<PAGE>
As filed with the Securities and Exchange Commission on April , 1996
Registration No. 33-76662
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 2 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
--------------------
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.
<PAGE>
CROSS-REFERENCE TABLE
Form N-8B-2 Item Caption in Prospectus
- ---------------- ---------------------
1, 2 Cover, The Account and Series
Fund, and 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
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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
<PAGE>
- --------------
[LOGO OF [LOGO OF JOHN HANCOCK APPEARS HERE]
MEDALLION
VARIABLE LIFE
APPEARS HERE] Mutual Life
- -------------- Insurance Company
(John Hancock)
FLEXIBLE PREMIUM VARIABLE LIFE 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 policy ("Policy") described in this
Prospectus can be funded, at the discretion of the Owner, by up to ten 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 up to nine of 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 Mutual Life Insurance Company ("John Hancock"). The assets of the
Fixed Account will be invested in the general account of John Hancock Mutual
Life Insurance Company ("John Hancock").
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY................................................................... 1
JOHN HANCOCK.............................................................. 6
THE ACCOUNT AND SERIES FUND............................................... 6
The Account............................................................. 6
Series Fund............................................................. 6
THE FIXED ACCOUNT......................................................... 9
POLICY PROVISIONS AND BENEFITS............................................ 9
Requirements for Issuance of Policy..................................... 9
Premiums................................................................ 9
Account Value and Surrender Value....................................... 12
Death Benefits.......................................................... 13
Transfers Among Subaccounts............................................. 14
Telephone Transfers and Policy Loans.................................... 15
Loan Provisions and Indebtedness........................................ 16
Default................................................................. 17
Exchange Privilege...................................................... 17
CHARGES AND EXPENSES...................................................... 17
Charges Deducted from Premiums.......................................... 17
Sales Charges........................................................... 18
Administrative Surrender Charge......................................... 20
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......................................... 24
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK................. 25
REPORTS................................................................... 26
VOTING PRIVILEGES......................................................... 26
CHANGES THAT JOHN HANCOCK CAN MAKE........................................ 27
STATE REGULATION.......................................................... 27
LEGAL MATTERS............................................................. 27
REGISTRATION STATEMENT.................................................... 27
EXPERTS................................................................... 28
FINANCIAL STATEMENTS...................................................... 28
APPENDIX--OTHER POLICY PROVISIONS......................................... 57
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES
AND ACCUMULATED PREMIUMS................................................. 59
</TABLE>
THE POLICY DESCRIBED HEREIN IS AVAILABLE ONLY IN NEW YORK. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING IN ANY OTHER JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE. 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:
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Account....................................................... 6
Account Value................................................. 1
Age........................................................... 58
Base Policy Target Premium.................................... 18
DAC Tax....................................................... 18
Death Benefit................................................. 13
Fixed Account................................................. 9
Fund.......................................................... Front Cover
Guaranteed Death Benefit...................................... 10
Guaranteed Death Benefit Grace Period......................... 10
Guaranteed Death Benefit Premium ............................. 10
Home Office................................................... 6
Indebtedness.................................................. 16
Investment Rule............................................... 11
Loan Account.................................................. 16
Minimum First Premium......................................... 10
Modal Processing Date......................................... 10
Planned Premium............................................... 10
Policy Anniversary............................................ 58
Policy Grace Period........................................... 10
Portfolio..................................................... Front Cover
Subaccount.................................................... Front Cover
Sum Insured................................................... 4
Surrender Value............................................... 12
Target Premium................................................ 18
Valuation Date................................................ 8
Valuation Period.............................................. 8
Variable Subaccounts.......................................... 2
7-Pay Premium Limit........................................... 11
</TABLE>
<PAGE>
SUMMARY
WHAT IS THE VARIABLE LIFE POLICY OFFERED?
John Hancock Mutual Life Insurance Company ("John Hancock") issues variable
life insurance policies. The Policies described in this Prospectus are
flexible premium policies. John Hancock issues other variable life insurance
policies. These other policies are offered by means of other Prospectuses, but
use the same underlying Fund.
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 life insurance in providing lifetime protection against economic
loss resulting from the death of the 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 taxes and, from certain premiums, sales expenses.
John Hancock then places the rest of the premium into as many as ten
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 insured and with the amount of
insurance provided at the start of each month.
The Policy provides for payment of death benefit proceeds when the 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 may be either level or variable as elected by the Owner. The
level death benefit provides a death benefit that generally remains fixed in
amount and an Account Value that varies daily. Two versions of the level death
benefit are available. The variable death benefit provides for a death benefit
and Account Value that may vary daily. 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.
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 the insured is living. The Surrender Value is the Account
Value less the sum of any Administrative Surrender Charge, any Contingent
Deferred Sales Charge and any Indebtedness. The Owner may also make partial
withdrawals from a Policy, subject to certain restrictions and an
administrative 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 at issue is $100,000. All persons insured must be
between ages 20 and 75 years at issue and meet certain health and other
criteria called "underwriting standards." An insured may be eligible for the
"preferred" class, which has the lowest insurance charges. The smoking status
of the insureds is generally reflected in the insurance charges made. Policies
issued in connection with certain employee plans will not directly reflect the
sex of the insured in either the premium rates or the charges and values under
the Policy.
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The Owner of a Policy issued on a standard or preferred underwriting basis
may be eligible for the Guaranteed Death Benefit feature if he or she
satisfies certain other underwriting standards relating to health and
occupation. This provision is applicable at no additional cost only in the
first five Policy years and cannot be extended. Under this provision, the
Policy will be guaranteed not to lapse during the first five Policy years,
regardless of adverse investment performance, if the Owner pays the Guaranteed
Death Benefit Premiums on a cumulative basis over that period.
WHAT IS THE AMOUNT OF THE PREMIUMS?
Premiums are flexible and the Owner may choose the amount and frequency of
premium payments.
The minimum amount of premium required at the time of Policy issue is three
months of Guaranteed Death Benefit Premium. One year's Guaranteed Death
Benefit Premium equals the "Target Premium" of a Policy. Unless the Guaranteed
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.
The Target Premium is equal to the annual Guaranteed Death Benefit Premium.
The Target Premium is the sum of Base Policy Target Premium, an amount set
forth in the Policy at issue, plus any rider premium.
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.
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
Short-Term U.S. Government Portfolio, at an annual rate of .50% of the first
$250 million of the average daily net assets and, at lesser percentages for
amounts above $250 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 amounts above $250 million; with respect to the Special Opportunities
Portfolio, at an annual rate of .75% of the first $250 million of the 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
average daily net assets; with respect to the Large Cap Value and Small Cap
Growth Portfolios at an annual rate of 0.75% of the average daily net assets;
with
2
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respect to the Mid Cap Growth Portfolio at an annual rate of 0.85% for the
first $100,000,000 of average daily 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 average daily 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 average daily 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 average daily 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
average daily 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 average daily 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?
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 Deduction from Premium. A charge equal to no more than 4% of
the Target Premium received in any Policy year. John Hancock currently intends
to waive this deduction from premiums received after the first 10 Policy
years.
Contingent Deferred Sales Charge. A charge deducted from Account Value if
the Policy lapses or is surrendered during the first 12 Policy years. The
amount of the charge depends upon the year in which lapse or surrender occurs.
The charge will never be higher than 26% of Base Policy Target Premiums paid
to date. The total charges for sales expenses over the lesser of 20 years or
the life expectancy of the insured will not exceed 9% of the Target Premium
payments under the Policy; assuming all Target Premiums are paid.
Administrative Surrender Charge. A charge deducted from Account Value if the
Policy lapses or is surrendered in the first 9 Policy years. The amount of the
charge depends upon the year in which lapse or surrender occurs and the
Policy's Sum Insured at that time. The maximum charge is $5 per $1,000 of
current Sum Insured.
Issue Charge. A charge deducted monthly from Account Value at the rate of
$20 per month for the first 12 Policy months.
Maintenance Charge. A charge deducted monthly from Account Value in an
amount equal to no more than $8 (currently $6) per Policy.
Insurance Charge. A charge based upon the amount for which John Hancock is
at risk, considering the attained age and risk classification of the insured
and John Hancock's then current monthly insurance rates (never to exceed rates
set forth in the Policy) deducted monthly from Account Value. John Hancock
currently intends to reduce this charge beginning the tenth Policy year.
Charge for Mortality and Expense Risks. A charge made daily at a maximum
effective annual rate of .90% (currently .60%) of the assets of the Account.
Charge for Extra Mortality Risks. An additional charge, depending upon the
age of the insured and the degree of additional mortality risk, required if
the insured does not qualify for the standard or preferred 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 monthly from Account Value.
3
<PAGE>
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 one or more of its Subaccounts on the date of issue of the Policy.
The initial net premium is the gross premium less the sales charge deducted
from certain premium payments and less the charges deducted from all premiums
for state premium taxes and the Federal DAC Tax charge. These charges also
apply to subsequent premium payments. Net premiums derived from payments
received after the issue 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 one but not more than ten of the Subaccounts. The Owner may
change the Investment Rule under which John Hancock will allocate amounts to
Subaccounts.
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 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?
Three death benefit options are available at the time of application for a
Policy.
Option 1: Level Death Benefit. A level death benefit equal to the Sum
Insured or, if greater, the Account Value multiplied by the applicable
Corridor Factor.
Option 2: Variable Death Benefit. A variable death benefit equal to the Sum
Insured plus any Account Value, or, if greater, the Account Value multiplied
by the applicable Corridor Factor.
If neither of the above Options meets the objectives of the Owner, a third
Option may be elected and an endorsement to the Policy will be issued. This
third Option is described below.
Option 3: Level Death Benefit With Greater Funding. A level death benefit
equal to the Sum Insured, or, if greater, the Account Value multiplied by the
applicable Death Benefit Factor. It differs from the level death benefit
option described above in that a greater amount of premium payments can
generally be made by the Owner.
Under each of the Options, an alternative death benefit is computed that is
equal to the Account Value multiplied by a Corridor Factor or a Death Benefit
Factor to increase the death benefit if necessary to ensure that the Policy
will continue to qualify as life insurance under the Federal tax law. See
"Death Benefits", "Definition of Life Insurance" and "Tax Considerations".
4
<PAGE>
Under the Guaranteed Death Benefit provision, the Policy is guaranteed not
to lapse during the first 5 Policy years, provided that, on each Modal
processing date, the amount of cumulative premiums paid, minus any
withdrawals, is at least equal to the cumulative amount of Guaranteed Death
Benefit Premiums due to date. This provision applies only if the insured is in
the preferred or standard underwriting risk class and satisfies certain other
underwriting standards relating to health and occupation.
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?
After the first Policy year the Owner may obtain a Policy loan. Assuming no
Indebtedness (see below), the maximum amount of any loan in Policy years two
and three is 75% of that portion of the Surrender Value attributable to
variable subaccount investments, plus 100% of that portion of the Surrender
Value attributable to Fixed Account investments; thereafter the maximum is 90%
of that portion of Surrender Value attributable to variable subaccount
investments, plus 100% of that portion of the Surrender Value attributable to
Fixed Account investments. 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%. 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 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 canceled immediately as of the
date of such mailing or delivery. Any premium paid on it will be refunded. If
required by state law, the refund will equal the Account Value at the end of
the Valuation Period in which the Policy is received plus all charges or
deductions made against premiums plus an amount reflecting charges against the
Subaccounts and the investment management fee of the Fund.
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
5
<PAGE>
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, is authorized to transact a
life insurance and annuity business in Massachusetts and all other states.
John Hancock is a company chartered in Massachusetts in 1862. 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, 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").
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.
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.
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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.
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.
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.
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.
Equity Index Portfolio: to provide investment results that correspond to the
total return of 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.
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Small Cap Growth Portfolio: to provide long-term growth of capital through a
diversified portfolio investing primarily in common stocks of small
capitalization emerging growth companies.
Small Cap Value Portfolio: to provide long-term growth of capital by
investing in a well diversified portfolio of equity securities of small
capitalization 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, through investment in
non-U.S. equity and fixed income securities.
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, Managed, Real Estate Equity, Equity Index 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, London, England, provide sub-investment advice with respect to
the International Equities Portfolio, and John Hancock Advisers, Inc. does
likewise 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.
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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"), and charges will vary somewhat for Account
Value allocated to the Fixed Account. See "Charges Deducted from Account
Value".
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.
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 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
$100,000. At the time of issue, the insured must be age 20 through 75. 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 in connection with certain
employee plans will not directly reflect the sex of the insured 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.
