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As filed with the Securities and Exchange Commission on April , 1996
Registration No. 33-64364
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 3 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Exact name of trust)
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
(Name of depositor)
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(Complete address of depositor's principal executive offices)
--------------------
FRANCIS C. CLEARY, JR., ESQ.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
--------------------
Copy to:
GARY O. COHEN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
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It is proposed that this filing become effective(check appropriate box)
/ /immediately upon filing pursuant to paragraph (b) of Rule 485
--
/X/on May 1, 1996 pursuant to paragraph (b) of Rule 485
--
/ /60 days after filing pursuant to paragraph (a)(1) of Rule 485
--
/ /on (date) pursuant to paragraph (a)(1) of Rule 485
--
If appropriate check the following box
/ /this post-effective amendment designates a new effective date for a
--
previously filed amendment
Pursuant to the provisions of Rule 24f-2, Registrant has registered an
indefinite amount of the securities being offered and filed its Notice for
fiscal year 1995 pursuant to Rule 24f-2 on February 22, 1996.
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CROSS-REFERENCE TABLE
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<CAPTION>
Form N-8B-2 Item Caption in Prospectus
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1, 2 Cover, The Account and Series
Fund, John Hancock
3 Inapplicable
4 Cover, Distribution of Policies
5,6 The Account and Series Fund,
State Regulation
7, 8, 9 Inapplicable
10(a),(b),(c),(d),(e) Policy Provisions and Benefits
10(f) Voting Privileges
10(g),(h) Changes that John Hancock
Can Make
10(i) Appendix--Other Policy
Provisions, The Account and
Series Fund
11, 12 Summary, The Account and Series
Fund, Distribution of Policies
13 Charges and expenses,
Appendix--Illustration of Death
Benefits, Account Values,
Surrender Values and
Accumulated Premiums
14, 15 Summary, Distribution of
Policies, Premiums
16 The Account and Series Fund
17 Summary, Policy
Provisions and Benefits
18 The Account and Series Fund,
Tax Considerations
19 Reports
20 Changes that John Hancock Can Make
21 Policy Provisions and Benefits
22 Policy Provisions and Benefits
23 Distribution of Policies
24 Not Applicable
25 John Hancock
26 Not Applicable
27,28,29,30 John Hancock, Board
of Directors and Executive
Officers of John Hancock
31,32,33,34 Not Applicable
35 John Hancock
37 Not Applicable
38,39,40,41(a) Distribution of Policies,
John Hancock,
Charges and Expenses
42, 43 Not Applicable
44 The Account and Series Fund,
Policy Provisions,
Appendix--Illustration of Death
Benefits, Account Values,
Surrender Values and
Accumulated Premiums
45 Not Applicable
46 The Account and Series Fund,
Policy Provisions,
Appendix--Illustration of Death
Benefits, Account Values,
Surrender Values and
Accumulated Premiums
47 Not Applicable
48,49,50 Not Applicable
51 Policy Provisions and Benefits,
Appendix--Other Policy
Provisions
52 The Account and Series Fund,
Changes that John Hancock
Can Make
53,54,55 Not Applicable
56,57,58,59 Not Applicable
</TABLE>
<PAGE>
John Hancock Mutual Life
Insurance Company
(John Hancock)
[JOHN HANCOCK VARIABLE ESTATE PROTECTION LOGO APPEARS HERE]
FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP INSURANCE POLICY
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
LIFE AND ANNUITY SERVICES
P.O. BOX 111
BOSTON, MASSACHUSETTS 02117
TELEPHONE 1-800-REAL LIFE (1-800-732-5543)
FAX 617-572-5410
PROSPECTUS MAY 1, 1996
The flexible premium variable life survivorship policy ("Policy") described
in this Prospectus can be funded, at the discretion of the Owner, by any of
the variable subaccounts of John Hancock Mutual Variable Life Insurance
Account UV (the "Account"), by a fixed subaccount (the "Fixed Account"), or by
any combination of the Fixed Account and the variable subaccounts
(collectively, the "Subaccounts"). The assets of each variable Subaccount will
be invested in a corresponding investment portfolio ("Portfolio") of John
Hancock Variable Series Trust I (the "Fund"), a mutual fund advised by John
Hancock. The assets of the Fixed Account will be invested in John Hancock's
general account.
The Prospectus for the Fund, which is attached to this Prospectus, describes
the investment objectives, policies and risks of investing in the Portfolios
of the Fund: Growth and Income (formerly Stock), Large Cap Growth (formerly
Select Stock), Sovereign Bond (formerly Bond), Money Market, Managed, Real
Estate Equity, International Equities (formerly International), Short-Term
U.S. Government, Special Opportunities, Small Cap Growth, Small Cap Value, Mid
Cap Growth, Mid Cap Value, International Balanced, International
Opportunities, Large Cap Value, Strategic Bond and Equity Index. Other
variable Subaccounts and Portfolios may be added in the future.
Replacing existing insurance with a Policy described in this Prospectus may
not be to your advantage.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. IT IS NOT
VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS FOR THE FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS
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Page
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SUMMARY................................................................... 1
JOHN HANCOCK.............................................................. 6
THE ACCOUNT AND SERIES FUND............................................... 6
The Account............................................................. 6
Series Fund............................................................. 7
THE FIXED ACCOUNT......................................................... 9
POLICY PROVISIONS AND BENEFITS............................................ 10
Requirements for Issuance of Policy..................................... 10
Premiums................................................................ 10
Account Value and Surrender Value....................................... 12
Policy Split Option..................................................... 13
Death Benefits.......................................................... 13
Transfers Among Subaccounts............................................. 15
Telephone Transfers and Policy Loans.................................... 16
Loan Provisions and Indebtedness........................................ 16
Default................................................................. 17
Exchange Privilege...................................................... 18
CHARGES AND EXPENSES...................................................... 18
Charges Deducted from Premiums.......................................... 18
Sales Charge............................................................ 19
Reduced Charges for Eligible Groups..................................... 20
Charges Deducted from Account Value or Assets........................... 20
Guarantee of Premiums and Certain Charges............................... 22
DISTRIBUTION OF POLICIES.................................................. 22
TAX CONSIDERATIONS........................................................ 23
Policy Proceeds......................................................... 23
Charge for John Hancock's Taxes......................................... 25
Policy Split Option..................................................... 25
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK................. 26
REPORTS................................................................... 27
VOTING PRIVILEGES......................................................... 27
CHANGES THAT JOHN HANCOCK CAN MAKE........................................ 28
STATE REGULATION.......................................................... 28
LEGAL MATTERS............................................................. 29
REGISTRATION STATEMENT.................................................... 29
EXPERTS................................................................... 29
FINANCIAL STATEMENTS...................................................... 29
APPENDIX--OTHER POLICY PROVISIONS......................................... A-1
Settlement Provisions................................................... A-1
Additional Insurance Benefits........................................... A-1
General Provisions...................................................... A-1
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, SURRENDER VALUES AND ACCUMULATED
PREMIUMS................................................................. A-3
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY OTHER JURISDICTION THE
POLICY DESCRIBED HEREIN IS AVAILABLE ONLY IN NEW YORK. NO PERSON IS AUTHORIZED
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES
Below are listed certain words and phrases used in this Prospectus, together
with identification of the page on which each is defined or explained:
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Page
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Account....................................................... 6
Account Value................................................. 1
Additional Sum Insured........................................ 15
Age........................................................... A-2
Basic Sum Insured............................................. 1
DAC Tax....................................................... 19
Death Benefit................................................. 13
Fixed Account................................................. 9
Fund.......................................................... Front Cover
Grace Period.................................................. 17
Guaranteed Minimum Death Benefit.............................. 14
Guaranteed Minimum Death Benefit Premium...................... 11
Home Office................................................... 6
Indebtedness.................................................. 16
Investment Rule............................................... 11
Loan Account.................................................. 16
Minimum First Premium......................................... 10
Planned Premium............................................... 10
Policy Anniversary............................................ A-2
Portfolio..................................................... Front Cover
Subaccount.................................................... Front Cover
Sum Insured................................................... 5
Surrender Value............................................... 12
Target Premium................................................ 19
Valuation Date................................................ 9
Valuation Period.............................................. 9
Variable Subaccounts.......................................... 2
7-Pay Limit................................................... 12
</TABLE>
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SUMMARY
WHAT IS THE VARIABLE LIFE POLICY BEING OFFERED?
John Hancock Mutual Life Insurance Company ("John Hancock") issues variable
life insurance policies. The Policies described in this Prospectus provide
life insurance coverage on two insureds, with a death benefit payable only
when the last surviving insured dies. The Policies also provide for premium
flexibility. John Hancock issues other variable life insurance policies. These
other policies are funded by the Account and use the same underlying Fund, but
are offered by means of other Prospectuses.
As explained below, the death benefit and Surrender Value under the Policy
may increase or decrease daily. The Policies differ from ordinary fixed-
benefit life insurance in the way they work. However, the Policies are like
fixed-benefit survivorship life insurance in providing lifetime protection
against economic loss resulting from the death of the second of two persons
insured. The Policies are primarily insurance and not investments.
The Policies work generally as follows: the Policy owner (the "Owner")
periodically gives John Hancock a premium payment. John Hancock takes from
each premium an amount for processing expenses, taxes, and sales expenses.
John Hancock then places the rest of the premium into the Subaccounts as
directed by the Owner. The assets allocated to each variable Subaccount are
invested in shares of the corresponding Portfolio of the Fund. The currently
available Portfolios are identified on the cover of this Prospectus. The
assets allocated to the Fixed Account are invested in the general account of
John Hancock. During the year, John Hancock takes charges from each Subaccount
and credits or charges each Subaccount with its respective investment
performance. The insurance charge, which is deducted from the invested assets
attributable to each Policy ("Account Value"), varies monthly with the then
attained age of the insureds and with the amount of insurance provided at the
start of each month.
The Policy provides for payment of death benefit proceeds when the last
surviving insured dies. The death benefit proceeds will equal the death
benefit, plus any additional benefit included by rider and then due, minus any
Indebtedness. The death benefit under Option A equals the Sum Insured less any
withdrawals that the Owner has made. The death benefit under Option B equals
the Sum Insured plus the Policy Account Value on the date of death of the last
surviving insured. Under Option A, the Owner may also elect an Extra Death
Benefit feature that may result in a higher death benefit in some cases. The
Policy also increases the death benefit if necessary to ensure that the Policy
will continue to qualify as life insurance under the Federal tax laws.
Within limits prescribed by John Hancock, the Owner may also elect whether
to purchase the survivorship coverage as part of the "Basic Sum Insured" or as
an "Additional Sum Insured." The Basic Sum Insured will not lapse during the
first ten Policy years, so long as (1) specified Guaranteed Minimum Death
Benefit Premiums have been paid, and (2) the Additional Sum Insured is not
scheduled to exceed the Basic Sum Insured at any time. The Owner may elect for
this Guaranteed Minimum Death Benefit feature to extend beyond ten years. The
Additional Sum Insured is subject to lapse, but has certain cost and other
advantages.
The initial Account Value is the amount of the premium that John Hancock
credits to the Policy, after deduction of the initial charges. The Account
Value increases or decreases daily depending on the investment experience of
the Subaccounts to which the amounts are allocated at the direction of the
Owner. John Hancock does not guarantee a minimum amount of Account Value.
Therefore, the Owner bears the investment risk for that portion of the Account
Value allocated to the variable Subaccounts. The Owner may surrender a Policy
at any time while either of the insureds is living. The Surrender Value is the
Account Value less any Indebtedness. The Owner may also make partial
withdrawals from a Policy, subject to certain restrictions and an
administrative
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charge. If the Owner surrenders in the early Policy years, the amount of
Surrender Value would be low (as compared with other investments without sales
charges) and, consequently, the insurance protection provided prior to
surrender would be costly.
The minimum Sum Insured that may be bought at issue is $1,000,000. All
persons insured must meet specified age limits and certain health and other
criteria called "underwriting standards." The smoking status of the insureds
is generally reflected in the insurance charges made. Policies issued under
certain circumstances will not directly reflect the sexes of the insureds in
either the premium rates or the charges and values under the Policy.
WHAT IS THE AMOUNT OF THE PREMIUMS?
Premiums are flexible, and the Owner may choose the amount and frequency of
premium payments, so long as each premium payment is at least $100 and meets
certain other requirements.
The minimum amount of premium required at the time of Policy issue is
determined by John Hancock based on the characteristics of each insured, the
Policy's Sum Insured at issue, and the Policy options selected by the Owner.
Unless the Guaranteed Minimum Death Benefit is in effect, if the Policy
Account Value at the beginning of any Policy month is insufficient to pay the
monthly policy charges then due, John Hancock will estimate the amount of
additional premiums necessary to keep the Policy in force for three months.
The Owner will have a 61 day grace period to pay at least that amount or the
Policy will lapse.
At the time of Policy issue, the Owner may designate the amount and
frequency of Planned Premium payments. The Owner may pay premiums other than
the Planned Premium payments, subject to certain limitations.
The Policy has a Guaranteed Minimum Death Benefit provision, which
guarantees that the basic Sum Insured will not lapse during the first ten
Policy years if (1) prescribed amounts of premiums have been paid, based on
the characteristics of each insured and the amount of the Basic Sum Insured at
issue and (2) any Additional Sum Insured is not scheduled to exceed the Basic
Sum Insured at any time. The Owner may at the time of application elect for
this feature to be extended beyond the first ten Policy years for an
additional charge.
WHAT IS JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV?
The Account is a separate investment account of John Hancock, operated as a
unit investment trust, which supports benefits payable under the Policies.
Each variable Subaccount within the Account is invested in a corresponding
Portfolio of John Hancock Variable Series Trust I, a "series" type of mutual
fund. The Portfolios of the Fund which are currently available are Growth and
Income, Large Cap Growth, Sovereign Bond, Money Market, Managed, Real Estate
Equity, International Equities, Short-Term U.S. Government, Special
Opportunities, Small Cap Growth, Small Cap Value, Mid Cap Growth, Mid Cap
Value, International Balanced, International Opportunities, Large Cap Value,
Strategic Bond, and Equity Index.
Each Portfolio has a different investment objective and is managed by John
Hancock. John Hancock receives a fee from the Fund for providing investment
management services with respect to the Growth and Income, Sovereign Bond and
Money Market Portfolios, at an annual rate of .25% of the average daily net
assets; with respect to the Large Cap Growth and Managed Portfolios, at an
annual rate of .40% of the first $500 million of the average daily net assets
and at lesser percentages for amounts above $500 million; with respect to the
Real Estate Equity Portfolio, at an annual rate of .60% of the first $300
million of the average daily net assets and at lesser percentages for amounts
above $300 million; with respect to the International Equities Portfolio, at
an annual rate of .60% of the first $250 million of the average daily net
assets and at lesser percentages for
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amounts above $250 million; with respect to the Short-Term U.S. Government
Portfolio, at an annual rate of .50% for the first $250 million of average
daily net assets and at lesser percentages for amounts above $250 million;
with respect to the Special Opportunities Portfolio, at an annual rate of .75%
for the first $250 million of average daily net assets and at lesser
percentages for amounts above $250 million; with respect to the Equity Index
Portfolio at an annual rate of 0.25% of the net assets; with respect to the
Large Cap Value and Small Cap Growth Portfolios at an annual rate of 0.75% of
the net assets; with respect to the Mid Cap Growth Portfolio at an annual rate
of 0.85% for the first $100,000,000 of net assets and at lesser percentages
for amounts above $100,000,000; with respect to the Mid Cap Value Portfolio at
an annual rate of 0.80% of the first $250,000,000 of net assets and at lesser
percentages for amounts above $250,000,000; with respect to the Small Cap
Value Portfolio at an annual rate of 0.80% of the first $100,000,000 of net
assets and at lesser percentages for amounts above $100,000,000; with respect
to the Strategic Bond Portfolio at an annual rate of 0.75% of the first
$25,000,000 of net assets and at lesser percentages for amounts above
$25,000,000; with respect to the International Opportunities Portfolio at an
annual rate of 1% of the first $20,000,000 of net assets and at lesser
percentages for amounts above $20,000,000; and for the International Balanced
Portfolio at an annual rate of 0.85% of the first $100,000,000 of net assets
and at a lesser percentage for amounts above $100,000,000.
For a full description of the Fund, see the Prospectus for the Fund attached
to this Prospectus.
WHAT ARE THE CHARGES MADE BY JOHN HANCOCK?
Premium Processing Charge. A 1.25% charge deducted from each premium
payment. This charge will be reduced for Policies with a Sum Insured at issue
of more than $5,000,000, subject to a minimum charge of .50%.
State Premium Tax Charge and Federal DAC Tax Charge. Charges deducted from
each premium payment, currently 2.35% for state premium taxes and 1.25% as a
Federal deferred acquisition cost or "DAC Tax" charge.
Sales Charge. A charge deducted from each premium payment in the amount of
30% of premiums paid in the first year up to the "target premium" and 3.5% of
premiums paid during the first year in excess of that target. The current
sales charge in subsequent years generally is: 15% of premiums paid up to the
target premium in each of years 2 through 5; 10% of premiums paid up to the
target premium in each of years 6 through 10; 3% of premiums paid up to the
target premium in years 11 through 20; and 0% of premiums paid up to the
target premium thereafter. The current sales charge for premiums paid in
excess of the target premium is 3.5% of such excess premiums paid in years 2
through 10; 3% of such excess premiums paid in years 11 through 20; and 0% of
such excess premiums paid thereafter. Subject to maximums set forth in the
Policy, certain of these charges may be increased after the tenth Policy year.
Issue Charge. A charge deducted monthly from Account Value at the rate of
$55.55 per month for the first 5 Policy years, plus 2c per $1,000 of the Sum
Insured at issue for the first 3 Policy years, except that the charge per
$1,000 is guaranteed not to exceed $200 per month.
Administrative Charge. A charge deducted monthly from Account Value in an
amount equal to no more than $10 per Policy and 3c per $1,000 of the Sum
Insured at issue (currently $7.50 for all Policy years, plus 1c per $1,000 of
the Sum Insured at issue for the first 10 Policy years, except that the $7.50
charge currently is zero for any Policy with a Sum Insured at issue of at
least $5,000,000).
Insurance Charge. A charge based upon the amount for which John Hancock is
at risk, considering the attained age and risk classification of each of the
insureds and John Hancock's then current monthly insurance rates (never to
exceed rates set forth in the Policy) deducted monthly from Account Value.
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Guaranteed Minimum Death Benefit Charge. If the Guaranteed Minimum Death
Benefit option is elected beyond the first 10 Policy years, a maximum charge
starting at the beginning of the eleventh Policy year not to exceed 3c
(currently 1c) per $1,000 of the basic Sum Insured at issue, deducted monthly
from Account Value.
Charge for Mortality and Expense Risks. A charge made daily at a maximum
effective annual rate of .90% of the assets of the Account. The current
charges are: for a Policy with a Sum Insured at issue of $1 million through
$4.999 million, .625% of assets; $5 million through $14.999 million, .575% of
assets; and $15 million or more, .525% of assets.
Charge for Extra Mortality Risks. An additional charge, depending upon the
ages of the insureds and the degree of additional mortality risk, required if
either of the insureds does not qualify for the standard underwriting class.
This additional charge is deducted monthly from Account Value.
Charge for Optional Rider Benefits. An additional charge required if the
Owner elects to purchase optional insurance benefits by rider. This additional
charge is deducted from premiums when paid or is deducted monthly from Account
Value.
Charge for Partial Withdrawal. A charge of $20 made against Account Value at
the time of withdrawal.
See "Charges and Expenses", for a fuller description of the charges under
the Policy.
IS THERE A CHARGE AGAINST THE ACCOUNT FOR FEDERAL INCOME TAX?
Currently no charge is made against any Subaccount for Federal income taxes;
but if John Hancock incurs, or expects to incur, income taxes attributable to
any Subaccount or this class of Policies in future years, it reserves the
right to make a charge. John Hancock expects that it will continue to be taxed
as a life insurance company. See "Charge for John Hancock's Taxes."
WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?
The initial net premium is allocated by John Hancock from its general
account to the Money Market Subaccount on the date of issue of the Policy. The
initial net premium is the gross Minimum First Premium, plus any additional
amount of premium that has been paid prior to the date of issue, less the
premium processing charge, the charges deducted for sales expenses and state
premium taxes, and the Federal DAC Tax charge. These charges also apply to
subsequent premium payments. Twenty days after the date of issue, the amount
in the Money Market Subaccount is reallocated among the Subaccounts in
accordance with the Owner's election. Net premiums derived from payments
received after this reallocation date are allocated, generally on the date of
receipt, to one or more of the Subaccounts as elected by the Owner.
HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?
At issue and subsequently thereafter, the Owner will provide us with the
rule ("Investment Rule") we will follow to invest net premiums or other
amounts in any of the Subaccounts. The Owner may change the Investment Rule
under which John Hancock will allocate amounts to Subaccounts. See "Premiums--
Billing, Allocation of Premium Payments (Investment Rule)."
WHAT COMMISSIONS ARE PAID TO AGENTS?
The Policies are sold through agents who are licensed by state authorities
to sell John Hancock's insurance policies. Commissions payable to agents are
described under "Distribution of Policies." Sales expenses in any
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year are not equal to the deduction for sales expenses in that year. Rather,
total sales expenses under the Policies are intended to be recovered over the
lifetimes of the insureds covered by the Policies.
WHAT IS THE DEATH BENEFIT?
The death benefit proceeds, payable when the last insured dies, will equal
the death benefit of the Policy, plus any additional rider benefits included
and then due, minus any Indebtedness. The death benefit payable depends on the
Policy's Sum Insured and the death benefit option selected by the Owner at the
time the Policy is issued, as follows:
OPTION A: The death benefit equals the Policy's current Sum Insured
less any withdrawals of Account Value that the Owner has made. (The Sum
Insured is the Basic Sum Insured plus the amount of any Additional Sum
Insured.) If this option is elected, the Owner may also elect an
optional Extra Death Benefit feature, under which the death benefit
will increase if and when the Policy Account Value exceeds a certain
predetermined amount.
OPTION B: The death benefit is the Policy's current Sum Insured plus
the Policy Account Value on the date of death of the last surviving
insured, and varies in amount based on investment results.
The death benefit of the Policy under either Option A or Option B will be
increased if necessary to ensure that the Policy will continue to qualify as
life insurance under the Federal tax law. See "Death Benefits" and "Tax
Considerations."
If the last surviving insured or the younger of two living insureds attains
age 100, the Surrender Value otherwise payable on such date will become
payable to the beneficiary instead of any death benefit.
Under the Guaranteed Minimum Death Benefit provision, the Policy is
guaranteed not to lapse during the first 10 Policy years, provided the amount
of premiums paid, accumulated at 4% interest, minus any withdrawals, also
accumulated at 4% interest, is at least equal to the Guaranteed Minimum Death
Benefit Premiums, accumulated at 4% interest. For an additional charge, the
Owner also may elect for this benefit to continue beyond the tenth Policy
year. However, the Guaranteed Minimum Death Benefit will not apply to any
Policy if the Additional Sum Insured is scheduled to exceed the Basic Sum
Insured at any time.
HOW DOES THE ACCOUNT VALUE OF A POLICY VARY IN RELATION TO THE SUBACCOUNTS'
INVESTMENT EXPERIENCE?
In general, the Account Value for any day equals the Account Value for the
previous day, increased by any net premium placed in the Subaccounts for the
Policy, decreased by any charges made against the Account Value, and increased
or decreased by the investment experience of the Subaccounts. No minimum
Account Value for the Policy is guaranteed.
WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT,
ACCOUNT VALUE AND SURRENDER VALUE?
The Owner may obtain a Policy loan in the maximum amount of 90% of the
Surrender Value. Interest charged on any loan will accrue daily at an annual
rate determined by John Hancock at the start of each Policy year. This
interest rate will not exceed the greater of (1) the "Published Monthly
Average" (see "Loan Provision and Indebtedness") for the calendar month ending
two months before the calendar month of the Policy anniversary or (2) 5%. In
jurisdictions where a fixed loan rate is applicable, John Hancock will charge
interest at
5
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an effective annual rate of 5% in the first 20 Policy years and 4.5%
thereafter, accrued daily. A loan plus accrued interest ("Indebtedness") may
be repaid at the discretion of the Owner in whole or in part in accordance
with the terms of the Policy.
While a loan is outstanding, the rate of interest credited to the Account
Value because of the loan will usually be different than the net investment
experience of the Subaccounts. Therefore, the Account Value, the Surrender
Value and any death benefit above the current Sum Insured are permanently
affected by any loan.
