<PAGE>
Registration No. 333-22557
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NUMBER 2 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A. Exact name of Trust: Massachusetts Mutual
Variable Life Separate
Account I
B. Name of Depositor: Massachusetts Mutual Life
Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
It is proposed that this filing will become effective (check appropriate
box)
_________ immediately upon filing pursuant to paragraph (b) of Rule 485.
____X____ on May 1, 1999 pursuant to paragraph (b) of Rule 485.
_________ 60 days after filing pursuant to paragraph (a) of Rule 485
_________ on May 1, 1999 pursuant to paragraph (a) of Rule 485.
_________ this post effective amendment designates a new effective date for a
previously filed post effective amendment.
*STATEMENT PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
registered an indefinite amount of securities being offered. The Rule 24f-2
Notice for the fiscal year ending December 31, 1998 was filed on or about March
22, 1999.
1
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
Item No. of
Form N-8B-2 Caption
- ----------- -------
<S> <C>
1 Cover Page; Glossary; The Separate Account
2 Cover Page; The Separate Account
3 Investments of the Separate Account
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Cover Page; Premiums; Death Benefit Under the Policy; Free
Look Provision; Account Value; Policy Loan Privilege; The
Separate Account; Charges Under the Policy; Sales and Other
Agreements; When We Pay Proceeds; Payment Options; Our
Rights; Your Voting Rights;
11 The Separate Account
12 The Separate Account; Sales and Other Agreements
13 The Separate Account; Charges Under the Policy
14 Premiums; The Separate Account; Sales and Other Agreements
</TABLE>
2
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
Item No. of
Form N-8B-2 Caption
- ----------- -------
<S> <C>
15 Premiums;
16 Account Value;
17 The Separate Account; Account Value and Payment Options
18 The Separate Account
19 Records and Reports
20 Not Applicable
21 Policy Loan Privilege
22 Not Applicable
23 Bonding Arrangement
24 Limits on Our Right to Challenge the Policy; Suicide;
Misstatement of Age or Sex; Assignment; Beneficiary; Our
Rights; The Separate Account; Optional Benefits Obtainable
by Rider
25 Cover Page
26 Not Applicable
27 Cover Page
28 Directors and Executive Officers of MassMutual
29 Cover Page
30 Not Applicable
</TABLE>
3
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
Item No. of
Form N-8B-2 Caption
- ----------- -------
<S> <C>
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Cover Page
36 Not Applicable
37 Not Applicable
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Sales and Other Agreements
44 The Separate Account; Investment Return; Charges for Federal
Income Tax; Charges Under The Policy
45 Not Applicable
46 The Separate Account; Investment Return
47 The Separate Account
48 The Separate Account; Investment Return
49 Not Applicable
</TABLE>
4
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
Item No. of
Form N-8B-2 Caption
- ----------- -------
<S> <C>
50 The Separate Account
51 Cover Page; Availability; Underwriting; Free Look Provision;
Beneficiary; Reinstatement; Premiums
52 The Separate Account; Your Voting Rights; Our Rights
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
</TABLE>
5
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
Variable Rider to Group Flexible Premium Adjustable Life Insurance Certificate
This prospectus describes a variable rider issued in connection with
certificates issued to individuals participating under a group flexible premium
adjustable life insurance policy offered by Massachusetts Mutual Life Insurance
Company ("MassMutual"). The group policy allows individual owners to elect
certificates offering participation in MassMutual's fixed account and to elect a
rider to the certificate offering additional participation in a separate account
of MassMutual. We refer to the certificates we issue to individuals who elect
the variable rider as "policy" or "policies." The policy provides lifetime
insurance protection for as long as it remains in force.
You, the policyowner, may allocate the net premium for Your policy among several
investment options. Subject to state availability, these investment options
include a Guaranteed Principal Account ("GPA") and twenty-six Separate Account
Divisions of a segment of Massachusetts Mutual Variable Life Separate Account I.
Each of the Separate Account Divisions invests in a corresponding Fund. The
Separate Account Divisions invest in the following Funds:
<TABLE>
<S> <C>
MML Series Investment Fund Oppenheimer Variable Account Funds
MML Small Cap Value Equity Fund Oppenheimer Global Securities Fund/VA
MML Equity Fund Oppenheimer Small Cap Growth Fund/VA
MML Equity Index Fund Oppenheimer Aggressive Growth Fund/VA
MML Managed Bond Fund Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Main Street Growth & Income
Fund/VA
Panorama Series Fund, Inc. Oppenheimer Multiple Strategies Fund/VA
Panorama International Equity Portfolio Oppenheimer High Income Fund/VA
Panorama Growth Portfolio Oppenheimer Strategic Bond Fund/VA
Panorama Total Return Portfolio Oppenheimer Bond Fund/VA
Panorama LifeSpan Capital Appreciation Portfolio Oppenheimer Money Fund/VA
Panorama LifeSpan Balanced Portfolio
Panorama LifeSpan Diversified Income Portfolio
MFS(R) Variable Insurance TrustSM T. Rowe Price Equity Series, Inc.
MFS(R) New Discovery Series T. Rowe Price New America Growth Portfolio
MFS(R) Emerging Growth Series T. Rowe Price Mid-Cap Growth Portfolio
MFS(R) Research Series
Fidelity Variable Insurance Products Fund II
Contrafund Portfolio
</TABLE>
The policy is "flexible" because You may select the timing and amount of premium
payments. The policy is "adjustable" because You may choose to increase or
decrease the death benefit and change the death benefit option under the policy.
The policy is "variable" because the death benefit may, and cash surrender value
will, vary.
MassMutual is a mutual life insurance company established in 1851 under the laws
of Massachusetts. We are licensed to transact life, accident and health
insurance 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. The mailing address
for the Home Office is Massachusetts Mutual Life Insurance Company, Springfield,
Massachusetts 01111-0001. The telephone number is (413) 788-8411.
May 1, 1999
<PAGE>
The Securities and Exchange Commission has not approved or disapproved these
securities, or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus is not an offer to sell nor is it seeking an offer to buy these
securities in any state where the offer or sale is not permitted. This
prospectus is valid only when accompanied by the prospectuses of the Funds.
You should read and retain this prospectus.
Replacing existing insurance with the policy described in this prospectus may
not be to your advantage.
The policy is not available in all jurisdictions. This prospectus is not an
offering in any jurisdiction where the policy is not available. MassMutual has
not authorized any person to make any representations about the policy other
than those contained in this prospectus.
2
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents Page
----
<S> <C>
PART I -- General Provisions of the Policy ................................ 5
Availability ............................................................ 5
Underwriting ............................................................ 5
Charges Under the Policy ................................................ 5
Deductions from Premiums .............................................. 6
Sales Load .......................................................... 6
State Premium Tax Charge ............................................ 6
Deferred Acquisition Cost ("DAC") Tax Charge ........................ 6
Account Value Charges ................................................. 6
Administrative Charge ............................................... 7
Cost of Insurance Charge ............................................ 7
Rider Charge ........................................................ 7
Separate Account Charges .............................................. 7
Mortality and Expense Risk Charge ................................... 7
Charges for Federal Income Taxes .................................... 7
Fund Charges .......................................................... 7
Other Charges ......................................................... 8
Withdrawal Charges .................................................. 8
Loan Interest Rate Expense Charge ................................... 8
The Separate Account .................................................... 8
Investments of the Separate Account ................................... 8
MML Series Investment Fund .......................................... 9
Oppenheimer Variable Account Funds .................................. 10
Panorama Series Fund, Inc. .......................................... 11
MFS(R) Variable Insurance TrustSM ................................... 12
T. Rowe Price Equity Series, Inc. ................................... 13
Fidelity Variable Insurance Products Fund II ........................ 13
Fund Monitoring ..................................................... 13
The Guaranteed Principal Account ........................................ 14
Premiums ................................................................ 14
Minimum Initial Premium ............................................... 14
Modal Term Premium .................................................... 14
Minimum and Maximum Premium Payments .................................. 15
Net Premium Allocation ................................................ 15
Termination ............................................................. 15
Grace Period .......................................................... 15
Death Benefit Under the Policy .......................................... 15
Minimum Face Amount ................................................... 15
Death Benefit Options ................................................. 15
Changes in Selected Face Amount ....................................... 16
Account Value ........................................................... 16
Investment Return ..................................................... 17
Cash Surrender Value .................................................. 17
Transfers ............................................................. 17
Automated Account Value Transfer .................................... 18
Automated Account Re-Balancing ...................................... 18
Withdrawals ........................................................... 18
Policy Loan Privilege ................................................... 19
Source of Loan ........................................................ 19
If Loans Exceed the Policy Account Value .............................. 19
Interest .............................................................. 19
Repayment ............................................................. 20
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Interest Credited on Loaned Value ..................................... 20
Effect of Loan ........................................................ 20
PART II -- Additional Provisions of the Policy ............................ 20
Paid-up Policy Date ..................................................... 20
Reinstatement ........................................................... 20
Payment Options ......................................................... 20
Fixed Amount Payment Option ........................................... 20
Fixed Time Payment Option ............................................. 21
Lifetime Payment Option ............................................... 21
Interest Payment Option ............................................... 21
Joint Lifetime Payment Option ......................................... 21
Joint Lifetime Payment Option with Reduced Payments ................... 21
Withdrawal Rights under Payment Options ............................... 21
Beneficiary ............................................................. 21
Changing the Policyowner or Beneficiary ................................. 21
Assignment .............................................................. 21
Dividends ............................................................... 21
Limits on Our Right to Challenge the Policy ............................. 22
Misstatement of Age ..................................................... 22
Suicide Exclusion ....................................................... 22
When We Pay Proceeds .................................................... 22
Free Look Provision ..................................................... 22
Additional Benefits By Rider ............................................ 23
Accelerated Benefits Rider ............................................ 23
Accidental Death and Dismemberment Rider .............................. 23
Waiver of Monthly Charges Rider ....................................... 23
PART III -- Other Important Information ................................... 23
Federal Income Tax Considerations ....................................... 23
Your Voting Rights ...................................................... 25
Our Rights .............................................................. 25
Records and Reports ..................................................... 26
Sales and Other Agreements .............................................. 26
Commissions ............................................................. 27
Bonding Arrangement ..................................................... 27
Legal Proceedings ....................................................... 27
Experts ................................................................. 27
Financial Statements .................................................... 27
Appendix A -- Glossary .................................................... A-1
Appendix B -- Rates of Return ............................................. B-1
Appendix C -- Hypothetical Illustrations .................................. C-1
Appendix D -- Directors of Massachusetts Mutual Life Insurance Company .... D-1
Appendix E -- Modal Term Calculation ...................................... E-1
Appendix F -- Financial Statements ........................................ F-1
</TABLE>
4
<PAGE>
Part I - General Provisions
Of the Policy
This section of the prospectus describes the general provisions of the policy
and is subject to the terms of the policy. You may review a copy of the policy
upon request.
In the event of a conflict between the terms within this prospectus and the
terms of the policy, the policy terms will control.
Certain provisions of the policy as described in this prospectus may differ in a
particular state because of specific state requirements.
We refer to the certificates we issue to individuals who elect the variable
rider as policy or policies.
We define the following terms in Appendix A:
Application, Case, Employee, Employer, Enrollment Form, Group Contract,
Insured, Issue Date, Modal Term, Monthly Calculation Date, Monthly
Deduction, Net Premium, Participation Agreement, Policy Anniversary, Policy
Date, Policy Year, Policyowner, Valuation Date, Valuation Period and
Valuation Time.
Throughout the prospectus, MassMutual is referred to as We, Us or Our, and the
policyowner is referred to as You or Your.
Availability.
Only certificate owners may elect the variable rider. The certificates are only
available to individuals who are members of a group acceptable to MassMutual
where the group sponsor such as an employer, association, sponsoring
organization or trust executes a participation agreement requesting
participation in a group contract We issue. We aggregate each individual in a
group for purposes of determining:
o issue dates;
o policy dates;
o underwriting classification; and
o sales load percentages.
The group contract and the participation agreement specify the rights and
privileges of the employer. The policy is evidence of coverage under the group
contract and You may exercise all rights and privileges under the policy through
the employer. After termination of the employment or other relationship, You may
exercise all rights and privileges directly with Us.
In certain states, the policy is not available as a variable rider to a group
flexible premium adjustable life insurance certificate. In these states, the
policy is only available as a group flexible premium variable adjustable life
insurance certificate issued under a group flexible premium variable adjustable
life insurance policy. The policy will still provide You the opportunity to
allocate account value to the separate account and in all material respects is
identical to the variable rider to a group flexible premium adjustable life
insurance certificate.
In connection with the offering and sale of the policy, We reserve the right to
reject any purchase application.
Underwriting.
We do not require underwriting prior to the issuance of the variable rider.
However, before We issue any certificate, We require satisfactory evidence of
insurability. We do not require evidence of insurability under our guaranteed
issue underwriting program.
Charges Under The Policy.
We deduct certain charges for providing the insurance benefits under Your
policy, for administering Your policy, for assuming certain risks and for
incurring certain expenses in distributing Your policy. A summary of these
charges is as follows, and a more detailed description follows this chart:
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Charges Current Rate Guaranteed Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deductions Sales Load 0.75% of each premium 5% of each premium
from Premium Charge
State Premium 2.0% to 4.0% of each premium, depending This charge will always equal the
Tax Charge on Your state's applicable rate applicable state rate
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred 0.25% of each premium This charge will always represent the
Acquisition Cost expense to MassMutual of the deferred
Tax Charge acquisition cost tax
- ------------------------------------------------------------------------------------------------------------------------------------
Account Value Administrative $5.25 per month ($63.00 annually) $9.00 per month ($108.00 annually)
Charges Charge
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of A per thousand rate multiplied by the The maximum monthly cost of insurance
Insurance amount at risk each month. This charge charge for each $1,000 of insurance is
Charge varies by the insured's age and group shown in the Table of Maximum Monthly
rating Mortality Charges in Your policy
- ------------------------------------------------------------------------------------------------------------------------------------
Separate Mortality and 0.75% annually of each Separate Account 1.0% annually of each Separate Account
Account Expense Risks Division's assets Division's assets
Charges Charge
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Charges SEE FUND CHARGE TABLE SEE FUND CHARGE TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
Other Charges Withdrawal 2.0% of the withdrawn amount, but not 2.0% of the withdrawn amount, but not
Charge greater than $25.00 greater than $25.00
- ------------------------------------------------------------------------------------------------------------------------------------
Loan Interest 0.75% 1.25%
Crediting Rate
Charge
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Deductions from Premiums.
Prior to applying Your premium to the GPA or the selected Separate Account
Divisions, We deduct a sales load, state premium tax and a deferred acquisition
cost tax charge from Your premium.
Sales Load.
We deduct a sales load from Your premium for the expenses related to the sales
load and distribution of the policies. The sales load varies for each employer
group depending on:
o group enrollment procedures selected by the employer;
o total group premium paid by the employer;
o the size of the employer group; and
o other factors
All policies within an employer group will have the same sales load expressed as
a percentage of premiums paid. The charge applies to premiums paid under the
policy by either You or Your employer. Once the charge is set, it will never
change for any of the policies issued to individuals under the same group.
The amount of the sales load in a policy year is not necessarily related to Our
actual sales expenses for that particular year. To the extent that Our sales
expenses are not covered by the sales load, they will be recovered from Our
surplus, including any amounts derived from the mortality and expense risk
charge or the cost of insurance charge.
State Premium Tax Charge.
States assess premium taxes at various rates. We currently deduct the applicable
state rate from each premium to cover premium taxes assessed against Us by the
states. The state rate will be either the Massachusetts rate or the applicable
state rate.
We may increase or decrease this charge if there is any change in the tax or
change of residence. You should notify Us of any residence change. Any change in
this charge will be effective immediately.
Deferred Acquisition Cost ("DAC") Tax Charge.
This charge is related to Our federal income tax burden, under Internal Revenue
Code Section 848.
Account Value Charges.
On each monthly calculation date, We deduct from Your account value the
following charges:
1. An administrative charge;
2. A cost of insurance charge; and
6
<PAGE>
3. Any rider charge (if applicable).
We deduct the monthly account value charges from the GPA on each monthly
calculation date. If the value in the GPA is less than the account value charge,
then We will deduct the deficiency from the Separate Account prorata according
to Your value in the Separate Account Divisions.
1. Administrative Charge.
We deduct a monthly charge for costs We incur for providing certain
administrative services. These services include premium billing and collection,
record keeping, processing claims, and communicating with policyowners.
2. Cost of Insurance Charge.
(We refer to this charge as the "Mortality Charge" in Your policy.) We deduct a
cost of insurance charge on each monthly calculation date. This charge is based
on the:
o Insured's age; and
o Group rating;
This charge may vary monthly because it is determined by multiplying the
applicable cost of insurance rates by the amount at risk each policy month. We
will apply any change in this charge to all policies in the same class.
3. Rider Charge.
We will deduct applicable monthly rider charges for any additional benefits We
provide to You by rider.
Separate Account Charges
Mortality and Expense Risk Charge.
(We refer to this charge as the "Net Investment Factor Asset Charge" in Your
policy.)
We charge the Separate Account Divisions for the mortality and expense risks We
assume. We deduct this charge from the value of each Division's assets
attributable to the policies.
The mortality risk We assume is that the group of lives insured under Our
policies may, on average, live for shorter periods of time than We estimated.
The expense risk We assume is that Our costs of issuing and administering
policies may be more than We estimated.
If all the money We collect from this charge is not needed to cover death
benefits and expenses, it will be Our gain. We will use this gain for any
purpose, including payment of sales commissions. If the money We collect is
insufficient, We will still provide for all death benefits and expenses.
Charges for Federal Income Taxes.
We do not currently charge the Separate Account Divisions for federal income
taxes attributable to them. However, We reserve the right to eventually charge
the Separate Account Divisions to provide for future federal income tax
liability of the Separate Account Divisions.
Fund Charges.
The value of the Separate Account Divisions' assets will reflect investment
management fees and other expenses of the Funds. The following table shows the
Funds' total fund operating expenses expressed as a percentage of average net
assets for the year ended December 31, 1998:
<TABLE>
<CAPTION>
Total
Other Fund
Expenses Expenses
After After
Expense Expense
Management Reimbur- Reimbur-
Fund / Portfolio Name Fees sements sements
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MML Small Cap Value Equity(1) 0.39% 0.05% 0.44%
MML Equity(1) 0.37% 0.00% 0.37%
MML Equity Index 0.30% 0.20% 0.50%
MML Managed Bond(1) 0.45% 0.03% 0.48%
Oppenheimer Global Securities 0.68% 0.06% 0.74%
Oppenheimer Small Cap Growth 0.75% 0.12% 0.87%
Oppenheimer Aggressive Growth 0.69% 0.02% 0.71%
Oppenheimer Capital Appreciation(2) 0.72% 0.03% 0.75%
Opp. Main Street Growth & Income(3) 0.74% 0.05% 0.79%
Oppenheimer Multiple Strategies 0.72% 0.04% 0.76%
Oppenheimer High Income 0.74% 0.04% 0.78%
Oppenheimer Strategic Bond 0.74% 0.06% 0.80%
Oppenheimer Bond 0.72% 0.02% 0.74%
Oppenheimer Money 0.45% 0.05% 0.50%
Panorama International Equity 1.00% 0.09% 1.09%
Panorama Growth 0.52% 0.01% 0.53%
Panorama Total Return 0.53% 0.02% 0.55%
Panorama LifeSpan Capital Appreciation 0.85% 0.08% 0.93%
Panorama LifeSpan Balanced 0.85% 0.08% 0.93%
Panorama LifeSpan Diversified Income 0.75% 0.09% 0.84%
MFS(R) New Discovery(4) 0.90% 0.25% 1.15%
MFS(R) Emerging Growth 0.75% 0.10% 0.85%
MFS(R) Research 0.75% 0.11% 0.86%
T. Rowe Price New America Growth(6) 0.85% 0.00% 0.85%
T. Rowe Price Mid-Cap Growth(6) 0.85% 0.00% 0.85%
Fidelity VIP II Contrafund(5) 0.59% 0.21% 0.80%
</TABLE>
(1) MassMutual has agreed to bear the expenses of these Funds (other than the
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of 0.11% of the average daily net asset value of these Funds
through April 30, 2000. We do not expect that it will be required to reimburse
any expenses of the Funds due to this undertaking in 1999.
7
<PAGE>
(2) Prior to May 1, 1999, this Fund was called Oppenheimer Growth Fund.
(3) Prior to May, 1, 1999, this Fund was called Oppenheimer Growth & Income
Fund.
(4) The series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with its
custodian and dividend disbursing agent. The series may enter into other such
arrangements and directed brokerage arrangements, which would also have the
effect of reducing the series expenses. Expenses do not take into account these
expense reductions and are therefore higher than the actual expenses of the
series. MFS has agreed to bear expenses for the series, subject to reimbursement
by the series such that the series' "Other Expenses" shall not exceed 0.25% of
the average daily net assets of the series during the currant fiscal year. The
expenses shown includes this reimbursement. If not included, the Other Expenses
are estimated to be 5.22%. The payments made by MFS on behalf of the series
under this arrangement are subject to reimbursement by the series to MFS, which
will be accomplished by the payment of an expense reimbursement fee by the
series to MFS computed and paid monthly at a percentage of the series' average
daily net assets for its then current fiscal year, with a limitation that
immediately after such payment the series' "Other Expenses" will not exceed the
percentage set forth above for that series. The obligation of MFS to bear a
series' "Other Expenses" pursuant to this arrangement and the series' obligation
to pay the reimbursement fee to MFS, terminates on May 1, 2001.
