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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1996
REGISTRATION NO. 333-01349
811-8514
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
POST-EFFECTIVE AMENDMENT
NUMBER 1 TO THE
REGISTRATION STATEMENT
------------------------
CONNECTICUT MUTUAL VARIABLE LIFE
SEPARATE ACCOUNT I
(Exact Name of Registrant)
------------------------
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111
(Address of Principal Executive Office)
------------------------
THOMAS F. ENGLISH, ESQUIRE
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111
(Name and Address of Agent for Service of Process)
------------------------
It is proposed that this filing will become effective:
/ / on ______ pursuant to paragraph (a) of Rule 485
/ /60 days after filing pursuant to paragraph (a) of Rule 485
/ /immediately after filing pursuant to paragraph (b) of Rule 485
/X/ on May 1, 1996 pursuant to paragraph (b) of Rule 485.
An indefinite number of securities has been registered under the Securities Act
of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
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RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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1................................ Cover Page
2................................ Cover Page
3................................ Not Applicable
4................................ Distribution
5................................ MML, The Separate Account
6................................ The Separate Account
7................................ Not Applicable
8................................ Not Applicable
9................................ Legal Proceedings
10............................... Summary; Description of MML, the Separate Account, and the Funds; The Policy;
Policy Termination and Reinstatement; Other Policy Provisions
11............................... Summary; The CML Fund; The Fidelity VIPF Fund; The Oppenheimer Fund; Investment
Objectives and Policies
12............................... Summary; The CML Fund; The Fidelity VIPF Fund; The Oppenheimer Fund
13............................... Summary; The CML Fund; The Fidelity VIPF Fund; The Oppenheimer Fund; Investment
Advisory Services to the CML Fund; Investment Advisory Services to VIPF;
Investment Advisory Services to the Oppenheimer Fund; Charges and Deductions
14............................... Summary; Application for a Policy
15............................... Summary; Application for a Policy; Premium Payments; Allocation of Net Premiums
16............................... The Separate Account; The CML Fund; The Fidelity VIPF Fund; The Oppenheimer
Fund; Premium Payments; Allocation of Net Premiums
17............................... Summary; Surrender; Partial Withdrawal; Charges and Deductions; Policy
Termination and Reinstatement
18............................... The Separate Account; The CML Fund; The Fidelity VIPF Fund; The Oppenheimer
Fund; Premium Payments
19............................... Reports; Voting Rights
20............................... Not Applicable
21............................... Summary; Policy Loans; Other Policy Provisions
22............................... Other Policy Provisions
23............................... Not Required
24............................... Other Policy Provisions
25............................... MML
26............................... Not Applicable
27............................... MML
28............................... Directors and Principal Officers of MML
29............................... MML
30............................... Not Applicable
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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31............................... Not Applicable
32............................... Not Applicable
33............................... Not Applicable
34............................... Not Applicable
35............................... Distribution
36............................... Not Applicable
37............................... Not Applicable
38............................... Summary; Distribution
39............................... Summary; Distribution
40............................... Not Applicable
41............................... MML; Distribution
42............................... Not Applicable
43............................... Not Applicable
44............................... Premium Payments; Policy Value and Cash Surrender Value
45............................... Not Applicable
46............................... Policy Value and Cash Surrender Value; Federal Tax Considerations
47............................... MML
48............................... Not Applicable
49............................... Not Applicable
50............................... The Separate Account
51............................... Cover Page; Summary; Charges and Deductions; The Policy; Policy Termination and
Reinstatement; Other Policy Provisions
52............................... Addition, Deletion or Substitution of Investments
53............................... Federal Tax Considerations
54............................... Not Applicable
55............................... Not Applicable
56............................... Not Applicable
57............................... Not Applicable
58............................... Not Applicable
59............................... Not Applicable
</TABLE>
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CONNECTICUT MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
THE BLUE CHIP COMPANY'S VARIABLE UNIVERSAL LIFE POLICIES ISSUED BY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1295 STATE STREET, SPRINGFIELD, MASSACHUSETTS 01111
(413) 788-8411
------------------------
This Prospectus describes The Blue Chip Company's Variable Universal Life
Policies, which are individual flexible premium variable life insurance policies
("Policies") offered by Massachusetts Mutual Life Insurance Company ("MML") to
applicants Age 80 years old and under. Within limits, a Policyowner may choose
the amount of initial premium desired and the initial Sum Insured. A Policyowner
has the flexibility to vary the frequency and amount of premium payments,
subject to certain restrictions and conditions. A Policyowner may withdraw a
portion of the Policy's Surrender Value, or the Policy may be fully surrendered
at any time, subject to certain limitations. Because of the substantial nature
of the surrender charge, especially in the early Policy Years, the Policy is not
suitable for short-term investment purposes. A Policyowner contemplating
surrender of a Policy should pay special attention to the limitation of deferred
sales charges on surrenders in the first two years following issuance or Face
Amount increase.
The Policies permit Policyowners to allocate Net Premiums among up to seven
sub-accounts of Connecticut Mutual Variable Life Separate Account I, a separate
investment account of MML, and a fixed interest account of MML. Each Sub-Account
invests its assets in a corresponding investment portfolio of Panorama Series
Fund I, Inc. ("CML Fund"), Variable Insurance Products Fund (the "Fidelity VIPF
Fund") or Oppenheimer Variable Account Funds ("Oppenheimer Funds") (together the
"Funds").
In certain circumstances, a Policy may be considered a "modified endowment
contract." Under the Internal Revenue Code of 1986, as amended (the "Code"), any
policy loan, partial withdrawal or surrender from a modified endowment contract
may be subject to tax and tax penalties. See "FEDERAL TAX CONSIDERATIONS --
Modified Endowment Contracts."
------------------------
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE AS EITHER A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU
ALREADY OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY. "BLUE CHIP"
REFERS TO MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY; IT DOES NOT REFER TO
EITHER THE POLICIES OR THE NATURE OF THE SECURITIES IN WHICH THE SUB-ACCOUNTS
WILL INVEST. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT
PROSPECTUSES OF THE FUNDS. INVESTORS SHOULD RETAIN A COPY OF THIS PROSPECTUS FOR
FUTURE REFERENCE.
THE POLICIES DESCRIBED IN THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is May 1, 1996
<PAGE>
TABLE OF CONTENTS
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PAGE
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SPECIAL TERMS.............................................................................................. 4
SUMMARY.................................................................................................... 7
PERFORMANCE INFORMATION.................................................................................... 15
DESCRIPTION OF MML, THE SEPARATE ACCOUNT AND THE FUNDS..................................................... 17
MML...................................................................................................... 17
The Separate Account..................................................................................... 17
The CML Fund............................................................................................. 18
The Oppenheimer Fund.....................................................................................
The Fidelity VIPF Fund................................................................................... 18
Investment Objectives and Policies....................................................................... 18
Investment Advisory Services to the CML Fund............................................................. 19
Investment Advisory Services to the Oppenheimer Fund.....................................................
Investment Advisory Services to The Fidelity VIPF Fund................................................... 20
Fidelity VIPF Fund Portfolios............................................................................ 20
Addition, Deletion or Substitution of Investments........................................................ 21
Voting Rights............................................................................................ 21
THE POLICY................................................................................................. 22
Application for a Policy................................................................................. 22
Free Look Period......................................................................................... 23
Conversion Privileges.................................................................................... 23
Premium Payments......................................................................................... 24
Incentive Funding Discount............................................................................... 24
Allocation of Net Premiums............................................................................... 25
Transfer Privilege....................................................................................... 25
Death Proceeds........................................................................................... 26
Sum Insured Options...................................................................................... 26
Change in Sum Insured Option............................................................................. 28
Change in Face Amount.................................................................................... 29
Policy Value and Surrender Value......................................................................... 30
Payment Options.......................................................................................... 31
Optional Insurance Benefits.............................................................................. 31
Surrender................................................................................................ 31
Partial Withdrawal....................................................................................... 32
CHARGES AND DEDUCTIONS..................................................................................... 32
Surrender Charge......................................................................................... 32
Tax Expense Charge....................................................................................... 34
Monthly Deduction from Policy Value...................................................................... 34
Charges Against Assets of the Separate Account........................................................... 36
Charges on Partial Withdrawal............................................................................ 37
Transfer Charges......................................................................................... 38
Charge for Increase in Face Amount....................................................................... 38
Other Administrative Charges............................................................................. 38
Special Provisions for Group or Sponsored Arrangements................................................... 38
POLICY LOANS............................................................................................... 39
Loan Interest Charged.................................................................................... 39
Repayment of Debt........................................................................................ 39
Effect of Policy Loans................................................................................... 40
POLICY TERMINATION AND REINSTATEMENT....................................................................... 40
Termination.............................................................................................. 40
</TABLE>
2
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PAGE
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Reinstatement............................................................................................ 40
OTHER POLICY PROVISIONS.................................................................................... 41
Policyowner.............................................................................................. 41
Beneficiary.............................................................................................. 41
Incontestability......................................................................................... 42
Suicide.................................................................................................. 42
Age and Sex.............................................................................................. 42
Participating Contract................................................................................... 42
Assignment............................................................................................... 42
Postponement of Payments................................................................................. 43
DIRECTORS AND PRINCIPAL OFFICERS OF MML.................................................................... 43
DISTRIBUTION............................................................................................... 47
REPORTS.................................................................................................... 48
LEGAL PROCEEDINGS.......................................................................................... 48
FURTHER INFORMATION........................................................................................ 48
INDEPENDENT ACCOUNTANTS.................................................................................... 48
FEDERAL TAX CONSIDERATIONS................................................................................. 48
MML's Tax Status......................................................................................... 49
Policy Proceeds, Premiums and Loans...................................................................... 49
Modified Endowment Contracts............................................................................. 50
Qualified Plans.......................................................................................... 51
Diversification Standards................................................................................ 51
MORE INFORMATION ABOUT THE GENERAL ACCOUNT................................................................. 52
General Description...................................................................................... 52
General Account Value.................................................................................... 52
The Policy............................................................................................... 53
Transfers, Surrenders, Partial Withdrawals and Policy Loans.............................................. 53
MML Financial Statements................................................................................. 53
The Separate Account.....................................................................................
Separate Account Financial Statements....................................................................
APPENDIX A -- Optional Benefits............................................................................ A-1
APPENDIX B -- Payment Options.............................................................................. B-1
APPENDIX C -- Illustrations of Sum Insured, Policy Values and Accumulated Premiums......................... C-1
APPENDIX D -- Calculation of Maximum Surrender Charges..................................................... D-1
</TABLE>
3
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SPECIAL TERMS
<TABLE>
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Accumulation Unit: A measure of interest in a Sub-Account.
Age: The Insured's age as of his or her birthday nearest to a Policy
anniversary.
Beneficiary: The person(s) designated by the owner of the Policy to receive the
Death Proceeds upon the death of the Insured.
Company: Massachusetts Mutual Life Insurance Company.
Date of Issue: The date set forth in the Policy used to determine the Monthly
Payment Date, Policy months, Policy years, and Policy
anniversaries.
Death Proceeds: Prior to the Maturity Date, the Death Proceeds equal the amount
calculated under the applicable Sum Insured Option (Option 1 or
Option 2), less Debt outstanding at the time of the Insured's
death and any due and unpaid Monthly Deductions. After the
Maturity Date, the Death Proceeds equal the Policy Value less Debt
outstanding at the time of the Insured's death.
Debt: All unpaid Policy loans plus interest due or accrued on such loans.
Delivery Receipt: An acknowledgment, signed by the Policyowner and returned to the
Service Center, acknowledging that the Policyowner has received
both the Policy and the Notice of Withdrawal Rights.
Evidence of
Insurability: Information, including medical information in form satisfactory to
MML, to determine the Insured's Premium Class.
Face Amount: The amount of insurance coverage applied for. The Face Amount of
each Policy is set forth in the specification pages of the Policy.
General Account: All the assets of MML other than those held in a separate account.
Guideline Annual
Premium: The annual amount of premium that would be payable through the
Maturity Date of a Policy for the Sum Insured, if premiums were
fixed by MML as to both timing and amount, and monthly cost of
insurance charges were based on the 1980 Commissioners Standard
Ordinary Mortality Tables (Mortality Table B, Smoker or Non-
Smoker, for unisex Policies), net investment earnings at an annual
effective rate of 5%, and fees and charges as set forth in the
Policy and any Policy riders. The Sum Insured Option 1 Guideline
Annual Premium is used when calculating the maximum surrender
charge.
Guideline Minimum Sum
Insured: The minimum Sum Insured required to qualify the Policy as "life
insurance" under Federal tax laws. The Guideline Minimum Sum
Insured varies by Age. It is calculated by multiplying the Policy
Value by a percentage determined by the Insured's Age.
Insurance Amount at
Risk: The Sum Insured less the Policy Value.
Loan Value: The maximum amount that may be borrowed under the Policy.
</TABLE>
4
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Maturity Date: The Policy anniversary nearest the Insured's 95th birthday. The
Maturity Date is the latest date on which a premium payment may be
made. After this date, the Death Proceeds equal the Surrender
Value of the Policy.
Minimum Monthly Factor: A monthly premium amount calculated by MML and specified in your
Policy. If you pay this amount, MML guarantees that your Policy
will not lapse prior to the completion of the fourth year from the
Date of Issue or the effective date of either an increase in the
Face Amount or a Policy Change which causes a change in the
Minimum Monthly Factor. However, making payments at least equal to
the Minimum Monthly Factors will not prevent the Policy from
lapsing if: (a) Debt exceeds Policy Value less surrender charges;
or (b) partial withdrawals and partial withdrawal charges have
reduced premium payments below an amount equal to the Minimum
Monthly Factor multiplied by the number of months since the Date
of Issue or the effective date of an increase.
Monthly Deduction: Charges deducted monthly from the Policy Value of a Policy prior to
the Maturity Date. The charges include the monthly cost of
insurance, the monthly cost of any benefits provided by riders,
and the monthly administrative charge.
Monthly Payment Date: The date on which the Monthly Deduction is deducted from Policy
Value.
Net Premium: An amount equal to the premium less a tax expense charge.
Policy Change: Any change in the Face Amount, the addition or deletion of a rider,
or a change in the Sum Insured Option.
Policy Value: The total amount available for investment under a Policy at any
time. It is equal to the sum of (a) the value of the Accumulation
Units credited to a Policy in the Sub-Accounts and (b) the
accumulation in the General Account credited to that Policy.
Premium Class: The risk classification that MML assigns the Insured based on the
information in the application and any other Evidence of
Insurability considered by MML. The Insured's Premium Class will
affect the cost of insurance charge and the amount of premium
required to keep the Policy in force.
Principal Office: MML's office, located at 1295 State Street, Springfield,
Massachusetts 01111
Service Center: The location at which MML services the Policy. Currently it is
located at VUL Service Center, P.O. Box 15135, Worcester, MA
01615-0135.
Pro Rata Allocation: In certain circumstances, you may specify from which Sub-Account
certain deductions will be made or to which Sub-Account Policy
Value will be allocated. If you do not, MML will allocate the
deduction or Policy Value among the General Account and the
Sub-Accounts in the same proportion that the Policy Value in the
General Account, less Debt, and the Policy Value in each
Sub-Account bear to the total Policy Value, less Debt, on the date
of deduction or allocation.
</TABLE>
5
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Separate Account: The Connecticut Mutual Variable Life Separate Account I of MML to
which the Policyowner may make Net Premium allocations. The
separate account consists of assets segregated from MML's other
assets. The investment performance of the assets of the separate
account is determined separately from the other assets of MML. The
assets of the separate account which are equal to the reserves and
other contract liabilities are not chargeable with liabilities
arising out of any other business which MML may conduct.