IS THERE A SHORT-TERM CANCELLATION RIGHT?
The Owner may surrender a Policy by delivering or mailing it within 45 days
after the date Part A of the application has been completed for both insureds,
or within 10 days after receipt of the Policy by the Owner, or within 10 days
after mailing by John Hancock of a Notice of Withdrawal Right, whichever is
latest, to John Hancock's Home Office, or to the agent or agency office
through which it was delivered. Coverage under the Policy will be cancelled
immediately as of the date of such mailing or delivery. Any premium paid on it
will be refunded.
WHAT INVESTMENT TRANSFERS ARE ALLOWED AN OWNER?
The Owner may transfer the Account Value among the variable Subaccounts or
into the Fixed Account at any time. Transfers out of the Fixed Account,
however, are subject to restrictions.
ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?
The benefits under Policies described in this Prospectus are expected to
receive the same tax treatment under the Internal Revenue Code of 1986 as
benefits under traditional fixed-benefit life insurance policies. Thus, death
benefits payable under the Policies will not be included in the beneficiary's
gross income. Also, the Owner is not taxed on interest and gains under the
Policy unless and until values are actually received through withdrawal,
surrender, or other distributions.
Under Federal tax law, distributions from Policies on which premiums greater
than a "7-pay" premium limit (as defined in the law) have been paid, will be
subject to special taxation. See Premiums--7-Pay Premium Limit" and "Policy
Proceeds" for a discussion of how the "7-pay" premium limit may be exceeded
under a Policy. A distribution on such a Policy (called a "modified
endowment") will be taxed to the extent there is any income (gain) to the
Owner and an additional penalty tax may be imposed on the taxable amount.
JOHN HANCOCK
John Hancock, a mutual life insurance company chartered in 1862 under
Massachusetts law, is authorized to transact a life insurance and annuity
business in Massachusetts and all other states. Its Home Office is at John
Hancock Place, Boston, Massachusetts 02117. John Hancock's assets are over $45
billion.
THE ACCOUNT AND SERIES FUND
THE ACCOUNT
The Account, a separate account established under Massachusetts law in 1993,
meets the definition of "separate account" under the Federal securities laws
and is registered as a unit investment trust under the Investment Company Act
of 1940 ("1940 Act").
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The Account's assets are the property of John Hancock. Each Policy provides
that the portion of the Account's assets equal to the reserves and other
liabilities under the Policy shall not be chargeable with liabilities arising
out of any other business John Hancock may conduct. In addition to the assets
attributable to variable life policies, the Account's assets include assets
derived from charges made by John Hancock. From time to time these additional
assets may be transferred in cash by John Hancock to its general account.
Before making any such transfer, John Hancock will consider any possible
adverse impact the transfer might have on any Subaccount. Additional premiums
are charged for Policies where the insured is classified as a substandard risk
and a portion of these premiums is allocated to the Account.
The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve
supervision by the Commission of the management or policies of the Account or
John Hancock.
The assets in the variable Subaccounts are invested in corresponding
Portfolios of the Fund, but the assets of one variable Subaccount are not
necessarily legally insulated from liabilities associated with another
variable Subaccount. New variable Subaccounts may be added or existing
variable Subaccounts may be deleted as new Portfolios are added to or deleted
from the Fund and made available to Owners.
SERIES FUND
The Fund is a "series" type of mutual fund registered with the Commission
under the 1940 Act as an open-end diversified management investment company.
The Fund serves as the investment medium for the Account and other unit
investment trust separate accounts established for other variable life
insurance policies and variable annuity contracts. (See the attached Fund
Prospectus for a description of a need to monitor for possible conflicts and
other consequences.) A very brief summary of the investment objectives of each
Portfolio is set forth below.
Growth and Income (formerly Stock) Portfolio. The investment objective of
this Portfolio is to achieve intermediate and long-term growth of capital,
with income as a secondary consideration. This objective will be pursued by
investments principally in common stocks (and in securities convertible into
or with rights to purchase common stocks) of companies believed by management
to offer growth potential over both the intermediate and long-term.
Large Cap Growth (formerly Select Stock) Portfolio. The investment objective
of this Portfolio is to achieve above-average capital appreciation through the
ownership of common stocks of companies believed by management to offer above-
average capital appreciation opportunities. Current income is not an objective
of the Portfolio.
Sovereign Bond (formerly Bond) Portfolio. The investment objective of this
Portfolio is to provide as high a level of long-term total rate of return as
is consistent with prudent investment risk, through investment in a
diversified portfolio of freely marketable debt securities. Total rate of
return consists of current income, including interest and discount accruals,
and capital appreciation.
Money Market Portfolio. The investment objective of this Portfolio is to
provide maximum current income consistent with capital preservation and
liquidity. It seeks to achieve this objective by investing in a managed
portfolio of high quality money market instruments.
Managed Portfolio. The investment objective of this Portfolio is to achieve
maximum long-term total return consistent with prudent investment risk.
Investments will be made in common stocks, convertibles and other fixed income
securities and in money market instruments.
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Real Estate Equity Portfolio. The investment objective of this Portfolio is
to provide above-average income and long-term growth of capital by investment
principally in equity securities of companies in the real estate and related
industries.
International Equities (formerly International) Portfolio. The investment
objective of this Portfolio is to achieve long-term growth of capital by
investing primarily in foreign equity securities.
Short-Term U.S. Government Portfolio. The investment objective of this
Portfolio is to provide a high level of current income consistent with the
maintenance of principal, through investment in a portfolio of short-term U.S.
Treasury securities and U.S. Government agency securities.
Special Opportunities Portfolio. The investment objective of this Portfolio
is to achieve long-term capital appreciation by emphasizing investments in
equity securities of issuers in various economic sectors.
Equity Index Portfolio: to provide investment results that correspond to the
total return to the U.S. market as represented by the S&P 500 utilizing common
stocks that are publicly traded in the United States.
Large Cap Value Portfolio: to provide substantial dividend income, as well
as long-term capital appreciation, through investments in the common stocks of
established companies believed by management to offer favorable prospects for
increasing dividends and capital appreciation.
Mid Cap Growth Portfolio: to provide long-term growth of capital through a
non-diversified portfolio investing largely in common stocks of mid-sized
companies.
Mid Cap Value Portfolio: to provide long-term growth of capital primarily
through investment in the common stocks of medium capitalization companies
believed by management to sell at a discount to their intrinsic value.
Small Cap Growth Portfolio: to provide long-term growth of capital through a
diversified portfolio investing primarily in common stocks of small emerging
growth companies.
Small Cap Value Portfolio: to provide long-term growth of capital by
investing in a well diversified portfolio of common stocks of small-sized
companies exhibiting value characteristics.
Strategic Bond Portfolio: to provide a high total return consistent with
moderate risk of capital and maintenance of liquidity, from a portfolio of
domestic and international fixed income securities.
International Opportunities Portfolio: to provide capital appreciation
through investments in common stocks of primarily well-established, non-United
States companies.
International Balanced Portfolio: to maximize total U.S. dollar return,
consisting of capital appreciation and current income.
John Hancock acts as the investment manager for the Fund, and John Hancock's
indirectly owned subsidiary, Independence Investment Associates, Inc., with
its principal place of business at 53 State Street, Boston, Massachusetts,
provides sub-investment advice with respect to the Growth and Income, Large
Cap Growth, Equity Index, Managed, Real Estate Equity, and Short-Term U.S.
Government Portfolios. Another indirectly owned subsidiary, John Hancock
Advisers, Inc., located at 101 Huntington Avenue, Boston, Massachusetts, and
its subsidiary, John Hancock Advisers International, Limited, located at 34
Dover Street,
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London, England, provide sub-investment advice with respect to the
International Equities Portfolio. John Hancock Advisers provides sub-
investment advice with respect to the Sovereign Bond, Small Cap Growth and
Special Opportunities Portfolios.
T. Rowe Price Associates, Inc., located at 100 East Pratt St., Baltimore, MD
21202, provides sub-investment advice with respect to the Large Cap Value
Portfolio and, together with its subsidiary, Rowe Price-Fleming International,
Inc., also located at 100 East Pratt St., Baltimore, MD 21202, provides sub-
investment advice with respect to the International Opportunities Portfolio.
Invesco Management and Research located at 101 Federal Street, Boston, MA
02110, is the sub-investment adviser to the Small Cap Value Portfolio. Janus,
with its principal place of business at 100 Filmore Street, Denver CO 80206,
is the sub-investment adviser to the Mid Cap Growth Portfolio. Neuberger and
Berman Investment Management of 605 Third Avenue, New York, NY 10158, provides
sub-investment advice to the Mid Cap Value Portfolio. J.P. Morgan Investment
Management Inc., located at 522 Fifth Avenue, New York, NY 10036, provides
investment advice with respect to the Strategic Bond Portfolio and Brinson
Partners, Inc., of 209 S. LaSalle Street, Chicago, IL 60604, does likewise
with respect to the International Balanced Portfolio.
John Hancock will purchase and redeem Fund shares for the Account at their
net asset value without any sales or redemption charges. Shares of the Fund
represent an interest in one of the Portfolios of the Fund which corresponds
to a variable Subaccount of the Account. Any dividend or capital gains
distributions received by the Account will be reinvested in Fund shares at
their net asset value as of the dates paid.
On each Valuation Date, shares of each Portfolio are purchased or redeemed
by John Hancock for each variable Subaccount based on, among other things, the
amount of net premiums allocated to the variable Subaccount, distributions
reinvested, transfers to, from and among variable Subaccounts, all to be
effected as of that date. Such purchases and redemptions are effected at the
net asset value per Fund share for each Portfolio determined on that same
Valuation Date. A Valuation Date is any date on which John Hancock is open for
business, the New York Stock Exchange is open for trading and on which the
Fund values its shares. A Valuation Period is that period of time from the
beginning of the day following a Valuation Date to the end of the next
following Valuation Date.
A full description of the Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached Prospectus and the statement of additional
information referred to therein, which should be read together with this
Prospectus.
THE FIXED ACCOUNT
An Owner may allocate premiums to the Fixed Account or transfer all or a
part of the Account Value under a Policy to the Fixed Account. The amount so
allocated or transferred will become a part of John Hancock's general account
assets. John Hancock's general account consists of assets owned by John
Hancock other than those in the Account and in other separate accounts that
have been or may be established by John Hancock. Subject to applicable law,
John Hancock has sole discretion over the investment of assets of the general
account, and Owners do not share in the investment experience of those assets.
Instead, John Hancock guarantees that the Account Value allocated to the Fixed
Account will accrue interest daily at an effective annual rate of at least 4%
without regard to the actual investment experience of the general account.
Transfers from the Fixed Account are subject to certain limitations. See
"Transfers Among Subaccounts."
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The Account Value in the Fixed Account is equal to the portion of the net
premiums allocated to it, plus any amounts transferred to it and interest
credited to it, minus any charges deducted from it or partial withdrawals or
amounts transferred from it. John Hancock guarantees that interest credited to
the Account Value in the Fixed Account will not be less than an effective
annual rate of 4%. John Hancock may, in its sole discretion, credit higher
rates although it is not obligated to do so. The Owner assumes the risk that
interest credited will not exceed 4% per year. Upon request and in the annual
statement, John Hancock will inform Owners of the then-applicable rates. The
rate of interest declared with respect to any amount in the Fixed Account may
depend on when that amount was first allocated to the Fixed Account.
Because of exemptive and exclusionary provisions, interests in John
Hancock's general account have not been registered under the Securities Act of
1933 and the general account has not been registered as an investment company
under the 1940 Act. Accordingly, neither the general account nor any interests
therein are subject to the provisions of these Acts, and John Hancock has been
advised that the staff of the Securities and Exchange Commission has not
reviewed the disclosure in this Prospectus relating to the Fixed Account.
Disclosure regarding the Fixed Account may, however, be subject to certain
generally-applicable provisions of the Federal securities laws relating to
accuracy and completeness of statements made in prospectuses.
POLICY PROVISIONS AND BENEFITS
REQUIREMENTS FOR ISSUANCE OF POLICY
The Policy is generally available with a minimum Sum Insured at issue of
$1,000,000 and a minimum Basic Sum Insured of $500,000. At the time of issue,
each insured must be age 20 through 80. All persons insured must meet certain
health and other criteria called "underwriting standards." The smoking status
of each insured is reflected in the insurance charges made. Policies issued
under certain circumstances will not directly reflect the sexes of the
insureds in either the premium rates or the charges or values under the
Policy. Accordingly, the illustrations set forth in this Prospectus may differ
for such Policies. Amounts of coverage that John Hancock will accept under the
Policies may be limited by John Hancock's underwriting and reinsurance
procedures as in effect from time to time.
PREMIUMS
Payment Flexibility. Premiums are flexible. The Owner may choose the amount
and frequency of premium payments, so long as each premium payment is at least
$100 and meets the other requirements described below.
Minimum First Premium. The amount of premium required at the time of issue
is determined by John Hancock, and depends on the age, sex, smoking status,
and underwriting class of each of the insureds at issue, the Policy's Sum
Insured at issue, and any additional benefits selected. The Minimum First
Premium must be received by John Hancock at its Home Office before the Policy
is in full force and effect. See "Death Benefits." There is no grace period
for the payment of the Minimum First Premium.
Minimum Premiums. If the Policy's Surrender Value at the beginning of any
Policy month is insufficient to pay the monthly Policy charges then due, John
Hancock will notify the Owner and the Policy will enter a grace period, unless
the Guaranteed Minimum Death Benefit is in effect. If premiums sufficient to
pay at least three months estimated charges are not paid by the end of the
grace period, the Policy will lapse. See "Default."
Planned Premium Schedule. At the time of issue, the Owner may designate a
Planned Premium schedule for the amount and frequency of premium payments.
John Hancock will send billing statements for the amount
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chosen, at the frequency chosen. The Owner may change the Planned Premium
after issue. The Owner may also pay a premium in excess of the Planned
Premium, subject to the limitations described below. At the time of Policy
issuance, John Hancock will determine whether the Planned Premium schedule
will exceed the 7-Pay limit discussed below. If so, John Hancock will not
issue the Policy unless the Owner signs a form acknowledging that fact.
Other Premium Limitations. Federal tax law requires a minimum death benefit
in relation to Account Value. See "Death Benefits--Definition of Life
Insurance." The death benefit of the Policy will be increased if necessary to
ensure that the Policy will continue to satisfy this requirement. Also, as
described under "Death Benefits--Optional Extra Death Benefit Feature," the
optional Extra Death Benefit feature may result in a death benefit under
Option A that is higher than the Sum Insured. If the payment of a given
premium will cause the Policy Account Value to increase to such an extent that
an increase in death benefit is necessary to satisfy federal tax law
requirements, or pursuant to the Extra Death Benefit option, John Hancock has
the right to not accept the excess portion of that premium payment, or to
require evidence of insurability before that portion is accepted. In no event,
however, will John Hancock refuse to accept any premium necessary to maintain
the Guaranteed Minimum Death Benefit in effect under a Policy.
Whether or not the Guaranteed Minimum Death Benefit is in effect, John
Hancock also reserves the right to limit premium payments above the amount of
the cumulative Guaranteed Minimum Death Benefit premiums. John Hancock will
not, however, refuse to accept any premium payment that is required to keep
the Policy from lapsing.
Guaranteed Minimum Death Benefit Premiums. A Guaranteed Minimum Death
Benefit feature may apply during the first ten Policy years and, if the Owner
has elected, thereafter. See "Death Benefits." The Guaranteed Minimum Death
Benefit Premiums required to maintain this benefit in force depend on the
issue age, sex, smoking status, and underwriting class of each of the insureds
at issue and the Basic Sum Insured at issue. This premium will be higher than
the Minimum First Premium and is 85% of the target premium (discussed under
"Sales Charge"). To keep the Guaranteed Minimum Death Benefit in effect, the
amount of actual premiums paid, accumulated at 4% interest, minus any
withdrawals, also accumulated at 4% interest, must at each Policy anniversary
be at least equal to the Guaranteed Minimum Death Benefit Premiums due to date
accumulated at 4% interest. If this test is not satisfied on any Policy
anniversary, John Hancock will notify the Owner of the shortfall and a 61-day
grace period will commence as of that anniversary. This notice will be mailed
to the Owner's last-known address at least 31 days prior to the end of the
grace period. If John Hancock does not receive payment for the amount of the
deficiency by the end of the grace period, the Guaranteed Minimum Death
Benefit feature will lapse unless and until restored as described under
"Default--Reinstatement." The Guaranteed Minimum Death Benefit will not apply
if the Additional Sum Insured is scheduled to exceed the Basic Sum Insured at
any time.
Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by John Hancock for an amount of premium other
than the Guaranteed Minimum Death Benefit Premium. The Owner may also elect to
be billed for premiums on an annual, semi-annual or quarterly basis. An
automatic check-writing ("premiumatic") program may be available to an Owner
interested in making monthly premium payments. All premiums are payable at
John Hancock's Home Office.
Any premium payment will be processed by John Hancock as of the end of the
Valuation Period in which it is received, unless one of the three exceptions
noted below is applicable. Each premium payment will be reduced by the premium
processing charge, the state premium tax charge, the sales charge, and the
Federal DAC Tax charge. See "Charges and Expenses." The remainder is the net
premium.
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The Owner at the time of application must elect an Investment Rule which
will allocate net premiums and any credits to any of the ten Subaccounts. The
Owner must select allocation percentages in whole numbers, and the total
allocated must equal 100%. The Owner may thereafter change the Investment Rule
prospectively at any time. The change will be effective as to any net premiums
and credits applied after receipt at John Hancock's Home Office of notice
satisfactory to John Hancock. Notwithstanding the Investment Rule, all net
premiums credited to Account Value as of a date prior to the end of the
Valuation Period that includes the 20th day following the date of issue will
automatically be allocated to the Money Market Subaccount. At the end of that
Valuation Period, the Policy's Account Value will be reallocated automatically
among the Subaccounts in accordance with the Investment Rule chosen by the
Owner.
There are three exceptions to the normal practice of processing a premium
payment as of the end of the Valuation Period in which it is received:
(1) A payment received prior to a Policy's date of issue will be
processed as if received on the Valuation Date immediately
preceding the date of issue.
(2) If the Minimum First Premium is not received prior to the date of
issue, each payment received thereafter will be processed as if
received on the Valuation Date immediately preceding the date of
issue until all of the Minimum First Premium is received.
(3) That portion of any premium that we delay accepting as described
under "Other Premium Limitations" above, or "7-Pay Premium Limit"
below, will be processed as of the end of the Valuation Period in
which we accept that amount.
7-Pay Premium Limit. Federal tax law modifies the tax treatment of certain
Policy distributions such as loans, surrenders, partial surrenders, and
withdrawals. The application of this modified treatment to any Owner depends
upon whether premiums have been paid at any time during the first 7 Policy
years that exceed a "7-pay" premium limit as defined in the law. The "7-pay"
premium is greater than the Guaranteed Minimum Death Benefit Premium but is
generally less than the amount an Owner may choose to pay and John Hancock
will accept. The 7-pay limit is the total of net level premiums that would
have been payable at any time for the Policy to be fully paid-up after the
payment of 7 level annual premiums. If the total premiums paid exceed the 7-
pay limit, the Policy will be treated as a "modified endowment", which means
that the Owner will be subject to tax to the extent of any income (gain) on
any distributions made from the Policy. A material change in the Policy will
result in a new 7-pay limit and test period. A reduction in the Policy's
benefits within the 7-year period following issuance of, or a material change
in, the Policy may also result in the application of the modified endowment
treatment. See "Policy Proceeds" under "Tax Considerations." If John Hancock
receives any premium payment that will cause a Policy to become a modified
endowment, the excess portion of that premium payment will not be accepted
unless the Owner signs an acknowledgment of that fact.
ACCOUNT VALUE AND SURRENDER VALUE
Amount of Account Value. The Account Value increases or decreases depending
upon a number of factors, such as the applicable Subaccount's investment
experience, the proportion of the Account Value, invested in each Subaccount
and the interest credited to any Loan Account established upon the making of a
Policy loan. In general the Account Value for any day equals the Account Value
for the previous day, decreased by charges against the Account Value,
increased or decreased by the investment experience of the Subaccounts and
increased by net premiums received. No minimum amount of Account Value is
guaranteed.
A Policy loan will not affect the total amount of Account Value at the time
the loan is made but will result in a different rate of return being credited
to the Loan Account portion of the Account Value.
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Amount of Surrender Value. The Surrender Value will be the Account Value
less any Indebtedness.
When Policy May Be Surrendered. A Policy may be surrendered for its
Surrender Value at any time while either of the insureds is living and the
Policy is not in a grace period. Surrender takes effect and the Surrender
Value is determined as of the end of the Valuation Period in which occurs the
later of receipt at John Hancock's Home Office of a signed request or the
surrendered Policy.
If a Policy is surrendered during the second Policy year, a portion of the
sales charge, equal to 5% of premiums paid in the second Policy year up to one
target premium, will be refunded to the Owner.
Partial Withdrawal of Surrender Value. The Owner may request withdrawal of
part of the Surrender Value in accordance with John Hancock's rules then in
effect. Any withdrawal must be at least $1,000 and is subject to an
administrative charge of $20.
An Owner may request a partial withdrawal of Surrender Value at any time
when at least one of the insureds is still living, provided that the Policy is
not in a grace period. This privilege, which reduces the Account Value by the
amount of the withdrawal and the associated charge, may not be used to reduce
the Account Value below the amount John Hancock estimates will be required to
pay three months' charges under the Policy as they fall due. The withdrawal
will be effective as of the end of the Valuation Period in which John Hancock
receives written notice satisfactory to it at its Home Office.
A withdrawal will reduce any Option A death benefit by the amount withdrawn.
John Hancock reserves the right to refuse any withdrawal request that would
cause the Policy's death benefit to fall below $1,000,000.
An amount equal to the Account Value withdrawn will be removed from each
Subaccount in the same proportion as the Account Value is then allocated among
the Subaccounts. A withdrawal is not a loan and, once made, cannot be repaid.
A surrender or withdrawal may have significant tax consequences. See "Tax
Considerations."
POLICY SPLIT OPTION
The Owner may elect a rider that permits the Policy's current Sum Insured to
be split on a "50/50" basis into two other individual life insurance policies
on the lives of the insured persons. Such a split will not require evidence of
insurability of either insured, but is permitted only upon the insureds'
divorce or the occurrence of certain Federal tax law changes. This rider must
be elected at the time of application for a Policy, but may be cancelled at
any time by the Owner. The monthly charge for the rider is 3c per $1,000 of
current Sum Insured. Certain conditions, described in the rider, must be met
prior to effecting a Policy split. The rider automatically terminates on the
date of death of the first insured to die, the Policy anniversary nearest the
older insured's 80th birthday, or the date the Policy terminates, whichever is
earliest.
Tax Considerations. See "Tax Considerations--Policy Split Option", for
possible tax consequences of a Policy split under the option described above.
DEATH BENEFITS
The death benefit proceeds are payable when the last surviving insured dies
while the Policy is in effect. The death benefit proceeds will equal the death
benefit of the Policy, plus any additional rider benefits then due, minus any
Indebtedness. If the last surviving insured dies during a grace period, John
Hancock will also deduct
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any overdue monthly deductions. If the last surviving insured or the younger
of two living insureds attains age 100, the Surrender Value otherwise payable
on such date will become payable to the beneficiary instead of any death
benefit.
The death benefit payable depends on the current Sum Insured and the death
benefit option selected by the Owner at the time the Policy is issued, as
follows:
OPTION A: The death benefit equals the current Sum Insured, subject
to any increases described below under "Optional Extra Death Benefit
Feature" and "Definition of Life Insurance", and reduced by the amount
of any partial withdrawals that have been made over the life of the
Policy.
OPTION B: The death benefit is the current Sum Insured, plus the
Policy Account Value at the end of the Valuation Period in which the
last surviving insured dies. This death benefit is a varying amount and
fluctuates with the amount of the Account Value. This death benefit is
also subject to any increase described below under "Definition of Life
Insurance."
The Sum Insured is the Basic Sum Insured, plus the amount of any Additional
Sum Insured (discussed below).
Owners who prefer to have favorable investment experience reflected in
increased insurance coverage should choose Option B. Owners who prefer to have
insurance coverage that generally does not vary in amount and lower cost of
insurance charges should choose Option A.
