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As filed with the Securities and Exchange Commission on January 11, 1996
Registration No. 33-79108
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-6
Post-Effective Amendment No. 2 to
Registration Statement Under
THE SECURITIES ACT OF 1933
----------------------
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
(Exact name of trust)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(Name of depositor)
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(Complete address of depositor's principal executive offices)
--------------------
FRANCIS C. CLEARY, JR., ESQ.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)
--------------------
Copy to:
GARY O. COHEN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
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It is proposed that this filing become effective(check appropriate box)
/X/immediately upon filing pursuant to paragraph (b) of Rule 485
--
/ /on (date) 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 1994 pursuant to Rule 24f-2 on February 23, 1995.
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CROSS-REFERENCE TABLE
Form N-8B-2 Item Caption in Prospectus
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1, 2 Cover, The Account and The Series
Funds, JHVLICO and John Hancock
3 Inapplicable
4 Cover, Distribution of Policies
5,6 The Account and The Series Funds,
State Regulation
7, 8, 9 Inapplicable
10(a),(b),(c),(d),(e) Principal Policy Provisions
and Benefits
10(f) Voting Privileges
10(g),(h) Changes that JHVLICO
Can Make
10(i) Appendix--Other Policy
Provisions, The Account and
The Series Funds
11, 12 Summary, The Account and The Series
Funds, Distribution of Policies
13 Summary, 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 Funds
17 Summary, Principal Policy
Provisions and Benefits
18 The Account and The Series Funds,
Tax Considerations
19 Reports
20 Changes that JHVLICO
Can Make
21 Principal Policy Provisions
22 Principal Policy Provisions
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23 Distribution of Policies
24 Not Applicable
25 JHVLICO and John Hancock
26 Not Applicable
27,28,29,30 JHVLICO and John Hancock, Board
of Directors and Executive
Officers of JHVLICO
31,32,33,34 Not Applicable
35 JHVLICO and John Hancock
37 Not Applicable
38,39,40,41(a) Distribution of Policies,
JHVLICO and John Hancock,
Charges and Expenses
42, 43 Not Applicable
44 The Account and The Series Funds,
Principal Policy Provisions,
Appendix--Illustration of Death
Benefits, Surrender Values
and Accumulated Premiums
45 Not Applicable
46 The Account and The Series Funds,
Principal Policy Provisions,
Appendix--Illustration of Death
Benefits, Surrender Values
and Accumulated Values
47, 48, 49, 50 Not Applicable
51 Principal Policy Provisions,
Appendix--Other Policy
Provisions
52 The Account and The Series Funds,
Changes that JHVLICO
Can Make
53,54,55 Not Applicable
56,57,58 Not Applicable
59 Financial Statements
<PAGE>
John Hancock Variable Life
Insurance Company
[LOGO APPEARS HERE] (JHVLICO)
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
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 JANUARY 12, 1996
The flexible premium variable life policy ("Policy") described in this
Prospectus can be funded, at the discretion of the Owner, by any of the twelve
variable subaccounts of John Hancock Variable Life Account S (the "Account"),
by a fixed subaccount (the "Fixed Account"), or by any combination of the
Fixed Account and the variable subaccounts (collectively, the "Subaccounts").
The assets of each variable Subaccount will be invested in a corresponding
investment portfolio ("Portfolio") of John Hancock Variable Series Trust I, a
mutual fund advised by John Hancock Mutual Life Insurance Company ("John
Hancock") or of M Fund, Inc., a mutual fund advised by M Financial Investment
Advisers, Inc. (collectively the "Funds"). The assets of the Fixed Account
will be invested in the general account of John Hancock Variable Life
Insurance Company ("JHVLICO").
The Prospectuses for the Funds, which are attached to this Prospectus,
describe the investment objectives, policies and risks of investing in the
twelve Portfolios of the Funds: Stock, Select Stock, Bond, Money Market,
Managed, Real Estate Equity, International, Short-Term U.S. Government,
Special Opportunities, Edinburgh Overseas Equity, Turner Core Growth and
Frontier Capital Appreciation. Other variable Subaccounts and Portfolios may
be added in the future.
Replacing existing insurance with a Policy described in this Prospectus may
not be to your advantage.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
IT IS NOT VALID UNLESS ATTACHED TO CURRENT PROSPECTUSES FOR THE FUNDS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS
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Page
<S> <C>
SUMMARY................................................................... 1
JHVLICO and JOHN HANCOCK.................................................. 6
THE ACCOUNT AND THE SERIES FUNDS.......................................... 6
The Account............................................................. 6
The Series Funds........................................................ 7
THE FIXED ACCOUNT......................................................... 9
POLICY PROVISIONS AND BENEFITS............................................ 9
Requirements for Issuance of Policy..................................... 9
Premiums................................................................ 9
Account Value and Surrender Value....................................... 12
Death Benefits.......................................................... 12
Transfers Among Subaccounts............................................. 15
Telephone Transfers and Policy Loans.................................... 15
Loan Provisions and Indebtedness........................................ 15
Default................................................................. 16
Exchange Privilege...................................................... 17
CHARGES AND EXPENSES...................................................... 17
Charges Deducted from Premiums.......................................... 17
Sales Charge............................................................ 18
Reduced Charges for Eligible Groups..................................... 19
Charges Deducted from Account Value or Assets........................... 19
Guarantee of Certain Charges............................................ 21
DISTRIBUTION OF POLICIES.................................................. 21
TAX CONSIDERATIONS........................................................ 22
Policy Proceeds......................................................... 22
Charge for JHVLICO's Taxes.............................................. 23
Corporate and H.R. 10 Plans............................................. 23
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO...................... 24
REPORTS................................................................... 24
VOTING PRIVILEGES......................................................... 25
CHANGES THAT JHVLICO CAN MAKE............................................. 25
STATE REGULATION.......................................................... 26
LEGAL MATTERS............................................................. 26
REGISTRATION STATEMENT.................................................... 26
EXPERTS................................................................... 26
FINANCIAL STATEMENTS...................................................... 26
APPENDIX--OTHER POLICY PROVISIONS......................................... A-1
Settlement Provisions................................................... A-1
Additional Insurance Benefits........................................... A-1
General Provisions...................................................... A-1
APPENDIX--ILLUSTRATION OF DEATH BENEFITS, SURRENDER VALUES AND ACCUMULATED
PREMIUMS................................................................. A-3
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
<PAGE>
INDEX OF DEFINED WORDS AND PHRASES
Below are listed certain words and phrases used in this Prospectus, together
with identification of the page on which each is defined or explained:
<TABLE>
<CAPTION>
Page
<S> <C>
Account.............................................................. 6
Account Value........................................................ 1
Additional Sum Insured............................................... 14
Age.................................................................. A-2
Basic Sum Insured.................................................... 1
DAC Tax.............................................................. 18
Death Benefit........................................................ 12
Fixed Account........................................................ 9
Funds......................................................... Front Cover
Grace Period......................................................... 16
Guaranteed Minimum Death Benefit..................................... 13
Guaranteed Minimum Death Benefit Premium............................. 10
Home Office................................................... Front Cover
Indebtedness......................................................... 16
Investment Rule...................................................... 11
Loan Account......................................................... 16
Minimum First Premium................................................ 10
Optional Extra Death Benefit......................................... 13
Planned Premium...................................................... 10
Policy Anniversary................................................... A-2
Portfolio..................................................... Front Cover
Subaccount.................................................... Front Cover
Sum Insured.......................................................... 4
Surrender Value...................................................... 12
Target Premium....................................................... 18
Valuation Date....................................................... 8
Valuation Period..................................................... 8
Variable Subaccounts................................................. 2
7-Pay Limit.......................................................... 11
</TABLE>
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SUMMARY
WHAT IS THE VARIABLE LIFE POLICY BEING OFFERED?
John Hancock Variable Life Insurance Company ("JHVLICO") issues variable
life insurance policies. The Policies described in this Prospectus provide
life insurance coverage when the insured dies. The Policies also provide for
premium flexibility. JHVLICO issues other variable life insurance policies.
These other policies are offered by means of other Prospectuses.
As explained below, the death benefit and Surrender Value under the Policy
may increase or decrease daily. The Policies differ from ordinary fixed-
benefit life insurance in the way they work. However, the Policies are like
fixed-benefit life insurance in providing lifetime protection against economic
loss resulting from the death of the insured. The Policies are primarily
insurance and not investments.
The Policies work generally as follows: the Policy owner (the "Owner")
periodically gives JHVLICO a premium payment. JHVLICO takes from each premium
an amount for processing expenses, taxes, and sales expenses. JHVLICO then
places the rest of the premium into as many as thirteen Subaccounts as
directed by the Owner. The assets allocated to each variable Subaccount are
invested in shares of the corresponding Portfolio of the Funds. The currently
available Portfolios are Stock, Select Stock, Bond, Money Market, Managed,
Real Estate Equity, International, Short-Term U.S. Government, Special
Opportunities, Edinburgh Overseas Equity, Turner Core Growth and Frontier
Capital Appreciation. The assets allocated to the Fixed Account are invested
in the general account of JHVLICO. During the year, JHVLICO takes charges from
each Subaccount and credits or charges each Subaccount with its respective
investment performance. The insurance charge, which is deducted from the
invested assets attributable to each Policy ("Account Value"), varies monthly
with the then attained age of the insured and with the amount of insurance
provided at the start of each month.
The Policy provides for payment of death benefit proceeds when the insured
dies. The death benefit proceeds will equal the death benefit, plus any
additional benefit included by rider and then due, minus any Indebtedness. The
death benefit under Option A equals the Sum Insured less any withdrawals that
the Owner has made. The death benefit under Option B equals the Sum Insured
plus the Policy Account Value on the date of death of the insured. The death
benefit under Option M equals the Sum Insured, less any withdrawals by the
Owner, plus any optional Extra Death Benefit. The Policy also increases the
death benefit if necessary to ensure that the Policy will continue to qualify
as life insurance under the Federal tax laws.
Within limits prescribed by JHVLICO, the Owner may also elect whether to
purchase the coverage as part of the "Basic Sum Insured" or as an "Additional
Sum Insured". The Basic Sum Insured will not lapse during the first ten Policy
years, so long as (1) specified Guaranteed Minimum Death Benefit Premiums have
been paid, and (2) the Additional Sum Insured is not scheduled to exceed the
Basic Sum Insured at any time. The Owner may elect for this Guaranteed Minimum
Death Benefit feature to extend beyond ten years. The Additional Sum Insured
is subject to lapse, but has certain cost and other advantages.
The initial Account Value is the amount of the premium that JHVLICO credits
to the Policy, after deduction of the initial charges. The Account Value
increases or decreases daily depending on the investment experience of the
Subaccounts to which the amounts are allocated at the direction of the Owner.
JHVLICO does not guarantee a minimum amount of Account Value. Therefore, the
Owner bears the investment risk for that portion of the Account Value
allocated to the variable Subaccounts. The Owner may surrender a Policy at any
time while the insured is living. The Surrender Value is the Account Value
less any Indebtedness plus any sales charge refund. The Owner may also make
partial withdrawals from a Policy, subject to certain restrictions and an
administrative charge.
1
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If the Owner surrenders in the early Policy years, the amount of Surrender
Value would be low (as compared with other investments without sales charges)
and, consequently, the insurance protection provided prior to surrender would
be costly.
The minimum Sum Insured that may be bought at issue is $100,000. All persons
insured must meet specified age limits and certain health and other criteria
called "underwriting standards." The smoking status of the insured is
generally reflected in the insurance charges made. Policies issued in certain
jurisdictions and in connection with certain employer-sponsored plans will not
directly reflect the sex of the insured in either the premium rates or the
charges and values under the Policy.
WHAT IS THE AMOUNT OF THE PREMIUMS?
Premiums are flexible, and the Owner may choose the amount and frequency of
premium payments, so long as each premium payment is at least $100 and meets
certain other requirements.
The minimum amount of premium required at the time of Policy issue is
determined by JHVLICO based on the characteristics of the insured, the
Policy's Sum Insured at issue, and the Policy options selected by the Owner.
Unless the Guaranteed Minimum Death Benefit is in effect, if the Policy
Account Value at the beginning of any Policy month is insufficient to pay the
monthly Policy charges then due, JHVLICO will estimate the amount of
additional premiums necessary to keep the Policy in force for three months.
The Owner will have a 61 day grace period to pay at least that amount or the
Policy will lapse.
At the time of Policy issue, the Owner may designate the amount and
frequency of Planned Premium payments. The Owner may pay premiums other than
the Planned Premium payments, subject to certain limitations.
The Policy has a Guaranteed Minimum Death Benefit provision which guarantees
that the Basic Sum Insured will not lapse during the first ten Policy years if
(1) prescribed amounts of premiums have been paid, based on the
characteristics of the insured and the amount of the Basic Sum Insured at
issue and (2) any Additional Sum Insured is not scheduled to exceed the Basic
Sum Insured at any time. The Owner may at the time of application for the
Policy elect that this feature be extended beyond the first ten Policy years
at an additional charge.
WHAT IS JOHN HANCOCK VARIABLE LIFE ACCOUNT S?
The Account is a separate investment account of JHVLICO, operated as a unit
investment trust, which supports benefits payable under the Policies. There
are currently twelve variable Subaccounts within the Account. Each is invested
in a corresponding Portfolio of John Hancock Variable Series Trust I or of M
Fund, Inc., each of which is a "series" type of mutual fund. The Portfolios of
the Funds which are currently available are Stock, Select Stock, Bond, Money
Market, Managed, Real Estate Equity, International, Short-Term U.S.
Government, Special Opportunities, Edinburgh Overseas Equity, Turner Core
Growth and Frontier Capital Appreciation.
John Hancock receives a fee from John Hancock Variable Series Trust I for
providing investment management services with respect to the Stock, Bond and
Money Market Portfolios at an annual rate of .25% of the average daily net
assets; with respect to the Select Stock and Managed Portfolios, at an annual
rate of .40% of the first $500 million of the average daily net assets and at
lesser percentages for amounts above $500 million; with respect to the Short-
Term U.S. Government Portfolio, at an annual rate of .50% of the first $250
million of the average daily net assets and at lesser percentages for amounts
above $250 million; with respect to the Real Estate Equity Portfolio, at an
annual rate of .60% of the first $300 million of the average daily net assets
and at lesser percentages for amounts above $300 million; with respect to the
International 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; and with respect to the Special Opportunities Portfolio, at an
annual rate of .75% of the first $250 million of the average daily net assets
and at lesser percentages for amounts above $250 million.
2
<PAGE>
M Financial Investment Advisers, Inc., receives a fee from M Fund, Inc. for
providing investment management services with respect to the International
Equity Portfolio at an annual rate of 1.05% of the first $10 million of the
average daily net assets and at an annual rate of .90% of the next $15 million
of the average daily net assets and at lesser percentages for amounts above
$25 million; with respect to the Core Growth Portfolio at an annual rate of
.45% of the average daily net assets; and with respect to the Capital
Appreciation Portfolio at an annual rate of .90% of the average daily net
assets.
For a full description of the Funds, see the Prospectuses for the Funds
attached to this Prospectus.
WHAT ARE THE CHARGES MADE BY JHVLICO?
State Premium Tax Charge and Federal DAC Tax Charge. Charges deducted from
each premium payment, currently 2.35% for state premium taxes and 1.25% as a
Federal deferred acquisition cost or "DAC Tax" charge.
Sales Charge. A charge deducted from each premium payment in the amount of
9% of premiums paid in each of the first ten Policy years up to the "target
premium". No charge is deducted from premiums paid during the first 10 years
in excess of that target. The current sales charge in subsequent years
generally is 3% of premiums paid up to the target premium in each of years 11
through 20, and 0% thereafter. The current sales charge for premiums paid
during any Policy year in excess of one target premium after the tenth policy
year is zero. Subject to maximums set forth in the Policy, certain of these
charges may be increased.
Issue Charge. A charge deducted monthly from Account Value at the rate of
$12.50 per month for the first 3 Policy years, plus an amount set forth in the
Policy that varies by age per $1,000 of the Basic Sum Insured at issue for the
first 10 Policy years. For example, this additional monthly amount for a 45
year old is 17c per $1000 of Basic Sum Insured.
Administrative Charge. A charge deducted monthly from Account Value in an
amount equal to no more than $4 per Policy and 6c per $1,000 of the Basic Sum
Insured at issue (currently $2.50; plus 2c per $1,000 of the Basic Sum Insured
at issue.)
Insurance Charge. A charge based upon the amount for which JHVLICO is at
risk, considering the attained age and risk classification of the insured and
JHVLICO's then current monthly insurance rates (never to exceed rates set
forth in the Policy) deducted monthly from Account Value.
Guaranteed Minimum Death Benefit Charge. If the Guaranteed Minimum Death
Benefit option is elected beyond the first 10 Policy years, a maximum charge,
starting at the beginning of the eleventh Policy year not to exceed 2c
(currently 1c) per $1,000 of the Basic Sum Insured at issue, is deducted
monthly from Account Value.
Charge for Mortality and Expense Risks. A charge made daily at a maximum
effective annual rate of .40% of the assets of the Account. The current charge
is .20%.
Charge for Extra Mortality Risks. An additional charge, depending upon the
age of the insured and the degree of additional mortality risk, required if
the insured does not qualify for the standard underwriting class. This
additional charge is deducted monthly from Account Value.
Charge for Optional Rider Benefits. An additional charge required if the
Owner elects to purchase optional insurance benefits by rider. This additional
charge is deducted monthly from Account Value.
3
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Charge for Partial Withdrawal. A charge of $20 made against Account Value at
the time of withdrawal.
See "Charges and Expenses" for a full description of the charges under the
Policy.
IS THERE A CHARGE AGAINST THE ACCOUNT FOR FEDERAL INCOME TAX?
Currently no charge is made against any Subaccount for Federal income taxes;
but if JHVLICO 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. JHVLICO expects that it will continue to be taxed as a life
insurance company. See "Charge for JHVLICO's Taxes".
WHAT IS THE RELATIONSHIP BETWEEN THE PREMIUM AND THE AMOUNT ALLOCATED TO THE
SUBACCOUNTS?
The initial net premium is allocated by JHVLICO from its general account to
the Money Market Subaccount on the date of issue of the Policy. The initial
net premium is the gross Minimum First Premium, plus any additional amount of
premium that has been paid prior to the date of issue, less the charges
deducted for sales expenses, state premium taxes and the Federal DAC Tax
charge. These charges also apply to subsequent premium payments. Twenty days
after the date of issue, the amount in the Money Market Subaccount is
reallocated among the Subaccounts in accordance with the Owner's election. Net
premiums derived from payments received after this reallocation date are
allocated, generally on the date of receipt, to one or more of the Subaccounts
as elected by the Owner.
HOW ARE AMOUNTS ALLOCATED TO EACH SUBACCOUNT?
At issue and subsequently thereafter, the Owner will provide us with the
rule ("Investment Rule") we will follow to invest net premiums or other
amounts in any of the Subaccounts. The Owner may change the Investment Rule
under which JHVLICO will allocate amounts to Subaccounts. See "Premiums--
Billing, Allocation of Premium Payments (Investment Rule)".
WHAT COMMISSIONS ARE PAID TO AGENTS?
The Policies are sold through agents who are licensed by state authorities
to sell JHVLICO's insurance policies. Commissions payable to agents are
described under "Distribution of Policies". Sales expenses in any year are not
equal to the deduction for sales expenses in that year. Rather, total sales
expenses under the Policies are intended to be recovered over the lifetimes of
the insureds covered by the Policies.
WHAT IS THE DEATH BENEFIT?
The death benefit proceeds will equal the death benefit of the Policy, plus
any additional rider benefits included and then due, minus any Indebtedness.
The death benefit payable depends on the Policy's Sum Insured (the Sum Insured
is the Basic Sum Insured plus the amount of any Additional Sum Insured) and
the death benefit option selected by the Owner at the time the Policy is
issued, as follows:
OPTION A: The death benefit equals the Policy's current Sum Insured less
any withdrawals of Account Value that the Owner has made.
OPTION B: The death benefit is the Policy's current Sum Insured plus the
Policy Account Value on the date of death of the insured, and varies in
amount based on investment results.
OPTION M: The death benefit equals the Policy's current Sum Insured less
any withdrawals of Account Value that the Owner has made plus any Optional
Extra Death Benefit.
4
<PAGE>
The death benefit of the Policy under Options A, B, or M will be increased
if necessary to ensure that the Policy will continue to qualify as life
insurance under the Federal tax law. See "Death Benefits" and "Tax
Considerations".
Under the Guaranteed Minimum Death Benefit provision, the Policy is
guaranteed not to lapse during the first 10 Policy years, provided the amount
of premiums paid, accumulated at 4% interest, minus any withdrawals, also
accumulated at 4% interest, is at least equal to the Guaranteed Minimum Death
Benefit Premiums, accumulated at 4% interest. For an additional charge, the
Owner may elect this benefit to continue beyond the tenth Policy year.
However, the Guaranteed Minimum Death Benefit will not apply to any Policy if
the Additional Sum Insured is scheduled to exceed the Basic Sum Insured at any
time.
HOW DOES THE ACCOUNT VALUE OF A POLICY VARY IN RELATION TO THE SUBACCOUNTS'
INVESTMENT EXPERIENCE?
In general, the Account Value for any day equals the Account Value for the
previous day, increased by any net premium placed in the Subaccounts for the
Policy, decreased by any charges made against the Account Value, and increased
or decreased by the investment experience of the Subaccounts. No minimum
Account Value for the Policy is guaranteed.
WHAT IS THE LOAN PROVISION AND HOW DOES A LOAN AFFECT THE DEATH BENEFIT,
ACCOUNT VALUE AND SURRENDER VALUE?
The Owner may obtain a Policy loan in the maximum amount of 90% of the
Account Value. Interest charged on any loan will accrue daily at an annual
rate determined by JHVLICO at the start of each Policy year. This interest
rate will not exceed the greater of (1) the "Published Monthly Average" (see
"Loan Provision and Indebtedness") for the calendar month ending two months
before the calendar month of the Policy anniversary or (2) 5%. In
jurisdictions where a fixed loan rate is applicable, JHVLICO will charge
interest at an effective annual rate of 4.5% in the first 20 Policy years and
4.25% thereafter, accrued daily. A loan plus accrued interest ("Indebtedness")
may be repaid at the discretion of the Owner in whole or in part in accordance
with the terms of the Policy.
While a loan is outstanding, the rate of interest credited to the Account
Value because of the loan will usually be different than the net investment
experience of the Subaccounts. Therefore, the Account Value, the Surrender
Value and any death benefit above the current Sum Insured are permanently
affected by any loan.
IS THERE A SHORT-TERM CANCELLATION RIGHT?
The Owner may surrender a Policy by delivering or mailing it within 45 days
after the date Part A of the application has been completed, or within at
least 10 days after receipt of the Policy by the Owner, or within 10 days
after mailing by JHVLICO of a Notice of Withdrawal Right, whichever is latest,
to JHVLICO's Home Office, or to the agent or agency office through which it
was delivered. Coverage under the Policy will be cancelled immediately as of
the date of such mailing or delivery. Any premium paid on it will be refunded.
If required by state law, the refund will equal the Account Value at the end
of the Valuation Period in which the Policy is received plus all charges or
deductions made against premiums plus an amount reflecting charges against the
Subaccounts and the investment management fee of the Fund.
WHAT INVESTMENT TRANSFERS ARE ALLOWED AN OWNER?
The Owner may transfer the Account Value among the variable Subaccounts or
into the Fixed Account at any time. Transfers out of the Fixed Account,
however, are subject to restrictions.
5
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ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?
The benefits under Policies described in this Prospectus are expected to
receive the same tax treatment under the Internal Revenue Code of 1986 as
benefits under traditional fixed-benefit life insurance policies. Thus, death
benefits payable under the Policies will not be included in the beneficiary's
gross income. Also, the Owner is not taxed on interest and gains under the
Policy unless and until values are actually received through withdrawal,
surrender, or other distributions.
Under Federal tax law, distributions from Policies on which premiums greater
than a "7-pay" premium limit (as defined in the law) have been paid, will be
subject to special taxation. See "Premiums--7-Pay Premium Limit" and "Policy
Proceeds" for a discussion of how the "7-pay" premium limit may be exceeded
under a Policy. A distribution on such a Policy (called a "modified
endowment") will be taxed to the extent there is any income (gain) to the
Owner and an additional penalty tax may be imposed on the taxable amount.
JHVLICO AND JOHN HANCOCK
JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law, is authorized to transact a life insurance and annuity
business in Massachusetts and all other states, except New York. JHVLICO began
selling variable life insurance policies in 1980.
JHVLICO is a wholly-owned subsidiary of John Hancock, a company chartered in
Massachusetts in 1862. Its Home Office is at John Hancock Place, Boston,
Massachusetts 02117. As of December 31, 1994, John Hancock's assets were over
$45 billion and it had invested over $380 million in JHVLICO in connection
with JHVLICO's organization and operations. It is anticipated that John
Hancock will from time to time make additional capital contributions to
JHVLICO to enable it to meet its reserve requirements and expenses in
connection with its business, and John Hancock is committed to make additional
capital contributions if necessary to ensure that JHVLICO maintains a positive
net worth.
THE ACCOUNT AND THE SERIES FUNDS
THE ACCOUNT
The Account, a separate account established under Massachusetts law, meets
the definition of "separate account" under the Federal securities laws and is
registered as a unit investment trust under the Investment Company Act of 1940
("1940 Act").
The Account's assets are the property of JHVLICO. 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 JHVLICO may conduct. In addition to the assets
attributable to variable life policies, the Account's assets include assets
derived from charges made by JHVLICO. From time to time these additional
assets may be transferred in cash by JHVLICO to its general account. Before
making any such transfer, JHVLICO will consider any possible adverse impact
the transfer might have on any Subaccount. Additional premiums are charged for
Policies where the insured is classified as a substandard risk and a portion
of these premiums is allocated to the Account.
The Account is registered with the Securities and Exchange Commission (the
"Commission") under the 1940 Act. Such registration does not involve
supervision by the Commission of the management or policies of the Account,
JHVLICO or John Hancock.
6
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The assets in each variable Subaccount are invested in corresponding
Portfolios of the Funds, but the assets of one variable Subaccount are not
necessarily legally insulated from liabilities associated with another
variable Subaccount. New variable Subaccounts may be added or existing
variable Subaccounts may be deleted as new Portfolios are added to or deleted
from the Funds and made available to Owners.
THE SERIES FUNDS
Each Fund is a "series" type of mutual fund registered with the Commission
under the 1940 Act as an open-end diversified management investment company.
Each Fund serves as the investment medium for the Account and other unit
investment trust separate accounts established for other variable life
insurance policies and variable annuity contracts. (See the attached Fund
Prospectuses for a description of a need to monitor for possible conflicts and
other consequences.) A very brief summary of the investment objectives of each
Portfolio is set forth below.
Stock Portfolio. The investment objective of this Portfolio is to achieve
intermediate and long-term growth of capital, with income as a secondary
consideration. This objective will be pursued by investments principally in
common stocks (and in securities convertible into or with rights to purchase
common stocks) of companies believed by management to offer growth potential
over both the intermediate and long-term.
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.
Bond Portfolio. The investment objective of this Portfolio is to provide as
high a level of long-term total rate of return as is consistent with prudent
investment risk, through investment in a diversified portfolio of freely
marketable debt securities. Total rate of return consists of current income,
including interest and discount accruals, and capital appreciation.
Money Market Portfolio. The investment objective of this Portfolio is to
provide maximum current income consistent with capital preservation and
liquidity. It seeks to achieve this objective by investing in a managed
portfolio of high quality money market instruments.
Managed Portfolio. The investment objective of this Portfolio is to achieve
maximum long-term total return consistent with prudent investment risk.
Investments will be made in common stocks, convertibles and other fixed income
securities and in money market instruments.
Real Estate Equity Portfolio. The investment objective of this Portfolio is
to provide above-average income and long-term growth of capital by investment
principally in equity securities of companies in the real estate and related
industries.
International Portfolio. The investment objective of this Portfolio is to
achieve long-term growth of capital by investing primarily in foreign equity
securities.