Sub-Account: A division of the Separate Account. Each Sub-Account invests
exclusively in the shares of a corresponding Portfolio of one of
the Funds.
Sum Insured: The amount payable upon the death of the Insured, before the
Maturity Date, prior to deductions for Debt outstanding at the
time of the Insured's death, partial withdrawals and partial
withdrawal charges, if any, and any due and unpaid Monthly
Deductions. The amount of the Sum Insured will depend on the Sum
Insured Option chosen, but will always be at least equal to the
Face Amount.
Surrender Value: The amount payable upon a full surrender of the Policy. It is the
Policy Value less any Debt and applicable surrender charges.
Valuation Date: A day on which the net asset value of the shares of any of the
Portfolios is determined and Accumulation Unit values of the Sub-
Accounts are determined. Valuation Dates currently occur on each
day on which the New York Stock Exchange is open for business.
Valuation Period: The interval between two consecutive Valuation Dates.
Written Request: A request by the Policyowner in writing, satisfactory to MML.
You or Your: The Policyowner, as shown in the application or the latest change
filed with MML.
</TABLE>
6
<PAGE>
SUMMARY
THE POLICY
The flexible premium variable life policy (the "Policy") offered by this
Prospectus allows you, subject to certain limitations, to make premium payments
in any amount and frequency. As long as the Policy remains in force, it will
provide for: (a) life insurance coverage on the named Insured; (b) Policy Value;
(c) surrender rights and partial withdrawal rights; (d) loan privileges; and (e)
in some cases, additional insurance benefits available by rider for an
additional charge.
The Policies are life insurance contracts, with death benefits, Policy
Value, and other features traditionally associated with life insurance. The
Policies are "variable" because, unlike the fixed benefits of ordinary whole
life insurance, the Policy Value will, and under certain circumstances the Death
Proceeds may, increase or decrease depending on the investment experience of the
Sub-Accounts of the Separate Account. They are "flexible premium" policies,
because, unlike traditional insurance policies, there is no fixed schedule for
premium payments. Although you may establish a schedule of premium payments
("planned premium payments"), failure to make the planned premium payments will
not necessarily cause a Policy to lapse nor will making the planned premium
payments guarantee that a Policy will remain in force. Thus, you may, but are
not required to, pay additional premiums.
The Policy will remain in force until the Surrender Value is insufficient to
cover the next Monthly Deduction and loan interest accrued, if any, and a grace
period of sixty-two (62) days has expired without adequate payment being made by
you. During the first forty-eight (48) Policy months after the Date of Issue or
the effective date of either an increase in Face Amount or a Policy Change which
causes a change in the Minimum Monthly Factor, the Policy will not lapse if the
total premiums paid less Debt, partial withdrawals and withdrawal charges are
equal to or exceed the sum of the Minimum Monthly Factors for the number of
months the Policy, an increase in Face Amount, or a Policy Change has been in
force. However, even during these periods making payments at least equal to the
Minimum Monthly Factors will not prevent the Policy from lapsing if Debt equals
or exceeds Policy Value less surrender charges.
FREE LOOK PERIOD
You have the right to examine and cancel your Policy by returning it to MML
or to one of our agents on or before the latest of:
forty-five (45) days after the application for the Policy is signed,
ten (10) days after you receive the Policy (unless a different period is
required pursuant to applicable law, for example, twenty (20) days where so
required, or
ten (10) days after MML mails or personally delivers to you a notice of
withdrawal right.
If your Policy provides for a full refund of the initial premium payment
under its "Free Look" provision, you will receive on cancellation the greater of
(1) your entire payment, or (2) the Policy Value plus any amounts deducted under
the Policy or by the Funds for taxes, charges or fees. If your Policy does not
provide for a full refund of the initial premium payment, you will receive upon
cancellation the sum of (1) the difference between any payments made, including
fees and charges, and the amounts allocated to the Variable Account, (2) the
Policy Value (on the date the cancellation request is received by MML)
attributable to the amounts allocated to the Variable Account, and (3) any fees
or charges imposed on amounts in the Variable Account.
After all increases in Face Amount, a free-look period also applies to the
increase. See "THE POLICY -- Free Look Period."
CONVERSION PRIVILEGES
During the first twenty-four (24) Policy months after the Date of Issue,
subject to certain restrictions, you may convert this Policy to a flexible
premium fixed adjustable life insurance Policy by
7
<PAGE>
simultaneously transferring all accumulated value in the Sub-Accounts to the
General Account and instructing MML to allocate all future premiums to the
General Account. A similar conversion privilege is in effect for twenty-four
(24) Policy months after the date of an increase in Face Amount. Where required
by state law, and at your request, MML will issue a flexible premium adjustable
life insurance Policy or a fixed benefit permanent life insurance policy to you.
The new Policy will have the same face amount, issue age, date of issue, and
risk classifications as the original Policy. See "THE POLICY -- Conversion
Privileges."
SURRENDER CHARGES
At any time that a Policy is in effect, a Policyowner may elect to surrender
the Policy and receive its Surrender Value. A surrender charge is calculated
upon issuance of the Policy and upon each increase in Face Amount. The duration
of the surrender charge is fifteen (15) years for issue Ages 0 through 50,
grading down to ten (10) years for issue Ages 55 and above. The surrender charge
is only imposed if, during its duration, you request a full surrender or a
decrease in Face Amount. Surrenders from the General Account may be delayed for
a period not to exceed six months. See "OTHER POLICY PROVISIONS -- Postponement
of Payments". A surrender may have Federal income tax consequences and, if the
Policy is deemed a "modified endowment contract" at the time of the surrender,
may subject the Policyowner to Federal tax penalties. See "FEDERAL TAX
CONSIDERATIONS -- Modified Endowment Contracts."
The maximum surrender charge calculated upon issuance of the Policy equals
the appropriate factor based on issue Age from the "Maximum Surrender Charges
per $1,000 Face Amount" table in "APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER
CHARGES" multiplied by the initial Face Amount divided by $1,000. This surrender
charge will remain level for the first forty (40) Policy months after the
issuance of the Policy and then reduce each month thereafter as described in
"APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER CHARGES". During any Policy
year, the surrender charge may not exceed the sum of (a) plus (b) where (a) is a
deferred administrative charge equal to $8.50 per thousand dollars of the
initial Face Amount and (b) is a deferred sales charge of 49% of premiums
received up to a maximum number of Guideline Annual Premiums subject to the
deferred sales charge that varies by issue Age from 1.660714 (for Ages 0 through
55) to 0.948980 (for Age 80).
If you surrender the Policy during the first two (2) Policy years following
the Date of Issue, the deferred administrative charge will be $8.50 per thousand
dollars of initial Face Amount, as described above, but the deferred sales
charge will not exceed 29% of premiums received, up to one Guideline Annual
Premium (or the maximum number of Guideline Annual Premiums subject to the
deferred sales charge, if less), plus 9% of premiums received in excess of the
Guideline Annual Premium limitation. See "THE POLICY -- Surrender" and "CHARGES
AND DEDUCTIONS -- Surrender Charge".
A separate surrender charge will apply to and is calculated for each
increase in Face Amount. The initial maximum surrender charge for the increase
equals the appropriate factor based on Age at time of increase from the "Maximum
Surrender Charges per $1,000 Face Amount" table in "APPENDIX D -- CALCULATION OF
MAXIMUM SURRENDER CHARGES" multiplied by the Face Amount of the increase divided
by $1000. As noted above, this surrender charge will remain level for the first
forty (40) Policy months after the increase and then reduce each month
thereafter. During any Policy year following the increase, the surrender charge
associated with the increase may not exceed the sum of (a) plus (b) where (a) is
a deferred administrative charge equal to $8.50 per thousand dollars of Face
Amount increase and (b) is a deferred sales charge of 49% of premiums received
which are associated with the increase up to a maximum number of Guideline
Annual Premiums (for the increase) subject to the deferred sales charge that
varies by Age (at the time of the increase) from 1.660714 (for Ages 0 through
55) to 0.948980 (for Age 80).
During the first two Policy years following an increase in Face Amount, the
deferred administrative charge will be $8.50 per thousand dollars of Face Amount
increase, as described above, but the
8
<PAGE>
deferred sales charge will not exceed 29% of premiums received which are
associated with the increase, up to one Guideline Annual Premium (or the maximum
number of Guideline Annual Premiums subject to the deferred sales charge, if
less) associated with the increase, plus 9% of premiums received which are
associated with the increase in excess of the Guideline Annual Premium
limitation.
In the event of a decrease in Face Amount, the surrender charge imposed is
proportional to the charge that would apply to a full surrender. See "THE POLICY
- -- Surrender" and "CHARGES AND DEDUCTIONS -- Surrender Charge".
TAX EXPENSE CHARGE
A current charge of 3.5% of premiums will be deducted from each premium
payment to compensate MML for premium taxes imposed by various states and local
jurisdictions and for federal taxes imposed for deferred acquisition costs. See
"CHARGES AND DEDUCTIONS -- Tax Expense Charge."
MONTHLY DEDUCTIONS FROM POLICY VALUE
On the Date of Issue and each Monthly Payment Date thereafter prior to the
Maturity Date, certain charges ("Monthly Deductions") will be deducted from the
Policy Value. The Monthly Deduction consists of a charge for cost of insurance,
a charge for the cost of any additional benefits provided by rider, and a charge
for administrative expenses. You may instruct MML to deduct the Monthly
Deduction from one specific Sub-Account. If you do not, MML will make a Pro Rata
Allocation of the charge. No Monthly Deductions are made on or after the
Maturity Date.
The monthly cost of insurance charge is determined by multiplying the
Insurance Amount at Risk (the Sum Insured minus the Policy Value) for each
Policy month by the applicable cost of insurance rate or rates. The Insurance
Amount at Risk will be affected by any decreases or increases in the Face
Amount.
As noted above, certain additional insurance rider benefits are available
under the Policy for an additional monthly charge. See "APPENDIX A -- Optional
Benefits."
The monthly administrative charge is described in "CHARGES AND DEDUCTIONS --
Monthly Deduction From Policy Value."
POLICY ADMINISTRATIVE CHARGES
Each of the charges listed below is designed to reimburse MML for actual
Policy administrative costs incurred. None of these charges is designed to
result in a profit to MML.
DEFERRED ADMINISTRATIVE CHARGE. A component of the surrender charge is a
charge for administrative expenses. This deferred administrative charge is $8.50
per thousand dollars of the initial Face Amount or of an increase in Face
Amount. The charge is designed to reimburse MML for administrative costs
associated with product research and development, underwriting, Policy
administration, decreasing the Face Amount, and surrendering a Policy. Because
the maximum surrender charge reduces by 0.5% or more per month (depending on
issue Age) after the 40th Policy month from the Date of Issue or the effective
date of an increase in Face Amount, in certain situations some or all of the
deferred administrative charge may not be assessed upon surrender of the Policy.
See "THE POLICY -- Surrender" and "CHARGES AND DEDUCTIONS -- Surrender Charge."
MONTHLY ADMINISTRATIVE CHARGES. A component of the Monthly Deduction from
Policy Value is a charge for administrative expenses. Prior to the Maturity
Date, the charge is $5 per month. The charges are designed to reimburse MML for
the costs associated with issuing and administering the Policies, such as
processing premium payments, policy loans and loan repayments, changes in Sum
Insured Option, and death claims. These charges also help cover the cost of
providing annual statements and responding to Policyholder inquiries. See
"CHARGES AND DEDUCTIONS -- Monthly Deduction From Policy Value."
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TRANSACTION CHARGE ON PARTIAL WITHDRAWALS. A transaction charge, which is
the smaller of 2% of the amount withdrawn or $25, is assessed at the time of
each partial withdrawal to reimburse MML for the cost of processing the
withdrawal. In addition to the transaction charge, a partial withdrawal charge
of 5% of the excess withdrawal may also be assessed. See "CHARGES AND DEDUCTIONS
- -- Charges On Partial Withdrawal."
CHARGE FOR INCREASE IN FACE AMOUNT. For each increase in Face Amount, a
charge of $50 will be deducted from Policy Value. This charge is designed to
reimburse MML for underwriting and administrative costs associated with the
increase. See "THE POLICY -- Change In Face Amount" and "CHARGES AND DEDUCTIONS
- -- Charge For Increase In Face Amount." In addition, a deferred administrative
charge of $8.50 per thousand dollars of increase in Face Amount may be assessed
upon surrender of the Policy. See "THE POLICY -- Surrender" and "CHARGES AND
DEDUCTIONS -- Surrender Charge."
TRANSFER CHARGE. The first six (6) transfers of Policy Value in a Policy
year will be free of charge. Thereafter, with certain exceptions, a transfer
charge of $10 will be imposed for each transfer request to reimburse MML for the
costs of processing the transfer. See "THE POLICY -- Transfer Privilege" and
"CHARGES AND DEDUCTIONS -- Transfer Charges."
OTHER ADMINISTRATIVE CHARGES. MML reserves the right to impose a charge for
the administrative costs associated with changing the Net Premium allocation
instructions, for changing the allocation of any Monthly Deductions among the
various Sub-Accounts, or for a projection of values. See "CHARGES AND DEDUCTIONS
- -- Other Administrative Charges."
CHARGES AGAINST THE SEPARATE ACCOUNT
A daily charge equivalent to an effective annual rate of 1.15% of the
average daily net asset value of each Sub-Account of the Separate Account is
imposed to compensate MML for its assumption of certain mortality and expense
risks and for administrative costs associated with the Separate Account. The
current rate is 0.90% for the mortality and expense risk and 0.25% for the
Separate Account administrative charge, which administrative charge is
eliminated after the tenth Policy year. The mortality and expense risk charge
may increase but will never exceed 1.275% annually. See "CHARGES AND DEDUCTIONS
- -- Charges Against Assets Of The Separate Account."
CHARGES OF THE FUNDS
In addition to the charges described above, certain fees and expenses are
deducted from the assets of the Funds. See "CHARGES AND DEDUCTIONS -- Charges
Against Assets Of The Separate Account." The levels of fees and expenses vary
among the Portfolios of the Panorama Fund, the Oppenheimer Funds, and the
Fidelity VIPF Fund.
POLICY VALUE AND SURRENDER VALUE
The Policy Value is the total amount available for investment under a Policy
at any time. It is the sum of the value of all Accumulation Units in the
Sub-Accounts of the Separate Account and all accumulations in the General
Account of MML credited to the Policy. The Policy Value reflects the amount and
frequency of Net Premiums paid, charges and deductions imposed under the Policy,
interest credited to accumulations in the General Account, investment
performance of the Sub-Account(s) to which Policy Value has been allocated, and
partial withdrawals. The Policy Value may be relevant to the computation of the
Death Proceeds. You bear the entire investment risk for amounts allocated to the
Separate Account. MML does not guarantee a minimum Policy Value. See "SUMMARY --
Minimum Monthly Factor."
The Surrender Value will be the Policy Value less any Debt and applicable
surrender charges. The Surrender Value is relevant, for example, to the
continuation of the Policy and in the computation of the amounts available upon
partial withdrawals, Policy loans or surrender.