(5) A portion of the brokerage commission that the Fidelity VIP II Contrafund
pays is used to reduce its expenses. Additionally, this Portfolio has entered
into arrangements with its custodian whereby credits realized as a result of
uninvested cash balances are used to reduce custodian expenses. Including these
reductions, the Total Fund Expenses for this Portfolio would have decreased to
0.75%.
(6) Management fees include operating expenses.
Other Charges.
Withdrawal Charges.
We deduct a charge from each withdrawal.
Loan Interest Rate Expense Charge.
We deduct a charge from the loan interest rate. This charge reimburses us for
expenses We incur for administering Your loan.
The Separate Account.
Our Board of Directors established the Separate Account on July 13, 1988 in
accordance with the provisions of Section 132G of Chapter 175 of the
Massachusetts General Laws. The Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Securities and Exchange Commission does not supervise MassMutual's or the
Separate Account's management or investment practices. Under Massachusetts law,
however, the Division of Insurance of the Commonwealth of Massachusetts
regulates both Us and the Separate Account.
We establish designated segments of the Separate Account to receive and invest
premiums for other MassMutual variable life insurance policies. We have
established a segment for the policies.
Although the Separate Account assets are assets of MassMutual, We cannot use
those Separate Account assets equal to the reserves and other liabilities of the
Separate Account attributable to the policies to satisfy any obligations that
may arise out of any other business We conduct. The Separate Account assets may,
however, be subject to liabilities arising from other variable life insurance
policies funded by the Separate Account. We may at Our discretion transfer those
assets which exceed the reserves and other liabilities of the Separate Account
to Our general account. Such transfers will not adversely affect the Separate
Account.
We credit or charge the Separate Account Divisions with the Divisions' income
and realized or unrealized gains or losses without regard to any of MassMutual's
other income, gains, or losses.
MassMutual may accumulate in the Separate Account the mortality and expense
risks charge, account value charges and investment results applicable to those
assets that are in excess of net assets supporting the policies.
MassMutual has the right to establish additional divisions of the Separate
Account. We will invest amounts credited to any additional divisions in shares
of other Funds. We have the right to substitute new Funds for any Separate
Account Divisions. If We do this, We will obtain prior approval from all of the
necessary regulatory authorities. We will also give You notice of Our intent to
do this.
Investments of the Separate Account.
We have established a segment within the Separate Account to receive and invest
premium payments for the policies. We have established twenty-six Divisions
within the policies' designated segment of the Separate Account. Each Separate
Account Division invests in a corresponding Fund as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Division Fund
- --------------------------------------------------------------------------------
<S> <C>
MML Small Cap Value MML Small Cap Value
Equity Division Equity Fund
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
MML Equity Division MML Equity Fund
- --------------------------------------------------------------------------------
MML Equity Index Division MML Equity Index Fund
- --------------------------------------------------------------------------------
MML Managed Bond MML Managed Bond Fund
Division
- --------------------------------------------------------------------------------
Oppenheimer Global Oppenheimer Global
Securities Division Securities Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Small Cap Oppenheimer Small Cap
Growth Division Growth Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Aggressive Oppenheimer Aggressive
Growth Division * Growth Fund/VA*
- --------------------------------------------------------------------------------
Oppenheimer Capital Oppenheimer Capital
Appreciation Division** Appreciation Fund/VA**
- --------------------------------------------------------------------------------
Oppenheimer Main Street Oppenheimer Main Street
Growth & Income Division*** Growth & Income
Fund/VA***
- --------------------------------------------------------------------------------
Oppenheimer Multiple Oppenheimer Multiple
Strategies Division Strategies Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer High Income Oppenheimer High Income
Division Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Strategic Bond Oppenheimer Strategic Bond
Division Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Bond Division Oppenheimer Bond
Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Money Oppenheimer Money
Division Fund/VA
- --------------------------------------------------------------------------------
Panorama International Panorama International
Equity Division Equity Portfolio
- --------------------------------------------------------------------------------
Panorama Growth Division Panorama Growth Portfolio
- --------------------------------------------------------------------------------
Panorama Total Return Panorama Total Return
Division Portfolio
- --------------------------------------------------------------------------------
Panorama LifeSpan Capital Panorama LifeSpan Capital
Appreciation Division Appreciation Portfolio
- --------------------------------------------------------------------------------
Panorama LifeSpan Balanced Panorama LifeSpan Balanced
Division Portfolio
- --------------------------------------------------------------------------------
Panorama LifeSpan Panorama LifeSpan
Diversified Income Division Diversified Income Portfolio
- --------------------------------------------------------------------------------
MFS(R) New Discovery MFS(R) New Discovery Series
Division
- --------------------------------------------------------------------------------
MFS(R) Emerging Growth MFS(R) Emerging Growth
Division Series
- --------------------------------------------------------------------------------
MFS(R) Research Division MFS(R) Research Series
- --------------------------------------------------------------------------------
T. Rowe Price New America T. Rowe Price New America
Growth Division Growth Portfolio
- --------------------------------------------------------------------------------
T. Rowe Price Mid-Cap T. Rowe Price Mid-Cap
Growth Division Growth Portfolio
- --------------------------------------------------------------------------------
Fidelity Investments VIP II Fidelity VIP II Contrafund
Contrafund Division Portfolio
- --------------------------------------------------------------------------------
</TABLE>
*Prior to May 1, 1999, the Oppenheimer Aggressive Growth Division was called the
Oppenheimer Capital Appreciation Division. Prior to May 1, 1998, the Oppenheimer
Aggressive Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
**Prior to May 1, 1999, the Oppenheimer Capital Appreciation Division was called
the Oppenheimer Growth Division and the Oppenheimer Capital Appreciation Fund/VA
was called the Oppenheimer Growth Fund.
***Prior to May 1, 1999, the Oppenheimer Main Street Growth & Income Division
was called the Oppenheimer Growth & Income Division and the Oppenheimer Main
Street Growth & Income Fund/VA was called the Oppenheimer Growth & Income Fund.
As custodian for the Separate Account, MassMutual holds the shares of the
underlying Funds purchased by the Separate Account Divisions. The Separate
Account purchases and redeems shares of the Funds at their net asset value. The
net asset value is determined at the time of receipt of the purchase order or
redemption request.
Some of the Funds available to You are similar to mutual funds offered in the
retail marketplace. These Funds generally have the same investment objectives,
policies and portfolio managers as the retail mutual funds and usually were
formed after the retail mutual funds. While these Funds generally have identical
investment objectives, policies and portfolio managers, they are separate and
distinct from the retail mutual funds. In fact, performance of these Funds may
be dramatically different from the performance of the retail mutual funds. This
is due to differences in the funds' sizes, dates shares of stocks are purchased
and sold, cash flows and expenses. You should remember that retail mutual fund
performance is not the performance of the Funds that are available to You in
this policy and is not an indication of future performance of such Funds.
There is no assurance that the Funds will achieve stated objectives. The Fund
prospectuses contain more detailed information about the Funds. Current copies
of the Fund prospectuses are attached to this prospectus. You should read the
information contained in the Funds' prospectuses before making allocations to
any Division of the Separate Account.
MML Series Investment Fund
The MML Series Investment Fund (the "MML Trust") is a no-load, open-end
investment company. The MML Small Cap Value Equity Fund, MML Equity Fund, MML
Equity Index Fund and MML Managed Bond Fund (collectively, the "MML Funds") are
separate series of shares of the MML Trust.
MassMutual acts as investment manager to each of the MML Funds. David L. Babson
and Company, Inc. ("Babson") serves as the investment sub-adviser to the MML
Equity Fund and the MML Small Cap Value Equity Fund. Babson is a wholly-owned
subsidiary of DLB Acquisition Corporation, a controlled subsidiary of
MassMutual.
9
<PAGE>
MassMutual has also entered into an agreement with Mellon Equity Associates LLP
("Mellon Equity") to serve as the investment sub-adviser to the MML Equity Index
Fund. MassMutual, Babson and Mellon Equity are registered as investment advisers
under the Investment Advisers Act of 1940.
MassMutual is also the investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors, closed-end investment companies, certain
wholly-owned subsidiaries of MassMutual, and various employee benefit plans.
MassMutual also serves as the investment adviser to MassMutual Corporate Value
Partners, Limited; MassMutual High Yield Partners, II, LLC; MassMutual/Darby CBO
LLC; Somers CDO, Limited; and MassMutual Institutional Funds.
Citibank N.A. acts as custodian for the MML Trust, other than the MML Equity
Index Fund. Its home office is located at 111 Wall Street, New York, NY, 10005.
Boston Safe Deposit and Trust Company serves as the custodian of the MML Equity
Index Fund. It is an indirect subsidiary of Mellon Bank Corporation and is
located at One Boston Place, Boston, Massachusetts 02108.
MML Small Cap Value Equity Fund
The MML Small Cap Value Equity Fund seeks growth of capital and income by
investing primarily in small company stocks.
MML Equity Fund
The 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.
MML Equity Index Fund
The MML Equity Index Fund seeks investment results that correspond to the price
and yield performance of the 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 or The McGraw-Hill Companies, Inc.
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.)
MML Managed Bond Fund
The MML Managed Bond Fund seeks a high rate of return consistent with capital
preservation by investing in investment grade, publicly traded, fixed income
securities.
Oppenheimer Variable Account Funds
The Oppenheimer Variable Account Funds (the "Oppenheimer Funds") is an
investment company consisting of ten separate funds. Oppenheimer Funds acts as
the investment vehicle for separate accounts for variable insurance policies
offered by insurance companies. Oppenheimer Global Securities Fund/VA,
Oppenheimer Small Cap Growth Fund/VA, Oppenheimer Aggressive Growth Fund/VA,
Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Main Street Growth &
Income Fund/VA, Oppenheimer Multiple Strategies Fund/VA, Oppenheimer High Income
Fund/VA, Oppenheimer Strategic Bond Fund/VA, Oppenheimer Bond Fund/VA and
Oppenheimer Money Fund/VA are part of the Oppenheimer Funds.
OppenheimerFunds, Inc. ("OFI") supervises the investment operations of the
Oppenheimer Funds. OFI also determines the composition of each respective
portfolio and advises and recommends investment policies and the purchase and
sale of securities, pursuant to an investment advisory agreement with each
Oppenheimer Fund.
OFI is located at Two World Trade Center, New York, NY 10048-0203 and has
operated as an investment adviser since April 30, 1959. Oppenheimer Acquisition
Corp., a holding company owned in part by senior management of OFI, and
ultimately controlled by MassMutual, owns OFI. OFI is registered as an
investment adviser under the Investment Advisers Act of 1940.
Bank of New York acts as custodian for the Oppenheimer Funds. Its home office is
located at One Wall Street, New York, NY 10015.
Oppenheimer Global Securities Fund/VA
The Oppenheimer Global Securities Fund/VA seeks long-term capital appreciation
through 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.
Oppenheimer Small Cap Growth Fund/VA
The Oppenheimer Small Cap Growth Fund/VA seeks capital appreciation. Current
income is not an objective. In seeking its objective, the Fund emphasizes
investments in securities of "growth-type" companies with market capitalization
less than $1 billion, including common stocks, preferred stocks,
10
<PAGE>
convertible securities, rights, warrants and options, in proportions which may
vary from time to time.
Oppenheimer Aggressive Growth Fund/VA*
The Oppenheimer Aggressive Growth Fund/VA seeks long-term capital appreciation
by investing in "growth-type" companies. *Prior to May 1, 1998, this Fund was
called Oppenheimer Capital Appreciation Fund.
Oppenheimer Capital Appreciation Fund/VA*
The Oppenheimer Capital Appreciation Fund/VA seeks capital appreciation by
investing in securities of well-known established long-term companies. It
invests mainly in equity securities. *Prior to May 1, 1999, this Fund was called
Oppenheimer Growth Fund.
Oppenheimer Main Street Growth & Income Fund/VA*
The Oppenheimer Main Street Growth & Income Fund/VA seeks total return (which
includes growth in the value of its shares as well as current income) from
equity and debt securities. *Prior to May 1, 1999, this Fund was called
Oppenheimer Growth & Income Fund.
Oppenheimer Multiple Strategies Fund/VA
The Oppenheimer Multiple Strategies Fund/VA seeks a total return (which includes
current income and capital appreciation in the value of its shares) from
investments in common stocks and other equity securities, bonds and other debt
securities, and money market securities.
Oppenheimer High Income Fund/VA
The Oppenheimer High Income Fund/VA seeks a high level of current income. The
Fund invests in unrated securities or high risk securities in the lower rating
categories, commonly known as "junk bonds," which are subject to a greater risk
of loss of principal and nonpayment of interest than higher-rated securities.
Oppenheimer Strategic Bond Fund/VA
The Oppenheimer Strategic Bond Fund/VA 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.
Oppenheimer Bond Fund/VA
The Oppenheimer Bond Fund/VA seeks a high level of current income. The Fund
seeks capital growth when consistent with its primary objective. The Fund will
under normal market conditions invest at least 65% of its total assets in
investment grade debt securities.
Oppenheimer Money Fund/VA
The Oppenheimer Money Fund/VA seeks maximum current income from investments in
money market securities that is consistent with low capital risk and maintenance
of liquidity. The Fund invests in short-term, high quality money market
securities.
Panorama Series Fund, Inc.
The Panorama Series Fund, Inc., ("Panorama Fund") is an open-end investment
company. The Panorama Fund acts as the investment vehicle for separate accounts
for variable insurance policies offered by insurance companies. The Panorama
International Equity Portfolio, Panorama Growth Portfolio, Panorama Total Return
Portfolio, Panorama LifeSpan Capital Appreciation Portfolio, Panorama LifeSpan
Balanced Portfolio and Panorama LifeSpan Diversified Income Portfolio are
separate series of the Panorama Fund.
OFI supervises the investment operations of the Panorama Fund. OFI also
determines the composition of each Panorama Portfolio, and advises and
recommends investment policies and purchase and sale of securities, under an
investment advisory agreement with each Panorama Portfolio.
OFI has engaged three sub-advisers: Babson-Stewart Ivory International
("Babson-Stewart"), Credit Suisse Asset Management ("Credit Suisse") and Pilgrim
Baxter & Associates ("Pilgrim Baxter") to provide day-to-day portfolio
management for certain components of the Panorama LifeSpan Portfolios. Prior to
January 12, 1999, Credit Suisse was known as BEA Associates.
Babson-Stewart located at One Memorial Drive, Cambridge, MA 02142, also serves
as the sub-advisor to the Panorama International Equity Portfolio.
Babson-Stewart was originally formed in 1987. Credit Suisse is located at One
Corporate Center, 153 East 53rd Street, 57th Floor, New York, NY 10022. Pilgrim
Baxter is located at 825 Duportail Road, Wayne, PA 19087.
Bank of New York acts as custodian for the Panorama Fund. Its home office is
located at One Wall Street, New York, NY 10015.
Panorama International Equity Portfolio
The Panorama International Equity Portfolio seeks long-term growth of capital by
investing primarily in equity
11
<PAGE>
securities of companies wherever located, the primary stock market of which is
outside the United States.
Panorama Growth Portfolio
The Panorama Growth Portfolio seeks long-term growth of capital by investing
primarily in common stocks with low price-earnings ratios and better than
anticipated earnings. Realization of current income is a secondary
consideration.
Panorama Total Return Portfolio
The Panorama Total Return Portfolio seeks to maximize total investment return
(including both capital appreciation and income) principally by allocating its
assets among stocks, corporate bonds, U.S. Government securities and money
market instruments according to changing market conditions.
Panorama LifeSpan Capital Appreciation Portfolio
The Panorama LifeSpan Capital Appreciation Portfolio seeks long-term capital
appreciation by investing in a strategically allocated portfolio consisting
primarily of stocks. Current income is not a primary consideration.
Panorama LifeSpan Balanced Portfolio
The Panorama LifeSpan Balanced Portfolio seeks a blend of capital appreciation
and income by investing in a strategically allocated portfolio of stocks and
bonds with a slightly stronger emphasis on stocks.
Panorama LifeSpan Diversified Income Portfolio
The Panorama LifeSpan Diversified Income Portfolio seeks high current income,
with opportunities for capital appreciation by investing in a strategically
allocated consisting primarily of bonds.
MFS(R) Variable Insurance TrustSM
The MFS(R) Variable Insurance TrustSM ("MFS Trust") is an open-end management
investment company, organized as a Massachusetts business trust in 1994. The
MFS(R) New Discovery Series, MFS(R) Emerging Growth Series and MFS(R) Research
Series (collectively referred to as "MFS Series") are each a separate series of
shares of the MFS Trust.
Massachusetts Financial Services Company ("MFS Co.") advises the MFS Series. MFS
Co. is a Delaware corporation and is located at 500 Bolyston Street, Boston, MA
02116.
State Street Bank and Trust Company is the custodian of the MFS Series. It is
located at 225 Franklin Street, Boston, MA 02110.
MFS(R) New Discovery Series
The MFS(R) New Discovery Series seeks capital appreciation by investing, under
normal market conditions, at least 65% of its total assets in companies that are
believed to offer superior prospects for growth. Such securities may either be
listed on the securities exchanges or traded in the over-the-counter markets and
may be U.S. or foreign companies.
MFS(R) Emerging Growth Series
The MFS(R) Emerging Growth Series seeks long-term growth of capital by investing
primarily in common stocks of companies which are early in their life cycle, but
which have the potential to become major enterprises (emerging growth
companies).
MFS(R) Research Series
The MFS(R) Research Series seeks long-term growth of capital and future income
by investing a substantial portion of its assets in equity securities of
companies believed to possess better than average prospects for long-term
growth. A smaller proportion of the Fund's assets may be invested in bonds,
short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth.
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Series, Inc. is a diversified, open-end investment company
incorporated in Maryland in 1994. The T. Rowe Price Mid-Cap Growth Portfolio and
T. Rowe Price New America Growth Portfolio are each a separate series of shares
of T. Rowe Price Equity Series, Inc.
T. Rowe Price Associates, Inc. ("T. Rowe Price") was founded in 1937 and is the
investment adviser to each of the Portfolios. Its business address is 100 East
Pratt Street, Baltimore, MD 21202.
State Street Bank and Trust Company and The Chase Manhattan Bank, N.A., London
are the custodians for the T. Rowe Price Mid-Cap Growth Portfolio and T. Rowe
Price New America Growth Portfolio. The custodians' main offices are located at
225 Franklin Street, Boston, MA 02110 and Woolgate House, Coleman Street,
London, EC2P 2HD, England, respectively.
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
12
<PAGE>
companies as those with market capitalizations within the range of companies in
the S&P 400 Mid-Cap Index.
T. Rowe Price New America Growth Portfolio
The T. Rowe Price New America Growth Portfolio seeks long-term growth of capital
by investing in the common stocks of U.S. growth companies operating in service
industries. Most of Portfolio assets are invested in service companies, we
believe are above-average performers in their fields. The Portfolio may also
invest up to 25% of total assets in nonservice-related growth companies.
Fidelity Variable Insurance Products Fund II
Fidelity Variable Insurance Products Fund II ("Fidelity VIP II") is an open-end
management investment company, organized as a Massachusetts business trust in
1988. The Fidelity Investments VIP II Contrafund Portfolio is a diversified fund
of Fidelity Investments VIP II.
Fidelity Management & Research Company ("FMR") is the investment adviser to the
Fidelity VIP II Contrafund Portfolio. FMR is the management arm of Fidelity
Investments. Fidelity Investment has its principal business address at 82
Devonshire Street, Boston, MA.
Fidelity Management & Research (U.K.) Inc. in London, England, and Fidelity
Management & Research (Far East) Inc., in Tokyo, Japan, assist FMR with foreign
investments. They each serve as sub-advisers for the Fidelity VIP II Contrafund
Portfolio. The custodian for the VIP II Contrafund Portfolio is Brown Brothers
Harriman & Co., located at 40 Water Street, Boston, MA.
Fidelity Investments VIP II Contrafund Portfolio
The Fidelity Investments VIP II Contrafund Portfolio seeks long-term capital
appreciation by investing in the securities of companies whose value is not
fully recognized by the public.
Fund Monitoring.
The MML Trust, Oppenheimer Funds, Panorama Fund, MFS Trust, T. Rowe Price Equity
Series, Inc. and Fidelity VIP II were established to provide investment vehicles
for variable life insurance contracts and variable annuities contracts. Shares
of the MML Trust and Panorama Fund are not offered to the general public. They
are offered solely to MassMutual separate investment accounts and other life
insurance company separate accounts of MassMutual subsidiaries. Shares of the
Oppenheimer Funds, MFS Trust, T. Rowe Price Equity Series, Inc. and Fidelity VIP
II are also not offered to the general public. They are offered to insurance
company separate accounts affiliated and unaffiliated with MassMutual which fund
variable annuity, variable life insurance contracts and qualified plans.
Shares of the Funds may be sold to and held by separate accounts which fund
variable annuity and variable life insurance contracts. As a result, certain
conflicts of interests between variable annuity owners, variable life insurance
policyowners and program investors may occur. Each Board of Trustees/Directors
will monitor their respective Fund(s) for any material irreconcilable conflict
of interest. Each will determine the appropriate action, if any, which should be
taken if a material irreconcilable conflict arises between the holders of
variable annuity contracts and variable life policies.