Special Opportunities Portfolio. The investment objective of this Portfolio
is to achieve long-term capital appreciation by emphasizing investments in
equity securities of issuers in various economic sectors.
Short-Term U.S. Government Portfolio. The investment objective of this
Portfolio is to provide a high level of current income consistent with the
maintenance of principal, through investment in a portfolio of short-term U.S.
Treasury securities and U.S. Government agency securities.
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John Hancock acts as the investment manager for the above Portfolios, and
John Hancock's indirectly owned subsidiary, Independence Investment
Associates, Inc., with its principal place of business at 53 State Street,
Boston, Massachusetts, provides sub-investment advice with respect to the
Stock, Select Stock, Managed, Real Estate Equity and Short-Term U.S.
Government Portfolios. Another indirectly owned subsidiary, John Hancock
Advisers, Inc., located at 101 Huntington Avenue, Boston, Massachusetts, and
its subsidiary, John Hancock Advisers International, Limited, located at 34
Dover Street, London, England, provide sub-investment advice with respect to
the International Portfolio, and John Hancock Advisers, Inc. does likewise
with respect to the Bond and Special Opportunities Portfolios.
Edinburgh Overseas Equity Portfolio. Its investment objective is long-term
capital appreciation with reasonable investment risk through active management
and investment in common stock and common stock equivalents of foreign
issuers. Current income, if any, is incidental.
Turner Core Growth Portfolio. The investment objective of this Portfolio is
long-term capital appreciation through a diversified portfolio of common stocks
that show strong earnings potential with reasonable market prices.
Frontier Capital Appreciation Portfolio. This Portfolio seeks maximum
capital appreciation through investment in common stock of companies of all
sizes, with emphasis on stocks of small- to-medium-capitalization companies.
Importance is placed on an evaluation of earnings per share growth and
expectations of stock price appreciation, rather than income.
M Financial Investment Advisers, Inc., acts as the investment manager for
the three Portfolios of M Fund, Inc. described above. Edinburgh Fund Managers
PLC, North America provides sub-investment advice to the Edinburgh Overseas
Equity Portfolio; Turner Investment Partners, Inc. provides sub-investment
advice to the Turner Core Growth Portfolio; and Frontier Capital Management
Company, Inc., provides sub-investment advice to the Frontier Capital
Appreciation Portfolio.
JHVLICO 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 which corresponds to a variable
Subaccount of the Account. Any dividend or capital gains distributions
received by the Account will be reinvested in Fund shares at their net asset
value as of the dates paid.
On each Valuation Date, shares of each Portfolio are purchased or redeemed
by JHVLICO for each variable Subaccount based on, among other things, the
amount of net premiums allocated to the variable Subaccount, distributions
reinvested, transfers to, from and among variable Subaccounts, all to be
effected as of that date. Such purchases and redemptions are effected at the
net asset value per Fund share for each Portfolio determined on that same
Valuation Date. A Valuation Date is any date on which JHVLICO is open for
business, the New York Stock Exchange is open for trading and on which the
Fund values its shares. A Valuation Period is that period of time from the
beginning of the day following a Valuation Date to the end of the next
following Valuation Date.
A full description of each Fund, its investment objectives, policies and
restrictions, its charges, expenses and all other aspects of its operation is
contained in the attached Prospectuses and the statement of additional
information referred to therein, which should be read together with this
Prospectus.
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THE FIXED ACCOUNT
An Owner may allocate premiums to the Fixed Account or transfer all or a
part of the Account Value under a Policy to the Fixed Account. The amount so
allocated or transferred will become a part of JHVLICO's general account
assets. JHVLICO's general account consists of assets owned by JHVLICO other
than those in the Account and in other separate accounts that have been or may
be established by JHVLICO. Subject to applicable law, JHVLICO has sole
discretion over the investment of assets of the general account, and Owners do
not share in the investment experience of those assets. Instead, JHVLICO
guarantees that the Account Value allocated to the Fixed Account will accrue
interest daily at an effective annual rate of at least 4% without regard to
the actual investment experience of the general account. Transfers from the
Fixed Account are subject to certain limitations. See "Transfers Among
Subaccounts".
The Account Value in the Fixed Account is equal to the portion of the net
premiums allocated to it, plus any amounts transferred to it and interest
credited to it, minus any charges deducted from it or partial withdrawals or
amounts transferred from it. JHVLICO guarantees that interest credited to the
Account Value in the Fixed Account will not be less than an effective annual
rate of 4%. JHVLICO may, in its sole discretion, credit higher rates although
it is not obligated to do so. The Owner assumes the risk that interest
credited will not exceed 4% per year. Upon request and in the annual
statement, JHVLICO will inform Owners of the then-applicable rates. The rate
of interest declared with respect to any amount in the Fixed Account may
depend on when that amount was first allocated to the Fixed Account.
Because of exemptive and exclusionary provisions, interests in JHVLICO's
general account have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein
are subject to the provisions of these Acts, and JHVLICO has been advised that
the staff of the Securities and Exchange Commission has not reviewed the
disclosure in this Prospectus relating to the Fixed Account. Disclosure
regarding the Fixed Account may, however, be subject to certain generally-
applicable provisions of the Federal securities laws relating to accuracy and
completeness of statements made in prospectuses.
POLICY PROVISIONS AND BENEFITS
REQUIREMENTS FOR ISSUANCE OF POLICY
The Policy is generally available with a minimum Sum Insured at issue of
$100,000 and a minimum Basic Sum Insured of $50,000. At the time of issue, the
insured must be age 20 through 85. All persons insured must meet certain
health and other criteria called "underwriting standards". The smoking status
of the insured is reflected in the insurance charges made. Policies issued in
certain jurisdictions or in connection with certain employee benefit plans
will not directly reflect the sex of the insured in either the premium rates
or the charges or values under the Policy. Accordingly, the illustrations set
forth in this Prospectus may differ for such Policies. Amounts of coverage
that JHVLICO will accept under the Policies may be limited by JHVLICO's
underwriting and reinsurance procedures as in effect from time to time.
PREMIUMS
Payment Flexibility. Premiums are flexible. The Owner may choose the amount
and frequency of premium payments, so long as each premium payment is at least
$100 and meets the other requirements described below.
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Minimum First Premium. The amount of premium required at the time of issue
is determined by JHVLICO, and depends on the age, sex, smoking status, and
underwriting class of the insured at issue, the Policy's Sum Insured at issue,
and any additional benefits selected. The Minimum First Premium must be
received by JHVLICO at its Home Office before the Policy is in full force and
effect. See "Death Benefits". There is no grace period for the payment of the
Minimum First Premium.
Minimum Premiums. If the Policy's Surrender Value at the beginning of any
Policy month is insufficient to pay the monthly Policy charges then due,
JHVLICO will notify the Owner and the Policy will enter a grace period, unless
the Guaranteed Minimum Death Benefit is in effect. If premiums sufficient to
pay at least three months' estimated charges are not paid by the end of the
grace period, the Policy will lapse. See "Default".
Planned Premium Schedule. At the time of issue, the Owner may designate a
Planned Premium schedule for the amount and frequency of premium payments.
JHVLICO will send billing statements for the amount chosen at the frequency
chosen. The Owner may change the Planned Premium after issue. The Owner may
also pay a premium in excess of the Planned Premium, subject to the
limitations described below. At the time of Policy issuance, JHVLICO will
determine whether the Planned Premium schedule will exceed the 7-Pay limit
discussed below. If so, JHVLICO will not issue the Policy unless the Owner
signs a form acknowledging that fact.
Other Premium Limitations. Federal tax law requires a minimum death benefit
in relation to Account Value. See "Death Benefits--Definition of Life
Insurance". The death benefit of the Policy will be increased if necessary to
ensure that the Policy will continue to satisfy this requirement. Also, as
described under "Death Benefits--Optional Extra Death Benefit Feature," the
Optional Extra Death Benefit feature may result in a death benefit under
Option M that is higher than the Sum Insured. If the payment of a given
premium will cause the Policy Account Value to increase to such an extent that
an increase in death benefit is necessary to satisfy federal tax law
requirements, or pursuant to the Optional Extra Death Benefit, JHVLICO has the
right to not accept the excess portion of that premium payment, or to require
evidence of insurability before that portion is accepted. In no event,
however, will JHVLICO refuse to accept any premium necessary to maintain the
Guaranteed Minimum Death Benefit in effect under a Policy.
Whether or not the Guaranteed Minimum Death Benefit is in effect, JHVLICO
also reserves the right to limit premium payments above the amount of the
cumulative Guaranteed Minimum Death Benefit premiums. JHVLICO will not,
however, refuse to accept any premium payment that is required to keep the
Policy from lapsing.
Guaranteed Minimum Death Benefit Premiums. A Guaranteed Minimum Death
Benefit feature may apply during the first ten Policy years and, if the Owner
has elected, thereafter. See "Death Benefits". The Guaranteed Minimum Death
Benefit Premiums required to maintain this benefit in force depend on the
issue age, sex, smoking status, and underwriting class of the insured at issue
and the Basic Sum Insured at issue. This premium is 50% of the target premium
(discussed under "Sales Charge"). To keep the Guaranteed Minimum Death Benefit
in effect, the amount of actual premiums paid, accumulated at 4% interest,
minus any withdrawals, also accumulated at 4% interest, must at the beginning
of each Policy month be at least equal to the Guaranteed Minimum Death Benefit
Premiums due to date accumulated at 4% interest. If this test is not satisfied
at the beginning of any Policy month, JHVLICO will notify the Owner of the
shortfall and the amount of the shortfall must be paid within a period which
ends at the start of the third Policy month that begins after the date of
default. This notice will be mailed to the Owner's last-known address at least
31 days prior to the end of the grace period. If JHVLICO does not receive
payment for the amount of the deficiency by the end of the grace period, the
Guaranteed Minimum Death Benefit feature will lapse unless and until restored
as described under "Default--Reinstatement". The Guaranteed Minimum Death
Benefit will not apply if the Additional Sum Insured is scheduled to exceed
the Basic Sum Insured at any time.
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Billing, Allocation of Premium Payments (Investment Rule). The Owner may at
any time elect to be billed by JHVLICO for an amount of premium other than the
Guaranteed Minimum Death Benefit Premium. The Owner may also elect to be
billed for premiums on an annual, semi-annual, quarterly or monthly basis. All
premiums are payable at JHVLICO's Home Office.
Any premium payment will be processed by JHVLICO as of the end of the
Valuation Period in which it is received, unless one of the three exceptions
noted below is applicable. Each premium payment will be reduced by the state
premium tax charge, any applicable sales charge, and the Federal DAC Tax
charge. See "Charges and Expenses". The remainder is the net premium.
The Owner at the time of application must elect an Investment Rule which
will allocate net premiums and any credits to any of the ten Subaccounts. The
Owner must select allocation percentages in whole numbers, and the total
allocated must equal 100%. The Owner may thereafter change the Investment Rule
prospectively at any time. The change will be effective as to any net premiums
and credits applied after receipt at JHVLICO's Home Office of notice
satisfactory to JHVLICO. Notwithstanding the Investment Rule, all net premiums
credited to Account Value as of a date prior to the end of the Valuation
Period that includes the 20th day following the date of issue will
automatically be allocated to the Money Market Subaccount. At the end of that
Valuation Period, the Policy's Account Value will be reallocated automatically
among the Subaccounts in accordance with the Investment Rule chosen by the
Owner.
There are three exceptions to the normal practice of processing a premium
payment as of the end of the Valuation Period in which it is received:
(1) A payment received prior to a Policy's date of issue will be
processed as if received on the Valuation Date immediately
preceding the date of issue.
(2) If the Minimum First Premium is not received prior to the date of
issue, each payment received thereafter will be processed as if
received on the Valuation Date immediately preceding the date of
issue until all of the Minimum First Premium is received.
(3) That portion of any premium that we delay accepting as described
under "Other Premium Limitations" above, or "7-Pay Premium Limit"
below, will be processed as of the end of the Valuation Period in
which we accept that amount.
7-Pay Premium Limit. Federal tax law modifies the tax treatment of certain
Policy distributions such as loans, surrenders, partial surrenders, and
withdrawals. The application of this modified treatment to any Owner depends
upon whether premiums have been paid at any time during the first 7 Policy
years that exceed a "7-pay" premium limit as defined in the law. The "7-pay"
premium is greater than the Guaranteed Minimum Death Benefit Premium . The 7-
pay limit is the total of net level premiums that would have been payable at
any time for the Policy to be fully paid-up after the payment of 7 level
annual premiums. If the total premiums paid exceed the 7-pay limit, the Policy
will be treated as a "modified endowment", which means that the Owner will be
subject to tax to the extent of any income (gain) on any distributions made
from the Policy. A material change in the Policy will result in a new 7-pay
limit and test period. A reduction in the Policy's benefits within the 7-year
period following issuance of, or a material change in, the Policy may also
result in the application of the modified endowment treatment. See "Policy
Proceeds" under "Tax Considerations". If JHVLICO receives any premium payment
that will cause a Policy to become a modified endowment, the excess portion of
that premium payment will not be accepted unless the Owner signs an
acknowledgment of that fact. When it identifies such an excess premium,
JHVLICO sends the Owner immediate notice and refunds the excess premium if it
has not received notice of the acknowledgment by the time the premium payment
has had a reasonable time to clear the banking system, but in no case longer
than two weeks.
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ACCOUNT VALUE AND SURRENDER VALUE
Amount of Account Value. The Account Value increases or decreases depending
upon a number of factors, such as the applicable Subaccount's investment
experience, the proportion of the Account Value invested in each Subaccount
and the interest credited to any Loan Account established upon the making of a
Policy loan. In general the Account Value for any day equals the Account Value
for the previous day, decreased by charges against the Account Value,
increased or decreased by the investment experience of the Subaccounts and
increased by net premiums received. No minimum amount of Account Value is
guaranteed.
A Policy loan will not affect the total amount of Account Value at the time
the loan is made but will result in a different rate of return being credited
to the Loan Account portion of the Account Value.
Amount of Surrender Value. The Surrender Value will be the Account Value
less any Indebtedness. If a Policy is surrendered at any time during the first
3 Policy years, any sales charge deducted within 365 days prior to the date
JHVLICO receives the surrender request will be refunded to the Owner.
When Policy May Be Surrendered. A Policy may be surrendered for its
Surrender Value at any time while the insured is living and the Policy is not
in a grace period. Surrender takes effect and the Surrender Value is
determined as of the end of the Valuation Period in which occurs the later of
receipt at JHVLICO's Home Office of a signed request or the surrendered
Policy.
Partial Withdrawal of Surrender Value. The Owner may request withdrawal of
part of the Surrender Value in accordance with JHVLICO's rules then in effect.
Any withdrawal must be at least $1,000 and is subject to an administrative
charge of $20.
An Owner may request a partial withdrawal of Surrender Value at any time
while the insured is living, provided that the Policy is not in a grace
period. This privilege, which reduces the Account Value by the amount of the
withdrawal and the associated charge, may not be used to reduce the Account
Value below the amount JHVLICO estimates will be required to pay three months'
charges under the Policy as they fall due. The withdrawal will be effective as
of the end of the Valuation Period in which JHVLICO receives written notice
satisfactory to it at its Home Office.
A withdrawal will reduce any Option A or M Sum Insured by the amount
withdrawn. JHVLICO reserves the right to refuse any withdrawal request that
would cause the Policy's Sum Insured to fall below $100,000.
An amount equal to the Account Value withdrawn will be removed from each
Subaccount in the same proportion as the Account Value is then allocated among
the Subaccounts. A withdrawal is not a loan and, once made, cannot be repaid.
A surrender or withdrawal may have significant tax consequences. See "Tax
Considerations".
DEATH BENEFITS
The death benefit proceeds are payable when the insured dies while the
Policy is in effect. The death benefit proceeds will equal the death benefit
of the Policy, plus any additional rider benefits then due, minus any
Indebtedness. If the insured dies during a grace period, JHVLICO will also
deduct any overdue monthly deductions.
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The death benefit payable depends on the current Sum Insured and the death
benefit option selected by the Owner at the time the Policy is issued, as
follows:
OPTION A: The death benefit equals the current Sum Insured, subject to
any increases described below under "Definition of Life Insurance", and
reduced by the amount of any partial withdrawals that have been made over
the life of the Policy.
OPTION B: The death benefit is the current Sum Insured, plus the Policy
Account Value at the end of the Valuation Period in which the insured dies.
This death benefit is a varying amount and fluctuates with the amount of
the Account Value. This death benefit is also subject to any increase
described below under "Definition of Life Insurance".
OPTION M: The death benefit is the current Sum Insured, subject to any
increases described below under "Optional Extra Death Benefit Feature" and
"Definition of Life Insurance" and reduced by the amount of any partial
withdrawals that have been made over the life of the Policy.
The Sum Insured is the Basic Sum Insured, plus the amount of any Additional
Sum Insured (discussed below).
Owners who prefer to have favorable investment experience reflected in
increased insurance coverage should choose Option B or M. As between the two,
the anticipated increase in insurance coverage is likely to occur later under
Option M. Owners who prefer to have insurance coverage that generally does not
vary in amount and lower cost of insurance charges should choose Option A.
Optional Extra Death Benefit Feature. Pursuant to this feature the death
benefit under Option M will be no less than the amount of the Policy Account
Value, plus any refund of sales charges, multiplied by a factor specified in
the Policy. The factor is based on the insured's age. The optional Extra Death
Benefit feature may result in an Option M death benefit that is higher than
the minimum death benefit required under Federal tax law, as described below
under "Definition of Life Insurance." Although there is no special charge for
the optional Extra Death Benefit, the monthly cost of insurance deductions
will be based on the amount of death benefit then in effect, including any
additional death benefit pursuant to this option. An election of this option
must be made at the time of application for the Policy.
Definition of Life Insurance. Federal tax law requires a minimum death
benefit in relation to cash value for a Policy to qualify as life insurance.
The death benefit of a Policy will be increased if necessary to ensure that
the Policy will continue to qualify as life insurance. The higher death
benefit amount will be equal to the Policy Account Value on the date of death
of the insured, plus any refund of sales charges, times a percentage based on
the insured's age at the beginning of the Policy year of the insured's death.
This percentage, which declines with age, is set out in the Policy. The
monthly deductions for the cost of insurance will be based on the amount of
death benefit then in effect, including any additional death benefit required
to satisfy the definition of life insurance.
Guaranteed Minimum Death Benefit. During the first 10 Policy years (and
thereafter if the Owner elects) the Basic Sum Insured is guaranteed not to
lapse, provided that (1) the amount of premiums paid through each Policy
anniversary, accumulated at 4% interest, minus any withdrawals, also
accumulated at 4% interest, is at least equal to the Guaranteed Minimum Death
Benefit Premiums accumulated at 4% interest and (2) any Additional Sum Insured
under a Policy is not scheduled to exceed the Basic Sum Insured at any time.
This feature is not available if Option B has been selected. At any time when
this feature is not in force, the death benefit of the Policy is not
guaranteed. The election to extend the Guaranteed Minimum Death Benefit beyond
ten Policy years must be made at the time of Policy issuance. The Owner may
revoke the election at any time. JHVLICO imposes a charge after the tenth
Policy year if the Owner elects to extend this Benefit.
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Additional Sum Insured. The Owner may apply for an amount of Additional Sum
Insured under the Policy, pursuant to which an additional amount of death
benefit will be paid upon the death of the insured under the Policy.
Purchasers of a Policy should consider various factors in determining whether
to elect coverage in the form of Basic Sum Insured or in the form of
Additional Sum Insured.
The Basic Sum Insured generally cannot be increased or decreased after
issue, whereas the amount of Additional Sum Insured can be decreased, or, upon
application and submission of evidence of insurability, increased subsequent
to Policy issuance. JHVLICO may refuse to accept any request to reduce the
Additional Sum Insured (a) that would cause the Policy's current Sum Insured
to fall below $100,000 or (b) if immediately following the reduction, the
Policy's current death benefit would reflect an increase necessary for the
Policy to continue to qualify as life insurance (see "Death Benefits--
Definition of Life Insurance") or an increase pursuant to the optional Extra
Death Benefit feature. Any increase or decrease in Additional Sum Insured will
become effective at the beginning of the first Policy month after JHVLICO
receives in good order at its Home Office all information necessary to process
the change, and, in the case of an increase in coverage, approves the change.
Any decision by the Owner to modify the amount of Additional Sum Insured
coverage after issue can have significant tax consequences. See "Tax
Considerations--Policy Proceeds".
Also, the Owner may elect among several forms of Additional Sum Insured
coverage at the time the Owner applies for it: a level amount of coverage; an
amount of coverage that increases on each Policy anniversary up to a
prescribed limit; an amount of coverage that increases on each Policy
anniversary to the amount of premiums paid during prior years plus the Planned
Premium for the current year, subject to certain limits; or a combination of
those forms of coverage.
The amount of target premium under a Policy is not affected by the amount of
the Additional Sum Insured. Accordingly, the amount of sales charge paid by
the Owner and the amount of compensation paid to the selling insurance agent
may be less if coverage is included as Additional Sum Insured, rather than as
Basic Sum Insured.
The amount of any Additional Sum Insured is not included in any Guaranteed
Minimum Death Benefit. Therefore, if the Policy's Account Value is
insufficient to pay the monthly charges as they fall due (including the
charges for the Additional Sum Insured) the Additional Sum Insured coverage
will lapse, even if the Basic Sum Insured stays in effect pursuant to the
Guaranteed Minimum Death Benefit feature.
The Additional Sum Insured at issue is limited to 400% of the Basic Sum
Insured. Generally, an Owner will incur lower sales charges and have more
flexible coverage with respect to the Additional Sum Insured than with respect
to the Basic Sum Insured. On the other hand, for Owners that wish to take
advantage of the Guaranteed Mimimum Death Benefit, the proportion of the
Policy's Sum Insured that is guaranteed can be increased by taking out more
coverage as Basic Sum Insured at the time of Policy issue. The Guaranteed
Minimum Death Benefit does not apply to either the Basic Sum Insured or any
Additional Sum Insured if the Additional Sum Insured is scheduled to exceed
the Basic Sum Insured at any time. In such a case, it could be to the Owner's
advantage either to increase the amount of coverage applied for as Basic Sum
Insured in order that the Guaranteed Minimum Death Benefit will be available
or, if such guarantee is not of value to the Owner, to maximize the proportion
of the Additional Sum Insured.
Temporary Coverage Prior to Policy Delivery. If a specified amount of
premium is paid with the application for a Policy, temporary term coverage may
be available prior to the time that coverage under the Policy takes effect.
Temporary term coverage is subject to the terms and conditions described in
the application for a Policy.
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TRANSFERS AMONG SUBACCOUNTS
The Owner may reallocate the amounts held for the Policy in the Subaccounts
with no charge at any time, except as noted below. The Owner may either (1)
use percentages (in whole numbers) to be transferred among Subaccounts or (2)
designate the dollar amount of funds to be transferred among Subaccounts. The
reallocation must be such that the total in the Subaccounts after reallocation
equals 100% of Account Value. Transfers out of a variable Subaccount will be
effective at the end of the Valuation Period in which JHVLICO receives at its
Home Office notice satisfactory to JHVLICO.
Transfers out of the Fixed Account to the variable Subaccounts are permitted
only once each Policy year and only during the 31-day period beginning on the
Policy anniversary. Transfers out of the Fixed Account may be requested from
60 days before to 30 days after the Policy anniversary. If received on or
before the Policy anniversary, requests for transfer out of the Fixed Account
will be processed on the Policy anniversary (or the next Valuation Date if the
Policy anniversary does not occur on a Valuation Date); if received after the
Policy anniversary, they will be processed at the end of the Valuation Period
in which JHVLICO receives the request at its Home Office. (JHVLICO reserves
the right to defer such Fixed Account transfers for six months.) If an Owner
requests a transfer out of the Fixed Account 61 days or more prior to the
Policy anniversary, that portion of the reallocation will not be processed and
the Owner's confirmation statement will not reflect a transfer out of the
Fixed Account as to such request. Transfers among variable Subaccounts and
transfers into the Fixed Account may be requested at any time. A maximum of
20% of Fixed Account assets or, if greater, $500 may be transferred out of the
Fixed Account in any Policy year. Currently, there is no minimum amount limit
on transfers out of the Fixed Account, but JHVLICO reserves the right to
impose such a limit in the future.
No transfers may be made while the Policy is in a grace period.
Telephone Transfers and Policy Loans. Once a written authorization is
completed by the Owner, the Owner may request a transfer or policy loan by
telephoning 1-800-732-5543. During periods of heavy telephone usage,
implementing a telephone transfer or policy loan may be difficult. If an Owner
is unable to reach JHVLICO via the above number, the Owner should send a
written request via fax to 1-800-621-0448. (Any requests via fax are
considered telephone requests and are bound by the conditions in the Owner's
signed telephone authorization form.) Any fax request should include the
Owner's name, daytime telephone number, Policy number and, in the case of
transfers, the names of the subaccounts from which and to which money will be
transferred. The right to discontinue telephone transactions at any time
without notice to Owners is specifically reserved.
An Owner who authorizes telephone transactions will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which JHVLICO reasonably believes to be genuine, unless such
loss, expense or cost is the result of JHVLICO's mistake or negligence.
JHVLICO employs procedures which provide adequate safeguards against the
execution of unauthorized transactions, and which are reasonably designed to
confirm that instructions received by telephone are genuine. These procedures
include requiring personal identification, tape recording calls, and providing
written confirmation to the Owner. If JHVLICO does not employ reasonable
procedures to confirm that instructions communicated by telephone are genuine,
it may be liable for any loss due to unauthorized or fraudulent instructions.
LOAN PROVISIONS AND INDEBTEDNESS
Loan Provisions. Loans may be made at any time a Loan Value is available,
the insured is alive and the Policy is not in a grace period. The Owner may
borrow money, assigning the Policy as the only security for the loan, by
completion of a form satisfactory to JHVLICO or, if the telephone transaction
authorization form has
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been completed by telephone. The Loan Value will be 90% of the Account Value.
Interest charged on any loan will accrue and compound daily at an annual rate
determined by JHVLICO at the start of each Policy Year. This interest rate
will not exceed the greater of (1) the "Published Monthly Average" (defined
below) for the calendar month ending 2 months before the calendar month of the
Policy anniversary or (2) 5%. In jurisdictions where a fixed loan rate is
applicable, JHVLICO will charge interest at an effective annual rate of 4.5%
in the first 20 Policy years, and 4.25% thereafter, accrued daily. The
"Published Monthly Average" means Moody's Corporate Bond Yield Average-Monthly
Average Corporates, as published by Moody's Investors Service, Inc., or if the
average is no longer published, a substantially similar average established by
the insurance regulator where the Policy is issued.
The amount of any outstanding loan plus accrued interest is called the
"Indebtedness". The amount of the loan available will be the Loan Value less
any existing Indebtedness. A loan will not be permitted unless it is at least
$1,000. A loan may be repaid in full or in part at any time before the
insured's death and while the Policy is not in a grace period. When a loan is
made, an amount equal to the loan proceeds will be transferred out of the
Account and the Fixed Account, as applicable. This amount is allocated to the
Loan Account, a portion of JHVLICO's general account. Each Subaccount will be
reduced in the same proportion as the Account Value is then allocated among
the Subaccounts. Upon each loan repayment, the same proportionate amount of
the entire loan as was borrowed from the Fixed Account will be repaid to the
Fixed Account. The remainder of the loan repayment will be allocated to the
appropriate Subaccounts as stipulated in the current Investment Rule. For
example, if the entire loan outstanding is $3000 of which $1000 was borrowed
from the Fixed Account, then upon a repayment of $1500, $500 would be
allocated to the Fixed Account and the remaining $1000 would be allocated to
the appropriate Subaccounts as stipulated in the current Investment Rule. If
an Owner wishes any payment to constitute a loan repayment (rather than a
premium payment), the Owner must so specify.
