<PAGE>
As filed with the Securities and Exchange Commission on April 12, 1996
Registration No. 33-63900
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 3 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Exact name of trust)
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
(Name of depositor)
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(Complete address of depositor's principal executive offices)
--------------------
FRANCIS C. CLEARY, JR., ESQ.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
--------------------
Copy to:
GARY O. COHEN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
--------------------
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 The Series
Fund, John Hancock
3 Inapplicable
4 Cover, Distribution of Policies
5,6 The Account and The Series Fund,
State Regulation
7, 8, 9 Inapplicable
10(a),(b),(c),(d),(e) Principal Policy Provisions
10(f) Voting Privileges
10(g),(h) Changes in Applicable
Law--Funding and Otherwise
10(i) Appendix--Other Policy
Provisions, The Account and The
Series Fund
11, 12 Summary, The Account and The Series
Fund, Distribution of Policies
13 Charges and expenses,
Appendix--Illustration of Death
Benefits, Surrender Values and
Accumulated Premiums
14, 15 Summary, Distribution of
Policies, Premiums
16 The Account and The Series Fund
17 Summary of Policies, Principal
Policy Provisions
18 The Account and The Series Fund,
Tax Considerations
19 Reports
20 Changes in Applicable
Law--Funding and Otherwise
21 Principal Policy Provisions
22 Principal Policy Provisions
23 Distribution of Policies
24 Not Applicable
25 John Hancock
26 Charges and Expenses
27,28,29,30 John Hancock, Management
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 Management
43 Not Applicable
44 The Account and The Series Fund,
Principal Policy Provisions,
Appendix--Illustration of Death
Benefits, Cash Values and
Accumulated Premiums
45 Not Applicable
46 The Account and The Series Fund,
Principal Policy Provisions,
Appendix--Illustration of Death
Benefits, Cash Values and
Accumulated Premiums
47 Not Applicable
48,49,50 Not Applicable
51 Principal Policy Provisions,
Appendix--Other Policy Provisions
52 The Account and The Series Funds,
Changes in Applicable
Law--Funding and Otherwise
53,54,55 Not Applicable
56,57,58,59 Not Applicable
FCC0189.DOC
<PAGE>
[JOHN HANCOCK LOGO APPEARS HERE]
Mutual Life
Insurance Company
(John Hancock)
ANNUAL PREMIUM VARIABLE LIFE INSURANCE POLICIES
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 annual premium variable life Policies described in this prospectus can
be funded, at the discretion of the Owner, by one or more of seven subaccounts
of John Hancock Mutual Variable Life Insurance Account UV ("Account"). The
assets of each subaccount will be invested in a corresponding Portfolio of
John Hancock Variable Series Trust I ("Fund"), a mutual fund advised by 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 a number of
Portfolios of the Fund. Of these Portfolios, only the Growth and Income
(formerly Stock) Portfolio, Sovereign Bond (formerly Bond) Portfolio, Money
Market Portfolio, Large Cap Growth (formerly Select Stock) Portfolio, Managed
Portfolio, Real Estate Equity Portfolio and International Equities (formerly
International) Portfolio and their corresponding subaccounts are available to
Owners of the Policies described in this Prospectus.
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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY OF POLICIES....................................................... 1
JOHN HANCOCK.............................................................. 5
THE ACCOUNT AND THE SERIES FUND........................................... 5
The Account............................................................. 5
The Series Fund......................................................... 6
PRINCIPAL POLICY PROVISIONS............................................... 7
Death Benefit........................................................... 8
Account Net Investment Rate (ANIR)...................................... 9
Annual Dividends........................................................ 9
Surrender Value......................................................... 10
Loan Provision and Indebtedness......................................... 11
Premiums................................................................ 12
Investment Option....................................................... 13
Transfer Option......................................................... 13
Default and Options on Lapse............................................ 13
Exchange of Policy During First 24 Months............................... 15
CHARGES AND EXPENSES...................................................... 15
Charges Deducted from Premiums.......................................... 15
Expenses Charged to Account............................................. 16
Guarantee of Premiums and Certain Charges............................... 17
DISTRIBUTION OF POLICIES.................................................. 17
TAX CONSIDERATIONS........................................................ 18
Policy Proceeds......................................................... 18
Charge for John Hancock's Taxes......................................... 18
Corporate and H.R. 10 Plans............................................. 18
MANAGEMENT................................................................ 19
THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JOHN HANCOCK............. 19
VOTING PRIVILEGES......................................................... 20
CHANGES IN APPLICABLE LAW--FUNDING AND OTHERWISE.......................... 20
REPORTS................................................................... 21
STATE REGULATION.......................................................... 21
LEGAL MATTERS............................................................. 21
REGISTRATION STATEMENT.................................................... 21
EXPERTS................................................................... 21
FINANCIAL STATEMENTS...................................................... 21
APPENDIX--OTHER POLICY PROVISIONS......................................... 49
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, CASH VALUES AND ACCUMULATED
PREMIUMS................................................................. 51
</TABLE>
THE POLICY DESCRIBED HEREIN IS AVAILABLE ONLY IN NEW YORK. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING IN ANY OTHER JURISDICTION. NO PERSON IS
AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS.
<PAGE>
- --------------------------------------------------------------------------------
THE PURPOSE OF THE POLICIES IS TO PROVIDE INSURANCE PROTECTION FOR THE
BENEFICIARY NAMED IN THE POLICY.
NO CLAIM IS MADE THAT THE POLICIES ARE IN ANY WAY SIMILAR OR COMPARABLE
TO A SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.
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SUMMARY OF POLICIES
WHAT ARE THE VARIABLE LIFE INSURANCE POLICIES BEING OFFERED?
John Hancock Mutual Life Insurance Company ("John Hancock") issues variable
life insurance policies in New York. The Policies described in this prospectus
are fixed annual premium policies. John Hancock also issues other forms of
variable life insurance policies. These other policies are offered by means of
other prospectuses.
As explained below, the death benefit under the Policies increases or
decreases monthly; the cash value increases or decreases daily. The Policies,
therefore, differ from ordinary fixed-benefit life insurance in the way they
work. However, the Policies are the same as ordinary fixed-benefit life
insurance in providing lifetime protection against economic loss resulting
from the death of the person insured. So, the Policies are primarily insurance
and not investments.
The Policies work generally as follows: the Owner gives John Hancock a fixed
premium each year. John Hancock takes from the premium an amount for expenses.
John Hancock then places the rest of the premium into not more than five of
the seven subaccounts of the Account. (The Owner decides how much goes into
each subaccount). The assets in each subaccount, other than assets
attributable to policy loans, are invested in shares of the corresponding
Portfolio of the Fund. The seven Portfolios currently available are Growth and
Income (formerly Stock) Portfolio, Sovereign Bond (formerly Bond) Portfolio,
Money Market Portfolio, Large Cap Growth (formerly Select Stock) Portfolio,
Managed Portfolio, Real Estate Equity Portfolio and International Equities
(formerly International) Portfolio. During the year John Hancock takes from
each subaccount charges and credits or charges each subaccount with its
respective investment performance. Costs of insurance, which are deducted from
each Policy's cash value, vary monthly with the attained age of the insured
and with the Variable Sum Insured.
The death benefit increases or decreases monthly depending on the investment
experience of the subaccounts to which premiums are allocated. In general, if
the net investment experience is more favorable than 4 1/2% per year, the
death benefit will increase, and, if less than 4 1/2% per year, the death
benefit will decrease. However, John Hancock guarantees that, regardless of
the investment experience, the death benefit will never be less than the
amount originally purchased. (This is called the Guaranteed Minimum Death
Benefit.) The Owner, therefore, bears the investment risk for the amount above
the Guaranteed Minimum Death Benefit, and John Hancock bears the investment
risk for the Guaranteed Minimum Death Benefit.
The Owner may surrender a Policy for its cash value at any time while the
insured is living. The cash value is basically the amount of the premium that
John Hancock places in the Account, as explained above. The cash value
increases or decreases daily depending on the investment experience. However,
John Hancock does not guarantee a minimum amount of cash value. Therefore, the
Owner bears the investment risk for the cash value.
1
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If the Owner surrenders in the early policy years, the amount of cash value
would be low (as compared with the premiums accumulated with interest), and,
consequently, the insurance protection provided prior to surrender would be
costly.
This prospectus describes three types of Policies being offered by John
Hancock: a Variable Whole Life Policy, a Variable Whole Life P 50 Policy and a
Variable Whole Life 100 Policy. The minimum death benefit that may be bought
is $25,000 for the Whole Life Policy, $50,000 for the Whole Life P 50 Policy
and $100,000 for the Whole Life 100 Policy. For the Whole Life Policy and the
Whole Life P 50 Policy, all persons insured must meet certain health and other
criteria called "underwriting standards." All persons insured under the Whole
Life 100 Policy must meet "preferred risk" and non-smoking underwriting
standards. All Policies may be issued on insureds between ages of 0 and 75.
Discounts are available to insureds meeting non-smoking underwriting criteria.
WHAT IS THE AMOUNT OF THE PREMIUMS?
Premiums are fixed and level and do not vary with the Account's investment
experience. The amount of the premium depends on the type of Policy, the
Policy's Initial Sum Insured, the insured's age, sex, smoking habits and the
frequency of premium payments. Premiums are payable annually or more
frequently over the insured's lifetime. Additional premiums are charged for
Policies in cases involving extra mortality risks and for additional insurance
benefits. There is a 31-day grace period in which to make premium payments due
after the first. (See "Premiums", Page 12.)
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 its variable life
insurance policies. There are currently seven subaccounts within the Account.
Each is invested in a corresponding Portfolio of John Hancock Variable Series
Trust I, a "series" type of mutual fund. The seven Portfolios of the Fund
which are currently available are Growth and Income Portfolio, Sovereign Bond
Portfolio, Money Market Portfolio, Large Cap Growth Portfolio, Managed
Portfolio, Real Estate Equity Portfolio and International Equities Portfolio.
Each Portfolio has a different investment objective and is managed by John
Hancock. John Hancock receives a fee from the Fund for providing investment
management services with respect to the Growth and Income, Sovereign Bond and
Money Market Portfolios at an annual rate of .25% of the average daily net
assets, with respect to the Large Cap Growth and Managed Portfolios, at an
annual rate of .40% of the first $500 million of the average daily net assets
and at lesser percentages for amounts above $500 million, with respect to the
Real Estate Equity Portfolio, at an annual rate of .60% of the first $300
million of the average daily net assets and at lesser percentages for amounts
above $300 million, and, 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.
For a full description of the Fund, see the prospectus for the Fund attached
to this Prospectus.
WHAT CHARGES ARE DEDUCTED FROM THE PREMIUM IN DETERMINING THE AMOUNT ALLOCATED
TO THE SUBACCOUNTS?
A modal net premium is allocated by John Hancock from its general account to
one or more of the subaccounts on the premium due date. The modal net premium
for each Policy year is the actuarial equivalent, for the premium payment
interval in effect, of the basic annual premium for a standard or preferred
mortality
2
<PAGE>
risk payable for such year, less the charges deducted for sales loads, state
premium taxes, annual administrative expenses, contributions for dividends and
risk charge ("modal net premium"). An additional deduction for administrative
expenses in connection with the issuance of a Policy is made in the first
Policy year. Additional premiums are charged for Policies where the insured is
classified as a substandard mortality risk and a portion of these premiums may
be allocated to the subaccounts from time to time to support the reserves for
extra mortality risks. The additional premiums for extra mortality risks are
determined such that the Policy Cash Value for a substandard risk policy is
the same as for a comparable standard risk policy.
The charges deducted from premiums are for administrative expenses ($50 in
each Policy year plus a one-time charge the first year of as much as $13 per
$1,000 of initial guaranteed minimum death benefit), sales expenses (which
during the first two Policy years shall not exceed 30% of the basic annual
premium paid during the first Policy year plus 10% of the basic annual premium
paid for the second Policy year and which, including sales expenses in the
third and later Policy years, average up to 9% over 20 years), state premium
taxes (2 1/2% of the basic annual premium), the risk that the death benefit
payable will be the guaranteed minimum death benefit rather than a lesser
amount (approximately 3% of the basic annual premium) and for dividends
(approximately 5-9% of the basic annual premium). See "Charges Deducted from
Premiums", Page 15.
WHAT ARE THE OTHER CHARGES?
Charges are made against each subaccount for the mortality and expense risks
assumed by John Hancock (at an effective annual rate of .50% of the assets of
the subaccount). The cash value of a Policy is charged monthly for the cost of
insurance for the insured (at varying levels). See "Expenses Charged to
Account", Page 16.
HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?
At issue and subsequently thereafter the Owner will have the option of
deciding what percentage or amount of the reserves held for the Policy will be
invested in not more than five of the seven subaccounts. (See "Investment
Option" and "Transfer Option", Page 13.)
ARE DIVIDENDS PAID ON THE POLICIES?
Beginning two or three years after issue, depending on the form of Policy
purchased, John Hancock expects to pay dividends on each policy anniversary.
(See "Annual Dividends", Page 9.)
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. Agent's commissions for the first
Policy year do not exceed a maximum of 55% of the premiums paid. Commissions
payable for later years are described under "Distribution of Policies". Sales
expenses in any year are not equal to the deduction for sales load 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.
HOW DOES THE DEATH BENEFIT VARY IN RELATION TO THE SUBACCOUNTS' INVESTMENT
EXPERIENCE?
The Death Benefit during the first policy month is equal to the Initial Sum
Insured shown on the Policy at issue and thereafter will vary monthly
depending on the subaccounts' rates of return after charges against the
3
<PAGE>
subaccounts' (the "Account Net Investment Rate"). In general, if the Account
Net Investment Rate on an annual basis is greater than 4 1/2% the Death
Benefit will increase and if less than 4 1/2% the Death Benefit will decrease
(but never less than the Guaranteed Minimum Death Benefit.) (See "Death
Benefit", Page 8.)
HOW DOES THE POLICY CASH VALUE VARY IN RELATION TO THE SUBACCOUNTS' INVESTMENT
EXPERIENCE?
In general, the Policy Cash Value for any day equals the Policy Cash Value
for the previous day, increased by any modal net premium placed in the
subaccounts for the Policy and decreased by any charge for the cost of
insurance for the insured, accumulated at the subaccounts' rates of return
after charges against the subaccounts. The Policy Cash Value for substandard
risk policies is the same as for comparable standard risk policies. (See
"Surrender Value", Page 10.)
WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT AND
POLICY CASH VALUE?
The Owner may obtain a Policy loan of up to 90% of the Policy Cash Value.
Interest charged on any loan will accrue daily either at an annual rate
determined by John Hancock at the start of each Policy Year (Variable Loan
Interest Rate) or, at the election of the Owner, at an effective annual rate
of 8%. A loan plus accrued interest 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 portion of the Policy Cash Value equal to
the loan plus accrued interest is credited with the Policy Loan Rate (the
Fixed or Variable Loan Interest Rate less an amount not exceeding 2%, assuming
no taxes) rather than the subaccounts' net investment experience during such
period. Therefore, the Death Benefit above the Guaranteed Minimum Death
Benefit and the Policy Cash Value are permanently affected by any loan,
whether or not repaid in whole or in part. Also, the amount of any outstanding
loan plus accrued interest is subtracted from the Death Benefit or Policy Cash
Value otherwise payable. (See "Loan Provision and Indebtedness", Page 11.)
IS THERE A SHORT-TERM CANCELLATION RIGHT?
The Owner may surrender this Policy by delivering or mailing it within 45
days after the date of Part A of the application, or within 10 days after
receipt of the Policy by the Owner, or within 10 days after mailing by John
Hancock of the Notice of Withdrawal Right, whichever is latest, to John
Hancock at Boston, Massachusetts, or to the agent or agency office through
which it was delivered. Immediately on such delivery or mailing, the Policy
shall be deemed void from the beginning. Any premium paid on it will be
refunded.
CAN A POLICY BE EXCHANGED FOR A FIXED BENEFIT LIFE INSURANCE POLICY?
Within twenty four months after a Policy's issue date, the Policy may be
exchanged without evidence of insurability for a fixed benefit policy on the
life of the Insured having the same face amount as the Initial Sum Insured of
the Policy. (See "Exchange of Policy During First 24 Months", Page 15.)
ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?
There has been a determination by the Internal Revenue Service that death
benefits payable under variable life insurance policies (which appear to be
similar to those described in this prospectus in all material respects) are
excludable from the beneficiary's gross income for Federal tax purposes. It is
also believed that an Owner will not be deemed to be in constructive receipt
of the cash values of his or her Policy until its actual surrender.
4
<PAGE>
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. (See "Tax
Considerations", Page 18.)
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", Page 18.)
JOHN HANCOCK
John Hancock, a mututal 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 THE SERIES FUND
THE ACCOUNT
The Account, a separate account established under Massachusetts law in 1993,
meets the definition of "separate account" under the Federal securities laws
and is registered as a unit investment trust under the Investment Company Act
of 1940 ("1940 Act").
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 daily charges made by John Hancock and, possibly, funds
previously contributed by John Hancock. From time to time these additional
assets may be transferred in cash by John Hancock to its general account.
Before making any such transfer, John Hancock will consider any possible
adverse impact the transfer might have on any subaccount. Additional premiums
are charged for Policies where the insured is classified as a substandard risk
and a portion of these premiums may be allocated to one or more of the
subaccounts from time to time to support the reserves for extra mortality
risks.
The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve the
supervision by the Commission of the management or policies of the Account or
John Hancock.
5
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There currently are seven subaccounts in the Account. The assets in each,
apart from assets attributable to policy loans, are invested in a separate
class of shares issued by the Fund, but the assets of one subaccount are not
necessarily legally insulated from liabilities associated with another
subaccount. New subaccounts may be added as new portfolios are added to the
Fund and made available to Owners.
THE SERIES FUND
The Fund is a "series" type of mutual fund registered with the Commission as
an open-end diversified management investment company. The Fund serves as the
investment medium for the Account and for other unit investment trust separate
accounts established for other variable life insurance policies and for
variable annuity contracts. (See the attached Fund prospectus for the
description of a need to monitor for possible conflicts and other
consequences.) A very brief summary of the investment objectives of the
Portfolios available to the Account is set forth below.
Growth and Income (formerly Stock) Portfolio
The investment objective of this Portfolio is to achieve intermediate and
long-term growth of capital, with income as a secondary consideration. This
objective will be pursued by investments principally in common stocks (and in
securities convertible into or with rights to purchase common stocks) of
companies believed by management to offer growth potential over both the
intermediate and the long term.
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.
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.
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.
6
<PAGE>
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.
John Hancock acts as the investment manager for the Fund. Its 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 and
Managed Portfolios. Independence Investment Associates, Inc., also provides
sub-investment advice with respect to the Real Estate Equity Portfolio. And
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 International Equities Portfolio
and John Hancock Advisers, Inc. does likewise with respect to the Sovereign
Bond 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 the 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. Any such distribution will result in a reduction
in the value of the Fund shares of the Portfolio from which the distribution
was made. The total net asset value of the Account will not change because of
such distribution, however.
On each Valuation Date, shares of each Portfolio are purchased or redeemed
by John Hancock for each subaccount based on, among other things, the amount
of modal net premiums allocated to the subaccount, dividends and distributions
reinvested, transfers to, from and among 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 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.