PREMIUMS
Payment Flexibility. Premiums are flexible. The Owner may choose the amount
and frequency of premium payments, so long as each premium payment meets the
requirements described below.
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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 the insured 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. The minimum amount of premium required at the time
of Policy issue is three months of Guaranteed Death Benefit Premium. However,
an automatic check writing program ("premiumatic") may be available to an
Owner interested in making monthly premium payments and, if utilized by an
Owner, only one month of Guaranteed Death Benefit Premium need be paid to
satisfy the minimum amount.
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 Policy grace period,
unless the Guaranteed 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. The estimated charges will equal three
times the monthly Policy charges then due. 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 chosen, at the
frequency chosen, whether quarterly, monthly, semi-annually or annually. 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. 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, 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 prevent the Policy from lapsing.
Also, if an Owner has elected to use the "guideline premium and cash value
corridor" test for Federal income tax purposes, John Hancock will not accept
the portion of any premium that exceeds the maximum amount prescribed under
that test.
Guaranteed Death Benefit Premiums. A Guaranteed Death Benefit feature may
apply during the first five Policy years. See "Death Benefits". The Guaranteed
Death Benefit Premiums required to maintain this benefit in force depend on
the issue age, sex, smoking status, and underwriting class of the insured at
issue, the Sum Insured at issue and any additional benefits selected. This
premium will equal 1/12th of the Target Premium for Owners electing a monthly
premium payment mode; 1/4 of the Target Premium for Owners electing the
quarterly mode; 1/2 of the Target Premium for owners electing the semi-annual
mode; and the Target Premium for Owners electing the annual mode. The due date
for each premium is referred to as the Modal processing date. To keep the
Guaranteed Death Benefit in effect, the amount of actual premiums paid minus
any withdrawals must at each Modal processing date be at least equal to the
Guaranteed Death Benefit Premiums due to date. If this test is not satisfied
on any Modal processing date, John Hancock will notify the Owner of the
shortfall immediately and a Guaranteed Death Benefit grace period will
commence as of that anniversary. The Guaranteed Death Benefit grace period
will end on the second monthly processing date after the determination of the
shortfall. This notice will be mailed to the Owner's last-known address at
least 31 days prior to the end of the Guaranteed Death Benefit grace period.
If John Hancock does not receive payment for the amount of the deficiency by
the end of
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the Guaranteed Death Benefit grace period, the Guaranteed Death Benefit
feature will lapse. The Guaranteed Death Benefit is only available if the
insured's underwriting class is standard or preferred and the insured meets
certain other underwriting standards relating to health and occupation.
Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by John Hancock for a Planned Premium other than
the Guaranteed Death Benefit Premium. The Owner may also elect to be billed
for premiums on an annual, semi-annual, quarterly or monthly basis. An
automatic check-writing program ("premiumatic") 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 state
premium tax charge, any sales charge, and the Federal DAC Tax charge. See
"Charges and Expenses". The remainder is the net premium.
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.
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 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 reinstatement or other 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. When it identifies such
an excess premium, John Hancock sends the Owner immediate notice and refunds
the excess premium if it
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has not received notice of the acknowledgement by the time the premium payment
check has had a reasonable time to clear the banking system, but in no case
longer than two weeks.
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.
Amount of Surrender Value. The Surrender Value will be the Account Value
less the sum of any Administrative Surrender Charge, any Contingent Deferred
Sales Charge, and any Indebtedness.
When Policy May Be Surrendered. A Policy may be surrendered for its
Surrender Value at any time while the insured is living and the Policy is not
in a Policy 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 and the surrendered
Policy.
A portion of the Contingent Deferred Sales Charge, equal to 20% of premiums
paid in the second Policy year up to one Base Policy Target Premium, will be
waived in calculating the second Policy year's Surrender Value.
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
provided that the Policy is not in a Policy 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.
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.
The effect of a withdrawal, including its associated charge, upon the death
benefit depends upon the death benefit option in effect.
Option 1. Level Death Benefit. Any withdrawal will first be deducted from
Account Value until the Account Value, multiplied by the appropriate Corridor
Factor, is no higher than the Sum Insured. Thereafter, both the Sum Insured
and the Account Value will be reduced by the remaining amount of the
withdrawal. If the Account Value multiplied by the appropriate Corridor Factor
does not exceed the Sum Insured at the time of the withdrawal, the withdrawal
will reduce both the Sum Insured and the Account Value.
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Option 2. Variable Death Benefit. Any withdrawal will be deducted from
Account Value and will not affect the Sum Insured. Nonetheless, because
Account Value will be reduced, the death benefit under this option also will
be reduced.
Option 3. Level Death Benefit with Greater Funding. Any withdrawal will
first be deducted from Account Value until the Account Value, multiplied by
the appropriate Death Benefit Factor, is no higher than the Sum Insured.
Thereafter, both the Sum Insured and the Account Value will be reduced by any
remaining amount of the withdrawal. If the Account Value multiplied by the
appropriate Death Benefit Factor does not exceed the Sum Insured at the time
of the withdrawal, the withdrawal will reduce both the Sum Insured and the
Account Value.
A surrender or withdrawal may have significant tax consequences. See "Tax
Considerations".
John Hancock reserves the right to refuse any withdrawal request that would
cause the Policy's Sum Insured to fall below $100,000.
DEATH BENEFITS
The death benefit proceeds will equal the death benefit of the Policy, plus
any additional rider benefits then due, minus any Indebtedness. If the insured
dies during a Policy grace period, John Hancock will also deduct any overdue
monthly deductions.
The death benefit payable depends on the current Sum Insured and the death
benefit option selected by the Owner. At the time of application for a Policy,
the Owner must select from among three death benefit options. After issue of
the Policy the Owner may change the selection from Option 1 to Option 2 or
vice versa, subject to such evidence of insurability as John Hancock may
require. The three options are:
Option 1: Level Death Benefit: Under this option, the death benefit will
equal the Sum Insured, unless the Account Value multiplied by the Corridor
Factor produces a higher death benefit. The Corridor Factor depends upon the
attained age of the insured. The Corridor Factor decreases slightly (or
remains the same at older and younger ages) from year to year as the attained
age of the insured increases. A complete list of Corridor Factors is set forth
in the Policy. The Policy will be subject under this option to the "guideline
premium and cash value corridor" test as defined by Internal Revenue Code
("Code") Section 7702. This option will offer the best opportunity for the
Account Value under a Policy to increase without increasing the death benefit
as quickly as it might under the other options. When the Account Value
multiplied by the Corridor Factor exceeds the Sum Insured, the death benefit
will increase whenever there is an increase in the Policy's Account Value and
will decrease whenever there is a decrease in the Account Value, but never
below the Sum Insured.
Option 2: Variable Death Benefit: Under this option, the death benefit will
equal the Sum Insured plus any Account Value, unless the Account Value
multiplied by the Corridor Factor produces a higher death benefit. The
Corridor Factor depends upon the then attained age of the insured. The
Corridor Factor decreases slightly (or remains the same at older and younger
ages) from year to year as the attained age of the insured increases. A
complete list of Corridor Factors is set forth in the Policy. Under this
option the Policy will be subject to the "guideline premium and cash value
corridor" test as defined by Code Section 7702. This option will offer the
best opportunity for the Owner who would like to have an increasing death
benefit as early as possible. The death benefit will increase whenever there
is an increase in the Policy's Account Value and will decrease whenever there
is a decrease in the Account Value, but never below the Sum Insured.
If neither of the above Options meets the objectives of the Owner, a third
Option may be elected and an endorsement to the Policy will be issued. This
third Option is described below.
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Option 3: Level Death Benefit With Greater Funding: Under this option, the
death benefit will equal the Sum Insured, unless the Account Value, multiplied
by the Death Benefit Factor, gives a higher death benefit. The Death Benefit
Factor depends upon the sex, smoking status and then attained age of the
insured. The Death Benefit Factor decreases slightly from year to year as the
attained age of the insured increases. A complete list of Death Benefit
Factors is set forth in the Policy. Under this option, the death benefit will
be subject to the "cash value accumulation" test as defined by Code Section
7702. This option will offer the best opportunity for the Owner who is looking
for an increasing death benefit in later Policy years and/or would like to
fund the policy at the "7-pay" limit for the full 7 years. When the Account
Value multiplied by the Death Benefit Factor exceeds the Sum Insured, the
death benefit will increase whenever there is an increase in the Policy's
Account Value and will decrease whenever there is a decrease in the Account
Value, but never below the Sum Insured.
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. One of two tests under
current Federal tax law can be used to determine if a Policy complies with the
definition of life insurance in Section 7702 of the Code.
The "guideline premium and cash value corridor" test limits the amount of
premiums payable under a Policy to a certain amount for an insured of a
particular age and sex. The test also applies a prescribed "Corridor Factor"
to determine a minimum ratio of death benefit to Account Value.
The "cash value accumulation test" also limits the amount of premiums
payable under a Policy to a prescribed amount, using a minimum ratio of death
benefit to a Policy's Account Value, but employs as a standard a "net single
premium" computed in compliance with the Code. If the Account Value under a
Policy is at any time greater than the net single premium at the insured's age
and sex for the proposed death benefit, the death benefit will be increased
automatically by multiplying the Account Value by a "Death Benefit Factor"
computed in compliance with the Code.
Guaranteed Death Benefit. During the first 5 Policy years the Policy is
guaranteed not to lapse, provided that (1) the amount of premiums paid through
each Modal processing date minus any withdrawals is at least equal to the sum
of the cumulative Guaranteed Death Benefit Premiums due to date and (2) the
insured is in the standard or preferred underwriting class and satisfies
certain other underwriting standards relating to health and occupation. At any
time when this feature is not in force, the death benefit of the Policy is not
guaranteed and the Policy may lapse if the Account Value falls to a low level.
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.
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
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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.
If the Owner requests a reallocation which would result in amounts being
held in more than ten subaccounts, such reallocation will not be effective and
a revised reallocation may be chosen in order that amounts will be reallocated
to no more than ten subaccounts.
Dollar Cost Averaging. A scheduled monthly transfer option is available to
Owners seeking to take advantage of "dollar cost averaging". This option
provides for the automatic transfer on a monthly basis of a dollar amount
chosen by the Owner from the Money Market Subaccount to any of the other
variable Subaccounts.
Eligibility for this option is limited to an Owner who has $2500 or more in
the Money Market Subaccount on the day the transfer is scheduled to begin.
Scheduled transfers may be made to one or more of any other variable
Subaccounts but the amount to be transferred monthly to any Subaccount must be
$100 or more.
Once the written election is received in form satisfactory to John Hancock
at its Home Office, transfers will begin on the second monthly processing date
following its receipt. To request an election form or if you have any
questions with respect to this provision, call 1-800-732-5543.
Once elected, the scheduled monthly transfer option will remain in effect
until the receipt of written notice from the Owner by John Hancock at its Home
Office of cancellation of the option or receipt of notice of the death of the
insured, whichever first occurs.
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 1-800-621-0448. (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
transactions 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. If John
Hancock does not employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, it may be liable for any loss due to
unauthorized or fraudulent instructions.
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<PAGE>
LOAN PROVISIONS AND INDEBTEDNESS
Loan Provision. Loans may be made at any time a Loan Value is available
after the first Policy year. 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. Assuming no outstanding Indebtedness in Policy years
two and three, the Loan Value will be 75% of that portion of the Surrender
Value attributable to the variable Subaccount investments, plus 100% of that
portion of the Surrender Value attributable to Fixed Account Investments and,
in later Policy years, 90% of that portion of the Surrender Value attributable
to variable Subaccount investments, plus 100% of that portion of the surrender
Value attributable to Fixed Account investments. 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" (defined below) for the calendar month ending 2
months before the calendar month of the Policy anniversary or (2) 5%. 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.
The amount of any outstanding loan plus accrued interest is called the
"Indebtedness", a loan will not be permitted unless it is at least $300. The
Owner may repay all or a portion of any Indebtedness while the insured is
living and 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 JHVLICO'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 interest
at a rate that is 1% less than the loan interest rate for the first 20 Policy
years and, thereafter, .5% less 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 the Surrender 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.
If a Policy is a modified endowment at the time a loan is made, that loan
may have significant tax consequences. See "Tax Considerations".
16
<PAGE>
DEFAULT
Grace Period, Default and Lapse. Unless the 5 Year Guaranteed 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 Policy 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 Policy 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.