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DEATH PROCEEDS
The Policy provides for the payment of certain Death Proceeds to the named
Beneficiary upon the death of the Insured. Prior to the Maturity Date, the Death
Proceeds will be equal to the Sum Insured, reduced by any outstanding Debt,
partial withdrawals, partial withdrawal charges, and any Monthly Deductions due
and not yet deducted through the policy month in which the Insured dies. Two Sum
Insured Options are available. Under Option 1, the Sum Insured is the greater of
the Face Amount of the Policy or the Guideline Minimum Sum Insured. Under Option
2, the Sum Insured is the greater of the Face Amount of the Policy plus the
Policy Value or the Guideline Minimum Sum Insured. The Guideline Minimum Sum
Insured is equivalent to a percentage (determined each month based on the
Insured's Age) of the Policy Value. On or after the Maturity Date, the Death
Proceeds will equal the Surrender Value. See "THE POLICY -- Death Proceeds."
The Death Proceeds under the Policy may be received in a lump sum or under a
Payment Option. See "APPENDIX B -- Payment Options."
FLEXIBILITY TO ADJUST SUM INSURED
Subject to certain limitations, you may adjust the Sum Insured, and thus the
Death Proceeds, at any time prior to the Maturity Date, by increasing or
decreasing the Face Amount of the Policy. Any change in the Face Amount will
affect the monthly cost of insurance charges and the amount of the surrender
charge. If the Face Amount is decreased, a pro rata surrender charge may be
imposed. The Policy Value is reduced by the amount of the charge. See "THE
POLICY -- Change In Face Amount."
The minimum increase in Face Amount is $10,000, and any increase may also
require additional Evidence of Insurability satisfactory to MML. The increase is
subject to a "free look period" and, during the first 24 months after the
increase, to a conversion privilege. See "THE POLICY -- Free Look Period --
Conversion Privileges."
ADDITIONAL INSURANCE BENEFITS
You have the flexibility to add additional insurance benefits by rider.
These include the Disability Benefit Rider, Guaranteed Insurability Rider, Other
Insured Rider, Exchange Option Rider and Accelerated Benefits Rider. See
"APPENDIX A -- Optional Benefits."
The cost of these optional insurance benefits will be deducted from Policy
Value as part of the Monthly Deduction. See "CHARGES AND DEDUCTIONS -- Monthly
Deduction From Policy Value."
POLICY ISSUANCE
If at the time of application you make a payment equal to at least one
Minimum Monthly Factor for the Policy as applied for, MML will provide
conditional insurance, equal to the amount applied for but not to exceed
$1,000,000. If the application is approved, the Policy will be issued as of the
date the terms of the conditional insurance agreement are met. If you do not
wish to make any payment at the time of application, insurance coverage will not
be in force until delivery of the Policy and payment of sufficient premium
during the lifetime of the Insured.
If any premiums are paid prior to the issuance of the Policy, such premiums
will be held in MML's General Account. If your application is approved and the
Policy is issued and accepted, your Net Premiums held in the General Account
will be credited with interest at a specified rate (no less than 3%) beginning
not later than the date of receipt of the premiums at the Company's Principal
Office. IF A POLICY IS NOT ISSUED AND ACCEPTED, THE INITIAL PREMIUMS WILL BE
RETURNED TO YOU WITHOUT INTEREST.
If your application is approved, your Policy Value will be allocated
according to your instructions upon issuance and acceptance of the Policy,
except that, if your Policy provides for a full refund of the initial premium
payment under its "Free Look" provision, then the portion of your Policy Value
which
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<PAGE>
you have instructed to be allocated to the Separate Account will be initially
allocated to the Money Market Portfolio until the expiration of your applicable
"Free Look" period. Thereafter, your Policy Value will be allocated to the
Sub-Accounts according to your instructions.
MINIMUM MONTHLY FACTOR
The Policy is guaranteed not to lapse prior to the completion of the fourth
(4) year from the Date of Issue or the effective date of either an increase in
the Face Amount or a Policy Change which causes a change in the Minimum Monthly
Factor, if you make premium payments, less partial withdrawals and partial
withdrawal charges, at least equal to the sum of the Minimum Monthly Factors for
the number of months the Policy, an increase, or Policy Change which causes a
change in the Minimum Monthly Factor, has been in force. Policy Changes which
cause a change in the Minimum Monthly Factor are changes in Face Amount and the
addition or deletion of a rider. However, at all other times, payments of such
premiums do not guarantee that the Policy will remain in force. See "THE POLICY
- -- Premium Payments." Moreover, even during the forty-eight (48) month periods,
if Debt exceeds Policy Value less surrender charges, then making payments at
least equal to the Minimum Monthly Factors will not prevent the Policy from
lapsing.
ALLOCATION OF NET PREMIUMS
Net Premiums are the premiums paid less the 3.5% tax expense charge. After
the Policy has been issued and accepted, Net Premiums may be allocated to one or
more Sub-Accounts of the Separate Account, to the General Account, or to any
combination of Accounts (some restrictions apply during the "Free Look" period
in certain states). You bear the investment risk of Net Premiums allocated to
the Sub-Accounts. The minimum allocation is 1% of Net Premium. All allocations
must be in whole numbers and must total 100%. See "THE POLICY -- Allocation Of
Net Premiums."
Premiums allocated to MML's General Account will earn a fixed rate of
interest. Net premiums and minimum interest on MML's General Account are
guaranteed by MML. For more information, see "MORE INFORMATION ABOUT THE GENERAL
ACCOUNT."
INVESTMENT OPTIONS
The Policy permits Net Premiums to be allocated either to MML's General
Account or to the Separate Account. The Separate Account is currently comprised
of six (6) Sub-Accounts ("Sub-Accounts"). Each Sub-Account invests exclusively
in a corresponding CML Fund investment portfolio ("CML Fund Portfolio"),
Oppenheimer Funds portfolio ("Oppenheimer Funds Portfolio"), or Fidelity VIPF
Fund investment portfolio ("Fidelity VIPF Fund Portfolio"). The Policy permits
you to transfer Policy Value among the available Sub-Accounts and between the
Sub-Accounts and the General Account of MML, subject to certain limitations
described under "THE POLICY -- Transfer Privilege."
The Funds are open-end, diversified series management investment companies.
Six (6) different Portfolios are available under the Policies: the Total Return
Portfolio and the Growth Portfolio of the CML Fund, the Bond Fund ("Bond
Portfolio") of the Oppenheimer Funds and the Money Market Portfolio, the High
Income Portfolio and the Overseas Portfolio of the Fidelity VIPF Fund.
Each of the Portfolios has its own investment objectives. However, the
Oppenheimer Funds Portfolio has investment objectives similar to certain
Fidelity VIPF Fund Portfolios. Certain Portfolios may not be available in all
states.
The value of each Sub-Account will vary daily depending upon the performance
of the Portfolio in which it invests. Each Sub-Account reinvests dividends or
capital gains distributions received from a Portfolio in additional shares of
that Portfolio.
There can be no assurance that the investment objectives of the Portfolios
can be achieved. For more information, see "DESCRIPTION OF MML, THE SEPARATE
ACCOUNT AND THE FUNDS."
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<PAGE>
PARTIAL WITHDRAWAL
After the first Policy Year, you may make partial withdrawals in a minimum
amount of $500 from the Policy Value. If Option 1 is in effect, the Face Amount
is reduced by the amount of the partial withdrawal, and a partial withdrawal
will not be allowed if it would reduce the Face Amount below $40,000.
A transaction charge which is described in "CHARGES AND DEDUCTIONS --
Charges On Partial Withdrawal," will be assessed to reimburse MML for the cost
of processing each partial withdrawal. A partial withdrawal charge may also be
imposed upon a partial withdrawal. Generally, amounts withdrawn during each
Policy year in excess of 10% of the Policy Value ("excess withdrawal") are
subject to the partial withdrawal charge. The partial withdrawal charge is equal
to 5% of the excess withdrawal, but the partial withdrawal charge will never
exceed the surrender charge on the date of the partial withdrawal. If no
surrender charge is applicable at the time of withdrawal, no partial withdrawal
charge will be deducted. The Policy's outstanding surrender charge will be
reduced by the amount of the partial withdrawal charge deducted. See "THE POLICY
- -- Partial Withdrawal" and "CHARGES AND DEDUCTIONS -- Charges On Partial
Withdrawal."
A partial withdrawal may have Federal income tax consequences and if the
Policy is deemed a "modified endowment contract" at the time of withdrawal may
subject the Policyowner to Federal tax penalties. See "FEDERAL TAX
CONSIDERATIONS." A partial withdrawal from the General Account may be delayed
for a period not to exceed six months. See "OTHER POLICY PROVISIONS --
Postponement of Payments."
LOAN PRIVILEGE
You may borrow against the Policy Value. The total amount you may borrow is
the Loan Value. Loan Value in the first Policy Year is 75% of an amount equal to
Policy Value less surrender charge, Monthly Deductions, and interest on Debt to
the end of the Policy year. Thereafter, Loan Value is 90% of an amount equal to
Policy Value less the surrender charge.
Policy loans will be allocated among the General Account and the
Sub-Accounts in accordance with your instructions. If no allocation is made by
you, MML will make a Pro Rata Allocation among the Accounts. In either case,
Policy Value equal to the Policy loan will be transferred from the appropriate
Sub-Account(s) to the General Account, and will earn monthly interest at an
effective annual rate of at least 6%. Therefore, a Policy loan may have a
permanent impact on the Policy Value even though it is eventually repaid.
Although the loan amount is a part of the Policy Value, the Death Proceeds will
be reduced by the amount of outstanding Debt at the time of death.
Policy loans will bear interest at a *fixed rate of 8% per year, due and
payable in arrears at the end of each Policy year. If interest is not paid when
due, it will be added to the loan balance. Policy loans may be repaid at any
time. You must notify MML if a payment is a loan repayment; otherwise, it will
be considered a premium payment. Any partial or full repayment of Debt by you
will be allocated to the General Account or Sub-Accounts in accordance with your
instructions. If you do not specify an allocation, MML will allocate the loan
repayment in accordance with your most recent premium allocation instructions.
See "POLICY LOANS."
There are risks involved in taking a Policy loan, which include the
potential for a Policy to lapse if projected earnings, taking into account
outstanding loans, are not achieved, as well as adverse tax consequences if a
Policy lapses with outstanding loans. See "FEDERAL TAX CONSIDERATIONS."
POLICY LAPSE AND REINSTATEMENT
The failure to make premium payments will not cause a Policy to lapse
unless: (a) the Surrender Value is insufficient to cover the next Monthly
Deduction plus loan interest accrued, if any, or (b) Debt exceeds Policy Value
less surrender charges. A sixty-two (62) day grace period applies to each
situation. Except for the situation described in (b) above, the Policy will not
lapse prior to the forty-ninth (49th) Monthly Deduction following the Date of
Issue or the effective date of either an increase in Face Amount or a Policy
Change which causes a change in the Minimum Monthly Factor, if you make
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<PAGE>
premium payments, less Debt, partial withdrawals and partial withdrawal charges,
at least equal to the sum of the Minimum Monthly Factors for the number of
months the Policy, increase in Face Amount, or Policy Change which causes a
change in the Minimum Monthly Factor, has been in force. Subject to certain
conditions (including Evidence of Insurability showing that the Insured is
insurable according to MML's underwriting rules and the payment of sufficient
premium), a Policy may be reinstated at any time within three (3) years after
the expiration of the grace period and prior to the Maturity Date. MML reserves
the right to increase the Minimum Monthly Factor upon reinstatement. See "POLICY
TERMINATION AND REINSTATEMENT."
TAX CONSEQUENCES OF THE POLICY
MML believes the Policy meets the Statutory definition of life insurance
under Section 7702 and hence, the Death Proceeds paid under the Policy generally
should be fully excludable from the gross income of the Beneficiary for Federal
income tax purposes and the Policyowner should not be deemed in constructive
receipt of Policy Values under a Policy until there is a distribution from the
Policy. See "FEDERAL TAX CONSIDERATIONS."
A Policy may be treated as a "modified endowment contract" depending on the
amount of premiums paid in relation to the death benefit. See "FEDERAL TAX
CONSIDERATIONS -- Modified Endowment Contracts." If the Policy is a modified
endowment contract, then all pre-death distributions, including Policy loans and
assignments, will be treated first as distribution of taxable income and then as
a return of basis or investment in the contract. In addition, prior to age
59 1/2 any such distributions generally will be subject to a 10% penalty tax.
If the Policy is not a modified endowment contract, distributions generally
will be treated first as a return of basis or investment in the contract and
then as disbursing taxable income. Moreover, loans will not be treated as
distributions. Finally, neither distributions nor loans from a policy that is
not a modified endowment contract are subject to the 10% penalty tax.
------------------------
The purpose of the Policy is to provide insurance protection for the
Beneficiary named therein. This summary is intended to provide only a very brief
overview of the more significant aspects of the Policy. Further detail is
provided in this Prospectus and in the Policy. No claim is made that the Policy
is in any way similar or comparable to a systematic investment plan of a mutual
fund. The Policy together with its attached application constitutes the entire
agreement between MML and you.
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<PAGE>
PERFORMANCE INFORMATION
MML from time to time may advertise the "total return" and the "average
annual total return." THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE.
"Total Return" for a Portfolio refers to the total of the income generated
by the Portfolio net of total Portfolio operating expenses plus capital gains
and losses, realized or unrealized. "Total Return" for the Sub-Accounts refers
to the total of the income generated by the Portfolio net of total Portfolio
operating expenses plus capital gains and losses, realized or unrealized, and
the mortality and expense risk charge, Separate Account administrative charges
and the $5 monthly administrative charge. "Average Annual Total Return" reflects
the hypothetical annually compounded return that would have produced the same
cumulative return if the Funds Portfolio's or Sub-Account's performance had been
constant over the entire period. Because average annual total returns tend to
smooth out variations in the return of the Portfolio, they are not the same as
actual year-by-year results.
Performance information may be compared, in reports and promotional
literature, to: (i) the Standard & Poor's 500 Stock Index ("S & P 500"), Dow
Jones Industrial Average ("DJIA"), Shearson Lehman Aggregate Bond Index or other
unmanaged indices so that investors may compare the Sub-Account results with
those of a group of unmanaged securities widely regarded by investors as
representative of the securities markets in general; (ii) other groups of
variable life separate accounts or other investment products tracked by Lipper
Analytical Services, a widely used independent research firm which ranks mutual
funds and other investment products by overall performance, investment
objectives, and assets, or tracked by other services, companies, publications,
or persons, such as Morningstar, Inc., who rank such investment products on
overall performance or other criteria; or (iii) the Consumer Price Index (a
measure for inflation) to assess the real rate of return from an investment in
the Sub-Account. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses.
MML may provide in advertising, sales literature, periodic publications or
other materials information on various topics of interest to Policyowners and
prospective Policyowners. These topics may include the relationship between
sectors of the economy and the economy as a whole and its effect on various
securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparisons between the Policies and the
characteristics of and market for such financial instruments.
The Policies were first offered to the public in 1994. However, total return
data may be advertised based on the period of time that the Portfolios have been
in existence. The results for any period prior to the Policies being offered
will be calculated as if the Policies had been offered during that period of
time, with all charges assumed to be those applicable to the Policies.
DESCRIPTION OF MML, THE SEPARATE ACCOUNT AND THE FUNDS
MML
Massachusetts Mutual Life Insurance Company ("MML") is a mutual life
insurance company specially chartered by the Commonwealth of Massachusetts on
May 14, 1851. It is currently licensed to transact life (including variable
life), accident, and health insurance business in all states, the District of
Columbia and certain provinces of Canada. As of March 1, 1996, the Company had
total assets of $50 billion.
