<PAGE>
Registration No. 333-41657
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of Trust: Massachusetts Mutual Variable Life Separate
Account I
B. Name of Depositor: Massachusetts Mutual Life Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
D. Name and address of Ann Lomeli
Agent for Service Corporate Secretary
of Process: 1295 State Street
Springfield, MA 01111
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, 1999 pursuant to paragraph (b) of Rule 485.
--------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
--------
on ____________ pursuant to paragraph (a)(1) of Rule 485.
--------
this post effective amendment designates a new effective
date for a previously filed post effective amendment. Such
effective date shall be _____________.
--------
E. Title of Securities being registered: Survivorship Flexible Premium
Adjustable Variable Life Insurance
Policies
F. Approximate date of proposed As soon as practicable after the
public offering: effective date of this Registration
Statement.
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
1 Cover Page; The Separate Account.
2 Cover Page.
3 Cover Page.
4 Sales and Other Agreements.
5 The Separate Account.
6 Not Applicable.
7 Not Applicable.
8 Appendix F. Financial Statement.
9 Legal Proceedings.
10 Detailed Description of Policy Features; Investment Options;
Other Policy Information.
11 Investment Options.
12 Investment Options; Sales and Other Agreements.
13 Introduction; Detailed Description of Policy Features.
14 Detailed description of Policy Features.
15 Premiums; Exhibit 99(11).
16 Introduction; The Separate Account.
17 Detailed description of Policy Features; Exhibit 99(11).
18 The Separate Account.
19 Other Information.
20 Not Applicable.
21 Policy Loan Privilege.
22 Not Applicable.
23 Bonding Arrangement.
24 Detailed Description of Policy Features; Other Information;
Investment Options.
25 Other Information.
26 Other Information; The Investment Options.
27 Other Information.
28 Appendix E: Directors and Executive Officers.
29 Other Information.
30 Other Information.
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
31 Not Applicable.
32 Not Applicable.
33 Not Applicable.
34 Not Applicable.
35 Sales and Other Agreements.
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.
45 Not Applicable.
46 Account Value and Net Surrender Value; The Separate Account.
47 The Separate Account.
48 Not Applicable.
49 Not Applicable.
50 Not Applicable.
51 Detailed Description of Policy Features; Other Policy Information.
52 Investment Options.
53 Federal Income Tax Considerations.
54 Not Applicable.
55 Not Applicable.
56 Not Applicable.
57 Not Applicable.
58 Not Applicable.
59 Appendix F.
<PAGE>
Survivorship Flexible Premium Adjustable
Variable Life Insurance Policies*
Issued by Massachusetts Mutual Life Insurance Company
This Prospectus describes a survivorship life insurance policy (the "Policy")
offered by Massachusetts Mutual Life Insurance Company ("MassMutual"). While the
Policy is in force, it provides lifetime insurance protection on the two
Insureds named in the Policy. It pays a Death Benefit at the death of the last
surviving Insured (the "second death").
In this Prospectus, "you" and "your" refer to the Owner of the Policy. "We,"
"us," and "our" refer to MassMutual.
The Policy provides premium payment and Death Benefit flexibility. It permits
you to vary the frequency and amount of premium payments and to increase or
decrease the Death Benefit. This flexibility allows you to meet changing
insurance needs under a single insurance policy.
You may allocate Net Premiums and Account Value among the investment funds
(Divisions of the Separate Account) offered under this Policy and a Guaranteed
Principal Account (the "GPA"). Currently, the following funds are available
under this Policy.
<TABLE>
<CAPTION>
MML Trust Oppenheimer Trust Variable Insurance Products Fund II
- --------- ----------------- -----------------------------------
<S> <C> <C>
MML Equity Fund Oppenheimer Capital Appreciation Fund/VA VIP II Contrafund Portfolio
MML Managed Bond Fund Oppenheimer Aggressive Growth Fund/VA
MML Money Market Fund Oppenheimer Global Securities Fund/VA
MML Blend Fund Oppenheimer Strategic Bond Fund/VA T. Rowe Price Equity Series, Inc.
MML Equity Index Fund ---------------------------------
MML Small Cap Value Equity T. Rowe Price Mid-Cap Growth Portfolio
Fund
American Century Variable
Portfolios, Inc.
-------------------------
American Century VP Income & Growth
</TABLE>
You bear the investment risk of any Account Value allocated to the investment
funds. The Death Benefit may vary, and the Net Surrender Value will vary,
depending on the investment performance of the funds.
This Policy is not a deposit or obligation of, or guaranteed or endorsed by, any
financial institution. It is not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other federal agency. It is also
subject to investment risks including loss of the principal amount invested.
We service the Policy at our Administrative Office located at 1295 State Street,
Springfield, Massachusetts 01111-0001. Our telephone number is (413) 788-8411.
Our Home Office is located in Springfield, Massachusetts.
This Policy provides insurance protection. It is not a way to invest in mutual
funds. Replacing an existing life insurance policy with this Policy may not be
to your advantage.
Please read this prospectus and keep it for further reference.
Neither the United States Securities and Exchange Commission nor any state
securities commission has approved this Prospectus or determined that it is
accurate or complete. Any representation to the contrary is a criminal offense.
This Prospectus is valid only when accompanied by the prospectuses for the
investment funds. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that is filed with the Commission.
This Prospectus is not an offer to sell the Policy in any jurisdiction where it
is illegal to offer the Policy or to anyone to whom it is illegal to offer the
Policy.
EFFECTIVE MAY 1, 1999
*Title may vary in some jurisdictions.
<PAGE>
Table of Contents
I. INTRODUCTION ...............................3
II. DETAILED DESCRIPTION OF
POLICY FEATURES
Purchasing the Policy .....................6
Death Benefit .............................6
Premiums ..................................8
Transfers .................................9
Policy Termination and Reinstatement .....10
Charges and Deductions ...................11
Deductions from Premiums .................11
Monthly Charges Against the
Account Value ..........................11
Daily Charges Against the
Separate Account .......................12
Surrender Charges ........................12
Other Charges ............................12
Special Circumstances.....................12
Account Value and Net
Surrender Value.........................13
Policy Loan Privilege ....................14
III. INVESTMENT OPTIONS
The Guaranteed Principal Account .........16
The Separate Account .....................16
The Funds ................................17
Fund Profiles.............................17
The Investment Advisers ..................19
IV. OTHER POLICY INFORMATION
When We Pay Proceeds .....................21
Payment Options ..........................21
Beneficiary ..............................22
Assignment ...............................22
Limits on Our Right to Challenge
the Policy .............................22
Error of Age or Gender....................22
Suicide .................................22
Additional Benefits You Can Get
by Rider ...............................23
Sales and Other Agreements ...............23
Compensation .............................24
V. OTHER INFORMATION
MassMutual................................25
Annual Reports............................25
Federal Income Tax Considerations.........25
Your Voting Rights........................27
Reservation of Rights.....................27
Bonding Arrangement.......................28
Legal Proceedings.........................28
Year 2000.................................28
Experts...................................28
Appendix A
Definition of Terms ......................29
Appendix B
Examples of Death Benefit
Option Changes .........................31
Appendix C
Rates of Return...........................33
Appendix D
Illustration of Death Benefits,
Net Surrender Values, and
Accumulated Premiums ...................37
Appendix E
Directors of MassMutual ..................50
Executive Vice Presidents ................52
Appendix F
Separate Account Financial
Statements.............................F-1
Financial Statements ...................FF-1
2 Table of Contents
<PAGE>
I. Introduction
Please refer to Appendix A, Glossary for definitions of the terms contained in
this Prospectus.
You should consult your Policy for more information about its terms and
conditions, and for any state-specific variances that may apply to your Policy.
These variations will depend on the "contract state" of your Policy; it is
usually the state or other jurisdiction in which you live.
The Policy is a life insurance contract providing a Death Benefit, an Account
Value, surrender rights, Policy loan privileges, and other features
traditionally associated with life insurance. The Policy is a "survivorship"
policy because it provides life insurance on two insured lives and pays a Death
Benefit at the time of the second death.
There is no fixed schedule of premium payments. You may establish a schedule of
premium payments ("Planned Premium Payments"), but if a Planned Premium Payment
is not made the Policy will not necessarily terminate. If Planned Premium
Payments are made they do not guarantee a Policy will remain in force. The
Policy allows you to match premium payments to your income flows or other
financial decisions.
You may increase or decrease the Death Benefit and change the Death Benefit
Option under the Policy. Further, the Death Benefit may vary, and the Net
Surrender Value will vary, with the investment experience of the investment
funds in which an Owner has Account Value. The GPA interest rate is declared and
guaranteed each calendar year. This guaranteed calendar-year rate will not be
less than 3%; it may be greater than 3%. We may credit an interest rate
periodically that exceeds this guaranteed rate.
The following diagram summarizes how the Policy works.
<TABLE>
<S> <C> <C>
HOW THE POLICY WORKS
Premium Payment
We deduct a Premium Expense
Charge from each Premium
Payment
(graphic arrow to
"Net Premium")
Net Premium
We allocate the Net Premium
and Account Value among the
Divisions of the Separate
Account and the GPA based on
the percentages you have chosen
Investment Earnings (graphic arrow to Account Value Charges
------------------- "Account Value") ---------------------
Each day we credit or debit the Each month we deduct for
investment earnings or losses of the ----------------------------------- administrative, insurance, and
Divisions of the Separate Account Account Value rider expenses
less fund investment management fees
and separate account fees You determine how the Account Owner Access to
Value is allocated among the ---------------
We also credit interest on values available investment options. Account Value
in the GPA (graphic arrows to "Account Value You may access Account Values
(graphic arrow to "Account Value") Charges", "Owner Access to Account through loans and withdrawals
Value", "Death Benefit", and
Death Benefit "Policy Surrender") Policy Surrender
------------- ----------------
You have a choice of 3 Death Benefit ----------------------------------- In the first 10 years of coverage,
Options. You can change the Option if you surrender all of your
at a later date coverage or decrease your Policy
Face Amount, we deduct a Surrender
Charge from any amount we pay You.
</TABLE>
Introduction 3
<PAGE>
All expense charges and deductions are described in Charges and Deductions in
Part II.
A summary of the product and separate account charges follows.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CURRENT RATE GUARANTEED RATE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Premium Expense Charge Coverage Years 1-10:13% of premium All Coverage Years: 13% of premium up
up to Expense Premium; 3% of premium to Expense Premium; 3% of premium
over Expense Premium over Expense Premium
Coverage Years 11+: 3% of all premium
- --------------------------------------------------------------------------------------------------------------------
Administrative Charge Policy Years 1-10: $12 per month per All Policy Years: $12 per month per
Policy Policy
Policy Years 11+: $6 per month per
Policy
- --------------------------------------------------------------------------------------------------------------------
Face Amount Charge Coverage Years 1-10: $0.13 per month Coverage Years 1-10: $0.13 per month
per $1,000 of Face Amount per $1,000 of Face Amount
Coverage Years 11+: $0.0 Coverage Years 11+: $0.0
- --------------------------------------------------------------------------------------------------------------------
Insurance Charges A per thousand rate multiplied by For standard risks, the guaranteed
the amount at risk each month. The cost of insurance rates are based on
rate varies by the genders, Issue 1980 Commissioners Standard Ordinary
Ages, and risk classifications of (CSO) Mortality Tables.
the Insureds, and the Year of
Coverage.
- --------------------------------------------------------------------------------------------------------------------
Mortality and Expense All Policy Years: 0.25% on an annual All Policy Years: 0.90% on an annual
Risk Charge basis of daily net asset value of basis of daily net asset value of the
the Separate Account Separate Account
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Investment Management (See separate table on next page.)
Fees and Other Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loan Rate Expense Charge Policy Years 1-10: 0.50% of loaned All Policy Years: 2.0% of loaned
amount amount
Policy Years 11+: 0.25% of loaned
amount
- --------------------------------------------------------------------------------------------------------------------
Withdrawal Fee $25 $25
- --------------------------------------------------------------------------------------------------------------------
Surrender Charges First Coverage Year: the lesser of First Coverage Year: the lesser of
100% of the Target Premium or $60 100% of the Target Premium or $60 per
per thousand of Face Amount. thousand of Face Amount.
Coverage years 2-10: the prior year Coverage years 2-10: the prior year
Surrender Charge reduced by 10% of Surrender Charge reduced by 10% of
the first year Surrender Charge the first year Surrender Charge
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Expense Premium referenced above is used to determine the Premium Expense
Charge. The Expense Premium is shown in the Policy; it can be quoted upon
request before the Policy is issued. Examples of current Expense Premiums per
$1,000 of Face Amount, for a Male and Female, both Preferred Nontobacco risk
class, are: Both Age 25 - $5.23; Both Age 55 - $19.09; Both Age 85 - $120.05.
The Expense Premium for your Policy will be based on the Issue Ages, genders,
and risk classes of the Insureds, and on the Face Amount.
The Target Premium referenced above is used to determine commission payments and
Surrender Charges. Although the Target Premium is not shown in the Policy, the
Surrender Charges are listed in the Policy; they can be quoted upon request
before the Policy is issued. Examples of current Target Premiums per $1,000 of
Face Amount, for a Male and Female, both Preferred Nontobacco risk class, are:
Both Age 25 - $3.68; Both Age 55 - $12.64; Both Age 85 - $88.27. The Target
Premium for your Policy will be based on the Issue Ages, genders, and risk
classes of the Insureds, and on the Face Amount.
4 Introduction
<PAGE>
INVESTMENT MANAGEMENT FEES
AND OTHER EXPENSES
Total fund operating expenses expressed as a percentage of average net assets
for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Total Fund
Management Other Operating
Fund Name Fees Expenses Expenses
- --------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
MML Equity Fund 0.37% 0.00% 0.37%
MML Managed Bond Fund 0.45% 0.03% 0.48%
MML Blend Fund 0.37% 0.00% 0.37%
MML Money Market Fund 0.46% 0.03% 0.49%
MML Equity Index Fund 0.30% 0.20% 0.50%
MML Small Cap Value Equity Fund 0.39% 0.05% 0.44%
Oppenheimer Capital
Appreciation Fund/VA+ 0.72% 0.03% 0.75%
Oppenheimer Aggressive Growth
Fund/VA++ 0.69% 0.02% 0.71%
Oppenheimer Global Securities
Fund/VA 0.68% 0.06% 0.74%
Oppenheimer Strategic Bond
Fund/VA 0.74% 0.06% 0.80%
VIP II Contrafund Portfolio* 0.59% 0.07% 0.66%
T. Rowe Price Mid-Cap Growth
Portfolio 0.85% 0.00% 0.85%
American Century VP Income &
Growth N/A N/A 0.70%
- --------------------------------------------------------------------------------------
</TABLE>
+The Oppenheimer Growth Division invests in the Oppenheimer Capital
Appreciation Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation
Fund/VA was called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*A portion of the brokerage commissions that Contrafund pays was used to reduce
the Other Expenses for the Fund. In addition, Contrafund, or the investment
manager on behalf of the Fund, entered into an arrangement with a Fund custodian
whereby credits realized as a result of non-invested cash balances were used to
reduce custodian expenses. Without such reductions, the Other Expenses would
have been 0.11%, increasing the Total Fund Operating Expenses to 0.70%.
Introduction 5
<PAGE>
II. Detailed Description of Policy Features
Purchasing the Policy
To purchase a Policy you must send a completed application to our Administrative
Office. The minimum Initial Face Amount of a Policy is currently $500,000. The
Policy can be issued for two Insureds where the older Insured is between the
ages of 18 and 90 inclusive, and the younger Insured is between the ages of 18
and 85 inclusive. Before issuing a Policy, we will require evidence of
insurability. This usually will require a medical examination.
We determine whether to accept or reject the application for the Policy and the
Insureds' risk classifications. If we do not accept the application, we will
refund any premium paid.
Coverage under the Policy becomes effective on the Issue Date of the Policy or,
if later, the date the first premium is paid. See Premiums for more about the
first premium. For the first premium to be paid, we must receive it in Good
Order.
Unisex Policy. Policies generally are issued with values that vary based on the
genders of the Insureds. Policies issued as part of an employee benefit plan may
be "unisex"; that is, they have policy values that do not vary by gender.
References in the Prospectus to sex-distinct policy values are not applicable to
unisex Policies. Upon request we will provide you illustrations showing the
effect of unisex rates on premiums, Net Surrender Values and Death Benefits.
Right to Return the Policy. Once you receive your Policy, you should review it
carefully. If you are not satisfied with your Policy, you may cancel it within
10 days after you receive it. (This period of time may vary by state.)
To cancel the Policy, return it to us at our Administrative Office, to the agent
who sold the Policy, or to one of our agency offices. If you cancel your Policy,
we will give you a refund.
In most states, this refund is the sum of:
(i) any premium paid for the Policy; plus
(ii) any interest credited to the Policy under the GPA; plus or minus
(iii) an amount reflecting the investment experience of the Divisions of the
Separate Account under this Policy to the date we receive the Policy;
minus
(iv) any amounts withdrawn and any Policy Debt.
In other states, this refund is equal to any premium paid for the Policy,
reduced by any amounts withdrawn and any Policy Debt.
Consult your Policy to determine which refund applies under your Policy. A few
states have variations of these two refund types.
Death Benefit
While the Policy is in force, we will pay the Death Benefit to the named
Beneficiary at the second death. Although we normally will pay the Death Benefit
within seven days of receiving satisfactory proof of the Insureds' deaths, we
may delay payments under certain circumstances. All or part of the Death Benefit
can be paid in cash or under one or more of the payment options described in the
Policy.
Minimum Death Benefit. In order to qualify as life insurance under Internal
Revenue Code ("IRC") Section 7702, the Policy has a Minimum Death Benefit
determined by one of two compliance tests. You choose the test when you apply
for the Policy. You cannot change your choice of test after the Policy is
issued.
Under one test, the Cash Value Test, the Minimum Death Benefit is equal to a
percentage of the Account Value. The percentage depends on the genders (male,
female, unisex), tobacco classifications, and Attained Ages of both Insureds.
Under the other test, the Guideline Premium Test, the Minimum Death Benefit also
is equal to a percentage of the Account Value, but the percentage varies only by
the Attained Age of the younger Insured. The percentages are shown in the
Policy.
6 Detailed Desriptions of policy Features
<PAGE>
Your choice of the Guideline Premium Test or the Cash Value Test will depend on
how you intend to pay premiums. In general, if you intend to pay premiums in
early policy years only, the Cash Value Test may be more appropriate. If you
intend to pay level premiums over a long period of years, the Guideline Premium
Test may be more appropriate. You should see Policy illustrations of both
approaches to determine how the Policy works under each approach, and which is
best for you.
Death Benefit Options. The Death Benefit is the benefit provided under the Death
Benefit Option in effect on the date of the second death. This benefit is
reduced by any outstanding Policy Debt and any due but unpaid premium needed to
avoid Policy termination. You may choose one of three Death Benefit Options:
(a) Option 1 (a level amount option) or
(b) Options 2 or 3 (variable amount options).
You choose the Death Benefit Option in the application and you may change the
option at a later date subject to certain restrictions described in Changes in
Death Benefit Option.
The Death Benefit provided by Options 1, 2 and 3 is as follows.
Option 1 - The benefit is the greater of:
(a) the Face Amount on the date of the second death; and
(b) the Minimum Death Benefit on the date of the second death.
Option 2 - The benefit is the greater of:
(a) the Face Amount plus the Account Value on the date of the second death;
and
(b) the Minimum Death Benefit on the date of the second death.
Option 3 - The benefit is the greater of:
(a) the Face Amount plus the premiums paid less any premiums refunded under
the Policy to the date of the second death; and
(b) the Minimum Death Benefit on the date of the second death.
See Appendix B for examples of how changes in Account Value and the amount of
premiums paid may affect the Death Benefit of a Policy.
Changes in Death Benefit Option. After the first Policy Year, you may change the
Death Benefit Option. You must provide a written application and you may have to
provide evidence that the Insureds still are insurable. The effective date of a
change will be the Monthly Charge Date on or preceding the date we approve the
change. A change in the Death Benefit Option will result in a change of the
Policy Face Amount. The Death Benefit under the new Death Benefit Option will be
the same as the Death Benefit under the old Death Benefit Option at the time of
the change.
You cannot change the Death Benefit Option if:
1. the Face Amount is reduced to less than $500,000 as a result of the
change,
2. the Attained Age of either Insured is 85 or older; or
3. only one of the Insureds is alive.
When the Policy Face Amount changes as a result of a change in the Death Benefit
Option, the Monthly Charges also will change. The change in Face Amount also may
change the charges for certain additional benefits. The change in Face Amount
will not change the Policy Surrender Charge.
For examples of Death Benefit Option changes and how they impact the contract,
see Appendix B.
Changes in Face Amount. You may request an increase or decrease in the Face
Amount by submitting a written request for a change of Face Amount to our
Administrative Office. The Face Amount change will be effective on the Monthly
Charge Date on or preceding our acceptance of the request.
Increases in Face Amount. You must provide us with a written application and
evidence the Insureds still are insurable to increase your Face Amount. An
increase may not be less than $50,000. You cannot increase the Face Amount of
the Policy after the younger Insured reaches Attained Age 85, or the older
Insured reaches Attained Age 90.
If you increase the Policy Face Amount the Face Amount Charge and the Insurance
Charges will increase.
Detailed Description of Policy Features 7
<PAGE>
Decreases in Face Amount. You may decrease the Policy Face Amount any time after
the first Policy Year or one year after a Face Amount increase. You must send a
written request to us. You cannot decrease the Face Amount if the decrease would
result in a Face Amount of less than $500,000.
If you decrease the Face Amount, a Surrender Charge may apply. We will deduct
Surrender Charges from the Division(s) of the Separate Account and from the GPA
in proportion to the non-loaned values in each.
A decrease will reduce the Face Amount in the following order:
(a) the Face Amount of the most recent increase
(b) the Face Amounts of the next most recent increases successively
(c) the Initial Face Amount.
If you decrease the Face Amount the Monthly Charges deducted from the Account
Value will change.
If you decrease the Face Amount, the Policy may become a "modified endowment
contract" under federal tax law. Consult your tax advisor. (See also Modified
Endowment Contracts in Part V).
Premiums
The first premium must be paid before the Policy can become effective.
Thereafter, within limits you may make premium payments at any time and in any
amount. Net Premiums are allocated to the Account Value as you choose.
First Premium. Generally, you determine the first premium you want to pay for
the Policy; but it must be at least equal to the minimum initial premium. The
minimum initial premium depends on your chosen premium frequency, Initial Face
Amount and Death Benefit Option, and on the Issue Age, gender, and risk
classification of each Insured.
Planned Premiums. When applying for the Policy, you select the Planned Premium
and the payment frequency (annual, semiannual, quarterly, or monthly check
service). The Planned Premium must be at least $20. The amount of the Planned
Premium and the payment frequency you select are shown in the Policy. We will
send you premium notices based on your selections. To change the amount and
frequency of Planned Premiums, send a written notice to us at our Administrative
Office.
If a Planned Premium payment is not made, the Policy will not necessarily
terminate. Conversely, making Planned Premium payments does not guarantee the
Policy will remain in force. To keep the Policy in force, you must either have a
sufficient "policy value" or meet the safety test. See Grace Period and
Termination.
Premium Payments and Flexibility. After you have paid the first premium, within
limits you may pay any amount at any time while at least one Insured is living.
Send all premium payments to us either at our Administrative Office or at the
address shown on the premium notice.
You may elect to pay premiums by pre-authorized check. Under this procedure, we
automatically deduct premium payments each month from a bank account you
designate. We will not send a bill for these automatic payments.
Premium Limitations. The minimum premium payment is $20.
If you choose the Cash Value Test to qualify your Policy as life insurance, the
maximum premium each Policy Year is the greatest of:
(a) an amount equal to $100 plus double the Expense Premium for the Policy;
(b) the amount of premium paid in the preceding Policy Year; and
(c) the highest premium payment amount that would not increase the insurance
risk (see Insurance Charges).
We may refund any amount of premium payment that exceeds the Cash Value Test
limit.
If you choose the Guideline Premium Test, the maximum premium for each Policy
Year is the lesser of:
(a) the maximum premium for the Cash Value Test; and
(b) the Guideline Premium Test amount which will be stated in the Policy.
8 Detailed Description of Policy Features
<PAGE>
If you choose the Guideline Premium Test, we will refund any amount of premium
payment that exceeds the Guideline Premium Test limit. Otherwise, the Policy
would no longer qualify as life insurance under federal tax law.
Allocating Net Premiums. A Net Premium is a premium payment we receive in Good
Order, minus the Premium Expense Charge.
Net Premiums Received through Issue Date. We will allocate any Net Premiums
received through the Issue Date of the Policy to our general investment account.