Effect of Loan and Indebtedness. While the Indebtedness is outstanding, that
portion of the Account Value that is in the Loan Account is credited with
interest at a rate that is .5% less than the loan interest rate for the first
20 Policy years and, thereafter, .25% less than the loan interest rate. This
rate will usually be different than the net return for the Subaccounts. Since
the Loan Account and the remaining portion of the Account Value will generally
have different rates of investment return, any death benefit above the Sum
Insured, the Account Value, and the Surrender Value are permanently affected
by any Indebtedness, whether or not repaid in whole or in part. The amount of
any Indebtedness is subtracted from the amount otherwise payable when the
Policy proceeds become payable.
Whenever the Indebtedness equals or exceeds 90% of the Account Value, the
Policy terminates 31 days after notice has been mailed by JHVLICO to the Owner
and any assignee of record at their last known addresses, unless a repayment
of the excess Indebtedness is made within that period.
Tax Considerations. If the Policy is a modified endowment at the time a loan
is made, that loan may have significant tax consequences. See "Tax
Considerations". Interest is not tax deductible on any loan under a Policy
covering the life of any officer or employee or person financially interested
in the business of an Owner that is not a natural person, to the extent all
policy loans on life insurance contracts covering such individual exceed
$50,000.
DEFAULT
Premium Grace Period, Default and Lapse. Unless the Guaranteed Minimum Death
Benefit is in force, at the beginning of each Policy month JHVLICO determines
whether the Account Value, net of any Indebtedness, is sufficient to pay all
monthly charges then due under the Policy. If not, the Policy is in default
and JHVLICO
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<PAGE>
will notify the Owner of the amount estimated to be necessary to pay three
months' deductions, and a grace period will be in effect until 61 days after
the date the notice was mailed. If JHVLICO does not receive payment of at
least this amount by the end of the grace period, the Policy will lapse, and
any remaining amount owed to the Owner as of the date of lapse will be paid to
the Owner.
If the Guaranteed Minimum Death Benefit is in effect and the Policy provides
for an Additional Sum Insured, the grace period and lapse procedures set forth
in the preceding paragraph will apply only to the Additional Sum Insured.
Lapse of the Additional Sum Insured can have significant tax consequences. See
"Tax Considerations--Policy Proceeds". If the Guaranteed Minimum Death Benefit
has been in effect and lapses at the end of a grace period (as described in
"Premiums--Guaranteed Minimum Death Benefit Premiums"), the usual default,
grace period and lapse procedures described in the preceding paragraph will be
applied commencing with the first day of the first Policy month following the
lapse of the Guaranteed Minimum Death Benefit.
The insurance under the Policy continues in full force during any grace
period but, if the insured dies during the grace period, the amount in default
is deducted from the death benefit otherwise payable.
Written notice will be furnished to the Owner at his or her last known
address, at least 31 days prior to the end of any grace period, specifying the
minimum amount which must be paid to continue the Policy in force on a premium
paying basis after the end of the grace period.
Reinstatement. A lapsed Policy (or a lapsed Additional Sum Insured, if the
Basic Sum Insured remains in force or is reinstated) or the Guaranteed Minimum
Death Benefit may be reinstated in accordance with the Policy's terms.
Evidence of insurability satisfactory to JHVLICO will be required (except as
to a request to restore the Guaranteed Minimum Death Benefit within 1 year
after the beginning of its grace period) and payment of the required premium
and charges. The request must be received at JHVLICO's Home Office within 1
year after the beginning of the grace period (or 5 years if the request
relates only to the Guaranteed Minimum Death Benefit). JHVLICO reserves the
right to refuse Guaranteed Minimum Death Benefit restorations after the first
restoration. A reinstatement of the Basic Sum Insured or the Additional Sum
Insured may be treated as a material change for Federal income tax purposes.
See "Premiums--7-Pay Premium Limit" and "Tax Considerations".
EXCHANGE PRIVILEGE
The Owner may transfer the entire Account Value under the Policy to the
Fixed Account at any time, creating a non-variable policy. The exchange will
be effective at the end of the Valuation Period in which JHVLICO receives at
its Home Office notice of the transfer satisfactory to JHVLICO.
----------------
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.
CHARGES AND EXPENSES
CHARGES DEDUCTED FROM PREMIUMS
In addition to the sales charge (see "Sales Charge" below), the following
charges are deducted from premiums:
State Premium Tax Charge. A charge currently equal to 2.35% of each premium
payment will be deducted from each premium payment. Premium taxes vary from
state to state, ranging from zero to 4% currently. A charge of 2.35% is made,
regardless of the premium tax imposed by any state. The 2.35% rate is the
average rate currently expected to be paid on premiums received in all states
over the lifetimes of the insureds covered by the Policies. JHVLICO will not
increase this charge under outstanding Policies, but reserves the right to
change this charge for Policies not yet issued in order to correspond with
changes in the state premium tax levels.
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<PAGE>
Federal DAC Tax Charge. A charge currently equal to 1.25% of each premium
payment will be deducted from each premium payment to cover the estimated cost
to JHVLICO of the Federal income tax treatment of the Policies' deferred
acquisition costs--commonly referred to as the "DAC Tax". JHVLICO has
determined that this charge is reasonable in relation to JHVLICO's increased
Federal income tax burden under the Internal Revenue Code resulting from the
receipt of premiums. JHVLICO will not increase this charge under outstanding
Policies, but reserves the right, subject to any required regulatory approval,
to change this charge for Policies not yet issued in order to correspond with
changes in the Federal income tax treatment of the Policies' deferred
acquisition costs.
SALES CHARGE
A charge is made to compensate JHVLICO for the cost of selling the Policy.
This cost includes agents' commissions, commission overrides, advertising, and
the printing of Prospectuses and sales literature. The amount of the charge in
any Policy year cannot be specifically related to sales expenses for that
year. JHVLICO expects to recover its total sales expenses over the period the
Policies are in effect. To the extent that sales charges are insufficient to
cover total sales expenses, the sales expenses may be recovered from other
sources, including gains from the charge for mortality and expense risks and
other gains with respect to the Policies, or from JHVLICO's general assets.
See "Distribution of Policies".
The current sales charge in each of the first ten Policy years is equal to
9% of the premiums paid up to one "target premium". There is no sales charge
on premiums in excess of the target premium. The target premium is established
at issue and is the amount of the 7-Pay premium limit for the Basic Sum
Insured at the maximum guaranteed cost of insurance rates and a net interest
rate of 4%. See "Premiums--7-Pay Premium Limit". Target premiums will vary
based on the issue age, sex, smoking status and underwriting class of the
insured.
The current sales charge for premiums paid up to one target premium in each
subsequent Policy year is 3% in years 11 through 20, and zero thereafter. The
current sales charge for premiums paid in excess of the target premium after
the tenth Policy year is zero. Payment of premiums in excess of the target
premium may cause the Policy to become a modified endowment, resulting in
adverse tax consequences to the Owner upon receipt of any Policy
distributions. See "Premiums--7-Pay Premium Limit".
The guaranteed maximum sales charges under the Policy are no higher than the
current sales charges, except that the guaranteed maximum sales charge for
premiums paid up to one target premium is 5% in Policy years 11 through 20 and
3% after Policy year 20 and for premiums paid in excess of one target premium
is 3%. Because the Policies were first offered in 1994, sales charges at the
lower current rates are not yet applicable under any outstanding Policy.
An Owner may structure the timing and amount of premium payments to minimize
the sales charges deducted from premium payments, although doing so involves
certain risks. Paying less than one target premium in the first Policy year or
paying more than one target premium in any Policy year could reduce the
Owner's total sales charges over time. For example, an Owner, paying ten
target premiums of $10,000 each, would pay total sales charges of $9,000 if he
paid $10,000 in each of the first ten Policy years, but only $4,500 if he paid
$20,000 (i.e., two times the target premium amount) in every other Policy year
up to the ninth Policy year. However, delaying the payment of target premiums
to later Policy years could increase the risk that the Guaranteed Minimum
Death Benefit will lapse and that the Account Value will be insufficient to
pay monthly
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<PAGE>
Policy charges as they come due. As a result, the Policy or any Additional Sum
Insured may lapse and eventually terminate. See "Default". Conversely,
accelerating the payment of target premiums to earlier Policy years could
cause aggregate premiums paid to exceed the Policy's 7-pay premium limit and,
as a result, cause the Policy to become a modified endowment, with adverse tax
consequences to the Owner upon receipt of Policy distributions. See
"Premiums--7-Pay Premium Limit".
REDUCED CHARGES FOR ELIGIBLE GROUPS
The sales charge and issue charge (described below) otherwise applicable may
be reduced with respect to Policies issued to a class of associated
individuals or to a trustee, employer or similar entity where JHVLICO
anticipates that the sales to the members of the class will result in lower
than normal sales or administrative expenses. The charge for mortality and
expense risks (described below) otherwise applicable may be reduced with
respect to Policies issued to a trustee, employer or similar entity where
JHVLICO anticipates that, because of the nature of the group on whose behalf
the Policies are purchased, there will be a lower than normal risk of the
mortality and expense charge not being sufficient to cover actual mortality
and expense costs. These reductions will be made in accordance with JHVLICO's
rules in effect at the time of the application for a Policy. The factors
considered by JHVLICO in determining the eligibility of a particular group for
reduced charges, and the level of the reduction, are as follows: the nature of
the association and its organizational framework; the method by which sales
will be made to the members of the class; the facility with which premiums
will be collected from the associated individuals and the association's
capabilities with respect to administrative tasks; the anticipated persistency
of the policies; the size of the class of associated individuals and the
number of years it has been in existence; the aggregate amount of premiums to
be paid by or for the class of associated individuals; and any other such
circumstances which justify a reduction in sales or administrative charges or
mortality and expense risk charges. Any reduction will be reasonable and will
apply uniformly to all prospective Policy purchasers in the class and will not
be unfairly discriminatory to the interests of any Policy Owner.
CHARGES DEDUCTED FROM ACCOUNT VALUE OR ASSETS
The following charges are deducted from Account Value or assets:
Issue Charge. JHVLICO will deduct an issue charge from Account Value, at the
rate of $12.50 per month for the first 3 Policy years, plus an amount set
forth in the Policy that varies by age per $1,000 of the Basic Sum Insured at
issue for the first 10 Policy years. For example, this additional monthly
amount for a 45 year old is 17c per $1000 of Basic Sum Insured.
The issue charge is to compensate JHVLICO for expenses incurred in
connection with the issuance of the Policy, other than sales expenses. Such
expenses include medical examinations, insurance underwriting costs and costs
incurred in processing applications and establishing permanent Policy records.
Administrative charge. JHVLICO will deduct from the Account Value a monthly
charge not to exceed $4 per Policy and 6c per $1000 of the Basic Sum Insured
at issue. The current monthly charge is $2.50 per Policy plus 2c per $1000 of
Basic Sum Insured at issue.
This charge is to compensate JHVLICO for administrative expenses, including
recordkeeping, processing death claims and surrenders, making Policy changes,
reporting and other communications to Owners and other similar expense and
overhead costs.
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<PAGE>
Insurance Charge. The insurance charge deducted monthly from Account Value
is based on the attained age of the insured and the amount at risk. The amount
at risk is the difference between the current death benefit and the Account
Value (after reflecting all charges against Account Value). The amount of the
insurance charge is determined by multiplying JHVLICO's then current monthly
rate for insurance by the amount at risk.
Current monthly rates for insurance are based on the sex, age, smoking
status and underwriting class of the insureds and the length of time the
Policy has been in effect. JHVLICO will review these rates at least every 5
years, and may change these rates from time to time based on JHVLICO's
expectations of future experience. However, these rates will never be more
than the guaranteed maximum rates based on the 1980 Commissioners' Standard
Ordinary Mortality Tables, as set forth in the Policy.
Lower current insurance rates are offered at most ages for insureds who
qualify for the standard underwriting class and whose applications are fully
underwritten, i.e. subject to evidence of insurability on the part of the
insured, a process which may involve a medical examination. On the other hand,
higher current insurance rates are generally applicable if the Policies are
issued on a guaranteed issue basis, where evidence of insurability is not
required.
Policies issued to trustees, employers and similar entities are often issued
on a guaranteed issue basis. Because only limited underwriting information is
obtained in this alternative underwriting procedure, Policies in this class
may present additional mortality expense to JHVLICO relative to Policies which
are fully underwritten. This additional insurance risk is generally reflected
in higher insurance rates, nevertheless guaranteed not to exceed the 1980
Commissioners' Standard Ordinary Mortality Tables.
Guaranteed Minimum Death Benefit Charge. If the Guaranteed Minimum Death
Benefit option is elected for a period beyond the first 10 Policy years,
JHVLICO deducts a charge from Account Value beginning in the eleventh Policy
year. The maximum monthly charge is 2c per $1000 of the Basic Sum Insured at
issue and the current monthly charge is 1c per $1,000 of the Basic Sum Insured
at issue. If the Guaranteed Minimum Death Benefit lapses due to failure to pay
sufficient premiums, the charge will be discontinued.
Charge for Mortality and Expense Risks. A daily charge is made for mortality
and expense risks assumed by JHVLICO at a maximum effective annual rate of
.40% of the value of the Account's assets attributable to the Policies. The
current charge is at an effective annual rate of .20%. This charge begins when
amounts under a Policy are first allocated to the Account. The mortality risk
assumed is that insureds may live for a shorter period of time than estimated
and, therefore, a greater amount of death benefit than expected will be
payable in relation to the amount of premiums received. The expense risk
assumed is that expenses incurred in issuing and administering the Policies
will be greater than estimated. JHVLICO will realize a gain from this charge
to the extent it is not needed to provide for benefits and expenses under the
Policies.
Charges for Extra Mortality Risks. An insured who does not qualify for the
standard underwriting class must pay an additional charge because of the extra
mortality risk. The level of the charge depends upon the age of the insured
and the degree of extra mortality risk. This additional charge is deducted
monthly from Account Value.
Charges for Optional Rider Benefits. An additional charge must be paid if
the Owner elects to purchase an optional insurance benefit by Policy rider.
This additional charge is deducted monthly from Account Value.
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<PAGE>
Charges for Taxes. Currently no charge is made against Account Value for
JHVLICO's Federal income taxes but if JHVLICO incurs, or expects to incur,
income taxes attributable to the Account or this class of Policies in future
years, it reserves the right to make a charge, and any charge would affect
what the Subaccounts earn. Charges for other taxes, if any, attributable to
the Subaccounts may also be made.
Charge for Partial Withdrawal. JHVLICO will deduct a charge in the amount of
$20 on a partial withdrawal of Surrender Value, as described under "Account
Value and Surrender Value". The charge will be deducted from Account Value.
The charge is to compensate JHVLICO for the administrative expenses of
effecting the withdrawal.
Fund Investment Management Fee. The Account purchases shares of the Funds at
net asset value, a value which reflects the deduction from the assets of each
Fund of its investment management fee, which is described briefly in the
Summary of this Prospectus, and of certain non-advisory operating expenses.
For a full description of these deductions, see the attached Prospectuses for
the Funds.
The monthly deductions from Account Value described above are deducted on
the date of issue and on the first day of each Policy month thereafter. These
deductions are made from the Subaccounts in proportion to the amount of
Account Value in each. For each month that JHVLICO is unable to deduct any
charge because there is insufficient Account Value, the uncollected charges
will accumulate and be deducted when and if sufficient Account Value is
available.
GUARANTEE OF CERTAIN CHARGES
The state premium tax charge, the Federal DAC Tax charge, the issue charge
and the charge for partial withdrawals are guaranteed not to increase over the
life of the Policy. The administrative charge, the Guaranteed Minimum Death
Benefit charge, the sales charge, the mortality and expense risk charge, and
the insurance charge are guaranteed not to exceed the maximums set forth in
the Policy.
DISTRIBUTION OF POLICIES
Applications are solicited by agents who are licensed by state insurance
authorities to sell JHVLICO's Policies and who are also registered
representatives ("representatives") of John Hancock or other broker-dealer
firms, as discussed below. John Hancock performs insurance underwriting,
determines whether to accept or reject the application for a Policy and each
insured's risk classification and, pursuant to a sales agreement among John
Hancock, JHVLICO, and the Account, acts as the principal underwriter of the
Policies. The sales agreement will remain in effect until terminated upon
sixty days' written notice by any party. JHVLICO will make the appropriate
refund if a Policy ultimately is not issued or is returned under the short-
term cancellation provision. Officers and employees of John Hancock and
JHVLICO are covered by a blanket bond by a commercial carrier in the amount of
$25 million.
John Hancock's representatives are compensated for sales of the Policies on
a commission and service fee basis by John Hancock, and JHVLICO reimburses
John Hancock for such compensation and for other direct and indirect expenses
(including agency expense allowances, general agent, district manager and
supervisor's compensation, agent's training allowances, deferred compensation
and insurance benefits of agents, general agents, district managers and
supervisors, agency office clerical expenses and advertising) actually
incurred in connection with the marketing and sale of the Policies.
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<PAGE>
The maximum commission payable to a John Hancock representative for selling
a Policy is 14% of the target premium paid in each of the first 10 Policy
years, and 3% of the target premium paid in each year thereafter. The maximum
commission on any premium paid in any Policy year in excess of the target
premium is 2%.
Representatives with less than four years of service with John Hancock and
those compensated on salary plus bonus or level commission programs may be
paid on a different basis. Representatives who meet certain productivity and
persistency standards with respect to the sale of policies issued by JHVLICO
and John Hancock will be eligible for additional compensation.
John Hancock is registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. John Hancock is not a member of the Securities
Investor Protection Corporation because it is exempt from membership in that
organization. The Policies are also sold through other registered broker-
dealers that have entered into selling agreements with John Hancock and whose
representatives are authorized by applicable law to sell variable life
insurance policies. The commissions which will be paid by such broker-dealers
to their representatives will be in accordance with their established rules.
The commission rates may be more or less than those set forth above for John
Hancock's representatives. In addition, their qualified registered
representatives may be reimbursed by the broker-dealers under expense
reimbursement allowance programs in any year for approved voucherable expenses
incurred. John Hancock will compensate the broker-dealers as provided in the
selling agreements, and JHVLICO will reimburse John Hancock for such amounts
and for certain other direct expenses in connection with marketing the
Policies through other broker-dealers.
John Hancock serves as principal underwriter for six other separate accounts
registered under the 1940 Act: John Hancock Variable Annuity Accounts U, I and
V, John Hancock Mutual Variable Life Insurance Account UV and John Hancock
Variable Life Accounts U and V. John Hancock is also the principal investment
manager and principal underwriter for John Hancock Variable Series Trust I.
TAX CONSIDERATIONS
The below description of Federal income tax consequences is only a brief
summary and is not intended as tax advice. For further information consult a
qualified tax advisor. Federal, state and local tax laws can change from time
to time and, as a result, the tax consequences to the Owner and beneficiary
may be altered.
POLICY PROCEEDS
Although the Policy contains provisions not found in fixed benefit life
insurance policies, JHVLICO believes the Policy will receive the same Federal
income and estate tax treatment. Section 7702 of the Internal Revenue Code
("Code") defines life insurance for Federal tax purposes. See "Death
Benefits--Definition of Life Insurance". If certain standards are met at issue
and over the life of the Policy, the Policy will come within that definition.
JHVLICO will monitor compliance with these standards. Furthermore, JHVLICO
reserves the right to make any changes in the Policy necessary to ensure the
Policy is within the definition of life insurance.
If the Policy complies with the definition of life insurance, JHVLICO
believes the death benefit under the Policy will be excludable from the
beneficiary's gross income under Section 101 of the Code. In addition,
increases in Account Value as a result of interest or investment experience
will not be subject to Federal income tax unless and until values are actually
received through withdrawal, surrender or other distributions.
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<PAGE>
A surrender, lapse or partial withdrawal may have tax consequences. For
example, the Owner will be taxed on a surrender to the extent that the Account
Value exceeds the premiums paid under the Policy, ignoring premiums paid for
riders. But under certain circumstances within the first 15 Policy years, the
Owner may be taxed on a withdrawal of Policy values even if total withdrawals
do not exceed total premiums paid.
JHVLICO also believes that, except as noted below, loans received under the
Policy will be treated as indebtedness of an Owner and that no part of any
loan will constitute income to the Owner. However, the amount of any loan
outstanding will be taxed to the Owner if a Policy lapses.
Distributions under Policies on which premiums greater than the "7-pay"
limit (see "Premiums--7-Pay Premium Limit") have been paid will be treated as
distributions from a "modified endowment," which are subject to special
taxation based on Federal tax law. The Owner of such a Policy will be taxed on
distributions such as loans, surrenders and partial withdrawals to the extent
of any income (gain) to the Owner (income-first basis). The distributions
affected will be those made on or after, and within the two year period prior
to, the time the Policy becomes a modified endowment. Additionally, a 10%
penalty tax may be imposed on affected income distributed before the Owner
attains age 59 1/2.
Furthermore, any time there is a "material change" in a Policy (such as the
addition of certain other Policy benefits after issue, or reinstatement of a
lapsed Policy), the Policy will be subject to a new "7-pay" test, with the
possibility of a tax on distributions if it were subsequently to become a
modified endowment. Moreover, if benefits under a Policy are reduced (such as
a reduction in the Sum Insured or death benefit or the reduction or
cancellation of certain rider benefits, or Policy termination) during the 7
years in which the 7-pay test is being applied, the 7-pay limit will be
recalculated based on the reduced benefits. If the premiums paid to date are
greater than the recalculated 7-pay limit, the Policy will become a modified
endowment.
All modified endowments issued by the same insurer (or affiliates) to the
Owner during any calendar year generally will be treated as one contract for
the purpose of applying the modified endowment rules. Your tax advisor should
be consulted if you have questions regarding the possible impact of the 7-pay
limit on your Policy.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Owner or beneficiary.
CHARGE FOR JHVLICO'S TAXES
Except for the DAC Tax charge, JHVLICO currently makes no charge for Federal
income taxes that may be attributable to this class of Policies. If JHVLICO
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, JHVLICO 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>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF JHVLICO
The Directors and Executive Officers of JHVLICO and their principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Directors--Officers Principal Occupations
------------------- ---------------------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief Executive
Officer of JHVLICO; Senior Executive Vice
President and Director, John Hancock Mutual
Life Insurance Company.
Henry D. Shaw Vice Chairman of the Board and President of
JHVLICO; Senior Vice President, John
Hancock Mutual Life Insurance Company.
Thomas J. Lee Director of JHVLICO; Vice President, John
Hancock Mutual Life Insurance Company.
Michele G. Van Leer Director of JHVLICO; Vice President, John
Hancock Mutual Life Insurance Company.
Francis C. Cleary, Jr. Director and Counsel, JHVLICO; Vice
President and Counsel, John Hancock Mutual
Life Insurance Company.
Joseph A. Tomlinson Director and Vice President, JHVLICO; Vice
President, John Hancock Mutual Life
Insurance Company.
Robert R. Reitano Director of JHVLICO; Second Vice President,
John Hancock Mutual Life Insurance Company.
Robert S. Paster Director and Actuary, JHVLICO; Second Vice
President, John Hancock Mutual Life
Insurance Company.
Barbara L. Luddy Director of JHVLICO; Second Vice President,
John Hancock Mutual Life Insurance Company.
Daniel L. Ouellette Vice President, Marketing, JHVLICO; Vice
President, John Hancock Mutual Life
Insurance Company.
Patrick F. Smith Controller of JHVLICO; Assistant
Controller, John Hancock Mutual Life
Insurance Company.
</TABLE>
The business address of all Directors and officers of JHVLICO is John
Hancock Place, Boston, Massachusetts 02117.
REPORTS
At least once each Policy year a statement will be sent to the Owner setting
forth the amount of the death benefit, Basic Sum Insured, Additional Sum
Insured, Account Value, the portion of the Account Value in each Subaccount,
Surrender Value, premiums received and charges deducted from premiums since
the last report, and any outstanding Policy loan (and interest charged for the
preceding Policy year) as of the last day of such year. Moreover,
confirmations will be furnished to Owners of premium payments, transfers among
Subaccounts, Policy loans, partial withdrawals and certain other Policy
transactions.
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<PAGE>
Owners will be sent semiannually a report containing the financial
statements of the Funds, including a list of securities held in each
Portfolio.
VOTING PRIVILEGES
All of the assets in the variable Subaccounts of the Account are invested in
shares of the corresponding Portfolios of the Funds. JHVLICO will vote the
shares of each of the Portfolios of the Funds which are deemed attributable to
policies at regular and special meetings of the Funds' shareholders in
accordance with instructions received from owners of such policies. Shares of
the Funds held in the Account which are not attributable to policies and
shares for which instructions from owners are not received will be represented
by JHVLICO at the meeting and will be voted for and against each matter in the
same proportions as the votes based upon the instructions received from the
owners of all policies funded through the Account's corresponding variable
Subaccounts.
The number of Fund shares held in each variable Subaccount deemed
attributable to each Owner is determined by dividing the amount of a Policy's
Account Value held in the variable Subaccount by the net asset value of one
share in the corresponding Fund Portfolio in which the assets of that variable
Subaccount are invested. Fractional votes will be counted. The number of
shares as to which the Owner may give instructions will be determined as of
the record date for the Funds' meetings.
Owners of Policies may give instructions regarding the election of the Board
of Trustees of each Fund, ratification of the selection of independent
auditors, approval of Fund investment advisory agreements and other matters
requiring a vote under the 1940 Act. Owners will be furnished information and
forms by JHVLICO in order that voting instructions may be given.
JHVLICO 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 or to
approve or disapprove an investment advisory or underwriting contract for the
Funds. JHVLICO also may disregard voting instructions in favor of changes
initiated by an Owner or Fund's Board of Trustees in the investment policy,
investment adviser or principal underwriter of the Fund, if JHVLICO (i)
reasonably disapproves of such changes and (ii) in the case of a change of
investment policy or investment adviser, makes a good-faith determination that
the proposed change is contrary to state law or prohibited by state regulatory
authorities or that the change would be inconsistent with a variable
Subaccount's investment objectives or would result in the purchase of
securities which vary from the general quality and nature of investments and
investment techniques utilized by other separate accounts of JHVLICO or of an
affiliated life insurance company, which separate accounts have investment
objectives similar to those of the variable Subaccount. In the event JHVLICO
does disregard voting instructions, a summary of that action and the reasons
for such action will be included in the next semi-annual report to Owners.
CHANGES THAT JHVLICO CAN MAKE
The voting privileges described in this Prospectus are afforded based on
JHVLICO'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, JHVLICO reserves
the right to proceed in accordance with any such revised requirements. JHVLICO
also reserves the right, subject to compliance with applicable law, including
approval of Owners if so required, (1) to transfer assets determined by
JHVLICO to be
25
<PAGE>
associated with the class of policies to which the Policies belong from the
Account to another separate account or variable Subaccount by withdrawing the
same percentage of each investment in the Account with appropriate adjustments
to avoid odd lots and fractions, (2) to operate the Account as a "management-
type investment company" under the 1940 Act, or in any other form permitted by
law, the investment adviser of which would be JHVLICO, an affiliate or John
Hancock, (3) to deregister the Account under the 1940 Act, (4) to substitute
for the Portfolio shares held by a Subaccount any other investment permitted
by law, and (5) to take any action necessary to comply with or obtain any
exemptions from the 1940 Act. JHVLICO would notify Owners of any of the
foregoing changes and, to the extent legally required, obtain approval of
Owners and any regulatory body prior thereto. Such notice and approval,
however, may not be legally required in all cases.
STATE REGULATION
JHVLICO 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.
JHVLICO 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 JHVLICO. Messrs.
Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised JHVLICO on
certain Federal securities law matters in connection with the Policies.
REGISTRATION STATEMENT
This Prospectus omits certain information contained in the Registration
Statement which has been filed with the Commission. More details may be
obtained from the Securities and Exchange Commission upon payment of the
prescribed fee.
EXPERTS
The financial statements of the Account and JHVLICO 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 Philip
G. Johnson, F.S.A., an Actuary of JHVLICO.
FINANCIAL STATEMENTS
The financial statements of JHVLICO included herein should be distinguished
from the financial statements of the Account and should be considered only as
bearing upon the ability of JHVLICO to meet its obligations under the
Policies. The September 30, 1995 financial statements of JHVLICO are
unaudited.
The September 30, 1995 financial statements of the Account are unaudited.