Lapse can have significant tax consequences. See "Tax Considerations--Policy
Proceeds". If the Guaranteed Death Benefit has been in effect and lapses at
the end of a Guaranteed Death Benefit grace period (as described in
"Premiums--Guaranteed Death Benefit Premiums"), the usual default, Policy
grace period and lapse procedures described in the preceding paragraph will be
applied commencing with the first day of the Policy month in which the lapse
of the Guaranteed Death Benefit occurs.
The insurance under the Policy continues in full force during any grace
period but, if the insured dies during the Policy 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. If in the
Policy grace period, the notice will specify the minimum amount which must be
paid to continue the Policy in force on a premium paying basis after the end
of the Policy grace period. If in the Guaranteed Death Benefit grace period,
the notice will specify the amount which must be paid to continue the
Guaranteed Death Benefit feature in force.
Reinstatement. A lapsed Policy or the Guaranteed Death Benefit may be
reinstated in accordance with the Policy's terms. Evidence of insurability
satisfactory to John Hancock will be required and payment of the required
premium and charges. The request must be received at John Hancock's Home
Office within 1 year after the beginning of the applicable grace period. A
reinstatement of the Policy may be treated as 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 part of the sales charges (see "Sales Charges" below), the
following charges are deducted from premiums:
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
17
<PAGE>
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.
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 CHARGES
Charges are 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".
From Premiums. Part of the sales charge is deducted from premiums received.
The amount is 4% of the premiums received in any Policy year that do not
exceed that year's total Target Premium. The Target Premium is established at
issue and is the sum of Base Policy Target Premium and any rider premium. The
Base Policy Target Premium is set forth in the Policy. Target Premiums will
vary based on the issue age, sex, smoking status and underwriting class of the
insured. John Hancock currently intends to make this deduction only in the
first 10 Policy years, but this is not contractually guaranteed and the right
is reserved to continue deductions over a longer period. Because the Policies
were first offered for sale in 1994, no Policies have yet been outstanding for
more than 10 years.
John Hancock will waive a portion of the sales charge (it is currently
waiving a portion equal to 2% of all premiums from which sales charges are
deducted) otherwise to be deducted from premiums under a Policy with a current
Sum Insured of $250,000 or higher. The continuation of this waiver is not
contractually guaranteed and the waiver may be withdrawn or modified by John
Hancock in the future.
No sales charge is deducted from a premium payment received in excess of one
Target Premium in any Policy year.
Contingent Deferred Sales Charge. The remainder of the sales charge will be
deducted only if the Policy is surrendered or stays in default past its grace
period. This second part is the Contingent Deferred Sales Charge. The
Contingent Deferred Sales Charge, however, will not be deducted for a Policy
that lapses or is surrendered on or after the Policy's twelfth anniversary,
and it will be reduced for a Policy that lapses or is surrendered between the
end of the seventh Policy year and the end of the twelfth Policy year.
18
<PAGE>
The Contingent Deferred Sales Charge is computed as a percentage of Base
Policy Target Premiums paid in accordance with the following schedule:
<TABLE>
<CAPTION>
Maximum Contingent
For Surrenders or Lapses Effective During: Deferred Sales Charge
------------------------------------------ ---------------------
<S> <C>
Policy Year 1 26% of premiums received in Policy
Year 1 up to 1 Base Policy Target
Premium*
Policy Year 2 26% of premiums received in Policy
Years 1 and 2 up to 1 Base Policy
Target Premium in each year
Policy Years 3-7 26% of premiums received in Policy
Years 1, 2 and 3 up to 1 Base Policy
Target Premium in each year
Policy Year 8 83.33% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 9 66.67% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 10 50% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 11 33.33% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 12 16.67% of the Maximum Contingent
Deferred Sales Charge for Policy
Year 7
Policy Year 13 and later 0
</TABLE>
- --------
* The amount of the Contingent Deferred Sales Charge is calculated on the
basis of the Base Policy Target Premium for the age of the insured at the time
of issue of the Policy.
The Contingent Deferred Sales Charge reaches its maximum at the end of the
third Policy year, stays level through the seventh Policy year, and is reduced
by an equal amount at the beginning of each Policy year thereafter until it
reaches zero in Policy year 13. At issue ages higher than age 54, the maximum
is reached at an earlier Policy year, and may be reduced to zero over a
shorter number of years.
Effect of Premium Payment Pattern. An Owner may structure the timing and
amount of premium payments to minimize the sales charges, 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 $1,000 each would pay total premium sales
charges of $400 and be subject to a maximum Contingent Deferred Sales Charge
of $780 if he paid $1,000 in each of the first ten Policy years, but only a
$200 premium sales charge and $520 Contingent Deferred Sales Charge if he paid
$2,000 (i.e., two times the Target Premium amount) in every other Policy year
up to the tenth Policy year. However, delaying the payment of Target Premiums
to later Policy years could increase the risk that the Account Value will be
insufficient to pay monthly Policy charges as they come due and that, 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".
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<PAGE>
ADMINISTRATIVE SURRENDER CHARGE
A charge is made if the Policy is surrendered or lapses in the first nine
Policy years to recover administrative expenses relating to the Policy which
would not otherwise be recouped. The maximum charge in Policy years 1 through
7 is $5 per $1,000 of current Sum Insured, in Policy year 8 is $4 per $1,000
of current Sum Insured and in Policy year 9 is $3 per $1,000 of current Sum
Insured.
This charge is made to compensate John Hancock for expenses incurred in
connection with the underwriting, issuance and maintenance of the Policy which
may not be recovered upon the early surrender or lapse of the Policy.
REDUCED CHARGES FOR ELIGIBLE GROUPS
The sales charges, Administrative Surrender 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
Owner.
CHARGES DEDUCTED FROM ACCOUNT VALUE OR ASSETS
The following charges are deducted from Account Value or assets:
Issue Charge. John Hancock will deduct from Account Value an Issue Charge
equal to $20 per month for the first 12 Policy months 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.
Maintenance Charge. John Hancock will deduct from the Account Value a
monthly charge not to exceed $8 per Policy. The current monthly charge is $6
per Policy.
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 the insured and the amount at risk. The amount
at risk is the difference between the current 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 the insured 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 set forth in the Policy.
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<PAGE>
A reduction in the insurance charge may be made to a Policy beginning on the
first day of the first month in the tenth Policy year. This reduction is not
guaranteed but it is John Hancock's present intention to effect this reduction
in the tenth and following Policy years as long as the Policy is in force.
The amount of the reduction will depend upon the length of time the Policy
has been in force. In the tenth Policy year the monthly insurance charge will
be reduced by an amount equal to a percentage of the then Account Value. This
percentage will begin at an annual effective rate of .20% in the tenth Policy
year and increase annually by .01% through and including the thirtieth Policy
year. Thereafter the percentage reduction each year the Policy remains in
force will be at an annual effective rate of .40%.
For example, it is expected that the reduction percentage in Policy year 11
would be at an effective annual rate of .21%, in Policy year 20 would be .30%
and in Policy year 30 would be .40%.
John Hancock reserves the right to modify or discontinue this reduction.
Because the Policies were first offered for sale in 1994, no reductions have
yet been made.
Lower current insurance rates are offered at most ages for insureds who are
eligible for the preferred underwriting class of the Policy.
John Hancock also charges lower current insurance rates under a Policy with
a current Sum Insured of $250,000 or higher, but these lower rates are not
contractually guaranteed and may be withdrawn at some future date.
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
current charge is at an effective annual rate of .60%. 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.
Charges for Extra Mortality Risks. An insured who does not qualify for the
standard or preferred underwriting class must pay an additional charge because
of the extra mortality risk. The level of the charge depends upon the age of
the insured and the degree of extra mortality risk. This additional charge is
deducted monthly from Account Value. Alternatively, the charge may take the
form of an additional insurance charge as described above.
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 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.
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<PAGE>
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 each monthly processing date 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 Death Benefit Premium is guaranteed not to increase.
The state premium tax charge, the Federal DAC Tax charge, the Administrative
Surrender Charge, the Issue Charge and the charge for partial withdrawals are
guaranteed not to increase over the life of the Policy. The maintenance
charge, the sales charges, 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, pursuant to a sales agreement among John
Hancock, John Hancock, and the Account, acts as the principal underwriter of
the Policies. The sales agreement will remain in effect until terminated upon
sixty days' written notice by any party. 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 John Hancock
reimburses John Hancock for such compensation 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.
The maximum commission payable to a John Hancock representative for selling
a Policy is 50% of the Target Premium paid in the first Policy year, 6% of the
Target Premium paid in the second through fourth 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 will be eligible for additional compensation.
22
<PAGE>
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, and John Hancock will reimburse John Hancock for such
amounts and for certain other direct expenses in connection with marketing the
Policies through other broker-dealers.
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, John Hancock
believes 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.
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.
23
<PAGE>
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 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.
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.
CORPORATE AND H.R. 10 PLANS
The Policy may be acquired in connection with the funding of retirement
plans satisfying the qualification requirements of Section 401 of the Code. If
so, the Code provisions relating to such plans and life insurance benefits
thereunder should be carefully scrutinized.
24
<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 Occupations
--------- ---------------------
<S> <C>
Samuel W. Bodman Chairman of The Board and Chief Executive
Officer, Cabot Corporation (chemicals)
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 Executive
Officer, John Hancock
Thomas L. Phillips Director, formerly Chairman of the Board,
Raytheon Company (electronics).
I. MacAllister Booth Chairman of the Board and Chief Executive
Officer, Polaroid Corporation (photographic
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 Electric
System (electric utility).
Robert E. Fast Partner, Hale and Dorr (law firm).
Foster L. Aborn Vice Chairman of the Board, John Hancock
Kathleen F. Feldstein President, Economic Studies Inc. (consultant).
Lawrence K. Fish Chairman and Chief Executive Officer, Citizens
Financial Group (banking).
Richard F. Syron Chairman of the Board and Chief Executive
Officer, American Stock Exchange.
Michael C. Hawley President and Chief Operating Officer, The
Gillette Company (razors).
<CAPTION>
Executive Officers
------------------
<S> <C>
Diane M. Capstaff Executive Vice President
Thomas E. Moloney Executive Vice President
Richard S. Scipione General Counsel
Bruce E. Skrine Vice President and Secretary
</TABLE>
The business address of all Directors and officers of John Hancock is John
Hancock Place, Boston, Massachusetts 02117.
25
<PAGE>
REPORTS
At least once each Policy year a statement will be sent to the Owner setting
forth the amount of the death benefit, 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
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 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.
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
26
<PAGE>
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.
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.
27
<PAGE>
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 Randi M.
Sterrn, 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.
28
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
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>
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
STATEMENTS OF OPERATIONS -- CONTINUED
<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
period.......... 6,394,338 4,823,500 -- 46,246,013 45,948,084 --
----------- ---------- ---------- ----------- ----------- -----------
End of period.... $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
period.......... 2,341,003 1,042,619 -- 9,336,390 9,077,877 --
------------ ------------ -------------- ------------ ------------ --------------
End of period.... $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.
48
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
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 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 Geographic
Type Statement Value Concentration Statement Value
-------- --------------- ------------- ---------------
(In millions) (In millions)
<S> <C> <S> <C>
Apartments.......... $2,374.6 East North Central..... $ 822.7
Hotels.............. 164.4 East South Central..... 178.2
Industrial.......... 780.4 Middle Atlantic........ 1,861.1
Office buildings.... 1,823.6 Mountain............... 431.3
Retail.............. 1,545.1 New England............ 915.6
1-4 Family.......... 9.5 Pacific................ 2,253.4
Agricultural........ 1,607.0 South Atlantic......... 1,611.7
Other............... 496.9 West North Central..... 217.7
-------- West South Central..... 447.4
$8,801.5 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.
ADDITIONAL INSURANCE BENEFITS
On payment of an additional charge and subject to certain age and insurance
underwriting requirements, certain additional provisions, such as an
Accidental Death Benefit, which are subject to the restrictions and
limitations set forth therein, may be included in a Policy by rider.
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. If the insured dies and there is no surviving Beneficiary, the
Owner will be the Beneficiary, but if the insured was the Owner, the Owner's
estate will be the Beneficiary.
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.
MISSTATEMENT OF AGE OR SEX. If the age or sex of the insured has been
misstated, John Hancock will adjust the benefits payable to reflect the
correct age or sex.
57
<PAGE>
SUICIDE. If the 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 the suicide is within 2 years (except where state law requires a shorter
period) from the date of any Policy change that increases the death benefit,
or the payment of any premium requiring evidence of insurability, the death
benefit will not include the increased benefit but will include the excess
premium.