PRINCIPAL POLICY PROVISIONS
The discussions which follow under "Death Benefit", "Surrender Value" and
"Loan Provision and Indebtedness" assume that premiums have been duly paid
and, in the case of Death Benefit and Surrender Value that there has been no
Policy loan. Benefits and values are affected if premiums are not paid or if a
Policy loan is made. For the effect of a default in payment of premiums, see
"Default and Options on Lapse", and of a loan, see "Loan Provision and
Indebtedness". Determinations, applications, and payments may be deferred, see
"Deferral of Determinations and Payments".
7
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DEATH BENEFIT
The Death Benefit will be an amount equal to the greater of the Initial Sum
Insured and the Variable Sum Insured on the date of death of the insured. The
Variable Sum Insured is an amount equal to the Initial Sum Insured at issue
and thereafter is the amount of life insurance determined according to the
Valuation Provisions of the Policy.
Guaranteed Minimum Death Benefit. The Guaranteed Minimum Death Benefit is
equal to the Initial Sum Insured on the date of issue of the Policy. John
Hancock guarantees that, regardless of what the Account earns, the Death
Benefit will never be less than the Guaranteed Minimum Death Benefit.
Changes in Death Benefit. After the first policy month, the Death Benefit is
determined once each policy month on the Monthly Date. (The Monthly Date is
the first day of a policy month which day immediately follows a date which is
a Valuation Date.) The Death Benefit remains level during the policy month
following the determination. The Owner bears the investment risk that the
Death Benefit could decrease on any Monthly Date (but not below the Guaranteed
Minimum Death Benefit) and forgoes any increase in Death Benefit from
favorable investment results until the next Monthly Date.
Changes in the Death Benefit for each policy month are computed by a
formula, filed with the insurance supervisory officials of the jurisdiction in
which the Policy has been delivered or issued for delivery. Under the formula
the difference between the applicable Account Net Investment Rate (ANIR) for
each Valuation Period and the Policy's assumed annual rate of 4 1/2% is
translated, on an actuarial basis, into a change in the Death Benefit.
If the Death Benefit were equal to the Guaranteed Minimum Death Benefit for
a policy month, it would increase above the Guaranteed Minimum Death Benefit
on the next Monthly Date only if the applicable ANIR for the last policy month
were sufficiently greater than a monthly rate equivalent to an annual rate of
4 1/2% to result in such an increase. If the ANIR was equivalent to an annual
rate of less than 4 1/2% and the Death Benefit was greater than the Guaranteed
Minimum Death Benefit, the Death Benefit would be reduced (but not below the
Guaranteed Minimum Death Benefit). The percentage change in the Death Benefit
is not the same as the Account Net Investment Rate.
The changes in Death Benefit may be more readily understood by reference to
the following examples.
Using the Policy illustrated on Page 45 and the 6% hypothetical gross annual
investment return assumption (equivalent to an ANIR of 4.85%), the Death
Benefit shown at the end of Policy year 5 would increase to the amount shown
at the end of Policy year 6, as follows:
<TABLE>
<S> <C>
Death Benefit at end of Policy year 5............... $62,736
Increase in Death Benefit........................... $ 322(.51% increase)
Death Benefit at end of Policy year 6............... $63,058
</TABLE>
If, instead, the 0% hypothetical gross annual investment return assumption
(equivalent to an ANIR of 1.09%) were used, the Death Benefit shown at the end
of Policy year 5 would decrease to the amount shown at the end of Policy year
6 as follows:
<TABLE>
<S> <C>
Death Benefit at end of Policy year 5.............. $62,736
Decrease in Death Benefit.......................... $ 298 (.48% decrease)
Death Benefit at end of Policy year 6.............. $62,438
</TABLE>
8
<PAGE>
In the case of a Death Benefit which was equal to the Guaranteed Minimum
Death Benefit because the Variable Sum Insured was less than the Guaranteed
Minimum Death Benefit, such Death Benefit would increase on a Monthly Date
only if the ANIR for the last policy month was sufficiently greater than an
equivalent annual rate of 4 1/2% to result in an increase sufficiently large
to bring the Variable Sum Insured above the Guaranteed Minimum Death Benefit.
ACCOUNT NET INVESTMENT RATE (ANIR)
The ANIR for each subaccount in which the Policy reserve is invested is
determined separately for each Policy. The ANIR for a Valuation Period is
determined as of the end of the Valuation Period as a weighted average of the
Policy Loan Rate and the Account Equity Rate and reflects the Policy's
indebtedness allocated to the subaccounts. In the absence of any indebtedness,
the ANIR equals the Account Equity Rate. The ANIR may be positive or negative.
Valuation Date
A Valuation Date is any date on which the New York Stock Exchange is open
for trading and on which the Fund values its shares.
Valuation Period
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.
Values during Valuation Periods
The values of the Fund shares in the Account will be determined as of the
end of each Valuation Period and shall be the same for each day of the
Valuation Period.
Account Equity Rate
For each subaccount the Account Equity Rate for a Valuation Period is
determined as of the end of the Valuation Period and reflects the subaccount's
accrued investment income (excluding accrued policy loan interest) and capital
gains and losses, realized or unrealized, of the subaccount for the Valuation
Period, and any applicable income taxes paid or change in any provision for
taxes maintained in the subaccount during the Valuation Period, and a
Valuation Period charge at an effective rate of .50% annually of the value of
the subaccount at the beginning of the Valuation Period.
Policy Loan Rate
For each Policy the Policy Loan Rate for a Valuation Period is determined as
of the end of the Valuation Period and reflects the Policy's accrued Policy
loan interest for the Valuation Period, any applicable income taxes paid, or
change in any provision for taxes maintained by the Account during the
Valuation Period, and a Valuation Period charge at an effective rate of not
more than 2% annually of the total indebtedness of the Policy at the beginning
of the Valuation Period.
ANNUAL DIVIDENDS
These Policies are participating policies which, except while in force as
Fixed Extended Term Insurance, are entitled to the share, if any, of the
divisible surplus which John Hancock shall annually determine and
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<PAGE>
apportion to them. Any share will be distributed as a dividend payable
annually on the Policy anniversary
beginning not later than the end of the second Policy year for the Variable
Whole Life 100 Policy and not later than the end of the third Policy year for
the Variable Whole Life Policy and Variable Whole Life P50 Policy.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a policy to the actual level of cost
emerging over time after the Policy's issue. Thus, participating policies
generally have gross premiums which are higher than those for comparable non-
participating policies. If a Policy is surrendered before dividends become
payable, the Owner does not benefit from having a participating policy.
Both Federal and state law recognize that dividends are considered to be a
refund of a portion of the premium paid and therefore are not treated as
income for Federal or state income tax purposes.
Dividend illustrations published at the time of issue of a Policy reflect
the actual recent experience of the issuing insurance company with respect to
factors such as interest, mortality, and expenses. State law generally
prohibits a company from projecting or estimating future results. State law
also requires that dividends must be based on surplus, after setting aside
certain necessary amounts, and that such surplus must be apportioned equitably
among participating policies. In other words, in principle and by statute,
dividends must be based on actual experience and cannot be guaranteed at issue
of a Policy.
Each year John Hancock's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and withdrawal rates, investment yield in the general account, and
actual expenses incurred in administering the Policies. Such data is then
allocated to each dividend class, e.g., by year of issue, age, smoking habits
and plan. The actuary then determines what dividends can be equitably
apportioned to each Policy class and makes a recommendation to John Hancock's
Board of Directors. The Board of Directors, which has the ultimate authority
to ascertain dividends, will vote the amount of surplus to be apportioned to
each policy class, thereby authorizing the distribution of each year's
dividend.
Dividend Options. The Owner may in general elect to have any dividend paid
or applied under any one of the following options: paid in cash; applied to
premium payments; left to accumulate with interest of at least 3 1/2% a year;
purchase fixed paid-up insurance; purchase one year term insurance; or
purchase variable paid-up insurance.
SURRENDER VALUE
Amount of Policy Cash Value. The Policy Cash Value increases or decreases
depending on the applicable subaccount's investment experience and the
proportion of the Policy's reserve invested in each subaccount. The Policy
Cash Value for any day equals the Policy Cash Value for the previous day,
increased by any modal net premium placed in the subaccounts and decreased by
any charge for the cost of insurance for the insured, accumulated at the
subaccounts' rates of return after charges against the subaccounts. A modal
net premium is placed into the subaccounts on the Monthly Date if a premium is
due in that Policy Month. The cost of insurance for the insured is deducted
from the Account on every Monthly Date. No minimum amount of Policy Cash Value
is guaranteed.
Even though the premium is higher for a substandard mortality risk policy
than for a comparable standard risk policy and the premium is lower if a non-
smoker discount has been made available to an insured than in the
10
<PAGE>
case of a comparable standard risk policy, the premium is determined such that
the Policy Cash Value in either instance is the same as the Policy Cash Value
for a standard risk policy of the same age and sex, for the same Initial Sum
Insured and having the same date of issue.
When Policy may be Surrendered. A Policy may be surrendered for its
surrender value at any time while the insured is living. Surrender takes
effect and the surrender value is determined as of the end of the Valuation
Period in which occurs the later of receipt of John Hancock's Home Office of a
signed request and the surrendered policy. The surrender value will be the
Policy Cash Value plus any dividends and interest unpaid or unapplied, and the
cash value of any insurance purchased under any dividend option with an
adjustment to reflect the difference between the gross premium and the net
premium for the period beyond the date of surrender, less any indebtedness.
When Part of Policy may be Surrendered. A Policy may be partially
surrendered in accordance with John Hancock's rules. The Policy after the
partial surrender must have an Initial Sum Insured at least as great as the
minimum issue size for that type of Policy. The premium and the Guaranteed
Minimum Death Benefit for the Policy will be based on the new Initial Sum
Insured.
LOAN PROVISION 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 on completion of a
form satisfactory to John Hancock assigning the Policy as the only security
for the loan. The Loan Value will be 90% of the total of the Policy Cash Value
(assuming no dividends) and any cash value under the variable paid-up
insurance dividend option, plus any cash value under the fixed paid up
insurance dividend option. Interest accrues and is compounded daily at an
effective annual rate equal to the then applicable Variable Loan Interest
Rate. If the Owner elects the Fixed Loan Interest Rate or the Variable Loan
Interest Rate is unavailable in the Owner's state, interest accrues and is
compounded daily at an effective annual rate of 8%.
The amount of any outstanding loan plus accrued interest is called the
"indebtedness". Except when used to pay premiums, a loan will not be permitted
unless it is at least $100. The Owner may repay all or a portion of any
indebtedness while the insured is living and premiums are being duly paid. Any
loan is charged against the subaccounts in proportion to the Policy Cash Value
allocated to the subaccounts and, upon repayment, the repayment is allocated
to the subaccounts in proportion to the outstanding indebtedness in each
subaccount at such time.
Loan Interest Rates. The Variable Loan Interest Rate is determined annually
for a Policy by John Hancock. The Fixed Loan Interest Rate is 8% for the life
of the Policy. The Owner, at the time of issue, can elect which loan interest
rate will apply to any Policy Loan. If permitted by the law of the state in
which the Policy is issued, the Owner may change a prior choice of Loan
Interest Rate. If at the time of such request there is outstanding
indebtedness, the change will generally become effective on the next Policy
anniversary.
The Variable Loan Interest Rate determined annually for a Policy will apply
to all indebtedness outstanding during the policy year following the date of
determination. The rate will not exceed the higher of 5 1/2% or the Published
Monthly Average (as defined below) for the calendar month which is two months
prior to the month in which the date of determination occurs. The Published
Monthly Average means Moody's Corporate Bond Yield Average as published by
Moody's Investors Service, Inc. or any successor thereto.
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<PAGE>
Effect of Loan and Indebtedness. A loan does not affect the amount of the
premiums due. While the indebtedness is outstanding, that portion of the
indebtedness attributable to the Account is credited with the
Policy Loan Rate rather than the Account Equity Rate. The Policy Loan Rate is
either the Fixed or Variable Loan Interest Rate less an amount not exceeding
2%, assuming no taxes. Therefore, the Death Benefit above the Guaranteed
Minimum Death Benefit, the Policy Cash Value and any insurance and cash value
under the variable paid up dividend option 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 then outstanding indebtedness equals or exceeds the Policy Cash
Value, plus any cash values under a dividend option providing paid-up
insurance, 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.
PREMIUMS
Payment Period and Frequency. Premiums are payable annually or more
frequently over the insured's lifetime in accordance with John Hancock's
published rules and rates. Premiums are payable at John Hancock's Home Office
on or before the due date specified in the Policy. A refund or charge will be
made to effect premium payment to the end of the policy month in which the
insured dies.
Level Premiums. The level premiums act as an averaging device to cover
expenses which are highest in the early Policy years and the cost of insurance
which increases with age. In the early Policy years premiums are higher than
needed to pay death claims, while in the later years premiums are less than
required to pay the death claims. Also, assets are allocated to John Hancock's
general account to accumulate as a reserve to cover the contingency that the
insured will die at a time when the Guaranteed Minimum Death Benefit exceeds
the death benefit which would have been payable in the absence of such
guarantee.
Illustration of Premium Rates. The tables below show premium rates on an
annual and special monthly basis for each Policy of various Initial Sums
Insured for various issue ages. Payments may also be made on a semiannual and
quarterly basis. When payments are made on other than an annual basis, the
aggregate premium amounts for a Policy year are higher, reflecting higher
surrender experience and additional billing and collection expenses.
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<PAGE>
PREMIUMS FOR $1,000 OF INITIAL SUM INSURED
<TABLE>
<CAPTION>
% Excess of Total
Special Monthly
Premiums for Policy
Special Year Over
Annual Basis Monthly Basis Annual Premiums
Initial ------------- -------------- ----------------------
Issue Sum
Age Insured Male Female Male Female Male Female
- ----- -------- ------ ------ ------ ------- --------- ----------
VARIABLE WHOLE LIFE (STANDARD MORTALITY RATE)
<S> <C> <C> <C> <C> <C> <C> <C>
25.......... $ 25,000 $13.02 $12.22 $1.15 $1.08 6.0% 6.1%
40,000 12.27 11.47 1.08 1.01 5.6 5.7
VARIABLE WHOLE LIFE P50 (STANDARD MORTALITY RATE)
25.......... 50,000 11.54 10.77 1.01 .94 5.0 4.7
100,000 11.04 10.27 .96 .89 4.3 4.0
40.......... 50,000 20.95 19.12 1.82 1.66 4.2 4.2
100,000 20.45 18.62 1.77 1.61 3.9 3.8
VARIABLE WHOLE LIFE 100 (PREFERRED MORTALITY RATE)
25.......... 100,000 9.38 9.23 .81 .80 3.6 4.0
40.......... 100,000 17.61 17.13 1.52 1.48 3.6 3.7
</TABLE>
Policies issued in connection with certain employee plans will not directly
reflect the sex of the insured in the premium rates.
INVESTMENT OPTION
The Owner has the option to allocate applicable premiums (other than
premiums for any additional insurance benefits) and dividends under the
variable paid-up insurance dividend option to any one but not more than five
of the seven subaccounts. The Owner must select allocation percentages in
whole numbers, the minimum allocation to a subaccount may not be less than 10%
and the total allocated must equal 100%.
The initial election must be made by the Owner at the time of completion of
the application for the Policy. The Owner may thereafter change the election
at any time. The change will be effective as to any applicable premiums and
dividends applied after receipt at John Hancock's Home Office of notice
satisfactory to John Hancock. If the Owner requests a change which would
result in amounts being held in more than five subaccounts, such change will
not be effective and a revised request must be made reflecting an allocation
of net premiums or credits to no more than five subaccounts.
TRANSFER OPTION
The Owner may reallocate the amounts held for the Policy in the subaccounts
six times in each Policy year with no charge. The Owner may use either
percentages (in whole numbers) or designate the amount of money to be
transferred between subaccounts. The reallocation must be such that the total
after reallocation equals 100%. The change will be effective at the end of the
Valuation Period in which John Hancock receives at its Home Office notice
satisfactory to John Hancock. If the Owner requests a reallocation which would
result in amounts being held in more than five subaccounts, such reallocation
will not be effective. A revised reallocation may be chosen in order that
amounts will be reallocated to no more than five subaccounts.
DEFAULT AND OPTIONS ON LAPSE
A premium unpaid as of its due date is in default, but the Policy provides
for a 31-day grace period for the payment of each premium after the first. The
insurance continues in full force during the grace period but, if the
13
<PAGE>
insured dies during the grace period, the portion of the premium due which is
applicable to the period from the premium due date to the end of the policy
month in which the insured dies is deducted from the amount otherwise payable.
Prior to the end of the Valuation Period immediately preceding the 70th day
after the date of default, any Policy values available determined in
accordance with the Policy may be applied as of the date of default under one
of the following options for continued insurance not requiring further payment
of premiums. These options provide for Variable or Fixed Paid-Up Insurance or
Fixed Extended Term Insurance on the life of the insured commencing on the
date of default.
Both the Variable and Fixed Paid-Up Insurance options provide an amount of
paid-up whole life insurance which the available Policy values will purchase.
The amount of Variable Paid-Up Insurance may then increase or decrease in
accordance with the investment experience of the Account. The Fixed Paid-Up
Insurance option provides a fixed and level amount of insurance. The Fixed
Extended Term Insurance option provides a fixed amount of insurance determined
in accordance with the Policy, with the insurance coverage continuing for as
long a period as the available Policy values will purchase.
For example, using the Policy illustrated on Page 42 and the 6%
hypothetical gross annual investment return assumption, if an option was
elected and became effective at the end of Policy year 5, the insurance
coverage provided by the options on lapse would be as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Variable or Fixed Fixed Extended Term Insurance
Paid-Up Whole Life -----------------------------
------------------
Death Benefit Death Benefit Term in Years and Days
------------- ------------- ----------------------
or
<S> <C> <C>
$10,427 $62,736 12 years 331 days
</TABLE>
- -------------------------------------------------------------------------------
If no option has been elected before the end of the Valuation Period
immediately preceding the 70th day after the date of default, the Fixed
Extended Term Insurance option automatically applies unless the amount of
Fixed Paid-Up Insurance would equal or exceed the amount of Fixed Extended
Term Insurance or unless the insured is a substandard risk, in either of which
cases Fixed Paid-Up Insurance is provided.
If the insured dies after the grace period but before the end of the
Valuation Period immediately preceding the 70th day after the date of default
and prior to any election, and if the Policy is then in force, John Hancock
will pay a death benefit equal to the greater of the death benefits provided
under Fixed Extended Term Insurance (if available) or Fixed Paid-Up Insurance
determined in accordance with the Policy.
A Policy continued under any option may be surrendered for its cash value
while the insured is living. Loans may be available under the Variable and
Fixed Paid-Up Insurance options, but not under the Fixed Extended Term
Insurance option.
Reinstatement. The Policy may be reinstated in accordance with its terms
(including evidence of insurability satisfactory to John Hancock and payment
of the required charges) within 3 years after the due date of the first unpaid
premium unless the surrender value has been paid or otherwise exhausted, or
the period of any extended term insurance has expired.
14
<PAGE>
EXCHANGE OF POLICY DURING FIRST 24 MONTHS
At any time during the first twenty-four months after the issue date shown
in the Policy while premiums are being duly paid, the Owner may exchange the
Policy without evidence of insurability for the fixed benefit life insurance
policy specified in the Policy on the insured's life. The new policy will have
the same issue date, issue age, and risk classification for the insured as the
Policy. The Sum Insured will be equal to the Initial Sum Insured. Premiums for
the new policy will be based on the premium rates which were in effect on the
issue date of the Policy.