The Guaranteed Principal Account (GPA).
In addition to the Separate Account, You may allocate net premium or transfer
account value to the GPA. Amounts You allocate or transfer to the GPA become
part of MassMutual's general account assets. You do not share in the investment
experience of those assets. Rather, We guarantee a 3% rate of return on Your
allocated amount. For amounts transferred to the GPA due to a policy loan, the
guaranteed rate is the greater of: (a) 3%; and (b) the policy loan rate less a
charge we declare. This charge is currently 0.75% and will not exceed 1.25%.
Although We are not obligated to credit interest at a rate higher than this
minimum, We will credit and guarantee a secondary interest rate, which may be
higher but will never be lower than the minimum, for the calendar year 1999. We
may also pay a rate of interest in excess of that secondary guarantee for such
periods. At Your request, We will inform you of the then applicable rate or
rates.
Because of exemptive and exclusionary provisions, MassMutual has not registered
interests in Our general account under the Securities Act of 1933. We also have
not registered the general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
interests therein are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be
13
<PAGE>
subject to certain provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
Premiums.
There are two premium concepts under the policy:
1. Minimum Initial Premium.
2. Modal Term Premium.
1. Minimum Initial Premium.
You must pay the minimum initial premium and submit the application and all
other required forms in good order to Our Home Office before We will issue Your
variable rider. The minimum initial premium is $500 and it must be paid in one
lump sum.
There is no $500 minimum initial premium payment requirement to activate the
variable rider in the states where We issue the policy as a group flexible
premium variable adjustable life insurance certificate instead of as a variable
rider to a group flexible premium adjustable life insurance certificate.
2. Modal Term Premium.
Your employer pays the estimated premium amount that is necessary to cover the
premium deductions and monthly deductions We assess under the policy during a
period of time selected by Your employer. We call the estimated premium amount a
modal term premium. The period of time selected by Your employer can be one
month, one quarter, a six month period or one year. We call this period of time
the modal term.
We base the modal term premium for a policy upon:
o cost of insurance rates;
o the sales load;
o the state premium tax charge;
o the deferred acquisition cost tax charge;
o the administrative charge; and
o any applicable rider charges.
The modal term premium for Your policy may be subject to minimum and maximum
amounts depending on:
o the selected face amount of Your policy;
o the insured's age; and
o the employer group.
Please refer to Appendix E for the calculation of a hypothetical modal term
premium.
The modal term selected by the employer in the participation agreement forms the
basis for the billing cycle for your policy. If the employer selects a monthly
modal term, then We will send Your employer a monthly premium invoice for your
policy. If the employer selects a yearly modal term, then We will send Your
employer an annual premium invoice. The employer may change the selected modal
term at any time by written request to Us. Your modal term is specified in Your
policy's schedule page.
If You become disassociated with the employer, You may elect to continue the
policy on Your own. If You choose to continue the policy, You will become vested
in all policy rights previously held by Your employer, including the right to
change the modal term to any mode but monthly. In this event, We will
discontinue billing for Your modal term premium.
There is no penalty if the employer does not pay the modal term premium. Payment
of this amount does not guarantee coverage for any period of time. Even if the
employer pays modal term premiums, the policy terminates if the account value
becomes insufficient to pay account value charges and the grace period expires
without sufficient payment.
Minimum and Maximum Premium Payments.
While Your policy is in force, You may pay premiums at any time before the death
of the insured subject to certain restrictions. There are no minimum or maximum
premium payments under the policy.
We have the right to refund a premium paid in any year if it will increase the
net amount at risk under the policy. Premium payments should be sent to Our Home
Office or to the address indicated for payment on the premium reminder notice.
Net Premium Allocation.
You choose the percentages of Your net premiums to be allocated to the Separate
Account Divisions and/or the GPA. You may choose any whole-number percentages as
long as the total is 100%. You may allocate net premium payments to a maximum of
eight Separate Account Divisions and the GPA at any time. You may also change
Your allocation of future net premiums at any time without charge. To allocate
net premiums or to transfer account value to a ninth Separate Account Division,
You must transfer 100% of the account value from one or more of Your eight
selected Separate Account Divisions.
During Your free look period, we will apply Your first net premium to the GPA,
provided the premium equals or exceeds the minimum net first policy premium. At
the end of the free look period, We will apply Your account value to the GPA
and/or Separate Account Divisions according to Your instructions and
14
<PAGE>
subject to Our current allocation rules.
Termination.
We will not terminate Your policy for failure to pay premiums. Instead, We will
terminate Your policy if on a monthly calculation date the account value less
any policy debt is insufficient to cover the total monthly deduction. Your
policy will then enter a 61- day grace period.
Grace Period.
We allow You 61 days to pay any premium necessary to cover an overdue monthly
deduction. You will receive a notice from Us which states the overdue amount and
premium due. During the 61-day grace period, the policy remains in force. Your
policy will terminate without value if We do not receive the premium due by the
later of 61 days or 30 days after We have mailed the written notice.
Death Benefit Under the Policy.
The death benefit is the amount We pay to the designated beneficiary(ies) when
the insured dies. Upon receiving proof of death, We pay the beneficiary the
death benefit amount determined as of the date the insured dies. The beneficiary
may direct Us to pay all or part of the benefit in cash or to apply it under one
or more of Our payment options.
Minimum Face Amount.
To qualify as life insurance under federal tax laws currently in effect, the
policy has a minimum face amount. We determine the minimum face amount by
multiplying the account value by the minimum face amount percentage. The
percentages depend upon the insured's age.
Death Benefit Options.
In the application or enrollment form, You choose a selected face amount and
death benefit option. We offer two death benefit options:
1. Death Benefit Option A:
the death benefit is the greater of the selected face amount in effect
on the date of death or the minimum face amount in effect on the date
of death.
2. Death Benefit Option B:
the death benefit is the greater of (a) the sum of the selected face
amount in effect on the date of death plus the account value on the
date of death or (b) the minimum face amount in effect on the date of
death.
If the insured dies while the policy is in force, We will pay the death benefit
based on the option in effect on the date of death, with the following
adjustments:
o We add the part of any account value charges that apply for the period
beyond the date of death; and
o We deduct any policy debt outstanding on the date of death; and
o We deduct any account value charges unpaid as of the date of death.
If the insured dies after the first policy year, We will also include a pro-rata
share of any dividend allocated to the policy for the year death occurs.
Under death benefit option A, the death benefit amount is unaffected by Your
policy's investment experience unless the death benefit is based on the minimum
face amount. Under death benefit option B, the death benefit amount may increase
or decrease by investment experience.
We pay interest on the death benefit from the date of death to the date the
death benefit is paid or a payment option becomes effective. The interest rate
equals the rate determined under the interest payment option.
Example: The following example shows how the death benefit may vary as a result
of investment performance and death benefit option in effect on the date of
death.
<TABLE>
<CAPTION>
Policy A Policy B
-------- --------
<S> <C> <C>
(a) Selected face amount: $100,000 $100,000
(b) Account value on
date of death $30,000 $50,000
(c) Minimum face amount
percentage on date of death: 280% 280%
(e) Minimum face amount
(b x c): $84,000 $140,000
Death benefit if
death benefit option A
is in effect
[greater of (a) or (d)]: $100,000 $140,000
Death benefit if
death benefit option B
is in effect [greater of
(a + b) or (d)]: $130,000 $150,000
</TABLE>
The examples assume no additions to or deductions from the selected face amount
or minimum face amount are applicable.
You may change Your death benefit option by written request and subject to Our
guidelines regarding proof
15
<PAGE>
of insurability. There is no charge for a change in death benefit option. The
effective date of the change will be Your first policy anniversary on, or next
following, the later of:
o 15 days after We receive and approve Your written request for such
change; or
o the requested effective date of the change.
Changes In Selected Face Amount.
You may increase the selected face amount by sending Us a new enrollment form,
or by sending Us an application if You are no longer associated with your
employer. We may request adequate evidence of insurability for an increase. We
will not allow an increase in the selected face amount after the policy
anniversary date following the insured's 75th birthday. Additionally, any
increase in the selected face amount will be effective on the monthly
calculation date which is on, or next follows, the later of:
o 15 days after We have received and approved Your written request for
such change; or
o the requested effective date of the change.
Any increase for policyowners no longer associated with the employer must be at
least $5,000.
You may also decrease Your policy's selected face amount. We allow a decrease in
the selected face amount only once per policy year. The selected face amount
after a decrease must be at least $50,000. Any requested decrease in the
selected face amount will be effective on the monthly calculation date which is
on, or next follows the later of:
o 15 days after We receive and approve Your written request for such
change;
o the one year period following the effective date of Your previously
requested decrease; or
o the requested effective date of the change.
Account Value.
The account value of Your policy is the value in the Separate Account Divisions
plus the value in the GPA. Initially, this value equals the net amount of the
first premium You and Your employer paid under the policy. We apply this amount
to the GPA until the expiration of the free look period. The account value is
then allocated among the Separate Account Divisions and/or the GPA according to
Your instructions, subject to applicable restrictions. We always apply billed
modal term premiums payable by the employer to the GPA.
The purchase and sale of accumulation units will affect Your account value in
the Separate Account Divisions. We purchase and sell units at the unit value as
of the valuation time on the valuation date if We receive Your transaction
request before the valuation time. Otherwise, We will purchase and sell units to
complete Your request at the unit value as of the valuation time on the next
following valuation date, or a later date if You request. We determine unit
values on each valuation date.
Investment Return.
The investment return of a policy is based on:
o The account value held in each Separate Account Division for that
policy;
o The investment experience of each Separate Account Division as
measured by its actual net rate of return; and
o The interest rate credited on account value held in the GPA.
The investment experience of a Separate Account Division reflects:
o increases or decreases in the net asset value of the shares of the
underlying fund;
o any dividend or capital gains distributions declared by the fund; and
o any charges against the assets of the Separate Account Division.
We determine the investment experience each day on each valuation date. The
actual net rate of return for a Separate Account Division measures the
investment experience from the end of one valuation date to the
end of the next valuation date.
Cash Surrender Value.
You may surrender Your policy for its cash surrender value at any time while the
insured is living. The cash surrender value is:
o Account value; less
o Any outstanding policy debt.
There is no surrender charge.
Your surrender is effective on the date We receive the policy and a fully
completed written request at Our Home Office, unless You select a later
effective date. If, however, We receive Your surrender request on a date that is
not a valuation date or after a valuation
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<PAGE>
time, then Your surrender will be effective on the next valuation date.
Transfers.
You may transfer all or part of the account value among the policy's Separate
Account Divisions and the GPA by written request. In Your transfer request, You
must indicate the dollar amount or the whole-number percentage You wish to
transfer. There is no limit on the number of transfers You may make from the
Separate Account Divisions.
You may maintain account value in a maximum of eight Separate Account Divisions
and the GPA at any one time. If You want to transfer net premium or transfer
account value to a ninth Division, You must transfer 100% of the account value
from one or more of the eight active Separate Account Divisions.
You may transfer all account value in the Separate Account to the GPA at any
time without incurring a fee. The transfer will take effect when We receive Your
signed, written request.
We will consider all transfers made on one valuation date to be one transfer.
We currently do not charge a fee for transfers. We, however, reserve the right
to charge a fee for transfers if there are more than twelve transfers in a
policy year. This fee will not exceed $10 per transfer.
You may only transfer account value from the GPA to the Separate Account once
per policy year. This transfer may not exceed the lesser of:
o 25% of Your account value in the GPA at the time of Your transfer, or
o Your account value in the GPA less an amount equal to one plus the
number of monthly calculation dates remaining in your modal term
multiplied by your most recent monthly deduction.
For purposes of this transfer restriction, Your account value in the GPA does
not include policy debt. However, You may transfer 100% of Your account value in
the GPA to the Separate Account if:
o You have transferred 25% of Your account value in the GPA in each of
the previous three policy years, and
o You have not allocated premium payments or made transfers to the GPA
during any of the previous three policy years, except as a result of a
policy loan.
You cannot transfer GPA account value equal to any policy debt.
Automated Account Value Transfer.
Automated account value transfer allows You to make monthly transfers of account
value in a Separate Account Division to any combination of Separate Account
Divisions and the GPA. You must specify the amount You wish to transfer as a
dollar amount or a whole-number percentage. Automated account value transfers
are not available from more than one Separate Account Division or from the GPA.
We consider this process as one transfer per policy year.
You can elect, change or cancel automated account value transfer on any
valuation date, provided We receive a fully completed written request. We will
only make transfers on the monthly calculation date. The effective date of the
first automated transfer will be the first monthly calculation date after We
receive Your request at Our Home Office. If We receive Your request before the
end of the free look period, Your first automated transfer will occur at the end
of this period.
Transfers will occur automatically. However, You must specify:
o the Separate Account Division We are to transfer from; and
o the Separate Account Division(s) and/or GPA We are to transfer to; and
o the length of time during which transfers will continue.
If Your transfer amount is greater than Your account value in the Separate
Account Division We are transferring from, then We will transfer Your remaining
value in that Division in the same proportion as Your previously transferred
amounts. We will not process any more automated transfers thereafter.
Automated Account Re-Balancing.
Automated account re-balancing permits You to maintain a specified whole-number
percentage of Your account value in any combination of the Separate Account
Divisions and the GPA. We must receive a fully completed written request in
order to begin Your automated account re-balancing program. Then, We will make
transfers on a quarterly basis to and from the Separate Account Divisions and
the GPA to re-adjust Your account value to Your specified percentage. The
minimum amount We will transfer under this provision
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<PAGE>
is $5.00.
This program allows You to maintain a specific fund allocation. Quarterly
re-balancing is based on Your policy year. We will re-balance Your account value
only on a monthly calculation date. We consider automated account re-balancing
as one transfer per policy year.
You can elect or cancel automated account re-balancing on any valuation date,
provided We receive a fully completed written request. You may only change
allocation percentages once each policy year. In addition, You may only reduce
Your allocation to the GPA by up to 25% once each policy year.
The effective date of the first automated re-balancing will be the first monthly
calculation date after We receive Your request at the Home Office. If We receive
the request before the end of the free look period, Your first re-balancing will
occur at the end of the free look period. The automated account re-balancing
program is not subject to the restrictions on transfers from the GPA to the
Separate Account.
You may participate in either the automated account value transfer program or
the automated account re-balancing program at one time.
Withdrawals.
After Your policy has been in force for six months, You can withdraw value from
Your policy on any monthly calculation date. You must send written request to
Our Home Office.
o Minimum withdrawal amount: $500 (before deducting the withdrawal
charge).
o Maximum withdrawal amount: cash surrender value less an amount equal
to one plus the number of monthly calculation dates remaining in your
modal term multiplied by your most recent monthly deduction.
We deduct the withdrawal amount from Your account value as of the valuation time
on the applicable monthly calculation date. You must specify the GPA or the
Separate Account Division(s) from which the withdrawal is to be made. If You do
not specify otherwise, We will withdraw the amount in proportion from Your
values in the Separate Account Divisions and the GPA in excess of one plus the
number of monthly calculation dates remaining in your modal term multiplied by
your most recent monthly deduction, and subject to restrictions on amounts in
the GPA. The withdrawal amount may not exceed the non-loaned account value of a
Separate Account Division or GPA. A withdrawal from the GPA may not exceed an
amount equal to one plus the number of monthly calculation dates remaining in
Your modal term multiplied by Your most recent monthly deduction.
We deduct a charge of 2.0% of the amount You withdraw. This charge will not
exceed $25.00.
We will reduce Your account value by the amount of the withdrawal. If necessary,
We will reduce Your policy's selected face amount to prevent an increase in the
amount at risk, unless You provide Us with satisfactory evidence of
insurability. Withdrawals may have tax consequences.
Policy Loan Privilege.
The policy loan privilege becomes effective 6 months after the policy date. You
can take a loan on Your policy at any time while the insured is living. The
maximum loan is:
o 90% of your account value at the time of the loan; less
o any outstanding policy debt before the new loan; less
o interest on the loan being made and on any outstanding policy debt to
the next policy anniversary date; less
o an amount equal to one plus the number of monthly calculation dates
remaining in your modal term multiplied by your most recent monthly
deduction.
You must properly assign Your policy to Us as collateral for the loan.
Source of Loan.
We deduct Your requested loan amount from the Separate Account Divisions and the
GPA in proportion to the non-loaned account value of each on the date of the
loan request. However, an amount equal to one plus the number of monthly
calculation dates remaining in Your modal term multiplied by your most recent
monthly deduction must remain in the GPA. We liquidate shares taken from the
Separate Account Divisions and transfer the resulting dollar amounts to the GPA.
These dollar amounts become part of the loaned portion of the GPA. You may not
borrow from the loaned portion of the GPA.
We may delay any loan from the non-loaned portion of the GPA for up to six
months. We may also delay any
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<PAGE>
loan from the Separate Account if:
o the New York Stock Exchange is closed, except for normal weekend and
holiday closings, or
o trading is restricted, or
o the Securities and Exchange Commission determines that an emergency
exists, or
o the Securities and Exchange Commission permits Us to delay payment.
If Loans Exceed the Policy Account Value.
Policy debt is Your outstanding loan balance, including accrued interest. Policy
debt must not exceed Your account value. If this limit is reached, We may
terminate the policy. If We terminate Your policy for this reason, We will
notify You, and any assignee shown on our records, in writing. This notice
states the amount necessary to bring the policy debt back within the limit. If
We do not receive a payment within 30 days after the date We mailed the notice,
the policy terminates without value at the end of those 30 days. Termination of
a policy under these circumstances could cause You to recognize gross income.
Interest.
Your employer elects a loan interest rate of 6% per year or, where permitted, an
adjustable loan rate. All policies within a case must have the same fixed or
adjustable loan rate. We set the adjustable loan rate each year that will apply
for the next policy year. The maximum rate is based on the monthly average of
the composite yield on seasoned corporate bonds as published by Moody's
Investors Service. If Moody's is no longer published, We will use a
substantially similar average. The maximum rate is the greater of:
o the published monthly average for the calendar month ending two months
before the policy year begins; or
o 5%.
We will increase the rate if the maximum limit is at least 1/2% higher than the
rate in effect for the previous year. We will decrease the rate if the maximum
limit is at least 1/2% lower than the rate in effect for the previous year.
Interest accrues daily, becoming part of the policy debt. Interest is due on
each policy anniversary. If You do not pay interest when due, We will add the
interest to the loan, and it will bear interest at the same rate. We treat any
interest capitalized on a policy anniversary the same as a new loan. We will
deduct this capitalized interest from the Separate Account 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 Your policy is in
force. Upon repayment, We will transfer values equal to the repayment from the
loaned portion of the GPA to the non-loaned portion of the GPA and the
applicable Separate Account Division(s). We will transfer the repayment in
proportion to the non-loaned value in each Separate Account Division and/or the
GPA at the time of repayment. If You do not repay the loan, We deduct the loan
amount due from the surrender value or death benefit.
Interest Credited on Loaned Value.
The amount equal to any outstanding policy loans is held in the GPA. This amount
is credited with interest at a rate which is the greater of 3.0% or Your policy
loan rate, less a MassMutual declared charge. This charge is currently .75%. We
guarantee that this charge will not exceed 1.25%.
Effect of Loan.
Your policy loan reduces the death benefit and cash surrender value under the
policy by the amount of the loan. Your repayment of the loan increases the death
benefit and cash surrender value by the amount of the repayment.
As long as a loan is outstanding, a portion of Your policy's account value equal
to the loan is held in the GPA. The Separate Account's investment performance
does not affect this amount. Tax consequences may result if You have policy debt
when you surrender Your policy.
Part II - Additional Provisions of the Policy.
Paid-up Policy Date.
The paid-up policy date is the policy anniversary nearest the insured's 100th
birthday. On this date, Your selected face amount automatically changes to equal
the account value. As of this date and thereafter, the death benefit option will
be death benefit option A, the charge for cost of insurance will be $0 and We
will no longer accept premium payments. We will continue to deduct any other
account value charges. The policy does not lapse after the paid-up policy date.
Your payment of planned
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<PAGE>
annual premiums does not guarantee that the policy will continue in force to the
paid-up policy date.
Reinstatement.
For a period of five (5) years after termination, You can request that We
reinstate the policy during the insured's lifetime. We will not reinstate the
policy if it has been surrendered for its cash surrender value. A termination
and/or reinstatement may cause the policy to become a modified endowment
contract.
Before We reinstate the policy, We must receive the following:
o A premium payment that will produce an account value equal to 3 times
the total account value charges for the policy on the monthly
calculation date on or next following the date of reinstatement;
o Evidence of insurability satisfactory to us; and
o Where necessary, a signed acknowledgement that the policy has become a
modified endowment contract.
If We do reinstate the policy, Your policy's selected face amount for the
reinstated policy will be the same as if the policy had not terminated.
Payment Options.
Upon full surrender or the insured's death, We will pay the entire cash
surrender value or all or part of the death benefit in cash or as a series of
level payments under a payment option. Your payments will no longer be affected
by the investment experience of the Separate Account Divisions or the GPA.