Any Net Premiums received before the Policy Date will be allocated as of that
Date. We will credit interest at the rate(s) we use for the GPA during that
time.
Register Date and Valuation Date. Net Premiums credited to the Policy on and
after the Register Date will be allocated among the Divisions and the GPA
according to your Net Premium allocation. Also, any values in the Policy held
before the Register Date will be allocated on that Date among the Divisions and
the GPA according to your Net Premium allocation on that Date.
The Register Date must be a Valuation Date. A Valuation Date is any date on
which the New York Stock Exchange is open for trading.
We set the Register Date for the Policy. It depends on the type of refund
offered under the Right To Return provision in your Policy. Refer back to
Purchasing the Policy for information about this provision.
If the refund includes interest and investment experience, the Register Date is
the Valuation Date that is on, or next follows, the later of:
(a) the day after the Issue Date of the Policy; and
(b) the day we receive the first premium payment in Good Order.
If the refund does not include interest or investment experience:
1. The Register Date is the Valuation Date that is on, or next follows, the
later of:
. the day after the end of the Right To Return period; and
. the day we receive the first premium in Good Order;
2. Any Net Premiums received after the Issue Date but before the Register
Date will be allocated to the Money Market Division; and
3. Any values in the Policy held as of the Issue Date will be allocated to
the Money Market Division on the first Valuation Date after the Issue
Date.
Net Premium Allocation. When applying for the Policy, you indicate how you want
Net Premiums allocated among the Divisions and the GPA. You may change your Net
Premium allocation at any time. Just send a written notice to us at our
Administrative Office.
You may set your Net Premium allocation in terms of whole-number percentages
that add to 100%. (Also see Overall Limitation on Net Premium Allocations and
Transfers.)
Transfers
You may transfer all or part of the Account Value invested in a Division of the
Separate Account to any other Division or to the GPA. Simply send us a written
request. Although currently there is no limit on the number of transfers you may
make, we reserve the right to limit the number to no more than one every 90
days. If we impose a limit, it would not apply to a transfer of all funds in the
Separate Account Divisions to the GPA or to transfers made in connection with
any automated-transfer program we offer.
We limit transfers from the GPA to the Separate Account Divisions to one each
Policy Year. You may not transfer more than 25% of the Fixed Account Value (less
any Policy Debt) at the time of the transfer. There is one exception to this
rule. If:
. you have transferred 25% of the Fixed Account Value each year for three
consecutive Policy Years, and
. you have not invested any Net Premium amount in the GPA or
. transferred any money into the GPA during these three years,
you may transfer the remainder of the Fixed Account Value (less any Policy Debt)
out of the GPA in the succeeding Policy Year. In this
Detailed Descriptions of Policy Features 9
<PAGE>
situation, you must transfer the full amount out of the GPA in one transaction.
Any transfer is effective on the Valuation Date at the price next determined
after we receive the request in Good Order at our Administrative Office. We do
not charge for transfers.
Overall Limitation on Net Premium Allocations and Transfers. You may allocate
Net Premiums and transfer amounts to up to 16 Divisions over the life of the
Policy.
Policy Termination and Reinstatement
The Policy will not terminate simply because you do not make Planned Premium
payments. Conversely, making Planned Premium payments does not guarantee that
the Policy will remain in force.
The Policy may terminate if its value cannot cover the Monthly Charges and the
safety test is not met.
If the Policy does terminate, you may be permitted to reinstate it.
Grace Period and Termination. The Policy may terminate without value if:
. its "policy value" on a Monthly Charge Date cannot cover the Monthly
Charges due; and
. the safety test is not met on that Date.
However, we allow a grace period for payment of the premium amount (not less
than $20) needed to avoid termination. We will mail you a notice stating this
amount.
The Policy will terminate without value if we do not receive the required
payment by the end of the grace period.
Grace Period. The grace period begins on the date the Monthly Charges are due.
It ends 61 days after that date or, if later, 31 days after the date we mail the
notice stating the amount needed.
During the grace period, the Policy will stay in force. If the second death
occurs during the grace period, the Death Benefit will be payable. In this case,
any due but unpaid premium amount needed to avoid termination will be deducted
from the Death Benefit.
Policy Value. The definition of "policy value" depends on the Policy Year. The
"policy value" is equal to:
. during the first three Policy Years, the Account Value less any Policy
Debt; and
. after the first three Policy Years, the Net Surrender Value.
If the "policy value" cannot cover the Monthly Charges due but the safety test
is met, then the Monthly Charges due will be reduced to an amount equal to the
Account Value less any Policy Debt.
Safety Test. (Not available in New York) The safety test allows you to keep the
Policy in force, regardless of the value of the Policy, by making minimum
premium payments. But the safety test can be met only during the Guarantee
Period stated in the Policy.
The Guarantee Period has an associated monthly Guarantee Premium. The amount of
the Guarantee Premium depends on the Issue Age, gender, and risk classification
of each Insured, and on the Face Amount and Death Benefit Option.
During the Guarantee Period, the safety test is met if (A) equals or exceeds
(B), defined as:
(A) premiums paid less any amounts withdrawn, accumulated at an effective
annual interest rate of 3%;
(B) monthly Guarantee Premiums paid on each Monthly Charge Date beginning on
the Policy Date, accumulated at an effective annual interest rate of 3%.
In (A) above, we exclude any premiums refunded (see Premium Limitations).
Example:
The Policy is in the Guarantee Period. The monthly Guarantee Premium is $25.
You have made premium payments of $35 on each Monthly Charge Date beginning
on the Policy Date. In this case, the safety test is met. Even if the "policy
value" cannot cover the Monthly Charges, the Policy will stay in force.
10 Detailed Descriptions of Policy Features
<PAGE>
Generally, the Guarantee Period is the first five Policy Years. Consult your
Policy for the Guarantee Period available to you.
Reinstating Your Policy. If your Policy terminates, you may reinstate it--that
is, put it back in force. But you may not reinstate your Policy if:
. you surrendered it; or
. five years have passed since it terminated; or
. an Insured has died since the Policy terminated.
Requirements to Reinstate Your Policy. To reinstate your Policy, we will need:
1. a written application to reinstate;
2. evidence, satisfactory to us, that each Insured living when the Policy
terminated still is insurable; and
3. a premium payment sufficient to keep the Policy in force for three months
after reinstatement. The minimum amount of this premium payment will be
quoted on request.
Policy after You Reinstate. If you reinstate your Policy, the Face Amount will
be the same as it was when it terminated. Your Account Value at reinstatement
will be the premium paid at that time, reduced by the Premium Expense Charge and
any Monthly Charges then due. Surrender Charges after reinstatement will apply
as if the Policy had not terminated. However, if the Surrender Charge was taken
when the Policy terminated, then the applicable Surrender Charges will not be
reinstated.
If you reinstate your Policy, it may become a "modified endowment contract"
under current federal tax law. Consult your tax advisor.
Charges and Deductions
We will deduct charges from the Policy to compensate us for:
(a) providing the insurance benefits under the Policy (including any riders);
(b) administering the Policy;
(c) assuming certain risks in connection with the Policy (including any
riders); and
(d) selling and distributing the Policy.
In addition, the fund managers deduct expenses from the funds. For more
information about these expenses, see the individual fund prospectuses.
Deductions from Premiums
We deduct a Premium Expense Charge from each premium payment you make. The
Premium Expense Charge rate is higher for premium payments up to Expense Premium
than for premium payments over Expense Premium. The Expense Premium is based on
the Issue Ages, genders, and risk classifications of the Insureds.
If you have increased the Policy Face Amount, the Expense Premium used here is
the total of the Expense Premiums for the Initial Face Amount and for all
increases.
Monthly Charges Against the Account Value
We deduct charges from the Account Value on each Monthly Charge Date. The
Monthly Charges are:
(a) an Administrative Charge;
(b) a Face Amount Charge;
(c) an Insurance Charge; and
(d) a rider charge for any additional benefits provided by rider.
We deduct the Monthly Charges from the Division(s) and the GPA in proportion to
the non-loaned values of the Policy in the Division(s) and the GPA.
Administrative Charge and Face Amount Charge. The monthly Administrative Charge
and Face Amount Charge reimburse us for issuing and administering the Policy,
and for such activities as processing claims, maintaining records and
communicating with you.
Insurance Charges. The monthly Insurance Charge for a Policy is equal to the
"amount at risk" under the Policy, multiplied by the monthly Insurance Charge
rate for that Policy month. We determine the amount at risk on the first day of
each Policy month. It is the amount by which the Death Benefit (discounted at
the monthly
Detailed Description of Policy Features 11
<PAGE>
equivalent of 3% per year) exceeds the Account Value.
Insurance rates are based on the genders, Issue Ages, and risk classes of the
Insureds, and the Year of Coverage. We currently place Insureds into the
following three standard rate classes: Select Preferred Nontobacco, Preferred
Nontobacco, and Preferred Tobacco. We also have substandard rate classes for
greater mortality risks. In otherwise identical Policies, the monthly insurance
rate is higher for tobacco users than for those who do not use tobacco and
higher for Preferred Nontobacco Insureds than for Select Preferred Nontobacco
Insureds.
Rider Charge. You can obtain additional benefits by requesting riders on your
Policy. The monthly rider charges include charges for any benefits you add by
rider.
Daily Charges Against the Separate Account
Mortality and Expense Risk Charge. Each day we deduct a charge from the Separate
Account for mortality and expense risks. We do not deduct this charge from the
assets in the GPA.
The mortality risk is a risk that the group of lives we insure may, on average,
live for shorter periods of time than we estimated. The expense risk is a risk
that our costs of issuing and administering Policies may be more than we
estimated.
If we do not need all the money we collect in mortality and risk charges to
cover death benefits and expenses, the amount we do not need will be our gain.
However, even if the money we collect is not enough to cover death benefits and
expenses, we will pay all death benefits and expenses.
Investment Management Fee and Other Expenses. Each of the funds incurs
investment management fees and other expenses. These are deducted from the fund.
Surrender Charges
During the first 10 Years of Coverage under the Initial Face Amount, we will
take a Surrender Charge against the Account Value if you fully surrender the
Policy or decrease the Face Amount. This also applies during the first 10 Years
after an increase in Face Amount. We calculate Surrender Charges separately for
the Initial Face Amount and for each increase in the Face Amount. The Surrender
Charge in the first Year of Coverage is based on the Target Premium. The
Surrender Charge is decreased by 10% of the first year Surrender Charge in each
of the next nine Years of Coverage, and is zero in the eleventh year.
Decrease in Selected Face Amount. If you decrease your Policy Face Amount, we
cancel all or a part of your Face Amount segments. We charge a partial Surrender
Charge. The partial Surrender Charge is equal to the Surrender Charge associated
with each decreased or canceled Face Amount segment. If the partial Surrender
Charge for a decreased or canceled Face Amount segment would be greater than the
Account Value of the Policy, we set the partial Surrender Charge equal to the
Account Value on the date of the surrender.
After a Face Amount decrease, we reduce the Surrender Charge for the remaining
segments by the amount of the partial Surrender Charge.
Other Charges
Withdrawal Fee. If you make a partial Withdrawal from your Policy, we deduct $25
from the amount you withdraw. This fee is guaranteed not to increase for the
duration of the Policy.
Loan Interest Rate Expense Charge. This charge reimburses us for the expenses of
administering loans.
Special Circumstances
We may vary the charges and other terms of Policies where special circumstances
result in sales or administrative expenses or insurance risks that are different
than those normally associated with these Policies. We will make these
variations only in accordance with uniform rules we establish.
12 Detailed Description of Policy Features
<PAGE>
Account Value and Net Surrender Value
The Account Value of the Policy has two components: the Variable Account Value
and the Fixed Account Value.
Variable Account Value. The Variable Account Value is the sum of your values in
each of the Divisions of the Separate Account. It reflects:
. Net Premiums allocated to the Separate Account;
. transfers to the Separate Account from the Guaranteed Principal Account;
. transfers and withdrawals from the Separate Account;
. Monthly Charges and Surrender Charges deducted from the Separate Account;
and
. the net investment experience of the Separate Account.
These transactions are all reflected in the Variable Account Value through the
purchase and sale of accumulation units.
Net Investment Experience and Accumulation Units. The net investment experience
of the Variable Account Value is reflected in the value of the accumulation
units. The value of your accumulation units in a Division is equal to:
. the accumulation unit value in that Division; multiplied by
. the number of accumulation units in that Division credited to your Policy.
We purchase and sell accumulation units at the unit value as of the closing time
of the New York Stock Exchange on the Valuation Date processed.
If we receive a premium or a transaction request in Good Order before the
closing time on a Valuation Date, units will be purchased or sold as of that
Valuation Date. If we receive it in Good Order after that time, units will be
purchased or sold as of the next Valuation Date.
The Variable Account Value of the Policy is the total of the values of the
accumulation units in each Division credited to Policy.
Fixed Account Value. The Fixed Account Value is the accumulation at interest of:
. Net Premiums allocated to the Guaranteed Principal Account; plus
. amounts transferred into the GPA from the Separate Account; less
. amounts transferred or withdrawn from the GPA; and less
. Monthly Charges and Surrender Charges deducted from the GPA.
Interest on the Fixed Account Value. The Fixed Account Value earns interest at
an effective annual rate, credited daily.
For the part of the Fixed Account Value equal to any Policy loan, the daily rate
we use is the daily equivalent of:
. the annual loan interest rate minus the Loan Interest Rate Expense Charge;
or
. 3% if greater.
For the part of the fixed account in excess of any Policy loan, the daily rate
we use is the daily equivalent of:
. the current interest rate we declare; or
. the guaranteed calendar-year interest rate we declare for the year if
greater.
This guaranteed calendar-year rate for each year will be at least 3%.
Net Surrender Value. The Net Surrender Value of the Policy is equal to:
. the Account Value; less
. any Surrender Charges that apply; and less
. any Policy Debt.
You may surrender the Policy by sending a written request together with the
Policy to our Administrative Office. We will determine the Net Surrender Value
at the end of the Valuation Date on which we receive the request in Good Order.
Withdrawals. After the first Policy Year, you may withdraw up to 75% of the Net
Surrender Value. We deduct a fee of $25 from the amount withdrawn. We do not
charge a Surrender Charge for a Withdrawal. The minimum amount you can withdraw
is $100 (including the Withdrawal fee). We may not allow a Withdrawal if it
would result
Detailed Description of Policy Features 13
<PAGE>
in a reduction of the Face Amount to less than $500,000.
You must state in the Withdrawal Request from which Divisions or the GPA you
want the withdrawal made. You can state the amount as a dollar amount or a
percentage. The withdrawal will be effective on the date we receive the written
request in Good Order. We will process it within seven days. The Withdrawal
amount you wish taken from each Division of the Separate Account and from the
GPA may not exceed the non-loaned Account Value in each of these. If you have
chosen Death Benefit Option 1 or 3, we will reduce the Face Amount by the amount
of the Withdrawal unless you provide evidence satisfactory to us that the
Insureds or Insured alive still is insurable.
Policy Loan Privilege
General. After the first Policy Year, you may take a loan from the Policy as
long as the Account Value exceeds the total of any Surrender Charges. You must
assign the Policy to us as collateral for the loan. The maximum amount you can
borrow at any time is 90% of the Policy's Account Value less any Surrender
Charge. If there is any outstanding Policy Debt, including any accrued interest,
it reduces the maximum amount available.
Source of Loan. We take the Policy loan amount from the Divisions and the GPA in
proportion to the amount of Account Value in each Division and the GPA
(excluding any outstanding loans) on the date of the loan. We reduce the amount
of units in the Divisions of the Separate Account from which the loan is taken.
We transfer the resulting dollar amounts to the loaned portion of the GPA.
We may delay granting any loan you want taken from the GPA for up to six months.
We may delay granting any loan from the Divisions during any period that:
(i) the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
(ii) trading is restricted;
(iii) the SEC determines a state of emergency exists; or
(iv) the SEC permits us to delay payment for the protection of our Owners.
Whenever total Policy Debt (which includes accrued interest) equals or exceeds
the Account Value less Surrender Charges, we will send a notice to you. This
notice will state the amount needed to bring the Policy Debt back within the
limit. If we do not receive this amount within 31 days after the date we mailed
the notice, and if Policy Debt exceeds the Account Value less any Surrender
Charges at the end of those 31 days, the Policy terminates without value.
Loan Interest Charged. At the time of Application, you may select a loan
interest rate of 5% or an adjustable loan rate. Each year we will set the
adjustable rate that will apply for the next Policy Year. The maximum loan rate
is based on the Monthly Average Corporate yield on seasoned corporate bonds as
published by Moody's Investors Service, Inc. If this Average is no longer
published, we will use a similar average as approved by the insurance department
of your "contract state." The maximum rate is the greater of:
(i) the published monthly average for the calendar month ending two months
before the Policy Year begins,
(ii) or 4%.
If the maximum rate is less than 1/2% higher than the rate in effect for the
previous year, we will not increase the rate. If the maximum rate is at least
1/2% lower than the rate in effect for the previous year, we will decrease the
rate.
Interest on Policy loans accrues daily and becomes part of the Policy Debt as it
accrues. It is due on each Policy Anniversary. If you do not pay it when it is
due, the interest is added to the loan. As part of the loan, it will bear
interest at the loan rate. We will treat capitalized interest the same as a new
loan. We will take an amount equal to the interest due from the Divisions and
the GPA in proportion to the non-loaned Account Value in each.
Repayment. You may repay all or part of any Policy Debt at any time while at
least one of the Insureds is living and while the Policy is in force. Any loan
repayment you make within 30 days of the Policy Anniversary date first pays
Policy loan interest due. We will allocate any other loan
14 Detailed Description of Policy Features
<PAGE>
repayment to the GPA until you have repaid all loan amounts that were deducted
from the GPA. We will allocate additional loan repayments based on the premium
allocation. You must clearly identify the payment as a loan repayment or we will
consider the payments premium payments.
We will deduct any outstanding Policy Debt from the proceeds payable at the
second death or the surrender of the Policy.
Interest on Loaned Value. We deposit an amount equal to the loaned amount in the
GPA. This amount earns interest at a rate equal to the greater of 3% and the
Policy loan rate less the Loan Interest Rate Expense Charge. We guarantee this
Charge will not exceed 2%. Currently, the Charge is 0.50% in Policy Years one
through 10 and 0.25% in Policy Years 11 and later.
Effect of Loan. A Policy loan affects the Policy since we reduce the Death
Benefit and Net Surrender Value by the amount of the loan. If you repay the
loan, we increase the Death Benefit and Net Surrender Value under the Policy by
the amount of the repayment. Taking a Policy loan could have adverse tax
consequences if your Policy is a "modified endowment contract" under current
federal tax law. Consult your tax advisor.
As long as a loan is outstanding, a portion of the Policy Account Value equal to
the loan is invested in the GPA. This amount does not participate in the
Separate Account investment performance.
Detailed Description of Policy Features 15
<PAGE>
III. Investment Options
The Guaranteed Principal Account
You may allocate some or all of the Net Premiums to the Guaranteed Principal
Account ("GPA"). An Owner also may transfer some or all of the Account Value in
the Divisions of the Separate Account to the GPA. Neither our General Account
nor the GPA is registered under federal or state securities laws.
Amounts allocated to the GPA become part of our General Account. Our General
Account consists of all assets owned by us other than those in the Separate
Account and in our other separate accounts. Subject to applicable law, we have
sole discretion over the investment of the assets of our General Account.
We guarantee amounts allocated to the GPA in excess of any Policy Debt (which
includes accrued interest) will accrue interest daily at an effective annual
rate at least equal to 3%. For amounts in the GPA equal to any Policy Debt, the
guaranteed minimum interest rate is an effective annual rate of 3% or, if
greater, the Policy loan rate less the Loan Interest Rate Expense Charge. This
charge will not be greater than 2% per year. This rate will be paid regardless
of the actual investment experience of the GPA. In addition to the guaranteed
minimum interest rate, we will declare a calendar year guaranteed minimum rate
each December for the upcoming calendar year. The rate we credit in any calendar
year will not be lower than this calendar year guaranteed minimum rate. Although
we are not obligated to credit interest at a rate higher than the guaranteed
minimum, we may declare a higher rate.
The Separate Account
Our Board of Directors established the Separate Account on February 2, 1995, as
a separate investment account of MassMutual. The Board established the Separate
Account based on the laws of the State of Massachusetts. The Separate Account is
registered with the Securities and Exchange Commission as a unit investment
trust under the provisions of the Investment Company Act of 1940. We have
established a segment within the Separate Account to receive and invest premium
payments for the Policies. We have since divided this segment into 13 Divisions.
Each Division invests in a shares of a designated Fund of MML Trust, Oppenheimer
Trust, Variable Insurance Products Fund II (managed by Fidelity Management &
Research Company), T. Rowe Price Equity Series, Inc., or American Century
Variable Portfolios, Inc. We may establish additional divisions within the
Segment in the future.
We own the assets in the Separate Account. We are required to maintain
sufficient assets in the Separate Account to meet anticipated obligations of the
Policies funded by the Separate Account. We credit or charge the income, gains,
or losses, realized or unrealized, of the Separate Account against the assets
held in the Separate Account. We do not take any regard of the other income,
gains, or losses of MassMutual. Assets in the Separate Account attributable to
the reserves and other liabilities under the Policies cannot be charged with
liabilities from any other business conducted by MassMutual. We may transfer to
our General Account any assets that exceed anticipated obligations of the
Separate Account.
Some of the Funds offered are generally identical to, or are "clones" of, mutual
funds offered in the retail marketplace. These "clone" funds have the same
investment objectives, policies, and portfolio managers as the retail funds and
usually were formed after the retail funds. While the clone funds generally have
identical investment objectives, policies and portfolio managers, they are
separate and distinct from the retail funds. In fact, the performance of the
clone funds may be dramatically different from the performance of the retail
funds due to differences in the funds' sizes, dates shares of stock are
purchased and sold, cash flows and expenses. Thus, while the performance of the
retail funds may be informative, you should remember that such performance is
not the performance of the funds that support the Policy. It is not an
indication of future performance of the Policy funds.
16 Other Policy Information
<PAGE>
The Funds
The MML Trust, Oppenheimer Trust, Variable Insurance Products Fund II, T. Rowe
Price Equity Series, Inc., and American Century Variable Portfolios, Inc., are
open-end, management investment companies registered under the Investment
Company Act of 1940 ("1940 Act"). They all provide an investment vehicle for the
separate investment accounts of variable life and variable annuity contracts
offered by companies such as MassMutual. Shares of these organizations are not
offered to the general public.
The assets of certain variable annuity separate accounts offered by MassMutual,
an affiliate, or other life insurers are invested in shares of these funds.
Because these separate accounts are invested in the same underlying Funds, it is
possible conflicts could arise between Policy Owners and owners of the variable
annuity contracts.
The Boards of Trustees or Boards of Directors of the Funds will follow
procedures developed to determine whether conflicts have arisen. If a conflict
exists, the Boards will notify the Insurers and they will take appropriate
action to eliminate the conflicts.
We purchase the shares of each Fund for the Division at net asset value. All
dividends and capital gain distributions received from a Fund are automatically
reinvested in that Fund at net asset value, unless MassMutual, on behalf of the
Separate Account, elects otherwise. We redeem shares of the Funds at their net
asset values as needed to make payments under the Policies.
MML Trust. The MML Trust, managed by MassMutual, was organized as a
Massachusetts business trust on December 19, 1984. Six of the diversified
investment portfolios of the Trust are available under this Policy.
Oppenheimer Trust. The Oppenheimer Trust is managed by OppenheimerFunds, Inc.
The Trust consists of 10 separate funds, four of which are offered under this
Policy.
Variable Insurance Products Fund II. Variable Insurance Products Fund II
("Fidelity VIP II"), managed by Fidelity Management & Research Company ("FMR"),
was organized as a Massachusetts business trust on March 21, 1988. One of its
investment portfolios, the VIP II Contrafund Portfolio, is available under this
Policy.
T. Rowe Price Equity Series, Inc. The T. Rowe Price Equity Series, Inc. was
incorporated in Maryland in 1994. Currently, it consists of four series, each
representing a separate class of shares having different objectives and
investment policies. One of the series, the Mid-Cap Growth Portfolio, is
available under this Policy.
American Century Variable Portfolios, Inc. American Century Variable Portfolios,
Inc. is part of American Century Investments, a family of funds that includes
nearly 70 no-load mutual funds covering a variety of investment opportunities.
One of the funds, VP Income & Growth, is offered under this Policy.
Fund Profiles
Following is a chart illustrating the risk profiles of the investment options
available under this Policy, and a summary of the investment objectives of each
fund. Please note there can be no assurance any fund will achieve its
objectives. More detailed information concerning these investment objectives and
the Funds is contained in the accompanying prospectuses, including information
on the risks associated with the investments, the investment techniques of each
of the funds, and the deduction of expenses applicable to each of the funds.
