment Upon Transfer................................... 18
Reports To Owner........................................... 18
Annual Report.............................................. 18
Illustrative Report........................................ 18
Part 5. - The Death Benefit................................ 18
Amount Of Death Benefit.................................... 18
Death Benefit Options...................................... 18
Minimum Face Amount........................................ 19
Changes In The Death Benefit Option........................ 19
When We Pay................................................ 19
Interest On Death Benefit.................................. 19
Suicide Exclusion.......................................... 20
Part 6. - Payment Options.................................. 20
Availability Of Options.................................... 20
Minimum Amounts............................................ 20
Description Of Options..................................... 20
Electing A Payment Option.................................. 24
Effective Date And Payment Dates........................... 24
Withdrawals And Changes.................................... 25
Income Protection.......................................... 25
Part 7. - Notes On Our Computations........................ 25
Net Investment Factor...................................... 25
Accumulation Unit Value.................................... 25
Adjustments Of Units And Values............................ 25
Basis Of Computation....................................... 25
Method Of Computing Values................................. 26
Any Riders and Endorsements, and a Copy of The Application for The Policy,
Follow Page 26.
29
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Flexible Premium Variable Whole Life Insurance Policy With Table Of Selected
Face Amounts
This Policy provides that:
Insurance is payable when the Insured dies.
Within specified limits, flexible premiums may be paid during the Insured's
lifetime. Annual dividends may be paid.
Notice Of Annual Meeting
The Insured is hereby notified that by virtue of this policy he or she is a
member of Massachusetts Mutual Life Insurance Company and is entitled to vote
either in person or by proxy at any and all meetings of said Company. The annual
meetings are held at its Home Office, in Springfield, Massachusetts, on the
second Wednesday of April in each year at 2 o'clock p.m.
30
<PAGE>
Exhibit 1(A)(10)
Application for a Flexible Premium Variable Whole
Life Insurance Policy
1. Name:
2. Business Address:
street & no. city state zip
3. Taxpayer ID No. 4. Plan Account No. (if available):
For each Proposed Insured, the attached Schedule of Insureds lists: Full Name,
Social Security Number, Date of Birth, Sex and, for the first Policy Year,
Selected Face Amount of Insurance and any Supplemental One-Year Term Insurance.
5. Is every Proposed Insured now working a minimum of 1,000 hours annually
for the Employer or its affiliate(s)?
If "No," give detailed explanation in 19. Yes No
6. Is every Proposed Insured a citizen of and resident in the USA? Yes No
If "No," is citizenship and residence of each Proposed Insured indicated
on the Schedule of Insureds? Yes No
7. Permanent Plan (select one):
Whole Life with Supplemental One-Year Term Insurance Option (Strategic
Life 4) Flexible Premium Whole Life with Table of Selected Face
Amounts (Strategic Life 7)
8. Death Benefit Option (if applicable):
Option 1 - Selected Face Amount
Option 2 - Selected Face Amount plus Account Value
Option 3 - Selected Face Amount with Cost-of-Living Adjustment
9. For each Policy Year after the first, Supplemental One-Year Term Insurance
(or, if applicable, Selected Face Amount):
10. Loan Interest Rate (where elective):
(a) Rate: Adjustable 6% %
(b) Payable in: Arrears Advance
11. Policy Date (for all policies on Proposed Insureds listed in Schedule of
Insureds):
12. Automatic Premium Loan (if applicable): Yes No
13. Premium Amounts (if applicable):
(a) First Premium (total for all policies) $
(b) Planned Annual Premium (total for all policies) $
(c) Method of premium allocation to each policy
14. Dividend Option (if applicable):
Cash Accumulations Reduce Premium Paid-Up Additions
15. The policies applied for will be used in conjunction with an
employer-sponsored plan involving both males and females. All policies
will be issued on a unisex basis unless checked here for sex-distinct
basis. Sex-Distinct Basis
16. Owner:
1
<PAGE>
Employer
Proposed Insured
Other (Give full name, address and Taxpayer ID No.)
