<PAGE>
Registration No. 33-89798
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 4
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:
D. Name and address of Ann Lomeli
Agent for Service Corporate Secretary
of Process: 1295 State Street
Springfield, MA 01111
immediately upon filing pursuant to paragraph (b) of Rule 485.
-----
X on May 1, 1999 pursuant to paragraph (b) of Rule 485.
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on ___________________ pursuant to paragraph (a)(1) of Rule 485.
-----
this post effective amendment designates a new effective date for
----- a previously filed post effective amendment. Such effective date
shall be _____________.
E. Title of Securities being registered: Flexible Premium Variable Whole
Life Insurance Policies
F. Approximate date of proposed As soon as practicable after the
public offering: effective date of this Registration
Statement.
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
1 Cover Page; The Separate Account.
2 Cover Page.
3 Cover Page.
4 Sales and Other Agreements.
5 The Separate Account.
6 Not Applicable.
7 Not Applicable.
8 Appendix F. Financial Statement.
9 Legal Proceedings.
10 Detailed Description of Policy Features; Investment Options; Other
Policy Information.
11 Investment Options.
12 Investment Options; Sales and Other Agreements.
13 Introduction; Detailed Description of Policy Features.
14 Detailed description of Policy Features.
15 Premiums; Exhibit 99.A.11.
16 Introduction; The Separate Account.
17 Detailed description of Policy Features; Exhibit 99.A.11.
18 The Separate Account.
19 Other Information.
20 Not Applicable.
21 Policy Loan Privilege.
22 Not Applicable.
23 Bonding Arrangement.
24 Detailed Description of Policy Features; Other Information; Investment
Options.
25 Other Information.
26 Other Information; The Investment Options.
27 Other Information.
28 Appendix E: Directors and Executive Officers.
29 Other Information.
30 Other Information.
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
31 Not Applicable.
32 Not Applicable.
33 Not Applicable.
34 Not Applicable.
35 Sales and Other Agreements.
36 Not Applicable.
37 Not Applicable.
38 Sales and Other Agreements.
39 Sales and Other Agreements.
40 Sales and Other Agreements.
41 Sales and Other Agreements.
42 Not Applicable.
43 Sales and Other Agreements.
44 The Separate Account.
45 Not Applicable.
46 Account Value and Net Surrender Value; The Separate Account.
47 The Separate Account.
48 Not Applicable.
49 Not Applicable.
50 Not Applicable.
51 Detailed Description of Policy Features; Other Policy Information.
52 Investment Options.
53 Federal Income Tax Considerations.
54 Not Applicable.
55 Not Applicable.
56 Not Applicable.
57 Not Applicable.
58 Not Applicable.
59 Appendix F.
<PAGE>
Flexible Premium Variable Whole Life
Insurance Policies*
Issued by Massachusetts Mutual Life Insurance Company
This Prospectus describes a life insurance policy (the "Policy") offered by
Massachusetts Mutual Life Insurance Company ("MassMutual"). While the Policy is
in force, it provides lifetime insurance protection on the Insured named in the
Policy. It pays a Death Benefit at the death of the Insured.
In this Prospectus, "you" and "your" refer to the Owner of the Policy. "We,"
"us," and "our" refer to MassMutual. "MassMutual" refers to Massachusetts Mutual
Life Insurance Company.
The Policy provides premium payment and Death Benefit flexibility. It permits
you to vary the frequency and amount of premium payments and to increase or
decrease the Death Benefit. This flexibility allows you to meet changing
insurance needs under a single insurance policy.
You may allocate Net Premiums and Account Value among the investment funds
(Divisions of the Separate Account) offered under this Policy and a Guaranteed
Principal Account (the "GPA"). Currently, the following funds are available
under this Policy.
MML Trust Oppenheimer Trust
MML Equity Fund Oppenheimer Aggressive Growth Fund/VA
MML Managed Bond Fund Oppenheimer Global Securities Fund/VA
MML Money Market Fund Oppenheimer Capital Appreciation Fund/VA
MML Blend Fund Oppenheimer Strategic Bond Fund/VA
You bear the investment risk of any Account Value allocated to the investment
funds. The Death Benefit may vary, and the Cash Surrender Value will vary,
depending on the investment performance of the funds.
This Policy is not a deposit or obligation of, or guaranteed or endorsed by, any
financial institution. It is not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other federal agency. It is also
subject to investment risks including loss of the principal amount invested.
We service the Policy at our Principal Administrative Office located at 1295
State Street, Springfield, Massachusetts 01111-0001. Our telephone number is
(413) 788-8411. Our Home Office is located in Springfield, Massachusetts.
This Policy provides insurance protection. It is not a way to invest in mutual
funds. Replacing an existing life insurance policy with this Policy may not be
to your advantage.
Please read this prospectus and keep it for further reference.
Neither the United States Securities and Exchange Commission nor any state
securities commission has approved this Prospectus or determined that it is
accurate or complete. Any representation to the contrary is a criminal offense.
This Prospectus is valid only when accompanied by the prospectuses for the
investment funds. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that is filed with the Commission.
This Prospectus is not an offer to sell the Policy in any jurisdiction where it
is illegal to offer the Policy or to anyone to whom it is illegal to offer the
Policy.
EFFECTIVE MAY 1, 1999
*Title may vary in some jurisdictions.
<PAGE>
Table of Contents
I. INTRODUCTION ..........................................................3
II. DETAILED DESCRIPTION OF POLICY FEATURES
Purchasing the Policy ................................................6
Death Benefit ........................................................6
Premiums .............................................................8
Transfers ............................................................9
Dollar Cost Averaging.................................................9
Policy Termination and Reinstatement ................................10
Charges and Deductions ..............................................10
Deductions from Premiums ............................................11
Monthly Charges Against the Account Value ...........................11
Daily Charges Against the Separate Account ..........................11
Surrender Charges ...................................................11
Other Charges .......................................................12
Special Circumstances................................................12
Account Value and Net Surrender Value................................12
Policy Loan Privilege ...............................................14
III. INVESTMENT OPTIONS
The Guaranteed Principal Account ....................................16
The Separate Account ................................................16
The Funds ...........................................................16
Fund Profiles........................................................17
The Investment Advisers .............................................19
IV. OTHER POLICY INFORMATION
When We Pay Proceeds ................................................20
Payment Options .....................................................20
Beneficiary .........................................................21
Assignment ..........................................................21
Limits on Our Right to Challenge the Policy .........................21
Error of Age or Gender...............................................21
Suicide ............................................................21
Additional Benefits You Can Get by Rider ............................22
Sales and Other Agreements ..........................................22
Compensation ........................................................23
V. OTHER INFORMATION
MassMutual...........................................................24
Annual Reports.......................................................24
Federal Income Tax Considerations....................................24
Your Voting Rights...................................................26
Reservation of Rights................................................26
Bonding Arrangement..................................................27
Legal Proceedings....................................................27
Year 2000............................................................27
Experts..............................................................27
Appendix A
Definition of Terms .................................................28
Appendix B
Examples of Death Benefit Option Changes ............................30
Appendix C
Rates of Return......................................................31
Appendix D
Illustration of Death Benefits, Cash Surrender Values, and
Accumulated Premiums ..............................................34
Appendix E
Directors of MassMutual .............................................43
Executive Vice Presidents ...........................................45
Appendix F
Separate Account Financial Statements...............................F-1
Financial Statements ..............................................FF-1
2 Table of Contents
<PAGE>
I. Introduction
Please refer to Appendix A, Glossary for definitions of the terms contained in
this Prospectus.
You should consult your Policy for more information about its terms and
conditions, and for any state-specific variances that may apply to your Policy.
These variations will depend on the "contract state" of your Policy; it is
usually the state or other jurisdiction in which you live.
The Policy is a life insurance contract providing a Death Benefit, an Account
Value, surrender rights, Policy loan privileges, and other features
traditionally associated with life insurance.
There is no fixed schedule of premium payments. You may establish a schedule of
premium payments ("Planned Premium Payments"), but if a Planned Premium Payment
is not made the Policy will not necessarily terminate. If Planned Premium
Payments are made they do not guarantee a Policy will remain in force. The
Policy allows you to match premium payments to your income flows or other
financial decisions.
You may increase or decrease the Death Benefit and change the Death Benefit
Option under the Policy. Further, the Death Benefit may vary, and the Cash
Surrender Value will vary, with the investment experience of the investment
funds in which an Owner has Account Value. The GPA interest rate is declared and
guaranteed each calendar year. This guaranteed calendar-year rate will not be
less than 3%; it may be greater than 3%. We may credit an interest rate
periodically that exceeds this guaranteed rate.
The following diagram summarizes how the Policy works.
<TABLE>
<S> <C> <C>
HOW THE POLICY WORKS
Premium Payment
---------------
We deduct a Premium Expense
Charge from each Premium
Payment
(graphic arrow to "Net Premium")
Net Premium
We allocate the Net Premium
and Account Value among the
Divisions of the Separate
Account and the GPA based on
the percentages you have chosen
(graphic arrow to "Account Value")
Investment Earnings Account Value Charges
------------------- ------------------------------------ ---------------------
Each day we credit or debit the Each month we deduct for
investment earnings or losses of the Account Value administrative, mortality, and
Divisions of the Separate Account ------------- rider expenses
less fund investment management fees
and separate account fees You determine how the Account Owner Access to
Value is allocated among the Account Value
We also credit interest on values available investment options. ---------------
in the GPA (graphic arrows to "Account Value You may access Account Values
(graphic arrow to "Account Value") Charges", "Owner Access to Account through loans and withdrawals
Value", "Death Benefit", and
Death Benefit "Policy Surrender") Policy Surrender
------------- ------------------------------------ ----------------
You have a choice of 2 Death Benefit In the first 15 years of coverage,
Options. You can change the Option if you surrender all of your
at a later date coverage or decrease your Selected
Face Amount, we deduct a Surrender
Charge from any amount we pay you.
</TABLE>
Introduction 3
<PAGE>
All expense charges and deductions are described in Charges and Deductions in
Part II.
A summary of the product and separate account charges follows.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CURRENT RATE GUARANTEED RATE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Premium Expense Charge Policy Years 1-20: 4%, equal to 2% All Policy Years: 4%, equal to 2%
Sales Charge plus 2% Premium Tax Sales Charge plus 2% Premium Tax
Charge Charge
Policy Years 21+: 0% of premium
- ------------------------------------------------------------------------------------------------------------------
Administrative Charge All Policy Years: $6 per month per All Policy Years: $9 per month per
Policy Policy
- ------------------------------------------------------------------------------------------------------------------
Mortality Charges A per thousand rate multiplied by For standard risks, the guaranteed
the amount at risk each month. The cost of insurance rates are based on
rate varies by the gender, Issue 1980 Commissioners Standard Ordinary
Age, and risk classification of the (CSO) Mortality Tables.
Insured, and the Year of Coverage.
- ------------------------------------------------------------------------------------------------------------------
Charge to Increase $75 deducted from Account Value at $75 deducted from Account Value at
Selected Face Amount time of increase. time of increase.
- ------------------------------------------------------------------------------------------------------------------
Charge to Change from $0.00 $75 deducted from Account Value at
Death Benefit Option from time of increase.
1 to 2
- ------------------------------------------------------------------------------------------------------------------
Mortality and Expense All Policy Years: 0.55% on an annual All Policy Years: 0.90% on an annual
Risk Charge basis of daily net asset value of basis of daily net asset value of the
the Separate Account Separate Account
- ------------------------------------------------------------------------------------------------------------------
Investment Management Fees (See separate table on next page.)
and Other Expenses
- ------------------------------------------------------------------------------------------------------------------
Loan Interest Rate All Policy Years: 0.90% of loaned All Policy Years: 2.0% of loaned
Expense Charge amount amount
- ------------------------------------------------------------------------------------------------------------------
Withdrawal Fee $25 (or 2% of amount withdrawn, if $25 (or 2% of amount withdrawn, if
less) less)
- ------------------------------------------------------------------------------------------------------------------
Surrender Charges Coverage Years 1-15: Administrative Coverage Years 1-15: Administrative
Surrender Charge (ASC) plus Sales Surrender Charge (ASC) plus Sales
Load Surrender Charge (SLSC). ASC Load Surrender Charge (SLSC). ASC
equals $5 per $1,000 of Selected equals $5 per $1,000 of Selected Face
Face Amount for Years 1-5, then Amount for Years 1-5, then grades to
grades to zero during Years 6-10, zero during Years 6-10, and is zero
and is zero thereafter. During the thereafter. During the first 10
first 10 Years of Coverage, SLSC Years of Coverage, SLSC equals 26% of
equals 26% of premium paid for the premium paid for the coverage up to
coverage up to the Surrender Charge the Surrender Charge Band, and 4% of
Band, and 4% of premium paid for the premium paid for the coverage in
coverage in excess of the Band up to excess of the Band up to three times
three times the Band. During the the Band. During the next 5 Years of
next 5 Years of Coverage, these Coverage, these percentages are
percentages are reduced, by factors reduced, by factors set forth in the
set forth in the Policy, to zero by Policy, to zero by the end of the
the end of the 15th Year. 15th Year
Coverage Years 16+: $0 Coverage Years 16+: $0
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
4 Introduction
<PAGE>
INVESTMENT MANAGEMENT FEES
AND OTHER EXPENSES
Total fund operating expenses expressed as a percentage of average net assets
for the year ended December 31, 1998.
Total Fund
Management Other Operating
Fund Name Fees Expenses Expenses
- --------------------------------------------------------------------------------
MML Equity Fund 0.37% 0.00% 0.37%
MML Managed Bond Fund 0.45% 0.03% 0.48%
MML Blend Fund 0.37% 0.00% 0.37%
MML Money Market Fund 0.46% 0.03% 0.49%
Oppenheimer Capital
Appreciation Fund/VA+ 0.72% 0.03% 0.75%
Oppenheimer Aggressive Growth
Fund/VA++ 0.69% 0.02% 0.71%
Oppenheimer Global Securities
Fund/VA 0.68% 0.06% 0.74%
Oppenheimer Strategic Bond
Fund/VA 0.74% 0.06% 0.80%
- --------------------------------------------------------------------------------
+The Oppenheimer Growth Division invests in the Oppenheimer Capital Appreciation
Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation Fund/VA was
called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
Introduction 5
<PAGE>
II. Detailed Description of Policy Features
Purchasing the Policy
To purchase a Policy you must send a completed application to our Principal
Administrative Office. The minimum Selected Face Amount of a Policy is currently
$50,000. The Policy can be issued for an Insured between the ages of 0 and 80
inclusive. Before issuing a Policy, we will require evidence of insurability.
This usually will require a medical examination.
We determine whether to accept or reject the application for the Policy and the
Insured's risk classification. If we do not accept the application, we will
refund any premium paid.
Coverage under the Policy becomes effective on the Issue Date of the Policy or,
if later, the date the first premium is paid. See Premiums for more about the
first premium. For the first premium to be paid, we must receive it in Good
Order.
Unisex Policy. Policies generally are issued with values that vary based on the
gender of the Insured. Policies issued in Massachusetts and Montana are
"unisex"; that is, the policy values do not vary by the gender of the Insured.
Policies issued as part of an employee benefit plan also may have policy values
that do not vary by gender. References in the Prospectus to sex-distinct policy
values are not applicable to unisex Policies. Upon request we will provide you
illustrations showing the effect of unisex rates on premiums, Cash Surrender
Values and Death Benefits.
Right to Return the Policy. Once you receive your Policy, you should review it
carefully. If you are not satisfied with your Policy, you may cancel it within
10 days after you receive it, or 10 days after you receive a written notice of
withdrawal right, or 45 days after signing Part 1 of your Application, whichever
is latest. (This period of time may vary by state.)
To cancel the Policy, return it to us at our Principal Administrative Office, to
the agent who sold the Policy, or to one of our agency offices. If you cancel
your Policy, we will give you a refund.
In most states, this refund is the sum of:
(i) any premium paid for the Policy; plus
(ii) any interest credited to the Policy under the GPA; plus or minus
(iii) an amount reflecting the investment experience of the Divisions of the
Separate Account under this Policy to the date we receive the Policy,
minus
(iv) any amounts withdrawn and any Policy Debt.
In other states, this refund is equal to any premium paid for the Policy,
reduced by any amounts withdrawn and any Policy Debt.
Consult your Policy to determine which refund applies under your Policy. A few
states have variations of these two refund types.
Death Benefit
While the Policy is in force, we will, upon receipt of due proof of the
Insured's death, pay the Death Benefit to the named Beneficiary. Although we
normally will pay the Death Benefit within seven days of receiving satisfactory
proof of the Insured's death, we may delay payments under certain circumstances.
All or part of the Death Benefit can be paid in cash or under one or more of the
payment options described in the Policy.
Minimum Face Amount. In order to qualify as life insurance under Internal
Revenue Code ("IRC") Section 7702, the Policy has a Minimum Face Amount. The
Minimum Face Amount is equal to a percentage of the Account Value. The
percentage depends on the gender (male, female, unisex), risk classification,
and Attained Age of the Insured.
Death Benefit Options. The Death Benefit is the benefit provided under the Death
Benefit Option in effect on the date of the Insured's death. This benefit is
reduced by any outstanding
6 Detailed Description of Policy Features
<PAGE>
Policy Debt and any unpaid Monthly Charges to the date of death.
You may choose one of two Death Benefit Options:
(a) Option 1 (a level amount option) or
(b) Option 2 (variable amount option).
You choose the Death Benefit Option in the application and you may change the
option at a later date subject to certain restrictions described in Changes in
Death Benefit Option.
The Death Benefit provided by Options 1 and 2 is as follows.
Option 1 - The benefit is the greater of:
(a) the Selected Face Amount on the date of death; and
(b) the Minimum Death Benefit on the date of death.
Option 2 - The benefit is the greater of:
(a) the Selected Face Amount plus the Account Value on the date of death; and
(b) the Minimum Face Amount on the date of death.
See Appendix B for examples of how changes in Account Value and the amount of
premiums paid may affect the Death Benefit of a Policy.
Changes in Death Benefit Option. After the first Policy Year, you may change the
Death Benefit Option by written request. The effective date of a change will be
the Monthly Calculation Date on or next following the date we approve the
change. A change in the Death Benefit Option will result in a change of the
Policy Selected Face Amount. The Death Benefit under the new Death Benefit
Option will be the same as the Death Benefit under the old Death Benefit Option
at the time of the change.
A change from Option 1 to Option 2 will require evidence of insurability
satisfactory to us. In addition, we may deduct a $75 charge from the Account
Value on the effective date of the change; it will be deducted from the
Division(s) and the GPA in proportion to the non-loaned values in each. (We
currently do not make this charge, but we reserve the right to do so.)
You cannot change from Option 1 to Option 2:
1. if the Selected Face Amount would be reduced to less than $50,000 as a
result of the change, or
2. after the Insured reaches Attained Age 80.
When the Selected Face Amount changes as a result of a change in the Death
Benefit Option, the Monthly Charges also will change. The change in Selected
Face Amount also may change the charges for certain additional benefits. The
change in Selected Face Amount will not change the Policy Surrender Charge.
For examples of Death Benefit Option changes and how they impact the contract,
see Appendix B.
Changes in Selected Face Amount. You may request an increase or decrease in the
Selected Face Amount by submitting a written request for a change of Selected
Face Amount to our Principal Administrative Office. The Selected Face Amount
change will be effective on the Monthly Calculation Date on or next following
our acceptance of the request.
Increases in Selected Face Amount. You must provide us with a written
application and evidence the Insured still is insurable to increase your
Selected Face Amount. An increase may not be less than $15,000. You cannot
increase the Selected Face Amount of the Policy after the Insured reaches
Attained Age 80.
If you increase the Selected Face Amount, we will deduct a $75 charge from the
Account Value on the effective date of the increase; it will be deducted from
the Division(s) and the GPA in proportion to the non-loaned values in each.
If you increase the Selected Face Amount, the Mortality Charges will increase.
Decreases in Selected Face Amount. You may decrease the Selected Face Amount any
time after the first Policy Year. You must send a written request to us. You
cannot decrease the Selected Face Amount if the decrease would result in a
Selected Face Amount of less than $50,000.
If you decrease the Selected Face Amount, a Surrender Charge may apply. We will
deduct Surrender Charges from the Division(s) of the
Detailed Description of Policy Features 7
<PAGE>
Separate Account and from the GPA in proportion to the non-loaned values in
each.
A decrease will reduce the Selected Face Amount in the following order:
(a) the Selected Face Amount of the most recent increase
(b) the Selected Face Amounts of the next most recent increases successively
(c) the initial Selected Face Amount.
If you decrease the Selected Face Amount, the Monthly Charges deducted from the
Account Value will change.
If you decrease the Selected Face Amount, the Policy may become a "modified
endowment contract" under federal tax law. Consult your tax advisor. (See also
Modified Endowment Contracts in Part V).
Premiums
The first premium must be paid before the Policy can become effective.
Thereafter, within limits you may make premium payments at any time and in any
amount. Net Premiums are allocated to the Account Value as you choose.
First Premium. Generally, you determine the first premium you want to pay for
the Policy; but it must be at least equal to the minimum initial premium. The
minimum initial premium depends on your chosen premium frequency, initial
Selected Face Amount and Death Benefit Option, and on the Issue Age, gender, and
risk classification of the Insured.
Planned Annual Premiums. When applying for the Policy, you select the Planned
Annual Premium and the payment frequency (annual, semiannual, quarterly, or
monthly check service). The amount of the Planned Annual Premium and the payment
frequency you select are shown in the Policy. We will send you premium notices
based on your selections. To change the amount and frequency of planned
premiums, send a written notice to us at our Principal Administrative Office.
If a planned premium payment is not made, the Policy will not necessarily
terminate. Conversely, making planned premium payments does not guarantee the
Policy will remain in force. To keep the Policy in force, you must have a
sufficient Account Value. See Grace Period and Termination.
Premium Payments and Flexibility. After you have paid the first premium, within
limits you may pay any amount at any time while the Insured is living. Send all
premium payments to us either at our Principal Administrative Office or at the
address shown on the premium notice.