The exchange will be effective on receipt of written notice at John
Hancock's Home Office satisfactory to John Hancock, the surrender of the
Policy, and payment to John Hancock of any cost to exchange.
The exchange shall be subject to an equitable adjustment in premiums, cash
values and dividends to reflect variances, if any, in the premiums, cash
values, and dividends under the Policy and the new policy. Any outstanding
indebtedness must be repaid on or before the effective date of the exchange.
The exchange is subject to the restrictions and limitations stated in the
Policy. The method of calculating the adjustment is filed by John Hancock with
the appropriate state insurance regulatory authorities and as an exhibit to
the Registration Statement which has been filed with the Commission.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policies which have been filed as exhibits to the Registration
Statement.
CHARGES AND EXPENSES
CHARGES DEDUCTED FROM PREMIUMS
The basic annual premium is the annual premium less the premiums for any
optional insurance benefits, additional charges for extra mortality risks and
a $50 annual administrative charge. Premiums paid more frequently than
annually (modal premiums) are higher.
Annual Administrative Charge. The $50 charge in each Policy year is for
annual administrative expenses, including premium billing and collection,
recordkeeping, processing Death Benefit claims, cash surrenders and Policy
changes, reporting and other communications to Owners and other similar
expense and overhead costs.
The amount allocated to the Account for a Policy equals the basic annual
premium less the charges and deduction listed below.
Charge for Sales Load. A charge not to exceed 9% of the basic annual premium
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 Table. The charge during the first two Policy
years shall not exceed 30% of the basic annual premium paid during the first
Policy year plus 10% of the basic annual premium paid for the second Policy
year. Charges of 10% or less are made for later Policy years. The amount of
the charge in any Policy year cannot be specifically related to sales expenses
for that year. To the extent that sales expenses are not recovered from the
charge for sales load, such expenses may be recovered from other sources,
including any gains attributable to operations with respect to the Policies or
John Hancock's general assets.
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<PAGE>
Additional First Year Administrative Charge. A charge in the first Policy
year at the rate of $13 per $1,000 of Initial Sum Insured for a Variable Whole
Life Policy, $7 per $1,000 for a Variable Whole Life P50 Policy and $4 per
$1,000 for a Variable Whole Life 100 policy or a pro rata portion thereof, to
cover administrative expenses in connection with the issuance of the Policy.
Such expenses include medical examination, insurance underwriting costs, and
costs incurred in processing applications and establishing permanent Policy
records. John Hancock does not expect to profit from this charge.
State Premium Tax Charge. A charge equal to 2 1/2% of the basic annual
premium. Premium taxes vary from state to state. The 2 1/2% rate is the
average rate expected to be paid on premiums received in all states over the
lifetimes of the insureds covered by the Policies.
Risk Charge. A charge necessary to cover the risk assumed by John Hancock
that the Variable Sum Insured will be less than the Guaranteed Minimum Death
Benefit. This charge will vary by age of the insured but averages
approximately 3% of the basic annual premium.
Deduction for Dividends. A deduction for dividends to be paid or credited in
accordance with the dividend scale in effect on the issue date of the Policy.
This deduction will vary by age of the insured and duration of the Policy but
is expected to average approximately 5-9% of the basic annual premium.
EXPENSES CHARGED TO ACCOUNT
Charge for Mortality and Expense Risks. A daily charge is made for mortality
and expense risks assumed by John Hancock at an effective annual rate of .50%
of the value of the Account's assets attributable to the Policies. The
mortality risk assumed is that insureds may live for a shorter period of time
than estimated and, therefore, a greater amount of Death Benefits 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.
The charge for mortality and expense risks constitutes the Valuation Period
charge. See "Account Net Investment Rate (ANIR)".
Charge for Taxes. Currently no charge is made to the subaccounts for company
Federal income taxes but if John Hancock incurs, or expects to incur, income
taxes attributable to the subaccounts 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 Cost of Insurance. A charge for the cost of insurance for the
insured is deducted each month in advance over the life of the Policy. This
charge is based on the attained age of the insured and the Variable Sum
Insured. The cost of insurance rates for these Policies will not exceed the
rates stated in the 1980 Commissioners Standard Ordinary Mortality Table.
Using the policy illustrated on page 44 and assuming an Account Net Investment
Rate of 4 1/2% (which results in the Variable Sum Insured always equalling the
Initial Sum Insured), the cost of insurance deducted from the Policy Cash
Value for the last month of the fifth policy year would be $8.54 and for the
last month of the sixth policy year would be $8.57. The increase in the cost
of insurance deducted reflects the increase in the attained age of the
insured. Each charge reduces the Policy Cash Value. See "Surrender Value".
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
16
<PAGE>
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.
GUARANTEE OF PREMIUMS AND CERTAIN CHARGES
John Hancock guarantees, and may not increase, the amount of the premiums,
charges deducted from premiums and charges to the Account for mortality and
expense risks. John Hancock further guarantees that the method by which the
ANIR is calculated will not be changed for the life of any 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 of John Hancock. John Hancock acts as the principal
underwriter of the Policies, performs suitability and insurance underwriting
and determines whether to accept or reject the application for the Policy and
the insured's risk classification. John Hancock will refund any premiums paid
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 issued by a commercial carrier in the amount of $20 million.
Agents are compensated for sales of the Policies on a commission and service
fee basis by John Hancock, and for other direct and indirect expenses
(including agency expense allowances, general agent, district manager and
supervisor's compensation, agent's training allowances, deferred compensation
and insurance benefits, agency office clerical expenses and advertising)
actually incurred in connection with the marketing and sale of the Policies.
The maximum commission payable to an agent for selling a Policy is 55% of
the premium in the first Policy year, 15% of the premium in the second Policy
year, 10% of the premium in the third, fourth and
fifth Policy years, 5% of the premium in Policy years six through ten and 3%
of the premium in the eleventh and later Policy years.
Agents with less than four years of service with John Hancock and agents
compensated on salary plus bonus or level commission programs may be paid on a
different basis. Agents who meet certain productivity and persistency
standards with respect to the sale of policies issued by John Hancock and its
affiliates will be eligible for additional compensation.
John Hancock is registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. The Policies may be sold through other registered
broker-dealers whose representatives are authorized by applicable law to sell
variable life insurance policies. The commissions which will be paid out by
such broker-dealers to their registered representatives will be in accordance
with their established rules. 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 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.
17
<PAGE>
TAX CONSIDERATIONS
POLICY PROCEEDS
Although the Policy contains provisions not found in fixed benefit life
insurance policies, John Hancock believes the Policy will nevertheless receive
the same federal income and estate tax treatment. Section 7702 of the Internal
Revenue Code ("Code") defines life insurance for federal tax purposes. 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.
John Hancock believes that the death benefit under the Policy will be
excludable from the beneficiary's gross income under Section 101 of the Code.
The Owner of a Policy is not deemed to be in constructive receipt of the cash
values until a partial withdrawal or surrender. A surrender, partial surrender
or withdrawal may have tax consequences. For example, the Owner will be taxed
on a surrender to the extent that the surrender value exceeds the net premiums
paid under the Policy, i.e., ignoring premiums paid for optional benefits and
riders. But under certain circumstances 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 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.
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.
The above description of Federal tax consequences is only a brief summary
and is not intended as tax advice. For further information consult a qualified
tax adviser.
Federal and state tax laws can change from time to time and, as a result,
the tax consequences to the Owner and beneficiary may be altered.
CHARGE FOR JOHN HANCOCK'S TAXES
Currently John Hancock makes no charge against the Account 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.
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<PAGE>
MANAGEMENT
THE 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 as follows:
<TABLE>
<CAPTION>
Directors Principal Occupations
--------- ---------------------
<S> <C>
Samuel W. Bodman Chairman of The Board and Chief Executive Of-
ficer, 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
Kathleen F. Feldstein President, Economics Studies Inc. (consul-
tant)
Lawrence K. Fish Chairman and Chief Executive Officer, Citi-
zens Financial Group (Banking).
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 Of-
ficer, 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
Richard F. Syron Chairman of the Board and Chief Executive Of-
ficer, American Stock Exchange
Michael C. Hawley President and Chief Operating Officer, The
Gillette Company (razors).
Executive Officers
------------------
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.
19
<PAGE>
VOTING PRIVILEGES
All of the assets in the subaccounts of the Account, apart from assets
attributable to policy loans, are invested in shares of the corresponding
Portfolios of the Fund. John Hancock will vote the shares of each of the
Portfolios of the Fund which are deemed attributable to the Policies at
meetings of the Fund's shareholders in accordance with instructions received
from owners of all policies funded through the Account's corresponding
variable subaccount. Shares of the Fund which are not attributable to the
Policies and shares for which instructions from owners are not received will
be voted by John Hancock for and against each matter in the same proportion as
the votes based upon the instructions received from the owners of all policies
funded through the Account's corresponding variable subaccount.
The number of Fund shares held in each subaccount deemed attributable to
each Owner is determined by dividing a Policy's cash value (less any
outstanding indebtedness) in the subaccount by the net asset value of one
share in the corresponding Fund Portfolio in which the assets of that
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 the Fund's investment management agreement 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 the
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 subaccount's investment objectives or would result in the purchase of
securities which vary from the general quality and nature of investments and
investment techniques utilized by other separate accounts of John Hancock or
of an affiliated life insurance company, which separate accounts have
investment objectives similar to those of the 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 IN APPLICABLE LAW--FUNDING AND OTHERWISE
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 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, and (3) to
deregister the Account under the 1940 Act. John Hancock would notify
20
<PAGE>
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.
REPORTS
In each Policy year (except while the Policy is continued in effect under a
fixed option on lapse) a statement will be sent to the Owner setting forth the
Death Benefit, Policy Cash Value, any cash value of Variable Paid-Up Insurance
and any outstanding indebtedness (and interest charged for the preceding
Policy year) as of the last day of such year. Moreover, confirmations will be
furnished to Owners of transfers between subaccounts, Policy loans, partial
surrenders 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.
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 Commission upon payment of the prescribed fee.
EXPERTS
The financial statements of John Hancock and the Account included in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, for
the periods indicated in their reports thereon which appear elsewhere herein,
and have been included in reliance on their reports given on their authority
as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by 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.
21
<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.
22
<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.
23
<PAGE>
<TABLE>
<CAPTION>
Special
Real Estate Equity Opportunities
Subaccount Subaccount
----------------------------------------- -----------------------------
For the Period
from For the Period
October 4, from
1993 May 6, 1994
(commencement (commencement
Year ended Year ended of operations) to Year ended of operations) to
December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994
----------- ----------- ----------------- ----------- -----------------
Investment in-
come:
<S> <C> <C> <C> <C> <C>
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $153,495 $ 99,568 $ 15,939 $ 22,718 $ 746
Interest income
on policy loans. 12,322 10,386 4,645 -- --
-------- -------- --------- -------- -------
Total income.... 165,817 109,954 20,584 22,718 746
Expenses:
Mortality and
expense risks
and other
charges......... 13,502 9,807 1,662 3,017 289
-------- -------- --------- -------- -------
Net investment
income.......... 152,315 100,147 18,922 19,701 457
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss) .... (39,490) (17,561) (3,306) 9,743 77
Net unrealized
appreciation
(depreciation)
during the year. 155,992 (47,683) (63,670) 126,004 (1,412)
-------- -------- --------- -------- -------
Net realized and
unrealized gain
(loss) on
investments..... 116,502 (65,244) (66,976) 135,747 (1,335)
-------- -------- --------- -------- -------
Net increase
(decrease) in
net assets
resulting from
operations...... $268,817 $ 34,903 $(48,054) $155,448 $ (878)
======== ======== ========= ======== =======
<CAPTION>
Short-Term
U.S.
Government
Stock Subaccount Subaccount Managed Subaccount
------------------------------------------ ----------------------------- ----------------------------------------
For the Period
For the Period from
from For the Period October 4,
October 4, from 1993
1993 May 1, 1994 (commencement
(commencement (commencement of operations)
Year ended Year ended of operations) to Year ended of operations) to Year ended Year ended to
December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1995 1994 1993
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Investment in-
come:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $10,687,455 $ 5,320,942 $ 5,347,556 $2,749 $ 239 $ 5,946,035 $ 2,136,167 $ 2,133,124
Interest income
on policy loans. 1,397,618 1,289,505 844,843 -- -- 626,984 554,232 372,441
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Total income.... 12,085,073 6,610,447 6,192,399 2,749 239 6,573,019 2,690,399 2,505,565
Expenses:
Mortality and
expense risks
and other
charges......... 646,807 529,971 121,956 295 22 356,869 299,763 69,919
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Net investment
income.......... 11,438,266 6,080,476 6,070,443 2,454 217 6,216,150 2,390,636 2,435,646
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gain (loss) .... 85,385 (249,230) 7,903 477 (6) (6,127) (182,296) (2,062)
Net unrealized
appreciation
(depreciation)
during the year. 17,351,805 (5,560,223) (3,787,331) 1,735 (282) 7,134,666 (2,984,103) (1,721,053)
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Net realized and
unrealized gain
(loss) on
investments..... 17,437,190 (5,809,453) (3,779,428) 2,212 (288) 7,128,539 (3,166,399) (1,723,115)
----------- ------------ ----------------- ----------- ----------------- ------------ ------------ --------------
Net increase
(decrease) in
net assets
resulting from
operations...... $28,875,456 $ 271,023 $ 2,291,015 $4,666 $ (71) $13,344,689 $ (775,763) $ 712,531
=========== ============ ================= =========== ================= ============ ============ ==============
</TABLE>
See accompanying notes.
24
<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 of 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.......... $ 773,338 $ 311,266 $ 223,100 $ 3,860,075 $ 3,145,758 $ 1,054,238
Net realized
gains (losses).. 23,090 (35,449) (45) (127,733) (215,268) (7,963)
Net unrealized
appreciation
(depreciation)
during the year. 1,225,784 (298,196) (152,267) 4,205,161 (3,583,940) (865,311)
----------- ---------- ---------- ----------- ----------- -----------
Net increase
(decrease) in
net assets
resulting from
operations...... 2,022,212 (22,379) 70,788 7,937,503 (653,450) 180,964
From policyholder
transactions:
Net contributions
from
policyholders... 3,921,962 3,110,357 774,582 8,741,178 9,292,171 2,130,456
Net benefits to
policyholders... (2,170,453) (1,704,646) 3,341,695 (8,117,059) (8,795,613) 35,919,978
Net increase in
policy loans.... 181,384 187,506 636,435 344,088 454,821 7,716,686
----------- ---------- ---------- ----------- ----------- -----------
Net increase in
net assets from
policyholder
transactions.... 1,932,893 1,593,217 4,752,712 968,207 951,379 45,767,120
----------- ---------- ---------- ----------- ----------- -----------
Net increase in
net assets..... 3,955,105 1,570,838 4,823,500 8,905,710 297,929 45,948,084
Net assets:
Beginning of
year............ 6,394,338 4,823,500 -- 46,246,013 45,948,084 --
----------- ---------- ---------- ----------- ----------- -----------
End of year...... $10,349,443 $6,394,338 $4,823,500 $55,151,723 $46,246,013 $45,948,084
=========== ========== ========== =========== =========== ===========
<CAPTION>
International Money Market
Subaccount Subaccount
---------------------------------------- ----------------------------------------
For the Period For the Period
from from
October 4, October 4,
1993 1993
(commencement (commencement
of of
Year ended Year ended operations) to Year ended Year ended operations) to
December 31 December 31 December 31 December 31 December 31 December 31
1995 1994 1993 1995 1994 1993
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in
net assets from
operations:
Net investment
income.......... $ 24,050 $ 30,484 $ 20,634 $ 869,075 $ 380,450 $ 148,505
Net realized
gains (losses).. 14,367 11,225 2,973 -- -- --
Net unrealized
appreciation
(depreciation)
during the year. 164,490 (159,108) 62,914 -- -- --
------------ ------------ -------------- ------------ ------------ --------------
Net increase
(decrease) in
net assets
resulting from
operations...... 202,907 (117,399) 86,521 869,075 380,450 148,505
From policyholder
transactions:
Net contributions
from
policyholders... 1,439,112 1,997,179 467,433 13,611,860 2,450,447 380,938
Net benefits to
policyholders... (927,937) (636,005) 418,803 (2,969,848) (2,597,488) 6,535,046
Net increase in
policy loans.... 27,649 54,609 69,862 149,842 25,104 2,013,388
------------ ------------ -------------- ------------ ------------ --------------
Net increase in
net assets from
policyholder
transactions.... 538,824 1,415,783 956,098 10,791,854 (121,937) 8,929,372
------------ ------------ -------------- ------------ ------------ --------------
Net increase in
net assets..... 741,731 1,298,384 1,042,619 11,660,929 258,513 9,077,877
Net assets:
Beginning of
year............ 2,341,003 1,042,619 -- 9,336,390 9,077,877 --
------------ ------------ -------------- ------------ ------------ --------------
End of year...... $3,082,734 $2,341,003 $1,042,619 $20,997,319 $9,336,390 $9,077,877
============ ============ ============== ============ ============ ==============
</TABLE>
See accompanying notes.
25
<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.
26
<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.
27
<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>
28
<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
29
<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.
30
<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.
31
<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.
32
<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
33
<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
34
<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
35
<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.
36
<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
37
<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.
38
<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>
39
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized
Value Gains Losses Fair Value
--------- ---------- ---------- ----------
(In millions)
Year ended December 31, 1995
----------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities and
obligations of U.S. government
corporations and agencies............ $ 638.5 $ 42.5 $ 0.2 $ 680.8
Obligations of states and political
subdivisions......................... 194.1 20.6 0.1 214.6
Debt securities issued by foreign gov-
ernments............................. 297.7 42.2 0.0 339.9
Corporate securities.................. 18,358.6 1,818.3 73.9 20,103.0
Mortgage-backed securities............ 1,619.6 57.9 20.8 1,656.7
--------- -------- ------ ---------
Totals.............................. $21,108.5 $1,981.5 $ 95.0 $22,995.0
========= ======== ====== =========
<CAPTION>
Year ended December 31, 1994
----------------------------
<S> <C> <C> <C> <C>
U.S. treasury securities and
obligations of U.S. government
corporations and agencies............ $ 1,545.1 $ 1.8 $128.6 $ 1,418.3
Obligations of states and political
subdivisions......................... 170.6 4.5 1.7 173.4
Debt securities issued by foreign gov-
ernments............................. 143.5 9.8 0.5 152.8
Corporate securities.................. 16,208.9 471.1 401.8 16,278.2
Mortgage-backed securities............ 1,815.9 4.8 44.1 1,776.6
--------- -------- ------ ---------
Totals.............................. $19,884.0 $ 492.0 $576.7 $19,799.3
========= ======== ====== =========
</TABLE>
The statement value and fair value of bonds at December 31, 1995, by
contractual maturity, are shown below. Maturities will differ from contractual
maturities because eligible borrowers may exercise their right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Statement Value Fair Value
--------------- ----------
(In millions)
<S> <C> <C>
Due in one year or less.............................. $ 1,408.9 $ 1,456.4
Due after one year through five years................ 6,406.1 6,795.4
Due after five years through ten years............... 5,969.7 6,551.4
Due after ten years.................................. 5,704.2 6,535.1
--------- ---------
19,488.9 21,338.3
Mortgage-backed securities........................... 1,619.6 1,656.7
--------- ---------
$21,108.5 $22,995.0
========= =========
</TABLE>
Proceeds from sales of bonds during 1995 and 1994 were $2.9 billion and $2.5
billion, respectively. Gross gains of $69.7 million in 1995 and $16.6 million
in 1994 and gross losses of $44.3 million in 1995 and $99.3 million in 1994
were realized on these transactions.