Investment Options 17
<PAGE>
INVESTMENT PREFERENCE CHART*
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Oppenheimer Global Securities Fund/VA
VIP II Contrafund Portfolio
Oppenheimer Aggressive Growth Fund/VA++
MML Small Cap Value Equity Fund
T. Rowe Price Mid-Cap Growth Portfolio
Oppenheimer Capital Appreciation Fund/VA+
MML Equity Index Fund
American Century VP Income & Growth
MML Equity Fund
MML Blend Fund
Oppenheimer Strategic Bond Fund/VA
MML Managed Bond Fund
MML Money Market Fund
Guaranteed Principal Account
- ---------------------------------------------------------------------------------------------------------------------
Conservative Less Conservative Moderate Aggressive More Aggressive
</TABLE>
Conservative: Investment goal is preservation of principal, while incurring
little risk.
Less Conservative: Investment goal is primarily preservation of principal, with
some desire for growth.
Moderate: Investment goal is growth, while seeking some preservation of
principal.
Aggressive: Investment goal is growth, with more tolerance for risk.
More Aggressive: Investment goal is significant growth over the long-term, with
greater tolerance for risk.
+The Oppenheimer Growth Division invests in the Oppenheimer Capital Appreciation
Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation Fund/VA was
called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*This chart is provided by Massachusetts Mutual Life Insurance Company. It does
not necessarily reflect the opinion of the underlying fund managers.
MML Money Market Fund
MML Money Market Fund seeks to maximize current income, to preserve capital, and
to maintain liquidity by investing in money market instruments.
MML Managed Bond Fund
MML Managed Bond Fund seeks a high rate of return, consistent with capital
preservation, by investing primarily in investment grade, publicly-traded, fixed
income securities.
Oppenheimer Strategic Bond Fund/VA
Oppenheimer Strategic Bond Fund/VA is a mutual fund that seeks a high level of
current income principally derived from interest on debt securities and seeks to
enhance such income by writing covered call options on debt securities. The Fund
invests in three market sectors: debt securities of foreign government and
companies, U.S. Government securities, and lower-rated, high-yield securities of
U.S. companies.
MML Blend Fund
MML Blend Fund seeks a high total rate of return over time, consistent with
prudent investment risk and capital preservation, by investing in equity, fixed
income and money market securities.
Sub-adviser to the equity sector of the Fund is David L. Babson & Company, Inc.
MML Equity Fund
MML Equity Fund seeks to achieve a superior rate of return over time from both
capital appreciation and current income and to preserve capital by investing in
equity securities.
18 Investment Options
<PAGE>
Sub-adviser to the Fund is David L. Babson & Company, Inc.
American Century VP Income & Growth
American Century VP Income & Growth seeks long-term growth of capital as well as
current income. The Fund pursues a total return and dividend yield that exceed
those of the S&P 500 by investing in stocks of companies with strong dividend
growth potential.
MML Equity Index Fund
MML Equity Index Fund seeks 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 by the Fund. The Fund is not sponsored, endorsed,
sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies
("S&P"), or The McGraw Hill Companies, Inc. Standard & Poor's makes no
representation regarding the advisability of investing in the Fund.)
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Capital Appreciation Fund/VA is a mutual fund that seeks long-term
capital appreciation by investing in securities of well-known established
companies. It invests mainly in equity securities.
T. Rowe Price Mid-Cap Growth Portfolio
The T. Rowe Price Mid-Cap Growth Portfolio seeks to provide long-term capital
appreciation by investing in mid-cap stocks with potential for above-average
earnings growth. T. Rowe Price defines mid-cap companies as those with market
capitalizations within the range of companies in the S&P 400 Mid-Cap Index.
MML Small Cap Value Equity Fund
The MML Small Cap Value Equity Fund seeks long-term growth of capital and income
by investing primarily in small company stocks.
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Aggressive Growth Fund/VA is a mutual fund that seeks long-term
capital appreciation by investing in "growth-type" companies. Prior to May 1,
1998, the Fund was named Oppenheimer Capital Appreciation Fund.
VIP II Contrafund Portfolio
This Fund seeks long-term capital appreciation. It invests primarily in common
stocks. It also invests in the securities of companies whose value FMR believes
is not fully recognized by the public, in domestic and foreign issuers, and in
either "growth" stocks or "value" stocks or both.
Oppenheimer Global Securities Fund/VA
Oppenheimer Global Securities Fund/VA is a mutual fund that seeks long-term
capital appreciation by investing a substantial portion of assets in securities
of foreign issuers, "growth-type" companies, cyclical industries and special
situations, which are considered to have appreciation possibilities. It invests
in equity securities of U.S. and foreign issuers.
The Investment Advisers
MassMutual serves as investment manager of each of the MML Funds under
investment management agreements. David L. Babson & Company, Inc. ("Babson"),
which is a controlled subsidiary of MassMutual, is the investment sub-adviser to
MML Equity Fund and the Equity Sector of the MML Blend Fund. Babson also is the
sub-adviser to the MML Small Cap Value Equity Fund. Both MassMutual and Babson
are registered investment advisers under the Investment Advisers Act of 1940.
MassMutual entered into a sub-advisory agreement with Mellon Equity. Mellon
Equity manages the investment and reinvestment of the assets of the MML Equity
Index Fund.
OppenheimerFunds, Inc. ("OFI") is an investment adviser organized under the laws
of Colorado as a corporation; it was originally organized in 1959. It (including
a subsidiary) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $95 billion as of December 31, 1998,
and with more than 4 million shareholder accounts. OFI is located at Two World
Trade
Investment Options 19
<PAGE>
Center, 34th Floor, New York, New York 10048-0203. OFI is owned by Oppenheimer
Acquisition Corporation, a holding company owned in part by senior management of
OFI and ultimately controlled by MassMutual. OFI serves as investment adviser to
the Oppenheimer Trust. OFI is registered as an investment adviser under the
Investment Advisers Act of 1940. OFI serves as Investment Adviser to the
Oppenheimer Funds.
Citibank N.A., with its home office located at 111 Wall Street, New York, NY
10005, acts as custodian for the MML Trust. Bank of New York, with its home
office at One Wall Street, New York, NY 10015, acts as custodian for the
Oppenheimer Trust.
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.
Fidelity Management & Research Company ("FMR") is the investment adviser to the
VIP II Contrafund Portfolio. FMR is the management arm of Fidelity
Investments(R), which was established in 1946. Fidelity Investments(R) has its
principal business address at 82 Devonshire Street, Boston, Massachusetts. FMR
handles the VIP II Contrafund business affairs and, with the assistance of
affiliates, chooses the Fund's investments. Fidelity Management & Research
(U.K.) Inc., in London, England, and Fidelity Management & Research (Far East),
Inc., serve as sub-advisers for the VIP II Contrafund Portfolio.
T. Rowe Price Associates, Inc. ("T. Rowe Price"), is the investment adviser to
the T. Rowe Price Mid-Cap Growth Portfolio. T. Rowe Price was founded in 1937.
The T. Rowe Price Equity Series, Inc. (the "Corporation"), was incorporated in
Maryland in 1994, and is a diversified, open-end investment company. The
Corporation is governed by a Board of Directors that meets regularly to review
the Fund's investments, performance, expenses, and other business affairs. The
policy of the Corporation is that a majority of Board members will be
independent of T. Rowe Price.
American Century Investment Management, Inc., is the investment adviser to the
American Century VP Income & Growth Fund. Under the laws of the state of
Maryland, the Board of Directors is responsible for managing the business and
affairs of the Fund. Acting under an investment management agreement entered
into with the Fund, American Century Investment Management, Inc., serves as the
manager of the Fund. Its principal place of business is American Century Tower,
4500 Main Street, Kansas City, Missouri. The manager has been providing
investment advisory services to investment companies and institutional investors
since it was founded in 1958.
20 Investment Options
<PAGE>
IV. Other Policy Information
When We Pay Proceeds
If the Policy has not terminated, we normally pay surrender, withdrawal, or loan
proceeds or the Death Benefit within seven days after we receive all required
documents in a form satisfactory to us at our Administrative Office.
We can delay payment of the Death Benefit, the Net Surrender Value, or any
Withdrawal or loan from the Separate Account during any period when:
(i) it is not reasonably practical to determine the amount because the New
York Stock Exchange is closed (other than customary week-end and holiday
closings); or
(ii) trading is restricted by the SEC; or
(iii) the SEC declares an emergency exists; or
(iv) the SEC, by order, permits us to delay payment in order to protect our
Owners.
We may delay paying any Net Surrender Value, any Withdrawal, or any loan
proceeds based on the GPA for up to six months from the date the request is
received at our Administrative Office.
We can delay payment of the entire Death Benefit if we contest the payment. We
investigate all death claims occurring within the two-year contestable period.
We may investigate death claims occurring beyond the two-year contestable
period. When we receive the information from a completed investigation, we
generally determine within five days whether we will authorize payment of the
claim. We make all payments promptly after authorization.
If we delay payment of a surrender or Withdrawal for 30 days or more, we add
interest to the date of payment at the same rate it is paid under the interest
payment option. We pay interest on the Death Benefit from the date of death to
the date of payment.
Payment Options
We will pay the Policy proceeds (the Death Benefit or the Net Surrender Value)
in cash. Or if you wish, we will pay all or part of these under one or more of
the following payment options. The minimum amount that can be applied under a
payment option is $5,000. If the periodic payment under any option is less than
$50, we reserve the right to make payments at less-frequent intervals. None of
these benefits depends on the performance of the Separate Account or the GPA.
For additional information concerning these options, see the Policy. The
following payment options are currently available.
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Installments for a Specified Equal monthly payments for any period selected, up to 30 years. The amount of each
Period payment depends on the total amount applied, the period selected, and the monthly
income rates we are using when the first payment is due.
- -------------------------------------------------------------------------------------------------------------------
Life Income Equal monthly payments based on the life of a named person. Payments will continue
for the lifetime of that person. You can elect income with or without a minimum
payment period.
- -------------------------------------------------------------------------------------------------------------------
Interest We will hold any amount applied under this option. We will pay interest on the
amount at an effective annual rate determined by us. This rate will not be less
than 3%.
- -------------------------------------------------------------------------------------------------------------------
Installments of Specified Fixed amount payments. The total amount paid during the first year must be at
Amount least 6% of the total amount applied. We will credit interest each month on the
unpaid balance and add this interest to the unpaid balance. This interest will be
an effective annual rate determined by us, but not less than 3%. Payments continue
until the balance we hold is reduced to less than the agreed fixed amount. The
last payment will be for the balance only.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Investment Options 21
<PAGE>
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Life Income with Payments Equal monthly payments based on the life of a named person. We will make payments
Guaranteed for Amount Applied until the total amount paid equals the amount applied, whether the named person
lives until all payments have been made or not. If the named person lives beyond
the payment of the total amount applied, we will continue to make monthly payments
as long as the named person lives.
- -------------------------------------------------------------------------------------------------------------------
Joint Lifetime Income with Monthly payments based on the lives of two named persons. We will make payments at
Reduced Payments to Survivor the initial level while both are living, or for 10 years if longer. When one dies
(but not before the 10 years has elapsed), we will reduce the payments by one-third.
Payments will continue at that level for the lifetime of the other. After the 10
years has elapsed, payments stop when both named persons have died.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Withdrawal Rights Under Payment Options. If provided in the payment option
election, you may withdraw or apply under any other option all or part of the
unpaid balance under the Fixed Amount or Interest Payment Option. You may not
withdraw any part of the payments under the Specified Period Payment Option or
payments that are based on a named person's life.
Beneficiary
A Beneficiary is any person named on our records to receive insurance proceeds
at the second death. The Applicant names the Beneficiary in the application for
the Policy. You may name 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.
You may change the Beneficiary during either Insured's lifetime by writing to
our Administrative Office. Generally, the change will take effect as of the date
of the request. If no Beneficiary is living at the second death, unless provided
otherwise, the Death Benefit is paid to you or, if deceased, to your estate.
Assignment
You may assign the Policy as collateral for a loan or other obligation. For any
assignment to be binding on MassMutual, however, we must receive a signed copy
of it at our Administrative Office. We are not responsible for the validity of
any assignment.
Limits on Our Right to Challenge the Policy
Except for any Policy change or reinstatement requiring evidence of
insurability, we cannot contest the validity of the Policy with respect to any
material misrepresentation in the application:
. regarding the insurability of Insured No. 1, once the Policy has been in
force during the lifetime of Insured No. 1 for two years after the its
Issue Date; or
. regarding the insurability of Insured No. 2, once the Policy has been in
force during the lifetime of Insured No. 2 for two years after the Issue
Date.
For any Policy change or reinstatement requiring evidence the Insured(s) are
insurable, we cannot contest the validity of the change or reinstatement with
respect to each Insured after the change has been in effect for two years during
the lifetime of that Insured.
Error of Age or Gender
If either Insured's age or gender is misstated in the Policy application, we
will adjust the Death Benefit we pay under the Policy based on what the Policy
would provide based on the most recent Monthly Charge for the correct date of
birth and correct gender.
Suicide
Suicide within two years of the Policy Date is not covered by the Policy. If
either Insured dies by suicide, while sane or insane, within two years from the
Issue Date or Reinstatement Date, the
22 Other Policy Information
<PAGE>
Policy will terminate. We will refund the amount of all premiums paid, less any
Withdrawals and Policy Debt. If either Insured, while sane or insane, dies by
suicide within two years after the effective date of any increase in the Face
Amount, the increase will terminate and we will refund the Monthly Charges for
that increase. However, if a refund was payable as the result of suicide during
the first two years following the Issue Date or the Reinstatement Date of the
Policy, there is no additional refund for any Face Amount increase.
Additional Benefits You Can Get by Rider
You can obtain additional benefits if you request them and qualify for them. We
provide additional benefits by riders. Additional benefits are subject to the
terms of both the rider and the Policy. The cost of any rider is deducted as
part of the Monthly Charges. Subject to state availability, the following riders
are available.
Policy Split Option Rider. (Not available in New York) This rider allows you to
exchange the Policy for two new policies, one on the life of each Insured. Both
Insureds must be living when the exchange is made. We do not require evidence
that the Insureds are insurable. Each new Policy may be a fixed premium
permanent life Policy or a flexible premium adjustable life Policy. This right
will be available for the six-month period beginning on:
. The date six months after the effective date of a final court decree of
divorce. The decree must first become effective at least one year after
the Policy Issue Date, and it must remain in effect during the entire
six-month period after it first becomes effective.
. The date IRC Section 2056:
- is nullified;
- is amended to eliminate or reduce by at least 50% the Insureds'
federal estate tax marital deduction;
. The date the maximum federal estate tax rate given in IRC Section 2001 is
reduced to half the rate in effect on the Policy Issue Date of this
Policy.
. The effective date of the dissolution of the corporation or partnership
that owns the Policy.
The new policies must meet the Policy requirements in effect at the time of the
exchange.
. The face amount of each new Policy will be one-half the Face Amount of
this Policy at the time of the split.
. The Policy Date of each new Policy will be the date of exchange.
. The issue age of each Insured will be the age of each Insured on the
birthday nearest the Policy Date of the new policies.
You may attach this rider to the Policy only at the time of Policy issue and
only if the younger Insured is younger than age 80, and the insurance risk class
of neither Insured is uninsurable.
There is no charge for this rider.
Estate Protection Rider. You may attach this rider to the Policy only at the
time the Policy is issued. It provides an additional Death Benefit during the
first four Policy Years if both Insureds die during this period. You select the
Face Amount of the rider. The minimum amount is $25,000 and the maximum amount
is 125% of the Initial Face Amount.
We will deduct a Monthly Charge from the Account Value for this rider. It will
equal the rider charge rate multiplied by the Face Amount of the rider, divided
by $1,000.
Sales and Other Agreements
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, is the principal underwriter of the Policy. MML Investors Services,
Inc. ("MMLISI"), at the same address serves as the co-underwriter of the Policy.
Both MML Distributors and MMLISI are registered with the SEC as broker-dealers
and are members of the National Association of Securities Dealers, Inc. (the
"NASD").
MML Distributors may have selling agreements with other broker-dealers that are
registered with the SEC and are members of the NASD ("selling brokers"). We sell
the Policy through agents who are licensed by state insurance officials to sell
the
Other Policy Information 23
<PAGE>
Policy. These agents also are registered representatives of selling brokers or
of MMLISI. We intend to offer the Policy in California and New York.
We also may contract with independent third party broker-dealers who may assist
us in finding broker-dealers to offer and sell the Policies. These third parties
also may provide training, marketing and other sales related functions for us
and other broker-dealers. And they may provide certain administrative services
to us in connection with the Policies.
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.
Compensation
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the Policy.
Agents who sell these Policies will receive commissions based on certain
commission schedules and rules. We pay some commissions as a percentage of the
premium paid in each Year of Coverage. These commissions distinguish between
premiums up to the Target Premium and premiums paid in excess of the Target
Premium. The Target Premium is based on the Issue Ages, genders, and risk
classifications of the Insureds. We also pay commissions as a percentage of the
average monthly Account Value in each Policy Year. The maximum commission
percentages are as follow.
<TABLE>
<CAPTION>
Premium-based Commissions
- --------------------------------------------------------------------------------
<S> <C>
Coverage Year 1 50% of premium paid up to the Target Premium
3% of premium paid over the Target Premium
Coverage Years 2-5 5% of premium paid up to the Target Premium
3% of premium paid over the Target Premium
Coverage Years 6-10 3% of all premium paid
Coverage Years 11 and 1% of all premium paid
beyond
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Asset-based Commissions
- --------------------------------------------------------------------------------
<S> <C>
Policy Years 2 and 0.15% of the average monthly Account Value in each
beyond Policy Year
- --------------------------------------------------------------------------------
</TABLE>
We may compensate agents who have financing agreements with general agents of
MassMutual differently. Agents who meet certain productivity and persistency
standards in selling MassMutual and MassMutual policies are eligible for
additional compensation. General agents and district managers who are registered
representatives of MMLISI also may receive commission overrides, allowances and
other compensation.
We may pay independent, third-party broker-dealers who assist us in finding
broker-dealers to offer and sell the Policies compensation based on premium
payments for the Policies. In addition, some sales personnel may receive various
types of non-cash compensation as special sales incentives, including trips and
educational and/or business seminars.
While the compensation we pay to broker-dealers for sales of Policies may vary
with the sales agreement and level of production, the compensation generally is
expected to be comparable to the aggregate compensation we pay to agents and
general agents.
24 Other Policy Information
<PAGE>
V. Other Information
MassMutual
MassMutual is a mutual life insurance company chartered in 1851 under the laws
of Massachusetts. Its Home Office is located in Springfield, Massachusetts.
MassMutual is licensed to transact life, accident, and health business in all
fifty states of the United States, the District of Columbia, Puerto Rico, and
certain provinces of Canada. As of December 31, 1998, MassMutual had
consolidated statutory assets in excess of $67 billion and estimated total
assets under management of $176.8 billion.
MassMutual's Tax Status. MassMutual is taxed as a life insurance company under
Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The Segment and
the Separate Account are part of MassMutual.
Due to our current tax status, we do not charge the Segment for our federal
income taxes that may be a result of activity of the Segment. Periodically, we
review the question of a charge to the Segment for our federal income taxes. In
the future, we may impose a charge for any federal income taxes we pay resulting
from activity of the Segment. Depending on the method of calculating interest on
Policy values allocated to the Guaranteed Principal Account, we may charge for
the Policy's share of our federal income taxes that are a result of activity of
the GPA.
Under current laws, we may have to pay state or local taxes (in addition to
premium taxes). At present, these taxes are not significant. We reserve the
right to charge the Separate Account for such taxes, if any, resulting from
activity of the Separate Account.
Annual Reports
MassMutual maintains the records and accounts relating to the Separate Account,
the Segment and the Divisions. Each year within the 30 days following the Policy
Anniversary, we will mail you a report showing:
(i) the Account Value at the beginning of the previous Policy Year,
(ii) all premiums paid since that time,
(iii) all additions to and deductions from the Account Value during the year;
and
(iv) the Account Value, Death Benefit, Net Surrender Value and Policy Debt as
of the last Policy Anniversary.
This report may contain additional information if required by any applicable law
or regulation.
Federal Income Tax Considerations
The information in this prospectus is general and is not an exhaustive
discussion of all tax questions that might arise under the Policy. It also is
not intended as tax advice. In addition, we do not profess to know the
likelihood the current federal income tax laws and Treasury Regulations or of
the current interpretations of the Internal Revenue Service will continue. We
cannot make any guarantee regarding the future tax treatment of any Policy. We
reserve 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 any tax issue, we urge you to consult a qualified
tax advisor. No attempt is made in this prospectus to consider any applicable
state or other tax laws.
Policy Proceeds, Premiums and Loans. We believe the Policy meets the IRC
definition of life insurance. Therefore, the Death Benefit under the Policy
generally is excludible from the gross income of the Beneficiary under the IRC.
Decreases in Face Amount and Withdrawals may be taxable depending on the
circumstances. The IRC states that:
. if there is a reduction of future benefits during the first 15 years after
a Policy is issued and
. if there is a cash distribution as a result of the reduction,
Other Policy Information 25
<PAGE>
you may be taxed on all or a part of the amount distributed.
If these conditions do not apply, a Withdrawal is taxable only to the extent it
exceeds your unrecovered premiums unless the Policy is a modified endowment
contract. After 15 years, cash distributions are not subject to federal income
tax, except to the extent they exceed the total amount of premiums paid and not
previously recovered.
If you surrender the Policy for its full Net Surrender Value, some of the Net
Surrender Value may be considered ordinary income for tax purposes. The
distribution is ordinary income to the extent the Account Value exceeds the
premiums (or any other amounts paid for the Policy) paid but not previously
recovered. In making this calculation, the Account Value considered is not
reduced by any outstanding Policy Debt but it is reduced by any Surrender
Charges.
A change of the Owner or the Insured(s) or an exchange or assignment of the
Policy may result in immediate taxable income.
We believe that under current law any loan received under the Policy will be
treated as Policy Debt of an Owner. The loan will not be considered income to
you unless the Policy has become a "modified endowment contract." If the Policy
is a modified endowment contract, loans will be fully taxable to the extent of
any income in the Policy and could be subject to an additional 10 percent tax.
Interest on Policy loans used for personal purposes generally is not
tax-deductible. However, you may deduct this interest if the loan proceeds are
used for "trade or business" or "investment" purposes if you meet certain tax
rules.
If the Owner is a business or corporation additional restrictions may apply. For
example, there are limits on interest deductions available for loans against a
business-owned Policy. The corporate alternative minimum tax may apply to any
gain in the Policy. This tax also may apply to a portion of the amount by which
Death Benefits received exceed the Policy's Net Surrender Value on the date of
death.
The impact of federal income taxes on values under this Policy and on the
benefit to you or your Beneficiary depends on MassMutual's tax status and on the
tax status of the individual concerned. We currently do not make any charge
against the Separate Account for federal income taxes. We may make such a charge
eventually in order to recover the future federal income tax liability of the
Separate Account.
Federal estate and gift taxes, state and local estate taxes, and other taxes
depend on the circumstances of each Owner or Beneficiary.
Modified Endowment Contracts. If a Policy is a modified endowment contract
("MEC"), loans, partial withdrawals, and other amounts distributed under the
Policy are taxable to the extent of any accumulated income in the Policy. The
collateral assignment of a MEC is also treated as a taxable distribution. In
general, the amount subject to taxation is the excess of the Account Value (both
loaned and unloaned) over the previously unrecovered premiums paid. Death
benefits paid under a MEC, however, are not taxed any differently than death
benefits payable under other life insurance contracts.
A Policy is a modified endowment contract if it satisfies the definition of life
insurance in the IRC 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 for a Policy providing
guaranteed benefits and requiring the payment of only seven level annual
premiums.
A Policy may pass the 7-pay test and still be taxed as a MEC if it is received
in exchange for a MEC.
If certain changes are made to a Policy we will re-test it to determine if it
has become a MEC. For example, if you reduce the death benefit during the first
seven contract years we will retest the Policy. If the test shows the Policy has
become a MEC, this classification change is effective retroactively to the
Policy Year in which the actual premiums paid exceed the new 7-pay limits.
We will retest whenever there is a "material change" to the Policy while it is
in force. If there
26 Other Information
<PAGE>
is a material change a new 7-pay test period begins at that time. The term
"material change" includes any increases in death benefits.
Since the Policy provides for flexible premium payments, we have procedures for
determining whether increases in death benefits or additional premium payments
cause the start of a new seven-year test period or the taxation of distributions
and loans.