You may elect to pay premiums by pre-authorized check. Under this procedure, we
automatically deduct premium payments each month from a bank account you
designate. We will not send a bill for these automatic payments.
Premium Limitations. The minimum premium payment is $10.
The maximum premium each Policy Year is the greatest of:
(a) an amount equal to $100 plus double the basic premium for the Policy;
(b) the amount of premium paid in the preceding Policy Year;
(c) the highest premium payment amount that would not increase the amount at
risk; and
(d) the minimum annual premium under the Death Benefit Guarantee Rider, if
included with the Policy.
We may refund any amount of premium payment that exceeds this limit.
Allocating Net Premiums. A Net Premium is a premium payment we receive in Good
Order, minus the Premium Expense Charge.
Net Premiums credited to the Policy on and after the Register Date will be
allocated among the Divisions and the GPA according to your Net Premium
allocation. Also, any Net Premiums in the Policy held before the Register Date
will be allocated on that Date among the Divisions and the GPA according to your
Net Premium allocation on that Date.
Register Date and Valuation Date. The Register Date must be a Valuation Date. A
Valuation Date is any date on which the New York Stock Exchange is open for
trading.
8 Detailed Description of Policy Features
<PAGE>
The Register Date is the Valuation Date that is on, or next follows, the latest
of:
(a) the Policy Date;
(b) the day we receive your completed Part 1 of Application for the Policy; and
(c) the day we receive the first premium payment in Good Order.
Net Premium Allocation. When applying for the Policy, you indicate how you want
Net Premiums allocated among the Divisions and the GPA. You may change your Net
Premium allocation at any time. Just send a written notice to us at our
Principal Administrative Office.
You may set your Net Premium allocation in terms of whole-number percentages
that add to 100%.
Transfers
You may transfer all or part of the Account Value invested in a Division of the
Separate Account to any other Division or to the GPA. Simply send us a written
request. Although currently there is no limit on the number of transfers you may
make, we reserve the right to limit the number to no more than one every 90
days. If we impose a limit, it would not apply to a transfer of all funds in the
Separate Account Divisions to the GPA or to transfers made in connection with
any automated-transfer program we offer.
We limit transfers from the GPA to the Separate Account Divisions to one each
Policy Year. You may not transfer more than 25% of the Fixed Account Value (less
any Policy Debt) at the time of the transfer. There is one exception to this
rule. If:
. you have transferred 25% of the Fixed Account Value each year for three
consecutive Policy Years, and
. you have not invested any Net Premium amount in the GPA or
. transferred any money into the GPA during these three years,
you may transfer the remainder of the Fixed Account Value (less any Policy Debt)
out of the GPA in the succeeding Policy Year. In this situation, you must
transfer the full amount out of the GPA in one transaction.
Any transfer is effective on the Valuation Date at the price next determined
after we receive the request in Good Order at our Principal Administrative
Office. We do not charge for transfers.
Dollar Cost Averaging
You may specify a specific dollar amount to be periodically transferred from any
Division to any combination of Divisions and the GPA. Once elected, these
transfers occur automatically. You specify the specific dollar amounts to be
transferred and the Division to transfer money from, the Division(s) and/or GPA
to transfer money to, the date on which transfers will be made (subject to our
rules), the frequency of transfers, which may be monthly, quarterly,
semiannually or annually, and the period of time that such dollar cost averaging
will continue. The minimum allowable transfer to any Division or the GPA is $50.
This process is called Dollar Cost Averaging. Dollar Cost Averaging transfers
are not available for transfers from the GPA, but these transfers may be made
into the GPA. To elect Dollar Cost Averaging transfers, the Account Value in the
Division from which transfers will be made must be at least $5,000.
The main objective of Dollar Cost Averaging is to shield your investment from
short-term price fluctuations. Since the same dollar amount is transferred to a
Division with each transfer, more units are purchased in a Division if the value
per unit is low and fewer units are purchased if the value per unit is high.
Therefore, a lower-than-average cost per unit may be achieved over the long
term. This plan of investing allows you to take advantage of market fluctuations
but does not assure a profit or protect against a loss in declining markets.
We will make all Dollar Cost Averaging transfers either on the day of each
calendar month you specify or on the next Valuation Date. You may specify any
day of the month up through the 28th day.
To elect Dollar Cost Averaging, send us your written request at least one week
prior to the date Dollar Cost Averaging transfers are to commence.
Detailed Description of Policy Features 9
<PAGE>
The Dollar Cost Averaging option can be started, changed, or canceled at any
time; however, we need seven business days' notice to change any transfer
arrangement. If the value of the Division from which transfers are being made
falls below the total transfer amount, the remaining value in that Division will
be transferred on a pro rata basis to all the designated Divisions and the GPA,
and no more automated transfers will be processed.
Dollar Cost Averaging transfers are not subject to any transfer charges or any
limitations on the number of transfers in a Policy Year.
Policy Termination and Reinstatement
The Policy will not terminate simply because you do not make planned premium
payments. Conversely, making planned premium payments does not guarantee that
the Policy will remain in force.
The Policy may terminate if its value cannot cover the Monthly Charges.
If the Policy does terminate, you may be permitted to reinstate it.
Grace Period and Termination. The Policy may terminate without value if the
Account Value less any Policy Debt on a Monthly Calculation Date cannot cover
the Monthly Charges due.
However, we allow a grace period for payment of the premium amount (not less
than $10) needed to avoid termination. We will mail you a notice stating this
amount.
The Policy will terminate without value if we do not receive the required
payment by the end of the grace period.
Grace Period. The grace period begins on the date the Monthly Charges are due.
It ends 61 days after that date or, if later, 30 days after the date we mail the
notice stating the amount needed.
During the grace period, the Policy will stay in force. If the Insured dies
during the grace period, the Death Benefit will be payable. In this case, any
unpaid Monthly Charges to the date of death will be deducted from the Death
Benefit.
Reinstating Your Policy. If your Policy terminates, you may reinstate it--that
is, put it back in force. But you may not reinstate your Policy if:
. you surrendered it; or
. five years have passed since it terminated.
Requirements to Reinstate Your Policy. To reinstate your Policy, we will need:
1. a written application to reinstate;
2. evidence, satisfactory to us, that the Insured still is insurable; and
3. a premium payment sufficient to produce an Account Value equal to triple
the Monthly Charges due on the Monthly Calculation Date on, or next
following, the reinstatement date. The minimum amount of this premium
payment will be quoted on request.
Policy after You Reinstate. If you reinstate your Policy, the Selected Face
Amount will be the same as it was when it terminated. Your Account Value at
reinstatement will be the premium paid at that time, reduced by the Premium
Expense Charge and any Monthly Charges then due. Surrender Charges after
reinstatement will apply as if the Policy had not terminated. However, if the
Surrender Charge was taken when the Policy terminated, then the applicable
Surrender Charges will not be reinstated.
If you reinstate your Policy, it may become a "modified endowment contract"
under current federal tax law. Consult your tax advisor.
Charges and Deductions
We will deduct charges from the Policy to compensate us for:
(a) providing the insurance benefits under the Policy (including any riders);
(b) administering the Policy;
(c) assuming certain risks in connection with the Policy (including any
riders); and
(d) selling and distributing the Policy.
In addition, the fund managers deduct expenses from the funds. For more
information about
10 Detailed Description of Policy Features
<PAGE>
these expenses, see the individual fund prospectuses.
Deductions from Premiums
We deduct a Premium Expense Charge from each premium payment you make. The
Premium Expense Charge is 4%. It is equal to a Sales Charge of 2% plus a Premium
Tax Charge of 2%. The Sales Charge reimburses us for selling and distributing
the Policy. The Premium Tax Charge reimburses us for the average cost of state
and local premium taxes we pay for the Policy.
Monthly Charges Against the Account Value
We deduct charges from the Account Value on each Monthly Calculation Date. The
Monthly Charges are:
(a) an Administrative Charge;
(b) a Mortality Charge; and
(c) a rider charge for any additional benefits provided by rider.
We deduct the Monthly Charges from the Division(s) and the GPA in proportion to
the non-loaned values of the Policy in the Division(s) and the GPA.
Administrative Charge. The monthly Administrative Charge reimburses us for
issuing and administering the Policy, and for such activities as processing
claims, maintaining records and communicating with you.
Mortality Charges. The monthly Mortality Charge for a Policy is equal to the
"amount at risk" under the Policy, multiplied by the monthly Mortality Charge
rate for that Policy month. We determine the amount at risk on the first day of
each Policy month. It is the amount by which the Death Benefit (discounted at
the monthly equivalent of 3% per year) exceeds the Account Value.
Mortality Charge rates are based on the gender, Issue Age, and risk class of the
Insured, and the Year of Coverage. We currently place Insureds into the
following three standard rate classes: Preferred Nonsmoker, Nonsmoker, and
Smoker. We also have substandard rate classes for greater mortality risks. In
otherwise identical Policies, the monthly Mortality Charge rate is higher for
Smokers than for Nonsmokers and higher for Nonsmokers than for Preferred
Nonsmokers.
Rider Charge. You can obtain additional benefits by requesting riders on your
Policy. The monthly rider charges include charges for any benefits you add by
rider.
Daily Charges Against the Separate Account
Mortality and Expense Risk Charge. Each day we deduct a charge from the Separate
Account for mortality and expense risks. We do not deduct this charge from the
assets in the GPA.
The mortality risk is a risk that the group of lives we insure may, on average,
live for shorter periods of time than we estimated. The expense risk is a risk
that our costs of issuing and administering Policies may be more than we
estimated.
If we do not need all the money we collect in mortality and risk charges to
cover death benefits and expenses, the amount we do not need will be our gain.
However, even if the money we collect is not enough to cover death benefits and
expenses, we will pay all death benefits and expenses.
Investment Management Fee and Other Expenses. Each of the funds incurs
investment management fees and other expenses. These are deducted from the fund.
Surrender Charges
The Surrender Charge has two parts: an Administrative Surrender Charge and a
Sales Load Surrender Charge. The Administrative Surrender Charge applies during
the first 10 Policy Years for the initial Selected Face Amount, and during the
first 10 Years of Coverage following an increase in the Selected Face Amount, if
you surrender the Policy or decrease the Selected Face Amount. The Sales Load
Surrender Charge applies for the first 15 Policy Years, and during the first 15
Years of Coverage following an increase in the Selected Face
Detailed Description of Policy Features 11
<PAGE>
Amount, if you surrender the Policy or decrease the Selected Face Amount.
Administrative Surrender Charge. This charge is $5 for each $1,000 of Selected
Face Amount. It remains level for five years, then grades down to zero over the
next five years. This charge reimburses us for expenses incurred in issuing the
Policy, such as processing the applications (including underwriting) and setting
up computer records.
Sales Load Surrender Charge. During the first 10 Years of Coverage for the
initial Selected Face Amount and for each increase, this charge is equal to 26%
of the premiums paid for the coverage up to the Surrender Charge Band, plus 4%
of premiums paid for the coverage in excess of the Surrender Charge Band up to
three times the Surrender Charge Band. During the next 5 Years of Coverage,
these percentages are reduced, by factors set forth in the Policy, to zero by
the end of the 15th Year.
The Surrender Charge Band is set forth in the Policy and is an amount based on
the Selected Face Amount and varies by the age and gender of the Insured at the
time of purchase. Premiums are allocated to the initial Selected Face Amount,
and to each increase, based on factors shown in the Policy.
Decrease in Selected Face Amount. If you decrease your Selected Face Amount, we
cancel all or a part of your Selected Face Amount segments. We charge a
Surrender Charge. The Surrender Charge is equal to the pro rata Surrender Charge
for each decreased or canceled Selected Face Amount segment
After a Selected Face Amount decrease, we reduce the Surrender Charge for the
remaining segments by the amount of the partial Surrender Charge.
Other Charges
Withdrawal Fee. If you make a partial Withdrawal from your Policy, we deduct $25
(or 2% of the amount withdrawn, if less) from the amount you withdraw. This fee
reimburses us for administering withdrawals.
Loan Interest Rate Expense Charge. This charge reimburses us for the expenses of
administering loans.
Charge for Increase in Selected Face Amount. For each increase in Selected Face
Amount, a charge of $75 will be deducted from the Account Value. The charge is
designed to reimburse us for underwriting and administrative costs associated
with the increase. This fee is guaranteed not to increase for the duration of
the Policy.
Charge for Change from Option 1 to Option 2. For each change in the Death
Benefit Option from Option 1 to Option 2, a charge of $75 will be deducted from
the Account Value. The charge is designed to reimburse us for the underwriting
and administrative costs associated with the change. This fee is guaranteed not
to increase for the duration of the Policy. (We currently do not charge the $75
fee for this change, but we reserve the right to do so.)
Special Circumstances
We may vary the charges and other terms of Policies where special circumstances
result in sales or administrative expenses or insurance risks that are different
than those normally associated with these Policies. We will make these
variations only in accordance with uniform rules we establish.
Account Value and Cash Surrender Value
The Account Value of the Policy has two components: the Variable Account Value
and the Fixed Account Value.
Variable Account Value. The Variable Account Value is the sum of your values in
each of the Divisions of the Separate Account. It reflects:
. Net Premiums allocated to the Separate Account;
. transfers to the Separate Account from the Guaranteed Principal Account;
. transfers and withdrawals from the Separate Account;
12 Detailed Description of Policy Features
<PAGE>
. Monthly Charges and Surrender Charges deducted from the Separate Account;
and
. the net investment experience of the Separate Account.
These transactions are all reflected in the Variable Account Value through the
purchase and sale of accumulation units.
Net Investment Experience and Accumulation Units. The net investment experience
of the Variable Account Value is reflected in the value of the accumulation
units. The value of your accumulation units in a Division is equal to:
. the accumulation unit value in that Division; multiplied by
. the number of accumulation units in that Division credited to your Policy.
We purchase and sell accumulation units at the unit value as of the closing time
of the New York Stock Exchange on the Valuation Date processed.
If we receive a premium or a transaction request in Good Order before the
closing time on a Valuation Date, units will be purchased or sold as of that
Valuation Date. If we receive it in Good Order after that time, units will be
purchased or sold as of the next Valuation Date.
The Variable Account Value of the Policy is the total of the values of the
accumulation units in each Division credited to Policy.
Fixed Account Value. The Fixed Account Value is the accumulation at interest of:
. Net Premiums allocated to the Guaranteed Principal Account; plus
. amounts transferred into the GPA from the Separate Account; less
. amounts transferred or withdrawn from the GPA; and less
. Monthly Charges and Surrender Charges deducted from the GPA.
Interest on the Fixed Account Value. The Fixed Account Value earns interest at
an effective annual rate, credited daily.
For the part of the Fixed Account Value equal to any Policy loan, the daily rate
we use is the daily equivalent of:
. the annual loan interest rate minus the Loan Interest Rate Expense Charge;
or
. 3% if greater.
For the part of the fixed account in excess of any Policy loan, the daily rate
we use is the daily equivalent of:
. the current interest rate we declare; or
. the guaranteed calendar-year interest rate we declare for the year if
greater.
This guaranteed calendar-year rate for each year will be at least 3%.
Cash Surrender Value. The Cash Surrender Value of the Policy is equal to:
. the Account Value; less
. any Surrender Charges that apply; and less
. any Policy Debt.
You may surrender the Policy by sending a written request together with the
Policy to our Principal Administrative Office. We will determine the Cash
Surrender Value at the end of the Valuation Date on which we receive the request
in Good Order.
Withdrawals. After the first Policy Year, you may withdraw up to 75% of the Cash
Surrender Value. We deduct a fee from the amount withdrawn. We do not charge a
Surrender Charge for a Withdrawal. The minimum amount you can withdraw is $100
(including the Withdrawal fee). We may not allow a Withdrawal if it would result
in a reduction of the Selected Face Amount to less than $25,000.
You must state in the Withdrawal Request from which Divisions or the GPA you
want the withdrawal made. You can state the amount as a dollar amount or a
percentage. The withdrawal will be effective on the date we receive the written
request in Good Order. We will process it within seven days. The Withdrawal
amount you wish taken from each Division of the Separate Account and from the
GPA may not exceed the non-loaned Account Value in each of these. If you have
chosen Death Benefit Option 1, we will reduce the Selected Face Amount by the
amount of the Withdrawal unless you provide evidence satisfactory to us that the
Insured still is insurable.
Detailed Description of Policy Features 13
<PAGE>
Policy Loan Privilege
General. After the first Policy Year, you may take a loan from the Policy as
long as the Account Value exceeds the total of any Surrender Charges. You must
assign the Policy to us as collateral for the loan. The maximum amount you can
borrow at any time is 90% of the Policy's Account Value less any Surrender
Charge. If there is any outstanding Policy Debt, including any accrued interest,
it reduces the maximum amount available.
Source of Loan. We take the Policy loan amount from the Divisions and the GPA in
proportion to the amount of Account Value in each Division and the GPA
(excluding any outstanding loans) on the date of the loan. We reduce the amount
of units in the Divisions of the Separate Account from which the loan is taken.
We transfer the resulting dollar amounts to the loaned portion of the GPA.
We may delay granting any loan you want taken from the GPA for up to six months.
We may delay granting any loan from the Divisions during any period that:
(i) the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
(ii) trading is restricted;
(iii) the SEC determines a state of emergency exists; or
(iv) the SEC permits us to delay payment for the protection of our Owners.
Whenever total Policy Debt (which includes accrued interest) equals or exceeds
the Account Value less Surrender Charges, we will send a notice to you. This
notice will state the amount needed to bring the Policy Debt back within the
limit. If we do not receive this amount within 31 days after the date we mailed
the notice, and if Policy Debt exceeds the Account Value less any Surrender
Charges at the end of those 31 days, the Policy terminates without value.
Loan Interest Charged. At the time of Application, you may select a loan
interest rate of 6% or an adjustable loan rate. Each year we will set the
adjustable rate that will apply for the next Policy Year. The maximum loan rate
is based on the Monthly Average Corporate yield on seasoned corporate bonds as
published by Moody's Investors Service, Inc. If this Average is no longer
published, we will use a similar average as approved by the insurance department
of your "contract state." The maximum rate is the greater of:
(i) the published monthly average for the calendar month ending two months
before the Policy Year begins, or
(ii) 4%.
If the maximum rate is less than 1/2% higher than the rate in effect for the
previous year, we will not increase the rate. If the maximum rate is at least
1/2% lower than the rate in effect for the previous year, we will decrease the
rate.
Interest on Policy loans accrues daily and becomes part of the Policy Debt as it
accrues. It is due on each Policy Anniversary. If you do not pay it when it is
due, the interest is added to the loan. As part of the loan, it will bear
interest at the loan rate. We will treat capitalized interest the same as a new
loan. We will take an amount equal to the interest due from the Divisions and
the GPA in proportion to the non-loaned Account Value in each.
Repayment. You may repay all or part of any Policy Debt at any time while the
Insured is living and while the Policy is in force. We will allocate any other
loan repayment to the GPA until you have repaid all loan amounts that were
deducted from the GPA. We will allocate additional loan repayments based on the
premium allocation. You must clearly identify the payment as a loan repayment or
we will consider the payments premium payments.
We will deduct any outstanding Policy Debt from the proceeds payable at death or
the surrender of the Policy.
Interest on Loaned Value. We deposit an amount equal to the loaned amount in the
GPA. This amount earns interest at a rate equal to the greater of 3% and the
Policy loan rate less a Loan Interest Rate Expense Charge. We guarantee this
Charge will not exceed 2%. Currently, the Charge is 0.90%.
Effect of Loan. A Policy loan affects the Policy since we reduce the Death
Benefit and Cash Surrender Value by the amount of the loan.
14 Detailed Description of Policy Features
<PAGE>
If you repay the loan, we increase the Death Benefit and Cash Surrender Value
under the Policy by the amount of the repayment. Taking a Policy loan could have
adverse tax consequences if your Policy is a "modified endowment contract" under
current federal tax law. Consult your tax advisor.
As long as a loan is outstanding, a portion of the Policy Account Value equal to
the loan is invested in the GPA. This amount does not participate in the
Separate Account investment performance.
Detailed Description of Policy Features 15
<PAGE>
III. Investment Options
The Guaranteed Principal Account
You may allocate some or all of the Net Premiums to the Guaranteed Principal
Account ("GPA"). You also may transfer some or all of the Account Value in the
Divisions of the Separate Account to the GPA. Neither our General Account nor
the GPA is registered under federal or state securities laws.
Amounts allocated to the GPA become part of our General Account. Our General
Account consists of all assets owned by us other than those in the Separate
Account and in our other separate accounts. Subject to applicable law, we have
sole discretion over the investment of the assets of our General Account.
We guarantee amounts allocated to the GPA in excess of any Policy Debt (which
includes accrued interest) will accrue interest daily at an effective annual
rate at least equal to 3%. For amounts in the GPA equal to any Policy Debt, the
guaranteed minimum interest rate is an effective annual rate of 3% or, if
greater, the Policy loan rate less the Loan Interest Rate Expense Charge. This
charge will not be greater than 2% per year. This rate will be paid regardless
of the actual investment experience of the GPA. In addition to the guaranteed
minimum interest rate, we will declare a calendar year guaranteed minimum rate
each December for the upcoming calendar year. The rate we credit in any calendar
year will not be lower than this calendar year guaranteed minimum rate. Although
we are not obligated to credit interest at a rate higher than the guaranteed
minimum, we may declare a higher rate.
The Separate Account
Our Board of Directors established the Separate Account on June 9, 1982, as a
separate investment account of MassMutual. The Separate Account is maintained
under the laws of the State of Massachusetts. The Separate Account is registered
with the Securities and Exchange Commission as a unit investment trust under the
provisions of the Investment Company Act of 1940. We have established a segment
within the Separate Account to receive and invest premium payments for the
Policies. We have since divided this segment into eight Divisions. Each Division
invests in shares of a designated Fund of MML Trust or Oppenheimer Trust. We may
establish additional divisions within the Segment in the future.