To receive payments under any of the following options, the proceeds must be at
least $2,000. If the payments under any option are less than $20 each, We
reserve the right to make payments at less frequent intervals. Your payment
option choices are:
A. Fixed Amount Payment Option. We make a monthly payment for an agreed
fixed amount. The amount of each payment may not be less than $10 for
each $1,000 applied. We credit interest of at least 3% per year each
month on the unpaid balance and add the interest to this balance.
Payments continue until the amount We hold runs out.
B. Fixed Time Payment Option. We make equal monthly payments for any
period selected, up to 30 years. The amount of each payment depends
on:
o the total amount applied;
o the period selected;
o and the interest rate We credit to the unpaid balance.
C. Lifetime Payment Option. We make equal monthly payments on the life of
a named person. Three variations are available:
o Payments for life only;
o Payments guaranteed for five, ten or twenty years or the
death of the named person, whichever is later; or
o Payments guaranteed for the amount applied or the death of
the named person, whichever is later.
D. Interest Payment Option. We hold amounts applied under this option. We
will pay interest monthly of at least 3% per year on the unpaid
balance.
E. Joint Lifetime Payment Option. We make equal monthly payments based on
the lives of two named persons. While both named persons are living,
we make one payment per month. When one of the named persons dies, the
same payment continues for the lifetime of the other named person. We
offer two variations:
o Payments guaranteed for 10 years or when both named persons die,
whichever is later; and
o Payments for two lives only. We do not guarantee a specific number of
payments. We stop payments when both named persons die.
F. Joint Lifetime Payment Option with Reduced Payments. We make monthly
payments based on the lives of two named persons. While both named
persons are living, we make one payment each month. When one dies, we
reduce payments by one-third and continue for the lifetime of the
other named person. We stop payments when both named persons die.
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Withdrawal Rights under Payment Options.
If provided in the payment option election, You may withdraw all or part of the
unpaid balance or apply it under any other option. However, You may not withdraw
payments which are based on a named person's life.
Beneficiary.
A beneficiary is any person You name on Our records to receive insurance
proceeds after the insured dies. You name the beneficiary in the policy
application. There may be different classes of beneficiaries, such as primary
and secondary. These classes set the order of payment. There may be more than
one beneficiary in a class.
You may name any beneficiary as an irrevocable beneficiary. We need the consent
of an irrevocable beneficiary if You wish to change that beneficiary. We also
need the consent of any irrevocable beneficiary if You wish to exercise any
policy right except the right to reinstate the policy after termination.
If no beneficiary is living when the insured dies, we will pay the death benefit
to the policyowner unless instructed otherwise. If the policyowner is deceased,
then We will pay the death benefit to the policyowner's estate.
Changing the Policyowner or Beneficiary.
You may change the policyowner or any beneficiary during the insured's lifetime
by writing to Our Home Office. The change takes effect as of the date of the
request, even if the insured dies before We receive it. Different rules apply if
You named an irrevocable beneficiary.
Assignment.
You may assign Your policy as collateral for a loan or other obligation, subject
to any outstanding policy debt. For any assignment to be binding on us, We must
receive a signed assignment in proper form at Our Home Office. We are not
responsible for the validity of any assignment.
Dividends.
Each year We determine the money available to pay dividends. We then determine
if We will pay any dividend under the policy. We will pay any dividend on Your
policy anniversary. If the insured dies after the first policy year, We will
include as part of the death benefit a pro rata share of any allocated dividend
for the year death occurs. We do not expect to pay any dividends under the
policies.
Limits on Our Right to Challenge the Policy.
We reserve the right to contest the validity of a policy within two years from
its issue date, reinstatement or an increase in the selected face amount. After
that two-year period, We cannot contest its validity, except for failure to pay
premiums.
Misstatement of Age.
We will make an adjustment if the insured's date of birth in the application is
not correct. If the adjustment is made when the insured dies, We will adjust the
death benefit by the most recent cost of insurance charge according to the
correct age. If We make the adjustment before the insured dies, We will base
future monthly deductions on the correct age.
Suicide Exclusion.
If the insured commits suicide whether sane or insane within two years from the
issue date, We will pay a limited death benefit in one sum to the beneficiary.
The limited death benefit is the amount of premiums paid for the policy, less
any policy debt or amounts withdrawn.
If the insured commits suicide whether sane or insane within two years from an
increase in the selected face amount and while the policy is in force, We will
pay a limited benefit to the beneficiary. The limited death benefit is the cost
of insurance charges associated with the selected face amount increase plus the
death benefit in effect two years prior to the suicide.
When We Pay Proceeds.
If the policy has not terminated, We will normally pay the cash surrender value,
loan proceeds or the death benefit within 7 days after We receive all required
documents in proper form at Our Home Office. We can delay payment of the cash
surrender value, any withdrawal from the Separate Account, Separate Account loan
proceeds or the death benefit during any period that:
o It is not reasonably practicable for Us to determine the amount
because the New York Stock Exchange is closed, except for normal
weekend or holiday closings, or trading is restricted; or
o The Securities and Exchange Commission determines that an emergency
exists; or
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o The Securities and Exchange Commission permits Us to delay payment for
the protection of our policyowners.
We may delay payment of any cash surrender value or loan proceeds from the GPA
for up to 6 months from the date the We receive the request at Our Home Office.
We can delay payment of the entire death benefit if payment is contested. We
investigate all death claims arising within the two-year contestable period.
When the investigation is complete, We generally determine within five days
whether the claim should be paid and make payments promptly. If We delay payment
for 10 working days or more from the effective date of surrender or withdrawal,
We will add interest at the same rate as is paid under the interest payment
option at that time. The minimum amount of such interest is $25.
Free Look Provision.
You may cancel the certificate within 10 days (or longer if required by state
law) after You have received the certificate. Your election of the variable
account rider does not increase or decrease the duration of this free look
period. If You choose to cancel the certificate within the free look period, You
should mail or deliver the certificate and certificate delivery receipt (if
applicable) either to Us or to the agent who sold the certificate or to one of
our agency offices. If the You cancel the certificate in this fashion, We will
make a refund to You. The refund equals either:
o the account value plus any premium deduction(s) and monthly
deduction(s) reduced by any amounts You borrowed or withdrew; or,
o where required by state law, all premiums paid, reduced by any amounts
borrowed or withdrawn.
During the free look period, We will apply the initial net premium We receive
under certificates to which a variable rider has been added to the GPA. If You
elect the variable account rider after the free look period applicable to Your
certificate has expired, We will apply the net premiums You pay among the GPA
and the Divisions of the Separate Account in accordance with Your instructions.
Additional Benefits By Rider.
At Your employer's request, the policy can include additional benefits. We
approve these benefits based on Our standards and limits for issuing insurance
and classifying risks. Any additional benefit We provide by rider is subject to
the terms of both the rider and the policy. We deduct the cost of any rider from
Your account value. Subject to state availability, the following riders are
available.
Accelerated Benefits Rider.
This rider permits part of the proceeds of the policy to be available before
death if the Insured becomes terminally ill. We will require proof, satisfactory
to Us, that the Insured is terminally ill and is not expected to live longer
than 12 months prior to activation of the rider. In return for the advanced
payment, We establish a lien against the policy, equal to the amount of the
accelerated benefit. We do not charge interest against the lien. This rider is
available under all policies.
Accidental Death and Dismemberment Rider.
With this rider We will pay a benefit equal to a percentage of the accidental
death and dismemberment rider face amount specified in the following table if
the Insured dies or becomes dismembered due to accidental causes prior to
attaining age 65. The rider's selected face amount will be the lesser of the
policy's selected face amount or $500,000. Your employer determines whether this
rider becomes available under Your policy.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Percent of
Rider Face
Loss of Amount Payable
- --------------------------------------------------------------------------------
<S> <C>
Life 100
- --------------------------------------------------------------------------------
Both Limbs 100
- --------------------------------------------------------------------------------
Both Arms 100
- --------------------------------------------------------------------------------
Sight of Both Eyes 100
- --------------------------------------------------------------------------------
One Limb and Sight of One Eye 100
- --------------------------------------------------------------------------------
One Arm and Sight of One Eye 100
- --------------------------------------------------------------------------------
One Limb or One Arm 50
- --------------------------------------------------------------------------------
Vision of One Eye 50
- --------------------------------------------------------------------------------
</TABLE>
Waiver of Monthly Charges Rider.
This rider allows Us to waive the account value charges of Your policy for at
least two years if:
o the insured becomes totally disabled before the policy anniversary
after the insured's 65th birthday; and
o such total disability continues for 6 months.
The Waiver of Monthly Charges Rider will terminate when any of the following
occurs:
o The insured is no longer disabled; or
o You do not give us the required satisfactory
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proof of continued total disability; or
o The insured fails or refuses to have a required examination; or
o The policy anniversary date after the insured's 65th birthday, or, if
later, the date two years from the date the total disability began.
Part III - Other Important Information.
Federal Income Tax Considerations.
The following discussion presents a general description of the federal income
tax consequences of the policy, in accordance with Our understanding of current
federal income tax laws. It is not an exhaustive study of all tax issues that
might arise under the policy. This discussion is not intended as tax advice. We
make no representation as to the likelihood of continuation of current federal
income tax laws and Treasury Regulations or of the current interpretations of
the Internal Revenue Service. We reserve the right to make changes in the policy
to ensure it qualifies as life insurance for tax purposes. We do not address
state or other applicable tax laws in this discussion. We make no guarantee
regarding the future tax treatment of any policy.
For complete consideration of federal and state tax consequences, You should
consult a qualified tax adviser prior to purchasing the policy.
Under current state laws, We may incur state and local taxes (in addition to
premium taxes). At present, these taxes are not significant. If there is a
material change in state or local tax laws, We reserve the right to charge the
Separate Account for such taxes if attributable to the Separate Account.
Policy Proceeds, Premiums and Loans.
We believe the policy meets the statutory definition of life insurance under
Internal Revenue Code ("Code") Section 7702 and thus receives the same tax
treatment as that given to fixed benefit life insurance. As a result, the
policy's death benefit is generally excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code. An exception to this general
rule is where a policy has been transferred for value. In that case, only the
portion of the death benefit equal to premiums paid for the policy may be
excluded from gross income.
Upon Your full surrender of a policy for its cash surrender value, You may
recognize ordinary income for federal tax purposes. Ordinary income is the
amount by which:
o account value, including
o outstanding policy debt (which may include unpaid interest), exceeds
o premiums paid but not previously recovered.
Decreases in selected face amount and withdrawals may be taxable depending on
the circumstances. Code Section 7702(f)(7) states that if a reduction of future
benefits occurs during the first 15 years after a policy is issued and if there
is a cash distribution associated with that reduction, You may be taxed on all
or part of the amount distributed. After 15 years, such cash distributions are
not subject to federal income tax, except to the extent they exceed the total
amount of premiums paid but not previously recovered. Generally, if a taxable
event does not otherwise exist, a withdrawal is taxable only if it exceeds Your
yet unrecovered premium contributions. We suggest that You consult Your tax
adviser prior to decreasing Your selected face amount or taking a withdrawal.
If You change the policyowner or the insured or exchange or assign Your policy,
tax consequences may occur. We also believe that under current law any policy
loan will be treated as policy debt. Therefore, no part of any loan under a
policy will constitute income to You. Under the "personal" interest limitation
provisions of the Code, interest on policy loans used for personal purposes,
which otherwise meet the requirements of Code Section 264, will no longer be tax
deductible. Other rules may apply to allow all or part of the interest expense
as a deduction if the loan proceeds are used for "trade or business" or
"investment" purposes. We suggest You consult Your tax adviser for further
guidance on the deductibility for tax purposes of the interest on policy loans.
If a business or corporation owns the policy, the Code may impose additional
restrictions. The interest deduction available for loans against a
business-owned policy is limited. For those corporations subject to the
alternative minimum tax, there may be an indirect tax upon the inside build-up
of gain. The corporate alternative minimum tax could also apply to a portion of
the amount by which death benefits received exceed the policy's cash value at
date of death.
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<PAGE>
Federal, state and local estate, inheritance, and other tax consequences of
ownership or receipt of policy proceeds depend on the circumstances of each
policyowner or beneficiary.
For complete information on the impact of changes to Your policy and federal and
state tax considerations, You should consult a qualified tax adviser.
Modified Endowment Contracts.
If Your policy becomes a modified endowment contract, loans, collateral
assignments, and other amounts distributed are taxable to the extent of any
accumulated income in the policy. In general, the amount subject to tax is the
excess of the account value (both loaned and unloaned) over the previously
unrecovered premiums paid. Any death benefits We pay under a modified endowment
contract, however, are not taxed any differently from death benefits payable
under other life insurance contracts.
A policy is a modified endowment contract if it satisfies the definition of life
insurance in the Code, but fails the additional "7-pay test." A policy fails
this test if the accumulated amount paid under the policy at any time during the
first seven policy years exceeds the total premiums that would have been payable
under a policy providing for guaranteed benefits upon the payment of seven level
annual premiums. Regardless, a policy which would otherwise satisfy the 7-pay
test will still be taxed as a modified endowment contract if it is received in
exchange for a modified endowment contract.
Certain changes will require Us to re-test a policy to determine whether it has
become a modified endowment contract. For example, a reduction in death benefits
during the first seven contract years will cause Us to re-test the policy as if
it had originally been issued with the reduced death benefit. If the premiums
actually paid into a policy exceed the limits under the 7-pay test for a policy
with the reduced death benefit, the policy will become a modified endowment
contract. This change is effective retroactively to the contract year in which
the actual premiums paid exceed the new 7-pay limits.
In addition, a "material change" occurring at any time while the policy is in
force will require Us to re-test the policy to determine whether it continues to
meet the 7-pay test. A material change starts a new 7-pay test period. The term
"material change" includes many increases in death benefits.
Since the policy provides for flexible premium payments, We will carefully
monitor the policy to determine whether increases in death benefits or
additional premium payments cause either the start of a new 7-pay test period or
the taxation of distributions and loans. All additional premium payments will be
considered.
If any amount is taxable as a distribution of income under a modified endowment
contract, it will also be subject to a 10% penalty tax. Limited exceptions from
the additional penalty tax are available for individual policyowners. These
exceptions include:
o distributions made on or after the date the taxpayer attains age 59
1/2; or
o distributions attributable to the taxpayer's becoming disabled; or
o distributions that are part of a series of substantially equal
periodic payments (made not less frequently than annually) made for
the life or life expectancy of the taxpayer.
Once a policy fails the 7-pay test, loans, collateral assignments, and
distributions occurring in the year of failure and thereafter become subject to
the rules for modified endowment contracts. In addition, any distribution or
loan made within two years prior to failing the 7-pay test is considered to have
been made in anticipation of the failure and may result in tax consequences.
For purposes of determining the amount of income received from a modified
endowment contract, the law requires the aggregation of all modified endowment
contracts issued to the same policyowner by an insurer and its affiliates within
the same calendar year. Therefore, loans and distributions from any one such
policy are taxable to the extent of the income accumulated in all the contracts
required to be aggregated.
You should consult a qualified tax adviser for complete information on modified
endowment contract status, especially in the case of a corporate-owned policy.
Diversification Standards.
To comply with final regulations under Code Section 817(h) ("Final
Regulations"), each Fund is required to diversify its investments. All
securities of the same issuer are treated as a single investment. Each
government agency or instrumentality, however, is treated as a separate issuer.
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<PAGE>
We intend to comply with the Final Regulations to ensure the policy continues to
qualify as life insurance for federal income tax purposes. If future regulations
are issued regarding whether a policyowner may direct investments to a
particular division of a separate account, We reserve the right to modify the
policy as necessary to prevent the policyowner from being considered the owner
of the assets of the Separate Account.
Your Voting Rights.
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, as amended, You have voting rights.
You are entitled to instruct Us how to vote the Funds' shares held in the
Separate Account that are attributable to Your policy at shareholder meetings.
We determine who has voting rights as of the record date for the meeting.
We determine the number of Fund shares held in the Separate Account attributable
to Your policy by dividing Your account value in each Division, if any, by $100.
We count fractional votes.
In order to exercise Your voting rights, We will send You proxy material and an
instruction form. If We have not received effective voting instructions, We will
vote Fund shares held by the Separate Account in the same proportion as the
shares for which We received instructions, if required by law. Otherwise, We
reserve the right to vote such shares at Our own discretion.
Our Rights.
We reserve the right to take certain actions in connection with Our operations
and the operations of the Separate Account. We will act in accordance with
applicable laws. If required by law or regulation, We will seek Your approval.
Specifically, We reserve the right to:
o Create new segments of the Separate Account for any new variable life
insurance products We create in the future;
o Create new Separate Accounts;
o Combine any two or more Separate Accounts;
o Make available additional Separate Account Divisions investing in
additional investment companies;
o Eliminate one or more Separate Account Divisions;
o Substitute or merge two or more Separate Account Divisions or Separate
Accounts;
o Invest the assets of the Separate Account in securities other than
shares of the Funds as a substitute for such shares already purchased
or as the securities to be purchased in the future;
o Operate the Separate Account as a management investment company under
the Investment Company Act of 1940, as amended, or in any other form
permitted by law;
o De-register the Separate Account under the Investment Company Act of
1940, as amended, if registration is no longer required; and
o Change the name of the Separate Account.
We reserve all rights to the name MassMutual and Massachusetts Mutual Life
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use Our name or part of it, but We may also
withdraw this right.
Records And Reports.
We maintain all Separate Account and GPA records and accounts. Each year within
30 days after Your policy anniversary, We will mail to You a report showing:
o Your account value at the beginning of the previous policy year;
o all premiums paid during the previous policy year;
o all additions to and deductions from Your account value during the
policy year; and
o the account value, death benefit, cash surrender value and policy debt
as of Your last policy anniversary.
We will include any additional information required by any applicable law or
regulation in this report.
Sales And Other Agreements.
MML Distributors, LLC ("MML Distributors") a wholly-owned subsidiary of
MassMutual, is the principal underwriter of the policy. MML Investors Services,
Inc. ("MMLISI"), a wholly-owned subsidiary of MassMutual, serves as the
co-underwriter of the policies. Both MML Distributors and MMLISI are located at
1414 Main Street, Springfield, MA 01144-1013. Each underwriter is
25
<PAGE>
registered with the Securities and Exchange Commission ("SEC") as a
broker-dealer under the Securities Exchange Act of 1934. Each is also a member
of the National Association of Securities Dealers, Inc. ("NASD").
MML Distributors may enter into selling agreements with other registered SEC
broker-dealers who are also members of the NASD. These are selling brokers.
We also sell the policies through state insurance licensed agents. These agents
are also registered representatives of selling brokers or of MMLISI.
When a supplement to the application requesting one of the policies is
completed, it is submitted to us. We or the selling broker perform suitability
review, and in some cases, We perform insurance underwriting. If We accept the
application, we determine the insured's risk classification. If We do not accept
the application, We will refund any premium paid.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies. We pay commissions through MMLISI and MML
Distributors to agents and selling brokers.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
Commissions.
Agents or selling brokers receive commissions as a percentage of the premium
paid. General Agents may also receive compensation as a percentage of premium
paid. Commissions paid will not exceed 24% of Modal Term Premiums, plus 3% of
premiums paid in excess of the Modal Term Premium, plus 0.20% of the Policy's
average annual Variable Account Value.
Agents and General Agents may receive commissions at lower rates on Policies
sold to replace existing insurance issued by MassMutual or any of its
subsidiaries.
If a selling broker, agent or General Agent produces $1,000,000 of excess
premium from the sale of a policy during any calendar year, We will pay that
selling broker, agent or General Agent additional compensation equal to 1% of
the excess premium received during that calendar year in which the production
goal was met. We define excess premium as premium We receive in excess of the
policy's modal term premium.
Bonding Arrangement.
We maintain an insurance company blanket bond which provides $50,000,000
coverage for MassMutual officers and employees and general agents and agents.
The blanket bond is subject to a $350,000 deductible.
Year 2000.
Like other businesses and governments around the world, We could be adversely
affected if the computer systems used by Us and those with which we do business
do not properly recognize the year 2000. This is commonly known as the "Year
2000 issue."
In 1996, We began an enterprise-wide process of identifying, evaluating and
implementing changes to computer systems and applications software to address
the Year 2000 issue on Our own behalf and on behalf of certain subsidiaries. We
are addressing the Year 2000 issue internally with modifications to existing
programs and conversions to new programs. We are also seeking assurances from
vendors, customers, service providers, governments and others with which We
conduct 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 Us.
Legal Proceedings.
We are currently not involved in any material legal proceedings that adversely
impact the policy.
Experts.
We have included the financial statements of MassMutual and the Strategic Group
Variable Universal Life segment of MassMutual 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.
John M. Valencia, Assistant Vice President for MassMutual, has examined the
illustrations in Appendix C of this prospectus. We filed his opinion on
26
<PAGE>
the illustrations as an exhibit to the registration statement filed with the
SEC.
Financial Statements.
You should consider the financial statements of MassMutual and the Strategic
Group Variable Universal Life segment of the Separate Account included in
Appendix F of this prospectus only as bearing upon Our ability to meet Our
obligations under the policy.
27
<PAGE>
Appendix A - Glossary
Application:
The form used to apply for the initial selected face amount when underwriting is
involved and the form used to apply for an increase in the selected face amount
of the policy after You cease to be associated with an employer. An employer
must complete a master application in order to initially apply for the program.
You must complete a supplement to the application in order to apply for the
policy.
Case:
A group of policies sold to individuals with a common employment or other
non-insurance motivated relationship.