Optional Extra Death Benefit Feature. If Option A is elected, the Owner may
also elect an optional Extra Death Benefit feature. Pursuant to this feature
the death benefit under Option A will be no less than the amount of the Policy
Account Value at the beginning of the Policy year in which the last surviving
insured dies, multiplied by a factor specified in the Policy. The factor is
based on the younger insured's age. The optional Extra Death Benefit feature
may result in an Option A death benefit that is higher than the minimum death
benefit required under Federal tax law, as described below under "Definition
of Life Insurance." Although there is no special charge for the optional Extra
Death Benefit, the monthly cost of insurance deductions will be based on the
amount of death benefit then in effect, including any additional death benefit
pursuant to this option. An election of this option must be made at the time
of application for the Policy, although the Owner may revoke the election at
any time. There may be tax consequences involved, if revoking the Extra Death
Benefit feature under Option A causes a reduction in death benefit. See "Tax
Considerations--Policy Proceeds."
Definition of Life Insurance. Federal tax law requires a minimum death
benefit in relation to cash value for a Policy to qualify as life insurance.
The death benefit of a Policy will be increased if necessary to ensure that
the Policy will continue to qualify as life insurance. The higher death
benefit amount will be equal to the Policy Account Value on the date of death
of the last surviving insured, times a percentage based on the younger
insured's age at the beginning of the Policy year of the last surviving
insured's death. This percentage, which declines with age, is set out in the
Policy. The monthly deductions for the cost of insurance will be based on the
amount of death benefit then in effect, including any additional death benefit
required to satisfy the definition of life insurance.
Guaranteed Minimum Death Benefit. During the first 10 Policy years (and
thereafter if the Owner elects), the Basic Sum Insured is guaranteed not to
lapse, provided (1) the amount of premiums paid through each Policy
anniversary, accumulated at 4% interest, minus any withdrawals, also
accumulated at 4% interest, is at least equal to the Guaranteed Minimum Death
Benefit Premiums accumulated at 4% interest and (2) any Additional Sum Insured
under a Policy is not scheduled to exceed the Basic Sum Insured at any time.
At any time when this feature is not in force, the death benefit of the Policy
is not guaranteed. The election to extend the Guaranteed
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Minimum Death Benefit beyond ten Policy years must be made at the time of
Policy issuance, and the Owner may revoke the election at any time. John
Hancock imposes a charge after the tenth Policy year if the Owner elects to
extend this benefit.
Additional Sum Insured. The Owner must purchase an amount of Additional Sum
Insured under the Policy equal in amount to the Basic Sum Insured under the
Policy. The Basic Sum Insured and Additional Sum Insured generally cannot be
increased or decreased after issue, although the Additional Sum Insured may be
decreased or, upon application and submission or evidence of insurability,
increased on a Policy anniversary. John Hancock may refuse to accept any
request to reduce the Additional Sum Insured (a) that would cause the Policy's
current Sum Insured to fall below $1,000,000 or (b) if immediately following
the reduction, the Policy's current death benefit would reflect an increase
necessary for the Policy to continue to qualify as life insurance (see "Death
Benefits--Definition of Life Insurance") or an increase pursuant to the
optional Extra Death Benefit feature. Any change in Additional Sum Insured
will become effective at the beginning of the Policy year after John Hancock
receives in good order at its Home Office all information necessary to process
the change, and, in the case of an increase in coverage, approves the change.
Any decision by the Owner to modify the amount of Additional Sum Insured
coverage after issue can have significant tax consequences. See "Tax
Considerations--Policy Proceeds."
The Owner may elect among several forms of Additional Sum Insured coverage:
a level amount of coverage; an amount of coverage that increases on each
Policy anniversary up to a prescribed limit; an amount of coverage that
increases on each Policy anniversary equal to the amount of premiums paid
during prior years plus the Planned Premium for the current year, subject to
certain limits; or a combination of those forms of coverage.
The amount of any Additional Sum Insured is not included in any Guaranteed
Minimum Death Benefit. Therefore, if the Policy's Account Value is
insufficient to pay the monthly charges as they fall due (including the
charges for the Additional Sum Insured) the Additional Sum insured coverage
will lapse, even if the Basic Sum Insured stays in effect pursuant to the
Guaranteed Minimum Death Benefit feature.
The Additional Sum Insured is limited to 100% of the Basic Sum Insured at
issue of the Policy and 400% of the Basic Sum Insured thereafter.
Temporary Coverage Prior to Policy Delivery. If a specified amount of
premium is paid with the application for a Policy, temporary survivorship term
coverage may be available prior to the time when coverage under the Policy
takes effect. Temporary term coverage under all applications with John Hancock
and its affiliates will not exceed $1,000,000, and is subject to the terms and
conditions described in the application for a Policy.
TRANSFERS AMONG SUBACCOUNTS
The Owner may reallocate the amounts held for the Policy in the Subaccounts
with no charge at any time, except as noted below. The Owner may either (1)
use percentages (in whole numbers) to be transferred among Subaccounts or (2)
designate the dollar amount of funds to be transferred among Subaccounts. The
reallocation must be such that the total in the Subaccounts after reallocation
equals 100% of Account Value. Transfers out of a variable Subaccount will be
effective at the end of the Valuation Period in which John Hancock receives at
its Home Office notice satisfactory to John Hancock.
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Transfers out of the Fixed Account to the variable Subaccounts are permitted
only once each Policy year and only during the 31-day period beginning on the
Policy anniversary. Transfers out of the Fixed Account may be requested from
60 days before to 30 days after the Policy anniversary. If received on or
before the Policy anniversary, requests for transfer out of the Fixed Account
will be processed on the Policy anniversary (or the next Valuation Date if the
Policy anniversary does not occur on a Valuation Date); if received after the
Policy anniversary, they will be processed at the end of the Valuation Period
in which John Hancock receives the request at its Home Office. (John Hancock
reserves the right to defer such Fixed Account transfers for six months.) If
an Owner requests a transfer out of the Fixed Account 61 days or more prior to
the Policy anniversary, that portion of the reallocation will not be processed
and the Owner's confirmation statement will not reflect a transfer out of the
Fixed Account as to such request. Transfers among variable Subaccounts and
transfers into the Fixed Account may be requested at any time. A maximum of
20% of Fixed Account assets or, if greater, $500 may be transferred out of the
Fixed Account in any Policy year. Currently, there is no minimum amount limit
on transfers out of the Fixed Account, but John Hancock reserves the right to
impose such a limit in the future. No transfers may be made while the Policy
is in a grace period.
TELEPHONE TRANSFERS AND POLICY LOANS
Once a written authorization is completed by the Owner, the Owner may
request a transfer or policy loan by telephoning 1-800-732-5543. During
periods of heavy telephone usage, implementing a telephone transfer or policy
loan may be difficult. If an Owner is unable to reach John Hancock via the
above number, the Owner should send a written request via fax to 1-800-621-
0488. (Any requests via fax are considered telephone requests and are bound by
the conditions in the Owner's signed telephone authorization form.) Any fax
request should include the Owner's name, daytime telephone number, Policy
number and, in the case of transfers, the names of the subaccounts from which
and to which money will be transferred. The right to discontinue telephone
transactions at any time without notice to Owners is specifically reserved.
An Owner who authorizes telephone transactions will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which John Hancock reasonably believes to be genuine, unless such
loss, expense or cost is the result of John Hancock's mistake or negligence.
John Hancock employs procedures which provide adequate safeguards against the
execution of unauthorized transactions, and which are reasonably designed to
confirm that instructions received by telephone are genuine. These procedures
include requiring personal identification, tape recording calls, and providing
written confirmation to the Owner.
LOAN PROVISIONS AND INDEBTEDNESS
Loan Provisions. Loans may be made at any time a Loan Value is available,
either of the insureds is alive and the Policy is not in a grace period. The
Owner may borrow money, assigning the Policy as the only security for the
loan, by completion of a form satisfactory to John Hancock or, if the
telephone transaction authorization form has been completed, by telephone. The
Loan Value will be 90% of the Surrender Value. Interest charged on any loan
will accrue and compound daily at an annual rate determined by John Hancock at
the start of each Policy Year. This interest rate will not exceed the greater
of (1) the "Published Monthly Average" (defined below) for the calendar month
ending 2 months before the calendar month of the Policy anniversary or (2) 5%.
In jurisdictions where a fixed loan rate is applicable, John Hancock will
charge interest at an effective annual rate of 5% in the first 20 Policy
years, and 4.5% thereafter, accrued daily. The "Published Monthly Average"
means Moody's Corporate Bond Yield Average-Monthly Average Corporates, as
published by Moody's Investors Service, Inc., or if the average is no longer
published, a substantially similar average established by the insurance
regulator where the Policy is issued.
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The amount of any outstanding loan plus accrued interest is called the
"Indebtedness." A loan will not be permitted unless it is at least $500. A
loan may be repaid in full or in part at any time before the last surviving
insured's death and while the Policy is not in a grace period. When a loan is
made, an amount equal to the loan proceeds will be transferred out of the
Account and the Fixed Account, as applicable. This amount is allocated to the
Loan Account, a portion of John Hancock's general account. Each Subaccount
will be reduced in the same proportion as the Account Value is then allocated
among the Subaccounts. Upon each loan repayment, the same proportionate amount
of the entire loan as was borrowed from the Fixed Account will be repaid to
the Fixed Account. The remainder of the loan repayment will be allocated to
the appropriate Subaccounts as stipulated in the current Investment Rule. For
example, if the entire loan outstanding is $3,000 of which $1,000 was borrowed
from the Fixed Account, then upon a repayment of $1,500, $500 would be
allocated to the Fixed Account and the remaining $1,000 would be allocated to
the appropriate Subaccounts as stipulated in the current Investment Rule. If
an Owner wishes any payment to constitute a loan repayment (rather than a
premium payment), the Owner must so specify.
Effect of Loan and Indebtedness. While the Indebtedness is outstanding, that
portion of the Account Value that is in the Loan Account is credited with
interest at a rate that is 1% less than the loan interest rate for the first
20 Policy years and, thereafter, .5% than the loan interest rate. This rate
will usually be different than the net return for the Subaccounts. Since the
Loan Account and the remaining portion of the Account Value will generally
have different rates of investment return, any death benefit above the Sum
Insured, the Account Value, and the Surrender Value are permanently affected
by any Indebtedness, whether or not repaid in whole or in part. The amount of
any Indebtedness is subtracted from the amount otherwise payable when the
Policy proceeds become payable.
Whenever the Indebtedness equals or exceeds 90% of the Account Value, the
Policy terminates 31 days after notice has been mailed by John Hancock to the
Owner and any assignee of record at their last known addresses, unless a
repayment of the excess Indebtedness is made within that period.
Tax Considerations. If the Policy is a modified endowment at the time a
loan is made, that loan may have significant tax consequences. See "Tax
Considerations."
DEFAULT
Premium Grace Period, Default and Lapse. Unless the Guaranteed Minimum
Death Benefit is in force, at the beginning of each Policy month, John Hancock
determines whether the Account Value, net of any Indebtedness, is sufficient
to pay all monthly charges then due under the Policy. If not, the Policy is in
default and John Hancock will notify the Owner of the amount estimated to be
necessary to pay three months' deductions, and a grace period will be in
effect until 61 days after the date the notice was mailed. If John Hancock
does not receive payment of at least this amount by the end of the grace
period, the Policy will lapse, and any remaining amount owed to the Owner as
of the date of lapse will be paid to the Owner.
If the Guaranteed Minimum Death Benefit is in effect and the Policy provides
for an Additional Sum Insured, the grace period and lapse procedures set forth
in the preceding paragraph will apply only to the Additional Sum Insured.
Lapse of the Additional Sum Insured can have significant tax consequences. See
"Tax Considerations--Policy Proceeds." If the Guaranteed Minimum Death Benefit
has been in effect and lapses at the end of a grace period (as described in
"Premiums--Guaranteed Minimum Death Benefit Premiums"), the usual default,
grace period and lapse procedures described in the preceding paragraph will be
applied commencing with the first day of the first Policy month following the
lapse of the Guaranteed Minimum Death Benefit.
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The insurance under the Policy continues in full force during any grace
period but, if the last surviving insured dies during the grace period, the
amount in default is deducted from the death benefit otherwise payable.
Written notice will be furnished to the Owner at his or her last known
address, at least 31 days prior to the end of any grace period, specifying the
minimum amount which must be paid to continue the Policy in force on a premium
paying basis after the end of the grace period.
Reinstatement. A lapsed Policy (or a lapsed Additional Sum Insured, if the
Basic Sum Insured remains in force or is reinstated) or the Guaranteed Minimum
Death Benefit may be reinstated in accordance with the Policy's terms.
Evidence of insurability satisfactory to John Hancock will be required (except
as to a request to restore the Guaranteed Minimum Death Benefit within 1 year
after the beginning of its grace period) and payment of the required premium
and charges. The request must be received at John Hancock's Home Office within
3 years after the beginning of the grace period (or 5 years if the request
relates only to the Guaranteed Minimum Death Benefit). John Hancock reserves
the right to refuse Guaranteed Minimum Death Benefit restorations after the
first. A reinstatement of the Basic Sum Insured or the Additional Sum Insured
may be deemed a material change for Federal income tax purposes. See
"Premiums--7-Pay Premium Limit" and "Tax Considerations."
EXCHANGE PRIVILEGE
The Owner may transfer the entire Account Value under the Policy to the
Fixed Account at any time, creating a non-variable policy. The exchange will
be effective at the end of the Valuation Period in which John Hancock receives
at its Home Office notice of the transfer satisfactory to John Hancock.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.
CHARGES AND EXPENSES
CHARGES DEDUCTED FROM PREMIUMS
In addition to the sales charge (see "Sales Charge" below), the following
charges are deducted from premiums:
Premium Processing Charge. 1.25% of each premium payment will be deducted
from each premium payment for collection and Policy processing costs. This
charge will be reduced for a Policy with a Sum Insured at issue of more than
$5,000,000, subject to a minimum charge equal to .50%. The premium processing
charge for these larger Policies will be computed pursuant to a mathematical
formula which defines the percentage rate of the charge to be:
1.25% x [1--(Sum Insured at Issue--$5,000,000) x .25]
--------------------------------
$10,000,000
State Premium Tax Charge. A charge currently equal to 2.35% of each premium
payment will be deducted from each premium payment. Premium taxes vary from
state to state. The 2.35% rate is the average rate currently expected to be
paid on premiums received in all states over the lifetimes of the insureds
covered by the Policies. John Hancock will not increase this charge under
outstanding Policies, but reserves the right to change this charge for
Policies not yet issued in order to correspond with changes in the state
premium tax levels.
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Federal DAC Tax Charge. A charge currently equal to 1.25% of each premium
payment will be deducted from each premium payment to cover the estimated cost
to John Hancock of the Federal income tax treatment of the Policies' deferred
acquisition costs--commonly referred to as the "DAC Tax." John Hancock has
determined that this charge is reasonable in relation to John Hancock's
increased Federal income tax burden under the Internal Revenue Code resulting
from the receipt of premiums. John Hancock will not increase this charge under
outstanding Policies, but reserves the right, subject to any required
regulatory approval, to change this charge for Policies not yet issued in
order to correspond with changes in the Federal income tax treatment of the
Policies' deferred acquisition costs.
SALES CHARGE
A charge is made to compensate John Hancock for the cost of selling the
Policy. This cost includes agents' commissions, commission overrides,
advertising, and the printing of prospectuses and sales literature. The amount
of the charge in any Policy year cannot be specifically related to sales
expenses for that year. John Hancock expects to recover its total sales
expenses over the period the Policies are in effect. To the extent that sales
charges are insufficient to cover total sales expenses, the sales expenses may
be recovered from other sources, including gains from the charge for mortality
and expense risks and other gains with respect to the Policies, or from John
Hancock's general assets. See "Distribution of Policies."
The sales charge in the first Policy year is equal to 30% of the premiums
paid up to one "target premium" and 3.5% of all premiums in excess of the
target premium in that year. The target premium is established at issue and is
the amount of the level premium that would be necessary to support a whole
life insurance policy in the amount of the Basic Sum Insured at the maximum
guaranteed cost of insurance rates, assuming deductions or charges for the
other policy expenses at the maximum levels guaranteed under the Policies, a
state premium tax charge of 2.35%, a Federal DAC tax premium charge of 1.25%,
and a net interest rate of 5%. Target premiums will vary based on the issue
age, sex, smoking status and underwriting class of each of the insureds.
The current sales charge for premiums paid up to one target premium in
subsequent Policy years is 15% in years 2 through 5, 10% in years 6 through
10, 3% for years 11 through 20 and 0% thereafter. The sales charge for
premiums paid in excess of the target premium is 3.5% in years 2 through 10,
3% in years 11 through 20 and 0% thereafter.
The guaranteed maximum sales charges under the Policy are no higher than the
current sales charges, except that the guaranteed maximum sales charge for
premiums paid up to one target premium is 4% in years 11 through 20 and 3%
thereafter and, for premiums paid in excess of one target premium, is 3% after
year 20. Because the Policies were first offered only in 1993, sales charges
at the lower current rates are not yet applicable under any outstanding
Policy.
Notwithstanding the foregoing, if the younger insured is age 71 or older at
the time of Policy issuance, the current and guaranteed sales charge is 0%,
commencing in Policy year 12 and thereafter.
An Owner may structure the timing and amount of premium payments to minimize
the sales charges deducted from premium payments, although doing so involves
certain risks. Paying less than one target premium in the first Policy year or
paying more than one target premium in any Policy year could reduce the
Owner's total sales charges over time. For example, an Owner, paying ten
target premiums of $10,000 each, would pay total sales charges of $14,000 if
he paid $10,000 in each of the first ten Policy years, but only $9,750 if he
paid $20,000 (i.e., two times the target premium amount) in every other Policy
year up to the ninth Policy year. However, delaying the payment of target
premiums to later Policy years could increase the risk that the
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<PAGE>
Guaranteed Minimum Death Benefit may lapse and that the Account Value will be
insufficient to pay monthly Policy charges as they come due. As a result, the
Policy will lapse and eventually terminate. See "Default." Conversely,
accelerating the payment of target premiums to earlier Policy years could
cause aggregate premiums paid to exceed the Policy's 7-pay premium limit and,
as a result, cause the Policy to become a modified endowment, with adverse tax
consequences to the Owner upon receipt of Policy distributions. See
"Premiums--7-Pay Premium Limit."
REDUCED CHARGES FOR ELIGIBLE GROUPS
The sales charge and issue charge (described below) otherwise applicable may
be reduced with respect to Policies issued to a class of associated
individuals or to a trustee, employer or similar entity where John Hancock
anticipates that the sales to the members of the class will result in lower
than normal sales or administrative expenses. These reductions will be made in
accordance with John Hancock's rules in effect at the time of the application
for a Policy. The factors considered by John Hancock in determining the
eligibility of a particular group for reduced charges, and the level of the
reduction, are as follows: the nature of the association and its
organizational framework; the method by which sales will be made to the
members of the class; the facility with which premiums will be collected from
the associated individuals and the association's capabilities with respect to
administrative tasks; the anticipated persistency of the Policies; the size of
the class of associated individuals and the number of years it has been in
existence; and any other such circumstances which justify a reduction in sales
or administrative expenses. Any reduction will be reasonable and will apply
uniformly to all prospective Policy purchasers in the class and will not be
unfairly discriminatory to the interests of any Policy Owner.
CHARGES DEDUCTED FROM ACCOUNT VALUE OR ASSETS
The following charges are deducted from Account Value or assets:
Issue Charge. John Hancock will deduct an issue charge from Account Value,
currently at the rate of $55.55 per month for the first 5 Policy years, plus
2c per $1,000 of the Sum Insured at issue for the first 3 Policy years. The
charge per $1,000 of Sum Insured at issue is guaranted not to exceed $200 per
month. Thus, for a Policy with a Sum Insured at issue of $1,000,000, the
aggregate amount deducted during the first 3 Policy years would be $2,719.80.
The issue charge is to compensate John Hancock for expenses incurred in
connection with the issuance of the Policy, other than sales expenses. Such
expenses include medical examinations, insurance underwriting costs and costs
incurred in processing applications and establishing permanent Policy records.
Administrative Charge. John Hancock will deduct from the Account Value a
maximum charge of $10 per Policy and 3c per $1,000 of the Sum Insured at
issue. The current monthly charge is $7.50 for all Policy years, plus 1c per
$1,000 of the Sum Insured at issue for the first 10 Policy years, except that
the $7.50 charge currently is zero for any Policy with a Sum Insured at issue
of at least $5,000,000. Thus, for a Policy with a Sum Insured at issue of
$1,000,000 and using the current administrative charge, the aggregate amount
deducted during the first 10 Policy years would be $2,100.
This charge is to compensate John Hancock for administrative expenses,
including recordkeeping, processing death claims and surrenders, making Policy
changes, reporting and other communications to Owners and other similar
expense and overhead costs.
Insurance Charge. The insurance charge deducted monthly from Account Value
is based on the attained age of each of the insureds and the amount at risk.
The amount at risk is the difference between the current
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death benefit and the Account Value. The amount of the insurance charge is
determined by multiplying John Hancock's then current monthly rate for
insurance by the amount at risk.
Current monthly rates for insurance are based on the sex, age, smoking
status and underwriting class of each of the insureds and the length of time
the Policy has been in effect. John Hancock will review these rates at least
every 5 years, and may change these rates from time to time based on John
Hancock's expectations of future experience. However, these rates will never
be more than the guaranteed maximum rates based on the 1980 Commissioners'
Standard Ordinary Mortality Tables, as set forth in the Policy. The insurance
charge is not affected by the death of the first insured to die.
If an insured's underwriting risk classification has worsened, any
subsequently-added Additional Sum Insured coverage may have higher insurance
charge rates than the Basic Sum Insured. If an insured's underwriting risk
classification has improved, cost of insurance rates on the total Sum Insured
may be reduced, as may the target premium with respect to subsequent premium
payments.
Lower current insurance rates are offered at most ages for insureds who
qualify as non-smokers. To qualify, an insured must meet additional
requirements that relate to smoking habits.
Guaranteed Minimum Death Benefit Charge. There is no charge for any
Guaranteed Minimum Death Benefit during the first 10 Policy years. If the
Guaranteed Minimum Death Benefit option is elected for a period beyond the
first 10 Policy years, John Hancock deducts a charge from Account Value
beginning in the eleventh Policy year. The maximum monthly charge is 3c per
$1000 of the Basic Sum Insured at issue and the current monthly charge is 1c
per $1,000 of the Basic Sum Insured at issue. If the Guaranteed Minimum Death
Benefit lapses due to failure to pay sufficient premiums, the charge will be
discontinued. Because the Policies were first offered only in 1993, no
Guaranteed Minimum Death Benefit charge is yet applicable to any Policy at the
current rate.
Charge for Mortality and Expense Risks. A daily charge is made for mortality
and expense risks assumed by John Hancock at a maximum effective annual rate
of .90% of the value of the Account's assets attributable to the Policies. The
effective annual rate of this charge will vary, depending upon the Sum Insured
at issue. The table below shows the current levels of this charge. This charge
begins when amounts under a Policy are first allocated to the Account. The
mortality risk assumed is that insureds may live for a shorter period of time
than estimated and, therefore, a greater amount of death benefit than expected
will be payable in relation to the amount of premiums received. The expense
risk assumed is that expenses incurred in issuing and administering the
Policies will be greater than estimated. John Hancock will realize a gain from
this charge to the extent it is not needed to provide for benefits and
expenses under the Policies.
<TABLE>
<CAPTION>
Current Charge For
Sum Insured at Issue Mortality and Expense Risks
-------------------- ---------------------------
<S> <C>
$ 1-4.999 million............................. .625% of assets
5-14.999 million............................ .575% of assets
15 million or more.......................... .525% of assets
</TABLE>
Charges for Extra Mortality Risks. An insured who does not qualify for the
standard underwriting class must pay an additional charge because of the extra
mortality risk. The level of the charge depends upon the ages of the insureds
and the degree of extra mortality risk. This additional charge is deducted
monthly from Account Value.
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Charges for Optional Rider Benefits. An additional charge must be paid if
the Owner elects to purchase an optional insurance benefit by Policy rider.
This additional charge is deducted from premiums when paid or is deducted
monthly from Account Value.
Charges for Taxes. Currently no charge is made against Account Value for
John Hancock's Federal income taxes but if John Hancock incurs, or expects to
incur, income taxes attributable to the Account or this class of Policies in
future years, it reserves the right to make a charge, and any charge would
affect what the Subaccounts earn. Charges for other taxes, if any,
attributable to the Subaccounts may also be made.
Charge for Partial Withdrawal. John Hancock will deduct a charge in the
amount of $20 on a partial withdrawal of Surrender Value, as described under
"Account Value and Surrender Value." The charge will be deducted from Account
Value. The charge is to compensate John Hancock for the administrative
expenses of effecting the withdrawal.