17. Beneficiary:
Employer
If the Employer is the beneficiary, the Employer certifies,
represents and warrants that:
(i) The Employer has a lawful and substantial economic
interest in the life, health and bodily safety of each
Proposed Insured; and
(ii) The Services of each such Proposed Insured are such that
the Employer expects to realize either:
A substantial pecuniary gain through the continued
life of the Proposed Insured; or
A substantial pecuniary loss in the event of the
Proposed Insured's death.
As designated by Proposed Insured on Application (Part 1B)
Owner (if other than Proposed Insured)
See memo attached
If two or more persons are the beneficiaries in any class, payment shall be made
to them equally or to the survivor(s), unless otherwise requested. If payment is
made in one sum and there is no beneficiary entitled to payment when the
Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured. But if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
18. Will the insurance now being applied for replace or change, or is it
intended to replace or change, any insurance or annuity, in whole or in
part, issued by this or any other company? Yes No
If "Yes," give company name, policy number, amount and plan in 19.
19. Remarks:
20. Premium paid with this Application $ (allocated to each policy
using method given in 13c)
21. Premium and Other Notices will be sent to the Employer.
22. The Employer applies for temporary life insurance on the life of each
Proposed Insured listed in the attached Schedule of Insureds: Yes No
If "No," the following provisions of this section do not apply.
23. The effective date of the temporary insurance is the latest of:
(i) The date we receive from the Employer an amount of premium not less
than one-fourth of the sum of the minimum initial premiums for the
policies applied for;
(ii) The date this Application (Part 1A) is signed by one of our Officers;
and
(iii) The date chosen by the Employer (optional).
24. The amount of temporary insurance on the life of each Proposed Insured is:
The Selected Face Amount and any Supplemental One-Year Term Insurance for
the first Policy Year, as shown in the Schedule of Insureds
2
<PAGE>
25. Any temporary insurance on the life of a Proposed Insured will terminate
on the earliest of:
(i) The date the permanent life insurance applied for in this
application takes effect on the life of that Proposed Insured;
(ii) The date that Proposed Insured fails to meet any requirements to
qualify for the permanent life insurance applied for;
(iii) The date 90 days after the effective date of the temporary insurance
(in this case, we will give the Employer notice prior to termination); and
(iv) The date the Employer's written notice of termination of the
insurance is received by us at our Principal Administrative Office.
If the temporary insurance on the life of a Proposed Insured terminates for the
reason specified above in 25(i), the amount of premium paid with this
Application that was allocated to the policy on the life of that Proposed
Insured will be applied as premiums under that permanent life insurance policy.
If the temporary insurance on the life of a Proposed Insured terminates for any
other reason, we will refund the amount of premium paid with this Application
that was allocated to the policy on the life of that Proposed Insured, less a
mortality charge. This mortality charge will be for the period from the
effective date of the temporary insurance to, but not including, the termination
date. The mortality charge for that Proposed Insured will be based on the amount
of temporary insurance on the Proposed Insured's life, and the term rate from
the attached Table of Temporary Insurance Rates for the Proposed Insured's age.
The person(s) signing below acknowledge and agree that:
The Application - This is part of an application for permanent life insurance.
The application includes this Part 1A and its attached Schedule of Insureds and
Table of Temporary Insurance Rates, the Part 1B (which has been or which will be
completed by the Proposed Insured), any Part 2 that may be required, and any
amendments or supplements to either Part. To the best of the knowledge and
belief of the person(s) signing below, all statements in this application are
complete and true and were correctly recorded. Each person signing below adopts
all the statements made in the application and agrees to be bound by them. This
Application (Part 1A) is valid until withdrawn by the Owner by written notice to
us at our Principal Administrative Office. Withdrawal of this Application (Part
1A) shall not necessarily affect its use with applications submitted prior to
the date we receive such notice.