THE SEPARATE ACCOUNT
The Separate Account was established on March 3, 1994 in accordance with
authorization by the Board of Directors of Connecticut Mutual Life Insurance
Company ("CML"). On March 1, 1996, CML
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<PAGE>
merged with and into Massachusetts Mutual Life Insurance Company ("MML"). CML
was a Connecticut mutual life insurance company originally chartered by a
special act of the Connecticut General Assembly in 1846. Prior to the merger CML
was the nation's sixth oldest life insurance company. Upon the merger, CML's
existence ceased and MML became the surviving company under the name
Massachusetts Mutual Life Insurance Company. In approving the merger, the boards
of directors of MML and CML determined that the merger of two financially strong
mutual life insurance companies would result in an overall enhanced capital
position and reduced expenses, which, together, would be in the long-term
interests of policyholders. On January 26, 1996, 95.76% of the policyholders of
MML and 95.75% of the insured of MML, each voting as a separate class, voted to
approve the merger. On January 27, 1996, 94.0% of the policyholders of CML and
94.27% of the members of CML, each voting as a separate class, voted to approve
the merger. In addition, the Connecticut Insurance Department and the
Massachusetts Division of Insurance have approved the merger.
All of the Contracts issued by CML and outstanding on March 1, 1996, were,
at the time of the merger, assumed by MML. The merger did not affect any
provisions of, or rights or obligations under, those Contracts as originally
issued by CML. The Separate Account meets the definition of a "separate account"
under the federal securities laws and is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940, as amended, ("1940 Act"). Such registration does
not involve the supervision of its management or investment practices or
policies of the Separate Account or MML by the Commission.
The assets used to fund the variable portion of the Policies are set aside
in the Separate Account and are kept separate from the general assets of MML.
Assets equal to the reserves and other liabilities of the Separate Account may
not be charged with any liabilities arising out of any other business of MML.
The Separate Account currently has seven Sub-Accounts. Each Sub-Account is
administered and accounted for as part of the general business of MML, but the
income, capital gains, or capital losses of each Sub-Account are allocated to
such Sub-Account, without regard to other income, capital gains, or capital
losses of MML or the other Sub-Accounts. Each Sub-Account invests exclusively in
a corresponding mutual fund Portfolio. The assets of each Portfolio are held
separate from the assets of the other Portfolios. Each Portfolio operates as a
separate investment vehicle and the income or losses of one Portfolio generally
have no effect on the investment performance of another Portfolio. Shares of
each Portfolio are not offered to the general public but solely to separate
accounts of life insurance companies, such as the Separate Account. Each
Sub-Account has two sub-divisions. One sub-division applies to Policies during
their first ten (10) Policy years, which are subject to a Separate Account
administrative charge. See "CHARGES AND DEDUCTIONS -- Charges Against Assets of
the Separate Account." Thereafter, such Policies are automatically allocated to
the second sub-division to account for the elimination of the Separate Account
administrative charge.
MML reserves the right, subject to compliance with applicable law, to change
the names of the Sub-Accounts and Separate Account.
THE CML FUND
The Panorama Series Fund, Inc. (the "CML Fund"), formerly known as the
Connecticut Mutual Financial Services Series Fund I, Inc., is an open-end,
diversified management investment company registered with the Commission under
the 1940 Act. Such registration does not involve supervision by the Commission
of the investments or investment policy of the CML Fund or its separate
investment Portfolios.
The CML Fund was incorporated in Maryland on August 17, 1981. Two CML Fund
Portfolios are available under the Policies, each issuing a series of shares:
the Total Return Portfolio and the Growth Portfolio.
OppenheimerFunds, Inc., an indirect subsidiary of MML, serves as investment
adviser of the CML Fund and manages the investments of the CML Fund Portfolios.
See "INVESTMENT ADVISORY SERVICES TO THE CML FUND."
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<PAGE>
THE OPPENHEIMER FUND
The Oppenheimer Variable Account Funds is an open-end management investmment
company organized as a Massachusetts business trust in 1984 and registered with
the Commission under the 1940 Act. One of the Oppenheimer Variable Account Funds
is available under the Policies: the Oppenheimer Bond Fund ("Bond Portfolio")
OppenheimerFunds, Inc., an indirect subsidiary of MML, serves as investment
adviser of the Oppenheimer Bond Portfolio and the other Oppenheimer Variable
Account Funds. See "INVESTMENT ADVISORY SERVICES TO THE OPPENHEIMER FUNDS."
THE FIDELITY VIPF FUND
Variable Insurance Products Fund (the "Fidelity VIPF Fund"), managed by
Fidelity Management & Research Company ("Fidelity Management"), is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on November 13, 1981 and registered with the Commission under the 1940
Act. Three (3) Fidelity VIPF Fund Portfolios are available under the Policies:
the Money Market Portfolio, the High Income Portfolio and the Overseas
Portfolio.
Fidelity Management, a registered investment adviser under the Investment
Advisers Act of 1940, as amended, performs certain activities required to
operate the Fidelity VIPF Fund. It is one of America's largest investment
management organizations and has its principal business address at 82 Devonshire
Street, Boston, MA. Founded in 1946, Fidelity Management provides the Fidelity
VIPF Fund, as well as other mutual funds and clients, with investment research
and portfolio management services. The Fidelity VIPF Fund Portfolios, as part of
their operating expenses, pay an investment management fee to Fidelity
Management. See "INVESTMENT ADVISORY SERVICES TO VIPF" in this section.
INVESTMENT OBJECTIVES AND POLICIES
A summary of investment objectives of each of the six available Portfolios
is set forth below. MORE DETAILED INFORMATION REGARDING THE INVESTMENT
OBJECTIVES, RESTRICTIONS AND RISKS, EXPENSES PAID BY THE PORTFOLIOS AND OTHER
RELEVANT INFORMATION REGARDING THE FUNDS MAY BE FOUND IN THEIR RESPECTIVE
PROSPECTUSES, WHICH ACCOMPANY THIS PROSPECTUS AND SHOULD BE READ CAREFULLY
BEFORE INVESTING. The statements of additional information of the Funds are
available by written or telephone request to the CML Fund, the Oppenheimer Fund,
and the Fidelity VIPF Fund, whose addresses and telephone numbers are shown in
their prospectuses. There can be no assurance that the investment objectives of
the Funds Portfolios can be achieved.
BOND FUND ("BOND PORTFOLIO".) The Bond Portfolio of the Oppenheimer Fund
primarily seeks a high level of current income from investment in high yield
fixed-income securities rated "Baa" or better by Moody's or "BBB" or better by
Standard & Poor's. Secondarily, this Portfolio seeks capital growth when
consistent with its primary objective.
TOTAL RETURN PORTFOLIO. The Total Return Portfolio of the CML Fund seeks to
maximize the total investment return (including capital appreciation and income)
by allocating its assets among stocks, corporate bonds, securities issued by the
U.S. Government and its instrumentalities, and money market instruments
according to changing market conditions.
GROWTH PORTFOLIO. The Growth Portfolio of the CML Fund seeks to achieve
long-term growth of capital by investing in common stocks with low
price-earnings ratios and better than anticipated earnings.
MONEY MARKET PORTFOLIO. The Money Market Portfolio of the Fidelity VIPF
Fund is invested in a diversified portfolio of high-quality, short-term debt
instruments with the objective of obtaining maximum current income consistent
with the preservation of capital and liquidity.
HIGH INCOME PORTFOLIO. The High Income Portfolio of the Fidelity VIPF Fund
seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated fixed-income securities (commonly referred to as
"junk bonds"), while also considering growth of capital. These securities
17
<PAGE>
are often considered to be speculative and involve greater risk of default or
price changes than securities assigned a high quality rating. For more
information about these lower-rated securities, see "Investment Principles and
Risks" in the Fidelity VIPF Fund prospectus.
OVERSEAS PORTFOLIO. The Overseas Portfolio of Fidelity VIPF Fund seeks
long-term growth of capital primarily through investments in foreign securities
and provides a means for aggressive investors to diversify their own portfolios
by participating in companies and economies outside of the United States.
THE OPPENHEIMER PORTFOLIO HAS INVESTMENT OBJECTIVES AND/OR POLICIES SIMILAR
TO THOSE OF CERTAIN FIDELITY VIPF FUND PORTFOLIOS. THEREFORE, TO CHOOSE THE
SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND OBJECTIVES, CAREFULLY READ THE
PROSPECTUSES OF THE FUNDS ALONG WITH THIS PROSPECTUS. IN SOME STATES, INSURANCE
REGULATIONS MAY RESTRICT THE AVAILABILITY OF PARTICULAR SUB-ACCOUNTS.
If required in your state, in the event of a material change in the
investment policy of a Sub-Account or the Portfolio in which it invests, you
will be notified of the change. If you have Policy Value in that Sub-Account,
MML will transfer it without charge on written request by you to another Sub-
Account or to the General Account. MML must receive your written request within
sixty (60) days of the later of (1) the effective date of such change in the
investment policy or (2) the receipt of the notice of your right to transfer.
You may then change your premium and deduction allocation percentages.
INVESTMENT ADVISORY SERVICES TO THE CML FUND
The CML Fund has entered into an investment advisory agreement with
OppenheimerFunds, Inc. ("Oppenheimer"), an indirect subsidiary of MML. Under the
investment advisory agreement, Oppenheimer provides certain administrative
services and investment advice to each CML Fund Portfolio. Oppenheimer provides
administrative and management services to the CML Fund Portfolios, such as
providing accounting, administrative and clerical personnel and monitoring the
activities of the custodian and independent auditors for the CML Fund
Portfolios. The investment advisory agreement obligates Oppenheimer to provide
investment advisory services and to pay all compensation of and furnish office
space for officers of the CML Fund connected with investment and economic
research, trading and investment management of the CML Fund and the CML Fund
Portfolios. Each CML Fund Portfolio pays all other expenses incurred in its
operation. The Board of Directors of the CML Fund is primarily responsible for
monitoring activities of Oppenheimer.
For providing its services under the investment advisory agreement,
Oppenheimer receives a monthly fee, computed daily at an annual rate based on
the average daily net asset value of each CML Fund Portfolio as follows:
<TABLE>
<CAPTION>
PORTFOLIO NET ASSET VALUE RATE
- --------------------------- ---------------------------- ---------
<S> <C> <C>
Total Return First $600 million 0.625%
More than $600 million 0.450%
Growth First $300 million 0.625%
Next $100 million 0.500%
More than $400 million 0.450%
</TABLE>
INVESTMENT ADVISORY SERVICES TO THE OPPENHEIMER FUND
The Oppenheimer Bond Fund ("Bond Portfolio") is advised by OppenheimerFunds,
Inc. (previously named Oppenheimer Management Corporation.) OppenheimerFunds,
Inc. (the "Manager") is responsible for selecting the Bond Portfolio's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Oppenheimer Funds' Board of
Trustees, under an Investment Advisory Agreement with the Bond Portfolio. The
prospectus for the
18
<PAGE>
Bond Portfolio contains additional information concerning the Portfolio,
including information concerning additional expenses the Portfolio is
responsible to pay to conduct its business, and should be read in conjunction
with this Prospectus.
For providing its services under the Investment Advisory Agreement, the
Manager receives a monthly fee, computed daily at an annual rate based on the
average daily net asset value of the Bond Portfolio as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE RATE
- ------------------------ ---------
<S> <C>
First $200 million 0.75%
Next $200 million 0.72%
Next $200 million 0.69%
Next $200 million 0.66%
Next $200 million 0.60%
More than $1 billion 0.50%
</TABLE>
INVESTMENT ADVISORY SERVICES TO THE FIDELITY VIPF FUND
For managing investments and business affairs, each Fidelity VIPF Fund
Portfolio pays a monthly fee to Fidelity Management. The Prospectus of the
Fidelity VIPF Fund contains additional information concerning the Portfolios,
including information concerning additional expenses paid by the Fidelity VIPF
Fund Portfolios, and should be read in conjunction with this Prospectus.
FIDELITY VIPF FUND PORTFOLIOS
The Money Market Portfolio's management fee is (a) the sum of a group fee
rate and an individual fund fee rate of 0.03%, and (b) the addition of an income
component of 6% of the Portfolio's gross income in excess of a 5% annual yield.
The result is multiplied by the Portfolio's average net assets. The group fee
rate, which is based on the average net assets of all of the mutual funds
advised by Fidelity Management, cannot rise above 0.37%, and it drops as total
assets under management increase. The effective group fee rate for December 1995
was 0.1482%. The income component cannot rise above 0.24%.
The High Income Portfolio pays a monthly fee to Fidelity Management at an
annual fee rate made up of the sum of two components:
1. A group fee rate based on the monthly average net assets of all the
mutual funds advised by Fidelity Management. On an annual basis this rate cannot
rise above 0.37%, and it drops as total assets in all these funds rise. The
effective group fee rate for December 1995 was 0.1482%.
2. An individual fund fee rate of 0.45% of the High Income Portfolio's
average net assets throughout the month. One-twelfth of the annual management
fee rate is applied to net assets averaged over the most recent month, resulting
in a dollar amount which is the management fee for that month.
The Overseas Portfolios fee rates are made of two components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by Fidelity Management. On an annual basis, this rate
cannot rise above 0.52%, and drops as total assets in all these mutual funds
rise. The effective group fee rate for December 1995 was 0.3097%.
2. An individual Portfolio fee rate of 0.45%.
One-twelfth of the sum of these two rates is applied to the respective
Fidelity VIPF Fund Portfolio's net assets averaged over the most recent month,
giving a dollar amount which is the fee for that month.
19
<PAGE>
Thus, the High Income Portfolio may have a monthly fee of as high as 0.82%
of its average net assets. The Overseas Portfolio may have a monthly fee of as
high as 0.97% of its average net assets. The actual fee rate may be less
depending on the total assets in each Portfolio and in the other funds advised
by Fidelity Management.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
MML reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares that are held in the
Sub-Accounts or that the Sub-Accounts may purchase. If the shares of any
Portfolio are no longer available for investment or if in MML's judgment further
investment in any Portfolio should become inappropriate in view of the purposes
of the Separate Account or the affected Sub-Account, MML may redeem the shares
of that Portfolio and substitute shares of another registered open-end
management company. MML will not substitute any shares attributable to a Policy
interest in a Sub-Account without notice to the Policyowner and prior approval
of the Commission and state insurance authorities, to the extent required by the
1940 Act or other applicable law. The Separate Account may, to the extent
permitted by law, purchase other securities for other policies or permit a
conversion between policies upon request by a Policyowner.
MML also reserves the right to establish additional Sub-Accounts of the
Separate Account, each of which would invest in shares corresponding to a new
Portfolio or in shares of another investment company having a specified
investment objective. Subject to applicable law and any required Commission
approval, MML may, in its sole discretion, establish new Sub-Accounts or
eliminate one or more Sub-Accounts if marketing needs, tax considerations or
investment conditions warrant. Any new Sub-Accounts may be made available to
existing Policyowners on a basis to be determined by MML.
Shares of the CML Fund Portfolios are also issued to separate accounts of
MML and its affiliates which issue variable annuity contracts ("mixed funding").
In the future, shares of the CML Fund Portfolios may be issued to separate
accounts of unaffiliated insurance companies ("shared funding"). Currently, the
Oppenheimer Variable Account Funds and the Fidelity VIPF Fund Portfolios are
used for both mixed and shared funding. It is conceivable that in the future
such mixed funding or shared funding may be disadvantageous for variable life
Policyowners or variable annuity Contract Owners. Although MML and the Funds do
not currently foresee any such disadvantages to either variable life insurance
Policyowners or variable annuity Contract Owners, MML, the Board of Directors of
the CML Fund, the Board of Trustees of the Oppenheimer Variable Account Funds,
and the Board of Trustees of Fidelity VIPF Fund intend to monitor events in
order to identify any material conflicts between such Policyowners and Contract
Owners and to determine what action, if any, should be taken in response
thereto.