If any amount is taxable as a distribution of income under a MEC, it also will
be subject to a 10% penalty tax. There are a few exceptions to the additional
penalty tax for individual Owners. The penalty tax will not apply to
distributions:
(i) made on or after the date the taxpayer attains age 59 1/2; or
(ii) made because the taxpayer became disabled; or
(iii) made as part of a series of substantially equal periodic payments paid for
the life or life expectancy of the taxpayer. These payments must be made
at least annually.
Once a Policy fails the 7-pay test, loans and distributions in the year of
failure and in future years are subject to the rules for MECs. In addition,
loans and distributions received in anticipation of failing the 7-pay test are
defined as any loans and distributions made within two years prior to failing
the 7-pay test and are subject to taxation.
Under certain circumstances, a loan, collateral assignment, or other
distribution under a MEC 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 MEC, the law considers the total of all income in all the
MECs issued within the same calendar year to the same Owner by an insurer and
its affiliates. Loans, collateral assignments, and distributions from any one
MEC are taxable to the extent of this total income.
Qualified Plans. The Policy may be used as part of certain tax-qualified and/or
ERISA employee benefit plans. Since the rules concerning the use of a Policy
with such plans are complex, you should not use the Policy in this way until you
have consulted a competent tax adviser. You may not use the Policy as part of an
Individual Retirement Account (IRA).
Your Voting Rights
You have the right to instruct us how to vote on questions submitted to the
shareholders of the funds supporting the Policy to the extent you have invested
in these Divisions.
Your right to instruct us is based on the number of shares of the Funds
attributable to your Policy. The Policy's number of shares of the Funds is
determined by dividing the Policy's Account Value held in each Division of the
Separate Account by $100. Fractional votes are counted.
You receive proxy material and a form to complete giving us voting instructions.
Shares of the Funds held by the Separate Account for which we do not receive
instructions are voted for or against any proposition in the same proportion as
the shares for which we do receive instructions.
Reservation of Rights
We reserve the right to take certain actions. Specifically, we reserve the right
to:
. Create new Divisions of the Separate Account;
. Create new Separate Accounts and new Segments;
. Combine any two or more Separate Accounts, Segments or Divisions;
. Make available additional or alternative 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. These securities can be substitutes for Fund shares already
purchased or they can apply only to future purchases.
. Operate the Separate Account as a management investment company under the
1940 Act or in any other form permitted by law;
. De-register the Separate Account under the 1940 Act in the event such
registration is no longer required;
Other Information 27
<PAGE>
. Substitute one or more Funds for other funds with similar investment
objectives;
. Delete Funds or close Funds to future investments; and
. Change the name of the Separate Account.
We have reserved all rights to the name 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 also may withdraw this right.
Bonding Arrangement
An insurance company blanket bond is maintained providing $75,000,000 coverage
for officers and employees of MassMutual (subject to a $350,000 deductible) and
$75,000,000 for MassMutual's general agents and agents (also subject to a
$350,000 deductible).
Legal Proceedings
We are not currently involved in any legal proceedings that would have a
material impact on the Policy.
Year 2000
Like other businesses and governments around the world, MassMutual could be
adversely affected if the computer systems used by the company and those with
which it does business do not properly recognize the year 2000. This is commonly
known as the "Year 2000 issue."
In 1996, MassMutual began an enterprise-wide process of identifying, evaluating
and implementing changes to computer systems and applications software to
address the Year 2000 issue on its own behalf and on behalf of certain
subsidiaries. MassMutual is addressing the Year 2000 issue internally with
modifications to existing programs and conversions to new programs. MassMutual
is also seeking assurances from vendors, customers, service providers,
governments and others with which MassMutual conducts business, to determine
their year 2000 readiness.
The costs are currently being expensed, and when measured against net gain from
operations before dividends, are not material to MassMutual.
Experts
We have included the financial statements of MassMutual, and the Survivorship
Variable Universal Life Segment of Massachusetts Mutual Variable Life Separate
Account I, in this prospectus in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP'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.
Craig Waddington, FSA, MAAA, Vice President for MassMutual, has examined the
illustrations in Appendix D of this prospectus. We filed his opinion on the
illustrations as an exhibit to the registration statement filed with the SEC.
28 Other Information
<PAGE>
Appendix A
Definition of Terms
Account Value: The sum of the Variable Account Value and the Fixed Account Value
of the Policy.
Administrative Office: Our Administrative Office is located at 1295 State
Street, Springfield, Massachusetts 01111-0001.
Attained Age: The Issue Age of an Insured plus the number of completed Policy
Years.
Beneficiary(ies): The person or persons specified by you to receive some or all
of the Death Benefit at the second death.
Death Benefit: The amount paid following receipt of due proof of the death of
both Insureds. The amount is equal to the benefit provided by the Death Benefit
Option in effect on the date of the second death less any Policy Debt
outstanding and any due but unpaid premium needed to avoid Policy termination.
Death Benefit Option: The Policy offers three Death Benefit Options for
determination of the amount of the Death Benefit. The Death Benefit Option is
elected at time of application and, subject to certain requirements, may be
changed at a later date.
Expense Premium: An amount used to determine the Premium Expense Charges. For
the Initial Face Amount, the Expense Premium is based on the Issue Ages,
genders, and risk classifications of the Insureds. For each increase in Face
Amount, the Expense Premium is based on the ages, genders and risk
classifications of the Insureds on the effective date of the increase.
Fixed Account Value: The current Account Value that is allocated to the
Guaranteed Principal Account.
Good Order: Generally, in Good Order means that we have received everything we
need to process the transaction. For example, we may need certain forms
completed and signed before we can process a transaction. Likewise, we cannot
process certain financial transactions until we have received funds with proper
instructions and authorizations.
Guaranteed Principal Account ("GPA"): Part of our General Account, the GPA is a
fixed account to and from which you may make allocations and transfers.
Initial Face Amount: The amount of insurance coverage issued under the Policy.
Subject to certain limitations, you may change the Face Amount after issue.
Insureds: The two persons whose lives this Policy insures.
Issue Age: The age of an Insured at his or her birthday nearest the Policy Date.
Issue Date: The date on which the Policy is actually issued; it is also the date
the suicide and contestability periods begin.
Minimum Death Benefit: The Death Benefit determined in accordance with the
applicable Death Benefit Compliance Test. The applicable Test is either the Cash
Value Test or the Guideline Premium Test, as chosen at the time of application.
Monthly Charge Date: The monthly date on which the Monthly Charges for the
Policy are due. The first Monthly Charge Date is the Policy Date, and subsequent
Monthly Charge Dates are on the same day of each succeeding calendar month.
Monthly Charges: The charges assessed against the Policy Account Value each
month.
Net Premium: The premium payment we receive in Good Order, minus the Premium
Expense Charge.
Net Surrender Value: The amount payable to an Owner upon surrender of the
Policy. It is equal to the Account Value less any Surrender Charges that apply
and less any Policy Debt.
Appendix A 29
<PAGE>
Owner: The person or entity that owns the Policy.
Policy: The survivorship flexible premium adjustable variable life insurance
Policy offered by MassMutual and described in this Prospectus.
Policy Anniversary Date: An anniversary of the Policy Date.
Policy Date: The date shown on the Policy that is the starting point for
determining Policy Anniversary Dates, Policy Years, and Monthly Charge Dates.
Policy Debt: All outstanding Policy loans plus accrued loan interest.
Policy Year: A twelve-month period commencing with the Policy Date or a Policy
Anniversary Date.
Second Death: The death of the surviving Insured.
Separate Account: The Policies' designated segment of the "Massachusetts Mutual
Variable Life Separate Account I" we established under the laws of Massachusetts
and registered as a unit investment trust with the Securities and Exchange
Commission under 1940 Act. The Separate Account is used to receive and invest
Net Premiums for this Policy.
Target Premium: The level of premium payments used to determine commission
payments and Surrender Charges. The Target Premium is based on the Issue Ages,
genders, and risk classifications of the Insureds. It is usually not equal to
the Expense Premium.
Valuation Date: A date on which the net asset value of the shares of each
Division of the Separate Account is determined. Generally, this will be any date
on which the New York Stock Exchange (or its successor) is open for trading.
Variable Account Value: The total of the values of the accumulation units
credited to the Policy in each Division of the Separate Account multiplied by
your number of units in that Division.
We, us, our: Refer to MassMutual.
Year of Coverage: For the Initial Face Amount, each Policy Year is a Year of
Coverage. For any increase in the Face Amount, each Year of Coverage is measured
from the effective date of the increase.
You, your: Refer to the Owner of the Policy.
30 Appendix A
<PAGE>
Appendix B
Examples of the Impact of the Account Value and Premiums on the Policy Death
Benefit
Example I ~ Death Benefit Option 1
- --------------------------------------------------------------------------------
Assume the following:
- -------------------------------------------------------------------------------
. Face Amount is $1,000,000
. Account Value is $50,000
. Minimum Death Benefit is $219,000
. No Policy Debt
- --------------------------------------------------------------------------------
Based on these assumptions,
. the Death Benefit is $1,000,000.
If the Account Value increases to $80,000 and the Minimum Death Benefit
increases to $350,400,
. the Death Benefit remains at $1,000,000.
If the Account Value decreases to $30,000 and the Minimum Death Benefit
decreases to $131,400,
. the Death Benefit still remains at $1,000,000.
Example II ~ Death Benefit Option 2
- --------------------------------------------------------------------------------
Assume the following:
- --------------------------------------------------------------------------------
. Face Amount is $1,000,000
. Account Value is $50,000
. Minimum Death Benefit is $219,000
. No Policy Debt
Based on these assumptions,
. the Death Benefit is $1,050,000 (Face Amount plus Account Value).
If the Account Value increases to $80,000 and the Minimum Death Benefit
increases to $350,400,
. the Death Benefit will increase to $1,080,000.
If the Account Value decreases to $30,000 and the Minimum Death Benefit
decreases to $131,400,
. the Death Benefit will decrease to $1,030,000.
Example III ~ Death Benefit Option 3
- --------------------------------------------------------------------------------
Assume the following:
- --------------------------------------------------------------------------------
. Face Amount is $1,000,000
. Account Value is $50,000
. Minimum Death Benefit is $219,000
. No Policy Debt
. Premiums paid under the Policy to-date total $40,000
- --------------------------------------------------------------------------------
Based on these assumptions,
. the Death Benefit is $1,040,000 (Face Amount plus Premiums paid).
If you pay an additional $30,000 of premium and the Account Value increases to
$80,000 and the Minimum Death Benefit increases to $350,400,
. the Death Benefit will increase to $1,070,000.
Examples of Death Benefit Option Changes
Example I - Change from Option 2 to Option 1
- --------------------------------------------------------------------------------
For a change from Option 2 to Option 1, the Face Amount is increased by the
amount of the Account Value on the effective date of the change.
For example, if the Policy has a Face Amount of $500,000 and an Account
Value of $25,000, the Death Benefit under Option 2 is equal to the Face
Amount plus the Account Value, or $525,000. If you change from Option 2 to
Option 1, the Death Benefit under Option 1 is equal to the Policy Face
Amount. Since the Death Benefit under the Policy does not change as the
result of a Death Benefit Option change, the Face Amount will be increased
from $500,000 under Option 2 to $525,000 under Option 1 and the Death
Benefit after the change will remain at $525,000.
Appendix B 31
<PAGE>
Example II - Change from Option 3 to Option 1
- --------------------------------------------------------------------------------
For a change from Option 3 to Option 1, the Face Amount is increased by the
amount of the premiums paid to the effective date of the change.
For example, if a Policy has a Face Amount of $500,000, and premium
payments of $12,000 have been made to-date, the Death Benefit under Option
3 is equal to the Face Amount plus the premiums paid, or $512,000. If you
change from Option 3 to Option 1, the Death Benefit under Option 1 is equal
to the Face Amount. Since the Death Benefit under the Policy does not
change as the result of a Death Benefit Option change, the Face Amount will
be increased from $500,000 under Option 3 to $512,000 under Option 1 and
the Death Benefit after the change will remain at $512,000.
Example III- Change from Option 1 to Option 2
- --------------------------------------------------------------------------------
For a change from Option 1 to Option 2, the Face Amount will be decreased by the
amount of the Account Value on the effective date of the change.
For example, if the Policy has a Face Amount of $700,000 and an Account
Value of $25,000, under Option 1 the Death Benefit is equal to the Face
Amount, or $700,000. If you change from Option 1 to Option 2, the Death
Benefit under Option 2 is equal to the Face Amount plus the Account Value.
Since the Death Benefit does not change as the result of a Death Benefit
Option change, the Face Amount will be decreased by $25,000 to $675,000,
and the Death Benefit under Option 2 after the change will remain $700,000.
Example IV - Change from Option 1 to Option 3
- --------------------------------------------------------------------------------
For a change from Option 1 to Option 3, the Face Amount will be decreased by the
amount of the premiums paid to the effective date of the change.
For example, if the Policy has a Face Amount of $700,000 and premiums paid
to-date are $30,000, the Death Benefit under Option 1 is equal to the Face
Amount, or $700,000. If you change from Option 1 to Option 3, the Death
Benefit under Option 3 is equal to the Face Amount plus the premiums paid
to-date. Since the Death Benefit under the Policy does not change as the
result of a Death Benefit Option change, the Face Amount will be decreased
from $700,000 under Option 1 to $670,000 under Option 3 and the Death
Benefit after the change will remain at $700,000.
Example V - Change from Option 2 to Option 3, or from Option 3 to Option 2
- --------------------------------------------------------------------------------
For a change from Option 2 to Option 3 or from Option 3 to Option 2, the Face
Amount is changed (increased or decreased) by the difference between the Account
Value and the premiums paid to-date.
For example, if the Policy has a Face Amount of $1,000,000 and an Account
Value of $70,000 and premiums paid of $25,000, the Death Benefit under
Option 2 is equal to the Face Amount plus the Account Value, or $1,070,000.
If you change from Option 2 to Option 3, the Death Benefit under Option 3
is equal to the Face Amount plus the premiums paid to-date. Since the Death
Benefit under the Policy does not change as the result of a Death Benefit
Option change, the Face Amount will be increased by the difference between
the Account Value and the premiums paid, or $45,000, to $1,045,000 under
Option 3, maintaining a Death Benefit of $1,070,000.
A similar type of change would be made for a change from Option 3 to Option 2.
32 Appendix B
<PAGE>
Appendix C
Rates of Return
From time to time, we may report different types of historical performance for
the Divisions of the Separate Account available under the Policy. We may report
the average annual total returns of the funds over various time periods. These
returns will reflect deductions for investment management fees and fund expenses
and an annual deduction for the Mortality and Expense Risk Charge. The returns
do not reflect any Policy charges, which, if included, would reduce performance.
On request, we will provide an illustration of Account Values and Net Surrender
Values for hypothetical Insureds of given ages, genders, risk classifications,
premium levels and Initial Face Amounts. We will base the illustration either on
actual historic fund performance or on a hypothetical investment return. The
hypothetical return will be between 0% and 12%. The Net Surrender Value figures
will assume all fund charges, the Mortality and Expense Risk Charge, and all
other Policy charges are deducted. The Account Value figures will assume all
charges except the Surrender Charge are deducted.
We also may distribute sales literature comparing the Divisions of the Separate
Account to established market indices, such as the Standard & Poor's 500 Stock
Index and the Dow Jones Industrial Average. These comparisons may show the
percentage change in the net asset values of the funds or in the Accumulation
Unit Values. We also may make comparisons to the percentage change in values of
other mutual funds with investment objectives similar to those of the Divisions
of the Separate Account being compared.
Tables 1 and 2 show the Effective Annual Rates of Return and One Year Total
Returns, respectively, of the funds based on the actual investment performance
(after deduction of investment management fees and direct operating expenses)
underlying each Division of the Separate Account. Table 1 shows figures for
periods ended December 31, 1998, while Table 2 shows December 31 one- year total
returns for each year shown. These rates do not reflect:
. the Mortality and Expense Risk Charges assessed against the Separate
Account
. deductions from premiums or Monthly Charges assessed against the Account
Value of the Policies
. the Policy's Surrender Charges
Therefore, these rates are not illustrative of how actual investment performance
will affect the benefits under the Policy (see, however, Illustration of Death
Benefits, Net Surrender Values, and Accumulated Premiums, Appendix D). The rates
of return shown are not necessarily indicative of future performance. You may
consider these rates of return, however, in assessing the competence and
performance of the investment advisers.
Appendix C 33
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Since
Fund Inception 15 Years 10 Years 5 Years 1 Year
<S> <C> <C> <C> <C> <C>
MML Equity 14.84% 15.76% 16.39% 19.66% 16.20%
MML Managed Bond 10.24% 10.16% 9.19% 7.07% 8.14%
MML Blend 13.67% --- 13.70% 14.60% 13.56%
MML Money Market 6.66% 6.16% 5.41% 4.95% 5.16%
MML Equity Index 31.03% --- --- --- 28.22%
MML Small Cap Value Equity (23.88%) --- --- --- (23.88%)*
Oppenheimer Capital Appreciation+ 16.03% --- 16.85% 22.10% 24.00%
Oppenheimer Aggressive Growth++ 15.07% --- 16.12% 13.06% 12.36%
Oppenheimer Global Securities 12.49% --- --- 9.67% 14.11%
Oppenheimer Strategic Bond 6.79% --- --- 6.83% 2.90%
VIP II Contrafund Portfolio 28.62% --- --- --- 29.98%
T. Rowe Price Mid-Cap Growth Portfolio 20.43% --- --- --- 22.08%
American Century VP Income & Growth 30.68% --- --- --- 26.87%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The figures show in this Table do not reflect any charges at the Separate
Account or Policy level.
+ The Oppenheimer Growth Division invests in the Oppenheimer Capital
Appreciation Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation
Fund/VA was called the Oppenheimer Growth Fund.
++ The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*since inception.
<TABLE>
<CAPTION>
Dates of inception:
<S> <C>
MML Equity Fund - 9/15/71 Oppenheimer Capital Appreciation Fund/VA - 4/3/85
MML Managed Bond Fund - 12/16/81 Oppenheimer Aggressive Growth Fund/VA - 8/15/86
MML Money Market Fund - 12/16/81 Oppenheimer Global Securities Fund/VA - 11/12/90
MML Blend Fund - 2/3/84 Oppenheimer Strategic Bond Fund/VA - 5/3/93
MML Equity Index Fund - 5/1/97 VIP II Contrafund Portfolio - 1/3/95
MML Small Cap Value Equity Fund - 6/1/98 T. Rowe Price Mid-Cap Growth Portfolio - 12/31/96
American Century VP Income & Growth - 10/30/97
</TABLE>
34 Appendix C
<PAGE>
TABLE 2
ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MML
MML MML MML Small Cap
Year MML Managed MML Money Equity Value
Ended Equity Bond Blend Market Index Equity
<S> <C> <C> <C> <C> <C> <C>
1998 16.20% 8.14% 13.56% 5.16% 28.22% (23.88%)*
1997 28.59% 9.91% 20.89% 5.18% 21.93%* ---
1996 20.25% 3.25% 13.95% 5.01% --- ---
1995 31.13% 19.14% 23.28% 5.58% --- ---
1994 4.10% (3.76%) 2.48% 3.84% --- ---
1993 9.52% 11.81% 9.70% 2.75% --- ---
1992 10.48% 7.31% 9.36% 3.48% --- ---
1991 25.56% 16.66% 24.00% 6.01% --- ---
1990 (0.51%) 8.38% 2.37% 8.12% --- ---
1989 23.04% 12.83% 19.96% 9.16% --- ---
1988 16.68% 7.13% 13.40% 7.39% --- ---
1987 2.10% 2.60% 3.12% 6.49% --- ---
1986 20.15% 14.46% 18.30% 6.60% --- ---
1985 30.54% 19.94% 24.88% 8.03% --- ---
1984 5.40% 11.69% 8.24%* 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 show in this Table do not reflect any charges at the Separate
Account or Policy level.
* Since inception.
** Performance for the MML Equity Fund prior to 1974 is not available.
<TABLE>
<CAPTION>
Dates of inception:
<S> <C>
MML Equity Fund - 9/15/71 Oppenheimer Capital Appreciation Fund/VA - 4/3/85
MML Managed Bond Fund - 12/16/81 Oppenheimer Aggressive Growth Fund/VA - 8/15/86
MML Money Market Fund - 12/16/81 Oppenheimer Global Securities Fund/VA - 11/12/90
MML Blend Fund - 2/3/84 Oppenheimer Strategic Bond Fund/VA - 5/3/93
MML Equity Index Fund - 5/1/97 VIP II Contrafund Portfolio - 1/3/95
MML Small Cap Value Equity Fund - 6/1/98 T. Rowe Price Mid-Cap Growth Portfolio - 12/31/96
American Century VP Income & Growth - 10/30/97
</TABLE>
Appendix C 35
<PAGE>
TABLE 2 (continued)
ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. Rowe Price American
Oppenheimer Oppenheimer Oppenheimer Oppenheimer VIP II Mid Cap Century
Year Ended Capital Aggressive Global Strategic Contrafund Growth VP Income &
Appreciation+ Growth++ Securities Bond Portfolio Portfolio Growth
1998 24.00% 12.36% 14.11% 2.90% 29.98% 22.08% 26.87%
1997 26.69% 11.67% 22.42% 8.71% 24.14% 18.80%* 7.8%*
1996 25.20% 20.23% 17.80% 12.07% 21.22% -- --
1995 36.66% 32.52% 2.24% 15.33% 39.72%* -- --
1994 0.97% (7.59%) (5.72%) (3.78%) --- -- --
1993 7.25% 27.32% 70.32% 4.25%* --- -- --
1992 14.53% 15.42% (7.11%) --- --- -- --
1991 25.54% 54.72% 3.39% --- --- -- --
1990 (8.21%) (16.82%) 0.40%* --- --- -- ---
1989 23.59% 27.57% --- --- --- -- ---
1988 22.09% 13.41% --- --- --- -- ---
1987 3.31% 14.34% --- --- --- -- ---
1986 17.76% (1.65%)* --- --- --- -- ---
1985 9.50%* --- --- --- --- -- ---
1984 --- --- --- --- --- -- ---
1983 --- --- --- --- --- -- ---
1982 --- --- --- --- --- -- ---
1981 --- --- --- --- --- -- ---
1980 --- --- --- --- --- -- ---
1979 --- --- --- --- --- -- ---
1978 --- --- --- --- --- -- ---
1977 --- --- --- --- --- -- ---
1976 --- --- --- --- --- -- ---
1975 --- --- --- --- --- -- ---
1974 --- --- --- --- --- -- ---
- --------------------------------------------------------------------------------------------------------------------------
<TABLE/>
The figures show in this Table do not reflect any charges at the Separate
Account or Policy level.
+The Oppenheimer Growth Division invests in the Oppenheimer Capital
Appreciation Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation
Fund/VA was called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*since inception.
<CAPTION>
<S> <C>
Dates of inception:
MML Equity Fund - 9/15/71 Oppenheimer Capital Appreciation Fund/VA - 4/3/85
MML Managed Bond Fund - 12/16/81 Oppenheimer Aggressive Growth Fund/VA - 8/15/86
MML Money Market Fund - 12/16/81 Oppenheimer Global Securities Fund/VA - 11/12/90
MML Blend Fund - 2/3/84 Oppenheimer Strategic Bond Fund/VA - 5/3/93
MML Equity Index Fund - 5/1/97 VIP II Contrafund Portfolio - 1/3/95
MML Small Cap Value Equity Fund - 6/1/98 T. Rowe Price Mid-Cap Growth Portfolio - 12/31/96
American Century VP Income & Growth - 10/30/97
</TABLE>
Appendix C
<PAGE>
Appendix D
Illustration of Death Benefits, Net Surrender Values, and Accumulated Premiums
The following tables illustrate the way in which a Policy operates. They show
how the Death Benefit and Net 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), equal to constant gross annual rates of 0%, 6%, and 12%. The tables
are based on annual premium payments of $5,000 for a combination of a Select
Preferred Male age 35 and a Select Preferred Female age 35. Select Preferred is
currently our best risk classification. Separate tables are shown for the
current and guaranteed schedules of charges. These tables will assist in the
comparison of Death Benefits and Net Surrender Values for the Policy with those
of other variable life policies.
The Death Benefits and Net 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 and below that average in individual Policy Years
. any Policy loan were made during the period of time illustrated
. the rates of return for all funds averaged 0%, 6%, and 12% but varied
above or below that average for particular funds.
The Death Benefits and Net Surrender Values shown in Tables 1, 2, 3, 7, 8, and 9
reflect the following current charges:
. Administrative Charges of $12 per month per Policy in Policy Years 1-10,
and $6 per month in Policy Years 11 and beyond.