26
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Real Short-Term
Select Money Estate Special U.S.
Stock Bond International Market Equity Opportunities Stock Government Managed
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ------------- ---------- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value (Note 2). $4,180,629 $1,067,480 $2,257,466 $2,127,396 $526,923 $1,181,786 $6,288,376 $2,169,031 $2,779,981
---------- ---------- ---------- ---------- -------- ---------- ---------- ---------- ----------
Total assets.... 4,180,629 1,067,480 2,257,466 2,127,396 526,923 1,181,786 6,288,376 2,169,031 2,779,981
Liabilities
Asset charges
payable (Note
2)............. 63 16 35 34 8 19 93 14 36
---------- ---------- ---------- ---------- -------- ---------- ---------- ---------- ----------
Total liabili-
ties........... 63 16 35 34 8 19 93 14 36
---------- ---------- ---------- ---------- -------- ---------- ---------- ---------- ----------
Net assets $4,180,566 $1,067,464 $2,257,431 $2,127,362 $526,915 $1,181,767 $6,288,283 $2,169,017 $2,779,945
========== ========== ========== ========== ======== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
27
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Select
Stock Subaccount Bond Subaccount
-------------------------------------------- --------------------------------------------
For the Period For the Period
from from
Unaudited December 14, Unaudited December 14,
Nine Month 1993 Nine Month 1993
Period (commencement Period (commencement
ended Year ended of operations) to ended Year ended of operations) to
September 30, December 31, December 31, September 30, December 31, December 31,
1995 1994 1993 1995 1994 1993
------------- ------------ ----------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $ 54,365 $ 39,711 $ 541 $32,048 $ 7,083 --
-------- -------- ----- ------- ------- ---
Total investment
income.......... 54,365 39,711 541 32,048 7,083 --
Expenses:
Mortality and
expense risks.. 10,465 2,688 4 2,347 509 --
-------- -------- ----- ------- ------- ---
Net investment
income.......... 43,900 37,023 537 29,701 6,574 --
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 100,217 (37,955) -- 7,883 (2,259) --
Net unrealized
appreciation
(depreciation)
during the
period......... 386,437 (24,086) (447) 22,837 (3,839) --
-------- -------- ----- ------- ------- ---
Net realized and
unrealized gain
(loss) on
investments..... 486,654 (62,041) (447) 30,720 (6,098) --
-------- -------- ----- ------- ------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... $530,554 $(25,018) $ 90 $60,421 $ 476 --
======== ======== ===== ======= ======= ===
<CAPTION>
International
Subaccount
--------------------------------------------
For the Period
from
Unaudited December 14,
Nine Month 1993
Period (commencement
ended Year ended of operations) to
September 30, December 31, December 31,
1995 1994 1993
------------- ------------ -----------------
<S> <C> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $19,256 $ 11,324 --
------- -------- ---
Total investment
income.......... 19,256 11,324 --
Expenses:
Mortality and
expense risks.. 6,983 2,129 --
------- -------- ---
Net investment
income.......... 12,273 9,195 --
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). (20,969) 5,934 --
Net unrealized
appreciation
(depreciation)
during the
period......... 94,687 (46,936) --
------- -------- ---
Net realized and
unrealized gain
(loss) on
investments..... 73,718 (41,002) --
------- -------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... $85,991 $(31,807) --
======= ======== ===
</TABLE>
See accompanying notes.
28
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Money Market Real Estate
Subaccount Equity Subaccount
-------------------------------------------- --------------------------------------------
For the Period For the Period
from from
Unaudited December 14, Unaudited December 14,
Nine Month 1993 Nine Month 1993
Period (commencement Period (commencement
ended Year ended of operations) to ended Year ended of operations) to
September 30, December 31, December 31, September 30, 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........ $80,579 $39,245 -- $21,360 $ 10,909 --
------- ------- --- ------- -------- ---
Total investment
income.......... 80,579 39,245 -- 21,360 10,909 --
Expenses:
Mortality and
expense risks.. 8,066 5,184 -- 1,915 689 --
------- ------- --- ------- -------- ---
Net investment
income.......... 72,513 34,061 -- 19,445 10,220 --
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). -- -- -- (5,581) (10,840) --
Net unrealized
appreciation
(depreciation)
during the
period......... -- -- -- 31,560 9,936 --
------- ------- --- ------- -------- ---
Net realized and
unrealized gain
(loss) on
investments..... -- -- -- 25,979 (904) --
------- ------- --- ------- -------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... $72,513 $34,061 -- $45,424 $ 9,316 --
======= ======= === ======= ======== ===
<CAPTION>
Special
Opportunities
Subaccount
-------------------------------
For the Period
from
Unaudited May 6,
Nine Month 1994
Period (commencement
ended of operations) to
September 30, December 31,
1995 1994
------------- -----------------
<S> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $ 504 $1,493
-------- ------
Total investment
income.......... 504 1,493
Expenses:
Mortality and
expense risks.. 2,971 607
-------- ------
Net investment
income.......... (2,467) 886
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 11,636 (117)
Net unrealized
appreciation
(depreciation)
during the
period......... 144,301 3,155
-------- ------
Net realized and
unrealized gain
(loss) on
investments..... 155,937 3,038
-------- ------
Net increase
(decrease) in
net assets
resulting from
operations...... $153,470 $3,924
======== ======
</TABLE>
See accompanying notes.
29
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Short-Term
U.S. Government
Stock Subaccount Subaccount
-------------------------------------------- -------------------------------
For the Period
from For the Period
Unaudited December 14, Unaudited from
Nine Month 1993 Nine Month May 1, 1994
Period (commencement Period (commencement
ended Year ended of operations) to ended of operations) to
September 30, December 31, December 31, September 30, December 31,
1995 1994 1993 1995 1994
------------- ------------ ----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $ 74,533 $ 70,819 -- $30,210 $ 331
-------- -------- --- ------- -----
Total investment
income.......... 74,533 70,819 -- 30,210 331
Expenses:
Mortality and
expense risks.. 14,287 3,073 -- 1,596 25
-------- -------- --- ------- -----
Net investment
income.......... 60,246 67,746 -- 28,614 306
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 71,866 (1,272) -- 3,907 (1)
Net unrealized
appreciation
(depreciation)
during the
period......... 624,107 (67,362) -- 3,148 (325)
-------- -------- --- ------- -----
Net realized and
unrealized gain
(loss) on
investments..... 695,973 (68,634) -- 7,055 (326)
-------- -------- --- ------- -----
Net increase
(decrease) in
net assets
resulting from
operations...... $756,219 $ (888) -- $35,669 $ (20)
======== ======== === ======= =====
<CAPTION>
Managed Subaccount
--------------------------------------------
For the Period
from
Unaudited December 14,
Nine Month 1993
Period (commencement
ended Year ended of operations) to
September 30, December 31, December 31,
1995 1994 1993
------------- ------------ -----------------
<S> <C> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $ 69,742 $ 12,985 --
-------- -------- ---
Total investment
income.......... 69,742 12,985 --
Expenses:
Mortality and
expense risks.. 6,864 1,318 --
-------- -------- ---
Net investment
income.......... 62,878 11,667 --
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). 156,923 (4,727) --
Net unrealized
appreciation
(depreciation)
during the
period......... 154,367 (8,296) --
-------- -------- ---
Net realized and
unrealized gain
(loss) on
investments..... 311,290 (13,023) --
-------- -------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... $374,168 $ (1,356) --
======== ======== ===
</TABLE>
See accompanying notes.
30
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Select Stock Subaccount Bond Subaccount
--------------------------------------------- --------------------------------------------
For the Period For the Period
from Unaudited from
Unaudited December 14, Nine December 14,
Nine Month 1993 Month 1993
Period (commencement Period (commencement
ended Year ended of operations) to ended Year ended of operations) to
September 30, December 31, December 31, September 30, December 31, December 31,
1995 1994 1993 1995 1994 1993
------------- ------------ ----------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 43,900 $ 37,023 $ 537 $ 29,701 $ 6,574 --
Net realized
gains (losses). 100,217 (37,955) -- 7,883 (2,259) --
Net unrealized
appreciation
(depreciation)
during the
period......... 386,437 (24,086) (447) 22,837 (3,839) --
---------- ----------- ------- ---------- -------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... 530,554 (25,018) 90 60,421 476 --
From policyholder
transactions:
Net premiums
from
policyholders.. 4,781,623 2,165,201 12,650 875,665 279,171 --
Net benefits to
policyholders.. (2,033,980) (1,250,017) (537) (85,671) (62,598) --
---------- ----------- ------- ---------- -------- ---
Net increase
(decrease) in
net assets from
policyholder
transactions.... 2,747,643 915,184 12,113 789,994 216,573 --
---------- ----------- ------- ---------- -------- ---
Net increase
(decrease) in
net assets...... 3,278,197 890,166 12,203 850,415 217,049 --
Net assets at
beginning of
year............ 902,369 12,203 -- 217,049 -- --
---------- ----------- ------- ---------- -------- ---
Net assets at end
of period....... $4,180,566 $ 902,369 $12,203 $1,067,464 $217,049 --
========== =========== ======= ========== ======== ===
<CAPTION>
International Subaccount
--------------------------------------------
For the Period
from
Unaudited December 14,
Nine Month 1993
Period (commencement
ended Year ended of operations) to
September 30, December 31, December 31,
1995 1994 1993
------------- ------------ -----------------
<S> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 12,273 $ 9,195 --
Net realized
gains (losses). (20,969) 5,934 --
Net unrealized
appreciation
(depreciation)
during the
period......... 94,687 (46,936) --
---------- --------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... 85,991 (31,807) --
From policyholder
transactions:
Net premiums
from
policyholders.. 1,878,844 1,223,410 --
Net benefits to
policyholders.. (699,731) (199,276) --
---------- --------- ---
Net increase
(decrease) in
net assets from
policyholder
transactions.... 1,179,113 1,024,134 --
---------- --------- ---
Net increase
(decrease) in
net assets...... 1,265,104 992,327 --
Net assets at
beginning of
year............ 992,327 -- --
---------- --------- ---
Net assets at end
of period....... $2,257,431 $ 992,327 --
========== ========= ===
</TABLE>
See accompanying notes.
31
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Money Market Real Estate
Subaccount Equity Subaccount
---------------------------------------------- --------------------------------------------
For the Period For the Period
from from
December 14, December 14,
Unaudited 1993 Unaudited 1993
Nine Month (commencement Nine Month (commencement
Period ended Year ended of operations) to Period ended Year ended of operations) to
September 30, December 31, December 31, September 30, December 31, December 31,
1995 1994 1993 1995 1994 1993
------------- ------------ ----------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 72,513 $ 34,061 -- $ 19,445 $ 10,220 --
Net realized
gains (losses). -- -- -- (5,581) (10,840) --
Net unrealized
appreciation
(depreciation)
during the
period......... -- -- -- 31,560 9,936 --
------------ ----------- --- -------- -------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... 72,513 34,061 -- 45,424 9,316 --
From policyholder
transactions:
Net premiums
from
policyholders.. 12,819,682 7,344,361 -- 292,428 525,631 --
Net benefits to
policyholders.. (13,019,966) (5,123,289) -- (230,821) (115,063) --
------------ ----------- --- -------- -------- ---
Net increase
(decrease) in
net assets from
policyholder
transactions.... (200,284) 2,221,072 -- 61,607 410,568 --
------------ ----------- --- -------- -------- ---
Net increase
(decrease) in
net assets...... (127,771) 2,255,133 -- 107,031 419,884 --
Net assets at
beginning of
year............ 2,255,133 -- -- 419,884 -- --
------------ ----------- --- -------- -------- ---
Net asset at end
of year......... $ 2,127,362 $ 2,255,133 -- $526,915 $419,884 --
============ =========== === ======== ======== ===
<CAPTION>
Special
Opportunities
Subaccount
-----------------------------------
For the Period
from
May 6,
Unaudited 1994
Nine Month (commencement
Period ended of operations) to
September 30, December 31,
1995 1994
------------- -----------------
<S> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ (2,467) $ 886
Net realized
gains (losses). 11,636 (117)
Net unrealized
appreciation
(depreciation)
during the
period......... 144,301 3,155
---------- --------
Net increase
(decrease) in
net assets
resulting from
operations...... 153,470 3,924
From policyholder
transactions:
Net premiums
from
policyholders.. 1,017,198 333,168
Net benefits to
policyholders.. (321,791) (4,202)
---------- --------
Net increase
(decrease) in
net assets from
policyholder
transactions.... 695,407 328,966
---------- --------
Net increase
(decrease) in
net assets...... 848,877 332,890
Net assets at
beginning of
year............ 882,890 --
---------- --------
Net asset at end
of year......... $1,181,767 $332,890
========== ========
</TABLE>
See accompanying notes.
32
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Short-Term U.S.
Government
Stock Subaccount Subaccount
-------------------------------------------- -------------------------------
For the Period For the Period
from from
December 14, May 1,
Unaudited 1993 Unaudited 1994
Nine Month (commencement Nine Month (commencement
Period ended Year ended of operations) to Period ended of operations) to
September 30, December 31, December 31, September 30, December 31,
1995 1994 1993 1995 1994
------------- ------------ ----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 60,246 $ 67,746 -- $ 28,614 $ 306
Net realized
gains (losses). 71,866 (1,272) -- 3,907 (1)
Net unrealized
appreciation
(depreciation)
during the
period......... 624,107 (67,362) -- 3,148 (325)
---------- ---------- --- ---------- -------
Net increase
(decrease) in
net assets
resulting from
operations...... 756,219 (888) -- 35,669 (20)
From policyholder
transactions:
Net premiums
from
policyholders.. 4,933,082 1,606,781 -- 2,235,875 41,816
Net benefits to
policyholders.. (753,641) (253,270) -- (143,990) (333)
---------- ---------- --- ---------- -------
Net increase in
net assets from
policyholder
transactions.... 4,179,441 1,353,511 -- 2,091,885 41,483
---------- ---------- --- ---------- -------
Net increase in
net assets...... 4,935,660 1,352,623 -- 2,127,554 41,463
Net assets at
beginning of
year............ 1,352,623 -- -- 41,463 --
---------- ---------- --- ---------- -------
Net asset at end
of year......... $6,288,283 $1,352,623 -- $2,169,017 $41,463
========== ========== === ========== =======
<CAPTION>
Managed Subaccount
--------------------------------------------
For the Period
from
December 14,
Unaudited 1993
Nine Month (commencement
Period ended Year ended of operations) to
September 30, December 31, December 31,
1995 1994 1993
------------- ------------ -----------------
<S> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 62,878 $ 11,667 --
Net realized
gains (losses). 156,923 (4,727) --
Net unrealized
appreciation
(depreciation)
during the
period......... 154,367 (8,296) --
------------- ------------ ---
Net increase
(decrease) in
net assets
resulting from
operations...... 374,168 (1,356) --
From policyholder
transactions:
Net premiums
from
policyholders.. 4,142,912 859,794 --
Net benefits to
policyholders.. (2,383,868) (211,705) --
------------- ------------ ---
Net increase in
net assets from
policyholder
transactions.... 1,759,044 648,089 --
------------- ------------ ---
Net increase in
net assets...... 2,133,212 646,733 --
Net assets at
beginning of
year............ 646,733 -- --
------------- ------------ ---
Net asset at end
of year......... $2,779,945 $646,733 --
============= ============ ===
</TABLE>
See accompanying notes.
33
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1995
NOTE 1--ORGANIZATION
John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a wholly-
owned subsidiary of John Hancock Mutual Life Insurance Company (John Hancock).
The Account was created on November 12, 1993. The Account commenced operations
on December 14, 1993 from the receipt of policy premiums. The Account was
formed to fund variable life insurance policies (Policies) issued by JHVLICO.
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 JHVLICO'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 JHVLICO. The portion of the
Account's assets applicable to the policies may not be charged with
liabilities arising out of any other business JHVLICO may conduct.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments 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
JHVLICO, which is taxed as a life insurance company under the Internal Revenue
Code. JHVLICO 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, JHVLICO 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.
34
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
(UNAUDITED)
EXPENSES
JHVLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at a maximum annual rate of .40%
of net assets (excluding policy loans) of the Account. In addition, a monthly
charge at varying levels for the cost of insurance is deducted from the net
assets of the Account.
JHVLICO 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. At September 30, 1995, there were no outstanding policy
loans.
NOTE 3--TRANSACTION WITH AFFILIATES
John Hancock acts as the distributor, principal underwriter and investment
advisor for the Fund.
Certain officers of the Account are officers and directors of JHVLICO, the
Fund or John Hancock.
NOTE 4--DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
portfolios of the Fund at September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
- --------- ------------ ---- -----
<S> <C> <C> <C>
Select Stock.............................. 234,873 $ 3,794,192 $ 4,180,629
Bond...................................... 107,480 1,044,643 1,067,480
International............................. 144,956 2,162,779 2,257,466
Money Market.............................. 212,683 2,127,396 2,127,396
Real Estate Equity........................ 45,709 495,363 526,923
Special Opportunities..................... 93,711 1,037,484 1,181,786
Stock..................................... 436,615 5,664,269 6,288,376
Short-Term U.S. Government................ 214,268 2,165,884 2,169,031
Managed................................... 198,209 2,625,614 2,779,981
--------- ----------- -----------
1,688,504 $21,117,624 $22,579,068
========= =========== ===========
</TABLE>
35
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 5--DETAILS OF INVESTMENTS--CONTINUED
(UNAUDITED)
Purchases, including reinvestment of dividend distributions and proceeds from
sales of shares in the portfolios of the Fund for the period ended September
30, 1995 were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- --------- --------- -----
<S> <C> <C>
Select Stock........................................... $ 4,053,519 $ 1,286,446
Bond................................................... 1,018,140 202,268
International.......................................... 1,759,940 615,455
Money Market........................................... 8,176,099 8,303,836
Real Estate Equity..................................... 317,700 226,704
Special Opportunities.................................. 829,737 133,625
Stock.................................................. 5,297,994 1,125,576
Short-Term U.S. Government............................. 2,326,096 205,907
Managed................................................ 4,038,781 2,225,120
----------- -----------
$27,818,006 $14,324,937
=========== ===========
</TABLE>
36
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Real Short-Term
Select Money Estate Special U.S.
Stock Bond International Market Equity Opportunities Stock Government Managed
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ------------- ---------- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investment in
shares of
portfolios of
John Hancock
Variable Series
Trust I, at
value (Notes 2
and 3)......... $902,369 $217,049 $ 992,327 $2,255,133 $419,884 $332,891 $1,352,623 $41,463 $646,733
Receivable from
John Hancock
Variable Series
Trust I, for
shares
redeemed....... 10,064 7 16,164 268,706 31 4,029 10,093 57 77
-------- -------- ---------- ---------- -------- -------- ---------- ------- --------
Total assets.... 912,433 217,056 1,008,491 2,523,839 419,915 336,920 1,362,716 41,520 646,810
Liabilities
Payable to John
Hancock
Variable Life
Insurance
Company........ 10,035 -- 16,132 268,641 17 4,019 10,050 56 56
Asset charges
payable (Note
2)............. 29 7 32 65 14 11 43 1 21
-------- -------- ---------- ---------- -------- -------- ---------- ------- --------
Total liabili-
ties........... 10,064 7 16,164 268,706 31 4,030 10,093 57 77
-------- -------- ---------- ---------- -------- -------- ---------- ------- --------
Net assets $902,369 $217,049 $ 992,327 $2,255,133 $419,884 $332,890 $1,352,623 $41,463 $646,733
======== ======== ========== ========== ======== ======== ========== ======= ========
</TABLE>
See accompanying notes.
37
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Select International
Stock Subaccount Bond Subaccount Subaccount
------------------------------ ------------------------------ ------------------------------
For the Period For the Period For the Period
from from from
December 14, December 14, December 14,
1993 1993 1993
(commencement (commencement (commencement
Year ended of operations) to Year ended of operations) to Year ended of operations) to
December 31, December 31, December 31, December 31, December 31, December 31,
1994 1993 1994 1993 1994 1993
------------ ----------------- ------------ ----------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $ 39,711 $ 541 $ 7,083 -- $ 11,324 --
-------- ----- ------- --- -------- ---
Total investment
income.......... 39,711 541 7,083 -- 11,324 --
Expenses:
Mortality and
expense risks.. 2,688 4 509 -- 2,129 --
-------- ----- ------- --- -------- ---
Net investment
income.......... 37,023 537 6,574 -- 9,195 --
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). (37,955) -- (2,259) -- 5,934 --
Net unrealized
depreciation
during the
year........... (24,086) (447) (3,839) -- (46,936) --
-------- ----- ------- --- -------- ---
Net realized and
unrealized loss
on investments.. (62,041) (447) (6,098) -- (41,002) --
-------- ----- ------- --- -------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... $(25,018) $ 90 $ 476 -- $(31,807) --
======== ===== ======= === ======== ===
<CAPTION>
Money Market
Subaccount
------------------------------
For the Period
from
December 14,
1993
(commencement
Year ended of operations) to
December 31, December 31,
1994 1993
------------ -----------------
<S> <C> <C>
Investment
income:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I........ $39,245 --
------------ ---
Total investment
income.......... 39,245 --
Expenses:
Mortality and
expense risks.. 5,184 --
------------ ---
Net investment
income.......... 34,061 --
Net realized and
unrealized gain
(loss) on
investments:
Net realized
gains (losses). -- --
Net unrealized
depreciation
during the
year........... -- --
------------ ---
Net realized and
unrealized loss
on investments.. -- --
------------ ---
Net increase
(decrease) in
net assets
resulting from
operations...... $34,061 --
============ ===
</TABLE>
See accompanying notes.
38
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Special Short-Term
Real Estate Opportunities U.S. Government
Equity Subaccount Subaccount* Stock Subaccount Subaccount*
------------------------------ ------------- ------------------------------ ---------------
For the Period For the Period
from from
December 14, December 14,
1993 1993
(commencement (commencement
Year ended of operations) to Period ended Year ended of operations) to Period ended
December 31, December 31, December 31, December 31, December 31, December 31,
1994 1993 1994 1994 1993 1994
------------ ----------------- ------------- ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $ 10,909 -- $1,493 $ 70,819 -- $ 331
-------- --- ------ -------- --- -----
Total investment
income........... 10,909 -- 1,493 70,819 -- 331
Expenses:
Mortality and
expense risks... 689 -- 607 3,073 -- 25
-------- --- ------ -------- --- -----
Net investment
income........... 10,220 -- 886 67,746 -- 306
Net realized and
unrealized gain
(loss) on invest-
ments:
Net realized
losses.......... (10,840) -- (117) (1,272) -- (1)
Net unrealized
appreciation
(depreciation)
during the year. 9,936 -- 3,155 (67,362) -- (325)
-------- --- ------ -------- --- -----
Net realized and
unrealized gain
(loss) on
investments...... (904) -- 3,038 (68,634) -- (326)
-------- --- ------ -------- --- -----
Net increase
(decrease) in net
assets resulting
from operations.. $ 9,316 -- $3,924 $ (888) -- $ (20)
======== === ====== ======== === =====
<CAPTION>
Managed Subaccount
------------------------------
For the Period
from
December 14,
1993
(commencement
Year ended of operations) to
December 31, December 31,
1994 1993
------------ -----------------
<S> <C> <C>
Investment in-
come:
Distributions
received from
the portfolios
of John Hancock
Variable Series
Trust I......... $ 12,985 --
------------ ---
Total investment
income........... 12,985 --
Expenses:
Mortality and
expense risks... 1,318 --
------------ ---
Net investment
income........... 11,667 --
Net realized and
unrealized gain
(loss) on invest-
ments:
Net realized
losses.......... (4,727) --
Net unrealized
appreciation
(depreciation)
during the year. (8,296) --
------------ ---
Net realized and
unrealized gain
(loss) on
investments...... (13,023) --
------------ ---
Net increase
(decrease) in net
assets resulting
from operations.. $ (1,356) --
============ ===
</TABLE>
* The Short-Term U.S. Government and the Special Opportunities Subaccounts
commenced operations on May 1 and May 6, 1994, respectively.
See accompanying notes.
39
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Select Stock Subaccount Bond Subaccount International Subaccount
------------------------------ ---------------------------- -----------------------------
For the Period For the Period For the Period
from from from
December 14, December 14, December 14,
1993 1993 1993
(commencement (commencement (commencement
Year ended of operations) to Year ended of operations) to Year ended of operations) to
December December 31, December December 31, December December 31,
31, 1994 1993 31, 1994 1993 31, 1994 1993
----------- ----------------- ---------- ----------------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 37,023 $ 537 $ 6,574 -- $ 9,195 --
Net realized
gains (losses). (37,955) -- (2,259) -- 5,934 --
Net unrealized
depreciation
during the
year........... (24,086) (447) (3,839) -- (46,936) --
----------- ------- -------- --- ---------- ---
Net increase
(decrease) in
net assets
resulting from
operations...... (25,018) 90 476 -- (31,807) --
From policyholder
transactions:
Net premiums
from
policyholders.. 2,165,201 12,650 279,171 -- 1,223,410 --
Net benefits to
policyholders.. (1,250,017) (537) (62,598) -- (199,276) --
----------- ------- -------- --- ---------- ---
Net increase in
net assets from
policyholder
transactions.... 915,184 12,113 216,573 -- 1,024,134 --
----------- ------- -------- --- ---------- ---
Net increase in
net assets...... 890,166 12,203 217,049 -- 992,327 --
Net assets at
beginning of
year............ 12,203 -- -- -- -- --
----------- ------- -------- --- ---------- ---
Net assets at end
of year......... $ 902,369 $12,203 $217,049 -- $ 992,237 --
=========== ======= ======== === ========== ===
<CAPTION>
Money Market Subaccount
------------------------------
For the Period
from
December 14,
1993
(commencement
Year ended of operations) to
December December 31,
31, 1994 1993
------------ -----------------
<S> <C> <C>
Increase in net
assets from
operations:
Net investment
income......... $ 34,061 --
Net realized
gains (losses). -- --
Net unrealized
depreciation
during the
year........... -- --
------------ ---
Net increase
(decrease) in
net assets
resulting from
operations...... 34,061 --
From policyholder
transactions:
Net premiums
from
policyholders.. 7,344,361 --
Net benefits to
policyholders.. (5,123,289) --
------------ ---
Net increase in
net assets from
policyholder
transactions.... 2,221,072 --
------------ ---
Net increase in
net assets...... 2,255,133 --
Net assets at
beginning of
year............ -- --
------------ ---
Net assets at end
of year......... $ 2,255,133 --
============ ===
</TABLE>
See accompanying notes.
40
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
Short-
Special Term U.S.
Real Estate Opportunities Government
Equity Subaccount Subaccount* Stock Subaccount Subaccount*
---------------------------- ------------- ----------------------------- -----------
For the Period For the Period
from from
December 14, December 14,
1993 1993
Year (commencement (commencement Period
ended of operations) to Period ended Year ended of operations) to ended
December December 31, December 31, December December 31, December
31, 1994 1993 1994 31, 1994 1993 31, 1994
--------- ----------------- ------------- ---------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase in net
assets from
operations:
Net investment
income.......... $ 10,220 -- $ 886 $ 67,746 -- $ 306
Net realized
losses.......... (10,840) -- (117) (1,272) -- (1)
Net unrealized
appreciation
(depreciation)
during the year. 9,936 -- 3,155 (67,362) -- (325)
--------- --- -------- ---------- --- -------
Net increase
(decrease) in net
assets resulting
from operations.. 9,316 -- 3,924 (888) -- (20)
From policyholder
transactions:
Net premiums
from
policyholders... 525,631 -- 333,168 1,606,781 -- 41,816
Net benefits to
policyholders... (115,063) -- (4,202) (253,270) -- (333)
--------- --- -------- ---------- --- -------
Net increase in
net assets from
policyholder
transactions..... 410,568 -- 328,966 1,353,511 -- 41,483
--------- --- -------- ---------- --- -------
Net increase in
net assets....... 419,884 -- 332,890 1,352,623 -- 41,463
Net assets at
beginning of
year............. -- -- -- -- -- --
--------- --- -------- ---------- --- -------
Net asset at end
of year.......... $ 419,884 -- $332,890 $1,352,623 -- $41,463
========= === ======== ========== === =======
<CAPTION>
Managed Subaccount
----------------------------
For the Period
from
December 14,
1993
Year (commencement
ended of operations) to
December December 31,
31, 1994 1993
---------- -----------------
<S> <C> <C>
Increase in net
assets from
operations:
Net investment
income.......... $ 11,667 --
Net realized
losses.......... (4,727) --
Net unrealized
appreciation
(depreciation)
during the year. (8,296) --
---------- ---
Net increase
(decrease) in net
assets resulting
from operations.. (1,356) --
From policyholder
transactions:
Net premiums
from
policyholders... 859,794 --
Net benefits to
policyholders... (211,705) --
---------- ---
Net increase in
net assets from
policyholder
transactions..... 648,089 --
---------- ---
Net increase in
net assets....... 646,733 --
Net assets at
beginning of
year............. -- --
---------- ---
Net asset at end
of year.......... $ 646,733 --
========== ===
</TABLE>
* The Short-Term U.S. Government and the Special Opportunities Subaccounts
commenced operations on May 1 and May 6, 1994, respectively.