We own the assets in the Separate Account. We are required to maintain
sufficient assets in the Separate Account to meet anticipated obligations of the
Policies funded by the Separate Account. We credit or charge the income, gains,
or losses, realized or unrealized, of the Separate Account against the assets
held in the Separate Account. We do not take any regard of the other income,
gains, or losses of MassMutual. Assets in the Separate Account attributable to
the reserves and other liabilities under the Policies cannot be charged with
liabilities from any other business conducted by MassMutual. We may transfer to
our General Account any assets that exceed anticipated obligations of the
Separate Account.
Some of the Funds offered are generally identical to, or are "clones" of, mutual
funds offered in the retail marketplace. These "clone" funds have the same
investment objectives, policies, and portfolio managers as the retail funds and
usually were formed after the retail funds. While the clone funds generally have
identical investment objectives, policies and portfolio managers, they are
separate and distinct from the retail funds. In fact, the performance of the
clone funds may be dramatically different from the performance of the retail
funds due to differences in the funds' sizes, dates shares of stock are
purchased and sold, cash flows and expenses. Thus, while the performance of the
retail funds may be informative, you should remember that such performance is
not the performance of the funds that support the Policy. It is not an
indication of future performance of the Policy funds.
The Funds
The MML Trust and Oppenheimer Trust are open-end, management investment
companies
16 Other Policy Information
<PAGE>
registered under the Investment Company Act of 1940 ("1940 Act"). They all
provide an investment vehicle for the separate investment accounts of variable
life and variable annuity contracts offered by companies such as MassMutual.
Shares of these organizations are not offered to the general public.
The assets of certain variable annuity separate accounts offered by MassMutual,
an affiliate, or other life insurers are invested in shares of these Funds.
Because these separate accounts are invested in the same underlying Funds, it is
possible conflicts could arise between Policy Owners and owners of the variable
annuity contracts.
The Boards of Trustees or Boards of Directors of the Funds will follow
procedures developed to determine whether conflicts have arisen. If a conflict
exists, the Boards will notify the Insurers and they will take appropriate
action to eliminate the conflicts.
We purchase the shares of each Fund for the Division at net asset value. All
dividends and capital gain distributions received from a Fund are automatically
reinvested in that Fund at net asset value, unless MassMutual, on behalf of the
Separate Account, elects otherwise. We redeem shares of the Funds at their net
asset values as needed to make payments under the Policies.
MML Trust. The MML Trust, managed by MassMutual, was organized as a
Massachusetts business trust on December 19, 1984. Six of the diversified
investment portfolios of the Trust are available under this Policy.
Oppenheimer Trust. The Oppenheimer Trust is managed by OppenheimerFunds, Inc.
The Trust consists of 10 separate funds, four of which are offered under this
Policy.
Fund Profiles
Following is a chart illustrating the risk profiles of the investment options
available under this Policy, and a summary of the investment objectives of each
Fund. Please note there can be no assurance any Fund will achieve its
objectives. More detailed information concerning these investment objectives and
the Funds is contained in the accompanying prospectuses, including information
on the risks associated with the investments, the investment techniques of each
of the Funds, and the deduction of expenses applicable to each of the Funds.
Investment Options 17
<PAGE>
INVESTMENT PREFERENCE CHART*
- --------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA
Oppenheimer Aggressive Growth Fund/VA++
Oppenheimer Capital Appreciation Fund/VA+
MML Equity Fund
MML Blend Fund
Oppenheimer Strategic Bond Fund/VA
MML Managed Bond Fund
MML Money Market Fund
Guaranteed Principal Account
- --------------------------------------------------------------------------------
Conservative Less Conservative Moderate Aggressive More Aggressive
Conservative: Investment goal is preservation of principal, while incurring
little risk.
Less Conservative: Investment goal is primarily preservation of principal, with
some desire for growth.
Moderate: Investment goal is growth, while seeking some preservation of
principal.
Aggressive: Investment goal is growth, with more tolerance for risk.
More Aggressive: Investment goal is significant growth over the long-term,
with greater tolerance for risk.
+The Oppenheimer Growth Division invests in the Oppenheimer Capital Appreciation
Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation Fund/VA was
called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*This chart is provided by Massachusetts Mutual Life Insurance Company. It does
not necessarily reflect the opinion of the underlying fund managers.
MML Money Market Fund
MML Money Market Fund seeks to maximize current income, to preserve capital, and
to maintain liquidity by investing in money market instruments.
MML Managed Bond Fund
MML Managed Bond Fund seeks a high rate of return, consistent with capital
preservation, by investing primarily in investment grade, publicly-traded, fixed
income securities.
Oppenheimer Strategic Bond Fund/VA
Oppenheimer Strategic Bond Fund/VA is a mutual fund that seeks a high level of
current income principally derived from interest on debt securities and seeks to
enhance such income by writing covered call options on debt securities. The Fund
invests in three market sectors: debt securities of foreign government and
companies, U.S. Government securities, and lower-rated, high-yield securities of
U.S. companies.
MML Blend Fund
MML Blend Fund seeks a high total rate of return over time, consistent with
prudent investment risk and capital preservation, by investing in equity, fixed
income and money market securities.
Sub-adviser to the equity sector of the Fund is David L. Babson & Company, Inc.
MML Equity Fund
MML Equity Fund seeks to achieve a superior rate of return over time from both
capital appreciation and current income and to preserve capital by investing in
equity securities.
Sub-adviser to the Fund is David L. Babson & Company, Inc.
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Capital Appreciation Fund/VA is a mutual fund that seeks long-term
capital appreciation by investing in securities of well-known established
companies. It invests mainly in equity securities.
18 Investment Options
<PAGE>
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Aggressive Growth Fund/VA is a mutual fund that seeks long-term
capital appreciation by investing in "growth-type" companies. Prior to May 1,
1998, the Fund was named Oppenheimer Capital Appreciation Fund.
Oppenheimer Global Securities Fund/VA
Oppenheimer Global Securities Fund/VA is a mutual fund that seeks long-term
capital appreciation by investing a substantial portion of assets in securities
of foreign issuers, "growth-type" companies, cyclical industries and special
situations, which are considered to have appreciation possibilities. It invests
in equity securities of U.S. and foreign issuers.
The Investment Advisers
MassMutual serves as investment manager of each of the MML Funds under
investment management agreements. David L. Babson & Company, Inc. ("Babson"),
which is a controlled subsidiary of MassMutual, is the investment sub-adviser to
MML Equity Fund and the Equity Sector of the MML Blend Fund. Both MassMutual and
Babson are registered investment advisers under the Investment Advisers Act of
1940.
OppenheimerFunds, Inc. ("OFI") is an investment adviser organized under the laws
of Colorado as a corporation; it was originally organized in 1959. It (including
a subsidiary) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $95 billion as of December 31, 1998,
and with more than 4 million shareholder accounts. OFI is located at Two World
Trade Center, 34th Floor, New York, New York 10048-0203. OFI is owned by
Oppenheimer Acquisition Corporation, a holding company owned in part by senior
management of OFI and ultimately controlled by MassMutual. OFI serves as
investment adviser to the Oppenheimer Trust. OFI is registered as an investment
adviser under the Investment Advisers Act of 1940. OFI serves as Investment
Adviser to the Oppenheimer Funds.
Citibank N.A., with its home office located at 111 Wall Street, New York, NY
10005, acts as custodian for the MML Trust. Bank of New York, with its home
office at One Wall Street, New York, NY 10015, acts as custodian for the
Oppenheimer Trust.
MassMutual is also the investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors, closed-end investment companies, certain
wholly owned subsidiaries of MassMutual, and various employee benefit plans.
Investment Options 19
<PAGE>
IV. Other Policy Information
When We Pay Proceeds
If the Policy has not terminated, we normally pay surrender, withdrawal, or loan
proceeds or the Death Benefit within seven days after we receive all required
documents in a form satisfactory to us at our Principal Administrative Office.
We can delay payment of the Death Benefit, the Cash Surrender Value, or any
Withdrawal or loan from the Separate Account during any period when:
(i) it is not reasonably practical to determine the amount because the New
York Stock Exchange is closed (other than customary week-end and holiday
closings); or
(ii) trading is restricted by the SEC; or
(iii) the SEC declares an emergency exists; or
(iv) the SEC, by order, permits us to delay payment in order to protect our
Owners.
We may delay paying any Cash Surrender Value, any Withdrawal, or any loan
proceeds based on the GPA for up to six months from the date the request is
received at our Principal Administrative Office.
We can delay payment of the entire Death Benefit if we contest the payment. We
investigate all death claims occurring within the two-year contestable period.
We may investigate death claims occurring beyond the two-year contestable
period. When we receive the information from a completed investigation, we
generally determine within five days whether we will authorize payment of the
claim. We make all payments promptly after authorization.
If we delay payment of a surrender or Withdrawal for 30 days or more, we add
interest to the date of payment at the same rate it is paid under the interest
payment option. We pay interest on the Death Benefit from the date of death to
the date of payment.
Payment Options
We will pay the Policy proceeds (the Death Benefit or the Cash Surrender Value)
in cash. Or if you wish, we will pay all or part of these under one or more of
the following payment options. The minimum amount that can be applied under a
payment option is $2,000. If the periodic payment under any option is less than
$20, we reserve the right to make payments at less-frequent intervals. None of
these benefits depends on the performance of the Separate Account or the GPA.
For additional information concerning these options, see the Policy. The
following payment options are currently available.
- --------------------------------------------------------------------------------
Installments for Equal monthly payments for any period selected, up to 30
a Specified years. The amount of each payment depends on the total
Period amount applied, the period selected, and the monthly
income rates we are using when the first payment is due.
- --------------------------------------------------------------------------------
Life Income Equal monthly payments based on the life of a named
person. Payments will continue for the lifetime of that
person. You can elect income with or without a minimum
payment period.
- --------------------------------------------------------------------------------
Interest We will hold any amount applied under this option. We will
pay interest on the amount at an effective annual rate
determined by us. This rate will not be less than 2.5%.
- --------------------------------------------------------------------------------
Installments of Each monthly payment is for an agreed specified amount not
Specified Amount less than $10 for each $1,000 applied under the option.
Interest of at least 2.5% per year is credited each month
on the unpaid balance and added to it. Payments continue
until the amount we hold runs out.
- --------------------------------------------------------------------------------
20 Other Policy Information
<PAGE>
- --------------------------------------------------------------------------------
Life Income with Equal monthly payments based on the life of a named
Payments Guaranteed person. We will make payments until the total amount paid
for Amount Applied equals the amount applied, whether the named person lives
until all payments have been made or not. If the named
person lives beyond the payment of the total amount
applied, we will continue to make monthly payments as long
as the named person lives.
- --------------------------------------------------------------------------------
Joint Lifetime Equal monthly payments based on the lives of two named
Income persons. The same payment is made each month until both
named persons have died. You can elect income with or
without a minimum payment period.
- --------------------------------------------------------------------------------
Joint Lifetime Monthly payments based on the lives of two named persons.
Income with We will make payments at the initial level while both are
Reduced Payments living, we will reduce the payments by one-third. Payments
to Survivor will continue at that level for the lifetime of the other.
Payments stop when both named persons have died.
- --------------------------------------------------------------------------------
Withdrawal Rights Under Payment Options. If provided in the payment option
election, you may withdraw or apply under any other option all or part of the
unpaid balance under the Fixed Amount or Interest Payment Option. You may not
withdraw any part of the payments under the Specified Period Payment Option or
payments that are based on a named person's life.
Beneficiary
A Beneficiary is any person named on our records to receive insurance proceeds
at the Insured's death. The Applicant names the Beneficiary in the application
for the Policy. You may name different classes of beneficiaries, such as primary
and secondary. These classes set the order of payment. There may be more than
one Beneficiary in a class.
You may change the Beneficiary during the Insured's lifetime by writing to our
Principal Administrative Office. Generally, the change will take effect as of
the date of the request. If no Beneficiary is living at the Insured's death,
unless provided otherwise, the Death Benefit is paid to you or, if deceased, to
your estate.
Assignment
You may assign the Policy as collateral for a loan or other obligation. For any
assignment to be binding on us, however, we must receive a signed copy of it at
our Principal Administrative Office. We are not responsible for the validity of
any assignment.
Limits on Our Right to Challenge the Policy
Except for any Policy change or reinstatement requiring evidence of
insurability, we cannot contest the validity of the Policy with respect to any
material misrepresentation in the application regarding the insurability of the
Insured once the Policy has been in force during the lifetime of Insured for two
years after the its Issue Date.
For any Policy change or reinstatement requiring evidence of insurability, we
cannot contest the validity of the change or reinstatement with respect to the
Insured after the change has been in effect for two years during the lifetime of
the Insured.
Error of Age or Gender
If the Insured's age or gender is misstated in the Policy application, we will
adjust the Death Benefit we pay under the Policy based on what the Policy would
provide based on the most recent Monthly Charge for the correct date of birth
and correct gender.
Suicide
Suicide within two years of the Policy Date is not covered by the Policy. If the
Insured dies by suicide, while sane or insane, within two years from the Issue
Date or Reinstatement Date, the Policy will terminate. We will refund the amount
of all premiums paid, less any Withdrawals and Policy Debt. If the Insured dies
by suicide, while sane or insane, within two years after the
Other Policy Information 21
<PAGE>
effective date of any increase in the Selected Face Amount, the increase will
terminate and we will refund the Monthly Charges for that increase. However, if
a refund was payable as the result of suicide during the first two years
following the Issue Date or the Reinstatement Date of the Policy, there is no
additional refund for any Selected Face Amount increase.
Additional Benefits You Can Get by Rider
You can obtain additional benefits if you request them and qualify for them. We
provide additional benefits by riders. Additional benefits are subject to the
terms of both the rider and the Policy. The cost of any rider is deducted as
part of the Monthly Charges. Subject to state availability, the following riders
are available.
Disability Benefit Rider. This rider provides that, in the event of the
Insured's total disability that begins before Attained Age 65 and continues for
at least six months, we will apply a premium payment to the Policy on each
Monthly Calculation Date while the Insured remains totally disabled (but not
after Attained Age 70 if the disability occurred after Attained Age 60).
At the time of application, you choose a Specified Monthly Amount. In the event
of the Insured's total disability, the amount of the premium payment applied on
each Monthly Calculation Date will be the greater of: (a) the Specified Monthly
Amount; or (b) the Monthly Charge (increased by the current Premium Expense
Charge) on that Monthly Calculation Date.
Accidental Death Benefit Rider. This rider provides for an addition to the Death
Benefit in the event the Insured's death was caused by accidental bodily injury
occurring within six months before the Insured's death. This rider provides no
benefit if the Insured dies after Attained Age 69.
Insurability Protection Rider. This rider allows the Policyowner to increase the
Selected Face Amount of the Policy for a specified amount on specified dates,
without evidence of insurability.
Accelerated Death Benefit Rider. This rider advances the Policyowner a portion
of the Death Benefit when we receive proof, satisfactory to us, the Insured is
terminally ill and is not expected to live more than 12 months. In return for
the advanced payment, a lien is established against the Policy, equal to the
amount of the Death Benefit accelerated under the Policy.
Interest is not charged on the lien.
Right to Exchange Insured Endorsement. Upon request, the Policy may include a
Right to Exchange Insured Endorsement. Under this endorsement, the Policy may be
exchanged for a new Policy on the life of a new insured, subject to certain
conditions and satisfactory evidence of insurability.
Sales and Other Agreements
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, is the principal underwriter of the Policy. MML Investors Services,
Inc. ("MMLISI"), at the same address serves as the co-underwriter of the Policy.
Both MML Distributors and MMLISI are registered with the SEC as broker-dealers
and are members of the National Association of Securities Dealers, Inc. (the
"NASD").
MML Distributors may have selling agreements with other broker-dealers that are
registered with the SEC and are members of the NASD ("selling brokers"). We sell
the Policy through agents who are licensed by state insurance officials to sell
the Policy. These agents also are registered representatives of selling brokers
or of MMLISI. We sell the Policy in all states except New York, and in the
District of Columbia.
We also may contract with independent third party broker-dealers who may assist
us in finding broker-dealers to offer and sell the Policies. These third parties
also may provide training, marketing and other sales related functions for us
and other broker-dealers. And they may provide certain administrative services
to us in connection with the Policies.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors,
22 Other Policy Information
<PAGE>
Limited Liability Company in the states of Maine, Ohio and West Virginia.
Compensation
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the Policy.
Agents who sell these Policies will receive commissions based on certain
commission schedules and rules. We pay some commissions as a percentage of the
premium paid in each Year of Coverage. These commissions distinguish between
premiums up to the Target Premium and premiums paid in excess of the Target
Premium. The Target Premium is based on the Issue Age, gender, and risk
classification of the Insured. We also pay commissions as a percentage of the
average monthly Account Value in each Policy Year. The maximum commission
percentages are as follow.
Premium-based Commissions
- -------------------------------------------------------------------------------
Coverage Year 1 50% of premium paid up to the Target Premium
2% of premium paid over the Target Premium
Coverage Years 2-10 6.5% of premium paid up to the Target Premium
2% of premium paid over the Target Premium
Coverage Years 11+ 2% of all premium paid
- -------------------------------------------------------------------------------
We may compensate agents who have financing agreements with general agents of
MassMutual differently. Agents who meet certain productivity and persistency
standards in selling MassMutual and MassMutual policies are eligible for
additional compensation. General agents and district managers who are registered
representatives of MMLISI also may receive commission overrides, allowances and
other compensation.
We may pay independent, third-party broker-dealers who assist us in finding
broker-dealers to offer and sell the Policies compensation based on premium
payments for the Policies. In addition, some sales personnel may receive various
types of non-cash compensation as special sales incentives, including trips and
educational and/or business seminars.
While the compensation we pay to broker-dealers for sales of Policies may vary
with the sales agreement and level of production, the compensation generally is
expected to be comparable to the aggregate compensation we pay to agents and
general agents.
Other Policy Information 23
<PAGE>
V. Other Information
MassMutual
MassMutual is a mutual life insurance company chartered in 1851 under the laws
of Massachusetts. Its Home Office is located in Springfield, Massachusetts.
MassMutual is licensed to transact life, accident, and health business in all
fifty states of the United States, the District of Columbia, Puerto Rico, and
certain provinces of Canada. As of December 31, 1998, MassMutual had
consolidated statutory assets in excess of $67 billion and estimated total
assets under management of $176.8 billion.
MassMutual's Tax Status. MassMutual is taxed as a life insurance company under
Subchapter L of the Internal Revenue Code of 1986 (the "Code"). The Segment and
the Separate Account are part of MassMutual.
Due to our current tax status, we do not charge the Segment for our federal
income taxes that may be a result of activity of the Segment. Periodically, we
review the question of a charge to the Segment for our federal income taxes. In
the future, we may impose a charge for any federal income taxes we pay resulting
from activity of the Segment. Depending on the method of calculating interest on
Policy values allocated to the Guaranteed Principal Account, we may charge for
the Policy's share of our federal income taxes that are a result of activity of
the GPA.
Under current laws, we may have to pay state or local taxes (in addition to
premium taxes). At present, these taxes are not significant. We reserve the
right to charge the Separate Account for such taxes, if any, resulting from
activity of the Separate Account.
Annual Reports
MassMutual maintains the records and accounts relating to the Separate Account,
the Segment and the Divisions. Each year within the 30 days following the Policy
Anniversary, we will mail you a report showing:
(i) the Account Value at the beginning of the previous Policy Year,
(ii) all premiums paid since that time,
(iii) all additions to and deductions from the Account Value during the year,
and
(iv) the Account Value, Death Benefit, Cash Surrender Value and Policy Debt as
of the last Policy Anniversary.
This report may contain additional information if required by any applicable law
or regulation.
Federal Income Tax Considerations
The information in this prospectus is general and is not an exhaustive
discussion of all tax questions that might arise under the Policy. It also is
not intended as tax advice. In addition, we do not profess to know the
likelihood the current federal income tax laws and Treasury Regulations or of
the current interpretations of the Internal Revenue Service will continue. We
cannot make any guarantee regarding the future tax treatment of any Policy. We
reserve the right to make changes in the Policy to assure that it continues to
qualify as life insurance for tax purposes.
For complete information on any tax issue, we urge you to consult a qualified
tax advisor. No attempt is made in this prospectus to consider any applicable
state or other tax laws.
Policy Proceeds, Premiums and Loans. We believe the Policy meets the IRC
definition of life insurance. Therefore, the Death Benefit under the Policy
generally is excludible from the gross income of the Beneficiary under the IRC.
Decreases in Selected Face Amount and Withdrawals may be taxable depending on
the circumstances. The IRC states that:
. if there is a reduction of future benefits during the first 15 years after
a Policy is issued and
. if there is a cash distribution as a result of the reduction,
24 Other Information
<PAGE>
you may be taxed on all or a part of the amount distributed.
If these conditions do not apply, a Withdrawal is taxable only to the extent it
exceeds your unrecovered premiums unless the Policy is a modified endowment
contract. After 15 years, cash distributions are not subject to federal income
tax, except to the extent they exceed the total amount of premiums paid and not
previously recovered.
If you surrender the Policy for its full Cash Surrender Value, some of the Cash
Surrender Value may be considered ordinary income for tax purposes. The
distribution is ordinary income to the extent the Account Value exceeds the
premiums (or any other amounts paid for the Policy) paid but not previously
recovered. In making this calculation, the Account Value considered is not
reduced by any outstanding Policy Debt but it is reduced by any Surrender
Charges.
A change of the Owner or the Insured or an exchange or assignment of the Policy
may result in immediate taxable income.
We believe that under current law any loan received under the Policy will be
treated as Policy Debt of an Owner. The loan will not be considered income to
you unless the Policy has become a "modified endowment contract." If the Policy
is a modified endowment contract, loans will be fully taxable to the extent of
any income in the Policy and could be subject to an additional 10 percent tax.
Interest on Policy loans used for personal purposes generally is not
tax-deductible. However, you may deduct this interest if the loan proceeds are
used for "trade or business" or "investment" purposes if you meet certain tax
rules.
If the Owner is a business or corporation additional restrictions may apply. For
example, there are limits on interest deductions available for loans against a
business-owned Policy. The corporate alternative minimum tax may apply to any
gain in the Policy. This tax also may apply to a portion of the amount by which
Death Benefits received exceed the Policy's Cash Surrender Value on the date of
death.