. Face Amount Charges of $0.13 per month per $1,000 of Face Amount in
Coverage Years 1-10.
. Insurance Charges based on the current rates we are charging for Select
Preferred, fully underwritten risks.
. Mortality and Expense Risk Charges of 0.25% on an annual basis of the
daily net asset value of the Separate Account in all Policy Years.
. Fund level expenses of 0.59% on an annual basis of the net asset value of
the Separate Account. These expenses represent the unweighted average of
all fund expenses.
The Death Benefits and Net Surrender Values shown in Tables 4, 5, 6, 10, 11, and
12 reflect the following guaranteed maximum charges as well as the current fund
level expenses.
. Administrative Charges equal to $12 per month per Policy in all years.
. Face Amount Charge of $0.13 per month per $1,000 of Face Amount in
Coverage Years 1-10.
. Insurance Charges based on the Commissioners 1980 Standard Ordinary
Nonsmoker Mortality Table.
. Mortality and Expense Risk Charges equal to 0.90% on an annual basis of
the daily net asset value of the Separate Account in all years.
Net Surrender Values shown in the Tables reflect the deduction of Surrender
Charges in the first 10 Policy Years. The Surrender Charge in the first year is
the Target Premium or $60 per $1,000 of Face Amount if less. In each of Years
two through 10, the Surrender Charge is equal to the Surrender Charge in the
prior year reduced by 10% of the Surrender Charge in the first year.
Taking the current Mortality and Expense Risk Charge and the fund level expenses
into account, the gross rates of 0%, 6%, and 12% are (0.86%), 5.09%, and 11.04%,
respectively, on a net basis
Appendix C 37
<PAGE>
TABLE 1
<TABLE>
<S> <C>
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 1 $1 million Initial Face Amount
Current Schedule of Charges Guideline Premium Test
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,000,000 $1,000,000 $1,000,000 $0 $0 $0
2 $10,763 $1,000,000 $1,000,000 $1,000,000 $1,102 $1,676 $2,277
3 $16,551 $1,000,000 $1,000,000 $1,000,000 $4,124 $5,242 $6,457
4 $22,628 $1,000,000 $1,000,000 $1,000,000 $7,122 $8,963 $11,046
5 $29,010 $1,000,000 $1,000,000 $1,000,000 $10,096 $12,848 $16,089
6 $35,710 $1,000,000 $1,000,000 $1,000,000 $13,046 $16,905 $21,637
7 $42,746 $1,000,000 $1,000,000 $1,000,000 $15,974 $21,145 $27,745
8 $50,133 $1,000,000 $1,000,000 $1,000,000 $18,878 $25,574 $34,474
9 $57,889 $1,000,000 $1,000,000 $1,000,000 $21,761 $30,207 $41,897
10 $66,034 $1,000,000 $1,000,000 $1,000,000 $24,623 $35,052 $50,089
15 $113,287 $1,000,000 $1,000,000 $1,000,000 $47,172 $73,175 $118,258
20 $173,596 $1,000,000 $1,000,000 $1,000,000 $68,164 $121,279 $232,392
25 $250,567 $1,000,000 $1,000,000 $1,000,000 $87,838 $182,503 $424,723
30 $348,804 $1,000,000 $1,000,000 $1,000,000 $105,494 $259,875 $748,976
35 $474,182 $1,000,000 $1,000,000 $1,503,372 $118,700 $355,966 $1,296,011
40 $634,199 $1,000,000 $1,000,000 $2,372,748 $123,302 $473,822 $2,217,521
45 $838,426 $1,000,000 $1,000,000 $3,958,306 $107,753 $615,740 $3,769,815
50 $1,099,077 $1,000,000 $1,000,000 $6,688,119 $43,789 $787,259 $6,369,637
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
--------------------------------------------------------------
End of
Policy Year 0% 6% 12%
--------------------------------------------------------------
<S> <C> <C> <C>
1 $2,615 $2,820 $3,025
2 $5,206 $5,780 $6,381
3 $7,772 $8,890 $10,105
4 $10,314 $12,155 $14,238
5 $12,832 $15,584 $18,825
6 $15,326 $19,185 $23,917
7 $17,798 $22,969 $29,569
8 $20,246 $26,942 $35,842
9 $22,673 $31,119 $42,809
10 $25,079 $35,508 $50,545
15 $47,172 $73,175 $118,258
--------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
38 Appendix D
<PAGE>
<TABLE>
<S> <C>
TABLE 2
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 2 $1 million Initial Face Amount
Current Schedule of Charges Guideline Premium Test
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,002,615 $1,002,820 $1,003,025 $0 $0 $0
2 $10,763 $1,005,206 $1,005,780 $1,006,381 $1,102 $1,676 $2,277
3 $16,551 $1,007,772 $1,008,890 $1,010,105 $4,124 $5,242 $6,457
4 $22,628 $1,010,314 $1,012,155 $1,014,238 $7,122 $8,963 $11,046
5 $29,010 $1,012,832 $1,015,583 $1,018,825 $10,096 $12,847 $16,089
6 $35,710 $1,015,326 $1,019,184 $1,023,916 $13,046 $16,904 $21,636
7 $42,746 $1,017,797 $1,022,967 $1,029,567 $15,973 $21,143 $27,743
8 $50,133 $1,020,244 $1,026,941 $1,035,840 $18,876 $25,573 $34,472
9 $57,889 $1,022,671 $1,031,116 $1,042,806 $21,759 $30,204 $41,894
10 $66,034 $1,025,077 $1,035,505 $1,050,540 $24,621 $35,049 $50,084
15 $113,287 $1,047,165 $1,073,162 $1,118,235 $47,165 $73,162 $118,235
20 $173,596 $1,068,137 $1,121,224 $1,232,279 $68,137 $121,224 $232,279
25 $250,567 $1,087,746 $1,182,291 $1,424,191 $87,746 $182,291 $424,191
30 $348,804 $1,105,189 $1,259,051 $1,746,457 $105,189 $259,051 $746,457
35 $474,182 $1,117,667 $1,352,635 $2,285,046 $117,667 $352,635 $1,285,046
40 $634,199 $1,120,359 $1,462,058 $3,182,354 $120,359 $462,058 $2,182,354
45 $838,426 $1,100,363 $1,576,661 $4,668,238 $100,363 $576,661 $3,668,238
50 $1,099,077 $1,029,484 $1,664,568 $7,110,319 $29,484 $664,568 $6,110,319
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
-----------------------------------------------------------
End of
Policy Year 0% 6% 12%
-----------------------------------------------------------
<S> <C> <C> <C>
1 $2,615 $2,820 $3,025
2 $5,206 $5,780 $6,381
3 $7,772 $8,890 $10,105
4 $10,314 $12,155 $14,238
5 $12,832 $15,583 $18,825
6 $15,326 $19,184 $23,916
7 $17,797 $22,967 $29,567
8 $20,244 $26,941 $35,840
9 $22,671 $31,116 $42,806
10 $25,077 $35,505 $50,540
15 $47,165 $73,162 $118,235
-----------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 39
<PAGE>
<TABLE>
<S> <C>
TABLE 3
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 3 $1 million Initial Face Amount
Current Schedule of Charges Guideline Premium Test
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,005,000 $1,005,000 $1,005,000 $0 $0 $0
2 $10,763 $1,010,000 $1,010,000 $1,010,000 $1,102 $1,676 $2,277
3 $16,551 $1,015,000 $1,015,000 $1,015,000 $4,124 $5,242 $6,457
4 $22,628 $1,020,000 $1,020,000 $1,020,000 $7,122 $8,963 $11,046
5 $29,010 $1,025,000 $1,025,000 $1,025,000 $10,096 $12,847 $16,089
6 $35,710 $1,030,000 $1,030,000 $1,030,000 $13,045 $16,904 $21,636
7 $42,746 $1,035,000 $1,035,000 $1,035,000 $15,972 $21,143 $27,743
8 $50,133 $1,040,000 $1,040,000 $1,040,000 $18,876 $25,572 $34,472
9 $57,889 $1,045,000 $1,045,000 $1,045,000 $21,758 $30,203 $41,894
10 $66,034 $1,050,000 $1,050,000 $1,050,000 $24,620 $35,048 $50,084
15 $113,287 $1,075,000 $1,075,000 $1,075,000 $47,159 $73,159 $118,238
20 $173,596 $1,100,000 $1,100,000 $1,100,000 $68,122 $121,224 $232,320
25 $250,567 $1,125,000 $1,125,000 $1,125,000 $87,703 $182,327 $424,481
30 $348,804 $1,150,000 $1,150,000 $1,150,000 $105,059 $259,303 $748,174
35 $474,182 $1,175,000 $1,175,000 $1,501,323 $117,212 $354,015 $1,294,244
40 $634,199 $1,200,000 $1,200,000 $2,369,562 $118,830 $467,845 $2,214,544
45 $838,426 $1,225,000 $1,225,000 $3,953,038 $94,853 $598,172 $3,764,798
50 $1,099,077 $1,250,000 $1,250,000 $6,679,265 $7,516 $736,644 $6,361,204
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
------------------------------------------------------------
End of
Policy Year 0% 6% 12%
------------------------------------------------------------
<S> <C> <C> <C>
1 $2,615 $2,820 $3,025
2 $5,206 $5,780 $6,381
3 $7,772 $8,890 $10,105
4 $10,314 $12,155 $14,238
5 $12,832 $15,583 $18,825
6 $15,325 $19,184 $23,916
7 $17,796 $22,967 $29,567
8 $20,244 $26,940 $35,840
9 $22,670 $31,115 $42,806
10 $25,076 $35,504 $50,540
15 $47,159 $73,159 $118,238
------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
40 Appendix D
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE 4
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 1 $1 million Initial Face Amount
Guaranteed Schedule of Mortality and Expense Charges and Guideline Premium Test
Current Fund Level Charges
</TABLE>
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,000,000 $1,000,000 $1,000,000 $0 $0 $0
- -------------------------- ----------------------------------------------- ----------------------------------------------
2 $10,763 $1,000,000 $1,000,000 $1,000,000 $1,037 $1,605 $2,198
- -------------------------- ----------------------------------------------- ----------------------------------------------
3 $16,551 $1,000,000 $1,000,000 $1,000,000 $3,997 $5,096 $6,291
- -------------------------- ----------------------------------------------- ----------------------------------------------
4 $22,628 $1,000,000 $1,000,000 $1,000,000 $6,913 $8,714 $10,753
- -------------------------- ----------------------------------------------- ----------------------------------------------
5 $29,010 $1,000,000 $1,000,000 $1,000,000 $9,782 $12,462 $15,618
- -------------------------- ----------------------------------------------- ----------------------------------------------
6 $35,710 $1,000,000 $1,000,000 $1,000,000 $12,605 $16,345 $20,927
- -------------------------- ----------------------------------------------- ----------------------------------------------
7 $42,746 $1,000,000 $1,000,000 $1,000,000 $15,378 $20,364 $26,723
- -------------------------- ----------------------------------------------- ----------------------------------------------
8 $50,133 $1,000,000 $1,000,000 $1,000,000 $18,101 $24,525 $33,054
- -------------------------- ----------------------------------------------- ----------------------------------------------
9 $57,889 $1,000,000 $1,000,000 $1,000,000 $20,771 $28,830 $39,973
- -------------------------- ----------------------------------------------- ----------------------------------------------
10 $66,034 $1,000,000 $1,000,000 $1,000,000 $23,387 $33,284 $47,536
- -------------------------- ----------------------------------------------- ----------------------------------------------
15 $113,287 $1,000,000 $1,000,000 $1,000,000 $41,212 $64,757 $105,765
- -------------------------- ----------------------------------------------- ----------------------------------------------
20 $173,596 $1,000,000 $1,000,000 $1,000,000 $55,879 $101,697 $198,612
- -------------------------- ----------------------------------------------- ----------------------------------------------
25 $250,567 $1,000,000 $1,000,000 $1,000,000 $66,171 $144,101 $347,393
- -------------------------- ----------------------------------------------- ----------------------------------------------
30 $348,804 $1,000,000 $1,000,000 $1,000,000 $68,337 $189,519 $586,604
- -------------------------- ----------------------------------------------- ----------------------------------------------
35 $474,182 $1,000,000 $1,000,000 $1,133,210 $52,169 $229,293 $976,905
- -------------------------- ----------------------------------------------- ----------------------------------------------
40 $634,199 $1,000,000 $1,000,000 $1,725,499 $0 $243,077 $1,612,616
- -------------------------- ----------------------------------------------- ----------------------------------------------
45 $838,426 $1,000,000 $1,000,000 $2,774,042 $0 $171,224 $2,641,945
- -------------------------- ----------------------------------------------- ----------------------------------------------
50 $1,099,077 $1,000,000 $1,000,000 $4,484,995 $0 $0 $4,271,424
- -------------------------- ----------------------------------------------- ----------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
--------------------------------------------------------------
End of
Policy Year 0% 6% 12%
--------------------------------------------------------------
1 $2,592 $2,795 $2,999
--------------------------------------------------------------
2 $5,141 $5,709 $6,302
--------------------------------------------------------------
3 $7,645 $8,744 $9,939
--------------------------------------------------------------
4 $10,105 $11,906 $13,945
--------------------------------------------------------------
5 $12,518 $15,198 $18,354
--------------------------------------------------------------
6 $14,885 $18,625 $23,207
--------------------------------------------------------------
7 $17,202 $22,188 $28,547
--------------------------------------------------------------
8 $19,469 $25,893 $34,422
--------------------------------------------------------------
9 $21,683 $29,742 $40,885
--------------------------------------------------------------
10 $23,843 $33,740 $47,992
--------------------------------------------------------------
15 $41,212 $64,757 $105,765
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 41
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE 5
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 2 $1 million Initial Face Amount
Guaranteed Schedule of Mortality and Expense Charges and Guideline Premium Test
Current Fund Level Charges
</TABLE>
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,002,592 $1,002,795 $1,002,999 $0 $0 $0
- -------------------------- ----------------------------------------------- ----------------------------------------------
2 $10,763 $1,005,141 $1,005,709 $1,006,302 $1,037 $1,605 $2,198
- -------------------------- ----------------------------------------------- ----------------------------------------------
3 $16,551 $1,007,645 $1,008,744 $1,009,939 $3,997 $5,096 $6,291
- -------------------------- ----------------------------------------------- ----------------------------------------------
4 $22,628 $1,010,104 $1,011,905 $1,013,944 $6,912 $8,713 $10,752
- -------------------------- ----------------------------------------------- ----------------------------------------------
5 $29,010 $1,012,517 $1,015,197 $1,018,352 $9,781 $12,461 $15,616
- -------------------------- ----------------------------------------------- ----------------------------------------------
6 $35,710 $1,014,883 $1,018,623 $1,023,205 $12,603 $16,343 $20,925
- -------------------------- ----------------------------------------------- ----------------------------------------------
7 $42,746 $1,017,200 $1,022,185 $1,028,543 $15,376 $20,361 $26,719
- -------------------------- ----------------------------------------------- ----------------------------------------------
8 $50,133 $1,019,465 $1,025,887 $1,034,415 $18,097 $24,519 $33,047
- -------------------------- ----------------------------------------------- ----------------------------------------------
9 $57,889 $1,021,678 $1,029,734 $1,040,873 $20,766 $28,822 $39,961
- -------------------------- ----------------------------------------------- ----------------------------------------------
10 $66,034 $1,023,834 $1,033,727 $1,047,973 $23,378 $33,271 $47,517
- -------------------------- ----------------------------------------------- ----------------------------------------------
15 $113,287 $1,041,166 $1,064,679 $1,105,629 $41,166 $64,679 $105,629
- -------------------------- ----------------------------------------------- ----------------------------------------------
20 $173,596 $1,055,702 $1,101,345 $1,197,879 $55,702 $101,345 $197,879
- -------------------------- ----------------------------------------------- ----------------------------------------------
25 $250,567 $1,065,611 $1,142,778 $1,344,021 $65,611 $142,778 $344,021
- -------------------------- ----------------------------------------------- ----------------------------------------------
30 $348,804 $1,066,817 $1,185,122 $1,572,584 $66,817 $185,122 $572,584
- -------------------------- ----------------------------------------------- ----------------------------------------------
35 $474,182 $1,048,631 $1,215,666 $1,921,144 $48,631 $215,666 $921,144
- -------------------------- ----------------------------------------------- ----------------------------------------------
40 $634,199 $1,000,000 $1,205,135 $2,435,939 $0 $205,135 $1,435,939
- -------------------------- ----------------------------------------------- ----------------------------------------------
45 $838,426 $1,000,000 $1,081,007 $3,151,296 $0 $81,007 $2,151,296
- -------------------------- ----------------------------------------------- ----------------------------------------------
50 $1,099,077 $1,000,000 $1,000,000 $4,081,957 $0 $0 $3,081,957
- -------------------------- ----------------------------------------------- ----------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
--------------------------------------------------------------
End of
Policy Year 0% 6% 12%
--------------------------------------------------------------
1 $2,592 $2,795 $2,999
--------------------------------------------------------------
2 $5,141 $5,709 $6,302
--------------------------------------------------------------
3 $7,645 $8,744 $9,939
--------------------------------------------------------------
4 $10,104 $11,905 $13,944
--------------------------------------------------------------
5 $12,517 $15,197 $18,352
--------------------------------------------------------------
6 $14,883 $18,623 $23,205
--------------------------------------------------------------
7 $17,200 $22,185 $28,543
--------------------------------------------------------------
8 $19,465 $25,887 $34,415
--------------------------------------------------------------
9 $21,678 $29,734 $40,873
--------------------------------------------------------------
10 $23,834 $33,727 $47,973
--------------------------------------------------------------
15 $41,166 $64,679 $105,629
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
42 Appendix D
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE 6
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 3 $1 million Initial Face Amount
Guaranteed Schedule of Mortality and Expense Charges and Guideline Premium Test
Current Fund Level Charges
</TABLE>
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
1 $5,250 $1,005,000 $1,005,000 $1,005,000 $0 $0 $0
- -------------------------- ----------------------------------------------- ----------------------------------------------
2 $10,763 $1,010,000 $1,010,000 $1,010,000 $1,037 $1,605 $2,198
- -------------------------- ----------------------------------------------- ----------------------------------------------
3 $16,551 $1,015,000 $1,015,000 $1,015,000 $3,997 $5,096 $6,291
- -------------------------- ----------------------------------------------- ----------------------------------------------
4 $22,628 $1,020,000 $1,020,000 $1,020,000 $6,912 $8,713 $10,752
- -------------------------- ----------------------------------------------- ----------------------------------------------
5 $29,010 $1,025,000 $1,025,000 $1,025,000 $9,781 $12,460 $15,616
- -------------------------- ----------------------------------------------- ----------------------------------------------
6 $35,710 $1,030,000 $1,030,000 $1,030,000 $12,602 $16,342 $20,924
- -------------------------- ----------------------------------------------- ----------------------------------------------
7 $42,746 $1,035,000 $1,035,000 $1,035,000 $15,374 $20,359 $26,718
- -------------------------- ----------------------------------------------- ----------------------------------------------
8 $50,133 $1,040,000 $1,040,000 $1,040,000 $18,094 $24,516 $33,045
- -------------------------- ----------------------------------------------- ----------------------------------------------
9 $57,889 $1,045,000 $1,045,000 $1,045,000 $20,760 $28,817 $39,958
- -------------------------- ----------------------------------------------- ----------------------------------------------
10 $66,034 $1,050,000 $1,050,000 $1,050,000 $23,370 $33,264 $47,514
- -------------------------- ----------------------------------------------- ----------------------------------------------
15 $113,287 $1,075,000 $1,075,000 $1,075,000 $41,126 $64,654 $105,640
- -------------------------- ----------------------------------------------- ----------------------------------------------
20 $173,596 $1,100,000 $1,100,000 $1,100,000 $55,562 $101,300 $198,104
- -------------------------- ----------------------------------------------- ----------------------------------------------
25 $250,567 $1,125,000 $1,125,000 $1,125,000 $65,155 $142,789 $345,629
- -------------------------- ----------------------------------------------- ----------------------------------------------
30 $348,804 $1,150,000 $1,150,000 $1,150,000 $65,361 $185,575 $581,082
- -------------------------- ----------------------------------------------- ----------------------------------------------
35 $474,182 $1,175,000 $1,175,000 $1,175,000 $43,641 $217,779 $961,013
- -------------------------- ----------------------------------------------- ----------------------------------------------
40 $634,199 $1,000,000 $1,200,000 $1,697,450 $0 $210,388 $1,586,402
- -------------------------- ----------------------------------------------- ----------------------------------------------
45 $838,426 $1,000,000 $1,225,000 $2,729,433 $0 $75,899 $2,599,460
- -------------------------- ----------------------------------------------- ----------------------------------------------
50 $1,099,077 $1,000,000 $1,000,000 $4,413,348 $0 $0 $4,203,189
- -------------------------- ----------------------------------------------- ----------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
-----------------------------------------------------------
End of
Policy Year 0% 6% 12%
-----------------------------------------------------------
1 $2,592 $2,795 $2,999
-----------------------------------------------------------
2 $5,141 $5,709 $6,302
-----------------------------------------------------------
3 $7,645 $8,744 $9,939
-----------------------------------------------------------
4 $10,104 $11,905 $13,944
-----------------------------------------------------------
5 $12,517 $15,196 $18,352
-----------------------------------------------------------
6 $14,882 $18,622 $23,204
-----------------------------------------------------------
7 $17,198 $22,183 $28,542
-----------------------------------------------------------
8 $19,462 $25,884 $34,413
-----------------------------------------------------------
9 $21,672 $29,729 $40,870
-----------------------------------------------------------
10 $23,826 $33,720 $47,970
-----------------------------------------------------------
15 $41,126 $64,654 $105,640
-----------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 43
<PAGE>
TABLE 7
<TABLE>
<S> <C>
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 1 $1 million Initial Face Amount
Current Schedule of Charges Cash Value Test
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,000,000 $1,000,000 $1,000,000 $0 $0 $0
2 $10,763 $1,000,000 $1,000,000 $1,000,000 $1,102 $1,676 $2,277
3 $16,551 $1,000,000 $1,000,000 $1,000,000 $4,124 $5,242 $6,457
4 $22,628 $1,000,000 $1,000,000 $1,000,000 $7,122 $8,963 $11,046
5 $29,010 $1,000,000 $1,000,000 $1,000,000 $10,096 $12,848 $16,089
6 $35,710 $1,000,000 $1,000,000 $1,000,000 $13,046 $16,905 $21,637
7 $42,746 $1,000,000 $1,000,000 $1,000,000 $15,974 $21,145 $27,745
8 $50,133 $1,000,000 $1,000,000 $1,000,000 $18,878 $25,574 $34,474
9 $57,889 $1,000,000 $1,000,000 $1,000,000 $21,761 $30,207 $41,897
10 $66,034 $1,000,000 $1,000,000 $1,000,000 $24,623 $35,052 $50,089
15 $113,287 $1,000,000 $1,000,000 $1,000,000 $47,172 $73,175 $118,258
20 $173,596 $1,000,000 $1,000,000 $1,000,000 $68,164 $121,279 $232,392
25 $250,567 $1,000,000 $1,000,000 $1,108,496 $87,838 $182,503 $424,711
30 $348,804 $1,000,000 $1,000,000 $1,638,070 $105,494 $259,875 $747,977
35 $474,182 $1,000,000 $1,000,000 $2,382,680 $118,700 $355,966 $1,287,935
40 $634,199 $1,000,000 $1,000,000 $3,473,015 $123,302 $473,822 $2,184,286
45 $838,426 $1,000,000 $1,000,000 $5,118,051 $107,753 $615,740 $3,655,751
50 $1,099,077 $1,000,000 $1,000,000 $7,662,758 $43,789 $787,259 $6,033,667
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
--------------------------------------------------------------
End of
Policy Year 0% 6% 12%
--------------------------------------------------------------
<S> <C> <C> <C>
1 $2,615 $2,820 $3,025
2 $5,206 $5,780 $6,381
3 $7,772 $8,890 $10,105
4 $10,314 $12,155 $14,238
5 $12,832 $15,584 $18,825
6 $15,326 $19,185 $23,917
7 $17,798 $22,969 $29,569
8 $20,246 $26,942 $35,842
9 $22,673 $31,119 $42,809
10 $25,079 $35,508 $50,545
15 $47,172 $73,175 $118,258
--------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
44 Appendix D
<PAGE>
TABLE 8
<TABLE>
<S> <C>
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 2 $1 million Initial Face Amount
Current Schedule of Charges Cash Value Test