Employee:
A person who is associated with an employer and the spouse of such person.
Employer:
The employer, association, sponsoring organization or trust which has executed a
participation agreement electing participation in a group contract.
Enrollment Form:
A document used by potential certificate owners to apply for the certificates
and to apply for an increase in the selected face amount of the certificate when
the certificate owner is associated with an employer and no underwriting is
involved.
Group Contract:
A group flexible premium adjustable life insurance contract in which the
employer elects to participate and which is issued by Us.
Insured:
Person whose life the policy insures.
Issue Date:
The date the policy is in force. It is also the start date of the suicide
exclusion and contestability periods.
Modal Term:
A period selected by the employer for which modal term premiums will be paid in
advance by the employer. This period may be monthly, quarterly, semi-annual or
annual. Your modal term is specified in Your policy schedule page.
Monthly Calculation Date:
The date the account value charges are due. The first monthly calculation date
is the policy date. Subsequent monthly calculation dates are on the same date of
each calendar month thereafter.
Monthly Deductions:
The deductions from the account value under the policy which We generally deduct
on the monthly calculation date. The deductions are equal to the sum of the
charge for cost of insurance protection, the administrative charge, and the
charge for the cost of any additional benefits provided by rider. We refer to
these three charges as account value charges.
Net Premium:
Premium paid less sales load, premium tax charges and federal deferred
acquisition cost tax charges.
Participation Agreement:
An agreement executed by the employer requesting participation in a group
contract issued by Us.
A-1
<PAGE>
Policy Anniversary:
The anniversary of the policy date.
Policy Date:
The date used as the starting point for determining policy anniversary dates,
policy years and monthly calculation dates.
Policy Year:
The twelve month period beginning with the policy date, and each successive
twelve month period thereafter.
Policyowner:
The corporation, partnership, trust, individual, or other entity who owns the
policy, as shown on Our records.
Valuation Date:
A date on which the price of the Funds is determined. Generally, this will be
any date on which the New York Stock Exchange is open for trading.
Valuation Period:
The period from the end of one valuation date to the end of the next valuation
date.
Valuation Time:
The time the New York Stock Exchange closes on a valuation date (currently 4:00
p.m. New York time). All required actions will be performed as of the valuation
time.
A-2
<PAGE>
Appendix B - Rates of Return
Table 1 shows the Effective Annual Rates of Return of the Funds based on the
actual investment performance of the Funds, after deductions of investment
management fees and other operating expenses. This Table is based on December
31, 1998 figures. The Effective Annual Rates of Return do not reflect the
deduction of the mortality and expense risk charge, premium deductions, the
administrative charge or cost of insurance charges.
Table 2 shows the Effective Annual Rates of Return of the Separate Account
Divisions. These returns are based on the actual underlying Fund performance and
the deduction of the current mortality and expense risk charge. The Effective
Annual Rates of Return do not reflect premium deductions, the administrative
charge, cost of insurance charges or face amount charges. This table is based on
December 31, 1998 figures. It assumes the Separate Account Divisions have been
in operation for the same periods as the underlying Funds in which they invest.
Also, it reflects the total of the income generated by the Funds' net of
investment management fees and other operating expenses, plus realized or
unrealized capital gains and losses.
Table 3 shows the One Year Total Returns of the Funds based on actual investment
performance. It reflects the deduction of investment management fees and other
operating expenses. This table is based on December 31, 1998 annualized figures.
These rates of return do not reflect the deduction of the mortality and expense
risk charge, premium deductions, the administrative charge or cost of insurance
charges.
Since Tables 1, 2 and 3 do not reflect deductions from premiums or the
administrative and cost of insurance charges, the rates do not illustrate how
actual investment performance will affect the benefits under the policy. If
these charges were included, the returns would be lower.
The rates of return shown do not indicate future performance. You may consider
these rates of returns when assessing Funds' investment advisers and
sub-advisers competence and performance.
B-1
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN(1)
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 3 5 10 15 20 Since
Fund (Inception Date) Year Years Years Years Years Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MML Small Cap Value Equity Fund
(6/1/98) -- -- -- -- -- -- -23.88%
MML Equity Fund (9/15/71)(2) 16.20% 21.57% 19.66% 16.39% 15.76% 16.86% 14.84%
MML Equity Index Fund (5/1/97) 28.22% -- -- -- -- -- 31.03%
MML Managed Bond Fund (12/16/81) 8.14% 7.06% 7.07% 9.19% 10.16% -- 10.24%
Oppenheimer Global Securities
Fund/VA (11/12/90)(3) 14.11% 18.06% 9.67% -- -- -- 12.49%
Oppenheimer Small Cap Growth
Fund/VA (5/1/98)(3) -- -- -- -- -- -- -4.00%
Oppenheimer Aggressive Growth
Fund/VA (8/15/86)(3) 12.36% 14.69% 13.06% 16.12% -- -- 15.07%
Oppenheimer Capital Appreciation
Fund/VA (4/3/85)(3,7) 24.00% 25.29% 22.10% 16.85% -- -- 16.03%
Oppenheimer Main Street Growth &
Income Fund/VA (7/5/95)(3,8) 4.70% 22.49% -- -- -- -- 27.00%
Oppenheimer Multiple Strategies
Fund/VA (2/9/87)(3) 6.66% 13.03% 11.43% 11.22% -- -- 11.57%
Oppenheimer High Income Fund/VA
(4/30/86)(3) 0.31% 9.06% 8.62% 12.71% -- -- 12.26%
Oppenheimer Strategic Bond Fund/VA
(5/3/93)(3) 2.90% 7.82% 6.83% -- -- -- 6.79%
Oppenheimer Bond Fund/VA
(4/3/85)(3) 6.80% 6.93% 7.01% 9.28% -- -- 9.66%
Oppenheimer Money Fund/VA
(4/3/85)(3,4,5) 5.25% 5.23% 5.10% 5.61% -- -- 5.88%
Panorama International Equity
Portfolio (5/13/92) 19.40% 13.49% 10.34% -- -- -- 10.21%
Panorama Growth Portfolio (1/21/82) 8.43% 17.66% 17.47% 18.02% 15.74% -- 17.70%
Panorama Total Return Portfolio
(9/30/82) 10.90% 13.22% 12.14% 13.72% 13.11% -- 13.86%
Panorama LifeSpan Capital
Appreciation Portfolio (9/1/95) 6.49% 12.23% -- -- -- -- 13.11%
Panorama LifeSpan Balanced
Portfolio (9/1/95) 6.17% 10.54% -- -- -- -- 11.39%
Panorama LifeSpan Diversified
Income Portfolio (9/1/95) 4.88% 8.06% -- -- -- -- 9.02%
MFS(R) New Discovery Series (5/1/98) -- -- -- -- -- -- 2.20%
MFS(R) Emerging Growth Series
(7/24/95) 34.16% 24.16% -- -- -- -- 26.55%
</TABLE>
B-2
<PAGE>
TABLE 1(continued)
EFFECTIVE ANNUAL RATES OF RETURN(1)
AS OF DECEMBER 31, 1998(continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 3 5 10 15 20 Since
Fund (Inception Date) Year Years Years Years Years Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MFS(R) Research Series (7/26/95) 23.39% 21.99% -- -- -- -- 22.52%
T. Rowe Price Mid-Cap Growth
Portfolio (12/31/96) 22.08% -- -- -- -- -- 20.43%
T. Rowe Price New America Growth
Portfolio (3/31/94) 18.51% 19.90% -- -- -- -- 22.56%
Fidelity Variable Insurance Products
Fund II Contrafund Portfolio (1/3/95)(6) 29.94% 25.03% -- -- -- -- 28.59%
</TABLE>
1. The Effective Annual Rates Of Return is calculated by determining, over a
stated period of time, the average annual compounded rate of return that an
investment in the Fund earned over that period, assuming reinvestment of
all distributions.
2. Although the MML Equity Fund commenced operations in 1971, the information
necessary to calculate the returns is available only for the year 1974 and
subsequent periods.
3. Each Oppenheimer Fund is a series of Oppenheimer Variable Account Funds.
4. Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the returns is available only for the
year 1987 and subsequent periods.
5. An investment in money market funds is neither insured nor guaranteed by
the U.S. Government and such a fund's net asset value is not guaranteed to
remain stable at $1.00 per share.
6. Service Class shares include an asset based distribution fee (12b-1 fee).
Initial offering of Service Class shares took place on November 3, 1997, at
which time the 12b-1 fee was imposed. Returns prior to that date do not
include the effect of the Service Class fee structure, and returns listed
would have been lower for each portfolio if the Service Class fee structure
were in place and reflected in the performance. Fidelity Investments is a
registered trademark of FMR Corporation.
7. Prior to May 1, 1999, this Fund was called Oppenheimer Growth Fund.
8. Prior to May 1, 1999, this Fund was called Oppenheimer Growth & Income
Fund.
B-3
<PAGE>
The chart below shows the Effective Annual Rates Of Return Of Each Division Of
The Separate Account. The performance figures are calculated on the basis of the
actual historical performance of the Funds for the periods shown. These
performance figures reflect all Fund level charges, that is, all investment
management fees and direct operating expenses, as well as the mortality and
expense charge. The current mortality and expense risk charge is 0.75%. These
returns do not reflect expenses or administrative and cost of insurance charges
assessed against the account value of the policy. The inclusion of these charges
would reduce the returns shown.
TABLE 2
EFFECTIVE ANNUAL RATES OF RETURN OF EACH DIVISION OF THE SEPARATE ACCOUNT
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1 5 10 Since
Division (Inception Date) Year Years Years Inception
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MML Small Cap Value Equity Division
(6/1/98) -- -- -- -24.63%
MML Equity Division (9/15/71)(1) 15.45% 18.91% 15.64% 14.09%
MML Equity Index Division (5/1/97) 27.47% -- -- 30.28%
MML Managed Bond Division (12/16/81) 7.39% 6.32% 8.44% 9.49%
Oppenheimer Global Securities Division
(11/12/90)(2) 13.36% 8.92% -- 11.74%
Oppenheimer Small Cap Growth Division
(5/1/98)(2) -- -- -- -4.75%
Oppenheimer Aggressive Growth Division
(8/15/86)(2,5) 11.61% 12.31% 15.37% 14.32%
Oppenheimer Capital Appreciation Division
(4/3/85)(2,6) 23.25% 21.35% 16.10% 15.28%
Oppenheimer Main Street Growth & Income
Division (7/5/95)(2,7) 3.95% -- -- 26.25%
Oppenheimer Multiple Strategies Division
(2/9/87)(2) 5.91% 10.68% 10.47% 10.82%
Oppenheimer High Income Division (4/30/86)(2) -0.44% 7.87% 11.96% 11.51%
Oppenheimer Strategic Bond Division (5/3/93)(2) 2.15% 6.08% -- 6.04%
Oppenheimer Bond Division (4/3/85)(2) 6.05% 6.26% 8.53% 8.91%
Oppenheimer Money Division (4/3/85)(2,3) 4.50% 4.35% 4.86% 5.13%
Panorama International Equity Division
(5/13/92) 18.65% 9.59% -- 9.46%
Panorama Growth Division (1/21/82) 7.68% 16.72% 17.27% 16.95%
Panorama Total Return Division (9/30/82) 10.15% 11.39% 12.97% 13.11%
Panorama LifeSpan Capital Appreciation
Portfolio (9/1/95) 5.74% -- -- 12.36%
Panorama LifeSpan Balanced Portfolio (9/1/95) 5.42% -- -- 10.64%
Panorama LifeSpan Diversified Income
Portfolio (9/1/95) 4.13% -- -- 8.27%
MFS(R) New Discovery Division (5/1/98) -- -- -- 1.45%
MFS(R) Emerging Growth Division (7/24/95) 33.41% -- -- 25.80%
</TABLE>
B-4
<PAGE>
TABLE 2(continued)
EFFECTIVE ANNUAL RATES OF RETURN OF EACH DIVISION OF THE SEPARATE ACCOUNT
AS OF DECEMBER 31, 1998(continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1 5 10 Since
Division (Inception Date) Year Years Years Inception
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS(R) Research Division (7/26/95) 22.64% -- -- 21.77%
T. Rowe Price Mid-Cap Growth Division
(12/31/96) 21.33% -- -- 19.68%
T. Rowe Price New America Growth Division
(3/31/94) 17.76% -- -- 21.81%
Fidelity Variable Insurance Products Fund II
Contrafund Division(4) 29.19% -- -- 27.84%
</TABLE>
The returns for any Divisions of the Separate Account reflect only the
performance of a hypothetical investment in the Separate Account Divisions
during the particular time period on which the calculations are based. The
returns should be considered in light of the investment objectives and policies,
characteristics and quality of the Fund in which the Separate Account Divisions
invest and the market conditions during the given time period and should not be
considered as a representation of what may be achieved in the future. Actual
returns may be more or less than those shown and will depend on a number of
factors, including the investment allocations by a policyowner and the different
investment rates of return for the Separate Account Divisions. The inception
date of Strategic Group Variable Universal Life is 5/1/97. The performance
figures above are based on the performance of the Separate Account's underlying
Funds. The performance from the Funds inception dates is derived by reducing the
actual performance of the underlying Fund by the fees and charges of Strategic
Group Variable Universal Life. You may obtain a personalized illustration which
reflects charges based on your individual characteristics. Please refer to the
prospectus for additional information including sample hypothetical
illustrations.
1. Although the MML Equity Fund commenced operations in 1971, the information
necessary to calculate the returns is available only for the year 1974 and
subsequent periods.
2. Each Oppenheimer Fund is a series of Oppenheimer Variable Account Funds.
3. Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the returns is available only for the
year 1987 and subsequent periods.
4. Service Class shares include an asset based distribution fee (12b-1 fee).
Initial offering of Service Class shares took place on November 3, 1997, at
which time the 12b-1 fee was imposed. Returns prior to that date do not
include the effect of the Service Class fee structure, and returns listed
would have been lower for each portfolio if the Service Class fee structure
were in place and reflected in the performance. Fidelity Investments is a
registered trademark of FMR Corporation.
5. Prior to May 1, 1999, this Division was called Oppenheimer Capital
Appreciation Division.
6. Prior to May 1, 1999, this Division was called Oppenheimer Growth Division.
7. Prior to May 1, 1999, this Division was called Oppenheimer Growth & Income
Division.
B-5
<PAGE>
TABLE 3
ONE YEAR TOTAL RETURNS(1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended 1998 1997 1996 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MML Small Cap Value Equity Fund
(6/1/98)(2) -23.88% -- -- -- -- -- -- --
MML Equity Fund (9/15/71)(3) 16.20% 28.59% 20.25% 31.13% 4.10% 9.52% 10.48% 25.56%
MML Equity Index Fund (5/1/97) 28.22% 21.93% -- -- -- -- -- --
MML Mgd. Bond Fund (12/16/81)(3) 8.14% 9.91% 3.25% 19.14% (3.76)% 11.81% 7.31% 16.66%
Opp. Global Securities Fund/VA
(11/12/90)(4) 14.11% 22.42% 17.80% 2.24% (5.72)% 70.32% (7.11)% 3.39%
Opp. Small Cap Growth Fund/VA
(5/1/98)(4,5) (4.00)% -- -- -- -- -- -- --
Opp. Aggressive Growth Fund/VA
(8/15/86)(4) 12.36% 11.67% 20.23% 32.52% (7.59)% 27.32% 15.42% 54.72%
Opp. Capital Appreciation Fund/VA
(4/3/85)(4,7) 24.00% 26.69% 25.20% 36.66% 0.97% 7.25% 14.53% 25.54%
Opp. Main Street Growth & Income
Fund/VA (7/5/95)(4,8) 4.70% 32.48% 32.51% 23.25% -- -- -- --
Opp. Multi. Strategies Fund/VA (2/9/87)(4) 6.66% 17.22% 15.50% 21.36% (1.95)% 15.95% 8.99% 17.48%
Opp. High Income Fund/VA (4/30/86)(4) 0.31% 12.22% 15.25% 20.37% (3.18)% 26.34% 17.92% 33.91%
Opp. Strategic Bond Fund/VA (5/3/93)(4) 2.90% 8.71% 12.07% 15.33% (3.78)% 4.25% -- --
Opp. Bond Fund/VA (4/3/85)(4) 6.80% 9.26% 4.80% 17.00% (1.94)% 13.04% 6.50% 17.63%
Opp. Money Fund/VA (4/3/85)(4) 5.25% 5.32% 5.13% 5.62% (4.21)% 3.16% 4.03% 6.18%
Panorama International Equity Portfolio
(5/13/92) 19.40% 8.11% 13.26% 10.30% 1.44% 21.80% (4.32)% --
Panorama Growth Portfolio (1/21/82)(3) 8.43% 26.37% 18.87% 38.06% (0.51)% 21.22% 12.36% 37.53%
Panorama Total Return Portfolio
(9/30/82)(3) 10.90% 18.81% 10.14% 24.66% (1.97)% 16.28% 10.21% 28.79%
Panorama LifeSpan Capital Appreciation
Portfolio (9/1/95) 6.49% 12.53% 17.97% 6.65% -- -- -- --
Panorama LifeSpan Balanced Portfolio
(9/1/95) 6.17% 12.20% 13.38% 6.08% -- -- -- --
Panorama LifeSpan Diversified Income
Portfolio (9/1/95) 4.88% 12.51% 6.93% 5.69% -- -- -- --
MFS(R) New Discovery Series (5/1/98)(5) 2.20% -- -- -- -- -- -- --
MFS(R) Emerging Growth Series (7/24/95) 34.16% 21.90% 17.02% -- -- -- -- --
MFS(R) Research Series (7/26/95) 23.39% 20.26% 22.33% -- -- -- -- --
T. Rowe Price Mid-Cap Growth Portfolio
(12/31/96) 22.08% 18.80% -- -- -- -- -- --
T. Rowe Price New America Growth
Portfolio (3/31/94) 18.51% 21.12% 20.09% 51.10% 1.00% -- -- --
Fidelity Variable Insurance Products
Fund II Contrafund Portfolio (1/3/95)(6) 29.94% 24.14% 21.22% 39.72% -- -- -- --
</TABLE>
B-6
<PAGE>
TABLE 3 (Continued)
ONE YEAR TOTAL RETURNS(1)(Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended 1990 1989 1988 1987 1986 1985 1984 1983
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MML Small Cap Value Equity Fund
(6/1/98)(2) -- -- -- -- -- -- -- --
MML Equity Fund (9/15/71)(3) (0.51)% 23.04% 16.68% 2.10% 20.15% 30.54% 5.40% 22.85%
MML Equity Index Fund (5/1/97) -- -- -- -- -- -- -- --
MML Mgd. Bond Fund (12/16/81)(3) 8.38% 12.83% 7.13% 2.60% 14.46% 19.94% 11.69% 7.26%
Opp. Global Securities Fund/VA
(11/12/90)(4) 0.40% -- -- -- -- -- -- --
Opp. Small Cap Growth Fund/VA (5/1/98)(4) -- -- -- -- -- -- -- --
Opp. Aggressive Growth Fund/VA
(8/15/86)(4) (16.82)% 27.57% 13.41% 14.34% (1.65)% -- -- --
Opp. Capital Appreciation Fund/VA
(4/3/85)(4,7) (8.21)% 23.59% 22.09% 3.31% 17.76% 9.50% -- --
Opp. Main Street Growth & Income
Fund/VA (7/5/95)(4,8) -- -- -- -- -- -- -- --
Opp. Multi. Strategies Fund/VA (2/9/87)(4) 1.91% 15.76% 22.15% 3.97% -- -- -- --
Opp. High Income Fund/VA (4/30/86)(4) 4.65% 4.84% 15.58% 8.07% 4.73% -- -- --
Opp. Strategic Bond Fund/VA (5/3/93)(4) -- -- -- -- -- -- -- --
Opp. Bond Fund/VA (4/3/85)(4) 7.92% 13.32% 8.97% 2.53% 10.12% 18.82% -- --
Opp. Money Fund/VA (4/3/85)(4) 7.84% 9.56% 6.96% 6.75% 6.00% 5.00% -- --
Panorama International Equity Portfolio
(5/13/92) -- -- -- -- -- -- -- --
Panorama Growth Portfolio (1/21/82)(3) (7.90)% 35.81% 14.46% 0.25% 11.58% 27.31% 4.89% 32.72%
Panorama Total Return Portfolio
(9/30/82)(3) 0.50% 22.98% 11.64% 4.26% 12.58% 25.43% 6.68% 20.20%
Panorama LifeSpan Capital Appreciation
Portfolio (9/1/95) -- -- -- -- -- -- -- --
Panorama LifeSpan Balanced Portfolio
(9/1/95) -- -- -- -- -- -- -- --
Panorama LifeSpan Diversified Income
Portfolio (9/1/95) -- -- -- -- -- -- -- --
MFS(R) New Discovery Series (5/1/98)(5) -- -- -- -- -- -- -- --
MFS(R) Emerging Growth Series (7/24/95) -- -- -- -- -- -- -- --
MFS(R) Research Series (7/26/95) -- -- -- -- -- -- -- --
T. Rowe Price Mid-Cap Growth Portfolio
(12/31/96) -- -- -- -- -- -- -- --
T. Rowe Price New America Growth
Portfolio (3/31/94) -- -- -- -- -- -- -- --
Fidelity Variable Insurance Products
Fund II Contrafund Portfolio (1/3/95)(6) -- -- -- -- -- -- -- --
</TABLE>
1. The figures shown are one year total returns from inception of the Funds.
These figures do not reflect the mortality and expense risk charges
assessed against the Separate Account, deductions from premiums or
administrative, cost of insurance and underwriting charges assessed against
the account value of the Policies. If these charges were included, the
total return figures would be lower. They may be considered in assessing
the competence and performance of each of the Funds' investment advisers.