The cost of common stocks was $78.1 million and $82.1 million at December 31,
1995 and 1994, respectively. At December 31, 1995, gross unrealized
appreciation on common stocks totaled $76.3 million, and gross
40
<PAGE>
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--INVESTMENTS--CONTINUED
unrealized depreciation totaled $23.5 million. The fair value of preferred
stock totaled $338.8 million at December 31, 1995 and $281.6 million at
December 31, 1994.
Mortgage loans with outstanding principal balances of $115.5 million, bonds
with amortized cost of $32.8 million and real estate with depreciated cost of
$28.5 million were nonincome producing for the twelve months ended December
31, 1995.
Restructured commercial mortgage loans aggregated $466.0 million and $507.1
million as of December 31, 1995 and 1994, respectively. The expected gross
interest income that would have been recorded had the loans been current in
accordance with the original loan agreements and the actual interest income
recorded were as follows:
<TABLE>
<CAPTION>
Year ended
December 31
-------------
1995 1994
------ ------
(In millions)
<S> <C> <C>
Expected.................................................... $ 47.0 $ 54.5
Actual...................................................... $ 26.8 34.2
</TABLE>
Generally, the terms of the restructured mortgage loans call for the Company
to receive some form or combination of an equity participation in the
underlying collateral, excess cash flows or an effective yield at the maturity
of the loans sufficient to meet the original terms of the loans.
At December 31, 1995, the mortgage loan portfolio was diversified by
geographic region and specific collateral property type as displayed below.
The Company controls credit risk through credit approvals, limits and
monitoring procedures.
<TABLE>
<CAPTION>
Property
Type Statement Value
-------- ---------------
(In millions)
<S> <C>
Apartments................ $2,374.6
Hotels.................... 164.4
Industrial................ 780.4
Office buildings.......... 1,823.6
Retail.................... 1,545.1
1-4 Family................ 9.5
Agricultural.............. 1,607.0
Other..................... 496.9
--------
$8,801.5
========
</TABLE>
<TABLE>
<CAPTION>
Geographic
Concentration Statement Value
------------- ---------------
(In millions)
<S> <C>
East North Central....... $ 822.7
East South Central....... 178.2
Middle Atlantic.......... 1,861.1
Mountain................. 431.3
New England.............. 915.6
Pacific.................. 2,253.4
South Atlantic........... 1,611.7
West North Central....... 217.7
West South Central....... 447.4
Other.................... 62.4
--------
$8,801.5
========
</TABLE>
At December 31, 1995, the fair values of the commercial and agricultural
mortgage loan portfolios were $7.6 billion and $1.8 billion, respectively. The
corresponding amounts as of December 31, 1994 were approximately $6.5 billion
and $1.7 billion, respectively.
41
<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.
42
<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.
43
<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.
44
<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).
45
<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.
46
<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>
47
<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.
48
<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 Policies.
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 premium and subject to certain age and insurance
underwriting requirements, certain additional provisions, such as Disability
Waiver of Premiums and Accidental Death Benefits, which are subject to the
restrictions and limitations set forth therein, may be included in a Policy.
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.
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.
AGE AND SEX. If the age or sex of the insured has been misstated, John
Hancock will adjust the Initial Sum Insured and every other benefit to that
which the premium paid would have purchased at the correct age and sex.
49
<PAGE>
SUICIDE. If the insured commits suicide, while sane or insane, within 2
years (except where state law requires a shorter period) from the issue date
shown in the Policy, John Hancock will pay in place of all other benefits an
amount equal to the premiums paid less any indebtedness.
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 premiums paid or the surrender value, less indebtedness.
INCONTESTABILITY. The Policy, except for any provision for a disability
benefit or additional benefits provisions added after issue, shall be
incontestable after it has been in force during the lifetime of the insured
for 2 years from its issue date except for nonpayment of premium.
DEFERRAL OF DETERMINATIONS AND PAYMENTS. If the Policy is not on a fixed
non-forfeiture option, payment of any death, surrender, 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 the determination, payment or application of such
amounts if the effective date for determining such amounts falls within any
period during which: (1) the disposal or valuation of the Accounts' assets is
not reasonably practicable because the New York Stock Exchange is closed or
conditions are such that, under the Commissions' 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 John
Hancock Owners.
Under a Policy being continued under a fixed non-forfeiture option payment
of the cash value or loan proceeds may be deferred by John Hancock for up to
six months after receipt of a request therefor. Interest will be accrued at an
annual rate of 3 1/2% if such a deferment extends beyond 29 days.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policies which have been filed as exhibits to the Registration
Statement.
50
<PAGE>
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, CASH VALUES
AND ACCUMULATED PREMIUMS.
The following tables illustrate the way in which the three types of Policies
operate. Each table illustrates the changes in the death benefit and cash
value of the base Policy, disregarding any dividends or Policy loans. Each
table separately illustrates the operation of a Policy assuming dividends
WHICH ARE NOT GUARANTEED are used to purchase additional variable paid-up
death benefits. The tables show how the death benefit and cash value may vary
over an extended period of time assuming the subaccounts experience
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 premiums for a
standard risk and will assist in a comparison of the total death benefit and
cash value figures set forth in the tables with those under other variable
life insurance policies which may be issued by John Hancock or other
companies. The death benefit and cash value for a Policy would be different
from those shown if premiums are paid more frequently than annually or if the
actual gross rates of investment return applicable to the Policy average 0%,
6% or 12% over a period of years, but nevertheless fluctuated above or below
the average for individual Policy years.
The amounts shown for the death benefit and cash value as of the end of each
Policy year reflect a total asset charge of 1.086% comprised of the daily
charge against the Account for mortality and expense risks (equivalent to an
effective annual rate of .50% of the value of the Account's assets), an
average asset charge for the daily investment advisory expense charges to the
Portfolios of the Fund (equivalent to an effective annual rate of .39%) and an
assumed average asset charge for the annual non-advisory operating expenses of
each Portfolio of the Fund (equivalent to an effective annual rate of .20%).
For a description of expenses charged to the Portfolios, including the
reimbursement of any Portfolio for annual non-advisory operating expenses in
excess of an effective annual rate of .25%, a continuing obligation of the
Fund's investment adviser, see the attached prospectus for the Fund. The
charges for the daily investment management fee and the annual non-advisory
operating expenses are based on the hypothetical assumption that Policy values
are allocated equally among the seven subaccounts. The actual charges and
expenses associated with any Policy may be more or less than 1.086% and 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.
The second column of each table shows the amount to which the total premiums
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.
The death benefits (and resulting cash values) shown for additional variable
paid-up death benefits purchased with dividends paid under a Policy are
illustrative of those which would be paid if investment retruns of 0%, 6% and
12% are realized, if John Hancock's mortality and expense experience in the
future is as currently experienced and if its dividend scale remains
unchanged. However, as experience has clearly shown, conditions cannot be
expected to continue unchanged, and accordingly dividend scales must be
expected to change from time to time. MOREOVER, THERE IS NO GUARANTEE AS TO
THE AMOUNT OF DIVIDENDS, IF ANY, THAT WILL BE PAID UNDER A POLICY. Although
the tables are based on the assumption that dividends will be used to purchase
additional variable paid-up death benefits, other dividend options are
available. (See "Annual Dividends".)
John Hancock will furnish upon request a comparable illustration reflecting
the proposed insured's age, sex, smoking status and the Initial Sum Insured or
premium amount requested, and assuming that premiums are paid on an annual
basis and the proposed insured is a standard risk.
51
<PAGE>
PLAN:VARIABLE WHOLE LIFE 100
AGE 25 YEARS MALE--NON-SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $135,135
ANNUAL PREMIUM $1,250.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
---------------------- ---------------------- -----------------------
Death Benefit Death Benefit Death Benefit
---------------------- ---------------------- -----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------- ------ ------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 135,135 0 135,135 135,550 0 135,550 142,561 0 142,561
2 2,691 135,135 208 135,343 135,588 208 135,796 143,283 208 143,491
3 4,138 135,135 400 135,535 135,786 410 136,196 147,033 421 147,454
4 5,657 135,135 575 135,710 135,993 608 136,600 151,098 642 151,739
5 7,252 135,135 734 135,869 136,206 799 137,005 155,417 869 156,286
6 8,928 135,135 879 136,014 136,423 986 137,409 159,987 1,105 161,092
7 10,686 135,135 1,011 136,146 136,644 1,168 137,812 164,813 1,350 166,164
8 12,533 135,135 1,153 136,288 136,870 1,374 138,244 169,906 1,679 171,585
9 14,472 135,135 1,302 136,437 137,099 1,601 138,700 175,277 2,126 177,403
10 16,508 135,135 1,458 136,593 137,332 1,853 139,185 180,939 2,712 183,652
15 28,322 135,135 2,420 137,555 138,519 3,981 142,500 213,370 8,251 221,620
20 43,399 135,135 3,384 138,519 139,804 7,708 147,512 255,762 19,892 275,654
25 62,642 135,135 4,103 139,238 141,231 12,607 153,838 312,737 40,264 353,002
30 87,201 135,135 4,595 139,730 142,712 18,666 161,378 386,200 74,054 460,254
35 118,545 135,135 4,986 140,121 144,248 26,213 170,461 481,203 129,322 610,525
Age 65 158,550 135,135 5,342 140,477 145,835 35,315 181,150 604,241 217,588 821,829
<CAPTION>
0% 6% 12%
---------------------- ---------------------- -----------------------
Cash Value Cash Value Cash Value
---------------------- ---------------------- -----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------- ------ ------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 94 0 94 99 0 99 105 0 105
2 2,691 934 34 968 995 34 1,028 1,056 34 1,090
3 4,138 1,774 67 1,841 1,937 69 2,007 2,108 71 2,179
4 5,657 2,613 100 2,713 2,929 106 3,035 3,269 112 3,381
5 7,252 3,448 132 3,580 3,968 145 4,112 4,548 158 4,706
6 8,928 4,278 164 4,443 5,056 185 5,241 5,957 208 6,165
7 10,686 5,101 196 5,297 6,192 227 6,420 7,503 264 7,767
8 12,533 5,915 232 6,147 7,379 277 7,656 9,202 340 9,542
9 14,472 6,720 271 6,991 8,614 335 8,949 11,063 447 11,510
10 16,508 7,513 315 7,828 9,899 402 10,301 13,102 591 13,693
15 28,322 11,495 627 12,123 17,345 1,036 18,381 26,840 2,156 28,996
20 43,399 15,037 1,045 16,082 26,110 2,390 28,499 47,986 6,193 54,178
25 62,642 17,723 1,498 19,221 35,800 4,623 40,423 79,639 14,826 94,465
30 87,201 19,972 1,967 21,938 46,822 8,025 54,847 127,290 31,977 159,267
35 118,545 21,708 2,473 24,181 58,936 13,060 71,996 197,510 64,715 262,225
Age 65 158,550 22,958 3,032 25,990 71,982 20,142 92,124 299,610 124,650 424,260
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-annual $638.73, Quarterly $325.90,
Special Monthly $108.30
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT HYPOTHETICAL INVESTMENT RESULTS ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS 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.
52
<PAGE>
PLAN:VARIABLE WHOLE LIFE 100
AGE 40 YEARS MALE--NON-SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $113,968
ANNUAL PREMIUM $2,000.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
---------------------- ---------------------- -----------------------
Death Benefit Death Benefit Death Benefit
---------------------- ---------------------- -----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------- ------ ------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,100 113,968 0 113,968 114,318 0 114,318 120,231 0 120,231
2 4,305 113,968 102 114,070 114,417 102 114,519 122,111 102 122,213
3 6,620 113,968 196 114,164 114,581 202 114,783 125,257 262 125,519
4 9,051 113,968 282 114,250 114,754 342 115,096 128,695 511 129,206
5 11,604 113,968 362 114,330 114,931 536 115,467 132,341 854 133,196
6 14,284 113,968 459 114,427 115,112 780 115,892 136,184 1,296 137,479
7 17,098 113,968 577 114,545 115,295 1,072 116,367 140,221 1,840 142,061
8 20,053 113,968 735 114,703 115,480 1,437 116,917 144,460 2,529 146,989
9 23,156 113,968 923 114,891 115,667 1,867 117,535 148,909 3,365 152,273
10 26,413 113,968 1,139 115,107 115,857 2,366 118,224 153,577 4,367 157,944
15 45,315 113,968 2,421 116,389 116,823 5,812 122,635 180,222 12,462 192,684
20 69,438 113,968 3,776 117,744 117,844 10,765 128,609 214,207 27,661 241,868
Age 65 100,226 113,968 4,895 118,863 118,945 16,990 135,935 258,552 53,375 311,927
30 139,521 113,968 5,836 119,804 120,069 24,212 144,791 314,489 95,727 410,216
35 189,672 113,968 6,651 120,619 121,212 34,125 155,337 385,101 163,843 548,944
<CAPTION>
0% 6% 12%
---------------------- ---------------------- -----------------------
Cash Value Cash Value Cash Value
---------------------- ---------------------- -----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------- ------ ------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,100 591 0 591 626 0 626 662 0 662
2 4,305 1,986 28 2,014 2,137 28 2,165 2,291 28 2,319
3 6,620 3,350 57 3,407 3,694 58 3,752 4,056 76 4,132
4 9,051 4,682 84 4,767 5,296 102 5,399 5,967 154 6,121
5 11,604 5,984 112 6,096 6,947 166 7,113 8,036 266 8,302
6 14,284 7,254 147 7,401 8,644 250 8,894 10,273 417 10,690
7 17,098 8,494 191 8,685 10,391 356 10,746 12,695 613 13,308
8 20,053 9,705 251 9,956 12,187 493 12,680 15,315 871 16,186
9 23,156 10,886 326 11,212 14,035 662 14,697 18,151 1,198 19,350
10 26,413 12,037 416 12,453 15,934 868 16,801 21,218 1,607 22,826
15 45,315 17,504 1,037 18,541 26,385 2,499 28,884 40,891 5,380 46,270
20 69,438 22,070 1,878 23,948 37,910 5,381 43,291 69,226 13,883 83,110
Age 65 100,226 25,346 2,780 28,126 49,861 9,691 59,552 108,880 30,573 139,453
30 139,521 27,731 3,736 31,467 62,133 15,892 78,025 163,488 61,828 225,316
35 189,672 29,282 4,725 34,007 74,287 24,354 98,641 237,100 117,438 354,538
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-annual $1,021.60, Quarterly
$520.90, Special Monthly $172.80
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT HYPOTHETICAL INVESTMENT RESULTS ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS 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.
53
<PAGE>
PLAN:VARIABLE WHOLE LIFE P50
AGE 25 YEARS MALE--NON-SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $65,723
ANNUAL PREMIUM $700.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Qualified
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 65,723 0 65,723 65,925 0 65,925 69,335 0 69,335
2 1,507 65,723 0 65,723 65,930 0 65,930 69,442 0 69,442
3 2,317 65,723 175 65,898 66,029 192 66,221 71,304 211 71,515
4 3,168 65,723 352 66,075 66,130 402 66,533 73,289 456 73,745
5 4,061 65,723 527 66,250 66,234 625 66,859 75,389 735 76,124
6 4,999 65,723 702 66,425 66,340 862 67,202 77,607 1,052 78,659
7 5,984 65,723 876 66,599 66,448 1,114 67,562 79,948 1,407 81,356
8 7,019 65,723 1,056 66,779 66,557 1,388 67,945 82,417 1,816 84,234
9 8,105 65,723 1,240 66,963 66,669 1,684 68,352 85,021 2,282 87,302
10 9,245 65,723 1,428 67,151 66,782 2,002 68,784 87,765 2,810 90,575
15 15,860 65,723 2,434 68,157 67,358 4,007 71,365 103,443 6,732 110,175
20 24,303 65,723 3,406 69,129 67,982 6,620 74,601 123,953 13,481 137,433
25 35,079 65,723 4,135 69,858 68,677 9,555 78,232 151,610 23,919 175,529
30 48,833 65,723 4,571 70,294 69,399 12,600 81,999 187,256 39,210 226,466
35 66,385 65,723 4,740 70,463 70,147 15,688 85,835 233,343 61,314 294,657
Age
65 88,788 65,723 4,692 70,415 70,919 18,763 89,682 293,022 92,895 385,917
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 13 0 13 14 0 14 15 0 15
2 1,507 423 0 423 450 0 450 476 0 476
3 2,317 834 29 863 908 32 941 985 35 1,021
4 3,168 1,244 61 1,305 1,390 70 1,461 1,548 80 1,628
5 4,061 1,652 95 1,747 1,896 113 2,009 2,168 133 2,301
6 4,999 2,057 131 2,188 2,425 162 2,587 2,850 198 3,048
7 5,984 2,459 170 2,629 2,978 217 3,195 3,600 275 3,874
8 7,019 2,857 212 3,069 3,555 280 3,835 4,423 368 4,790
9 8,105 3,250 258 3,508 4,156 352 4,508 5,324 479 5,804
10 9,245 3,637 309 3,946 4,781 435 5,216 6,312 612 6,925
15 15,860 5,592 631 6,223 8,416 1,043 9,459 12,984 1,759 14,743
20 24,303 7,332 1,051 8,383 12,696 2,052 14,749 23,256 4,197 27,453
25 35,079 8,636 1,509 10,145 17,409 3,503 20,912 38,608 8,808 47,416
30 48,833 9,727 1,956 11,683 22,769 5,417 28,186 61,719 16,933 78,652
35 66,385 10,569 2,351 12,920 28,660 7,817 36,477 95,776 30,686 126,461
Age
65 88,788 11,176 2,664 13,839 35,004 10,702 45,706 145,295 53,222 198,517
</TABLE>
- --------
*Corresponding to modal premiums of: Semi-annual $357.95, Quarterly $182.90,
Special Monthly $61.00
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT HYPOTHETICAL INVESTMENT RESULTS ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS 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.