If any of these substitutions or changes are made, MML may by appropriate
endorsement change the Policy to reflect the substitution or change and will
notify Policyowners of all such changes. If MML deems it to be in the best
interest of Policyowners, and subject to any approvals that may be required
under applicable law, the Separate Account or any Sub-Account(s) may be operated
as a management company under the 1940 Act, may be deregistered under the 1940
Act if registration is no longer required, or may be combined with other
Sub-Accounts or other separate accounts of MML.
VOTING RIGHTS
To the extent required by law, MML will vote Portfolio shares held by each
Sub-Account in accordance with instructions received from Policyowners with
Policy Value in such Sub-Account. Currently, the Funds do not hold regular
annual shareholders' meetings. If the 1940 Act or any rules thereunder should be
amended or if the present interpretation of the 1940 Act or such rules should
change, and as a result MML determines that it is permitted to vote shares in
its own right, whether or not such shares are attributable to the Policies, MML
reserves the right to do so.
Each person having a voting interest will be provided with proxy materials
of the Portfolio together with an appropriate form with which to give voting
instructions to MML. Shares held in each
20
<PAGE>
Sub-Account for which no timely instructions are received will be voted in
proportion to the instructions received from all persons with an interest in
such Sub-Account furnishing instructions to MML. MML will also vote shares held
in the Separate Account that it owns and which are not attributable to Policies
in the same proportion.
The number of votes which a Policyowner has the right to instruct will be
determined by MML as of the record date established for the Portfolio. This
number is determined by dividing each Policyowner's Policy Value in the
Sub-Account, if any, by the net asset value of one share in the corresponding
Portfolio in which the assets of the Sub-Account are invested.
MML may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that the shares be voted so as
(1) to cause a change in the subclassification or investment objective of one or
more of the Portfolios or (2) to approve or disapprove an investment advisory
contract for the Portfolios. In addition, MML may disregard voting instructions
in favor of any change in the investment policies or in any investment adviser
or principal underwriter initiated by Policyowners, the Board of Directors of
the CML Fund or the Board of Trustees of the Oppenheimer Variable Account Funds
or the Board of Trustees of Fidelity VIPF Fund. MML's disapproval of any such
change must be reasonable and, in the case of a change in investment policies or
investment adviser, based on a good faith determination that such change would
be contrary to state law or otherwise is inappropriate in light of the
objectives and purposes of the Portfolio. In the event MML does disregard voting
instructions, a summary of and the reasons for that action will be included in
the next periodic report to Policyowners.
THE POLICY
APPLICATION FOR A POLICY
Upon receipt at its Principal Office of a completed application from a
prospective Policyowner, MML will follow certain insurance underwriting
procedures designed to determine whether the proposed Insured is insurable. This
process may involve such verification procedures as medical examinations and may
require that further information be provided by the proposed Policyowner before
a determination of insurability can be made. A Policy cannot be issued until
this underwriting procedure has been completed. MML reserves the right to reject
an application which does not meet MML's underwriting guidelines, but in
underwriting insurance, MML shall comply with all applicable federal and state
prohibitions concerning unfair discrimination.
If at the time of application a prospective Policyowner makes a payment
equal to at least one Minimum Monthly Factor for the Policy as applied for,
pending underwriting approval, MML will provide fixed conditional insurance
pursuant to a Conditional Insurance Agreement in the amount of insurance applied
for, up to a maximum of $1,000,000. This coverage will generally continue for a
maximum of ninety (90) days from the date of the application or the completion
of a medical exam, should one be required. In no event will any insurance
proceeds be paid under the Conditional Insurance Agreement if death is by
suicide.
If the application is approved, the Policy will be issued as of the date the
terms of the Conditional Insurance Agreement were met, including completion of a
physical exam and Policy application. Such terms include that insured must not
within the past year have been treated for or diagnosed as having AIDS, drug or
alcohol abuse, stroke, cancer, disorder of the heart, or have been advised to
have such treatment, or within the past ninety (90) days have been admitted to a
hospital or have been advised to be admitted or to have a diagnostic test or
surgery not yet performed. If no Conditional Insurance Agreement is in effect
because the prospective Policyowner does not wish to make any payment until the
Policy is issued, or has paid an initial premium that is not sufficient to place
the Policy in force, upon delivery of the Policy MML will require payment of
sufficient premium to place the insurance in force.
21
<PAGE>
Pending completion of insurance underwriting and Policy issuance procedures,
initial premium will be held in the MML's General Account. If the application is
approved and the Policy is issued and accepted, the Net Premium which was held
in the General Account will be credited with interest at a specified rate (no
less than three percent) (3%) beginning not later than the date of receipt of
the premium at the Company's Principal Office. IF A POLICY IS NOT ISSUED AND
ACCEPTED, THE INITIAL PREMIUMS WILL BE RETURNED TO YOU WITHOUT INTEREST.
If your application is approved, your Policy Value will be allocated
according to your instructions upon issuance and acceptance of the Policy.
However, if your Policy provides for a full refund of the initial premium
payment under its "Free Look" provision (see "THE POLICY -- "Free Look Period"),
for the first ten (10) days following issuance and acceptance of the Policy
(twenty (20) days for replacements in states with an extended right-to-examine
requirement), the portion of your Policy Value which you have instructed to be
allocated to the Variable Account will be allocated to the Money Market
Sub-Account. Thereafter, your Policy Value will be allocated to the Sub-Accounts
and the General Account according to your instructions.
Subject to the approval of MML, a Policy may be backdated no more than six
(6) months prior to the date of application. Backdating may be advantageous
where the insured's lower age on the Date of Issue results in lower cost of
insurance rates. MML will require the payment of all cost of insurance charges
which would have been due had the application date coincided with the back-dated
Date of Issue, but MML will not retroactively deduct any Separate Account
charges or Portfolio operating expenses.
FREE LOOK PERIOD
The Policy provides for an initial Free Look Period. You may cancel the
Policy by mailing or delivering the Policy to the Service Center or an agent of
MML on or before the latest of (a) forty-five (45) days after the application
for the Policy is signed, (b) ten (10) days after you receive the Policy, twenty
(20) days where required by law for the replacement of insurance, or (c) ten
(10) days after MML mails or personally delivers to you a notice of withdrawal
right. If your Policy provides for a full refund of the initial payment under
its "Free Look" provision, you will receive on cancellation the greater of (1)
your entire payment, or (2) the Policy Value plus any amounts deducted under the
Policy or by the Funds for taxes, charges or fees. If your Policy does not
provide for a full refund of the initial payment, you will receive upon
cancellation the sum of (1) the difference between any payments made, including
fees and charges, and the amounts allocated to the Variable Account, (2) the
Policy Value (on the date the cancellation request is received by MML)
attributable to the amounts allocated to the Variable Account, and (3) any fees
or charges imposed on amounts in the Variable Account.
The refund of any payment you have made by check may be delayed until the
check has cleared your bank.
After an increase in Face Amount, MML will mail or personally deliver a
notice of a "Free Look" with respect to the increase. You will have the right to
cancel the increase before the latest of (a) forty-five (45) days after the
application for the increase is signed, (b) ten (10) days after you receive the
new specification pages issued for the increase, or (c) ten (10) days after MML
mails or delivers a notice of withdrawal rights to you. Upon canceling the
increase, you will receive a credit to your Policy Value of charges which would
not have been deducted but for the increase. The amount to be credited will be
refunded if you so request. MML will also waive any surrender charge calculated
for the increase.
CONVERSION PRIVILEGES
Once during the first twenty-four (24) months after the Date of Issue or
after the effective date of an increase in Face Amount, while the Policy is in
force, you may convert your Policy without Evidence of Insurability to any
flexible premium adjustable life insurance Policy with fixed and guaranteed
minimum benefits which had been offered by MML on the Date of Issue or on the
effective date of an increase in Face amount, whichever is applicable. Assuming
that there have been no increases in the initial Face Amount, you can accomplish
this within twenty-four (24) months after the Date of Issue by transferring,
without charge, the Policy Value in the Separate Account to the General Account
and
22
<PAGE>
by simultaneously changing your premium allocation instructions to allocate
future premium payments to the General Account. Within twenty-four (24) months
after the effective date of each increase, you can transfer, without charge, all
or part of the Policy Value in the Separate Account to the General Account and
simultaneously change your premium allocation instructions to allocate all or
part of future premium payments to the General Account.
Where required by state law, and at your request, MML will issue a flexible
premium adjustable life insurance policy to you. The new Policy will have the
same Face Amount, Issue Ages, Dates of Issue, and Risk Classifications as the
original Policy.
PREMIUM PAYMENTS
Premium Payments are payable to MML, and may be mailed to the Principal
Office (for initial premiums) or Service Center (for subsequent premiums) or
paid through an authorized agent of MML. All premium payments after the initial
premium payment are credited to the Separate Account or General Account as of
date of receipt at the Service Center.
You may establish a schedule of planned premiums which will be billed by MML
at regular intervals. Failure to pay planned premiums, however, will not itself
cause the Policy to lapse. You may also make unscheduled premium payments at any
time prior to the Maturity Date or skip planned premium payments, subject to the
maximum and minimum premium limitations described below. Therefore, unlike
conventional insurance policies, a Policy does not obligate you to pay premiums
in accordance with a rigid and inflexible premium schedule.
You may also elect to pay premiums by means of a monthly pre-authorized
check service procedure ("PAC"). Under a PAC procedure, amounts will be deducted
each month, generally on the Monthly Payment Date, from your checking account
and applied as a premium under a Policy. The minimum payment permitted under PAC
is fifty dollars ($50).
Premiums are not limited as to frequency and number. However, no premium
payment (except for PAC premium payments) may be less than one hundred dollars
($100) without MML's consent. Moreover, premium payments must be sufficient to
provide a positive Surrender Value at the end of each Policy month, or the
Policy may lapse. See "POLICY TERMINATION AND REINSTATEMENT." If, in the first
forty-eight (48) policy months following issue, an increase in the Face Amount,
or a Policy Change which causes a change in the Minimum Monthly Factor, you make
premium payments, less partial withdrawals and partial withdrawal charges, at
least equal to the sum of the Minimum Monthly Factors for the number of months
the Policy, increase in Face Amount, or Policy Change which causes a change in
the Minimum Monthly Factor, has been in force, the Policy is guaranteed not to
lapse during that period. EXCEPT FOR THE FORTY-EIGHT (48) POLICY MONTHS AFTER
THE DATE OF ISSUE OR THE EFFECTIVE DATE OF AN INCREASE IN FACE AMOUNT, MAKING
MONTHLY PAYMENTS AT LEAST EQUAL TO THE MINIMUM MONTHLY FACTORS DOES NOT
GUARANTEE THAT THE POLICY WILL REMAIN IN FORCE.
In no event may the total of all premiums paid exceed the current maximum
premium limitations set forth in the Policy, which are required by Federal tax
laws. These maximum premium limitations will change whenever there is any change
in the Face Amount, the addition or deletion of a rider, or a change in the Sum
Insured Option. If a premium is paid which would result in total premiums
exceeding the current maximum premium limitations, MML will only accept that
portion of the premiums which shall make total premiums equal the maximum. Any
part of the premiums in excess of that amount will be returned and no further
premiums will be accepted until allowed by the current maximum premium
limitation prescribed by Internal Revenue Service rules. However,
notwithstanding the current maximum premium limitations, MML will accept a
premium which is needed in order to prevent a lapse of the Policy during a
policy year. See "POLICY TERMINATION AND REINSTATEMENT."
23
<PAGE>
INCENTIVE FUNDING DISCOUNT
MML will lower the cost of insurance charges by five percent (5%) during any
Policy year for which you qualify for an incentive funding discount. To qualify,
total premiums paid under the Policy, less any debt, withdrawals and withdrawal
charges, and transfers from other policies issued by MML, must exceed ninety
percent (90%) of the guideline level premiums (as defined in Section 7702 of the
Code) accumulated from the Date of Issue to the date of qualification. The
incentive funding discount is not available in New York and certain other
states. For a discussion of cost of insurance charges, see "CHARGES AND
DEDUCTIONS -- Monthly Deductions from Policy Value."
Qualification for the incentive funding discount is determined on the Date
of Issue for the first Policy year and on each Policy anniversary for each
subsequent Policy year. However, if MML receives the proceeds from a policy
issued by an unaffiliated company to be exchanged for the Policy, the
qualification for the incentive funding discount for the first Policy year will
be determined on the date the proceeds are received by MML and only insurance
charges becoming due after the date such proceeds are received will be eligible
for the incentive funding discount.
ALLOCATION OF NET PREMIUMS
The Net Premium equals the premium paid less the three and one-half percent
(3.5%) tax expense charge. In the application for a Policy, you indicate the
initial allocation of Net Premiums among the General Account and the
Sub-Accounts of the Separate Account. You may allocate premiums to one or more
Sub-Accounts, but may not have Policy Value in more than six Sub-Accounts at any
one time (although the Separate Account currently maintains six Sub-Accounts, it
may maintain more in the future). The minimum amount which may be allocated to a
Sub-Account is one percent (1%) of Net Premium paid. Allocation percentages must
be in whole numbers (for example, thirty-three and one third [33 1/3%] may not
be chosen) and must total one hundred percent (100%).
For certain Policyowners, after the underwriting period and during the "Free
Look" period the portion of your Policy Value which you have instructed to be
allocated to the Separate Account will be allocated to the Money Market
Portfolio. (See "THE POLICY -- Application for a Policy"). Thereafter, your Net
Premium will be allocated to the Sub-Accounts and the General Account according
to your instructions.
You may change the allocation of future Net Premiums at any time pursuant to
written or telephone request. If allocation changes by telephone are elected by
the Policyowner, a properly completed authorization form must be on file before
telephone requests will be honored. The policy of MML and its agents and
affiliates is that they will not be responsible for losses resulting from acting
upon telephone requests reasonably believed to be genuine. MML will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine; otherwise, MML may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures MML follows for transactions initiated
by telephone include requirements that Policyowners and callers on behalf of a
Policyowner identify themselves by name and identify the Policyowner by name,
date of birth and social security number. All transfer instructions by telephone
are tape recorded. An allocation change will be effective as of the date of
receipt of the notice at the Service Center. No charge is currently imposed for
changing premium allocation instructions. MML reserves the right to impose such
a charge in the future, but guarantees that the charge will not exceed
twenty-five dollars ($25).
The Policy Value in the Sub-Accounts will vary with their investment
experience; you bear this investment risk. The investment performance may affect
the Death Proceeds as well. Policyowners should periodically review their
allocations of premiums and Policy Value in light of market conditions and
overall financial planning requirements.
TRANSFER PRIVILEGE
Subject to MML's then current rules, you may at any time transfer the Policy
Value among the Sub-Accounts or between a Sub-Account and the General Account.
However, the Policy Value held in the General Account to secure a Policy loan
may not be transferred.
24
<PAGE>
All requests for transfers must be made to the Service Center. The amount
transferred will be based on the Policy Value in the Account(s) next computed
after receipt of the transfer order. MML will make transfers pursuant to written
or telephone request. As discussed in "THE POLICY -- Allocation of Net
Premiums," a properly completed authorization form must be on file at the
Service Center before telephone requests will be honored.