Our Liability - A minimum amount of premium may be paid to the agent in exchange
for temporary life insurance as discussed above in the Temporary Insurance
Agreement section. If this is done, we shall be liable only as set forth in that
Agreement. If that amount of premium is not paid, we shall have no liability
unless and until:
- - The application has been approved by us at our Principal Administrative
Office; and
- - The first premium has been paid during the lifetime of the Proposed Insured;
and
- - The Proposed Insured is actively working a minimum of 1,000 hours annually
for the Employer or its affiliate(s); and
- - The policy, contract or certificate of coverage has been delivered to the
person named as Owner in the policy; and
- - At the time of payment and delivery, all statements in the application which
are material to the risk are complete and true as though they were made at
that time.
If any of these conditions are not met, the policy, contract or certificate of
coverage and rider(s) applied for shall not take effect.
3
<PAGE>
Authority of Agents - No agent can change the terms of this application or any
policy/contract issued by us. No agent can waive any of our rights or
requirements, or extend the time for any payment.
Changes and Corrections - Any change or correction of the application will be
shown on an Amendment of Application attached to the policy/contract. Acceptance
of any policy, contract or certificate of coverage issued shall be acceptance of
any change or correction of the application we made. However, unless otherwise
indicated in this application, any correction or change of amount,
classification, plan of insurance or riders must be agreed to in writing.
Taxpayer Identification (Applies only if the Employer is the Owner) - The
Employer certifies, under penalties of perjury, that: (i) the number referred to
in 3 of this Application (Part 1A) is the correct Taxpayer Identification Number
(or the Employer is waiting for a number to be issued); and (ii) the Employer is
not subject to backup withholding either because the Internal Revenue Service
(IRS) has not notified the Employer that the Employer is subject to backup
withholding as a result of a failure to report all interest or dividends, or
because the IRS has notified the Employer of termination of backup withholding.
If the IRS has notified said Owner that he/she is subject to backup withholding
and he/she has not received notice from the IRS that backup withholding has
terminated, he/she should strike out the language above in (ii) that he/she is
not subject to backup withholding due to notified payee underreporting.
For the Employer:
Print Name and Title of Person Authorized Signature of Authorized Person
to Sign for the Employer
Signed at on
City State Date
For the Life Insurance Company specified above (if temporary insurance applied
for):
Print Name and Title of Officer Authorized Officer's Signature Date
to Sign for Life Insurance Company
General Agent Submitting Application Signature of Soliciting Agent
4
<PAGE>
1. The Application consists of this Part 1B and Part 1A No.
2. Employer
3. Name and Address of Proposed Insured (hereinafter, "you" and "your" refer
to the Proposed Insured):
first name middle name
last name suffix
street & no. city state zip
mo. day yr.
4. Social Security No. 6. Date of Birth
5. Male Female 7. Citizenship, if not USA:
Type of Visa: Permanent Temporary
8. Business Address:
street & no. city state zip
9. Beneficiary (if to be named by Proposed Insured as indicated in Employer -
Sponsor Application Part 1A):
If two or more persons are the beneficiaries in any class, payment shall be made
to them equally or to the survivor(s), unless otherwise requested. If payment is
made in one sum and there is no beneficiary entitled to payment when the
Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured. But if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
10. Are you now actively working a minimum of 1,000 hours annually for the
Employer or its affiliate(s)? Yes No
11. Have you smoked cigarettes in the last 12 months? Yes No
To the best of my knowledge and belief, all answers and statements are full,
complete and true and were correctly recorded before I signed my name below.
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in 4 of this Application (Part 1B) is his/her correct
Taxpayer Identification Number (or he/she is waiting for a number to be issued);
and (ii) he/she is not subject to backup withholding either because he/she has
not been notified by the Internal Revenue Service (IRS) that he/she is subject
to backup withholding as a result of a failure to report all interest or
dividends, or because the IRS has notified him/her that he/she is no longer
subject to backup withholding. If the IRS has notified that Proposed Insured
that he/she is subject to backup withholding and he/she has not received notice
from the IRS that backup withholding has terminated, he/she should strike out
the language above in (ii) that he/she is not subject to backup withholding due
to notified payee underreporting.