Fund Investment Management Fee. The Account purchases shares of the Fund at
net asset value, a value which reflects the deduction from the assets of the
Fund of its investment management fee, which is described briefly in the
Summary of this Prospectus, and of certain non-advisory operating expenses.
For a full description of these deductions, see the attached Prospectus for
the Fund.
The monthly deductions from Account Value described above are deducted on
the date of issue and on the first day of each Policy month thereafter. These
deductions are made from the Subaccounts in proportion to the amount of
Account Value in each. For each month that John Hancock is unable to deduct
any charge because there is insufficient Account Value, the uncollected
charges will accumulate and be deducted when and if sufficient Account Value
is available.
GUARANTEE OF PREMIUMS AND CERTAIN CHARGES
The Policy's Guaranteed Minimum Death Benefit Premium is guaranteed not to
increase. The premium processing charge, the state premium tax charge, the
Federal DAC Tax charge, the issue charge and the charge for partial
withdrawals are guaranteed not to increase over the life of the Policy. The
administrative charge, the Guaranteed Minimum Death Benefit Charge, the sales
charge, the mortality and expense risk charge, and the insurance charge are
guaranteed not to exceed the maximums set forth in the Policy.
DISTRIBUTION OF POLICIES
Applications are solicited by agents who are licensed by state insurance
authorities to sell John Hancock's Policies and who are also registered
representatives ("representatives") of John Hancock or other broker-dealer
firms, as discussed below. John Hancock performs insurance underwriting,
determines whether to accept or reject the application for a Policy and each
insured's risk classification and acts as the principal underwriter of the
Policies. John Hancock will make the appropriate refund if a Policy ultimately
is not issued or is returned under the short-term cancellation provision.
Officers and employees of John Hancock are covered by a blanket bond by a
commercial carrier in the amount of $25 million.
John Hancock's representatives are compensated for sales of the Policies on
a commission and service fee basis by John Hancock and for other direct and
indirect expenses (including agency expense allowances, general agent,
district manager and supervisor's compensation, agent's training allowances,
deferred compensation and insurance benefits of agents, general agents,
district managers and supervisors, agency office clerical expenses and
advertising) actually incurred in connection with the marketing and sale of
the Policies.
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The maximum commission payable to a John Hancock representative for selling
a Policy is 45% of the target premium paid in the first Policy year, 5% of the
target premium paid in the second through fifth Policy years, and 3% of the
target premium paid in each year thereafter. The maximum commission on any
premium paid in any year in excess of the target premium is 3%.
Representatives with less than four years of service with John Hancock and
those compensated on salary plus bonus or level commission programs may be
paid on a different basis. Representatives who meet certain productivity and
persistency standards with respect to the sale of policies issued by John
Hancock and its affiliates will be eligible for additional compensation.
John Hancock is registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. John Hancock is not a member of the Securities
Investor Protection Corporation because it is exempt from membership in that
organization. The Policies are also sold through other registered broker-
dealers that have entered into selling agreements with John Hancock and whose
representatives are authorized by applicable law to sell variable life
insurance policies. The commissions which will be paid by such broker-dealers
to their representatives will be in accordance with their established rules.
The commission rates may be more or less than those set forth above for John
Hancock's representatives. In addition, their qualified registered
representatives may be reimbursed by the broker-dealers under expense
reimbursement allowance programs in any year for approved voucherable expenses
incurred. John Hancock will compensate the broker-dealers as provided in the
selling agreements.
John Hancock serves as principal underwriter for other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V and John Hancock Variable Life Accounts U, V and S. John Hancock is also the
principal investment manager and principal underwriter for the Fund.
TAX CONSIDERATIONS
The below description of Federal income tax consequences is only a brief
summary and is not intended as tax advice. For further information consult a
qualified tax advisor. Federal, state and local tax laws can change from time
to time and, as a result, the tax consequences to the Owner and beneficiary
may be altered.
POLICY PROCEEDS
Although the Policy contains provisions not found in fixed benefit life
insurance policies, John Hancock believes the Policy will receive the same
Federal income and estate tax treatment. Section 7702 of the Internal Revenue
Code ("Code") defines life insurance for Federal tax purposes. See "Death
Benefits--Definition of Life Insurance." If certain standards are met at issue
and over the life of the Policy, the Policy will come within that definition.
John Hancock will monitor compliance with these standards. Furthermore, John
Hancock reserves the right to make any changes in the Policy necessary to
ensure the Policy is within the definition of life insurance.
If the Policy complies with the definition of life insurance and the
investment diversification requirements mentioned below, as John Hancock
believes it will, the death benefit under the Policy will be excludable from
the beneficiary's gross income under Section 101 of the Code. In addition,
increases in Account Value as a result of interest or investment experience
will not be subject to Federal income tax unless and until values are actually
received through withdrawal, surrender or other distributions.
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A surrender, lapse or partial withdrawal may have tax consequences. For
example, the Owner will be taxed on a surrender to the extent that the Account
Value exceeds the premiums paid under the Policy, ignoring premiums paid for
riders. But under certain circumstances within the first 15 Policy years, the
Owner may be taxed on a withdrawal of Policy values even if total withdrawals
do not exceed total premiums paid.
John Hancock also believes that, except as noted below, loans received under
the Policy will be treated as indebtedness of an Owner and that no part of any
loan will constitute income to the Owner. However, the amount of any loan
outstanding will be taxed to the Owner if a Policy lapses.
Distributions under Policies on which premiums greater than the "7-pay"
limit (see "Premiums--7-Pay Premium Limit") have been paid will be treated as
distributions from a "modified endowment," which are subject to special
taxation based on Federal tax law. The Owner of such a Policy will be taxed on
distributions such as loans, surrenders and partial withdrawals to the extent
of any income (gain) to the Owner (income-first basis). The distributions
affected will be those made on or after, and within the two year period prior
to, the time the Policy becomes a modified endowment. Additionally, a 10%
penalty tax may be imposed on affected income distributed before the Owner
attains age 59 1/2.
Furthermore, any time there is a "material change" in a Policy (such as an
increase in Additional Sum Insured, the addition of certain other Policy
benefits after issue, or reinstatement of a lapsed Policy), the Policy will be
subject to a new "7-pay" test, with the possibility of a tax on distributions
if it were subsequently to become a modified endowment. Moreover, if benefits
under a Policy are reduced (such as a reduction in the Sum Insured or death
benefit or the reduction or cancellation of certain rider benefits, or Policy
termination) during the 7 years in which the 7-pay test is being applied, the
7-pay limit will be recalculated based on the reduced benefits. If the
premiums paid to date are greater than the recalculated 7-pay limit, the
Policy will become a modified endowment.
All modified endowments issued by the same insurer (or affiliates) to the
Owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. Your tax advisor should
be consulted if you have questions regarding the possible impact of the 7-pay
limit on your Policy.
The Code and Treasury Regulations set forth requirements for the
diversification of the investments underlying variable life insurance
policies. John Hancock and the Portfolios intend to comply with these
requirements with respect to the Policy. Failure to meet these requirements
would mean that the Policy would not be treated as a life insurance contract,
subjecting the Owner to Federal income tax on the income and gains under the
Policy.
The Treasury Department has said in the past that it may issue a regulation
or a ruling prescribing the circumstances in which an Owner's control over
investments underlying a variable life insurance policy may cause the Owner,
rather than the insurance company, to be treated as the owner of the assets in
the Account, with the effect that income and gains from the Account would be
included in the Owner's income for Federal income tax purposes. Under current
law, we believe that John Hancock, and not the Policy Owner, would be
considered the owner of the assets of the Account. However, John Hancock has
reserved certain rights to alter the Policy and the investment alternatives of
the Account if necessary to comply with any such regulation or ruling.
The United States Congress and the Treasury Department have in the past and
may in the future consider new legislation that, if enacted, could change the
Federal tax treatment of life insurance policy income or death benefits. Any
such change could have a retroactive effect. We suggest you consult with your
legal or tax adviser, if you have any questions about this.
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<PAGE>
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary.
CHARGE FOR JOHN HANCOCK'S TAXES
Except for the DAC Tax charge, John Hancock currently makes no charge for
Federal income taxes that may be attributable to this class of Policies. If
John Hancock incurs, or expects to incur, income taxes attributable to this
class of Policies or any Subaccount in the future, it reserves the right to
make a charge for those taxes.
Under current laws, John Hancock may incur state and local taxes (in
addition to premium taxes) in several states. At present, these taxes are not
significant. If there is a material change in applicable state or local tax
laws, charges for such taxes may be made.
POLICY SPLIT OPTION
An Owner may elect to split a Policy into two other individual life
insurance policies, as described under "Policy Split Option." A Policy split
could have adverse tax consequences including, but not limited to, the
recognition of taxable income in an amount up to any taxable gain in the
Policy at the time of the split.
25
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK
The Directors and Executive Officers of John Hancock and their principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Directors Principal Occupation
--------- --------------------
<S> <C>
Samuel W. Bodman Chairman of the Board and Chief Execu-
tive Officer, Cabot Corporation (chemi-
cals).
Nelson S. Gifford Director, formerly Chairman of the
Board, Dennison Manufacturing Company,
Inc. (paper products).
William L. Boyan President and Chief Operating Officer,
John Hancock.
E. James Morton Director, formerly Chairman of the
Board, John Hancock.
John F. Magee Chairman of the Board, Arthur D. Little,
Inc. (management consultant).
John M. Connors, Jr. President and Chief Executive Officer,
Hill, Holliday, Connors, Cosmopoulos,
Inc. (advertising).
Stephen L. Brown Chairman of the Board and Chief Execu-
tive Officer, John Hancock.
Thomas L. Phillips Director, formerly Chairman of the
Board, Raytheon Company (electronics).
I. MacAllister Booth Chairman of the Board and Chief Execu-
tive Officer, Polaroid Corporation (pho-
tographic products).
C. Vincent Vappi Retired, formerly Chairman of the Board,
Vappi & Company, Inc. (construction).
Randolph W. Bromery Interim President, Springfield College.
Delbert C. Staley Retired; formerly Chairman of the Board,
NYNEX Corporation (telephone utility).
David F. D'Alessandro Senior Executive Vice President, John
Hancock.
Joan T. Bok Chairman of the Board, New England Elec-
tric System (electric utility).
Robert E. Fast Partner, Hale and Dorr (law firm).
Foster L. Aborn Vice Chairman of the Board, John Han-
cock.
Lawrence K. Fish Chairman and Chief Executive Officer,
Citizens Financial Group (banking).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Directors Principal Occupation
--------- --------------------
<S> <C>
Richard F. Syron Chairman of the Board and Chief Execu-
tive Officer, American Stock Exchange.
Kathleen F. Feldstein President, Economic Studies Inc. (eco-
nomic consulting).
Michael C. Hawley President and Chief Operating Officer,
The Gillette Company (razors).
<CAPTION>
Executive Officers Principal Occupations
------------------ ---------------------
<S> <C>
Diane M. Capstaff Executive Vice President.
Thomas E. Moloney Executive Vice President.
Richard S. Scipione General Counsel.
Bruce E. Skrine Vice President, Counsel and Secretary.
</TABLE>
The business address of all Directors and officers of John Hancock is John
Hancock Place, Boston, Massachusetts 02117.
REPORTS
At least once each Policy year a statement will be sent to the Owner setting
forth the amount of the death benefit, Basic Sum Insured, Additional Sum
Insured, Account Value, the portion of the Account Value in each Subaccount,
Surrender Value, premiums received and charges deducted from premiums since
the last report, and any outstanding Policy loan (and interest charged for the
preceding Policy year) as of the last day of such year. Moreover,
confirmations will be furnished to Owners of premium payments, transfers among
Subaccounts, Policy loans, partial withdrawals and certain other Policy
transactions.
Owners will be sent semiannually a report containing the financial
statements of the Fund, including a list of securities held in each Portfolio.
VOTING PRIVILEGES
All of the assets in the variable Subaccounts of the Account are invested in
shares of the corresponding Portfolios of the Fund. John Hancock will vote the
shares of each of the Portfolios of the Fund which are deemed attributable to
the Policies at regular and special meetings of the Fund's shareholders in
accordance with instructions received from owners of such policies. Shares of
the Fund held in the Account which are not attributable to the Policies and
shares for which instructions from owners are not received will be represented
by John Hancock at the meeting and will be voted for and against each matter
in the same proportions as the votes based upon the instructions received from
the owners of all policies funded through the Account's corresponding variable
Subaccounts.
The number of Fund shares held in each variable Subaccount deemed
attributable to each Owner is determined by dividing the amount of a Policy's
Account Value held in the variable Subaccount by the net asset value of one
share in the corresponding Fund Portfolio in which the assets of that variable
Subaccount are invested. Fractional votes will be counted. The number of
shares as to which the Owner may give instructions will be determined as of
the record date for the Fund's meeting.
27
<PAGE>
Owners of Policies may give instructions regarding the election of the Board
of Trustees of the Fund, ratification of the selection of independent
auditors, approval of Fund investment advisory agreements and other matters
requiring a vote under the 1940 Act. Owners will be furnished information and
forms by John Hancock in order that voting instructions may be given.
John Hancock may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to change the investment objectives of the Portfolios of the Fund
or to approve or disapprove an investment advisory or underwriting contract
for the Fund. John Hancock also may disregard voting instructions in favor of
changes initiated by an Owner or the Fund's Board of Trustees in an investment
policy, investment adviser or principal underwriter of the Fund, if John
Hancock (i) reasonably disapproves of such changes and (ii) in the case of a
change of investment policy or investment adviser, makes a good-faith
determination that the proposed change is contrary to state law or prohibited
by state regulatory authorities or that the change would be inconsistent with
a variable Subaccount's investment objectives or would result in the purchase
of securities which vary from the general quality and nature of investments
and investment techniques utilized by other separate accounts of John Hancock
or of an affiliated life insurance company, which separate accounts have
investment objectives similar to those of the variable Subaccount. In the
event John Hancock does disregard voting instructions, a summary of that
action and the reasons for such action will be included in the next semi-
annual report to Owners.
CHANGES THAT JOHN HANCOCK CAN MAKE
The voting privileges described in this Prospectus are afforded based on
John Hancock's understanding of applicable Federal securities law
requirements. To the extent that applicable law, regulations or
interpretations change to eliminate or restrict the need for such voting
privileges, John Hancock reserves the right to proceed in accordance with any
such revised requirements. John Hancock also reserves the right, subject to
compliance with applicable law, including approval of Owners if so required,
(1) to transfer assets determined by John Hancock to be associated with the
class of policies to which the Policies belong from the Account to another
separate account or variable Subaccount by withdrawing the same percentage of
each investment in the Account with appropriate adjustments to avoid odd lots
and fractions, (2) to operate the Account as a "management-type investment
company" under the 1940 Act, or in any other form permitted by law, the
investment adviser of which would be John Hancock or an affiliate, (3) to
deregister the Account under the 1940 Act, (4) to substitute for the Portfolio
shares held by a Subaccount any other investment permitted by law, and (5) to
take any action necessary to comply with or obtain any exemptions from the
1940 Act. John Hancock would notify Owners of any of the foregoing changes
and, to the extent legally required, obtain approval of Owners and any
regulatory body prior thereto. Such notice and approval, however, may not be
legally required in all cases.
STATE REGULATION
John Hancock is subject to regulation and supervision by the Massachusetts
Commissioner of Insurance who periodically examines its affairs. It also is
subject to the applicable insurance laws and regulations of all jurisdictions
in which it is authorized to do business.
John Hancock is required to submit annual statements of its operations,
including financial statements, to the insurance departments of the various
jurisdictions in which it does business for purposes of determining solvency
and compliance with local insurance laws and regulations.
28
<PAGE>
LEGAL MATTERS
Legal matters in connection with the Policies described in this Prospectus
have been passed on by Francis C. Cleary, Jr., Counsel for John Hancock.
Messrs. Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised John
Hancock on certain Federal securities law matters in connection with the
Policies.
REGISTRATION STATEMENT
This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Commission. More details may be
obtained from the Securities and Exchange Commission upon payment of the
prescribed fee.
EXPERTS
The financial statements of John Hancock and the Account included in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, for
the periods indicated in their reports thereon which appear elsewhere herein
and have been included in reliance on their reports given on their authority
as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Deborah
A. Poppel, F.S.A., an Actuary of John Hancock.
FINANCIAL STATEMENTS
The financial statements of John Hancock included herein should be
distinguished from the financial statements of the Account and should be
considered only as bearing upon the ability of John Hancock to meet its
obligations under the Policies.
29
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Short-Term
Select Money Real Special U.S.
Stock Bond International Market Estate Equity Opportunities Stock Government
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
----------- ----------- ------------- ----------- ------------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $ 9,312,773 $46,330,265 $2,926,534 $18,732,426 $2,450,601 $952,172 $111,633,780 $79,674
Policy loans and
accrued interest
receivable...... 1,036,670 8,821,458 156,200 2,264,893 156,219 -- 19,832,901 --
Receivable from
John Hancock
Variable Series
Trust I......... 2,251 28,577 8,433 10,350 7,860 7,240 55,463 6
----------- ----------- ---------- ----------- ---------- -------- ------------ -------
Total assets.... 10,351,694 55,180,300 3,091,167 21,007,669 2,614,680 959,412 131,522,144 79,680
LIABILITIES
Payable to John
Hancock Variable
Series Trust I.. 1,763 26,061 8,290 9,344 7,738 7,194 49,440 2
Payable to John
Hancock Mutual
Life Insurance
Company.........
Asset charges
payable ........ 488 2,516 143 1,006 122 46 6,023 4
----------- ----------- ---------- ----------- ---------- -------- ------------ -------
Total
liabilities..... 2,251 28,577 8,433 10,350 7,860 7,240 55,463 6
----------- ----------- ---------- ----------- ---------- -------- ------------ -------
Net assets....... $10,349,443 $55,151,723 $3,082,734 $20,997,319 $2,606,820 $952,172 $131,466,681 $79,674
=========== =========== ========== =========== ========== ======== ============ =======
<CAPTION>
Managed
Subaccount
-----------
<S> <C>
ASSETS
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value........... $62,301,402
Policy loans and
accrued interest
receivable...... 8,932,761
Receivable from
John Hancock
Variable Series
Trust I......... 54,142
-----------
Total assets.... 71,288,305
LIABILITIES
Payable to John
Hancock Variable
Series Trust I.. 50,846
Payable to John
Hancock Mutual
Life Insurance
Company.........
Asset charges
payable ........ 3,296
-----------
Total
liabilities..... 54,142
-----------
Net assets....... $71,234,163
===========
</TABLE>
See accompanying notes.
30
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Select Stock Bond
Subaccount Subaccount
----------------------------------------- -------------------------------------------
For the Period For the Period
from from
October 4, October 4,
1993 1993
(commencement (commencement
Year ended Year ended of operations) to Year ended Year ended of operations) to
December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1993
----------- ----------- ----------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $ 754,115 $ 288,656 $ 200,562 $3,504,747 $ 2,780,967 $ 686,594
Interest income
on policy loans. 67,279 54,175 28,819 641,677 622,042 429,402
---------- --------- --------- ---------- ----------- ----------
Total income.... 821,394 342,831 229,381 4,146,424 3,403,009 1,115,996
Expenses:
Mortality and
expense risks
and other
charges......... 48,056 31,565 6,281 286,349 257,251 61,758
---------- --------- --------- ---------- ----------- ----------
Net investment
income.......... 773,338 311,266 223,100 3,860,075 3,145,758 1,054,238
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss) .... 23,090 (35,449) (45) (127,733) (215,268) (7,963)
Net unrealized
appreciation
(depreciation)
during the year. 1,225,784 (298,196) (152,267) 4,205,161 (3,583,940) (865,311)
---------- --------- --------- ---------- ----------- ----------
Net realized and
unrealized gain
(loss) on
investments..... 1,248,874 (333,645) (152,312) 4,077,428 (3,799,208) (873,274)
---------- --------- --------- ---------- ----------- ----------
Net increase
(decrease) in net
assets resulting
from operations.. $2,022,212 $ (22,379) $ 70,788 $7,937,503 $ (653,450) $ 180,964
========== ========= ========= ========== =========== ==========
<CAPTION>
International Money Market
Subaccount Subaccount
----------------------------------------- -----------------------------------------
For the Period For the Period
from from
October 4, October 4,
1993 1993
(commencement (commencement
Year ended Year ended of operations) to Year ended Year ended of operations) to
December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1993
----------- ----------- ----------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $ 29,692 $ 32,660 $19,111 $810,091 $284,469 $ 53,402
Interest income
on policy loans. 9,853 7,477 2,557 155,058 148,601 107,771
----------- ----------- ----------------- ----------- ----------- -----------------
Total income.... 39,545 40,137 21,668 965,149 433,070 161,173
Expenses:
Mortality and
expense risks
and other
charges......... 15,495 9,653 1,034 96,074 52,620 12,668
----------- ----------- ----------------- ----------- ----------- -----------------
Net investment
income.......... 24,050 30,484 20,634 869,075 380,450 148,505
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss) .... 14,367 11,225 2,973 -- -- --
Net unrealized
appreciation
(depreciation)
during the year. 164,490 (159,108) 62,914 -- -- --
----------- ----------- ----------------- ----------- ----------- -----------------
Net realized and
unrealized gain
(loss) on
investments..... 178,857 (147,883) 65,887 -- -- --
----------- ----------- ----------------- ----------- ----------- -----------------
Net increase
(decrease) in net
assets resulting
from operations.. $202,907 $(117,399) $86,521 $869,075 $380,450 $148,505
=========== =========== ================= =========== =========== =================
</TABLE>
See accompanying notes.
31
<PAGE>
<TABLE>
<CAPTION>
Special
Real Estate Equity Opportunities
Subaccount Subaccount
----------------------------------------- -----------------------------
For the Period
from For the Period
October 4, from
1993 May 6, 1994
(commencement (commencement
Year ended Year ended of operations) to Year ended of operations) to
December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994
----------- ----------- ----------------- ----------- -----------------
Investment in-
come:
<S> <C> <C> <C> <C> <C>
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $153,495 $ 99,568 $ 15,939 $ 22,718 $ 746
Interest income
on policy loans. 12,322 10,386 4,645 -- --
-------- -------- --------- -------- -------
Total income.... 165,817 109,954 20,584 22,718 746
Expenses:
Mortality and
expense risks
and other
charges......... 13,502 9,807 1,662 3,017 289
-------- -------- --------- -------- -------
Net investment
income.......... 152,315 100,147 18,922 19,701 457
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss) .... (39,490) (17,561) (3,306) 9,743 77
Net unrealized
appreciation
(depreciation)
during the year. 155,992 (47,683) (63,670) 126,004 (1,412)
-------- -------- --------- -------- -------
Net realized and
unrealized gain
(loss) on
investments..... 116,502 (65,244) (66,976) 135,747 (1,335)
-------- -------- --------- -------- -------
Net increase
(decrease) in
net assets
resulting from
operations...... $268,817 $ 34,903 $(48,054) $155,448 $ (878)
======== ======== ========= ======== =======
<CAPTION>
Short-Term
U.S.
Government
Stock Subaccount Subaccount Managed Subaccount
------------------------------------------ ----------------------------- ----------------------------------------
For the Period
For the Period from
from For the Period October 4,
October 4, from 1993
1993 May 1, 1994 (commencement
(commencement (commencement of operations)
Year ended Year ended of operations) to Year ended of operations) to Year ended Year ended to
December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1995 1994 1993
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Investment in-
come:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $10,687,455 $ 5,320,942 $ 5,347,556 $2,749 $ 239 $ 5,946,035 $ 2,136,167 $ 2,133,124
Interest income
on policy loans. 1,397,618 1,289,505 844,843 -- -- 626,984 554,232 372,441
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Total income.... 12,085,073 6,610,447 6,192,399 2,749 239 6,573,019 2,690,399 2,505,565
Expenses:
Mortality and
expense risks
and other
charges......... 646,807 529,971 121,956 295 22 356,869 299,763 69,919
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Net investment
income.......... 11,438,266 6,080,476 6,070,443 2,454 217 6,216,150 2,390,636 2,435,646
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss) .... 85,385 (249,230) 7,903 477 (6) (6,127) (182,296) (2,062)
Net unrealized
appreciation
(depreciation)
during the year. 17,351,805 (5,560,223) (3,787,331) 1,735 (282) 7,134,666 (2,984,103) (1,721,053)
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Net realized and
unrealized gain
(loss) on
investments..... 17,437,190 (5,809,453) (3,779,428) 2,212 (288) 7,128,539 (3,166,399) (1,723,115)
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Net increase
(decrease) in
net assets
resulting from
operations...... $28,875,456 $ 271,023 $ 2,291,015 $4,666 $ (71) $13,344,689 $ (775,763) $ 712,531
=========== ============ ================= =========== ================= ============ ============ ==============
</TABLE>
See accompanying notes.