You may have automatic transfers of at least one hundred dollars ($100) a
month made on a periodic basis (a) from the Sub-Account(s) investing in the
Money Market Portfolio of Fidelity VIPF Fund or the Bond Portfolio of the
Oppenheimer Fund to one or more of the other Sub-Accounts or (b) to
automatically reallocate Policy Value among the Sub-Accounts. Automatic
transfers may be made on a monthly, bimonthly, quarterly, semiannual or annual
schedule. Generally, all automatic transfers will be processed on the fifteenth
(15th) of each scheduled month. However, if the fifteenth (15th) is not a
business day or is the Monthly Payment Date, the automatic transfer will be
processed on the next business day.
The transfer privilege is subject to the consent of MML. MML reserves the
right to impose limitations on transfers including, but not limited to: (1) the
minimum amount that may be transferred, (2) the minimum amount that may remain
in a Sub-Account following a transfer from that Sub-Account, (3) the minimum
period of time between transfers involving the General Account, and (4) the
maximum amount that may be transferred each time to or from the General Account.
The first six (6) transfers in a Policy year will be free of any charge.
Thereafter a ten dollar ($10) transfer charge will be deducted from the amount
transferred for each transfer in that Policy year. MML may increase or decrease
this charge, but it is guaranteed never to exceed twenty-five dollars ($25). The
first automatic transfer counts as one (1) transfer towards the six (6) free
transfers allowed in each policy year; each subsequent automatic transfer is
without charge and does not reduce the remaining number of transfers which may
be made free of charge. Any transfers made with respect to a conversion
privilege, Policy loan or material change in investment policy will not count
towards the six (6) free transfers. Transfers out of the General Account may be
delayed for up to six (6) months. See "OTHER POLICY PROVISIONS -- Postponement
of Payments."
DEATH PROCEEDS
As long as the Policy remains in force (see "POLICY TERMINATION AND
REINSTATEMENT"), MML will, upon due proof of the Insured's death, pay the Death
Proceeds of the Policy to the named Beneficiary. MML will normally pay the Death
Proceeds within seven (7) days of receiving due proof of the Insured's death,
but MML may delay payments under certain circumstances. See "OTHER POLICY
PROVISIONS -- Postponement Of Payments." The Death Proceeds may be received by
the Beneficiary in cash or under one or more payment options currently offered
by MML, except as may be restricted by state law. See "APPENDIX B -- PAYMENT
OPTIONS."
Prior to the Maturity Date, the Death Proceeds are: (a) the Sum Insured
provided under Option 1 or Option 2, whichever is elected and in effect on the
date of death; plus (b) any additional insurance on the Insured's life that is
provided by rider; minus (c) any outstanding Debt, any partial withdrawals and
partial withdrawal charges, and any Monthly Deductions due and unpaid through
the Policy month in which the Insured dies. After the Maturity Date, the Death
Proceeds equal the Surrender Value of the Policy. The amount of Death Proceeds
payable will be determined as of the date of MML's receipt of due proof of the
Insured's death.
SUM INSURED OPTIONS
The Policy provides two Sum Insured Options: Option 1 and Option 2, as
described below. You designate the desired Sum Insured Option in the
application. You may change the option once per Policy year by written request.
There is no charge for a change in option.
Under Option 1, the Sum Insured is equal to the greater of the Face Amount
of insurance or the Guideline Minimum Sum Insured.
25
<PAGE>
Under Option 2, the Sum Insured is equal to the greater of the Face Amount
of insurance plus the Policy Value or the Guideline Minimum Sum Insured.
GUIDELINE MINIMUM SUM INSURED The Guideline Minimum Sum Insured is equal to
a percentage of the Policy Value as set forth in the table below. The Guideline
Minimum Sum Insured is determined in accordance with Code regulations to ensure
that the Policy qualifies as a life insurance contract and that the insurance
proceeds will be excluded from the gross income of the Beneficiary.
GUIDELINE MINIMUM SUM INSURED TABLE
<TABLE>
<CAPTION>
AGE OF INSURED PERCENTAGE OF
ON DATE OF DEATH POLICY VALUE
- ---------------------------------------------------------------- -------------
<S> <C>
40 and under.................................................... 250%
45.............................................................. 215%
50.............................................................. 185%
55.............................................................. 150%
60.............................................................. 130%
65.............................................................. 120%
70.............................................................. 115%
75.............................................................. 105%
80.............................................................. 105%
85.............................................................. 105%
90.............................................................. 105%
95 and above.................................................... 100%
</TABLE>
For the Ages not listed, the progression between the listed Ages is linear.
Under both Option 1 and Option 2 the Sum Insured provides insurance
protection. Under Option 1, the Sum Insured remains level unless the applicable
percentage of Policy Value under the Guideline Minimum Sum Insured exceeds the
Face Amount, in which case the Sum Insured will vary as the Policy Value varies.
Under Option 2, the Sum Insured varies as the Policy Value changes.
For any Face Amount, the amount of the Sum Insured and thus the Death
Proceeds will be greater under Option 2 than under Option 1, since the Policy
Value is added to the specified Face Amount and included in the Death Proceeds
only under Option 2. However, the cost of insurance included in the Monthly
Deduction will be greater, and thus the rate at which Policy Value will
accumulate will be slower, under Option 2 than under Option 1 (assuming the same
specified Face Amount and the same actual premiums paid). See "CHARGES AND
DEDUCTIONS -- Monthly Deduction From Policy Value."
If you desire to have premium payments and investment performance reflected
in the amount of the Sum Insured, you should choose Option 2. If you desire
premium payments and investment performance reflected to the maximum extent in
the Policy Value, you should select Option 1.
ILLUSTRATION OF OPTION 1. For purposes of this illustration, assume that
the Insured is under the Age of 40, and that there is no outstanding Debt.
Under Option 1, a Policy with a $50,000 Face Amount will have a Sum Insured
equal to $50,000 whenever the Policy Value is $20,000 or less. However, because
the Sum Insured must be equal to or greater than 250% of Policy Value, if at any
time the Policy Value exceeds $20,000, the Sum Insured will exceed the $50,000
Face Amount. In this example, each additional dollar of Policy Value above
$20,000 will increase the Sum Insured by $2.50. For example, a Policy with a
Policy Value of $35,000 will have a Guideline Minimum Sum Insured of $87,500
($35,000 x 2.50); Policy Value of $40,000 will produce a Guideline Minimum Sum
Insured of $100,000 ($40,000 x 2.50); and Policy Value of $50,000 will produce a
Guideline Minimum Sum Insured of $125,000 ($50,000 x 2.50).
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Similarly, so long as the Policy Value exceeds $20,000, each dollar taken
out of the Policy Value will reduce the Sum Insured by $2.50. If, for example,
the Policy Value is reduced from $25,000 to $20,000 because of partial
withdrawals, charges or negative investment performance, the Sum Insured will be
reduced from $62,500 to $50,000. If at any time, however, the Policy Value
multiplied by the applicable percentage is less than the Face Amount, the Sum
Insured will equal the Face Amount of the Policy.
The applicable percentage becomes lower as the Insured's Age increases. If
the Insured's Age in the above example were, for example, fifty (50) (rather
than between 0 and 40), the applicable percentage would be 185%. The Sum Insured
would not exceed the $50,000 Face Amount unless the Policy Value exceeded
$27,027 (rather than $20,000), and each dollar then added to or taken from
Policy Value would change the Sum Insured by $1.85.
ILLUSTRATION OF OPTION 2. For purposes of this illustration, assume that
the Insured is under the Age of 40 and that there is no outstanding Debt.
Under Option 2, a Policy with a Face Amount of $50,000 will have a Sum
Insured of $50,000 plus the Policy Value whenever the Policy Value is $33,333 or
less. For example, a Policy with Policy Value of $5,000 will produce a Sum
Insured of $55,000 ($50,000 + $5,000); Policy Value of $10,000 will produce a
Sum Insured of $60,000 ($50,000 + $10,000); Policy Value of $25,000 will produce
a Sum Insured of $75,000 ($50,000 + $25,000). However, the Sum Insured must be
at least 250% of the Policy Value. Therefore, if the Policy Value is greater
than $33,333, 250% of that amount will be the Sum Insured, which will be greater
than the Face Amount plus Policy Value. In this example, each additional dollar
of Policy Value above $33,333 will increase the Sum Insured by $2.50. For
example, if the Policy Value is $35,000, the Guideline Minimum Sum Insured will
be $87,500 ($35,000 x 2.50); Policy Value of $40,000 will produce a Guideline
Minimum Sum Insured of $100,000 ($40,000 x 2.50); and Policy Value of $50,000
will produce a Guideline Minimum Sum Insured of $125,000 ($50,000 x 2.50).
Similarly, if Policy Value exceeds $33,333, each dollar taken out of Policy
Value will reduce the Sum Insured by $2.50. If, for example, the Policy Value is
reduced from $45,000 to $40,000 because of partial withdrawals, charges or
negative investment performance, the Sum Insured will be reduced from $112,500
to $100,000. If at any time, however, Policy Value multiplied by the applicable
percentage is less than the Face Amount plus Policy Value, then the Sum Insured
will be the current Face Amount plus Policy Value.
The applicable percentage becomes lower as the Insured's Age increases. If
the Insured's Age in the above example were fifty (50), the Sum Insured must be
at least 1.85 times the Policy Value. The amount of the Sum Insured would be the
sum of the Policy Value plus $50,000 unless the Policy Value exceeded $58,824
(rather than $33,000). Each dollar added to or subtracted from the Policy would
change the Sum Insured by $1.85.
The Sum Insured under Option 2 will always be the greater of the Face Amount
plus Policy Value or the Policy Value multiplied by the applicable percentage.
CHANGE IN SUM INSURED OPTION
Generally, the Sum Insured Option in effect may be changed once each Policy
year by sending a written request for change to the Service Center. Changing Sum
Insured Options may require Evidence of Insurability. The effective date of any
such change will be the Monthly Payment Date on or following the date of receipt
of the request. No charges will be imposed on changes in Sum Insured Options.
If the Sum Insured Option is changed from Option 2 to Option 1, the Face
Amount will be increased to equal the Sum Insured which would have been payable
under Option 2 on the effective date of the change (i.e. the Face Amount
immediately prior to the change plus the Policy Value on the date of the
change). The amount of the Sum Insured will not be altered at the time of the
change. However, the change in option will affect the determination of the Sum
Insured from that point on, since the Policy Value will no longer be added to
the Face Amount in determining the Sum Insured; the
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Sum Insured will equal the new Face Amount (or, if higher, the Guideline Minimum
Sum Insured). The cost of insurance may be higher or lower than it otherwise
would have been since any increases or decreases in Policy Value will,
respectively, reduce or increase the Insurance Amount at Risk under Option 1.
Assuming a positive net investment return with respect to any amounts in the
Separate Account, changing the Sum Insured Option from Option 2 to Option 1 will
reduce the Insurance Amount at Risk and therefore the cost of insurance charge
for all subsequent Monthly Deductions, compared to what such charge would have
been if no such change were made.
If the Sum Insured Option is changed from Option 1 to Option 2, the Face
Amount will be decreased to equal the Sum Insured less the Policy Value on the
effective date of the change. This change may not be made if it would result in
a Face Amount less than forty thousand dollars ($40,000). A change from Option 1
to Option 2 will not alter the amount of the Sum Insured at the time of the
change, but will affect the determination of the Sum Insured from that point on.
Because the Policy Value will be added to the new specified Face Amount, the Sum
Insured will vary with the Policy Value. Thus, under Option 2, the Insurance
Amount at Risk will always equal the Face Amount unless the Guideline Minimum
Sum Insured is in effect. The cost of insurance may also be higher or lower than
it otherwise would have been without the change in Sum Insured Option. See
"CHARGES AND DEDUCTIONS -- Monthly Deduction From Policy Value."
A change in Sum Insured Option may result in total premiums paid exceeding
the then current maximum premium limitation determined by Internal Revenue
Service Rules. In such event, MML will return the excess amount to the
Policyowner determined as required by law. No surrender charges or other fees
will be imposed on the refunded premium. See "THE POLICY -- Premium Payments."
CHANGE IN FACE AMOUNT
Subject to certain limitations, you may increase or decrease the specified
Face Amount of a Policy at any time by submitting a written request to MML. Any
increase or decrease in the specified Face Amount requested by you will become
effective on the Monthly Payment Date on or next following the date of receipt
of the request at the Service Center, or, if Evidence of Insurability is
required, the date of approval of the request.
INCREASES. Along with the written request for an increase, you must submit
satisfactory Evidence of Insurability. The consent of the Insured is also
required whenever the Face Amount is increased. A request for an increase in
Face Amount may not be less than ten thousand dollars ($10,000). You may not
increase the Face Amount after the Insured reaches Age eighty (80). An increase
must be accompanied by an additional premium if the Surrender Value is less than
fifty dollars ($50) plus an amount equal to the sum of two (2) Minimum Monthly
Factors. On the effective date of each increase in Face Amount, a transaction
charge of fifty dollars ($50) will be deducted from the Policy Value for
administrative costs. The effective date of the increase will be the first
Monthly Payment Date on or following the date all of the conditions for the
increase are met.
An increase in the Face Amount will generally affect the Insurance Amount at
Risk and may affect the portion of the Insurance Amount at Risk included in
various Premium Classes (if more than one Premium Class applies), both of which
may affect the monthly cost of insurance charges. A surrender charge will also
be calculated for the increase. See "CHARGES AND DEDUCTIONS -- Monthly Deduction
From Policy Value -- Surrender Charge."
After increasing the Face Amount, you will have the right (1) during a Free
Look Period, to have the increase canceled and the charges which would not have
been deducted but for the increase will be credited to the Policy, and (2)
during the first twenty-four (24) months following the increase, to transfer any
or all Policy Value to the General Account free of charge. See "THE POLICY --
Free Look Period, -- Conversion Privileges." A refund of charges which would not
have been deducted but for the increase will be made at your request.
DECREASES. The minimum amount for a decrease in Face Amount is ten thousand
dollars ($10,000). The Face Amount in force after any decrease may not be less
than fifty thousand dollars
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($50,000). If, following a decrease in Face Amount, the Policy would not comply
with the maximum premium limitation applicable under the Internal Revenue
Service Rules, the decrease may be limited or Policy Value may be returned to
the Policyowner (at your election) to the extent necessary to meet the
requirements. A return of Policy Value may result in tax liability to you.
A decrease in the Face Amount will affect the total Insurance Amount at Risk
and the portion of the Insurance Amount at Risk covered by various Premium
Classes, both of which may affect a Policyowner's monthly cost of insurance
charges. See "CHARGES AND DEDUCTIONS -- Monthly Deduction From Policy Value."
For purposes of determining the cost of insurance charge, any decrease in the
Face Amount will reduce the Face Amount in the following order,: (a) the Face
Amount provided by the most recent increase; (b) the next most recent increases
successively; and (c) the initial Face Amount. This order will also be used to
determine whether a surrender charge will be deducted and in what amount. If you
request a decrease in the Face Amount, the amount of any surrender charge
deducted will reduce the current Policy Value. You may specify one Sub-Account
from which the surrender charge will be deducted. If no specification is
provided, MML will make a Pro Rata Allocation. The current surrender charge will
be reduced by the amount deducted. See "CHARGES AND DEDUCTIONS -- Surrender
Charge."
POLICY VALUE AND SURRENDER VALUE
The Policy Value is the total amount available for investment and is equal
to the sum of the accumulation in the General Account and the value of the
Accumulation Units in the Sub-Accounts. The Policy Value is used in determining
the Surrender Value (the Policy Value less any Debt and applicable surrender
charges). See "THE POLICY -- Surrender." There is no guaranteed minimum Policy
Value. Because Policy Value on any date depends upon a number of variables, it
cannot be predetermined.