The impact of federal income taxes on values under this Policy and on the
benefit to you or your Beneficiary depends on MassMutual's tax status and on the
tax status of the individual concerned. We currently do not make any charge
against the Separate Account for federal income taxes. We may make such a charge
eventually in order to recover the future federal income tax liability of the
Separate Account.
Federal estate and gift taxes, state and local estate taxes, and other taxes
depend on the circumstances of each Owner or Beneficiary.
Modified Endowment Contracts. If a Policy is a modified endowment contract
("MEC"), loans, partial withdrawals, and other amounts distributed under the
Policy are taxable to the extent of any accumulated income in the Policy. The
collateral assignment of a MEC is also treated as a taxable distribution. In
general, the amount subject to taxation is the excess of the Account Value (both
loaned and unloaned) over the previously unrecovered premiums paid. Death
benefits paid under a MEC, however, are not taxed any differently than death
benefits payable under other life insurance contracts.
A Policy is a MEC if it satisfies the definition of life insurance in the IRC
but fails the additional "7-pay test." A Policy fails this test if:
. the accumulated amount paid under the contract at any time during the first
seven contract years
exceeds
. the total premiums that would have been payable for a Policy providing
guaranteed benefits and requiring the payment of only seven level annual
premiums.
A Policy may pass the 7-pay test and still be taxed as a MEC if it is received
in exchange for a MEC.
If certain changes are made to a Policy we will re-test it to determine if it
has become a MEC. For example, if you reduce the death benefit during the first
seven contract years we will retest the Policy. If the test shows the Policy has
become a MEC, this classification change is effective retroactively to the
Policy Year in which the actual premiums paid exceed the new 7-pay limits.
We will retest whenever there is a "material change" to the Policy while it is
in force. If there is a material change a new 7-pay test period
Other Information 25
<PAGE>
begins at that time. The term "material change" includes any increases in death
benefits.
Since the Policy provides for flexible premium payments, we have procedures for
determining whether increases in death benefits or additional premium payments
cause the start of a new seven-year test period or the taxation of distributions
and loans.
If any amount is taxable as a distribution of income under a MEC, it also will
be subject to a 10% penalty tax. There are a few exceptions to the additional
penalty tax for individual Owners. The penalty tax will not apply to
distributions:
(i) made on or after the date the taxpayer attains age 59 1/2; or
(ii) made because the taxpayer became disabled; or
(iii) made as part of a series of substantially equal periodic payments paid for
the life or life expectancy of the taxpayer. These payments must be made
at least annually.
Once a Policy fails the 7-pay test, loans and distributions in the year of
failure and in future years are subject to the rules for MECs. In addition,
loans and distributions received in anticipation of failing the 7-pay test are
defined as any loans and distributions made within two years prior to failing
the 7-pay test and are subject to taxation.
Under certain circumstances, a loan, collateral assignment, or other
distribution under a MEC may be taxable even though it exceeds the amount of
income accumulated in the Policy. For purposes of determining the amount of
income received from a MEC, the law considers the total of all income in all the
MECs issued within the same calendar year to the same Owner by an insurer and
its affiliates. Loans, collateral assignments, and distributions from any one
MEC are taxable to the extent of this total income.
Qualified Plans. The Policy may be used as part of certain tax-qualified and/or
ERISA employee benefit plans. Since the rules concerning the use of a Policy
with such plans are complex, you should not use the Policy in this way until you
have consulted a competent tax adviser. You may not use the Policy as part of an
Individual Retirement Account (IRA).
Your Voting Rights
You have the right to instruct us how to vote on questions submitted to the
shareholders of the funds supporting the Policy to the extent you have invested
in these Divisions.
Your right to instruct us is based on the number of shares of the Funds
attributable to your Policy. The Policy's number of shares of the Funds is
determined by dividing the Policy's Account Value held in each Division of the
Separate Account by $100. Fractional votes are counted.
You receive proxy material and a form to complete giving us voting instructions.
Shares of the Funds held by the Separate Account for which we do not receive
instructions are voted for or against any proposition in the same proportion as
the shares for which we do receive instructions.
Reservation of Rights
We reserve the right to take certain actions. Specifically, we reserve the right
to:
. Create new Divisions of the Separate Account;
. Create new Separate Accounts and new Segments;
. Combine any two or more Separate Accounts, Segments or Divisions;
. Make available additional or alternative Divisions of the Separate Account
investing in additional investment companies;
. Invest the assets of the Separate Account in securities other than shares
of the Funds. These securities can be substitutes for Fund shares already
purchased or they can apply only to future purchases.
. Operate the Separate Account as a management investment company under the
1940 Act or in any other form permitted by law;
. De-register the Separate Account under the 1940 Act in the event such
registration is no longer required;
. Substitute one or more Funds for other funds with similar investment
objectives;
26 Other Information
<PAGE>
. Delete Funds or close Funds to future investments; and
. Change the name of the Separate Account.
We have reserved all rights to the name Massachusetts Mutual Life Insurance
Company or any part of it. We may allow the Separate Account and other entities
to use our name or part of it, but we also may withdraw this right.
Bonding Arrangement
An insurance company blanket bond is maintained providing $75,000,000 coverage
for officers and employees of MassMutual (subject to a $350,000 deductible) and
$75,000,000 for MassMutual's general agents and agents (also subject to a
$350,000 deductible).
Legal Proceedings
We are not currently involved in any legal proceedings that would have a
material impact on the Policy.
Year 2000
Like other businesses and governments around the world, MassMutual could be
adversely affected if the computer systems used by the company and those with
which it does business do not properly recognize the year 2000. This is commonly
known as the "Year 2000 issue."
In 1996, MassMutual began an enterprise-wide process of identifying, evaluating
and implementing changes to computer systems and applications software to
address the Year 2000 issue on its own behalf and on behalf of certain
subsidiaries. MassMutual is addressing the Year 2000 issue internally with
modifications to existing programs and conversions to new programs. MassMutual
is also seeking assurances from vendors, customers, service providers,
governments and others with which MassMutual conducts business, to determine
their year 2000 readiness.
The costs are currently being expensed, and when measured against net gain from
operations before dividends, are not material to MassMutual.
Experts
We have included the financial statements of MassMutual, and the Variable Life
Select segment of Massachusetts Mutual Variable Life Separate Account I, in this
prospectus in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
PricewaterhouseCoopers LLP's report on the statutory financial statements of
MassMutual includes explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles.
Craig Waddington, FSA, MAAA, Vice President for MassMutual, has examined the
illustrations in Appendix D of this prospectus. We filed his opinion on the
illustrations as an exhibit to the registration statement filed with the
SEC.
Other Information 27
<PAGE>
Appendix A
Definition of Terms
Account Value: The sum of the Variable Account Value and the Fixed Account Value
of the Policy.
Principal Administrative Office: Our Principal Administrative Office is located
at 1295 State Street, Springfield, Massachusetts 01111-0001.
Attained Age: The Issue Age of the Insured plus the number of completed Policy
Years.
Beneficiary(ies): The person or persons specified by you to receive some or all
of the Death Benefit at the Insured's death.
Cash Surrender Value: The amount payable to an Owner upon surrender of the
Policy. It is equal to the Account Value less any Surrender Charges that apply
and less any Policy Debt.
Death Benefit: The amount paid following receipt of due proof of the Insured's
death. The amount is equal to the benefit provided by the Death Benefit Option
in effect on the date of death less any Policy Debt outstanding and any unpaid
Monthly Charges to the date of death.
Death Benefit Option: The Policy offers two Death Benefit Options for
determination of the amount of the Death Benefit. The Death Benefit Option is
elected at time of application and, subject to certain requirements, may be
changed at a later date.
Fixed Account Value: The current Account Value that is allocated to the
Guaranteed Principal Account.
Good Order: Generally, in Good Order means that we have received everything we
need to process the transaction. For example, we may need certain forms
completed and signed before we can process a transaction. Likewise, we cannot
process certain financial transactions until we have received funds with proper
instructions and authorizations.
Guaranteed Principal Account ("GPA"): Part of our General Account, the GPA is a
fixed account to and from which you may make allocations and transfers.
Insured: The person whose life this Policy insures.
Issue Age: The age of the Insured at his or her birthday nearest the Policy
Date.
Issue Date: The date on which the Policy is actually issued; it is also the date
the suicide and contestability periods begin.
Minimum Face Amount: The Death Benefit needed for the Policy to qualify as life
insurance under federal tax law.
Monthly Calculation Date: The monthly date on which the Monthly Charges for the
Policy are due. The first Monthly Calculation Date is the Policy Date, and
subsequent Monthly Calculation Dates are on the same day of each succeeding
calendar month.
Monthly Charges: The charges assessed against the Policy Account Value each
month.
Net Premium: The premium payment we receive in Good Order, minus the Premium
Expense Charge.
Owner: The person or entity that owns the Policy.
Policy: The flexible premium variable whole life insurance policy offered by
MassMutual and described in this Prospectus.
Policy Anniversary Date: An anniversary of the Policy Date.
Policy Date: The date shown on the Policy that is the starting point for
determining Policy Anniversary Dates, Policy Years, and Monthly Calculation
Dates.
28 Appendix A
<PAGE>
Policy Debt: All outstanding Policy loans plus accrued loan interest.
Policy Year: A twelve-month period commencing with the Policy Date or a Policy
Anniversary Date.
Separate Account: The Policies' designated segment of the "Massachusetts Mutual
Variable Life Separate Account I" established by MassMutual under the laws of
Massachusetts and registered as a unit investment trust with the Securities and
Exchange Commission under 1940 Act. The Separate Account is used to receive and
invest Net Premiums for this Policy.
Target Premium: The level of premium payments used to determine commission
payments. The Target Premium is based on the Issue Age, gender, and risk
classification of the Insured.
Valuation Date: A date on which the net asset value of the shares of each
Division of the Separate Account is determined. Generally, this will be any date
on which the New York Stock Exchange (or its successor) is open for trading.
Variable Account Value: The total of the values of the accumulation units
credited to the Policy in each Division of the Separate Account multiplied by
your number of units in that Division.
We, us, our: Refer to MassMutual.
Year of Coverage: For the initial Selected Face Amount, each Policy Year is a
Year of Coverage. For any increase in the Selected Face Amount, each Year of
Coverage is measured from the effective date of the increase.
You, your: Refer to the Owner of the Policy.
Appendix A 29
<PAGE>
Appendix B
Examples of the Impact of the Account Value and Premiums on the Policy Death
Benefit
Example I ~ Death Benefit Option 1
- --------------------------------------------------------------------------------
Assume the following:
- --------------------------------------------------------------------------------
. Selected Face Amount is $1,000,000
. Account Value is $50,000
. Minimum Face Amount is $219,000
. No Policy Debt
- --------------------------------------------------------------------------------
Based on these assumptions,
. the Death Benefit is $1,000,000.
If the Account Value increases to $80,000 and the Minimum Face Amount increases
to $350,400,
. the Death Benefit remains at $1,000,000.
If the Account Value decreases to $30,000 and the Minimum Face Amount decreases
to $131,400,
. the Death Benefit still remains at $1,000,000.
Example II ~ Death Benefit Option 2
- --------------------------------------------------------------------------------
Assume the following:
- --------------------------------------------------------------------------------
. Selected Face Amount is $1,000,000
. Account Value is $50,000
. Minimum Face Amount is $219,000
. No Policy Debt
Based on these assumptions,
. the Death Benefit is $1,050,000 (Selected Face Amount plus Account Value).
If the Account Value increases to $80,000 and the Minimum Face Amount increases
to $350,400,
. the Death Benefit will increase to $1,080,000.
If the Account Value decreases to $30,000 and the Minimum Face Amount decreases
to $131,400,
. the Death Benefit will decrease to $1,030,000.
Examples of Death Benefit Option Changes
Example I - Change from Option 2 to Option 1
- --------------------------------------------------------------------------------
For a change from Option 2 to Option 1, the Selected Face Amount is increased by
the amount of the Account Value on the effective date of the change.
For example, if the Policy has a Selected Face Amount of $500,000 and an
Account Value of $25,000, the Death Benefit under Option 2 is equal to the
Selected Face Amount plus the Account Value, or $525,000. If you change
from Option 2 to Option 1, the Death Benefit under Option 1 is equal to the
Policy Selected Face Amount. Since the Death Benefit under the Policy does
not change as the result of a Death Benefit Option change, the Selected
Face Amount will be increased from $500,000 under Option 2 to $525,000
under Option 1 and the Death Benefit after the change will remain at
$525,000.
Example II - Change from Option 1 to Option 2
- --------------------------------------------------------------------------------
For a change from Option 1 to Option 2, the Selected Face Amount will be
decreased by the amount of the Account Value on the effective date of the
change.
For example, if the Policy has a Selected Face Amount of $700,000 and an
Account Value of $25,000, under Option 1 the Death Benefit is equal to the
Selected Face Amount, or $700,000. If you change from Option 1 to Option 2,
the Death Benefit under Option 2 is equal to the Selected Face Amount plus
the Account Value. Since the Death Benefit does not change as the result of
a Death Benefit Option change, the Selected Face Amount will be decreased
by $25,000 to $675,000, and the Death Benefit under Option 2 after the
change will remain $700,000.
30 Appendix B
<PAGE>
Appendix C
Rates of Return
From time to time, we may report different types of historical performance for
the Divisions of the Separate Account available under the Policy. We may report
the average annual total returns of the funds over various time periods. These
returns will reflect deductions for investment management fees and fund expenses
and an annual deduction for the Mortality and Expense Risk Charge. The returns
do not reflect any Policy charges, which, if included, would reduce performance.
On request, we will provide an illustration of Account Values and Cash Surrender
Values for hypothetical Insureds of given ages, gender, risk classifications,
premium levels and initial Selected Face Amounts. We will base the illustration
either on actual historic fund performance or on a hypothetical investment
return. The hypothetical return will be between 0% and 12%. The Cash Surrender
Value figures will assume all fund charges, the Mortality and Expense Risk
Charge, and all other Policy charges are deducted. The Account Value figures
will assume all charges except the Surrender Charge are deducted.
We also may distribute sales literature comparing the Divisions of the Separate
Account to established market indices, such as the Standard & Poor's 500 Stock
Index and the Dow Jones Industrial Average. These comparisons may show the
percentage change in the net asset values of the funds or in the Accumulation
Unit Values. We also may make comparisons to the percentage change in values of
other mutual funds with investment objectives similar to those of the Divisions
of the Separate Account being compared.
Tables 1 and 2 show the Effective Annual Rates of Return and One Year Total
Returns, respectively, of the funds based on the actual investment performance
(after deduction of investment management fees and direct operating expenses)
underlying each Division of the Separate Account. Table 1 shows figures for
periods ended December 31, 1998, while Table 2 shows December 31 one-year total
returns for each year shown. These rates do not reflect:
. the Mortality and Expense Risk Charges assessed against the Separate
Account
. deductions from premiums or Monthly Charges assessed against the Account
Value of the Policies
. the Policy's Surrender Charges
Therefore, these rates are not illustrative of how actual investment performance
will affect the benefits under the Policy (see, however, Illustration of Death
Benefits, Cash Surrender Values, and Accumulated Premiums, Appendix D). The
rates of return shown are not necessarily indicative of future performance. You
may consider these rates of return, however, in assessing the competence and
performance of the investment advisers.
Appendix C 31
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Since
Fund Inception 15 Years 10 Years 5 Years 1 Year
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MML Equity 14.84% 15.76% 16.39% 19.66% 16.20%
MML Managed Bond 10.24% 10.16% 9.19% 7.07% 8.14%
MML Blend 13.67% -- 13.70% 14.60% 13.56%
MML Money Market 6.66% 6.16% 5.41% 4.95% 5.16%
Oppenheimer Capital Appreciation+ 16.03% -- 16.85% 22.10% 24.00%
Oppenheimer Aggressive Growth++ 15.07% -- 16.12% 13.06% 12.36%
Oppenheimer Global Securities 12.49% -- -- 9.67% 14.11%
Oppenheimer Strategic Bond 6.79% -- -- 6.83% 2.90%
- -----------------------------------------------------------------------------------------
</TABLE>
The figures show in this Table do not reflect any charges at the Separate
Account or Policy level.
+The Oppenheimer Growth Division invests in the Oppenheimer Capital Appreciation
Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation Fund/VA was
called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*since inception.
<TABLE>
<CAPTION>
Dates of inception:
- ------------------
<S> <C>
MML Equity Fund - 9/15/71 Oppenheimer Capital Appreciation Fund/VA - 4/3/85
MML Managed Bond Fund - 12/16/81 Oppenheimer Aggressive Growth Fund/VA - 8/15/86
MML Money Market Fund - 12/16/81 Oppenheimer Global Securities Fund/VA - 11/12/90
MML Blend Fund - 2/3/84 Oppenheimer Strategic Bond Fund/VA - 5/3/93
</TABLE>
32 Appendix C
<PAGE>
TABLE 2
ONE YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MML MML Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Year MML Managed MML Money Capital Aggressive Global Strategic
Ended Equity Bond Blend Market Appreciation+ Growth++ Securities Bond
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 16.20% 8.14% 13.56% 5.16% 24.00% 12.36% 14.11% 2.90%
1997 28.59% 9.91% 20.89% 5.18% 26.69% 11.67% 22.42% 8.71%
1996 20.25% 3.25% 13.95% 5.01% 25.20% 20.23% 17.80% 12.07%
1995 31.13% 19.14% 23.28% 5.58% 36.66% 32.52% 2.24% 15.33%
1994 4.10% (3.76%) 2.48% 3.84% 0.97% (7.59%) (5.72%) (3.78%)
1993 9.52% 11.81% 9.70% 2.75% 7.25% 27.32% 70.32% 4.25%*
1992 10.48% 7.31% 9.36% 3.48% 14.53% 15.42% (7.11%) --
1991 25.56% 16.66% 24.00% 6.01% 25.54% 54.72% 3.39% --
1990 (0.51%) 8.38% 2.37% 8.12% (8.21%) (16.82%) 0.40%* --
1989 23.04% 12.83% 19.96% 9.16% 23.59% 27.57% -- --
1988 16.68% 7.13% 13.40% 7.39% 22.09% 13.41% -- --
1987 2.10% 2.60% 3.12% 6.49% 3.31% 14.34% -- --
1986 20.15% 14.46% 18.30% 6.60% 17.76% (1.65%)* -- --
1985 30.54% 19.94% 24.88% 8.03% 9.50%* -- -- --
1984 5.40% 11.69% 8.24%* 10.39% -- -- -- --
1983 22.85% 7.26% -- 8.97% -- -- -- --
1982 25.67% 22.79%* -- 11.12%* -- -- -- --
1981 6.67% -- -- -- -- -- -- --
1980 27.62% -- -- -- -- -- -- --
1979 19.54% -- -- -- -- -- -- --
1978 3.71% -- -- -- -- -- -- --
1977 (0.52%) -- -- -- -- -- -- --
1976 24.77% -- -- -- -- -- -- --
1975 32.85% -- -- -- -- -- -- --
1974 (17.61%)* -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The figures shown in this Table do not reflect any charges at the Separate
Account or Policy level.
+The Oppenheimer Growth Division invests in the Oppenheimer Capital Appreciation
Fund/VA. Prior to May 1, 1999, the Oppenheimer Capital Appreciation Fund/VA was
called the Oppenheimer Growth Fund.
++The Oppenheimer Capital Appreciation Division invests in the Oppenheimer
Aggressive Growth Fund/VA. Prior to May 1, 1998, the Oppenheimer Aggressive
Growth Fund/VA was called the Oppenheimer Capital Appreciation Fund.
*Since inception.
**Performance for the MML Equity Fund prior to 1974 is not available.
<TABLE>
<CAPTION>
Dates of inception:
- -------------------
<S> <C>
MML Equity Fund - 9/15/71 Oppenheimer Capital Appreciation Fund/VA - 4/3/85
MML Managed Bond Fund - 12/16/81 Oppenheimer Aggressive Growth Fund/VA - 8/15/86
MML Money Market Fund - 12/16/81 Oppenheimer Global Securities Fund/VA - 11/12/90
MML Blend Fund - 2/3/84 Oppenheimer Strategic Bond Fund/VA - 5/3/93
</TABLE>
Appendix C 33
<PAGE>
Appendix D
Illustration of Death Benefits, 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), equal to constant gross annual rates of 0%, 6%, and
12%. The tables are based on annual premium payments of $1,200 for a Preferred
Nonsmoker Male age 35. Preferred Nonsmoker is currently our best risk
classification. Separate tables are shown for the current and guaranteed
schedules of charges. These tables will assist in the comparison of Death
Benefits and Cash Surrender Values for the Policy with those of other variable
life policies.
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 and below that average in individual Policy Years
. any Policy loan were made during the period of time illustrated
. the rates of return for all funds averaged 0%, 6%, and 12% but varied above
or below that average for particular funds.
The Death Benefits and Cash Surrender Values shown in Tables 1, 2, 3 and 4
reflect the following current charges:
. Administrative Charges of $6 per month per Policy in all Policy Years.
. Mortality Charges based on the current rates we are charging for Preferred
Nonsmoker, fully underwritten risks.
. Mortality and Expense Risk Charges of 0.55% on an annual basis of the daily
net asset value of the Separate Account in all Policy Years.
. Fund level expenses of 0.59% on an annual basis of the net asset value of
the Separate Account. These expenses represent the unweighted average of
all fund expenses.
The Death Benefits and Cash Surrender Values shown in Tables 5, 6, 7 and 8
reflect the following guaranteed maximum charges as well as the current fund
level expenses.
. Administrative Charges equal to $9 per month per Policy in all years.
. Mortality Charges based on the Commissioners 1980 Standard Ordinary
Nonsmoker Mortality Table.
. Mortality and Expense Risk Charges equal to 0.90% on an annual basis of the
daily net asset value of the Separate Account in all years.
