HANCOCK JOHN VARIABLE LIFE ACCOUNT S, 485APOS, 1999-10-19

HANCOCK JOHN VARIABLE LIFE ACCOUNT S
485APOS, 1999-10-19

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<PAGE>

As filed with the Securities and Exchange Commission on October 19, 1999

Registration No. 333-425
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

-----------------------

FORM S-6
Post-Effective Amendment No. 5 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)

--------------------

RONALD J. BOCAGE, ESQ.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
JOHN HANCOCK PLACE, BOSTON, 02117
(Name and complete address of agent for service)

--------------------

Copy to:
THOMAS C. LAUERMAN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036

--------------------

It is proposed that this filing become effective(check appropriate box)

/ / immediately upon filing pursuant to paragraph (b) of Rule 485
--

/ / on (date) pursuant to paragraph (b) of Rule 485
--
/X/ 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 1998 pursuant to Rule 24f-2 on March 23, 1999.
<PAGE>

CROSS-REFERENCE TABLE

Form N-8B-2 Item Caption in Prospectus
- ---------------- ---------------------

1 Additional Information-How we
support the policy and investment
options-Separate Account S

2 Cover Page

3 Not applicable

4 Additional Information-How we
we market the policies

5, 6 Additional Information-How we
support the policy and investment
options-Separate Account S

7, 8, 9 Not applicable

10(a),(b),(c),(d) Basic Information-How can I access my
investment in the policy?; Basic Information-
How can I change my policy's investment
allocations?; Basic Information-Who owns the
policy?

10(e) Basic Information-Is there a minimum amount I
must invest?

10(f) Additional Information-Voting privileges that
you will have

10(g),(h) Additional Information-Changes that JHVLICO
can make as to your policy

10(i) Not applicable

11, 12 Cover Page

13 Basic Information-What charges will JHVLICO
deduct from my investment in the policy?; Basic
Information-What charges will the Trust deduct
from my investment in the policy?; Basic
Information-What other changes could JHVLICO
impose in the future?

14, 15 Additional Information-Procedures for issuance
of a policy; Additional Information-How we
process certain policy transactions

16 Additional Information-How we process certain
policy transactions

<PAGE>

Form N-8B-2 Item Caption in Prospectus
- ---------------- --------------------

17 Basic information-How do I communicate with
JHVLICO?; Basic Information-Is there a minimum
amount I must invest?; Additional Information
Effects of policy loans

18 Basic Information-How will the value of my
investment in the policy change over time?;
Additional Information-How we support the
policy and investment options

19 Additional Information-Reports that you will
receive

20 Not applicable

21 Basic Information-How can I access my
investment in the policy?; Additional
Information-Effects of policy loans

22, 23 Not applicable

24 Additional Information-Adjustments we make to
death benefits

25 Additional Information-Description of JHVLICO

26 Basic Information-What charges will JHVLICO
deduct from my investment in the policy?; Basic
Information-What charges will the Trust deduct
from my investment in the policy?

27 Additional Information-Reports that you will
receive

28 Additional Information-List of Directors and
Executive Officers of JHVLICO

29 Additional Information-Description of JHVLICO

30, 31, 32, 33, 34 Not applicable

35 Additional Information-Description of JHVLICO

36, 37 Not applicable

38, 39 Additional Information-How we market the
policies

40 Not applicable

41(a) Additional Information-How we market the
policies
<PAGE>

Form N-8B-2 Item Caption in Prospectus
- ---------------- ---------------------

41(b), (c), (d), 42, 43 Not applicable

44 Additional Information-How we support the
policy and investment options-Separate
Account S

45 Not applicable

46, 47 Additional Information-How we support the
policy and investment options-Separate
Account S; Additional Information-When we pay
policy proceeds

48, 49, 50 Not applicable

51(a)-(f) Cover Page; Basic Information-What is the
policy?

51(g) Basic Information-How can I invest money in the
policy?; Basic Information-Is there a minimum
amount I must invest?

51(h)-(j) Not applicable

52 Additional Information-Changes that JHVLICO can
make as to your policy

53(a) Cover Page; Additional Information-How we
support the policy and investment options

53(b), 54, 55, 56, 57, 58 Not applicable

59 Financial Statements of JHVLICO and the Account

<PAGE>

PROSPECTUS DATED ___________, 1999

-------------------------------------------------------
MEDALLION EXECUTIVE VARIABLE LIFE III
-------------------------------------------------------

a flexible premium variable life insurance policy
issued by

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
("JHVLICO")

JHVLICO LIFE SERVICING OFFICE
-----------------------------
EXPRESS DELIVERY U.S. MAIL
---------------- ---------
529 Main Street (X-4) P.O. Box 111
Charlestown, MA 02129 Boston, MA 02117

PHONE: 1-800-732-5543 / FAX: 1-617-886-3048

The policy provides an investment option with fixed rates of return declared
by JHVLICO and the following 23 variable investment options:

<TABLE>
<CAPTION>
VARIABLE INVESTMENT OPTION MANAGED BY
- -------------------------- ----------
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Managed ................................................ Independence Investment Associates, Inc.
Growth & Income ........................................ Independence Investment Associates, Inc.
Equity Index .......................................... State Street Global Advisors
Large Cap Value ........................................ T. Rowe Price Associates, Inc.
Large Cap Growth ...................................... Independence Investment Associates, Inc.
Mid Cap Value .......................................... Neuberger Berman, LLC
Mid Cap Growth ......................................... Janus Capital Corporation
Real Estate Equity ..................................... Independence Investment Associates, Inc.
Small/Mid Cap Growth.................................... Wellington Management Company, LLP
Small/Mid Cap CORE ..................................... Goldman Sachs Asset Management
Small Cap Value ........................................ INVESCO Management & Research, Inc.
Small Cap Growth ....................................... John Hancock Advisers, Inc.
Global Equity .......................................... Scudder Kemper Investments, Inc.
International Balanced ................................. Brinson Partners, Inc.
International Equity Index ............................. Independence International Associates, Inc.
International Opportunities ............................ Rowe Price-Fleming International, Inc.
Emerging Markets Equity ................................ Montgomery Asset Management, LLC
Short-Term Bond ........................................ Independence Investment Associates, Inc.
Bond Index ............................................. Mellon Bond Associates, LLP
Sovereign Bond ......................................... John Hancock Advisers, Inc.
Global Bond ............................................ J.P. Morgan Investment Management, Inc.
High Yield Bond ........................................ Wellington Management Company, LLP
Money Market ........................................... John Hancock Mutual Life Insurance Company
- ---------------------------------------------------------------------------------------------------------
</TABLE>

We may add or delete variable investment options in the future.
<PAGE>

When you select one or more of these variable investment options, we invest
your money in the corresponding investment option(s) of the John Hancock
Variable Series Trust I (the "Trust"). The Trust is a mutual fund that offers a
number of different investment options (which are called "funds"). The
investment results of each variable investment option you select will depend on
those of the corresponding fund of the Trust. Attached to this prospectus is a
prospectus for the Trust that contains detailed information about each fund
offered under the policy. Be sure to read the prospectus for the Trust before
selecting any of the variable investment options shown on page 1.

GUIDE TO THIS PROSPECTUS

This prospectus contains information that you should know before you buy a
policy or exercise any of your rights under the policy. However, please keep in
mind that this is a prospectus - - it is not the policy. The prospectus
---
simplifies many policy provisions to better communicate the policy's essential
features. Your rights and obligations under the policy will be determined by the
language of the policy itself. When you receive your policy, read it carefully.

This prospectus is arranged in the following way:

. The section which follows is called "Basic Information". It is in a
question and answer format. We suggest you read the Basic Information
section before reading any other section of the prospectus.

. Behind the Basic Information section are illustrations of
hypothetical policy benefits that help clarify how the policy works.
These start on page 17.

. Behind the illustrations is a section called "Additional Information"
that gives more details about the policy. It generally does not
---
repeat information that is in the Basic Information section. A table
of contents for the Additional Information section appears on page
22.

. Behind the Additional Information section are the financial
statements for JHVLICO and Separate Account S. These start on page
40.

. Finally, there is an Alphabetical Index of Key Words and Phrases at
the back of the prospectus on page 79.

After the Alphabetical Index of Key Words and Phrases, this prospectus ends and
the Trust prospectus begins.

**********

Please note that the Securities and Exchange Commission ("SEC") has not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

<PAGE>

BASIC INFORMATION

This part of the prospectus provides answers to commonly asked questions about
the policy.

Here are the page numbers where the questions and answers appear:
<TABLE>
<CAPTION>
Question Pages to See
- -------- ------------
<S> <C>
.What is the policy?............................................ 4
.Who owns the policy?........................................... 4
.How can I invest money in the policy?.......................... 4-5
.Is there a minimum amount I must invest?....................... 5-6
.How will the value of my investment in the policy change over
time?.......................................................... 7
.What charges will JHVLICO deduct from my investment in the
policy?........................................................ 7-9
.What charges will the Trust deduct from my investment in the
policy?........................................................ 9
.What other charges could JHVLICO impose in the future?......... 10
.How can I change my policy's investment allocations?........... 10-11
.How can I access my investment in the policy?.................. 11-12
.How much will JHVLICO pay when the insured person dies?........ 12-13
.How can I change my policy's insurance coverage?............... 13-14
.Can I cancel my policy after it's issued?...................... 14
.Can I choose the form in which JHVLICO pays out policy
proceeds?...................................................... 14
.To what extent can JHVLICO vary the terms and conditions of
its policies in particular cases?.............................. 15
.How will my policy be treated for income tax purposes?......... 15
.How do I communicate with JHVLICO?............................. 15-16
</TABLE>

3
<PAGE>

WHAT IS THE POLICY?

The policy's primary purpose is to provide lifetime protection against
economic loss due to the death of the insured person. The value of the amount
you have invested under the policy may increase or decrease daily based upon the
investment results of the variable investment options that you choose. The
amount we pay to the policy's beneficiary if the insured person dies (we call
this the "death benefit") may be similarly affected.

While the insured person is alive, you will have a number of options under the
policy. Here are some major ones:

. Determine when and how much you invest in the various investment
options

. Borrow or withdraw amounts you have in the investment options

. Change the beneficiary who will receive the death benefit

. Change the amount of insurance

. Turn in (i.e., "surrender") the policy for the full amount of its
surrender value

. Choose the form in which we will pay out the death benefit or other
proceeds

Most of these options are subject to limits that are explained later in this
prospectus.

WHO OWNS THE POLICY?

That's up to the person who applies for the policy. The owner of the policy is
the person who can exercise most of the rights under the policy, such as the
right to choose the investment options or the right to surrender the policy. In
many cases, the person buying the policy is also the person who will be the
owner. However, the application for a policy can name another person or entity
(such as a trust) as owner. Whenever we've used the term "you" in this
prospectus, we've assumed that the reader is the person who has whatever right
or privilege is being discussed. There may be tax consequences if the owner and
the insured person are different, so you should discuss this issue with your tax
adviser.

HOW CAN I INVEST MONEY IN THE POLICY?

Premium Payments

We call the investments you make in the policy "premiums" or "premium
payments". The amount we require as your first premium depends upon the
-----
specifics of your policy and the insured person. Except as noted below, you can
make any other premium payments you wish at any time. That's why the policy is
called a "flexible premium" policy.

<PAGE>

Minimum premium payment

Each premium payment must be at least $50.

Maximum premium payments

Federal tax law limits the amount of premium payments you can make relative to
the amount of your policy's insurance coverage. We will not knowingly accept any
amount by which a premium payment exceeds the maximum. If you exceed certain
other limits, the law may impose a penalty on amounts you take out of your
policy. More discussion of these tax law requirements begins on page 29. Also,
we may refuse to accept any amount of an additional premium if:

. that amount of premium would increase our insurance risk exposure,
and

. the insured person doesn't provide us with adequate evidence that he
or she continues to meet our requirements for issuing insurance.

In no event, however, will we refuse to accept any premium necessary to
prevent the policy or the guaranteed death benefit feature from terminating.

Ways to pay premiums

If you pay premiums by check or money order, they must be drawn on a U.S. bank
in U.S. dollars and made payable to "John Hancock Variable Life Insurance
Company." Premiums after the first must be sent to the JHVLICO Life Servicing
Office at the appropriate address shown on page 1 of this prospectus.

We will also accept premiums:

. by wire or by exchange from another insurance company, or

. if we agree to it, through a salary deduction plan with your
employer.

You can obtain information on these other methods of premium payment by
contacting your JHVLICO representative or by contacting the JHVLICO Life
Servicing Office.

IS THERE A MINIMUM AMOUNT I MUST INVEST?

Planned Premiums

The Policy Specifications page of your policy will show the "Planned Premium"
for the policy. You choose this amount in the policy application. The premium
reminder notice we send you is based on this amount. You will also choose how
often to pay premiums-- annually, semi-annually, quarterly or monthly. The date
on which such a payment is "due" is referred to in the policy as a "modal
processing date." However, payment of Planned Premiums is not necessarily
required. You need only invest enough to keep the policy in force (see "Lapse
and reinstatement" and "Guaranteed death benefit feature" below).

<PAGE>

Lapse and reinstatement

Either your entire policy or the Additional Sum Insured portion of your Total
Sum Insured can lapse for failure to pay charges due under the policy. If the
guaranteed death benefit feature is in effect, only the Additional Sum Insured,
if any, can lapse. If the guaranteed death benefit feature is not in effect, the
---
entire policy can lapse. In either case, if the policy's surrender value is not
sufficient to pay the charges on a quarterly processing date, we will notify you
of how much you will need to pay to keep any Additional Sum Insured or the
policy in force. You will have a 61 day "grace period" to make that payment. If
you don't pay at least the required amount by the end of the grace period, the
Additional Sum Insured or your policy will terminate (i.e., "lapse"). If your
policy lapses, all coverage under the policy will cease. Even if the policy or
the Additional Sum Insured terminates in this way, you can still reactivate
(i.e., "reinstate") it within 3 years from the beginning of the grace period.
You will have to provide evidence that the insured person still meets our
requirements for issuing coverage. You will also have to pay a minimum amount of
premium and be subject to the other terms and conditions applicable to
reinstatements, as specified in the policy. If the guaranteed death benefit is
not in effect and the insured person dies during the grace period, we will
deduct any unpaid monthly charges from the death benefit. During such a grace
period, you cannot make a partial withdrawal or policy loan. (The "quarterly
processing dates" are every third monthly deduction date. The term "monthly
deduction date" is defined on page 28 under "Procedures for issuance of a
policy".)

Guaranteed death benefit feature

This feature guarantees that your Basic Sum Insured will not lapse during the
first 5 policy years, regardless of adverse investment performance, if on each
quarterly processing date during that 5 year period the amount of cumulative
premiums you have paid (less all withdrawals from the policy and all outstanding
loans) equals or exceeds the sum of all Guaranteed Death Benefit Premiums due to
date. The annual Guaranteed Death Benefit Premium (or "GDB Premium) is defined
in the policy and one-twelfth of that amount is "due" on each monthly deduction
date. If the Guaranteed Death Benefit test is not satisfied on any quarterly
processing date, the guaranteed death benefit feature will not be "in effect" on
that quarterly processing date.

No GDB Premium will ever be greater than the so-called "guideline premium" for
the policy as defined in Section 7702 of the Internal Revenue Code. Also, the
GDB Premiums may change in the event of any change in the Additional Sum Insured
of the policy or any change in the death benefit option (see "How much will
JHVLICO pay when the insured person dies?" on page 12).

The guaranteed death benefit feature applies only to the Basic Sum Insured. It
does not apply to any amount of Additional Sum Insured (see "How much will
---
JHVLICO pay when the insured person dies?" on page 12).

If there are monthly charges that remain unpaid because of this feature, we
will deduct such charges when there is sufficient surrender value to pay them.

6
<PAGE>

HOW WILL THE VALUE OF MY INVESTMENT IN THE POLICY CHANGE OVER TIME?

From each premium payment you make, we deduct the charges described under
"Deductions from premium payments" below. We invest the rest in the investment
options you've elected. Special investment rules apply for the first 20 days
after your policy becomes effective. (See "Commencement of investment
performance" beginning on page 28.)

Over time, the amount you've invested in any variable investment option will
--------
increase or decrease the same as if you had invested the same amount directly in
the corresponding fund of the Trust and had reinvested all fund dividends and
distributions in additional fund shares; except that we will deduct certain
additional charges which will reduce your account value. We describe these
charges under "What charges will JHVLICO deduct from my investment in the
policy?" below.

The amount you've invested in the fixed investment option will earn interest
-----
at a rate we declare from time to time. We guarantee that this rate will be at
least 4%. If you want to know what the current declared rate is, just call or
write to us. The current declared rate will also appear in the annual statement
we will send you. Amounts you invest in the fixed investment option will not be
---
subject to the mortality and expense risk charge described on page 8. Otherwise,
the charges applicable to the fixed investment option are the same as those
applicable to the variable investment options.

At any time, the "account value" of your policy is equal to:

. the amount you invested,

. plus or minus the investment experience of the investment options
you've chosen,

. minus all charges we deduct, and

. minus all withdrawals you have made.

If you take a loan on the policy, however, your account value will be computed
somewhat differently. This is discussed beginning on page 11.

WHAT CHARGES WILL JHVLICO DEDUCT FROM MY INVESTMENT IN THE POLICY?

Deductions from premium payments

. Premium tax charge - A charge to cover state premium taxes we currently
------------------
expect to pay, on average. This charge is currently 1.60% of each premium.
We guarantee that this charge will never exceed 2.35% of each premium.

. DAC tax charge - A charge to cover the increased Federal income tax
--------------
burden that we currently expect will result from receipt of premiums. This
charge is currently zero, but we reserve the right to impose a charge of
up to 1.25% of each premium.

<PAGE>

. Premium sales charge - A charge to help defray our sales costs. The
--------------------
current charge is a percentage of a certain portion of the premium you pay.
The percentage is 8% in policy years 1 through 10. We currently intend to
stop making this charge on premiums received after the 10th policy year, but
this is not guaranteed. Because policies of this type were first offered for
sale in 1999, no termination of this charge has yet occurred. In no event
will the charge exceed 3% after policy year 10. The portion of each year's
premium that is currently subject to the charge is called the "Target
Premium". It's determined at the time the policy is issued and will appear in
the "Policy Specifications" section of the policy. We currently impose no
sales charge on premiums in excess of the Target Premium. However, we reserve
the right to impose a charge of up to 3% of such excess premiums paid in any
policy year.

. Optional enhanced cash value rider charge - A charge to cover the cost of
-----------------------------------------
this rider, if elected, equal to 1% of premium paid in the first policy
year that does not exceed the Target Premium.

Deductions from account value

. Maintenance charge - A monthly charge to help defray our administrative
------------------
costs. This is a flat dollar charge of up to $15 (currently $10). We
currently intend to stop making this charge after the 10th policy year,
but this is not guaranteed.

. Insurance charge - A monthly charge for the cost of insurance. To
----------------
determine the charge, we multiply the amount of insurance for which we are
at risk by a cost of insurance rate. The rate is derived from an actuarial
table. The table in your policy will show the maximum cost of insurance
-------
rates. The cost of insurance rates that we currently apply are generally
less than the maximum rates. We will review the cost of insurance rates at
least every 5 years and may change them from time to time. However, those
rates will never be more than the maximum rates shown in the policy. The
table of rates we use will depend on the insurance risk characteristics
and (usually) gender of the insured person, the Total Sum Insured and the
length of time the policy has been in effect. Regardless of the table
used, cost of insurance rates generally increase each year that you own
your policy, as the insured person's attained age increases. (The insured
person's "attained age" on any date is his or her age on the birthday
nearest that date.) Higher current insurance rates are generally
applicable to policies issued on a "guaranteed issue" basis, where only
very limited underwriting information is obtained. This is often the case
with policies issued to trustees, employers and similar entities.

. Extra mortality charge - A monthly charge specified in your policy for
----------------------
additional mortality risk if the insured person is subject to certain types
of special insurance risk.

. Asset-based risk charge - A monthly charge for mortality and expense
-----------------------
risks we assume. The charge is a percentage of that portion of your account
value allocated to variable investment options. The current
--------
percentages are .0501% for policy years 1 - 10, .0292% for policy years 11-
20, and .0125% thereafter. These percentages equate to effective annual rates
of .60%, .35% and .15%, respectively. The reductions after 10 and 20 years
have not occurred yet under any policy, since no policy has yet been
outstanding for 10 years. We guarantee that this charge will never exceed
.0753% of that portion of your account value allocated to variable investment
options. This

<PAGE>

percentage equates to an effective annual rate of .90%. This charge does
not apply to the fixed investment option.

. Optional benefits charge - Monthly charges for any optional insurance
------------------------
benefits added to the policy by means of a rider (other than the enhanced
cash value rider). We currently do not offer any rider for which such a
charge is made, but we may offer such riders in the future.

. Partial withdrawal charge - A charge for each partial withdrawal of
-------------------------
account value to compensate us for the administrative expenses of
processing the withdrawal. The charge is equal to the lesser of $20 or 2%
of the withdrawal amount.

WHAT CHARGES WILL THE TRUST DEDUCT FROM MY INVESTMENT IN THE POLICY?

The Trust must pay investment management fees and other operating expenses.
These fees and expenses are different for each fund of the Trust and reduce the
investment return of each fund. Therefore, they also indirectly reduce the
return you will earn on any variable investment options you select. The figures
in the following chart are expressed as percentages of each fund's average daily
net assets for 1998 (rounded to two decimal places). The percentages reflect the
investment management fees that were payable for 1998 and the 1998 other
operating expenses that would have been allocated to the funds under the
allocation rules currently in effect.

<TABLE>
<CAPTION>
Other Total Fund Other Operating
Investment Operating Operating Expenses
Fund Name Management Fee Expenses Expenses Absent Reimbursement*
- --------- -------------- ---------- ----------- -----------------------
<S> <C> <C> <C> <C>
Managed..................... 0.32% 0.05% 0.37% 0.05%
Growth & Income............. 0.25% 0.05% 0.30% 0.05%
Equity Index................ 0.14% 0.08% 0.22% 0.08%
Large Cap Value............. 0.74% 0.07% 0.81% 0.07%
Large Cap Growth............ 0.37% 0.05% 0.42% 0.05%
Mid Cap Value............... 0.80% 0.05% 0.85% 0.05%
Mid Cap Growth.............. 0.85% 0.08% 0.93% 0.08%
Real Estate Equity.......... 0.60% 0.05% 0.65% 0.05%
Small/Mid Cap Growth**...... 0.75% 0.05% 0.80% 0.05%
Small/Mid Cap CORE.......... 0.80% 0.10% 0.90% 0.23%
Small Cap Value............. 0.80% 0.07% 0.87% 0.07%
Small Cap Growth............ 0.75% 0.08% 0.83% 0.08%
Global Equity............... 0.90% 0.10% 1.00% 0.50%
International Balanced...... 0.85% 0.10% 0.95% 0.64%
International Equity
Index...................... 0.17% 0.10% 0.27% 0.23%
International
Opportunities.............. 0.87% 0.10% 0.97% 0.32%
Emerging Markets
Equity..................... 1.30% 0.10% 1.40% 0.68%
Short-Term Bond............. 0.30% 0.05% 0.35% 0.05%
Bond Index.................. 0.15% 0.05% 0.20% 0.05%
Sovereign Bond.............. 0.25% 0.05% 0.30% 0.05%
Global Bond**............... 0.69% 0.06% 0.75% 0.06%
High Yield Bond............. 0.65% 0.07% 0.72% 0.07%
Money Market................ 0.25% 0.05% 0.30% 0.05%
</TABLE>

* John Hancock reimburses a fund when the fund's other operating expenses
exceed 0.10% of the fund's average daily net assets.

** Small/Mid Cap Growth was formerly "Diversified Mid Cap Growth" and Global
Bond was formerly "Strategic Bond."

<PAGE>

WHAT OTHER CHARGES COULD JHVLICO IMPOSE IN THE FUTURE?

We currently make no charge against account value for our Federal income
taxes, but if we incur, or expect to incur, income taxes attributable to any
subaccount of the Account or this class of policies in future years, we reserve
the right to make such a charge. Any such charge would reduce what you earn on
any affected investment options. However, we expect that no such charge will be
necessary.

Under current laws, we 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, we may make charges
for such taxes.

HOW CAN I CHANGE MY POLICY'S INVESTMENT ALLOCATIONS?

Future premium payments

At any time, you may change the investment options in which future premium
payments will be invested. You make the original allocation in the application
for the policy. The percentages you select must be in whole numbers and must
total 100%.

Transfers of existing account value

You may also transfer your existing account value from one investment option
to another. To do so, you must tell us how much to transfer, either as a whole
number percentage or as a specific dollar amount.

Under our current rules, you can make transfers out of any variable investment
--------
option anytime you wish. However, transfers out of the fixed investment option
-----
are currently subject to the following restrictions:

. You can only make such a transfer once in each policy year.

. The most you can transfer at any one time is the greater of $500 or 20%
of the assets in your fixed investment option.

We reserve the right to impose limits on:

. the minimum amount of each transfer out of the fixed investment option;

. the maximum amount of any transfer into the fixed investment option after
the second policy year; and

. the number and frequency of transfers out of the variable investment
options.

HOW CAN I ACCESS MY INVESTMENT IN THE POLICY?

Full surrender

You may surrender your policy in full at any time. If you do, we will pay you
the account value less any policy loans. This is called your "surrender value."
You must return your policy when you request a full surrender.

<PAGE>

Partial withdrawals

You may make a partial withdrawal of your surrender value at any time.
Generally, each partial withdrawal must be at least $1,000. There is a charge
(usually $20) for each partial withdrawal. We will automatically reduce the
account value of your policy by the amount of the withdrawal and the related
charge. Each investment option will be reduced in the same proportion as the
account value is then allocated among them. We will not permit a partial
withdrawal if it would cause your surrender value to fall below 3 months' worth
of monthly charges (see "Deductions from account value" on page 8). We also
reserve the right to refuse any partial withdrawal that would cause the policy's
Total Sum Insured to fall below $100,000 or the policy's Basic Sum Insured to
fall below $20,000. Because it reduces the account value, any partial withdrawal
will reduce your death benefit under either Option A or Option B (see "How much
will JHVLICO pay when the insured person dies?" on page 13). Under Option A,
such a partial withdrawal may also reduce the Total Sum Insured. This will
happen only if the minimum insurance amount under Option A is equal to or less
than the Total Sum Insured. Any such reduction in the Total Sum Insured will be
implemented by first reducing any Additional Sum Insured then in effect. The
Basic Sum Insured will be reduced only after the Additional Sum Insured has been
reduced to zero. If such a reduction in Total Sum Insured would cause the policy
to fail the Internal Revenue Code's definition of life insurance, we will not
permit the partial withdrawal.

Policy loans

You may borrow from your policy at any time after it has been in effect for 1
year by completing a form satisfactory to us or, if the telephone transaction
authorization form has been completed, by telephone. The maximum amount you can
borrow is determined as follows:

. We first determine the surrender value of your policy.

. We then subtract an amount equal to 12 times the monthly charges then
being deducted from account value.

. We then multiply the resulting amount by .75% in policy years 1
through 10, .50% in policy years 11 through 20, and .25% therefafter.

. We then subtract the third item above from the second item above.

The minimum amount of each loan is $1,000. The interest charged on any loan is
an effective annual rate of 4.75% in the first 10 policy years, 4.50% in policy
years 11 through 20, and 4.25% thereafter. Accrued interest will be added to the
loan daily and will bear interest at the same rate as the original loan amount.
The amount of the loan is deducted from the investment options in the same
proportion as the account value is then allocated among them and is placed in a
special loan account. This special loan account will earn interest at an
effective annual rate of 4.0%. However, if we determine that a loan will be
treated as a taxable distribution because of the differential between the loan
interest rate and the rate being credited on the special loan account, we
reserve the right to decrease the rate credited on the special loan account to a

<PAGE>

rate that would, in our reasonable judgement, result in the transaction being
treated as a loan under Federal tax law.

You can repay all or part of a loan at any time. Each repayment will be
allocated among the investment options as follows:

. The same proportionate part of the loan as was borrowed from the
fixed investment option will be repaid to the fixed investment
option.

. The remainder of the repayment will be allocated among the investment
options in the same way a new premium payment would be allocated.

If you want a payment to be used as a loan repayment, you must include
instructions to that effect. Otherwise, all payments will be assumed to be
premium payments.

HOW MUCH WILL JHVLICO PAY WHEN THE INSURED PERSON DIES?

In your application for the policy, you will tell us how much life insurance
coverage you want on the life of the insured person. This is called the "Total
Sum Insured." Total Sum Insured is composed of the Basic Sum Insured and any
Additional Sum Insured you elect. The only limitation on how much Additional Sum
Insured you can have is that it generally cannot exceed 400% of the Basic Sum
Insured. There are a number of factors you should consider in determining
whether to elect coverage in the form of Basic Sum Insured or in the form of
Additional Sum insured. These factors are discussed under "Basic Sum Insured vs.
Additional Sum Insured" on page __.

When the insured person dies, we will pay the death benefit minus any
outstanding loans. There are two ways of calculating the death benefit. You
choose which one you want in the application. The two death benefit options are:

. Option A - The death benefit will equal the greater of (1) the Total
Sum Insured or (2) the minimum insurance amount (as described below).