Proposed Insured Signature of Soliciting Agent
Signed at on
City State Date
5
<PAGE>
1. The Application consists of this Part 1B and Part 1A No.
2. Employer
3. Name and Address of Proposed Insured (hereinafter, "you" and "your" refer
to the Proposed Insured):
first name middle name
last name suffix
street & no. city state zip
mo. day yr.
4. Social Security No. 6. Date of Birth
5. Male Female 7. Citizenship, if not USA:
Type of Visa: Permanent Temporary
8. Business Address:
street & no. city state zip
9. Beneficiary (if to be named by Proposed Insured as indicated in Employer -
Sponsor Application Part 1A):
If two or more persons are the beneficiaries in any class, payment shall be made
to them equally or to the survivor(s), unless otherwise requested. If payment is
made in one sum and there is no beneficiary entitled to payment when the
Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured. But if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
10. Amount of insurance currently applied for, or now in force, on the
Proposed Insured in other companies.
If none, check here
Company Name
Amount of Life Insurance
Amount of Accidental Death Benefit
Waiver of Premium Benefit
Year of Issue
Currently Applied for (X)
11. What is your Occupation(s) and Exact Duties?
12. Have you smoked cigarettes in the last 12 months? Yes No
13. Are you now actively working a minimum of 1,000 hours annually for the
Employer or its affiliate(s)? Yes No
14. Have you ever been treated for, or been diagnosed by a member of the
medical profession as having, a deficiency of the immune system such as
acquired immune deficiency syndrome (AIDS) or AIDS related complex (ARC)?
Yes No
15. Have you ever consulted or been treated by a physician for cancer or disease
of the heart? Yes No
16. Have you applied for life insurance and been declined or postponed in the
last 5 years? Yes No (If "Yes" answers given in 14, 15 or 16 give details
here.)
17. Remarks:
6
<PAGE>
To the best of my knowledge and belief, all answers and statements are full,
complete and true and were correctly recorded before I signed my name below.
Authorization to Obtain and Disclose Information - I have received the Notice
regarding the Medical Information Bureau, Inc. and the Fair Credit Reporting
Act. I understand that an investigative consumer report may be made regarding my
character, general reputation, personal characteristics and mode of living, and
authorize that report to be made. I hereby authorize any licensed physician,
medical practitioner, hospital, clinic, other medical or medically related
facility, insurance company, the Medical Information Bureau, Inc., or other
organization that has any records or knowledge of me and my health, to make such
information available to the life insurance company or its reinsurers. A copy of
this authorization shall be as valid as the original. (This authorization is
only valid where permitted by law.)
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in 4 of this Application (Part 1B) is his/her correct
Taxpayer Identification Number (or he/she is waiting for a number to be issued);
and (ii) he/she is not subject to backup withholding either because he/she has
not been notified by the Internal Revenue Service (IRS) that he/she is subject
to backup withholding as a result of a failure to report all interest or
dividends, or because the IRS has notified him/her that he/she is no longer
subject to backup withholding. If the IRS has notified the Proposed Insured that
he/she is subject to backup withholding and he/she has not received notice from
the IRS that backup withholding has terminated, he/she should strike out the
language above in (ii) that he/she is not subject to backup withholding due to
notified payee underreporting.
Proposed Insured Signature of Soliciting Agent
Signed at on
City State Date
7
<PAGE>
Notice To Insured And/Or Applicant For Insurance
Thank you for applying for insurance with us. We will give your application
prompt consideration and will notify you of our action as soon as possible.
In addition to your answers on the application, we must also consider
information from other sources. These sources may include results of a physical
examination, an investigative consumer report, and reports from doctors who have
attended you or from hospitals where you have been treated.