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,002,615 $1,002,820 $1,003,025 $0 $0 $0
2 $10,763 $1,005,206 $1,005,780 $1,006,381 $1,102 $1,676 $2,277
3 $16,551 $1,007,772 $1,008,890 $1,010,105 $4,124 $5,242 $6,457
4 $22,628 $1,010,314 $1,012,155 $1,014,238 $7,122 $8,963 $11,046
5 $29,010 $1,012,832 $1,015,583 $1,018,825 $10,096 $12,847 $16,089
6 $35,710 $1,015,326 $1,019,184 $1,023,916 $13,046 $16,904 $21,636
7 $42,746 $1,017,797 $1,022,967 $1,029,567 $15,973 $21,143 $27,743
8 $50,133 $1,020,244 $1,026,941 $1,035,840 $18,876 $25,573 $34,472
9 $57,889 $1,022,671 $1,031,116 $1,042,806 $21,759 $30,204 $41,894
10 $66,034 $1,025,077 $1,035,505 $1,050,540 $24,621 $35,049 $50,084
15 $113,287 $1,047,165 $1,073,162 $1,118,235 $47,165 $73,162 $118,235
20 $173,596 $1,068,137 $1,121,224 $1,232,279 $68,137 $121,224 $232,279
25 $250,567 $1,087,746 $1,182,291 $1,424,191 $87,746 $182,291 $424,191
30 $348,804 $1,105,189 $1,259,051 $1,746,457 $105,189 $259,051 $746,457
35 $474,182 $1,117,667 $1,352,635 $2,377,182 $117,667 $352,635 $1,284,963
40 $634,199 $1,120,359 $1,462,058 $3,465,122 $120,359 $462,058 $2,179,322
45 $838,426 $1,100,363 $1,576,661 $5,106,523 $100,363 $576,661 $3,647,516
50 $1,099,077 $1,029,484 $1,664,568 $7,645,590 $29,484 $664,568 $6,020,150
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
-------------------------------------------------------------
End of
Policy Year 0% 6% 12%
-------------------------------------------------------------
<S> <C> <C> <C>
1 $2,615 $2,820 $3,025
2 $5,206 $5,780 $6,381
3 $7,772 $8,890 $10,105
4 $10,314 $12,155 $14,238
5 $12,832 $15,583 $18,825
6 $15,326 $19,184 $23,916
7 $17,797 $22,967 $29,567
8 $20,244 $26,941 $35,840
9 $22,671 $31,116 $42,806
10 $25,077 $35,505 $50,540
15 $47,165 $73,162 $118,235
-------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 45
<PAGE>
TABLE 9
<TABLE>
<S> <C>
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 3 $1 million Initial Face Amount
Current Schedule of Charges Cash Value Test
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,005,000 $1,005,000 $1,005,000 $0 $0 $0
2 $10,763 $1,010,000 $1,010,000 $1,010,000 $1,102 $1,676 $2,277
3 $16,551 $1,015,000 $1,015,000 $1,015,000 $4,124 $5,242 $6,457
4 $22,628 $1,020,000 $1,020,000 $1,020,000 $7,122 $8,963 $11,046
5 $29,010 $1,025,000 $1,025,000 $1,025,000 $10,096 $12,847 $16,089
6 $35,710 $1,030,000 $1,030,000 $1,030,000 $13,045 $16,904 $21,636
7 $42,746 $1,035,000 $1,035,000 $1,035,000 $15,972 $21,143 $27,743
8 $50,133 $1,040,000 $1,040,000 $1,040,000 $18,876 $25,572 $34,472
9 $57,889 $1,045,000 $1,045,000 $1,045,000 $21,758 $30,203 $41,894
10 $66,034 $1,050,000 $1,050,000 $1,050,000 $24,620 $35,048 $50,084
15 $113,287 $1,075,000 $1,075,000 $1,075,000 $47,159 $73,159 $118,238
20 $173,596 $1,100,000 $1,100,000 $1,100,000 $68,122 $121,224 $232,320
25 $250,567 $1,125,000 $1,125,000 $1,125,000 $87,703 $182,327 $424,481
30 $348,804 $1,150,000 $1,150,000 $1,637,208 $105,059 $259,303 $747,584
35 $474,182 $1,175,000 $1,175,000 $2,381,460 $117,212 $354,015 $1,287,276
40 $634,199 $1,200,000 $1,200,000 $3,471,263 $118,830 $467,845 $2,183,184
45 $838,426 $1,225,000 $1,225,000 $5,115,492 $94,853 $598,172 $3,653,923
50 $1,099,077 $1,250,000 $1,250,000 $7,658,947 $7,516 $736,644 $6,030,667
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
-------------------------------------------------------------
End of
Policy Year 0% 6% 12%
-------------------------------------------------------------
1 $2,615 $2,820 $3,025
2 $5,206 $5,780 $6,381
3 $7,772 $8,890 $10,105
4 $10,314 $12,155 $14,238
5 $12,832 $15,583 $18,825
6 $15,325 $19,184 $23,916
7 $17,796 $22,967 $29,567
8 $20,244 $26,940 $35,840
9 $22,670 $31,115 $42,806
10 $25,076 $35,504 $50,540
15 $47,159 $73,159 $118,238
-------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
46 Appendix D
<PAGE>
TABLE 10
<TABLE>
<S> <C>
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 1 $1 million Initial Face Amount
Guaranteed Schedule of Mortality and Expense Charges and Cash Value Test
Current Fund Level Charges
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,000,000 $1,000,000 $1,000,000 $0 $0 $0
2 $10,763 $1,000,000 $1,000,000 $1,000,000 $1,037 $1,605 $2,198
3 $16,551 $1,000,000 $1,000,000 $1,000,000 $3,997 $5,096 $6,291
4 $22,628 $1,000,000 $1,000,000 $1,000,000 $6,913 $8,714 $10,753
5 $29,010 $1,000,000 $1,000,000 $1,000,000 $9,782 $12,462 $15,618
6 $35,710 $1,000,000 $1,000,000 $1,000,000 $12,605 $16,345 $20,927
7 $42,746 $1,000,000 $1,000,000 $1,000,000 $15,378 $20,364 $26,723
8 $50,133 $1,000,000 $1,000,000 $1,000,000 $18,101 $24,525 $33,054
9 $57,889 $1,000,000 $1,000,000 $1,000,000 $20,771 $28,830 $39,973
10 $66,034 $1,000,000 $1,000,000 $1,000,000 $23,387 $33,284 $47,536
15 $113,287 $1,000,000 $1,000,000 $1,000,000 $41,212 $64,757 $105,765
20 $173,596 $1,000,000 $1,000,000 $1,000,000 $55,879 $101,697 $198,612
25 $250,567 $1,000,000 $1,000,000 $1,000,000 $66,171 $144,101 $347,393
30 $348,804 $1,000,000 $1,000,000 $1,280,903 $68,337 $189,519 $584,887
35 $474,182 $1,000,000 $1,000,000 $1,763,008 $52,169 $229,293 $952,977
40 $634,199 $1,000,000 $1,000,000 $2,394,441 $0 $243,077 $1,505,937
45 $838,426 $1,000,000 $1,000,000 $3,214,166 $0 $171,224 $2,295,833
50 $1,099,077 $1,000,000 $1,000,000 $4,288,680 $0 $0 $3,376,913
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
------------------------------------------------------------
End of
Policy Year 0% 6% 12%
------------------------------------------------------------
1 $2,592 $2,795 $2,999
2 $5,141 $5,709 $6,302
3 $7,645 $8,744 $9,939
4 $10,105 $11,906 $13,945
5 $12,518 $15,198 $18,354
6 $14,885 $18,625 $23,207
7 $17,202 $22,188 $28,547
8 $19,469 $25,893 $34,422
9 $21,683 $29,742 $40,885
10 $23,843 $33,740 $47,992
15 $41,212 $64,757 $105,765
------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 47
<PAGE>
<TABLE>
TABLE 11
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
<S> <C>
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 2 $1 million Initial Face Amount
Guaranteed Schedule of Mortality and Expense Charges and Cash Value Test
Current Fund Level Charges
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,002,592 $1,002,795 $1,002,999 $0 $0 $0
2 $10,763 $1,005,141 $1,005,709 $1,006,302 $1,037 $1,605 $2,198
3 $16,551 $1,007,645 $1,008,744 $1,009,939 $3,997 $5,096 $6,291
4 $22,628 $1,010,104 $1,011,905 $1,013,944 $6,912 $8,713 $10,752
5 $29,010 $1,012,517 $1,015,197 $1,018,352 $9,781 $12,461 $15,616
6 $35,710 $1,014,883 $1,018,623 $1,023,205 $12,603 $16,343 $20,925
7 $42,746 $1,017,200 $1,022,185 $1,028,543 $15,376 $20,361 $26,719
8 $50,133 $1,019,465 $1,025,887 $1,034,415 $18,097 $24,519 $33,047
9 $57,889 $1,021,678 $1,029,734 $1,040,873 $20,766 $28,822 $39,961
10 $66,034 $1,023,834 $1,033,727 $1,047,973 $23,378 $33,271 $47,517
15 $113,287 $1,041,166 $1,064,679 $1,105,629 $41,166 $64,679 $105,629
20 $173,596 $1,055,702 $1,101,345 $1,197,879 $55,702 $101,345 $197,879
25 $250,567 $1,065,611 $1,142,778 $1,344,021 $65,611 $142,778 $344,021
30 $348,804 $1,066,817 $1,185,122 $1,572,584 $66,817 $185,122 $572,584
35 $474,182 $1,048,631 $1,215,666 $1,921,144 $48,631 $215,666 $921,144
40 $634,199 $1,000,000 $1,205,135 $2,435,939 $0 $205,135 $1,435,939
45 $838,426 $1,000,000 $1,081,007 $3,151,296 $0 $81,007 $2,151,296
50 $1,099,077 $1,000,000 $1,000,000 $4,081,957 $0 $0 $3,081,957
- -------------------------- ----------------------------------------------- ----------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
-------------------------------------------------------------
End of
Policy Year 0% 6% 12%
-------------------------------------------------------------
1 $2,592 $2,795 $2,999
2 $5,141 $5,709 $6,302
3 $7,645 $8,744 $9,939
4 $10,104 $11,905 $13,944
5 $12,517 $15,197 $18,352
6 $14,883 $18,623 $23,205
7 $17,200 $22,185 $28,543
8 $19,465 $25,887 $34,415
9 $21,678 $29,734 $40,873
10 $23,834 $33,727 $47,973
15 $41,166 $64,679 $105,629
-------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
48 Appendix D
<PAGE>
TABLE 12
<TABLE>
<S> <C>
Survivorship Flexible Premium Adjustable Variable Life Insurance Policy
Male and Female Each Issue Age 35, Select Preferred $5,000 Annual Premium
Death Benefit Option 3 $1 million Initial Face Amount
Guaranteed Schedule of Mortality and Expense Charges and Cash Value Test
Current Fund Level Charges
<CAPTION>
Death Benefit Assuming Hypothetical Net Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------- ----------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------- ----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5,250 $1,005,000 $1,005,000 $1,005,000 $0 $0 $0
2 $10,763 $1,010,000 $1,010,000 $1,010,000 $1,037 $1,605 $2,198
3 $16,551 $1,015,000 $1,015,000 $1,015,000 $3,997 $5,096 $6,291
4 $22,628 $1,020,000 $1,020,000 $1,020,000 $6,912 $8,713 $10,752
5 $29,010 $1,025,000 $1,025,000 $1,025,000 $9,781 $12,460 $15,616
6 $35,710 $1,030,000 $1,030,000 $1,030,000 $12,602 $16,342 $20,924
7 $42,746 $1,035,000 $1,035,000 $1,035,000 $15,374 $20,359 $26,718
8 $50,133 $1,040,000 $1,040,000 $1,040,000 $18,094 $24,516 $33,045
9 $57,889 $1,045,000 $1,045,000 $1,045,000 $20,760 $28,817 $39,958
10 $66,034 $1,050,000 $1,050,000 $1,050,000 $23,370 $33,264 $47,514
15 $113,287 $1,075,000 $1,075,000 $1,075,000 $41,126 $64,654 $105,640
20 $173,596 $1,100,000 $1,100,000 $1,100,000 $55,562 $101,300 $198,104
25 $250,567 $1,125,000 $1,125,000 $1,125,000 $65,155 $142,789 $345,629
30 $348,804 $1,150,000 $1,150,000 $1,271,973 $65,361 $185,575 $580,809
35 $474,182 $1,175,000 $1,175,000 $1,751,077 $43,641 $217,779 $946,528
40 $634,199 $1,000,000 $1,200,000 $2,378,533 $0 $210,388 $1,495,932
45 $838,426 $1,000,000 $1,225,000 $3,193,063 $0 $75,899 $2,280,760
50 $1,099,077 $1,000,000 $1,000,000 $4,260,744 $0 $0 $3,354,916
- -------------------------- ----------------------------------------------- ----------------------------------------------
<CAPTION>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
------------------------------------------------------------
End of
Policy Year 0% 6% 12%
------------------------------------------------------------
<S> <C> <C> <C>
1 $2,592 $2,795 $2,999
2 $5,141 $5,709 $6,302
3 $7,645 $8,744 $9,939
4 $10,104 $11,905 $13,944
5 $12,517 $15,196 $18,352
6 $14,882 $18,622 $23,204
7 $17,198 $22,183 $28,542
8 $19,462 $25,884 $34,413
9 $21,672 $29,729 $40,870
10 $23,826 $33,720 $47,970
15 $41,126 $64,654 $105,640
------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 49
<PAGE>
Appendix E
Directors of Massachusetts Mutual Life Insurance Company
<TABLE>
<CAPTION>
Name, Position, Business Address Principal Occupation(s) During Past Five Years
<S> <C>
Roger G. Ackerman, Director Corning, Inc.
One Riverfront Plaza, HQE 2 Chairman and Chief Executive Officer (since 1996)
Corning, NY 14831 President and Chief Operating Officer (1990-1996)
James R. Birle, Director Resolute Partners, LLC
2 Soundview Drive Chairman (since 1997), Founder (1994)
Greenwich, CT 06836 President (1994-1997)
Blackstone Group
General Partner (1988-1994)
Gene Chao, Director Computer Projections, Inc.
733 SW Vista Avenue Chairman, President and CEO (since 1991)
Portland, OR 97205
Patricia Diaz Dennis, Director SBC Communications Inc.
175 East Houston, Room 5-A-70 Senior Vice President - Regulatory and Public Affairs (since 1998)
San Antonio, TX 78205 Senior Vice President and Assistant General Counsel (1995-1998)
Sullivan & Cromwell
Special Counsel (1993-1995)
U.S. Department of State
Asst. Secy. of State for Human Rights and Human. Affrs. (1992-1993)
Anthony Downs, Director The Brookings Institution
1775 Massachusetts Ave., N.W. Senior Fellow (since 1977)
Washington, DC 20036-2188
James L. Dunlap, Director Ocean Energy, Inc.
1201 Louisiana, Suite 1400 Vice Chairman (since 1998)
Houston, TX 77002-5603 United Meridian Corporation
President and Chief Operating Officer (1996-1998)
Texaco, Inc.
Senior Vice President (1987-1996)
William B. Ellis, Director Yale University School of Forestry and Environmental Studies
31 Pound Foolish Lane Senior Fellow (since 1995)
Glastonbury, CT 06033 Northeast Utilities
Chairman of the Board (1993-1995) and Chief Executive Officer (1983-1993)
Robert M. Furek, Director Resolute Partners LLC
1 State Street, Suite 2310 Partner (since 1997)
Hartford, CT 06103 State Board of Trustees for the Hartford School System
Chairman (since 1997)
Heublein, Inc.
President and Chief Executive Officer (1987-1996)
</TABLE>
50 Appendix E
<PAGE>
<TABLE>
<CAPTION>
Name, Position, Business Address Principal Occupation(s) During Past Five Years
<S> <C>
Charles K. Gifford, Director BankBoston, N.A.
100 Federal Street Chairman and Chief Executive Officer (since 1996)
Boston, MA 02110 President (1989-1996)
BankBoston Corporation
Chairman (since 1998) and Chief Executive Officer (since 1995)
President (1989-1996)
William N. Griggs, Director Griggs & Santow, Inc.
75 Wall Street, 20th Floor Managing Director (since 1983)
New York, NY 10005
George B. Harvey, Director Pitney Bowes
One Landmark Square, Suite 1905 Chairman, President and CEO (1983-1996)
Stamford, CT 06901
Barbara B. Hauptfuhrer, Director Director of various corporations (since 1972)
1700 Old Welsh Road
Huntingdon Valley, PA 19006
Sheldon B. Lubar, Director Lubar & Co. Incorporated
700 North Water Street, Suite 1200 Chairman (since 1977)
Milwaukee, WI 53202
William B. Marx, Jr., Director Lucent Technologies
5 Peacock Lane Senior Executive Vice President (1996-1996)
Village of Golf, FL 33436-5299 AT&T Multimedia Products Group
Executive Vice President and CEO (1994-1996)
AT&T Network Systems Group
Executive Vice President and CEO (1993-1994)
Group Executive and President (1989-1993)
John F. Maypole, Director Peach State Real Estate Holding Company
55 Sandy Hook Road - North Managing Partner (since 1984)
Sarasota, FL 34242
Robert J. O'Connell, Director, President MassMutual
and Chief Executive Officer President and Chief Executive Officer (since 1999)
1295 State Street American International Group, Inc.
Springfield, MA 01111 Senior Vice President (1991-1998)
AIG Life Companies
President and Chief Executive Officer (1991-1998)
Thomas B. Wheeler, Director and MassMutual
Chairman of the Board Chairman of the Board (since 1996)
1295 State Street President (1988-1996) and Chief Executive Officer (1988-1999)
Springfield, MA 01111
</TABLE>
Appendix E 51
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Name, Position, Business Address Principal Occupation(s) During Past Five Years
Alfred M. Zeien, Director The Gillette Company
Prudential Tower Chairman and Chief Executive Officer (since 1991)
Boston, MA 02199
Executive Vice Presidents:
Lawrence V. Burkett, Jr. MassMutual
1295 State Street Executive Vice President and General Counsel (since 1993)
Springfield, MA 01111 Senior Vice President and Deputy General Counsel (1992-1993)
Peter J. Daboul MassMutual
1295 State Street Executive Vice President and Chief Information Officer (since 1997)
Springfield, MA 01111 Senior Vice President (1990-1997)
John B. Davies MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Associate Executive Vice President (1994-1994)
General Agent (1982-1993)
Daniel J. Fitzgerald MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Corporate Financial Operations (1994-1997)
Senior Vice President (1991-1994)
James E. Miller MassMutual
1295 State Street Executive Vice President (since 1997 and 1987-1996)
Springfield, MA 01111 UniCare Life & Health
Senior Vice President (1996-1997)
John V. Murphy MassMutual
1295 State Street Executive Vice President (since 1997)
Springfield, MA 01111 David L. Babson & Co., Inc.
Executive Vice President and Chief Operating Officer (1995-1997)
Concert Capital Management, Inc.
Chief Operating Officer (1993-1995)
Liberty Financial Companies
Senior Vice President and Chief Financial Officer (1977-1993)
Joseph M. Zubretsky MassMutual
1295 State Street Executive Vice President and Chief Financial Officer (since 1997)
Springfield, MA 01111 HealthSource
Chief Financial Officer (1996-1996)
Coopers & Lybrand
Partner (1990-1996)
</TABLE>
52 Appendix E
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
Massachusetts Mutual Life Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the divisions of the
Survivorship Variable Universal Life segment of Massachusetts Mutual Variable
Life Separate Account I (hereafter referred to as "the Account") at December 31,
1998, the results of each of their operations and the changes in each of their
net assets for the period from June 29, 1998 (commencement of operations)
through December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at December 31, 1998 by correspondence with
the investment companies, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
See notes to Financial Statements.
F-1
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Survivorship Variable Universal Life
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
American
MML MML Oppenheimer Century
MML Money Managed MML Oppenheimer Strategic VP Income
Equity Market Bond Blend Growth Bond & Growth
Division Division Division Division Division Division Division
---------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 1,278 21,596 537 1,262 199 1,351 2,427
========== ========== =========== =========== ========== =========== ===========
Identified cost (Note 3B) $ 51,083 $ 21,596 $ 6,892 $ 33,018 $ 6,892 $ 6,892 $ 15,970
========== ========== =========== =========== ========== =========== ===========
Value (Note 3A) $ 50,105 $ 21,596 $ 6,764 $ 31,651 $ 7,309 $ 6,919 $ 16,456
Dividends receivable 2,538 40 123 1,983 - - -
---------- ---------- ----------- ----------- ---------- ----------- -----------
Total assets 52,643 21,636 6,887 33,634 7,309 6,919 16,456
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 7 2 1 5 1 1 4
---------- ---------- ----------- ----------- ---------- ----------- -----------
NET ASSETS $ 52,636 $ 21,634 $ 6,886 $ 33,629 $ 7,308 $ 6,918 $ 16,452
========== ========== =========== =========== ========== =========== ===========
Net Assets:
For variable life insurance policies $ 52,636 $ 21,634 $ 6,886 $ 33,629 $ 7,308 $ 6,918 $ 16,452
========== ========== =========== =========== ========== =========== ===========
Accumulation Units (Note 8)
Policyowners 49,324 21,119 6,637 31,767 6,896 6,954 15,253
========== ========== =========== =========== ========== =========== ===========
NET ASSET VALUE PER ACCUMULATION UNIT
December 31, 1998 $ 1.07 $ 1.02 $ 1.04 $ 1.06 $ 1.06 $ 0.99 $ 1.08
<CAPTION>
T. Rowe Price Fidelity
Mid-Cap VIP II
Growth Contrafund
Division Division
----------- -----------
<S> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 1,745 1,016
=========== ===========
Identified cost (Note 3B) $ 23,033 $ 22,782
=========== ===========
Value (Note 3A) $ 24,898 $ 24,825
Dividends receivable - -
----------- -----------
Total assets 24,898 24,825
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 4 5
----------- -----------
NET ASSETS $ 24,894 $ 24,820
=========== ===========
Net Assets:
For variable life insurance policies $ 24,894 $ 24,820
=========== ===========
Accumulation Units (Note 8)
Policyowners 23,778 22,310
=========== ===========
NET ASSET VALUE PER ACCUMULATION UNIT
December 31, 1998 $ 1.05 $ 1.11
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Survivorship Variable Universal Life
STATEMENT OF OPERATIONS
For The Period June 29, 1998 (Commencement of Operations) Through
December 31, 1998
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Oppenheimer Strategic
Equity Market Bond Blend Growth Bond
Division Division Division Division Division Division
----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 2,538 $ 40 $ 123 $ 1,983 $ - $ -
Expenses
Mortality and expense risk fees (Note 4) 7 2 1 5 1 1
----------- ---------- ----------- ---------- ----------- ----------
Net investment income (loss) (Note 3C) 2,531 38 122 1,978 (1) (1)
----------- ---------- ----------- ---------- ----------- ----------
Net realized and unrealized gain (loss) on investments
Net realized gain on investments (Notes 3B, 3C and 6) - - - - - -
Change in net unrealized appreciation/depreciation of
investments (978) - (128) (1,367) 417 27
----------- ---------- ----------- ---------- ----------- ----------
Net gain (loss) on investments (978) - (128) (1,367) 417 27
----------- ---------- ----------- ---------- ----------- ----------
Net increase (decrease) in net assets resulting from
operations $ 1,553 $ 38 $ (6) $ 611 $ 416 $ 26
=========== ========== =========== ========== =========== ==========
<CAPTION>
Century T. Rowe Price Fidelity
VP Income Mid-Cap VIP II
& Growth Growth Contrafund
Division Division Division
----------- ---------- ----------
<S> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 80 $ 252 $ -
Expenses
Mortality and expense risk fees (Note 4) 4 4 5
----------- ---------- ----------
Net investment income (loss) (Note 3C) 76 248 (5)
----------- ---------- ----------
Net realized and unrealized gain (loss) on investments
Net realized gain on investments (Notes 3B, 3C and 6) - 1 1
Change in net unrealized appreciation/depreciation of
investments 486 1,865 2,043
----------- ---------- ----------
Net gain (loss) on investments 486 1,866 2,044
----------- ---------- ----------
Net increase (decrease) in net assets resulting from
operations $ 562 $ 2,114 $ 2,039
=========== ========== ==========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Survivorship Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS
For The Period June 29, 1998 (Commencement of Operations) Through
December 31, 1998
<TABLE>
<CAPTION>
American
MML MML Oppenheimer Century
MML Money Managed MML Oppenheimer Strategic VP Income
Equity Market Bond Blend Growth Bond & Growth
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) $ 2,531 $ 38 $ 122 $ 1,978 $ (1) $ (1) $ 76
Net realized gain on investments - - - - - - -
Change in net unrealized
appreciation/depreciation of
investments (978) - (128) (1,367) 417 27 486
---------- ---------- ----------- ------------ ----------- ----------- -----------
Net increase in net assets
resulting from operations 1,553 38 (6) 611 416 26 562
---------- ---------- ----------- ------------ ----------- ----------- -----------
Capital transactions: (Note 8)
Transfer of net premium 51,120 21,596 6,892 33,057 6,892 6,892 15,928
Transfer of surrender values (34) - - (34) - - (33)
Transfer due to reimbursement
of accumulation unit value fluctuation 2 - - - - - -
Withdrawal due to charges for
administrative and insurance costs (5) - - (5) - - (5)
---------- ---------- ----------- ------------ ----------- ----------- -----------
Net increase in net assets
resulting from capital transactions 51,083 21,596 6,892 33,018 6,892 6,892 15,890
---------- ---------- ----------- ------------ ----------- ----------- -----------
Total increase 52,636 21,634 6,886 33,629 7,308 6,918 16,452
NET ASSETS, at beginning
of the period - - - - - - -
---------- ---------- ----------- ------------ ----------- ----------- -----------
NET ASSETS, at end
of the year $ 52,636 $ 21,634 $ 6,886 $ 33,629 $ 7,308 $ 6,918 $ 16,452
========== ========== =========== ============ =========== =========== ===========
<CAPTION>
T. Rowe Price Fidelity
Mid-Cap VIP II
Growth Contrafund
Division Division
---------- ----------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 248 $ (5)
Net realized gain on investments 1 1
Change in net unrealized
appreciation/depreciation of investments 1,865 2,043
---------- ----------
Net increase in net assets
resulting from operations 2,114 2,039
---------- ----------
Capital transactions: (Note 8)
Transfer of net premium 22,820 22,820
Transfer of surrender values (35) (34)
Transfer due to reimbursement
of accumulation unit value fluctuation - -
Withdrawal due to charges for
administrative and insurance costs (5) (5)
---------- ----------
Net increase in net assets
resulting from capital transactions 22,780 22,781
---------- ----------
Total increase 24,894 24,820
NET ASSETS, at beginning
of the period - -
---------- ----------
NET ASSETS, at end
of the year $ 24,894 $ 24,820
========== ==========
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Survivorship Variable Universal Life
Notes To Financial Statements
1. HISTORY
Massachusetts Mutual Variable Life Separate Account I ("Separate Account
I") is a separate investment account established on July 13, 1988 by
Massachusetts Mutual Life Insurance Company ("MassMutual") in accordance
with the provisions of Section 132G of Chapter 175 of the Massachusetts
General Laws.