AGE, POLICY ANNIVERSARIES AND MONTHLY PROCESSING DATE. 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. The
monthly processing date is on or about the first Valuation Date in each Policy
month.
AVIATION ACTIVITY EXCLUSION. If the insured dies in an aviation accident
while a crew member on other than a commercial aircraft and the Policy
provides at the request of the Owner for a limited benefit in such situation,
John Hancock will pay in place of all other benefits an amount equal to the
greater of the premium paid or the Surrender Value, less any Indebtedness.
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.
58
<PAGE>
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
SURRENDER VALUES AND ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit, Account Value
and Surrender Value of the Policy, disregarding any Policy loans. Each table
separately illustrates the operation of a Policy for an identified issue age,
Planned Premium schedule and Sum Insured and shows how the death benefit,
Account Value 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 values 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 each of the three available death benefit
options. The values 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 in a state in which no distinctions are
made based on the gender of the insureds.
The amounts shown for the death benefit, Account Value and Surrender Value
are as of the end of each Policy year. The tables headed "Using Current
Charges" assume that the current rates for insurance, sales, risk, and expense
charges (including John Hancock's intended waiver after ten Policy years of
the sales charges deducted from certain premiums and its intended reduction in
the tenth Policy year in the insurance charge deducted monthly from Account
Value) will apply in each year illustrated. The 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 nine 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 Death Benefit feature was in effect
the first 5 Policy years.
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.
59
<PAGE>
DEATH BENEFIT OPTION 1: --LEVEL DEATH BENEFIT
ILLUSTRATION ASSUMES CURRENT CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*
<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 217 244 270 0 0 0
2 1,636 100,000 100,000 100,000 662 736 814 0 0 71
3 2,516 100,000 100,000 100,000 1,091 1,241 1,405 0 149 312
4 3,439 100,000 100,000 100,000 1,504 1,758 2,046 411 666 953
5 4,409 100,000 100,000 100,000 1,897 2,285 2,741 804 1,193 1,648
6 5,428 100,000 100,000 100,000 2,272 2,823 3,495 1,179 1,730 2,402
7 6,497 100,000 100,000 100,000 2,625 3,369 4,312 1,532 2,276 3,219
8 7,620 100,000 100,000 100,000 2,957 3,923 5,198 2,063 3,029 4,304
9 8,799 100,000 100,000 100,000 3,265 4,484 6,160 2,570 3,789 5,465
10 10,037 100,000 100,000 100,000 3,558 5,061 7,219 3,261 4,765 6,922
11 11,337 100,000 100,000 100,000 3,854 5,676 8,404 3,656 5,479 8,207
12 12,702 100,000 100,000 100,000 4,127 6,302 9,701 4,029 6,203 9,602
13 14,135 100,000 100,000 100,000 4,375 6,937 11,119 4,375 6,937 11,119
14 15,640 100,000 100,000 100,000 4,596 7,580 12,670 4,596 7,580 12,670
15 17,220 100,000 100,000 100,000 4,787 8,228 14,369 4,787 8,228 14,369
16 18,879 100,000 100,000 100,000 4,948 8,883 16,232 4,948 8,883 16,232
17 20,621 100,000 100,000 100,000 5,069 9,534 18,270 5,069 9,534 18,270
18 22,450 100,000 100,000 100,000 5,143 10,176 20,499 5,143 10,176 20,499
19 24,370 100,000 100,000 100,000 5,166 10,803 22,938 5,166 10,803 22,938
20 26,387 100,000 100,000 100,000 5,131 11,409 25,609 5,131 11,409 25,609
25 38,086 100,000 100,000 100,000 3,846 13,872 43,500 3,846 13,872 43,500
30 53,018 ** 100,000 100,000 ** 14,354 73,356 ** 14,354 73,356
35 72,076 ** 100,000 143,268 ** 9,914 124,581 ** 9,914 124,581
40 96,398 ** ** 219,421 ** ** 208,973 ** ** 208,973
45 127,441 ** ** 366,521 ** ** 349,067 ** ** 349,067
</TABLE>
- --------
(*) If premiums are paid more frequently than annually, the above values shown
would be affected.
(**) Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS 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, ACCOUNT VALUE 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 FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
60
<PAGE>
DEATH BENEFIT OPTION 1: LEVEL DEATH BENEFIT ILLUSTRATION ASSUMES GUARANTEED
CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM *
<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 0 100,000 100,000 191 217 242 0 0 0
2 1,636 0 100,000 100,000 609 680 754 0 0 11
3 2,516 0 100,000 100,000 1,010 1,153 1,307 0 60 214
4 3,439 100,000 100,000 100,000 1,394 1,634 1,905 301 541 812
5 4,409 100,000 100,000 100,000 1,758 2,123 2,550 665 1,030 1,457
6 5,428 100,000 100,000 100,000 2,102 2,619 3,247 1,009 1,526 2,154
7 6,497 100,000 100,000 100,000 2,424 3,119 3,999 1,332 2,026 2,906
8 7,620 100,000 100,000 100,000 2,725 3,624 4,810 1,831 2,730 3,916
9 8,799 100,000 100,000 100,000 3,000 4,131 5,684 2,305 3,435 4,989
10 10,037 100,000 100,000 100,000 3,252 4,640 6,630 2,956 4,344 6,334
11 11,337 100,000 100,000 100,000 3,477 5,149 7,650 3,279 4,951 7,452
12 12,702 100,000 100,000 100,000 3,672 5,654 8,750 3,573 5,555 8,651
13 14,135 100,000 100,000 100,000 3,837 6,154 9,939 3,837 6,154 9,939
14 15,640 100,000 100,000 100,000 3,971 6,649 11,224 3,971 6,649 11,224
15 17,220 100,000 100,000 100,000 4,070 7,133 12,612 4,070 7,133 12,612
16 18,879 100,000 100,000 100,000 4,133 7,605 14,114 4,133 7,605 14,114
17 20,621 100,000 100,000 100,000 4,153 8,057 15,737 4,153 8,057 15,737
18 22,450 100,000 100,000 100,000 4,123 8,483 17,489 4,123 8,483 17,489
19 24,370 100,000 100,000 100,000 4,041 8,877 19,380 4,041 8,877 19,380
20 26,387 100,000 100,000 100,000 3,896 9,228 21,421 3,896 9,228 21,421
25 38,086 100,000 100,000 100,000 2,009 10,042 34,419 2,009 10,042 34,419
30 53,018 ** 100,000 100,000 ** 7,972 54,285 ** 7,972 54,285
35 72,076 ** 100,000 100,000 ** ** 86,922 ** ** 86,922
40 96,398 ** ** 148,635 ** ** 141,557 ** ** 141,557
45 127,441 ** ** 240,512 ** ** 229,059 ** ** 229,059
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS 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, ACCOUNT VALUE AND SURRENDER VALUE FOR A POLICY
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT
RETURN AVERAGE 0%, 5% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
61
<PAGE>
DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT
ILLUSTRATION ASSUMES CURRENT CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK
SUM INSURED AT ISSUE: $100,000
$760 BASE POLICY TARGET PREMIUM*
<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,217 100,243 100,269 217 243 269 0 0 0
2 1,636 100,660 100,734 100,812 660 734 812 0 0 68
3 2,516 101,087 101,237 101,399 1,087 1,237 1,399 0 144 306
4 3,439 101,496 101,749 102,035 1,496 1,749 2,035 403 657 942
5 4,409 101,885 102,271 102,723 1,885 2,271 2,723 792 1,178 1,630
6 5,428 102,255 102,801 103,467 2,255 2,801 3,467 1,162 1,709 2,374
7 6,497 102,601 103,337 104,270 2,601 3,337 4,270 1,509 2,245 3,177
8 7,620 102,925 103,879 105,138 2,925 3,879 5,138 2,031 2,985 4,244
9 8,799 103,225 104,425 106,075 3,225 4,425 6,075 2,530 3,730 5,380
10 10,037 103,506 104,984 107,102 3,506 4,984 7,102 3,210 4,687 6,806
11 11,337 103,789 105,575 108,247 3,789 5,575 8,247 3,592 5,378 8,049
12 12,702 104,049 106,174 109,492 4,049 6,174 9,492 3,950 6,075 9,393
13 14,135 104,280 106,776 110,845 4,280 6,776 10,845 4,280 6,776 10,845
14 15,640 104,482 107,379 112,315 4,482 7,379 12,315 4,482 7,379 12,315
15 17,220 104,653 107,981 113,912 4,653 7,981 13,912 4,653 7,981 13,912
16 18,879 104,791 108,581 115,649 4,791 8,581 15,649 4,791 8,581 15,649
17 20,621 104,887 109,168 117,530 4,887 9,168 17,530 4,887 9,168 17,530
18 22,450 104,933 109,734 119,564 4,933 9,734 19,564 4,933 9,734 19,564
19 24,370 104,925 110,271 121,760 4,925 10,271 21,760 4,925 10,271 21,760
20 26,387 104,855 110,772 124,129 4,855 10,772 24,129 4,855 10,772 24,129
25 38,086 103,365 112,395 139,032 3,365 12,395 39,032 3,365 12,395 39,032
30 53,018 ** 111,247 160,376 ** 11,247 60,376 ** 11,247 60,376
35 72,076 ** 104,150 189,745 ** 4,150 89,745 ** 4,150 89,745
40 96,398 ** ** 229,025 ** ** 129,025 ** ** 129,025
45 127,441 ** ** 277,606 ** ** 177,606 ** ** 177,606
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
above would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS 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, ACCOUNT VALUE 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 FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
62
<PAGE>
DEATH BENEFIT OPTION 2: VARIABLE DEATH BENEFIT ILLUSTRATION ASSUMES GUARANTEED
CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE:
$100,000 $760 BASE POLICY TARGET PREMIUM*
<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- ---------------------------------- ----------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- ---------------------------------- ----------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,190 100,216 100,241 190 216 241 0 0 0
2 1,636 100,607 100,678 100,751 607 678 751 0 0 8
3 2,516 101,006 101,148 101,302 1,006 1,148 1,302 0 55 209
4 3,439 101,387 101,626 101,895 1,387 1,626 1,895 294 533 802
5 4,409 101,747 102,109 102,533 1,747 2,109 2,533 654 1,016 1,440
6 5,428 102,086 102,598 103,221 2,086 2,598 3,221 993 1,505 2,128
7 6,497 102,402 103,089 103,959 2,402 3,089 3,959 1,309 1,997 2,866
8 7,620 102,695 103,583 104,753 2,695 3,583 4,753 1,801 2,689 3,859
9 8,799 102,962 104,076 105,605 2,962 4,076 5,605 2,267 3,380 4,910
10 10,037 103,204 104,568 106,522 3,204 4,568 6,522 2,908 4,272 6,225
11 11,337 103,417 105,056 107,505 3,417 5,056 7,505 3,220 4,858 7,307
12 12,702 103,600 105,536 108,558 3,600 5,536 8,558 3,501 5,437 8,459
13 14,135 103,751 106,007 109,688 3,751 6,007 9,688 3,751 6,007 9,688
14 15,640 103,868 106,466 110,899 3,868 6,466 10,899 3,868 6,466 10,899
15 17,220 103,949 106,909 112,197 3,949 6,909 12,197 3,949 6,909 12,197
16 18,879 103,992 107,332 113,586 3,992 7,332 13,586 3,992 7,332 13,586
17 20,621 103,991 107,729 115,070 3,991 7,729 15,070 3,991 7,729 15,070
18 22,450 103,938 108,089 116,649 3,938 8,089 16,649 3,938 8,089 16,649
19 24,370 103,831 108,408 118,329 3,831 8,408 18,329 3,831 8,408 18,329
20 26,387 103,659 108,671 120,109 3,659 8,671 20,109 3,659 8,671 20,109
25 38,086 101,637 108,821 130,610 1,637 8,821 30,610 1,637 8,821 30,610
30 53,018 ** 105,640 143,760 ** 5,640 43,760 ** 5,640 43,760
35 72,076 ** ** 158,340 ** ** 58,340 ** ** 58,340
40 96,398 ** ** 170,746 ** ** 70,746 ** ** 70,746
45 127,441 ** ** 171,683 ** ** 71,683 ** ** 71,683
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS 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, ACCOUNT VALUE 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 FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
63
<PAGE>
DEATH BENEFIT OPTION 3: LEVEL DEATH BENEFIT WITH GREATER FUNDING ILLUSTRATION
ASSUMES CURRENT CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE:
$100,000 $760 BASE POLICY TARGET PREMIUM*
<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- --------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 217 244 270 0 0 0
2 1,636 100,000 100,000 100,000 662 736 814 0 0 71
3 2,516 100,000 100,000 100,000 1,091 1,241 1,405 0 149 312
4 3,439 100,000 100,000 100,000 1,504 1,758 2,046 411 666 953
5 4,409 100,000 100,000 100,000 1,897 2,285 2,741 804 1,193 1,648
6 5,428 100,000 100,000 100,000 2,272 2,823 3,495 1,179 1,730 2,402
7 6,497 100,000 100,000 100,000 2,625 3,369 4,312 1,532 2,276 3,219
8 7,620 100,000 100,000 100,000 2,957 3,923 5,198 2,063 3,029 4,304
9 8,799 100,000 100,000 100,000 3,265 4,484 6,160 2,570 3,789 5,465
10 10,037 100,000 100,000 100,000 3,558 5,061 7,219 3,261 4,765 6,922
11 11,337 100,000 100,000 100,000 3,854 5,676 8,404 3,656 5,479 8,207
12 12,702 100,000 100,000 100,000 4,127 6,302 9,701 4,029 6,203 9,602
13 14,135 100,000 100,000 100,000 4,375 6,937 11,119 4,375 6,937 11,119
14 15,640 100,000 100,000 100,000 4,596 7,580 12,670 4,596 7,580 12,670
15 17,220 100,000 100,000 100,000 4,787 8,228 14,369 4,787 8,228 14,369