MEDICAL INFORMATION BUREAU NOTICE - Information regarding your insurability will
be treated as confidential. We or our reinsurers may, however, make a brief
report thereon to the Medical Information Bureau, Inc., a non-profit membership
organization of life insurance companies, which operates an information exchange
on behalf of its members. If you apply to another Bureau member company for life
or health insurance coverage, or a claim for benefits is submitted to such a
company, the Bureau, upon request, will supply that company with the information
it may have in its files.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. Unless the Medical Director feels that it
is in your best interest to disclose this information to your physician, it will
be disclosed directly to you. If you question the accuracy of information in the
Bureau's file, you may contact the Bureau and seek a correction in accordance
with the procedures set forth in the federal Fair Credit Reporting Act. The
address of the Bureau's information office is Post Office Box 105, Essex
Station, Boston, Massachusetts 02112, telephone number (617) 426-3660. We or our
reinsurers may also release information in our file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a claim
for benefits may be submitted.
The purpose of the Bureau is to protect its member companies and their
policyholders from the costs created by people who try to hide facts about their
insurability. Information furnished by the Bureau cannot be used as a basis for
evaluating risks. However it may be used to alert us to the possible need for
further investigation. THE BUREAU DOES NOT HAVE MEDICAL REPORTS FROM HOSPITALS
AND DOCTORS. THE INFORMATION IN ITS FILES DOES NOT SHOW WHETHER AN INSURANCE
APPLICATION WAS ACCEPTED, PLACED IN AN INCREASED PREMIUM CLASS OR DECLINED.
(This Notice is only valid where permitted by law).
FAIR CREDIT REPORTING ACT NOTICE - As previously noted, an investigative
consumer report may be made on you. It will cover information about your
insurability, including information regarding your character, general
reputation, personal characteristics and mode of living. The information may be
obtained through personal interviews with you, an adult family member, friends,
neighbors and associates. You may send us a written request for a complete and
accurate disclosure of the nature and scope of any report that is made.
If requested, we will be happy to let you know whether or not we asked for an
investigative consumer report to be made. If we did, we will also tell you the
name and address of the consumer reporting agency that furnished the report. By
contacting that agency, you may inspect and receive a copy of the report.
OUR PURPOSE - Part of our basic Company purpose is to provide insurance at the
lowest possible cost. The underwriting process is necessary both to assure this
low cost and to make sure that each policyholder contributes his or her fair
share of the cost. The procedures described above benefit you as a policyholder,
because they assist us in providing your insurance at the lowest possible cost.
8
<PAGE>
1. The Application consists of this Part 1B, Part 2, and Part 1A No.
2. Employer
3. Name and Address of Proposed Insured (hereinafter, "you" and "your" refer
to the Proposed Insured):
first name middle name
last name suffix
street & no. city state zip
mo. day yr.
4. Social Security No. 6. Date of Birth
5. Male Female 7. Citizenship, if not USA:
Type of Visa: Permanent Temporary
8. Business Address:
street & no. city state zip
9. Beneficiary (if to be named by Proposed Insured as indicated in Employer -
Sponsor Application Part 1A):
If two or more persons are the beneficiaries in any class, payment shall be made
to them equally or to the survivor(s), unless otherwise requested. If payment is
made in one sum and there is no beneficiary entitled to payment when the
Proposed Insured dies and the Proposed Insured is the Owner at that time,
payment shall be made to the estate of the Proposed Insured. But if the Proposed
Insured is not the Owner, payment shall be made to the Owner.
10. Amount of insurance currently applied for, or now in force, on the
Proposed Insured in other companies. If none, check here
Company Name
Amount of Life Insurance
Amount of Accidental Death Benefit
Waiver of Premium Benefit
Year of Issue
Currently Applied for (X)
11. What is your Occupation(s) and Exact Duties?
12. Have you smoked cigarettes in the last 12 months? Yes No
13. Are you now actively working a minimum of 1,000 hours annually for the
Employer or its affiliate(s)? Yes No
14. Have you ever been treated for, or been diagnosed by a member of the
medical profession as having, a deficiency of the immune system such as
acquired immune deficiency syndrome (AIDS) or AIDS related complex (ARC)?