MassMutual maintains eight segments within Separate Account I. The initial
segment ("Variable Life Plus Segment") is used exclusively for MassMutual's
flexible premium variable whole life insurance policy, known as Variable
Life Plus.
On March 30, 1990, MassMutual established a second segment ("Large Case
Variable Life Plus Segment") within Separate Account I to be used
exclusively for MassMutual's flexible premium variable whole life insurance
policy with table of selected face amounts, known as Large Case Variable
Life Plus.
On July 5, 1995, MassMutual established a third segment ("Strategic
Variable Life Segment") within Separate Account I to be used exclusively
for MassMutual's flexible premium variable whole life insurance policy with
table of selected face amounts, known as Strategic Variable Life.
On July 24, 1995, MassMutual established a fourth segment ("Variable Life
Select Segment") within Separate Account I to be used exclusively for
MassMutual's flexible premium variable whole life insurance policy, known
as Variable Life Select.
On February 11, 1997, MassMutual established a fifth segment ("Strategic
GVUL Segment") within Separate Account I to be used exclusively for
MassMutual's group flexible premium adjustable life insurance policy, known
as Strategic Group Variable Universal Life.
On November 12, 1997, MassMutual established a sixth segment ("SVUL
Segment") within Separate Account I to be used exclusively for MassMutual's
survivorship flexible premium adjustable variable life insurance policy,
known as Survivorship Variable Universal Life.
On November 12, 1997, MassMutual established a seventh segment ("VUL
Segment") within Separate Account I to be used exclusively for MassMutual's
flexible premium adjustable variable life insurance policy, known as
Variable Universal Life.
On July 13, 1998, MassMutual established an eighth segment ("Strategic
Variable Life Plus Segment") within Separate Account I to be used
exclusively for MassMutual's flexible premium adjustable variable life
insurance policy, known as Strategic Variable Life Plus.
The Separate Account I operates as a registered unit investment trust
pursuant to the Investment Company Act of 1940.
2. INVESTMENT OF SVUL SEGMENT'S ASSETS
The SVUL Segment maintains thirteen divisions. Each division invests in
corresponding shares of either the MML Series Investment Fund ("MML
Trust"), Oppenheimer Variable Account Funds ("Oppenheimer Trust"), American
Century Variable Portfolios, Inc. ("American Century"), T. Rowe Price
Equity Series, Inc., ("T. Rowe Price Equity Series") and Variable Insurance
Products II ("Fidelity VIP II").
The MML Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940. All six of its
separate series are available to the SVUL Segment's policyowners: MML
Equity Fund, MML Money Market Fund, MML Managed Bond Fund, MML Blend Fund,
MML Equity Index Fund and MML Small Cap Value Equity Fund. MassMutual
serves as investment manager of each of the MML Funds pursuant to an
investment management agreement. David L. Babson & Company, Inc. ("Babson")
a controlled subsidiary of MassMutual, serves as the sub-adviser to the MML
Equity Fund and the Equity Sector of the MML Blend Fund. MassMutual has
also entered in a sub-advisory agreement with Mellon Equity Associates
("Mellon Equity") whereby Mellon Equity serves as the sub-adviser to the
MML Equity Index Fund.
F-5
<PAGE>
Notes To Financial Statements (Continued)
Oppenheimer Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940 with four of its funds
available to the SVUL Segment's policyowners: Oppenheimer Aggressive Growth
Fund, Oppenheimer Growth Fund, Oppenheimer Global Securities Fund and
Oppenheimer Strategic Bond Fund. OppenheimerFunds, Inc. ("OFI"), a
controlled subsidiary of MassMutual, serves as investment manager to the
Oppenheimer Trust.
American Century is an open-end, diversified management investment company.
American Century VP Income and Growth is available to the SVUL Segment's
policyowners. Investment Management, Inc. is the investment manager to the
American Century VP Income & Growth Fund Portfolio.
T. Rowe Price Equity Series is an open-end, diversified investment company
with one of its series of shares currently available to the SVUL Segment's
policyowners: T. Rowe Price Mid-Cap Growth Portfolio. T. Rowe Price
Associates, Inc. is the investment manager to the T. Rowe Price Mid-Cap
Growth Portfolio.
Fidelity VIP II is an open-end, diversified management investment company
registered under the Investment Company Act of 1940 with one of its Funds
available to the SVUL Segment's policyowners: the VIP II Contrafund
Portfolio. Fidelity Management & Research Company ("FMR") is the investment
manager to the VIP II Contrafund Portfolio. Fidelity Management & Research
(U.K.) Inc. and Fidelity Management & Research (Far East) Inc., serve as
the investment Sub-Adviser to the VIP II Contrafund Portfolio.
In addition to the thirteen divisions, policyowners may also allocate funds
to the Guaranteed Principal Account ("GPA"), which is part of MassMutual's
general account. Because of exemptive and exclusionary provisions,
interests in the GPA, are not registered under the Securities Act of 1933.
Also, 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 SVUL Segment in preparation of the financial statements
in conformity with generally accepted accounting principles.
A. Investment Valuation
Investments in the MML Trust, the Oppenheimer Trust, American Century, T.
Rowe Price Equity Series and Fidelity VIP II are each stated at market
value which is the net asset value of each of the respective underlying
funds.
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
MassMutual is taxed under federal law as a life insurance company under the
provisions of the 1986 Internal Revenue Code, as amended. SVUL Segment is
part of MassMutual's total operation and is not taxed separately. SVUL
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 SVUL
Segment are credited to the policies. Accordingly, MassMutual does not
intend to make any charge to SVUL Segment divisions to provide for company
income taxes. MassMutual may, however, make such a charge in the future if
an unanticipated change of current law results in a company tax liability
attributable to SVUL Segment.
D. Policy Loan
When a policy loan is made, SVUL Segment transfers the amount of the loan
to MassMutual, thereby decreasing both the investments and net assets of
SVUL Segment by an equal amount. The interest rate charged on any loan is
5% per year or the policyowner may select an adjustable loan rate at the
time of application. All loan repayments are allocated to the GPA.
F-6
<PAGE>
Notes To Financial Statements (Continued)
The policyowner earns interest on the loaned value at a rate which is the
greater of 3% or the policy loan rate less the loan interest rate expense
charge.
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
A premium expense charge is deducted from each premium payment made prior
to the allocation of the payment to the Divisions of the Separate Account I
and the GPA. The charge is 13% of premium up to expense premium and 3% of
premium over expense premium.
Charges will be deducted from the account value on each monthly charge
date. The monthly charges consist of: (a) an administrative charge; (b) a
face amount charge; (c) an insurance charge and (d) a rider charge for any
additional benefits provided by rider.
Daily charges against the net asset value of the Separate Account I will be
assessed for mortality and expense risks. This charge is not deducted from
the assets in the GPA. The current effective annual rate is 0.25% of daily
net asset value.
5. SALES AGREEMENT
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 to which MML Distributors, MassMutual
and Separate Account I are parties. MML Investors Services, Inc. ("MMLISI")
serves as the co-underwriter of the policy. Both MML Distributors and
MMLISI are 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 that are registered with the SEC and are members of the NASD
in order to sell the policies.
Pursuant to the underwriting and servicing agreement, 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 policy.
F-7
<PAGE>
Notes To Financial Statements(Continued)
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
MML MML
For the Period June 29, 1998 MML Money Managed MML Oppenheimer
(Commencement of Operations) Equity Market Bond Blend Growth
through December 31, 1998 Division Division Division Division Division
------------------------- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Cost of purchases $ 51,121 $ 21,596 $ 6,892 $ 33,057 $ 6,892
Proceeds from sales 38 - - 39 -
Average monthly value of securities 32,873 21,596 6,764 23,711 7,309
<CAPTION>
American
Oppenheimer Century T. Rowe Price Fidelity
For the Period June 29, 1998 Strategic VP Income Mid-Cap VIP II
(Commencement of Operations) Bond & Growth Growth Contrafund
through December 31, 1998 (Continued) Division Division Division Division
------------------------------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cost of purchases $ 6,892 $ 16,009 $ 23,072 $ 22,822
Proceeds from sales - 39 39 40
Average monthly value of securities 6,919 16,011 20,257 20,194
</TABLE>
7. NET INVESTMENT RETURN
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML Oppenheimer
Equity Market Bond Blend Growth
Division Division Division Division Division
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
For the Period June 29, 1998
(Commencement of Operations)
through December 31, 1998 4.55% 0.18% -0.09% 2.47% 5.69%
</TABLE>
<TABLE>
<CAPTION>
American
Oppenheimer Century T. Rowe Price Fidelity
Strategic VP Income Mid-Cap VIP II
Bond & Growth Growth Contrafund
Division Division Division Division
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
For the Period June 29, 1998
(Commencement of Operations)
through December 31, 1998 (Continued) 0.38% 3.51% 10.44% 10.10%
</TABLE>
The net investment return for each division of the SVUL 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 the period shown.
Note: The amounts shown for the period June 29, 1998 through December 31, 1998
are not annualized.
F-8
<PAGE>
Notes To financial Statements(Continued)
8. NET INCREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML MML
For the Period June 29, 1998 MML Money Managed MML Oppenheimer
(Commencement of Operations) Equity Market Bond Blend Growth
through December 31, 1998 Division Division Division Division Division
------------------------- ------------ ------------ ------------ ------------- -------------
Units Purchased 49,361 21,119 6,637 31,804 6,896
Units withdrawn and transferred to
Guaranteed Principal Account (37) - - (37) -
Units transferred between divisions - - - - -
------------ ------------ ------------ ------------- -------------
Net increase 49,324 21,119 6,637 31,767 6,896
Units, at beginning of the period - - - - -
------------ ------------ ------------ ------------- -------------
Units, at end of the year 49,324 21,119 6,637 31,767 6,896
============ ============ ============ ============= =============
<CAPTION>
American
Oppenheimer Century T. Rowe Price Fidelity
For the Period June 29, 1998 Strategic VP Income Mid-Cap VIP II
(Commencement of Operations) Bond & Growth Growth Contrafund
through December 31, 1998 (Continued) Division Division Division Division
------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Units Purchased 6,954 15,290 23,818 22,348
Units withdrawn and transferred to
Guaranteed Principal Account - (37) (40) (38)
Units transferred between divisions - - - -
------------ ------------ ------------ ------------
Net increase 6,954 15,253 23,778 22,310
Units, at beginning of the period - - - -
------------ ------------ ------------ ------------
Units, at end of the year 6,954 15,253 23,778 22,310
============ ============ ============ ============
</TABLE>
F-9
<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 SVUL Segment. The combined net assets as of December 31, 1998
for Separate Account I, which includes the Variable Life Plus, Large Case
Variable Life Plus, Strategic Variable Life, Variable Life Select, GVUL and
SVUL Segments are as follows:
<TABLE>
<CAPTION>
MML MML MML Oppenheimer
MML Equity Money Managed MML Oppenheimer High Oppenheimer
Equity Index Market Bond Blend Money Income Bond
Division Division Division Division Division Division Division Division
------------- ----------- ------------ ------------ ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $68,569,760 $3,773,362 $13,343,746 $25,285,963 $18,619,343 $3,331,631 $2,182,008 $1,980,384
Total liabilities 103,103 946 25,266 23,205 22,397 1,263 3,659 429
------------- ----------- ------------ ------------ ------------ ----------- ----------- -----------
Net assets $68,466,657 $3,772,416 $13,318,480 $25,262,758 $18,596,946 $3,330,368 $2,178,349 $1,979,955
============= =========== ============ ============ ============ =========== =========== ===========
Net assets:
For variable life
insurance policies 68,346,887 3,763,311 13,264,753 25,197,665 18,501,128 3,323,389 2,162,993 1,972,470
Retained in Variable
Life Separate Account
I by Massachusetts
Mutual Life
Insurance Company 119,770 9,105 53,727 65,093 95,818 6,979 15,356 7,485
------------- ----------- ------------ ------------ ------------ ----------- ----------- -----------
Net assets $68,466,657 $3,772,416 $13,318,480 $25,262,758 $18,596,946 $3,330,368 $2,178,349 $1,979,955
============= =========== ============ ============ ============ =========== =========== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Multiple Global
Appreciation Growth Strategies Securities
Division Division Division Division
------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Total assets $16,395,636 $13,202,771 $941,427 $9,080,902
Total liabilities 13,959 11,379 854 9,817
------------- ------------- ---------- -----------
Net assets $16,381,677 $13,191,392 $940,573 $9,071,085
============= ============= ========== ===========
Net assets:
For variable life
insurance policies 16,354,171 13,168,468 930,839 9,047,257
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 27,506 22,924 9,734 23,828
------------- ------------- ---------- -----------
Net assets $16,381,677 $13,191,392 $940,573 $9,071,085
============= ============= ========== ===========
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
Bond Income Total Return Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
------------- ----------- ------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets $1,250,072 $3,209,353 $1,208,387 $1,034,642 $148,692 $93,514 $74,338 $58,063
Total liabilities 1,912 673 8 - - 123 135 89
------------- ----------- ------------ ------------ ------------ ----------- ----------- -----------
Net assets $1,248,160 $3,208,680 $1,208,379 $1,034,642 $148,692 $93,391 $74,203 $57,974
============= =========== ============ ============ ============ =========== =========== ===========
Net assets:
For variable life
insurance policies 1,233,948 3,196,228 1,207,280 1,033,583 147,559 86,570 67,138 50,784
Retained in Variable
Life Separate Account
I by Massachusetts
Mutual Life
Insurance Company 14,212 12,452 1,099 1,059 1,133 6,821 7,065 7,190
------------- ----------- ------------ ------------ ------------ ----------- ----------- -----------
Net assets $1,248,160 $3,208,680 $1,208,379 $1,034,642 $148,692 $93,391 $74,203 $57,974
============= =========== ============ ============ ============ =========== =========== ===========
<CAPTION>
American
Dreyfus T.Rowe Price Century Fidelity
Stock Mid-Cap VP Income VIP II
Index Growth & Growth Contrafund
Division Division Division Division
------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Total assets $46,510,033 $24,898 $16,456 $24,825
Total liabilities 51,088 4 4 5
------------- ------------- ---------- -----------
Net assets $46,458,945 $24,894 $16,452 $24,820
============= ============= ========== ===========
Net assets:
For variable life
insurance policies 46,449,250 24,894 16,452 24,820
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 9,695 - - -
------------- ------------- ---------- -----------
Net assets $46,458,945 $24,894 $16,452 $24,820
============= ============= ========== ===========
</TABLE>
F-10
<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, 1998 and 1997,
and the related statutory statements of income and changes in policyholders'
contingency reserves, and of cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Division of Insurance
of the Commonwealth of Massachusetts, 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, are presumed to be
material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements audited by us do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
or the results of its operations or its cash flows for each of the three years
in the period ended December 31, 1998.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Massachusetts Mutual Life Insurance
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
FF-1
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1998 1997
-------- --------
(In Millions)
Assets:
Bonds $ 25,215.8 $ 23,508.2
Common stocks 296.3 354.7
Mortgage loans 5,916.5 5,245.8
Real estate 1,739.8 1,697.7
Other investments 2,263.7 1,963.8
Policy loans 5,224.2 4,950.4
Cash and short-term investments 1,123.3 1,941.2
----------- -----------
41,779.6 39,661.8
Other assets 1,306.2 1,169.7
----------- -----------
43,085.8 40,831.5
Separate account assets 19,589.7 16,803.1
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-2
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1998 1997
-------- --------
(In Millions)
Liabilities:
Policyholders' reserves and funds $ 35,277.0 $ 33,783.2
Policyholders' dividends 1,021.6 954.1
Policyholders' claims and other benefits 332.4 353.4
Federal income taxes 634.9 436.5
Asset valuation and other investment reserves 1,053.4 973.4
Other liabilities 1,578.9 1,457.9
----------- -----------
39,898.2 37,958.5
Separate account liabilities 19,588.5 16,802.8
----------- -----------
59,486.7 54,761.3
Policyholders' contingency reserves 3,188.8 2,873.3
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-3
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income $ 7,482.2 $ 6,764.8 $ 6,328.6
Net investment income 2,956.8 2,870.2 2,834.4
Fees and other income 154.0 126.7 117.2
--------- --------- ---------
10,593.0 9,761.7 9,280.2
--------- --------- ---------
Benefits and expenses:
Policyholders' benefits and payments 5,873.9 6,583.8 6,048.2
Addition to policyholders' reserves and funds 2,299.6 826.8 945.2
Operating expenses 509.5 450.8 428.0
Commissions 299.3 315.3 335.5
State taxes, licenses and fees 88.1 81.5 96.4
Merger restructuring costs - - 66.1
--------- --------- ---------
9,070.4 8,258.2 7,919.4
--------- --------- ---------
Net gain before federal income taxes and dividends 1,522.6 1,503.5 1,360.8
Federal income taxes 199.3 284.4 276.7
--------- --------- ---------
Net gain from operations before dividends 1,323.3 1,219.1 1,084.1
Dividends to policyholders 982.9 919.5 859.9
--------- --------- ---------
Net gain from operations 340.4 299.6 224.2
Net realized capital gain (loss) 25.4 (42.5) 40.3
--------- --------- ---------
Net income $ 365.8 $ 257.1 $ 264.5
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-4
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Policyholders' contingency reserves,
beginning of year $2,873.3 $2,638.6 $2,600.9
-------- -------- --------
Increases (decreases) due to:
Net income 365.8 257.1 264.5
Net unrealized capital gain (loss) 17.4 119.1 (1.7)
Change in asset valuation and other investment reserves (81.0) (76.0) (142.4)
Change in prior year policyholders' reserves 8.6 (55.4) (72.2)
Other 4.7 (10.1) (10.5)
-------- -------- --------
315.5 234.7 37.7
-------- -------- --------
Policyholders' contingency reserves,
end of year $3,188.8 $2,873.3 $2,638.6
======== ======== ========
</TABLE>
See notes to statutory financial statements.
FF-5
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Operating activities:
Net income $ 365.8 $ 257.1 $ 264.5
Addition to policyholders' reserves and funds,
net of transfers to separate accounts 1,472.8 421.3 426.7
Net realized capital (gain) loss (25.4) 42.5 (40.3)
Other changes 15.4 (108.1) (286.1)
--------- --------- ---------
Net cash provided by operating activities 1,828.6 612.8 364.8
--------- --------- ---------
Investing activities:
Loans and purchases of investments (15,981.2) (12,292.7) (10,171.5)
Sales or maturities of investments and receipts
from repayment of loans 13,334.7 12,545.7 8,539.3
--------- --------- ---------
Net cash provided by (used in) investing activities (2,646.5) 253.0 (1,632.2)
--------- --------- ---------
Increase (decrease) in cash and short-term investments (817.9) 865.8 (1,267.4)
Cash and short-term investments, beginning of year 1,941.2 1,075.4 2,342.8
--------- --------- ---------
Cash and short-term investments, end of year $ 1,123.3 $ 1,941.2 $ 1,075.4
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-6
<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 either directly or through its subsidiaries, 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, 1996 in conformity with the 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. In 1996, merger-related expenses totaling
$66.1 million were recorded in the Statutory Statement of Income. 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 charge to
policyholders' contingency reserves.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life
Insurance Company (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.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, have been prepared in
conformity with the statutory accounting practices of the NAIC and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts and are different in some respects from
financial statements prepared in accordance with generally accepted
accounting principles ("GAAP"). 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, morbidity 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 requires they be reported 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
income and changes in reserves, whereas under GAAP, these payments would be
recorded as deposits to policyholders' account balances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). Codification provides a comprehensive guide of
statutory accounting principles for use by insurers in all states and is
expected to become effective no later than January 1, 2001. The effect of
adopting Codification shall be reported as an adjustment to policyholders'
contingency reserves on the effective date. The Company is currently
reviewing the impact of Codification; however, since the Division of
Insurance of the Commonwealth of Massachusetts has not approved
Codification, the ultimate impact cannot be determined at this time.
FF-7
<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.
Certain 1997 and 1996 amounts have been reclassified to conform with the
current year presentation.
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
NAIC. 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 net of unamortized premium or
discount. The Company discontinues the accrual of interest on mortgage loans
which are delinquent more than 90 days or when collection is uncertain. Real
estate is valued at cost less accumulated depreciation, impairment
allowances and mortgage encumbrances. Encumbrances totaled $63.5 million in
1998 and $14.2 million in 1997. 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 ("AVR") and an Interest Maintenance Reserve ("IMR"). The
AVR 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 IMR
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 and interest related hedging activities. 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 $189.1 million
in 1998, $95.4 million in 1997 and $73.1 million in 1996 were charged to the
IMR. Amortization of the IMR into net investment income amounted to $40.3
million in 1998, $31.0 million in 1997, and $26.9 million in 1996.
Realized capital gains and losses, less taxes, not includible in the IMR,
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 contractholders. Assets consist
principally of marketable securities reported at fair value. Premiums,
benefits and expenses of the separate
FF-8
<PAGE>
Notes To Statutory Financial Statements (Continued)
accounts are reported in the Statutory Statement of Income. The Company
receives administrative and investment advisory fees from these accounts.
Net transfers to separate accounts of $821.3 million, $355.7 million and
$636.5 million in 1998, 1997 and 1996, respectively, are included in the
addition of policyholders' reserves and funds.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally certain furniture,
equipment and other receivables) are excluded from the Statutory Statement
of Financial Position by an adjustment to policyholders' contingency
reserves.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life insurance 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 6.75
percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee contracts 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 $7,734.6 million and $8,077.9
million at December 31, 1998 and 1997, respectively with a fair value of
$7,940.6 million and $8,250.0 million at December 31, 1998 and 1997,
respectively, as determined by discounted cash flow projections.
Disability income 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
which increased policyholders' contingency reserves by $8.6 million in 1998
and decreased policyholders' contingency reserves by $55.4 million and $72.2
million in 1997 and 1996, respectively.
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. Disability
income 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.
FF-9
<PAGE>
Notes To Statutory Financial Statements (Continued)
G. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers
all highly liquid investments purchased with a maturity of twelve months or
less to be short-term investments.
H. 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.
2. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7.50 percent and $250.0
million at 7.625 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 1998, 1997 and 1996.