16 18,879 100,000 100,000 100,000 4,948 8,883 16,232 4,948 8,883 16,232
17 20,621 100,000 100,000 100,000 5,069 9,534 18,270 5,069 9,534 18,270
18 22,450 100,000 100,000 100,000 5,143 10,176 20,499 5,143 10,176 20,499
19 24,370 100,000 100,000 100,000 5,166 10,803 22,938 5,166 10,803 22,938
20 26,387 100,000 100,000 100,000 5,131 11,409 25,609 5,131 11,409 25,609
25 38,086 100,000 100,000 100,000 3,846 13,872 43,500 3,846 13,872 43,500
30 53,018 ** 100,000 123,596 ** 14,354 72,618 ** 14,354 72,618
35 72,076 ** 100,000 177,234 ** 9,914 117,094 ** 9,914 117,094
40 96,398 ** ** 251,422 ** ** 183,680 ** ** 183,680
45 127,441 ** ** 354,524 ** ** 280,789 ** ** 280,789
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS 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, ACCOUNT VALUE 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 FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
64
<PAGE>
DEATH BENEFIT OPTION 3: LEVEL DEATH BENEFIT WITH GREATER FUNDING ILLUSTRATION
ASSUMES GUARANTEED CHARGES
MALE, ISSUE AGE 35, STANDARD NONSMOKER UNDERWRITING RISK SUM INSURED AT ISSUE:
$100,000 $760 BASE POLICY TARGET PREMIUM*
<TABLE>
<CAPTION>
Death Benefit Account Value Surrender Value
-------------------------------- -------------------------------- --------------------------------
Premiums Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross
End of Accumulated Annual Investment Return of: Annual Investment Return of: Annual Investment Return of:
Policy At 5% Interest -------------------------------- -------------------------------- --------------------------------
Year Per Year 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
- ------ -------------- -------- -------- --------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 798 100,000 100,000 100,000 191 217 242 0 0 0
2 1,636 100,000 100,000 100,000 609 680 754 0 0 11
3 2,516 100,000 100,000 100,000 1,010 1,153 1,307 0 60 214
4 3,439 100,000 100,000 100,000 1,394 1,634 1,905 301 541 812
5 4,409 100,000 100,000 100,000 1,758 2,123 2,550 665 1,030 1,457
6 5,428 100,000 100,000 100,000 2,102 2,619 3,247 1,009 1,526 2,154
7 6,497 100,000 100,000 100,000 2,424 3,119 3,999 1,352 2,026 2,906
8 7,620 100,000 100,000 100,000 2,725 3,624 4,810 1,831 2,730 3,916
9 8,799 100,000 100,000 100,000 3,000 4,131 5,684 2,305 3,435 4,989
10 10,037 100,000 100,000 100,000 3,252 4,640 6,630 2,956 4,344 6,334
11 11,337 100,000 100,000 100,000 3,477 5,149 7,650 3,279 4,951 7,452
12 12,702 100,000 100,000 100,000 3,672 5,654 8,750 3,573 5,555 8,651
13 14,135 100,000 100,000 100,000 3,837 6,154 9,939 3,837 6,154 9,939
14 15,640 100,000 100,000 100,000 3,971 6,649 11,224 3,971 6,649 11,224
15 17,220 100,000 100,000 100,000 4,070 7,133 12,612 4,070 7,133 12,612
16 18,879 100,000 100,000 100,000 4,133 7,605 14,114 4,133 7,605 14,114
17 20,621 100,000 100,000 100,000 4,153 8,057 15,737 4,153 8,057 15,737
18 22,450 100,000 100,000 100,000 4,123 8,483 17,489 4,123 8,483 17,489
19 24,370 100,000 100,000 100,000 4,041 8,877 19,380 4,041 8,877 19,380
20 26,387 100,000 100,000 100,000 3,896 9,228 21,421 3,896 9,228 21,421
25 38,086 100,000 100,000 100,000 2,009 10,042 34,419 2,009 10,042 34,419
30 53,018 ** 100,000 100,000 ** 7,972 54,285 ** 7,972 54,285
35 72,076 ** 100,000 128,453 ** ** 84,866 ** ** 84,866
40 96,398 ** ** 175,741 ** ** 128,391 ** ** 128,391
45 127,441 ** ** 237,879 ** ** 188,404 ** ** 188,404
</TABLE>
- --------
* If premiums are paid more frequently than annually, the above values shown
would be affected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS 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, ACCOUNT VALUE 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 FLUCTUATED ABOVE
OR BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE
YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
65
<PAGE>
POLICIES ISSUED BY JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, MASSACHUSETTS 02117
S8138 5/93
<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 65 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. 1 to the registration
statement of this Account, filed in April, 1995
(2) Not Applicable
(3) (a) Distribution Agreement.
(b) Not applicable.
(c) Schedule of sales commissions included in Exhibit 1. A. (3) (a)
above.
(4) Not Applicable
(5) Form of flexible premium variable life insurance policy included in
the initial registration statement of this Account on this Form S-6,
filed March 18, 1994.
(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.
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 the registration statement of this Account
on this Form S-6, filed August 30, 1994.
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).
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
Pre-Effective Amendment No. 1 to the registration statement of this Account
on this Form S-6, filed August 30, 1994.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
THOMAS E. MOLONEY
- -----------------
Thomas E. Moloney April 8, 1996
JANET A. PENDLETON
- ------------------ (Principal
Janet A. Pendleton Accounting Officer) April 8, 1996
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
</TABLE>
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>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> SELECT 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> 8,537,452
<INVESTMENTS-AT-VALUE> 9,312,773
<RECEIVABLES> 1,038,921
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,351,694
<PAYABLE-FOR-SECURITIES> 1,763
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 488
<TOTAL-LIABILITIES> 2,251
<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> 10,349,443
<DIVIDEND-INCOME> 754,115
<INTEREST-INCOME> 67,279
<OTHER-INCOME> 0
<EXPENSES-NET> 48,056
<NET-INVESTMENT-INCOME> 773,338
<REALIZED-GAINS-CURRENT> 23,090
<APPREC-INCREASE-CURRENT> 1,225,784
<NET-CHANGE-FROM-OPS> 2,022,212
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,998,468
<NUMBER-OF-SHARES-REDEEMED> 478,935
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,955,106
<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> 48,056
<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> 2
<NAME> BONO 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> 46,574,355
<INVESTMENTS-AT-VALUE> 46,330,265
<RECEIVABLES> 8,850,035
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,180,300
<PAYABLE-FOR-SECURITIES> 26,061
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,516
<TOTAL-LIABILITIES> 28,577
<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> 55,151,723
<DIVIDEND-INCOME> 3,504,747
<INTEREST-INCOME> 641,677
<OTHER-INCOME> 0
<EXPENSES-NET> 286,349
<NET-INVESTMENT-INCOME> 3,860,075
<REALIZED-GAINS-CURRENT> (127,733)
<APPREC-INCREASE-CURRENT> 4,205,161
<NET-CHANGE-FROM-OPS> 7,937,503
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,586,137
<NUMBER-OF-SHARES-REDEEMED> 2,116,423
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,905,710
<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> 286,349
<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> 3
<NAME> INTERNATIONAL 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> 2,858,238
<INVESTMENTS-AT-VALUE> 2,926,534
<RECEIVABLES> 164,633
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,091,167
<PAYABLE-FOR-SECURITIES> 8,290
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 143
<TOTAL-LIABILITIES> 8,433
<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> 3,082,734
<DIVIDEND-INCOME> 29,692
<INTEREST-INCOME> 9,853
<OTHER-INCOME> 0
<EXPENSES-NET> 15,495
<NET-INVESTMENT-INCOME> 24,050
<REALIZED-GAINS-CURRENT> 14,367
<APPREC-INCREASE-CURRENT> 164,490
<NET-CHANGE-FROM-OPS> 202,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 935,730
<NUMBER-OF-SHARES-REDEEMED> 401,257
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 741,731
<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> 15,495
<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> 4
<NAME> MONEY MARKET 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> 18,773,711
<INVESTMENTS-AT-VALUE> 18,732,426
<RECEIVABLES> 2,275,243
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,007,669
<PAYABLE-FOR-SECURITIES> 9,344
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,006
<TOTAL-LIABILITIES> 10,350
<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> 20,997,319
<DIVIDEND-INCOME> 810,091
<INTEREST-INCOME> 155,058
<OTHER-INCOME> 0
<EXPENSES-NET> 96,074
<NET-INVESTMENT-INCOME> 869,075
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 380,450
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,092,516
<NUMBER-OF-SHARES-REDEEMED> 1,587,249
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11,660,929
<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> 96,074
<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> 5
<NAME> REAL ESTATE EQUITY 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> 2,405,959
<INVESTMENTS-AT-VALUE> 2,450,601
<RECEIVABLES> 164,079
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,614,680
<PAYABLE-FOR-SECURITIES> 7,738
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122
<TOTAL-LIABILITIES> 7,860
<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> 2,606,820
<DIVIDEND-INCOME> 153,495
<INTEREST-INCOME> 12,322
<OTHER-INCOME> 0
<EXPENSES-NET> 13,502
<NET-INVESTMENT-INCOME> 152,315
<REALIZED-GAINS-CURRENT> (39,490)
<APPREC-INCREASE-CURRENT> 155,992
<NET-CHANGE-FROM-OPS> 268,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 879,282
<NUMBER-OF-SHARES-REDEEMED> 404,509
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 527,519
<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> 13,502
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
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<PER-SHARE-NAV-END> 0
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> SPECIAL OPPORTUNITIES 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> 827,580
<INVESTMENTS-AT-VALUE> 952,172
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 959,412
<PAYABLE-FOR-SECURITIES> 7,194
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46
<TOTAL-LIABILITIES> 7,240
<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> 952,172
<DIVIDEND-INCOME> 22,718
<INTEREST-INCOME> 0
<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
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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> 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
<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> 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
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,241,967
<NUMBER-OF-SHARES-REDEEMED> 3,915,114
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 34,735,452
<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> 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
<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> 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
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<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 356,869
<AVERAGE-NET-ASSETS> 0
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<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
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 79,680
<PAYABLE-FOR-SECURITIES> 2
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<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
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<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
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<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
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<GROSS-EXPENSE> 295
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</TABLE>
<PAGE>
Exhibit 1.A..(3) (a)
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the 26th day of August, 1993, by and between
John Hancock Mutual Life Insurance Company ("John Hancock") and, on its own
behalf and on behalf of its several existing and future separate accounts
registered under the Investment Company Act of 1940 (the "Investment Company
Act"), including without limitation John Hancock Variable Life Accounts U, V and
S, John Hancock Variable Life Insurance Company ("JHVLICO").