54
<PAGE>
PLAN:VARIABLE WHOLE LIFE P50
AGE 40 YEARS MALE--NON-SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $62,945
ANNUAL PREMIUM $1,200.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 62,945 0 62,945 63,138 0 63,138 66,404 0 66,404
2 2,583 62,945 0 62,945 63,183 0 63,183 67,251 0 67,251
3 3,972 62,945 98 63,043 63,273 119 63,392 68,979 140 69,119
4 5,431 62,945 212 63,157 63,369 264 63,633 70,870 322 71,192
5 6,962 62,945 338 63,283 63,467 435 63,901 72,875 547 73,422
6 8,570 62,945 472 63,417 63,566 627 64,193 74,988 814 75,802
7 10,259 62,945 605 63,550 63,667 829 64,496 77,207 1,114 78,321
8 12,032 62,945 752 63,697 63,769 1,060 64,830 79,536 1,471 81,007
9 13,893 62,945 903 63,848 63,873 1,311 65,184 81,981 1,879 83,860
10 15,848 62,945 1,061 64,006 63,977 1,584 65,562 84,546 2,345 86,890
15 27,189 62,945 1,911 64,856 64,509 3,297 67,806 99,150 5,778 104,928
20 41,663 62,945 2,691 65,636 65,071 5,414 70,486 117,795 11,414 129,209
Age 65 60,136 62,945 3,279 66,224 65,682 7,724 73,406 142,241 19,839 162,080
30 83,713 62,945 3,713 66,658 66,304 10,211 76,516 173,058 32,226 205,284
35 113,804 62,945 3,971 66,916 66,936 12,826 79,673 211,949 50,237 262,186
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 251 0 251 266 0 266 281 0 281
2 2,583 1,026 0 1,026 1,101 0 1,101 1,177 0 1,177
3 3,972 1,784 28 1,813 1,962 34 1,996 2,149 41 2,189
4 5,431 2,525 63 2,588 2,848 79 2,927 3,200 97 3,296
5 6,962 3,248 104 3,353 3,760 135 3,895 4,338 170 4,508
6 8,570 3,954 151 4,105 4,699 201 4,900 5,568 262 5,830
7 10,259 4,643 200 4,843 5,664 275 5,939 6,900 371 7,271
8 12,032 5,316 257 5,573 6,657 364 7,021 8,341 507 8,848
9 13,893 5,972 319 6,292 7,679 465 8,144 9,901 669 10,570
10 15,848 6,612 388 7,000 8,729 581 9,310 11,588 863 12,451
15 27,189 9,670 818 10,488 14,530 1,418 15,947 22,435 2,494 24,929
20 41,663 12,227 1,335 13,562 20,933 2,698 23,631 38,068 5,711 43,780
Age 65 60,136 14,029 1,862 15,892 27,533 4,405 31,938 59,900 11,365 71,265
30 83,713 15,340 2,377 17,717 34,311 6,567 40,878 89,965 20,816 110,781
35 113,804 16,191 2,821 19,013 41,023 9,154 50,177 130,493 36,012 166,505
</TABLE>
- --------
* Corresponding to modal premiums of Semi-annual $613.20, Quarterly $312.90,
Special Monthly $104.00.
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT HYPOTHETICAL INVESTMENT RESULTS ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS 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.
55
<PAGE>
PLAN:VARIABLE WHOLE LIFE P50
AGE 25 YEARS MALE--SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $61,670
ANNUAL PREMIUM $700.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 61,670 0 61,670 61,859 0 61,859 65,059 0 65,059
2 1,507 61,670 0 61,670 61,865 0 61,865 65,160 0 65,160
3 2,317 61,670 164 61,834 61,957 181 62,138 66,907 198 67,105
4 3,168 61,670 331 62,001 62,052 378 62,430 68,769 428 69,198
5 4,061 61,670 495 62,165 62,150 586 62,736 70,740 690 71,430
6 4,999 61,670 659 62,329 62,249 809 63,058 72,821 987 73,808
7 5,984 61.670 822 62,492 62,350 1,045 63,395 75,018 1,321 76,339
8 7,019 61,670 991 62,661 62,453 1,303 63,755 77,335 1,705 79,039
9 8,105 61,670 1,163 62,833 62,557 1,580 64,137 79,778 2,141 81,919
10 9,245 61,670 1,339 63,009 62,664 1,879 64,543 82,352 2,637 84,989
15 15,860 61,670 2,283 63,953 63,204 3,760 66,964 97,064 6,317 103,381
20 24,303 61.670 3,195 64,865 63,789 6,211 70,001 116,309 12,650 128,959
25 35,079 61,670 3,880 65,550 64,442 8,965 73,408 142,261 22,445 164,705
30 48,833 61,670 4,289 65,959 65,119 11,823 76,942 175,708 36,793 212,501
35 66,385 61,670 4,448 66,118 65,821 14,721 80,542 218,954 57,534 276,488
Age
65 88,788 61,670 4,402 66,072 66,546 17,606 84,152 274,952 87,168 362,121
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 735 12 0 12 13 0 13 14 0 14
2 1,507 397 0 397 422 0 422 446 0 446
3 2,317 782 28 810 852 30 883 924 33 958
4 3,168 1,167 58 1,224 1,305 66 1,370 1,452 75 1,527
5 4,061 1,550 89 1,639 1,779 106 1,885 2,034 125 2,159
6 4,999 1,930 123 2,053 2,276 152 2,428 2,675 186 2,860
7 5,984 2,307 159 2,466 2,794 203 2,998 3,378 258 3,635
8 7,019 2,681 199 2,880 3,336 263 3,599 4,150 345 4,495
9 8,105 3,049 242 3,292 3,900 331 4,230 4,996 450 5,446
10 9,245 3,413 290 3,702 4,486 408 4,894 5,923 575 6,498
15 15,860 5,247 592 5,839 7,897 979 8,876 12,183 1,651 13,834
20 24,303 6,880 986 7,866 11,913 1,926 13,839 21,822 3,939 25,760
25 35,079 8,103 1,416 9,519 16,335 3,287 19,622 36,227 8,265 44,492
30 48,833 9,127 1,836 10,963 21,365 5,083 26,448 57,913 15,889 73,802
35 66,385 9,918 2,206 12,123 26,893 7,334 34,227 89,870 28,794 118,663
Age
65 88,788 10,487 2,499 12,986 32,846 10,042 42,888 136,335 49,941 186,276
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-annual $357.95, Quarterly $182.90.
Special Monthly $61.00.
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS SHOWN
ABOVE ARE ILLLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS
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.
56
<PAGE>
PLAN:VARIABLE WHOLE LIFE P50
AGE 40 YEARS MALE--SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $57,644
ANNUAL PREMIUM $1,200.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 57,644 0 57,644 57,821 0 57,821 60,812 0 60,812
2 2,583 57,644 0 57,644 57,862 0 57,862 61,587 0 61,587
3 3,972 57,644 90 57,734 57,945 109 58,053 63,170 128 63,299
4 5,431 57,644 194 57,838 58,032 242 58,274 64,902 295 65,197
5 6,962 57,644 309 57,953 58,122 398 58,520 66,738 501 67,239
6 8,570 57,644 432 58,076 58,213 574 58,787 68,672 746 69,418
7 10,259 57,644 554 58,198 58,305 759 59,065 70,705 1,020 71,725
8 12,032 57,644 688 58,332 58,399 971 59,370 72,838 1,347 74,185
9 13,893 57,644 827 58,471 58,494 1,201 59,695 75,077 1,721 76,797
10 15,848 57,644 972 58,616 58,589 1,451 60,040 77,425 2,148 79,573
15 27,189 57,644 1,750 59,394 59,076 3,019 62,096 90,800 5,291 96,092
20 41,663 57,644 2,464 60,108 59,591 4,959 64,550 107,875 10,453 118,327
Age
65 60,136 57,644 3,003 60,647 60,151 7,073 67,224 130,262 18,169 148,430
30 83,712 57,644 3,400 61,044 60,720 9,351 70,072 158,484 29,512 187,996
35 113,803 57,644 3,637 61,281 61,299 11,746 73,045 194,100 46,007 240,106
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 230 0 230 244 0 244 258 0 258
2 2,583 940 0 940 1,008 0 1,008 1,078 0 1,078
3 3,972 1,634 26 1,660 1,797 31 1,828 1,968 37 2,005
4 5,431 2,312 58 2,370 2,608 72 2,681 2,930 88 3,019
5 6,962 2,975 96 3,070 3,444 123 3,567 3,972 156 4,128
6 8,570 3,621 138 3,759 4,303 184 4,487 5,099 240 5,339
7 10,259 4,252 183 4,435 5,187 252 5,439 6,319 340 6,659
8 12,032 4,868 235 5,103 6,097 333 6,430 7,639 464 8,103
9 13,893 5,469 292 5,762 7,032 426 7,458 9,067 613 9,680
10 15,848 6,055 355 6,410 7,994 532 8,526 10,612 790 11,402
15 27,189 8,856 749 9,605 13,306 1,298 14,604 20,545 2,284 22,830
20 41,663 11,197 1,222 12,420 19,170 2,471 21,641 34,862 5,230 40,093
Age
65 60,136 12,848 1,705 14,553 25,214 4,034 29,249 54,855 10,408 65,263
30 83,712 14,048 2,177 16,225 31,421 6,014 37,435 82,389 19,063 101,451
35 113,803 14,828 2,584 17,412 37,568 8,383 45,951 119,504 32,979 152,483
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-Annual $613.20, Quarterly $312.90,
Special Monthly $104.00
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT HYPOTHETICAL INVESTMENT RESULTS ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS 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.
57
<PAGE>
PLAN:VARIABLE WHOLE LIFE
AGE 25 YEARS MALE--NON-SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $28,930
ANNUAL PREMIUM $350.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 28,930 0 28,930 29,019 0 29,019 30,520 0 30,520
2 753 28,930 0 28,930 29,021 0 29,021 30,567 0 30,567
3 1,159 28,930 26 28,956 29,065 26 29,090 31,387 33 31,419
4 1,584 28,930 49 28,979 29,109 61 29,171 32,260 81 32,341
5 2,031 28,930 79 29,009 29,155 106 29,261 33,185 143 33,328
6 2,500 28,930 114 29,044 29,202 160 29,361 34,161 222 34,383
7 2,992 28,930 152 29,082 29,249 222 29,471 35,192 316 35,508
8 3,509 28,930 199 29,129 29,297 296 29,593 36,279 432 36,711
9 4,052 28,930 251 29,181 29,346 382 29,729 37,424 573 37,997
10 4,622 28,930 310 29,240 29,396 482 29,878 38,632 739 39,371
15 7,930 28,930 1,001 29,931 29,650 1,533 31,183 45,534 2,474 48,008
20 12,152 28,930 1,741 30,671 29,924 3,006 32,931 54,562 5,636 60,198
25 17,540 28,930 2,208 31,138 30,230 4,526 34,756 66,736 10,369 77,105
30 24,416 28,930 2,440 31,370 30,548 6,022 36,570 82,426 17,198 99,625
35 33,193 28,930 2,513 31,443 30,877 7,507 38,384 102,713 27,021 129,734
Age
65 44,394 28,930 2,479 31,409 31,217 8,977 40,194 128,983 41,035 170,018
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 6 0 6 6 0 6 7 0 7
2 753 186 0 186 198 0 198 209 0 209
3 1,159 367 4 371 400 4 404 434 5 439
4 1,584 547 9 556 612 11 623 681 14 695
5 2,031 727 14 741 835 19 854 954 26 980
6 2,500 905 21 927 1,068 30 1,098 1,255 42 1,296
7 2,992 1,082 30 1,112 1,311 43 1,354 1,585 62 1,646
8 3,509 1,257 40 1,297 1,565 60 1,625 1,947 88 2,034
9 4,052 1,430 52 1,483 1,829 80 1,909 2,344 120 2,464
10 4,622 1,601 67 1,668 2,105 105 2,209 2,779 161 2,940
15 7,930 2,462 260 2,721 3,705 399 4,104 5,715 646 6,362
20 12,152 3,227 538 3,765 5,589 932 6,521 10,237 1,755 11,991
25 17,540 3,801 806 4,607 7,663 1,659 9,322 16,994 3,818 20,813
30 24,416 4,282 1,044 5,326 10,022 2,589 12,612 27,167 7,427 34,595
35 33,193 4,652 1,247 5,899 12,616 3,740 16,356 42,159 13,523 55,682
Age
65 44,394 4,919 1,407 6,327 15,408 5,120 20,528 63,956 23,510 87,466
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-annual $179.28, Quarterly $91.90,
Special Monthly $30.90
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT HYPOTHETICAL INVESTMENT RESULTS ARE
ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS 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.
58
<PAGE>
PLAN:VARIABLE WHOLE LIFE
AGE 40 YEARS MALE--NON-SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $28,661
ANNUAL PREMIUM $600.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ---------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ---------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 28,661 0 28,661 28,749 0 28,749 30,236 0 30,236
2 1,291 28,661 0 28,661 28,752 0 28,752 30,284 0 30,284
3 1,986 28,661 15 28,676 28,795 17 28,812 31,101 26 31,127
4 2,715 28,661 35 28,696 28,839 50 28,889 31,965 72 32,037
5 3,481 28,661 64 28,725 28,884 94 28,978 32,873 136 33,009
6 4,285 28,661 102 28,763 28,929 152 29,082 33,825 221 34,046
7 5,129 28,661 142 28,803 28,975 217 29,192 34,823 320 35,144
8 6,016 28,661 190 28,851 29,021 296 29,317 35,870 445 36,315
9 6,947 28,661 245 28,906 29,068 386 29,455 36,968 592 37,559
10 7,924 28,661 305 28,966 29,116 489 29,604 38,119 765 38,884
15 13,594 28,661 1,041 29,702 29,355 1,584 30,939 44,623 2,551 47,174
20 20,831 28,661 1,800 30,461 29,610 3,043 32,652 52,948 5,621 58,569
Age
65 30,068 28,661 2,260 30,921 29,891 4,474 34,365 64,018 9,994 74,012
30 41,856 28,661 2,512 31,173 30,177 5,897 36,074 77,947 16,251 94,198
35 56,901 28,661 2,630 31,291 30,466 7,342 37,809 95,511 25,239 120,750
<CAPTION>
0% 6% 12%
-------------------- -------------------- ---------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ---------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 12 0 12 12 0 12 13 0 13
2 1,291 371 0 371 394 0 394 417 0 417
3 1,986 722 4 726 787 5 792 854 8 861
4 2,715 1,065 11 1,076 1,191 15 1,206 1,327 22 1,348
5 3,481 1,401 20 1,421 1,608 29 1,637 1,839 42 1,881
6 4,285 1,728 32 1,761 2,037 49 2,085 2,392 71 2,463
7 5,129 2,048 47 2,095 2,477 72 2,549 2,991 107 3,098
8 6,016 2,360 65 2,425 2,931 102 3,032 3,639 153 3,792
9 6,947 2,664 87 2,751 3,397 137 3,534 4,341 211 4,551
10 7,924 2,961 112 3,073 3,877 179 4,056 5,099 282 5,380
15 13,594 4,406 446 4,851 6,558 681 7,239 10,014 1,101 11,115
20 20,831 5,618 893 6,511 9,525 1,516 11,041 17,112 2,812 19,924
Age
65 30,068 6,429 1,283 7,712 12,530 2,552 15,082 26,959 5,725 32,684
30 41,856 7,018 1,608 8,626 15,616 3,792 19,408 40,521 10,497 51,018
35 56,901 7,398 1,868 9,267 18,672 5,240 23,912 58,804 18,092 76,897
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-Annual $306.90. Quarterly $156.90,
Special Monthly $52.40.
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS SHOWN
ABOVE ARE ILLLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS
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.
59
<PAGE>
PLAN:VARIABLE WHOLE LIFE
AGE 25 YEARS MALE--SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $27,223
ANNUAL PREMIUM $350.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ----------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 27,223 0 27,223 27,307 0 27,307 28,719 0 28,719
2 753 27,223 0 27,223 27,309 0 27,309 28,764 0 28,764
3 1,159 27,223 24 27,247 27,350 24 27,374 29,535 31 29,565
4 1,584 27,223 47 27,270 27,392 58 27,450 30,357 76 30,433
5 2,031 27,223 74 27,297 27,435 100 27,534 31,227 135 31,361
6 2,500 27,223 107 27,330 27,479 150 27,629 32,146 209 32,354
7 2,992 27,223 143 27,366 27,523 208 27,732 33,115 297 33,413
8 3,509 27,223 187 27,410 27,569 278 27,847 34,138 407 34,545
9 4,052 27,223 236 27,459 27,615 360 27,975 35,216 539 35,755
10 4,622 27,223 291 27,514 27,662 453 28,115 36,353 696 37,048
15 7,930 27,223 942 28,165 27,900 1,443 29,343 42,847 2,328 45,175
20 12,152 27,223 1,638 28,861 28,159 2,829 30,987 51,342 5,303 56,646
25 17,540 27,223 2,077 29,300 28,447 4,258 32,705 62,798 9,757 72,555
30 24,416 27,223 2,296 29,519 28,746 5,667 34,412 77,563 16,183 93,746
35 33,193 27,223 2,365 29,588 29,055 7,064 36,119 96,653 25,426 122,079
Age 65 44,394 27,223 2,332 29,555 29,375 8,447 37,822 121,372 38,613 159,985
<CAPTION>
0% 6% 12%
-------------------- -------------------- ----------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ----------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 368 5 0 5 6 0 6 6 0 6
2 753 175 0 175 186 0 186 197 0 197
3 1,159 345 4 349 376 4 380 408 5 413
4 1,584 515 8 523 576 10 586 641 13 654
5 2,031 684 13 697 785 18 803 898 24 922
6 2,500 852 20 872 1,005 28 1,033 1,181 39 1,220
7 2,992 1,018 28 1,046 1,234 41 1,274 1,491 58 1,549
8 3,509 1,183 38 1,221 1,473 56 1,529 1,832 82 1,914
9 4,052 1,346 49 1,395 1,721 75 1,797 2,205 113 2,319
10 4,622 1,506 63 1,570 1,980 98 2,079 2,615 152 2,766
15 7,930 2,316 244 2,561 3,486 375 3,861 5,378 608 5,986
20 12,152 3,037 506 3,543 5,259 877 6,136 9,633 1,651 11,284
25 17,540 3,577 758 4,335 7,211 1,561 8,772 15,992 3,593 19,585
30 24,416 4,029 983 5,012 9,431 2,436 11,867 25,564 6,989 32,553
35 33,193 4,378 1,173 5,551 11,871 3,519 15,391 39,671 12,725 52,396
Age 65 44,394 4,629 1,324 5,953 14,499 4,818 19,317 60,182 22,122 82,305
</TABLE>
- --------
* Corresponding to modal premiums of: Semi-Annual $179.28, Quarterly $91.90,
Special Monthly $30.90
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS
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>
PLAN:VARIABLE WHOLE LIFE
AGE 40 YEARS MALE--SMOKER
INITIAL SUM INSURED (GUARANTEED MINIMUM DEATH BENEFIT) $26,354
ANNUAL PREMIUM $600.00* (PRMS ACCUM MEANS PREMIUMS ACCUMULATED)
Dividends Purchasing Variable Paid-Up Additions (Var Pu Adds) Dividends are Not
Guaranteed
<TABLE>
<CAPTION>
0% 6% 12%
-------------------- -------------------- ---------------------
Death Benefit Death Benefit Death Benefit
-------------------- -------------------- ---------------------
Prms Accum
at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 26,354 0 26,354 26,435 0 26,435 27,802 0 27,802
2 1,292 26,354 0 26,354 26,437 0 26,437 27,846 0 27,846
3 1,986 26,354 14 26,368 26,477 16 26,493 28,598 24 28,621
4 2,715 26,354 32 26,386 26,518 46 26,563 29,392 66 29,458
5 3,481 26,354 59 26,413 26,559 87 26,646 30,227 125 30,352
6 4,285 26,354 93 26,447 26,601 140 26,741 31,102 203 31,306
7 5,129 26,354 130 26,484 26,643 199 26,842 32,020 294 32,315
8 6,016 26,354 175 26,529 26,685 272 26,958 32,983 409 33,392
9 6,947 26,354 225 26,579 26,729 355 27,084 33,992 544 34,536
10 7,924 26,354 281 26,635 26,772 449 27,222 35,050 704 35,754
15 13,594 26,354 957 27,311 26,992 1,456 28,449 41,031 2,346 43,377
20 20,832 26,354 1,655 28,009 27,226 2,798 30,024 48,686 5,168 53,854
Age
65 30,068 26,354 2,078 28,432 27,485 4,114 31,599 58,865 9,190 68,055
30 41,856 26,354 2,310 28,664 27,748 5,423 33,170 71,673 14,943 86,616
35 56,902 26,354 2,418 28,772 28,014 6,751 34,765 87,823 23,207 111,030
<CAPTION>
0% 6% 12%
-------------------- -------------------- ---------------------
Cash Value Cash Value Cash Value
-------------------- -------------------- ---------------------
Base Prem
Accum at Base Var Pu Base Var Pu Base Var Pu
Year 5%/Annum Policy Adds Total Policy Adds Total Policy Adds Total
---- ---------- ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 630 11 0 11 11 0 11 12 0 12
2 1,292 341 0 341 362 0 362 383 0 383
3 1,986 664 4 668 723 5 728 785 7 792
4 2,715 980 10 989 1,095 14 1,109 1,220 20 1,240
5 3,481 1,288 18 1,306 1,479 27 1,506 1,691 39 1,729
6 4,285 1,589 30 1,619 1,873 45 1,918 2,200 65 2,265
7 5,129 1,883 43 1,926 2,278 66 2,344 2,750 98 2,848
8 6,016 2,170 60 2,230 2,695 93 2,788 3,346 141 3,487
9 6,947 2,450 80 2,530 3,124 126 3,250 3,991 194 4,185
10 7,924 2,723 103 2,825 3,565 165 3,729 4,688 259 4,947
15 13,594 4,051 410 4,461 6,030 626 6,656 9,208 1,012 10,221
20 20,832 5,166 821 5,987 8,759 1,394 10,153 15,734 2,586 18,320
Age
65 30,068 5,912 1,180 7,092 11,522 2,346 13,868 24,789 5,264 30,053
30 41,856 6,453 1,479 7,932 14,359 3,487 17,846 37,260 9,652 46,912
35 56,902 6,803 1,718 8,521 17,169 4,818 21,987 54,071 16,636 70,707
</TABLE>
- --------
* Corresponding to Modal Premiums of: Semi-annual $306.90, Quarterly $156.90,
Special Monthly $52.40
DIVIDENDS ILLUSTRATED ARE BASED ON CURRENT SCALES AND EXPERIENCE AND ARE NOT
GUARANTEED. IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED REPRESENTATIVE 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 AN OWNER. THE DEATH BENEFIT AND CASH 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 NEVERTHELESS
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>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
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 annual premium prospectus consisting of 61 pages
The undertaking to file reports.