32
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Select Stock Bond
Subaccount Subaccount
------------------------------------------ ----------------------------------------
For the Period
For the Period from
from October 4,
October 4, 1993
1993 (commencement
(commencement of
Year ended Year ended ofoperations) to Year ended Year ended operations) to
December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1993
----------- ----------- ---------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income.......... $ 773,338 $ 311,266 $ 223,100 $ 3,860,075 $ 3,145,758 $ 1,054,238
Net realized
gains (losses).. 23,090 (35,449) (45) (127,733) (215,268) (7,963)
Net unrealized
appreciation
(depreciation)
during the year. 1,225,784 (298,196) (152,267) 4,205,161 (3,583,940) (865,311)
----------- ---------- ---------- ----------- ----------- -----------
Net increase
(decrease) in
net assets
resulting from
operations...... 2,022,212 (22,379) 70,788 7,937,503 (653,450) 180,964
From policyholder
transactions:
Net contributions
from
policyholders... 3,921,962 3,110,357 774,582 8,741,178 9,292,171 2,130,456
Net benefits to
policyholders... (2,170,453) (1,704,646) 3,341,695 (8,117,059) (8,795,613) 35,919,978
Net increase in
policy loans.... 181,384 187,506 636,435 344,088 454,821 7,716,686
----------- ---------- ---------- ----------- ----------- -----------
Net increase in
net assets from
policyholder
transactions.... 1,932,893 1,593,217 4,752,712 968,207 951,379 45,767,120
----------- ---------- ---------- ----------- ----------- -----------
Net increase in
net assets..... 3,955,105 1,570,838 4,823,500 8,905,710 297,929 45,948,084
Net assets:
Beginning of
year............ 6,394,338 4,823,500 -- 46,246,013 45,948,084 --
----------- ---------- ---------- ----------- ----------- -----------
End of year...... $10,349,443 $6,394,338 $4,823,500 $55,151,723 $46,246,013 $45,948,084
=========== ========== ========== =========== =========== ===========
<CAPTION>
International Money Market
Subaccount Subaccount
---------------------------------------- ----------------------------------------
For the Period For the Period
from from
October 4, October 4,
1993 1993
(commencement (commencement
of of
Year ended Year ended operations) to Year ended Year ended operations) to
December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1993
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income.......... $ 24,050 $ 30,484 $ 20,634 $ 869,075 $ 380,450 $ 148,505
Net realized
gains (losses).. 14,367 11,225 2,973 -- -- --
Net unrealized
appreciation
(depreciation)
during the year. 164,490 (159,108) 62,914 -- -- --
------------ ------------ -------------- ------------ ------------ --------------
Net increase
(decrease) in
net assets
resulting from
operations...... 202,907 (117,399) 86,521 869,075 380,450 148,505
From policyholder
transactions:
Net contributions
from
policyholders... 1,439,112 1,997,179 467,433 13,611,860 2,450,447 380,938
Net benefits to
policyholders... (927,937) (636,005) 418,803 (2,969,848) (2,597,488) 6,535,046
Net increase in
policy loans.... 27,649 54,609 69,862 149,842 25,104 2,013,388
------------ ------------ -------------- ------------ ------------ --------------
Net increase in
net assets from
policyholder
transactions.... 538,824 1,415,783 956,098 10,791,854 (121,937) 8,929,372
------------ ------------ -------------- ------------ ------------ --------------
Net increase in
net assets..... 741,731 1,298,384 1,042,619 11,660,929 258,513 9,077,877
Net assets:
Beginning of
year............ 2,341,003 1,042,619 -- 9,336,390 9,077,877 --
------------ ------------ -------------- ------------ ------------ --------------
End of year...... $3,082,734 $2,341,003 $1,042,619 $20,997,319 $9,336,390 $9,077,877
============ ============ ============== ============ ============ ==============
</TABLE>
See accompanying notes.
33
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF CHANGES IN NET ASSETS--CONTINUED
<TABLE>
<CAPTION>
Special
Real Estate Equity Opportunities
Subaccount Subaccount
---------------------------------------- -----------------------------
For the Period
from
October 4, For the Period
1993 from
(commencement May 6, 1994
of (commencement
Year ended Year ended operations) to Year ended of operations) to
December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994
----------- ----------- -------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income.......... $ 152,315 $ 100,147 $ 18,922 $ 19,701 $ 457
Net realized
gains (losses).. (39,490) (17,561) (3,306) 9,743 77
Net unrealized
appreciation
(depreciation)
during the year. 155,992 (47,683) (63,670) 126,004 (1,412)
---------- ---------- ---------- -------- --------
Net increase
(decrease) in
net assets
resulting from
operations...... 268,817 34,903 (48,054) 155,448 (878)
From policyholder
transactions:
Net contributions
from
policyholders... 1,086,721 1,225,072 372,968 774,566 201,268
Net benefits to
policyholders... (814,812) (573,521) 904,219 (164,561) (13,671)
Net increase in
policy loans.... (13,207) 57,955 105,759 0 --
---------- ---------- ---------- -------- --------
Net increase in
net assets from
policyholder
transactions.... 258,702 709,506 1,382,946 610,005 187,597
---------- ---------- ---------- -------- --------
Net increase in
net assets..... 527,519 744,409 1,334,892 765,453 186,719
Net assets:
Beginning of
period.......... 2,079,301 1,334,892 -- 186,719 --
---------- ---------- ---------- -------- --------
End of period.... $2,606,820 $2,079,301 $1,334,892 $952,172 $186,719
========== ========== ========== ======== ========
<CAPTION>
Short-Term
U.S.
Government
Stock Subaccount Subaccount Managed Subaccount
----------------------------------------- ----------------------------- ----------------------------------------
For the Period For the Period
from from
October 4, For the Period October 4,
1993 from 1993
(commencement May 1, 1994 (commencement
of (commencement of
Year ended Year ended operations) to Year ended of operations) to Year ended Year ended operations) to
December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1995 1994 1993
------------- ------------ -------------- ----------- ----------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income.......... $ 11,438,266 $ 6,080,476 $ 6,070,443 $ 2,454 $ 217 $ 6,216,150 $ 2,390,636 $ 2,435,646
Net realized
gains (losses).. 85,385 (249,230) 7,903 477 (6) (6,127) (182,296) (2,062)
Net unrealized
appreciation
(depreciation)
during the year. 17,351,805 (5,560,223) (3,787,331) 1,735 (282) 7,134,666 (2,984,103) (1,721,053)
------------- ------------ -------------- ----------- ----------------- ------------ ------------ --------------
Net increase
(decrease) in
net assets
resulting from
operations...... 28,875,456 271,023 2,291,015 4,666 (71) 13,344,689 (775,763) 712,531
From policyholder
transactions:
Net contributions
from
policyholders... 20,933,714 20,019,801 3,883,758 68,539 21,611 13,141,463 13,309,384 3,377,066
Net benefits to
policyholders... (16,972,544) (16,374,221) 69,401,930 (14,808) (263) (11,680,334) (10,118,793) 41,295,282
Net increase in
policy loans.... 1,898,826 1,394,155 15,843,768 0 -- 1,120,431 723,705 6,784,502
------------- ------------ -------------- ----------- ----------------- ------------ ------------ --------------
Net increase in
net assets from
policyholder
transactions.... 5,859,996 5,039,735 89,129,456 53,731 21,348 2,581,560 3,914,296 51,456,850
------------- ------------ -------------- ----------- ----------------- ------------ ------------ --------------
Net increase in
net assets..... 34,735,452 5,310,758 91,420,471 58,397 21,277 15,926,249 3,138,533 52,169,381
Net assets:
Beginning of
period.......... 96,731,229 91,420,471 -- 21,277 -- 55,307,914 52,169,381 --
------------- ------------ -------------- ----------- ----------------- ------------ ------------ --------------
End of period.... $131,466,681 $96,731,229 $91,420,471 $79,674 $21,277 $71,234,163 $55,307,914 $52,169,381
============= ============ ============== =========== ================= ============ ============ ==============
</TABLE>
See accompanying notes.
34
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1. ORGANIZATION
John Hancock Mutual Variable Life Insurance Account UV (the Account) is a
separate investment account of John Hancock Mutual Life Insurance Company
(JHMLICO). The Account was created on August 16, 1993. The Account commenced
operations on October 4, 1993 as a result of a transfer of net assets from two
existing separate accounts, John Hancock Variable Life Account U (JHVLAU) and
John Hancock Variable Life Account V (JHVLAV). John Hancock Mutual Variable
Life Insurance Account UV was formed to fund variable life insurance policies
(Policies) issued by JHMLICO. The Account is operated as a unit investment
trust registered under the Investment Company Act of 1940, as amended, and
currently consists of nine subaccounts. The assets of each subaccount are
invested exclusively in shares of a corresponding portfolio of John Hancock
Variable Series Trust I (the Fund). New subaccounts may be added as new
portfolios are added to the Fund, or as other investment options are
developed, and made available to policyowners. The nine portfolios of the Fund
which are currently available are Select Stock, Bond, International, Money
Market, Real Estate Equity, Special Opportunities, Stock, Short-Term U.S.
Government and Managed. Each portfolio has a different investment objective.
The net assets of the Account may not be less than the amount required under
state insurance law to provide for death benefits (without regard to the
minimum death benefit guarantee) and other policy benefits. Additional assets
are held in JHMLICO's general account to cover the contingency that the
guaranteed minimum death benefit might exceed the death benefit which would
have been payable in the absence of such guarantee.
The assets of the Account are the property of JHMLICO. The portion of the
Account's assets applicable to the policies may not be charged with
liabilities arising out of any other business JHMLICO may conduct.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments
Investment in shares of the Fund are valued at the reported net asset values
of the respective portfolios. Investment transactions are recorded on the
trade date. Dividend income is recognized on the ex-dividend date. Realized
gains and losses on sales of fund shares are determined on the basis of
identified cost.
Federal Income Taxes
The operations of the Account are included in the federal income tax return
of JHMLICO, which is taxed as a life insurance company under the Internal
Revenue Code. JHMLICO has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations
of the Account or to the Policies funded in the Account. Currently, JHMLICO
does not make a charge for income or other taxes. Charges for state and local
taxes, if any, attributable to the Account may also be made.
Expenses
JHMLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from
.525% to .625%, depending on the type of policy, of net assets (excluding
policy loans) of the Account. Additionally, a monthly charge at varying levels
for the cost of extra insurance is deducted from the net assets of the
Account.
35
<PAGE>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
JHMLICO makes certain deductions for administrative expenses and state
premium taxes from premium payments before amounts are transferred to the
Account.
Policy Loans
Policy loans represent outstanding loans plus accrued interest. Interest is
accrued (net of a charge for policy loan administration determined at an
annual rate of .75% of the aggregate amount of policyowner indebtedness) and
compounded daily.
NOTE 3. TRANSACTIONS WITH AFFILIATES
JHMLICO acts as the distributor, principal underwriter and investment
advisor for the Fund.
Certain officers of the Account are officers and directors of JHMLICO or the
Fund.
NOTE 4. DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
portfolios of the Fund at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
--------- ------------ ----------- -----------
<S> <C> <C> <C>
Select Stock.............................. 536,192 $ 8,537,452 $ 9,312,773
Bond...................................... 4,574,603 46,574,355 46,330,265
International............................. 187,483 2,858,238 2,926,534
Money Market.............................. 1,873,372 18,773,711 18,732,426
Real Estate Equity........................ 209,521 2,405,959 2,450,601
Special Opportunities..................... 72,219 827,580 952,172
Stock..................................... 8,007,462 103,629,530 111,633,780
Short-Term U.S. Government................ 7,787 78,221 79,674
Managed................................... 4,538,676 59,872,578 62,301,402
</TABLE>
Purchases, including reinvestment of dividend distributions, and proceeds
from the sales of shares in the portfolios of the Fund during 1995, were as
follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
--------- ---------- ---------
<S> <C> <C>
Select Stock.............................................. $2,998,468 $ 478,935
Bond...................................................... 6,586,137 2,116,423
International............................................. 935,730 401,257
Money Market.............................................. 13,092,516 1,587,249
Real Estate Equity........................................ 829,282 404,509
Special Opportunities..................................... 698,554 68,848
Stock..................................................... 19,241,967 3,915,114
Short-Term U.S. Government................................ 71,209 15,024
Managed................................................... 11,383,468 3,752,413
</TABLE>
36
<PAGE>
REPORTS OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Policyholders
John Hancock Mutual Variable Life Insurance Account UV
of John Hancock Mutual Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Mutual Variable Life Insurance Account UV (the "Account") (comprising,
respectively, the Select Stock, Bond, International, Money Market, Real Estate
Equity, Special Opportunities, Stock, Short-Term U.S. Government, and Managed
Subaccounts) as of December 31, 1995, and the related statements of operations
and statements of changes in net assets for the periods indicated therein.
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 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting John Hancock Mutual Variable Life Insurance Account
UV at December 31, 1995, and the results of their operations and the changes
in their net assets for each of the periods indicated, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
February 9, 1996
----------------
To the Directors and Policyholders John Hancock Mutual Life Insurance Company
We have audited the accompanying statements of financial position of John
Hancock Mutual Life Insurance Company as of December 31, 1995 and 1994, and
the related summary of operations and changes in policyholders' contingency
reserves and statements of cash flows for the years then ended. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of John Hancock Mutual Life
Insurance Company at December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles for mutual life insurance companies
and with reporting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance.
ERNST & YOUNG LLP
Boston, Massachusetts
February 7, 1996
37
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31
-------------------
1995 1994
--------- ---------
(In millions)
<S> <C> <C>
ASSETS
Bonds--Note 6............................................... $21,108.5 $19,884.0
Stocks:
Preferred................................................. 338.8 274.4
Common.................................................... 130.9 115.9
Investments in affiliates................................. 1,265.3 1,089.4
--------- ---------
1,735.0 1,479.7
Mortgage loans on real estate--Note 6....................... 8,801.5 8,274.2
Real estate:
Company occupied.......................................... 377.4 385.2
Investment properties..................................... 1,949.5 1,765.5
--------- ---------
2,326.9 2,150.7
Policy loans................................................ 1,621.3 1,669.2
Cash items:
Cash in banks and offices................................. 286.6 336.7
Temporary cash investments................................ 254.1 556.2
--------- ---------
540.7 892.9
Premiums due and deferred................................... 234.0 230.9
Investment income due and accrued........................... 597.5 578.2
Other general account assets................................ 883.0 979.4
Assets held in separate accounts............................ 12,928.2 10,712.5
--------- ---------
TOTAL ASSETS................................................ $50,776.6 $46,851.7
========= =========
Obligations and Policyholders' Contingency Reserves
OBLIGATIONS
Policy reserves........................................... $17,711.4 $16,817.9
Policyholders' and beneficiaries' funds................... 14,724.8 13,974.8
Dividends payable to policyholders........................ 378.6 377.6
Policy benefits in process of payment..................... 217.1 224.4
Other policy obligations.................................. 159.6 256.5
Asset valuation reserve--Note 1........................... 1,014.3 835.7
Federal income and other accrued taxes--Note 1............ 250.5 231.8
Other general account obligations......................... 873.2 1,120.7
Obligations related to separate accounts.................. 12,913.6 10,682.3
--------- ---------
TOTAL OBLIGATIONS........................................... 48,243.1 44,521.7
Policyholders' Contingency Reserves
Surplus notes--Note 2..................................... 450.0 450.0
Special contingency reserve for group insurance........... 193.1 191.7
General contingency reserve............................... 1,890.4 1,688.3
--------- ---------
TOTAL POLICYHOLDERS' CONTINGENCY RESERVES................... 2,533.5 2,330.0
--------- ---------
TOTAL OBLIGATIONS AND POLICYHOLDERS' CONTINGENCY RESERVES... $50,776.6 $46,851.7
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
SUMMARY OF OPERATIONS AND CHANGES IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1995 1994
----------- -----------
(In millions)
<S> <C> <C>
Income
Premiums, annuity considerations and pension fund
contributions..................................... $ 8,127.8 $ 7,617.4
Net investment income--Note 4...................... 2,678.5 2,557.8
Other, net......................................... 90.8 64.1
----------- -----------
10,897.1 10,239.3
Benefits and Expenses
Payments to policyholders and beneficiaries:
Death benefits................................... 787.4 817.6
Accident and health benefits..................... 321.3 350.2
Annuity benefits................................. 1,342.7 1,273.9
Surrender benefits and annuity fund withdrawals.. 5,243.6 4,759.3
Matured endowments............................... 19.8 20.8
----------- -----------
7,714.8 7,221.8
Additions to reserves to provide for future
payments to policyholders and beneficiaries....... 1,497.0 1,503.5
Expenses of providing service to policyholders and
obtaining new insurance:
Field sales compensation and expenses............ 277.4 303.2
Home office and general expenses................. 455.8 437.3
Cost of restructuring.............................. 0.0 57.8
Payroll, state premium and miscellaneous taxes..... 78.6 72.1
----------- -----------
10,023.6 9,595.7
----------- -----------
GAIN FROM OPERATIONS BEFORE DIVIDENDS TO
POLICYHOLDERS, FEDERAL INCOME TAXES AND NET
REALIZED CAPITAL GAINS (LOSSES)............... 873.5 643.6
Dividends to policyholders........................... 465.9 385.0
Federal income taxes--Note 1......................... 128.5 59.7
----------- -----------
594.4 444.7
----------- -----------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL GAINS (LOSSES)........................ 279.1 198.9
Net realized capital gains (losses)--Note 5.......... 21.2 (35.3)
----------- -----------
NET INCOME..................................... 300.3 163.6
Other increases (decreases) in policyholders' contin-
gency reserves:
Net unrealized capital losses and other adjust-
ments--Note 5..................................... (85.1) (118.2)
Valuation reserve changes--Note 1.................. 0.0 41.0
Net gain from separate accounts.................... 2.6 0.8
Issuance of surplus notes.......................... 0.0 450.0
Prior years' federal income taxes.................. (36.8) (26.2)
Other reserves and adjustments..................... 22.5 4.3
----------- -----------
NET INCREASE IN POLICYHOLDERS' CONTINGENCY
RESERVES...................................... 203.5 515.3
Policyholders' contingency reserves at beginning of
year................................................ 2,330.0 1,814.7
----------- -----------
POLICYHOLDERS' CONTINGENCY RESERVES AT END OF YEAR... $ 2,533.5 $ 2,330.0
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1995 1994
----------- -----------
(In millions)
<S> <C> <C>
Cash Flows From Operating Activities:
Insurance premiums, annuity considerations and de-
posits............................................ $ 8,280.3 $ 7,827.5
Net investment income.............................. 2,756.9 2,560.0
Benefits to policyholders and beneficiaries........ (7,917.6) (7,417.0)
Dividends paid to policyholders.................... (464.9) (391.4)
Insurance expenses and taxes....................... (795.1) (801.0)
Net transfers (to) from separate accounts.......... 132.0 (548.4)
Other, net......................................... (154.7) (88.1)
----------- -----------
NET CASH PROVIDED FROM OPERATIONS................ 1,836.9 1,141.6
----------- -----------
Cash Flows Used In Investing Activities:
Bond purchases..................................... (6,456.9) (6,834.2)
Bond sales......................................... 2,874.9 2,530.2
Bond maturities and scheduled redemptions.......... 1,600.6 1,437.6
Bond prepayments................................... 795.9 620.8
Stock purchases.................................... (224.3) (282.7)
Proceeds from stock sales.......................... 131.4 70.8
Real estate purchases.............................. (375.1) (255.9)
Real estate sales.................................. 365.0 280.6
Other invested assets purchases.................... (46.5) (66.5)
Proceeds from the sale of other invested assets.... 251.1 169.3
Mortgage loans issued.............................. (2,041.6) (1,547.7)
Mortgage loan repayments........................... 1,277.9 1,391.8
Other, net......................................... (554.6) 845.3
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES............ (2,402.2) (1,640.6)
----------- -----------
Cash Flows From Financing Activities:
Issuance of surplus notes.......................... 0.0 450.0
Issuance of REMIC notes payable.................... 213.1 0.0
----------- -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES...... 213.1 450.0
----------- -----------
DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS...... (352.2) (49.0)
Cash and temporary cash investments at beginning of
year................................................ 892.9 941.9
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR... $ 540.7 $ 892.9
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES
John Hancock Mutual Life Insurance Company (the Company) provides a broad
range of financial services and insurance products. The Company's insurance
operations focus principally in three segments: the Retail Sector, which
encompasses the Company's individual life, annuity, and long-term care
operations; Business Insurance, its group life, health, and long-term care
operations including administrative services provided to group customers; and
Group Pension, which offers single premium annuity and guaranteed investment
contracts through both the general and separate accounts. In addition, through
its subsidiaries and affiliates, the Company also offers a wide range of
investment management and advisory services and other related products
including domestic property and casualty insurance, life insurance products
for the Canadian market, a full range of retail and institutional securities
brokerage services, investment management and advisory services, sponsorship
and distribution of mutual funds, real estate financing and management, and
various other financial services. Investments in these subsidiaries and other
affiliates are recorded on the statutory equity method.
The Company is licensed in all fifty of the United States, the District of
Columbia, Puerto Rico, Guam, the US Virgin Islands, and Canada. The Company
distributes its individual products in North America primarily through a
career agency system. The career agency system is composed of company owned,
unionized branch offices and independent general agencies. The Company also
distributes its individual products through several alternative distribution
channels.
The Company distributes its group benefit products through group
representatives, who are John Hancock employees or through intermediaries, in
key markets nationwide.
The Company markets pension and other investment-related products primarily to
sponsors of retirement and savings plans covering employees of private sector
companies, and plans covering public employees and collective bargaining
unions and non-profit organizations. Products are marketed and sold through a
combination of group pension field employee representatives, as well as
marketing personnel and investment professionals employed by the Company.
The preparation of the financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Such estimates and
assumptions could change in the future as more information becomes known,
which could impact the amounts reported and disclosed herein.
Basis of Presentation: The financial statements have been prepared on the
basis of accounting practices prescribed or permitted by the Commonwealth of
Massachusetts Division of Insurance and in conformity with the practices of
the National Association of Insurance Commissioners, which are currently
considered generally accepted accounting principles for mutual life insurance
companies. However, in April 1993, the Financial Accounting Standard Board
(FASB) issued Interpretation 40, "Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises"
(Interpretation). The Interpretation, as amended, is effective for 1996 annual
financial statements and thereafter, and no longer will allow statutory-basis
financial statements to be described as being prepared in conformity with
generally accepted accounting principles (GAAP). Upon the effective date of
the Interpretation in order for their financial statements to be described as
being prepared in conformity with GAAP, mutual life insurance companies will
be required to adopt all
41
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
applicable authoritative GAAP pronouncements in any general-purpose financial
statements that they may issue. The Company has not quantified the effects of
the application of the Interpretation on its financial statements.
The Company has not yet determined whether for general purposes it will
continue to issue statutory-basis financial statements or statements adopting
all applicable authoritative GAAP pronouncements. If the Company decides that
its general purpose financial statements will be prepared in accordance with
GAAP rather than statutory accounting practices, the financial statements
included herein would have to be restated to reflect all applicable
authoritative GAAP pronouncements, including Statement of Financial Accounting
Standards (SFAS) Nos. 60, 97, and 113, and the American Institute of Certified
Public Accountants' Statement of Position 95-1, which addresses the accounting
for long-duration and short-duration insurance and reinsurance contracts,
including all participating business.
The significant accounting practices of the Company are as follows:
Revenues and Expenses: Premium revenues are recognized over the premium-paying
period of the policies whereas expenses, including the acquisition costs of
new business, are charged to operations as incurred and policyholder dividends
are provided as paid or accrued.
Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-
term, highly-liquid investments both readily convertible to known amounts of
cash and so near maturity that there is insignificant risk of changes in value
because of changes in interest rates.
Valuation of Assets: General account investments are carried at amounts
determined on the following bases:
Bond and stock values are carried as prescribed by the National Association
of Insurance Commissioners (NAIC): bonds generally at amortized amounts or
cost, preferred stocks generally at cost and common stocks at market. The
discount or premium on bonds is amortized using the interest method.
Investments in affiliates are included on the statutory equity method.
Mortgage loans are carried at outstanding principal balance or amortized
cost.