WHEREAS, John Hancock is the principal underwriter of John Hancock
Variable Series Trust I ("the Fund"), a series mutual fund whose shareholders
are separate accounts of insurance companies, including JHVLICO, pursuant to an
Underwriting and Administrative Services Agreement dated as of January 15, 1986
("Underwriting Agreement");
WHEREAS, insurance companies issue variable life insurance and annuity
products under which net premiums or considerations are allocated to such
separate accounts for investment in the Fund;
WHEREAS, the Fund is registered as an open-end investment company under
the Investment Company Act;
WHEREAS, John Hancock is registered as a broker-dealer under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc.;
WHEREAS, JHVLICO will issue variable life insurance policies ("Policies")
whose net premiums are or will be allocated to JHVLICO's registered separate
accounts; and
WHEREAS, John Hancock and JHVLICO wish to enter into this Agreement
defining the conditions under which John Hancock will distribute the Contracts;
NOW THEREFORE, John Hancock and JHVLICO hereby agree as follows:
1. John Hancock shall offer for sale and sell Policies on behalf of
JHVLICO in each state and other jurisdictions in which such policies may be
lawfully sold. Such offering or sale shall be on such terms and conditions and
shall provide for such lawful compensation to John Hancock as John Hancock and
JHVLICO shall determine, provided that such terms, conditions and compensation
shall be as set forth in or not inconsistent with a prospectus meeting the
requirements of Section 10(a) of the Securities Act of 1933, as amended, and
containing the required information for or forming a part of a registration
statement effective under said Act.
Applications for Policies shall be solicited by insurance agents of
JHVLICO who are duly and appropriately licensed for the sale of such Policies in
each such state or other jurisdiction. John Hancock shall have responsibility
for arranging for such licensing. John Hancock shall review completed
applications for Policies in terms of suitability (except to the extent that
responsibility for suitability determinations is assumed by other broker-dealers
pursuant to the selling agreements referred to in paragraph 10 below) and
insurance underwriting and shall determine whether to accept or reject any
application in accordance with underwriting rules established by JHVLICO. John
Hancock will determine an insured's risk classification pursuant to its own
underwriting rules. Initial and subsequent premium payments under Policies shall
be made by check payable to JHVLICO. JHVLICO will refund any premiums paid if a
Policy is not issued or is surrendered under the short-term cancellation
provision.
<PAGE>
2. John Hancock shall pay its registered representatives acting as
JHVLICO's agents commissions and service fees in accordance with its then
applicable compensation rules and procedures. The maximum commission payable to
an agent for selling a policy shall be as set forth in Exhibit A appended
hereto. JHVLICO will reimburse John Hancock for commissions, any service fees
and for other direct and indirect expenses (including agency expense allowances,
general agent, district manager and supervisor compensation, agent 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
Policies.
3. The books, accounts and records of John Hancock and JHVLICO as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions, including particularly
such accounting information as is necessary to support the reasonableness of the
amounts to be paid by JHVLICO hereunder and to ensure compliance with applicable
regulatory and reporting requirements. To the extent that either of John Hancock
or JHVLICO maintains on behalf of the other any records required to be
maintained by the other pursuant to 1940 Act Rules 30a- or 30a-2 under the
Investment Company Act or pursuant to 1934 Act Rules 17a-3 and 17a-4, such
records are the property of the party so required to maintain them and will be
surrendered promptly to that party upon its request.
4. This Agreement shall terminate automatically if it shall be assigned or
if the Underwriting Agreement is terminated. This Agreement may be terminated at
any time on 60 days' written notice to the other party hereto, without the
payment of any penalty, by John Hancock or JHVLICO.
5. John Hancock will pay the expenses of preparing and printing
registration statements, prospectuses and sales literature, all fees and
expenses in connection with John Hancock's qualification as a broker-dealer and
all other expenses relating to the offering, sale or delivery of Policies.
JHVLICO will reimburse John Hancock for registration fees under the Securities
Act of 1933, the costs associated with the preparation and printing of
registration statements, prospectuses and sales literature and for like expenses
actually incurred in connection with the offering, sale and delivery of
Policies.
6. In offering, selling and delivering Policies, John Hancock will duly
conform in all respects with the laws of the United States and of each state in
which Policies may be offered for sale by it pursuant to this Agreement.
Applications will be solicited by registered representatives of John Hancock or
any other broker-dealer who have been duly licensed. In connection with the
offering, sale or delivery of Policies, John Hancock will not give any
information or make any representation other than information and
representations contained in or not inconsistent with a prospectus meeting the
requirement of Section 10(a) of the Securities Act of 1933 and containing the
required information for or forming a part of a registration statement which is
effective under said Act.
7. John Hancock agrees that, in the absence of a fixed account or if no
suitable fixed-dollar policy is available from JHVLICO, it will issue a policy
of fixed benefit insurance without evidence of insurability in exchange for any
Policy whenever the Owner of a Policy elects to exchange the Policy in
accordance with its provisions.
8. JHVLICO undertakes to guarantee the performance of all of John
Hancock's obligations, imposed by Section 27(f) of the Investment Company Act of
1940, as amended, and Rules 6e-2(b)(l4)(vi), 6e-3(T)(b)(l3)(vi) and 27d-2(b)
adopted by the Securities and Exchange Commission, to make refunds of charges
required of the principal underwriter of Policies issued in connection with the
registered separate account.
<PAGE>
9. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
10. John Hancock and JHVLICO may agree with one or more broker-dealers
registered under the Securities Exchange Act of 1934 for the sale of the
Policies funded by the registered separate account. Any broker-dealer offering,
selling or delivering Policies will agree with John Hancock and JHVLICO to
conform duly in all respects with the laws of the United States and of each
state in which Contracts may be offered for sale by it. No agent or
representative of any such broker-dealer shall solicit applications for Policies
until duly licensed and appointed by JHVLICO as a life insurance agent of
JHVLICO in the appropriate jurisdiction. John Hancock will compensate other
broker-dealers as provided in the selling agreements with such other broker-
dealers, and JHVLICO will reimburse John Hancock for such amounts.
11. This Agreement shall be subject to the applicable provisions of the
Federal securities laws and the rules, regulations, and rulings thereunder,
including such exemptions as the Securities and Exchange Commission may grant,
and the terms hereof shall be interpreted and construed in accordance therewith.
12. John Hancock shall, in connection with its obligations hereunder,
comply with all laws and regulations, whether Federal or state, and whether
relating to insurance or securities, including but not limited to the
recordkeeping and sales supervision requirements of such laws and regulations
and rules of the National Association of Securities Dealers, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year above written.
Date: August 26, l993
John Hancock Mutual Life Insurance Company
By: WILLIAM L. BOYAN
----------------
William L. Boyan
President
Date: August 26, 1993
John Hancock Variable Life Insurance Company
By: HENRY D. SHAW/
--------------
Henry D., Shaw
President
<PAGE>
AMENDMENT TO DISTRIBUTION AGREEMENT
BY AND BETWEEN
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
AND
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
AGREEMENT made this 1st day of August, 1994, by and between John Hancock
Mutual Life Insurance Company ("John Hancock") and John Hancock Variable Life
Insurance Company ("JHVLICO"), on its own behalf and on behalf of its several
existing and future separate accounts registered under the Investment Company
Act of 1940 (the "Investment Company Act"), including without limitation John
Hancock Variable Life Accounts U, V and S and John Hancock Variable Annuity
Account I.
WHEREAS, John Hancock and JHVLICO are parties to a distribution agreement
dated August 26, 1993 (the "Distribution Agreement") governing the terms and
conditions under which John Hancock has undertaken to offer for sale and sell on
behalf of JHVLICO, in each state and other jurisdiction where lawfully
permitted, certain variable life insurance policies, issued by JHVLICO, whose
net premiums are or will be allocated to JHVLICO's registered separate accounts;
WHEREAS, JHVLICO will continue to issue such variable life insurance
policies and will begin to issue variable annuity contracts whose net premiums
are or will be allocated to certain JHVLICO registered separate accounts;
WHEREAS, John Hancock and JHVLICO wish to enter into this Amendment
redefining the conditions and terms of the Distribution Agreement and Exhibit A
thereto;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, John Hancock and JHVLICO hereby amend the Distribution Agreement and
Exhibit A thereto and agree to the following terms:
1. Any reference to "variable life insurance policies" in the Distribution
Agreement shall be read "variable life insurance policies and variable annuity
contracts"; and
2. Except as otherwise specified in this Amendment, any reference to "Policies"
or "policies" in the Distribution Agreement shall include variable life
insurance policies, issued by JHVLICO, whose net premiums are or will be
allocated to certain JHVLICO registered separate accounts and variable annuity
contracts, issued by JHVLICO, whose net premiums are or will be allocated to
certain JHVLICO registered separate accounts; and
3. The phrase "With respect to life insurance policies only" should be added to
the beginning of provision seven in the Distribution Agreement; and
4. The commission schedule for John Hancock Variable Annuity Account I should
be included in
<PAGE>
Exhibit A, as shown in the attachment to this Amendment.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the day and year indicated.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
BY: STEPHEN L. BROWN AUGUST 2, 1994
----------------- --------------
Stephen L. Brown (date)
Chairman and Chief Executive Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
on its own behalf and on behalf of its
several existing and future registered
separate accounts
BY: HENRY D. SHAW AUGUST 5, 1994
-------------- --------------
Henry D. Shaw (date)
President
EXHIBIT A
Scheduled Premium Policy (Flex V)
Maximum commission of 50% of premium paid under Modified Schedule of
premiums in Policy year 1, 10% of such premiums in Policy years 2-4, and 3% of
any other premiums.
Annual Premium Policy (VLI)
Maximum commission of 55% of premium paid in Policy year 1, 15% of
premium paid in Policy year 2, 10% of premium paid in Policy years 3-5, 5% of
premium paid in Policy years 6-10, and 3% of any other premiums.
Single Premium Policy
Maximum commission of 3%.
Flexible Premium Variable Survivorship Policy (VEP)
Maximum commission of 45% of Target Premium paid in Policy year 1, 5%
of Target Premium paid in Policy years 2-5, 3% of Target Premium paid in any
subsequent years, and 3% of any excess premium in any year.
Individual Deferred Combination Fixed/Variable Annuity Contract (Independence
Preferred)
Maximum commission of 3% of premium on contracts issued to Annuitants
issue age 0-70, maximum commission of 2% of premium on contracts issued to
Annuitants issue ages 71 and above.
<PAGE>
Revised Flexible Premium Policy (New Flex V)
Maximum Commission of 50% of premium paid up to Required Premium in
Policy year 1, 8% of such premiums in Policy years 2-4, and 3% of any other
premiums.
Universal Variable Policy (MVL)
Maximum commission of 50% of premium paid up to Required Premium paid
in Policy year 1, 6% of the Target Premium for Policy years 2-4; 3% of the
Target Premium in each year thereafter, and 3% of excess premium in any year.
Variable COLI Policy (VCOLI)
Maximum commission of 14% of Target Premium in Policy years 1-10; 3% of
Target Premium in Policy years 11 and thereafter; and 2% of any excess premium
paid.
Universal Variable Policy (MVL II)
Maximum commission of 20% of Target Premium in Policy year 1, plus 6%
of the Target Premium for the first Policy year which will be payable in each of
Policy years 2-4; 6% of the Target Premium for Policy years 2-4; 3% of the
Target Premium paid in each year thereafter; and 3% of excess premium in any
year.
(Exhibit A, as amended, December 6, 1995)
<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
FCC0162.DOC
<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. ln
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
FCC0159.DOC
<PAGE>
EXHIBIT 6
April 6,1996
Board of Directors
John Hancock Mutual Life Insurance Company
Members of the Board:
This opinion is furnished in connection with the filing of this Post-Effective
Amendment to the Registration Statement on Form S-6 by John Hancock Mutual Life
Insurance Company (JHMLICO) under the Securities Act of 1933, as amended, with
respect to the flexible premium variable life insurance policy under which
amounts will be allocated by JHMLICO to one or more of the subaccounts of John
Hancock Variable Life Account UV ("Account"). The flexible premium policy is
described in the prospectus indicated in the amended Registration Statement.
The policy form was prepared under my direction, and I am familiar with the
amended Registration Statement and exhibits thereto. In my opinion:
1. Except to the extent that exemptive relief is applicable, 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 per centum of the "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 life expectancy of the insured named in the policy based on the
1980 Commissioners Standard Ordinary Mortality Tables. The sales load on
payments made in excess of such sum will not exceed 9%. Sales loads in
excess of (1) 30% of payments made which are less than or equal to one
guideline annual premium, plus (2) 10% of payments greater than one but not
greater than two guideline annual premiums, plus (3) 9% of payments in
excess of two guideline annual premiums, will be refunded if the policy is
surrendered during the first twenty-four months after issue.