Yes No
15. Have you ever consulted or been treated by a physician for cancer or
disease of the heart? Yes No
16. Have you applied for life insurance and been declined or postponed in the
last 5 years? Yes No
9
<PAGE>
17. Within the last 3 years, have you been, or do you now expect to become, a
pilot, student pilot or crew member of any type of aircraft? If "Yes,"
complete Aviation Supplement A3310 Yes No
18. Within the last 3 years, have you taken part in, or do you now expect to
take part in, underwater diving, hang gliding, para sailing, para kiting,
parachuting, skydiving, mountain climbing, or organized racing by
automobile, motorcycle, motorboat or snowmobile? Yes No
If "Yes," complete Avocation Supplement A3320
19. Have you ever been advised of, treated for, or had any known indication
of: (If "Yes," explain in 21 below.)
(a) Heart or blood vessel disease (e.g. hardening of the arteries, poor
circulation, stroke)?
(b) High blood pressure?
(c) Diabetes?
(d) Kidney or other urinary disorder?
(e) Lung disorder?
(f) Nervous system or psychiatric disorder?
(g) Cancer or tumor?
(h) Liver, digestive or bowel disorder?
(i) Impairment of speech, hearing or sight?
(j) Blood disorder?
(k) Arthritis, bone, joint or other muscular disorder?
(l) Any physical or health impairment not previously noted?
20. Are you now taking any medicine or under any other treatment not already
noted? Yes No (If "Yes," explain in 21 below.)
A. Ques. No.
Diagnosis
Medication/Treatment
Still Under Treatment Yes No
# of Attacks/Occurrences
Dates (mo/yr) Onset Recovery
Physician/Medical Facility Name Address ZIP
B. Ques. No.
Diagnosis
Medication/Treatment
Still Under Treatment Yes No
# of Attacks/Occurrences
Dates (mo/yr) Onset Recovery
Physician/Medical Facility Name Address ZIP
22. Have you received any treatment in relation to the use of alcohol, drugs
or other chemical substance? Yes No (If "Yes," explain in 24 below.)
23. (a) Height in shoes ft. in. (b) Weight (clothed) lbs.
(c) Loss in weight in the past year? Yes No If "Yes," Amount lbs.
Reason
24. Remarks (give question no. & details):
25. Personal Physician Information
(a) Name/Address given in: 21A 21B
Have no personal physician
Other - give Personal Physician Name / Address here:
(b) Reason you last consulted this physician:
As indicated in: 21A 21B
Routine or General Exam - all findings normal
10
<PAGE>
Other - give details here:
Date last seen
Diagnosis or Reason Last Seen
Medication/Treatment
To the best of my knowledge and belief, all answers and statements are full,
complete and true and were correctly recorded before I signed my name below.
Authorization to Obtain and Disclose Information - I have received the Notice
regarding the Medical Information Bureau, Inc. and the Fair Credit Reporting
Act. I understand that an investigative consumer report may be made regarding my
character, general reputation, personal characteristics and mode of living, and
authorize that report to be made. I hereby authorize any licensed physician,
medical practitioner, hospital, clinic, other medical or medically related
facility, insurance company, the Medical Information Bureau, Inc., or other
organization that has any records or knowledge of me and my health, to make such
information available to the life insurance company or its reinsurers. A copy of
this authorization shall be as valid as the original. (This authorization is
only valid where permitted by law.)