. Option B - The death benefit will equal the greater of (1) the Total
Sum Insured plus your policy's account value on the date of death, or
(2) the minimum insurance amount.

For the same premium payments, the death benefit under Option B will tend to
be higher than the death benefit under Option A. On the other hand, the monthly
insurance charge will be higher under Option B to compensate us for the
additional insurance risk. Because of that, the account value will tend to be
higher under Option A than under Option B for the same premium payments.

The minimum insurance amount

In order for a policy to qualify as life insurance under Federal tax law,
there has to be a minimum amount of insurance in relation to account value.
There are two tests that can be

12
<PAGE>

applied under Federal tax law -- the "guideline premium and cash value corridor
test" and the "cash value accumulation test." When you elect the Option A death
benefit, you must also elect which test you wish to have applied. If you elect
the Option B death benefit, the guideline premium and cash value corridor test
will automatically be applied. Under the guideline premium and cash value
corridor test, we compute the minimum insurance amount each business day by
multiplying the account value on that date by the so-called "corridor factor"
applicable on that date. The corridor factors are derived by applying the
guideline premium and cash value corridor test. The corridor factor starts out
at 2.50 for ages at or below 40 and decreases as attained age increases,
reaching a low of 1.0 at age 95. A table showing the factor for each age will
appear in the policy. Under the cash value accumulation test, we compute the
minimum insurance amount each business day by multiplying the account value on
that date by the so-called "death benefit factor" applicable on that date. The
death benefit factors are derived by applying the cash value accumulation test.
The death benefit factor decreases as attained age increases. A table showing
the factor for each age will appear in the policy.

As noted above, you have to elect which test will be applied if you elect the
Option A death benefit. The cash value accumulation test may be preferable if
you want an increasing death benefit in later policy years and/or want to fund
the policy at the "7 pay" limit for the full 7 years (see "Tax Considerations"
beginning on page __). The guideline premium and cash value corridor test may be
preferable if you want the account value under the policy to increase without
increasing the death benefit as quickly as might otherwise be required.

When the insured person reaches 100

On the policy anniversary nearest the insured person's 100th birthday, the
death benefit will become equal to the account value on the date of death. Death
benefit Options A and B (as described above) will cease to apply. Also, we will
stop deducting any monthly charges (other than the asset-based risk charge) and
will stop accepting any premium payments.

HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?

Increase in coverage

You may request an increase in the Additional Sum Insured at any time (but see
"Effective date of other policy transactions" on page __). Generally, each such
increase must be at least $50,000. However, you will have to provide us with
evidence that the insured person still meets our requirements for issuing
insurance coverage.

Decrease in coverage

After the first policy year, you may request a reduction in the Total Sum
Insured at any time, but only if:

. the remaining Basic Sum Insured will be at least $20,000,

. the remaining Total Sum Insured will be at least $100,000, and

<PAGE>

. the remaining Total Sum Insured will at least equal the minimum
required by the tax laws to maintain the policy's life insurance
status.

Change of death benefit option

At any time, you may change your coverage from death benefit Option A to
Option B or vice-versa, but only if there is no change in the Federal tax law
test used to determine the minimum insurance amount.. If you change from Option
A to Option B, we will require evidence that the insured person still meets our
requirements for issuing coverage. This is because such a change increases our
insurance risk exposure.

Tax consequences

Please read "Tax considerations" starting on page 29 to learn about possible
tax consequences of changing your insurance coverage under the policy.

CAN I CANCEL MY POLICY AFTER IT'S ISSUED?

You have the right to cancel your policy within 10 days (or longer in some
states) after you receive it. This is often referred to as the "free look"
period. To cancel your policy, simply deliver or mail the policy to:

. JHVLICO at one of the addresses shown on page 1, or

. the JHVLICO representative who delivered the policy to you.

In most states, you will receive a refund of any premiums you've paid. In some
states, the refund will be your account value on the date of cancellation plus
all charges deducted by JHVLICO or the Trust prior to that date. The date of
cancellation will be the date of such mailing or delivery.

CAN I CHOOSE THE FORM IN WHICH JHVLICO PAYS OUT POLICY PROCEEDS?

Choosing a payment option

You may choose to receive proceeds from the policy as a single sum. This
includes proceeds that become payable because of death or full surrender.
Alternatively, you can elect to have proceeds of $1,000 or more applied to any
of a number of other payment options, including the following:

. Option 1 - Proceeds left with us to accumulate with interest

. Option 2A - Equal monthly payments of a specified amount until all
proceeds are paid out

. Option 2B - Equal monthly payments for a specified period of time

14
<PAGE>

. Option3 - Equal monthly payments for life, but with payments
guaranteed for a specific number of years

. Option 4 - Equal monthly payments for life with no refund

. Option 5 - Equal monthly payments for life with a refund if all of
the proceeds haven't been paid out

You cannot choose an option if the monthly payments under the option would be
less than $50. We will issue a supplementary agreement when the proceeds are
applied to any alternative payment option. That agreement will spell out the
terms of the option in full. We will credit interest on each of the above
options. For Options 1 and 2A, the interest will be at least an effective annual
rate of 3 1/2%.

Changing a payment option

You can change the payment option at any time before the proceeds are payable.
If you haven't made a choice, the payee of the proceeds has a prescribed period
in which he or she can make that choice.

Tax impact

There may be tax consequences to you or your beneficiary depending upon which
payment option is chosen. You should consult with a qualified tax adviser before
making that choice.

TO WHAT EXTENT CAN JHVLICO VARY THE TERMS AND CONDITIONS OF ITS POLICIES IN
PARTICULAR CASES?

Listed below are some variations we can make in the terms of our policies. Any
variation will be made only in accordance with uniform rules that we apply
fairly to all of our customers.

State law insurance requirements

Insurance laws and regulations apply to JHVLICO in every state in which its
policies are sold. As a result, various terms and conditions described in the
prospectus may vary depending upon where you reside. These variations will be
reflected in your policy or in endorsements attached to your policy.

Variations in expenses or risks

We may vary the charges and other terms of our policies where special
circumstances result in sales or administrative expenses, mortality risks or
other risks that are different from those normally associated with the policies.
These include the type of variations discussed under "Reduced charges for
eligible classes" on page 28. No variation in any charge will exceed any maximum
stated in this prospectus with respect to that charge.

15
<PAGE>

HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?

Generally, death benefits paid under policies such as yours are not subject to
income tax. Earnings on your account value are not subject to income tax as long
as we don't pay them out to you. If we do pay out any amount of your account
value upon surrender or partial withdrawal, all or part of that distribution
should generally be treated as a return of the premiums you've paid and should
not be subject to income tax. Amounts you borrow are generally not taxable to
you.

However, some of the tax rules change if your policy is found to be a
"modified endowment contract." This can happen if you've paid more than a
certain amount of premiums that is prescribed by the tax laws. Additional taxes
and penalties may be payable for policy distributions of any kind.

For further information about the tax consequences of owning a policy, please
read "Tax considerations" beginning of page 29.

HOW DO I COMMUNICATE WITH JHVLICO?

General Rules

You should mail or express all checks and money orders for premium payments
and loan repayments to the JHVLICO Life Servicing Office at the appropriate
address shown on page 1.

Certain requests must be made in writing and be signed and dated by you. They
include the following:

. loans, surrenders or partial withdrawals

. transfers of account value among investment options

. change of allocation among investment options for new premium
payments

. change of death benefit option

. increase or decrease in Total Sum Insured

. change of beneficiary

. election of payment option for policy proceeds

. tax withholding elections

. election of telephone transaction privilege

You should mail or express these requests to the JHVLICO Life Servicing Office
at the appropriate address shown on page 1. You should also send notice of the
insured person's death and related documentation to the JHVLICO Life Servicing
Office. We don't consider that we've

<PAGE>

"received" any communication until such time as it has arrived at the proper
place and in the proper and complete form.

We have special forms that should be used for a number of the requests
mentioned above. You can obtain these forms from the JHVLICO Life Servicing
Office or your JHVLICO representative. Each communication to us must include
your name, your policy number and the name of the insured person. We cannot
process any request that doesn't include this required information. Any
communication that arrives after the close of our business day, or on a day that
is not a business day, will be considered "received" by us on the next following
business day. Our business day currently closes at 4:00 p.m. Eastern Standard
Time, but special circumstances (such as suspension of trading on a major
exchange) may dictate an earlier closing time.

Telephone Transactions

If you complete a special authorization form, you can request loans, transfers
among investment options and changes of allocation among investment options
simply by telephoning us at 1-800-732-5543 or by faxing us at 1-617-886-3048.
Any fax request should include your name, daytime telephone number, policy
number and, in the case of transfers and changes of allocation, the names of the
investment options involved. We will honor telephone instructions from anyone
who provides the correct identifying information, so there is a risk of loss to
you if this service is used by an unauthorized person. However, you will receive
written confirmation of all telephone transactions. There is also a risk that
you will be unable to place your request due to equipment malfunction or heavy
phone line usage. If this occurs, you should submit your request in writing.

The policies are not designed for professional market timing organizations or
other persons or entities that use programmed or frequent transfers among
investment options. For reasons such as that, we reserve the right to change our
telephone transaction policies or procedures at any time. We also reserve the
right to suspend or terminate the privilege altogether.

<PAGE>

ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES,
SURRENDER VALUES AND ACCUMULATED PREMIUMS

The following tables illustrate the changes in death benefit, account value
and surrender value of the policy under certain hypothetical circumstances that
we assume solely for this purpose. Each table separately illustrates the
operation of a policy for a specified issue age, premium payment schedule and
Total Sum Insured. The amounts shown are for the end of each policy year and
assume that all of the account value is invested in funds that achieve
investment returns at constant annual rates of 0%, 6% and 12% before any fees or
expenses. (Investment return reflects investment income and all realized and
unrealized capital gains and losses.) The tables assume annual Planned Premiums
that are paid at the beginning of each policy year for an insured person who is
a 35 year old male preferred non-smoker underwriting risk when the policy is
issued.

Tables are provided for each of the two death benefit options. The tables
headed "Current Charges" assume that the current rates for all charges deducted
by JHVLICO will apply in each year illustrated, including the intended waiver of
the premium sales charge after the tenth policy year. The tables headed "Maximum
Charges" are the same, except that the maximum permitted rates for all years are
used for all charges. The tables do not reflect any charge that we reserve the
right to make but are not currently making.

With respect to fees and expenses deducted from Trust assets, the amounts
shown in all tables reflect (1) investment management fees equivalent to an
effective annual rate of .59%, and (2) an assumed average asset charge for all
other Trust operating expenses equivalent to an effective annual rate of .07%.
These rates are the arithmetic average for all funds of the Trust. In other
words, they are based on the hypothetical assumption that policy account values
are allocated equally among the variable investment options. The actual rates
associated with any policy will vary depending upon the actual allocation of
policy values among the investment options.

The second column of each table shows the amount you would have at the end of
each policy year if an amount equal to the assumed Planned Premiums were
invested to earn interest, after taxes, at 5% compounded annually. This is not a
policy value. It is included for comparison purposes only.

Because your circumstances will no doubt differ from those in the
illustrations that follow, values under your policy will differ, in most cases
substantially. Upon request, we will furnish you with a comparable illustration
reflecting your proposed insured person's issue age, sex and underwriting risk
classification, and the Total Sum Insured and annual Planned Premium amount
requested.

<PAGE>

PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST
PLANNED PREMIUM: $2,000*
USING CURRENT CHARGES

<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------- ---------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------- ---------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ -------- -------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,100 $100,000 $100,000 $100,000 $ 928 $ 1,008 $ 1,088
2 4,305 100,000 100,000 100,000 2,229 2,455 2,690
3 6,620 100,000 100,000 100,000 3,179 3,625 4,108
4 9,051 100,000 100,000 100,000 4,256 4,999 5,836
5 11,604 100,000 100,000 100,000 5,300 6,417 7,726
6 14,284 100,000 100,000 100,000 6,702 8,285 10,215
7 17,098 100,000 100,000 100,000 8,062 10,219 12,947
8 20,053 100,000 100,000 100,000 9,380 12,220 15,948
9 23,156 100,000 100,000 100,000 10,653 14,288 19,246
10 26,414 100,000 100,000 100,000 11,903 16,459 22,919
11 29,834 100,000 100,000 100,000 13,226 18,836 27,107
12 33,426 100,000 100,000 100,000 14,500 21,301 31,735
13 37,197 100,000 100,000 100,000 15,722 23,859 36,855
14 41,157 100,000 100,000 100,000 16,888 26,511 42,526
15 45,315 100,000 100,000 100,000 17,994 29,264 48,818
16 49,681 100,000 100,000 100,000 19,036 32,121 55,809
17 54,265 100,000 100,000 100,000 20,009 35,088 63,591
18 59,078 100,000 100,000 100,000 20,908 38,171 72,270
19 64,132 100,000 100,000 100,002 21,727 41,378 81,969
20 69,439 100,000 100,000 111,291 22,457 44,715 92,743
25 100,227 100,000 100,000 191,435 24,567 63,872 166,465
30 139,522 100,000 100,000 304,004 22,998 89,279 289,528
35 189,673 100,000 130,059 520,998 14,460 123,866 496,189
</TABLE>
- ---------
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Additional Sum Insured, or optional rider
benefits are elected.

IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE
DEATH BENEFIT AND SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGE 0%, 6%, OR 12% OVER
A PERIOD OF YEARS, BUT ALSO FLUCTUATE ABOVE OR BELOW THE AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RESULTS CAN BE ACHIEVED FOR ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

<PAGE>

<TABLE>
<CAPTION>
Death Benefits Surrender Value
---------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ -------- -------- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,100 $100,000 $100,000 $100,000 $ 609 $ 678 $ 748
2 4,305 100,000 100,000 100,000 1,573 1,758 1,952
3 6,620 100,000 100,000 100,000 2,170 2,522 2,908
4 9,051 100,000 100,000 100,000 2,879 3,451 4,102
5 11,604 100,000 100,000 100,000 3,537 4,379 5,380
6 14,284 100,000 100,000 100,000 4,534 5,712 7,167
7 17,098 100,000 100,000 100,000 5,467 7,056 9,094
8 20,053 100,000 100,000 100,000 6,331 8,407 11,171
9 23,156 100,000 100,000 100,000 7,119 9,758 13,411
10 26,414 100,000 100,000 100,000 7,824 11,102 15,826
11 29,834 100,000 100,000 100,000 8,502 12,499 18,501
12 33,426 100,000 100,000 100,000 9,086 13,884 21,399
13 37,197 100,000 100,000 100,000 9,574 15,256 24,547
14 41,157 100,000 100,000 100,000 9,963 16,611 27,976
15 45,315 100,000 100,000 100,000 10,244 17,944 31,721
16 49,681 100,000 100,000 100,000 10,408 19,245 35,820
17 54,265 100,000 100,000 100,000 10,441 20,504 40,317
18 59,078 100,000 100,000 100,000 10,326 21,707 45,263
19 64,132 100,000 100,000 100,000 10,040 22,836 50,720
20 69,439 100,000 100,000 100,000 9,564 23,873 56,764
25 100,227 100,000 100,000 114,459 3,522 27,067 99,530
30 139,522 ** 100,000 178,326 ** 23,693 169,835
35 189,673 ** 100,000 297,282 ** 1,923 283,125
</TABLE>
- ---------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, or optional rider
benefits are elected.
** Policy lapses unless additional premium payments are made.

<PAGE>

PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS
OPTION B DEATH BENEFIT
GUIDELINE PREMIUM AND CASH VALUE CORRIDOR TEST
PLANNED PREMIUM: $2,000*
USING CURRENT CHARGES

<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ -------- -------- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,100 $100,926 $101,006 $101,086 $ 926 $ 1,006 $ 1,086
2 4,305 102,063 102,288 102,523 2,223 2,448 2,683
3 6,620 103,166 103,610 104,091 3,166 3,610 4,091
4 9,051 104,234 104,972 105,804 4,234 4,972 5,804
5 11,604 105,265 106,373 107,672 5,265 6,373 7,672
6 14,284 106,648 108,217 110,127 6,648 8,217 10,127
7 17,098 107,985 110,116 112,811 7,985 10,116 12,811
8 20,053 109,272 112,071 115,745 9,272 12,071 15,745
9 23,156 110,507 114,080 118,950 10,507 14,080 18,950
10 26,414 111,709 116,173 122,497 11,709 16,173 22,497
11 29,834 112,974 118,449 126,515 12,974 18,449 26,515
12 33,426 114,177 120,788 130,919 14,177 20,788 30,919
13 37,197 115,313 123,185 135,743 15,313 23,185 35,743
14 41,157 116,376 125,638 141,028 16,376 25,638 41,028
15 45,315 117,360 128,144 146,817 17,360 28,144 46,817
16 49,681 118,260 130,696 153,159 18,260 30,696 53,159
17 54,265 119,066 133,289 160,106 19,066 33,289 60,106
18 59,078 119,772 135,916 167,715 19,772 35,916 67,715
19 64,132 120,367 138,568 176,048 20,367 38,568 76,048
20 69,439 120,840 141,235 185,173 20,840 41,235 85,173
25 100,227 121,081 154,453 245,741 21,081 54,453 145,741
30 139,522 116,471 165,889 341,757 16,471 65,889 241,757
35 189,673 104,047 171,387 493,439 4,047 71,387 393,439
</TABLE>
- ---------
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Additional Sum Insured, or optional rider
benefits are elected.

<PAGE>

<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------- -------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------- -------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ -------- -------- -------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,100 $100,603 $100,672 $100,742 $ 603 $ 672 $ 742
2 4,305 101,399 101,582 101,774 1,559 1,742 1,934
3 6,620 102,142 102,490 102,870 2,142 2,490 2,870
4 9,051 102,832 103,394 104,034 2,832 3,394 4,034
5 11,604 103,465 104,290 105,268 3,465 4,290 5,268
6 14,284 104,431 105,578 106,993 4,431 5,578 6,993
7 17,098 105,323 106,862 108,833 5,323 6,862 8,833
8 20,053 106,136 108,134 110,791 6,136 8,134 10,791
9 23,156 106,861 109,384 112,872 6,861 9,384 12,872
10 26,414 107,491 110,601 115,075 7,491 10,601 15,075
11 29,834 108,079 111,840 117,474 8,079 11,840 17,474
12 33,426 108,558 113,031 120,014 8,558 13,031 20,014
13 37,197 108,928 114,167 122,705 8,928 14,167 22,705
14 41,157 109,182 115,240 125,556 9,182 15,240 25,556
15 45,315 109,314 116,237 128,573 9,314 16,237 28,573
16 49,681 109,312 117,142 131,759 9,312 17,142 31,759
17 54,265 109,164 117,934 135,117 9,164 17,934 35,117
18 59,078 108,852 118,591 138,643 8,852 18,591 38,643
19 64,132 108,357 119,081 142,331 8,357 19,081 42,331
20 69,439 107,660 119,376 146,174 7,660 19,376 46,174
25 100,227 100,616 116,920 167,572 616 16,920 67,572
30 139,522 ** 103,786 190,888 ** 3,786 90,888
35 189,673 ** ** 209,236 ** ** 109,236
</TABLE>
- ---------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, or optional rider
benefits are elected.
** Policy lapses unless additional premium payments are made.

<PAGE>

PLAN: FLEXIBLE PREMIUM VARIABLE LIFE
$100,000 TOTAL SUM INSURED
MALE, ISSUE AGE 45, FULLY UNDERWRITTEN PREFERRED UNDERWRITING CLASS
OPTION A DEATH BENEFIT
CASH VALUE ACCUMULATION TEST
PLANNED PREMIUM: $2,000*
USING CURRENT CHARGES

<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------- ---------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------- ---------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ -------- -------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,100 $100,000 $100,000 $100,000 $ 928 $ 1,008 $ 1,088
2 4,305 100,000 100,000 100,000 2,229 2,455 2,690
3 6,620 100,000 100,000 100,000 3,179 3,625 4,108
4 9,051 100,000 100,000 100,000 4,256 4,999 5,836
5 11,604 100,000 100,000 100,000 5,300 6,417 7,726
6 14,284 100,000 100,000 100,000 6,702 8,285 10,215
7 17,098 100,000 100,000 100,000 8,062 10,219 12,947
8 20,053 100,000 100,000 100,000 9,380 12,220 15,948
9 23,156 100,000 100,000 100,000 10,653 14,288 19,246
10 26,414 100,000 100,000 100,000 11,903 16,459 22,919
11 29,834 100,000 100,000 100,000 13,226 18,836 27,107
12 33,426 100,000 100,000 100,000 14,500 21,301 31,735
13 37,197 100,000 100,000 100,000 15,722 23,859 36,855
14 41,157 100,000 100,000 100,000 16,888 26,511 42,526
15 45,315 100,000 100,000 100,000 17,994 29,264 48,818
16 49,681 100,000 100,000 101,944 19,036 32,121 55,801
17 54,265 100,000 100,000 113,122 20,009 35,088 63,488
18 59,078 100,000 100,000 125,068 20,908 38,171 71,932
19 64,132 100,000 100,000 137,852 21,727 41,378 81,204
20 69,439 100,000 100,000 151,546 22,457 44,715 91,381
25 100,227 100,000 100,000 236,783 24,567 63,872 159,129
30 139,522 100,000 118,901 360,548 22,998 87,776 266,166
35 189,673 100,000 145,338 543,763 14,460 115,715 432,932
</TABLE>
- ---------
* The illustrations assume that Planned Premiums equal to the Target Premium are
paid at the start of each Policy Year. The Death Benefit and Surrender Value
will differ if premiums are paid in different amounts or frequencies, if
policy loans are taken, or if Additional Sum Insured, or optional rider
benefits are elected.

<PAGE>

<TABLE>
<CAPTION>
Death Benefit Surrender Value
---------------------------- --------------------------
Assuming hypothetical Assuming hypothetical
End of Planned Premiums gross annual return of gross annual return of
Policy accumulated at ---------------------------- --------------------------
Year 5% annual interest 0% 6% 12% 0% 6% 12%
- ------ ------------------ -------- -------- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 2,100 $100,000 $100,000 $100,000 $ 609 $ 678 $ 748
2 4,305 100,000 100,000 100,000 1,573 1,758 1,952
3 6,620 100,000 100,000 100,000 2,170 2,522 2,908
4 9,051 100,000 100,000 100,000 2,879 3,451 4,102
5 11,604 100,000 100,000 100,000 3,537 4,379 5,380
6 14,284 100,000 100,000 100,000 4,534 5,712 7,167
7 17,098 100,000 100,000 100,000 5,467 7,056 9,094
8 20,053 100,000 100,000 100,000 6,331 8,407 11,171
9 23,156 100,000 100,000 100,000 7,119 9,758 13,411
10 26,414 100,000 100,000 100,000 7,824 11,102 15,826
11 29,834 100,000 100,000 100,000 8,502 12,499 18,501
12 33,426 100,000 100,000 100,000 9,086 13,884 21,399
13 37,197 100,000 100,000 100,000 9,574 15,256 24,547
14 41,157 100,000 100,000 100,000 9,963 16,611 27,976
15 45,315 100,000 100,000 100,000 10,244 17,944 31,721
16 49,681 100,000 100,000 100,000 10,408 19,245 35,820
17 54,265 100,000 100,000 100,000 10,441 20,504 40,317
18 59,078 100,000 100,000 100,000 10,326 21,707 45,263
19 64,132 100,000 100,000 100,000 10,040 22,836 50,720
20 69,439 100,000 100,000 100,000 9,564 23,873 56,764
25 100,227 100,000 100,000 142,613 3,522 27,067 95,842
30 139,522 ** 100,000 205,660 ** 23,693 151,824
35 189,673 ** 100,000 288,431 ** 1,923 229,643
</TABLE>
- ---------
* The illustrations assume that Planned Premiums equal to the Target Premium
are paid at the start of each Policy Year. The Death Benefit and Surrender
Value will differ if premiums are paid in different amounts or frequencies,
if policy loans are taken, or if Additional Sum Insured, or optional rider
benefits are elected.
** Policy lapses unless additional premium payments are made.

<PAGE>

ADDITIONAL INFORMATION

This section of the prospectus provides additional detailed information that
is not contained in the Basic Information section on pages 3 through 16.

<TABLE>
<CAPTION>
CONTENTS OF THIS SECTION PAGES TO SEE
- ------------------------ ------------
<S> <C>
Description of JHVLICO ....................................... 23
How we support the policy and investment options.............. 23-24
Procedures for issuance of a policy........................... 24-25
Basic Sum Insured vs. Additional Sum Insured .................
Commencement of investment performance........................ 25
How we process certain policy transactions.................... 25-27
Effects of policy loans....................................... 27
Additional information about how certain policy charges work.. 27-28
How we market the policies.................................... 28-29
Tax considerations............................................ 29-30
Reports that you will receive................................. 31
Voting privileges that you will have.......................... 31
Changes that JHVLICO can make as to your policy............... 31-32
Adjustments we make to death benefits......................... 32
When we pay policy proceeds................................... 32-33
Other details about exercising rights and paying benefits..... 33
Year 2000 Issues..............................................
Legal matters................................................. 33
Registration statement filed with the SEC..................... 33
Accounting and actuarial experts.............................. 33
Financial statements of JHVLICO and the Account............... 33
List of Directors and Executive Officers of JHVLICO........... 34
</TABLE>

<PAGE>

DESCRIPTION OF JHVLICO

We are JHVLICO, a stock life insurance company chartered in 1979 under
Massachusetts law. We are authorized to transact a life insurance and annuity
business in all states other than New York and in the District of Columbia. We
began selling variable life insurance policies in 1980.

We are regulated and supervised by the Massachusetts Commissioner of
Insurance, who periodically examines our affairs. We also are subject to the
applicable insurance laws and regulations of all jurisdictions in which we are
authorized to do business. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of the
various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations. The
regulation to which we are subject, however, does not provide a guarantee as to
such matters.

We are a wholly-owned subsidiary of John Hancock Mutual Life Insurance Company
("John Hancock"), a company chartered in Massachusetts in 1862. John Hancock's
home office is at John Hancock Place, Boston, Massachusetts 02117. At year end
1998, John Hancock's assets were approximately $67 billion and it had invested
over $380 million in JHVLICO in connection with JHVLICO's organization and
operation. It is anticipated that John Hancock will from time to time make
additional capital contributions to JHVLICO to enable us to meet our reserve
requirements and expenses in connection with our business. John Hancock is
committed to make additional capital contributions if necessary to ensure that
we maintain a positive net worth.

HOW WE SUPPORT THE POLICY AND INVESTMENT OPTIONS

Separate Account S

The variable investment options shown on page 1 are in fact subaccounts of
Separate Account S (the "Account"), a separate account established by us under
Massachusetts law. The Account 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"). Such registration does not
involve supervision by the SEC of the management of the Account or JHVLICO.

The Account's assets are the property of JHVLICO. Each policy provides that
amounts we hold in the Account pursuant to the policies cannot be reached by any
other persons who may have claims against us.

The assets in each subaccount are invested in the corresponding fund of the
Trust, but the assets of one subaccount are not necessarily legally insulated
from liabilities associated with another subaccount. New subaccounts may be
added as new funds are added to the Trust and made available to policy owners.
Existing subaccounts may be deleted if existing funds are deleted from the
Trust.

We will purchase and redeem Trust shares for the Account at their net asset
value without any sales or redemption charges. Shares of the Trust represent an
interest in one of the funds of the Trust which corresponds to a subaccount of
the Account. Any dividend or capital gains distributions received by the Account
will be reinvested in shares of that same fund at their net asset value as of
the dates paid.

On each business day, shares of each fund are purchased or redeemed by us for
each subaccount based on, among other things, the amount of net premiums
allocated to the subaccount, distributions reinvested, and transfers to, from
and among subaccounts, all to be effected as of that date. Such

<PAGE>

purchases and redemptions are effected at each fund's net asset value per share
determined for that same date. A "business day" is any date on which the New
York Stock Exchange is open for trading. We compute policy values for each
business day as of the close of that day (usually 4:00 p.m. Eastern Standard
Time).

Our general account

Our obligations under the policy's fixed investment option are backed by our
general account assets. Our general account consists of assets owned by us other
than those in the Account and in other separate accounts that we may establish.
Subject to applicable law, we have sole discretion over the investment of assets
of the general account and policy owners do not share in the investment
experience of, or have any preferential claim on, those assets. Instead, we
guarantee that the account value allocated to the fixed investment option will
accrue interest daily at an effective annual rate of at least 4% without regard
to the actual investment experience of the general account.

Because of exemptive and exclusionary provisions, interests in our fixed
investment option have not been registered under the Securities Act of 1933 and
our 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 we have been advised that the staff
of the SEC has not reviewed the disclosure in this prospectus relating to the
fixed investment option. Disclosure regarding the fixed investment option may,
however, be subject to certain generally-applicable provisions of the Federal
securities laws relating to accuracy and completeness of statements made in
prospectuses.

PROCEDURES FOR ISSUANCE OF A POLICY

Generally, the policy is available with a minimum Total Sum Insured at issue
of $100,000 and a minimum Basic Sum Insured at issue of $20,000. At the time of
issue, the insured person must have an attained age of at least 20 and no more
than 80. All insured persons must meet certain health and other insurance risk
criteria called "underwriting standards".