Cash Surrender Values shown in the Tables reflect the deduction of the
applicable Administrative Surrender Charge (during the first 10 Policy Years)
and the applicable Sales Loan Surrender Charge (during the first 15 Policy
Years).
Taking the current Mortality and Expense Risk Charge and the fund level expenses
into account, the gross rates of 0%, 6%, and 12% are (1.13%), 4.80%, and 10.73%,
respectively, on a net basis.
34 Appendix D
<PAGE>
TABLE 1
Flexible Premium Variable Whole Life Insurance Policy
Male Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 1 $100,000 Selected Face Amount
Current Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
-----------------------------------------------------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,000 $100,000 $100,000 $149 $210 $272
2 $2,583 $100,000 $100,000 $100,000 $998 $1,177 $1,364
3 $3,972 $100,000 $100,000 $100,000 $1,853 $2,210 $2,596
4 $5,431 $100,000 $100,000 $100,000 $2,712 $3,307 $3,977
5 $6,962 $100,000 $100,000 $100,000 $3,552 $4,447 $5,497
6 $8,570 $100,000 $100,000 $100,000 $4,464 $5,725 $7,263
7 $10,259 $100,000 $100,000 $100,000 $5,363 $7,056 $9,207
8 $12,032 $100,000 $100,000 $100,000 $6,240 $8,434 $11,339
9 $13,893 $100,000 $100,000 $100,000 $7,094 $9,861 $13,678
10 $15,848 $100,000 $100,000 $100,000 $7,926 $11,339 $16,248
15 $27,189 $100,000 $100,000 $100,000 $11,570 $19,426 $33,418
20 $41,663 $100,000 $100,000 $144,301 $14,364 $28,995 $61,144
25 $60,136 $100,000 $100,000 $216,376 $16,670 $41,095 $106,066
30 $83,713 $100,000 $100,000 $316,718 $17,392 $55,759 $176,937
35 $113,804 $100,000 $115,853 $454,290 $15,632 $73,325 $287,525
40 $152,208 $100,000 $133,825 $655,235 $9,685 $93,584 $458,206
45 $201,222 $100,000 $152,710 $941,647 $0 $116,573 $718,815
50 $263,778 $100,000 $174,816 $1,366,847 $0 $142,127 $1,111,258
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- ---------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- ---------------------------------------------------------------
1 $915 $976 $1,038
2 $1,812 $1,991 $2,178
3 $2,690 $3,047 $3,433
4 $3,549 $4,144 $4,814
5 $4,389 $5,284 $6,334
6 $5,209 $6,470 $8,009
7 $6,008 $7,701 $9,853
8 $6,785 $8,979 $11,884
9 $7,540 $10,306 $14,123
10 $8,271 $11,684 $16,594
15 $11,579 $19,435 $33,426
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 35
<PAGE>
TABLE 2
Flexible Premium Variable Whole Life Insurance Policy
Male Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 2 $100,000 Selected Face Amount
Current Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
-------------------------------------------- ---------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------------------------ -------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,914 $100,975 $101,036 $148 $209 $270
2 $2,583 $101,807 $101,986 $102,172 $993 $1,172 $1,358
3 $3,972 $102,680 $103,035 $103,420 $1,843 $2,198 $2,583
4 $5,431 $103,533 $104,124 $104,791 $2,696 $3,287 $3,954
5 $6,962 $104,363 $105,253 $106,295 $3,527 $4,416 $5,458
6 $8,570 $105,173 $106,423 $107,949 $4,428 $5,678 $7,204
7 $10,259 $105,959 $107,634 $109,764 $5,313 $6,989 $9,119
8 $12,032 $106,719 $108,887 $111,757 $6,174 $8,342 $11,212
9 $13,893 $107,455 $110,183 $113,946 $7,009 $9,738 $13,501
10 $15,848 $108,164 $111,523 $116,351 $7,818 $11,177 $16,006
15 $27,189 $111,304 $118,929 $132,492 $11,296 $18,921 $32,484
20 $41,663 $113,821 $127,766 $158,751 $13,821 $27,766 $58,751
25 $60,136 $115,698 $138,391 $207,801 $15,698 $38,391 $101,863
30 $83,713 $115,646 $149,731 $304,738 $15,646 $49,731 $170,245
35 $113,804 $112,670 $160,706 $437,638 $12,670 $60,706 $276,986
40 $152,208 $105,234 $169,269 $631,803 $5,234 $69,269 $441,820
45 $201,222 $100,000 $171,789 $908,767 $0 $71,789 $693,715
50 $263,778 $100,000 $161,944 $1,320,463 $0 $61,944 $1,073,547
- ------------------------ -------------------------------------------- ---------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- ---------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- ---------------------------------------------------------------
1 $914 $975 $1,036
2 $1,807 $1,986 $2,172
3 $2,680 $3,035 $3,420
4 $3,533 $4,124 $4,791
5 $4,363 $5,253 $6,295
6 $5,173 $6,423 $7,949
7 $5,959 $7,634 $9,764
8 $6,719 $8,887 $11,757
9 $7,455 $10,183 $13,946
10 $8,164 $11,523 $16,351
15 $11,304 $18,929 $32,492
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
36 Appendix D
<PAGE>
TABLE 3
Flexible Premium Variable Whole Life Insurance Policy
Female Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 1 $100,000 Selected Face Amount
Current Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
-----------------------------------------------------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,000 $100,000 $100,000 $196 $258 $320
2 $2,583 $100,000 $100,000 $100,000 $1,058 $1,240 $1,429
3 $3,972 $100,000 $100,000 $100,000 $1,944 $2,304 $2,695
4 $5,431 $100,000 $100,000 $100,000 $2,814 $3,416 $4,093
5 $6,962 $100,000 $100,000 $100,000 $3,663 $4,568 $5,630
6 $8,570 $100,000 $100,000 $100,000 $4,582 $5,857 $7,414
7 $10,259 $100,000 $100,000 $100,000 $5,492 $7,205 $9,381
8 $12,032 $100,000 $100,000 $100,000 $6,385 $8,605 $11,543
9 $13,893 $100,000 $100,000 $100,000 $7,260 $10,059 $13,921
10 $15,848 $100,000 $100,000 $100,000 $8,117 $11,571 $16,538
15 $27,189 $100,000 $100,000 $106,102 $11,980 $19,950 $34,109
20 $41,663 $100,000 $100,000 $167,065 $15,301 $30,214 $62,571
25 $60,136 $100,000 $100,000 $250,861 $18,416 $43,408 $109,070
30 $83,713 $100,000 $118,600 $365,491 $20,662 $59,598 $183,664
35 $113,804 $100,000 $137,719 $527,064 $21,767 $79,149 $302,911
40 $152,208 $100,000 $156,856 $753,052 $21,012 $102,520 $492,191
45 $201,222 $100,000 $178,906 $1,086,444 $16,285 $129,642 $787,278
50 $263,778 $100,000 $202,019 $1,561,914 $2,855 $160,333 $1,239,614
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- ---------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- ---------------------------------------------------------------
1 $930 $992 $1,053
2 $1,840 $2,021 $2,210
3 $2,730 $3,091 $3,482
4 $3,601 $4,202 $4,880
5 $4,449 $5,355 $6,417
6 $5,277 $6,552 $8,109
7 $6,087 $7,800 $9,976
8 $6,880 $9,100 $12,038
9 $7,655 $10,454 $14,316
10 $8,412 $11,866 $16,833
15 $11,987 $19,957 $34,116
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 37
<PAGE>
TABLE 4
Flexible Premium Variable Whole Life Insurance Policy
Female Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 2 $100,000 Selected Face Amount
Current Schedule of Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,928 $100,990 $101,052 $195 $257 $318
2 $2,583 $101,836 $102,016 $102,205 $1,054 $1,235 $1,423
3 $3,972 $102,721 $103,081 $103,470 $1,935 $2,294 $2,683
4 $5,431 $103,585 $104,184 $104,858 $2,799 $3,397 $4,071
5 $6,962 $104,426 $105,325 $106,381 $3,639 $4,539 $5,594
6 $8,570 $105,242 $106,508 $108,052 $4,547 $5,813 $7,357
7 $10,259 $106,040 $107,736 $109,891 $5,445 $7,141 $9,297
8 $12,032 $106,818 $109,013 $111,917 $6,323 $8,518 $11,422
9 $13,893 $107,575 $110,338 $114,148 $7,180 $9,943 $13,753
10 $15,848 $108,311 $111,715 $116,605 $8,016 $11,420 $16,310
15 $27,189 $111,748 $119,517 $133,305 $11,741 $19,510 $33,298
20 $41,663 $114,869 $129,233 $162,701 $14,869 $29,233 $60,937
25 $60,136 $117,688 $141,392 $244,767 $17,688 $41,392 $106,420
30 $83,713 $119,416 $155,686 $357,005 $19,416 $55,686 $179,399
35 $113,804 $119,687 $172,193 $515,186 $19,687 $72,193 $296,084
40 $152,208 $117,617 $190,404 $736,460 $17,617 $90,404 $481,346
45 $201,222 $110,885 $207,984 $1,063,036 $10,885 $107,984 $770,316
50 $263,778 $100,000 $220,001 $1,529,242 $0 $120,001 $1,213,684
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- ---------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- ---------------------------------------------------------------
1 $928 $990 $1,052
2 $1,836 $2,016 $2,205
3 $2,721 $3,081 $3,470
4 $3,585 $4,184 $4,858
5 $4,426 $5,325 $6,381
6 $5,242 $6,508 $8,052
7 $6,040 $7,736 $9,891
8 $6,818 $9,013 $11,917
9 $7,575 $10,338 $14,148
10 $8,311 $11,715 $16,605
15 $11,748 $19,517 $33,305
- ---------------------------------------------------------------
- -------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
38 Appendix D
<PAGE>
TABLE 5
Flexible Premium Variable Whole Life Insurance Policy
Male Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 1 $100,000 Selected Face Amount
Guaranteed Schedules of Mortality and Expense Charges
and Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,000 $100,000 $100,000 $96 $156 $215
2 $2,583 $100,000 $100,000 $100,000 $891 $1,064 $1,243
3 $3,972 $100,000 $100,000 $100,000 $1,690 $2,030 $2,399
4 $5,431 $100,000 $100,000 $100,000 $2,489 $3,053 $3,690
5 $6,962 $100,000 $100,000 $100,000 $3,265 $4,111 $5,103
6 $8,570 $100,000 $100,000 $100,000 $4,109 $5,294 $6,743
7 $10,259 $100,000 $100,000 $100,000 $4,935 $6,521 $8,538
8 $12,032 $100,000 $100,000 $100,000 $5,735 $7,783 $10,496
9 $13,893 $100,000 $100,000 $100,000 $6,507 $9,080 $12,632
10 $15,848 $100,000 $100,000 $100,000 $7,252 $10,415 $14,967
15 $27,189 $100,000 $100,000 $100,000 $10,335 $17,480 $30,230
20 $41,663 $100,000 $100,000 $127,682 $12,072 $25,130 $54,102
25 $60,136 $100,000 $100,000 $184,885 $12,164 $33,468 $90,630
30 $83,713 $100,000 $100,000 $259,978 $9,577 $42,204 $145,239
35 $113,804 $100,000 $100,000 $355,136 $1,994 $50,704 $224,770
40 $152,208 $100,000 $100,000 $482,412 $0 $58,029 $337,351
45 $201,222 $100,000 $100,000 $642,980 $0 $61,981 $490,825
50 $263,778 $100,000 $100,000 $854,089 $0 $57,122 $694,381
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- ---------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- ---------------------------------------------------------------
1 $862 $922 $981
2 $1,705 $1,878 $2,057
3 $2,527 $2,867 $3,236
4 $3,326 $3,890 $4,527
5 $4,102 $4,948 $5,940
6 $4,854 $6,040 $7,488
7 $5,580 $7,166 $9,183
8 $6,280 $8,328 $11,041
9 $6,952 $9,525 $13,077
10 $7,598 $10,760 $15,312
15 $10,344 $17,489 $30,239
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 39
<PAGE>
TABLE 6
Flexible Premium Variable Whole Life Insurance Policy
Male Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 2 $100,000 Selected Face Amount
Guaranteed Schedules of Mortality and Expense Charges
and Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
---------------------------------------------------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,860 $100,920 $100,979 $94 $154 $213
2 $2,583 $101,700 $101,872 $102,051 $886 $1,058 $1,237
3 $3,972 $102,517 $102,856 $103,223 $1,680 $2,019 $2,386
4 $5,431 $103,310 $103,870 $104,503 $2,473 $3,033 $3,666
5 $6,962 $104,077 $104,916 $105,901 $3,240 $4,079 $5,064
6 $8,570 $104,817 $105,992 $107,427 $4,072 $5,247 $6,682
7 $10,259 $105,530 $107,098 $109,093 $4,884 $6,453 $8,447
8 $12,032 $106,213 $108,234 $110,912 $5,668 $7,689 $10,366
9 $13,893 $106,866 $109,400 $112,897 $6,421 $8,954 $12,451
10 $15,848 $107,488 $110,595 $115,065 $7,143 $10,250 $14,720
15 $27,189 $110,059 $116,965 $129,272 $10,051 $16,957 $29,264
20 $41,663 $111,465 $123,756 $151,233 $11,465 $23,756 $51,233
25 $60,136 $111,002 $130,166 $184,845 $11,002 $30,166 $84,845
30 $83,713 $107,611 $134,737 $243,272 $7,611 $34,737 $135,906
35 $113,804 $100,000 $134,515 $333,105 $0 $34,515 $210,826
40 $152,208 $100,000 $124,341 $453,320 $0 $24,341 $317,007
45 $201,222 $100,000 $100,000 $605,277 $0 $0 $462,043
50 $263,778 $100,000 $100,000 $805,672 $0 $0 $655,018
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- --------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- --------------------------------------------------------------
1 $860 $920 $979
2 $1,700 $1,872 $2,051
3 $2,517 $2,856 $3,223
4 $3,310 $3,870 $4,503
5 $4,077 $4,916 $5,901
6 $4,817 $5,992 $7,427
7 $5,530 $7,098 $9,093
8 $6,213 $8,234 $10,912
9 $6,866 $9,400 $12,897
10 $7,488 $10,595 $15,065
15 $10,059 $16,965 $29,272
- --------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
40 Appendix D
<PAGE>
TABLE 7
Flexible Premium Variable Whole Life Insurance Policy
Female Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 1 $100,000 Selected Face Amount
Guaranteed Schedules of Mortality and Expense Charges
and Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
------------------------------------------ --------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------------------------ ------------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,000 $100,000 $100,000 $150 $210 $271
2 $2,583 $100,000 $100,000 $100,000 $966 $1,141 $1,323
3 $3,972 $100,000 $100,000 $100,000 $1,802 $2,148 $2,523
4 $5,431 $100,000 $100,000 $100,000 $2,621 $3,195 $3,842
5 $6,962 $100,000 $100,000 $100,000 $3,415 $4,277 $5,287
6 $8,570 $100,000 $100,000 $100,000 $4,278 $5,486 $6,962
7 $10,259 $100,000 $100,000 $100,000 $5,122 $6,739 $8,795
8 $12,032 $100,000 $100,000 $100,000 $5,939 $8,028 $10,795
9 $13,893 $100,000 $100,000 $100,000 $6,732 $9,357 $12,980
10 $15,848 $100,000 $100,000 $100,000 $7,500 $10,727 $15,371
15 $27,189 $100,000 $100,000 $100,000 $10,732 $18,039 $31,052
20 $41,663 $100,000 $100,000 $148,192 $12,895 $26,288 $55,503
25 $60,136 $100,000 $100,000 $214,424 $14,042 $35,950 $93,228
30 $83,713 $100,000 $100,000 $300,692 $13,823 $47,368 $151,101
35 $113,804 $100,000 $105,365 $413,667 $10,885 $60,555 $237,740
40 $152,208 $100,000 $114,875 $559,246 $3,132 $75,082 $365,520
45 $201,222 $100,000 $123,670 $752,210 $0 $89,616 $545,079
50 $263,778 $100,000 $130,250 $995,428 $0 $103,373 $790,022
- ------------------------ ------------------------------------------ --------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- --------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- --------------------------------------------------------------
1 $884 $944 $1,004
2 $1,747 $1,922 $2,104
3 $2,588 $2,934 $3,309
4 $3,407 $3,981 $4,629
5 $4,202 $5,063 $6,074
6 $4,973 $6,181 $7,657
7 $5,716 $7,334 $9,390
8 $6,434 $8,523 $11,290
9 $7,127 $9,752 $13,375
10 $7,795 $11,022 $15,666
15 $10,739 $18,046 $31,059
- --------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
Appendix D 41
<PAGE>
TABLE 8
Flexible Premium Variable Whole Life Insurance Policy
Female Issue Age 35, Preferred Nonsmoker $1,200 Annual Premium
Death Benefit Option 2 $100,000 Selected Face Amount
Guaranteed Schedules of Mortality and Expense Charges
and Current Fund Level Charges
<TABLE>
<CAPTION>
Death Benefit Assuming Hypothetical Cash Surrender Value Assuming Hypothetical
Gross Annual Investment Return of: Gross Annual Investment Return of:
----------------------------------------------------------------------------------------
Premiums
End of Accumulated at
Policy 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,882 $100,942 $101,002 $149 $209 $269
2 $2,583 $101,743 $101,917 $102,099 $961 $1,136 $1,318
3 $3,972 $102,579 $102,924 $103,298 $1,793 $2,137 $2,511
4 $5,431 $103,392 $103,963 $104,608 $2,605 $3,177 $3,821
5 $6,962 $104,179 $105,034 $106,038 $3,392 $4,248 $5,252
6 $8,570 $104,939 $106,138 $107,601 $4,244 $5,443 $6,906
7 $10,259 $105,670 $107,271 $109,307 $5,075 $6,676 $8,712
8 $12,032 $106,372 $108,437 $111,170 $5,877 $7,942 $10,675
9 $13,893 $107,047 $109,636 $113,207 $6,652 $9,241 $12,812
10 $15,848 $107,693 $110,870 $115,436 $7,398 $10,575 $15,141
15 $27,189 $110,480 $117,569 $130,179 $10,472 $17,562 $30,172
20 $41,663 $112,356 $125,077 $153,367 $12,356 $25,077 $53,367
25 $60,136 $113,059 $133,205 $206,457 $13,059 $33,205 $89,764
30 $83,713 $112,185 $141,562 $290,058 $12,185 $41,562 $145,758
35 $113,804 $108,313 $148,431 $399,537 $8,313 $48,431 $229,619
40 $152,208 $100,000 $151,264 $540,674 $0 $51,264 $353,382
45 $201,222 $100,000 $142,737 $727,969 $0 $42,737 $527,514
50 $263,778 $100,000 $111,101 $964,645 $0 $11,101 $765,592
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Account Value Assuming Hypothetical
Gross Annual Investment Return of:
- --------------------------------------------------------------
End of
Policy Year 0% 6% 12%
- --------------------------------------------------------------
1 $882 $942 $1,002
2 $1,743 $1,917 $2,099
3 $2,579 $2,924 $3,298
4 $3,392 $3,963 $4,608
5 $4,179 $5,034 $6,038
6 $4,939 $6,138 $7,601
7 $5,670 $7,271 $9,307
8 $6,372 $8,437 $11,170
9 $7,047 $9,636 $13,207
10 $7,693 $10,870 $15,436
15 $10,480 $17,569 $30,179
- --------------------------------------------------------------
- --------------------------------------------------------------------------------
Please remember that the hypothetical investment rates of return shown above and
elsewhere in this prospectus are illustrative only and are not a representation
of past or future investment rates of return. Actual rates of return may be more
or less than those shown.
42 Appendix D
<PAGE>
Appendix E
Directors of Massachusetts Mutual Life Insurance Company
<TABLE>
<CAPTION>
Name, Position, Business Address Principal Occupation(s) During Past Five Years
- -------------------------------- ----------------------------------------------
<S> <C>
Roger G. Ackerman, Director Corning, Inc.
One Riverfront Plaza, HQE 2 Chairman and Chief Executive Officer (since 1996)
Corning, NY 14831 President and Chief Operating Officer (1990-1996)
James R. Birle, Director Resolute Partners, LLC
2 Soundview Drive Chairman (since 1997), Founder (1994)
Greenwich, CT 06836 President (1994-1997)
Blackstone Group
General Partner (1988-1994)
Gene Chao, Director Computer Projections, Inc.
733 SW Vista Avenue Chairman, President and CEO (since 1991)
Portland, OR 97205
Patricia Diaz Dennis, Director SBC Communications Inc.
175 East Houston, Room 5-A-70 Senior Vice President - Regulatory and Public Affairs (since 1998)
San Antonio, TX 78205 Senior Vice President and Assistant General Counsel (1995-1998)
Sullivan & Cromwell
Special Counsel (1993-1995)
U.S. Department of State
Asst. Secy. of State for Human Rights and Human. Affrs. (1992-1993)
Anthony Downs, Director The Brookings Institution
1775 Massachusetts Ave., N.W. Senior Fellow (since 1977)
Washington, DC 20036-2188
James L. Dunlap, Director Ocean Energy, Inc.
1201 Louisiana, Suite 1400 Vice Chairman (since 1998)
Houston, TX 77002-5603 United Meridian Corporation
President and Chief Operating Officer (1996-1998)
Texaco, Inc.
Senior Vice President (1987-1996)
William B. Ellis, Director Yale University School of Forestry and Environmental Studies
31 Pound Foolish Lane Senior Fellow (since 1995)
Glastonbury, CT 06033 Northeast Utilities
Chairman of the Board (1993-1995) and Chief Executive Officer (1983-1993)
Robert M. Furek, Director Resolute Partners LLC
1 State Street, Suite 2310 Partner (since 1997)
Hartford, CT 06103 State Board of Trustees for the Hartford School System
Chairman (since 1997)
Heublein, Inc.
President and Chief Executive Officer (1987-1996)
</TABLE>
Appendix E 43
<PAGE>
<TABLE>
<CAPTION>
Name, Position, Business Address Principal Occupation(s) During Past Five Years
- -------------------------------- ----------------------------------------------
<S> <C>
Charles K. Gifford, Director BankBoston, N.A.