Policy Value and Surrender Value will reflect frequency and amount of Net
Premiums paid, interest credited to accumulations in the General Account, the
investment performance of the chosen Sub-Accounts, any partial withdrawals, any
loans, any loan repayments, any loan interest paid or credited, and any charges
assessed in connection with the Policy.
CALCULATION OF POLICY VALUE. The Policy Value is determined first on the
Date of Issue and thereafter on each Valuation Date. On the Date of Issue, the
Policy Value will be the Net Premiums received, plus any interest earned during
the period when premiums are held in the General Account (before being
transferred to the Separate Account; see THE POLICY -- Application For A
Policy") less any Monthly Deductions due.
On each Valuation Date after the Date of Issue the Policy Value will be:
(1) the aggregate of the values in each of the Sub-Accounts on the Valuation
Date, determined for each Sub-Account by multiplying the value of an
Accumulation Unit in that Sub-Account on that date by the number of such
Accumulations Units allocated to the Policy; plus
(2) the value in the General Account (including any amounts transferred to
the General Account with respect to a loan).
Thus, the Policy Value is determined by multiplying the number of
Accumulation Units in each Sub-Account by the value of the applicable
Accumulation Units on the particular Valuation Date, adding the products, and
adding the amount of the accumulations in the General Account, if any.
THE ACCUMULATION UNIT. Each Net Premium is allocated to the Sub-Account(s)
selected by you. Allocations to the Sub-Accounts are credited to the Policy in
the form of Accumulation Units. Accumulation Units are credited separately for
each Sub-Account.
The number of Accumulation Units of each Sub-Account credited to the Policy
is equal to the portion of the Net Premium allocated to the Sub-Account, divided
by the dollar value of the applicable Accumulation Unit as of the Valuation Date
the payment is received at MML's Service Center. The
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number of Accumulation Units will remain fixed unless changed by subsequent
premium payments or a subsequent split of Accumulation Unit value, transfer,
partial withdrawal or surrender. In addition, if MML is deducting the Monthly
Deduction or other charges from a Sub-Account, each such deduction will result
in cancellation of a number of Accumulation Units equal in value to the amount
deducted.
The dollar value of an Accumulation Unit of each Sub-Account varies from
Valuation Date to Valuation Date based on the investment experience of that
Sub-Account. That experience, in turn, will reflect the investment performance,
expenses and charges of the respective Funds Portfolios. The value of an
Accumulation Unit was set at one dollar ($1.00) on the first Valuation Date for
each Sub-Account. The dollar value of an Accumulation Unit on a given Valuation
Date is determined by multiplying the dollar value of the corresponding
Accumulation Unit as of the immediately preceding Valuation Date by the
appropriate net investment factor.
NET INVESTMENT FACTOR. The net investment factor measures the investment
performance of a Sub-Account of the Separate Account during the Valuation Period
just ended. The net investment factor for each Sub-Account is equal to one
thousand (1.0000) plus the number arrived at by dividing (a) by (b) and
subtracting (c) and (d) from the result, where:
(a) is the investment income of that Sub-Account for the Valuation Period,
plus capital gains, realized or unrealized, credited during the
Valuation Period; minus capital losses, realized or unrealized, charged
during the Valuation Period; adjusted for provisions made for taxes, if
any;
(b) is the value of that Sub-Account's assets at the beginning of the
Valuation Period;
(c) is a charge for each day in the Valuation Period equal on an annual
basis to 0.90% of the daily net asset value of that Sub-Account for
mortality and expense risks. This charge may be increased or decreased
by MML, but may not exceed 1.275%; and
(d) is the Separate Account administrative charge for each day in the
Valuation Period equal on an annual basis to 0.25% of the daily net
asset value of that Sub-Account. This charge is applicable only during
the first ten Policy years.
The net investment factor may be greater or less than one (1). Therefore,
the value of an Accumulation Unit may increase or decrease. You bear the
investment risk.
Allocations to the General Account are not converted into Accumulation
Units, but are credited interest at a rate periodically set by MML. See "MORE
INFORMATION ABOUT THE GENERAL ACCOUNT."
PAYMENT OPTIONS
During the Insured's lifetime, you may arrange for the Death Proceeds to be
paid in a single sum or under one or more of the payment options currently
offered by MML, subject to any state limitations. See "APPENDIX B, "PAYMENT
OPTIONS." These payment options are also available at the Maturity Date and if
the Policy is surrendered. MML may make more payment options available in the
future. If no election is made, MML will pay the Death Proceeds in a single sum.
When the Death Proceeds are payable in a single sum, the Beneficiary may, within
one (1) year of the Insured's death, select one or more of the payment options,
if no payments have yet been made.
OPTIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more of the optional insurance
benefits described in "APPENDIX A -- OPTIONAL BENEFITS" may be added to a Policy
by rider. The cost of any optional insurance benefits will be deducted as part
of the Monthly Deduction. See "CHARGES AND DEDUCTIONS -- Monthly Deduction From
Policy Value."
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SURRENDER
You may at any time surrender the Policy and receive its Surrender Value.
The Surrender Value is the Policy Value less any Debt and applicable surrender
charges. The Surrender Value will be calculated as of the Valuation Date on
which a written request for surrender and the Policy are received at the Service
Center. A surrender charge will be deducted when a Policy is surrendered if less
than fifteen (15) full Policy years have elapsed from the Date of Issue of the
Policy or from the effective date of any increase in Face Amount. See "CHARGES
AND DEDUCTIONS -- Surrender Charge."
The proceeds on surrender may be paid in a single lump sum or under one or
more payment options currently offered by MML, subject to any state limitations.
See "APPENDIX B -- PAYMENT OPTIONS." MML will normally pay the Surrender Value
within seven (7) days following MML's receipt of the surrender request, but MML
may delay payment under the circumstances described in "OTHER POLICY PROVISIONS
- -- Postponement Of Payments."
For important tax consequences which may result from surrender see "FEDERAL
TAX CONSIDERATIONS."
PARTIAL WITHDRAWAL
Any time after the first Policy year, you may withdraw a portion of the
Surrender Value of your Policy, subject to the limits stated below, upon written
request filed at the Service Center. The written request must indicate the
dollar amount you wish to receive and the Accounts from which such amount is to
be withdrawn. You may allocate the amount withdrawn among the Sub-Accounts and
the General Account. If you do not provide allocation instructions MML will make
a Pro Rata Allocation. Each partial withdrawal must be in a minimum amount of
five hundred dollars ($500). Under Option 1, the Face Amount is reduced by the
amount of the partial withdrawal, and a partial withdrawal will not be allowed
if it would reduce the Face Amount below forty thousand dollars ($40,000.)
A partial withdrawal from a Sub-Account will result in the cancellation of
the number of Accumulation Units equivalent in value to the amount withdrawn.
The amount withdrawn equals the amount requested by you plus the transaction
charge and any applicable partial withdrawal charge as described under "CHARGES
AND DEDUCTIONS -- Charges On Partial Withdrawal." MML will normally pay the
amount of the partial withdrawal within seven (7) days following MML's receipt
of the partial withdrawal request, but MML may delay payment under certain
circumstances described in "OTHER POLICY PROVISIONS -- Postponement Of
Payments."
For a discussion of important tax consequences which may result from partial
withdrawals, see "FEDERAL TAX CONSIDERATIONS."
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate MML for
providing the insurance benefits set forth in the Policy and any additional
benefits added by rider, administering the Policy, incurring distribution
expenses, and assuming certain risks in connection with the Policies. Each of
the charges identified as an administrative charge is intended to reimburse MML
for actual administrative costs incurred, and is not intended to result in a
profit to MML.
SURRENDER CHARGE
The Policy provides for a contingent surrender charge. A separate surrender
charge, described in more detail below, is calculated upon the issuance of the
Policy and for each increase in the Face
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Amount. A surrender charge may be deducted if you request a full surrender of
the Policy or a decrease in Face Amount. The duration of the surrender charge is
fifteen (15) years from Date of Issue or from the effective date of any increase
in the Face Amount for issue Ages 0 through 50, grading down to ten (10) years
for issue Ages fifty-five (55) and above. The initial maximum surrender charges
per one thousand dollars ($1,000) of Face Amount are shown in the table "Maximum
Surrender Charges per one thousand dollars ($1,000) Face Amount" on pages and
of "APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER CHARGES". The initial
maximum surrender charge continues in a level amount for forty (40) Policy
months and then reduces thereafter, as described in "APPENDIX D -- CALCULATION
OF MAXIMUM SURRENDER CHARGES".
The maximum surrender charge calculated upon issuance of the Policy equals
the appropriate factor based on issue Age from the "Maximum Surrender Charges
per one thousand dollars ($1,000) Face Amount" table in "APPENDIX D --
CALCULATION OF MAXIMUM SURRENDER CHARGES" multiplied by the initial Face Amount
divided by one thousand dollars ($1,000). As noted above, this surrender charge
will remain level for the first forty (40) Policy months after the issuance of
the Policy and then reduce each month thereafter. During any Policy year, the
surrender charge may not exceed the sum of (a) plus (b) where (a) is a deferred
administrative charge equal to $8.50 per thousand dollars of the initial Face
Amount and (b) is a deferred sales charge of 49% of premiums received up to a
maximum number of Guideline Annual Premiums subject to the deferred sales
charge. That maximum varies by issue Age from 1.660714 (for Ages 0 through 55)
to 0.948980 (for Age 80).
If you surrender the Policy during the first two (2) Policy years following
the Date of Issue, the deferred administrative charge will be $8.50 per thousand
dollars of initial Face Amount, as described above, but the deferred sales
charge will not exceed twenty-nine percent (29%) of premiums received, up to one
Guideline Annual Premium (or the maximum number of Guideline Annual Premiums
subject to the deferred sales charge, if less), plus nine percent (9%) of
premiums received in excess of the Guideline Annual Premium limitation. See
"APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER CHARGES". If surrender occurs
before premiums equal or exceed one Guideline Annual Premium, MML will not
assess the nine percent (9%) charge.
The deferred administrative charge compensates MML for expenses incurred in
administering the Policy. The deferred sales charge compensates MML for expenses
relating to the distribution of the Policy, including agents commissions,
advertising and the printing of the prospectus and sales literature.
A separate surrender charge will apply to and is calculated for each
increase in Face Amount. The surrender charge for the increase is in addition to
that for the initial Face Amount. The initial maximum surrender charge for the
increase equals the appropriate factor based on Age at time of increase from the
"Maximum Surrender Charges per one thousand dollars ($1,000) Face Amount" table
in "APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER CHARGES" multiplied by the
Face Amount of the increase divided by one thousand dollars ($1,000). As noted
above, this surrender charge will remain level for the first forty (40) Policy
months after the increase and then reduce each month thereafter. During any
Policy year following the increase, the surrender charge associated with the
increase may not exceed the sum of (a) plus (b) where (a) is a deferred
administrative charge equal to $8.50 per thousand dollars of Face Amount
increase and (b) is a deferred sales charge of forty-nine percent (49%) of
premiums received which are associated with the increase up to a maximum number
of Guideline Annual Premiums (for the increase) subject to the deferred sales
charge that varies by Age (at the time of the increase) from 1.660714 (for Ages
0 through 55) to 0.948980 (for Age 80).
During the first two (2) Policy years following an increase in Face Amount,
the deferred administrative charge will be $8.50 per thousand dollars of Face
Amount increase, as described above, but the deferred sales charge will not
exceed twenty-nine percent (29%) of premiums received which are associated with
the increase, up to one Guideline Annual Premium (or the maximum number of
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Guideline Annual Premiums subject to the deferred sales charge, if less)
associated with the increase, plus nine percent (9%) of premiums received which
are associated with the increase in excess of the Guideline Annual Premium
limitation. See "APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER CHARGES". The
premiums associated with the increase are determined as described below.
Additional premium payments may not be required to fund a requested increase
in Face Amount. Therefore, a special rule, which is based on relative Guideline
Annual Premium payments, applies to allocate a portion of existing Policy Value
to the increase and to allocate subsequent premium payments between the initial
Policy and the increase. For example, suppose the Guideline Annual Premium is
equal to one thousand five hundred dollars ($1,500) before an increase and is
equal to two thousand dollars ($2,000) as a result of the increase. The Policy
Value on the effective date of the increase would be allocated 75%
($1,500/$2,000) to the initial Face Amount and twenty-five percent (25%) to the
increase. Thus, existing Policy Value associated with the increase will equal
the portion of Policy Value allocated to the increase on the effective date of
the increase, before any deductions are made. Premiums associated with the
increase will equal the portion of the premium payments actually made on or
after the effective date of the increase which are allocated to the increase.
See "APPENDIX D -- CALCULATION OF MAXIMUM SURRENDER CHARGES," for examples
illustrating the calculation of the maximum surrender charge.
A surrender charge may be deducted on a decrease in the Face Amount. In the
event of a decrease, the surrender charge deducted is a fraction of the charge
that would apply to a full surrender of the Policy. The fraction will be
determined by dividing the amount of the decrease by the current Face Amount and
multiplying the result by the surrender charge. If more than one surrender
charge is in effect (i.e., pursuant to one or more increases in the Face Amount
of a Policy), the surrender charge will be applied in the following order: (1)
the most recent increase, (2) the next most recent increase successively, and
(3) the initial Face Amount. Where a decrease causes a partial reduction in an
increase or in the initial Face Amount, a proportionate share of the surrender
charge for that increase or for the initial Face Amount will be deducted.
TAX EXPENSE CHARGE
Currently, a deduction of three and one-half percent (3.5%) of premiums for
state and local premium taxes and federal taxes imposed for deferred acquisition
costs ("DAC taxes") is made from each premium payment. The premium payment less
the tax expense charge equals the Net Premium. The total charge is a combined
state and local premium tax deduction of two and one-half percent (2.5%) of
premiums and a DAC tax deduction of one percent (1%) of premiums. While the
premium tax of two and one-half percent (2.5%) is deducted from each premium
payment, some jurisdictions may not impose premium taxes. Premium taxes vary
from state to state, ranging from zero to four percent (4.0%), and the two and
one-half percent (2.5%) rate attributable to premiums for state and local
premium taxes approximates the average expenses to MML associated with the
premium taxes. The two and one-half percent (2.5%) charge may be higher or lower
than the actual premium tax imposed by the applicable jurisdiction. However, MML
does not expect to make a profit from this charge. The one percent (1%) rate
attributable to premiums for DAC taxes approximates MML's expenses in paying
federal taxes for deferred acquisition costs associated with the Policies. MML
reserves the right to increase or decrease the tax expense charge to reflect
changes in MML's expenses for premium taxes and DAC taxes. The DAC tax deduction
is a factor MML must use when calculating the maximum sales load it can charge
under the SEC rules during the first two Policy years.
MONTHLY DEDUCTION FROM POLICY VALUE
Prior to the Maturity Date, a Monthly Deduction from Policy Value will be
made to cover a charge for the cost of insurance, a charge for any optional
insurance benefits added by rider and a monthly administrative charge. The cost
of insurance charge and the monthly administrative charges are
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discussed below. The Monthly Deduction on or following the effective date of a
requested increase in the Face Amount will also include a fifty dollar ($50)
administrative charge for the increase. See "THE POLICY -- Change In Face
Amount."