B-7
<PAGE>
2. This is the return for the period June 1, 1998 to December 31, 1998.
3. The figures for the MML Equity Fund from 1974 through 1981 are as follows:
1974: (17.61)%; 1975: 32.85%; 1976: 24.77%; 1977: (0.52)%; 1978: 3.71%;
1979: 19.54% 1980: 27.62%; 1981: 6.67%; 1982: 25.67%. The figure for 1982
for the MML Managed Bond Fund is 22.79%. The figure for 1982 for the
Panorama Growth Portfolio is 33.00%. The figure for 1982 for the Panorama
Total Return Portfolio is 8.10%.
4. Each Oppenheimer Fund is a series of Oppenheimer Variable Account Funds.
5. This is the return for the period May 1, 1998 to December 31, 1998.
6. Service Class shares include an asset based distribution fee (12b-1 fee).
Initial offering of Service Class shares took place on November 3, 1997, at
which time the 12b-1 fee was imposed. Returns prior to that date do not
include the effect of the Service Class fee structure, and returns listed
would have been lower for each portfolio if the Service Class fee structure
were in place and reflected in the performance. Fidelity Investments is a
registered trademark of FMR Corporation.
7. Prior to May 1, 1999, this Fund was called Oppenheimer Growth Fund.
8. Prior to May 1, 1999, this Fund was called Oppenheimer Growth & Income
Fund.
B-8
<PAGE>
Appendix C
Illustrations of Death Benefits (Option A & Option B), Cash Surrender Values and
Accumulated Premiums
The following tables illustrate the way in which a policy operates. They show
how the death benefit and cash surrender value could vary over an extended
period of time, assuming the funds experience hypothetical gross rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized), equivalent to constant gross annual rates of 0%, 6% and
12%. Illustration 1 shows death benefit option A using the current schedule of
charges. Illustration 2 shows death benefit option A using the guaranteed
schedule of charges. Illustration 3 shows death benefit option B using the
current schedule of charges. Illustration 4 shows death benefit option B using
the guaranteed schedule of charges.
The tables are based on the following assumptions: 1) the policyowner is issue
age 45; 2) the policyowner has requested a level selected face amount of
$250,000; 3) no policy loans have been made, 4) the employer has selected an
annual modal term; 5) the modal term premium is always allocated to the GPA; 6)
the GPA credits the modal term premium interest at an annual rate of 3%; and 7)
and the policyowner makes annual premium payments of $4,000 in excess of the
modal term premium for 20 years which are allocated to the Separate Account.
These tables will assist in the comparison of death benefits and cash surrender
values for the policy with those under other variable life policies which may be
issued by Us or other companies.
The death benefits and cash surrender values for a policy would be different
from the amount shown if the rates of return of the funds averaged 0%, 6% and
12% over a period of years but varied above and below that average in individual
policy years. They would also differ if any policy loan were made during the
period of time illustrated. They would also be different depending upon the
allocation of investment value to each division, if the rates of return for all
the funds averaged 0%, 6% or 12% but varied above or below that average for
particular funds.
The tables assume that the modal term premium is credited interest at a
guaranteed rate of 3%. The current credited rate is higher than 3%. Therefore,
if current rates were used, the cash surrender values for the policy illustrated
in the tables would be higher.
The death benefits and cash surrender values shown in Illustrations 1 & 3
reflect a state premium tax deduction of 2% and a DAC Tax deduction of 0.25%,
Fund level expenses of 0.75% on an annual basis, of the net assets of the MML
Trust, Oppenheimer Trust, Panorama Fund, MFS Trust, T. Rowe Price Equity Series
Inc., and Fidelity Investments VIP Fund II shares held by the Separate Account
(This unweighted average reflects current fund level expenses), plus the
following current charges:
1. A sales load of 0.75% of premium.
2. Administrative charge, equal to $5.25 per month.
3. Cost of insurance protection, based on the current guaranteed select issue
rates being charged by the Company.
4. Mortality and expense risk charge, which is equal to 0.75% on an annual
basis, of the net asset value of the fund shares held by the Separate
Account.
The select cost of insurance rates are applicable to new business where the
insureds meet our current underwriting guidelines. The standard cost of
insurance rates are applicable to new business where insureds do not meet our
current underwriting guidelines. The standard rates are higher than the select
rates but in no event will they exceed the guaranteed cost of insurance rates.
The death benefits and cash surrender values shown in Illustrations 2 & 4
reflect a state premium tax deduction of 2% and a DAC Tax deduction of 0.25%,
Fund level expenses of 0.75% on an annual basis, of the net assets of the MML
Trust, Oppenheimer Trust, Panorama Fund, MFS Trust, T. Rowe Price Equity Series
Inc., and Fidelity Investments VIP II shares held by the Separate Account (This
unweighted average reflects current fund level expenses), plus the following
guaranteed charges:
1. A sales load of 5% of premium (We will establish a sales load between 0.75%
to 5% of premium for a policy upon its issuance. However, once the sales
load is established, it will not change for the life of the policy.)
2. Administrative charge, equal to $9.00 per month.
3. Cost of insurance charge, based on 125% of the 1980 CSO Mortality Table.
4. Mortality and expense risk charge, which is equal to 1.00% on an annual
basis, of the net asset value of the fund shares held by the Separate
Account.
C-1
<PAGE>
Currently no charge is made against the Separate Account for federal income
taxes but We reserve the right to charge the Separate Account for federal income
taxes attributable to the Separate Account if such taxes are imposed in the
future.
The fifth column of each table shows the amounts which would accumulate if an
amount equal to the annual premium were invested to earn interest after taxes,
of 5% per year, compounded annually.
Cash surrender values show in the tables reflect the deduction of applicable
premium taxes for a case with an initial case premium paid of $250,000. Taking
into account the mortality and expense risk charge and the fund level expenses,
the effect is that for gross annual rates of return of 0%, 6% and 12%, the
actual net annual rate of return on a current basis would be - 1.486%, 4.425%
and 10.336%, respectively, on a guaranteed basis would be -1.730%, 4.167% and
10.063%, respectively.
C-2
<PAGE>
Illustration 1
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
o Modal Term Premium, plus
o $4,000 Premium
Using Current Schedule of Charges
Illustrating Death Benefit Option A
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option A) Cash Surrender Value
Premiums ------------------------------- -----------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest ------------------------------- -----------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
------ ---------- ---------- ------- ----------- -------- -------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $382 $4,000 $4,382 $4,601 $250,000 $250,000 $250,000 $3,828 $4,057 $4,287
2 418 4,000 4,418 9,470 250,000 250,000 250,000 7,604 8,300 9,023
3 456 4,000 4,456 14,622 250,000 250,000 250,000 11,333 12,739 14,257
4 515 4,000 4,515 20,094 250,000 250,000 250,000 15,016 17,385 20,043
5 551 4,000 4,551 25,877 250,000 250,000 250,000 18,655 22,247 26,439
6 608 4,000 4,608 32,010 250,000 250,000 250,000 22,255 27,341 33,514
7 682 4,000 4,682 38,526 250,000 250,000 250,000 25,819 32,680 41,342
8 764 4,000 4,764 45,455 250,000 250,000 250,000 29,351 38,279 50,007
9 853 4,000 4,853 52,823 250,000 250,000 250,000 32,858 44,157 59,604
10 954 4,000 4,954 60,666 250,000 250,000 250,000 36,343 50,332 70,237
11 1,065 4,000 5,065 69,018 250,000 250,000 250,000 39,814 56,825 82,026
12 1,168 4,000 5,168 77,895 250,000 250,000 250,000 43,274 63,654 95,095
13 1,280 4,000 5,280 87,334 250,000 250,000 250,000 46,729 70,844 109,590
14 1,406 4,000 5,406 97,377 250,000 250,000 257,630 50,187 78,422 125,673
15 1,548 4,000 5,548 108,071 250,000 250,000 286,805 53,659 86,419 143,402
16 1,706 4,000 5,706 119,466 250,000 250,000 316,063 57,153 94,870 162,919
17 1,923 4,000 5,923 131,658 250,000 250,000 350,351 60,693 103,832 184,395
18 2,124 4,000 6,124 144,671 250,000 250,000 384,836 64,284 113,337 208,019
19 2,339 4,000 6,339 158,561 250,000 250,000 421,209 67,940 123,433 234,005
20 (age 65) 2,576 4,000 6,576 173,394 250,000 250,000 462,115 71,680 134,180 262,566
21 0 0 0 182,063 250,000 250,000 493,568 68,852 138,719 286,958
22 0 0 0 191,167 250,000 250,000 526,939 65,689 143,367 313,654
23 0 0 0 200,725 250,000 250,000 562,445 62,224 148,166 342,954
24 0 0 0 210,761 250,000 250,000 603,747 58,503 153,125 374,998
25 0 0 0 221,299 250,000 250,000 643,608 54,497 158,257 409,942
26 0 0 0 232,364 250,000 251,902 689,876 50,167 163,573 447,971
27 0 0 0 243,982 250,000 255,274 738,926 45,468 169,056 489,355
28 0 0 0 256,181 250,000 258,528 790,896 40,351 174,681 534,389
29 0 0 0 268,991 250,000 261,639 845,927 34,753 180,441 583,398
30 0 0 0 282,440 250,000 264,607 904,168 28,600 186,343 636,738
31 0 0 0 296,562 250,000 269,201 972,165 21,634 192,287 694,404
32 0 0 0 311,390 250,000 273,633 1,044,350 13,783 198,285 756,776
33 0 0 0 326,960 250,000 275,900 1,112,868 4,771 204,370 824,347
34 0 0 0 343,308 0 279,925 1,193,293 0 210,470 897,213
35 0 0 0 360,473 0 283,715 1,278,203 0 216,577 975,728
40 0 0 0 460,065 0 304,168 1,806,634 0 247,291 1,468,808
45 0 0 0 587,173 0 324,317 2,539,425 0 277,194 2,170,448
50 0 0 0 749,398 0 341,847 3,528,389 0 307,970 3,178,729
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-3
<PAGE>
Illustration 2
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
o Modal Term Premium, plus
o $4,000 Premium
Using Guaranteed Schedule of Charges (except fund level charges which are
reflected on a current basis)
Illustrating Death Benefit Option A
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option A) Cash Surrender Value
Premiums ------------------------------- ---------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest ------------------------------- ---------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
------ ---------- ---------- ------- ----------- -------- -------- --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $382 $4,000 $4,382 $4,601 $250,000 $250,000 $250,000 $2,507 $2,698 $2,889
2 418 4,000 4,418 9,470 250,000 250,000 250,000 4,909 5,446 6,008
3 456 4,000 4,456 14,622 250,000 250,000 250,000 7,204 8,246 9,379
4 515 4,000 4,515 20,094 250,000 250,000 250,000 9,406 11,113 13,045
5 551 4,000 4,551 25,877 250,000 250,000 250,000 11,485 14,018 17,005
6 608 4,000 4,608 32,010 250,000 250,000 250,000 13,446 16,971 21,301
7 682 4,000 4,682 38,526 250,000 250,000 250,000 15,292 19,976 25,974
8 764 4,000 4,764 45,455 250,000 250,000 250,000 17,013 23,026 31,059
9 853 4,000 4,853 52,823 250,000 250,000 250,000 18,593 26,112 36,595
10 954 4,000 4,954 60,666 250,000 250,000 250,000 20,026 29,230 42,633
11 1,065 4,000 5,065 69,018 250,000 250,000 250,000 21,313 32,387 49,240
12 1,168 4,000 5,168 77,895 250,000 250,000 250,000 22,433 35,567 56,477
13 1,280 4,000 5,280 87,334 250,000 250,000 250,000 23,388 38,780 64,431
14 1,406 4,000 5,406 97,377 250,000 250,000 250,000 24,178 42,033 73,210
15 1,548 4,000 5,548 108,071 250,000 250,000 250,000 24,793 45,326 82,927
16 1,706 4,000 5,706 119,466 250,000 250,000 250,000 25,211 48,653 93,711
17 1,923 4,000 5,923 131,658 250,000 250,000 250,000 25,447 52,046 105,757
18 2,124 4,000 6,124 144,671 250,000 250,000 250,000 25,425 55,450 119,211
19 2,339 4,000 6,339 158,561 250,000 250,000 250,000 25,098 58,842 134,285
20 (age 65) 2,576 4,000 6,576 173,394 250,000 250,000 265,911 24,430 62,214 151,086
21 0 0 0 182,063 250,000 250,000 279,593 16,944 58,764 162,554
22 0 0 0 191,167 250,000 250,000 293,617 8,668 54,476 174,772
23 0 0 0 200,725 0 250,000 307,997 0 49,230 187,803
24 0 0 0 210,761 0 250,000 324,630 0 42,867 201,633
25 0 0 0 221,299 0 250,000 339,733 0 35,174 216,390
26 0 0 0 232,364 0 250,000 357,318 0 25,865 232,025
27 0 0 0 243,982 0 250,000 375,311 0 14,553 248,550
28 0 0 0 256,181 0 250,000 393,644 0 735 265,976
29 0 0 0 268,991 0 0 412,262 0 0 284,319
30 0 0 0 282,440 0 0 431,151 0 0 303,627
31 0 0 0 296,562 0 0 453,228 0 0 323,735
32 0 0 0 311,390 0 0 475,648 0 0 344,672
33 0 0 0 326,960 0 0 495,252 0 0 366,853
34 0 0 0 343,308 0 0 518,796 0 0 390,072
35 0 0 0 360,473 0 0 542,858 0 0 414,395
40 0 0 0 460,065 0 0 676,336 0 0 549,866
45 0 0 0 587,173 0 0 824,174 0 0 704,423
50 0 0 0 749,398 0 0 985,148 0 0 887,521
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-4
<PAGE>
Illustration 3
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
o Modal Term Premium, plus
o $4,000 Premium
Using Current Schedule of Charges
Illustrating Death Benefit Option B
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option B) Cash Surrender Value
Premiums ------------------------------- -----------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest ------------------------------- -----------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
------ ---------- ---------- ------- ----------- -------- -------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $382 $4,000 $4,382 $4,601 $253,822 $254,052 $254,281 $3,822 $4,052 $4,281
2 418 4,000 4,418 9,470 257,588 258,283 259,005 7,588 8,283 9,005
3 456 4,000 4,456 14,622 261,298 262,701 264,216 11,298 12,701 14,216
4 515 4,000 4,515 20,094 264,952 267,315 269,967 14,952 17,315 19,967
5 551 4,000 4,551 25,877 268,552 272,133 276,312 18,552 22,133 26,312
6 608 4,000 4,608 32,010 272,099 277,164 283,312 22,099 27,164 33,312
7 682 4,000 4,682 38,526 275,593 282,418 291,037 25,593 32,418 41,037
8 764 4,000 4,764 45,455 279,036 287,904 299,560 29,036 37,904 49,560
9 853 4,000 4,853 52,823 282,427 293,633 308,964 32,427 43,633 58,964
10 954 4,000 4,954 60,666 285,768 299,616 319,340 35,768 49,616 69,340
11 1,065 4,000 5,065 69,018 289,059 305,864 330,788 39,059 55,864 80,788
12 1,168 4,000 5,168 77,895 292,301 312,388 343,420 42,301 62,388 93,420
13 1,280 4,000 5,280 87,334 295,496 319,202 357,358 45,496 69,202 107,358
14 1,406 4,000 5,406 97,377 298,643 326,316 372,737 48,643 76,316 122,737
15 1,548 4,000 5,548 108,071 301,744 333,746 389,706 51,744 83,746 139,706
16 1,706 4,000 5,706 119,466 304,798 341,505 408,428 54,798 91,505 158,428
17 1,923 4,000 5,923 131,658 307,807 349,608 429,087 57,807 99,608 179,087
18 2,124 4,000 6,124 144,671 310,772 358,069 451,881 60,772 108,069 201,881
19 2,339 4,000 6,339 158,561 313,693 366,905 477,032 63,693 116,905 227,032
20 (age 65) 2,576 4,000 6,576 173,394 316,571 376,133 504,783 66,571 126,133 254,783
21 0 0 0 182,063 312,899 378,946 528,269 62,899 128,946 278,269
22 0 0 0 191,167 308,929 381,521 553,809 58,929 131,521 303,809
23 0 0 0 200,725 304,716 383,899 581,669 54,716 133,899 331,669
24 0 0 0 210,761 300,232 386,039 612,057 50,232 136,039 362,057
25 0 0 0 221,299 295,448 387,894 645,198 45,448 137,894 395,198
26 0 0 0 232,364 290,332 389,417 681,339 40,332 139,417 431,339
27 0 0 0 243,982 284,853 390,555 720,753 34,853 140,555 470,753
28 0 0 0 256,181 278,980 391,253 763,739 28,980 141,253 513,739
29 0 0 0 268,991 272,672 391,444 812,894 22,672 141,444 560,617
30 0 0 0 282,440 265,881 391,050 868,634 15,881 141,050 611,714
31 0 0 0 296,562 258,370 389,791 933,916 8,370 139,791 667,083
32 0 0 0 311,390 250,135 387,617 1,003,257 135 137,617 726,998
33 0 0 0 326,960 0 384,265 1,069,076 0 134,265 791,908
34 0 0 0 343,308 0 379,546 1,146,332 0 129,546 861,904
35 0 0 0 360,473 0 373,250 1,227,898 0 123,250 937,327
40 0 0 0 460,065 0 312,889 1,735,513 0 62,889 1,410,986
45 0 0 0 587,173 0 0 2,439,437 0 0 2,084,989
50 0 0 0 749,398 0 0 3,389,446 0 0 3,053,555
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-5
<PAGE>
Illustration 4
VARIABLE RIDER TO FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE CERTIFICATE
Age 45, Unismoker, Unisex
$250,000 Selected Face Amount - All Years
Assumes 2 Types of Premium Received on an Annual Basis:
o Modal Term Premium, plus
o $4,000 Premium
Using Guaranteed Schedule of Charges (except fund level charges which are
reflected on a current basis)
Illustrating Death Benefit Option B
Assumes Mandatory Employee Participation
Modal Term Premiums allocated to Guaranteed Principal Account credited at 3%
annualized
<TABLE>
<CAPTION>
Death Benefit (Option B) Cash Surrender Value
Premiums ------------------------------- ---------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Total At 5% Annual Investment Return of Annual Investment Return of
Policy Modal Term Additional Premium Interest ------------------------------- ---------------------------
Year Premium Premium Paid Per Year 0% 6% 12% 0% 6% 12%
------ ---------- ---------- ------- ----------- -------- -------- --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $382 $4,000 $4,382 $4,601 $252,489 $252,678 $252,868 $2,489 $2,678 $2,868
2 418 4,000 4,418 9,470 254,855 255,387 255,943 4,855 5,387 5,943
3 456 4,000 4,456 14,622 257,098 258,124 259,240 7,098 8,124 9,240
4 515 4,000 4,515 20,094 259,228 260,900 262,792 9,228 10,900 12,792
5 551 4,000 4,551 25,877 261,214 263,681 266,589 11,214 13,681 16,589
6 608 4,000 4,608 32,010 263,059 266,470 270,657 13,059 16,470 20,657
7 682 4,000 4,682 38,526 264,763 269,263 275,021 14,763 19,263 25,021
8 764 4,000 4,764 45,455 266,312 272,045 279,693 16,312 22,045 29,693
9 853 4,000 4,853 52,823 267,689 274,794 284,685 17,689 24,794 34,685
10 954 4,000 4,954 60,666 268,885 277,497 290,015 18,885 27,497 40,015
11 1,065 4,000 5,065 69,018 269,896 280,145 295,710 19,896 30,145 45,710
12 1,168 4,000 5,168 77,895 270,702 282,712 301,784 20,702 32,712 51,784
13 1,280 4,000 5,280 87,334 271,302 285,190 308,268 21,302 35,190 58,268
14 1,406 4,000 5,406 97,377 271,697 287,573 315,203 21,697 37,573 65,203
15 1,548 4,000 5,548 108,071 271,872 289,838 322,614 21,872 39,838 72,614
16 1,706 4,000 5,706 119,466 271,805 291,952 330,522 21,805 41,952 80,522
17 1,923 4,000 5,923 131,658 271,507 293,919 338,986 21,507 43,919 88,986
18 2,124 4,000 6,124 144,671 270,898 295,645 347,974 20,898 45,645 97,974
19 2,339 4,000 6,339 158,561 269,930 297,065 357,481 19,930 47,065 107,481
20 (age 65) 2,576 4,000 6,576 173,394 268,570 298,128 367,520 18,570 48,128 117,520
21 0 0 0 182,063 260,548 292,187 371,163 10,548 42,187 121,163
22 0 0 0 191,167 251,945 285,257 374,408 1,945 35,257 124,408
23 0 0 0 200,725 0 277,256 377,176 0 27,256 127,176
24 0 0 0 210,761 0 268,083 379,362 0 18,083 129,362
25 0 0 0 221,299 0 257,601 380,813 0 7,601 130,813
26 0 0 0 232,364 0 0 381,328 0 0 131,328
27 0 0 0 243,982 0 0 380,641 0 0 130,641
28 0 0 0 256,181 0 0 378,429 0 0 128,429
29 0 0 0 268,991 0 0 374,329 0 0 124,329
30 0 0 0 282,440 0 0 367,965 0 0 117,965
31 0 0 0 296,562 0 0 358,956 0 0 108,956
32 0 0 0 311,390 0 0 346,914 0 0 96,914
33 0 0 0 326,960 0 0 331,435 0 0 81,435
34 0 0 0 343,308 0 0 312,048 0 0 62,048
35 0 0 0 360,473 0 0 288,151 0 0 38,151
40 0 0 0 460,065 0 0 0 0 0 0
45 0 0 0 587,173 0 0 0 0 0 0
50 0 0 0 749,398 0 0 0 0 0 0
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the funds that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-6
<PAGE>
Appendix D - Directors of Massachusetts Mutual Life Insurance Company
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)
- --------------------------------------------------------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-1
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-2
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
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>
D-3
<PAGE>
Appendix E
MODAL TERM PREMIUM CALCULATION
The modal term premium is an estimate of the premium that will be sufficient to
cover the premium deductions and the monthly deduction for the modal term. It
equals the monthly deduction(s) during the modal term divided by 1 less the
premium deduction discounted at a rate no lower than the monthly equivalent of
the minimum annual interest rate for the GPA.