Taxpayer Identification (Applies only if Proposed Insured is Owner) - The
Proposed Insured herein certifies, under penalties of perjury, that: (i) the
number referred to in 4 of this Application (Part 1B) is his/her correct
Taxpayer Identification Number (or he/she is waiting for a number to be issued);
and (ii) he/she is not subject to backup withholding either because he/she has
not been notified by the Internal Revenue Service (IRS) that he/she is subject
to backup withholding as a result of a failure to report all interest or
dividends, or because the IRS has notified him/her that he/she is no longer
subject to backup withholding. If the IRS has notified the Proposed Insured that
he/she is subject to backup withholding and he/she has not received notice from
the IRS that backup withholding has terminated, he/she should strike out the
language above in (ii) that he/she is not subject to backup withholding due to
notified payee underreporting.
Proposed Insured Signature of Soliciting Agent
Signed at on
City State Date
11
<PAGE>
Notice To Insured And/Or Applicant For Insurance
Thank you for applying for insurance with us. We will give your application
prompt consideration and will notify you of our action as soon as possible.
In addition to your answers on the application, we must also consider
information from other sources. These sources may include results of a physical
examination, an investigative consumer report, and reports from doctors who have
attended you or from hospitals where you have been treated.
MEDICAL INFORMATION BUREAU NOTICE - Information regarding your insurability will
be treated as confidential. We or our reinsurers may, however, make a brief
report thereon to the Medical Information Bureau, Inc., a non-profit membership
organization of life insurance companies, which operates an information exchange
on behalf of its members. If you apply to another Bureau member company for life
or health insurance coverage, or a claim for benefits is submitted to such a
company, the Bureau, upon request, will supply that company with the information
it may have in its files.
Upon receipt of a request from you, the Bureau will arrange disclosure of any
information it may have in your file. Unless the Medical Director feels that it
is in your best interest to disclose this information to your physician, it will
be disclosed directly to you. If you question the accuracy of information in the
Bureau's file, you may contact the Bureau and seek a correction in accordance
with the procedures set forth in the federal Fair Credit Reporting Act. The
address of the Bureau's information office is Post Office Box 105, Essex
Station, Boston, Massachusetts 02112, telephone number (617) 426-3660. We or our
reinsurers may also release information in our file to other life insurance
companies to whom you may apply for life or health insurance, or to whom a claim
for benefits may be submitted.
The purpose of the Bureau is to protect its member companies and their
policyholders from the costs created by people who try to hide facts about their
insurability. Information furnished by the Bureau cannot be used as a basis for
evaluating risks. However it may be used to alert us to the possible need for
further investigation. THE BUREAU DOES NOT HAVE MEDICAL REPORTS FROM HOSPITALS
AND DOCTORS. THE INFORMATION IN ITS FILES DOES NOT SHOW WHETHER AN INSURANCE
APPLICATION WAS ACCEPTED, PLACED IN AN INCREASED PREMIUM CLASS OR DECLINED.
(This Notice is only valid where permitted by law).
FAIR CREDIT REPORTING ACT NOTICE - As previously noted, an investigative
consumer report may be made on you. It will cover information about your
insurability, including information regarding your character, general
reputation, personal characteristics and mode of living. The information may be
obtained through personal interviews with you, an adult family member, friends,
neighbors and associates. You may send us a written request for a complete and
accurate disclosure of the nature and scope of any report that is made.
If requested, we will be happy to let you know whether or not we asked for an
investigative consumer report to be made. If we did, we will also tell you the
name and address of the consumer reporting agency that furnished the report. By
contacting that agency, you may inspect and receive a copy of the report.
OUR PURPOSE - Part of our basic Company purpose is to provide insurance at the
lowest possible cost. The underwriting process is necessary both to assure this
low cost and to make sure that each policyholder contributes his or her fair
share of the cost. The procedures described above benefit you as a policyholder,
because they assist us in providing your insurance at the lowest possible cost.
12
<PAGE>
This Supplement is part of Application Part 1 No. Dated: Month Day Year
1. Owner's Name:
The Owner's Taxpayer Identification No. and address are shown on Part 1 of
the Application.