See accompanying notes.
41
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE 1--ORGANIZATION
John Hancock Variable Life Account S (the Account) is a separate investment
account of John Hancock Variable Life Insurance Company (JHVLICO), a wholly-
owned subsidiary of John Hancock Mutual Life Insurance Company (John Hancock).
The Account was created on November 12, 1993. The Account commenced operations
on December 14, 1993 from the receipt of policy premiums. The Account was
formed to fund variable life insurance policies (Policies) issued by JHVLICO.
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 JHVLICO'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 JHVLICO. The portion of the
Account's assets applicable to the policies may not be charged with
liabilities arising out of any other business JHVLICO may conduct.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments 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
JHVLICO, which is taxed as a life insurance company under the Internal Revenue
Code. JHVLICO 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, JHVLICO 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.
42
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
EXPENSES
JHVLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at a maximum annual rate of .40%
of net assets (excluding policy loans) of the Account. In addition, a monthly
charge at varying levels for the cost of insurance is deducted from the net
assets of the Account.
JHVLICO 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. At December 31, 1994, there were no outstanding policy
loans.
NOTE 3--NET ASSETS
The net assets attributable to JHVLICO represent JHVLICO's funds deposited in
the Account. At its discretion, these amounts may be transferred by JHVLICO to
its general account. At December 31, 1994, there were no assets attributable
to JHVLICO in the Account.
NOTE 4--TRANSACTION WITH AFFILIATES
John Hancock acts as the distributor, principal underwriter and investment
advisor for the Fund.
Certain officers of the Account are officers and directors of JHVLICO, the
Fund or John Hancock.
NOTE 5--DETAILS OF INVESTMENTS
The details of the shares owned and cost and value of investments in the
portfolios of the Fund at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
Portfolio Shares Owned Cost Value
- --------- ------------ ---- -----
<S> <C> <C> <C>
Select Stock................................ 62,636 $ 926,902 $ 902,369
Bond........................................ 23,627 220,888 217,049
International............................... 67,885 1,039,263 992,327
Money Market................................ 225,457 2,255,133 2,255,133
Real Estate Equity.......................... 37,639 409,948 419,884
Special Opportunities....................... 33,480 329,736 332,891
Stock....................................... 117,597 1,419,985 1,352,623
Short-Term U.S. Government.................. 4,290 41,788 41,463
Managed..................................... 54,065 655,030 646,733
------- ---------- ----------
626,676 $7,298,673 $7,160,472
======= ========== ==========
</TABLE>
43
<PAGE>
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 5--DETAILS OF INVESTMENTS--CONTINUED
Purchases, including reinvestment of dividend distributions, and proceeds from
sales of shares in the portfolios of the Fund during 1994 were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- --------- --------- -----
<S> <C> <C>
Select Stock............................................. $ 2,345,698 $1,393,491
Bond..................................................... 285,533 62,386
International............................................ 1,224,358 191,029
Money Market............................................. 7,455,168 5,200,035
Real Estate Equity....................................... 631,071 210,283
Special Opportunities.................................... 334,391 4,538
Stock.................................................... 1,673,086 251,829
Short-Term U.S. Government............................... 42,146 357
Managed.................................................. 967,228 307,741
----------- ----------
$14,958,679 $7,621,689
=========== ==========
</TABLE>
44
<PAGE>
REPORTS OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Policyholders
John Hancock Variable Life Account S
of John Hancock Variable Life Insurance Company
We have audited the accompanying statement of assets and liabilities of John
Hancock Variable Life Account S (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,
1994, and the related statements of operations and statements of changes in
net assets for the year ended December 31, 1994, and the period from October
4, 1993 (commencement of operations) to December 31, 1993 for the Select
Stock, Bond, International, Money Market, Real Estate Equity, Stock, and
Managed Subaccounts; the related statement of operations and statement of
changes in net assets for the period from May 6, 1994 (commencement of
operations) to December 31, 1994 for the Special Opportunities Subaccount; and
the related statement of operations and statement of changes in net assets for
the period from May 1, 1994 (commencement of operations) to December 31, 1994
for the Short-Term U.S. Government Subaccount. 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 Variable Life Account S at December 31,
1994, and the results of their operations and the changes in their net assets
for each of the periods indicated above, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Boston, Massachusetts
February 7, 1995
----------------
Board of Directors
John Hancock Variable Life Insurance Company
We have audited the accompanying statements of financial position of John
Hancock Variable Life Insurance Company as of December 31, 1994 and 1993, and
the related statements of operations and unassigned deficit and cash flows for
each of the three years in the period ended December 31, 1994. 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 Variable Life
Insurance Company at December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles
for a stock life insurance company wholly-owned by a mutual life insurance
company and with reporting practices prescribed or permitted by the
Commonwealth of Massachusetts Division of Insurance.
Ernst & Young LLP
Boston, Massachusetts
February 7, 1995
45
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
------------ ------------------
1995 1994 1993
---- ---- ----
(In millions)
<S> <C> <C> <C>
Assets
Bonds--Note 7................................. $ 466.8 $ 458.3 $ 433.0
Preferred stocks.............................. 5.2 5.3 6.4
Common stocks................................. 2.3 1.9 2.4
Investment in affiliate....................... 64.9 59.9 57.6
Mortgage loans on real estate--Note 7......... 138.0 148.5 163.1
Real estate................................... 43.0 27.8 16.7
Policy loans.................................. 58.4 47.3 36.9
Cash items:
Cash in banks............................... 0.0 29.3 5.7
Temporary cash investments.................. 52.4 46.7 17.6
-------- -------- --------
52.4 76.0 23.3
Premiums due and deferred..................... 38.6 43.9 47.3
Investment income due and accrued............. 16.0 14.7 14.4
Other general account assets.................. 12.1 22.3 8.9
Assets held in separate accounts.............. 2,210.0 1,721.0 1,568.6
-------- -------- --------
TOTAL ASSETS.................................. $3,107.7 $2,626.9 $2,378.6
======== ======== ========
Obligations and Stockholder's Equity
OBLIGATIONS:
Policy reserves............................. $ 658.1 $ 638.6 $ 600.3
Federal income and other taxes payable--Note
1.......................................... 9.8 17.3 (1.2)
Other accrued expenses...................... (14.9) 22.8 1.0
Asset valuation reserve--Note 1............. 14.1 12.6 10.4
Obligations related to separate accounts.... 2,206.2 1,717.7 1,565.3
-------- -------- --------
TOTAL OBLIGATIONS............................. 2,873.3 2,409.0 2,175.8
Stockholder's Equity--Notes 2 and 6
Common Stock, $50 par value; authorized
50,000 shares;
issued and outstanding 50,000 shares--1995;
20,000 shares--1994 and 1993............... 2.5 25.0 25.0
Paid-in capital............................. 377.5 355.0 355.0
Unassigned deficit.......................... (145.6) (162.1) (177.2)
-------- -------- --------
TOTAL STOCKHOLDER'S EQUITY.................... 234.4 217.9 202.8
-------- -------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY.... $3,107.7 $2,626.9 $2,378.6
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT
<TABLE>
<CAPTION>
(Unaudited)
Nine months
ended
September 30 Year ended December 31
---------------- -------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C> <C>
Income
Premiums.................... $ 378.9 $ 345.2 $ 430.5 $ 398.8 $ 416.4
Net investment income--Note
4.......................... 47.1 43.1 57.6 61.3 62.0
Other, net.................. 57.7 1.1 95.5 (4.0) (3.9)
------- ------- ------- ------- -------
483.7 389.4 583.6 456.1 474.5
Benefits and Expenses
Payments to policyholders
and beneficiaries.......... 161.3 138.7 187.5 190.8 199.0
Additions to reserves to
provide for future payments
to policyholders and bene-
ficiaries.................. 165.3 124.4 185.3 111.5 120.9
Expenses of providing
service to policyholders
and obtaining new
insurance--Note 6.......... 113.9 127.9 168.9 144.5 111.4
Cost of restructuring....... 0.0 0.0 3.0 0.0 0.0
State and miscellaneous tax-
es......................... 8.8 8.2 11.3 9.8 9.5
------- ------- ------- ------- -------
449.3 399.2 556.0 456.6 440.8
------- ------- ------- ------- -------
GAIN (LOSS) FROM
OPERATIONS BEFORE FEDERAL
INCOME TAXES AND NET
REALIZED CAPITAL GAINS
(LOSSES)................. 34.4 (9.8) 27.6 (0.5) 33.7
Federal income taxes (bene-
fit)--Note 1................. 19.9 (1.4) 15.0 6.5 20.5
------- ------- ------- ------- -------
GAIN (LOSS) FROM
OPERATIONS BEFORE NET
REALIZED CAPITAL GAINS
(LOSSES)................. 14.5 (8.4) 12.6 (7.0) 13.2
Net realized capital gains
(losses)--Note 5............. (0.6) 1.2 0.4 (2.6) (1.4)
------- ------- ------- ------- -------
NET GAIN (LOSS)........... 13.9 (7.2) 13.0 (9.6) 11.8
Unassigned deficit at begin-
ning of year................. (162.1) (177.2) (177.2) (142.3) (157.1)
Net unrealized capital gains
(losses) and other adjust-
ments--Note 5................ 2.0 (3.7) (1.5) (3.2) (2.2)
Valuation reserve changes--
Note 1....................... 0.0 2.5 2.7 2.3 9.0
Change in separate account
surplus...................... 0.5 0.0 0.0 0.5 0.2
Other reserves and adjust-
ments........................ 0.1 0.4 0.9 (24.9) (4.0)
------- ------- ------- ------- -------
UNASSIGNED DEFICIT AT END
OF PERIOD................ $(145.6) $(185.2) $(162.1) $(177.2) $(142.3)
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Nine months ended
September 30 Year ended December 31
----------------- ----------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C> <C>
Cash Provided
Insurance premiums............ $383.3 $352.3 $517.2 $411.4 $425.4
Net investment income......... 46.1 43.2 57.9 63.0 62.0
Other, net.................... 66.2 0.4 (0.3) (0.6) (2.6)
-------- -------- ------- ------- -------
495.6 395.9 574.8 473.8 484.8
Benefits to policyholders and
beneficiaries................ 150.3 132.6 175.3 176.6 186.4
Dividends paid to policyhold-
ers.......................... 9.5 8.9 11.9 14.8 12.2
Insurance expenses and other
taxes........................ 122.5 135.5 180.6 148.4 118.9
Net transfers to separate ac-
counts....................... 149.4 96.4 146.6 91.9 65.9
Other, net.................... 37.8 6.0 7.7 22.1 33.1
-------- -------- ------- ------- -------
469.5 379.4 522.1 453.8 416.5
-------- -------- ------- ------- -------
NET CASH PROVIDED FROM OP-
ERATIONS................. 26.1 16.5 52.7 20.0 68.3
Proceeds from the disposition,
redemption and prepayment of:
Bonds....................... 44.9 44.5 70.1 103.0 49.1
Stocks...................... 0.7 1.0 1.2 9.4 4.5
Real estate................. 0.0 4.2 22.1 3.6 1.7
Other invested assets....... 0.0 0.0 1.3 0.1 0.0
Mortgage loan repayments...... 16.3 26.0 35.2 80.1 13.9
Other sources................. 0.0 11.2 21.8 0.0 0.0
-------- -------- ------- ------- -------
TOTAL CASH PROVIDED....... 88.0 103.4 204.4 216.2 137.5
Cash Applied
Purchase of:
Bonds....................... 53.3 81.0 94.1 92.3 132.5
Stocks...................... 1.7 1.5 1.5 59.8 1.4
Real estate................. 15.5 0.0 18.4 0.5 0.3
Other invested assets....... 0.0 0.9 0.9 4.2 0.2
Mortgage loans issued......... 6.5 28.7 37.9 32.4 16.8
Return of paid-in capital to
John Hancock................. 0.0 0.0 0.0 1.8 0.0
Other applications............ 34.6 0.0 (1.1) 43.8 (0.3)
-------- -------- ------- ------- -------
TOTAL CASH APPLIED........ 111.6 112.1 151.7 234.8 150.9
-------- -------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND
TEMPORARY
CASH INVESTMENTS............... (23.6) (8.7) 52.7 (18.6) (13.4)
Cash and temporary cash invest-
ments at beginning of year..... 76.0 23.3 23.3 41.9 55.3
-------- -------- ------- ------- -------
CASH AND TEMPORARY CASH INVEST-
MENTS AT
END OF PERIOD.................. $ 52.4 $ 14.6 $ 76.0 $ 23.3 $ 41.9
======== ======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Common Paid-in Unassigned
Stock Capital Deficit Total
------ ------- ---------- ------
(In millions)
<S> <C> <C> <C> <C>
Balance at January 1, 1992................ $25.0 $356.8 $(157.1) $224.7
1992 Transactions:
Net gain................................ 11.8 11.8
Net unrealized capital losses and other
adjustments............................ (2.2) (2.2)
Valuation reserve changes............... 9.0 9.0
Change in separate account surplus...... 0.2 0.2
Other reserves and adjustments.......... (4.0) (4.0)
----- ------ ------- ------
Balance at December 31, 1992.............. 25.0 356.8 (142.3) 239.5
1993 Transactions:
Net loss................................ (9.6) (9.6)
Net unrealized capital losses and other
adjustments............................ (3.2) (3.2)
Valuation reserve changes............... 2.3 2.3
Change in separate account surplus...... 0.5 0.5
Other reserves and adjustments.......... (24.9) (24.9)
Return of capital....................... (1.8) (1.8)
----- ------ ------- ------
Balance at December 31, 1993.............. 25.0 355.0 (177.2) 202.8
1994 Transactions:
Net gain................................ 13.0 13.0
Net unrealized capital losses and other
adjustments............................ (1.5) (1.5)
Valuation reserve changes............... 2.7 2.7
Change in separate account surplus...... 0.0 0.0
Other reserves and adjustments.......... 0.9 0.9
----- ------ ------- ------
Balance at December 31, 1994.............. $25.0 $355.0 $(162.1) $217.9
===== ====== ======= ======
For the nine months ended September 30,
1994 (unaudited)
Balance at January 1, 1994................ $25.0 $355.0 $(177.2) $202.8
1994 Transactions:
Net loss................................ (7.2) (7.2)
Net unrealized capital losses and other
adjustments............................ (3.7) (3.7)
Valuation reserve changes............... 2.5 2.5
Change in separate account surplus...... 0.0 0.0
Other reserves and adjustments.......... 0.4 0.4
----- ------ ------- ------
Balance at September 30, 1994............. $25.0 $355.0 $(185.2) $194.8
===== ====== ======= ======
For the nine months ended September 30,
1995 (unaudited)
Balance at January 1, 1995................ $25.0 $355.0 $(162.1) $217.9
1995 Transactions:
Net gain................................ 13.9 13.9
Net unrealized capital gains and other
adjustments............................ 2.0 2.0
Valuation reserves changes.............. 0.0 0.0
Change in separate account surplus...... 0.5 0.5
Other reserves and adjustments.......... 0.1 0.1
Reclassification of paid-in capital..... (22.5) 22.5 0.0
----- ------ ------- ------
Balance at September 30, 1995............. $ 2.5 $377.5 $(145.6) $234.4
===== ====== ======= ======
</TABLE>
49
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (INFORMATION AS OF, AND FOR THE
PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
NOTE 1--ACCOUNTING PRACTICES
John Hancock Variable Life Insurance Company (the Company) is a wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company (John Hancock). 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 a stock life insurance company wholly-owned by a
mutual life insurance company. Accordingly, the assets in the statements of
financial position are "admitted assets" as defined by regulatory authorities.
In January, 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 120, "Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises
for Certain Long-Duration Participating Contracts." This Statement extends the
requirements of Statements No. 60, 97 and 113 to mutual life insurance
enterprises and amends FASB Interpretation No. 40, "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises." SFAS No. 120 and Interpretation No. 40, as amended, require life
insurance companies to adopt certain accounting principles in their financial
statements in order to continue to be considered in accordance with generally
accepted accounting principles, effective for 1996 financial statements. The
manner in which policy reserves, new business acquisition costs, asset
valuation and the related tax effects are recorded will change. The
modifications to existing accounting practices which may be necessary have
been defined by the American Institute of Certified Public Accountants in
Statement of Position (SOP) 95-1, "Accounting for Certain Insurance Activities
of Mutual Life Insurance Enterprises." The Company has not yet determined the
effects of such modifications on its general purpose financial statements.
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:
Bonds 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.
Goodwill is amortized on a straight line basis over a ten year period.
Mortgage loans are carried at outstanding principal balance or amortized
cost.
50
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--ACCOUNTING PRACTICES--CONTINUED
Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight line
basis.
Real estate acquired in satisfaction of debt and held for sale 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.
Asset Valuation and Interest Maintenance Reserves: Beginning in 1992, the
Company adopted the Asset Valuation Reserve (AVR) prescribed by the NAIC to
replace the Mandatory Securities Valuation Reserve (MSVR) previously required
by the NAIC and the additional Mortgage and Real Estate Valuation Reserve
(MRVR) provided by the Company. The AVR is computed in accordance with the
prescribed NAIC formula and represents a provision for possible fluctuations
in the value of bonds, equity securities, mortgage loans, real estate and
other invested assets. Changes to the AVR are charged or credited directly to
the unassigned deficit.
The Company also records the NAIC prescribed Interest Maintenance Reserve
(IMR) that represents the after tax net accumulated unamortized realized
capital gains and losses attributable to changes in the general level of
interest rates on sales of fixed income securities, principally bonds and
mortgage loans. Such gains and losses are deferred and amortized into income
over the remaining expected lives of the investments sold. At September 30,
1995, the IMR, net of 1995 amortization of $0.8 million, amounted to $6.5
million which is included in policy reserves. The corresponding amounts at
September 30, 1994 were $0.8 million and $7.4 million, respectively. At
December 31, 1994, the IMR, net of 1994 amortization of $1.1 million, amounted
to $7.1 million, which is included in policy reserves. The corresponding 1993
amounts were $0.5 million and $7.6 million, respectively.
Separate Accounts: Separate account assets (unit investment trusts valued at
market) and separate account obligations (principally policyholder account
values) are included as separate captions in the statements of financial
position. In 1995 and 1994, the change in separate account surplus is
recognized through direct charges or credits to unassigned deficit. In 1993
and 1992 separate account business was combined with the general account under
the appropriate captions in the consolidated summary of operations. The 1993
and 1992 presentation was reclassified to permit comparison with the
corresponding 1995 and 1994 amounts. The presentation has no effect on
unassigned deficit.
Fair Values of Financial Instruments: 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.
51
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--ACCOUNTING PRACTICES--CONTINUED
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
its 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 loans. Mortgage loans with similar characteristics
and credit risks are aggregated into qualitative categories for purposes of
the fair value calculations.
The carrying amount in the statement of financial position for policy loans
approximates its fair value.
The fair value for outstanding commitments to purchase long-term bonds 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 the end of the period, respectively. The fair
value for commitments to purchase real estate approximates the amount of
the initial commitment.
Capital Gains and Losses: Realized capital gains and losses, net of taxes and
amounts transferred to the IMR, are included in net gain or loss. Unrealized
gains and losses, which consist of market value and book value adjustments,
are shown as adjustments to the unassigned deficit.
Policy Reserves: Reserves for variable life insurance policies are maintained
principally on the modified preliminary term method using the 1958 and 1980
Commissioner's Standard Ordinary (CSO) mortality tables, with an assumed
interest rate of 4% for policies issued prior to May 1, 1983 and 4 1/2% for
policies issued on or thereafter. Reserves for single premium policies are
determined by the net single premium method using the 1958 CSO mortality
table, with an assumed interest rate of 4%. Reserves for universal life
policies issued prior to 1985 are equal to the gross account value which at
all times exceeds minimum statutory requirements. Reserves for universal life
policies issued from 1985 through 1988 are maintained at the greater of the
Commissioner's Reserve Valuation Method (CRVM) using the 1958 CSO mortality
table, with 4 1/2% interest or the cash surrender value. Reserves for
universal life policies issued after 1988 and for flexible variable policies
are maintained using the greater of the cash surrender value or the CRVM
method with the 1980 CSO mortality table and 5 1/2% interest for policies
issued from 1988 through 1992; 5% interest for policies issued in 1993 and
1994; and 4 1/2% interest for policies issued in 1995.
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 are
consolidated with John Hancock, its Parent, in filing a consolidated federal
income tax return for the affiliated group. The federal income taxes of the
Company are allocated on a separate return basis with certain adjustments. The
Company made payments of $26.7 million for the nine months ended September 30,
1995 and
52
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 1--ACCOUNTING PRACTICES--CONTINUED
received tax benefits of $1.8 million for the nine months ended September 30,
1994. The Company received federal tax benefits of $7.0 million in 1994 and
made payments of $17.0 million and $24.9 million in 1993 and 1992,
respectively.
Income before taxes differs from taxable income principally due to tax-exempt
investment income, the limitation placed on the tax deductibility of
policyholder dividends, accelerated depreciation, differences in policy
reserves for tax return and financial statement purposes, capitalization of
policy acquisition expenses for tax purposes and other adjustments prescribed
by the Internal Revenue Code.
No provision is generally recognized for timing differences that may exist
between financial reporting and taxable income or loss.
Adjustments to Policy Reserves: 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 the unassigned deficit.
During 1994, the Company refined certain actuarial assumptions inherent in the
calculation of preconversion yearly renewable term and gross premium
deficiency reserves, resulting in a $2.7 million decrease in the unassigned
deficit at December 31, 1994. Similar refinements to the actuarial assumptions
inherent in the calculation of active life waiver of premium disability
reserves were made during 1993 and 1992 resulting in a $2.3 million and $9.0
million decrease in the unassigned deficit at December 31, 1993 and December
31, 1992, respectively. During the nine months ended September 30, 1995, there
were no refinements in actuarial assumptions inherent in the calculation of
policy reserves. During the nine months ended September 30, 1994, the Company
refined actuarial assumptions inherent in the calculation of preconversion
yearly renewable term reserves, resulting in a $2.5 million decrease in the
unassigned deficit at September 30, 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.
Reclassifications: Certain 1993 and 1992 amounts have been reclassified to
permit comparison with the corresponding 1995 and 1994 amounts.
NOTE 2--CAPITALIZATION
At December 31, 1994, the Company had 50,000 shares authorized with 20,000
shares issued and outstanding. On February 16, 1995, the Company issued the
remaining 30,000 shares to John Hancock and transferred $22.5 million from
common stock to paid-in capital. The par value per share is $50.
In prior years, the Company received capital contributions from John Hancock,
with a portion of the contributed capital being credited to common stock,
although no additional shares were issued. This practice had the effect of
stating the carrying value of issued shares of common stock at amounts other
than $50 per share par value with the offset reflected in paid-in capital.
During 1993, the Company returned $1.8 million of paid-in capital to John
Hancock.
53
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 3--ACQUISITION
On June 23, 1993, the Company acquired all of the outstanding shares of stock
of Colonial Penn Annuity and Life Insurance Company (CPAL) from Colonial Penn
Life Insurance Company, for an aggregate purchase price of approximately $42.5
million. At the date of acquisition, assets of CPAL were approximately $648.5
million, consisting principally of cash and temporary cash investments and
liabilities were approximately $635.2 million, consisting principally of
reserves related to a block of interest sensitive single-premium whole life
insurance business assumed by CPAL from Charter National Life Insurance
Company (Charter). The purchase price includes contingent payments of up to
approximately $7.3 million payable between 1994 and 1998 based on the actual
lapse experience of the business in force on June 23, 1993. The acquisition
was accounted for using the purchase method and the unamortized goodwill was
$17.9 million and $18.9 million at September 30, 1995 and December 31, 1994,
respectively. The Company made contingent payments to CPAL of $1.5 million for
the nine months ended September 30, 1995 and $1.5 million in 1994.
On June 24, 1993, the Company contributed $24.6 million in additional capital
to CPAL. CPAL was renamed John Hancock Life Insurance Company of America
(JHLICOA) on July 7, 1993. JHLICOA manages the business assumed from Charter
and does not currently issue new business.
NOTE 4--NET INVESTMENT INCOME
Investment income has been reduced by the following amounts:
<TABLE>
<CAPTION>
Nine months ended
September 30
-----------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C> <C>
Investment expenses ........................... $ 1.9 $ 2.3 $3.4 $2.9 $2.8
Interest expense............................... 0.0 0.0 0.2 0.0 0.0
Depreciation expense........................... 0.7 0.4 0.6 0.6 0.5
Investment taxes............................... 0.4 0.2 0.2 0.3 0.2
-------- -------- ---- ---- ----
$ 3.0 $ 2.9 $4.4 $3.8 $3.5
======== ======== ==== ==== ====
</TABLE>
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS
Net realized capital gains (losses) consist of the following items:
<TABLE>
<CAPTION>
Nine months ended
September 30
------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C> <C>
Gains (losses) from asset sales....... $ 0.1 $ (0.7) $(1.6) $ 9.6 $(2.1)
Less capital gains (tax) credit....... (0.5) 2.5 2.5 (4.2) 0.8
Less net amounts transferred to IMR... (0.2) (0.6) (0.5) (8.0) (0.1)
-------- -------- ----- ----- -----
Net Realized Capital Gains (Losses). $ (0.6) $ 1.2 $ 0.4 $(2.6) $(1.4)
======== ======== ===== ===== =====
</TABLE>
54
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 5--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS--CONTINUED
Net unrealized capital gains (losses) and other adjustments consist of the
following items:
<TABLE>
<CAPTION>
Nine months ended
September 30
------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C> <C>
Gains (losses) from changes in security
values and book value adjustments..... $ 3.6 $ (2.0) $ 0.7 $(1.4) $ 1.4
Increase in asset valuation reserve.... (1.6) (1.7) (2.2) (1.8) (3.6)
-------- -------- ----- ----- -----
Net Unrealized Capital Gains (Losses)
and Other
Adjustments......................... $ 2.0 $ (3.7) $(1.5) $(3.2) $(2.2)
======== ======== ===== ===== =====
</TABLE>
NOTE 6--TRANSACTIONS WITH PARENT
The Company's Parent provides the Company with personnel, property and
facilities in carrying out certain of its corporate functions. The Parent
annually determines a fee for these services and facilities based on a number
of criteria which were revised in 1995, 1994, 1993 and 1992 to reflect
continuing changes in the Company's operations. The amount of the service fee
charged to the Company was $72.4 million, $88.5 million, $117.0 million, $98.2
million and $75.2 million for the nine months ended September 30, 1995 and
September 30, 1994, in 1994 and 1993, and 1992, respectively, which has been
included in insurance and investment expenses. The Parent has guaranteed that,
if necessary, it will make additional capital contributions to prevent the
Company's stockholder's equity from declining below $1.0 million.
In 1992, the National Association of Insurance Commissioners issued its
accounting policy for "Employers' Accounting for Postretirement Benefits Other
Than Pensions." The service fee charged to the Company by the Parent includes
$1.6 million, $2.0 million, $6.0 million and $1.4 million for the nine months
ended September 30, 1995 and September 30, 1994 and the years ended December
31, 1994 and 1993, respectively, representing the portion of the provision for
retiree benefit plans determined under the accrual method in accordance with
this policy, including a provision for the transition liability which is being
amortized over twenty years, that was allocated to the Company.