Example:
<TABLE>
<S> <C>
a. Modal Term: 3 Months
b. Premium Deduction: 0.75%
c. Annual Interest Rate Used For
Discounting Monthly Deduction(s): 5%
d. Monthly Deduction In Month 1: $100
e. Monthly Deduction In Month 2: $110
f. Monthly Deduction In Month 3: $120
g. Sum of Monthly Charges Discounted At
Monthly Equivalent Of 5%: $328.58
h. Modal Term Premium (g. divided by 1
less Premium Deduction): $331.06
-------
</TABLE>
E-1
<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
Strategic Group 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 for the year then ended and the
changes in each of their net assets for each of the two years in the period then
ended, 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
F-1
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
MML Oppenheimer *Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
Index Money Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 148,476 406,928 56,205 102,424 26,464 53,088 12,461 19,478
========== ======== ======== ========== ========== ========== ======== ========
Identified cost (Note 3B) $1,995,714 $406,928 $645,224 $1,222,947 $1,162,150 $1,795,926 $213,440 $418,829
========== ======== ======== ========== ========== ========== ======== ========
Value (Note 3A) $2,265,741 $406,928 $619,376 $1,261,865 $1,186,357 $1,946,735 $212,456 $429,881
Dividends receivable 34,016 677 -- -- -- -- -- --
Receivable from Massachusetts
Mutual Life Insurance Company 48,822 3,521 -- 36,925 3,663 29,599 -- 358
---------- -------- -------- ---------- ---------- ---------- -------- --------
Total assets 2,348,579 411,126 619,376 1,298,790 1,190,020 1,976,334 212,456 430,239
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company -- -- 1,134 -- -- -- 414 --
---------- -------- -------- ---------- ---------- ---------- -------- --------
NET ASSETS $2,348,579 $411,126 $618,242 $1,298,790 $1,190,020 $1,976,334 $212,042 $430,239
========== ======== ======== ========== ========== ========== ======== ========
Net Assets:
For Variable Life Insurance
policies $2,347,285 $410,068 $617,233 $1,297,707 $1,188,992 $1,975,136 $209,938 $430,197
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 1,294 1,058 1,009 1,083 1,028 1,198 2,104 42
---------- -------- -------- ---------- ---------- ---------- -------- --------
Net assets $2,348,579 $411,126 $618,242 $1,298,790 $1,190,020 $1,976,334 $212,042 $430,239
========== ======== ======== ========== ========== ========== ======== ========
Accumulation units (Note 8)
Policyowners 1,814,694 388,110 612,062 1,196,999 1,157,578 1,649,057 201,267 390,953
Massachusetts Mutual Life
Insurance Company 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
---------- -------- -------- ---------- ---------- ---------- -------- --------
Total units 1,815,694 389,110 613,062 1,197,999 1,158,578 1,650,057 202,267 391,953
========== ======== ======== ========== ========== ========== ======== ========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 1.29 $ 1.06 $ 1.01 $ 1.08 $ 1.03 $ 1.20 $ 1.05 $ 1.10
December 31, 1997 1.02 1.01 1.01 1.02 0.92 0.97 0.99 0.97
</TABLE>
*This division invests in the Oppenheimer Aggressive Growth Fund. Prior to May
1, 1998, the Oppenheimer Aggressive Growth Fund was called the Oppenheimer
Capital Appreciation Fund.
See Notes to Financial Statements.
F-2
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF ASSETS AND LIABILITIES (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
Bond Income Total Return Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 77,474 56,753 632,663 315,669 94,135 42,089 53,357 38,157
======== ========== ========== ========== ======== ======= ======= =======
Identified cost (Note 3B) $399,965 $1,225,681 $1,167,805 $1,060,652 $137,228 $48,325 $69,715 $52,054
======== ========== ========== ========== ======== ======= ======= =======
Value (Note 3B) $396,669 $1,162,291 $1,208,387 $1,032,239 $147,792 $49,245 $68,297 $51,893
Dividends receivable -- -- -- -- -- -- -- --
Receivable from Massachusetts
Mutual Life Insurance Company -- 1,159 -- 2,403 900 -- -- --
-------- ---------- ---------- ---------- -------- ------- ------- -------
Total assets 396,669 1,163,450 1,208,387 1,034,642 148,692 49,245 68,297 51,893
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company $ 731 $ -- $ 8 $ -- $ -- $ 114 $ 131 $ 85
-------- ---------- ---------- ---------- -------- ------- ------- -------
NET ASSETS $395,938 $1,163,450 $1,208,379 $1,034,642 $148,692 $49,131 $68,166 $51,808
======== ========== ========== ========== ======== ======= ======= =======
Net Assets:
For Variable Life Insurance
policies 394,909 1,162,393 1,207,280 1,033,583 147,559 48,065 67,138 50,784
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company $ 1,029 $ 1,057 $ 1,099 $ 1,059 $ 1,133 $ 1,066 $ 1,028 $ 1,024
-------- ---------- ---------- ---------- -------- ------- ------- -------
Net assets $395,938 $1,163,450 $1,208,379 $1,034,642 $148,692 $49,131 $68,166 $51,808
======== ========== ========== ========== ======== ======= ======= =======
Accumulation units (Note 8)
Policyowners 383,655 1,099,630 1,098,805 976,062 130,215 45,081 65,320 49,560
Massachusetts Mutual Life
Insurance Company 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
-------- ---------- ---------- ---------- -------- ------- ------- -------
Total units 384,655 1,100,630 1,099,805 977,062 131,215 46,081 66,320 50,560
======== ========== ========== ========== ======== ======= ======= =======
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 1.03 $ 1.06 $ 1.10 $ 1.06 $ 1.13 $ 1.07 $ 1.03 $ 1.02
December 31, 1997 1.01 1.02 1.00 0.98 0.96 1.02 0.98 0.97
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
MML Oppenheimer *Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
Index Money Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 34,394 $11,095 $ 9,293 $14,459 $10,539 $ 47,283 $ 4,515 $17,230
Expenses
Mortality and expense risk fees
(Note 4) 10,458 1,644 3,381 6,066 5,631 8,546 1,071 2,120
--------- ------- -------- ------- ------- -------- ------- -------
Net investment income (loss)
(Note 3C) 23,936 9,451 5,912 8,393 4,908 38,737 3,444 15,110
--------- ------- -------- ------- ------- -------- ------- -------
Net realized and unrealized gain
(loss) on investments
Net realized gain (loss) on
investments (Notes 3B, 3C and 6) 4,223 -- (2,942) 2 1,258 (2,321) (1,013) (1,024)
Change in net unrealized
appreciation/depreciation
of investments 270,019 -- (25,846) 38,909 24,284 150,834 (968) 11,081
--------- ------- -------- ------- ------- -------- ------- -------
Net gain (loss) on investments 274,242 -- (28,788) 38,911 25,542 148,513 (1,981) 10,057
--------- ------- -------- ------- ------- -------- ------- -------
Net increase (decrease) in net
assets resulting from operations $ 298,178 $ 9,451 $(22,876) $47,304 $30,450 $187,250 $ 1,463 $25,167
========= ======= ======== ======= ======= ======== ======= =======
</TABLE>
* This division invests in the Oppenheimer Aggressive Growth Fund. Prior to May
1, 1998, the Oppenheimer Aggressive Growth Fund was called the Oppenheimer
Capital Appreciation Fund.
See Notes to Financial Statements.
F-4
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF OPERATIONS (Continued)
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
Bond Income Total Return Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 5,017 $ 15,699 $ 37,146 $ 58,997 $ 850 $ 621 $ 2,924 $ 1,538
Expenses
Mortality and expense risk fees
(Note 4) 2,182 5,500 5,166 4,847 556 552 381 221
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income (loss)
(Note 3C) 2,835 10,199 31,980 54,150 294 69 2,543 1,317
-------- -------- -------- -------- -------- -------- -------- --------
Net realized and unrealized gain
(loss) on investments
Net realized gain (loss) on
investments (Notes 3B, 3C and 6) (49) (1,985) (4,047) (2,259) 80 (1,213) (231) (19)
Change in net unrealized
appreciation/depreciation
of investments (3,286) (63,406) 40,582 (28,399) 10,607 894 (1,395) (132)
-------- -------- -------- -------- -------- -------- -------- --------
Net gain (loss) on investments (3,335) (65,391) 36,535 (30,658) 10,687 (319) (1,626) (151)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net
assets resulting from operations $ (500) $(55,192) $ 68,515 $ 23,492 $ 10,981 $ (250) $ 917 $ 1,166
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
MML Oppenheimer *Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
Index Money Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment income $ 23,936 $ 9,451 $ 5,912 $ 8,393 $ 4,908 $ 38,737 $ 3,444 $ 15,110
Net realized gain
(loss) on investments 4,223 -- (2,942) 2 1,258 (2,321) (1,013) (1,024)
Change in net unrealized
appreciation/depreciation
of investments 270,019 -- (25,846) 38,909 24,284 150,834 (968) 11,081
---------- -------- -------- ---------- ---------- ---------- -------- --------
Net increase (decrease) in
net assets resulting from
operations 298,178 9,451 (22,876) 47,304 30,450 187,250 1,463 25,167
---------- -------- -------- ---------- ---------- ---------- -------- --------
Capital transactions:
(Note 8)
Transfer of net premium 2,009,872 514,397 715,208 1,254,579 1,125,671 1,718,072 210,380 401,802
Transfer to Guaranteed
Principal Account -- -- -- -- -- -- -- --
Transfer of surrender
values (19,258) 113,182) (81,313) (10,246) (13,860) (2,243) (5,757) (4,489)
Transfer due to
reimbursement (payment)
of accumulation unit
value fluctuation 69,432 1,718 7,473 6,855 55,709 82,682 5,824 8,997
Withdrawal due to charges
for administrative and
insurance costs (10,661) (2,269) (1,263) (725) (8,871) (10,400) (858) (2,207)
Divisional transfers -- -- -- -- -- -- -- --
---------- -------- -------- ---------- ---------- ---------- -------- --------
Net increase in net assets
resulting from capital
transactions 2,049,385 400,664 640,105 1,250,463 1,158,649 1,788,111 209,589 404,103
---------- -------- -------- ---------- ---------- ---------- -------- --------
Total increase 2,347,563 410,115 617,229 1,297,767 1,189,099 1,975,361 211,052 429,270
NET ASSETS, at beginning
of the year 1,016 1,011 1,013 1,023 921 973 990 969
---------- -------- -------- ---------- ---------- ---------- -------- --------
NET ASSETS, at end
of the year $2,348,579 $411,126 $618,242 $1,298,790 $1,190,020 $1,976,334 $212,042 $430,239
========== ======== ======== ========== ========== ========== ======== ========
</TABLE>
*This division invests in the Oppenheimer Aggressive Growth Fund. Prior to May
1, 1998, the Oppenheimer Aggressive Growth Fund was called the Oppenheimer
Capital Appreciation Fund.
See Notes to Financial Statements.
F-6
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS (Continued)
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
Bond Income Total Return Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment income $ 2,835 $ 10,199 $ 31,980 $ 54,150 $ 294 $ 69 $ 2,543 $ 1,317
Net realized gain
(loss) on investments (49) (1,985) (4,047) (2,259) 80 (1,213) (231) (19)
Change in net unrealized
appreciation/depreciation
of investments (3,286) (63,406) 40,582 (28,399) 10,607 894 (1,395) (132)
-------- ---------- ---------- ---------- -------- -------- ------- -------
Net increase (decrease)
in net assets resulting
from operations (500) (55,192) 68,515 23,492 10,981 (250) 917 1,166
-------- ---------- ---------- ---------- -------- -------- ------- -------
Capital transactions:
(Note 8)
Transfer of net premium 392,044 1,184,530 1,142,980 1,011,655 141,407 136,142 67,382 50,715
Transfer to Guaranteed
Principal Account -- -- -- -- -- -- -- --
Transfer of surrender
values -- (15,810) (16,795) (17,339) -- (89,192) (1,076) --
Transfer due to
reimbursement (payment)
of accumulation unit
value fluctuation 4,084 57,668 24,093 20,386 (3,835) 1,624 456 656
Withdrawal due to charges
for administrative and
insurance costs (698) (8,763) (11,412) (4,536) (817) (217) (488) (1,698)
Divisional transfers -- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ------- -------
Net increase in net assets
resulting from capital
transactions 395,430 1,217,625 1,138,866 1,010,166 136,755 48,357 66,274 49,673
-------- ---------- ---------- ---------- -------- -------- ------- -------
Total increase 394,930 1,162,433 1,207,381 1,033,658 147,736 48,107 67,191 50,839
NET ASSETS, at beginning
of the year 1,008 1,017 998 984 956 1,024 975 969
-------- ---------- ---------- ---------- -------- -------- ------- -------
NET ASSETS, at end
of the year $395,938 $1,163,450 $1,208,379 $1,034,642 $148,692 $ 49,131 $68,166 $51,808
======== ========== ========== ========== ======== ======== ======= =======
</TABLE>
See Notes to Financial Statements.
F-7
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS For The Period October 1, 1997 (Commencement
of Operations) Through December 31, 1997
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
Index Money Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 8 $ 11 $ 16 $ 14 $ (2) $ (2) $ 7 $ (2)
Change in net unrealized
appreciation/depreciation
of investments 8 -- (3) 9 (77) (25) (17) (29)
------ ------ ------- ------ ------- ------- ------- -------
Net increase (decrease) in net
assets resulting from operations 16 11 13 23 (79) (27) (10) (31)
------ ------ ------- ------ ------- ------- ------- -------
Capital transactions: (Note 8)
Investment by Massachusetts Mutual
Life Insurance Company 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
------ ------ ------- ------ ------- ------- ------- -------
Net increase in net assets resulting
from capital transactions 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
------ ------ ------- ------ ------- ------- ------- -------
Total increase 1,016 1,011 1,013 1,023 921 973 990 969
NET ASSETS, at beginning of the period -- -- -- -- -- -- -- --
------ ------ ------- ------ ------- ------- ------- -------
NET ASSETS, at end of the year $1,016 $1,011 $ 1,013 $1,023 $ 921 $ 973 $ 990 $ 969
====== ====== ======= ====== ======= ======= ======= =======
</TABLE>
See Notes to Financial Statements.
F-8
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
STATEMENT OF CHANGES IN NET ASSETS (Continued)
For The Period October 1, 1997 (Commencement of Operations)
Through December 31, 1997
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Total Panorama International Diversified LifeSpan Capital
Bond Income Return Growth Equity Income Balanced Appreciation
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 17 $ 1 $ (2) $ (2) $ (2) $ (2) $ (2) $ (2)
Change in net unrealized
appreciation/depreciation
of investments (9) 16 -- (14) (42) 26 (23) (29)
------- ------ ------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting from operations 8 17 (2) (16) (44) 24 (25) (31)
------- ------ ------- ------- ------- ------- ------- -------
Capital transactions: (Note 8)
Investment by Massachusetts
Mutual Life Insurance Company 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
------- ------ ------- ------- ------- ------- ------- -------
Net increase in net assets
resulting from capital
transactions 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
------- ------ ------- ------- ------- ------- ------- -------
Total increase 1,008 1,017 998 984 956 1,024 975 969
NET ASSETS, at beginning
of the period -- -- -- -- -- -- -- --
------- ------ ------- ------- ------- ------- ------- -------
NET ASSETS, at end of the year $ 1,008 $1,017 $ 998 $ 984 $ 956 $ 1,024 $ 975 $ 969
======= ====== ======= ======= ======= ======= ======= =======
</TABLE>
See Notes to Financial Statements.
F-9
<PAGE>
Massachusetts Mutual Variable Life Separate Account I -
Strategic Group Variable Universal Life
Notes To Financial Statements
1. HISTORY
Massachusetts Mutual Variable Life Separate Account I ("Separate Account
I") is a separate investment account established on July 13, 1988 by
Massachusetts Mutual Life Insurance Company ("MassMutual") in accordance
with the provisions of Section 132G of Chapter 175 of the Massachusetts
General Laws.
MassMutual maintains 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 variable universal life
insurance policy, known as Strategic Variable Life Plus.
MassMutual paid $16,000 to the Strategic GVUL Segment on October 1, 1997 to
provide initial capital: 5,513 shares were purchased in the three
management investment companies described in Note 2 supporting the sixteen
divisions of Strategic GVUL Segment.
Separate Account I operates as a registered unit investment trust pursuant
to the Investment Company Act of 1940.
2. INVESTMENT OF STRATEGIC GVUL SEGMENT'S ASSETS
Strategic GVUL Segment maintains sixteen divisions. Each division invests
in corresponding shares of either the MML Series Investment Fund ("MML
Trust"), Oppenheimer Variable Account Funds ("Oppenheimer Trust"), or the
Panorama Series Fund, Inc. ("Panorama Fund"). At any time, only eight
divisions of the Separate Account plus the Guaranteed Principal Account
("GPA") are available to a policyowner.
MML Trust, a no-load, open-end, management investment company registered
under the Investment Company Act of 1940, with one of its six funds, MML
Equity Index Fund, available to the Strategic Group Variable Universal Life
policyowners. MassMutual serves as investment manager. MassMutual has
entered into a sub-advisory agreement with Mellon Equity Associates
("Mellon Equity") whereby Mellon Equity serves as the sub-adviser to the
MML Equity Index Fund.
F-10
<PAGE>
Notes To Financial Statements (Continued)
Oppenheimer Trust is a diversified open-end, management investment company
registered under the Investment Company Act of 1940, with nine of its ten
funds currently available to the Strategic Group Variable Universal Life
policyowners:
Oppenheimer Money Fund, Oppenheimer High Income Fund, Oppenheimer Bond
Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund,
Oppenheimer Multiple Strategies Fund, Oppenheimer Global Securities Fund,
Oppenheimer Strategic Bond Fund and Oppenheimer Growth & Income Fund.
Panorama Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, with six of its
portfolios currently available to the Strategic Group Variable Universal
Life policyowners: Panorama Total Return Portfolio, Panorama Growth
Portfolio, Panorama International Equity Portfolio, Panorama LifeSpan
Diversified Income Portfolio, Panorama LifeSpan Balanced Portfolio and
Panorama LifeSpan Capital Appreciation Portfolio. OppenheimerFunds, Inc.
("OFI"), a controlled subsidiary of MassMutual, serves as investment
manager to the Oppenheimer Trust and Panorama Fund. OFI has entered into
investment sub-advisory agreements with three sub-advisers to assist in the
selection of portfolio investments for the Panorama Fund's three LifeSpan
Portfolios and Panorama Fund's International Equity Portfolio.
Babson-Stewart Ivory International ("Babson-Stewart") is the sub-adviser to
the International Equity Portfolio and international stock components of
the LifeSpan Balanced Portfolio and the LifeSpan Capital Appreciation
Portfolio. BEA Associates ("BEA") is the sub-adviser to the high yield bond
component of the LifeSpan Diversified Income Portfolio, LifeSpan Balanced
Portfolio, and LifeSpan Capital Appreciation Portfolio. Pilgrim, Baxter &
Associates ("Pilgrim Baxter") is the sub-adviser to the small cap component
of the LifeSpan Balanced Portfolio and the LifeSpan Capital Appreciation
Portfolio. For providing its services under the sub-advisory agreements,
OFI pays the three sub-advisers a monthly fee calculated daily at an annual
rate based on the average daily net assets of the portion of their
respective components of the Panorama LifeSpan Portfolios.
In addition to the sixteen divisions of Strategic GVUL Segment, a
policyowner may also allocate funds to the Guaranteed Principal Account
("GPA"), which is part of MassMutual's general account. Because of
exemptive and exclusionary provisions, interests in the GPA, are not
registered under the Securities Act of 1933. 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 Strategic GVUL Segment in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
Investments in the MML Trust, the Oppenheimer Trust and the Panorama Fund
are each stated at market value which is the net asset value per share of
each of the respective underlying funds.