<PAGE>
The undertaking regarding indemnification.
The signatures.
The following exhibits:
1.A. (1) John Hancock Board Resolution establishing the separate account,
included in the initial registration statement of this Account,
filed June 4, 1993.
(2) Not Applicable
(3) (a) Not applicable
(b) Not applicable
(c) Schedule of sales commissions included in "Distribution of
Policies" in the prospectuses forming part of this Registration
Statement.
(4) Not Applicable
(5) (a) Form of annual premium policy, included in the initial
registration statement of this Account, filed June 4, 1993.
(b) Form of single premium policy, included in the initial
registration statement of this Account, filed June 4, 1993.
(6) Charter and By-Laws of John Hancock Mutual Life Insurance Company.
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Form of application for Policies, included in the initial
registration statement of this Account, filed June 4, 1993.
2. Included as exhibit 1.A(5) above
3. Opinion and consent of counsel as to securities being registered, included
in the initial registration statement of this Account, filed June 4, 1993
4. Not Applicable
5. Not Applicable
6. (a) and (b) Opinions and consents of actuary, included in the initial
registration statement of this Account, filed June 4, 1993.
7. Consent of independent auditors
<PAGE>
8. Memorandum describing John Hancock's issuance, transfer and redemption
procedures (which are the same as those of its affiliate John Hancock
Variable Life Insurance Company) for Policies pursuant to Rule 6e-
2(b)(12)(ii) and method of computing adjustments in payments and cash
values of Policies upon conversion to fixed benefit policies pursuant to
Rule 6e-2(b)(13)(v)(B).
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. 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 APPEARS HERE]
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.
SIGNATURES TITLE DATE
- ---------- ----- ----
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
/s/ THOMAS E. MOLONEY
- ---------------------
Thomas E. Moloney April 8, 1996
/s/ JANET A. PENDLETON
- ---------------------- (Principal
Janet A. Pendleton Accounting Officer) April 8, 1996
Chairman of the Board and
Chief Executive Officer
/s/STEPHEN L. BROWN (Principal Executive Officer)
- ---------------------
Stephen L. Brown
for himself and as
Attorney-in-Fact April 8, 1996
FOR: Foster L. Aborn Vice Chairman of the Board
William L. Boyan President, Chief Operating Officer & Director
David F. D'Alessandro Senior Executive Vice President & Director
Nelson S. Gifford Director E. James Morton Director
John F. Magee Director Thomas L. Phillips Director
John M. Connors Director Joan T. Bok Director
Delbert C. Staley Director Robert E. Fast Director
C. Vincent Vappi Director Samuel W. Bodman Director
Randolph W. Bromery Director Lawrence K. Fish Director
I. MacAllister Booth Director Kathleen F. Feldstein Director
Michael C. Hawley Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, John Hancock Mutual Variable Life Insurance Account UV, certifies
that it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto fixed and attested, all in the City of Boston and Commonwealth of
Massachusetts on the 8th day of April, 1996.
JOHN HANCOCK MUTUAL VARIABLE LIFE INSURANCE ACCOUNT UV
(Registrant)
By John Hancock Mutual Life Insurance Company
(Depositor)
[SEAL APPEARS HERE]
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
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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> 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
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<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
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,502
<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> 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
<RECEIVABLES> 7,240
<ASSETS-OTHER> 0
<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
<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> 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
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> STOCK SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 103,629,530
<INVESTMENTS-AT-VALUE> 111,633,780
<RECEIVABLES> 19,888,364
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 131,522,144
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 55,463
<TOTAL-LIABILITIES> 55,463
<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
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<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
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 356,869
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<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> 9
<NAME> SHORT-TERM U.S. GOVERNMENT SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 78,221
<INVESTMENTS-AT-VALUE> 79,674
<RECEIVABLES> 6
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 79,680
<PAYABLE-FOR-SECURITIES> 2
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 6
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 79,674
<DIVIDEND-INCOME> 2,749
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 295
<NET-INVESTMENT-INCOME> 2,454
<REALIZED-GAINS-CURRENT> 477
<APPREC-INCREASE-CURRENT> 1,735
<NET-CHANGE-FROM-OPS> 4,666
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 11,209
<NUMBER-OF-SHARES-SOLD> 15,024
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 58,397
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 295
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT I.A.(6)
Chap. 125
COMMONWEALTH OF MASSACHUSETTS
In the year One Thousand Eight Hundred and Sixty-Two
AN ACT to incorporate the John Hancock Mutual Life Insurance Company,
Be it enacted by the Senate and House of Representatives in General Court
assembled, and by the authority of the same, as follows: Nathaniel Harris, James
P. Thorndike, Gerry W. Cochrane, their associates and successors, are hereby
made a corporation by the name of the John Hancock Mutual Life Insurance
Company, to be established and located in the City of Boston, for the purpose of
making insurance upon lives with all the powers and privileges, and subject to
the duties, liabilities and restrictions set forth in so much of the fifty-
eighth chapter of the General Statutes as related to mutual life insurance
companies, and all other acts which are or may be in force relative to such
companies.
House of Representatives, April 18, 1862
Passed to be enacted, Alex. H. Bullock, Speaker
<PAGE>
Exhibit I. A. (6)
BY-LAWS
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
1. The Annual Meeting of the Company shall be held at its Home Office, on
the second Monday of April in each year, at twelve o'clock, noon. The order of
business shall be as follows:
(a) Reading the records of the previous meeting.
(b) Ballot for Directors.
(c) Report of the Directors to the policyholder.
(d) Other business, if any.
2. Special meetings of the Company may be called by vote or written request
of three-fourths of the Directors, and the Secretary shall give notice thereof,
by advertisement in some daily newspaper published in Boston, at least seven
days before the meeting.
3. Ten members shall constitute a quorum at any meeting of the Company, but
policyholders in arrears of premiums at the hour of meeting shall not be
entitled to vote or to be recognized as members.
4. The Board of Directors shall consist of not more than twenty-four members
nor less than sixteen members divided into classes of not less than four nor
more than six members each, one class to be elected at each Annual Meeting, for
a term of four years. The election shall be by ballot, and the presiding officer
of the meeting shall appoint a Committee to supervise the balloting and the
count thereof.
5. No person shall be eligible as a Director unless he be insured in the
Company to the amount of not less than one thousand dollars, and no person shall
be elected as a Director at any annual or special meeting of the Company unless
he shall have been nominated either by a majority of the Board of Directors or
by one-tenth of one percent of the members, by a writing filed with the
Secretary not more than six months nor less than ninety days before such
meeting. Such writing shall be on a form approved by the Secretary and the
signatures of the Directors or members' making such nominations shall be
authenticated or verified in such manner as he may prescribe. The Secretary
shall make available at his office, upon written request of any member, a copy
of such approved form and a list of any members then nominated for Director. A
three-quarters vote of qualified members voting shall be necessary to elect.
<PAGE>
6. The Directors shall have the control and management of the business and
affairs of the Company and the distribution of its surplus funds; they shall
present a report at every Annual Meeting with the full statement of condition
of the Company, its assets and liabilities. They shall meet after the Annual
Meeting and at such meeting or some adjournment thereof shall choose by ballot
from their own number a Chairman of the Board of Directors, a Vice Chairman of
the Board, a President, and at least one Vice President. They may also at such
meeting or any other regular or special meeting elect, from their own number or
not as they see fit, additional Vice Presidents, a Secretary, a Treasurer and
such other officers as they shall deem proper or advisable and fill vacancies
occurring in any office. The Chairman of the Board of Directors, or in his
absence the Vice Chairman of the Board, shall preside at all meetings of the
Board of Directors. The Directors shall fix the compensation and define the
other duties of the Chairman of the Board of Directors and may fix the
compensation and may define the duties of all other officers and may remove any
officer at any time.
At their meeting after the Annual Meeting or at any regular or special
meeting they shall choose by ballot from their own number a Committee of
Finance consisting of no fewer than six members which shall include the
Chairman of the Board of Directors and the President and one or more alternate
members, any of whom may " serve in the place of any member absent from a
meeting. They may also at such meeting or any regular or special meeting choose
such other committees as they shall deem proper or advisable, fix the
compensation and define the duties of the members of such committees, fill
vacancies occurring in any such committee and remove any member of any
committee.
6a. The Directors may, subject to the limits and restrictions imposed by law
and subject to such rules and regulations consistent with law that they may
make, make contributions of such sums of money as they determine to be
reasonable for public welfare or for charitable, scientific or educational
purposes.
7. No person shall be eligible as an elective or appointed officer, who has
any interest in commissions or other compensation based on premiums or
considerations payable to the Company on any policy or contract, or on any
extension or conversion thereof, unless such policy, contract, extension, or
conversion was written and effective prior to his election or appointment.
8. Each officer elected by the Directors shall, unless removed, hold office
until the next Annual Meeting, and until a successor is elected. Vacancies in
the Board of Directors occurring by enlargement of the Board, by failure to
elect, or otherwise, may be filled by the Directors, or at any annual or special
meeting of the Company.
<PAGE>
8a. The Board of Directors may provide, notwithstanding other provisions of
these By-Laws, for filling vacancies in the Board in the event that due to act
of war or other disaster the number of Directors who are able and available to
act is less than a quorum.
9. Regular meetings of the Directors shall be held without call or formal
notice on the second Monday of each month. Special meetings may be called by the
Chairman, the Vice Chairman or any five Directors, and written or printed
notices of all special meetings shall be sent to the Directors by mail,
postpaid, or personal delivery by the Secretary. A waiver of such notice in
writing signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice. No
notice of any adjourned meeting of the Directors shall be required. In any case
it shall be deemed sufficient notice to a Director to send notice by mail at
least 48 hours or by personal delivery at least 24 hours before the meeting.
Five members of the Board shall constitute a quorum, but a lesser number may
adjourn any meeting from time to time. When a quorum is present at any meeting,
a majority of the Directors in attendance thereat shall, except where a larger
vote is required by law or these By-Laws, decide any question brought before
such meeting.
9a. The Company shall, except as hereinafter provided and subject to
limitations of law, indemnify each Director, former Director, officer and former
officer of the Company, and any such person and any employee or former employee
of the Company who serves at the request of the Company as a Director or officer
of any other organization in which the Company directly or indirectly owns
shares or of which it is a creditor, and his heirs and legal representatives,
against all loss, liability and expense, whether heretofore or hereafter imposed
upon or incurred by him in connection with any pending or future action, suit,
proceeding or claim in which he may be involved, or with which he may be
threatened, by reason of any alleged act or omission as such Director or officer
while so serving or by reason of such Director or officer concurrently holding
office as a director of another organization of which he was a director at the
time he first became such Director or officer. Such loss, liability and expense
shall include, but not be limited to, judgments, fines, court costs, reasonable
attorneys' fees and the cost of reasonable settlements. Such indemnification
shall not cover (a) loss, liability or expense imposed or incurred in connection
with any item or matter as to which such Director or officer shall be finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Company; or (b) loss, liability or
expense imposed or incurred in connection with any item or matter which shall be
settled without final adjudication unless such settlement shall have been
approved as in the best interests of the Company (1) by vote of the Board of
Directors at a meeting in which no Director participates against whom any suit
or proceeding on the same or similar grounds is then pending or threatened or
(2) by a vote of the
<PAGE>
policyholders. As part of such indemnification, the Company may pay expenses
incurred in defending any such action, suit, proceeding or claim in advance of
the final disposition thereof upon receipt of all undertakings by the person
indemnified to repay such payment if he should be determined not to be entitled
to indemnification hereunder. The foregoing rights of indemnification shall be
in addition to any rights to which any Director, former Director, officer,
former officer, employee or former employee, heirs or legal representatives may
otherwise be lawfully entitled.
10. The Chairman of the Board of Directors, or in his absence the Vice
Chairman of the Board, shall preside at all the meetings of the Company. 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
<PAGE>
EXHIBIT 7
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Prospectus and to the use of our reports dated February 9, 1996 with respect to
the financial statements of John Hancock Mutual Variable Life Insurance Account
UV and dated February 7, 1996 with respect to the financial statements of John
Hancock Mutual Life Insurance Company, included in this Post-Effective Amendment
No.3 to the Registration Statement (Form S-6, No. 33-63900).
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
April 5, 1996
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Exhibit 8
Description of JHVLICO's Issuance, Transfer and
Redemption Procedures for Policies
Pursuant to Rule 6e-2(b) (12) (ii)
and
Method of Computing Adjustments in
Payments and Cash Values of Policies
Upon Conversion to Fixed Benefit Policies
Pursuant to Rule 6e-2(b) (13) (v) (B)
-------------------------------------
Set forth below is the information called for under Rule 6e-2(b) (12) (ii)
and Rule 6e-2(b) (13) (v) (B) under the Investment Company Act of 1940 ("1940
Act") regarding certain procedures under John Hancock Variable Life Insurance
Company's ("JHVLICO") Variable Life Insurance Policies (hereinafter referred to
individually as the "Policy" and collectively as the "Policies"). JHVLICO issues
Single Premium Variable Life Policies and Annual Premium Variable Life Policies.
There are currently three types of Annual Premium Variable Life Policies being
offered by JHVLICO: a Variable Whole Life Policy, a Variable Whole Life P 50
Policy and a Variable Whole Life 100 Policy.
Rule 6e-2(b) (12) (ii) 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-2, 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 non-discriminatory, and
be disclosed in the registration statement filed with respect to such variable
life insurance policies.
JHVLICO represents that its procedures meet the foregoing standards of
Rule 6e-2(b) (12) (ii), 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 by JHVLICO from those established
and utilized by its parent, John Hancock Mutual Life Insurance Company
("John Hancock"); in connection with the administration of John Hancock's
fixed benefit life insurance policies.
<PAGE>
3. Certain procedures, including the 24-month conversion right to fixed
benefit policies, are required by Rule 6e-2.
4. JHVLICO, in structuring its procedures to comply with Rule 6e-2, state
insurance laws, and established administrative procedures of John Hancock,
has attempted to meet the intent of the 1940 Act to the extent deemed
feasible.
5. Generally speaking, the state insurance laws to which JHVLICO is subject
reflect the fundamental principle that the procedures shall not be unfair,
unreasonable or unjustly discriminatory to any policyholder.
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 of 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. At the same time, the summary, in order to provide a
comprehensive view of the procedures, includes procedural steps that do not
constitute a deviation from the Sections and Rule cited above.
Rule 6e-2(b) (13) (v) (B) grants an exemption for a 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 variable life
insurance policies which allow the policyholder to convert a 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 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. JHVLICO's
Policies provide for such a conversion privilege. The adjustments in payments
and cash values, made upon exercise of that privilege, are described below.
This memorandum divides the information called for by Rules 6e-2(b) (12) (ii)
and 6e-2(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
<PAGE>
third part summarizes the adjustments made in payments and cash values which
take place when one of the Policies is converted to a fixed benefit policy.
I "Redemption" Procedures:
Surrender and Related Transactions
----------------------------------
JHVLICO's Policies provide for the payment of monies to a Policyholder
("Owner") or beneficiary upon presentation to JHVLICO 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 will not receive a pro rata
or proportionate share of the assets in JHVLICO'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 cash
surrender value or death benefit.
There are also certain Policy provisions - such as options on lapse for
Annual Premium Policies - under which the Policy will not be presented to
JHVLICO but which will affect the Owner's benefits and involve a transfer of the
assets supporting the Policy reserve out of John Hancock Variable Life Account U
(the "Account"). Finally, state insurance law may require that certain
requirements be met before JHVLICO is permitted to make payments to the payee.
A. Surrender for Cash Values
-------------------------
If the insured party under a Policy ("Insured") is alive, JHVLICO 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 Account 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. This will enable JHVLICO 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 Policy
Account Value plus any cash value of any insurance purchased under any dividend
option, plus dividends and interest unpaid or unapplied, plus an Annual Premium
Policy adjustment for premium paid beyond the date of surrender, less any
indebtedness and less any Contingent Deferred Sales Charges (for Single Premium
Policies only). In general, the Policy Account Value for any day equals the
Policy Account Value for the previous day, increased by the applicable net
prenium and decreased by any charge for the cost of insurance for the insured,
accumulated at the Account's rate of return after charges
<PAGE>
against the Account. For Annual Premium Policies, the Policy Cash Value is the
Policy Account Value. The adjustment for premium paid beyond the date of
surrender for Annual Premium Policies could be positive or negative and reflects
the difference between the premium paid and the Modal Net Premium that was
allocated to the Account. The Contingent Deferred Sales Charge is deducted from
the Policy Account Value upon surrender of the Single Premium Policy during the
first nine policy years after issue. The amount of this charge will be 9% of the
Policy Account Value in the first policy year and will decline by 1% each year
until the charge in the ninth policy year is but 1% and 0% in all years
thereafter.
In no event will the charge exceed 9% of the single premium paid (excluding
the premium for any Fixed Accidental Death Benefit). No minimum amount of Policy
Account Value is guaranteed.
The formula for determining the Policy Cash Value for an Annual Premium
Policy at the end of the first Policy year is designed to ensure that (i) the
Policy Cash Value for the Variable Sum Insured is always as great or greater
than the minimum non-forfeiture value required by state insurance law, and (ii)
that the "sales load" during the first two Policy years, as permitted by
Rule 6e-2, never exceeds 30% of payments made for the first Policy year plus
10% of the payments made for the second policy year. There is always a Policy
Cash Value for Annual Premium Policies during the first Policy Year.