On October 1, 1993, the Company entered into an assumption reinsurance
agreement with John Hancock to cede a block of variable life, universal life
and flexible variable life insurance policies to John Hancock representing
substantially all of such policies written by the Company in the State of New
York. In connection with this agreement, general account assets consisting of
bonds, mortgage loans, policy loans, cash, investment income due and accrued
and deferred and uncollected premiums totalling $72.2 million were transferred
by the Company to John Hancock, along with policy reserves, unearned premiums
and dividend liabilities totalling $47.7 million and surplus totalling $24.5
million. Separate account assets consisting of common stock and policy loans
totalling $200.8 million were transferred to John Hancock's separate accounts
along with $200.8 million in separate account policyholder obligations.
55
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 6--TRANSACTIONS WITH PARENT--CONTINUED
Effective January 1, 1994, the Company entered into a modified coinsurance
agreement with John Hancock to reinsure 50% of 1995 and 1994 issues of
flexible premium variable life insurance and scheduled premium variable life
insurance policies. In connection with this agreement, John Hancock
transferred $30.2 million of cash for tax, commission, and expense allowances
to the Company, which increased the Company's net gain from operations by
$13.6 million for the nine months ended September 30, 1995. The corresponding
amounts for the year ended December 31, 1994 were $29.5 million and $26.9
million, respectively.
NOTE 7--INVESTMENTS
The statement value and fair value of bonds are shown below:
<TABLE>
<CAPTION>
Nine months ended September 30, 1995
--------------------------------------
Gross Gross
Statement Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ---------- ------
(In millions)
<S> <C> <C> <C> <C>
U.S. treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 4.4 $ 0.0 $ 0.1 $ 4.3
Obligations of states and political sub-
divisions.............................. 12.9 1.1 0.0 14.0
Debt securities issued by foreign gov-
ernments............................... 0.3 0.0 0.0 0.3
Corporate securities.................... 442.6 38.5 0.6 480.5
Mortgage-backed securities.............. 6.6 0.2 0.1 6.7
------ ----- ----- ------
Totals.................................. $466.8 $39.8 $ 0.8 $505.8
====== ===== ===== ======
<CAPTION>
Year ended December 31, 1994
--------------------------------------
Gross Gross
Statement Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ---------- ------
(In millions)
<S> <C> <C> <C> <C>
U.S. treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 10.4 $ 0.0 $ 0.5 $ 9.9
Obligations of states and political sub-
divisions.............................. 11.6 0.2 0.1 11.7
Debt securities issued by foreign gov-
ernments............................... 1.3 0.0 0.0 1.3
Corporate securities.................... 431.9 10.5 9.9 432.5
Mortgage-backed securities.............. 3.1 0.1 0.1 3.1
------ ----- ----- ------
Totals.................................. $458.3 $10.8 $10.6 $458.5
====== ===== ===== ======
</TABLE>
56
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 7--INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
Year ended December 31, 1993
--------------------------------------
Gross Gross
Statement Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ---------- ------
(In millions)
<S> <C> <C> <C> <C>
U.S. treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 3.5 $ 0.2 $0.0 $ 3.7
Obligations of states and political sub-
divisions.............................. 10.6 1.3 0.0 11.9
Debt securities issued by foreign gov-
ernments............................... 0.4 0.0 0.0 0.4
Corporate securities.................... 413.5 47.3 0.8 460.0
Mortgage-backed securities.............. 5.0 0.2 0.0 5.2
------ ----- ---- ------
Totals.................................. $433.0 $49.0 $0.8 $481.2
====== ===== ==== ======
</TABLE>
The statement value and fair value of bonds 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>
September 30, 1995 December 31, 1994
--------------------- -------------------
Statement Fair Statement Fair
Value Value Value Value
----------- --------- ---------- --------
(In millions)
<S> <C> <C> <C> <C>
Due in one year or less............... $ 14.5 $ 14.8 $ 28.5 $ 28.6
Due after one year through five years. 133.0 139.1 163.1 165.7
Due after five years through ten
years................................ 177.1 188.4 167.7 162.5
Due after ten years................... 135.6 156.8 95.9 98.6
--------- --------- -------- --------
460.2 499.1 455.2 455.4
Mortgage-backed securities............ 6.6 6.7 3.1 3.1
--------- --------- -------- --------
$466.8 $505.8 $458.3 $458.5
========= ========= ======== ========
</TABLE>
Proceeds from sales, maturities and prepayments of bonds during the nine
months ended September 30, 1995 and September 30, 1994 were $44.9 million and
$44.5 million, respectively. Gross gains of $0.6 million and $0.9 million and
gross losses of $0.1 million and $0.0 million were realized on these
transactions during the nine months ended September 30, 1995 and September 30,
1994, respectively.
Proceeds from sales, maturities, and prepayments of bonds during 1994, 1993
and 1992 were $70.1 million, $103.0 million and $49.1 million, respectively.
Gross gains of $1.1 million in 1994, $10.1 million in 1993, and $0.9 million
in 1992 and gross losses of $0.2 million in 1994, $0.0 million in 1993, and
$1.0 million in 1992 were realized on these transactions.
The cost of common stocks was $1.4 million at September 30, 1995, December 31,
1994 and December 31, 1993, respectively. Gross unrealized appreciation on
common stocks totaled $1.6 million at September 30, 1995
57
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 7--INVESTMENTS--CONTINUED
and $1.6 million at December 31, 1994 and gross unrealized depreciation
totaled $0.7 million at September 30, 1995 and $1.2 million at December 31,
1994. The fair value of preferred stock totaled $5.4 million at September 30,
1995, $5.0 million at December 31, 1994, and $6.7 million at December 31,
1993.
Mortgage loans with outstanding principal balances of $1.1 million and bonds
with amortized cost of $0.0 million were nonincome producing for the nine
months ended September 30, 1995. The corresponding amounts for the twelve
months ended December 31, 1994 were $3.4 million and $0.2 million,
respectively.
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>
September 30, 1995
- ---------------------------------------------------------------------------------------
Statement Geographic Statement
Property Type Value Concentration Value
------------- --------- ------------- ---------
(In millions) (In millions)
<S> <C> <C> <C>
Apartments.................. $ 44.9 East North Central.......... $ 24.9
Hotels...................... 4.5 East South Central.......... 4.9
Industrial.................. 20.7 Middle Atlantic............. 11.2
Office buildings............ 12.6 Mountain.................... 11.8
Retail...................... 12.1 New England................. 20.5
1-4 Family.................. 20.4 Pacific..................... 37.7
Agricultural................ 22.8 South Atlantic.............. 27.0
------ ------
$138.0 $138.0
====== ======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
- ---------------------------------------------------------------------------------------
Statement Geographic Statement
Property Type Value Concentration Value
------------- --------- ------------- ---------
(In millions) (In millions)
<S> <C> <C> <C>
Apartments.................. $ 53.7 East North Central.......... $ 25.3
Hotels...................... 4.6 East South Central.......... 5.5
Industrial.................. 20.9 Middle Atlantic............. 16.1
Office buildings............ 19.0 Mountain.................... 14.4
Retail...................... 17.1 New England................. 24.2
Agricultural................ 26.3 Pacific..................... 38.2
Other....................... 6.9 South Atlantic.............. 24.8
------ ------
$148.5 $148.5
====== ======
</TABLE>
At September 30, 1995, the fair values of the commercial and agricultural
mortgage loans portfolios were $121.9 million and $29.3 million, respectively.
The corresponding amounts as of December 31, 1994 were approximately $118.8
million and $27.3 million, respectively. The corresponding amounts as of
December 31, 1993 were approximately $141.4 million and $31.4 million,
respectively.
58
<PAGE>
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
(INFORMATION AS OF, AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994 IS
UNAUDITED)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
NOTE 8--REINSURANCE
The Company cedes business to reinsurers to share risks under variable life,
universal life and flexible variable life insurance policies for the purpose
of reducing exposure to large losses. Premiums, benefits and reserves ceded to
reinsurers during the nine months ended September 30, 1995 were $48.1 million,
$6.1 million, and $12.9 million, respectively. The corresponding amounts
during the nine months ended September 30, 1994 were $9.5 million, $9.3
million, and $15.9 million, respectively. The corresponding amounts in 1994
were $67.5 million, $12.3 million, and $16.3 million, respectively. The
corresponding amounts in 1993 were $74.9 million, $9.8 million, and $14.4
million, respectively. The corresponding amounts in 1992 were $15.5 million,
$5.8 million, and $18.4 million, respectively.
To the extent that an assuming reinsurance company in unable to meet its
obligations under a reinsurance agreement, the Company remains liable as the
direct insurer on all risks reinsured.
NOTE 9--COMMITMENTS AND CONTINGENCIES
The Company has extended commitments to purchase long-term bonds and issue
real estate mortgages totalling $9.0 million and $9.3 million, respectively,
at September 30, 1995. The corresponding amounts at December 31, 1994 were
$6.7 million and $5.0 million, respectively. The Company monitors the
creditworthiness of borrowers under long-term bond commitments and requires
collateral as deemed necessary. If funded, loans related to real estate
mortgages would be fully collateralized by the related properties. The fair
values of the commitments described above was $19.2 million at September 30,
1995 and $11.7 million at December 31, 1994. The majority of the commitments
at September 30, 1995 expire in 1996.
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 September 30, 1995 and
December 31, 1994. 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.
59
<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
JHVLICO under the terms of a supplementary agreement. The agreement will be
issued when the proceeds are applied through the election of any one of the
options below.
The following options are subject to the restrictions and limitations stated
in the Policy.
Option 1--Interest Income at the declared rate but not less than 3 1/2% a
year on proceeds held on deposit.
Option 2A--Income of a Specified Amount, with payments each year totaling
at least 1/12th of the proceeds, until the proceeds, with interest credited
at the declared rate but not less than 3 1/2% a year on unpaid balances,
are fully paid.
Option 2B--Income for a Fixed Period, with each payment as declared.
Option 3--Life Income with Payments for a Guaranteed Period.
Option 4--Life Income without Refund at the death of the Payee of any
part of the proceeds applied. Only one payment is made if the Payee dies
before the second payment is due.
Option 5--Life Income with Cash Refund at the death of the Payee of the
amount, if any, equal to the proceeds applied less the sum of all income
payments made.
No election of an option may provide for income payments of less than $50.
Other options may be arranged with JHVLICO's approval including optional
methods of settlement available from John Hancock.
ADDITIONAL INSURANCE BENEFITS
On payment of an additional premium or charge and subject to certain age and
insurance underwriting requirements, certain additional provisions, such as an
Accidental Death Benefit, which are subject to the restrictions and
limitations set forth therein, may be included in a Policy by rider.
GENERAL PROVISIONS
BENEFICIARY. The Beneficiary will be as shown in the application for the
Policy, unless thereafter changed by the Owner in accordance with the terms of
the Policy. If the insured dies and there is no surviving Beneficiary, the
Owner will be the Beneficiary, but if the insured was the Owner, the Owner's
estate will be the Beneficiary.
OWNER AND ASSIGNMENT. The Owner's interest in the Policy may be assigned
without the consent of any revocable Beneficiary. JHVLICO 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 JHVLICO's Home Office. JHVLICO assumes
no responsibility for the validity or sufficiency of any assignment.
MISSTATEMENT OF AGE OR SEX. If the age or sex of the insured has been
misstated, JHVLICO will adjust the benefits payable to reflect the correct age
or sex.
A-1
<PAGE>
SUICIDE. If the insured commits suicide within 2 years (except where state
law requires a shorter period) from the date of issue shown in the Policy,
JHVLICO will pay in place of all other benefits an amount equal to the premium
paid less any Indebtedness on the date of death and any withdrawals. If the
suicide is within 2 years (except where state law requires a shorter period)
from the date of any Policy change that increases the death benefit, the death
benefit will be limited as set forth in the Policy.
AGE AND POLICY ANNIVERSARIES. For purpose of the Policy, an insured's "age"
is his or her age on his or her nearest birthday. Policy months and Policy
years are calculated from the date of issue.
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,
JHVLICO will pay in place of all other benefits an amount equal to the greater
of the premium paid or the Surrender Value, less any Indebtedness.
INCONTESTABILITY. The Policy shall be incontestable other than for
nonpayment of premiums after it has been in force during the lifetime of an
insured for 2 years from its issue date. If, however, evidence of insurability
is required with respect to any increase in death benefit, such increase shall
be incontestable after the increase has been in force for 2 years from the
increase date.
DEFERRAL OF DETERMINATIONS AND PAYMENTS. Payment of any death, surrender,
partial withdrawal or loan proceeds will ordinarily be made within seven days
after receipt at JHVLICO'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.
JHVLICO may defer any transaction requiring a determination of Account Value
in any variable Subaccount for any period during which: (1) the disposal or
valuation of the Account's assets is not reasonably practicable because the
New York Stock Exchange is closed or conditions are such that, under the
Commission's rules and regulations, trading is restricted or an emergency is
deemed to exist or (2) the Commission by order permits postponement of such
actions for the protection of Owners.
The foregoing description of Policy provisions is qualified by reference to
the specimen Policy which has been filed as an exhibit to the Registration
Statement.
A-2
<PAGE>
APPENDIX--ILLUSTRATION OF DEATH BENEFITS,
SURRENDER VALUES AND ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit and Surrender
Value of the Policy, disregarding any Policy loans. Each table separately
illustrates the operation of a Policy for an identified issue age, Planned
Premium schedule and Sum Insured and shows how the death benefit and Surrender
Value may vary over an extended period of time assuming hypothetical rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross annual rates of 0%, 6%
and 12%. The Account Values during the first three Policy years would be
slightly less than the Surrender Values shown, due to the refund of sales
charges. See "Account Value and Surrender Value". The tables are based on
given annual Planned Premiums paid at the beginning of each Policy year and
will assist in a comparison of the death benefit and Surrender Value figures
set forth in the tables with those under other variable life insurance
policies which may be issued by JHVLICO or other companies. Tables are
provided for Options A, B and M. The death benefit and Surrender Value for a
Policy would be different from those shown if premiums are paid in different
amounts or at different times or if the actual gross rates of investment
return average 0%, 6% or 12% over a period of years, but nevertheless
fluctuate above or below the average for individual Policy years, or if the
Policy were issued in a state in which no distinctions are made based on the
gender of the insured.
The amounts shown for the death benefit and Surrender Value are as of the
end of each Policy year. The first three tables headed "Using Current Charges"
assume that the current rates for insurance, sales, risk, and expense charges
will apply in each year illustrated. The three tables headed "Using Maximum
Charges" assume that the maximum (guaranteed) insurance, sales, risk, and
expense charges will be made in each year illustrated. The amounts shown in
all tables reflect an average asset charge for the daily investment advisory
expense charges to the Portfolios of the Funds (equivalent to an effective
annual rate of .53%) and an assumed average asset charge for the annual
nonadvisory operating expenses of each Portfolio of the Funds (equivalent to
an effective annual rate of .15%). For a description of expenses charged to
the Portfolios, see the attached Prospectuses for the Funds. 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 variable Subaccounts. The actual Portfolio charges
and expenses associated with any Policy will vary depending upon the actual
allocation of Policy values among Subaccounts.
The tables reflect that no charge is currently made to the Accounts for
Federal income taxes. However, JHVLICO reserves the right to make such a
charge in the future and any charge would require higher rates of investment
return in order to produce the same Policy values. All of the tables do,
however, reflect the imposition of a Federal DAC Tax charge in the amount of
1.25% of all premiums paid and a premium tax charge in the amount of 2.35% of
all premiums paid.
The tables assume that the Guaranteed Minimum Death Benefit has not been
elected beyond the tenth Policy year, that no Additional Sum Insured or
optional rider benefits have been elected, and that the application for the
Policy has been fully underwritten.
The second column of each table shows the amount to which the total premiums
paid to the end of a Policy year would accumulate if an amount equal to those
premiums were invested to earn interest, after taxes, at 5% compounded
annually.
JHVLICO will furnish upon request a comparable illustration reflecting the
proposed insured's age, sex, underwriting risk classification and the Sum
Insured at issue and Planned Premium amount requested, and assuming annual
Planned Premiums.
A-3
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at ------------------------------------------------------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ----------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $100,000 $100,000 $ 4,404 $ 4,657 $ 4,911
2 11,337 100,000 100,000 100,000 8,272 9,026 9,811
3 17,434 100,000 100,000 100,000 12,077 13,588 15,225
4 23,836 100,000 100,000 100,000 15,509 18,050 20,911
5 30,559 100,000 100,000 100,000 19,371 23,232 27,753
6 37,617 100,000 100,000 100,000 23,195 28,679 35,360
7 45,028 100,000 100,000 111,166 26,992 34,416 43,804
8 47,280 100,000 100,000 118,186 26,176 35,602 48,045
9 49,644 100,000 100,000 125,755 25,349 36,839 52,725
10 52,126 100,000 100,000 133,910 24,504 38,127 57,885
11 54,732 100,000 100,000 143,219 23,854 39,687 63,800
12 57,469 100,000 100,000 153,176 23,154 41,293 70,293
13 60,342 100,000 100,000 163,897 22,428 42,968 77,449
14 63,359 100,000 100,000 175,481 21,688 44,726 85,351
15 66,527 100,000 100,000 187,970 20,921 46,565 94,065
16 69,853 100,000 100,000 201,397 20,103 48,474 103,647
17 73,346 100,000 100,000 215,824 19,221 50,453 114,174
18 77,013 100,000 100,000 231,328 18,268 52,506 125,736
19 80,864 100,000 100,000 248,011 17,238 54,636 138,430
20 84,907 100,000 100,000 265,983 16,121 56,851 152,364
25 108,366 100,000 107,011 378,923 8,634 69,142 244,830
30 138,305 ** 116,150 543,085 ** 83,304 389,504
35 176,516 ** 127,628 787,777 ** 99,593 614,731
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, Guaranteed Minimum Death Benefit after the tenth Policy Year, or
optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-4
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION A DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at ------------------------------------------------------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ----------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $ 100,000 $ 100,000 $ 4,241 $ 4,489 $ 4,738
2 11,337 100,000 100,000 100,000 7,955 8,688 9,452
3 17,434 100,000 100,000 100,000 11,616 13,081 14,667
4 23,836 100,000 100,000 100,000 14,902 17,359 20,126
5 30,559 100,000 100,000 100,000 18,609 22,334 26,699
6 37,617 100,000 100,000 100,000 22,263 27,548 33,989
7 45,028 100,000 100,000 106,750 25,865 33,011 42,064
8 47,280 100,000 100,000 112,825 24,830 33,883 45,866
9 49,644 100,000 100,000 119,312 23,757 34,764 50,024
10 52,126 100,000 100,000 126,236 22,638 35,649 54,567
11 54,732 100,000 100,000 134,113 21,670 36,746 59,744
12 57,469 100,000 100,000 142,500 20,641 37,853 65,394
13 60,342 100,000 100,000 151,436 19,545 38,968 71,560
14 63,359 100,000 100,000 160,959 18,375 40,091 78,287
15 66,527 100,000 100,000 171,094 17,118 41,216 85,620
16 69,853 100,000 100,000 181,885 15,762 42,339 93,605
17 73,346 100,000 100,000 193,372 14,292 43,454 102,297
18 77,013 100,000 100,000 205,589 12,687 44,553 111,745
19 80,864 100,000 100,000 218,582 10,924 45,626 122,004
20 84,907 100,000 100,000 232,402 8,974 46,663 133,128
25 108,366 ** 100,000 316,031 ** 50,974 204,194
30 138,305 ** 100,000 429,711 ** 52,093 308,192
35 176,516 ** 100,000 584,510 ** 44,157 456,114
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, Guaranteed Minimum Death Benefit after the tenth Policy Year, or
optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-5
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at ------------------------------------------------------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ----------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 103,920 $ 104,173 $ 104,426 $ 4,394 $ 4,647 $ 4,900
2 11,337 107,765 108,516 109,297 8,239 8,990 9,771
3 17,434 111,532 113,033 114,658 12,006 13,507 15,132
4 23,836 115,382 117,899 120,733 15,382 17,899 20,733
5 30,559 119,170 122,982 127,446 19,170 22,982 27,446
6 37,617 122,899 128,297 134,873 22,899 28,297 34,873
7 45,028 126,582 133,868 143,102 26,582 33,868 43,102
8 47,280 125,653 134,867 147,111 25,653 34,867 47,111
9 49,644 124,712 135,896 151,540 24,712 35,896 51,540
10 52,126 123,750 136,946 156,426 23,750 36,946 56,426
11 54,732 122,985 138,245 162,049 22,985 38,245 62,049
12 57,469 122,158 139,539 168,221 22,158 39,539 68,221
13 60,342 121,302 140,860 175,033 21,302 40,860 75,033
14 63,359 120,433 142,227 182,573 20,433 42,227 82,573
15 66,527 119,535 143,626 190,906 19,535 43,626 90,906
16 69,853 118,578 145,027 200,085 18,578 45,027 100,085
17 73,346 117,550 146,417 210,191 17,550 46,417 110,191
18 77,013 116,444 147,787 223,197 16,444 47,787 121,316
19 80,864 115,253 149,130 239,272 15,253 49,130 133,552
20 84,907 113,971 150,435 256,607 13,971 50,435 146,994
25 108,366 105,659 155,727 365,548 5,659 55,727 236,188
30 138,305 ** 156,628 523,898 ** 56,628 375,743
35 176,516 ** 149,129 759,930 ** 49,129 593,000
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, Guaranteed Minimum Death Benefit after the tenth Policy Year, or
optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-6
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION B DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at ------------------------------------------------------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ----------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $103,753 $104,001 $104,248 $ 4,227 $ 4,475 $ 4,722
2 11,337 107,439 108,168 108,927 7,913 8,642 9,401
3 17,434 111,056 112,508 114,080 11,530 12,982 14,554
4 23,836 114,753 117,181 119,915 14,753 17,181 19,915
5 30,559 118,375 122,045 126,343 18,375 22,045 26,343
6 37,617 121,921 127,107 133,425 21,921 27,107 33,425
7 45,028 125,386 132,370 141,225 25,386 32,370 41,225
8 47,280 124,208 133,010 144,713 24,208 33,010 44,713
9 49,644 122,986 133,622 148,517 22,986 33,622 48,517
10 52,126 121,712 134,195 152,662 21,712 34,195 52,662
11 54,732 120,581 134,931 157,392 20,581 34,931 57,392
12 57,469 119,382 135,619 162,547 19,382 35,619 62,547
13 60,342 118,109 136,252 168,167 18,109 36,252 68,167
14 63,359 116,758 136,819 174,295 16,758 36,819 74,295
15 66,527 115,315 137,306 180,972 15,315 37,306 80,972
16 69,853 113,771 137,695 188,245 13,771 37,695 88,245
17 73,346 112,113 137,968 196,165 12,113 37,968 96,165
18 77,013 110,325 138,102 204,781 10,325 38,102 104,781
19 80,864 108,386 138,066 214,147 8,386 38,066 114,147
20 84,907 106,275 137,830 224,319 6,275 37,830 124,319
25 108,366 ** 132,555 293,810 ** 32,555 189,836
30 138,305 ** 115,936 399,389 ** 15,936 286,444
35 176,516 ** ** 543,198 ** ** 423,877
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, Guaranteed Minimum Death Benefit after the tenth Policy Year, or
optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-7
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION M DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING CURRENT CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
--------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at --------------------------------------------------------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ --------------- --------------- ----------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $ 100,000 1 00,000 $ 4,404 $ 4,657 $ 4,911
2 11,337 100,000 100,000 100,000 8,272 9,026 9,811
3 17,434 100,000 100,000 100,000 12,077 13,588 15,225
4 23,836 100,925 117,168 135,446 15,496 17,990 20,797
5 30,559 135,391 161,606 192,254 19,210 22,929 27,278
6 37,617 152,236 186,904 229,010 22,806 27,999 34,307
7 45,028 166,350 210,108 265,334 26,307 33,227 41,960
8 47,280 151,319 203,058 271,422 25,254 33,888 45,297
9 49,644 137,695 196,424 277,985 24,242 34,582 48,941
10 52,126 125,303 190,127 284,959 23,263 35,298 52,904
11 54,732 115,142 185,350 293,679 22,530 36,268 57,465
12 57,469 105,710 180,551 302,439 21,790 37,217 62,342
13 60,342 100,000 175,986 311,666 21,067 38,195 67,642
14 63,359 100,000 171,747 321,576 20,331 39,227 73,448
15 66,527 100,000 167,733 332,054 19,566 40,297 79,775
16 69,853 100,000 163,796 342,844 18,750 41,372 86,597
17 73,346 100,000 159,918 353,919 17,869 42,442 93,930
18 77,013 100,000 156,103 365,287 16,916 43,507 101,808
19 80,864 100,000 152,361 376,983 15,885 44,566 110,268
20 84,907 100,000 148,715 389,072 14,765 45,618 119,347
25 108,366 100,000 131,455 454,605 7,233 50,567 174,875
30 138,305 ** 115,457 527,842 ** 54,685 250,008
35 176,516 ** 101,979 616,356 ** 58,247 352,042
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, Guaranteed Minimum Death Benefit after the tenth Policy Year, or
optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-8
<PAGE>
PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN NONSMOKER UNDERWRITING CLASS
OPTION M DEATH BENEFIT
NO GUARANTEED MINIMUM DEATH BENEFIT OPTION AFTER TENTH POLICY YEAR
PLANNED PREMIUM: $5,267 FOR SEVEN YEARS*
USING MAXIMUM CHARGES
<TABLE>
<CAPTION>
Death Benefit Surrender Value
------------------------------------------------------------------------------------------
Planned Premiums Assuming hypothetical gross annual return of Assuming hypothetical gross annual return of
End of accumulated at ------------------------------------------------------------------------------------------
Policy Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ----------- ------------------ -------------- -------------- ----------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 5,530 $ 100,000 $ 100,000 $ 100,000 $ 4,241 $ 4,489 $ 4,738
2 11,337 100,000 100,000 100,000 7,955 8,688 9,452
3 17,434 100,000 100,000 100,000 11,616 13,081 14,667
4 23,836 100,000 112,707 130,326 14,899 17,305 20,011
5 30,559 130,051 155,219 184,617 18,452 22,023 26,194
6 37,617 145,940 179,062 219,256 21,863 26,825 32,846
7 45,028 158,896 200,463 252,863 25,128 31,701 39,988
8 47,280 142,746 191,473 255,787 23,823 31,955 42,688
9 49,644 128,082 182,813 258,750 22,550 32,185 45,555
10 52,126 114,761 174,449 261,706 21,306 32,387 48,586
11 54,732 103,699 167,438 265,750 20,291 32,763 52,000
12 57,469 100,000 160,617 269,733 19,265 33,108 55,600
13 60,342 100,000 154,005 273,682 18,171 33,424 59,398
14 63,359 100,000 147,597 277,590 17,001 33,711 63,401
15 66,527 100,000 141,374 281,416 15,743 33,964 67,609
16 69,853 100,000 135,326 285,139 14,385 34,181 72,021
17 73,346 100,000 129,459 288,758 12,910 34,358 76,636
18 77,013 100,000 123,751 292,225 11,299 34,490 81,445
19 80,864 100,000 118,190 295,494 9,526 34,571 86,432
20 84,907 100,000 112,778 298,555 7,565 34,594 91,581
25 108,366 ** 100,000 310,917 ** 33,215 119,602
30 138,305 ** 100,000 316,877 ** 24,001 150,086
35 176,516 ** ** 316,006 ** ** 180,492
</TABLE>
- --------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each of the first seven Policy Years. The Death
Benefit and Surrender Value will differ if premiums are paid in different
amounts or frequencies, if policy loans are taken, or if Additional Sum
Insured, Guaranteed Minimum Death Benefit after the tenth Policy Year, or
optional rider benefits are elected.