<PAGE>
-2-
2. Except to the extent that exemptive relief is applicable, the proportionate
amount of sales load deducted from any payment during the policy period
will not exceed the proportionate amount deducted from any prior payment
during the policy period, unless an increase is caused by a reduction in
the annual cost of insurance.
3. The illustration of death benefit, account value, surrender value, and
accumulated premiums shown in the appendix of the flexible premium
prospectus included in the amended Registration Statement, based on the
assumptions stated in the illustrations, are consistent with the provisions
of the policy. Such assumptions, including the current cost of insurance
rates and other charges, are reasonable. The policy has not been designed
so as to make the relationship between premiums and benefits, as shown in
the illustrations, appear disproportionately more favorable to a
prospective purchaser of a Policy for a standard risk male nonsmoker age
35, than to a prospective purchaser of a policy for a male at other ages or
in another risk classification or for a female nor have the particular
examples set forth in the illustrations been selected for the purpose of
making this relationship appear more favorable.
4. The charge for federal taxes that is imposed under the policy is reasonable
in relation to JHMLICO's increased tax burden under Section 848 of the
Internal Revenue Code of 1986, resulting from JHMLICO's receipt of such
premiums. The cost to JHMLICO of capital used to satisfy its increased tax
burden under Section 848 is, in essence, JHMLICO's targeted rate of return.
The targeted rate of return is reasonable and the factors taken into
account by JHMLICO in determining such targeted rate of return are
appropriate factors to consider.
I hereby consent to the filing of this opinion as an exhibit to the amended
Registration Statement and to the use of my name relating to actuarial matters
under the heading "Experts" in the prospectus contained in the Registration
Statement.
/s/ Randi M. Sterrn
------------------
Randi M. Sterrn, FSA
Senior Associate Actuary
FCC0217.DOC
<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.2 to the Registration Statement (Form S-6, No. 33-76662).
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 12, 1996
FCC0216.DOC
<PAGE>
EXHIBIT 8
March, 1994
Description of JHMLICO's and JHVLICO's Issuance,
Transfer and Redemption Procedures for Policies
Pursuant to Rule 6e-3(T)(b)(12)(iii)
and
Method of Computing Adjustments upon Conversion to Fixed
Benefit Policies
Pursuant to Rule 6e-3(T)(b)(13)(v)(B).
--------------------------------------
Set forth below is the information called for under Rule 6e-3(T)(b) (12) (iii)
and Rule 6e-3(T)(b) (13) (v) (B) under the Investment Company Act 1940 ("1940
Act") regarding certain procedures under John Hancock Mutual Life Insurance
Company's ("JHMLICO") and John Hancock Variable Life Insurance Company's
("JHVLICO") Flexible Premium Variable Life Insurance Policies (hereinafter
referred to individually as the "Policy" and collectively as the "Policies")
newly issued in 1994.
Rule 6e-3(T)(b) (12) (iii) provides an exemption for a variable life insurance
separate account, its sponsoring insurance company, its investment adviser and
its principal underwriter from Sections 22(d), 22(e) and 27(c) (1) of the 1940
Act and Rule 22c-1 thereunder for issuance, transfer and redemption procedures
under a variable life insurance Policy to the extent necessary to assure
compliance with Rule 6e-3(T), state insurance law or established administrative
procedures of the life insurance company. The Rule requires, as a condition for
exemption, that such procedures be reasonable, fair and nondiscriminatory, and
be disclosed in the registration statement filed with respect to such variable
life insurance policies.
JHMLICO and JHVLICO represent that their procedures meet the foregoing standards
of Rule 6e-3(T)(b) (12) (iii), based on the following facts and circumstances:
1. Because of the insurance nature of the Policies and, in certain instances, as
a result of the requirements of the state insurance laws, the procedures
necessarily differ in significant respects from the procedures for mutual funds
and contractual plans for which the 1940 Act was designed.
2. Many of the procedures have been adapted from those established and utilized
in connection with the administration of JHMLICO's fixed benefit life insurance
policies and earlier versions of variable life insurance policies issued by its
subsidiary, JHVLICO.
3. Certain procedures, including the 24-month conversion right to fixed benefit
policies, are required by Rule 6e-3(T).
4. JHMLICO and JHVLICO, in structuring their procedures to comply with Rule 6e-
3(T), state insurance laws, and their established administrative procedures,
have attempted to meet the intent of the 1940 Act to the extent deemed feasible.
5. Generally speaking, the state insurance laws to which both JHMLICO and
JHVLICO are subject reflect the fundamental principle that the procedures shall
not be unfair, unreasonable or unjustly discriminatory to any policyholder.
<PAGE>
2
6. Because of the intricate insurance methodology underlying the procedures, it
is often difficult to determine, with certainty, whether and to what extent a
particular procedure, or a given step to that procedure, deviates from a
specific requirement of Section 22(d), 22(e) or 27(c) (1) of the 1940 Act or
Rule 22c-1 thereunder.
Accordingly, the summary below includes the principal Policy provisions and
procedures that might be deemed to constitute, either directly or indirectly,
accommodation of the 1940 Act requirements and insurance practices. Given the
complexities of the Policies' operations, the summary, although comprehensive,
does not attempt to treat each and every mechanical variation or permutation
that might occur and does not repeat every provision or procedure that is
already set forth in the registration statement or exhibits thereto. At the
same time, the summary, in order to provide a comprehensive view of the
procedures, includes certain procedural steps that do not constitute a deviation
from the Sections and Rule cited above.
Rule 6e-3(T)(b) (13) (v) (B) grants an exemption for a flexible premium variable
life insurance separate account, its sponsoring insurance company, its
investment adviser and its principal underwriter from Section 27(d) of the 1940
Act for flexible premium variable life insurance policies which allow the
policyholder to convert a flexible premium variable life insurance policy into a
fixed benefit life insurance policy at any time during the first 24 months after
issuance. The Rule requires, as a condition for exemption, that the method of
computing any adjustments made in payments(or charges) or cash values to reflect
variances between the payments and cash values under the original policy and new
policy be set out in an exhibit to the registration statement filed with respect
to the variable life insurance Policy. JHMLICO's and JHVLICO's Policies provide
for such a conversion privilege. No adjustments in payments(or charges) and
cash values are made upon exercise of that privilege, as described below.
This memorandum divides the information called for by Rules 6e-3(T)(b) (12) (ii)
and 6e-3(T)(b) (13) (v) (B) into three parts. The first part summarizes
procedures under the policies which might be deemed to involve, either directly
or indirectly, a "redemption" within the meaning of the 1940 Act. The second
part summarizes procedures which might be deemed to involve, either directly or
indirectly, a "purchase" transaction. The third part summarizes the procedures
for converting a Policy to a fixed benefit Policy.*/
-
_____________________
*/ If an Owner requests a "purchase" or "redemption" transaction which is
- -
impossible (for example, allocation of a loan or partial surrender to
subaccounts which have insufficient assets to support said allocation) or
impermissible (such as a reduction in the Basic Death Benefit below the minimum
required amount), JHMLICO will notify the Policy Owner to determine what action,
if any, the Policy Owner wishes to take instead.
<PAGE>
3
This exhibit refers to procedures as they affect the respective variable
accounts of JHMLICO and JHVLICO ("the Account") used in funding the Policies.
Except as otherwise stated herein, these procedures do not necessarily reflect
the Fixed Account under the Policies which is held in the General Account of
each insurer. Whenever reference is made herein to JHMLICO it should also be
read as JHVLICO, insofar as JHVLICO and its Account are concerned, each insurer
having adopted identical procedures.
Except as otherwise defined herein, capitalized terms used in this memorandum
have the same meaning as are defined in the prospectus contained in the
applicable registration statement.
I. "Redemption" Procedures:
Surrender and Related Transactions
----------------------------------
JHMLICO's Policies provide for the payment of monies to a policyholder ("Owner")
or beneficiary upon presentation to JHMLICO of a Policy. Such presentation
might be deemed to constitute, either directly or indirectly, a "redemption" of
the Owner's interest within the meaning of the 1940 Act. Set forth below is a
summary of the principal policy provisions and procedures which might be viewed
as involving such a "redemption". The principal difference between such
"redemptions" and redemptions in the mutual fund or contractual plan context is
that under the Policies, the payee may be deemed not to receive a pro rata or
proportionate share of the assets in JHMLICO's account within the meaning of the
1940 Act. The amount received by the payee will depend upon the particular
benefit for which the Policy is presented, including, for example the Surrender
Value or Death Benefit.
There are also certain Policy provisions -- such as Policy loans -- under which
the Policy will not be presented to JHMLICO but which will affect the Owner's
benefits and involve a transfer of the assets supporting the Policy reserve out
of the Account. Finally, state insurance law may require that certain
requirements be met before JHMLICO is permitted to make payments to the payee.
A. Surrender Values
----------------
If the insured party under a Policy ("Insured") is alive, JHMLICO will pay,
within seven days, the Surrender Value next computed after receipt, at its Home
Office, of the Policy and a signed request for surrender. Computations with
respect to the investment experience of the subaccounts will be made as of 4:00
p.m., New York City time, on each day during which the New York Stock Exchange
is open for trading and on which the fund values its shares. This will enable
JHMLICO to pay the Surrender Value based on the next computed value after a
request is received.
While no premium is in default, the Surrender Value is equal to the Account
Value less any indebtedness, less any Contingent Deferred Sales Charges and less
any Administrative Surrender Charge. In general, the Account Value for any day
equals the Policy Account Value for the previous day, increased by any net
premium and decreased by any charges against the Account Value, accumulated at
the subaccount's rate of return after charges against the Account. The
Contingent Deferred Sales Charge is deducted from the Policy Account Value upon
surrender of the Policy during the first twelve Policy years after issue. (It
is deducted for fewer than twelve years at certain issue ages).
The amount of this charge is calculated on the basis of the Base Policy Target
Premium for the issue age of the Policy. Lower percentages apply at higher
issue ages. The total charge for sales load, including the Contingent Deferred
Sales Charge, over the lesser of 20 years or the life expectancy of the insured,
will not exceed 9% of the Target Premium at issue over that period. No minimum
amount of Policy Account Value is guaranteed. JHMLICO will make the payment of
the Surrender Value out of
<PAGE>
4
its General Account and transfer assets from the Account to the General Account
for the amounts held for the Policy in the Account.
The Administrative Surrender Charge is deducted from a Policy's Account Value
upon its surrender or lapse in the first nine Policy years after issue. The
amount of this charge is determined as an amount per thousand of current Sum
Insured.
In lieu of payment of the Surrender Value upon surrender of a Policy in a single
sum, an election may be made to apply all or a portion of the proceeds under one
of the benefit settlement options described in the Policy or, with the approval
of JHMLICO, under other optional methods of settlement available from JHMLICO.
The election may be made by the Owner during the Insured's lifetime, or, if no
election is in effect at death, by the beneficiary. The benefit settlement
options are subject to the restrictions and limitations set forth in the Policy.
B. Death Claims
--------------
JHMLICO will pay a death benefit to the beneficiary within seven days after
receipt at its Home Office of due proof of death of the Insured, and all other
requirements necessary 1/ to make payment. Provided the Policy is in full
-
force, 2/ the Death Benefit will be the greater of (1) the Sum Insured (and
-
Account Value, if any, under the variable death benefit option) plus all
premiums received after the last processing date prior to the Insured's date of
death less any indebtedness on the date of death, and (2) the Account Value at
the end of the Valuation Period in which death occurs multiplied by the
applicable Death Benefit Factor or Corridor Factor, as applicable, less any
indebtedness on the date of death. The Death Benefit is also less any premium
in default if death occurs during the 61 day Policy grace period.
The proceeds payable on death also reflect interest from the date of death to
the date of payment.
JHMLICO will make payment of the Death Benefit out of its General Account, and
will transfer assets from the Account to the General Account in an amount equal
to the amount held in the Account for the Policy terminated by death.
In lieu of payment of the Death Benefit in a single sum, a settlement option may
be selected as described in Section I.A, above.
- ---------------
1/State insurance laws impose various requirements, such as receipt of a tax
- -
waiver before payment of the Death Benefit may be made. In addition, payment of
the Death Benefit is subject to the provisions of the Policy regarding suicide
and incontestability.
2/"In full force", means that the insurance under the Policy is being continued
- -
for the greater of the Guaranteed Death Benefit and the Current Death Benefit,
and that no unpaid premium is more than 61 days overdue.