Policies issued in Montana or in connection with certain employee plans will
not directly reflect the sex of the insured person in either the premium rates
or the charges or values under the policy. The illustrations set forth in this
prospectus are sex-distinct and, therefore, may not reflect the rates, charges,
or values that would apply to such policies.

Minimum Initial Premium

The Minimum Initial Premium must be received by us at our Life Servicing
Office in order for the policy to be in full force and effect. There is no grace
period for the payment of the Minimum Initial Premium. The Minimum Initial
Premium is determined by us based on the characteristics of the insured person,
the Total Sum Insured at issue, and the policy options you have selected.

Commencement of insurance coverage

After you apply for a policy, it can sometimes take up to several weeks for us
to gather and evaluate all the information we need to decide whether to issue a
policy to you and, if so, what the insured person's rate class should be. After
we approve an application for a policy and assign an appropriate insurance rate
class, we will prepare the policy for delivery. We will not pay a death benefit
under a policy unless the policy is in effect when the insured person dies
(except for the circumstances described under "Temporary insurance coverage
prior to policy delivery" on page 25).

The policy will take effect only if all of the following conditions are
satisfied:

. The policy is delivered to and received by the applicant.

. The Minimum Initial Premium is received by us.

<PAGE>

. Each insured person is living and still meets our health criteria for
issuing insurance.

If all of the above conditions are satisfied, the policy will take effect on
the date shown in the policy as the "date of issue." That is the date on which
we begin to deduct monthly charges. Policy months, policy years and policy
anniversaries are all measured from the date of issue.

Backdating

In order to preserve a younger age at issue for the insured person, we can
designate a date of issue that is up to 60 days earlier than the date that would
otherwise apply. This is referred to as "backdating" and is allowed under state
insurance laws. Backdating can also be used in certain corporate-owned life
insurance cases involving multiple policies to retain a common monthly deduction
date.

The conditions for coverage described above under "Commencement of insurance
coverage" must still be satisfied, but in a backdating situation the policy
always takes effect retroactively. Backdating results in a lower insurance
charge (because of the insured person's younger age at issue), but monthly
charges begin earlier than would otherwise be the case. Those monthly charges
will be deducted as soon as we receive premiums sufficient to pay them.

Temporary coverage prior to policy delivery

If a specified amount of premium is paid with the application for a policy and
other conditions are met, we will provide temporary term life insurance coverage
on the insured person for a period prior to the time coverage under the policy
takes effect. Such temporary term coverage will be subject to the terms and
conditions described in the application for the policy, including limits on
amount and duration of coverage.

Monthly deduction dates

Each charge that we deduct monthly is assessed against your account value or
the subaccounts at the close of business on the date of issue and at the close
of the first business day in each subsequent policy month.

BASIC SUM INSURED VS. ADDITIONAL SUM INSURED

As noted earlier in this prospectus, you should consider a number of factors
in determining whether to elect coverage in the form of Basic Sum Insured or in
the form of Additional Sum Insured.

The amount of sales charge deducted from premiums and the amount of
compensation paid to the selling insurance agent will be less if coverage is
included as Additional Sum Insured, rather than as Basic Sum Insured. On the
other hand, the amount of any Additional Sum Insured is not included in the
guaranteed death benefit feature. Therefore, if the policy's surrender 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 death
benefit feature.

Generally, you 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. If this is your priority, you may wish to maximize the proportion of
the Additional Sum Insured. However, if your priority is to take advantage of
the guaranteed death benefit feature, the proportion of the Policy's Total Sum
Insured that is guaranteed can be increased by taking out more coverage as Basic
Sum Insured at the time of policy issuance.

Any decision you make to modify the amount of Additional Sum Insured coverage
after issue can have significant tax consequences (see "Tax Considerations"
beginning on page __).

COMMENCEMENT OF INVESTMENT PERFORMANCE

Any premium payment processed prior to the twentieth day after the date of
issue will automatically be allocated to the Money Market

<PAGE>

investment option. On the later of the date such payment is received or the
twentieth day following the date of issue, the portion of the Money Market
investment option attributable to such payment will be reallocated automatically
among the investment options you have chosen.

All other premium payments will be allocated among the investment options you
have chosen as soon as they are processed.

HOW WE PROCESS CERTAIN POLICY TRANSACTIONS

Premium payments

We will process any premium payment as of the day we receive it, unless one of
the following exceptions applies:

(1) We will process a payment received prior to a policy's date of issue as if
received on the date of issue.

(2) If the Minimum Initial Premium is not received prior to the date of issue,
we will process each premium payment received thereafter as if received on the
business day immediately preceding the date of issue until all of the Minimum
Initial Premium is received.

(3) We will process the portion of any premium payment for which we require
evidence of the insured person's continued insurability only after we have
received such evidence and found it satisfactory to us.

(4) If we receive any premium payment that we think will cause a policy to
become a modified endowment or will cause a policy to lose its status as life
insurance under the tax laws, we will not accept the excess portion of that
premium payment and will immediately notify the owner. We will refund the excess
premium when the premium payment check has had time to clear the banking system
(but in no case more than two weeks after receipt), except in the following
circumstances:

. The tax problem resolves itself prior to the date the refund is to be
made; or

. The tax problem relates to modified endowment status and we receive a
signed acknowledgment from the owner prior to the refund date instructing
us to process the premium notwithstanding the tax issues involved.

In the above cases, we will treat the excess premium as having been received on
the date the tax problem resolves itself or the date we receive the signed
acknowledgment. We will then process it accordingly.

(5) If a premium payment is received or is otherwise scheduled to be processed
(as specified above) on a date that is not a business day, the premium payment
will be processed on the business day next following that date.

Transfers among investment options

Any reallocation among investment options must be such that the total in all
investment options after reallocation equals 100% of account value. Transfers
out of any investment option will be effective at the end of the business day in
which we receive at our Life Servicing Office notice satisfactory to us.

We have the right to defer transfers of amounts out of the fixed investment
option for up to six months.

Telephone transfers and policy loans

Once you have completed a written authorization, you may request a transfer or
policy loan by telephone or by fax. If the fax request option becomes
unavailable, another means of telecommunication will be substituted.

If you authorize telephone transactions, you will be liable for any loss,
expense or cost arising out of any unauthorized or fraudulent telephone
instructions which we reasonably believe to be genuine, unless such loss,
expense or cost is the result of our mistake or negligence. We employ procedures
which provide safeguards against the execution of unauthorized

<PAGE>

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 we do not employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, we may be liable for any loss due to
unauthorized or fraudulent instructions.

Effective date of other policy transactions

The following transactions take effect on the monthly deduction date on or
next following the date we approve your request:

. Total Sum Insured decreases.

. Reinstatements of lapsed policies.

The following transactions take effect on the policy anniversary on or next
following the date we approve your request:

. Additional Sum Insured increases.

. Change of death benefit Option from A to B.

A change from Option B to Option A is effective on the policy anniversary on
or next following the date we receive the request.

We process loans, surrenders, partial withdrawals and loan repayments as of
the day we receive such request or repayment.

EFFECTS OF POLICY LOANS

The account value, the surrender value, and any death benefit above the Total
Sum Insured are permanently affected by any loan, whether or not it is repaid in
whole or in part. This is because the amount of the loan is deducted from the
investment options and placed in a special loan account. The investment options
and the special loan account will generally have different rates of investment
return.

The amount of the outstanding loan (which includes accrued and unpaid
interest) is subtracted from the amount otherwise payable when the policy
proceeds become payable.

Whenever the outstanding loan equals or exceeds the account value, the policy
will terminate 31 days after we have mailed notice of termination to you (and to
any assignee of record at such assignee's last known address) specifying the
minimum amount that must be paid to avoid termination, unless a repayment of at
least the amount specified is made within that period.

ADDITIONAL INFORMATION ABOUT HOW CERTAIN POLICY CHARGES WORK

Sales expenses and related charges

The premium sales charges help to compensate us for the cost of selling our
policies. (See "What charges will JHVLICO deduct from my investment in the
policy?" in the Basic Information section of this prospectus.) The amount of the
charges in any policy year does not specifically correspond to sales expenses
for that year. We expect to recover our total sales expenses over the life of
the policies. To the extent that the sales charges do not 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 our general assets. (See "How we market the
policies" on page 28.)

Effect of premium payment pattern

You may structure the timing and amount of premium payments to minimize the
sales charges, although doing so involves certain risks. Paying less than one
Target Premium in the first policy year or paying more than one Target Premium
in any policy year could reduce your total sales charges over time. For example,
if the Target Premium was $10,000 and you paid a premium of $10,000 in each of
the first ten policy years, you would pay total sales charges of $8,000. If you
paid $20,000 (i.e., two times the Target Premium amount) in every other policy
year up to the ninth policy year, you would pay total sales charges of only
$4,000. However, delaying the payment of

30
<PAGE>

Target Premiums to later policy years could increase the risk that the
guaranteed death benefit feature will lapse and the account value will be
insufficient to pay monthly policy charges as they come due. As a result, the
policy or any Additional Sum Insured may lapse and eventually terminate.
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 you upon receipt of policy distributions. (See "Tax
consequences" beginning on page 29.)

Monthly charges

We deduct the monthly charges described in the Basic Information section from
your policy's investment options in proportion to the amount of account value
you have in each. For each month that we cannot deduct any charge because of
insufficient account value, the uncollected charges will accumulate and be
deducted when and if sufficient account value becomes available.

The insurance under the policy continues in full force during any grace period
but, if the insured person dies during the policy grace period, the amount of
unpaid monthly charges is deducted from the death benefit otherwise payable.

Reduced charges for eligible classes

The charges 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 we anticipate that the sales to the members of the class will
result in lower than normal sales or administrative expenses, lower taxes or
lower risks to us. We will make these reductions in accordance with our rules in
effect at the time of the application for a policy. The factors we consider 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 lapse and surrender rates 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 paid; and any other such
circumstances which result in a reduction in sales or administrative expenses,
lower taxes or lower risks. Any reduction in charges will be reasonable and will
apply uniformly to all prospective policy purchasers in the class and will not
unfairly discriminate against any owner.

HOW WE MARKET THE POLICIES

Signator Investors, Inc. ("Signator"), an indirect wholly-owned subsidiary of
John Hancock located at 197 Clarendon Street, Boston, MA 02117, is registered as
a broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. and the Securities Investor
Protection Corporation. Signator acts as principal underwriter and principal
distributor of the policies pursuant to a sales agreement among John Hancock,
Signator, JHVLICO, and the Account. Signator also serves as principal
underwriter for 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, all of which are registered under the 1940 Act. Signator is
also the principal underwriter for John Hancock Variable Series Trust I.

Applications for policies are solicited by agents who are licensed by state
insurance authorities to sell JHVLICO's policies and who are also registered
representatives ("representatives") of Signator or other broker-dealer firms, as
discussed below. John Hancock (on behalf of JHVLICO) performs insurance
underwriting and determines whether to accept or reject the application for a
policy and each insured person's risk classification. JHVLICO will make the
appropriate refund if a policy ultimately is not issued or is returned under the
"free look"

31
<PAGE>

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.

Signator's representatives are compensated for sales of the policies on a
commission and service fee basis by Signator, and JHVLICO reimburses Signator
for such compensation and for other direct and indirect expenses (including
agency expense allowances, general agent, district manager and supervisor's
compensation, agent's training allowances, deferred compensation and insurance
benefits of agents, general agents, district managers and supervisors, agency
office clerical expenses and advertising) actually incurred in connection with
the marketing and sale of the policies.

The maximum commission payable to a Signator representative for selling a
policy is the sum of the following:

. 15% of the Target Premium paid in the first policy year, 10% of the Target
Premium paid in the second through fifth policy years, and 3% of the Target
Premium paid in each policy year thereafter;

. 3% of any premium paid in any policy year in excess of the Target Premium;
and

. 15% of that portion of account value allocated to the variable investment
options in any policy year.

Representatives with less than four years of service with Signator 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.

The policies are also sold through other registered broker-dealers that have
entered into selling agreements with Signator 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 Signator'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. Signator will compensate the
broker-dealers as provided in the selling agreements, and JHVLICO will reimburse
Signator for such amounts and for certain other direct expenses in connection
with marketing the policies through other broker-dealers.

Representatives of Signator and the other broker-dealers mentioned above may
also earn "credits" toward qualification for attendance at certain business
meetings sponsored by John Hancock.

The offering of the policies is intended to be continuous, but neither JHVLICO
nor Signator is obligated to sell any particular amount of policies.

TAX CONSIDERATIONS

This description of federal income tax consequences is only a brief summary
and is not intended as tax advice. Tax consequences will vary based on your own
particular circumstances, and for further information you should consult a
qualified tax advisor. Federal, state and local tax laws, regulations and
interpretations can change from time to time. As a result, the tax consequences
to you and the beneficiary may be altered, in some cases retroactively.

Policy proceeds

We believe the policy will receive the same federal income and estate tax
treatment as fixed benefit life insurance policies. Section 7702 of the Internal
Revenue Code (the "Code") defines life insurance for federal tax purposes. If
certain standards are met at issue and over the life of the policy, the policy
will satisfy that definition. We will monitor compliance with these standards.

32
<PAGE>

If the policy complies with the definition of life insurance, we believe the
death benefit under the policy will be excludable from the beneficiary's gross
income under 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 distributions.
Distributions for tax purposes can include amounts received upon surrender or
partial withdrawals. You may also be deemed to have received a distribution for
tax purposes if you assign all or part of your policy rights or change your
policy's ownership.

In general, the owner will be taxed on the amount of distributions that exceed
the premiums paid under the policy. But under certain circumstances within the
first 15 policy years, the owner may be taxed on a distribution even if total
withdrawals do not exceed total premiums paid. Any taxable distribution will be
ordinary income to the owner (rather than capital gains).

We also believe 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 outstanding loan that
was not previously considered income (as discussed below) will be treated as if
it had been distributed to the owner if the policy terminates for any reason.

It is possible that, despite our monitoring, a policy might fail to qualify as
life insurance under Section 7702 of the Code. This could happen, for example,
if we inadvertently failed to return to you any premium payments that were in
excess of permitted amounts, or if the Trust failed to meet certain investment
diversification or other requirements of the Code. If this were to occur, you
would be subject to income tax on the income and gains under the policy for the
period of the disqualification and for subsequent periods.

In the past, the United States Treasury Department has stated that it
anticipated issuing guidelines prescribing circumstances in which the ability of
a policy owner to direct his or her investment to particular funds may cause the
policy owner, rather than the insurance company, to be treated as the owner of
the shares of those funds. In that case, any income and gains attributable to
those shares would be included in your current gross income for federal income
tax purposes. Under current law, however, we believe that we, and not the owner
of a policy, would be considered the owner of the fund's shares for tax
purposes.

Tax consequences of ownership or receipt of policy proceeds under federal,
state and local estate, inheritance, gift and other tax laws depend on the
circumstances of each owner or beneficiary.

Because there may be unfavorable tax consequences (including recognition of
taxable income and the loss of income tax-free treatment for any death benefit
payable to the beneficiary), you should consult a qualified tax adviser prior to
changing the policy's ownership or making any assignment of ownership interests.

7-pay premium limit

At the time of policy issuance, we will determine whether the Planned Premium
schedule will exceed the 7-pay limit discussed below. If so, our standard
procedures prohibit issuance of the policy unless you sign a form acknowledging
that fact.

The 7-pay limit is the total of net level premiums that would have been
payable at any time for a comparable fixed policy to be fully "paid-up" after
the payment of 7 equal annual premiums. "Paid-up" means that no further premiums
would be required to continue the coverage in force until maturity, based on
certain prescribed assumptions. If the total premiums paid at any time during
the first 7 policy years exceed the 7-pay limit, the policy will be treated as a
"modified endowment", which can have adverse tax consequences.

The owner will be taxed on distributions and loans from a "modified endowment"
to the extent of any income (gain) to the owner (on an income-first

33
<PAGE>

basis). The distributions and loans 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 taxable portions of
such distributions or loans that are made before the owner attains age 591/2.

Furthermore, any time there is a "material change" in a policy (such as an
increase in Additional Sum Insured, the addition of certain other policy
benefits after issue, a change in death benefit option, or reinstatement of a
lapsed policy), the policy will have a new 7-pay limit as if it were a
newly-issued policy. If a prescribed portion of the policy's then account value,
plus all other premiums paid within 7 years after the material change, at any
time exceed the new 7-pay limit, the policy will become a modified endowment.

Moreover, if benefits under a policy are reduced (such as a reduction in the
Total Sum Insured or death benefit or the reduction or cancellation of certain
rider benefits) during the 7 years in which a 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 its affiliates) to the
owner during any calendar year generally will be treated as one contract for the
purpose of applying the modified endowment rules. A policy received in exchange
for a modified endowment will itself also be a modified endowment. You should
consult your tax advisor if you have questions regarding the possible impact of
the 7-pay limit on your policy.

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. We are not responsible for compliance with the
terms of any such plan or with the requirements of applicable provisions of the
Code.

REPORTS THAT YOU WILL RECEIVE

At least annually, we will send you a statement setting forth the following
information as of the end of the most recent reporting period: the amount of the
death benefit, the Basic Sum Insured and the Additional Sum Insured, the account
value, the portion of the account value in each investment option, the 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). Moreover, you also will receive confirmations of premium payments,
transfers among investment options, policy loans, partial withdrawals and
certain other policy transactions.

Semiannually we will send you a report containing the financial statements of
the Trust, including a list of securities held in each fund.

VOTING PRIVILEGES THAT YOU WILL HAVE

All of the assets in the subaccounts of the Account are invested in shares of
the corresponding funds of the Trust. We will vote the shares of each of the
funds of the Trust which are deemed attributable to variable life insurance
policies at regular and special meetings of the Trust's shareholders in
accordance with instructions received from owners of such policies. Shares of
the Trust held in the Account which are not attributable to such policies, as
well as shares for which instructions from owners are not received, will be
represented by us at the meeting. We will vote such shares for and against each
matter in the same proportions as the votes based upon the instructions received
from the owners of such policies.

We determine the number of a fund's shares held in a subaccount attributable
to each owner by dividing the amount of a policy's account value held in the
subaccount by the net asset value of one share in the fund. Fractional votes
will be counted. We

34
<PAGE>

determine the number of shares as to which the owner may give instructions as of
the record date for the Trust's meeting. Owners of policies may give
instructions regarding the election of the Board of Trustees of the Trust,
ratification of the selection of independent auditors, approval of Trust
investment advisory agreements and other matters requiring a shareholder vote.
We will furnish owners with information and forms to enable owners to give
voting instructions.

However, we may, in certain limited circumstances permitted by the SEC's
rules, disregard voting instructions. If we do disregard voting instructions,
you will receive a summary of that action and the reasons for it in the next
semi-annual report to owners.

CHANGES THAT JHVLICO CAN MAKE AS TO YOUR POLICY

Changes relating to the Trust or the Account

The voting privileges described in this prospectus reflect our 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, we reserve the right to proceed in accordance with any
such revised requirements. We also reserve the right, subject to compliance with
applicable law, including approval of owners if so required, (1) to transfer
assets determined by JHVLICO to be associated with the class of policies to
which your policy belongs from the Account to another separate account or
subaccount, (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, John Hancock or an affiliate of either, (3)
to deregister the Account under the 1940 Act, (4) to substitute for the fund
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. We 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.

Other permissible changes

We reserve the right to make any changes in the policy necessary to ensure the
policy is within the definition of life insurance under the Federal tax laws and
is in compliance with any changes in Federal or state tax laws.

In our policies, we reserve the right to make certain changes if they would
serve the best interests of policy owners or would be appropriate in carrying
out the purposes of the policies. Such changes include the following:

. Changes necessary to comply with or obtain or continue exemptions under
the federal securities laws

. Combining or removing investment options

. Changes in the form of organization of any separate account

Any such changes will be made only to the extent permitted by applicable laws
and only in the manner permitted by such laws. When required by law, we will
obtain your approval of the changes and the approval of any appropriate
regulatory authority.

ADJUSTMENTS WE MAKE TO DEATH BENEFITS

If the insured person commits suicide within certain time periods, the amount
of death benefit we pay will be limited as described in the policy. Also, if an
application misstated the age or gender of the insured person, we will adjust
the amount of any death benefit as described in the policy.

WHEN WE PAY POLICY PROCEEDS

General

We will pay any death benefit, withdrawal, surrender value or loan within 7
days after we receive the last required form or request (and, with respect to

35
<PAGE>

the death benefit, any other documentation that may be required). If we don't
have information about the desired manner of payment within 7 days after the
date we receive notification of the insured person's death, we will pay the
proceeds as a single sum, normally within 7 days thereafter.

Delay to challenge coverage

We may challenge the validity of your insurance policy based on any material
misstatements made to us in the application for the policy. We cannot make such
a challenge, however, beyond certain time limits that are specified in the
policy.

Delay for check clearance

We reserve the right to defer payment of that portion of your account value
that is attributable to a premium payment made by check for a reasonable period
of time (not to exceed 15 days) to allow the check to clear the banking system.

Delay of separate account proceeds

We reserve the right to defer payment of any death benefit, loan or other
distribution that is derived from a variable investment option if (a) the New
York Stock Exchange is closed (other than customary weekend and holiday
closings) or trading on the New York Stock Exchange is restricted; (b) an
emergency exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the account
value; or (c) the SEC by order permits the delay for the protection of owners.
Transfers and allocations of account value among the investment options may also
be postponed under these circumstances. If we need to defer calculation of
separate account values for any of the foregoing reasons, all delayed
transactions will be processed at the next values that we do compute.

OTHER DETAILS ABOUT EXERCISING RIGHTS AND PAYING BENEFITS

Joint ownership

If more than one person owns a policy, all owners must join in most requests
to exercise rights under the policy.

Assigning your policy

You may assign your rights in the policy to someone else as collateral for a
loan or for some other reason. Assignments do not require the consent of any
revocable beneficiary. A copy of the assignment must be forwarded to us. We are
not responsible for any payment we make or any action we take before we receive
notice of the assignment in good order. Nor are we responsible for the validity
of the assignment. An absolute assignment is a change of ownership. All
collateral assignees of record must consent to any full surrender, partial
withdrawal or loan from the policy.

Your beneficiary

You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the proceeds we pay following the insured person's death. You may
change the beneficiary during the insured person's lifetime. Such a change
requires the consent of any irrevocable named beneficiary. A new beneficiary
designation is effective as of the date you sign it, but will not affect any
payments we make before we receive it. If no beneficiary is living when the
insured person dies, we will pay the insurance proceeds to the owner or the
owner's estate.

YEAR 2000 ISSUES

JHVLICO relies on John Hancock, its parent company, for information processing
services. John Hancock is executing its plan to address the impact of the Year
2000 issues that result from computer programs being written using two digits to
reflect the year rather than four to define the applicable year and century.
Historically, the first two digits were hard-

36
<PAGE>

coded to save memory. Many of John Hancock's computer programs that have
date-sensitive software, including those relied upon by JHVLICO, may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in an information technology (IT) system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities. In addition, non-IT systems including, but not limited to, security
alarms, elevators and telephones are subject to malfunction due to their
dependence on embedded technology such as micro-controllers for proper
operation. As described, the Year 2000 project presents a number of challenges
for financial institutions since the correction of Year 2000 issues in IT and
non-IT systems will be complex and costly for the entire industry.

John Hancock began to address the Year 2000 project as early as 1994. John
Hancock's plan to address the Year 2000 Project includes an awareness campaign,
an assessment period, a renovation stage, validation work and an implementation
of Company solutions.

The continuous awareness campaign serves several purposes: defining the
problem, gaining executive level support and sponsorship, establishing a team
and overall strategy, and assessing existing information system management
resources. Additionally, the awareness campaign establishes an education process
to ensure that all employees are aware of the Year 2000 issue and knowledgeable
of their role in securing solutions.

The assessment phase, which was completed for both IT and non-IT systems as of
April 1998, included the identification, inventory, analysis, and prioritization
of IT and non-IT systems and processes to determine their conversion or
replacement.

The renovation stage reflects the conversion, validation, replacement, or
elimination of selected platforms, applications, databases and utilities,
including the modification of applicable interfaces. Additionally, the
renovation stage includes performance, functionality, and regression testing and
implementation. The renovation phase for mission critical systems has been
completed. Similarly, most of the non-mission critical systems have been
renovated and the remaining systems are expected to be completed by the third
quarter of 1999.

The validation phase consists of the compliance testing of renovated systems.
The validation phase for mission critical systems has been completed.
Similarly, the majority of non-mission critical systems have been validated and
the remaining systems are expected to be completed by the third quarter of 1999.
We will use our testing facilities through the remainder of 1999 to perform
special functional testing. Special functional testing includes testing, as
required, with material third parties and industry groups and performing reviews
of "dry runs" of year-end activities. Scheduled testing of our material
relationships with third parties is underway. It is anticipated that testing
with material business partners will continue through much of 1999.

Finally, the implementation phase involves the actual implementation of
converted or replaced platforms, applications, databases, utilities, interfaces,
and contingency planning. Mission critical systems and most non-mission
critical systems have been implemented. The few remaining non-mission critical
systems are expected to be implemented by the third quarter of 1999.

37
<PAGE>

Through December 31, 1998, John Hancock has incurred and expensed approximately
$36.4 million in external costs for the project. The estimated range of
remaining external costs of the project is approximately $35 to $36 million.
The total costs of the Year 2000 project to John Hancock, based on management's
best estimates, include approximately $18 million in internal IT personnel, $7.4
million in the external modification of software, $34.2 million for external
solution providers, $19.4 million in replacement costs of non-compliant IT
systems and $12.6 million in oversight, test facilities and other expenses.
Accordingly, the estimated range of total costs of the Year 2000 project to
John Hancock, internal and external, is approximately $90 to $95 million.
However, there can be no guarantee that these estimates will be achieved and
actual results could materially differ from those plans. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.

John Hancock's total Year 2000 project costs include the estimated impact of
external solution providers and are based on presently available information.
However, there is no guarantee that the systems of other companies that John
Hancock's systems rely on will be timely converted, or that a failure to convert
by another company, or a conversion that is incompatible with John Hancock's
systems, including those upon which JHVLICO relies, would not have material
adverse effect on John Hancock or JHVLICO. It is documented in trade
publications that companies in foreign countries are not acting as intensively
as domestic companies to remediate Year 2000 issues. Accordingly, it is
expected that Company facilities based outside the United States face higher
degrees of risks from data exchanges with material business partners. In
addition, JHVLICO has numerous customers that hold its products. Nearly all
products sold by JHVLICO contain date sensitive data, examples of which are
policy expiration dates, birth dates and premium payment dates. Finally, the
regulated nature of JHVLICO's industry exposes it to potential supervisory or
enforcement actions relating to Year 2000 issues.

John Hancock's contingency planning initiative related to the Year 2000
project is underway. The plan is addressing John Hancock's readiness as well as
that of material business partners on whom John Hancock and JHVLICO depend.
John Hancock's contingency plans are being designed to keep each subsidiary's
operations functioning in the event of a failure or delay due to the Year 2000
record format and date calculation changes. Contingency plans are being
constructed based on the foundation of extensive business resumption plans that
John Hancock has maintained and updated periodically, which outline responses to
situations that may affect critical business functions. These plans also
provide emergency operations guidance, which defines a documented order of
actions to respond to problems. These extensive business resumption plans are
being enhanced to cover Year 2000 situations.

LEGAL MATTERS

The legal validity of the policies described in this prospectus has been
passed on by Ronald J. Bocage, Vice President and Counsel for JHVLICO. Messrs.
Freedman, Levy, Kroll & Simonds, Washington, D.C., have advised us on certain
Federal securities law matters in connection with the policies.

REGISTRATION STATEMENT FILED WITH THE SEC

This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. More details may be obtained from
the SEC upon payment of the prescribed fee.

ACCOUNTING AND ACTUARIAL EXPERTS

Certain of the financial statements of JHVLICO and the Account included in
this prospectus have been audited by Ernst & Young LLP, independent auditors,
for the periods indicated in their reports thereon which appear elsewhere herein
and have

38
<PAGE>

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 Todd G. Engelsen, F.S.A.,an Actuary of JHVLICO and Second Vice
President of John Hancock.

FINANCIAL STATEMENTS OF JHVLICO AND THE ACCOUNT

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.

In addition to those financial statements of JHVLICO and the Account included
herein that have been audited by Ernst & Young LLP, this prospectus also
contains unaudited financial statements of both JHVLICO and the Account for a
period subsequent to the audited financial statements.