** Policy lapses unless additional premium payments are made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND
WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY
THE OWNER. THE DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN
AVERAGE 0%, 6%, OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR
BELOW THE AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS CAN BE MADE
THAT THESE HYPOTHETICAL INVESTMENT RESULTS CAN BE ACHIEVED FOR ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
A-9
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
UNDERTAKING REGARDING INDEMNIFICATION
Pursuant to Section X of JHVLICO's Bylaws and Section 67 of the
Massachusetts Business Corporation Law, JHVLICO 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 JHVLICO.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
Cross-Reference Table.
The prospectus consisting of 66 pages.
The undertaking regarding indemnification.
The undertaking to file reports.
The signatures.
The following exhibits:
II-1
<PAGE>
I.A. (1) JHVLICO Board Resolution establishing the separate account.
(2) Not Applicable
(3) (a) Distribution Agreement and Amendment.
(b) Specimen Variable Contracts Selling Agreement between John
Hancock Mutual Life Insurance Company and selling broker-dealers.
(c) Schedule of sales commissions included in Exhibit I.A.(3) (a)
above.
(4) Not Applicable
(5) Form of flexible premium variable life insurance policy, included in
the initial registration statement for flexible premium policies on
Form S-6 of this Account (File No. 33-79108), filed May 18, 1994.
(6) (a) JHVLICO Certificate of Incorporation.
(b) JHVLICO By-laws.
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) Forms of applications for Policy, included in the initial
registration statement for flexible premium policies on Form S-6 of
this Account (File No. 33-79108), filed May 18, 1994.
II-2
<PAGE>
2. Included as Exhibit 1.A(5) above.
3. Opinion and consent of counsel as to securities being registered, included
in Pre-Effective Amendment No. 1 to the registration statement on Form S-6
of this Account (File No. 33-79108), filed October 10, 1994.
4. Not Applicable
5. Not Applicable
6. Opinion and consent of actuary.
7. Consent of independent auditors.
8. Memorandum describing JHVLICO's issuance, transfer and redemption procedures
for the flexible policy pursuant to Rule 6e-3(T)(b)(12)(iii), included in
the initial registration statement for flexible premium policies on Form S-6
of this Account, filed May 18, 1994.
9. Powers of attorney for Cleary, Tomlinson, D'Alessandro, Shaw, Luddy, Lee,
Reitano, Van Leer and Paster, included in Post-Effective Amendment No. 1 to
the Registration Statement on Form S-6 of this Account, filed April, 1995.
10. Representations, Description and Undertaking pursuant to Rule
6e-3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940, included in
Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6 of
this Account, filed October 10, 1994.
11. Exemptive Relief Relied Upon, included in Pre-Effective Amendment No. 1 to
the Registration Statement on Form S-6 of this Account, filed October 10,
1994.
12. Opinion of Counsel as to eligibility of this Post-Effective Amendment
for filing pursuant to Rule 485(b).
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the John
Hancock Variable Life Insurance Company has duly caused this 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 5th day of January, 1996.
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
(SEAL)
By /s/ HENRY D. SHAW
Henry D. Shaw
President
Attest: /s/ FRANCIS C. CLEARY, JR.
Francis C. Cleary, Jr.
Counsel
II-4
<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 Variable Life Insurance
Company and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
======================
David F. D'Alessandro Chairman of the Board , 1996
/s/ HENRY D. SHAW Vice Chairman of the Board
Henry D. Shaw and President(Acting Principal
Executive Officer) January 5, 1996
/s/ ROBERT S. PASTER
Robert S. Paster Director January 5, 1996
/s/ ROBERT R. REITANO Director(Principal
Robert R. Reitano Financial Officer) January 5, 1996
/s/ FRANCIS C. CLEARY, JR.
Francis C. Cleary, Jr Director January 5, 1996
/s/ THOMAS J. LEE
Thomas J. Lee Director January 5, 1996
/s/ MICHELE VAN LEER
Michele Van Leer Director January 5, 1996
======================
Joseph A. Tomlinson Director , 1996
/s/ BARBARA L. LUDDY
Barbara L. Luddy Director January 5, 1996
/s/ PATRICK F. SMITH Controller (Principal
Patrick F. Smith Accounting Officer) January 5, 1996
</TABLE>
II-5
<PAGE>
-3-
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, John Hancock Variable Life Account S, 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
5th day of January, 1996.
JOHN HANCOCK VARIABLE LIFE ACCOUNT S
(Registrant)
By John Hancock Mutual Life Insurance Company
(Depositor)
(SEAL)
By /s/ HENRY D. SHAW
Henry D. Shaw
President
Attest: /s/ FRANCIS C. CLEARY, JR.
Francis C. Cleary, Jr.
Counsel
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> SELECT STOCK SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 4,180,629
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,180,629
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63
<TOTAL-LIABILITIES> 63
<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> 4,180,566
<DIVIDEND-INCOME> 54,365
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10,465
<NET-INVESTMENT-INCOME> 43,900
<REALIZED-GAINS-CURRENT> 100,217
<APPREC-INCREASE-CURRENT> 386,437
<NET-CHANGE-FROM-OPS> 530,554
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,278,197
<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> 10,465
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> BOND SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 1,067,480
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,067,480
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16
<TOTAL-LIABILITIES> 16
<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> 1,067,464
<DIVIDEND-INCOME> 32,048
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,347
<NET-INVESTMENT-INCOME> 29,701
<REALIZED-GAINS-CURRENT> 7,883
<APPREC-INCREASE-CURRENT> 22,837
<NET-CHANGE-FROM-OPS> 60,421
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 850,415
<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> 2,347
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 003
<NAME> INTERNATIONAL SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 2,257,466
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,257,466
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35
<TOTAL-LIABILITIES> 35
<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> 2,257,431
<DIVIDEND-INCOME> 19,256
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6,983
<NET-INVESTMENT-INCOME> 12,273
<REALIZED-GAINS-CURRENT> (20,969)
<APPREC-INCREASE-CURRENT> 94,687
<NET-CHANGE-FROM-OPS> 85,991
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,265,104
<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> 6,983
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 004
<NAME> MONEY MARKET SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 2,127,396
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,127,396
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<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> 2,127,362
<DIVIDEND-INCOME> 80,579
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 8,066
<NET-INVESTMENT-INCOME> 72,513
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 72,513
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (127,771)
<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> 8,066
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> REAL ESTATE EQUITY SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 526,923
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 526,923
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8
<TOTAL-LIABILITIES> 8
<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> 526,915
<DIVIDEND-INCOME> 21,360
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,915
<NET-INVESTMENT-INCOME> 19,445
<REALIZED-GAINS-CURRENT> (5,581)
<APPREC-INCREASE-CURRENT> 31,560
<NET-CHANGE-FROM-OPS> 45,424
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 107,031
<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> 1,915
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 006
<NAME> SPECIAL OPPORTUNITIES
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 1,181,786
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,181,786
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19
<TOTAL-LIABILITIES> 19
<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> 1,181,767
<DIVIDEND-INCOME> 504
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,971
<NET-INVESTMENT-INCOME> (2,467)
<REALIZED-GAINS-CURRENT> 11,636
<APPREC-INCREASE-CURRENT> 144,301
<NET-CHANGE-FROM-OPS> 153,470
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 848,877
<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> 0
<AVERAGE-NET-ASSETS> 2,971
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 007
<NAME> STOCK SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 6,288,376
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,288,376
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93
<TOTAL-LIABILITIES> 93
<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> 6,288,283
<DIVIDEND-INCOME> 74,533
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 14,287
<NET-INVESTMENT-INCOME> 60,246
<REALIZED-GAINS-CURRENT> 71,866
<APPREC-INCREASE-CURRENT> 624,107
<NET-CHANGE-FROM-OPS> 756,219
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,935,660
<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> 14,287
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 008
<NAME> SHORT TERM GOVERNMENT SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 2,169,031
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,169,031
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14
<TOTAL-LIABILITIES> 14
<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> 2,169,017
<DIVIDEND-INCOME> 30,210
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,596
<NET-INVESTMENT-INCOME> 28,614
<REALIZED-GAINS-CURRENT> 3,907
<APPREC-INCREASE-CURRENT> 3,148
<NET-CHANGE-FROM-OPS> 35,669
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,127,554
<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> 1,596
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JOHN HANCOCK
VARIABLE LIFE ACCOUNTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 009
<NAME> MANAGED SUBACCOUNT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 2,779,981
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,779,981
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36
<TOTAL-LIABILITIES> 36
<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> 2,779,945
<DIVIDEND-INCOME> 69,742
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6,864
<NET-INVESTMENT-INCOME> 62,878
<REALIZED-GAINS-CURRENT> 156,923
<APPREC-INCREASE-CURRENT> 154,367
<NET-CHANGE-FROM-OPS> 374,168
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,133,212
<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> 6,864
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 1. A.(1)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
Boston, Massachusetts
VOTE OF BOARD OF DIRECTORS
Meeting of May 27, 1993
VOTED, with respect to separate investment accounts:
(a) To establish one or more separate investment accounts (the
"Account"), pursuant to Section 132 G of Chapter 175 of the Massachusetts
General Laws, as amended, for the funds attributable to individual life policies
on a variable basis to be issued by the Company. The Officers of the Company
may determine the designation of each Account and may from time to time change
its designation as they deem necessary and appropriate.
(b) To allocate to the Account amounts to provide for life insurance
(including benefits incidental thereto) payable in fixed or variable amounts or
both and the income, gains and losses, realized or unrealized, attributable to
the Account shall be credited to or charged against the Account without regard
to the other income, gains or losses of the Company.
(c) To authorize the registration of the Account as an investment company
under the Investment Company Act of 1940 and the registration of the variable
life insurance policies issued in connection with the Account as securities
under the Securities Act of 1933, and to authorize and empower the Chairman of
the Board, the Vice Chairman, the President, or the Secretary of the Company
("Officers of the Company") to take all action necessary to comply with the
Acts, including but not limited to the execution and filing of registration
statements and amendments thereto, applications for exemptions from the
provisions of the Act as may be necessary or desirable and amendments thereto,
and agreements for the administration of the Account and for the distribution of
variable life insurance policies carrying an interest in the Account assets and
any other actions necessary under all other applicable federal and state laws
and regulations.
(d) To authorize the Officers of the Company to take all actions
necessary to register the Account as a unit investment trust under the
Investment Company Act of 1940, and to take such related actions as they deem
necessary and appropriate to carry out the foregoing, including, without
limitation, the following: determining that the fundamental investment policy
of the Account shall be to invest or reinvest the assets in securities issued by
such investment companies registered under
<PAGE>
-2-
the Investment Company Act of 1940 as the Officers may designate pursuant to the
provisions of the variable life insurance policies issued by the Company;
establishing one or more subaccounts within the Account to which net premiums
under the variable life insurance policies will be allocated in accordance with
instructions received from contractowners, reserving to the officers the
authority to increase or decrease the number of subaccounts in the Account as
they deem necessary or appropriate; and investing each subaccount only in the
shares of a single mutual fund or a single portfolio of an investment company
organized as a series fund pursuant to the Investment Company Act of 1940.
(e) To authorize the Officers of the Company to deposit such amount in
the Account or in each subaccount thereof as may be necessary or appropriate to
facilitate the Account's operations; to transfer funds from time to time between
the Company's general account and the Account as deemed appropriate and
consistent with the terms of the variable life insurance policies and applicable
laws; and to establish criteria by which the Company shall institute procedures
to provide for a pass-through of voting rights to the owners of variable life
insurance policies issued by the Company, as required by applicable laws, with
respect to the shares of any investment companies which are held in the Account.
(f) To appoint Francis C. Cleary, Jr., Counsel, as agent for service of
process or the like for the Company to receive notices and communications from
the Securities and Exchange Commission with respect to such Registration
Statements or exemptive applications and amendments thereto as may be filed on
behalf of the Company concerning the Account or the variable life insurance
policies, and to exercise the powers given to such agent in the rules and
regulations of the Securities and Exchange Commission under the Securities Act
of 1933, the Investment Company Act of 1940, or the Securities Exchange Act of
1934.
(g) To authorize the Officers of the Company to do or cause to be done
all things necessary or desirable, as may be advised by counsel, to comply with,
or obtain exemptions from, federal, state or local statutes or regulations that
may be applicable to the issuance and sale of variable life insurance products
by the Company.
(h) To authorize the Company to act as the depositor for the Account and
provide all administrative services in connection with the establishment and
maintenance of the Account and in connection with the issuance and sale of
variable life insurance policies, all on such terms and subject to such
modifications as the Officers deem necessary or appropriate to effectuate the
foregoing.
<PAGE>
-3-
(i) To authorize the Officers of the Company to contract with a suitable
investment company under the Investment Company Act of 1940, the shares of which
shall be purchased by the Company in order to serve as an investment vehicle for
the Account and, further, that the Officers are authorized to do all things as
they deem necessary and appropriate to carry out the foregoing.
(j) To empower the Executive Committee to authorize the execution and
delivery of such instruments and such other action as it may deem necessary or
desirable in order to carry out the purpose and intent of this vote and to
comply with applicable federal or state laws and regulations.
<PAGE>
Exhibit 1.A..(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the 26th day of August, 1993, by and between
John Hancock Mutual Life Insurance Company ("John Hancock") and, on its own
behalf and on behalf of its several existing and future separate accounts
registered under the Investment Company Act of 1940 (the "Investment Company
Act"), including without limitation John Hancock Variable Life Accounts U, V and
S, John Hancock Variable Life Insurance Company ("JHVLICO").
WHEREAS, John Hancock is the principal underwriter of John Hancock
Variable Series Trust I ("the Fund"), a series mutual fund whose shareholders
are separate accounts of insurance companies, including JHVLICO, pursuant to an
Underwriting and Administrative Services Agreement dated as of January 15, 1986
("Underwriting Agreement");
WHEREAS, insurance companies issue variable life insurance and annuity
products under which net premiums or considerations are allocated to such
separate accounts for investment in the Fund;
WHEREAS, the Fund is registered as an open-end investment company under
the Investment Company Act;
WHEREAS, John Hancock is registered as a broker-dealer under the
Securities Exchange Act of 1934 ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc.;
WHEREAS, JHVLICO will issue variable life insurance policies ("Policies")
whose net premiums are or will be allocated to JHVLICO's registered separate
accounts; and
WHEREAS, John Hancock and JHVLICO wish to enter into this Agreement
defining the conditions under which John Hancock will distribute the Contracts;
NOW THEREFORE, John Hancock and JHVLICO hereby agree as follows:
1. John Hancock shall offer for sale and sell Policies on behalf of
JHVLICO in each state and other jurisdictions in which such policies may be
lawfully sold. Such offering or sale shall be on such terms and conditions and
shall provide for such lawful compensation to John Hancock as John Hancock and
JHVLICO shall determine, provided that such terms, conditions and compensation
shall be as set forth in or not inconsistent with a prospectus meeting the
requirements of Section 10(a) of the Securities Act of 1933, as amended, and
containing the required information for or forming a part of a registration
statement effective under said Act.
Applications for Policies shall be solicited by insurance agents of
JHVLICO who are duly and appropriately licensed for the sale of such Policies in
each such state or other jurisdiction. John Hancock shall have responsibility
for arranging for such licensing. John Hancock shall review completed
applications for Policies in terms of suitability (except to the extent that
responsibility for suitability determinations is assumed by other broker-dealers
pursuant to the selling agreements referred to in paragraph 10 below) and
insurance underwriting and shall determine whether to accept or reject any
application in accordance with underwriting rules established by JHVLICO. John
Hancock will determine an insured's risk classification pursuant to its own
underwriting rules. Initial and subsequent premium payments under Policies shall
be made by check payable to JHVLICO. JHVLICO will refund any premiums paid if a
Policy is not issued or is surrendered under the short-term cancellation
provision.
<PAGE>
2. John Hancock shall pay its registered representatives acting as
JHVLICO's agents commissions and service fees in accordance with its then
applicable compensation rules and procedures. The maximum commission payable to
an agent for selling a policy shall be as set forth in Exhibit A appended
hereto. JHVLICO will reimburse John Hancock for commissions, any service fees
and for other direct and indirect expenses (including agency expense allowances,
general agent, district manager and supervisor compensation, agent training
allowances, deferred compensation and insurance benefits of agents, general
agents, district managers and supervisors, agency office clerical expenses and
advertising) actually incurred in connection with the marketing and sale of
Policies.
3. The books, accounts and records of John Hancock and JHVLICO as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions, including particularly
such accounting information as is necessary to support the reasonableness of the
amounts to be paid by JHVLICO hereunder and to ensure compliance with applicable
regulatory and reporting requirements. To the extent that either of John Hancock
or JHVLICO maintains on behalf of the other any records required to be
maintained by the other pursuant to 1940 Act Rules 30a- or 30a-2 under the
Investment Company Act or pursuant to 1934 Act Rules 17a-3 and 17a-4, such
records are the property of the party so required to maintain them and will be
surrendered promptly to that party upon its request.
4. This Agreement shall terminate automatically if it shall be assigned or
if the Underwriting Agreement is terminated. This Agreement may be terminated at
any time on 60 days' written notice to the other party hereto, without the
payment of any penalty, by John Hancock or JHVLICO.
5. John Hancock will pay the expenses of preparing and printing
registration statements, prospectuses and sales literature, all fees and
expenses in connection with John Hancock's qualification as a broker-dealer and
all other expenses relating to the offering, sale or delivery of Policies.
JHVLICO will reimburse John Hancock for registration fees under the Securities
Act of 1933, the costs associated with the preparation and printing of
registration statements, prospectuses and sales literature and for like expenses
actually incurred in connection with the offering, sale and delivery of
Policies.
6. In offering, selling and delivering Policies, John Hancock will duly
conform in all respects with the laws of the United States and of each state in
which Policies may be offered for sale by it pursuant to this Agreement.
Applications will be solicited by registered representatives of John Hancock or
any other broker-dealer who have been duly licensed. In connection with the
offering, sale or delivery of Policies, John Hancock will not give any
information or make any representation other than information and
representations contained in or not inconsistent with a prospectus meeting the
requirement of Section 10(a) of the Securities Act of 1933 and containing the
required information for or forming a part of a registration statement which is
effective under said Act.
7. John Hancock agrees that, in the absence of a fixed account or if no
suitable fixed-dollar policy is available from JHVLICO, it will issue a policy
of fixed benefit insurance without evidence of insurability in exchange for any
Policy whenever the Owner of a Policy elects to exchange the Policy in
accordance with its provisions.
8. JHVLICO undertakes to guarantee the performance of all of John
Hancock's obligations, imposed by Section 27(f) of the Investment Company Act of
1940, as amended, and Rules 6e-2(b)(l4)(vi), 6e-3(T)(b)(l3)(vi) and 27d-2(b)
adopted by the Securities and Exchange Commission, to make refunds of charges
required of the principal underwriter of Policies issued in connection with the
registered separate account.
<PAGE>
9. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
10. John Hancock and JHVLICO may agree with one or more broker-dealers
registered under the Securities Exchange Act of 1934 for the sale of the
Policies funded by the registered separate account. Any broker-dealer offering,
selling or delivering Policies will agree with John Hancock and JHVLICO to
conform duly in all respects with the laws of the United States and of each
state in which Contracts may be offered for sale by it. No agent or
representative of any such broker-dealer shall solicit applications for Policies
until duly licensed and appointed by JHVLICO as a life insurance agent of
JHVLICO in the appropriate jurisdiction. John Hancock will compensate other
broker-dealers as provided in the selling agreements with such other broker-
dealers, and JHVLICO will reimburse John Hancock for such amounts.
11. This Agreement shall be subject to the applicable provisions of the
Federal securities laws and the rules, regulations, and rulings thereunder,
including such exemptions as the Securities and Exchange Commission may grant,
and the terms hereof shall be interpreted and construed in accordance therewith.
12. John Hancock shall, in connection with its obligations hereunder,
comply with all laws and regulations, whether Federal or state, and whether
relating to insurance or securities, including but not limited to the
recordkeeping and sales supervision requirements of such laws and regulations
and rules of the National Association of Securities Dealers, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year above written.
Date: August 26, l993
John Hancock Mutual Life Insurance Company
By: WILLIAM L. BOYAN
----------------
William L. Boyan
President
Date: August 26, 1993
John Hancock Variable Life Insurance Company
By: HENRY D. SHAW/
--------------
Henry D., Shaw
President
<PAGE>
AMENDMENT TO DISTRIBUTION AGREEMENT
BY AND BETWEEN
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
AND
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
AGREEMENT made this 1st day of August, 1994, by and between John Hancock
Mutual Life Insurance Company ("John Hancock") and John Hancock Variable Life
Insurance Company ("JHVLICO"), on its own behalf and on behalf of its several
existing and future separate accounts registered under the Investment Company
Act of 1940 (the "Investment Company Act"), including without limitation John
Hancock Variable Life Accounts U, V and S and John Hancock Variable Annuity
Account I.
WHEREAS, John Hancock and JHVLICO are parties to a distribution agreement
dated August 26, 1993 (the "Distribution Agreement") governing the terms and
conditions under which John Hancock has undertaken to offer for sale and sell on
behalf of JHVLICO, in each state and other jurisdiction where lawfully
permitted, certain variable life insurance policies, issued by JHVLICO, whose
net premiums are or will be allocated to JHVLICO's registered separate accounts;
WHEREAS, JHVLICO will continue to issue such variable life insurance
policies and will begin to issue variable annuity contracts whose net premiums
are or will be allocated to certain JHVLICO registered separate accounts;
WHEREAS, John Hancock and JHVLICO wish to enter into this Amendment
redefining the conditions and terms of the Distribution Agreement and Exhibit A
thereto;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, John Hancock and JHVLICO hereby amend the Distribution Agreement and
Exhibit A thereto and agree to the following terms:
1. Any reference to "variable life insurance policies" in the Distribution
Agreement shall be read "variable life insurance policies and variable annuity
contracts"; and
2. Except as otherwise specified in this Amendment, any reference to
"Policies" or "policies" in the Distribution Agreement shall include variable
life insurance policies, issued by JHVLICO, whose net premiums are or will be
allocated to certain JHVLICO registered separate accounts and variable annuity
contracts, issued by JHVLICO, whose net premiums are or will be allocated to
certain JHVLICO registered separate accounts; and
3. The phrase "With respect to life insurance policies only" should be added
to the beginning of provision seven in the Distribution Agreement; and
4. The commission schedule for John Hancock Variable Annuity Account I should
be included in
<PAGE>
Exhibit A, as shown in the attachment to this Amendment.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the day and year indicated.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
BY: STEPHEN L. BROWN AUGUST 2, 1994
----------------- --------------
Stephen L. Brown (date)
Chairman and Chief Executive Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
on its own behalf and on behalf of its
several existing and future registered
separate accounts
BY: HENRY D. SHAW AUGUST 5, 1994
-------------- --------------
Henry D. Shaw (date)
President
EXHIBIT A
Scheduled Premium Policy (Flex V)
Maximum commission of 50% of premium paid under Modified Schedule of
premiums in Policy year 1, 10% of such premiums in Policy years 2-4, and 3% of
any other premiums.
Annual Premium Policy (VLI)
Maximum commission of 55% of premium paid in Policy year 1, 15% of
premium paid in Policy year 2, 10% of premium paid in Policy years 3-5, 5% of
premium paid in Policy years 6-10, and 3% of any other premiums.
Single Premium Policy
Maximum commission of 3%.
Flexible Premium Variable Survivorship Policy (VEP)
Maximum commission of 45% of Target Premium paid in Policy year 1, 5%
of Target Premium paid in Policy years 2-5, 3% of Target Premium paid in any
subsequent years, and 3% of any excess premium in any year.
Individual Deferred Combination Fixed/Variable Annuity Contract (Independence
Preferred)
Maximum commission of 3% of premium on contracts issued to Annuitants
issue age 0-70, maximum commission of 2% of premium on contracts issued to
Annuitants issue ages 71 and above.
<PAGE>
Revised Flexible Premium Policy (New Flex V)
Maximum Commission of 50% of premium paid up to Required Premium in
Policy year 1, 8% of such premiums in Policy years 2-4, and 3% of any other
premiums.
Universal Variable Policy (MVL)
Maximum commission of 50% of premium paid up to Required Premium paid
in Policy year 1, 6% of the Target Premium for Policy years 2-4; 3% of the
Target Premium in each year thereafter, and 3% of excess premium in any year.
Variable COLI Policy (VCOLI)
Maximum commission of 14% of Target Premium in Policy years 1-10; 3% of
Target Premium in Policy years 11 and thereafter; and 2% of any excess premium
paid.
Universal Variable Policy (MVL II)
Maximum commission of 20% of Target Premium in Policy year 1, plus 6%
of the Target Premium for the first Policy year which will be payable in each of
Policy years 2-4; 6% of the Target Premium for Policy years 2-4; 3% of the
Target Premium paid in each year thereafter; and 3% of excess premium in any
year.
(Exhibit A, as amended, December 6, 1995)
<PAGE>
EXHIBIT 1.A.(3)(b)
VARIABLE CONTRACTS
SELLING AGREEMENT
John Hancock Mutual Life Insurance Company ("JHMLICO"), as the distributor and
principal underwriter, and
("the Broker/Dealer"), enter into this agreement effective with its execution by
the Broker/Dealer for the purpose of authorizing the Broker/Dealer to solicit
applications for variable life insurance and annuity contracts ("Contracts")
distributed by JHMLICO on its own behalf and on behalf of John Hancock Variable
Life Insurance Company ("JHVLICO"), a subsidiary of JHMLICO. The parties
represent as follows:
1. JHMLICO is engaged in the issuance of variable annuity contracts and
JHVLICO is engaged in the issuance of variable life insurance contracts,
both in accordance with Federal securities laws and the applicable laws of
those states in which the Contracts have been qualified for sale. The
Contracts are considered securities under the Securities Act of 1933;
therefore, distribution of the Contracts is made through JHMLICO as a
registered broker/dealer under the Securities Act of 1934 and as a member
of the National Association of Securities Dealers, Inc. ("NASD").
2. The Broker/Dealer certifies that it is a registered Broker/Dealer under the
Securities Exchange Act of 1934 and a member of the NASD. The
Broker/Dealer agrees to abide by all rules and regulations of the NASD,
including its Rules of Fair Practice, and to comply with all applicable
state and Federal laws and the rules and regulations of authorized
regulatory agencies affecting the sale of the Contracts.
3. The Broker/Dealer will select persons to be registered and supervised by it
who will be trained and qualified to solicit applications for the Contracts
in conformance with applicable state and Federal laws and regulations.
Persons so trained and qualified will be registered representatives of the
Broker/Dealer in accordance with the rules of the NASD and they will be
properly licensed to represent JHMLICO or JHVLICO or both in accordance
with the state insurance laws of those jurisdictions in which the Contracts
may lawfully be distributed and in which they solicit applications for such
Contracts.
4. The Broker/Dealer will take reasonable steps to ensure that its registered
representatives shall not make recommendations to applicants to purchase
Contracts in the absence of reasonable grounds to believe the purchase of
each Contract is suitable for the applicant. The procedure will include
review of all proposals and applications for Contracts for suitability and
completeness and correctness as to form as well as review and endorsement
on an internal record of the Broker/Dealer of
<PAGE>
the transactions. The Broker/Dealer will promptly forward to JHMLICO all
applications found suitable, together with any payments received with the
applications, without deduction or reduction. JHMLICO reserves the right
to reject any Contract application and return any payment made in
connection with an application which is rejected. Contracts issued on
applications accepted by JHMLICO or JHVLICO will be forwarded to the
registered representative of the Broker/Dealer for delivery to the Contract
owner.
5. The Broker/Dealer will perform the selling functions required by this
agreement only in accordance with the terms and conditions of the then
current prospectus applicable to the Contracts and will make no
representations not included in the prospectus or in any authorized
supplemental material. Any material prepared or used by the Broker/Dealer
or its registered representatives, which describes or must describe the
Contracts, or uses the name of JHVLICO, JHMLICO or the logos or Service
Marks of either must be approved by JHMLICO in writing prior to any such
use.
6. JHMLICO will provide Broker/Dealer with prospectuses, and any supplements
or amendments thereto, describing the Contracts subject to this Agreement.