100 Federal Street Chairman and Chief Executive Officer (since 1996)
Boston, MA 02110 President (1989-1996)
BankBoston Corporation
Chairman (since 1998) and Chief Executive Officer (since 1995)
President (1989-1996)
William N. Griggs, Director Griggs & Santow, Inc.
75 Wall Street, 20th Floor Managing Director (since 1983)
New York, NY 10005
George B. Harvey, Director Pitney Bowes
One Landmark Square, Suite 1905 Chairman, President and CEO (1983-1996)
Stamford, CT 06901
Barbara B. Hauptfuhrer, Director Director of various corporations (since 1972)
1700 Old Welsh Road
Huntingdon Valley, PA 19006
Sheldon B. Lubar, Director Lubar & Co. Incorporated
700 North Water Street, Suite 1200 Chairman (since 1977)
Milwaukee, WI 53202
William B. Marx, Jr., Director Lucent Technologies
5 Peacock Lane Senior Executive Vice President (1996-1996)
Village of Golf, FL 33436-5299 AT&T Multimedia Products Group
Executive Vice President and CEO (1994-1996)
AT&T Network Systems Group
Executive Vice President and CEO (1993-1994)
Group Executive and President (1989-1993)
John F. Maypole, Director Peach State Real Estate Holding Company
55 Sandy Hook Road - North Managing Partner (since 1984)
Sarasota, FL 34242
Robert J. O'Connell, Director, President MassMutual
and Chief Executive Officer President and Chief Executive Officer (since 1999)
1295 State Street American International Group, Inc.
Springfield, MA 01111 Senior Vice President (1991-1998)
AIG Life Companies
President and Chief Executive Officer (1991-1998)
Thomas B. Wheeler, Director and Chairman of MassMutual
the Board Chairman of the Board (since 1996)
1295 State Street President (1988-1996) and Chief Executive Officer (1988-1999)
Springfield, MA 01111
</TABLE>
44 Appendix E
<PAGE>
<TABLE>
<CAPTION>
Name, Position, Business Address Principal Occupation(s) During Past Five Years
- -------------------------------- ----------------------------------------------
<S> <C>
Alfred M. Zeien, Director The Gillette Company
Prudential Tower Chairman and Chief Executive Officer (since 1991)
Boston, MA 02199
Executive Vice Presidents:
- -------------------------
Lawrence V. Burkett, Jr. MassMutual
1295 State Street Executive Vice President and General Counsel (since 1993)
Springfield, MA 01111 Senior Vice President and Deputy General Counsel (1992-1993)
Peter J. Daboul MassMutual
1295 State Street Executive Vice President and Chief Information Officer (since 1997)
Springfield, MA 01111 Senior Vice President (1990-1997)
John B. Davies MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Associate Executive Vice President (1994-1994)
General Agent (1982-1993)
Daniel J. Fitzgerald MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Corporate Financial Operations (1994-1997)
Senior Vice President (1991-1994)
James E. Miller MassMutual
1295 State Street Executive Vice President (since 1997 and 1987-1996)
Springfield, MA 01111 UniCare Life & Health
Senior Vice President (1996-1997)
John V. Murphy MassMutual
1295 State Street Executive Vice President (since 1997)
Springfield, MA 01111 David L. Babson & Co., Inc.
Executive Vice President and Chief Operating Officer (1995-1997)
Concert Capital Management, Inc.
Chief Operating Officer (1993-1995)
Liberty Financial Companies
Senior Vice President and Chief Financial Officer (1977-1993)
Joseph M. Zubretsky MassMutual
1295 State Street Executive Vice President and Chief Financial Officer (since 1997)
Springfield, MA 01111 HealthSource
Chief Financial Officer (1996-1996)
Coopers & Lybrand
Partner (1990-1996)
</TABLE>
Appendix E 45
<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
Variable Life Select 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 - Variable Life Select
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
--------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 406,900 3,157,021 35,042 144,709
=============== =============== ============= ==============
Identified cost (Note 3B) $ 14,259,898 $ 3,157,021 $ 439,941 $ 3,614,084
=============== =============== ============= ==============
Value (Note 3A) $ 15,949,563 $ 3,157,021 $ 441,403 $ 3,629,769
Dividends receivable 807,752 12,707 7,994 227,383
--------------- --------------- ------------- --------------
Total assets 16,757,315 3,169,728 449,397 3,857,152
LIABILITIES
Payable to Massachusetts
Mutual Life Insurance
Company 57,538 19,836 532 7,731
--------------- --------------- ------------- --------------
NET ASSETS: $ 16,699,777 $ 3,149,892 $ 448,865 $ 3,849,421
=============== =============== ============= ==============
Net Assets:
For variable life insurance
policies $ 16,689,956 $ 3,144,054 $ 442,384 $ 3,841,071
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 9,821 5,838 6,481 8,350
--------------- --------------- ------------- --------------
Net assets $ 16,699,777 $ 3,149,892 $ 448,865 $ 3,849,421
=============== =============== ============= ==============
Accumulation units (Note 8)
Policyowners 8,496,664 2,692,820 341,293 2,300,168
Massachusetts Mutual Life
Insurance Company 5,000 5,000 5,000 5,000
--------------- --------------- ------------- --------------
Total units 8,501,664 2,697,820 346,293 2,305,168
=============== =============== ============= ==============
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 1.96 $ 1.17 $ 1.30 $ 1.67
December 31, 1997 1.70 1.12 1.21 1.48
December 31, 1996 1.33 1.07 1.10 1.23
December 31, 1995 1.11 1.02 1.07 1.08
<CAPTION>
*Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 99,995 97,851 111,189 99,318
============= ============== ============= =============
Identified cost (Note 3B) $ 4,059,728 $ 3,140,744 $ 2,296,000 $ 509,073
============= ============== ============= =============
Value (Note 3A) $ 4,482,786 $ 3,588,209 $ 2,453,944 $ 508,506
Dividends receivable - - - -
------------- -------------- ------------- -------------
Total assets 4,482,786 3,588,209 2,453,944 508,506
LIABILITIES
Payable to Massachusetts
Mutual Life Insurance
Company 5,314 6,320 4,120 1,059
------------- -------------- ------------- -------------
NET ASSETS: $ 4,477,472 $ 3,581,889 $ 2,449,824 $ 507,447
============= ============== ============= =============
Net Assets:
For variable life insurance
policies $ 4,468,983 $ 3,571,175 $ 2,441,926 $ 500,890
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 8,489 10,714 7,898 6,557
------------- -------------- ------------- -------------
Net assets $ 4,477,472 $ 3,581,889 $2,449,824 $ 507,447
============= ============== ============= =============
Accumulation units (Note 8)
Policyowners 2,632,106 1,666,614 1,545,993 381,945
Massachusetts Mutual Life
Insurance Company 5,000 5,000 5,000 5,000
------------- -------------- ------------- -------------
Total units 2,637,106 1,671,614 1,550,993 386,945
============= ============== ============= =============
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 1.70 $ 2.14 $ 1.58 $ 1.31
December 31, 1997 1.52 1.74 1.39 1.28
December 31, 1996 1.37 1.38 1.14 1.19
December 31, 1995 1.14 1.11 0.98 1.06
</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 - Variable Life Select
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
-------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 807,853 $ 84,946 $ 20,295 $ 294,283
Expenses
Mortality and expense
risk fees
(Note 4) 69,175 9,341 1,536 14,517
-------------- ------------ ------------ -----------
Net investment income
(Note 3C) 738,678 75,605 18,759 279,766
-------------- ------------ ------------ -----------
Net realized and unrealized
gain (loss) on investments
Net realized gain (loss) on
investments
(Notes 3B, 3C and 6) 305,677 - 2,461 90,025
Change in net unrealized
appreciation/depreciation
of investments 876,296 - (1,682) (35,785)
-------------- ------------ ------------ -----------
Net gain (loss) on investments 1,181,973 - 779 54,240
-------------- ------------ ------------ -----------
Net increase in net assets
resulting from operations $ 1,920,651 $ 75,605 $ 19,538 $ 334,006
============== ============ ============ ===========
<CAPTION>
*Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 72,282 $ 162,870 $ 133,537 $ 9,309
Expenses
Mortality and expense
risk fees
(Note 4) 17,145 12,426 9,341 2,110
------------ ------------ ----------- ------------
Net investment income
(Note 3C) 55,137 150,444 124,196 7,199
------------ ------------ ----------- ------------
Net realized and unrealized
gain (loss) on investments
Net realized gain (loss) on
investments
(Notes 3B, 3C and 6) 26,668 61,581 54,777 (170)
Change in net unrealized
appreciation/depreciation
of investments 329,784 322,641 42,792 (541)
------------ ------------ ----------- ------------
Net gain (loss) on investments 356,452 384,222 97,569 (711)
------------ ------------ ----------- ------------
Net increase in net assets
resulting from operations $ 411,589 $ 534,666 $ 221,765 $ 6,488
============ ============ =========== ============
</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-3
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Variable Life Select
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 738,678 $ 75,605 $ 18,759 $ 279,766
Net realized gain (loss)
on investments 305,677 - 2,461 90,025
Change in net unrealized
appreciation/depreciation
of investments 876,296 - (1,682) (35,785)
--------------- -------------- ------------- --------------
Net increase in net assets
resulting from operations 1,920,651 75,605 19,538 334,006
--------------- -------------- ------------- --------------
Capital transactions: (Note 8)
Transfer of net premium 8,305,438 2,941,617 289,009 2,411,365
Transfer of surrender values (179,797) (125) (370) (34,607)
Transfer due to policy loans (63,455) - (5,268) (13,190)
Transfer due to death benefits (21,772) - - -
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation (665) (5,851) 95 (327)
Withdrawal due to charges for
administrative and insurance
costs (2,387,965) (125,372) (48,397) (513,925)
Divisional transfers (19,737) (30,323) 2,316 (84,046)
--------------- -------------- ------------- --------------
Net increase in net assets
resulting from capital
transactions 5,632,047 2,779,946 237,385 1,765,270
--------------- -------------- ------------- --------------
Total increase 7,552,698 2,855,551 256,923 2,099,276
NET ASSETS, at beginning
of the year 9,147,079 294,341 191,942 1,750,145
--------------- -------------- ------------- --------------
NET ASSETS, at end of the year $ 16,699,777 $ 3,149,892 $ 448,865 $ 3,849,421
=============== ============== ============= ==============
<CAPTION>
*Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
---------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 55,137 $ 150,444 $ 124,196 $ 7,199
Net realized gain (loss)
on investments 26,668 61,581 54,777 (170)
Change in net unrealized
appreciation/depreciation
of investments 329,784 322,641 42,792 (541)
---------------- -------------- ------------- ------------
Net increase in net assets
resulting from operations 411,589 534,666 221,765 6,488
---------------- -------------- ------------- ------------
Capital transactions: (Note 8)
Transfer of net premium 2,629,607 2,233,624 1,427,439 313,089
Transfer of surrender values (42,962) (21,766) (10,363) (658)
Transfer due to policy loans (14,330) (20,391) (11,519) (794)
Transfer due to death benefits (1,271) (35,141) - (531)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation 10,105 10,213 4,203 162
Withdrawal due to charges for
administrative and insurance
costs (723,258) (516,514) (306,507) (73,512)
Divisional transfers 59,470 69,370 20,108 (17,158)
---------------- -------------- ------------- ------------
Net increase in net assets
resulting from capital
transactions 1,917,361 1,719,395 1,123,361 220,598
---------------- -------------- ------------- ------------
Total increase 2,328,950 2,254,061 1,345,126 227,086
NET ASSETS, at beginning
of the year 2,148,522 1,327,828 1,104,698 280,361
---------------- -------------- ------------- ------------
NET ASSETS, at end of the year $ 4,477,472 $3,581,889 $ 2,449,824 $ 507,447
================ ============== ============= ============
</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 - Variable Life Select
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Division Division Division Division
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income $ 652,106 $ 11,486 $ 8,478 $ 146,547
Net realized gain
on investments 113,254 - 283 25,996
Change in net unrealized
appreciation/depreciation
of investments 655,786 - 3,483 36,654
-------------- -------------- --------------- --------------
Net increase in net assets
resulting from operations 1,421,146 11,486 12,244 209,197
-------------- -------------- --------------- --------------
Capital transactions: (Note 8)
Transfer of net premium 5,697,460 277,257 132,412 1,138,966
Transfer of surrender values (9,141) (65) (886) (38,685)
Transfer due to policy loans (36,245) - (22) (1,285)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation 6,641 (1,434) 55 (581)
Withdrawal due to charges for
administrative and insurance
costs (1,467,422) (30,917) (26,309) (255,857)
Divisional transfers (14,670) (110,410) 5,842 5,622
-------------- -------------- --------------- --------------
Net increase in net assets
resulting from capital
transactions 4,176,623 134,431 111,092 848,180
-------------- -------------- --------------- --------------
Total increase 5,597,769 145,917 123,336 1,057,377
NET ASSETS, at beginning
of the year 3,549,310 148,424 68,606 692,768
-------------- -------------- --------------- --------------
NET ASSETS, at end of the year $ 9,147,079 $ 294,341 $ 191,942 $ 1,750,145
============== ============== =============== ==============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Capital Oppenheimer Global Strategic
Appreciation Growth Securities Bond
Division Division Division Division
-------------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income $ 34,662 $ 22,021 $ 1,667 $ 15,318
Net realized gain
on investments 4,976 21,600 15,438 1,183
Change in net unrealized
appreciation/depreciation
of investments 83,156 97,916 91,300 (641)
-------------- ------------- -------------- -----------
Net increase in net assets
resulting from operations 122,794 141,537 108,405 15,860
-------------- ------------- -------------- -----------
Capital transactions: (Note 8)
Transfer of net premium 1,732,223 1,038,765 752,810 171,038
Transfer of surrender values (3,662) (1,562) (3,316) (3,024)
Transfer due to policy loans (7,380) (8,219) (35) (3,259)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation 10,564 8,961 9,589 61
Withdrawal due to charges for
administrative and insurance
costs (400,292) (213,539) (160,809) (41,809)
Divisional transfers 36,132 47,266 34,291 (4,073)
-------------- ------------- -------------- -----------
Net increase in net assets
resulting from capital
transactions 1,367,585 871,672 632,530 118,934
-------------- ------------- -------------- -----------
Total increase 1,490,379 1,013,209 740,935 134,794
NET ASSETS, at beginning
of the year 658,143 314,619 363,763 145,567
-------------- ------------- -------------- -----------
NET ASSETS, at end of the year $ 2,148,522 $ 1,327,828 $ 1,104,698 $ 280,361
============== ============= ============== ===========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Variable Life Select
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.
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.
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.
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.
On February 11, 1997, MassMutual established a fifth segment ("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 $40,000 to the Variable Life Select Segment on July 24,
1995 to provide initial capital: 7,656 shares were purchased in the two
management investment companies described in Note 2 supporting the eight
divisions of the Variable Life Select Segment.
Separate Account I operates as a registered unit investment trust pursuant
to the Investment Company Act of 1940.
2. INVESTMENT OF THE VARIABLE LIFE SELECT SEGMENT'S ASSETS
The Variable Life Select Segment maintains eight divisions. The MML Equity
Division invests in shares of MML Equity Fund, the MML Money Market
Division invests in shares of MML Money Market Fund, the MML Managed Bond
Division invests in shares of MML Managed Bond Fund and the MML Blend
Division invests in shares of MML Blend Fund. The Oppenheimer Capital
Appreciation Division invests in shares of Oppenheimer Aggressive Growth
Fund, the Oppenheimer Growth Division invests in shares of Oppenheimer
Growth Fund, the Oppenheimer Global Securities Division invests in shares
of Oppenheimer Global Securities Fund and the Oppenheimer Strategic Bond
Division invests in shares of Oppenheimer Strategic Bond Fund.
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend
Fund are four of six separate series of the MML Series Investment Fund (the
"MML Trust"). The MML Trust is a no-load, open-end, management investment
company registered under the Investment Company Act of 1940. MassMutual
serves as investment manager of the MML Trust. David L. Babson & Company,
Inc. ("Babson") a controlled subsidiary of MassMutual, serves as the
investment sub-adviser to MML Equity Fund and the Equity Sector of the MML
Blend Fund.
F-6
<PAGE>
Notes To Financial Statements (Continued)
Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund, Oppenheimer
Global Securities Fund and Oppenheimer Strategic Bond Fund are part of the
Oppenheimer Variable Account Funds (the "Oppenheimer Trust"). The
Oppenheimer Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940. OppenheimerFunds, Inc.
("OFI"), a controlled subsidiary of MassMutual, serves as investment
manager.
In addition to the eight divisions of the Variable Life Select Segment, a
policyowner may also allocate funds to the Guaranteed Principal Account,
which is part of MassMutual's general account. Because of exemptive and
exclusionary provisions, interests in the Guaranteed Principal Account, are
not registered under the Securities Act of 1933 and the general account is
not registered as an investment company under the Investment Company Act of
1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Variable Life Select Segment in preparation of the
financial statements in conformity with generally accepted accounting
principles.
A. Investment Valuation
Investments in the MML Trust and the Oppenheimer Trust are each stated at
market value which is the net asset value per share of each of the
respective underlying funds.
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
MassMutual is taxed under federal law as a life insurance company under the
provisions of the 1986 Internal Revenue Code, as amended. The Variable Life
Select Segment is part of MassMutual's total operation and is not taxed
separately. The Variable Life Select Segment will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains of the Variable Life Select Segment credited to
the policies. Accordingly, MassMutual does not intend to make any charge to
the Variable Life Select Segment's divisions to provide for company income
taxes. MassMutual may, however, make such a charge in the future if an
unanticipated change of current law results in a company tax liability
attributable to the Variable Life Select Segment.
D. Policy Loan
When a policy loan is made, the Variable Life Select Segment transfers the
amount of the loan to MassMutual, thereby decreasing both the investments
and net assets of the Variable Life Select 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, in all jurisdictions except Arkansas, at
the time of application. All loan repayments are allocated to the
Guaranteed Principal Account.
The policyowner earns interest at an annual rate determined by MassMutual,
which will not be less than 3%, on any loaned amount.
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.
F-7
<PAGE>
Notes To Financial Statements (Continued)
4. CHARGES
MassMutual charges the Variable Life Select Segment divisions for the
mortality and expense risks it assumes. The charge is made daily at an
effective annual rate of 0.55% of the value of each division's net assets.
MassMutual makes certain deductions from the annual premium before amounts
are allocated to the Variable Life Select Segment and the Guaranteed
Principal Account. A deduction of 2% of premium payments is made
representing sales charges and a 2% of premium payments is made for premium
tax charges. No additional deductions are taken when money is transferred
from the Guaranteed Principal Account to the Variable Life Select 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.
Under the sales agreement among MMLISI, MassMutual and Separate Account I,
agents receive commissions and service fees from MMLISI for selling and
servicing the policies. MassMutual reimburses MMLISI for such compensation
and for other expenses incurred in marketing and selling the policies.
6. PURCHASE AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
MML MML *Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global Strategic
For The Year Ended Equity Market Bond Blend Appreciation Growth Securities Bond
December 31, 1998 Division Division Division Division Division Division Division Division
----------------- ------------ ----------- ---------- ------------ ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of purchases $ 7,392,680 $ 6,902,607 $ 304,602 $ 2,583,472 $ 2,293,746 $ 2,124,467 $ 1,487,399 $ 306,676
Proceeds from sales 1,126,527 4,041,959 53,927 647,015 325,796 270,345 242,087 79,092
Average monthly value
of securities 12,436,709 1,615,603 282,565 2,619,073 3,125,066 2,270,713 1,711,986 385,399
</TABLE>
F-8
<PAGE>
Notes To Financial Statements (Continued)
7. NET INVESTMENT RETURN
The following table shows the net investment return for each division in
the Variable Life Select Segment:
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global Strategic
For The Year Ended Equity Market Bond Blend Appreciation Growth Securities Bond
December 31, Division Division Division Division Division Division Division Division
------------ ---------- ----------- ---------- ---------- -------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1998 15.33% 5.13% 6.92% 12.65% 13.20% 23.65% 12.97% 1.69%
December 31, 1997 23.45% 4.52% 9.94% 18.24% 9.55% 19.06% 16.10% 7.98%
December 31, 1996 19.34% 4.21% 5.38% 14.54% 7.57% 19.21% 17.61% 12.77%
*December 31, 1995 13.40% 1.39% 7.01% 8.28% 15.56% 8.92% (0.60%) 6.25%
</TABLE>
* For the Period July 24, 1995 (Commencement of Operations) Through December
31, 1995. The amounts shown are not annualized.
The net investment return for each division of the Variable Life Select
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.