Investment and company occupied real estate is carried at depreciated cost,
less encumbrances. Depreciation on investment and company occupied real
estate is recorded on a straight-line basis.
Real estate acquired in satisfaction of debt and held for sale, which is
classified with investment properties, is carried at the lower of cost or
market as of the date of foreclosure.
Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.
Other invested assets, which are classified with other general account
assets, include real estate and energy joint ventures and limited
partnerships and are valued based on the Company's equity in the underlying
net assets.
Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and
represents a provision for possible fluctuations in the value
42
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
of bonds, equity securities, mortgage loans, real estate and other invested
assets. The Company makes additional contributions to the AVR in excess of the
required amounts to account for potential losses and risks in the investment
portfolio when the Company believes such provisions are prudent. Changes to
the AVR are charged or credited directly to policyholders' contingency
reserves.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents that portion of the after tax net accumulated
unamortized realized capital gains and losses on sales of fixed income
securities, principally bonds and mortgage loans, attributable to changes in
the general level of interest rates. Such gains and losses are deferred and
amortized into income over the remaining expected lives of the investments
sold. At December 31, 1995, the IMR, net of 1995 amortization of $16.4
million, amounted to $69.5 million which is included in other policy
obligations. The corresponding 1994 amounts were $17.1 million and $52.7
million, respectively.
Property and Equipment: Data processing equipment, included in other general
account assets, is reported at depreciated cost, with depreciation recorded on
a straight-line basis. Nonadmitted furniture and equipment also is depreciated
on a straight-line basis. The useful lives of these assets range from three to
twenty years.
Separate Accounts: Separate account assets (valued at market) and obligations
are included as separate captions in the statements of financial position. The
change in separate account surplus is recognized through direct charges or
credits to policyholders' contingency reserves.
Fair Values of Financial Instruments: Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, whether or not recognized in the statement of financial position,
for which it is practicable to estimate the value. In situations where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Therefore, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The methods and assumptions utilized by the Company in estimating its fair
value disclosures for financial instruments are as follows:
The carrying amounts reported in the statement of financial position for
cash and temporary cash investments approximate their fair values.
Fair values for public bonds are obtained from an independent pricing
service. Fair values for private placement securities and publicly traded
bonds not provided by the independent pricing service are estimated by the
Company by discounting expected future cash flows using current market
rates applicable to the yield, credit quality and maturity of the
investments. The fair values for common and preferred stocks, other than
subsidiary investments which are carried at equity values, are based on
quoted market prices.
The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit
characteristics of the underlying loans. Mortgage loans with similar
43
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
characteristics and credit risks are aggregated into qualitative categories
for purposes of the fair value calculations.
The carrying amounts in the statement of financial position for policy
loans approximates their fair value.
The fair value of interest rate swaps and currency rate swaps is estimated
using a discounted cash flow method adjusted for the difference between the
rate of the existing swap and the current swap market rate. Discounted cash
flows in foreign currencies are converted to U.S. dollars using current
exchange rates.
The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow
method incorporating adjustments for the difference in the level of
interest rates between the dates the commitments were made and December 31,
1995. The fair value for commitments to purchase real estate approximates
the amount of the initial commitment.
Fair values for the Company's guaranteed investment contracts are estimated
using discounted cash flow calculations, based on interest rates currently
being offered for similar contracts with maturities consistent with those
remaining for the contracts being valued. The fair value for fixed-rate
deferred annuities is the cash surrender value, which represents the
account value less applicable surrender charges. Fair values for immediate
annuities without life contingencies and supplementary contracts without
life contingencies are estimated based on discounted cash flow calculations
using current market rates.
Capital Gains and Losses: Realized capital gains and losses, net of taxes and
amounts transferred to the IMR, are included in net income. Unrealized gains
and losses, which consist of market value and book value adjustments, are
shown as adjustments to policyholders' contingency reserves.
Interest Rate and Currency Rate Swap Contracts and Financial Futures
Contracts: The net interest effect of interest rate and currency rate swap
transactions is recorded as an adjustment of interest income as incurred.
Gains and losses on financial futures contracts used as hedges against
interest rate fluctuations are deferred and recognized in income over the
period being hedged.
Foreign Exchange Gains and Losses: Foreign exchange gains and losses are
reflected as direct credits or charges to policyholders' contingency reserves
through unrealized capital gains and losses.
Policy Reserves: Reserves for traditional individual life insurance policies
are maintained using the 1941, 1958 and 1980 Commissioner's Standard Ordinary
and American Experience mortality tables, with assumed interest rates ranging
from 2 1/2% to 6%, and using principally the net level premium method for
policies issued prior to 1978 and a modified preliminary term method for
policies issued in 1979 and later. Annuity and supplementary contracts with
life contingency reserves are based principally on modifications of the 1937
Standard Annuity Table, the Group Annuity Mortality Tables for 1951, 1971 and
1983, the 1971 Individual Annuity Mortality Table and the a-1983 Individual
Annuity Mortality Table, with interest rates ranging from 2% to 11 1/4%.
Reserves for deposit administration funds and immediate participation
guarantee funds are based on accepted actuarial methods at various interest
rates. Accident and health policy reserves generally are calculated using
either the two-year preliminary term or the net level premium method based on
various morbidity tables.
44
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
The statement value and fair value for investment-type insurance contracts are
as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------- -------------------
Statement Fair Statement Fair
Value Value Value Value
--------- --------- --------- ---------
(In millions)
<S> <C> <C> <C> <C>
Guaranteed investment contracts........ $12,014.3 $12,325.3 $11,333.3 $10,966.3
Fixed-rate deferred and immediate annu-
ities................................. 3,494.5 3,478.6 2,918.5 2,840.3
Supplementary contracts without life
contingencies......................... 39.6 40.7 36.5 35.4
--------- --------- --------- ---------
$15,548.4 $15,844.6 $14,288.3 $13,842.0
========= ========= ========= =========
</TABLE>
Federal Income Taxes: Federal income taxes are provided in the financial
statements based on amounts determined to be payable as a result of operations
within the current accounting period. The operations of the Company and its
subsidiaries and affiliates are combined in filing a consolidated federal
income tax return for the group. The federal income taxes of the Company are
determined on a separate return basis with certain adjustments.
Income before taxes differs from taxable income principally due to tax-exempt
investment income, dividends-received tax deductions, the limitation placed on
the tax deductibility of mutual companies' policyholder dividends, accelerated
depreciation, differences in policy and contract liabilities for tax return
and financial statement purposes, capitalization of policy acquisition
expenses for tax purposes and other adjustments prescribed by the Internal
Revenue Code.
Amounts for disputed tax issues relating to prior years are charged or
credited directly to policyholders' contingency reserves. No provision is
generally recognized for timing differences that may exist between financial
reporting and taxable income.
At December 31, 1994, the Company's subsidiaries had total estimated tax loss
carryforwards for federal income tax purposes of $26.5 million expiring in
years 2003 to 2005. After the 1994 federal income tax return was filed on
September 15, 1995, the Company's subsidiaries remaining tax loss
carryforwards for federal income tax purposes totaled $9.9 million. It is
expected that these losses will be fully utilized in the 1995 federal income
tax return. Certain subsidiaries acquired by the Company have additional
potential tax loss carryforwards of $117.8 million expiring in years 1996 to
1998. These amounts also may be used in the consolidated tax return but only
to offset future taxable income related to those subsidiaries. The Company
made federal tax payments of $211.5 million in 1995 and $78.8 million in 1994.
Adjustments to Policy Reserves and Policyholders' and Beneficiaries'
Funds: From time to time, the Company finds it appropriate to modify certain
required policy reserves because of changes in actuarial assumptions or
increased benefits. Reserve modifications resulting from such determinations
are recorded directly to policyholders' contingency reserves. During 1994, the
Company refined certain actuarial assumptions inherent
45
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED
in the calculation of preconversion yearly renewable term and gross premium
deficiency reserves resulting in a $41.0 million increase in policyholders'
contingency reserves at December 31, 1994.
Reinsurance: Premiums, commissions, expense reimbursements, benefits and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms
of the reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premium income. Amounts applicable to reinsurance
ceded for future policy benefits, unearned premium reserves and claim
liabilities have been reported as reductions of these items.
Restructuring Charge: In 1994, the Company provided for restructuring charges
of $57.8 million in accordance with the Company's plan to reduce its cost
structure and consolidate operations. The restructuring charge includes
severance costs and facilities consolidation expenses. During 1995 and 1994,
the Company paid $32.9 million and $10.7 million, respectively, under its
restructuring plan. The remaining liability for restructuring charges at
December 31, 1995 was $14.2 million.
Reclassifications: Certain 1994 amounts have been reclassified to permit
comparison with the corresponding 1995 amounts.
NOTE 2--SURPLUS NOTES
On February 25, 1994, the Company issued $450 million of surplus notes that
bear interest at 7 3/8% and are scheduled to mature on February 15, 2024. The
issuance of the surplus notes was approved by the Massachusetts Division of
Insurance and any payment of interest on and principal of the notes may be
made only with the prior approval of the Commissioner of the Massachusetts
Division of Insurance. Surplus notes are reported as surplus rather than
liabilities. Interest paid on the notes during 1995 and 1994 were $33.2
million and $15.7 million, respectively.
NOTE 3--BORROWED MONEY
At December 31, 1995, the Company had a $500 million syndicated line of
credit. There are 29 banks who joined the syndicate of lenders under the
leadership of Morgan Guaranty Trust Company of New York. The banks will commit
when requested to loan funds for a period of two years at prevailing interest
rates as determined in accordance with the line of credit agreement. The
agreement does not contain a material adverse change clause. As of December
31, 1995, no amounts had been borrowed under this agreement.
In 1995 the Company issued $213.1 million of debt through a Real Estate
Mortgage Investment Conduit (REMIC). As collateral to the debt, the Company
pledged $1,065.8 million of commercial mortgages to the REMIC Trust. The debt
was issued in two notes of equal amounts with last scheduled payment dates on
March 25, 1997 and June 25, 1998, respectively. The interest rates on the two
notes are calculated on a floating basis, based on LIBOR rates, and were
6.1575% and 6.2075%, respectively, at December 31, 1995. The outstanding
balances of the Notes totaled $213.1 million at December 31, 1995 and are
included in other general account obligations.
46
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Investment expenses.............................................. $332.9 $291.2
Interest expense................................................. 38.3 19.8
Depreciation on real estate and other invested assets............ 62.7 54.7
Real estate and other investment taxes........................... 61.2 61.3
------ ------
$495.1 $427.0
====== ======
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Gains (losses) from asset sales and foreclosures............... $118.6 $(41.5)
Capital gains tax.............................................. (64.2) (20.2)
Net capital (gains) losses transferred to the IMR.............. (33.2) 26.4
------ ------
Net Realized Capital Gains (Losses).......................... $ 21.2 $(35.3)
====== ======
</TABLE>
Net unrealized capital losses and other adjustments consist of the following
items:
<TABLE>
<CAPTION>
1995 1994
------ -------
(In millions)
<S> <C> <C>
Gains from changes in security values and book value adjust-
ments......................................................... $ 93.4 $ 36.4
Increase in asset valuation reserve............................ (178.5) (154.6)
------ -------
Net Unrealized Capital Losses and Other Adjustments.......... $(85.1) $(118.2)
====== =======
</TABLE>
47
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized
Value Gains Losses Fair Value
--------- ---------- ---------- ----------
(In millions)
Year ended December 31, 1995
----------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities and
obligations of U.S. government
corporations and agencies............ $ 638.5 $ 42.5 $ 0.2 $ 680.8
Obligations of states and political
subdivisions......................... 194.1 20.6 0.1 214.6
Debt securities issued by foreign gov-
ernments............................. 297.7 42.2 0.0 339.9
Corporate securities.................. 18,358.6 1,818.3 73.9 20,103.0
Mortgage-backed securities............ 1,619.6 57.9 20.8 1,656.7
--------- -------- ------ ---------
Totals.............................. $21,108.5 $1,981.5 $ 95.0 $22,995.0
========= ======== ====== =========
<CAPTION>
Year ended December 31, 1994
----------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities and
obligations of U.S. government
corporations and agencies............ $ 1,545.1 $ 1.8 $128.6 $ 1,418.3
Obligations of states and political
subdivisions......................... 170.6 4.5 1.7 173.4
Debt securities issued by foreign gov-
ernments............................. 143.5 9.8 0.5 152.8
Corporate securities.................. 16,208.9 471.1 401.8 16,278.2
Mortgage-backed securities............ 1,815.9 4.8 44.1 1,776.6
--------- -------- ------ ---------
Totals.............................. $19,884.0 $ 492.0 $576.7 $19,799.3
========= ======== ====== =========
</TABLE>
The statement value and fair value of bonds at December 31, 1995, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Value Fair Value
--------------- ----------
(In millions)
<S> <C> <C>
Due in one year or less.............................. $ 1,408.9 $ 1,456.4
Due after one year through five years................ 6,406.1 6,795.4
Due after five years through ten years............... 5,969.7 6,551.4
Due after ten years.................................. 5,704.2 6,535.1
--------- ---------
19,488.9 21,338.3
Mortgage-backed securities........................... 1,619.6 1,656.7
--------- ---------
$21,108.5 $22,995.0
========= =========
</TABLE>
Proceeds from sales of bonds during 1995 and 1994 were $2.9 billion and $2.5
billion, respectively. Gross gains of $69.7 million in 1995 and $16.6 million
in 1994 and gross losses of $44.3 million in 1995 and $99.3 million in 1994
were realized on these transactions.
The cost of common stocks was $78.1 million and $82.1 million at December 31,
1995 and 1994, respectively. At December 31, 1995, gross unrealized
appreciation on common stocks totaled $76.3 million, and gross
48
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
unrealized depreciation totaled $23.5 million. The fair value of preferred
stock totaled $338.8 million at December 31, 1995 and $281.6 million at
December 31, 1994.
Mortgage loans with outstanding principal balances of $115.5 million, bonds
with amortized cost of $32.8 million and real estate with depreciated cost of
$28.5 million were nonincome producing for the twelve months ended December
31, 1995.
Restructured commercial mortgage loans aggregated $466.0 million and $507.1
million as of December 31, 1995 and 1994, respectively. The expected gross
interest income that would have been recorded had the loans been current in
accordance with the original loan agreements and the actual interest income
recorded were as follows:
<TABLE>
<CAPTION>
Year ended
December 31
-------------
1995 1994
------ ------
(In millions)
<S> <C> <C>
Expected.................................................... $ 47.0 $ 54.5
Actual...................................................... $ 26.8 34.2
</TABLE>
Generally, the terms of the restructured mortgage loans call for the Company
to receive some form or combination of an equity participation in the
underlying collateral, excess cash flows or an effective yield at the maturity
of the loans sufficient to meet the original terms of the loans.
At December 31, 1995, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below.
The Company controls credit risk through credit approvals, limits and
monitoring procedures.
<TABLE>
<CAPTION>
Property
Type Statement Value
-------- ---------------
(In millions)
<S> <C>
Apartments................ $2,374.6
Hotels.................... 164.4
Industrial................ 780.4
Office buildings.......... 1,823.6
Retail.................... 1,545.1
1-4 Family................ 9.5
Agricultural.............. 1,607.0
Other..................... 496.9
--------
$8,801.5
========
</TABLE>
<TABLE>
<CAPTION>
Geographic
Concentration Statement Value
------------- ---------------
(In millions)
<S> <C>
East North Central....... $ 822.7
East South Central....... 178.2
Middle Atlantic.......... 1,861.1
Mountain................. 431.3
New England.............. 915.6
Pacific.................. 2,253.4
South Atlantic........... 1,611.7
West North Central....... 217.7
West South Central....... 447.4
Other.................... 62.4
--------
$8,801.5
========
</TABLE>
At December 31, 1995, the fair values of the commercial and agricultural
mortgage loan portfolios were $7.6 billion and $1.8 billion, respectively. The
corresponding amounts as of December 31, 1994 were approximately $6.5 billion
and $1.7 billion, respectively.
49
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 7--REINSURANCE
Premiums, benefits and reserves associated with reinsurance assumed in 1995
were $455.2 million, $276.7 million, and $12.7 million, respectively. The
corresponding amounts in 1994 were $385.9 million, $266.0 million, and $12.1
million, respectively.
The Company cedes business to reinsurers to share risks under life, health and
annuity contracts for the purpose of reducing exposure to large losses.
Premiums, benefits and reserves ceded to reinsurers in 1995 were $281.0
million, $217.0 million and $185.4 million, respectively. The corresponding
amounts in 1994 were $246.7 million, $203.2 million and $217.3 million,
respectively.
The Company has a coinsurance agreement with another insurer to cede 100% of
its individual disability business. Reserves ceded under this agreement,
included in the amount shown above, were $212.7 million at December 31, 1995
and $184.5 million at December 31, 1994.
To the extent that an assuming reinsurance company is unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.
NOTE 8--BENEFIT PLANS
The Company provides retirement benefits to substantially all employees and
general agency personnel. These benefits are provided through both defined
benefit and defined contribution pension plans. Pension benefits under the
defined benefit plans are based on years of service and average compensation
generally during the five years prior to retirement. The Company's funding
policy for qualified defined benefit plans is to contribute annually an amount
in excess of the minimum annual contribution required under the Employee
Retirement Income Security Act (ERISA). This amount is limited by the maximum
amount that can be deducted for federal income tax purposes. The funding
policy for nonqualified defined benefit plans is to contribute the amount of
the benefit payments made during the year. Plan assets consist principally of
listed equity securities, corporate obligations and U.S. government
securities.
Defined contribution plans include The Investment Incentive Plan (TIP) and the
Savings and Investment Plan (SIP). Employees are eligible to participate in
TIP after one year of service and may contribute up to the lesser of 15% of
their salary or $9,240 annually to the plan. The Company matches the first 2%
of pre-tax contributions and makes an additional annual profit sharing
contribution for employees who have completed at least two years of service.
Through SIP, marketing representatives, sales managers and agency managers are
eligible to contribute up to the lesser of 13% of their salary or $9,240. The
Company matches the first 3% of pretax contributions for marketing
representatives and the first 2% of pretax contributions for sales managers
and agency managers. The Company makes an annual profit sharing contribution
of up to 1% for sales managers and agency managers who have completed at least
two years of service.
The Company provides additional compensation to certain employees based on
achievement of annual and long-term corporate financial objectives.
50
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 8--BENEFIT PLANS--CONTINUED
Pension expense is summarized as follows:
<TABLE>
<CAPTION>
Year ended
December 31
----------------
1995 1994
------- -------
(In millions)
<S> <C> <C>
Defined benefit plans:
Service cost--benefits earned during the period............. $ 30.1 $ 46.5
Interest cost on the projected benefit obligation........... 103.5 96.1
Actual return on plan assets................................ (369.5) 29.4
Net amortization and deferral............................... 260.5 (144.7)
------- -------
24.6 27.3
Defined contribution plans.................................... 19.8 15.8
------- -------
Total pension expense..................................... $ 44.4 $ 43.1
======= =======
</TABLE>
Assumptions used in accounting for the defined benefit pension plans were as
follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Discount rate....................................................... 7.50% 8.00%
Weighted rate of increase in compensation levels.................... 5.10% 5.30%
Expected long-term rate of return on assets......................... 7.75% 8.25%
</TABLE>
The following table sets forth the funded status and actuarially determined
amounts related to the Company's defined benefit pension plans:
<TABLE>
<CAPTION>
Year ended December 31
------------------------
1995 1994
----------- -----------
(In millions)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.......................... $ (1,242.9) $ (1,108.9)
=========== ===========
Accumulated benefit obligation..................... $ (1,300.3) $ (1,151.0)
=========== ===========
Projected benefit obligation......................... $ (1,480.0) $ (1,350.2)
Plan assets fair value............................... 1,645.3 1,355.0
----------- -----------
Excess of plan assets over projected benefit obliga-
tion................................................ 165.3 4.8
Unrecognized net (gain) loss......................... (139.1) 36.3
Prior service cost not yet recognized in net periodic
pension cost........................................ 50.0 57.7
Unrecognized net asset, net of amortization.......... (111.2) (126.6)
----------- -----------
Net pension liability................................ $ (35.0) $ (27.8)
=========== ===========
</TABLE>
Since 1988, the Massachusetts Division of Insurance has provided the Company
with approval to recognize the pension plan prepaid expense, if any, in
accordance with the requirements of SFAS No. 87, "Employers' Accounting for
Pensions." The Company furnishes the Division of Insurance with an actuarial
certification of the prepaid expense computation on an annual basis.
51
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 9--OTHER POSTRETIREMENT BENEFIT PLANS
In addition to the Company's defined benefit pension plans, the Company has
employee welfare plans for medical, dental, and life insurance covering most
of its retired employees and general agency personnel. Substantially all
employees may become eligible for these benefits if they reach retirement age
while employed by the Company. The postretirement health care and dental
coverages are contributory based on service for post January 1, 1992 non-union
retirees. A small portion of pre-January 1, 1992 non-union retirees also
contribute. The applicable contributions are based on service.
In 1993, the Company changed its method of accounting for the costs of its
retiree benefit plans to the accrual method and elected to amortize its
transition liability for retirees and fully eligible or vested employees over
twenty years.
Since 1993, the Company funded a portion of the postretirement obligation. The
Company's policy is to fund postretirement benefits for non-union employees to
the maximum amount that can be deducted for federal income tax purposes and to
fund the benefits for union employees, which are fully tax qualified, at
sufficient amounts so that the total accrued liability related to
postretirement benefits is zero. As of December 31, 1995, plan assets related
to non-union employees were comprised of an irrevocable health insurance
contract to provide future health benefits to retirees while plan assets
related to union employees were comprised of approximately 60% equity
securities and 40% fixed income investments. The following table shows the
plans' combined funding status for vested benefits reconciled with the amounts
recognized in the Company's statements of financial position.
<TABLE>
<CAPTION>
December 31
-------------------------------------
1995 1994
------------------ ------------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obli-
gation:
Retirees............................... $(236.5) $(89.2) $(239.2) $(76.5)
Fully eligible active plan partici-
pants................................. (42.9) (20.1) (51.3) (22.2)
------- ------ ------- ------
(279.4) (109.3) (290.5) (98.7)
Plan assets at fair value................ 96.9 0.0 59.9 0.0
------- ------ ------- ------
Accumulated postretirement benefit
obligation in excess of plan assets..... (182.5) (109.3) (230.6) (98.7)
Unrecognized prior service cost.......... 18.2 5.8 22.2 6.2
Unrecognized prior net gain.............. (84.2) (4.2) (63.9) (12.3)
Unrecognized transition obligation....... 272.9 83.3 288.9 88.2
------- ------ ------- ------
Accrued postretirement benefit cost...... $ 24.4 $(24.4) $ 16.6 $(16.6)
======= ====== ======= ======
</TABLE>
Net postretirement benefits costs for the years ended December 31, 1995 and
1994 were $50.2 million and $52.1 million, respectively, and include the
expected cost of such benefits for newly eligible or vested employees,
interest cost, and amortization of the transition liability.
52
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 9--OTHER POSTRETIREMENT BENEFIT PLANS--CONTINUED
Net periodic postretirement benefits cost included the following components:
<TABLE>
<CAPTION>
December 31
------------------------------------
1995 1994
------------------ -----------------
Medical Medical
and Life and Life
Dental Insurance Dental Insurance
Plans Plans Plans Plans
------- --------- ------- ---------
(In millions)
<S> <C> <C> <C> <C>
Eligibility cost............................ $ 5.3 $ 1.5 $ 6.1 $ 2.3
Interest cost............................... 21.1 7.8 19.9 6.8
Actual return on plan assets................ (15.5) 0.0 (2.1) 0.0
Net amortization and deferral............... 25.0 5.0 14.4 4.7
------ ----- ----- -----
Net periodic postretirement benefit cost.... $ 35.9 $14.3 $38.3 $13.8
====== ===== ===== =====
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation at December 31, 1995 was 7.5% (8.0% for 1994). The annual assumed
rate of increase in the health care cost trend rate for the medical coverages
is 8.25% for 1996 (9.75% was assumed for 1995) and is assumed to decrease
gradually to 5.5% in 2001 and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported.
For example, increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated post retirement
benefit obligation for the medical coverages as of December 31, 1995 by $35.0
million and the aggregate of the eligibility and interest cost components of
net periodic postretirement benefit cost by $3.6 million for 1995 and $2.7
million for 1994.
Postretirement welfare benefits for non-vested employees are not reflected in
the above expenses or accumulated postretirement benefit obligations. As of
December 31, 1995, the accumulated postretirement benefit obligations for non-
vested employees amounted to $67.7 million for medical and dental plans and
$10.8 million for life insurance plans. The corresponding amounts as of
December 31, 1994 were $70.4 million and $9.1 million, respectively.