JHMLICO is responsible for maintaining in effect in accordance with the
requirements of the Securities and Exchange Commission each Registration
Statement of which the prospectus is part. JHMLICO will immediately notify
Broker/Dealer of the issuance of any stop order or any Federal or state
regulatory proceeding which would prevent the sale of Contracts in any
state or jurisdiction.
7. Compensation payable on sales of the Contracts solicited by the
Broker/Dealer will be paid to the Broker/Dealer by JHMLICO in accordance
with the compensation schedules defined under the John Hancock Mutual Life
Insurance Company/M Financial Group Master Agreement dated December 5, 1991
and the Producer Agreements related thereto, as in effect at the time the
contract premiums or considerations are received by JHMLICO or JHVLICO.
Compensation to the registered representative for contracts solicited by
the registered representative will be governed by an agreement between the
Broker/Dealer and its registered representative. To the extent requested by
Broker/Dealer, registered representative compensation may be paid directly
to such registered representative by JHMLICO or JHVLICO. A portion of the
compensation otherwise payable to Broker/Dealer pursuant to the
compensation schedules applicable to the Contracts shall be payable to
Mutual Service Corporation (MSC) in accordance with the agreement in effect
between M Financial Group and MSC (currently 2% of first year commissions,
1% of renewal commissions). To the extent requested by Broker/Dealer and
its registered representative, registered representative compensation shall
be paid to JH Networking Insurance Agency ("NIA") for allocation to The
John Hancock/M Financial Group Deferred Commission Plan, as in effect at
the time the compensation becomes payable.
8. In the event of any surrender of a Contract within the 10 day "free look"
period or, in the case of a variable life insurance policy, within 10 days
after the mailing of the Notice of Withdrawal Right, any compensation
payable to Broker/Dealer or its registered representatives will not be
payable or will be refunded if priorly
<PAGE>
paid, in accordance with the terms of the M Producer's Contract appended as
Exhibit A to the Master Agreement.
9. This agreement may not be assigned except by mutual consent and will
continue for an indefinite term, subject to the termination by either party
by ten days advance written notice to the other party, except that in the
event JHMLICO or the Broker/Dealer ceases to be a registered broker/dealer
or a member of the NASD, this agreement will immediately terminate. Upon
its termination, all authorizations, rights and obligations shall cease,
except the agreement in Section 11, the indemnifications in Section 12 and
the payment of any accrued but unpaid compensation to the Broker/Dealer.
10. For the purpose of compliance with any applicable Federal or state
securities laws or regulations, the Broker/Dealer acknowledges and agrees
that in performing the services covered by this agreement, it is acting in
the capacity of an independent "broker" or "dealer" as defined by the By-
Laws of the NASD and not as an agent or employee of either JHMLICO or
JHVLICO or any registered investment company. In furtherance of its
responsibilities as a broker or dealer, the Broker/Dealer acknowledges that
it is responsible for statutory and regulatory compliance in securities
transactions involving any business produced by its registered
representatives concerning the Contracts.
For the purpose of compliance with any applicable state insurance laws or
regulations, the Broker/Dealer acknowledges and agrees that only while
performing the insurance selling functions reflected by this agreement are
the Broker/Dealer's registered representatives acting as the licensed
insurance agents of JHMLICO or JHVLICO or both and in that capacity are
authorized only to solicit applications for the Contracts which will not
become effective until acceptance by JHMLICO or JHVLICO.
11. The Broker/Dealer and JHMLICO jointly agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or judicial
proceeding arising in connection with any Contract. Without limiting the
foregoing:
a. Broker/Dealer will be notified promptly of any customer complaint or
notice of any regulatory authority investigation or proceeding or
judicial proceeding received by JHMLICO with respect to any
Contract.
b. Broker/Dealer will promptly notify JHMLICO of any customer complaint
or notice of any regulatory authority investigation or proceeding or
judicial proceeding received by Broker/Dealer with respect to any
Contract.
12. (1) JHMLICO agrees to indemnify and hold harmless Broker/Dealer and each
person who controls or is associated with Broker/Dealer against any
losses, claims, damages or liabilities, joint or several, to which
Broker/Dealer or such controlling or associated person may become
subject under the 1933 Act or otherwise insofar
<PAGE>
as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading contained (i) in
any Registration Statement, any Prospectus or any document executed by
JHMLICO or JHVLICO specifically for the purpose of qualifying a Contract
for sale under the laws of any jurisdiction or (ii) in any written
information or sales material authorized for and supplied or furnished
to Broker/Dealer and its agents or representatives by JHMLICO, its
employees or agents, in connection with the sale of the Contract and
JHMLICO will reimburse Broker/Dealer and each such controlling person
for legal or other expenses reasonably incurred by Broker/Dealer or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action.
(2) Broker/Dealer agrees to indemnify and hold harmless such director or
officer may become subject under the 1933 Act and state JHMLICO and each
of its directors and officers against any insurance losses, claims,
damages or liabilities to which JHMLICO and any laws or otherwise
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(a)any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning a
Contract by Broker/Dealer or
(b)claims by agents or representatives or employees of Broker/Dealer
for commissions or other compensation or remuneration of any type
or
(c)failure by agents, representatives or employees of Broker/Dealer
to comply with all applicable state insurance laws and
regulations including but not limited to state licensing
requirements, rebate statutes and replacement regulations, and
the provisions of this Agreement; and Broker will reimburse
JHMLICO and any director or officer for any legal or other
expenses reasonably incurred by JHMLICO or such director or
officer in connection with investigating or defending any such
loss, claim, damage, liability or action.
(3) After receipt by a party entitled to indemnification of notice of the
commencement of any action, if a claim in respect thereof is to be made
against any person obligated to provide indemnification, such
indemnified party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, and the omission
so to notify the indemnifying party will not relieve it from any
liability except to the extent that the omission results in a failure of
actual notice to the indemnifying party, and such indemnifying party is
damaged solely as a result of the failure to give such notice.
<PAGE>
13. All notices to JHMLICO should be mailed to:
Mr. Henry D. Shaw, Senior Vice President
John Hancock Mutual Life Insurance Company
John Hancock Place
P. O. Box 111
Boston, MA 02117
All notices to the Broker/Dealer will be duly given if mailed to the
address shown below.
14. This agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
In reliance on the representations set forth and in consideration of the
undertakings described, the parties represented below do hereby contract
and agree.
John Hancock Mutual Life Broker-Dealer
Insurance Company
By:_______________________ By:____________________________
Title:____________________ Title: ________________________
Date of Execution_________ Date of Execution______________
<PAGE>
EXHIBIT 1.A.(6)(a)
NO. D-30612
THE COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF BANKING AND INSURANCE
Division of Insurance
CERTIFICATE OF AUTHORITY DATE: March 5, 1979
- ------------------------
THIS IS TO CERTIFY THAT THE
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
BOSTON MASSACHUSETTS
is duly organized under the laws of this Commonwealth, has fully complied with
the requirements of said laws applicable to it and that it is authorized to
issue policies and transact the kinds of business authorized under the Sections
of Chapter 175 of the General Laws of Massachusetts and amendments thereto
described by the following designations: (See Reverse Side for Legend)
6B 16A
This Certificate shall remain in effect for an indefinite term unless said
authority is amended or revoked in accordance with Law.
SEAL
IN WITNESS WHEREOF, I have
hereunto set my hand and
affixed the official seal of
this Division, at the City
of Boston, the date appearing
above.
MICHAEL J. SABBAGH
------------------
Michael J. Sabbagh
Commissioner of Insurance
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
DIVISION OF INSURANCE
100 Cambridge Street, Boston 02202
MICHAEL J. SABBAGH
COMMISSIONER OF INSURANCE
F 2975
TO WHOM IT MAY CONCERN:
I, Michael J. Sabbagh, Commissioner of Insurance for the Commonwealth
of Massachusetts, hereby certify that the
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
of Boston, in the Commonwealth of Massachusetts, having no liabilities, except
reasonable organization expenses and having complied with the requirements of
the Laws of this Commonwealth relating to insurance companies, adopted a proper
system of accounting, employed a competent accountant, a competent claim
manager, a competent and experienced underwriter, and a competent and
experienced actuary, and that its officers and directors are of good repute and
competent to manage said company, is fully authorized to insure upon the stock
plan the business of health and life insurance now or hereafter described or
permitted by Clauses Sixth and Sixteenth of Section Forty-Seven, Chapter One
Hundred and Seventy-Five of the General Laws of the Commonwealth of
Massachusetts and the acts in amendment thereof and in addition thereto.
IN WITNESS WHEREOF, I have here-unto set my hand and affixed the
official seal of this Division at the City of Boston, this Fifth Day of
March, A.D. 1979.
MICHAEL J. SABBAGH
------------------
Michael J. Sabbagh
Commissioner of Insurance
SEAL
<PAGE>
EXHIBIT 1.A.(6)(b)
BY-LAWS
OF
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
ARTICLE I
OFFICES
The principal office and principal place of business of the Company in the
Commonwealth of Massachusetts shall be located in the City of Boston, Suffolk
County.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders shall be
held on the 2nd Wednesday following the 2nd Monday in April in each year at the
hour of 2:00 P.M., for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for any annual meeting, or at any adjournment thereof, the
board of directors shall cause the election to be held at a meeting of the
shareholders as soon thereafter as conveniently may be.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the chairman of the board, the vice chairman of the board, the
president, a majority of the board of directors or by the holders of not less
than one-fifth of all the outstanding shares of the corporation.
SECTION 3. PLACE OF MEETING. The board of directors may designate any
place, either within or without the Commonwealth of Massachusetts as the place
of meeting for any annual meeting or for any special meeting. A waiver of notice
signed by all shareholders may designate any place, either within or without the
Commonwealth of Massachusetts, as the place for the holding of such meeting. If
no designation is made, or if a special meeting be otherwise called, the place
of meeting shall be the principal office of the corporation in the Commonwealth
of Massachusetts.
SECTION 4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting, and in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than forty days before the date of the meeting, or in the case
of a merger or consolidation not less than twenty nor more than forty days
before the meeting, either personally or by mail, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the records of the corporation, with postage
thereon prepaid.
1
<PAGE>
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or shareholders entitled to receive payment of any
dividend, or in order to make determination of shareholders for any other proper
purpose, the board of directors of the corporation may provide that the stock
transfer books shall be closed for a stated period but not to exceed, in any
case, forty days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days, or in the case
of a merger or consolidation, at least twenty days, immediately preceding such
meeting. In lieu of closing the stock transfer books, the board of directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than forty days and, for a
meeting of shareholders, not less than ten days, or in the case of a merger or
consolidation, not less than twenty days, immediately preceding such meeting. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
SECTION 6. VOTING LISTS. The agent having charge of the transfer books
for shares of the corporation shall make, at least ten days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting, arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of ten days prior to such meeting,
shall be kept on file at the principal office of the corporation and shall be
subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original share ledger or transfer book, or a
duplicate thereof kept in this Commonwealth, shall be prima facie evidence as to
who are the shareholders entitled to examine such list or share ledger or
transfer book or to vote at any meeting of shareholders.
SECTION 7. QUORUM. A majority of the outstanding shares of the
corporation, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders; provided, that if less than a majority of the
outstanding shares are represented at said meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting shall be the act of the shareholders.
SECTION 8. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the corporation before or at
the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy.
SECTION 9. VOTING OF SHARES. Each outstanding share shall be entitled to
one vote upon each matter submitted to vote at a meeting of shareholders.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent, or proxy as the by-laws of such corporation may prescribe, or, in the
absence of such provision, as the board of directors of such corporation may
determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian or conservator,
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either in person or by proxy without a transfer of such shares into the name of
such administrator, executor, court appointed guardian or conservator. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding shares at any given time.
SECTION 11. INSPECTORS. At any meeting of shareholders, the chairman of
the meeting may, or upon the request of any shareholder shall, appoint one or
more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or by
a majority of them if there be more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
SECTION 12. VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its board of directors. The board of directors shall
annually elect a chairman of the board, a vice chairman of the board, a
president, a secretary, a treasurer and such other officers as these by-laws may
provide. The board of directors shall at each annual meeting of the corporation
submit a full statement of the transactions of the corporation during the
previous year and of its financial condition.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the corporation shall be not less than five nor more than nine. Each director
shall hold office until the next annual meeting of shareholders or until his
successor shall have been elected and qualified.
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SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this by-law, immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place, either within or without the
Commonwealth of Massachusetts, for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the vice
chairman of the board, the president or any two directors. The person or persons
authorized to call special meetings of the board of directors may fix any place,
either within or without the Commonwealth of Massachusetts, as the place for
holding any special meeting of the board of directors called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at
least five days previous thereto by written notice delivered personally or
mailed to each director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegram company. Any director may waive notice of any meeting. The attendance
of a director at any meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the board of directors need be specified
in the notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number of directors then in
office, but no less than four in number, shall constitute a quorum for
transaction of business at any meeting of the board of directors, provided, that
if less than majority of such number of directors is present at said meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
SECTION 8. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the board of directors may be taken without a
meeting if written consents thereto are signed by all members of the board of
directors and such written consents are filed with the minutes of proceedings of
the board.
SECTION 9 VACANCIES. Any vacancy occurring in the board of directors
and any directorship to be filled by reason of an increase in the number of
directors, may be filled by the directors or by the shareholders at an annual
meeting or at a special meeting of shareholders called for that purpose.
SECTION 10. COMPENSATION. The board of directors, by the affirmative
vote of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for service to the corporation as directors,
officers or otherwise. By resolution of the board of directors the directors may
be paid their expenses, if any, of attendance at each meeting of the board.
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ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
SECTION 1. HOW CONSTITUTED. By resolution adopted by the board of
directors, the board may designate one or more committees, including an
executive committee, each consisting of at least three directors. Each member of
a committee shall be a director and shall hold office during the pleasure of the
board. The chairman of the board, the vice chairman of the board and the
president shall be members of the executive committee.
SECTION 2. POWERS OF THE EXECUTIVE COMMITTEE. Unless otherwise provided by
resolution of the board of directors, the executive committee shall, during the
intervals between meetings of the board of directors, have and may exercise all
of the powers of the board of directors in the management of the business and
affairs of the corporation except the power to declare a dividend, to authorize
the issuance of stock, or to recommend to shareholders any action requiring
shareholders' approval.
SECTION 3. OTHER COMMITTEES OF THE BOARD OF DIRECTORS. To the extent
provided by resolution of the board, other committees shall have and may
exercise any of the powers that may lawfully be granted to the executive
committee.
SECTION 4. PROCEEDINGS, QUORUM AND MANNER OF ACTING. In the absence of
appropriate resolution of the board of directors, each committee may adopt such
rules and regulations governing its proceedings, quorum and manner of acting as
it shall deem proper and desirable, provided that the quorum shall not be less
than two directors. In the absence of any member of any such committee, the
members thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the board of directors to act in the place of such
absent member.
SECTION 5. OTHER COMMITTEES. The board of directors may appoint other
committees, each consisting of one or more persons, who need not be directors.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the board of directors, but shall not
exercise any power which may lawfully be exercised only by the board of
directors or a committee thereof.
ARTICLE V
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a chairman of
the board, a vice chairman of the board, a president, one or more vice
presidents (the number thereof to be determined by the board of directors), a
controller, a treasurer, and a secretary, and such assistant controllers,
treasurers, secretaries or other officers as may be elected or appointed by the
board of directors. Any two or more offices may be held by the same person
except that the chairman, vice chairman and president cannot also serve
simultaneously as secretary of the corporation, but no person shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law, the Articles of Organization or these by-laws to
be executed, acknowledged or verified by two or more officers. The chairman of
the board, vice chairman and the president shall be selected from among the
directors and may hold such offices only so long as they continue to be
directors. No other officer need be a director.
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SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices filled at any meeting of the board of directors. Each officer shall hold
office until his successor shall have been duly elected and shall have qualified
or until his death or until he shall resign or shall have been removed in the
manner hereinafter provided. Election or appointment of an officer or agent
shall not of itself create contract rights.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the board
of directors may be removed by the board of directors whenever in its judgment
the best interest of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, or the person so
removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. CHAIRMAN OF THE BOARD. The chairman of the board shall be the
chief executive officer of the corporation, shall preside at all shareholders'
meetings and at all meetings of the board of directors and shall be ex officio a
-- -------
member of all committees of the board of directors, except the audit committee,
if any. Subject to the supervision of the board of directors, he shall have
general charge of the business, affairs and property of the corporation and its
officers, employees and agents. He shall sign (unless the vice chairman of the
board, the president or a vice president shall have signed) certificates
representing the stock of the corporation authorized for issuance by the board
of directors and shall have such other powers and perform such other duties as
may be assigned to him from time to time by the board of directors.
SECTION 6. VICE CHAIRMAN OF THE BOARD. The vice chairman of the board
shall assist the chief executive officer of the corporation in his duties and,
at the request of or in the absence or disability of the chairman of the board,
he shall preside at all shareholders' meetings and at all meetings of the board
of directors and shall in general exercise the powers and perform the duties of
the chairman of the board. He shall sign (unless the chairman of the board, the
president or a vice president shall have signed) certificates representing the
stock of the corporation authorized for issuance by the board of directors and
shall have such other powers and perform such other duties as may be assigned to
him from time to time by the chairman of the board or the board of directors.
SECTION 7. PRESIDENT. The president shall be the chief operating officer
of the corporation. In the event of the absence or disability of both the
chairman of the board and the vice chairman of the board, he shall preside at
all shareholders' meetings and at all meetings of the board of directors and
shall in general exercise the powers and perform the duties of both. Subject to
the supervision of the board of directors and such direction and control as the
chairman of the board and the vice chairman of the board may exercise, he shall
have general charge of the operations of the corporation and its officers,
employees and agents. He shall sign (unless the chairman or the vice chairman of
the board or a vice president shall have signed) certificates representing the
stock of the corporation authorized the board of directors may for issuance by
the board of directors. Except as otherwise order, he may sign in the name and
on behalf of the corporation all deeds, mortgages, bonds, contracts, instruments
or agreements. He shall exercise such other powers and perform such other duties
as from time to time may be assigned to him by the board of directors.
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SECTION 8. VICE PRESIDENT. The board of directors shall, from time to
time, designate and elect one or more vice presidents who shall have such powers
and perform such duties as from time to time may be assigned to them by the
board of directors or the president. At the request or in the absence or
disability of the president, the vice president (or, if there are two or more
vice presidents, then the senior of the vice presidents present and able to act)
may perform all the duties of the president and, when so acting, shall have all
the powers of and be subject to all the restrictions upon the president. Any
vice president may sign (unless the president or another vice president shall
have signed) certificates representing stock of the corporation authorized for
issuance by the board of directors.
SECTION 9. CONTROLLER AND ASSISTANT CONTROLLERS. The controller shall be
the principal accounting officer of the corporation and shall have general
charge of the books of account of the corporation. He shall cause to be prepared
annually a full and correct statement of the affairs of the corporation,
including a balance sheet and a financial statement of operations for the
preceding fiscal year. He shall perform all the duties incident to the office of
controller and such other duties as from time to time may be assigned to him by
the chairman or by the board of directors.
Any assistant controller may perform such duties of the controller as the
controller or the board of directors may assign and, in the absence of the
controller, he may perform all of the duties of the controller.
SECTION 10. TREASURER AND ASSISTANT TREASURER. The treasurer shall be the
principal financial officer of the corporation and shall have general charge of
the finances of the corporation. Except as otherwise provided by the board of
directors, he shall have general supervision of the funds and property of the
corporation. He shall sign (unless an assistant treasurer or secretary or
assistant secretary shall have signed) all certificates of stock of the
corporation authorized for issuance by the board of directors. He shall render
to the board of directors, whenever directed by the board, a report relating to
his custody of the funds and property of the corporation and of all his
transactions as treasurer; and as soon as possible after the close of each
fiscal year he shall make and submit to the board of directors a like report for
such fiscal year. He shall perform all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him by
the chairman or the board of directors.
Any assistant treasurer may perform such duties of the treasurer as the
treasurer or the board of directors may assign, and, in the absence of the
treasurer, he may perform all the duties of the treasurer.
SECTION 11. SECRETARY AND ASSISTANT SECRETARY. The secretary shall (a)
keep the minutes of the shareholders' and of the board of directors' meetings in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by law;
(c) be custodian of the corporate records and of the seal of the corporation and
see the seal of the corporation is affixed to all certificates for shares prior
to the issue thereof and to all documents, the execution of which on behalf of
the corporation under its seal is duly authorized in accordance with the
provisions of these by-laws;(d) keep a register of the post-office address of
each shareholder which shall be furnished to the secretary by such shareholder;
(e) sign with the chairman, vice chairman, president, or a vice president,
certificates for shares of the corporation, the issue of which shall have been
authorized by resolution of the board of directors; (f) have general charge of
the stock transfer books of the corporation; (g) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be assigned to him by the chairman or by the board of directors.
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Any assistant secretary may perform such duties of the secretary as
the secretary or the board of directors may assign, and, in the absence of the
secretary, he may perform all the duties of the secretary.
SECTION 12. SUBORDINATE OFFICERS. The board of directors from time to time
may appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the board of directors may determine. The board of
directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
SECTION 13. REMUNERATION. The salaries or other compensation of the
officers of the corporation shall be fixed from time to time by resolution of
the board of directors, except that the board of directors may by resolution
delegate to any person or group of persons the power to fix the salaries or
other compensation of any subordinate officers or agents appointed in accordance
with the provisions of Section 12 hereof. No officer shall be prevented from
receiving a salary by reason of the fact that he is also a director of the
corporation.
SECTION 14. The board of directors may require any officer or agent of the
corporation to execute a bond to the corporation in such sum and with such
surety or sureties as the board of directors may determine, conditioned upon the
faithful performance of his duties to the corporation, Any secretary, treasurer,
assistant secretary and assistant treasurer of the corporation shall, in
accordance with the applicable provisions of the Massachusetts General Laws,
give a bond, with surety, payable to the corporation conditioned upon the
faithful performance of his or her duties and that such bond be executed by such
officer before performing any duties of his or her office.
SECTION 15. COMMISSIONS. 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 paid to the corporation on any policy or
contract, or on any extension of conversion thereof, unless such policy,
contract, extension or conversion was written and effective prior to his
election or appointment.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver and
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the board of directors.
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SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as may be determined by the board of
directors. Such certificates shall be signed by the chairman of the board, the
vice chairman of the board, the president or a vice president and by the
secretary or an assistant secretary and shall be sealed with the seal of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. All certificates surrendered to the
corporation for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and cancelled, except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
SECTION 2. TRANSFERS OF SHARES. Transfers of shares of the corporation
shall be made only on the books of the corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed the
owner thereof for all purposes as regards the corporation.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January in each year and end on the last day of December in each year.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these by-laws or under the provisions of the Articles of
Incorporation, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE X
INDEMNIFICATION
The corporation shall, except as hereinafter provided and subject to
limitations of law, indemnify each director, former director, officer and former
officer, and his heirs and legal representatives, for and 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
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or claim in which he may be involved, or with which he may be threatened, by
reason of any alleged act or omission as a director or officer of the
corporation. 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 interest of the
corporation or (h) 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
corporation by vote of the board of directors at a meeting in which no director
participates against whom any suit, proceeding or claim on the same or similar
grounds is then pending or threatened, or in the event no such vote can be
taken, unless, in the opinion of independent counsel selected by or in a manner
determined by the board of directors, there is no reasonable ground not to
approve such settlement as being in the best interests of the corporation. As
part of such indemnification, the corporation may pay expenses incurred in
defending any such action, suit, proceeding or claim in advance of the final
disposition thereof upon receipt of an undertaking 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, or
former officer, heirs or legal representatives may otherwise be lawfully
entitled.
ARTICLE XI
AMENDMENTS
These by-laws may not be altered, amended or repealed prior to the
issuance of a certificate of authority to the company, except by written consent
of subscribers representing at least two-thirds of the shares subscribed, and
the approval of the Commissioner of Insurance of Massachusetts. After a
certificate of authority is issued, the power to make, amend or repeal these by-
laws shall be vested in the board of directors.
Adopted this 25th day of February, 1979.
Certified to be a true copy of the By-Laws of John Hancock Variable Life
Insurance Company as adopted at the Initial Meeting of Incorporators and as
amended from time to time, up to and including the date set forth below.
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Exhibit 6
January 5, 1996
Board of Directors
John Hancock Mutual Life lnsurance Company
Subject: Actuarial Opinion
Gentlemen:
This opinion is furnished in connection with the filing of this Post-Effective
Amendment to the Registration Statement on Form S-6 (File Number 33-79108) by
John Hancock Variable Life Insurance Company (JHVLICO) under the Securities Act
of 1933, as amended, with respect to the flexible premium variable life
insurance Policy under which amounts will be allocated by JHVLICO to one or more
of the twelve subaccounts of John Hancock Variable Life Account S ("Account").
The flexible premium policy is described in the prospectus included in the
amended Registration Statement.
The policy form was prepared under my direction, and I am familiar with the
amended Registration Statement and exhibits thereto. In my opinion:
1. The "sales load", as defined in paragraph (c) (4) of Rule 6e-3(T) under the
Investment Company Act of 1940, will not exceed 9% of the "payments" (as
defined in the first sentence of paragraph (c) (7) of the Rule) equal to the
sum of the guideline annual premiums (as defined in paragraph (c) (8) of the
Rule) that would be paid during the period equal to the lesser of 20 years or
the anticipated life expectancy of the insured named in the policy based on
the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker Mortality Tables.
The sales load on payments made in excess of such sum will not exceed 9%.
2. Except to the extent that exemptive relief is applicable, the proportionate
amount of sales load deducted from any payment during the policy will not
exceed the proportionate amount deducted from any prior payment during the
policy period, unless an increase is caused by a reduction in the annual cost
of insurance.
<PAGE>
-2-
3. The illustration of death benefit, surrender value, and accumulated premiums
shown in the appendix of the flexible premium prospectus included in the
amended Registration Statement, based on the assumptions stated in the
illustrations, are consistent with the provisions of the policy. Such
assumptions, including the current cost of insurance rates and other charges,
are reasonable. The policy has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear disproportionately more favorable to a prospective purchaser of a
policy for a male age 45, nonsmoker risk class, than to a prospective
purchaser of a policy for a male at other ages or in another risk
classification or for a female nor, have the particular examples set forth in
the illustrations been selected for the purpose of making this relationship
appear more favorable.
4. The charge for federal taxes that is imposed under the policy is reasonable
in relation to JHVLlCO's increased tax burden under Section 848 of the
lnternal Revenue Code of 1986, resulting from JHVLlCO's receipt of such
premiums. The cost to JHVLICO of capital used to satisfy its increased tax
burden under Section 848 is, in essence, JHVLlCO's targeted rate of return.
The targeted rate of return is reasonable and the factors taken into account
by JHVLICO in determining such targeted rate of return are appropriate
factors to consider.
I hereby consent to the filing of this opinion as an exhibit to the amended
Registration Statement and to the use of my name under the heading "Experts" in
the prospectus to actuarial matters.
/s/Philip G. Johnson, FSA
Senior Associate Actuary
<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 7, 1995, with respect to
the financial statements of John Hancock Variable Life Account S and with
respect to the financial statements of John Hancock Variable Life Insurance
Company, included in this Post-Effective Amendment No. 2 to the Registration
Statement (Form S-6, No. 33-79108).
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
January 10, 1996
<PAGE>
EXHIBIT 12
January 5, 1996
United States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
This opinion is being furnished with respect to the filing of this post-
effective amendment of the Registrant's Registration Statement with the
Securities and Exchange Commission as required by Rule 485 under the Securities
Act of 1933.
We have acted as counsel to Registrant for the purpose of preparing this
post-effective amendment which is being filed pursuant to paragraph (b) of Rule
485 and hereby represent to the Commission that in our opinion this post-
effective amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b).
We hereby consent to the filing of this opinion with and as a part of this
post-effective amendment to Registrant's Registration Statement with the
Commission.
Very truly yours,
/s/ Francis C. Cleary Jr.
Francis C. Cleary, Jr.
Vice President and Counsel