8. NET INCREASE (DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global Strategic
For The Year Ended Equity Market Bond Blend Appreciation Growth Securities Bond
December 31, 1998 Division Division Division Division Division Division Division Division
- ----------------- ---------- ---------- ----------- ---------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 4,605,674 2,571,511 227,854 1,538,277 1,690,458 1,186,421 969,018 239,509
Units withdrawn (1,471,878) (109,268) (42,784) (364,465) (504,560) (315,014) (225,549) (58,189)
Units transferred
between divisions (13,726) (28,111) 1,969 (52,318) 36,976 35,714 13,775 (13,152)
---------- ---------- ----------- ---------- ------------- -------------- ------------- ------------
Net increase 3,120,070 2,434,132 187,039 1,121,494 1,222,874 907,121 757,244 168,168
Units, at beginning
of the year 5,381,594 263,688 159,254 1,183,674 1,414,232 764,493 793,749 218,777
---------- ---------- ----------- ---------- ------------- -------------- ------------- ------------
Units, at end of the year 8,501,664 2,697,820 346,293 2,305,168 2,637,106 1,671,614 1,550,993 386,945
========== ========== =========== ========== ============= ============== ============= ============
<CAPTION>
MML MML Oppenheimer Oppenheimer Oppenheimer
MML Money Managed MML Capital Oppenheimer Global Strategic
For The Year Ended Equity Market Bond Blend Appreciation Growth Securities Bond
December 31, 1997 Division Division Division Division Division Division Division Division
- ----------------- ---------- ---------- ----------- ---------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units purchased 3,735,580 255,462 115,958 830,720 1,187,386 642,194 572,021 138,472
Units withdrawn (1,018,532) (27,916) (23,824) (216,286) (281,160) (137,246) (124,296) (39,006)
Units transferred
between divisions (6,540) (102,956) 4,891 5,797 26,640 31,343 27,016 (3,505)
---------- ---------- ----------- ---------- ------------- -------------- ------------- ------------
Net increase 2,710,508 124,590 97,025 620,231 932,866 536,291 474,741 95,961
Units, at beginning
of the year 2,671,086 139,098 62,229 563,443 481,366 228,202 319,008 122,816
---------- ---------- ----------- ---------- ------------- -------------- ------------- ------------
Units, at end of the year 5,381,594 263,688 159,254 1,183,674 1,414,232 764,493 793,749 218,777
========== ========== =========== ========== ============= ============== ============= ============
</TABLE>
F-9
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity of
MassMutual's Variable Life Select Segment. The combined net assets as of
December 31, 1998 for the Separate Account I, which includes the Variable
Life Plus, Large Case Variable Life Plus, Strategic Variable Life, Variable
Life Select, GVUL and SVUL, are as follows:
<TABLE>
<CAPTION>
MML MML MML
MML Equity Money Managed MML Oppenheimer
Equity Index Market Bond Blend Money
Division Division Division Division Division Division
----------- ------------ ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 68,569,760 $ 3,773,362 $ 13,343,746 $25,285,963 $18,619,343 $ 3,331,631
Total liabilities 103,103 946 25,266 23,205 22,397 1,263
------------ ------------ ------------- ------------ ------------ --------------
Net assets $ 68,466,657 $ 3,772,416 $ 13,318,480 $25,262,758 $18,596,946 $ 3,330,368
============ ============ ============= ============ ============ ==============
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
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
------------ ------------ ------------- ------------ ------------ --------------
Net assets $ 68,466,657 $ 3,772,416 $ 13,318,480 $25,262,758 $18,596,946 $ 3,330,368
============ ============ ============= ============ ============ ==============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer
High Oppenheimer Capital Oppenheimer Multiple Global
Income Bond Appreciation Growth Strategies Securities
Division Division Division Division Division Division
------------ ------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 2,182,008 $ 1,980,384 $ 16,395,636 $ 13,202,771 $ 941,427 $ 9,080,902
Total liabilities 3,659 429 13,959 11,379 854 9,817
------------ ------------- --------------- ------------- ------------- --------------
Net assets $ 2,178,349 $ 1,979,955 $ 16,381,677 $ 13,191,392 $ 940,573 $ 9,071,085
============ ============= =============== ============= ============= ==============
Net assets:
For variable life
insurance policies 2,162,993 1,972,470 16,354,171 13,168,469 930,839 9,047,257
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 15,356 7,485 27,506 22,923 9,734 23,828
------------ ------------- --------------- ------------- ------------- --------------
Net assets $ 2,178,349 $ 1,979,955 $ 16,381,677 $ 13,191,392 $ 940,573 $ 9,071,085
============ ============= =============== ============= ============= ==============
<CAPTION>
Panorama
Oppenheimer Oppenheimer Panorama Panorama LifeSpan
Strategic Growth & Total Panorama International Diversified
Bond Income Return Growth Equity Income
Division Division Division Division Division Division
----------- ------------ ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 1,250,072 $ 3,209,353 $ 1,208,387 $ 1,034,642 $ 148,692 $ 93,514
Total liabilities 1,912 673 8 0 0 123
----------- ------------ ------------- ------------ ------------ --------------
Net assets $ 1,248,160 $ 3,208,680 $ 1,208,379 $ 1,034,642 $ 148,692 $ 93,391
=========== ============ ============= ============ ============ ==============
Net assets:
For variable life insurance
policies 1,233,948 3,196,228 1,207,280 1,033,583 147,559 86,570
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 14,212 12,452 1,099 1,059 1,133 6,821
----------- ------------ ------------- ------------ ------------ --------------
Net assets $ 1,248,160 $ 3,208,680 $ 1,208,379 $ 1,034,642 $ 148,692 $ 93,391
=========== ============ ============= ============ ============ ==============
<CAPTION>
Panorama American
Panorama LifeSpan T. Rowe Price Century Fidelity
LifeSpan Capital Dreyfus Mid-Cap VP Income VIP II
Balanced Appreciation Index Growth & Growth Contrafund
Division Division Division Division Division Division
------------ ------------- --------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 74,338 $ 58,063 $ 46,510,033 $ 24,898 $ 16,456 $ 24,825
Total liabilities 135 89 51,088 4 4 5
------------ ------------- --------------- ------------- ------------- --------------
Net assets $ 74,203 $ 57,974 $ 46,458,945 $ 24,894 $ 16,452 $ 24,820
============ ============= =============== ============= ============= ==============
Net assets:
For variable life insurance
policies 67,138 50,784 46,449,250 24,894 16,452 24,820
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 7,065 7,190 9,695 - - -
------------ ------------- --------------- ------------- ------------- --------------
Net assets $ 74,203 $ 57,974 $ 46,458,945 $ 24,894 $ 16,452 $ 24,820
============ ============= =============== ============= ============= ==============
</TABLE>
F-10
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statements of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
and the related statutory statements of income and changes in policyholders'
contingency reserves, and of cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Division of Insurance
of the Commonwealth of Massachusetts, which practices differ from generally
accepted accounting principles. The effects on the financial statements of the
variances between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements audited by us do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
or the results of its operations or its cash flows for each of the three years
in the period ended December 31, 1998.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Massachusetts Mutual Life Insurance
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
FF-1
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1998 1997
-------- --------
(In Millions)
Assets:
Bonds $ 25,215.8 $ 23,508.2
Common stocks 296.3 354.7
Mortgage loans 5,916.5 5,245.8
Real estate 1,739.8 1,697.7
Other investments 2,263.7 1,963.8
Policy loans 5,224.2 4,950.4
Cash and short-term investments 1,123.3 1,941.2
----------- -----------
41,779.6 39,661.8
Other assets 1,306.2 1,169.7
----------- -----------
43,085.8 40,831.5
Separate account assets 19,589.7 16,803.1
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-2
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1998 1997
-------- --------
(In Millions)
Liabilities:
Policyholders' reserves and funds $ 35,277.0 $ 33,783.2
Policyholders' dividends 1,021.6 954.1
Policyholders' claims and other benefits 332.4 353.4
Federal income taxes 634.9 436.5
Asset valuation and other investment reserves 1,053.4 973.4
Other liabilities 1,578.9 1,457.9
----------- -----------
39,898.2 37,958.5
Separate account liabilities 19,588.5 16,802.8
----------- -----------
59,486.7 54,761.3
Policyholders' contingency reserves 3,188.8 2,873.3
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-3
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income $ 7,482.2 $ 6,764.8 $ 6,328.6
Net investment income 2,956.8 2,870.2 2,834.4
Fees and other income 154.0 126.7 117.2
--------- --------- ---------
10,593.0 9,761.7 9,280.2
--------- --------- ---------
Benefits and expenses:
Policyholders' benefits and payments 5,873.9 6,583.8 6,048.2
Addition to policyholders' reserves and funds 2,299.6 826.8 945.2
Operating expenses 509.5 450.8 428.0
Commissions 299.3 315.3 335.5
State taxes, licenses and fees 88.1 81.5 96.4
Merger restructuring costs - - 66.1
--------- --------- ---------
9,070.4 8,258.2 7,919.4
--------- --------- ---------
Net gain before federal income taxes and dividends 1,522.6 1,503.5 1,360.8
Federal income taxes 199.3 284.4 276.7
--------- --------- ---------
Net gain from operations before dividends 1,323.3 1,219.1 1,084.1
Dividends to policyholders 982.9 919.5 859.9
--------- --------- ---------
Net gain from operations 340.4 299.6 224.2
Net realized capital gain (loss) 25.4 (42.5) 40.3
--------- --------- ---------
Net income $ 365.8 $ 257.1 $ 264.5
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-4
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Policyholders' contingency reserves,
beginning of year $2,873.3 $2,638.6 $2,600.9
-------- -------- --------
Increases (decreases) due to:
Net income 365.8 257.1 264.5
Net unrealized capital gain (loss) 17.4 119.1 (1.7)
Change in asset valuation and other investment reserves (81.0) (76.0) (142.4)
Change in prior year policyholders' reserves 8.6 (55.4) (72.2)
Other 4.7 (10.1) (10.5)
-------- -------- --------
315.5 234.7 37.7
-------- -------- --------
Policyholders' contingency reserves,
end of year $3,188.8 $2,873.3 $2,638.6
======== ======== ========
</TABLE>
See notes to statutory financial statements.
FF-5
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Operating activities:
Net income $ 365.8 $ 257.1 $ 264.5
Addition to policyholders' reserves and funds,
net of transfers to separate accounts 1,472.8 421.3 426.7
Net realized capital (gain) loss (25.4) 42.5 (40.3)
Other changes 15.4 (108.1) (286.1)
--------- --------- ---------
Net cash provided by operating activities 1,828.6 612.8 364.8
--------- --------- ---------
Investing activities:
Loans and purchases of investments (15,981.2) (12,292.7) (10,171.5)
Sales or maturities of investments and receipts
from repayment of loans 13,334.7 12,545.7 8,539.3
--------- --------- ---------
Net cash provided by (used in) investing activities (2,646.5) 253.0 (1,632.2)
--------- --------- ---------
Increase (decrease) in cash and short-term investments (817.9) 865.8 (1,267.4)
Cash and short-term investments, beginning of year 1,941.2 1,075.4 2,342.8
--------- --------- ---------
Cash and short-term investments, end of year $ 1,123.3 $ 1,941.2 $ 1,075.4
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-6
<PAGE>
Notes To Statutory Financial Statements
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability income
products distributed primarily through career agents. The Company also
provides either directly or through its subsidiaries, a wide range of
pension products and services, as well as investment services to
individuals, corporations and institutions in all 50 states and the District
of Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") were merged into the Company. This
merger was accounted for under the pooling of interests method of
accounting. For the purposes of this presentation, these financial
statements reflect historical amounts giving retroactive effect as if the
merger had occurred on January 1, 1996 in conformity with the practices of
the National Association of Insurance Commissioners ("NAIC") and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts. In 1996, merger-related expenses totaling
$66.1 million were recorded in the Statutory Statement of Income. On the
merger date, policyholders' reserves attributable to disability income
contracts were strengthened by $75.0 million, investment reserves for real
estate were increased by $49.8 million and net prepaid pension assets were
increased by $10.4 million with all adjustments reflected as a charge to
policyholders' contingency reserves.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life
Insurance Company (formerly the MML Pension Insurance Company; currently
doing business as "UniCARE"), which comprised the Company's group life and
health business, to WellPoint Health Networks, Inc. The Company received
total consideration of $402.2 million ($340.0 million in cash and $62.2
million in notes receivable) and recognized a before tax gain of $187.9
million. The Company, pursuant to a 1994 reinsurance agreement, cedes its
group life, accident and health business to UniCARE.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, have been prepared in
conformity with the statutory accounting practices of the NAIC and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts and are different in some respects from
financial statements prepared in accordance with generally accepted
accounting principles ("GAAP"). The more significant differences are as
follows: (a) acquisition costs, such as commissions and other costs directly
related to acquiring new business, are charged to current operations as
incurred, whereas GAAP would require these expenses to be capitalized and
recognized over the life of the policies; (b) policy reserves are based upon
statutory mortality, morbidity and interest requirements without
consideration of withdrawals, whereas GAAP reserves would be based upon
reasonably conservative estimates of mortality, morbidity, interest and
withdrawals; (c) bonds are generally carried at amortized cost whereas GAAP
generally requires they be reported at fair value; (d) deferred income taxes
are not provided for book-tax timing differences as would be required by
GAAP, and (e) payments received for universal and variable life products,
variable annuities and investment related products are reported as premium
income and changes in reserves, whereas under GAAP, these payments would be
recorded as deposits to policyholders' account balances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). Codification provides a comprehensive guide of
statutory accounting principles for use by insurers in all states and is
expected to become effective no later than January 1, 2001. The effect of
adopting Codification shall be reported as an adjustment to policyholders'
contingency reserves on the effective date. The Company is currently
reviewing the impact of Codification; however, since the Division of
Insurance of the Commonwealth of Massachusetts has not approved
Codification, the ultimate impact cannot be determined at this time.
FF-7
<PAGE>
Notes To Statutory Financial Statements (Continued)
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosures of contingent assets and liabilities at
the date of the financial statements. Management must also make estimates
and assumptions that affect the amounts of revenues and expenses during the
reporting period. Future events, including changes in the levels of
mortality, morbidity, interest rates and asset valuations, could cause
actual results to differ from the estimates used in these financial
statements.
Certain 1997 and 1996 amounts have been reclassified to conform with the
current year presentation.
The following is a description of the Company's principal accounting
policies and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the
NAIC. Generally, bonds are valued at amortized cost, preferred stocks in
good standing at cost, and common stocks, except for unconsolidated
subsidiaries, at fair value.
Mortgage loans are valued at unpaid principal net of unamortized premium or
discount. The Company discontinues the accrual of interest on mortgage loans
which are delinquent more than 90 days or when collection is uncertain. Real
estate is valued at cost less accumulated depreciation, impairment
allowances and mortgage encumbrances. Encumbrances totaled $63.5 million in
1998 and $14.2 million in 1997. Depreciation on investment real estate is
calculated using the straight-line and constant yield methods.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
Investments in unconsolidated subsidiaries and affiliates, joint ventures
and other forms of partnerships are included in other investments on the
Statutory Statement of Financial Position and are accounted for using the
equity method.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve ("AVR") and an Interest Maintenance Reserve ("IMR"). The
AVR and other investment reserves stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines in
the value of bonds, mortgage loans and real estate investments. The IMR
captures after-tax realized capital gains and losses which result from
changes in the overall level of interest rates for all types of fixed income
investments and interest related hedging activities. These interest rate
related gains and losses are amortized into income using the grouped method
over the remaining life of the investment sold or over the remaining life of
the underlying asset. Net realized after tax capital gains of $189.1 million
in 1998, $95.4 million in 1997 and $73.1 million in 1996 were charged to the
IMR. Amortization of the IMR into net investment income amounted to $40.3
million in 1998, $31.0 million in 1997, and $26.9 million in 1996.
Realized capital gains and losses, less taxes, not includible in the IMR,
are recognized in net income. Realized capital gains and losses are
determined using the specific identification method. Unrealized capital
gains and losses are included in policyholders' contingency reserves.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of pension,
variable annuity and variable life insurance contractholders. Assets consist
principally of marketable securities reported at fair value. Premiums,
benefits and expenses of the separate
FF-8
<PAGE>
Notes To Statutory Financial Statements (Continued)
accounts are reported in the Statutory Statement of Income. The Company
receives administrative and investment advisory fees from these accounts.
Net transfers to separate accounts of $821.3 million, $355.7 million and
$636.5 million in 1998, 1997 and 1996, respectively, are included in the
addition of policyholders' reserves and funds.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally certain furniture,
equipment and other receivables) are excluded from the Statutory Statement
of Financial Position by an adjustment to policyholders' contingency
reserves.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life insurance contracts are developed using
accepted actuarial methods computed principally on the net level premium and
the Commissioners' Reserve Valuation Method bases using the American
Experience and the 1941, 1958 and 1980 Commissioners' Standard Ordinary
mortality tables with assumed interest rates ranging from 2.5 to 6.75
percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee contracts are
based on accepted actuarial methods principally at interest rates ranging
from 2.25 to 11.25 percent. Reserves for policies and contracts considered
investment contracts have a carrying value of $7,734.6 million and $8,077.9
million at December 31, 1998 and 1997, respectively with a fair value of
$7,940.6 million and $8,250.0 million at December 31, 1998 and 1997,
respectively, as determined by discounted cash flow projections.
Disability income policy reserves are generally calculated using the two-
year preliminary term, net level premium and fixed net premium methods and
various morbidity tables.
The Company made certain changes in the valuation of policyholders' reserves
which increased policyholders' contingency reserves by $8.6 million in 1998
and decreased policyholders' contingency reserves by $55.4 million and $72.2
million in 1997 and 1996, respectively.
E. Premium and Related Expense Recognition
Life insurance premium revenue is recognized annually on the anniversary
date of the policy. Annuity premium is recognized when received. Disability
income premiums are recognized as revenue when due. Commissions and other
costs related to issuance of new policies, maintenance and settlement costs
are charged to current operations when incurred.
F. Policyholders' Dividends
The Board of Directors annually approves dividends to be paid in the
following year. These dividends are allocated to reflect the relative
contribution of each group of policies to policyholders' contingency
reserves and consider investment and mortality experience, expenses and
federal income tax charges. The liability for policyholders' dividends is
equal to the estimated amount of dividends to be paid in the following
calendar year.
FF-9
<PAGE>
Notes To Statutory Financial Statements (Continued)
G. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers
all highly liquid investments purchased with a maturity of twelve months or
less to be short-term investments.
H. Policyholders' Contingency Reserves
Policyholders' contingency reserves represent surplus of the Company as
reported to regulatory authorities and are intended to protect policyholders
against possible adverse experience.
2. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7.50 percent and $250.0
million at 7.625 percent in 1994 and 1993, respectively. These notes are
unsecured and subordinate to all present and future indebtedness of the
Company, policy claims and prior claims against the Company as provided by
the Massachusetts General Laws. Issuance was approved by the Commissioner of
Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of
the Commissioner. Sinking fund payments are due as follows: $62.5 million in
2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in
2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, to holders of record on the preceding February 15
or August 15, respectively. Interest on the notes issued in 1993 is scheduled
to be paid on May 15 and November 15 of each year, to holders of record on
the preceding May 1 or November 1, respectively. Interest expense is not
recorded until approval for payment is received from the Commissioner.
Interest of $26.6 million was approved and paid in 1998, 1997 and 1996.
The proceeds of the notes, less a $24.4 million reserve in 1998, and a $28.3
million reserve in 1997 for contingencies associated with the issuance of the
notes, are recorded as a component of the Company's policyholders'
contingency reserves as permitted by the Division of Insurance. These surplus
note reserves are included in asset valuation and other investment reserves
on the Statutory Statement of Financial Position.
3. BENEFIT PLANS
The Company provides multiple benefit plans to employees, agents and retirees
including retirement plans and life and health benefits.
Retirement Plans
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes active employees and
retirees previously employed by Connecticut Mutual Life Insurance Company
which merged with MassMutual in 1996; the other plan includes all other
eligible employees and retirees. Benefits are based on the employees' years
of service, compensation during the last five years of employment and
estimated social security retirement benefits. The Company accounts for these
plans following Financial Accounting Standards Board Statement No. 87,
"Employers' Accounting for Pensions". Accordingly, as permitted by the
Massachusetts Division of Insurance, the Company has recognized a pension
asset of $216.0 million and $157.4 million at December 31, 1998 and 1997,
respectively. Company policy is to fund pension costs in accordance with the
requirements of the Employee Retirement Income Security Act of 1974 and,
based on such requirements, no funding was required for the years ended
December 31, 1998, and 1997. The assets of the plans are invested in the
Company's general account and separate accounts.
FF-10
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company also has defined contribution plans for employees and agents. The
Company funds the plans by matching employee contributions, subject to
statutory limits. Company contributions and any earnings on them are vested
based on years of vesting service using a graduated vesting schedule in 20
percent increments over a five-year period.
Life and Health
Life and health insurance benefits are provided to employees and agents
through group insurance contracts. Substantially all of the Company's
employees and agents may become eligible for continuation of certain of these
benefits if they retire as active employees or agents of the Company. The
Company adopted the National Association of Insurance Commissioners'
accounting standard for post retirement life and health benefit costs,
requiring these benefits to be accounted for using the accrual method for
employees and agents eligible to retire and current retirees. The initial
transition obligation of $137.9 million is being amortized over twenty years
through 2012. During 1998, the Company transferred the administration of the
retiree life and health plan benefit obligations and supporting assets to an
unconsolidated subsidiary.
The status of the defined benefit plans as of December 31 is as follows:
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
(In Millions)
Accumulated benefit obligation
at December 31 $ 822.8 $ 663.1 $ 185.6 $ 145.9
Fair value of plan assets
at December 31 1,160.2 1,154.2 21.0 21.7
--------- --------- -------- --------
Funded status $ 337.4 $ 491.1 $ (164.6) $ (124.2)
========= ========= ======== ========
The following rates were used in determining the actuarial present value of the
accumulated benefit obligations.
<TABLE>
<CAPTION>
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 6.75% 7.25% 6.75% 7.25%
Increase in future compensation
levels 4.00-5.00% 4.00-5.00% 5.00% 5.00-5.50%
Long-term rate of return on assets 9.00-10.00% 9.00-10.00% 6.75% 6.75%
Assumed increases in medical cost
Rates in the first year - - 7.00% 6.25-9.50%
declining to - - 4.25% 4.75-5.00%
within - - 5 years 5 years
</TABLE>
A one percent increase in the annual assumed inflation rate in medical cost
rates would increase the 1998 accumulated postretirement benefit liability and
benefit expense by $9.2 million and $1.1 million, respectively. A one percent
decrease in the annual assumed inflation rate in medical costs rates would
decrease the 1998 accumulated postretirement benefit liability and benefit
expense by $8.5 million and $1.0 million, respectively.
FF-11
<PAGE>
Notes To Statutory Financial Statements (Continued)
The expense charged to operations for all employee benefit plans is $32.1
million in 1998, $23.9 million in 1997 and $38.1 million in 1996. In 1997,
there was a significant reduction in plan participants in the Connecticut
Mutual Plan which resulted in recognition of a pension plan curtailment gain
of $10.7 million.
4. RELATED PARTY TRANSACTIONS
The company has management and service contracts or cost sharing arrangements
with various subsidiaries and affiliates whereby the Company, for a fee, will
furnish a subsidiary or affiliate, as required, operating facilities, human
resources, computer software development and managerial services. Fees earned
under the terms of the contracts or arrangements were $205.0 million and
$137.3 million for 1998 and 1997, respectively.