39
<PAGE>

LIST 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 Principal Occupations
- --------- ---------------------
<S> <C>
David F. D'Alessandro Chairman of the Board and Chief Executive Officer of
JHVLICO; President and Chief Operating Officer, John
Hancock Mutual Life Insurance Company.
Michele G. Van Leer Vice Chairman of the Board and President of JHVLICO;
Senior Vice President, John Hancock Mutual Life
Insurance Company.
Ronald J. Bocage Director, Vice President and Counsel of JHVLICO; Vice
President and Counsel, John Hancock Mutual Life
Insurance Company.
Thomas J. Lee Director and Vice President of JHVLICO; Vice President,
John Hancock Mutual Life Insurance Company.
Barbara L. Luddy Director, Vice President and Actuary of JHVLICO; Second
Vice President, John Hancock Mutual Life Insurance
Company.
Robert S. Paster Director and Vice President of JHVLICO; Second Vice
President, John Hancock Mutual Life Insurance Company.
Robert R. Reitano Director and Vice President of JHVLICO; Vice President,
John Hancock Mutual Life Insurance Company.
Joseph A. Tomlinson Director and Vice President of JHVLICO; Vice President,
John Hancock Mutual Life Insurance Company.
Daniel L. Ouellette Vice President, Marketing, of JHVLICO; Senior Vice
President, John Hancock Mutual Life Insurance Company.
Edward P. Dowd Vice President, Investments, of JHVLICO; Senior Vice
President, John Hancock Mutual Life Insurance Company
Roger G. Nastou Vice President, Investments, of JHVLICO; Vice
President, John Hancock Mutual Life Insurance Company
Todd G. Engelsen Vice President and Illustration Actuary of JHVLICO;
Second Vice President, John Hancock Mutual Life
Insurance Company
Julie H. Indge Treasurer of JHVLICO; Financial Officer, John Hancock
Mutual Life Insurance Company
Patrick F. Smith Controller of JHVLICO; Senior Associate Controller,
John Hancock Mutual Life Insurance Company.
Peter H. Scavongelli Secretary of JHVLICO; State Compliance Officer, John
Hancock Mutual Life Insurance Company
</TABLE>

The business address of all Directors and officers of JHVLICO is John Hancock
Place, Boston, Massachusetts 02117.

40
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

TO BE FILED BY AMENDMENT

41
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
December 31
--------------------
1998 1997
--------- ---------
(In millions)
<S> <C> <C>
ASSETS
Bonds--Note 6......................................... $1,185.8 $1,092.7
Preferred stocks...................................... 36.5 17.2
Common stocks......................................... 3.1 2.3
Investment in affiliates.............................. 81.7 79.1
Mortgage loans on real estate--Note 6................. 388.1 273.9
Real estate........................................... 41.0 39.9
Policy loans.......................................... 137.7 106.8
Cash items:
Cash in banks....................................... 11.4 83.1
Temporary cash investments.......................... 8.5 60.1
-------- --------
19.9 143.2
Premiums due and deferred............................. 32.7 33.8
Investment income due and accrued..................... 29.8 24.7
Other general account assets.......................... 47.5 16.8
Assets held in separate accounts...................... 6,595.2 4,691.1
-------- --------
TOTAL ASSETS.......................................... $8,599.0 $6,521.5
======== ========
OBLIGATIONS AND STOCKHOLDER'S EQUITY
OBLIGATIONS
Policy reserves..................................... $1,652.0 $1,124.3
Federal income and other taxes payable--Note 1...... 44.3 36.1
Other general account obligations................... 150.9 481.9
Transfers from separate accounts, net............... (190.3) (146.8)
Asset valuation reserve--Note 1..................... 21.9 18.6
Obligations related to separate accounts............ 6,589.4 4,685.7
-------- --------
TOTAL OBLIGATIONS..................................... 8,268.2 6,199.8
STOCKHOLDER'S EQUITY
Common Stock, $50 par value; authorized 50,000
shares; issued and outstanding 50,000 shares...... 2.5 2.5
Paid-in capital..................................... 377.5 377.5
Unassigned deficit.................................. (49.2) (58.3)
-------- --------
TOTAL STOCKHOLDER'S EQUITY............................ 330.8 321.7
-------- --------
TOTAL OBLIGATIONS AND STOCKHOLDER'S EQUITY............ $8,599.0 $6,521.5
======== ========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

42
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF OPERATIONS AND UNASSIGNED DEFICIT

<TABLE>
<CAPTION>
Year ended December 31
----------------------
1998 1997
---------- ----------
(In millions)
<S> <C> <C>
INCOME
Premiums.......................................... $ 1,272.3 $ 872.7
Net investment income--Note 3..................... 122.8 89.7
Other, net........................................ 618.1 449.1
---------- ----------
2,013.2 1,411.5
BENEFITS AND EXPENSES
Payments to policyholders and beneficiaries....... 301.4 264.0
Additions to reserves to provide for future
payments to policyholders and beneficiaries..... 1,360.2 826.2
Expenses of providing service to policyholders
and obtaining new insurance
--Note 5........................................ 274.2 233.2
State and miscellaneous taxes..................... 28.1 19.1
---------- ----------
1,963.9 1,342.5
---------- ----------
GAIN FROM OPERATIONS BEFORE FEDERAL INCOME
TAXES AND NET REALIZED CAPITAL LOSSES......... 49.3 69.0
Federal income taxes--Note 1........................ 33.1 38.5
---------- ----------
GAIN FROM OPERATIONS BEFORE NET REALIZED
CAPITAL
LOSSES........................................ 16.2 30.5
Net realized capital losses--Note 4................. (0.6) (3.0)
---------- ----------
NET INCOME..................................... 15.6 27.5
Unassigned deficit at beginning of year............. (58.3) (96.9)
Net unrealized capital (losses) gains and other
adjustments--Note 4................................ (6.0) 5.0
Other reserves and adjustments...................... (0.5) 6.1
---------- ----------
UNASSIGNED DEFICIT AT END OF YEAR................... $ (49.2) $ (58.3)
========== ==========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

43
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

STATUTORY-BASIS STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year ended December 31
----------------------
1998 1997
---------- ----------
(In millions)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Insurance premiums................................ $ 1,275.3 $ 877.0
Net investment income............................. 118.2 89.9
Benefits to policyholders and beneficiaries....... (275.5) (245.2)
Dividends paid to policyholders................... (22.3) (18.7)
Insurance expenses and taxes...................... (296.9) (267.2)
Net transfers to separate accounts................ (874.4) (715.2)
Other, net........................................ 551.3 408.9
---------- ----------
NET CASH PROVIDED FROM OPERATIONS.............. 475.7 129.5
---------- ----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Bond purchases.................................... (618.8) (621.6)
Bond sales........................................ 340.7 197.3
Bond maturities and scheduled redemptions......... 111.8 34.1
Bond prepayments.................................. 76.5 51.6
Stock purchases................................... (23.4) (15.7)
Proceeds from stock sales......................... 1.9 6.7
Real estate purchases............................. (4.2) (1.3)
Real estate sales................................. 2.1 0.4
Other invested assets purchases................... 0.0 (1.0)
Proceeds from the sale of other invested assets... 0.0 0.3
Mortgage loans issued............................. (145.5) (94.5)
Mortgage loan repayments.......................... 33.2 32.4
Other, net........................................ (435.2) 393.1
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES.......... (660.9) (18.2)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term note payable........... 61.9 0.0
---------- ----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES.... 61.9 0.0
---------- ----------
(DECREASE) INCREASE IN CASH AND TEMPORARY CASH
INVESTMENTS........................................ (123.3) 111.3
Cash and temporary cash investments at beginning of
year............................................... 143.2 31.9
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR.. $ 19.9 $ 143.2
========== ==========
</TABLE>

The accompanying notes are an integral part of the statutory-basis financial
statements.

44
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT 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
Company, domiciled in the Commonwealth of Massachusetts, principally writes
variable and universal life insurance policies. Those policies primarily are
marketed through John Hancock's sales organization, which includes a career
agency system composed of company-owned, unionized branch offices and
independent general agencies. Policies also are sold through various
unaffiliated securities broker-dealers and certain other financial institutions.
Currently, the Company writes business in all states except New York.

The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions could change in the future as
more information becomes known, which could impact the amounts reported and
disclosed herein.

Basis of Presentation: The financial statements have been prepared using
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 (NAIC), which practices differ
from generally accepted accounting principles (GAAP).

The significant differences from GAAP include: (1) policy acquisition costs are
charged to expense as incurred rather than deferred and amortized over the
related premium-paying period; (2) policy reserves are based on statutory
mortality, morbidity, and interest requirements without consideration of
withdrawals and Company experience; (3) certain assets designated as
"nonadmitted assets" are excluded from the balance sheet by direct charges to
surplus; (4) reinsurance recoverables are netted against reserves and claim
liabilities rather than reflected as an asset; (5) bonds held as available for
sale are recorded at amortized cost or market value as determined by the NAIC
rather than at fair value; (6) an Asset Valuation Reserve and Interest
Maintenance Reserve as prescribed by the NAIC are not calculated under GAAP.
Under GAAP, realized capital gains and losses are reported in the income
statement on a pretax basis as incurred and investment valuation allowances are
provided when there has been a decline in value deemed other than temporary; (7)
investments in affiliates are carried at their net equity value with changes in
value being recorded directly to unassigned deficit rather than consolidated in
the financial statements; (8) no provision is made for the deferred income tax
effects of temporary differences between book and tax basis reporting; and (9)
certain items, including modifications to required policy reserves resulting
from changes in actuarial assumptions, are recorded directly to unassigned
deficit rather than being reflected in income. The effects of the foregoing
variances from GAAP have not been determined but are presumed to be material.

The significant accounting practices of the Company are as follows:

Pending Statutory Standards: During March 1998, the NAIC adopted the
codification of statutory accounting practices, which is effective in 2001.
Codification will likely change, to some extent, prescribed statutory accounting
practices and may result in changes to the accounting practices that the Company
uses to prepare its statutory-basis financial statements. Codification will
require adoption by the various states before it becomes the prescribed
statutory basis of accounting for insurance companies domesticated within those
states. Accordingly, before codification becomes effective for the Company, the
Massachusetts Division of Insurance must adopt codification as the prescribed
basis of accounting on which domestic insurers must report their statutory-basis
results to the Division of Insurance. The impact of any such changes on the
Company's unassigned deficit is not expected to be material.

45
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

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.

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED

Cash and Temporary Cash Investments: Cash includes currency on hand and demand
deposits with financial institutions. Temporary cash investments are short-term,
highly-liquid investments both readily convertible to known amounts of cash and
so near maturity that there is insignificant risk of changes in value because of
changes in interest rates.

Valuation of Assets: General account investments are carried at amounts
determined on the following bases:

Bond and stock values are carried as prescribed by the NAIC; bonds generally
at amortized amounts or cost, preferred stocks generally at cost and common
stocks at fair value. The discount or premium on bonds is amortized using the
interest method.

Investments in affiliates are included on the statutory equity method.

Loan-backed bonds and structured securities are valued at amortized cost using
the interest method including anticipated prepayments. Prepayment assumptions
are obtained from broker dealer surveys or internal estimates and are based on
the current interest rate and economic environment. The retrospective
adjustment method is used to value all such securities except for
interest-only securities, which are valued using the prospective method.

The net interest effect of interest rate and currency rate swap transactions
is recorded as an adjustment of interest income as incurred. The initial cost
of interest rate cap agreements is amortized to net investment income over the
life of the related agreement. Gains and losses on financial futures contracts
used as hedges against interest rate fluctuations are deferred and recognized
in income over the period being hedged.

Mortgage loans are carried at outstanding principal balance or amortized cost.

Investment real estate is carried at depreciated cost, less encumbrances.
Depreciation on investment real estate is recorded on a straight-line basis.
Accumulated depreciation amounted to $3.0 million in 1998 and $2.1 million in
1997.

Real estate acquired in satisfaction of debt and real estate held for sale are
carried at the lower of cost or fair value.

Policy loans are carried at outstanding principal balance, not in excess of
policy cash surrender value.

Asset Valuation and Interest Maintenance Reserves: The Asset Valuation Reserve
(AVR) is computed in accordance with the prescribed NAIC formula and represents
a provision for possible fluctuations in the value 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 that portion of the after tax net accumulated unamortized
realized capital gains and losses on sales of fixed income securities,
principally bonds and mortgage loans, attributable to changes in the general
level of interest rates. Such gains and losses are deferred and amortized into
income over the remaining expected lives of the investments sold. At December
31, 1998, the IMR, net of 1998 amortization of $2.4 million, amounted to $10.7
million, which is included in policy reserves. The corresponding 1997 amounts
were $1.2 million and $7.8 million, respectively.

46
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

Goodwill: The excess of cost over the statutory book value of the net assets of
life insurance business acquired was $11.4 million and $13.1 million at December
31, 1998 and 1997, respectively, and generally is amortized over a ten-year
period using a straight-line method.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED

Separate Accounts: Separate account assets and liabilities reported in the
accompanying statements of financial position represent funds that are
separately administered, principally for variable life insurance policies, and
for which the contractholder, rather than the Company, generally bears the
investment risk. Separate account obligations are intended to be satisfied from
separate account assets and not from assets of the general account. Separate
accounts generally are reported at fair value. The operations of the separate
accounts are not included in the statement of operations; however, income earned
on amounts initially invested by the Company in the formation of new separate
accounts is included in other income.

Fair Value Disclosure of Financial Instruments: Statement of Financial
Accounting Standards (SFAS) No. 107, "Disclosure about Fair Value of Financial
Instruments," requires disclosure of fair value information about certain
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. See Note 11.

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.

Fair values for futures contracts are based on quoted market prices. Fair
values for interest rate swap, cap agreements, and currency swap agreements
are based on current settlement values. The current settlement values are
based on brokerage quotes that utilize pricing models or formulas using
current assumptions.

The fair value for mortgage loans is estimated using discounted cash flow
analyses using interest rates adjusted to reflect the credit characteristics
of the underlying loans. Mortgage loans with similar 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 their fair value.

The fair value for outstanding commitments to purchase long-term bonds and
issue real estate mortgages is estimated using a discounted cash flow method
incorporating adjustments for the difference in the level of interest rates
between the dates the commitments were made and December 31, 1998.

Capital Gains and Losses: Realized capital gains and losses are determined using
the specific identification method. 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.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 1--NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING PRACTICES--CONTINUED

Policy Reserves: Life reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest rates
and valuation methods that will provide, in the aggregate, reserves that are
greater than or equal to the minimum or guaranteed policy cash values or the
amounts required by the Commonwealth of Massachusetts Division of Insurance.
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 and4 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 and5
1/2% interest for policies issued from 1988 through 1992; 5% interest for
policies issued in 1993 and 1994; and4 1/2% interest for policies issued in 1995
through 1998.

Federal Income Taxes: Federal income taxes are reported 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 in filing a consolidated federal income tax
return basis 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 $38.2 million in 1998 and $29.6 million in 1997.

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.

Amounts for disputed tax issues relating to the prior years are charged or
credited directly to policyholders' contingency reserve.

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. Reserve modifications resulting from such determinations
are recorded directly to stockholder's equity. During 1997, the Company refined
certain actuarial assumptions inherent in the calculation of reserves related to
AIDS claims under individual life insurance policies resulting in a $6.4 million
increase in stockholder's equity at December 31, 1997. No additional refinements
were made during 1998.

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.

Reclassification: Certain 1997 amounts have been reclassified to conform to the
1998 presentation.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 2--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 Company made
contingent payments to CPAL of $1.5 million during 1998 and 1997.

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 was subsequently renamed Investors Partner Life Company
(IPL) on March 5, 1998. IPL manages the business assumed from Charter and does
not currently issue new business.

NOTE 3--NET INVESTMENT INCOME

Investment income has been reduced by the following amounts:

<TABLE>
<CAPTION>
1998 1997
------ ------
(In millions)
<S> <C> <C>
Investment expenses . . . . . . . . . . . . . . . . . . . . $ 8.3 $5.0
Interest expense . . . . . . . . . . . . . . . . . . . . . 2.4 0.7
Depreciation expense . . . . . . . . . . . . . . . . . . . 0.8 1.1
Investment taxes . . . . . . . . . . . . . . . . . . . . . 0.7 0.4
----- ----
$12.2 $7.2
===== ====
</TABLE>

NOTE 4--NET CAPITAL GAINS (LOSSES) AND OTHER ADJUSTMENTS

Net realized capital gains (losses) consist of the following items:

<TABLE>
<CAPTION>
1998 1997
------ -------
(In millions)
<S> <C> <C>
Net gains from asset sales . . . . . . . . . . . . . . . . . $ 7.6 $ 0.8
Capital gains tax . . . . . . . . . . . . . . . . . . . . . (2.9) (0.7)
Net capital gains transferred to IMR . . . . . . . . . . . . (5.3) (3.1)
----- -----
Net Realized Capital Losses . . . . . . . . . . . . . . . $(0.6) $(3.0)
===== =====
</TABLE>

Net unrealized capital (losses) gains and other adjustments consist of the
following items:

<TABLE>
<CAPTION>
1998 1997
--------- --------
(In millions)
<S> <C> <C>
Net (losses) gains from changes in security values
and book value adjustments . . . . . . . . . . . . $ (2.7) $ 7.0
Increase in asset valuation reserve . . . . . . . . (3.3) (2.0)
--------- -----
Net Unrealized Capital (Losses) Gains and Other
Adjustments . . . . . . . . . . . . . . . . . . $ (6.0) $ 5.0
========= =====
</TABLE>

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 5--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 1998 and 1997 to reflect continuing changes in
the Company's operations. The amount of the service fee charged to the Company
was $157.5 million and $123.6 million in 1998 and 1997, 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.

The service fee charged to the Company by the Parent includes $0.7 million and
$0.9 million in 1998 and 1997, respectively, representing the portion of the
provision for retiree benefit plans determined under the accrual method,
including a provision for the 1993 transition liability which is being amortized
over twenty years, that was allocated to the Company.

The Company has a modified coinsurance agreement with John Hancock to reinsure
50% of 1994 through 1998 issues of flexible premium variable life insurance and
scheduled premium variable life insurance policies. In connection with this
agreement, John Hancock transferred $4.9 million and $22.0 million of cash for
tax, commission, and expense allowances to the Company, which increased the
Company's net gain from operations by $22.2 million and $10.1 million in 1998
and 1997, respectively.

The Company also has a modified coinsurance agreement with John Hancock to
reinsure 50% of 1995 through 1998 issues of certain retail annuity contracts
(Independence Preferred and Declaration). In connection with this agreement, the
Company received a net cash payment of $12.7 million in 1998 and made a net cash
payment of $1.1 million in 1997 for surrender benefits, tax, reserve increase,
commission, expense allowances and premium. This agreement increased the
Company's net gain from operations by $8.4 million and $9.8 million in 1998 and
1997, respectively.

Effective January 1, 1997, the Company entered into a stop-loss agreement with
John Hancock to reinsure mortality claims in excess of 110% of expected
mortality claims in 1998 and 1997 for all policies that are not reinsured under
any other indemnity agreement. In connection with the agreement, John Hancock
received $1.0 million in 1998 and transferred $2.4 million in 1997 of cash for
mortality claims to the Company, which decreased by $0.5 million and increased
by $1.3 million the Company's net gain from operations in 1998 and 1997,
respectively.

At December 31, 1998, the Company had outstanding a short-term note of $61.9
million payable to an affiliate at a variable rate of interest. The note is part
of a revolving line of credit. Interest paid in 1998 was $2.9 million. The note
is included in other general account obligations.

51
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 6--INVESTMENTS

The statement value and fair value of bonds are shown below:

<TABLE>
<CAPTION>
Gross Gross
Statement Unrealized Unrealized Fair
December 31, 1998 Value Gains Losses Value
----------------- --------- ---------- ---------- ----------
(In millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies .... $ 5.1 $ 0.1 $ 0.0 $ 5.2
Obligations of states and
political subdivisions ....... 3.2 0.3 0.0 3.5
Corporate securities .......... 925.2 50.4 15.0 960.6
Mortgage-backed securities .... 252.3 10.0 0.1 262.2
-------- ----- ----- --------
Total bonds ................. $1,185.8 $60.8 $15.1 $1,231.5
======== ===== ===== ========
</TABLE>

<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 254.5 $ 0.2 $0.1 $ 254.6
Obligations of states and political
subdivisions ............................ 12.1 1.0 0.0 13.1
Debt securities issued by foreign
governments ............................. 0.2 0.0 0.0 0.2
Corporate securities ..................... 712.7 43.9 2.7 753.9
Mortgage-backed securities ............... 113.2 3.5 0.0 116.7
-------- ----- ---- --------
Total bonds ............................ $1,092.7 $48.6 $2.8 $1,138.5
======== ===== ==== ========
</TABLE>

The statement value and fair value of bonds at December 31, 1998, by contractual
maturity, are shown below. Maturities will differ from contractual maturities
because eligible borrowers may exercise their right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
Statement Fair
Value Value
--------- ----------
(In millions)
<S> <C> <C>
Due in one year or less ............................... $ 57.3 $ 59.1
Due after one year through five years ................. 283.4 294.1
Due after five years through ten years ............... 374.9 388.7
Due after ten years ................................... 217.9 227.4
-------- --------
933.5 969.3
Mortgage-backed securities ............................ 252.3 262.2
-------- --------
$1,185.8 $1,231.5
======== ========
</TABLE>

Gross gains of $3.4 million in 1998 and $1.1 million in 1997 and gross losses of
$0.7 million in 1998 and $4.5 million in 1997 were realized from the sale of
bonds.

At December 31, 1998, bonds with an admitted asset value of $8.6 million were on
deposit with state insurance departments to satisfy regulatory requirements.

The cost of common stocks was $2.1 million and $0.0 million at December 31, 1998
and 1997, respectively. At December 31, 1998, gross unrealized appreciation on
common stocks totaled $1.3 million, and gross unrealized

52
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 6--INVESTMENTS--CONTINUED

depreciation totaled $0.3 million. The fair value of preferred stock totaled
$36.5 million at December 31, 1998 and $17.2 million at December 31, 1997.

Bonds with amortized cost of $0.9 million were non-income producing for the
twelve months ended December 31, 1998.

At December 31, 1998, 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>
Statement Geographic Statement
Property Type Value Concentration Value
------------- --------- ------------- ---------
(In millions) (In millions)
<S> <C> <C> <C>
Apartments . . . . . $106.4 East North Central . $ 56.4
Hotels . . . . . . . 9.6 East South Central . 0.9
Industrial . . . . . 71.9 Middle Atlantic . . . 26.2
Office buildings . . 78.2 Mountain . . . . . . 27.5
Retail . . . . . . . 29.6 New England . . . . . 36.9
Agricultural . . . . 71.5 Pacific . . . . . . . 96.4
Other . . . . . . . . 20.9 South Atlantic . . . 83.8
West North Central . 13.1
West South Central . 43.3
Other . . . . . . . . 3.6
------ ------
$388.1 $388.1
====== ======
</TABLE>

At December 31, 1998, the fair values of the commercial and agricultural
mortgage loans portfolios were $331.3 million and $70.0 million, respectively.
The corresponding amounts as of December 31, 1997 were approximately $243.8
million and $42.0 million, respectively.

The maximum and minimum lending rates for mortgage loans during 1998 were 9.19%
and 6.82% for agricultural loans and 8.88% and 6.56% for other properties.
Generally, the maximum percentage of any loan to the value of security at the
time of the loan, exclusive of insured, guaranteed or purchase money mortgages,
is 75%. For city mortgages, fire insurance is carried on all commercial and
residential properties at least equal to the excess of the loan over the maximum
loan which would be permitted by law on the land without the building, except as
permitted by regulations of the Federal Housing Commission on loans fully
insured under the provisions of the National Housing Act. For agricultural
mortgage loans, fire insurance is not normally required on land based loans
except in those instances where a building is critical to the farming operation.
Fire insurance is required on all agri-business facilities in an aggregate
amount equal to the loan balance.

NOTE 7--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 in 1998 were $590.2 million, $21.5 million, and $8.2 million,
respectively. The corresponding amounts in 1997 were $427.4 million, $18.3
million, and $10.1 million, respectively.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 7--REINSURANCE--CONTINUED

Reinsurance ceded contracts do not relieve the Company from its obligations to
policyholders. The Company remains liable to its policyholders for the portion
reinsured to the extent that any reinsurer does not meet its obligations for
reinsurance ceded to it under the reinsurance agreements. Failure of the
reinsurers to honor their obligations could result in losses to the Company;
consequently, estimates are established for amounts deemed or estimated to be
uncollectible. To minimize its exposure to significant losses from reinsurance
insolvencies, the Company evaluates the financial condition of its reinsurers
and monitors concentration of credit risk arising from similar characteristics
of the reinsurer.

Neither the Company, nor any of its related parties, control, either directly or
indirectly, any external reinsurers with which the Company conducts business. No
policies issued by the Company have been reinsured with a foreign company which
is controlled, either directly or indirectly, by a party not primarily engaged
in the business of insurance.

The Company has not entered into any reinsurance agreements in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 1998 would result in a payment to the reinsurer of amounts
which, in the aggregate and allowing for offset of mutual credits from other
reinsurance agreements with the same reinsurer, exceed the total direct premiums
collected under the reinsured policies.

NOTE 8--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The notional amounts, carrying values and estimated fair values of the Company's
derivative instruments were as follows at December 31:

<TABLE>
<CAPTION>
Assets (Liabilities)
Number of Contracts/ ---------------------------------------
Notional Amounts 1998 1997
--------------------- --------------------- ----------------
Carrying Fair Carrying Fair
1998 1997 Value Value Value Value
---------- ---------- ---------- --------- -------- --------
($ In millions)
<S> <C> <C> <C> <C> <C> <C>
Futures contracts to
sell securities . . 947 367 $(0.5) $ (0.5) $(0.4) $(0.4)
Interest rate swap
agreements . . . . . $365.0 $245.0 -- (17.7) -- (7.8)
Interest rate cap
agreements . . . . . 89.4 89.4 3.1 3.1 1.4 1.4
Currency rate swap
agreements . . . . . 15.8 14.3 -- (3.3) -- (2.1)
</TABLE>

The Company uses futures contracts, interest rate swap, cap agreements, and
currency rate swap agreements for other than trading purposes to hedge and
manage its exposure to changes in interest rate levels, foreign exchange rate
fluctuations and to manage duration mismatch of assets and liabilities.

The futures contracts expire in 1999. The interest rate swap agreements expire
in 1999 to 2009. The interest rate cap agreements expire in 2006 to 2007. The
currency rate swap agreements expire in 2006 to 2009.

The Company's exposure to credit risk is the risk of loss from a counterparty
failing to perform to the terms of the contract. The Company continually
monitors its position and the credit ratings of the counterparties to these
derivative instruments. To limit exposure associated with counterparty
nonperformance on interest rate and currency swap agreements, the Company enters
into master netting agreements with its counterparties. The Company believes the
risk of incurring losses due to nonperformance by its counterparties is remote
and that such losses, if any, would be immaterial. Futures contracts trade on
organized exchanges and, therefore, have minimal credit risk.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 9--POLICY RESERVES, POLICYHOLDERS' AND BENEFICIARIES' FUNDS AND OBLIGATIONS
RELATED TO SEPARATE ACCOUNTS

The Company's annuity reserves and deposit fund liabilities that are subject to
discretionary withdrawal, with and without adjustment, are summarized as
follows:

<TABLE>
<CAPTION>
December 31, 1998 Percent
----------------- ---------
(In millions)
<S> <C> <C>
Subject to discretionary withdrawal (with
adjustment)
With market value adjustment . . . . . . . . . $ 0.9 0.1%
At book value less surrender charge . . . . . 1,677.9 88.8
-------- -----
Total with adjustment . . . . . . . . . . . 1,678.8 88.9
Subject to discretionary withdrawal at book value
(without adjustment) . . . . . . . . . . . . . 203.6 10.8
Not subject to discretionary withdrawal--general
account . . . . . . . . . . . . . . . . . . . . 6.5 0.3
-------- -----
Total annuity reserves and deposit
liabilities. . . . . . . . . . . . . . . . $1,888.9 100.0%
======== =====
</TABLE>

NOTE 10--COMMITMENTS AND CONTINGENCIES

The Company has extended commitments to purchase long-term bonds and issue real
estate mortgages totaling $5.9 million and $24.8 million, respectively, at
December 31, 1998. 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 estimated fair value of the commitments described
above is $32.1 million at December 31, 1998. The majority of these commitments
expire in 1999.

In the normal course of its business operations, the Company is involved with
litigation from time to time with claimants, beneficiaries and others, and a
number of litigation matters were pending as of December 31, 1998. 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 or results of operations of the Company.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 11--FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------
1998 1997
----------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------- ----------- --------- -----------
(In millions)
<S> <C> <C> <C> <C>
Assets
Bonds--Note 6 .............. $1,185.8 $1,231.5 $1,092.7 $1,138.5
Preferred stocks--Note 6 .... 36.5 36.5 17.2 17.2
Common stocks--Note 6 ....... 3.1 3.1 2.3 2.3
Mortgage loans on real
estate--Note 6 ............ 388.1 401.3 273.9 285.8
Policy loans--Note 1 ........ 137.7 137.7 106.8 106.8
Cash and cash
equivalents--Note 1 ...... 19.9 19.9 143.2 143.2
Derivatives assets
(liabilities) relating
to:--Note 8
Futures contracts .......... (0.5) (0.5) (0.4) (0.4)
Interest rate swaps ........ -- (17.7) -- (7.8)
Currency rate swaps ........ -- (3.3) -- (2.1)
Interest rate caps .......... 3.1 3.1 1.4 1.4
Liabilities
Commitments--Note 10 ........ -- 32.1 -- 194.5
</TABLE>

The carrying amounts in the table are included in the statutory-basis statements
of financial position. The method and assumptions utilized by the Company in
estimating its fair value disclosures are described in Note 1.

NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)

The Company relies on John Hancock, its parent company, for information
processing services. John Hancock is executing its plan to address the impact of
the Year 2000 issues that result from computer programs being written using two
digits to reflect the year rather than four to define the applicable year and
century. Historically, the first two digits were hardcoded to save memory. Many
of John Hancock's computer programs that have date-sensitive software, including
those relied upon by the Company, may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in an information technology
(IT) system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices or engage in similar normal business activities. In addition,
non-IT systems including, but not limited to, security alarms, elevators and
telephones are subject to malfunction due to their dependence on embedded
technology such as microcontrollers for proper operation. As described, the Year
2000 project presents a number of challenges for financial institutions since
the correction of Year 2000 issues in IT and non-IT systems will be complex and
costly for the entire industry.

The continuous awareness campaign serves several purposes: defining the problem,
gaining executive level support and sponsorship, establishing a team and overall
strategy, and assessing existing information system management resources.
Additionally, the awareness campaign establishes an education process to ensure
that all employees are aware of the Year 2000 issue and knowledgeable of their
role in securing solutions.

<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED

The renovation stage reflects the conversion, validation, replacement, or
elimination of selected platforms, applications, databases and utilities,
including the modification of applicable interfaces. Additionally, the
renovation stage includes performance, functionality, and regression testing and
implementation. As of December 31, 1998, the renovation phase was substantially
complete for computer applications, systems and desktops. For all remaining
components, the renovation phase is underway and will be complete before the end
of the second quarter of 1999.

The validation phase consists of the compliance testing of renovated systems.
The validation phase is expected to be complete by mid 1999, after renovation is
accomplished. Testing facilities will be used through the remainder of 1999 to
perform special functional testing. Special functional testing includes testing,
as required, with material third parties and industry groups and performing
reviews of "dry runs" of year-end activities. Scheduled testing of material
relationships with third parties, including those impacting the Company, is
underway. It is anticipated that testing with material business partners will
continue through much of 1999.

Finally, the implementation phase involves the actual implementation of
converted or replaced platforms, applications, databases, utilities, interfaces,
and contingency planning. Implementation is being performed concurrently during
the renovation phase and is expected to be completed before the end of the
second quarter of 1999.

The costs of the Year 2000 project consist of internal IT personnel and external
costs such as consultants, programmers, replacement software, and hardware. The
costs of the Year 2000 project are expensed as incurred. The project is funded
partially through a reallocation of resources from discretionary projects.
Through December 31, 1998, John Hancock has incurred and expensed approximately
$9.8 million in related payroll costs for its internal IT personnel on the
project. The estimated range of remaining internal IT personnel costs of the
project is approximately $8 to $9 million. Through December 31, 1998, John
Hancock has incurred and expensed approximately $36.4 million in external costs
for the project. The estimated range of remaining external costs of the project
is approximately $35 to $36 million. The total costs of the Year 2000 project to
John Hancock, based on management's best estimates, include approximately $18
million in internal IT personnel, $7.4 million in the external modification of
software, $34.2 million for external solution providers, $19.4 million in
replacement costs of non-compliant IT systems and $12.6 million in oversight,
test facilities and other expenses. Accordingly, the estimated range of total
costs of the Year 2000 project to John Hancock, internal and external, is
approximately $90 to $95 million. However, there can be no guarantee that these
estimates will be achieved and actual results could materially differ from those
plans. Specific factors that might cause such material differences include, but
are not limited to, the availability and cost of personnel trained in this area,
the ability to locate and correct all relevant computer codes, and similar
uncertainties.

57
<PAGE>

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS--CONTINUED

NOTE 12--IMPACT OF YEAR 2000 (UNAUDITED)--CONTINUED

John Hancock's total Year 2000 project costs include the estimated impact of
external solution providers and are based on presently available information.
However, there is no guarantee that the systems of other companies that John
Hancock's systems rely on will be timely converted, or that a failure to convert
by another company, or a conversion that is incompatible with John Hancock's
systems, including those upon which the Company relies, would not have material
adverse effect on John Hancock or the Company. It is documented in trade
publications that companies in foreign countries are not acting as intensively
as domestic companies to remediate Year 2000 issues. Accordingly, it is expected
that Company facilities based outside the United States face higher degrees of
risks from data exchanges with material business partners. In addition, the
Company has numerous customers that hold products of the Company. Nearly all
products sold by the Company contain date sensitive data, examples of which are
policy expiration dates, birth dates and premium payment dates. Finally, the
regulated nature of the Company's industry exposes it to potential supervisory
or enforcement actions relating to Year 2000 issues.

John Hancock's contingency planning initiative related to the Year 2000 project
is underway. The plan is addressing John Hancock's readiness as well as that of
material business partners on whom John Hancock and the Company depend. John
Hancock's contingency plans are being designed to keep each subsidiary's
operations functioning in the event of a failure or delay due to the Year 2000
record format and date calculation changes. Contingency plans are being
constructed based on the foundation of extensive business resumption plans that
John Hancock has maintained and updated periodically, which outline responses to
situations that may affect critical business functions. These plans also provide
emergency operations guidance, which defines a documented order of actions to
respond to problems. These extensive business resumption plans are being
enhanced to cover Year 2000 situations.

<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

TO BE FILED BY AMENDMENT

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

<TABLE>
<CAPTION>
INTERNATIONAL
LARGE CAP SOVEREIGN EQUITY SMALL CAP INTERNATIONAL
GROWTH BOND INDEX GROWTH BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value................. $65,018,220 $32,541,967 $ 12,595,630 $ 9,078,106 $3,103,327
Investments in shares
of portfolios of M
Fund Inc., at value... -- -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I ...... 70,159 83,725 29,266 29,789 1,571
M Fund Inc. .......... -- -- -- -- --
----------- ----------- ------------ ----------- ----------
Total assets .......... 65,088,379 32,625,692 12,624,896 9,107,895 3,104,898

LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company ............. 69,513 83,401 29,117 29,679 1,535
M Fund Inc. .......... -- -- -- -- --
Asset charges payable.. 646 324 149 110 36
----------- ----------- ------------ ----------- ----------
Total liabilities ..... 70,159 83,725 29,266 29,789 1,571
----------- ----------- ------------ ----------- ----------
Net assets ............ $65,018,220 $32,541,967 $ 12,595,630 $ 9,078,106 $3,103,327
=========== =========== ============ =========== ==========
</TABLE>

<TABLE>
<CAPTION>
DIVERSIFIED
MID CAP LARGE CAP MONEY MID CAP MID CAP
GROWTH VALUE MARKET VALUE GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares
of portfolios of John
Hancock Variable
Series Trust I, at
value. ............... $12,678,444 $16,629,520 $ 86,511,658 $15,754,611 $7,491,413
Investments in shares
of portfolios of M
Fund Inc., at value .. -- -- -- -- --
Receivable from:
John Hancock Variable
Series Trust I ...... 103,676 40,755 20,713,657 117,109 15,168
M Fund Inc. .......... -- -- -- -- --
----------- ----------- ------------ ----------- ----------
Total assets .......... 12,782,120 16,670,275 107,225,315 15,871,720 7,506,581

LIABILITIES
Payable to:
John Hancock Variable
Life Insurance
Company ............. 103,543 40,591 20,712,867 116,945 15,077
M Fund Inc. .......... -- -- -- -- --
Asset charges payable.. 133 164 790 164 91
----------- ----------- ------------ ----------- ----------
Total liabilities...... 103,676 40,755 20,713,657 117,109 15,168
----------- ----------- ------------ ----------- ----------
Net assets ............ $12,678,444 $16,629,520 $ 86,511,658 $15,754,611 $7,491,413
=========== =========== ============ =========== ==========
</TABLE>

See accompanying notes.

60
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 1998

<TABLE>
<CAPTION>
REAL ESTATE GROWTH & SHORT-TERM SMALL CAP
EQUITY INCOME MANAGED BOND VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value..... $ 4,772,174 $96,407,275 $40,066,692 $19,246,506 $10,510,748
Investments in shares of portfolios of M Fund
Inc., at value................................ -- -- -- -- --
Receivable from:
John Hancock Variable Series Trust I.......... 115,349 147,773 64,500 1,482 40,758
M Fund Inc.................................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total assets.................................... 4,887,523 96,555,048 40,131,192 19,247,988 10,551,506

LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company.. 115,288 146,677 64,069 1,304 40,631
M Fund Inc.................................... -- -- -- -- --
Asset charges payable........................... 61 1,096 431 178 127
----------- ----------- ----------- ----------- -----------
Total liabilities............................... 115,349 147,773 64,500 1,482 40,758
----------- ----------- ----------- ----------- -----------
Net assets...................................... $ 4,772,174 $96,407,275 $40,066,692 $19,246,506 $10,510,748
=========== =========== =========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
TURNER BRANDES
INTERNATIONAL EQUITY STRATEGIC CORE INTERNATIONAL
OPPORTUNITIES INDEX BOND GROWTH EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of portfolios of John
Hancock Variable Series Trust I, at value.... $18,958,530 $53,964,646 $8,279,571 $ -- $ --
Investments in shares of portfolios of M
Fund Inc., at value............................ -- -- -- 4,900,189 6,340,754
Receivable from:
John Hancock Variable Series Trust I.......... 130,881 381,439 149 -- --
M Fund Inc.................................... -- -- -- 121,074 59
----------- ----------- ---------- ---------- ----------
Total assets................................... 19,089,411 54,346,085 8,279,720 5,021,263 6,340,813

LIABILITIES
Payable to:
John Hancock Variable Life Insurance Company.. 130,683 380,886 55 121,024 --
M Fund Inc.................................... -- -- -- -- --
Asset charges payable.......................... 198 552 94 50 59
----------- ----------- ---------- ---------- ----------
Total liabilities.............................. 130,881 381,438 149 121,074 59
----------- ----------- ---------- ---------- ----------
Net assets..................................... $18,958,530 $53,964,647 $8,279,571 $4,900,189 $6,340,754
=========== =========== ========== ========== ==========
</TABLE>

See accompanying notes.

61
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 1998

<TABLE>
<CAPTION>
FRONTIER EMERGING HIGH
CAPITAL ENHANCED MARKETS GLOBAL BOND SMALL/MID YIELD
APPRECIATION U.S. EQUITY EQUITY EQUITY INDEX CAP CORE BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ----------- ---------- ---------- ---------- ---------- ------------

<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of portfolios of
John Hancock Variable Series Trust I, at
value.................................... $ -- $ -- $187,005 $164,028 $1,065,457 $303,153 $4,527,584
Investments in shares of portfolios of M
Fund Inc., at value...................... 9,675,718 2,474,617
Receivable from:
John Hancock Variable Series Trust I..... -- -- 2 2 16 4 20
M Fund Inc............................... 17,003 16,938 -- -- -- -- --
---------- ---------- -------- -------- ---------- -------- ----------
Total assets............................... 9,692,721 2,491,555 187,007 164,030 1,065,473 303,157 4,527,604

LIABILITIES
Payable to:
John Hancock Variable Life Insurance
Company................................ 16,917 16,917 -- -- -- -- --
M Fund Inc............................... -- -- 2 2 16 4 20
Asset charges payable...................... 86 21 -- -- -- -- --
---------- ---------- -------- -------- ---------- -------- ----------
Total liabilities.......................... 17,003 16,938 2 2 16 4 20
---------- ---------- -------- -------- ---------- -------- ----------
Net assets................................. $9,675,718 $2,474,617 $187,005 $164,028 $1,065,457 $303,153 $4,527,584
========== ========== ======== ======== ========== ======== ==========
</TABLE>

See accompanying notes.

62
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
LARGE CAP GROWTH SOVEREIGN BOND
SUBACCOUNT SUBACCOUNT
------------------------------------- -------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I.... $ 6,312,073 $ 2,884,498 $ 2,452,382 $2,190,901 $855,742 $242,881
M Fund Inc.............................. -- -- -- -- -- --
----------- ----------- ----------- ---------- -------- --------
Total investment income.................... 6,312,073 2,884,498 2,452,382 2,190,901 855,742 242,881
Expenses:
Mortality and expense risks.............. 168,652 91,256 49,880 93,556 39,184 14,129
----------- ----------- ----------- ---------- -------- --------
Net investment income...................... 6,143,421 2,793,242 2,402,502 2,097,345 816,558 228,752
Net realized and unrealized gain (loss) on
investments:
Net realized gains........................ 1,750,881 619,721 444,487 185,230 80,538 5,746
Net unrealized appreciation (depreciation)
during the period........................ 8,041,022 2,301,920 (1,104,574) (378,058) 63,687 (69,973)
----------- ----------- ----------- ---------- -------- --------
Net realized and unrealized gain (loss)
on investments........................... 9,791,903 2,921,641 (660,087) (192,828) 144,225 (64,227)
----------- ----------- ----------- ---------- -------- --------
Net increase in net assets resulting from
operations................................ $15,935,324 $ 5,714,883 $ 1,742,415 $1,904,517 $960,783 $164,525
=========== =========== =========== ========== ======== ========
</TABLE>

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX SMALL CAP GROWTH
SUBACCOUNT SUBACCOUNT
---------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996*
---------- ------------ -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I........... $1,930,710 $ 422,913 $ 52,188 $ -- $ 473 $ 512
M Fund Inc..................................... -- -- -- -- -- --
---------- ----------- -------- ---------- -------- --------
Total investment income........................... 1,930,710 422,913 52,188 -- 473 512
Expenses:
Mortality and expense risks...................... 45,651 33,893 23,132 22,593 6,547 1,547
---------- ----------- -------- ---------- -------- --------
Net investment income (loss)...................... 1,885,059 389,020 29,056 (22,593) (6,074) (1,035)
Net realized and unrealized gain (loss) on
investments:
Net realized gains (losses)..................... 152,030 244,810 165,730 58,729 21,707 (40,018)
Net unrealized appreciation (depreciation)
during the period............................... 78,480 (1,219,540) 137,729 1,070,805 126,699 (2,665)
---------- ----------- -------- ---------- -------- --------
Net realized and unrealized gain (loss) on
investments..................................... 230,510 (974,730) 303,459 1,129,534 148,406 (42,683)
---------- ----------- -------- ---------- -------- --------
Net increase (decrease) in net assets resulting
from operations................................. $2,115,569 $ (585,710) $332,515 $1,106,941 $142,332 $(43,718)
========== =========== ======== ========== ======== ========
</TABLE>
- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

63
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
INTERNATIONAL BALANCED MID CAP GROWTH
SUBACCOUNT SUBACCOUNT
------------------------------ -------------------------------
1998 1997 1996* 1998 1997 1996*
---------- --------- ------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I....................... $ 185,760 $ 61,249 $ 2,947 $1,114,374 $ -- $ 1,177
M Fund Inc ................................................ -- -- -- -- -- --
---------- -------- ------- ---------- -------- --------
Total investment income ..................................... 185,760 61,249 2,947 1,114,374 -- 1,177
Expenses:
Mortality and expense risks ................................ 9,687 4,443 356 26,123 8,287 719
---------- -------- ------- ---------- -------- --------
Net investment income (loss) ................................ 176,073 56,806 2,591 1,088,251 (8,287) 458
Net realized and unrealized gain (loss) on investments:
Net realized gains (losses) ................................ 24,206 8,667 56 599,619 1,235 (391)
Net unrealized appreciation (depreciation) during
the period ................................................ 147,461 (67,714) 5,307 1,184,263 486,186 6,440
---------- -------- ------- ---------- -------- --------
Net realized and unrealized gain (loss) on investments ...... 171,667 (59,047) 5,363 1,783,882 487,421 6,049
---------- -------- ------- ---------- -------- --------
Net increase (decrease) in net assets resulting
from operations ............................................ $ 347,740 $ (2,241) $ 7,954 $2,872,133 $479,134 $ 6,507
========== ======== ======= ========== ======== ========
</TABLE>

<TABLE>
<CAPTION>
LARGE CAP VALUE MONEY MARKET
SUBACCOUNT SUBACCOUNT
----------------------------- ------------------------------
1998 1997 1996* 1998 1997 1996
---------- -------- ------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions received from:
John Hancock Variable Series Trust I....................... $ 797,874 $194,199 $13,644 $1,854,829 $758,434 $287,321
M Fund Inc................................................. -- -- -- -- -- --
---------- -------- ------- ---------- -------- --------
Total investment income
Expenses:.................................................... 797,874 194,199 13,644 1,854,829 758,434 287,321
Mortality and expense risks................................. 41,415 11,163 964 167,813 66,882 30,722
---------- -------- ------- ---------- -------- --------
Net investment income........................................ 756,459 183,036 12,680 1,687,016 691,552 256,599
Net realized and unrealized gain on investments:
Net realized gains.......................................... 330,827 164,821 1,327 -- -- --
Net unrealized appreciation during
the period................................................. 145,355 279,449 23,553 -- -- --
---------- -------- ------- ---------- -------- --------
Net realized and unrealized gain (loss) on investments....... 476,182 444,270 24,880 -- -- --
---------- -------- ------- ---------- -------- --------
Net increase in net assets resulting from operations ........ $1,232,641 $627,306 $37,560 $1,687,016 $691,552 $256,599
========== ======== ======= ========== ======== ========

</TABLE>
- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

64
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
MID CAP VALUE DIVERSIFIED MID CAP GROWTH
SUBACCOUNT SUBACCOUNT
--------------------------------- ------------------------------------------
1998 1997 1996* 1998 1997 1996
------------ --------- -------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . $ 120,469 $446,081 $ 6,878 $ 142,469 $ 878,600 $ 238,163
M Fund Inc . -- -- -- -- -- --
----------- -------- -------- ------------- ------------ ------------
Total investment
income . 120,469 446,081 6,878 142,469 878,600 238,163
Expenses:
Mortality and expense
risks . 45,020 11,421 377 34,432 35,934 21,146
----------- -------- -------- ------------- ------------ ------------
Net investment income 75,449 434,660 6,501 108,037 842,666 217,017
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses) (538,516) 101,787 845 232,246 297,666 317,400
Net unrealized
appreciation
(depreciation)
during the period . (830,390) (39,717) 13,910 236,333 (730,748) 344,786
----------- -------- -------- ------------- ------------ ------------
Net realized and
unrealized gain
(loss) on investments (1,368,906) 62,070 14,755 468,579 (433,082) 662,186
----------- -------- -------- ------------- ------------ ------------
Net increase
(decrease) in net
assets resulting from
operations.... $(1,293,457) $496,730 $ 21,256 $ 576,616 $ 409,584 $ 879,203
=========== ======== ======== ============= ============ ============
</TABLE>

<TABLE>
<CAPTION>
REAL ESTATE EQUITY GROWTH & INCOME
SUBACCOUNT SUBACCOUNT
--------------------------------- ------------------------------------
1998 1997 1996 1998 1997 1996
----------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . $ 305,783 $ 246,677 $ 50,204 $9,266,175 $5,917,063 $3,056,625
M Fund Inc . -- -- -- -- -- --
---------- ---------- --------- ----------- ---------- -----------
Total investment
income . 305,783 246,677 50,204 9,266,175 5,917,063 3,056,625
Expenses:
Mortality and expense
risks . 22,716 13,879 4,547 290,361 169,135 89,391
------------ --------- --------- ----------- ---------- -----------
Net investment income 283,067 232,798 45,657 8,975,814 5,747,928 2,967,234
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses) (454,979) 252,095 19,122 2,061,212 2,390,414 512,402
Net unrealized
appreciation
(depreciation)
during the period . (698,676) (13,488) 191,067 7,759,307 435,778 (496,647)
------------ --------- --------- ----------- ---------- -------------
Net realized and
unrealized gain
(loss) on investments (1,153,655) 238,607 210,189 9,820,519 2,826,192 15,755
------------ --------- --------- ----------- ---------- -------------
Net increase
(decrease) in net
assets resulting from
operations . $ (870,588) $471,405 $255,846 $18,796,333 $8,574,120 $2,982,989
------------ --------- --------- ----------- ---------- -------------
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
MANAGED SHORT-TERM BOND
SUBACCOUNT SUBACCOUNT
---------------------------------- -----------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . . . . . $3,606,186 $1,879,954 $1,281,149 $ 977,164 $ 415,542 $181,937
M Fund Inc. . . . . -- -- -- -- -- --
---------- ---------- ---------- ------------ --------- --------
Total investment
income . . . . . . . 3,606,186 1,879,954 1,281,149 977,164 415,542 181,937
Expenses:
Mortality and expense
risks . . . . . . . 121,905 65,383 35,103 50,947 20,551 9,277
---------- ---------- ---------- ------------ --------- --------
Net investment income 3,484,281 1,814,571 1,246,046 926,217 394,991 172,660
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 278,186 171,318 124,493 24,740 35,294 (52,888)
Net unrealized
appreciation
(depreciation)
during the period . 1,791,231 715,231 (507,517) (136,999) (25,976) (7,734)
---------- ---------- ---------- ------------ --------- --------
Net realized and
unrealized gain
(loss) on investments 2,069,417 886,549 (383,024) (112,259) 9,318 (60,622)
---------- ---------- ---------- ------------ --------- --------
Net increase in net
assets resulting from
operations . . . . . $5,553,698 $2,701,120 $ 863,022 $ 813,958 $ 404,309 $112,038
========== ========== ========== ============ ========= ========
</TABLE>

<TABLE>
<CAPTION>
SMALL CAP VALUE INTERNATIONAL OPPORTUNITIES
SUBACCOUNT SUBACCOUNT
------------------------------ -------------------------------
1998 1997 1996* 1998 1997 1996*
---------- --------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . . . . . $ 47,350 $299,278 $ 8,296 $ 103,399 $ 69,078 $ 2,965
M Fund Inc. . . . . -- -- -- -- -- --
--------- -------- ------- ---------- --------- -------
Total investment
income . . . . . . . 47,350 299,278 8,296 103,399 69,078 2,965
Expenses:
Mortality and expense
risks . . . . . . . 33,335 8,494 523 50,003 13,177 1,439
--------- -------- ------- ---------- --------- -------
Net investment income 14,015 290,784 7,773 53,396 55,901 1,526
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (9,919) 75,149 58 191,495 80,782 242
Net unrealized
appreciation
(depreciation)
during the period . (523,693) (18,626) 14,046 1,108,416 (260,664) 36,666
--------- -------- ------- ---------- --------- -------
Net realized and
unrealized gain
(loss) on investments (533,612) 56,523 14,104 1,299,911 (179,882) 36,908
--------- -------- ------- ---------- --------- -------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $(519,597) $347,307 $21,877 $1,353,307 $(123,981) $38,434
========= ======== ======= ========== ========= =======
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
EQUITY INDEX STRATEGIC BOND
SUBACCOUNT SUBACCOUNT
------------------------------- -----------------------------
1998 1997 1996* 1998 1997 1996*
---------- ---------- ------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . . . . . $1,337,750 $ 409,920 $23,300 $303,545 $ 74,850 $ 7,425
M Fund Inc. . . . . -- -- -- -- -- --
---------- ---------- ------- -------- -------- --------
Total investment
income . . . . . . . 1,337,750 409,920 23,300 303,545 74,850 7,425
Expenses:
Mortality and expense
risks . . . . . . . 126,021 31,223 1,962 19,894 3,820 349
---------- ---------- ------- -------- -------- --------
Net investment income 1,211,729 378,697 21,338 283,651 71,030 7,076
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains . 691,270 901,978 17,398 81,659 8,335 22
Net unrealized
appreciation
(depreciation)
during the period . 6,098,919 392,256 55,782 43,608 (11,727) (591)
---------- ---------- ------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments 6,790,189 1,294,234 73,180 125,267 (3,392) (569)
---------- ---------- ------- -------- -------- --------
Net increase in net
assets resulting from
operations . . . . . $8,001,918 $1,672,931 $94,518 $408,918 $ 67,638 $ 6,507
========== ========== ======= ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
TURNER CORE GROWTH BRANDES INTERNATIONAL EQUITY
SUBACCOUNT SUBACCOUNT
---------------------------- -----------------------------
1998 1997 1996* 1998 1997 1996
-------- --------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . . . . . $ -- $ -- $ -- $ -- $ -- $ --
M Fund Inc. . . . . 84,940 91,360 21,778 358,080 32,677 5,263
-------- --------- ------- -------- -------- --------
Total investment
income . . . . . . . 84,940 91,360 21,778 358,080 32,677 5,263
Expenses:
Mortality and expense
risks . . . . . . . 7,737 4,071 2,140 14,434 7,502 2,280
-------- --------- ------- -------- -------- --------
Net investment income 77,203 87,289 19,638 343,646 25,175 2,983
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . 156,278 76,711 (9,767) 89,337 12,541 (2,433)
Net unrealized
appreciation
(depreciation)
during the period . 562,620 32,626 16,054 91,915 (26,022) (12,286)
-------- --------- ------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments 718,898 109,337 6,287 181,252 (13,481) (14,719)
-------- --------- ------- -------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $796,101 $ 196,626 $25,925 $524,898 $ 11,694 $(11,736)
======== ========= ======= ======== ======== ========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
ENHANCED
FRONTIER CAPITAL APPRECIATION U.S. EQUITY
SUBACCOUNT SUBACCOUNT
-------------------------------- ------------------
1998 1997 1996* 1998 1997**
---------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . . . . . $ -- $ -- $ -- $ -- $ --
M Fund Inc. . . . . 34,738 128,190 -- 72,302 15,335
--------- --------- -------- -------- --------
Total investment
income . . . . . . . 34,738 128,190 -- 72,302 15,335
Expenses:
Mortality and expense
risks . . . . . . . 24,841 10,040 1,679 4,069 478
--------- --------- -------- -------- --------
Net investment income
(loss) . . . . . . . 9,897 118,150 (1,679) 68,233 14,857
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (445,752) 614,358 (21,044) 87,723 4,177
Net unrealized
appreciation
(depreciation)
during the period . 432,064 (368,570) 5,101 89,677 6,844
--------- --------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments (13,688) 245,788 (15,943) 177,400 11,021
--------- --------- -------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $ (3,791) $ 363,938 $(17,622) $245,633 $ 25,878
========= ========= ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
EMERGING SMALL/
MARKETS GLOBAL BOND MID CAP HIGH YIELD
EQUITY EQUITY INDEX CORE BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ------------
1998*** 1998*** 1998*** 1998*** 1998***
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Distributions
received from:
John Hancock
Variable Series
Trust I . . . . . $ 522 $ 491 $ 23,842 $ -- $ 88,721
M Fund Inc. . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Total investment
income . . . . . . . 522 491 23,842 -- 88,721
Expenses:
Mortality and expense
risks . . . . . . . 387 339 937 535 1,962
-------- -------- -------- -------- --------
Net investment income
(loss) . . . . . . . 135 152 22,905 (535) 86,759
Net realized and
unrealized gain
(loss) on
investments:
Net realized gains
(losses). . . . . . (45,975) (21,835) 1,002 (25,196) 64,824
Net unrealized
appreciation
(depreciation)
during the period . 2,289 4,812 (10,217) 18,718 149,416
-------- -------- -------- -------- --------
Net realized and
unrealized gain
(loss) on investments (43,686) (17,023) (9,215) (6,478) 214,240
-------- -------- -------- -------- --------
Net increase
(decrease) in net
assets resulting from
operations . . . . . $(43,551) $(16,871) $ 13,690 $ (7,013) $300,999
======== ======== ======== ======== ========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).
** From July 1, 1997 (commencement of operations).
*** From May 1, 1998 (commencement of operations).

See accompanying notes.