<PAGE>
5
C. Default
--------
Premium Grace Period, Default and Lapse. Unless the 5 Year Guaranteed Death
Benefit is in force, at the beginning of each Policy month, JHVLICO 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
JHVLICO will notify the Owner of the amount estimated to be necessary to pay
three months' deductions, and a Policy grace period will be in effect until 61
days after the date the notice was mailed. If JHVLICO does not receive payment
of at least this amount by the end of the Policy 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.
Lapse can have significant tax consequences. If the Guaranteed Death
Benefit has been in effect and lapses at the end of a Guaranteed Death Benefit
grace period, the usual default, Policy grace period and lapse procedures
described in the preceding paragraph will be applied commencing with the first
day of the Policy month in which the lapse of the Guaranteed Death Benefit
occurs.
The insurance continues in full force during the grace period but, if the
insured dies during the Policy grace period, the amount in default will be
deducted from the amount of 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. If in the Policy grace
period, the notice will specify the minimum amount which must be paid to
continue the Policy in force on a premium paying basis after the end of the
Policy grace period. If in the Guaranteed Death Benefit grace period, the
notice will specify the new amount which must be paid to continue the Guaranteed
Death Benefit feature in force.
D. Policy Loan
-----------
Loans may be made at any time a Loan Value is available after the first Policy
year. The Owner may borrow money on completion of a form satisfactory to
JHMLICO assigning the Policy as the only security for the loan. Payment of the
loan will be made from JHMLICO's Home Office. The Loan Value will be 75% of
the Surrender Value in Policy years two and three and 90% of the Surrender Value
in later Policy years. Interest accrues and is compounded daily at an effective
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%. The "Published Monthly Average" means
Moody's Corporate Bond Yield Average-Monthly Average Corporate, 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.
The amount of any outstanding loan plus accrued interest is called the
"indebtedness". A loan will not be permitted unless its is at least $300. The
Owner may repay all or a portion of any indebtedness while the insured is living
and premiums are being duly paid. When a loan is made, shares are redeemed in
an aggregate equal to the amount of the loan and this aggregate value is
allocated to the Loan Account. The shares redeemed will be redeemed in each
subaccount 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.
<PAGE>
6
Loan interest which is not paid by a Policy anniversary will be added to the
loan principal by automatically effecting an additional Policy loan. Amounts
transferred to the Policy loan account are credited with interest at 1% less
than the loan interest rate per annum for the first 20 Policy years and .50%
less than the loan interest rate per annum in years 21 and beyond, which
interest is transferred to the subaccount when the loan is repaid, according to
the Investment Rule then in effect.
While the indebtedness is outstanding, that portion of the Account Value that is
in the Loan Account is credited with interest at a rate of 1% less than the loan
rate for the first 20 Policy years and .50% less than the loan rate in years 21
and later, a rate which 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 outstanding indebtedness is subtracted from the amount
otherwise payable when the Policy proceeds become payable.
Whenever the indebtedness equals or exceeds the Surrender Value, the Policy
terminates 31 days after notice has been mailed by JHMLICO 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.
E. Transfers Among Variable Subaccounts
------------------------------------
The Owner may reallocate the amounts held for the Policy in the variable
subaccounts in each Policy year without charge. The Owner may use either
percentages (in whole numbers) or designate the dollar amount of funds to be
transferred between subaccounts. The reallocation must be such that the total
in the subaccounts after reallocation equals 100%. The change will be effective
at the end of the Valuation Period in which JHMLICO receives at its Home Office
notice satisfactory to JHMLICO.
F. Conversion Privilege
--------------------
The conversion privilege provided in a accordance with Rule 6e-3(T)(b) (13) (v)
(B) under the 1940 Act is discussed under III. below.
G. Partial Withdrawal of Account Value
-----------------------------------
An Owner may withdraw a portion of Account Value from the Policy on or after the
first Policy anniversary. This privilege, which reduces the Account Value by
the amount of the withdrawal and the associated charge, may be exercised only
once in a Policy year and will be effective as of the end of the Valuation
Period in which JHMLICO receives written notice satisfactory to it at its Home
Office. The minimum amount that may be withdrawn is $1000. The Sum Insured of
the Policy will not be reduced until the Account Value multiplied by the
applicable Corridor or Death
Benefit Factor is less than or equal to the Sum Insured. At that time, the Sum
Insured is reduced by the amount of any withdrawals. An amount equal to $20 is
charged against Account Value for each partial withdrawal. When a withdrwawal
is made the cumulative premiums calculated for purposes of determining the
availability of the Guaranteed Death Benefit feature will be adjusted. If the
cumulative premiums paid are less than the Guaranteed Death Benefit Premiums
required at this point, the Guaranteed Death Benefit will no longer be in
effect.
<PAGE>
7
II. Purchase and Related Transactions
--------------------------------------
Set out below is a summary of the principal provisions of the Policies and
administrative procedures thereunder that might be deemed to constitute, either
directly or indirectly, a "purchase" transaction within the meaning of the 1940
Act. The summary shows that, because of the insurance nature of the Policies,
the procedures involved necessarily differ in certain significant respects from
the purchase procedures for mutual funds and contractual plans. The chief
differences revolve around the premium rate structure and the insurance
underwriting (i.e., evaluation of risk) process. There are also certain Policy
provisions -- such as reinstatement -- which do not result in the issuance of a
Policy but which required certain payments by the Owner and involve a transfer
of assets supporting the Policy reserve into the Account.
A. Premium Schedules and Underwriting Standards
--------------------------------------------
Premiums for JHMLICO's Policies will not be the same for all Owners. The chief
reason is that the principle of pooling and distribution of mortality risks is
based upon the assumption that each Owner pays a premium commensurate with the
Insured's mortality risk which is actuarially determined based upon factors such
as age, sex, smoking status, health and occupation. In the context of life
insurance as contrasted with mutual funds, a uniform premium (or "public
offering price") for all Insured's would discriminate unfairly in favor of those
Insured's representing greater mortality risks to the disadvantage of those
representing lesser risks. Accordingly, although there will be no uniform
"Public offering price" for all Insured's, there will be a single "price" for
all Insured's in a given actuarial category.
The Policies will be offered and sold pursuant to established premium targets 3/
-
and underwriting standards and in accordance with state insurance laws. Such
laws prohibit unfair discrimination among Policyholders, but recognize that
premiums may be based upon factors such as age, sex, smoking status, health, and
occupation. In a few states, the premiums and values under the Policies will
not directly reflect the sex of the insured.
B. Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application from a proposed Owner, JHMLICO will
follow certain insurance underwriting (i.e., evaluation of risk) procedures
designed to determine whether the proposed Insured is insurable. This process
may involve such verification procedures as medical examinations and may require
that further information be provided by the proposed Insured before a
determination can be made. A Policy cannot be issued, i.e., physically issued
through JHMLICO's computerized issue system until this underwriting procedure
has been completed.
The date on which a Policy is issued is referred to as the "date of Issue". The
date of issue coincides with the beginning of a Valuation Period. It represents
the commencement of the suicide and contestable periods for purposes of the
Policies. It is also the date as of which the insurance age of the proposed
Insured is determined. It represents the first day of the Policy year and
therefore determines the Policy anniversary. It also marks the commencement of
the variability of benefits.
- ----------------
3/In accordance with industry practice, JHMLICO will establish procedures to
- -
handle errors in initial and subsequent premium payments to collect
underpayments, except for de minimis amounts.
<PAGE>
8
These processing procedures are designed to provide immediate benefits to the
proposed Owner in connection with payment of the initial premium and will not
dilute any benefit payable to an existing Owner. Although a Policy cannot be
issued until after the underwriting process has been completed, the proposed
Insured will receive immediate insurance coverage, if he has paid his minimum
first premium, subject to the other terms and conditions of JHMLICO's Receipt
and Conditional Temporary Insurance Agreement. If the minimum first premium is
paid with the application and the Policy is issued as applied for, the date of
issue in general will be the last of the Part A date or the Part B date of the
application or the date of most recent evidence of insurability, so that
variability of benefits will commence as of that date. If the minimum first
premium is not paid with the application, the date of issue will be the actual
date the application is processed for issue or the next valid issue date
provided the Owner pays the necessary premium. Except as referred to above, no
coverage will take effect with respect to a Policy until the minimum first
premium has been paid and the Policy is delivered to the Owner while the insured
is living and has not consulted, been examined, or treated by a doctor since the
latest Part B of the application was completed. If coverage under a Policy
never goes into effect, any premium paid will be returned without interest.
JHMLICO will require that the Policy be delivered and the minimum initial
premium paid within a specific period to protect itself against anti-selection
by the proposed Owner resulting from deterioration in the Insured's health.
Generally, the period will not exceed 60 days from the date of completion of the
latest of Parts A and B of the application and any required medical examination.
JHMLICO will transfer the appropriate amount from its general account to the
Account on the date the Policy is approved. The appropriate amount will be
calculated as though the net premium had in fact been transferred from the
General Account to the Account commencing on the date the Policy is issued.
D. Reinstatement Provision
-----------------------
The Policy may be reinstated within 1 year after the beginning of the Policy
grace period unless the Surrender Value has been paid or otherwise exhausted. A
Policy will be reinstated upon receipt by JHMLICO of a written application for
reinstatement and production of evidence of insurability satisfactory to JHMLICO
and payment of an amount equal to the sum of (a) and (b).
(a)All paid monthly charges grossed up for State Premium Tax, Federal DAC Tax
and Sales Load if applicable plus interest from the due date to and including
the date of the reinstatement at an effective rate of 6%.
(b)Total of all monthly deductions grossed up for State Premium Tax, Federal DAC
Tax and Sales Load if applicable for the next three monthly processing dates
following the date of reinstatement, where the charges for each of the next
three processing dates are assumed to be equal to such charges as on the date of
default.
On the date of reinstatement the Policy will have (i) a Sum Insured as if no
lapse had occurred and (ii) indebtedness equal to any indebtedness at the end of
the day immediately preceding the date of reinstatement.
The Account Value on the date of reinstatement will be the sum of (a) and (b)
less (c) and (d) where:
(a) is the amount in Payment above;
<PAGE>
9
(b) is the deferred sales charge and administrative surrender charge as were
made on the date of lapse.
(c) is the aggregate premium expense charges, i.e. sales charge, premium tax
charge and Federal DAC tax charge; and
(d) is the sum of all Mortality Charges, Maintenance Charges and charges for
Riders and ratings, if any, that would have been made from the date of lapse to
the date of reinstatement if the Policy had not lapsed, with interest an
effective annual rate of 6% to the date of reinstatement.
In order to assist a lapsed Owner in making a considered judgment as to whether
to reinstate, JHMLICO may calculate the amount payable upon reinstatement and
"freeze" the amount for up to ten days.
F. Repayment of Loan
-----------------
The Owner may repay all or a portion of any indebtedness while the insured is
living and premiums are duly paid. When a loan is made, shares are redeemed in
an aggregate value equal to the amount of the loan and this aggregate value is
transferred to the general account and carried as a Loan Account. The shares
redeemed will be redeemed in each subaccount 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.
While the indebtedness is outstanding, that portion of the Account Value that is
in the Loan Account is credited with interest at a rate of at 1% less than the
loan rate in the first 20 Policy years and .50% less than the loan rate in years
21 and beyond, a rate which 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 outstanding indebtedness is subtracted from the
amount otherwise payable when the Policy proceeds become payable.
G. Correction of Misstatement of Age or Sex
----------------------------------------
If JHMLICO discovers that the age or sex of the Insured has been misstated,
JHMLICO will reconstruct the Policy by determining what benefits the premium
paid would have purchased at the correct age or sex. Special adjustments may
have to be made if the resultant face amount is below JHMLICO's minimum size
Policy.
Once the benefits are redetermined, JHMLICO will make the necessary adjustment
in the reserve assets in the Account to reflect the redetermined benefits and
the correct age and sex of the Insured.
III. Conversion of Policy
--------------------
JHMLICO's Policies, in accordance with Rule 6e-3(T)(b)(v)(B) under the 1940 Act,
provide that the Owner within 24 months of issue, or any time after thereafter,
may transfer the entire Account Value under the Policy to the Fixed Account thus
creating a non-variable or fixed benefit life insurance Policy. This conversion
privilege is designed to permit an Owner to change his or her mind and to obtain
a fixed benefit Policy.
<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>
FCC0213.DOC
<PAGE>
EXHIBIT 11
April 6, 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
FCC0214.DOC