The Policies are participating policies which, except while in force as Fixed
Extended Term Insurance, are entitled to the share, if any, of the divisible
surplus which JHVLICO shall annually determine and apportion to them. Dividends
under participating policies may be described as refunds of premiums which
adjust the cost of a policy to the actual level of cost emerging over time after
the policy's issue. The Owner may exercise several options with regard to the
disposition of the dividends as described in the Policies. Several of the
dividend options result in a cash value being available, as required under state
insurance law, and in such a case the Owner would receive the cash value upon
surrender of the Policy. Dividend options and values are more fully described in
Section II., D. below.
JHVLICO will make the payment of the surrender value out of its general
account and, at the same time, transfer assets from the Account to the general
account for the amounts held for the Policy in the Account.
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 fixed benefit settlement options described in the Policies or,
with the approval of JMVLICO, a combination of options. 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. An option in effect at death may not be changed to
another form of benefit after death. An option
<PAGE>
is available only if the proceeds to be applied are $1,000 or more or would
result in periodic payments of at least $50.00. The fixed benefit settlement
options are subject to the restrictions and limitations set forth in the
Policies.
B. Partial Surrender
-----------------
A Policy may be partially surrendered in accordance with Rule 6e-2(b)
(12)(ii). The Policy after the partial surrender must have an Initial Sum
Insured at least as great as the minimum issue size for that type of Policy. The
premium and the Guaranteed Mininum Death Benefit for the Policy will be based on
the new Initial Sum Insured.
When a Policy is partially surrendered, there is a proportionate reduction in
the Initial Sum Insured; the current Variable Sum Insured; the Policy Account
Value; the Surrender Value; and the Maximum Contingent Deferred Sales Charge
(CDSC), if applicable.
As mentioned above, the resulting Initial Sum Insured must at least be as
great as the minimum issue size. For Single Premium Policies, the resultant
Initial Sum Insured must equal or exceed that which would then be purchased with
a single premium of $10,000. In determining this minimum, JHVLICO will assume a
policy fee of $250 and no charge for state premium tax.
If there is an outstanding policy loan on the Policy, the outstanding
indebtedness after the partial surrender can not exceed the then current
available Loan Value.
Similar to the surrender transaction, JHVLICO will pay, within seven days,
the resultant surrender value next computed after receipt, at its Home Office,
of the Policy and a signed request for partial surrender.
<PAGE>
C. Death Claims
------------
JHVLICO 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,
the death benefit will include the DeathBenefit, any death benefit arising from
dividends, plus dividends and interests unpaid or unapplied, plus an Annual
Premium Policy adjustment for premium paid beyond the policy month in which the
insured dies, less any indebtedness and less any premium in default if death
occurs during the 31-day grace period.
The adjustment for premium paid beyond the policy month in which the insured
dies is the sum of (a) and (b), where:
(a) pro rata refund of modal net premium for the Variable Sum Insured in
effect
(b) pro rata adjustment of the difference (positive or negative) of the
premium paid over the modal net premium for the Initial Sum Insured that
was allocated to the Account.
The Death Benefit is an amount equal to the greater of the Initial Sum
Insured or the Variable Sum Insured in effect on the date of the insured's
death. The Death Renefit is the Initial Sum Insured during the first Policy
Month. After the first Policy Month a new Death Benefit is calculated and
becomes effective once each Policy Month on the Monthly Date.
The proceeds payable on death also reflect interest from the date of death to
the date of payment.
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 Policies
regarding suicide and incontestability.
<PAGE>
JHVLICO 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. The
excess of the Death Benefit over the Variable Sum Insured, if any, will be paid
out of a general account reserve maintained for that purpose.
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.
D. Default and Options on Lapse for annual premium policies
--------------------------------------------------------
A premium unpaid as of its due date is in default, but the Policies provide
for a 31-day grace period for the payment of each premium after the first. The
insurance continues in full force during the grace period, but, if the Insured
dies during the grace period, the premium in default is deducted from the amount
otherwise payable.
Prior to the end of the Valuation Period immediately preceding the 70th
dayafter the date of the default, any Policy values available at the end of the
applicable Valuation Period, as determined in accordance with the Policies may
be applied as a discounted value as of the date of default under one of the
following options for continued insurance not requiring further payment of
premiums. These options provide for Variable or Fixed Paid-Up Insurance or Fixed
Extended Term Insurance on the life of the Insured commencing on the date of
default. When either the Fixed Paid-Up Insurance or Fixed Extended Term
Insurance is the Option, the funds are transferred from the Account to JHVLICO's
general account.
Both the Variable and Fixed Paid-Up Insurance options provide an amount of
paid-up whole life insurance which the available Policy values will purchase.
The amount of Variable Paid-Up Insurance may then increase or decrease in
accordance with the Account's investment performance after charges against the
Account. The Fixed Paid-Up Insurance option provides a fixed and level amount of
insurance. The Fixed Extended Term Insurance option provides a fixed amount of
insurance determined in accordance with the Policies, with the insurance
coverage continuing for as long a period as the available Policy values will
purchase.
If no option has been elected before the end of the Valuation Period
immediately preceding the 70th day after the date of default, the Fixed Extended
Term Insurance option automatically applies unless the amount of Fixed Paid-Up
Insurance would equal or exceed the amount of Fixed Extended Term Insurance.
If the Insured dies after the grace period but before the end of the
Valuation Period immediately preceding the 70th day after the date of default
and prior to any election, and if the Policy is then in force, JHVLICO will pay
a Death Benefit equal to the greater
<PAGE>
of the death benefits provided under Fixed Extended Term Insurance (if
available) or Fixed Paid-Up Insurance determined in accordance with the Policy.
A Policy continued under any option may be surrendered for its cash value
while the Insured is living. Loans may be available under the Variable and Fixed
Paid-Up Insurance options, but not under the Fixed Extended Term Insurance
option.
E. Policy Loan
-----------
JHVLICO's Annual Premium Policies provide that an Owner, if no premium is in
default beyond the grace period, 2/ may make a loan at any time a Loan Value is
available after the first Policy year. Loans may be made at any time a Loan
Value is available for Single Premium Policies. The Owner may borrow money on
completion of a form satisfactory to JHVLICO, assigning the Policy as the only
security for the loan. Payment of the loan will be made from JHVLICO's general
account within seven days of receipt of the form at JHVLICO's Home Office.
Allocation of the loan between the subaccounts will be in the same proportion as
reserves for the Policy are held in the subaccounts.
The Loan Value for Annual Premium Policies will be 90% of the amount of the
Policy Account Value (assuming no dividends), plus the cash value of any Fixed
Paid-Up Insurance purchased with dividends, plus 90% of the cash value of any
Variable Paid-Up Insurance purchased with dividends determined in accordance
with the Policies. The Loan Value for Single Premium Policies will be 90% of the
Surrender Value (assuming no dividends), plus the cash value of any Fixed Paid-
Up insurance purchased with dividends, plus 90% of the cash value of any
Variable Paid-Up Insurance purchased with dividends determined in accordance
with the Policies. The Contingent Deferred Sales Charge (CDSC) of Single Premium
Policies will limit the amount available for loans in the first nine policy
years.
The Loan Value is calculated using the immediately preceding values which are
readily available for the convenience of the Owner rather than having to wait
for the end of the current Valuation Period to be able to quote a value. This
procedure is only used to quote a Loan Value. When a loan is actually made by
the Owner, values are adjusted beginning at the end of the Valuation Period
during which the loan is actually granted. The amount of any outstanding
indebtedness is subtracted from the amount otherwise payable when the Policy
proceeds become payable.
2/ The Policies also provide for a Loan Value while premiums are in default
and the Policies are in effect under the option on lapse for either
Variable or Fixed Paid-Up Insurance, but not the option on lapse for Fixed
Extended Term Insurance.
<PAGE>
Interest accrues and is compounded daily. The amount of any outstanding loan
plus accrued interest is called the "indebtedness." Except when used to pay
premiums, a loan will not be permitted for an Annual Premium Policy unless it is
for at least $100. For Single Premium Policies, the minimum amount of loan is
$1,000.
The applicable loan interest rate for a Single Premium Policy is a Fixed Loan
Interest Rate at an effective annual rate of 8%. However, the Annual Premium
Policyowner, at the time of issue, can elect which one of two loan interest
rates will apply to any policy loan. The Fixed Loan Interest Rate is 8% for the
life of the policy. The Variable Loan Interest Rate is determined annually for a
Policy by JHVLICO. If permitted by the law of the state in which the Policy is
issued, the Owner may change a prior choice of Loan Interest Rate. If at the
time of such request there is outstanding indebtedness, the change will
generally become effective on the next Policy anniversary.
The Variable Loan Interest Rate determined annually for an Annual Premium
Policy will apply to all indebtedness outstanding during the policy year
following the date of determination. The rate will not exceed the higher of 5
1/2% or the PublishedMonthly Average forthe calendar month which"is two months
prior to the month in which the date of determination occurs. The Published
Monthly Average means Moody's Corporate Bond Yield Average as published by
Moody's Investors Service, Inc. or any successor thereto.
A loan does not affect the amount of the premiums due. While the indebtedness
is outstanding, that portion of the indebtedness attributable to the Account is
credited with the Policy Loan Rate 3/ rather than the Account Equity Rate 4/.
Therefore, the Death Benefit above the Guaranteed Minimum Death Benefit, the
Policy Account Value and any insurance and cash value under any Variable Paid-Up
Insurance purchased with dividends, are permanently affected by any indebtedness
whether or not repaid in whole or in part.
3/ For each Policy, the Policy Loan Rate for a Valuation Period is determined
as of the end of the Valuation Period and reflects the Policy's accrued
Policy loan interest for the Valuation Period, any applicable income taxes
paid, or change in any tax reserve maintained by JHVLICO during the
Valuation Period, and a Valuation Period charge at an effective rate of 75%
annually of the total indebtedness of the Policy at the beginning of the
Valuation Period.
4/ The Account Equity Rate for a Valuation Period is determined as of the end
of the Valuation Period and reflects the Accounts accrued investment income
(excluding accrued Policy loan interest) and capital gains and losses,
realized or unrealized, of the Account for the Valuation Period, and any
applicable income taxes paid or change in any tax reserve held in Account
during the Valuation Period, and a Valuation Period charge at an effective
rate of .50% annually of the value of the Account at the beginning of the
Valuation Period.
<PAGE>
The Guaranteed Minimum Death Benefit is not affected by any indebtedness if
premiums are duly paid. While a Policy is in full force, "excess indebtedness"
is the amount by which the indebtedness exceeds the Policy Account Value minus
the Contingent Deferred Sales Charge, if applicable, plus the cash value of any
insurance purchased with dividends. When excess indebtedness occurs, the Policy
terminates at the end of the Valuation Period in which the 3lst day after
notification has been mailed to the Owner falls, if such excess indebtedness has
not been repaid.
F. Transfer From Account
---------------------
An Owner, as often as four times in each Policy year, may transfer amounts
held for the Policy in the Account from one subaccount to another. The Owner may
use either percentages (in whole numbers) or designate the amount of money to be
transferred between subaccounts. The reallocation must be such that the total
after reallocation equals 100%. The change will be effective at the end of the
Valuation Period in which JHVLICO receives at its Home Office notice
satisfactory to JHVLICO. The reallocation is based on the amounts next computed
after receipt of satisfactory notice. No charge is made for transfers.
G. Conversion Privilege
--------------------
The conversion privilege provided in accordance with Rule 6e-2(b) (13) (v)
(B) under the 1940 Act is discussed under III. below.
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, the insurance
underwriting (i.e., evaluation of risk) process and JHVLICO's advancement of the
"modal net premium" whether or not a premium has been paid. There are also
certain Policy provisions - such as reinstatement - which do not result in the
issuance of a Policy but which require 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 JHVLICO'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, health and occupation. In the context of life
insurance as contrasted with mutual funds,
<PAGE>
a uniform premium (or "public offering price") for all Insureds would
discriminate unfairly in favor of those Insureds representing greater mortality
risks to the disadvantage of those representing lesser risks. Accordingly,
although there will be no uniform "public offering price" for all Insureds,
there will be a single "price" for all Insureds in a given actuarial category.
The policies will be offered and sold pursuant to established premium
schedules 5/ 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, health, and
occupation. Premiums and the manner in which they are determined will be
described in JHVLICO's prospectuses under the Securities Act of 1933. The
prospectuses also will specify premiums for illustrative ages and offer to
furnish premium information applicable to any proposed insured upon request.
B. Application and Initial Premium Processing
------------------------------------------
Upon receipt of a completed application from a proposed Owner, JHVLICO 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 JHVLICO'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. This would
automatically exclude Sunday & Monday as date of issue. 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, except as noted below.
5/ In accordance with industry practice, JHVLICO will establish procedures to
- - handle errors in initial and subsequent premium payments to refund
overpayments and collect underpayments, except for de minimis amounts.
<PAGE>
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 any 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 first
premium or the entire single premium as the case may be. If the initial premium
is paid with the application and the Policy is issued as applied for, the date
of issue in general will be the latest of Part A date, Part B date of the
application or date of most recent evidence of insurability, so that variability
of benefits will commence as of that date. If the 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. If any payment is made with the application of a Single
Premium Policy, the entire single premium must accompany the application.
There are variations in the foregoing procedure. If the Owner of an Annual
Premium Policy wishes that permanent insurance protection and variability of
benefits to commence at a future date, he can select a period of initial term
insurance of up to 120 days. The date of issue will be at the end of the initial
term period. If the owner of an Annual Premium Policy wishes to have a specific
date to save age, he may elect the Back-Dating endorsement. This endorsement
allows JHVLICO to determine premium and policy values using an issue date
earlier than the date determined from our normal dating procedures. The premiums
are payable from this earlier date. JHVLICO will transfer the appropriate amount
from its general account to the Account on the date the policy is approved. The
appropriate amount is calculated as though the "modal net premium" had in fact
been transferred from the general account to the Account commencing on the back-
dated issue date and had earned a net rate equivalent to an annual effective
rate of 4 1/2%, the Assumed Investment Rate (AIR), since the back-dated issue
date. Hence, the use of the Back-Dating endorsement does not let the
policyholder share the past Account performance.
JHVLICO will require that the Policy be delivered within a specific delivery
period to protect itself against anti-selection by the proposed Owner resulting
from a deterioration in the Insured's health. Generally, the period will not
exceed 60 days from the date the Policy is approved.
JHVLICO will transfer the appropriate amount from its general account to the
Account on the date the Policy is approved unless, for Annual Premium Policies
only, the Owner selects a period of preliminary term insurance in which case the
first "modal
<PAGE>
net premium" will be transferred to the Account on the date of issue. 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.
The Net Single Premium of a Single Premium Policy is first transferred from
the general account to the Money Market subaccount until the expiration of the
period in which the Owner may exercise the short-term cancellation right. It is
expected that generally this will be the tenth day following the date of mailing
by JHVLICO of the Notice of Withdrawal Right to the Owner. Thereupon the value
of the Owner's interest in the Money Market subaccount at that time will be
allocated as elected by the Owner.
C. Subsequent Premiums' Processing
-------------------------------
JHVLICO will transfer from the general account to the Account the appropriate
"modal net premium" on the Monthly Date if a premium is due in that Policy
Month. This procedure will sometimes result in JHVLICO's advancing monies prior
to receipt of premiums. The "modal net premium" is the actuarial equivalent, for
the premium payment interval in effect, of the Annual Net Continuous Premium.
The amount of the "modal net premium" will depend upon such factors as the
Insured's age, plan, premium payment interval, the Policy's face amount, and the
period for which the Policy has been in force.
Premiums payable on an annual basis are based upon the assumption that, on
the average, they will be paid on the anniversary, although some may be paid
before and some later in the grace period.
Premiums payable other than annually are based on the assumption that they
will be paid on their due dates. Until such premiums are paid, JHVLICO will bear
a risk of not collecting the premiums. Consequently, the modal premiums are
higher than the annual premiums. JHVLICO uses a factor plus a per
billing/payment charge to determine the semiannual, quarterly, or special
monthly premiums. All premiums include a charge to reimburse JHVLICO for the
costs incurred in billing and collecting payments. This charge is $1.20 per
billing/payment for premiums payable on an annual, semiannual, or quarterly
basis and 90 cents per billing/payment for premiums payable on a special monthly
basis.
D. Annual Dividends
----------------
The share, if any, of the divisible surplus which JHVLICO shall annually
determine and apportion will be distributed as a dividend payable annually on
the Policy anniversary beginning not later than the end of the second Policy
year for the Variable Whole Life 100 Policy, not later than the end of the third
Policy year for the Variable Whole Life Policy and Variable Whole Life p50
Policy, and not later than the end of the fifth policy year for the Single
Premium Policy.
<PAGE>
Dividend illustrations published at the time of issue of a Policy reflect the
actual recent experience of JHVLICO with respect to factors such as interest,
mortality, and expenses, Each calendar year JHVLICO's actuary will analyze the
current and recent past experience and compare it to the assumptions used in
determining the premium rates at the time of issue. Some of the more important
data studied would include mortality and withdrawal rates, investment yield in
the general account, and actual expenses incurred in administering the Policies.
Such data is then allocated to each dividend class, e.g., by Policy year of
issue, age, type of Policy and smoking habits (Annual Premium Policy Only). The
actuary then determines what dividends can be equitably apportioned to each
Policy class and makes a recommendation to JVHLICO's Board of Directors. The
Board of Directors, which has the ultimate authority to ascertain dividends,
will vote the amount of surplus to be apportioned to each Policy class, thereby
authorizing the distribution of the dividend for each Policy year.
Approximately one month before the Policy anniversary, JHVLICO will calculate
the actual amount of dividend for each Policy. Once determined, the amount of
the annual dividend will be shown on the premium notice which is sent to the
Owner approximately three weeks prior the Policy anniversary. The Owner may
elect to have any dividend paid or applied under any one of the following
options:
a. paid in cash:
If premiums have been paid to the anniversary, a check for the amount
of the dividend will be mailed to the Owner on the anniversary date.
If premiums have not been paid to the anniversary, the dividend will
not be paid to the Owner until the overdue premiums have been paid.
b. applied to premium payments:
The premium notice sent to the Owner will show the net amount of the
premium due from the Owner.
c. left to accumulate with interest of at least 3 1/2% a year:
On the Policy anniversary, the credited to the Owner and held the
right to then withdraw all dividends held for the Owner's the Insured,
the amount of the amount of the dividend will be in the general
account. The Owner has or a portion of the accumulated benefit at any
time. At the death of accumulated dividends would be included in the
proceeds payable to the beneficiary.
d. purchase fixed paid-up insurance:
On the Policy anniversary, JHVLICO will purchase whole life fixed
paid-up insurance with the dividend. No "sales load" or other charges
are included
<PAGE>
in the purchase price and the amount of insurance is based on the
attained age of the Insured on each policy anniversary.
This insurance will always have a cash value of at least the amount of
the dividend used to purchase it. The insurance may be surrendered for
its cash value at any time. This insurance will be participating and
dividends, if any, will be declared annually. Reserves for this
insurance will be maintained in the general account and the face
amount of the insurance will not fluctuate.
e. purchase fixed one-year term insurance:
On the Policy anniversary, JHVLICO will purchase fixed one-year term
insurance with the dividend. Premiums will not exceed net premiums
based on the Commissioners 1958 Extended Term Insurance Table with
interest at 3% and the amount of insurance is based on the attained
age of the Insured on the Policy anniversary. This insurance is not
participating and no dividends will be declared. The reserves for the
insurance will be held in the General Account and the amount of
insurance will remain level for the Policy year.