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
LARGE CAP GROWTH SOVEREIGN BOND
SUBACCOUNT SUBACCOUNT
----------------------------------------- ---------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income . . . . . . . . . . $ 6,143,421 $ 2,793,242 $ 2,402,502 $ 2,097,345 $ 816,558 $ 228,752
Net realized gains . . . . . . . . . . . 1,750,881 619,721 444,487 185,230 80,538 5,746
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . 8,041,022 2,301,920 (1,104,574) (378,058) 63,687 (69,973)
------------ ------------ ----------- ------------ ----------- ----------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 15,935,324 5,714,883 1,742,415 1,904,517 960,783 164,525
From policyholder transactions:
Net premiums from policyholders . . . . . 29,859,648 20,264,849 13,036,922 38,567,292 21,324,560 4,312,776
Net benefits to policyholders . . . . . . (13,281,028) (10,390,849) (4,928,834) (27,391,317) (8,009,615) (679,839)
------------ ------------ ----------- ------------ ----------- ----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . 16,578,620 9,874,000 8,108,088 11,175,975 13,314,945 3,632,937
------------ ------------ ----------- ------------ ----------- ----------
Net increase in net assets . . . . . . . . 32,513,944 15,588,883 9,850,503 13,080,492 14,275,728 3,797,462
Net assets at beginning of period . . . . 32,504,276 16,915,393 7,064,890 19,461,475 5,185,747 1,388,285
------------ ------------ ----------- ------------ ----------- ----------
Net assets at end of period . . . . . . . $ 65,018,220 $ 32,504,276 $16,915,393 $ 32,541,967 $19,461,475 $5,185,747
============ ============ =========== ============ =========== ==========
</TABLE>

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY INDEX SMALL CAP GROWTH
SUBACCOUNT SUBACCOUNT
--------------------------------------- --------------------------------------
1998 1997 1996 1998 1997 1996*
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . . . $ 1,885,059 $ 389,020 $ 29,056 $ (22,593) $ (6,074) $ (1,035)
Net realized gains (losses) . . . . . . . . 152,030 244,810 165,730 58,729 21,707 (40,018)
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . 78,480 (1,219,540) 137,729 1,070,805 126,699 (2,665)
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . . 2,115,569 (585,710) 332,515 1,106,941 142,332 (43,718)
From policyholder transactions:
Net premiums from policyholders . . . . . . 10,034,119 8,150,400 4,750,218 12,088,047 2,870,481 1,120,880
Net benefits to policyholders . . . . . . . (8,344,107) (4,505,840) (1,906,352) (6,621,834) (1,005,386) (579,637)
----------- ----------- ----------- ----------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . . 1,690,012 3,644,560 2,843,866 5,466,213 1,865,095 541,243
----------- ----------- ----------- ----------- ----------- ----------
Net increase in net assets . . . . . . . . . 3,805,581 3,058,850 3,176,381 6,573,154 2,007,427 497,525
Net assets at beginning of period . . . . . . 8,790,049 5,731,199 2,554,818 2,504,952 497,525 0
----------- ----------- ----------- ----------- ----------- ----------
Net assets at end of period . . . . . . . . . $12,595,630 $ 8,790,049 $ 5,731,199 $ 9,078,106 $ 2,504,952 $ 497,525
=========== =========== =========== =========== =========== ==========
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

69
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
INTERNATIONAL BALANCED MID CAP GROWTH
SUBACCOUNT SUBACCOUNT
--------------------------------------- --------------------------------------
1998 1997 1996* 1998 1997 1996*
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income (loss) . . . . . . . . $ 176,073 $ 56,806 $ 2,591 $ 1,088,251 $ (8,287) $ 458
Net realized gains (losses) . . . . . . . . 24,206 8,667 56 599,619 1,235 (391)
Net unrealized appreciation (depreciation)
during the period . . . . . . . . . . . . . 147,461 (67,714) 5,307 1,184,263 486,186 6,440
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from
operations . . . . . . . . . . . . . . . . . 347,740 (2,241) 7,954 2,872,133 479,134 6,507
From policyholder transactions:
Net premiums from policyholders . . . . . . 10,034,119 8,150,400 4,750,218 12,088,047 2,870,481 1,120,880
Net benefits to policyholders . . . . . . . (8,344,107) (4,505,840) (1,906,352) (6,621,834) (1,005,386) (579,637)
----------- ----------- ----------- ----------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . . 1,280,342 1,325,191 144,341 6,191,559 2,297,295 831,816
----------- ----------- ----------- ----------- ----------- ----------
Net increase in net assets . . . . . . . . . 1,628,082 1,322,950 152,295 9,063,692 2,776,429 838,323
Net assets at beginning of period . . . . . . 1,475,245 152,295 0 3,614,752 838,323 0
----------- ----------- ----------- ----------- ----------- ----------
Net assets at end of period . . . . . . . . . $ 3,103,327 $ 1,475,245 $ 152,295 $12,678,444 $ 3,614,752 $ 838,323
=========== =========== =========== =========== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
LARGE CAP VALUE MONEY MARKET
SUBACCOUNT SUBACCOUNT
------------------------------------ --------------------------------------------
1998 1997 1996* 1998 1997 1996
------------ ------------ --------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets from operations:
Net investment income . . . . . . . . . . $ 756,459 $ 183,036 $ 12,680 $ 1,687,016 $ 691,552 $ 256,599
Net realized gains . . . . . . . . . . . 330,827 164,821 1,327 -- -- --
Net unrealized appreciation during the
period . . . . . . . . . . . . . . . . . 145,355 279,449 23,553 -- -- --
----------- ----------- -------- ------------- ------------- ------------
Net increase in net assets resulting from
operations. . . . . . . . . . . . . . . . 1,232,641 627,306 37,560 1,687,016 691,552 256,599
From policyholder transactions:
Net premiums from policyholders . . . . . 15,144,316 5,421,062 767,660 340,377,358 103,737,470 36,814,029
Net benefits to policyholders . . . . . . (4,937,583) (1,620,578) (42,864) (269,723,839) (100,296,756) (31,658,283)
----------- ----------- -------- ------------- ------------- ------------
Net increase in net assets resulting from
policyholder transactions . . . . . . . . 10,206,733 3,800,484 724,796 70,653,519 3,440,714 5,155,746
----------- ----------- -------- ------------- ------------- ------------
Net increase in net assets . . . . . . . . 11,439,374 4,427,790 762,356 72,340,535 4,132,266 5,412,345
Net assets at beginning of period . . . . 5,190,146 762,356 0 14,171,123 10,038,857 4,626,512
----------- ----------- -------- ------------- ------------- ------------
Net assets at end of period . . . . . . . $16,629,520 $ 5,190,146 $762,356 $ 86,511,658 $ 14,171,123 $ 10,038,857
=========== =========== ======== ============= ============= ============
</TABLE>

- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

70
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
MID CAP VALUE DIVERSIFIED MID CAP GROWTH
SUBACCOUNT SUBACCOUNT
---------------------------------------- ---------------------------------------
1998 1997 1996* 1998 1997 1996
------------ ------------ ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income ..................... $ 75,449 $ 434,660 $ 6,501 $ 108,037 $ 842,666 $ 217,017
Net realized gains (losses) ............... (538,516) 101,787 845 232,246 297,666 317,400
Net unrealized appreciation (depreciation)
during the period ........................ (830,390) (39,717) 13,910 236,333 (730,748) 344,786
----------- ----------- ------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ................ (1,293,457) 496,730 21,256 576,616 409,584 879,203
From policyholder transactions:
Net premiums from policyholders .......... 18,837,112 6,323,061 324,248 4,563,154 8,511,081 4,939,686
Net benefits to policyholders ............ (7,855,945) (1,089,206) (9,188) (6,481,542) (6,274,668) (1,301,761)
----------- ----------- ------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from policyholder transactions .. 10,981,167 5,233,855 315,060 (1,918,388) 2,236,413 3,637,925
----------- ----------- ------------ ----------- ----------- -----------
Net increase (decrease) in net assets ...... 9,687,710 5,730,585 336,316 (1,341,772) 2,645,997 4,517,128
Net assets at beginning of period .......... 6,066,901 336,316 0 8,833,185 6,187,188 1,670,060
----------- ----------- ------------ ----------- ----------- -----------
Net assets at end of period ................ $15,754,611 $ 6,066,901 $ 336,316 $ 7,491,413 $ 8,833,185 $ 6,187,188
=========== =========== ============ =========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
REAL ESTATE EQUITY GROWTH & INCOME
SUBACCOUNT SUBACCOUNT
-------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
------------ ------------ ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income .................... $ 283,067 $ 232,798 $ 45,657 $ 8,975,814 $ 5,747,928 $ 2,967,234
Net realized gains (losses) ............... (454,979) 252,095 19,122 2,061,212 2,390,414 512,402
Net unrealized appreciation (depreciation)
during the period ........................ (698,676) (13,488) 191,067 7,759,307 435,778 (496,647)
----------- ----------- ---------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations ................ (870,588) 471,405 255,846 18,796,333 8,574,120 2,982,989
From policyholder transactions:
Net premiums from policyholders .......... 6,964,604 4,833,914 748,683 60,975,616 35,535,599 19,263,021
Net benefits to policyholders ............ (5,513,221) (2,393,463) (295,788) (31,360,866) (21,776,809) (5,502,524)
----------- ----------- ---------- ------------ ------------ -----------
Net increase in net assets resulting from
policyholder transactions ................. 1,451,383 2,440,451 452,895 29,614,750 13,758,790 13,760,497
----------- ----------- ---------- ------------ ------------ -----------
Net increase in net assets ................. 580,795 2,911,856 708,741 48,411,083 22,332,910 16,743,486
Net assets at beginning of period .......... 4,191,379 1,279,523 570,782 47,996,192 25,663,282 8,919,796
----------- ----------- ---------- ------------ ------------ -----------
Net assets at end of period ................ $ 4,772,174 $ 4,191,379 $1,279,523 $ 96,407,275 $ 47,996,192 $25,663,282
=========== =========== ========== ============ ============ ===========
</TABLE>
- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
MANAGED SHORT-TERM BOND
SUBACCOUNT SUBACCOUNT
--------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
------------ ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income..................... $ 3,484,281 $ 1,814,571 $ 1,246,046 $ 926,217 $ 394,991 $ 172,660
Net realized gains (losses)............... 278,186 171,318 124,493 24,740 35,294 (52,888)
Net unrealized appreciation (depreciation)
during the period........................ 1,791,231 715,231 (507,517) (136,999) (25,976) (7,734)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting from
operations................................ 5,553,698 2,701,120 863,022 813,958 404,309 112,038
From policyholder transactions:
Net premiums from policyholders........... 21,019,273 16,914,475 9,996,216 27,490,588 12,911,228 8,757,242
Net benefits to policyholders............. (8,281,600) (9,357,535) (3,151,700) (21,534,195) (4,234,624) (7,683,085)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting from
policyholder transactions................. 12,737,673 7,556,940 6,844,516 5,956,393 8,676,604 1,074,157
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets................. 18,291,371 10,258,060 7,707,538 6,770,351 9,080,913 1,186,195
Net assets at beginning of period.......... 21,775,321 11,517,261 3,809,723 12,476,155 3,395,242 2,209,047
----------- ----------- ----------- ------------ ----------- -----------
Net assets at end of period................ $40,066,692 $21,775,321 $11,517,261 $ 19,246,506 $12,476,155 $ 3,395,242
=========== =========== =========== ============ =========== ===========
</TABLE>

<TABLE>
<CAPTION>
SMALL CAP VALUE INTERNATIONAL OPPORTUNITIES
SUBACCOUNT SUBACCOUNT
----------------------------------- ---------------------------------------------
1998 1997 1996* 1998 1997 1996*
------------ ----------- --------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income...................... $ 14,015 $ 290,784 $ 7,773 $ 53,396 $ 55,901 $ 1,526
Net realized gains (losses)................ (9,919) 75,149 58 191,495 80,782 242
Net unrealized appreciation (depreciation)
during the period ........................ (523,693) (18,626) 14,046 1,108,416 (260,664) 36,666
----------- ---------- -------- ------------ ----------- --------
Net increase (decrease) in net assets
resulting from operations .................. (519,597) 347,307 21,877 1,353,307 (123,981) 38,434
From policyholder transactions:
Net premiums from policyholders............. 11,420,833 4,182,527 335,271 23,844,756 8,906,153 960,081
Net benefits to policyholders .............. (4,363,378) (897,951) (16,141) (12,275,087) (3,655,731) (89,402)
----------- ---------- -------- ------------ ----------- --------
Net increase in net assets resulting from
policyholder transactions................... 7,057,455 3,284,576 319,130 11,569,669 5,250,422 870,679
----------- ---------- -------- ------------ ----------- --------
Net increase in net assets .................. 6,537,858 3,631,883 341,007 12,922,976 5,126,441 909,113
Net assets at beginning of period............ 3,972,890 341,007 0 6,035,554 909,113 0
----------- ---------- -------- ------------ ----------- --------
Net assets at end of period.................. $10,510,748 $3,972,890 $341,007 $ 18,958,530 $ 6,035,554 $909,113
=========== ========== ======== ============ =========== ========
</TABLE>
- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
EQUITY INDEX STRATEGIC BOND
SUBACCOUNT SUBACCOUNT
--------------------------------------- -------------------------------------------
1998 1997 1996* 1998 1997 1996*
------------- ------------ ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment income...................... $ 1,211,729 $ 378,697 $ 21,338 $ 283,651 $ 71,030 $ 7,076
Net realized gains......................... 691,270 901,978 17,398 81,659 8,335 22
Net unrealized appreciation (depreciation)
during the period......................... 6,098,919 392,256 55,782 43,608 (11,727) (591)
------------ ----------- ---------- ----------- ----------- ------------
Net increase in net assets resulting from
operations................................. 8,001,918 1,672,931 94,518 408,918 67,638 6,507
From policyholder transactions:
Net premiums from policyholders............ 60,690,933 23,412,687 1,282,798 9,258,713 1,828,179 259,231
Net benefits to policyholders.............. (31,166,123) (9,622,006) (403,009) (3,008,341) (534,164) (7,110)
------------ ----------- ---------- ----------- ----------- ------------
Net increase in net assets resulting from
policyholder transactions.................. 29,524,810 13,790,681 879,789 6,250,372 1,294,015 252,121
------------ ----------- ---------- ----------- ----------- ------------
Net increase in net assets.................. 37,526,728 15,463,612 974,307 6,659,290 1,361,653 258,628
Net assets at beginning of period........... 16,437,919 974,307 0 1,620,281 258,628 0
------------ ----------- ---------- ----------- ----------- ------------
Net assets at end of period................. $ 53,964,647 $16,437,919 $ 974,307 $ 8,279,571 $ 1,620,281 $ 258,628
============ =========== ========== =========== =========== ============
</TABLE>

<TABLE>
<CAPTION>
TURNER CORE GROWTH BRANDES INTERNATIONAL
SUBACCOUNT EQUITY SUBACCOUNT
--------------------------------------- -------------------------------------------
1998 1997 1996* 1998 1997 1996*
------------- ------------ ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>

Increase (decrease) in net assets from
operations:
Net investment income...................... $ 77,203 $ 87,289 $ 19,638 $ 343,646 $ 25,175 $ 2,983
Net realized gains (losses)................ 156,278 76,711 (9,767) 89,337 12,541 (2,433)
Net unrealized appreciation (depreciation)
during the period ........................ 562,620 32,626 16,054 91,915 (26,022) (12,286)
----------- ---------- ---------- ---------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations.................. 796,101 196,626 25,925 524,898 11,694 (11,736)
From policyholder transactions:
Net premiums from policyholders............ 4,779,974 743,622 1,135,180 5,520,633 2,484,010 1,021,041
Net benefits to policyholders.............. (1,690,860) (580,027) (506,352) 2,041,375 (1,088,249) (80,162)
----------- ---------- ---------- ---------- ----------- ----------
Net increase in net assets resulting from
policyholder transactions................ 3,089,114 163,595 628,828 3,479,258 1,395,761 940,879
----------- ---------- ---------- ---------- ----------- ----------
Net increase in net assets................ 3,885,215 360,221 654,753 4,004,156 1,407,455 929,143
Net assets at beginning of period......... 1,014,974 654,753 0 2,336,598 929,143 0
----------- ---------- ---------- ---------- ----------- ----------
Net assets at end of period............... $ 4,900,189 $1,014,974 $ 654,753 $6,340,754 $ 2,336,598 $ 929,143
=========== ========== ========== ========== =========== ==========
</TABLE>
- ---------
* From May 1, 1996 (commencement of operations).

See accompanying notes.

73
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS AND PERIODS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
FRONTIER CAPITAL APPRECIATION ENHANCED U.S. EQUITY
SUBACCOUNT SUBACCOUNT
-------------------------------------- ------------------------
1998 1997 1996* 1998 1997**
------------ ------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from
operations:
Net investment income $ 9,897 $ 118,150 $ (1,679) $ 68,233 $ 14,857
Net realized gains
(losses). . . . . . (445,752) 614,358 (21,044) 87,723 4,177
Net unrealized
appreciation
(depreciation)
during the period . 432,064 (368,570) 5,101 89,677 6,844
----------- ----------- ---------- ---------- ------------
Net increase
(decrease) in net
assets resulting from
operations . . . . . (3,791) 363,938 (17,622) 245,633 25,878
From policyholder
transactions:
Net premiums from
policyholders . . . 13,982,031 10,030,418 1,535,063 3,031,309 475,503
Net benefits to
policyholders . . . (9,695,520) (5,969,436) (549,363) 1,299,530 (4,176)
----------- ----------- ---------- ---------- ------------
Net increase in net
assets resulting from
policyholder
transactions . . . . 4,286,511 4,060,982 985,700 1,731,779 471,327
----------- ----------- ---------- ---------- ------------
Net increase in net
assets . . . . . . . 4,282,720 4,424,920 968,078 1,977,412 497,205
Net assets at
beginning of period 5,392,998 968,078 0 497,205 0
----------- ----------- ---------- ---------- ------------
Net assets at end of
period . . . . . . . $ 9,675,718 $ 5,392,998 $ 968,078 $2,474,617 $ 497,205
=========== =========== ========== ========== ============
</TABLE>

<TABLE>
<CAPTION>
EMERGING SMALL/
MARKETS GLOBAL BOND MID CAP HIGH YIELD
EQUITY EQUITY INDEX CORE BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------ ------------ ----------- ----------- --------------
1998*** 1998*** 1998*** 1998*** 1998***
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from
operations:
Net investment income
(loss). . . . . . . $ 135 $ 152 $ 22,905 $ (535) $ 86,759
Net realized gains
(losses). . . . . . (45,975) (21,835) 1,002 (25,196) 64,824
Net unrealized
appreciation
(depreciation)
during the period . 2,289 4,812 (10,217) 18,718 149,416
----------- ----------- ---------- ---------- -----------
Net increase
(decrease) in net
assets resulting from
operations . . . . . (43,551) (16,871) 13,690 (7,013) 300,999
From policyholder
transactions:
Net premiums from
policyholders . . . 2,434,226 2,372,034 1,176,234 1,089,030 6,683,673
Net benefits to
policyholders . . . (2,203,670) (2,191,135) (124,467) (778,864) (2,457,088)
----------- ----------- ---------- ---------- -----------
Net increase in net
assets resulting from
policyholder
transactions . . . . 230,556 180,899 1,051,767 310,166 4,226,585
----------- ----------- ---------- ---------- -----------
Net increase in net
assets . . . . . . . 187,005 164,028 1,065,457 303,153 4,527,584
Net assets at
beginning of period 0 0 0 0 0
----------- ----------- ---------- ---------- -----------
Net assets at end of
period . . . . . . . $ 187,005 $ 164,208 $1,065,457 $ 303,153 $ 4,527,584
=========== =========== ========== ========== ===========
</TABLE>
- ---------
* From May 1, 1996 (commencement of operations).
** From July 1, 1997 (commencement of operations).
*** From May 1, 1998 (commencement of operations).

See accompanying notes.

74
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1998

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 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 twenty-seven subaccounts. The assets of each subaccount are invested
exclusively in shares of a corresponding Portfolio of John Hancock Variable
Series Trust I (the Fund) or of M Fund Inc. (M Fund). New subaccounts may be
added as new Portfolios are added to the Fund or to M Fund, or as other
investment options are developed, and made available to policyholders. The
twenty-seven Portfolios of the Fund and M Fund which are currently available are
the Large Cap Growth, Sovereign Bond, International Equity Index (formerly,
International Equities), Small Cap Growth, International Balanced, Mid Cap
Growth, Large Cap Value, Money Market, Mid Cap Value, Diversified Mid Cap Growth
(formerly, Special Opportunities), Real Estate Equity, Growth & Income, Managed,
Short-Term Bond (formerly, Short-Term U.S. Government), Small Cap Value,
International Opportunities, Equity Index, Strategic Bond, Turner Core Growth,
Brandes International Equity (formerly, Edinburgh International Equity),
Frontier Capital Appreciation, Enhanced U.S. Equity, Emerging Markets Equity,
Global Equity, Bond Index, Small/Mid Cap CORE, and High Yield Bond Portfolios.
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.

2. SIGNIFICANT ACCOUNTING POLICIES

Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Valuation of Investments

Investment in shares of the Fund and of M 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 respective Portfolio 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.

75
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Expenses

JHVLICO assumes mortality and expense risks of the variable life insurance
policies for which asset charges are deducted at various rates ranging from .50%
to .625%, depending on the type of policy, 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 policyholder indebtedness) and
compounded daily. At December 31, 1998, there were no outstanding policy loans.

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.

76
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. DETAILS OF INVESTMENTS

The details of the shares owned and cost and value of investments in the
Portfolios of the Fund and of M Fund at December 31, 1998 were as follows:

<TABLE>
<CAPTION>
SUBACCOUNT SHARES OWNED COST VALUE
---------- ------------ ----------- -------------
<S> <C> <C> <C>
Large Cap Growth.............. 2,482,160 $55,624,133 $65,018,220
Sovereign Bond................ 3,279,909 32,895,576 32,541,967
International Equity Index.... 809,459 13,492,182 12,595,630
Small Cap Growth.............. 698,985 7,883,267 9,078,106
International Balanced........ 278,964 3,018,272 3,103,327
Mid Cap Growth................ 838,771 11,001,555 12,678,444
Large Cap Value............... 1,186,104 16,181,162 16,629,520
Money Market.................. 8,651,166 86,511,658 86,511,658
Mid Cap Value................. 1,292,860 16,610,808 15,754,611
Diversified Mid Cap Growth.... 469,987 7,452,538 7,491,413
Real Estate Equity............ 383,006 5,258,257 4,772,174
Growth & Income............... 4,945,907 88,453,571 96,407,275
Managed....................... 2,562,429 38,024,380 40,066,692
Short-Term Bond............... 1,915,373 19,395,427 19,246,506
Small Cap Value............... 906,973 11,039,020 10,510,748
International Opportunities... 1,552,119 18,074,112 18,958,530
Equity Index.................. 3,048,380 47,417,688 53,964,646
Strategic Bond................ 781,135 8,248,280 8,279,571
Turner Core Growth............ 274,674 4,288,888 4,900,189
Brandes International Equity.. 584,940 6,287,148 6,340,754
Frontier Capital Appreciation. 641,201 9,607,123 9,675,718
Enhanced U.S. Equity.......... 136,946 2,378,097 2,474,617
Emerging Markets Equity....... 26,387 184,716 187,005
Global Equity................. 16,615 159,217 164,028
Bond Index.................... 104,566 1,075,674 1,065,457
Small/Mid Cap CORE............ 33,614 284,435 303,153
High Yield Bond............... 490,466 4,378,169 4,527,584
</TABLE>

77
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Purchases, including reinvestment of dividend distributions, and proceeds from
sales of shares in the Portfolios of the Fund and of M Fund for the period ended
December 31, 1998, were as follows:

<TABLE>
<CAPTION>
SUBACCOUNT PURCHASES SALES
---------- ------------ -------------
<S> <C> <C>
Large Cap Growth......................... $ 29,361,732 $ 6,639,690
Sovereign Bond........................... 22,087,283 8,813,963
International Equity Index............... 9,220,337 5,645,266
Small Cap Growth......................... 7,281,622 1,838,002
International Balanced................... 2,024,060 567,645
Mid Cap Growth........................... 9,361,504 2,081,694
Large Cap Value.......................... 13,202,174 2,238,984
Money Market............................. 167,737,824 95,397,289
Mid Cap Value............................ 15,612,090 4,555,474
Diversified Mid Cap Growth............... 3,272,496 5,082,848
Real Estate Equity....................... 5,551,879 3,817,431
Growth & Income.......................... 50,746,313 12,155,749
Managed.................................. 19,441,220 3,219,267
Short-Term Bond.......................... 15,288,727 8,406,118
Small Cap Value.......................... 8,944,813 1,873,344
International Opportunities.............. 17,193,176 5,570,111
Equity Index............................. 35,787,894 5,051,356
Strategic Bond........................... 9,312,827 2,778,805
Turner Core Growth....................... 4,233,351 1,067,034
Brandes International Equity............. 5,189,547 1,366,643
Frontier Capital Appreciation............ 7,380,939 3,084,531
Enhanced U.S. Equity..................... 2,489,737 689,724
Emerging Markets Equity.................. 1,973,067 1,742,376
Global Equity............................ 2,561,712 2,380,660
Bond Index............................... 1,154,850 80,178
Small/Mid Cap CORE....................... 987,868 678,237
High Yield Bond.......................... 6,156,047 1,842,702
</TABLE>

5. IMPACT OF YEAR 2000 (UNAUDITED)

The John Hancock Variable Life Account S, along with John Hancock Mutual Life
Insurance Company, its ultimate parent (together, John Hancock), is executing
its plan to address the impact of the Year 2000 issues that result from computer
programs being written using two digits to reflect the year rather than four to
define the applicable year and century. Historically, the first two digits were
hardcoded to save memory. Many of the John Hancock's computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in an information technology (IT) system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities. In addition, non-IT systems
including, but not limited to, security alarms, elevators and telephones are
subject to malfunction due to their dependence on embedded technology such as
microcontrollers for proper operation. As described, the Year 2000 project
presents a number of challenges for financial institutions since the correction
of Year 2000 issues in IT and non-IT systems will be complex and costly for the
entire industry.

78
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The renovation stage reflects the conversion, validation, replacement, or
elimination of selected platforms, applications, databases and utilities,
including the modification of applicable interfaces. Additionally, the
renovation stage includes performance, functionality, and regression testing and
implementation. As of December 31, 1998, the renovation phase was substantially
complete for computer applications, systems and desktops. For all remaining
components the renovation phase is underway and will be complete before the end
of the second quarter of 1999.

The validation phase consists of the compliance testing of renovated systems.
The validation phase is expected to be complete by mid 1999, after renovation is
accomplished. John Hancock will use its testing facilities through the remainder
of 1999 to perform special functional testing. Special functional testing
includes testing, as required, with material third parties and industry groups
and to perform reviews of "dry run" of year-end activities. Scheduled testing of
John Hancock's material relationships with third parties is underway. It is
anticipated that testing with material business partners will continue through
much of 1999.

Finally, the implementation phase involves the actual implementation of
converted or replaced platforms, applications, databases, utilities, interfaces,
and contingency planning. John Hancock is concurrently performing implementation
during the renovation phase and plans to complete this phase before the end of
the second quarter of 1999.

The costs of the Year 2000 project consist of internal IT personnel, and
external costs such as consultants, programmers, replacement software, and
hardware. The costs of the Year 2000 project are expensed as incurred. The
project is funded partially through a reallocation of resources from
discretionary projects. Through December 31, 1998, John Hancock has incurred and
expensed approximately $9.8 million in related payroll costs for its internal IT
personnel on the project. The estimated range of remaining internal IT personnel
costs of the project is approximately $8 to $9 million. Through December 31,
1998, John Hancock has incurred and expensed approximately $36.4 million in
external costs for the project. The estimated range of remaining external costs
of the project is approximately $35 to $36 million. The total costs of the Year
2000 project, based on management's best estimates, include approximately $18
million in internal IT personnel, $7.4 million in the external modification of
software, $34.2 million for external solution providers, $19.4 million in
replacement costs of non-compliant IT systems and $12.6 million in oversight,
test facilities and other expenses. Accordingly, the estimated range of total
costs of the Year 2000 project, internal and external, is approximately $90 to
$95 million. However, there can be no guarantee that these estimates will be
achieved and actual results could materially differ from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.

79
<PAGE>

JOHN HANCOCK VARIABLE LIFE ACCOUNT S

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

John Hancock's total Year 2000 project costs include the estimated impact of
external solution providers and are based on presently available information.
However, there is no guarantee that the systems of other companies that John
Hancock's systems rely on will be timely converted, or that a failure to convert
by another company, or a conversion that is incompatible with John Hancock's
systems, would not have material adverse effect on John Hancock. It is
documented in trade publications that companies in foreign countries are not
acting as intensively as domestic companies to remediate Year 2000 issues.
Accordingly, it is expected that Company facilities based outside the United
States face higher degrees of risks from data exchanges with material business
partners. In addition, John Hancock has thousands of individual and business
customers that hold insurance policies, annuities and other financial products
of John Hancock. Nearly all products sold by John Hancock contain date sensitive
data, examples of which are policy expiration dates, birth dates, premium
payment dates. Finally, the regulated nature of John Hancock's industry exposes
it to potential supervisory or enforcement actions relating to Year 2000 issues.

John Hancock's contingency planning initiative related to the Year 2000
project is underway. The plan is addressing John Hancock's readiness as well as
that of material business partners on whom John Hancock depends. John Hancock's
contingency plans are being designed to keep each business unit's operations
functioning in the event of a failure or delay due to the Year 2000 record
format and date calculation changes. Contingency plans are being constructed
based on the foundation of extensive business resumption plans that John Hancock
has maintained and updated periodically, which outline responses to situations
that may affect critical business functions. These plans also provide emergency
operations guidance, which defines a documented order of actions to respond to
problems. These extensive business resumption plans are being enhanced to cover
Year 2000 situations.

80
<PAGE>

ALPHABETICAL INDEX OF KEY WORDS AND PHRASES

This index should help you locate more information about many of the important
concepts in this prospectus.

KEY WORD OR PHRASE PAGE

Account .......................................................... 23
account value .................................................... 7
Additional Sum Insured ...........................................
attained age ..................................................... 8
Basic Sum Insured ................................................
beneficiary ...................................................... 23
business day ..................................................... 23
changing Option A or B ........................................... 27
changing the Total Sum Insured ................................... 13
charges .......................................................... 7
Code ............................................................. 29
cost of insurance rates .......................................... 8
date of issue .................................................... 25
death benefit .................................................... 3
deductions ....................................................... 7
dollar cost averaging ............................................ 10
expenses of the Trust ............................................ 9
fixed investment option .......................................... 24
full surrender ................................................... 11
fund ............................................................. 2
grace period ..................................................... 6
guaranteed death benefit feature ................................. 6
Guaranteed Death Benefit Premium ................................. 6
insurance charge ................................................. 8
insured person ................................................... 4
investment options ............................................... 1
JHVLICO .......................................................... 23
John Hancock Variable Series Trust ............................... 2
lapse ............................................................ 6
loan ............................................................. 11
loan interest .................................................... 12
maximum premiums ................................................. 5
Minimum Initial Premium .......................................... 24
minimum insurance amount ......................................... 13
minimum premiums ................................................. 5
modified endowment contract ...................................... 30
monthly deduction date ........................................... 25
mortality and expense risk charge ................................ 8
Option A; Option B ............................................... 12
optional benefits ................................................ 8
owner ............................................................ 4
partial withdrawal ............................................... 11
partial withdrawal charge ........................................ 9
payment options .................................................. 14
Planned Premium .................................................. 5
policy anniversary ............................................... 25
policy year ...................................................... 25
premium; premium payment ......................................... 4
prospectus ....................................................... 2
receive; receipt ................................................. 16
reinstate; reinstatement ......................................... 6
sales charges .................................................... 7
SEC .............................................................. 2
Separate Account S ............................................... 23
Servicing Office ................................................. 1
special loan account ............................................. 12
subaccount ....................................................... 23
surrender ........................................................ 11
surrender value .................................................. 11
Target Premium ................................................... 8
tax considerations ............................................... 29
telephone transfers .............................................. 16
Total Sum Insured ................................................
transfers of account value ....................................... 10
variable investment options ...................................... 1
we; us ........................................................... 23
withdrawal ....................................................... 11
withdrawal charges ............................................... 9
you; your ........................................................ 4

81
<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.