NOTE 10--AFFILIATES
The Company has subsidiaries and affiliates in a variety of industries
including domestic and foreign life insurance and domestic property casualty
insurance, real estate, mutual funds, investment brokerage and various other
financial services entities.
Total assets of unconsolidated affiliates amounted to $9.5 billion at December
31, 1995 and $7.8 billion at December 31, 1994; total liabilities amounted to
$8.3 billion at December 31, 1995 and $6.7 billion at December 31, 1994; and
total net income was $89.5 million in 1995 and $61.9 million in 1994.
The Company customarily engages in transactions with its unconsolidated
affiliates, including the cession and assumption of certain insurance business
under the terms of established reinsurance agreements. Various services are
performed by the Company for certain affiliates for which the Company is
reimbursed on the basis of cost. Certain affiliates have entered into various
financial arrangements relating to borrowings and capital maintenance under
which agreements the Company would be obligated in the event of nonperformance
by an affiliate (see Note 14).
53
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 10--AFFILIATES--CONTINUED
The Company received dividends of $9.7 million and $10.1 million in 1995 and
1994, respectively, from unconsolidated affiliates.
NOTE 11--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into interest rate swap contracts for the purpose of
converting the interest rate characteristics (fixed or variable) of certain
investments to match those of related insurance liabilities. Maturities of
current agreements range from 1996 to 2005. These swaps involve, to varying
degrees, interest rate risk in excess of amounts recognized in the statement
of financial position.
The Company enters into currency rate swap agreements to manage exposure to
foreign exchange rate fluctuations. Maturities of current agreements range
through 2009. Should the counterparty fail to meet the terms of the contract,
the Company's market risk is limited to the currency rate differential.
The Company enters into interest rate cap contracts to manage exposure on
underlying security values due to a rise in interest rates. Maturities of
current agreements range through 2001.
The Company also uses financial futures contracts to hedge risks associated
with interest rate fluctuations on sales of guaranteed investment contracts.
The Company is subject to the risks associated with changes in the value of
the underlying securities; however, such changes in value generally are offset
by opposite changes in the value of the hedged items. The contract or notional
amounts of the contracts represent the extent of the Company's involvement but
not the future cash requirements, as the Company intends to close the open
positions prior to settlement.
The contract or notional amount of the foregoing financial instruments, which
indicates the Company's involvement and, in certain instances, maximum credit
risk related to those instruments, is as follows:
<TABLE>
<CAPTION>
December 31
-----------------
1995 1994
-------- --------
(In millions)
<S> <C> <C>
Futures contracts to purchase securities.................... $ 62.2 $ 147.9
======== ========
Futures contracts to sell securities........................ $ 299.9 $ 98.1
======== ========
Notional amount of interest rate swaps, currency rate swaps,
and interest rate caps to:
Receive variable rates.................................... $1,735.0 $ 916.0
======== ========
Receive fixed rates....................................... $1,756.3 $1,365.2
======== ========
</TABLE>
The Company continually monitors its positions and the credit ratings of the
counterparties to these financial instruments. The Company believes the risk
of incurring losses due to nonperformance by its counterparties is remote and
that any such losses would be immaterial.
Based on market rates in effect at December 31, 1995, the Company's interest
rate swaps, currency rate swaps, and interest rate caps represented (assets)
liabilities to the Company with fair values of $37.0 million, $23.3 million
and $(0.3) million, respectively. The corresponding amounts as of December 31,
1994 were $12.0 million, $15.4 million, and $(1.5) million, respectively.
54
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 12--LEASES
The Company leases office space and furniture and equipment under various
operating leases. Rental expenses for all operating leases totaled $32.2
million in 1995 and $35.2 million in 1994. At December 31, 1995, future
minimum rental commitments under noncancellable operating leases for office
space and furniture and equipment totaled approximately $44.3 million.
NOTE 13--POLICYHOLDERS' RESERVES AND BENEFICIARIES' FUNDS
The Company's annuity reserves and deposit fund liabilities that are subject
to discretionary withdrawal (with adjustment), subject to discretionary
withdrawal (without adjustment), and not subject to discretionary withdrawal
provisions are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1995 Percent
----------------- -------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with adjust-
ment):
With market value adjustment....................... $ 2,517.0 7.3%
At book value less surrender charge................ 2,502.2 7.3
--------- -----
Total with adjustment.............................. 5,019.2 14.6
Subject to discretionary withdrawal (without ad-
justment) at book value........................... 594.8 1.7
Subject to discretionary withdrawal--separate ac-
counts............................................ 10,813.9 31.4
Not subject to discretionary withdrawal:
General account.................................... 16,634.4 48.3
Separate accounts.................................. 1,387.2 4.0
--------- -----
Total annuity reserves and deposit liabilities--be-
fore reinsurance.................................... 34,449.5 100.0%
=====
Less reinsurance ceded............................... (0.2)
---------
Net annuity reserves and deposit fund liabilities.... $34,449.3
=========
</TABLE>
Activity in the liability for accident and health unpaid claims is:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Balance at January 1............................................ $216.2 $210.6
Less reinsurance recoverables................................. (7.3) (4.6)
------ ------
Net balance at January 1........................................ 208.9 206.0
------ ------
Incurred related to:
Current year.................................................. 301.0 350.4
Prior years................................................... (25.2) (40.4)
------ ------
Total incurred.................................................. 275.8 310.0
------ ------
Paid related to:
Current year.................................................. 192.0 231.2
Prior years................................................... 89.0 75.9
------ ------
Total paid...................................................... 281.0 307.1
------ ------
Net balance at December 31...................................... 203.7 208.9
Plus reinsurance recoverable.................................. 4.0 7.3
------ ------
Balance at December 31.......................................... $207.7 $216.2
====== ======
</TABLE>
55
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 13--POLICYHOLDERS' RESERVES AND BENEFICIARIES' FUNDS--CONTINUED
As a result of favorable changes in claim estimates and a decline in fully
insured business, the liability for prior year claims decreased in 1995 and
1994.
NOTE 14--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds, preferred
stocks, and real estate and issue real estate mortgages totaling $620.7
million, $19.1 million, $5.0 million and $396.6 million, respectively, at
December 31, 1995. If funded, loans related to real estate mortgages would be
fully collateralized by related properties. The Company monitors the credit
worthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary. The fair value of the commitments described
above is $1.1 billion at December 31, 1995. The majority of these commitments
expire in 1996.
During 1991, the Company entered into a credit support and collateral pledge
agreement with the Federal National Mortgage Association (FNMA). Under the
agreement, the Company sold $1.042 billion of multi-family loans and acquired
an equivalent amount of FNMA securities. FNMA is guarantying the full face
value of the bonds to the bondholders. However, the Company has agreed to
absorb the first 15% of original principal and interest losses (less buy-
backs) for the pool of loans involved, but is not required to commit
collateral to support this loss contingency. Historically, the Company has
experienced total losses as a percentage of its multi-family mortgage
portfolio of approximately 3%. Mortgage loan buy-backs required by FNMA in
1995 and 1994 amounted to $29.5 million and $12.7 million, respectively. There
were no losses associated with these buy-backs. At December 31, 1995, the
remaining pool of loans had an outstanding principal balance of $591.2
million.
The Company has a support agreement with JHVLICo under which the Company
agrees to continue directly or indirectly to own all of JHVLICo's common stock
and maintain JHVLICo's net worth at not less than $1 million.
The Company has a support agreement with John Hancock Capital Corporation
(JHCC) under which the Company agrees to continue directly or indirectly to
own all of JHCC's common stock and maintain JHCC's net worth at not less than
$1 million. JHCC's outstanding borrowings as of December 31, 1995 were $363.6
million for short-term borrowings and $142.7 million for notes payable.
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.
In the normal course of its business operations, the Company is involved in
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1995. It is the
opinion of management, after consultation with counsel, that the ultimate
liability with respect to these claims, if any, will not materially affect the
financial position of the Company.
56
<PAGE>
APPENDIX--OTHER POLICY PROVISIONS
SETTLEMENT PROVISIONS
In place of a single payment, an amount of $1,000 or more payable under the
Policy as a benefit or as the Surrender Value, if any, may be left with John
Hancock under the terms of a supplementary agreement. The agreement will be
issued when the proceeds are applied through the election of any one of the
options below.
The following options are subject to the restrictions and limitations stated
in the Policy.
Option 1--Interest Income at the declared rate but not less than 3 1/2% a
year on proceeds held on deposit.
Option 2A--Income of a Specified Amount, with payments each year totaling
at least 1/12th of the proceeds, until the proceeds, with interest credited
at the declared rate but not less than 3 1/2% a year on unpaid balances,
are fully paid.
Option 2B--Income for a Fixed Period, with each payment as declared.
Option 3--Life Income with Payments for a Guaranteed Period.
Option 4--Life Income without Refund at the death of the Payee of any
part of the proceeds applied. Only one payment is made if the Payee dies
before the second payment is due.
Option 5--Life Income with Cash Refund at the death of the Payee of the
amount, if any, equal to the proceeds applied less the sum of all income
payments made.
No election of an option may provide for income payments of less than $50.
Other options may be arranged with John Hancock's approval.
The tax treatment of the Policy proceeds may vary, depending on which
settlement option is chosen and when. You should consult your tax advisor in
this regard.
ADDITIONAL INSURANCE BENEFITS
On payment of an additional premium or charge and subject to certain age and
insurance underwriting requirements, certain additional provisions, such as
the yearly renewable term benefits discussed below, which are subject to the
restrictions and limitations set forth therein, may be included in a Policy by
rider.
Yearly Renewable Term Insurance. This is term insurance on the life of one
of the insureds under the base Policy and payable upon the death of the
covered insured person. This insurance is level or decreasing in amount and
may be applied for, or increased, at any time upon evidence of insurability
and any other underwriting requirements. The yearly coverage also may be
cancelled by the Owner at any time. The charges for this coverage will be
separately billed to and paid by the Owner and not out of Account Value. An
increase or a decrease in this insurance may have significant tax
consequences. See "Premiums--7-Pay Premium Limit" and "Tax Considerations."
GENERAL PROVISIONS
Beneficiary. The Beneficiary will be as shown in the application for the
Policy, unless thereafter changed by the Owner in accordance with the terms of
the Policy. In general, if on the death of the last surviving insured there is
no surviving Beneficiary, the Owner will be the Beneficiary, but if the Owner
was one of the insureds, his or her estate will be the Beneficiary.
A-1
<PAGE>
Owner and Assignment. The Owner's interest in the Policy may be assigned
without the consent of any revocable Beneficiary. John Hancock will not be on
notice of any assignment unless it is in writing and until a duplicate of the
original assignment has been filed at John Hancock's Home Office. John Hancock
assumes no responsibility for the validity or sufficiency of any assignment.
If a Policy has joint Owners, both Owners must join in any request or
instructions to John Hancock under the Policy.
Misstatement of Age or Sex. If the age or sex of an insured has been
misstated, John Hancock will adjust the benefits payable to reflect the
correct age or sex.
Suicide. If either insured commits suicide within 2 years (except where
state law requires a shorter period) from the date of issue shown in the
Policy, John Hancock will pay in place of all other benefits an amount equal
to the premium paid less any Indebtedness on the date of death and any
withdrawals. If either insured commits suicide within 2 years (except where
state law requires a shorter period) from the date of any Policy change that
increases the death benefit, the death benefit will be limited as described in
the Policy. Subject to terms and conditions set forth in the Policy, we will
make coverage available to any surviving insured, if the surviving insured
elects such coverage within 60 days after the suicide.
Age and Policy Anniversaries. For purpose of the Policy, an insured's "age"
is his or her age on his or her nearest birthday. Policy months and Policy
years are calculated from the date of issue.
Incontestability. The Policy shall be incontestable other than for
nonpayment of premiums after it has been in force during the lifetime of an
insured for 2 years from its issue date. If, however, evidence of insurability
is required with respect to any increase in death benefit, such increase shall
be incontestable after the increase has been in force for 2 years from the
increase date.
Deferral of Determinations and Payments. Payment of any death, surrender,
partial withdrawal or loan proceeds will ordinarily be made within seven days
after receipt at John Hancock's Home Office of all documents required for any
such payment. Approximately two-thirds of the claims for death proceeds which
are made within two years after the date of issue of the Policy will be
investigated to determine whether the claim should be contested and payment of
these claims will therefore be delayed.
John Hancock may defer any transaction requiring a determination of Account
Value in any variable Subaccount for any period during which: (1) the disposal
or valuation of the Account's assets is not reasonably practicable because the
New York Stock Exchange is closed or conditions are such that, under the
Commission's rules and regulations, trading is restricted or an emergency is
deemed to exist or (2) the Commission by order permits postponement of such
actions for the protection of Owners.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.
A-2
<PAGE>
APPENDIX--ILLUSTRATION OF DEATH BENEFITS,
SURRENDER VALUES AND ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit and Surrender
Value of the Policy, disregarding any Policy loans. Each table separately
illustrates the operation of a Policy for identified issue ages, Planned
Premium schedule and Sum Insured and shows how the death benefit and Surrender
Value may vary over an extended period of time assuming hypothetical rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross annual rates of 0%, 6%
and 12%. The tables are based on given annual Planned Premiums paid at the
beginning of each Policy year and will assist in a comparison of the death
benefit and surrender value figures set forth in the tables with those under
other variable life insurance policies which may be issued by John Hancock or
other companies. Tables are provided for Option A, without the Extra Death
Benefit feature, as well as for Option B death benefits. The death benefit and
Surrender Value for a Policy would be different from those shown if premiums
are paid in different amounts or at different times or if the actual gross
rates of investment return average 0%, 6% or 12% over a period of years, but
nevertheless fluctuate above or below the average for individual Policy years,
or if the Policy were issued under circumstances in which no distinctions are
made based on the gender of the insureds.
The amounts shown for the death benefit and Surrender Value are as of the
end of each Policy year. The first two tables headed "Using Current Charges"
assume that the current rates for insurance, sales, risk, and expense charges
will apply in each year illustrated. The two tables headed "Using Maximum
Charges" assumes that the maximum (guaranteed) insurance, sales, risk, and
expense charges will be made in each year illustrated. The amounts shown in
all tables reflect an average asset charge for the daily investment advisory
expense charges to the Portfolios of the Fund (equivalent to an effective
annual rate of .60%) and an assumed average asset charge for the annual
nonadvisory operating expenses of each Portfolio of the Fund (equivalent to an
effective annual rate of .19%). For a description of expenses charged to the
Portfolios, including the reimbursement of any Portfolio for annual non-
advisory operating expenses in excess of an effective annual rate of .25%, a
continuing obligation of the Fund's investment adviser, see the attached
Prospectus for the Fund. The charges for the daily investment management fee
and the annual non-advisory operating expenses are based on the hypothetical
assumption that Policy values are allocated equally among the seven variable
Subaccounts. The actual Portfolio charges and expenses associated with any
Policy will vary depending upon the actual allocation of Policy values among
Subaccounts.
The tables reflect that no charge is currently made to the Account for
Federal income taxes. However, John Hancock reserves the right to make such a
charge in the future and any charge would require higher rates of investment
return in order to produce the same Policy values. All of the tables do,
however, reflect the imposition of a Federal DAC Tax charge in the amount of
1.25% of all premiums paid and a premium tax charge in the amount of 2.35% of
all premiums paid.
The tables assume that the Guaranteed Minimum Death Benefit has not been
elected beyond the tenth Policy year and that no optional rider benefits have
been elected.
The second column of each table shows the amount to which the total premiums
paid to the end of a Policy year during the premium paying period would
accumulate if an amount equal to those premiums were invested to earn
interest, after taxes, at 5% compounded annually.
John Hancock will furnish upon request a comparable illustration reflecting
the proposed insureds' ages, sexes, underwriting risk classifications and the
Sum Insured at issue and Planned Premium amount requested, and assuming annual
Planned Premiums.
A-3
<PAGE>
PLAN:FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, NONSMOKER UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, NONSMOKER UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
-------------------------------- ---------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at -------------------------------- ---------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ ---------- ---------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,000,000 $1,000,000 $1,000,000 11,204 11,908 12,612
2 34,374 1,000,000 1,000,000 1,000,000 23,357 25,528 27,784
3 52,861 1,000,000 1,000,000 1,000,000 35,250 39,671 44,443
4 72,271 1,000,000 1,000,000 1,000,000 47,104 54,585 62,978
5 92,653 1,000,000 1,000,000 1,000,000 58,660 70,039 83,311
6 114,053 1,000,000 1,000,000 1,000,000 70,960 87,140 106,759
7 136,524 1,000,000 1,000,000 1,000,000 83,071 104,999 132,644
8 160,118 1,000,000 1,000,000 1,000,000 94,986 123,643 161,213
9 184,891 1,000,000 1,000,000 1,000,000 106,705 143,104 192,746
10 210,904 1,000,000 1,000,000 1,000,000 118,218 163,409 227,544
11 238,217 1,000,000 1,000,000 1,000,000 130,279 185,386 266,780
12 266,895 1,000,000 1,000,000 1,000,000 142,074 208,270 310,047
13 297,008 1,000,000 1,000,000 1,000,000 153,581 232,084 357,759
14 328,626 1,000,000 1,000,000 1,000,000 164,779 256,849 410,376
15 361,825 1,000,000 1,000,000 1,000,000 175,642 282,590 468,414
16 396,684 1,000,000 1,000,000 1,023,140 186,144 309,335 532,423
17 433,286 1,000,000 1,000,000 1,121,235 196,221 337,079 602,858
18 471,718 1,000,000 1,000,000 1,225,479 205,825 365,841 680,306
19 512,072 1,000,000 1,000,000 1,336,513 214,903 395,644 765,421
20 554,444 1,000,000 1,000,000 1,454,987 223,399 426,514 858,914
25 800,279 1,000,000 1,000,000 2,191,410 256,299 600,713 1,483,976
30 1,114,034 1,000,000 1,069,728 3,255,727 253,669 807,864 2,458,741
35 1,514,473 1,000,000 1,269,411 4,800,354 167,243 1,040,271 3,933,849
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy Year, or optional rider benefits are
elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-4
<PAGE>
PLAN:FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, NONSMOKER UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, NONSMOKER UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
-------------------------------- ----------------------------
Assuming Hypothetical Assuming Hypothetical
Planned Premiums Gross Annual Return of Gross Annual Return of
End of Accumulated at -------------------------------- ----------------------------
Policy Year 5% Annual Interest 0% 6% 12% 0% 6% 12%
----------- ------------------ ---------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,011,203 $1,011,907 $1,012,612 $ 11,203 $ 11,907 $ 12,612
2 34,374 1,023,354 1,025,525 1,027,780 23,354 25,525 27,780
3 52,861 1,035,240 1,039,659 1,044,430 35,240 39,659 44,430
4 72,271 1,047,079 1,054,555 1,062,943 47,079 54,555 62,943
5 92,653 1,058,607 1,069,974 1,083,233 58,607 69,974 83,233
6 114,053 1,070,863 1,087,017 1,106,605 70,863 87,017 106,605
7 136,524 1,082,919 1,104,801 1,132,386 82,919 104,801 132,386
8 160,118 1,094,770 1,123,349 1,160,815 94,770 123,349 160,815
9 184,891 1,106,413 1,142,691 1,192,163 106,413 142,691 192,163
10 210,904 1,117,836 1,162,846 1,226,719 117,836 162,846 226,719
11 238,217 1,129,796 1,184,648 1,265,653 129,796 184,648 265,653
12 266,895 1,141,465 1,207,305 1,308,514 141,465 207,305 308,514
13 297,008 1,152,813 1,230,821 1,355,675 152,813 230,821 355,675
14 328,626 1,163,809 1,255,199 1,407,547 163,809 255,199 407,547
15 361,825 1,174,418 1,280,435 1,464,577 174,418 280,435 464,577
16 396,684 1,184,601 1,306,525 1,527,259 184,601 306,525 527,259
17 433,286 1,194,272 1,333,408 1,596,079 194,272 333,408 596,079
18 471,718 1,203,360 1,361,043 1,671,598 203,360 361,043 671,598
19 512,072 1,211,790 1,389,376 1,754,423 211,790 389,376 754,423
20 554,444 1,219,477 1,418,342 1,845,217 219,477 418,342 845,217
25 800,279 1,244,464 1,571,038 2,448,372 244,464 571,038 1,448,372
30 1,114,034 1,221,695 1,708,935 3,378,840 221,695 708,935 2,378,840
35 1,514,473 1,097,100 1,762,847 4,771,809 97,100 762,847 3,771,809
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy Year, or optional rider benefits are
elected.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-5
<PAGE>
PLAN:FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, NONSMOKER UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, NONSMOKER UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
-------------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
Planned Premiums gross annual return of gross annual return of
End of accumulated at -------------------------------- --------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
----------- ------------------ ---------- ---------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,000,000 $1,000,000 $1,000,000 $10,904 $11,597 12,291
2 34,374 1,000,000 1,000,000 1,000,000 22,728 24,856 27,067
3 52,861 1,000,000 1,000,000 1,000,000 34,265 38,583 43,244
4 72,271 1,000,000 1,000,000 1,000,000 45,736 53,022 61,197
5 92,653 1,000,000 1,000,000 1,000,000 56,883 67,937 80,832
6 114,053 1,000,000 1,000,000 1,000,000 68,739 84,422 103,439
7 136,524 1,000,000 1,000,000 1,000,000 80,210 101,418 128,153
8 160,118 1,000,000 1,000,000 1,000,000 91,270 118,917 155,162
9 184,891 1,000,000 1,000,000 1,000,000 101,890 136,909 184,678
10 210,904 1,000,000 1,000,000 1,000,000 112,033 155,378 216,927
11 238,217 1,000,000 1,000,000 1,000,000 122,166 174,842 252,734
12 266,895 1,000,000 1,000,000 1,000,000 131,715 194,752 291,865
13 297,008 1,000,000 1,000,000 1,000,000 140,610 215,065 334,632
14 328,626 1,000,000 1,000,000 1,000,000 148,759 235,722 381,385
15 361,825 1,000,000 1,000,000 1,000,000 156,057 256,652 432,521
16 396,684 1,000,000 1,000,000 1,000,000 162,387 277,782 488,512
17 433,286 1,000,000 1,000,000 1,022,460 167,565 298,984 549,750
18 471,718 1,000,000 1,000,000 1,110,198 171,540 320,256 616,309
19 512,072 1,000,000 1,000,000 1,202,149 174,107 341,475 688,470
20 554,444 1,000,000 1,000,000 1,298,600 175,073 362,541 766,594
25 800,279 1,000,000 1,000,000 1,860,095 145,496 460,930 1,259,617
30 1,114,034 1,000,000 1,000,000 2,586,136 3,264 525,783 1,953,063
35 1,514,473 ** 1,000,000 3,533,702 ** 503,917 2,895,838
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy Year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-6
<PAGE>
PLAN:FLEXIBLE PREMIUM VARIABLE LIFE SURVIVORSHIP
$1,000,000 SUM INSURED ($500,000 BASIC SUM INSURED; $500,000 ADDITIONAL
SUM INSURED)
MALE, ISSUE AGE 55, NONSMOKER UNDERWRITING CLASS
FEMALE, ISSUE AGE 50, NONSMOKER UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $15,969*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
-------------------------------- ----------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at -------------------------------- ----------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ ---------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,768 $1,010,903 $1,011,597 $1,012,291 $ 10,903 $ 11,597 $ 12,291
2 34,374 1,022,725 1,024,853 1,027,064 22,725 24,853 27,064
3 52,861 1,034,255 1,038,571 1,043,231 34,255 38,571 43,231
4 72,271 1,045,711 1,052,993 1,061,163 45,711 52,993 61,163
5 92,653 1,056,831 1,067,874 1,080,756 56,831 67,874 80,756
6 114,053 1,068,644 1,084,302 1,103,288 68,644 84,302 103,288
7 136,524 1,080,047 1,101,206 1,127,877 80,047 101,206 127,877
8 160,118 1,091,007 1,118,562 1,154,685 91,007 118,562 154,685
9 184,891 1,101,487 1,136,345 1,183,890 101,487 136,345 183,890
10 210,904 1,111,437 1,154,514 1,215,675 111,437 154,514 215,675
11 238,217 1,121,309 1,173,555 1,250,797 121,309 173,555 250,797
12 266,895 1,130,513 1,192,880 1,288,939 130,513 192,880 288,939
13 297,008 1,138,956 1,212,396 1,330,296 138,956 212,396 330,296
14 328,626 1,146,521 1,231,975 1,375,053 146,521 231,975 375,053
15 361,825 1,153,071 1,251,462 1,423,393 153,071 251,462 423,393
16 396,684 1,158,457 1,270,684 1,475,502 158,457 270,684 475,502
17 433,286 1,162,446 1,289,368 1,531,494 162,446 289,368 531,494
18 471,718 1,164,971 1,307,400 1,591,665 164,971 307,400 591,665
19 512,072 1,165,783 1,324,467 1,656,145 165,783 324,467 656,145
20 554,444 1,164,655 1,340,265 1,725,099 164,655 340,265 725,099
25 800,279 1,118,789 1,384,964 2,140,074 118,789 384,964 1,140,074
30 1,114,034 ** 1,306,911 2,659,906 ** 306,911 1,659,906
35 1,514,473 ** * 3,237,534 ** * 2,237,534
</TABLE>
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, Guaranteed Minimum
Death Benefit after the tenth Policy Year, or optional rider benefits are
elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-7
<PAGE>
POLICIES ISSUED BY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, MASSACHUSETTS 02117
<PAGE>
PART II
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 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.