The cash value of the insurance at the beginning of the Policy year
and thereafter will equal the reserve for the insurance for the
balance of the Policy year. Such value will decrease steadily during
the year to zero cash value at the end of the Policy year. The
insurance may be surrendered for its cash value at any time during the
Policy year.
f. (not available)
g. purchase variable paid-up insurance:
On the Monthly Date which is or next follows the Policy anniversary
JHVLICO will purchase variable paid-up insurance with the dividend. No
"sales load" or other charges are included in the purchase price and
the amount of insurance is based on the attained age of the Insured on
the Policy anniversary. This insurance will be participating and
dividends, if any, will be declared annually. Reserves for this
insurance will be maintained in the Account. The cash value will
increase or decrease daily in accordance with the Account's investment
experience after charges against the Account. During the first policy
month after the purchase, the amount of insurance is the amount of
insurance determined at purchase and thereafter, a new amount of
insurance is calculated and becomes effective once each policy month
on the Monthly Date. Neither cash value nor amount of insurance under
Variable Paid-Up insurance is guaranteed. The insurance may be
surrendered for its cash value at any time.
<PAGE>
E. Reinstatement Provision for Annual Premium Policies
---------------------------------------------------
The Annual Premium Policy may be reinstated within five years after the due
date of the first unpaid premium unless the surrender value has been paid or
otherwise exhausted, or the period of any Fixed-Extended Term Insurance has
expired. An Annual Premium Policy will be reinstated upon receipt by JHVLICO of
a written application for reinstatement and production of evidence of
insurability satisfactory to JHVLICO and payment of an amount equal to the sum
of (A) and (B):
where
(A) = the greater of: (a) all overdue premiums with interest at 6%
compounded annually; or (b) 110% of (i) the excess of the Policy Cash
Value at the end of the Valuation Period immediately preceding the
date of reinstatement (calculated as if no lapse had occurred) over
the cash value as of the same date, less (ii) any indebtedness in
effect at the date any option on lapse became effective, with interest
at 6% compounded annually to the date of reinstatement. JHVLICO may
make an adjustment for dividends in the required payment.
(B) = all overdue premiums for any additional benefit provisions with
interest at 6% compounded annually to the date of reinstatement.
Upon reinstatement, the Policy will have the same Death Benefit, and Policy
Cash Value as if default had not occurred. This reinstatement provision is
designed to comply with the insurance laws of a number of states.
The amount payable by the Owner recognizes that, upon reinstatement, JHVLICO
must have on hand an amount at least equal to the increase in Policy Cash Value
and increase in cash value of any insurance purchased under any dividend option
resulting from reinstatement, after providing for (i) the commissions on the
portion of the payment that represents back premiums,
<PAGE>
6/ (ii) the state premium tax on the portion of the payment that represents back
--
premiums, (iii) the accumulated amount of lost charges for expenses and
mortality risks and other contingencies, and (iv) the risk premium for the
Guaranteed Minimum Death Benefit not collected. It is reasonable to expect that,
under conditions of favorable investment performance in the Account when
collection in excess of the gross premiums with interest is required, JHVLICO
would require payment of 10% of the increase in cash values to provide for the
items listed above. JHVLICO will place the reinstatement amount in its general
account and transfer to the Account assets equal to the reserve required to
support the reinstated benefits
6/ While a Policy is in effect under an option on lapse, agents continue to
provide services requested by Owners such as arranging for Policy assignments,
changes in beneficiaries and other Policy changes and reinstatement, and
answering general inquiries. In any event, commissions paid to agents are
intended to cover services rendered over the lifetime of the insured and are not
specifically related to the services rendered in a particular policy year.
<PAGE>
In order to assist a lapsed Owner in making a considered judgement as to
whether to reinstate, JHVLICO may calculate the amount payable upon
reinstatement and "freeze" the amount for up to ten days.
F. Repayment of Loan
-----------------
A loan made under JHVLICO's Policies may be repaid with an amount equal to
all or a portion of any indebtedness while the insured is living and premiums
are being duly paid if the Policy is in full force on a premium paying basis.
A loan does not affect the amount of the premiums due. While the indebtedness
is outstanding, that portion of the indebtedness attributable to the subaccount
is credited with the Policy Loan Rate rather than the Account Equity Rate for
the subaccount. Therefore, the Death Benefit above the Guaranteed Minimum Death
Benefit, the Policy Account Value and the death benefits and cash values under
any variable paid-up insurance purchased with dividends are permanently affected
by any indebtedness, whether or not repaid in whole or in part.
Upon repayment of a loan, that part of the repayment attributable to the
subaccount would again be credited with the Account Equity Rate for the
subaccount rather than the Policy Loan Rate. The application of the Account
Equity Rate would commence with the next Valuation Period immediately following
the date of receipt of the repayment.
particular Policy Year.
G. Correction of Misstatement of Age or Sex
----------------------------------------
If JHVLICO discovers that the age or sex of the Insured has been misstated,
JHVLICO will reconstruct the Policy by determining what benefits the premium
paid would have purchased at the correct age or sex. For Annual Premium
Policies, special adjustments may have to be made if the resultant face amount
is below JHVLICO's minimum size policy.
Once the benefits are redetermined, JHVLICO 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
--------------------
JHVLICO's Policies, in accordance with Rule 6e-2(b) (13) (v) (B) under the
1940 Act, provide that the Owner, within 24 months of issuance of a Policy,
while the Policy is in full force, may exchange the Policy without submission of
new evidence of insurability, for a permanent fixed benefit life insurance
policy on the life of the insured.
<PAGE>
If the original Policy is an Annual Premium Policy, the new policy shall be any
whole life policy with premiums payable at least to age 85 which is offered by
John Hancock. If the original Policy is a Single Premium Policy, the new policy
shall be a single premium whole life policy which is offered by JHVLICO. The new
policy will have a fixed amount of coverage equal to the Initial Sum Insured of
the original Policy and will be in the same risk classification as the original
Policy. This conversion privilege is designed to permit an Owner to change his
or her mind ab initio and to obtain a fixed benefit policy based on the issue
-- ------
age of the original Policy - just as if the owner had from the outset decided to
buy fixed benefit life insurance.
General Principles
- ------------------
The conversion will be subject to (1) adjustment in Policy Account Value of
the original Policy to reflect the variance between the actual Policy Account
Value and the tabular Policy Account Value of the original Policy plus (2)
adjustment in premiums, dividends and cash values to reflect variance, if any,
in the premiums, dividends and cash values under the original Policy and new
policy. Conceptually, the Policy Account Value adjustment "transforms" the
variable life insurance policy into a hypothetical fixed benefit life insurance
policy while the cash value, premium and dividend adjustments take care of the
exchange from this hypothetical fixed benefit life insurance policy to an actual
fixed benefit policy. However, credit to Owner, if any, should never exceed and
charge to Owner, if any, should never be less than the difference in actual
Policy Account Value before the exchange and cash value after the exchange. This
principle removes the incentive to exchange just prior to surrender in order to
obtain a higher cash value. If the calculation results in a charge to the Owner,
such charge would have to be paid by the Owner to JHVLICO on or before the
effective date of the new policy. If the result is a credit, JHVLICO would have
to pay the Owner in cash or leave the amount credited with John Hancock under an
advance premium agreement.
This conversion procedure is designed to avoid discrimination by preventing
an Owner from utilizing the conversion privilege in order to obtain lower
premiums for fixed benefit insurance, or higher cash values, than would
otherwise be available. Any outstanding indebtedness would have to be paid by
the Owner on or before the effective date of the conversion.
Policy Account Value Adjustment
- -------------------------------
The Policy Owner would be charged, or receive credit for, any variance in the
actual Policy Account Value (arising from the actual investment experience of
the Account) of the original Policy in comparison to the tabular Policy Account
Value (assume the Account earned a net rate equal to the Assumed Investment Rate
(AIR)) based on the Initial Sum Insured. The actual Policy Account Value used
for this purpose will be that next computed after receipt, at JHVLICO's Home
Office, of the Policy and written notice on a form satisfactory to JHVLICO. This
adjustment is based
<PAGE>
on the fact that at the time of the exchange JHVLICO needs an amount of money to
fund the future benefits under the fixed benefit insurance policy. If the actual
Policy Account Value exceeds the tabular Policy Account Value based on the
Initial Sum Insured, it means that there has been favorable investment
performance relative to the AIR, then the new policy would be overfunded and a
refund is given to the Owner. If the actual Policy Account Value were less than
the tabular Policy Account Value based on the Initial Sum Insured, it means that
there has been unfavorable investment performance relative to the AIR, then the
new policy is underfunded unless the Owner pays JHVLICO the difference. This
approach means that it is the Owner of the Policy, rather than JHVLICO, who
takes the market performance risk for the period of time when coverage was
furnished under the original Policy.
If the original Policy is a Single Premium Policy, a further adjustment is
needed. This adjustment (the excess of contingent deferred sales charge based on
actual over tabular Policy Account Values) is to prevent an Owner from
circumventing the payment of the sales charge by first converting to a fixed
benefit policy and then immediately surrendering the Policy. When an Owner of a
Single Premium Policy withdraws dollars from the contract within the first nine
years, either by surrender, partial withdrawal or conversion, they are subject
to a sales charge. The following show the necessity of this adjustment.
Example
-------
Single Premium Variable Life Policy
Issue Age = 45
Initial Sum Insured = $100,000
No Additional Benefits
Gross Premiun = $38,221.44
Max CDSC = 9% X 38,221.44 = $ 3,439.93
Exchange is done at the end of the second policy year. Policy
Account Values: Actual = $45,858.20
Tabular = $39,541.00
Assume JHVLICO failed to make an adjustment for the contingent deferred sales
charge due.
Surrender Value before Exchange:
Actual Policy Account Value = $45,858.20
Associated CDSC = 3,439.93
---------------
Surrender Value = $42,418.27
Surrender Value After Exchange:
Tabular Policy Account Value = $39,541.00
<PAGE>
Associated CDSC = 3,163.28
--------------- --------
Surrender Value = 36,377.72
* Credit for Exchange = 6,317.20
--------------------- --------
Total from Policy = $42,694.92
Relative Advantage to Owner seeking to avoid
normal CDSC = $42,694.92
-$42,418.27 = $276.65
Premium Adjustment
- ------------------
If the original Policy is an Annual Premium Policy and if the premium for the
new policy were less than the premium for the original Policy, the Owner would
be credited for the excess of:
(i) the difference in premiums to the date to which the original Policy
premiums have been paid; over
(ii) the corresponding difference in commissions.
If premium for the new policy were larger than the premium for the original
Policy, the Owner would be charged for the difference in premiums to the date to
which the original Policy premiums have been paid plus interest at 6% compounded
annually to the date of exchange.
Dividend Adjustment
- -------------------
If the original Policy is an Annual Premium Policy and if the actual paid
dividends for the new policy were larger than the actual paid dividends for the
original Policy, the Owner would be credited for such difference, and if the
dividends were lower, the Owner would be charged with the excess.
Cash Value Adjustment
- ---------------------
If the original Policy is an Annual Premium Policy and if the cash value of
the new policy is larger than the tabular Policy Account Value of the original
policy, the Owner would be charged with the excess.
Maximum Credit and Minimum Charge
- ---------------------------------
If the original Policy is an Annual Premium policy, the maximum credit is the
excess of the actual Policy Account Value of the original policy over the cash
value of the new policy, if positive.
If the original Policy is an Annual Premium policy, the minimum charge is
<PAGE>
the excess of the cash value of the new policy over the actual Policy Account
Value of the original policy, if positive.
Transfer of funds between JHVLICO and John Hancock
- --------------------------------------------------
Once the conversion takes effect with respect to an Annual Premium Policy,
there will be an appropriate transfer of funds between JHVLICO and John Hancock
to reflect the assumption of the risk by John Hancock. At the same time, JHVLICO
will transfer assets from the Account to the general account in an amount equal
to the Policy reserve held in the Account.
Dividend Treatment for a Single Premium Policy in the Year of Exchange
- ----------------------------------------------------------------------
The Single Premium Policy has no dividend payable until the end of the fifth
policy year. The fixed benefit policy is expected to have a dividend before that
time. In these early years, this represents a distribution of surplus
attributable to favorable general account investment performance. Since JHVLICO
did nothave the reserve forthe Policyinvested in the"general account prior to
the exchange, the substituted policy is not entitled to any fixed product
dividend that would have been earned prior to the exchange. For example, if the
exchange of a Single Premium Policy occurs midway through the second policy
year, the dividend to be paid at the end of the second year would be only half
of the dividend paid on a policy that had been in-force during all of the second
policy year.
The Detailed Statement of the Method of Computation of the Adjustment Upon
--------------------------------------------------------------------------
Exchange of a JHVLICO's
-----------------------
Variable Life Policy for a Fixed Benefit Life Policy
----------------------------------------------------
The charge or credit to the Owner is computed as follows:
(1) Difference between actual Policy Account Value and the tabular Policy
Account Value of the Initial Sum Insured on the Date of Exchange.
(a) If the actual Policy Account Value exceeds the tabular Policy Account
Value, credit the difference to the Owner.
(b) If the tabular Policy Account Value exceeds the actual Policy Account
Value, charge the difference to the Owner. "
(c) If the Contingent Deferred Sales Charge (CDSC) of a Single Premium
Policy based on the actual Policy Account Value exceeds the CDSC based on the
tabular Policy Account Value of the Initial Sum Insured on the Date of
Exchange, then charge the Owner with such excess.
<PAGE>
The following applies to Annual Premium Variable Life Insurance Policies only.
(2) Difference in Premiums between Variable and Fixed Policies.
(a) If the annual premium for the variable policy exceeds that for the
fixed policy, credit the policyholder with the excess of:
(i) the difference in premiums to the date to which the premiums for
the variable life policy have been paid; over,
(ii) the corresponding difference in commissions.
(b) If the annual premium for the variable policy is less than that for
the fixed policy, charge the policyholder the difference in premiuns to the
date to which the premiums for the variable life policy have been paid plus
interest at 6% compounded annually to the date of exchange.
(3) Difference in Dividends between Variable and Fixed Policies.
(a) If the actual paid dividends for the fixed policy exceed the actual
paid dividends of the variable policy, credit the difference to the
policyholder.
(b) If the actual paid dividends for the fixed policy are less than the
actual paid dividends of the variable policy, charge the difference to the
policyholder.
The premiums, commissions, and dividend calculations are made on the
basis of the total annual premium and dividend involved (including any
supplemental benefits) and appropriate fractions thereof.
(4) If the cash value of the fixed policy exceeds the tabular Policy Account
Value of the variable policy, charge the owner with such excess.
(5) If the net result of (1) through (4) is a credit to the Owner,that credit
can not exceed the maximum credit.
Maximum credit is defined as the greater of (1) excess of the actual Policy
Account Value of the variable policy over the cash value of
the fixed policy and (2) zero.
If the net result of (1) through (4) is a charge to the Owner, that
charge can never be less than the minimum charge.
<PAGE>
Minimum charge is defined as the greater of (1) excess of the cash value
of the fixed policy over the actual Policy Account Value of
the variable policy and (2) zero.
February l, 1986
<PAGE>
John Hancock Variable Life Insurance Company 2/1/86
Determination of Account Net Investment Rate
Account Equity Rate
- -------------------
The Account Equity Rate is determined at the end of a Valuation Period for
each of the subaccounts. It is defined as (a-b)/c, where
a = the investment return of the subaccount for the Valuation Period.
This reflects
(i) accrued investment income, excluding accrued policy loan
interest (in the case where assets are invested in an underlying series
fund, this will consist of distributions declared during the Valuation
Period), plus
----
(ii) realized and unrealized capital gains and losses, less
----
(iii) any applicable income taxes paid or change in any tax
reserves held (at present, these are maintained at zero;
b = the applicable Valuation Period deduction for mortality and
expense risks.
This is calculated by determining the rate for the Valuation Period
which will produce an effective rate of .50% annually, and
then multiplying that rate by the value of the
subaccount's asset (excluding policy loans) at the
beginning of the Valuation Period.
There are normally 253 Valuation Periods
in a typical year. (This is a variable because of
unexpected stock exchange closings and any yearly
fluctuations in holiday schedules).
The Valuation Period charge is (1.0050) 1/253-I = .000019714,
resulting in a Valuation Period deduction of $1.52.
c= the value of the subaccount's asset (excluding policy
loans) at the beginning of the Valuation Period (in the case
<PAGE>
where assets are invested in an underlying series fund, value
is based on the net asset value per share of the
corresponding portfolio of the series fund).
When a subaccount's assets (excluding policy loans) are invested in an
underlying series fund, the Account Equity Rate for the subaccount
may be expressed as (r-s-1), where
r = Ratio of (1) to (2), where
(1) = sum of the net asset value per share of the corresponding
portfolio of the underlying series fund at the end of the Valuation Period
plus per share distribution of dividends or capital gains at the end of the
----
Valuation Period, adjusted for any tax reserves held (which, as noted
above, are currently maintained at zero);
(2) = the net asset value per share of the corresponding portfolio
of the underlying series fund at the beginning of the Valuation Period,
adjusted for any tax reserves held (which, as noted above, are currently
maintained at zero).
s = the applicable Valuation Period charge for mortality and
expense risks. As described above, the current Valuation Period charge
is .000019714.
It can be shown that the two approaches will yield the same answer since
(r-1) in the second approach is equal to the quotient a/c in the
first approach and s in the second approach is equal to b/c in the
first approach.
Policy Loan Rate
- ----------------
The Policy Loan Rate is determined separately for each policy. It is
determined at the end of the Valuation Period and reflects the
policy's accrued policy loan interest for the Valuation Period,
any applicable income taxes paid or change in any tax reserve
during the Valuation Period, and a Valuation Period charge at an
effective rate of .75% annually of the total indebtedness of the
policy at the beginning of the Valuation Period.
The fixed annual loan rate is 8%. The variable loan rate is determined
annually. The current charge for taxes, denoted by t in the
formula below, is 0%. The number of days in a Policy Year, denoted
by n in the formula below, may be 365 or 366. The Policy Loan Rate
then becomes:
((1+i)l/n-1) - ((1+t)l/253-1) - (1.00751/253-I)
<PAGE>
When n=365 and i = 8% the Policy Loan Rate would be .000181340306765. A
Valuation Period of more than one day would affect the first term
of this formula. For example, a 3 day Valuation Period would be
reflected as:
(1.083/365-1) - ((1.t)l/253-1) - (1.00751/253-1) = .000603222516932
Account Net Investment Rate
- ---------------------------
The Account Net Investment Rate for each subaccount in which the policy
reserve is invested is determined separately for each policy. The
Account Net Investment Rate for a Valuation Period is determinable
as of the end of the Valuation Period as a weighted average of the
Policy Loan Rate and the Account Equity Rate and reflects the
policy's indebtedness allocated to the subaccount.
In the absence of any indebtedness, the Account Net Investment Rate equals
the Account Equity Rate. The Account Net Investment Rate may be
positive or negative and is the guaranteed yield for each
subaccount in which the policy reserve is invested for each
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>
<PAGE>
EXHIBIT 10
April 10, 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