REPRESENTATION OF REASONABLENESS

John Hancock Variable Life Insurance Company represents that the fees and
charges deducted under the Policies, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the insurance company.

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 prospectuses each consisting of 81 pages.

The undertaking regarding indemnification.

The undertaking to file reports.

The signatures.

The following exhibits:
<PAGE>

1.A. (1) JHVLICO Board Resolution establishing the separate account included
in the initial filing of this registration statement in filed on
January 25, 1996.

(2) Not Applicable.

(3) (a) Form of Distribution and Servicing Agreement by and among John
Hancock Distributors, Inc., John Hancock Mutual Life Insurance
Company, and John Hancock Variable Life Insurance Company,
incorporated by reference from Pre-Effective Amendment No. 2 to
Form S-6 Registration Statement of John Hancock Variable Life
Account S (File No. 333-15075) filed on April 23, 1997.

(b) Specimen Variable Contracts Selling Agreement between John Hancock
Mutual Life Insurance Company and Selling broker-dealers,
incorporated by reference from Pre-Effective Amendment No. 2 to
Form S-6 Registration Statement of John Hancock Variable Life
Account S (File No. 333-15075) filed on April 23, 1997.

(c) Schedule of sales commissions included in the text under the
heading "Additional Information-How we market the policies" in the
prospectus.

(4) Not Applicable

(5) (a) Form of flexible premium variable life insurance policy, included
in Pre-Effective Amendment No.1 to this registration statement,
filed on July 26, 1996.

(b) Form of flexible premium variable life insurane policy for
replacement product (filed herewith).

(6) (a) JHVLICO Certificate of Incorporation included in the initial
filing of this registration statement filed on January 25, 1996.

(b) JHVLICO By-laws included in the initial filing of this
registration statement filed on January 25, 1996.

(7) Not Applicable.

(8) Not Applicable.

(9) Not Applicable.

(10) Forms of individual and master applications for Policy included in
Pre-Effective Amendment No.1 to this registration statement, filed
on July 26, 1996.

<PAGE>

2. Included as exhibit 1.A(5)(a) and 1.A(5)(b) above.

3. Opinion and consent of counsel as to securities being registered included in
Pre-Effective Amendment No.1 to this registration statement filed on July
26, 1996.

4. Not Applicable

5. Not Applicable

6. Opinion and consent of actuary (to be filed by amendment).

7. Consent of independent auditors (to be filed by amendment).

8. Memorandum describing JHVLICO's issuance, transfer and redemption
procedures for the flexible premium policy pursuant to Rule 6e-
3(T)(b)(12)(iii) included in Pre-Effective Amendment No.1 to this
registration statement filed on July 26, 1996.

9. Powers of attorney for Tomlinson, D'Alessandro, Luddy, Lee, Reitano, Van
Leer and Paster included in the initial filing of this registration
statement filed January 25, 1996. Power of Attorney for Ronald J. Bocage,
incorporated by reference from Form 10-K annual report of John Hancock
Variable Life Insurance Company (File No. 33-62895) filed on March 28,
1997.

10. Representations, Description and Undertaking pursuant to Rule 6e-
3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940 included in
the initial filing of this registration statement filed on January 25,
1996.

11. Exemptive Relief Relied Upon included in the initial filing of this
registration statement filed on January 25, 1996.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant, John Hancock Variable Life Account S, has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunder duly authorized, and its seal to be hereunto fixed
and attested, all in the City of Boston and Commonwealth of Massachusetts on the
15th day of October, 1999.

JOHN HANCOCK VARIABLE LIFE ACCOUNT S
(Registrant)

By John Hancock Variable Life Insurance Company
(Depositor)

(SEAL)

By /s/ MICHELE G. VAN LEER
-----------------------
Michele G. Van Leer
President

Attest: /s/ Peter Scavongelli
----------------------
Secretary
<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.

Signatures Title Date
- ---------- ----- ----

/s/ PATRICK F. SMITH
- --------------------
Patrick F. Smith Controller (Principal Accounting October 15, 1999
Officer and Acting Principal
Financial Officer)

/s/ MICHELE G. VAN LEER
- -----------------------
Michele G. Van Leer Vice Chairman of the Board
for herself and as and President(Acting Principal
Attorney-in-Fact Executive Officer) October 15, 1999

For: David F. D'Alessandro Chairman of the Board
Robert S. Paster Director
Thomas J. Lee Director
Joseph A. Tomlinson Director
Barbara L. Luddy Director
Ronald J. Bocage Director
Robert R. Reitano Director

<PAGE>

Exhibit 1.A(5)(b)
[LOGO OF JOHN HANCOCK APPEARS HERE]
[Mutual] Life Insurance Company John Hancock Place
Boston, Massachusetts 02117
[(800) 521-1234]

INSURED JOHN HANCOCK TOTAL SUM INSURED AT ISSUE $200,000

POLICY NUMBER 9-000001 DATE OF ISSUE SEPTEMBER 1, 1999

DEATH BENEFIT Option A: (See Section 4)

PLAN FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE

INDIVIDUAL VARIABLE LIFE INSURANCE

The John Hancock [Mutual] Life Insurance Company ("the Company") agrees, subject
to the conditions and provisions of this policy, to pay the Death Benefit to the
Beneficiary upon the death of the Insured if such death occurs while the policy
is in full force, and to provide the other benefits, rights, and privileges of
the policy. The Death Benefit (see Section 4) will be payable, subject to the
"Deferral of Determinations and Payments" provision, on receipt at the Servicing
Office of the Company of due proof of the Insured's death.

The policy, which includes any Riders which are a part of the policy on
delivery, is issued in consideration of the application and payment of the
Minimum Initial Premium as shown on page 3.

The policy Specifications and the conditions and provisions on this and the
following pages are part of the policy.

Signed for the Company at Boston, Massachusetts:

PRESIDENT SECRETARY

Variable Life Insurance policy
Flexible Premiums
Death Benefit payable at death of Insured
Not eligible for dividends
Benefits, premiums and the policy class are shown in the Specifications Section
of the policy.

To the extent any benefit, payment, or value under this policy (including the
Account Value) is based on the investment experience of a Separate Account, such
benefit, payment, or value may increase or decrease in accordance with the
investment experience of the Separate Account and is not guaranteed as to fixed
dollar amount. However, this policy may provide a Guaranteed Death Benefit while
the policy is in full force during the Guaranteed Death Benefit Period shown on
page 3, measured from the Date of Issue, provided that premiums are paid on a
timely basis and other conditions are met as described in Sections 4,6 and 7.

Right to Cancel--The Owner may surrender this policy by delivering or mailing it
to the Company at its Servicing Office as shown on the back cover (or to the
agent or agency office through which it was delivered) within 10 days after
receipt by the Owner of the policy. Immediately on such delivery or mailing, the
policy shall be deemed void from the beginning. Any premium paid on this policy
will be refunded within 10 days after timely surrender of the policy.
<PAGE>

Policy Provisions
-----------------
Section

1. Policy Specifications
2. Table Of Rates
3. Definitions
4. Death Benefit
5. Payments
6. Guaranteed Death Benefit
7. Grace Period
8. Account Value
9. Charges
10. Loans
11. Surrenders and Withdrawals
12. Basis of Computations
13. Separate Account and Fixed Account
14. Allocation To Subaccounts
15. Investment Policy Change
16. Reports To Owner
17. Reinstatement
18. Owner, Contingent Owner and Beneficiary
19. Interest On Proceeds
20. Deferral Of Determinations And Payments
21. Claims Of Creditors
22. Assignment
23. Incontestability
24. Misstatements
25. Suicide
26. The Contract
27. Settlement Provisions

2
<PAGE>

- --------------------------------------------------------------------------------
1. POLICY SPECIFICATIONS
- --------------------------------------------------------------------------------

Insured [John Hancock] Plan Medallion Executive Variable
Life III

Issue Age [45] Policy Number [9-000001]

Sex [M]

Premium Class [Select] Date of Issue [September 1, 1999]

Death Benefit Option [Option A: Level Death Benefit (see Section 4)]

Sum Insured
Basic Sum Insured at Issue $ [100,000]
Additional Sum Insured at Issue $ [100,000]
-----------
Total Sum Insured at Issue $ [200,000]

Notice: The actual premiums paid will affect the Account Value and the duration
of insurance coverage, and will affect the Death Benefit if the Account Value
affects the Death Benefit. Even if the Planned Premiums shown below are paid as
scheduled, they may not be sufficient to continue the policy in force until the
death of the Insured. Unless the Guaranteed Death Benefit feature is in effect,
the policy will continue in force until the death of the Insured only if on each
Quarterly Processing Date the policy's Account Value, less any Surrender Charge
and any indebtedness, is sufficient to provide for all Policy Charges then due.

Premiums
--------

<TABLE>
<CAPTION>
ANNUAL PREMIUMS
<S> <C>
Planned Premium (the amount you plan to pay as specified in the application) $[6,000]

Target Premium (the portion of each year's premium payment that is subject to the Sales Charge.) $[5,649]

Guaranteed Death Benefit Premium $[2,259.60]

Minimum Initial Premium $[706.13]

Billing Interval [Annual]
</TABLE>

Other Benefits and Specifications
---------------------------------

Minimum Total Sum Insured [$100,000]

Minimum Basic Sum Insured [$20,000]

Definition of Life Insurance Elected [Cash Value Accumulation Test; not
available with Death Benefit
Option B]

Guaranteed Death Benefit Period [First Five Policy Years]

3
<PAGE>

- --------------------------------------------------------------------------------
1. POLICY SPECIFICATIONS, continued
- --------------------------------------------------------------------------------

A. Current Policy Charges*

<TABLE>
<CAPTION>
Deductions from Premium Payments
--------------------------------
<S> <C>
Sales Charge
Policy Years 1-10 8% up to Target Premium, 0% of Excess Premium.
Policy Years 11 and after 0% up to Target and Excess Premium
State Premium Tax Charge 1.60% up to Target and Excess Premium for all Policy Years
Federal DAC Tax Charge .0% up to Target and Excess Premium for all Policy Years
[Enhanced Cash Value Rider Charge] [1.0% of cumulative Premiums paid in Policy Year 1, up to the Target
Premium Amount.]
<CAPTION>
Deductions from Account Value
-----------------------------
<S> <C>
Maintenance Charge $10.00 per month for Policy Years 1-10.

Cost of Insurance Charge Determined in accordance with Section 9,
and deducted each month for all Policy
Years.

Asset-Based Risk Charge Monthly charge of .0501% of Separate
Account assets for Policy Years 1-10,
.0292% for Policy Years 11-20, and .0125%
thereafter.
</TABLE>

* We reserve the right to change the amount or percentage of any of these
charges, but no charge will exceed the amount or percentage shown in the
Table of Maximum Policy Charges on page 3B.

<PAGE>

B. Maximum Policy Charges

<TABLE>
<CAPTION>
Deductions from Premium Payments
--------------------------------
<S> <C>
Sales Charge
Policy Years 1-10 8% up to Target Premium, 3% of Excess
Premium Policy Years 11 and after 3% up to Target Premium, 3% of Excess Premium
State Premium Tax Charge 1.60% up to Target and Excess Premium for all Policy Years
Federal DAC Tax Charge 1.25% up to Target and Excess Premium for all Policy Years
[Enhanced Cash Value Rider Charge] [1.0% of cumulative Premiums paid in Policy Year 1, up to the Target
Premium Amount.]

<CAPTION>
Deductions from Account Value
-----------------------------
<S> <C>
Maintenance Charge $15.00 per month for all Policy Years.

Cost of Insurance Charge Determined in accordance with Section 9,
and deducted each month for all Policy
Years; see Table of Rates, Section 2, for
Maximum Monthly Rates used to determine
Cost of Insurance.

Asset-Based Risk Charge Monthly charge of .0753% of Separate
Account assets for all Policy Years.
</TABLE>
3B

<PAGE>

Insured [John Hancock] Plan
Medallion Executive
-------------------
Variable Life III
-----------------

Policy Number [9-000001]

Rider Date of Issue [September 1, 1999]

Rider Information

- --------------------------------------------------------------------------------
Type Description
- --------------------------------------------------------------------------------

Enhanced Cash Value Rider Additional cash value available upon
surrender during the first 5 Policy Years,
equal to the following percentages of
the cumulative premiums paid in the
first Policy Year, up to the Target Premium
amount:

Policy Year ECV Percentage

1 5%

2 4%

3 3%

4 2%

5 1%

6+ 0%

- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
2. TABLE OF RATES
- --------------------------------------------------------------------------------

Rate Table

Maximum Applied
Monthly rates per
$1,000 of Net Death Benefit
Age* Amount at Risk** Factors
---- ---------------- -------
45 0.3800 2.8779
46 0.4109 2.7904
47 0.4444 2.7064
48 0.4796 2.6255
49 0.5190 2.5477
50 0.5609 2.4728
51 0.6104 2.4008
52 0.6658 2.3317
53 0.7287 2.2654
54 0.8002 2.2019
55 0.8767 2.1412
56 0.9601 2.0831
57 1.0468 2.0275
58 1.1396 1.9742
59 1.2392 1.9230
60 1.3500 1.8740
61 1.4736 1.8269
62 1.6134 1.7818
63 1.7722 1.7387
64 1.9491 1.6976
65 2.1434 1.6584
66 2.3510 1.6211
67 2.5728 1.5855
68 2.8088 1.5516
69 3.0653 1.5191
70 3.3537 1.4880
71 3.6820 1.4583
72 4.0603 1.4301
73 4.4962 1.4033
74 4.9835 1.3781
75 5.5133 1.3546
76 6.0765 1.3325
77 6.6657 1.3117
78 7.2759 1.2922
79 7.9239 1.2737
80 8.6352 1.2560
81 9.4308 1.2392
82 10.3390 1.2232
83 11.3735 1.2082
84 12.5138 1.1942

*As defined in Section 3.

**Maximum Monthly Rates are based on the 1980 Commissioners Standard Ordinary
Mortality Tables.

<PAGE>

- --------------------------------------------------------------------------------
2. TABLE OF RATES, continued
- --------------------------------------------------------------------------------

Rate Table (continued)

Maximum Applied
Monthly rates per Death
$1,000 of Net Amount Benefit
Age* at Risk** Factors
---- --------- -------
85 13.7377 1.1812
86 15.0218 1.1692
87 16.3566 1.1580
88 17.7380 1.1475
89 19.1720 1.1374
90 20.6777 1.1277
91 22.2871 1.1181
92 24.0635 1.1082
93 26.1199 1.0979
94 28.8130 1.0869
95 32.8176 1.0748
96 39.6429 1.0616
97 53.0660 1.0476
98 85.5269 1.0334
99+ 165.3400 1.0198

*As defined in Section 3.

**Maximum Monthly Rates are based on the 1980 Commissioners Standard Ordinary
Mortality Tables.

4A
<PAGE>

- -------------------------------------------------------------------------------
3. DEFINITIONS
- --------------------------------------------------------------------------------

The term "Account Value" is as defined in Section 8.

The term "Age" means on any policy anniversary, the age of the person in
question at his or her birthday nearest that date. That "Age" will apply until
the next policy anniversary.

The term "Annual Processing Date" means each 12th Processing Date starting with
the Processing Date next after the Date of Issue.

The term "Excess Premium" means that portion of the total Premiums received
during any Policy Year that exceeds the Target Premium.

The term "Fixed Account" means an account established by us which accumulates at
rates which we will determine and declare from time to time, but which will not
be less than 4%. The assets of a Fixed Account are invested in a segment of our
General Account.

The term "Fund" means each division of a Series Fund which has a specific
investment objective.

The term "Guaranteed Death Benefit Premium" means the amount shown in Section 1.

The term "in full force" means that the policy has not lapsed in accordance with
Section 7.

The term "indebtedness" means the unpaid balance of a policy loan. As provided
in Section 10, the policy loan amount includes accrued interest.

The term "Minimum Initial Premium" means one-quarter of the sum of the Target
Premium (and any Rider Premium) as shown on page 3. However, if a Monthly
Premiumatic or Monthly Employee Consultation billing mode is selected on the
application, the "Minimum Initial Premium" shall be equal to one-twelfth of the
sum of the Target Premium (and any Rider Premium).

The term "Net Premium" is as defined in Section 5.

The term "Payment" means, unless otherwise stated, payment at our Servicing
Office.

The term "Planned Premium" means the amount shown on Page 3.

The term "Policy Year" means (a) or (b) below whichever is applicable:

(a) The first Policy Year is the period beginning on the Date of Issue and
ending on the Valuation Date immediately preceding the first Annual
Processing Date;

(b) Each subsequent Policy Year is the period beginning on an Annual
Processing Date and ending on the Valuation Date immediately preceding the
next Annual Processing Date.

The term "Premium" is as defined in Section 5.

The term "Processing Date" means the first day of a policy month. A policy month
shall begin on the day in each calendar month which corresponds to the day of
the calendar month on which the Date of Issue occurred. If the Date of Issue is
the 29th, 30th, or 31st day of a calendar month, then for any calendar month
which has fewer days, the first day of the policy month will be the last day of
such calendar month. The Date of Issue is not a Processing Date.

The term "Quarterly Processing Date" means each third Processing Date starting
with the Processing Date next after the Date of Issue.

The term "Separate Account", unmodified, means a separate investment account,
established by us pursuant to applicable law, in which you are eligible to
invest under this policy.

The term "Series Fund" means a series type mutual fund registered under the
Investment Company Act of 1940 as an open-end diversified management investment
company.

The term "Servicing Office" means the Company's Servicing Office at the address
shown on the back cover of this policy.

The term "Subaccount" means a Variable Account or a Fixed Account.

The term "Target Premium" means the amount shown on Page 3.

The term "Valuation Date" means any date on which the New York Stock Exchange is
open for trading.

5
<PAGE>

The term "Valuation Period" means the period of time from the beginning of the
day following a Valuation Date to the end of the next following Valuation Date.

The term "Variable Account" means each division of a Separate Account which has
a specific investment objective. The assets of each Variable Account are
invested solely in shares of the corresponding Fund of a Series Fund.

The terms "we", "us", and "our" refer only to the Company.

The term "written notice" means, unless otherwise stated, a written notice
received at our Servicing Office.

The terms "you" and "your" refer only to the Owner of this policy.

6
<PAGE>

- --------------------------------------------------------------------------------
4. DEATH BENEFIT
- --------------------------------------------------------------------------------

The Death Benefit is payable when the Insured dies while the policy is in full
force. The Death Benefit will equal the death benefit of the policy minus any
indebtedness on the date of death. We will also deduct any unpaid charges under
Section 9. In addition, if the Insured dies during a grace period as described
in Subsection A of Section 7, we will also deduct the amount of any unpaid
shortfall described in that subsection.

The death benefit of the policy depends on which of the following Options is
selected in the application for the policy.

The determination of the death benefit under each of these Options will be
affected by withdrawals as described in Section 11.

Option A: Level Death Benefit: The death benefit of the policy is the
greater of: (i) the Total Sum Insured; and (ii) the Account Value on the
date of death times the applicable Corridor Factor or Death Benefit Factor,
shown in Section 2.

Option B: Variable Death Benefit: The death benefit of the policy is the
greater of: (i) the Total Sum Insured plus the Account Value on the Date of
Death; and (ii) the Account Value on the Date of Death times the applicable
Corridor Factor shown in Section 2.

The Total Sum Insured equals the sum of the Basic Sum Insured and any Additional
Sum Insured, subject to the provisions on withdrawals in Section 11.

Death Benefit At and After Attained Age 100

If the Insured reaches attained age 100, Death Benefit Options A and B
(described above) will cease to apply. On the policy anniversary nearest the
Insured's 100th birthday, we will automatically set the Sum Insured equal to
zero, and discontinue deduction of the Maintenance Charge, the Cost of Insurance
Charge, and the sum of the charges for ratings and riders which are part of the
policy, if applicable, from the Account Value. As a result of such changes, the
death benefit of the policy will thereafter be equal to the Account Value, and
the applicable Corridor Factor and Death Benefit Factor will be 1.00. In no
event will premium payments be accepted after the policy anniversary nearest the
Insured's 100th birthday.

- --------------------------------------------------------------------------------
5. PAYMENTS
- --------------------------------------------------------------------------------

Payments under the policy shall be made only to us at our Servicing Office. A
premium reminder notice for Planned Premiums, as shown in the application for
the policy, will be sent to you at the beginning of each payment interval.

When we receive a payment, we first deduct any amount specified as payment of
accrued interest on loans then due under Section 10 and any amount specified as
loan repayment. The remainder will constitute Premium. We then deduct the State
Premium Tax Charge, the Federal DAC Tax Charge, the applicable Sales Charge, and
the Enhanced Cash Value Rider Charge, if any. The remainder will constitute Net
Premium. If coverage under the policy takes effect in accordance with the
provisions of the application, we will process any premium payment as of the
Valuation Period in which we receive it, unless one of the following exceptions
applies:

(i) We will process a payment received prior to the Date of Issue as
if received on the Date of Issue;

(ii) We will process the portion of any premium payment for which we require
evidence of the Insured's continued insurability on the first Valuation
Date after we have received such evidence and found it satisfactory to
us;

(iii) If our receipt of any premium payment (or portion thereof) would cause a
problem for the policy under the Federal income tax laws, we will not
process such payment or portion. However, in the case of certain tax
problems, we will process the payment or portion on the first Valuation
Date after we have received written instructions satisfactory to us from
the owner to process such payment or portion notwithstanding the
existence of the tax problem.

Premiums are payable in advance and a premium receipt will be furnished upon
request. Except as provided above, all payments will be processed as of the date
of receipt.

Subject to our maximum limits, you may pay Premiums in excess of the Planned
Premium while the policy is in full force. We may require evidence of
insurability for any such excess premium.

7
<PAGE>

The following applies if the Tax Test elected for Federal income tax purposes is
"Guideline Premium Test", as shown in Section 1.

The provisions of this policy are to be interpreted to ensure or maintain
qualification as a life insurance contract for federal tax purposes,
notwithstanding any other provisions to the contrary. If at any time the
premiums paid under the Policy exceed the amount allowable for such tax
qualification, such excess amount shall be removed from the policy as of the
date of its payment, together with investment experience thereon from such date,
and any appropriate adjustment in the Death Benefit shall be made as of such
date. This excess amount (plus or minus any investment experience) shall be
refunded to you no later than 60 days after the end of the applicable Policy
Year. If this excess amount (plus or minus any investment experience) is not
refunded by then, the Sum Insured under the policy shall be increased
retroactively so that at no time is the Death Benefit ever less than the amount
necessary to ensure or maintain such tax qualification. In no event, however,
will we refuse to accept any premium necessary to prevent the policy from
terminating.

The following applies if the Tax Test elected for Federal income tax purposes is
"Cash Value Accumulation Test", as shown in Section 1.

We reserve the right to modify the Death Benefit Factors shown in Section 1,
retroactively if necessary, to ensure or maintain qualification of this policy
as a life insurance contract for Federal tax purposes, notwithstanding any other
provisions of this policy to the contrary.

- --------------------------------------------------------------------------------
6. GUARANTEED DEATH BENEFIT
- --------------------------------------------------------------------------------

The Feature
The Guaranteed Death Benefit feature guarantees that the Basic Sum Insured will
not terminate as of any Quarterly Processing Date during the Guaranteed Death
Benefit Period (as shown in Section 1) if the funding requirement described
below is met on that Quarterly Processing Date. This guarantee will apply even
if the Surrender Value on the Quarterly Processing Date is insufficient to pay
the monthly charges then due.

The Funding Requirement

At the beginning of each Quarterly Processing Date during the Guaranteed Death
Benefit Period, we will determine whether the Cumulative Premium Balance (as
defined below) equals or exceeds the Guaranteed Death Benefit Premium Target (as
defined below). If it does, the Guaranteed Death Benefit feature will be in
effect on that Quarterly Processing Date.

The "Cumulative Premium Balance" is equal to the sum of all Premiums paid prior
to the date of calculation less the sum of all withdrawals made prior to that
date and less the policy indebtedness as of that date. The "Guaranteed Death
Benefit Premium Target" is the sum of all monthly Guaranteed Death Benefit
Premiums due on or prior to the date of calculation. On each Processing date,
one twelfth of the annual Guaranteed Death Benefit Premium (the "Annual GDB
Premium") then in effect will be considered to be "due" for purposes of this
Section 6. The Annual GDB Premium at the Date of Issue is shown on page 3.
Thereafter, the Annual GDB Premium will be revised on each Annual Processing
Date as of which the policy is amended. If there are Section 9 charges during
the period that the Guaranteed Death Benefit Feature is in effect which remain
unpaid, these charges will not be forgiven. Any Net Premium amounts received
during this period will first be applied to any outstanding Section 9 charges
which are in arrears. Any such charges which remain unpaid at the end of such
period will become immediately due and payable, and the provisions of Section 7
will apply.

- --------------------------------------------------------------------------------
7. GRACE PERIOD
- --------------------------------------------------------------------------------

If the Guaranteed Death Benefit feature is in effect on any Quarterly Processing
Date and there is no Additional Sum Insured then in effect, there can be no
default under the policy on that Quarterly Processing Date.

On any other Quarterly Processing Date, we will determine whether the total of
all unpaid Section 9 charges as of such date are greater than the Account Value
minus indebtedness as of such date. If that is the case, there will be a default
as of the Quarterly Processing Date on which such determination is made.

If on such date of default, both the Guaranteed Death Benefit feature and an
Additional Sum Insured are in effect, then only the Additional Sum Insured will
be in danger of discontinuance and the default will be an Additional Sum Insured
Default (referred to below as an "ASI Default"). If the Guaranteed Death Benefit
feature is not in effect, the entire policy will be in danger of lapsing and the
default will be a "Policy Default".

8
<PAGE>

The minimum amount you must pay to cure either type of default is "the Default
Payment". The Default Payment will be equal to a payment which, after deduction
of all Section 5 charges, equals: (i) any and all Section 9 charges unpaid prior
to the date of default plus (ii) the total of all Section 9 charges for the date
of default and the next two Processing Dates, where the charges for each of the
next two Processing Dates are assumed to be equal to such charges on the date of
default.

An amount equal at least to the Default Payment must be received within a grace
period of 61 days after the date of default. We will send notice to your last
known address and to any assignee of record at least 31 days before the end of
this grace period specifying whether there is an ASI Default or a Policy Default
and the Default Payment which you must make to cure the default.

If a payment at least equal to the Default Payment is received before the end of
the grace period, there will no longer be a default. Any payment received will
be processed as of the date of receipt at our Servicing Office. When payment is
received, any Section 9 charges which are past due and unpaid will be deducted
from the Account Value.

If there is an ASI Default and a payment at least equal to the Default Payment
is not received by the end of the grace period, then any Additional Sum Insured
will cease to be in effect and will be removed from the policy. If there is a
Policy Default and a payment at least equal to the Default Payment is not
received by the end of the grace period, then the policy will lapse and will no
longer be in full force. Upon a lapse of the policy the remaining Surrender
Value, if any, will be paid to the Owner.

If the Insured dies during a Policy Default, then we will deduct from the
proceeds the Default Payment.

The policy may also lapse due to excess indebtedness as described in Section 10.

No Rider provisions will be in effect after the policy ceases to be in full
force.

- --------------------------------------------------------------------------------
8. ACCOUNT VALUE
- --------------------------------------------------------------------------------

The Account Value as of the end of any Valuation Period is derived as follows:

(a) We will determine the value of each Subaccount as of the close of
business on the last day of the Valuation Period in accordance with
Section 13. ( Call our Servicing Office to determine when the "close
of business" currently occurs.)

(b) We will then determine the share of this policy in each Subaccount and
the total value of such shares.

(d) We will then add any Net Premium received during the Valuation Period
to the value derived in (c) above.

(e) If applicable, we will then compute and deduct all Section 9 charges
in the manner specified in Section 9.

- --------------------------------------------------------------------------------
9. CHARGES
- --------------------------------------------------------------------------------

In computing the Account Value as of the end of the Date of Issue or any
Processing Date, we will compute and deduct, in order, each of the charges (a)
through (e), where:

(a) is the Asset-Based Risk Charge;

(b) is the Maintenance Charge;

(d) is the sum of all charges for ratings, if applicable; and

(e) is the Cost of Insurance Charge.