2. Premium Amounts (if applicable):
(a) First Premium $ (b) Planned Annual Premium $
3. Net Premium Allocation (if applicable):
MML Equity % Opp. Bond % GPA %
MML Money Market % Opp. Capital Appreciation % %
MML Managed Bond % Opp. Growth % %
MML Blend % Opp. Multiple Strategies % %
Opp. Money % Opp. Global Securities % %
Opp. High Income % Opp. Strategic Bond % %
100%
4. Selected Face Amount (SFA) (if applicable):
(a) Initial $
(b) Subsequent - A pattern of SFAs may be elected here subject to current
issue limits. The SFA for the last Policy Year shown will apply to all
later Policy Years. If no SFA is elected here, the Initial SFA will apply
to all Policy Years.
Policy to and Policy Alternatives
Year including Year
Increase by % per year
Increase by $ per year
Increase by % per year Remain Level
Increase by $ per year
Increase by % per year Remain Level
Increase by $ per year
Complete the following if applicable:
5. Has the Owner received an Offering Memorandum or a Prospectus for the
policy(ies) being applied for? Yes No
If `Yes,' give date shown on the Offering Memorandum or Prospectus:
6. Does the Owner understand that:
- - The death benefit and the duration of insurance may be variable or
fixed under specified conditions? Yes No
- - The variable account value of the policy may increase or decrease in
accordance with the experience of the Separate Account (there are no
minimum guarantees as to the variable account value)?
Yes No
- - The fixed account value of the policy earns interest at a rate no less
than a minimum specified rate? Yes No
7. In view of the above, does the Owner believe that this policy will meet
his/her insurance needs and financial objectives? Yes No
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the policy(ies) applied for to be suitable for my objectives.
Signature of Owner Date
13
<PAGE>
1a. If the Owner is not an individual, a copy of the Authorization Document
(i.e., Corporate Resolution, Trust Instrument, or Partnership Agreement) must be
supplied. Have you attached or previously provided us with this? Yes No
1b. Is the Owner:
(i) a bank, savings and loan association, insurance company, or registered
investment company? Yes No
(ii) an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940? Yes No
(iii) any other entity (whether a natural person, corporation,
partnership, trust, or otherwise) with total assets of at least $50
million?
Yes No
If the Owner answered `Yes' to 1b (i), (ii) or (iii), skip 2 through 12.
2. Number of Owner's Dependents: 5.Owner's Estimated Earned Annual Income:$
3. Age of Owner's Dependents: 6. Owner's Estimated Unearned Annual Income:$
4. Owner's Occupation: 7. Owner's Estimated Net Worth: $
8. Investment Objectives (check all that apply):
Tax-Exempt Income Capital Preservation Income
Growth Tax Reduction
8a. Risk Tolerance (check only one): High Medium Low
9. Investment Strategy (check only one):
Growth without Risk Growth with Risk
10. Sources of Payments (check all that apply):
Current Income
Surrender or Loan on Life Insurance or Annuity
Sale of Mutual Funds Presently Held
Sale of Other Securities Presently Held
Plan Sponsor Contribution
Sale of Personal Property or Real Estate
Savings
11. Is Owner or Owner's Employer a member of the National Association of
Securities Dealers (NASD)? Yes No
12. Owner's estimated Federal Income Tax Bracket: 15% 28% 31% %
13. Remarks:
To the best of my knowledge, the above answers are true and correctly recorded.
I believe the policy(ies) applied for to be suitable for my objectives. I
acknowledge that, for purposes of this transaction, I have not received any
services from MML Investors Services, Inc., in its capacity as a registered
investment adviser.
Signature of Owner Date
Attestation of Agent / Registered Representative
The Owner of the policy(ies) applied for has been informed of the risks involved
in this investment, and I certify that I have reasonable grounds for believing
the policy(ies) to be suitable for the Owner's objectives.
Signature of Agent / Registered Representative Date
Authorized Principal Date
14