UNDERTAKING REGARDING INDEMNIFICATION
Pursuant to Article 9 of John Hancock's Bylaws and Section 67 of the
Massachusetts Business Corporation Law, John Hancock indemnifies each director,
former director, officer, and former officer, and his heirs and legal
representatives from liability incurred or imposed in connection with any legal
action in which he may be involved by reason of any alleged act or omission as
an officer or a director of John Hancock.
Insofar as indemnification for liability arising under the Securities Act
of 1933 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 Securities and Exchange 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.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
Cross-Reference Table.
The prospectus consisting of 63 pages.
The undertaking to file reports.
The undertaking regarding indemnification.
The signatures.
The following exhibits:
<PAGE>
1.A. (1) John Hancock Board Resolution establishing the separate account
included in Post-Effective Amendment No. 2 to this Form S-6
Registration Statement, filed April 1995.
(2) Not Applicable.
(3) (a) Not Applicable.
(b) Specimen Variable Contracts Selling Agreement between John
Hancock and selling broker-dealers included in the initial
Registration Statement on this Form S-6, filed June 11, 1993.
(c) Schedule of sales commissions included in the text under the
heading "Distribution of Policies" in the prospectus filed as
part of this Post-Effective Amendment.
(4) Not Applicable.
(5) (a) Form of survivorship variable life insurance policy, included in
Pre-Effective Amendment No. 1 to this Form S-6 Registration
Statement, filed on October 29, 1993.
(b) Form of rider option to split policy, included in the initial
Form S-6 Registration Statement of this Account, filed June 11,
1993.
(6) Charter and By-Laws of John Hancock Mutual Life Insurance Company.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Form of application for Policy included in Pre-Effective Amendment
No. 1 to this Form S-6 registration statement, filed October 29,
1993.
2. Included as exhibit 1.A(5) above
<PAGE>
3. Opinion and consent of counsel as to securities being registered included
in Pre-Effective Amendment No. 1 to this Form S-6 registration statement,
filed October 29, 1993.
4. Not Applicable
5. Not Applicable
6. Opinion and consent of actuary.
7. Consent of independent auditors.
8. Memorandum describing John Hancock's issuance, transfer and redemption
procedures for the policy pursuant to Rule 6e-3(T)(b)(12)(iii), included in
Pre-Effective Amendment No. 1 to this Form S-6 registration statement filed
on October 29, 1993.
9. Powers of attorney for Bodman, Gifford, Boyan, Morton, Magee, Connors,
Brown, Phillips, Booth, Vappi, Bromery, Staley, D'Alessandro, Fast, Aborn,
Bok, Feldstein, Fish, Syron and Hawley.
10. Representations, Description and Undertaking pursuant to Rule 6e-
3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940, included in
the initial Form S-6 Registration Statement of this Account, filed June 11,
1993.
11. Opinion of counsel as to eligibility of this Post-Effective Amendment for
filing pursuant to Rule 485(b).
- ------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the John
Hancock Mutual Life Insurance Company has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunder duly authorized, and its seal to be hereunto fixed and
attested, all in the City of Boston and Commonwealth of Massachusetts on the 8th
day of April, 1996.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
(SEAL)
By WILLIAM L. BOYAN
----------------
William L. Boyan
President
Attest: FRANCIS C. CLEARY, JR.
----------------------
Francis C. Cleary, Jr.
Counsel
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities with John Hancock Mutual Life Insurance
Company and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
THOMAS E. MOLONEY
- -----------------
Thomas E. Moloney April 8, 1996
JANET A. PENDLETON (Principal
- ------------------ Accounting Officer) April 8, 1996
Janet A. Pendleton
Chairman of the Board and
Chief Executive Officer
STEPHEN L. BROWN (Principal Executive Officer)
- ----------------
Stephen L. Brown
for himself and as
Attorney-in-Fact April 8, 1996
FOR: Foster L. Aborn Vice Chairman of the Board
William L. Boyan President, Chief Operating Officer & Director
David F. D'Alessandro Senior Executive Vice President & Director
Nelson S. Gifford Director E. James Morton Director
John F. Magee Director Thomas L. Phillips Director
John M. Connors Director Joan T. Bok Director
Delbert C. Staley Director Robert E. Fast Director
C. Vincent Vappi Director Samuel W. Bodman Director
Randolph W. Bromery Director Lawrence K. Fish Director
I. MacAllister Booth Director Kathleen F. Feldstein Director
Michael C. Hawley Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, John Hancock Mutual Variable Life Insurance Account UV, certifies
that it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto fixed and attested, all in the City of Boston and Commonwealth of
Massachusetts on the 8th day of April, 1996.
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Registrant)
By John Hancock Mutual Life Insurance Company
(Depositor)
(SEAL)
By WILLIAM L. BOYAN
----------------
William L. Boyan
President
Attest: FRANCIS C. CLEARY, JR.
----------------------
Francis C. Cleary, Jr.
Counsel
<TABLE> <S> <C>
<PAGE>
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<NUMBER> 1
<NAME> SELECT STOCK SUBACCOUNT
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<NAME> BONO SUBACCOUNT
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<TABLE> <S> <C>
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<NAME> INTERNATIONAL SUBACCOUNT
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<TABLE> <S> <C>
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</TABLE>
<TABLE> <S> <C>
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<ARTICLE> 6
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<NAME> SPECIAL OPPORTUNITIES SUBACCOUNT
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<OTHER-ITEMS-LIABILITIES> 46
<TOTAL-LIABILITIES> 7,240
<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 952,172
<DIVIDEND-INCOME> 22,718
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<OTHER-INCOME> 0
<EXPENSES-NET> 3,017
<NET-INVESTMENT-INCOME> 19,701
<REALIZED-GAINS-CURRENT> 9,743
<APPREC-INCREASE-CURRENT> 126,004
<NET-CHANGE-FROM-OPS> 155,448
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 698,554
<NUMBER-OF-SHARES-REDEEMED> 68,848
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 765,453
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,017
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> STOCK SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 103,629,530
<INVESTMENTS-AT-VALUE> 111,633,780
<RECEIVABLES> 19,888,364
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 131,522,144
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,463
<TOTAL-LIABILITIES> 55,463
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<NET-ASSETS> 131,466,681
<DIVIDEND-INCOME> 10,687,455
<INTEREST-INCOME> 1,397,618
<OTHER-INCOME> 0
<EXPENSES-NET> 646,807
<NET-INVESTMENT-INCOME> 11,438,266
<REALIZED-GAINS-CURRENT> 85,385
<APPREC-INCREASE-CURRENT> 17,351,805
<NET-CHANGE-FROM-OPS> 28,875,456
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 19,241,967
<NUMBER-OF-SHARES-REDEEMED> 3,915,114
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<ACCUMULATED-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 646,807
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> MANAGED SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 59,872,578
<INVESTMENTS-AT-VALUE> 62,301,402
<RECEIVABLES> 8,986,903
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,288,305
<PAYABLE-FOR-SECURITIES> 50,846
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,296
<TOTAL-LIABILITIES> 54,142
<SENIOR-EQUITY> 0
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<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 71,234,163
<DIVIDEND-INCOME> 5,946,035
<INTEREST-INCOME> 626,984
<OTHER-INCOME> 0
<EXPENSES-NET> 356,869
<NET-INVESTMENT-INCOME> 6,216,150
<REALIZED-GAINS-CURRENT> (6,127)
<APPREC-INCREASE-CURRENT> 7,134,666
<NET-CHANGE-FROM-OPS> 13,344,689
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,383,468
<NUMBER-OF-SHARES-REDEEMED> 3,752,413
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,926,249
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 356,869
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
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<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> SHORT-TERM U.S. GOVERNMENT SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 78,221
<INVESTMENTS-AT-VALUE> 79,674
<RECEIVABLES> 6
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 79,680
<PAYABLE-FOR-SECURITIES> 2
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 6
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 79,674
<DIVIDEND-INCOME> 2,749
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 295
<NET-INVESTMENT-INCOME> 2,454
<REALIZED-GAINS-CURRENT> 477
<APPREC-INCREASE-CURRENT> 1,735
<NET-CHANGE-FROM-OPS> 4,666
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 11,209
<NUMBER-OF-SHARES-SOLD> 15,024
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 58,397
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 295
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT I. A. (6)
Chap. 125
COMMONWEALTH OF MASSACHUSETTS
In the year One Thousand Eight Hundred and Sixty-Two
AN ACT to incorporate the John Hancock Mutual Life Insurance Company,
Be it enacted by the Senate and House of Representatives in General Court
assembled, and by the authority of the same, as follows: Nathaniel Harris, James
P. Thorndike, Gerry W. Cochrane, their associates and successors, are hereby
made a corporation by the name of the John Hancock Mutual Life Insurance
Company, to be established and located in the City of Boston, for the purpose of
making insurance upon lives with all the powers and privileges, and subject to
the duties, liabilities and restrictions set forth in so much of the fifty-
eighth chapter of the General Statutes as related to mutual life insurance
companies, and all other acts which are or may be in force relative to such
companies.
House of Representatives, April 18, 1862
Passed to be enacted, Alex. H. Bullock, Speaker
<PAGE>
Exhibit I. A. (6)
BY-LAWS
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
1. The Annual Meeting of the Company shall be held at its Home Office, on
the second Monday of April in each year, at twelve o'clock, noon. The order of
business shall be as follows:
(a) Reading the records of the previous meeting.
(b) Ballot for Directors.
(c) Report of the Directors to the policyholder.
(d) Other business, if any.
2. Special meetings of the Company may be called by vote or written request
of three-fourths of the Directors, and the Secretary shall give notice thereof,
by advertisement in some daily newspaper published in Boston, at least seven
days before the meeting.
3. Ten members shall constitute a quorum at any meeting of the Company, but
policyholders in arrears of premiums at the hour of meeting shall not be
entitled to vote or to be recognized as members.
4. The Board of Directors shall consist of not more than twenty-four
members nor less than sixteen members divided into classes of not less than four
nor more than six members each, one class to be elected at each Annual Meeting,
for a term of four years. The election shall be by ballot, and the presiding
officer of the meeting shall appoint a Committee to supervise the balloting and
the count thereof.
5. No person shall be eligible as a Director unless he be insured in the
Company to the amount of not less than one thousand dollars, and no person shall
be elected as a Director at any annual or special meeting of the Company unless
he shall have been nominated either by a majority of the Board of Directors or
by one-tenth of one percent of the members, by a writing filed with the
Secretary not more than six months nor less than ninety days before such
meeting. Such writing shall be on a form approved by the Secretary and the
signatures of the Directors or members' making such nominations shall be
authenticated or verified in such manner as he may prescribe. The Secretary
shall make available at his office, upon written request of any member, a copy
of such approved form and a list of any members then nominated for Director. A
three-quarters vote of qualified members voting shall be necessary to elect.
<PAGE>
6. The Directors shall have the control and management of the business and
affairs of the Company and the distribution of its surplus funds; they shall
present a report at every Annual Meeting with the full statement of condition of
the Company, its assets and liabilities. They shall meet after the Annual
Meeting and at such meeting or some adjournment thereof shall choose by ballot
from their own number a Chairman of the Board of Directors, a Vice Chairman of
the Board, a President, and at least one Vice President. They may also at such
meeting or any other regular or special meeting elect, from their own number or
not as they see fit, additional Vice Presidents, a Secretary, a Treasurer and
such other officers as they shall deem proper or advisable and fill vacancies
occurring in any office. The Chairman of the Board of Directors, or in his
absence the Vice Chairman of the Board, shall preside at all meetings of the
Board of Directors. The Directors shall fix the compensation and define the
other duties of the Chairman of the Board of Directors and may fix the
compensation and may define the duties of all other officers and may remove any
officer at any time.
At their meeting after the Annual Meeting or at any regular or special
meeting they shall choose by ballot from their own number a Committee of Finance
consisting of no fewer than six members which shall include the Chairman of the
Board of Directors and the President and one or more alternate members, any of
whom may serve in the place of any member absent from a meeting. They may also
at such meeting or any regular or special meeting choose such other committees
as they shall deem proper or advisable, fix the compensation and define the
duties of the members of such committees, fill vacancies occurring in any such
committee and remove any member of any committee.
6a. The Directors may, subject to the limits and restrictions imposed by law
and subject to such rules and regulations consistent with law that they may
make, make contributions of such sums of money as they determine to be
reasonable for public welfare or for charitable, scientific or educational
purposes.
7. No person shall be eligible as an elective or appointed officer, who has
any interest in commissions or other compensation based on premiums or
considerations payable to the Company on any policy or contract, or on any
extension or conversion thereof, unless such policy, contract, extension, or
conversion was written and effective prior to his election or appointment.
8. Each officer elected by the Directors shall, unless removed, hold office
until the next Annual Meeting, and until a successor is elected. Vacancies in
the Board of Directors occurring by enlargement of the Board, by failure to
elect, or otherwise, may be filled by the Directors, or at any annual or special
meeting of the Company.
<PAGE>
8a. The Board of Directors may provide, notwithstanding other provisions of
these By-Laws, for filling vacancies in the Board in the event that due to act
of war or other disaster the number of Directors who are able and available to
act is less than a quorum.
9. Regular meetings of the Directors shall be held without call or formal
notice on the second Monday of each month. Special meetings may be called by the
Chairman, the Vice Chairman or any five Directors, and written or printed
notices of all special meetings shall be sent to the Directors by mail,
postpaid, or personal delivery by the Secretary. A waiver of such notice in
writing signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice. No
notice of any adjourned meeting of the Directors shall be required. In any case
it shall be deemed sufficient notice to a Director to send notice by mail at
least 48 hours or by personal delivery at least 24 hours before the meeting.
Five members of the Board shall constitute a quorum, but a lesser number may
adjourn any meeting from time to time. When a quorum is present at any meeting,
a majority of the Directors in attendance thereat shall, except where a larger
vote is required by law or these By-Laws, decide any question brought before
such meeting.
9a. The Company shall, except as hereinafter provided and subject to
limitations of law, indemnify each Director, former Director, officer and former
officer of the Company, and any such person and any employee or former employee
of the Company who serves at the request of the Company as a Director or officer
of any other organization in which the Company directly or indirectly owns
shares or of which it is a creditor, and his heirs and legal representatives,
against all loss, liability and expense, whether heretofore or hereafter imposed
upon or incurred by him in connection with any pending or future action, suit,
proceeding or claim in which he may be involved, or with which he may be
threatened, by reason of any alleged act or omission as such Director or officer
while so serving or by reason of such Director or officer concurrently holding
office as a director of another organization of which he was a director at the
time he first became such Director or officer. Such loss, liability and expense
shall include, but not be limited to, judgments, fines, court costs, reasonable
attorneys' fees and the cost of reasonable settlements. Such indemnification
shall not cover (a) loss, liability or expense imposed or incurred in connection
with any item or matter as to which such Director or officer shall be finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Company; or (b) loss, liability or
expense imposed or incurred in connection with any item or matter which shall be
settled without final adjudication unless such settlement shall have been
approved as in the best interests of the Company (1) by vote of the Board of
Directors at a meeting in which no Director participates against whom any suit
or proceeding on the same or similar grounds is then pending or threatened or
(2) by a vote of the
<PAGE>
policyholders. As part of such indemnification, the Company may pay expenses
incurred in defending any such action, suit, proceeding or claim in advance of
the final disposition thereof upon receipt of all undertakings by the person
indemnified to repay such payment if he should be determined not to be entitled
to indemnification hereunder. The foregoing rights of indemnification shall be
in addition to any rights to which any Director, former Director, officer,
former officer, employee or former employee, heirs or legal representatives may
otherwise be lawfully entitled.
10. The Chairman of the Board of Directors, or in his absence the Vice
Chairman of the Board, shall preside at all the meetings of the Company. In
their absence the Directors shall elect a Chairman pro tempore. Every presiding
officer shall have the power to require from all members, including those
represented by proxy, satisfactory evidence of their right to vote.
11. The President, Vice Presidents, Secretary and Assistant Secretaries,
Treasurer and Assistant Treasurers, shall each give bond, with sufficient
sureties, in such sums as the Directors may from time to time determine, for the
faithful performance of the duties of their respective offices. The Committee of
Finance shall approve these bonds and examine them in the month of March in each
year, and the Directors may require new bonds whenever they shall see fit. The
bonds of the President and Vice Presidents shall be in the custody of the
Committee of Finance; those of the other officers shall be kept by the
President.
12. These By-Laws may be by a three-quarters vote, altered, amended or added
to, at any meeting of the Company, provided, that a copy of the proposed changes
be placed before the Directors, in writing, at least thirty days before such
meeting, but no changes shall affect the tenure of office of any officer chosen
prior thereto.
February, 1987
<PAGE>
Exhibit 6
April 5, 1996
Memorandum to: Board of Directors
John Hancock Mutual Life Insurance Company
Subject: Actuarial Opinion
Gentlemen:
This opinion is furnished with the filing of this post-Effective Amendment to
the Registration Statement on Form S-6 (File Number 33-64364) which covers
certain flexible premium joint and last survivor variable life insurance
Contracts issued by John Hancock Mutual Life Insurance Company, under which
amounts will be allocated by JHMLICO to subaccounts of John Hancock Mutual
Variable Life Insurance Account UV.
The Prospectus included in the amended Registration Statement describes
Contracts which are issued by the Company. The Contract forms were prepared
under my direction, and I am familiar with the amended Registration Statement
and exhibits thereto. In my opinion:
1 The "sales load" (as defined in paragraph (c)(4) of Rule 6e-3(T) under
the Investment Company Act of 1940) will not exceed 9% of "payments"
(as defined in the first sentence of paragraph (c)(7) of the Rule)
equal to the sum of the guideline annual premiums (as defined in
paragraph (c)(8) of the Rule) that would be paid during the period
equal to the lesser of 20 years or the anticipated joint life
expectancy of the named insureds based on the 1980 Commissioner's
Standard Ordinary Smoker/Nonsmoker Mortality Table. The sales load on
payments made in excess of such sum will not exceed 9%.
Sales load in excess of (1) 30% of payments made which are less than or
equal to one guideline annual premium, plus (2) 10% of
<PAGE>
-2-
payments greater than one but no greater than two guideline annual
premiums; plus (3) 9% of payments in excess of two guideline annual
premiums, will be refunded if the Contract is surrendered during the
first 24 months after issue. Except to the extent that exemptive relief
is applicable, the proportionate amount of sales load deducted from any
payment will not exceed the proportionate amount deducted from any
prior payment, unless an increase is caused by reductions in the annual
cost of insurance or a reduction in the sales load deducted from
amounts transferred to a Contract from another plan of insurance.
2. The death benefits, surrender values, and accumulated premiums of the
Contract as illustrated in the amended Registration Statement are based
on the assumptions stated in the illustrations and are consistent with
the provisions of the Contract. Such assumptions, including the current
rates of cost of insurance and other current charges, are reasonable.
The Contract has not been designed so as to make the relationship
between premiums and benefits, as shown in the illustrations, appear
more favorable to a prospective purchaser of a Contract for joint
insureds who are non-smoker males age 55 and non-smoker females age 50,
than to purchasers of a Contract for joint insureds who have different
underwriting characteristics. Nor were the particular illustrations
shown selected for the purpose of making the relationship appear more
favorable.
3. The charge for federal taxes that is imposed under the Contracts is
reasonable in relation to the Company's increased tax burden under
Section 848 of the Internal Revenue Code of 1986, resulting from the
Company's receipt of such premiums. The cost to the Company of capital
used to satisfy its increased federal tax burden under Section 848 is,
in essence, the Company's targeted rate of return. The targeted rate of
return that is used in calculating the level of such charge is
reasonable, and the factors taken into account by the Company in
determining such targeted rate of return are the appropriate factors to
consider in determining such targeted rate of return.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Experts" in the
Prospectus relating to actuarial matters.
/s/Deborah A. Poppel,
Deborah A. Poppel, FSA
<PAGE>
EXHIBIT 7
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Prospectus and to the use of our reports dated February 9, 1996, with respect to
the financial statements of John Hancock Mutual Variable Life Insurance Account
UV and dated February 7, 1996 with respect to the financial statements of John
Hancock Mutual Life Insurance Company, included in this Post-Effective Amendment
No. 3 to the Registration Statement (Form S-6, No. 33-64364).
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 5, 1996
<PAGE>
Exhibit 9
John Hancock Variable Annuity and Variable Life Insurance Accounts
------------------------------------------------------------------
POWER OF ATTORNEY
The undersigned member of the Board of Directors of John Hancock Mutual
Life Insurance Company does hereby constitute and appoint Stephen L. Brown,
Foster L. Aborn, William L. Boyan, Richard S. Scipione and Bruce E. Skrine, and
each of them individually, with full power of substitution, his or her true and
lawful attorneys and agents to execute, in the name of, and on behalf of, the
undersigned as a member of said Board of Directors, the Registration Statements
under the Securities Act of 1933 and the Investment Company Act of 1940, and
each amendment to the Registration Statements, to be filed for John Hancock
Variable Annuity Account U, John Hancock Mutual Variable Life Insurance Account
UV and any other variable annuity or variable life insurance account of John
Hancock Mutual Life Insurance Company with the Securities and Exchange
Commission and to take any and all action and to execute in the name of, and on
behalf of, the undersigned as a member of said Board of Directors or otherwise
any and all instruments, including applications for exemptions from such Acts,
which said attorneys and agents deem necessary or advisable to enable any
variable annuity or variable life insurance account of John Hancock Mutual Life
Insurance Company to comply with the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and the rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof; and
the undersigned hereby ratifies and confirms as his or her own act and deed all
that each of said attorneys and agents shall do or cause to have done by virtue
hereof. Each of said attorneys and agents shall have, and may exercise, all of
the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand on
the date shown.
<TABLE>
<CAPTION>
Date Director Date Director
<S> <C> <C> <C>
May 10, 1993 s/Stephen L. Brown May 10, 1993 s/Nelson S. Gifford
May 10, 1993 s/William L. Boyan May 10, 1993 s/Delbert C. Staley
May 10, 1993 s/Foster L. Aborn May 10, 1993 s/I. McAllister Booth
May 10, 1993 s/Thomas L. Phillips May 10, 1993 s/Robert E. Fast
May 10, 1993 s/Samuel W. Bodman May 10, 1993 s/E. James Morton
May 10, 1993 s/John M. Connors, Jr. May 10, 1993 s/John F. Magee
May 10, 1993 s/Joan T. Bok July 9, 1993 s/Lawrence K. Fish
May 11, 1993 s/David F. D'Alessandro September 3, 1993 s/Kathleen F. Feldstein
May 10, 1993 s/Randolph W. Bromery March 1, 1995 s/Richard E. Syron
May 10, 1993 s/Vincent Vappi September 30, 1995 s/Michael C. Hawley
</TABLE>
<PAGE>
EXHIBIT 11
April 5, 1996
United States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
This opinion is being furnished with respect to the filing of this post-
effective amendment of the Registrant's Registration Statement with the
Securities and Exchange Commission as required by Rule 485 under the Securities
Act of 1933.
We have acted as counsel to Registrant for the purpose of preparing this
post-effective amendment which is being filed pursuant to paragraph (b) of Rule
485 and hereby represent to the Commission that in our opinion this post-
effective amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b).
We hereby consent to the filing of this opinion with and as a part of this
post-effective amendment to Registrant's Registration Statement with the
Commission.
Very truly yours,
/s/ Francis C. Cleary Jr.
-------------------------
Francis C. Cleary, Jr.
Vice President and Counsel