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
MassMutual is taxed under federal law as a life insurance company under the
provisions of the 1986 Internal Revenue Code, as amended. Strategic GVUL
Segment is part of MassMutual's total operation and is not taxed
separately. Strategic GVUL Segment will not be taxed as a "regulated
investment company" under Subchapter M of the Internal Revenue Code. Under
existing federal law, no taxes are payable on investment income and
realized capital gains of Strategic GVUL Segment credited to the policies.
Accordingly, MassMutual does not intend to make any charge to Strategic
GVUL Segment divisions to provide for company income taxes. MassMutual may,
however, make such a charge in the future if an unanticipated change of
current law results in a company tax liability attributable to Strategic
GVUL Segment.
D. Policy Loan
When a policy loan is made, Strategic GVUL Segment transfers the amount of
the loan to MassMutual, thereby decreasing both the investments and net
assets of Strategic GVUL Segment by an equal amount. The interest rate
charged on any loan is 6% per year or the policyowner may select an
adjustable loan rate at the time of application. All loan repayments are
allocated to the Guaranteed Principal Account.
F-11
<PAGE>
Notes To Financial Statements (Continued)
The policyowner earns interest at a rate which is the greater of 3% or the
policy loan rate less a MassMutual declared charge (maximum 1.25%) for
expenses and taxes.
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. CHARGES
MassMutual charges the Strategic GVUL Segment divisions for the mortality
and expense risks it assumes. The charge is made daily at a current
effective annual rate of 0.75% of the value of each division's net assets.
MassMutual makes certain deductions from the annual premium before amounts
are allocated to the Strategic GVUL Segment or the GPA. A deduction as a
percentage of premium is made for sales charges, state premium taxes and
the deferred acquisition cost tax expense. No additional deductions are
taken when money is transferred from the GPA to the Strategic GVUL Segment.
MassMutual also makes certain charges for the cost of insurance and
administrative costs.
5. SALES AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the policies pursuant to an
underwriting and servicing agreement among MML Distributors, MassMutual and
Separate Account I. MML Distributors is registered with the Securities and
Exchange Commission (the "SEC") as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). MML Distributors may enter into
selling agreements with other broker-dealers who are registered with the
SEC and are members of the NASD in order to sell the policies.
MML Investors Services, Inc. ("MMLISI") a wholly-owned subsidiary of
MassMutual, serves as co-underwriter of the policies pursuant to
underwriting and servicing agreements among MMLISI, MassMutual and Separate
Account I. MMLISI is registered with the SEC as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the NASD. Registered
representatives of MMLISI sell the policies as authorized variable life
insurance agents under applicable state insurance laws.
Pursuant to the underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
policies are paid by MassMutual on behalf of MML Distributors or MMLISI.
MML Distributors and MMLISI also receive compensation for their activities
as underwriters of the policies.
6. PURCHASES AND SALES OF INVESTMENT
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
For The Year Ended Index Money Income Bond Appreciation Growth Strategies Securities
December 31, 1998 Division Division Division Division Division Division Division Division
- ----------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of purchases $2,032,702 $ 523,269 $ 734,503 $1,240,030 $1,205,826 $1,857,542 $227,204 $430,964
Proceeds from sales $ 42,211 $ 117,352 $ 87,354 $ 18,100 $ 45,934 $ 60,295 $ 13,760 $ 12,111
Average monthly
value of securities $1,386,653 $ 223,670 $ 452,026 $ 816,450 $ 753,357 $1,145,477 $142,793 $282,542
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
For The Year Ended Bond Income Total Return Growth Equity Income Balanced Appreciation
December 31, 1998 Division Division Division Division Division Division Division Division
- ----------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of purchases $ 401,329 $1,250,655 $1,199,629 $1,080,505 $ 137,550 $ 139,075 $ 74,267 $ 51,663
Proceeds from sales $ 2,334 $ 23,991 $ 28,777 $ 18,594 $ 1,402 $ 90,537 $ 5,321 $ 590
Average monthly
value of securities $ 289,404 $ 733,649 $ 700,711 $ 644,330 $ 74,787 $ 71,662 $ 50,557 $ 29,802
</TABLE>
F-12
<PAGE>
Notes To Financial Statements (Continued)
7. NET INVESTMENT RETURN
The following table shows the net investment return for each division in
the Strategic GVUL Segment:
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
For the Years Ended Index Money Income Bond Appreciation Growth Strategies Securities
December 31, Division Division Division Division Division Division Division Division
- ------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 21.50% 4.23% (5.06%) 5.79% 4.04% 16.35% 1.02% 8.91%
For the Period
October 1, 1997
(Commencement of
Operations) through
December 31, 1997 1.61% 1.12% 1.29% 2.24% (8.52%) (2.79%) (0.99%) (3.23%)
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
For the Years Ended Bond Income Total Return Growth Equity Income Balanced Appreciation
December 31, (Continued) Division Division Division Division Division Division Division Division
- ------------------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 (.17%) (7.52%) 9.78% 3.65% 14.68% (0.35%) 1.81% 3.91%
For the Period
October 1, 1997
(Commencement of
Operations) through
December 31, 1997 0.79% 1.72% (0.18%) (1.66%) (4.69%) 2.40% (2.55%) (3.19%)
</TABLE>
The net investment return for each division of the Strategic GVUL Segment
is computed using the net increase in net assets resulting from operations
as compared to the average monthly net assets. The net investment return
figures shown above do not reflect expenses related to insurance products.
Inclusion of such expenses would reduce the net investment return figures
for all periods shown.
Note: The amounts shown for the period October 1, 1997 through December 31,
1997 are not annualized.
F-13
<PAGE>
Notes To Financial Statements (Continued)
8. NET INCREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
For the Years Ended Index Money Income Bond Appreciation Growth Strategies Securities
December 31, 1998 Division Division Division Division Division Division Division Division
- ----------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 45,271 54,829 9,480 144,974 67,775 114,523 13,150 18,364
Units withdrawn and
transferred to -- -- -- -- -- -- --
Guaranteed Principal
Account (44,609) (120,633) (84,836) (22,077) (40,471) (51,956) (13,712) (14,203)
Units transferred
between divisions 1,814,032 453,913 687,418 1,074,102 1,130,274 1,586,489 201,830 386,792
--------- --------- --------- --------- --------- --------- ------- -------
Net Increase 1,814,694 388,110 612,062 1,196,999 1,157,578 1,649,057 201,267 390,953
Units, at beginning
of the year 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
--------- --------- --------- --------- --------- --------- ------- -------
Units, at end
of the year 1,815,694 389,110 613,062 1,197,999 1,158,578 1,650,057 202,267 391,953
========= ========= ========= ========= ========= ========= ======= =======
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
For the Years Ended Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
December 31, 1998 Bond Income Total Return Growth Equity Income Balanced Appreciation
(Continued) Division Division Division Division Division Division Division Division
- ------------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 2,195 82,970 153,414 93,794 4,819 2,545 3,343 8,084
Units withdrawn and
transferred to -- -- -- -- -- -- -- --
Guaranteed Principal
Account (1,473) (51,287) (95,513) (55,625) (1,720) (87,674) (2,638) (2,190)
Units transferred
between divisions 382,932 1,067,948 1,040,904 937,893 127,116 130,210 64,616 43,667
--------- --------- --------- --------- --------- --------- ------- -------
Net Increase 383,655 1,099,630 1,098,805 976,062 130,215 45,081 65,320 49,560
Units, at beginning
of the year 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
--------- --------- --------- --------- --------- --------- ------- -------
Units, at end
of the year 384,655 1,100,630 1,099,805 977,062 131,215 46,081 66,320 50,560
========= ========= ========= ========= ========= ========= ======= =======
<CAPTION>
MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Equity Oppenheimer High Oppenheimer Capital Oppenheimer Multiple Global
For the Years Ended Index Money Income Bond Appreciation Growth Strategies Securities
December 31, 1997 Division Division Division Division Division Division Division Division
- ----------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Units withdrawn and
transferred to
Guaranteed Principal
Account -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ------- -------
Net Increase 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Units, at beginning
of the period -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ------- -------
Units, at end
of the year 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
========= ========= ========= ========= ========= ========= ======= =======
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Panorama LifeSpan Panorama LifeSpan
For the Years Ended Strategic Growth & Panorama Panorama International Diversified LifeSpan Capital
December 31, 1998 Bond Income Total Return Growth Equity Income Balanced Appreciation
(Continued) Division Division Division Division Division Division Division Division
- ------------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Units withdrawn and
transferred to
Guaranteed Principal
Account -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ------- -------
Net Increase 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Units, at beginning
of the period -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ------- -------
Units, at end
of the year 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
========= ========= ========= ========= ========= ========= ======= =======
</TABLE>
F-14
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity of
MassMutual's Strategic GVUL 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, Strategic GVUL and SVUL Segments, are as follows:
<TABLE>
<CAPTION>
MML MML MML Oppenheimer
MML Equity Money Managed MML Oppenheimer High
Equity Index Market Bond Blend Money Income
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $68,569,760 $ 3,773,362 $13,343,746 $25,285,963 $18,619,343 $ 3,331,631 $ 2,182,008
Total liabilities 103,103 946 25,266 23,205 22,397 1,263 3,659
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $68,466,657 $ 3,772,416 $13,318,480 $25,262,758 $18,596,946 $ 3,330,368 $ 2,178,349
=========== =========== =========== =========== =========== =========== ===========
Net assets:
For variable life
insurance policies 68,346,866 3,763,311 13,264,755 25,197,666 18,501,132 3,323,389 2,162,993
Retained in Variable
Life Separate
Account I by
Massachusetts Mutual
Life Insurance Company 119,791 9,105 53,725 65,092 95,814 6,979 15,356
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $68,466,657 $ 3,772,416 $13,318,480 $25,262,758 $18,596,946 $ 3,330,368 $ 2,178,349
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Oppenheimer Capital Oppenheimer Multiple Global Strategic Growth &
Bond Appreciation Growth Strategies Securities Bond Income
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 1,980,384 $16,395,636 $13,202,771 $ 941,427 $ 9,080,902 $ 1,250,072 $ 3,209,353
Total liabilities 429 13,959 11,379 854 9,817 1,912 673
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $ 1,979,955 $16,381,677 $13,191,392 $ 940,573 $ 9,071,085 $ 1,248,160 $ 3,208,680
=========== =========== =========== =========== =========== =========== ===========
Net assets:
For variable life
insurance policies 1,972,470 16,354,171 13,168,469 930,839 9,047,257 1,233,948 3,196,228
Retained in Variable
Life Separate
Account I by
Massachusetts Mutual
Life Insurance Company 7,485 27,506 22,923 9,734 23,828 14,212 12,452
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $ 1,979,955 $16,381,677 $13,191,392 $ 940,573 $ 9,071,085 $ 1,248,160 $ 3,208,680
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Panorama Panorama
Panorama Panorama LifeSpan Panorama LifeSpan
Total Panorama International Diversified LifeSpan Capital Dreyfus
Return Growth Equity Income Balanced Appreciation Index
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 1,208,387 $ 1,034,642 $ 148,692 $ 93,514 $ 74,338 $ 58,063 $46,510,033
Total liabilities 8 0 0 123 135 89 51,088
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $ 1,208,379 $ 1,034,642 $ 148,692 $ 93,391 $ 74,203 $ 57,974 $46,458,945
=========== =========== =========== =========== =========== =========== ===========
Net assets:
For variable life
insurance policies 1,207,280 1,033,583 147,559 86,570 67,138 50,784 46,449,250
Retained in Variable
Life Separate
Account I by
Massachusetts Mutual
Life Insurance Company 1,099 1,059 1,133 6,821 7,065 7,190 9,695
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $ 1,208,379 $ 1,034,642 $ 148,692 $ 93,391 $ 74,203 $ 57,974 $46,458,945
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
American
T. Rowe Price Century Fidelity
Mid-Cap VP Income VIP II
Growth & Growth Contrafund
Division Division Division
----------- ----------- -----------
<S> <C> <C> <C>
Total assets $ 24,898 $ 16,456 $ 24,825
Total liabilities 4 4 5
----------- ----------- -----------
Net assets $ 24,894 $ 16,452 $ 24,820
=========== =========== ===========
Net assets:
For variable life
insurance policies 24,894 16,452 24,820
Retained in Variable
Life Separate
Account I by
Massachusetts Mutual
Life Insurance Company -- -- --
----------- ----------- -----------
Net assets $ 24,894 $ 16,452 $ 24,820
=========== =========== ===========
</TABLE>
F-15
<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 a Secretary,
a director, board member, committee member, officer or employee of any
organization or any separate investment account; or
(c) any individual who serves in any capacity with respect to any employee
benefit plan;
from and against all loss, liability and expense imposed upon or incurred
by such person in connection with any action, claim or proceeding of any
nature whatsoever, in which such person may be involved or with which he or
she may be threatened, by reason of any alleged act, omission or otherwise
while serving in any such capacity.
Indemnification shall be provided although the person no longer serves in such
capacity and shall include protection for the person's heirs and legal
representatives. Indemnities hereunder shall include, but not be limited to, all
costs and reasonable counsel fees, fines, penalties, judgments or awards of any
kind, and the amount of reasonable settlements, whether or not payable to the
Company or to any of the other entities described in the preceding paragraph, or
to the policyholders or security holders thereof
Notwithstanding the foregoing, no indemnification shall be provided with respect
to:
(1) any matter as to which the person shall have been adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that
his or her action was in the best interests of the Company or, to the
extent that such matter relates to service with respect to any employee
benefit plan, in the best interests of the participants or beneficiaries of
such employee benefit plan;
(2) any liability to any entity which is registered as an investment
company under the Federal Investment Company Act of 1940 or to the security
holders thereof, where the basis for such liability is willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of office; and
(3) any action, claim or proceeding voluntarily initiated by any person
seeking indemnification, unless such action, claim or proceeding had been
authorized by the Board of Directors or unless such person's
indemnification is awarded by vote of the Board of Directors.
In any matter disposed of by settlement or in the event of an adjudication which
in the opinion of the General Counsel or his delegate does not make a sufficient
determination of conduct which could preclude or permit indemnification in
accordance with the preceding paragraphs (1), (2) and (3), the person shall be
entitled to indemnification unless, as determined by the majority of the
disinterested directors or in the opinion of counsel (who may be an officer of
the Company or outside counsel employed by the Company), such person's conduct
was such as precludes indemnification under any of such paragraphs.
The Company may at its option indemnify for expenses incurred in connection with
any action or proceeding in advance of its final disposition, upon receipt of a
satisfactory undertaking for repayment if it be subsequently determined that the
person thus indemnified is not entitled to indemnification under this Article V.
1
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Massachusetts Mutual Life Insurance Company hereby represents that fees and
charges deducted under the Variable Rider to the Group Universal Life Insurance
Certificate described in this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Massachusetts Mutual Life Insurance Company.
2
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 2
This Post-Effective Amendment is comprised of the following papers and
documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consists of 98 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. Independent accountants, PricewaterhouseCoopers LLP.
2. Counsel opining as to the legality of securities being
registered.
3. Opinion opining as to actuarial matters contained in the
Registration Statement by John Valencia, Assistant Vice
President.
The following exhibits:
1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1) (a) Resolution of the Board of Directors of Massachusetts Mutual
Life Insurance Company authorizing the establishment of the
Separate Account.(1)
(b) Resolution of the Board of Directors of Massachusetts Mutual
Life Insurance Company authorizing the establishment of the
GVUL Segment of Massachusetts Mutual Variable Life Separate
Account I.(1)
(2) Not Applicable.
(3) (a) Form of Distribution Servicing Agreement between MML
Distributors, LLC, and MassMutual.(1)
(b) Form of Co-Underwriting Agreement between MML Investors
Services, Inc. and MassMutual.(1)
(c) Form of Broker Dealer Selling Agreement.(1)
(4) Not Applicable.
(5) Form of Flexible Premium Adjustable Life Insurance Certificate To
Age 95 With Variable Rider.(3)
(6) Organizational documents of the Company.
(a) Certificate of Incorporation of MassMutual.(1)
(b) By-Laws of MassMutual.(1)
3
<PAGE>
(7) Not Applicable.
(8) (a) Form of Participation Agreement with Oppenheimer Variable
Account Funds.(1)
(b) Form of Participation Agreement with Panorama Series Fund,
Inc.(1)
(c) Participation Agreement with T. Rowe Price Equity Series,
Inc.(5)
(d) Participation Agreement with MFS Variable Insurance
Trust.(5)
(e) Participation Agreement with Fidelity Variable Insurance
Products Fund II.(5)
(9) Not Applicable.
(10) (a) Form of Enrollment Form.(2)
(b) Form of Application.(2)
(c) Form of Variable Rider is included in Exhibit 1(5) above.
(11) Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under
the Investment Company Act of 1940.(3)
2. Opinion and Consent of Counsel as to the legality of the securities being
registered.(7)
3. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
4. Not Applicable.
5. Opinion and consent of John Valencia opining as to actuarial matters
pertaining to the securities being registered.(7)
6. Consent of Independent Accountants, PricewaterhouseCoopers LLP.(7)
7. (i) Powers of Attorney.(1)
(ii) Power of Attorney for Roger G. Ackerman.(4)
(iii) Power of Attorney for Robert J. O'Connell and Thomas B. Wheeler(6)
(1) Incorporated by reference to Registrant's Initial Registration Statement No.
333-22557, filed with the Commission on February 28, 1997.
(2) Incorporated by reference to Pre-Effective Amendment No. 2 to Registration
Statement No. 333-22557, filed with the Commission on August 4, 1997.
(3) Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement No. 333-22557, filed with the Commission on April 24, 1998.
(4) Incorporated by reference to Registration Statement No. 333-45039, filed
with the Commission on June 4, 1998.
(5) Incorporated by reference to Initial Registration Statement No. 333-65887,
filed with the Commission on October 20, 1998.
(6) Incorporated by reference to Pre-Effective Amendment Number 1 to
Registration Statement 333-65887 filed on January 28, 1999
(7) Filed herewith.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No. 2
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No.2 to Registration Statement No. 333-22557 to be
signed on its behalf by the undersigned thereunto duly authorized, all in the
city of Springfield and the Commonwealth of Massachusetts, on the 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. 2 to Registration Statement No. 333-22557 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.
/s/ Robert M. Furek* Director April 22, 1999
- --------------------------
Robert M. Furek
/s/ Charles K. Gifford* Director April 22, 1999
- --------------------------
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
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>
6
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
As counsel to the Registrant, I, James M. Rodolakis, have reviewed this
Post-Effective Amendment No. 2 to Registration Statement No. 333-22557 and I
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ James M. Rodolakis
--------------------------
James M. Rodolakis
Counsel
Massachusetts Mutual Life Insurance Company
7
<PAGE>
EXHIBIT LIST
99.2 Opinion and Consent of James M. Rodolakis.
99.C.6. Opinion and consent of John M. Valencia.
99.C.1. Consent of Independent Accountants, PricewaterhouseCoopers LLP.
8
<PAGE>
EXHIBIT 99.2
Opinion and Consent of James M. Rodolakis.
[MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
April , 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 06154
Dear Sirs/Madame:
RE: Post-Effective Amendment No. 2 to Registration Statement No. 333-22557
filed on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 2 to Registration Statement No. 333-22557 under the Securities
Act of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Variable Rider to Group Flexible Premium Adjustable Life Insurance Certificate
(the "Policies"). Massachusetts Mutual Variable Life Separate Account I issues
the Policies.
As Counsel for MassMutual, I provide legal advice to MassMutual in connection
with the operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Policies. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. MassMutual is a valid and subsisting corporation, organized and operated
under the laws of the Commonwealth of Massachusetts and is subject to regulation
by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Life Separate Account I is a separate account
validly established and maintained by MassMutual in accordance with
Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the Policies
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
- --------------------------
James M. Rodolakis
Counsel
9
<PAGE>
EXHIBIT 99.C.6.
Opinion and consent of John M. Valencia
[MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY LETTERHEAD]
April , 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 06154
Dear Sirs/Madame:
This opinion is furnished in connection with Post-Effective Amendment Number 2
to Registration Statement 333-22557 for Massachusetts Mutual Life Insurance
Company's Variable Rider to Group Flexible Premium Adjustable Life Insurance
Certificate (the "Policy"). The prospectus included in the Post-Effective
Amendment Number 2 describes the Policies. I am familiar with the forms of the
Policies and the prospectus.
In my opinion, the illustrations of death benefits and cash values included in
the Appendix C of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Policy and the group
flexible premium adjustable life insurance certificate (the "Certificate") which
the Policy amends. The rate structure of the Policy (and the Certificate) has
not been designed so as to make the relationship between premiums and benefits,
as shown in the illustrations, appear more favorable to a prospective purchaser
of the Policy for a person age 45 than to prospective purchasers of Policies for
people at other ages or underwriting classes.
I hereby consent to the use of this opinion as an exhibit to this amendment to
Post-Effective Amendment Number 2 to Registration Statement No. 333-22557, and
to the reference of my name under the heading "Experts" in the prospectus.
Sincerely,
/S/ JOHN M. VALENCIA
- --------------------------
John M. Valencia, FSA, MAAA
Assistant Vice President
10
<PAGE>
EXHIBIT 99.C.1.
Consent of Independent Accountants, PricewaterhouseCoopers LLP
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. 2 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Strategic Group Variable Universal Life segment) on Form S-6 (Registration No.
333-22557), of our report, dated February 25, 1999, on our audit of
Massachusetts Mutual Variable Life Separate Account I (Strategic Group 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
11