The Company has reinsurance agreements with its subsidiaries, C.M. Life
Insurance Company and MML Bay State Life Insurance Company, including stop-
loss and modified coinsurance agreements on life insurance products. Total
premiums assumed on these agreements were $38.4 million in 1998, $40.9
million in 1997 and $44.1 million in 1996.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's estimate of
its current tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves, acquisition costs and restructuring costs and of permanent
differences such as the equity tax, resulted in effective tax rates which
differ from the statutory tax rate.
The Company plans to file its 1998 federal income tax return on a
consolidated basis with its eligible life affiliates and non-life affiliates.
C.M. Life Insurance Company, which is not an eligible life affiliate, files a
separate return. The Company and its eligible life insurance and non-life
affiliates are subject to a written tax allocation agreement, which allocates
the group's consolidated tax liability for payment purposes. Generally, the
agreement provides that affiliates with losses shall be compensated for the
use of their losses and credits by other affiliates.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1995 for
Connecticut Mutual, and is currently examining Massachusetts Mutual for the
years 1993 and 1994. The Company believes adjustments which may result from
such examinations will not materially affect its financial position.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for
1998 or 1997. The Company records the estimated effects of anticipated
revisions in the Statutory Statement of Income.
Federal tax payments were $152.4 million in 1998, $353.4 million in 1997 and
$330.7 million in 1996.
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment. In the
normal course of business, the Company enters into commitments to purchase
privately placed bonds and to issue mortgage loans.
FF-12
<PAGE>
Notes To Statutory Financial Statements (Continued)
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 4,945.3 $ 473.0 $ 20.4 $ 5,397.9
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 41.2 1.5 1.3 41.4
foreign governments
Mortgage-backed securities 3,734.4 188.0 13.9 3,908.5
State and local governments 360.5 33.2 7.9 385.8
Corporate debt securities 14,133.3 845.3 118.4 14,860.2
Utilities 885.8 102.6 0.3 988.1
Affiliates 1,115.3 0.6 0.9 1,115.0
----------- ---------- -------- -----------
TOTAL $ 25,215.8 $ 1,644.2 $ 163.1 $ 26,696.9
=========== ========== ======== ===========
<CAPTION>
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 6,241.0 $ 470.5 $ 10.3 $ 6,701.2
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 83.5 4.4 3.0 84.9
foreign governments
Mortgage-backed securities 3,008.7 187.9 9.0 3,187.6
State and local governments 361.9 23.9 .6 385.2
Corporate debt securities 12,148.9 765.2 46.9 12,867.2
Utilities 871.8 100.1 2.2 969.7
Affiliates 792.4 2.8 1.0 794.2
----------- ---------- -------- -----------
TOTAL $ 23,508.2 $ 1,554.8 $ 73.0 $ 24,990.0
=========== ========== ======== ===========
</TABLE>
FF-13
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1998 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
--------- ---------
(In Millions)
Due in one year or less $ 556.5 $ 560.7
Due after one year through five years 4,150.6 4,270.5
Due after five years through ten years 8,622.8 9,045.0
Due after ten years 5,319.5 5,999.6
--------- ---------
18,649.4 19,875.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,566.4 6,821.1
--------- ---------
TOTAL $25,215.8 $26,696.9
========= =========
Proceeds from sales of investments in bonds were $11,663.4 million during
1998, $11,427.8 million during 1997 and $6,390.7 million during 1996. Gross
capital gains of $331.8 million in 1998, $200.7 million in 1997 and $188.8
million in 1996 and gross capital losses of $47.3 million in 1998, $68.8
million in 1997 and $255.5 million in 1996 were realized on those sales,
portions of which were included in the IMR. The estimated fair value of non-
publicly traded bonds is determined by the Company using a pricing matrix and
quoted market prices for publicly traded bonds.
B. Stocks
Common stocks, except for unconsolidated subsidiaries, had a cost of $238.4
million in 1998 and $250.3 million in 1997.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for non-
performing loans, was $6,178.8 million and $5,039.1 million at December 31,
1998 and 1997, respectively.
The Company had restructured loans with book values of $126.6 million, and
$202.3 million at December 31, 1998 and 1997, respectively. These loans
typically have been modified to defer a portion of the contractual interest
payments to future periods. Interest deferred to future periods totaled $0.1
million in 1998, $5.1 million in 1997 and $2.2 million in 1996. At December
31, 1998, scheduled commercial mortgage loan maturities were as follows:
1999 - $341.0 million; 2000 - $333.0 million; 2001 - $305.2 million; 2002 -
$210.6 million; 2003 - $299.0 million; and $3,106.4 million thereafter.
D. Policy Loans
Policy loans are recorded at cost as it is not practicable to determine the
fair value since they do not have a stated maturity.
E. Other
Preferred stocks in good standing had fair values of $116.0 million in 1998
and $145.5 million in 1997, using a pricing matrix for non-publicly traded
stocks and quoted market prices for publicly traded stocks.
FF-14
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value of investments which were non-income producing for the
preceding twelve months was $13.2 million and $5.7 million at December 31,
1998 and 1997, respectively.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks, primarily to reduce interest rate
and duration imbalances determined in asset/liability analyses. The fair
values of these financial instruments, described below, which are not
recorded in the financial statements, unless otherwise noted, are based upon
market prices or prices obtained from brokers. The Company does not hold or
issue these financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the
parties and, thus, are not a measure of the exposure of the Company. The
amounts exchanged are calculated on the basis of the notional amounts and the
other terms of the instruments, which relate to interest rates, exchange
rates, security prices or financial or other indexes.
The Company utilizes interest rate swap agreements, options, and purchased
caps and floors to reduce interest rate exposures arising from mismatches
between assets and liabilities and to modify portfolio profiles to manage
other risks identified. Under interest rate swaps, the Company agrees to an
exchange, at specified intervals, between streams of variable rate and fixed
rate interest payments calculated by reference to an agreed-upon notional
principal amount. Gains and losses realized on the termination of contracts
are deferred and amortized through the IMR over the remaining life of the
associated contract. IMR amortization is included in net investment income on
the Statutory Statement of Income. Net amounts receivable and payable are
accrued as adjustments to investment income and included in other assets on
the Statutory Statement of Financial Position. At December 31, 1998 and 1997,
the Company had swaps with notional amounts of $4,382.0 million and $3,220.2
million, respectively. The fair values of these instruments were $84.1
million at December 31, 1998 and $20.9 million at December 31, 1997.
Options grant the purchaser the right to buy or sell a security or enter into
a derivative transaction at a stated price within a stated period. The
Company's option contracts have terms of up to fifteen years. The amounts
paid for options purchased are amortized into investment income over the life
of the contract on a straight-line basis. Unamortized costs are included in
other investments on the Statutory Statement of Financial Position. Gains and
losses on these contracts are recorded at the expiration or termination date
and are deferred and amortized through the IMR over the remaining life of the
option contract. At December 31, 1998 and 1997, the Company had option
contracts with notional amounts of $12,704.4 million and $5,388.2 million,
respectively. The Company's credit risk exposure was limited to the
unamortized costs of $92.5 million and $59.0 million, which had fair values
of $161.9 million and $99.6 million at December 31, 1998 and 1997,
respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a stated rate calculated by
reference to an agreed upon notional amount. Interest rate floor agreements
grant the purchaser the right to receive the excess of a stated rate over a
referenced interest rate calculated by reference to an agreed upon notional
amount. Amounts paid for interest rate caps and floors are amortized into
investment income over the life of the asset on a straight-line basis.
Unamortized costs are included in other investments on the Statutory
Statement of Financial Position. Amounts receivable and payable are accrued
as adjustments to investment income and included in the Statutory Statement
of Financial Position as other assets. Gains and losses on these contracts,
including any unamortized cost, are recognized upon termination and are
deferred and amortized through the IMR over the remaining life of the
associated cap or floor agreement. At December 31, 1998 and 1997, the company
had agreements with notional amounts of $4,337.9 million and $3,348.6
million, respectively. The Company's credit risk exposure on these agreements
is limited to the unamortized costs of $22.7 million and $18.2 million at
December 31, 1998 and 1997, respectively. The fair values of these
instruments were $43.9 million and $23.4 million at December 31, 1998 and
1997, respectively.
FF-15
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company enters into forward U.S. Treasury, and Government National
Mortgage Association ("GNMA") and Federal National Home Mortgage Association
("FNMA") commitments for the purpose of managing interest rate exposure. The
Company generally does not take delivery on forward commitments. These
commitments are instead settled with offsetting transactions. Gains and
losses on forward commitments are recorded when the commitment is closed and
amortized through the IMR over the remaining life of the asset. At December
31, 1998 and 1997, the Company had U. S. Treasury, GNMA and FNMA purchase
commitments which will settle during the following year with contractual
amounts of $603.4 million and $1,100.7 million, respectively. The fair values
of these commitments were $604.1 million and $1,117.6 million, including net
unrealized gains of $0.7 million and $16.9 million at December 31, 1998 and
1997, respectively.
The Company utilizes other agreements to reduce exposures to various risks.
Notional amounts relating to these agreements totaled $384.2 million and
$385.6 million at December 31, 1998 and 1997, respectively. The fair values
of these instruments resulted in an unrealized gain of $7.2 million at
December 31, 1998 and an unrealized loss of $6.8 million at December 31,
1997.
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to derivative financial instruments. This
exposure is limited to contracts with a positive fair value. The amounts at
risk in a net gain position were $272.5 million and $146.7 million at
December 31, 1998 and 1997, respectively. The Company monitors exposure to
ensure counterparties are credit worthy and concentration of exposure is
minimized. Additionally, collateral positions have been obtained with
counterparties when considered prudent.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
MassMutual has two primary insurance subsidiaries, C.M. Life, which primarily
writes variable annuities and universal life insurance, and MML Bay State,
which primarily writes variable life and annuity business. MassMutual's
wholly-owned non-insurance subsidiary MassMutual Holding Company, Inc.
("MMHC") owns subsidiaries which include retail and institutional asset
management, registered broker dealer and international life and annuity
operations.
MassMutual accounts for the value of its investments in subsidiaries at their
underlying net equity. Operating results for such subsidiaries are reflected
as net unrealized capital gains in the Statement of Changes in Policyholders'
Contingency Reserves. Net investment income is recorded by MassMutual to the
extent that dividends are declared by the subsidiaries. The Company holds
debt issued by MMHC and its subsidiaries of $1,111.3 million and $792.4
million at December 31, 1998 and 1997, respectively.
Below is summarized financial information for the unconsolidated subsidiaries
as of December 31 and for the year then ended:
1998 1997
-------- --------
(In Millions)
Domestic Life Insurance Subsidiaries:
Total revenue $ 1,151.4 $ 1,086.9
Net income (loss) $ (3.2) $ 1.1
Assets $ 4,741.4 $ 3,766.8
Other Subsidiaries:
Total revenue $ 1,137.4 $ 967.2
Net income $ 73.6 $ 75.4
Assets $ 2,839.5 $ 2,018.8
FF-16
<PAGE>
Notes To Statutory Financial Statements (Continued)
9. REINSURANCE
The Company has reinsurance agreements with other insurance companies in the
normal course of business. In addition, the Company cedes the remainder of
its group life and health business to UniCARE. Premiums, benefits to
policyholders and provisions for future benefits are stated net of
reinsurance. The Company remains liable to the insured for the payment of
benefits if the reinsurer cannot meet its obligations under the reinsurance
agreements. Total premiums ceded were $183.9 million in 1998, $294.6 million
in 1997 and $793.5 million in 1996.
10. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in
which it does business. These laws assess insurance companies amounts to be
used to pay benefits to policyholders and claimants of insolvent insurance
companies. Many states allow these assessments to be credited against future
premium taxes. The Company believes such assessments in excess of amounts
accrued will not materially affect its financial position, results of
operations or liquidity.
The Company is involved in litigation arising in and out of the normal
course of its business. Management intends to defend these actions
vigorously. While the outcome of litigation cannot be foreseen with
certainty, it is the opinion of management, after consultation with legal
counsel, that the ultimate resolution of these matters will not materially
affect its financial position, results of operations or liquidity.
11. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1998 is illustrated below. The
Company provides management or advisory services to these companies.
Subsidiaries are wholly-owned, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
CM Assurance Company
CM Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
MassMutual Mortgage Finance, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps & Co., Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MML Investor Services, Inc.
FF-17
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Capital Corporation - 99.4%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 85.8%
Oppenheimer Acquisition Corporation - 89.36%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
HYP Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
MassMutual Benefits Management, Inc.
Subsidiaries of MassMutual International, Inc.
----------------------------------------------
Compensa de Seguros de Vida S.A. - 33.5%
MassLife Seguros de Vida (Argentina) S.A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S.A. - 33.5%
MassMutual International (Luxembourg) S.A.
MassMutual Holding MSC, Inc.
----------------------------
MassMutual Corporate Value Limited - 40.93%
9048 - 5434 Quebec, Inc.
1279342 Ontario Limited
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
FF-18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission (the "Commission") such supplementary and
periodic information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Article V of the Bylaws of MassMutual provide for indemnification of directors
and officers as follows:
Article V. Subject to limitations of law, the Company shall indemnify:
(a) each director, officer or employee;
(b) any individual who serves at the request of the Company as Secretary,
a director, board member, committee member, officer or employee of any
organization or any separate investment account; or
(c) any individual who serves in any capacity with respect to any employee
benefit plan; from and against all loss, liability and expense imposed
upon or incurred by such person in connection with any action, claim
or proceeding of any nature whatsoever, in which such person may be
involved or with which he or she may be threatened, by reason of any
alleged act, omission or otherwise while serving in any such capacity.
Indemnification shall be provided although the person no longer serves in
such capacity and shall include protection for the person's heirs and legal
representatives. Indemnities hereunder shall include, but not be limited
to, all costs and reasonable counsel fees, fines, penalties, judgments or
awards of any kind, and the amount of reasonable settlements, whether or
not payable to the Company or to any of the other entities described in the
preceding paragraph, or to the policyholders or security holders thereof.
Notwithstanding the foregoing, no indemnification shall be provided
with respect to:
(1) any matter as to which the person shall have been adjudicated in
any proceeding not to have acted in good faith in the reasonable
belief that his or her action was in the best interests of the
Company or, to the extent that such matter relates to service
with respect to any employee benefit plan, in the best interests
of the participants or beneficiaries of such employee benefit
plan;
(2) any liability to any entity which is registered as an investment
company under the Federal Investment Company Act of 1940 or to
the security holders thereof, where the basis for such liability
is willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of office; and
<PAGE>
(3) any action, claim or proceeding voluntarily initiated by any
person seeking indemnification, unless such action, claim or
proceeding had been authorized by the Board of Directors or
unless such person's indemnification is awarded by vote of the
Board of Directors.
In any matter disposed of by settlement or in the event of an
adjudication which in the opinion of the General Counsel or his
delegate does not make a sufficient determination of conduct
which could preclude or permit indemnification in accordance with
the preceding paragraphs (1), (2) and (3), the person shall be
entitled to indemnification unless, as determined by the majority
of the disinterested directors or in the opinion of counsel (who
may be an officer of the Company or outside counsel employed by
the Company), such person's conduct was such as precludes
indemnification under any of such paragraphs.
The Company may at its option indemnify for expenses incurred in
connection with any action or proceeding in advance of its final
disposition, upon receipt of a satisfactory undertaking for
repayment if it be subsequently determined that the person thus
indemnified is not entitled to indemnification under this Article
V.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
REPRESENTATION UNDER SECTION 26(e)(2)(A) OF
THE INVESTMENT COMPANY ACT OF 1940
Massachusetts Mutual Life Insurance Company hereby represents that the fees and
charges deducted under the flexible premium variable whole life insurance
policies described in this Registration Statement in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Massachusetts Mutual Life Insurance Company.
<PAGE>
CONTENTS OF POST-EFFECTIVE Amendment No. 4
This Post-Effective Amendment is comprised of the following documents:
The Facing Sheet.
The Prospectus consisting of 73 pages.
The Undertaking to File Reports.
The Signatures.
Written Consents of the Following Persons:
1. PricewaterhouseCoopers LLP, independent accountants;
2. Counsel opining as to the legality of securities being
registered;
3. Craig Waddington, FSA, MAAA, opining as to actuarial matters
contained in the Registration Statement.
The following Exhibits:
99. The following Exhibits correspond to those required by Paragraph A of
the instructions as to Exhibits in Form N-8B-2:
A. 1. Resolution of Board of Directors of MassMutual establishing
the Separate Account./1/
2. Not applicable.
3. Form of Distribution Agreements:
a. 1. Form of Distribution Servicing Agreement between MML
Distributors, LLC and MassMutual./2/
a. 2. Form of Co-Underwriting Agreement between MML Investors
Services, Inc. and MassMutual./2/
b. Not applicable.
c. Not applicable.
4. Not applicable.
5. Form of Flexible Premium Variable Whole Life Insurance
Policy./3/
6. a. Certificate of Incorporation of MassMutual./1/
b. By-Laws of MassMutual./1/
<PAGE>
7. Not applicable.
8. Participation Agreement with Oppenheimer Variable Account Funds
and MassMutual./1/
9. Not applicable.
10. Form of Application for a Flexible Premium Variable Whole Life
insurance policy./3/
11. Memorandum describing MassMutual issuance, transfer, and
redemption procedures for the Policy./3/
B. Opinion and Consent of Counsel as to the legality of the securities
being registered.
C. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
D. Not applicable.
E. Consent of PricewaterhouseCoopers LLP.
F. Opinion and consent of Craig Waddington, FSA, MAAA, as to actuarial
matters pertaining to the securities being registered.
G. 1. a. Powers of Attorney/4/
b. Power of Attorney - Roger G. Ackerman/5/
c. Powers of Attorney - Robert J. O'Connell and Thomas B.
Wheeler/6/
27 Not Applicable.
- --------------------------------------------------------------------------------
/1/ Incorporated by reference to the Initial Registration Statement of
Registration Statement No. 333-22557 filed as an exhibit with the
Commission on February 28, 1997.
/2/ Incorporated by reference to post-effective Amendment No. 1 to this
Registration Statement filed as an exhibit with the Commission effective
May 1, 1996.
/3/ Incorporated by reference to Post-Effective Amendment No. 3 to this
Registration Statement filed as an exhibit with the Commission effective
May 1, 1998.
/4/ Incorporated by reference to Registration Statement No. 333-22557 filed
with the Commission as an exhibit on February 28, 1997.
/5/ Incorporated by reference to the Pre-Effective Amendment No. 1 to
Registration Statement No. 333-45039 on Form N-4 filed with the Commission
as an exhibit on June 4, 1998.
/6/ Incorporated by reference to the Pre-Effective Amendment No. 1 to
Registration Statement No. 333-65887 filed with the Commission as an
exhibit on January 28, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No.
33-89798 pursuant to Rule 485(b) under the Securities Act of 1933 and has caused
this Post-Effective Amendment No. 4 to Registration Statement No. 33-89798 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
- ------------------- powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment No.
33-89798 to Registration Statement No. 4 has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert J. O'Connell* President and Chief April 22, 1999
- ------------------------ Executive Officer
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.
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Robert M. Furek* Director April 22, 1999
-------------------
Robert M. Furek
/s/ Charles K. Gifford* Director April 22, 1999
- -----------------------
Charles K. Gifford
/s/ William N. Griggs* Director April 22, 1999
- ----------------------
William N. Griggs
/s/ George B. Harvey* Director April 22, 1999
- ---------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director April 22, 1999
- --------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director April 22, 1999
- ---------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director April 22, 1999
- -------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director April 22, 1999
- --------------------
John F. Maypole
/s/ Thomas B. Wheeler* Director April 22, 1999
- ----------------------
Thomas B. Wheeler
/s/ Alfred M. Zeien* Director April 22, 1999
- --------------------
Alfred M. Zeien
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact
- -------------------- pursuant to powers of attorney
*Richard M. Howe
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
--------------------------------------
As counsel to the Registrant, I, Richard M. Howe, have reviewed this
Post-Effective Amendment No. 4 to Registration Statement No. 33-89798 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/ Richard M. Howe
-------------------
Richard M. Howe
Second Vice President & Assoc. General Counsel
Massachusetts Mutual Life Insurance Company
<PAGE>
EXHIBIT LIST
99.B. Opinion and Consent of Richard M. Howe, Esq/
99.E. Consent of PricewaterhouseCoopers LLP
99.F. Opinion and Consent of Craig Waddington, FSA, MAAA
<PAGE>
EXHIBIT 99.B.
[MASSMUTUAL LETTERHEAD APPEARS HERE]
April 23, 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Post-Effective Amendment No. 4 to Registration Statement
No. 33-89798 filed on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 4 to Registration Statement No. 33-89798 under the Securities Act
of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Flexible Premium Variable Whole Life Insurance Policies (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/ Richard M. Howe
Richard M. Howe
Second Vice President & Assoc. General Counsel
Massachusetts Mutual Life Insurance Company
<PAGE>
EXHIBIT 99.E.
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 4 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Variable Life Select segment) on Form S-6 (Registration No. 33-89798) of our
report dated February 25, 1999, on our audits of Massachusetts Mutual Variable
Life Separate Account I (Variable Life Select 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 the generally accepted accounting principles. We also consent to the
reference to our Firm under the caption "Experts."
PricewaterhouseCoopers LLP
Springfield, Massachusetts
April 27, 1999
<PAGE>
EXHIBIT 99.F.
[MASSMUTUAL LETTERHEAD APPEARS HERE]
April 23, 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 4 to
Registration Statement No. 33-89798 for Massachusetts Mutual Life Insurance
Company's Flexible Premium Variable Whole Life Insurance Policies (the
"Policies") under the Securities Act of 1933. The prospectus included in the
post-effective amendment describes the Policies. I am familiar with the forms of
the Policies and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix D of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 4 to Registration Statement No. 33-89798, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ Craig Waddington
Craig Waddington, FSA, MAAA
Vice President and Actuary