The Cost of Insurance Charge on the Date of Issue or on any Processing Date, as
the case may be, is an amount equal to the applicable Applied Monthly Rate
divided by 1,000, multiplied by the Net Amount at Risk on the Date of Issue or
such Processing Date, as the case may be. Each Cost of Insurance Charge is
deducted in advance of the insurance coverage to which it applies.

The Net Amount at Risk is the amount determined by subtracting (a) from the
greater of (b) or (c) where:

(a) is the Account Value at the end of the immediately preceding Valuation
Period less all charges due on the Date of Issue or Processing Date

(b) (i) is the Sum Insured divided by 1.0032737 for death benefit option
A; or
(ii) is the Sum Insured divided by 1.0032737 plus the Account Value
for death benefit option B; and

9
<PAGE>

(c) (i) is the amount defined in (a) multiplied by the applicable
Corridor Factor or Death Benefit Factor as shown in Section 2 for
death benefit option A; or

(ii) is the amount defined in (a) multiplied by the applicable
Corridor Factor as shown in Section 2 for death benefit option B.

The Applied Monthly Rates are the actual rates used to calculate the Cost of
Insurance Charge. We will determine the Applied Monthly Rates to be used for
this policy. They will not exceed the Maximum Monthly Rates shown in the
applicable Table of Rates in Section 2. The Applied Monthly Rates will be based
on our expectations of future mortality experience. They will be reviewed at
least once every 5 Policy Years. Any change in Applied Monthly Rates will be
made on a uniform basis for Insureds of the same sex, Issue Age, and premium
class, including smoker status, and whose policies have been in force for the
same length of time.

- --------------------------------------------------------------------------------
10. LOANS
- --------------------------------------------------------------------------------

You may borrow money from us on receipt at our Servicing Office of a completed
form satisfactory to us assigning the policy as the only security for the loan.

Loans may be made if a Loan Value is available. Each loan must be for at least
$1,000. We may defer loans as provided by law or as provided in Section 21.

The Loan Value while the policy is in full force will be an amount equal to (i)
the Surrender Value, less (ii) 12 times the monthly charges then being deducted
from the Account Value, less (iii) and amount determined as follows:

. Deduct (ii) above from (i) above.

. Multiply the result by the difference between the effective annual
rate then being charged on loans and the effective annual rate then
being credited on Loan Assets.

Values will be determined, subject to the "Deferral of Determinations and
Payments" provision, at the end of the Valuation Period in which the date of
receipt of the loan application at our Servicing Office occurs.

The interest charged on any loan will be at an effective annual rate of 4.75%
for years 1-10, 4.5% for years 11-20 and 4.25% thereafter. Loan interest will
accrue daily and will be payable on each Annual Processing Date and on the date
the loan is settled. Accrued interest will be added to the loan daily and will
bear interest from that date. Interest may be paid in advance at the equivalent
effective rate.

A loan may be repaid in full or in part at any time before the Insured's death,
and while the policy is in full force. When excess indebtedness occurs, the
policy will terminate on the 31st day after the Notice Date occurs if such
excess has not been repaid by that date. "Excess indebtedness" is the amount, if
any, by which indebtedness exceeds an amount equal to the Account Value. "Notice
Date" is the date on which notice of Excess indebtedness is mailed to you and
any assignee of record with us at the address last known to us.

Loan Assets are the total of all loans advanced plus interest credited on each
loan amount measured from the date of the loan. When a loan is made, the amount
of the loan will be transferred to Loan Assets. The interest rate credited to
Loan Assets is fixed. The interest credited to Loan Assets will be added to the
loan daily and will bear interest from that date at the same rate. The effective
annual rate of interest credited to Loan Assets is 4%. The amount transferred to
Loan Assets will be removed from the Subaccounts in proportion to your policy
investment in each Subaccount on the date such loan is made (unless our then
current rules allow you to designate different proportions in your loan request
and you in fact do so). Upon 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 Subaccount Investment
Option (unless our then current rules allow you to designate a different
allocation with your repayment and you in fact do so).

- --------------------------------------------------------------------------------
11. SURRENDERS AND WITHDRAWALS
- --------------------------------------------------------------------------------

We will determine and pay the Surrender Value of the policy if the Insured is
then alive, subject to Section 21, and the policy will terminate as of the end
of the Valuation Period in which we have received at our Servicing Office (i)
written notice requesting full surrender of the policy, and (ii) the surrendered
policy.

While the policy is in full force, the Surrender Value will be an amount equal
to the Account Value less any indebtedness.

10
<PAGE>

You may request a withdrawal of part of the Surrender Value in accordance with
our rules then in effect. Without our prior approval, the amount of the
withdrawal and its related charge will be removed from the Subaccounts in
proportion to your policy investment in each Subaccount on the date such
withdrawal is made. For each withdrawal, we reserve the right to make a charge
to the Account Value of an amount not to exceed $20. Generally, each withdrawal
must be at least $1,000. We will not permit the portion of any withdrawal and
its related charge that causes the Surrender Value to fall below 3 months' worth
of Section 9 charges. Nor will we permit the portion of any withdrawal and its
related charge that causes the policy to fail qualification as a life insurance
contract for federal tax purposes. We also reserve the right to refuse the
portion of any withdrawal and its related charge that causes the Total Sum
Insured to fall below $100,000 or the Basic Sum Insured to fall below $20,000.

All amounts withdrawn will be subtracted from the Cumulative Premium Balance as
described in Section 6 and will also be subtracted from your Account Value.
Further, your death benefit will be affected as provided below. With respect to
determining the death benefit under Death Benefit Option A (Level Death
Benefit), an amount equal to any withdrawal and its related charge will be
deducted from the Account Value until the Account Value multiplied by the
appropriate Corridor Factor becomes equal to the Total Sum Insured. After that
point is reached, both the Total Sum Insured and the Account Value will each be
reduced by an amount equal to any remaining withdrawal amounts. Your Death
Benefit will continue to be determined in accordance with Section 4. With
respect to determining the death benefit under Death Benefit Option B (Variable
Death Benefit), an amount equal to any withdrawal and its related charge will be
deducted from the Account Value. Withdrawals will not affect the Total Sum
Insured. Your Death Benefit will continue to be determined in accordance with
Section 4.

- --------------------------------------------------------------------------------
12. BASIS OF COMPUTATIONS
- --------------------------------------------------------------------------------

Minimum surrender values, reserves and net single premiums referred to in the
policy, if any, are computed on the basis of the Commissioners 1980 Standard
Ordinary Mortality Tables with percentage ratings, if applicable, and based on
the underwriting class of the Insured on the Date of Issue. The computations are
made using interest at the rate of 4% a year and using continuous functions.

The Account Value while the policy is in full force is computed as described in
Section 8. A detailed statement of the method of computation of values has been
filed with insurance supervisory officials of the jurisdiction in which this
policy has been delivered or issued for delivery. The values are not less than
the minimum values under the law of that jurisdiction.

Any values, reserves and premiums applicable to any provision for an additional
benefit shall be specified in the provision and have no effect in determining
the values available under the provisions of this Section 12.

- --------------------------------------------------------------------------------
13. SEPARATE ACCOUNT AND FIXED ACCOUNT
- --------------------------------------------------------------------------------

We will allocate Net Premiums, other credits, and charges to the Variable
Accounts and the Fixed Account in accordance with Section 14. We will allocate a
proportional share of the investment results of the Variable Accounts to your
policy. We reserve the right to make a charge for any applicable income taxes.

The assets of the Variable Accounts will be invested in shares of corresponding
Funds of a Series Fund. The Funds will be valued at the end of each Valuation
Period at a fair value in accordance with applicable law. We will deduct
liabilities attributable to a Variable Account when determining the value of a
Variable Account. The Variable Accounts available on the Date of Issue of this
policy are shown in the Prospectus for this policy, along with any investment
management fees associated with the corresponding Funds.

The assets of the Separate Account are the property of the Company. They shall
be available to cover liabilities of our general account only to the extent that
the assets of the Separate Account exceed the liabilities of the Separate
Account arising under the variable life insurance policies supported by the
Separate Account.

We reserve the right to make certain changes if, in our judgment, they would
best serve the interests of the owners of policies such as this or would be
appropriate in carrying out the purposes of such policies. Any changes will be
made only to the extent and in the manner permitted by applicable laws. Also,
when required by law, we will obtain your approval of the changes and approval
from any appropriate regulatory authority.

11
<PAGE>

Examples of the changes we may make include the following:

(a) To operate a Separate Account in any form permitted under the
Investment Company Act of 1940, or in any other form permitted by
law.

(b) To take any action necessary to comply with or obtain and continue
any exemptions from the Investment Company Act of 1940.

(d) To substitute, for the investment company stock held in any Fund,
another class of stock of the investment company or the stock of
another investment company or any other investment permitted by law.

(e) To make any other necessary technical changes in this policy in order
to conform with any action this provision permits us to take.

If any of these changes results in a material change in the underlying
investments of Variable Accounts to which the reserves for this policy are
allocated, we will notify you of such change. You may then make a new election
under the Subaccount Investment Option and the Variable Account Transfer
Provision.

- --------------------------------------------------------------------------------
14. ALLOCATION TO SUBACCOUNTS
- --------------------------------------------------------------------------------

Any Net Premium processed prior to the 20th day after the Date of Issue will be
invested in the Money Market Subaccount. On the 20th day after the Date of Issue
(or on the date such Net Premium is received, if later), we will reallocate the
amount in the Money Market Subaccount attributable to any such Net Premium in
accordance with the Subaccount Investment Option then in effect. We will
allocate all other Net Premiums and all other credits among the Subaccounts in
accordance with the Subaccount Investment Option then in effect. You may elect
to change the Subaccount Investment Option at any time. A change will be
effective at the end of the Valuation Period in which we receive notice
satisfactory to us. We reserve the right to impose limits on the number and
frequency of such changes. The minimum percentage that may be allocated to any
Subaccount and the maximum number of Subaccounts in which assets may be held
will be subject to our administrative rules in effect at the time of election.
We will allocate any charges under Section 9 among the applicable Subaccounts in
proportion to the value of your policy investment in each Subaccount on the date
of the charge.

Account Transfer Restrictions

General Restrictions
- --------------------

Subject to the limitations below, you may elect to transfer amounts among the
Subaccounts at any time while the policy is in full force. We reserve the right
to (i) impose limits on the number of such transfers in any Policy Year to any
number greater than 12, (ii) impose limits on the frequency of such transfers,
and (iii) impose a charge for each transfer that exceeds 12 in any Policy Year.
Such charge will not exceed $25 per transfer. A transfer will be effective at
the end of the Valuation Period in which we receive notice satisfactory to us.
The maximum number of Subaccounts in which assets may be held will be subject to
our rules in effect at the time of transfer.

Restrictions on Transfers to Subaccounts
- ----------------------------------------

Without our prior approval, the maximum amount which may be transferred to a
Subaccount in any Policy Year is $1,000,000.

Restrictions on Transfers to and from the Fixed Account
- -------------------------------------------------------

At any time during the first two Policy Years, you may elect to transfer all
assets held in the Variable Accounts to the Fixed Account. No charge will be
made for any such transfer, regardless of the number of transfers previously
made. We reserve the right to impose restrictions on transfers to the Fixed
Account after the first two Policy Years. Transfers from the Fixed Account will
be permitted only once in each Policy Year. The maximum transfer amount in each
Policy Year is 20% of the value of the Fixed Account as of the effective date of
the transfer, or $500, if greater. We may defer the transfer for up to 6 months
after the date your election would have been effective.

12
<PAGE>

- --------------------------------------------------------------------------------
15. INVESTMENT POLICY CHANGE
- --------------------------------------------------------------------------------

The investment policy of the Funds shall not be materially changed unless a
statement of the change is filed with, and not disapproved by, the Insurance
Commissioner of Massachusetts. In the event of such a change in investment
policy, and while this policy is in full force you may elect a transfer in
accordance with Section 14 within 60 days after (i) the effective date of the
material change or (ii) the receipt of a notice of the available options,
whichever is later. No charge will be made for any such transfer (regardless of
the number of transfers previously made), which will be effective as of the end
of the Valuation Period in which we receive the notice. If required, any
statement of material change filed with the Insurance Commissioner of
Massachusetts will be filed with the insurance supervisory officials of the
jurisdiction in which this policy is delivered or issued for delivery.

- --------------------------------------------------------------------------------
16. REPORTS TO OWNER
- --------------------------------------------------------------------------------

While the policy is in full force, we will send you a statement at least
annually, setting forth the following information:

(a) The Death Benefit, in connection with the Death Benefit Option
elected, Guaranteed Death Benefit, and Account Value as of the date of
the report;

(b) Payments received and charges made since the last report;

(d) Loan information.

We will furnish other reports if required by law or regulation.

- --------------------------------------------------------------------------------
17. REINSTATEMENT
- --------------------------------------------------------------------------------

If there is a Policy Default or ASI Default under Section 7, the policy or the
Additional Sum Insured (as the case may be) may be reinstated within 3 years
after the beginning of the grace period. The date of reinstatement of the policy
or the Additional Sum Insured is the date as of which all 4 requirements below
have been satisfied:

(l) We have received a written application for reinstatement.
(2) We have received evidence of insurability satisfactory to us.
(3) We have received a payment which, after deduction of all Section 5
charges (i.e., State Premium Tax Charge, Federal DAC Tax Charge, and
applicable Sales Charges) is at least equal to the sum of (i) all
unpaid charges described in Section 9, plus interest on each such
charge from the date due up to and including the date of reinstatement
at an annual effective rate of 6%, compounded annually, plus (ii) the
total of all Section 9 charges for the three Processing Dates next
following the date of reinstatement, where the Section 9 charges for
the three Processing Dates next following the date of reinstatement
are assumed to be equal to such charges on the date of default.
(4) We have verified receipt of items (2) and (3) above and have approved
the application for reinstatement.

On the date of reinstatement of the policy (i) the death benefit of the policy
will be the same as if no lapse had occurred and (ii) the policy will have
indebtedness equal to any indebtedness at the end of the day immediately
preceding the date of reinstatement.

The Account Value on the date of reinstatement of the policy will be the amount
specified in (3) above (i) less the sum of all Section 9 charges that would have
been made from the date of lapse to the date of reinstatement if the policy had
not lapsed, (ii) less interest on each such charge at an effective annual rate
of 6%, compounded annually, from the date such charge would have been due up to
and including the date of reinstatement.

- --------------------------------------------------------------------------------
18. OWNER, CONTINGENT OWNER, BENEFICIARY
- --------------------------------------------------------------------------------

The Owner, the Contingent Owner (if any) and the Beneficiary will be as shown in
the application unless you change them or they are changed by the terms of this
provision. You shall have the sole and absolute power to exercise all rights and
privileges without the consent of any other person unless you provide otherwise
by written notice. If you die, the Contingent Owner will become the Owner. If
there is no surviving Contingent Owner, the Insured will become the Owner.

If the Insured dies and has no surviving Beneficiary, you will be the
Beneficiary, but if you were the Insured, your estate will be Beneficiary.

13
<PAGE>

While the Insured is alive, you may change the Owner, Contingent Owner and
Beneficiary by written notice. You may also revoke any change of Owner prior to
its effective date by written notice. No change or revocation will take effect
unless we acknowledge receipt on the notice. If such acknowledgment occurs, then
(i) a change of Beneficiary will take effect on the date the notice is signed,
and (ii) a change or a revocation of Owner will take effect as of the date
specified in the notice, or if no such date is specified, on the date the notice
is signed. A change or revocation will take effect whether or not you or the
Insured is alive on the date we acknowledge receipt. A change or revocation will
be subject to the rights of any assignee of record with us and subject to any
payment made or other action taken by us before we acknowledge receipt.

- --------------------------------------------------------------------------------
19. INTEREST ON PROCEEDS
- --------------------------------------------------------------------------------

In the event of the Insured's death, we will pay interest on proceeds paid in
one sum from the date of death to the date of payment, at a rate not less than \
3 1/2%.

- --------------------------------------------------------------------------------
20. DEFERRAL OF DETERMINATIONS AND PAYMENTS
- --------------------------------------------------------------------------------

During any period when the New York Stock Exchange is closed for trading (except
for normal holiday closings) or when the Securities and Exchange Commission has
determined that a state of emergency exists which may make payment impractical,
or the Commission by order permits postponement for the protection of our
policyholders, we reserve the right to do the following:

(1) To defer determination of the Account Value, and if such determination
has been deferred, to defer:

(a) determination of the values for a loan as of the end of the
Valuation Period in which we receive the loan application at our
Servicing Office, and payment of the loan; and

(b) payment or application of any Death Benefit in excess of the
Guaranteed Death Benefit, if elected.

(2) To defer determination, application, processing, or payment of a
Surrender Value or any other policy transaction dependent upon Account
Value.

A deferral, as described above, will be applicable only if any portion of the
Account Value is invested in a Variable Account.

We reserve the right to defer payment of the Surrender Value from the Fixed
Account for a period of up to six months.

Except as provided in this provision we will make payment of the Death Benefit,
any Surrender Value, any withdrawal, or any loan amount within 7 days of the
date it becomes payable.

- --------------------------------------------------------------------------------
21. CLAIMS OF CREDITORS
- --------------------------------------------------------------------------------

The proceeds and any income payments under the policy will be exempt from the
claims of creditors to the extent permitted by law. These proceeds and payments
may not be assigned or withdrawn before becoming payable without our agreement.

- --------------------------------------------------------------------------------
22. ASSIGNMENT
- --------------------------------------------------------------------------------

Your interest in this policy may be assigned without the consent of any
revocable Beneficiary. Your interest, any interest of the Insured and of any
revocable Beneficiary shall be subject to the terms of the assignment.

We will not be on notice of any assignment unless it is in writing, nor will we
be on notice until a duplicate of the original assignment has been filed at our
Servicing Office. We assume no responsibility for the validity or sufficiency of
any assignment.

- --------------------------------------------------------------------------------
23. INCONTESTABILITY
- --------------------------------------------------------------------------------

This policy, except any provision for a disability benefit, shall be
incontestable after it has been in force during the lifetime of the Insured for
2 years from its Date of Issue, except for nonpayment of premium or fraud.
However, if we require evidence of insurability with respect to any payment we
are authorized to refuse under Section 5, any increase in the Death Benefit
resulting from such payment shall be incontestable after such increase has been
in force during the lifetime of the Insured for 2 years from the effective date
of such increase. Further, any reinstatement will be contestable as to material
misrepresentations in the reinstatement application for 2 years from the
effective date of such reinstatement.

14
<PAGE>

- --------------------------------------------------------------------------------
24. MISSTATEMENTS
- --------------------------------------------------------------------------------

If the age or sex of the Insured has been misstated, we will adjust the Basic
Sum Insured, the Additional Sum Insured, and every other benefit to that which
would have been purchased at the correct age or sex by the most recent Cost of
Insurance charge deducted under Section 9.

- --------------------------------------------------------------------------------
25. SUICIDE
- --------------------------------------------------------------------------------

If the Insured commits suicide, while sane or insane, within 2 years from the
Date of Issue, the policy will terminate on the date of such suicide and we will
pay (in place of all other benefits, if any) an amount equal to the Premiums
paid less the amount of any indebtedness on the date of death and less any
withdrawals under Section 11. If the Insured commits suicide, while sane or
insane, after 2 years from the Date of Issue and within 2 years from the
effective date of any increase in the Death Benefit resulting from any payment
of Premium we are authorized to refuse under Section 5, the benefits payable
under the policy will not include the amount of such Death Benefit increase but
will include the amount of such Premium.

- --------------------------------------------------------------------------------
26. THE CONTRACT
- --------------------------------------------------------------------------------

The written application for the policy is attached at issue. The entire contract
between the applicant and us consists of the policy, such application, and any
riders and endorsements. However, additional written applications for policy
changes or acceptance of excess payment under Section 5 may be submitted to us
after issue and such additional requests may become part of the policy. All
statements made in any application shall, in the absence of fraud, be deemed
representations and not warranties. We will use no statement made by or on
behalf of the Insured to defend a claim under the policy unless it is in a
written application. Policy Years, policy months, and policy anniversaries are
measured from the Date of Issue. Any reference in this policy to a date means a
calendar day ending at midnight local time at our Servicing Office. An exchange
of this policy for a new policy on a different plan may be made by agreement
between you and us in accordance with our published rules in effect at the Date
of Issue.

We reserve the right to make any changes necessary in order to keep this policy
in compliance with any changes in federal or state tax laws. Other changes in
this policy may be made by agreement between you and us. Only the President,
Vice President, the Secretary, or an Assistant Secretary of the Company has
authority to waive or agree to change in any respect any of the conditions or
provisions of the policy, or to extend credit or to make an agreement for us.

15
<PAGE>

- --------------------------------------------------------------------------------
27. SETTLEMENT PROVISIONS
- --------------------------------------------------------------------------------

Optional Methods of Settlement

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 us,
under the terms of a supplementary agreement. The agreement will be issued when
the proceeds are applied through the choice of any one of the options below, or
any additional options we, in our sole discretion, may make available after
issue. We shall at least annually declare the rate of interest or amount of
payment for each option. Such declaration shall be effective until the date
specified in the next declaration.

Option 1--Interest income at the declared rate but not less than 3.5% a year on
proceeds held on deposit. The proceeds may be paid or withdrawn in whole or in
part at any time as elected.

Option 2A--Income of a Specified Amount, with payments each year totaling at
least 1/12th of the proceeds, until the proceeds plus interest is paid in full.
We will credit interest on unpaid balances at the declared rate but not less
than 3.5% a year.

Option 2B--Income for a Fixed Period with each payment as declared but not less
than that shown in the Table for Option 2B.

Option 3--Life Income with Payments for a Guaranteed Period, with each payment
as declared but not less than that shown in the Table for Option 3. If the Payee
dies within that period, we will pay the present value of the remaining
payments. In determining present value, we will use the same interest rate used
to determine the payments for this option.

Option 4--Life Income without Refund at the death of the Payee of any part of
the proceeds applied. The amount of each payment shall be as declared but not
less than that shown in the Table for Option 4.

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.
The amount of each payment shall be as declared but not less than that shown in
the Table for Option 5.

You may choose an option by written notice to us: (a) while the Insured is
alive; and (b) before the proceeds become payable. If you have made no effective
choice, the Payee may make one by written notice within: (a) 6 months after the
death of the Insured; or (b) 2 months after the date on which the proceeds, if
any, are payable in any case except death.

No choice of an option may provide for payments of less than $50.00. The first
payment will be payable as of the date the proceeds are applied, except that
under Option 1 it will be payable at the end of the first payment interval.

The Payee under an option shall be the Insured, if living, and otherwise the
Beneficiary.

No option may be chosen without our consent if the proceeds are payable: (1) in
any case, except death, before the policy has been in force on the same plan for
at least 5 years; or (2) in any case to an executor, administrator, trustee,
corporation, partnership, association, or assignee.

A Payee may, by written notice, name and change a Contingent Payee to receive
any final amount that would otherwise be payable to the Payee's estate.

16
<PAGE>

<TABLE>
<CAPTION>
Table for Settlement Options 2B, 3, 4, and 5
(Monthly payments for each $1,000 of proceeds applied)
- -------------------------- ----------------------------------------------------------------------------------
Option 2B Age of Payee at Option 3 Option 4 Option 5
Income for a Fixed Birthday Nearest Life Income with Guaranteed Life Life
Period Date of First Period Income Income
Payment without with Cash
- -------------------------- ----------------------------------
Period of Payment 10 Years 20 Years Refund Refund
Years
- -------------------------- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 84.46 40 3.53 3.50 3.54 3.46
2 42.86 41 3.57 3.54 3.58 3.50
3 28.99 42 3.62 3.58 3.63 3.54
4 22.06 43 3.66 3.62 3.68 3.58
5 17.91 44 3.77 3.66 3.73 3.62
- -------------------------- ----------------------------------------------------------------------------------
6 15.14 45 3.76 3.71 3.78 3.66
7 13.16 46 3.82 3.75 3.83 3.71
8 11.68 47 3.87 3.80 3.89 3.75
9 10.53 48 3.93 3.85 3.95 3.80
10 9.61 49 3.99 3.90 4.02 3.85
- -------------------------- ----------------------------------------------------------------------------------
11 8.86 50 4.05 3.95 4.08 3.91
12 8.24 51 4.12 4.01 4.15 3.96
13 7.71 52 4.19 4.06 4.22 4.02
14 7.26 53 4.26 4.12 4.30 4.08
15 6.87 54 4.34 4.18 4.38 4.15
- -------------------------- ----------------------------------------------------------------------------------
16 6.53 55 4.42 4.24 4.47 4.21
17 6.23 56 4.50 4.31 4.56 4.28
18 5.96 57 4.59 4.37 4.66 4.36
19 5.73 58 4.69 4.44 4.76 4.44
20 5.51 59 4.79 4.50 4.87 4.52
- -------------------------- ----------------------------------------------------------------------------------
21 5.32 60 4.89 4.57 4.99 4.60
22 5.15 61 5.00 4.64 5.11 4.69
23 4.99 62 5.12 4.71 5.25 4.78
24 4.84 63 5.24 4.77 5.39 4.88
25 4.71 64 5.37 4.84 5.54 4.99
- -------------------------- ----------------------------------------------------------------------------------
26 4.59 65 5.50 4.91 5.70 5.09
27 4.47 66 5.64 4.97 5.87 5.21
28 4.37 67 5.79 5.03 6.06 5.33
29 4.27 68 5.94 5.09 6.26 5.46
30 4.18 69 6.10 5.14 6.47 5.59
- -------------------------- ----------------------------------------------------------------------------------
Annual, Semi-annual, or 70 6.27 5.19 6.69 5.73
quarterly payments under 71 6.44 5.24 6.94 5.88
Option 2B are 11.839, 72 6.61 5.28 7.20 6.04
5.963, and 2.993 73 6.79 5.32 7.48 6.20
respectively times the 74 6.98 5.36 7.79 6.38
monthly payments.
- -------------------------- ----------------------------------------------------------------------------------
75 7.16 5.38 8.11 6.56
76 7.35 5.41 8.47 6.75
77 7.54 5.43 8.84 6.96
78 7.72 5.45 9.25 7.17
79 7.91 5.46 9.69 7.39
----------------------------------------------------------------------------------
80 8.08 5.48 10.17 7.64
81 8.25 5.49 10.68 7.88
82 8.41 5.49 11.23 8.13
83 8.56 5.50 11.82 8.43
84 8.71 5.50 12.46 8.70
85 & over 8.83 5.51 13.14 8.99
----------------------------------------------------------------------------------
Options 3, 4 and 5 are available only at the ages as shown.
----------------------------------------------------------------------------------
</TABLE>

17
<PAGE>

Communications about this policy may be sent to the Company at John Hancock
Place, Boston, Massachusetts 02117.

Variable Life Insurance policy
Flexible Premiums
Death Benefit payable at death of Insured
Not eligible for dividends
Benefits and premiums and the policy class are shown in the Specifications
Section of the policy.
<PAGE>

[Mutual] Life Insurance Company
- --------------------------------------------------------------------------------
ENHANCED CASH VALUE RIDER

ADDITIONAL CASH VALUE PAYABLE UPON SURRENDER OF THE POLICY DURING FIRST 5

POLICY YEARS AS DEFINED AND LIMITED
- --------------------------------------------------------------------------------

This rider is made a part of the policy to which it is attached, in
consideration of: (a) the application, a copy of which is attached to and made a
part of the policy; and (b) premium deduction for this rider as shown in Section
1 of the policy. This rider may not be issued subsequent to the Date of Issue of
the policy.

The Owner under this rider, the Date of Issue of this rider (which is the Date
of Issue of the policy), and premium deduction for this rider are as shown in
Section 1 of the policy.

BENEFIT

We agree, subject to the terms and conditions of this rider and the policy, to
pay the amount of Enhanced Cash Value benefit to the Owner upon receipt at our
Servicing Office of written notice of surrender from you, if all the following
conditions are met:

(a) your written notice is received at our Servicing Office prior to the
death of the Insured;

(b) you surrender the policy during the first 5 Policy Years; and

Such Enhanced Cash Value benefit shall be equal to the percentage, as shown in
Section 1, of the cumulative Premiums paid in the first Policy Year up to the
Target Premium and shall be payable in addition to the Surrender Value.

EFFECT ON DEATH BENEFITS, NET AMOUNT AT RISK, WITHDRAWALS, AND LOAN VALUE

For purposes of computing any policy death benefit under Option A or Option B
(as described in Section 4) to be paid in the event of death of the Insured in
policy years 1 through 5, and only for such purposes, the Account Value will be
increased by the amount of the Enhanced Cash Value benefit. Calculation of the
net amount at risk (as explained in Section 9) during policy years 1 through 5
will be based on such increased Account Value.

The amount available for Withdrawal and the Loan Value of the policy are based
on the Surrender Value, and neither will in any way be increased due to this
Enhanced Cash Value Rider.

DEFERRAL OF DETERMINATIONS

We may defer the payment of any Enhanced Cash Value benefit in the same manner
that we may defer payment of any Surrender Value under the policy.

TERMINATION

This rider will terminate without value, on the earliest of:

a. the end of the fifth policy year;
b. the lapse, exchange, or termination of the policy;
c. absolute assignment of the policy;
d. death of the Insured; or
e. your written request to discontinue this rider.

Signed for the Company at Boston, Massachusetts.