The proceeds of the notes, less a $24.4 million reserve in 1998, and a $28.3
million reserve in 1997 for contingencies associated with the issuance of the
notes, are recorded as a component of the Company's policyholders'
contingency reserves as permitted by the Division of Insurance. These surplus
note reserves are included in asset valuation and other investment reserves
on the Statutory Statement of Financial Position.
3. BENEFIT PLANS
The Company provides multiple benefit plans to employees, agents and retirees
including retirement plans and life and health benefits.
Retirement Plans
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes active employees and
retirees previously employed by Connecticut Mutual Life Insurance Company
which merged with MassMutual in 1996; the other plan includes all other
eligible employees and retirees. 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 $216.0 million and $157.4 million at December 31, 1998 and 1997,
respectively. Company policy is to fund pension costs in accordance with the
requirements of the Employee Retirement Income Security Act of 1974 and,
based on such requirements, no funding was required for the years ended
December 31, 1998, and 1997. The assets of the plans are invested in the
Company's general account and separate accounts.
FF-10
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company also has defined contribution plans for employees and agents. The
Company funds the plans by matching employee contributions, subject to
statutory limits. Company contributions and any earnings on them are vested
based on years of vesting service using a graduated vesting schedule in 20
percent increments over a five-year period.
Life and Health
Life and health insurance benefits are provided to employees and agents
through group insurance contracts. Substantially all of the Company's
employees and agents may become eligible for continuation of certain of these
benefits if they retire as active employees or agents of 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 initial
transition obligation of $137.9 million is being amortized over twenty years
through 2012. During 1998, the Company transferred the administration of the
retiree life and health plan benefit obligations and supporting assets to an
unconsolidated subsidiary.
The status of the defined benefit plans as of December 31 is as follows:
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
(In Millions)
Accumulated benefit obligation
at December 31 $ 822.8 $ 663.1 $ 185.6 $ 145.9
Fair value of plan assets
at December 31 1,160.2 1,154.2 21.0 21.7
--------- --------- -------- --------
Funded status $ 337.4 $ 491.1 $ (164.6) $ (124.2)
========= ========= ======== ========
The following rates were used in determining the actuarial present value of the
accumulated benefit obligations.
<TABLE>
<CAPTION>
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 6.75% 7.25% 6.75% 7.25%
Increase in future compensation
levels 4.00-5.00% 4.00-5.00% 5.00% 5.00-5.50%
Long-term rate of return on assets 9.00-10.00% 9.00-10.00% 6.75% 6.75%
Assumed increases in medical cost
Rates in the first year - - 7.00% 6.25-9.50%
declining to - - 4.25% 4.75-5.00%
within - - 5 years 5 years
</TABLE>
A one percent increase in the annual assumed inflation rate in medical cost
rates would increase the 1998 accumulated postretirement benefit liability and
benefit expense by $9.2 million and $1.1 million, respectively. A one percent
decrease in the annual assumed inflation rate in medical costs rates would
decrease the 1998 accumulated postretirement benefit liability and benefit
expense by $8.5 million and $1.0 million, respectively.
FF-11
<PAGE>
Notes To Statutory Financial Statements (Continued)
The expense charged to operations for all employee benefit plans is $32.1
million in 1998, $23.9 million in 1997 and $38.1 million in 1996. 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.
4. RELATED PARTY TRANSACTIONS
The company has management and service contracts or cost sharing arrangements
with various subsidiaries and affiliates whereby the Company, for a fee, will
furnish a subsidiary or affiliate, as required, operating facilities, human
resources, computer software development and managerial services. Fees earned
under the terms of the contracts or arrangements were $205.0 million and
$137.3 million for 1998 and 1997, respectively.
The Company has reinsurance agreements with its subsidiaries, C.M. Life
Insurance Company and MML Bay State Life Insurance Company, including stop-
loss and modified coinsurance agreements on life insurance products. Total
premiums assumed on these agreements were $38.4 million in 1998, $40.9
million in 1997 and $44.1 million in 1996.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's 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 miscellaneous temporary differences, such as
reserves, acquisition costs and restructuring costs and of permanent
differences such as the equity tax, resulted in effective tax rates which
differ from the statutory tax rate.
The Company plans to file its 1998 federal income tax return on a
consolidated basis with its eligible life affiliates and non-life affiliates.
C.M. Life Insurance Company, which is not an eligible life affiliate, files a
separate return. The Company and its eligible life insurance 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 affiliates with losses shall be compensated for the
use of their losses and credits by other affiliates.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1995 for
Connecticut Mutual, and is currently examining Massachusetts Mutual for the
years 1993 and 1994. The Company believes adjustments which may result from
such examinations will not materially affect its financial position.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for
1998 or 1997. The Company records the estimated effects of anticipated
revisions in the Statutory Statement of Income.
Federal tax payments were $152.4 million in 1998, $353.4 million in 1997 and
$330.7 million in 1996.
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.
FF-12
<PAGE>
Notes To Statutory Financial Statements (Continued)
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 4,945.3 $ 473.0 $ 20.4 $ 5,397.9
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 41.2 1.5 1.3 41.4
foreign governments
Mortgage-backed securities 3,734.4 188.0 13.9 3,908.5
State and local governments 360.5 33.2 7.9 385.8
Corporate debt securities 14,133.3 845.3 118.4 14,860.2
Utilities 885.8 102.6 0.3 988.1
Affiliates 1,115.3 0.6 0.9 1,115.0
----------- ---------- -------- -----------
TOTAL $ 25,215.8 $ 1,644.2 $ 163.1 $ 26,696.9
=========== ========== ======== ===========
<CAPTION>
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
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 83.5 4.4 3.0 84.9
foreign governments
Mortgage-backed securities 3,008.7 187.9 9.0 3,187.6
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 $ 23,508.2 $ 1,554.8 $ 73.0 $ 24,990.0
=========== ========== ======== ===========
</TABLE>
FF-13
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1998 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 $ 556.5 $ 560.7
Due after one year through five years 4,150.6 4,270.5
Due after five years through ten years 8,622.8 9,045.0
Due after ten years 5,319.5 5,999.6
--------- ---------
18,649.4 19,875.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,566.4 6,821.1
--------- ---------
TOTAL $25,215.8 $26,696.9
========= =========
Proceeds from sales of investments in bonds were $11,663.4 million during
1998, $11,427.8 million during 1997 and $6,390.7 million during 1996. Gross
capital gains of $331.8 million in 1998, $200.7 million in 1997 and $188.8
million in 1996 and gross capital losses of $47.3 million in 1998, $68.8
million in 1997 and $255.5 million in 1996 were realized on those sales,
portions of which were included in the IMR. The estimated fair value of non-
publicly traded bonds is determined by the Company using a pricing matrix and
quoted market prices for publicly traded bonds.
B. Stocks
Common stocks, except for unconsolidated subsidiaries, had a cost of $238.4
million in 1998 and $250.3 million in 1997.
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, was $6,178.8 million and $5,039.1 million at December 31,
1998 and 1997, respectively.
The Company had restructured loans with book values of $126.6 million, and
$202.3 million at December 31, 1998 and 1997, respectively. These loans
typically have been modified to defer a portion of the contractual interest
payments to future periods. Interest deferred to future periods totaled $0.1
million in 1998, $5.1 million in 1997 and $2.2 million in 1996. At December
31, 1998, scheduled commercial mortgage loan maturities were as follows:
1999 - $341.0 million; 2000 - $333.0 million; 2001 - $305.2 million; 2002 -
$210.6 million; 2003 - $299.0 million; and $3,106.4 million thereafter.
D. Policy Loans
Policy loans are recorded at cost as it is not practicable to determine the
fair value since they do not have a stated maturity.
E. Other
Preferred stocks in good standing had fair values of $116.0 million in 1998
and $145.5 million in 1997, using a pricing matrix for non-publicly traded
stocks and quoted market prices for publicly traded stocks.
FF-14
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value of investments which were non-income producing for the
preceding twelve months was $13.2 million and $5.7 million at December 31,
1998 and 1997, respectively.
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 financial instruments, described below, which are not
recorded in the financial statements, unless otherwise noted, are based upon
market prices or prices obtained from brokers. The Company does not hold or
issue these financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the
parties and, thus, are not a measure of the exposure of the Company. The
amounts exchanged are calculated on the basis of the notional amounts and the
other terms of the instruments, which relate to interest rates, exchange
rates, security prices or financial or other indexes.
The Company 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. Gains and losses realized on the termination of contracts
are deferred and amortized through the IMR over the remaining life of the
associated contract. IMR amortization is included in net investment income on
the Statutory Statement of Income. Net amounts receivable and payable are
accrued as adjustments to investment income and included in other assets on
the Statutory Statement of Financial Position. At December 31, 1998 and 1997,
the Company had swaps with notional amounts of $4,382.0 million and $3,220.2
million, respectively. The fair values of these instruments were $84.1
million at December 31, 1998 and $20.9 million at December 31, 1997.
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 amortized into investment income over the life
of the contract on a straight-line basis. Unamortized costs 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 deferred and amortized through the IMR over the remaining life of the
option contract. At December 31, 1998 and 1997, the Company had option
contracts with notional amounts of $12,704.4 million and $5,388.2 million,
respectively. The Company's credit risk exposure was limited to the
unamortized costs of $92.5 million and $59.0 million, which had fair values
of $161.9 million and $99.6 million at December 31, 1998 and 1997,
respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a stated 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 stated 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
investment 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 investment income and included in the Statutory Statement
of Financial Position as other assets. Gains and losses on these contracts,
including any unamortized cost, are recognized upon termination and are
deferred and amortized through the IMR over the remaining life of the
associated cap or floor agreement. At December 31, 1998 and 1997, the company
had agreements with notional amounts of $4,337.9 million and $3,348.6
million, respectively. The Company's credit risk exposure on these agreements
is limited to the unamortized costs of $22.7 million and $18.2 million at
December 31, 1998 and 1997, respectively. The fair values of these
instruments were $43.9 million and $23.4 million at December 31, 1998 and
1997, respectively.
FF-15
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company enters into forward U.S. Treasury, and Government National
Mortgage Association ("GNMA") and Federal National Home Mortgage Association
("FNMA") 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 IMR over the remaining life of the asset. At December
31, 1998 and 1997, the Company had U. S. Treasury, GNMA and FNMA purchase
commitments which will settle during the following year with contractual
amounts of $603.4 million and $1,100.7 million, respectively. The fair values
of these commitments were $604.1 million and $1,117.6 million, including net
unrealized gains of $0.7 million and $16.9 million at December 31, 1998 and
1997, respectively.
The Company utilizes other agreements to reduce exposures to various risks.
Notional amounts relating to these agreements totaled $384.2 million and
$385.6 million at December 31, 1998 and 1997, respectively. The fair values
of these instruments resulted in an unrealized gain of $7.2 million at
December 31, 1998 and an unrealized loss of $6.8 million at December 31,
1997.
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 $272.5 million and $146.7 million at
December 31, 1998 and 1997, respectively. The Company monitors exposure to
ensure counterparties are credit worthy and concentration of exposure is
minimized. Additionally, collateral positions have been obtained with
counterparties when considered prudent.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
MassMutual has two primary insurance subsidiaries, C.M. Life, which primarily
writes variable annuities and universal life insurance, and MML Bay State,
which primarily writes variable life and annuity business. MassMutual's
wholly-owned non-insurance subsidiary MassMutual Holding Company, Inc.
("MMHC") owns subsidiaries which include retail and institutional asset
management, registered broker dealer and international life and annuity
operations.
MassMutual accounts for the value of its investments in subsidiaries at their
underlying net equity. Operating results for such subsidiaries are reflected
as net unrealized capital gains in the Statement of Changes in Policyholders'
Contingency Reserves. Net investment income is recorded by MassMutual to the
extent that dividends are declared by the subsidiaries. The Company holds
debt issued by MMHC and its subsidiaries of $1,111.3 million and $792.4
million at December 31, 1998 and 1997, respectively.
Below is summarized financial information for the unconsolidated subsidiaries
as of December 31 and for the year then ended:
1998 1997
-------- --------
(In Millions)
Domestic Life Insurance Subsidiaries:
Total revenue $ 1,151.4 $ 1,086.9
Net income (loss) $ (3.2) $ 1.1
Assets $ 4,741.4 $ 3,766.8
Other Subsidiaries:
Total revenue $ 1,137.4 $ 967.2
Net income $ 73.6 $ 75.4
Assets $ 2,839.5 $ 2,018.8
FF-16
<PAGE>
Notes To Statutory Financial Statements (Continued)
9. REINSURANCE
The Company has reinsurance agreements with other insurance companies in the
normal course of business. In addition, the Company cedes the remainder of
its group life and health business to UniCARE. 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. Total premiums ceded were $183.9 million in 1998, $294.6 million
in 1997 and $793.5 million in 1996.
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.
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. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1998 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
-----------------------------------------------------------
CM Assurance Company
CM Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
MassMutual Mortgage Finance, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps & Co., Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MML Investor Services, Inc.
FF-17
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Capital Corporation - 99.4%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 85.8%
Oppenheimer Acquisition Corporation - 89.36%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
HYP Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
MassMutual Benefits Management, Inc.
Subsidiaries of MassMutual International, Inc.
----------------------------------------------
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 (Luxembourg) S.A.
MassMutual Holding MSC, Inc.
----------------------------
MassMutual Corporate Value Limited - 40.93%
9048 - 5434 Quebec, Inc.
1279342 Ontario Limited
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
FF-18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission (the "Commission") such supplementary and
periodic information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Article V of the Bylaws of MassMutual provide for indemnification of directors
and officers as follows:
Article V. Subject to limitations of law, the Company shall indemnify:
(a) each director, officer or employee;
(b) any individual who serves at the request of the Company as
Secretary, a director, board member, committee member, officer
or employee of any organization or any separate investment
account; or
(c) any individual who serves in any capacity with respect to any
employee benefit plan; from and against all loss, liability and
expense imposed upon or incurred by such person in connection
with any action, claim or proceeding of any nature whatsoever,
in which such person may be involved or with which he or she may
be threatened, by reason of any alleged act, omission or
otherwise while serving in any such capacity.
Indemnification shall be provided although the person no longer serves
in such capacity and shall include protection for the person's heirs
and legal representatives. Indemnities hereunder shall include, but not
be limited to, all costs and reasonable counsel fees, fines, penalties,
judgments or awards of any kind, and the amount of reasonable
settlements, whether or not payable to the Company or to any of the
other entities described in the preceding paragraph, or to the
policyholders or security holders thereof.
Notwithstanding the foregoing, no indemnification shall be
provided with respect to:
(1) any matter as to which the person shall have been
adjudicated in any proceeding not to have acted in
good faith in the reasonable belief that his or her
action was in the best interests of the Company or,
to the extent that such matter relates to service
with respect to any employee benefit plan, in the
best interests of the participants or beneficiaries
of such employee benefit plan;
(2) any liability to any entity which is registered as
an investment company under the Federal Investment
Company Act of 1940 or to the security holders
thereof, where the basis for such liability is
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of office; and
(3) any action, claim or proceeding voluntarily
initiated by any person seeking indemnification,
unless such action, claim or proceeding had been
authorized by the Board of Directors or unless such
person's indemnification is awarded by vote of the
Board of Directors.
<PAGE>
In any matter disposed of by settlement or in the
event of an adjudication which in the opinion of
the General Counsel or his delegate does not make a
sufficient determination of conduct which could
preclude or permit indemnification in accordance
with the preceding paragraphs (1), (2) and (3), the
person shall be entitled to indemnification unless,
as determined by the majority of the disinterested
directors or in the opinion of counsel (who may be
an officer of the Company or outside counsel
employed by the Company), such person's conduct was
such as precludes indemnification under any of such
paragraphs.
The Company may at its option indemnify for
expenses incurred in connection with any action or
proceeding in advance of its final disposition,
upon receipt of a satisfactory undertaking for
repayment if it be subsequently determined that the
person thus indemnified is not entitled to
indemnification under this Article V.
Insofar as indemnification for liability arising
under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the registrant of expenses
incurred or paid by a director, officer or
controlling person of the registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
REPRESENTATION UNDER SECTION 26(e)(2)(A) OF
THE INVESTMENT COMPANY ACT OF 1940
Massachusetts Mutual Life Insurance Company hereby represents that the fees and
charges deducted under the flexible premium variable universal life insurance
policies described in this Registration Statement in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Massachusetts Mutual Life Insurance Company.
<PAGE>
CONTENTS OF FILING
This Registration Statement is comprised of the following documents:
The Facing Sheet.
Cross-Reference to items required by Form N-8B-2.
The Prospectus consisting of 79 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. PricewaterhouseCoopers, LLP, independent accountant;
2. Counsel opining as to the legality of securities being
registered;
3. Opinion and consent of Craig Waddington, FSA, MAAA,
opining as to actuarial matters contained in the
Registration Statement.
The following Exhibits:
99.A. The following Exhibits correspond to those required by
Paragraph A of the instructions as to Exhibits in Form
N-8B-2:
1. a. Resolution of Board of Directors of MassMutual
establishing the Separate Account./1/
b. Resolution of the Board of Directors establishing
the SVUL segment of the Separate Account./2/
2. Not Applicable.
3. Form of Distribution Agreements:
a. Form of Distribution Servicing Agreement between
MML Distributors, LLC and MassMutual./3/
b. Form of Co-Underwriting Agreement between MML
Investors Services, Inc. and MassMutual./3/
4. Not Applicable.
5. Form of Survivorship Flexible Premium Adjustable Variable
Life Policy./2/
<PAGE>
6. a. Certificate of Incorporation of MassMutual./1/
b. By-Laws of MassMutual./1/
7. Not Applicable.
8. Form of Participation Agreement.
a. Oppenheimer Variable Account Fund/1/
b. Variable Insurance Products Fund II/4/
c. T. Rowe Price Equity Series, Inc./5/
d. American Century Variable Portfolios, Inc./4/
9. Not Applicable.
10. Form of Application for a Survivorship Flexible Premium
Adjustable Variable Life insurance policy./6/
11. Memorandum describing MassMutual issuance, transfer, and
redemption procedures for the Policy./6/
99.B. Opinion and Consent of Counsel as to the legality of the
securities being registered./2/
99.C. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
99.D. Not Applicable.
99.E. Consent of PricewaterhouseCoopers, LLP.
99.F. Opinion and consent of Craig Waddington, FSA, MAAA, as to
actuarial matters pertaining to the securities being
registered./2/
99.G. a. Powers of Attorney/7/
b. Power of Attorney - Roger G. Ackerman/8/
c. Powers of Attorney - Robert J. O'Connell and
Thomas B. Wheeler/9/
27 Not Applicable
- ----------
/1/ Incorporated by reference to Initial Registration Statement of the Separate
Account filed with the Commission as an exhibit on February 28, 1997.
(Registration No. 333-22557)
/2/ Incorporated by reference to this Initial Registration Statement as an
exhibit filed with the Commission on December 5, 1997.
/3/ Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement No. 33-89798 as an exhibit filed with the Commission on May 1,
1997.
/4/ Incorporated by reference to the Pre-Effective Amendment No. 2 to
Registration Statement No. 333-41657 filed with the Commission as an
exhibit on May 26, 1998.
/5 Incorporated by reference to the Initial Registration Statement No.
333-65887 filed with the Commission as an exhibit on October 20, 1998.
/6/ Incorporated by reference to the Pre-Effective Amendment No. 1 to
Registration Statement No. 333-41667 filed with the Commission as an
exhibit on March 18, 1998.
/7/ Incorporated by reference to Registration Statement No. 333-22557 filed
with the Commission as an exhibit on February 28, 1997.
/8/ Incorporated by reference to the Pre-Effective Amendment No. 1 to
Registration Statement No. 333-45039 on Form N-4 filed with the Commission
as an exhibit on June 4, 1998.
/9/ Incorporated by reference to the Pre-Effective Amendment No. 1 to
Registration Statement No. 333-65887 filed with the Commission on Form S-6
as an exhibit on January 28, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No. 1
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No. 1 to Registration Statement No. 333-41657 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 22nd day of
April, 1999.
MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Robert J. O'Connell*
Robert J. O'Connell, President and Chief Executive Officer
Massachusetts Mutual Life Insurance Company
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
*Richard M. Howe powers of attorney.
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 1 to Registration Statement No. 333-41657 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. O'Connell* President and Chief Executive Officer April 22, 1999
- ------------------------
Robert J. O'Connell
/s/ Joseph M. Zubretsky* Executive Vice President, April 22, 1999
- ------------------------ Chief Financial Officer &
Joseph M. Zubretsky Chief Accounting Officer
/s/ Roger G. Ackerman* Director April 22, 1999
- ----------------------
Roger G. Ackerman
/s/ James R. Birle* Director April 22, 1999
- -------------------
James R. Birle
/s/ Gene Chao* Director April 22, 1999
- --------------
Gene Chao, Ph.D.
/s/ Patricia Diaz Dennis* Director April 22, 1999
- ------------------------
Patricia Diaz Dennis
s/ Anthony Downs* Director April 22, 1999
Anthony Downs
/s/ James L. Dunlap* Director April 22, 1999
- --------------------
James L. Dunlap
/s/ William B. Ellis* Director April 22, 1999
- ---------------------
William B. Ellis, Ph.D.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Robert M. Furek* Director April 22, 1999
- --------------------
Robert M. Furek
/s/ Charles K. Gifford* Director April 22, 1999
- -----------------------
Charles K. Gifford
/s/ William N. Griggs* Director April 22, 1999
- ----------------------
William N. Griggs
/s/ George B. Harvey* Director April 22, 1999
- ---------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director April 22, 1999
- ---------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director April 22, 1999
- ---------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director April 22, 1999
- -------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director April 22, 1999
- --------------------
John F. Maypole
/s/ Thomas B. Wheeler* Director April 22, 1999
- ----------------------
Thomas B. Wheeler
/s/ Alfred M. Zeien* Director April 22, 1999
- --------------------
Alfred M. Zeien
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact
- ------------------- pursuant to powers of attorney
*Richard M. Howe
</TABLE>
<PAGE>
EXHIBIT LIST
99.B. Opinion and Consent of Richard M. Howe, Esq.
99.E. Consent of PricewaterhouseCoopers, LLP
99.F. Opinion and Consent of Craig Waddington, FSA, MAAA
<PAGE>
EXHIBIT 99.B.
(MASSMUTUAL LETTERHEAD)
April 23, 1999
Massachusetts Mutual Life Insurance Company
140 Garden Street
Hartford, CT 06154
RE: Re: Post-Effective Amendment No. 1 to Registration Statement
--------------------------------------------------------
333-41657 filed on Form S-6
---------
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 1 to Registration Statement 333-41657 under the Securities Act of
1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Survivorship Flexible Premium Adjustable Variable Life Insurance Policies (the
"Policies"). Massachusetts Mutual Variable Life Separate Account I issues the
Policies.
As 2nd Vice President & Associate General Counsel for MassMutual, I provide
legal advice to Massachusetts Mutual in connection with the operation of its
variable products. In such role I am familiar with the filing for the Policies.
In so acting, I have made such examination of the law and examined such records
and documents as in my judgment are necessary or appropriate to enable me to
render the opinion expressed below. I am of the following opinion:
1. Massachusetts Mutual is a valid and subsisting corporation, organized and
operated under the laws of the state of Massachusetts and is subject to
regulation by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Life Separate Account I is a separate
account validly established and maintained by MassMutual in accordance
with Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the
Policies have been followed, and all applicable state laws have been
complied with.
I hereby consent to the use of this opinion as an exhibit to this filing.
Very truly yours,
/s/ Richard M. Howe
- -------------------
Richard M. Howe
2nd Vice President & Associate General Counsel
<PAGE>
EXHIBIT 99.E.
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 1 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Survivorship Variable Universal Life segment) on Form S-6 (Registration No.
333-41657), of our report dated February 25, 1999, on our audits of
Massachusetts Mutual Variable Life Separate Account I (Survivorship Variable
Universal Life segment), and of our report dated February 25, 1999, 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."
PricewaterhouseCoopers LLP
Springfield, Massachusetts
April 27, 1999
<PAGE>
EXHIBIT 99.F.
(MASSMUTUAL LETTERHEAD)
April 23, 1999
Massachusetts Mutual Life Insurance Company
140 Garden Street
Hartford, CT 06154
Re: Post-Effective Amendment No. 1 to Registration Statement 333-41657
------------------------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 1 to
Registration Statement 333-41657 for Massachusetts Mutual Life Insurance
Company's Survivorship Flexible Premium Adjustable Variable Life Insurance
Policies (the "Policies") under the Securities Act of 1933. The prospectus
included in the filing 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 D 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. 1 to Registration Statement 333-41657 and to the reference of my
name under the heading "Experts" in the prospectus.
Sincerely,
/s/ Craig Waddington
- --------------------
Craig Waddington, FSA, MAAA
Vice President and Actuary