Prior to the Maturity Date, the Monthly Deduction will be deducted as of
each Monthly Payment Date commencing with the Date of Issue of the Policy. It
will be allocated to one Sub-Account according to your instructions, or, if no
allocation is specified, MML will make a Pro Rata Allocation. If the Sub-Account
you specify does not have sufficient funds to cover the Monthly Deduction, MML
will deduct the charge for that month as if no specification were made. However,
if on subsequent Monthly Payment Dates there is sufficient Policy Value in the
Sub-Account you specified, the Monthly Deduction will be deducted from that
Sub-Account. No Monthly Deductions will be made on or after the Maturity Date.
COST OF INSURANCE. This charge is designed to compensate MML for the
anticipated cost of providing Death Proceeds to Beneficiaries of those Insureds
who die prior to the Maturity Date and to provide MML with a profit. The cost of
insurance is determined on a monthly basis, and is determined separately for the
initial Face Amount and for each subsequent increase in Face Amount. Because the
cost of insurance depends upon a number of variables, it can vary from month to
month. MML may earn a profit from this charge.
CALCULATION OF THE CHARGE. If you select Sum Insured Option 2, the monthly
cost of insurance charge for the initial Face Amount will equal the applicable
cost of insurance rate multiplied by the initial Face Amount. If you select Sum
Insured Option 1, however, the applicable cost of insurance rate will be
multiplied by the initial Face Amount less the Policy Value (minus charges for
rider benefits) at the beginning of the policy month. Thus, the cost of
insurance charge may be greater for Policy Owners who have selected Sum Insured
Option 2 than for those who have selected Sum Insured Option 1, assuming the
same Face Amount in each case and assuming that the Guideline Minimum Sum
Insured is not in effect. In other words, since the Sum Insured under Option 1
remains constant while the Sum Insured under Option 2 varies with the Policy
Value, any Policy Value increases will reduce the insurance charge under Option
1 but not under Option 2.
If you select Sum Insured Option 2, the monthly insurance charge for each
increase in Face Amount (other than an increase caused by a change in Sum
Insured Option) will be equal to the cost of insurance rate applicable to that
increase multiplied by the increase in Face Amount. If you select Sum Insured
Option 1, the applicable cost of insurance rate will be multiplied by the
increase in the Face Amount reduced by any Policy Value (minus rider charges) in
excess of the initial Face Amount at the beginning of the policy month.
If the Guideline Minimum Sum Insured is in effect under either Option, a
monthly cost of insurance charge will also be calculated for that portion of the
Sum Insured which exceeds the current Face Amount. This charge will be
calculated by multiplying the cost of insurance rate applicable to the initial
Face Amount times the Guideline Minimum Sum Insured (Policy Value times the
applicable percentage) less the greater of the Face Amount or the Policy Value
if you selected Sum Insured Option 1, or less the Face Amount plus the Policy
Value if you selected Sum Insured Option 2. When the Guideline Minimum Sum
Insured is in effect, the cost of insurance charge for the initial Face Amount
and for any increases will be calculated as set forth in the preceding two
paragraphs.
The monthly cost of insurance charge will also be adjusted for any decreases
in Face Amount. See "THE POLICY -- Change In Face Amount: Decreases."
COST OF INSURANCE RATES. The Policy contains cost of insurance rates which
MML guarantees will never be exceeded. These guaranteed rates for standard risk
classes are based upon certain of the 1980 Commissioners Standard Ordinary
Mortality Tables (and where unisex cost of insurance rates apply, the 1980
Commissioners Standard Ordinary Mortality Table B). These rates are also based
on the Insured's Age, sex, and underwriting class. The guaranteed rates for
substandard classes are based on multiples or additives of these tables.
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MML may also use current cost of insurance rates which may be lower than the
guaranteed rates but which will never, in any event, exceed the guaranteed
rates. The current cost of insurance rates are based upon MML's expectations as
to future mortality and persistency experience and other factors. These rates
may change from time to time. The current cost of insurance rates are determined
at the beginning of each Policy year for the initial Face Amount. The current
cost of insurance rates for an increase in Face Amount or rider are also
determined annually on the anniversary of the effective date of each increase or
rider.
In general terms, cost of insurance rates and charges (guaranteed or
current) are based on male, female or a blended unisex rate table, Age and
Premium Class of the Insured at the Date of Issue, the effective date of an
increase or date of rider, as applicable, and risk classification. For those
Policies issued in certain states or in certain cases on a unisex basis,
sex-distinct rates do not apply. The Premium Class of an Insured will affect the
cost of insurance rates. Insureds are currently placed into preferred Premium
Classes, standard Premium Classes and substandard Premium Classes. In an
otherwise identical Contract, an Insured in the preferred Premium Class will
have a lower cost of insurance than an Insured in a standard Premium Class who,
in turn, will have a lower cost of insurance than an Insured in a substandard
Premium Class with a higher mortality risk. Non-smoker Insureds will incur lower
cost of insurance rates than Insureds who are classified as smokers but who are
otherwise in the same Premium Class. Any Insured with an Age at issuance under
18 will be classified initially as regular or substandard. The Insured then will
be classified as a smoker at Age 18 unless the Insured provides satisfactory
evidence that the Insured is a non-smoker. MML will provide notice to you of the
opportunity for the Insured to be classified as a non-smoker when the Insured
reaches Age 18. MML will classify tobacco users (i.e.,. those who chew tobacco
or smoke pipes or cigars) as smokers for purposes of the current and guaranteed
rates. Certain Connecticut Mutual Life Insurance Company and MML life insurance
policies previously issued may have classified those who chew tobacco or smoke
pipes or cigars as non-smokers. Those policyowners who have been so classified
will be considered smokers if they exchange their existing policy for a Policy
offered by this prospectus. Therefore, such policyowners should carefully
consider the increased cost of insurance when contemplating a policy exchange.
The cost of insurance rate is determined separately for the initial Face
Amount and for the amount of any increase in Face Amount. For each increase in
Face Amount you request, at a time when the Insured is in a less favorable
Premium Class than previously, a correspondingly higher cost of insurance rate
will apply only to that portion of the Insurance Amount at Risk for the
increase. For the initial Face Amount and any prior increases, MML will use the
Premium Class previously applicable. On the other hand, if the Insured's Premium
Class improves on an increase, the lower cost of insurance rate generally will
apply to the entire Insurance Amount at Risk.
MONTHLY ADMINISTRATIVE CHARGES. Prior to the Maturity Date, a monthly
administrative charge of five dollars ($5) per month will be deducted from
Policy Value. This charge will be used to compensate MML for expenses incurred
in the administration of the Policy and will compensate MML for first year
underwriting and other start-up expenses incurred in connection with the Policy.
These expenses include the cost of processing applications, conducting medical
examinations, determining insurability and the Insured's Premium Class, and
establishing Policy records. MML does not expect to derive a profit from these
charges.
CHARGES AGAINST ASSETS OF THE SEPARATE ACCOUNT
MML assesses each Sub-Account with a charge for mortality and expense risks
assumed by MML and a charge for administrative expenses of the Separate Account.
MORTALITY AND EXPENSE RISK CHARGE. MML currently makes a charge on an
annual basis of 0.90% of the daily net asset value in each Sub-Account. This
charge is for the mortality risk and expense risk which MML assumes in relation
to the variable portion of the Policies. The total charges may be increased or
decreased by the Board of Directors of MML once each year, subject to compliance
with applicable state and Federal requirements, but it may not exceed 1.275% on
an annual basis.
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Any mortality and expense risk charge above 0.90% is currently considered
above the range of industry practice. To increase the charge above the range of
industry practice, MML must file a request with the Securities and Exchange
Commission ("SEC") for an exemption from certain SEC rules, in which it would be
necessary to demonstrate that the proposed charge is reasonable in relation to
the risks assumed under the Policy. Even with such a demonstration, there is no
assurance that the SEC would issue an exemptive order.
The mortality risk assumed by MML is that Insureds may live for a shorter
time than anticipated, and that MML will therefore pay an aggregate amount of
Death Proceeds greater than anticipated. The expense risk assumed is that the
expenses incurred in issuing and administering the Policies will exceed the
amounts realized from the administrative charges provided in the Policies. If
the charge for mortality and expense risks is not sufficient to cover actual
mortality experience and expenses, MML will absorb the losses. If costs are less
than the amounts provided, the difference will be a profit to MML. To the extent
this charge results in a current profit to MML, such profit will be available
for use by MML for, among other things, the payment of distribution, sales and
other expenses. MML expects a profit from this charge. Since mortality and
expense risks involve future contingencies which are not subject to precise
determination in advance, it is not feasible to identify specifically the
portion of the charge which is applicable to each.
SEPARATE ACCOUNT ADMINISTRATIVE CHARGE. During the first ten (10) Policy
years, MML assesses a charge on an annual basis of 0.25% of the daily net asset
value in each Sub-Account. The charge is assessed to help defray administrative
expenses actually incurred in the administration of the Separate Account and the
Sub-Accounts and is not expected to be a source of profit. The administrative
functions and expenses assumed by MML in connection with the Separate Account
and the Sub-Accounts include, but are not limited to, clerical, accounting,
actuarial and legal services, rent, postage, telephone, office equipment and
supplies, expenses of preparing and printing registration statements, expenses
of preparing and typesetting prospectuses and the cost of printing prospectuses
not allocable to sales expense, filing and other fees. No Separate Account
administrative charge is imposed after the tenth Policy year.
OTHER CHARGES AGAINST THE ASSETS OF THE SEPARATE ACCOUNT. Because the
Sub-Accounts purchase shares of the Funds, the value of the Accumulation Units
of the Sub-Accounts will reflect the investment advisory fee and other expenses
incurred by the Funds. The prospectuses and statements of additional information
of the Funds contain additional information concerning such fees and expenses.
No charges are currently made against the Sub-Accounts for Federal or state
income taxes. Should MML determine that taxes will be imposed, MML may make
deductions from the Sub-Account to pay such taxes. See "FEDERAL TAX
CONSIDERATIONS." The imposition of such taxes would result in a reduction of the
Policy Value in the Sub-Accounts.
CHARGES ON PARTIAL WITHDRAWAL
After the first Policy Year, partial withdrawals of Surrender Value may be
made. The minimum withdrawal is five hundred dollars ($500). Under Option 1, the
Face Amount is reduced by the amount of the partial withdrawal, and a partial
withdrawal will not be allowed if it would reduce the Face Amount below forty
thousand dollars ($40,000).
A transaction charge which is the smaller of two percent (2%) of the amount
withdrawn or twenty-five dollars ($25) will be assessed on each partial
withdrawal to reimburse MML for the cost of processing the withdrawal. MML does
not expect to make a profit on this charge.
A partial withdrawal charge may also be deducted from Policy Value. For each
partial withdrawal you may withdraw an amount equal to ten percent (10%) of the
Policy Value on the date the written withdrawal request is received by MML less
the total of any prior withdrawals in that Policy year which were not subject to
the Partial Withdrawal charge, without incurring a partial withdrawal
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charge. Any partial withdrawal in excess of this amount ("excess withdrawal")
will be subject to the partial withdrawal charge. The Partial Withdrawal charge
is equal to five percent (5%) of the excess withdrawal up to the amount of the
surrender charge(s) on the date of withdrawal.
This right is not cumulative from Policy year to Policy year. For example,
if only eight percent (8%) of Policy Value were withdrawn in Policy year two
(2), the amount you could withdraw in subsequent Policy years would not be
increased by the amount you did not withdraw in the second Policy year.
The Policy's outstanding surrender charge will be reduced by the amount of
the partial withdrawal charge deducted. The partial withdrawal charge deducted
will decrease existing surrender charges in the following order:
first, the surrender charge for the most recent increase in Face Amount;
second, the surrender charge for the next most recent increase
successively;
last, the surrender charge for the initial Face Amount.
TRANSFER CHARGES
The first six (6) transfers in a Policy year will be free of charge.
Thereafter, a transfer charge of ten dollars ($10) will be imposed for each
transfer request to reimburse MML for the administrative costs incurred in
processing the transfer request. MML reserves the right to increase the charge,
but it will never exceed twenty-five dollars ($25). MML also reserves the right
to change the number of free transfers allowed in a Policy Year. See "THE POLICY
- -- Transfer Privilege."
You may have automatic transfers of at least one hundred dollars ($100) a
month made on a periodic basis (a) from the Sub-Account(s) investing in the
Money Market Portfolio of Fidelity VIPF Fund or the Bond Fund ("Bond Portfolio")
of the Oppenheimer Funds to one (1) or more of the other Sub-Accounts or (b) to
reallocate Policy Value among the Sub-Accounts. The first automatic transfer
counts as one transfer towards the six (6) free transfers allowed in each Policy
Year. Each subsequent automatic transfer is without charge and does not reduce
the remaining number of transfers which may be made free of charge.
If you utilize the Conversion Privilege, Loan Privilege or reallocate Policy
Value within twenty (20) days of the Date of Issue of the Policy, any resulting
transfer of Policy Value from the Sub-Accounts to the General Account will be
free of charge, and in addition to the six (6) free transfers in a Policy year.
See "THE POLICY -- Conversion Privileges" and "POLICY LOANS."
CHARGE FOR INCREASE IN FACE AMOUNT
For each increase in Face Amount you request, a transaction charge of fifty
dollars ($50) will be deducted from Policy Value to reimburse MML for
administrative costs associated with the increase. This charge is guaranteed not
to increase and MML does not expect to make a profit on this charge.
OTHER ADMINISTRATIVE CHARGES
MML reserves the right to impose a charge for the administrative costs
incurred for changing the Net Premium allocation instructions, for changing the
allocation of any Monthly Deductions among the various Sub-Accounts, or for a
projection of values. No such charges are currently imposed and any such charge
is guaranteed not to exceed twenty-five dollars ($25).
SPECIAL PROVISIONS FOR GROUP OR SPONSORED ARRANGEMENTS
Where permitted by state insurance laws, the Policies may be purchased under
group or sponsored arrangements, as well as on an individual basis. A "group
arrangement" includes a program
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under which a trustee, employer or similar entity purchases the Policies
covering a group of individuals on a group basis. In California all participants
of group arrangements will be individually underwritten. A "sponsored
arrangement" includes a program under which an employer permits group
solicitation of its employees or an association permits group solicitation of
its members for the purchase of the Policies on an individual basis.
The charges and deductions previously described for the Policies may be
reduced for those Policies issued in connection with group or sponsored
arrangements. MML will reduce Policy charges in accordance with its rules in
effect as of the date an application for a Policy is approved. To qualify for
such a reduction, a group or sponsored arrangement must satisfy certain criteria
such as, size of the group, expected number of participants and anticipated
premium payments from the group. Generally, the sales, administrative, and
mortality costs per Policy will vary based upon the size of the group or
sponsored arrangement, the purpose for which the Policies were purchased, and
the characteristics of the group members. Any reductions will reflect the
reduced sales, administrative, and mortality costs which result from, or are
expected to result from, sales to qualifying groups and sponsored arrangements.
MML may modify from time to time on a uniform basis, both the amounts of
reductions and the criteria for qualification. Reductions in the charges and
deductions will not be unfairly discriminatory against any person, including the
affected policyowners and all other policyowners funded by the Separate Account.
POLICY LOANS
Loans may be obtained by request to MML on the sole security of this Policy.
The total amount which may be borrowed is the Loan Value. In the first Policy
year, the Loan Value is seventy-five percent (75%) of Policy Value reduced by
applicable surrender charges as well as Monthly Deductions and interest on Debt
to the end of the Policy year. The Loan Value in the second Policy year and
thereafter is ninety percent (90%) of an amount equal to Policy Value reduced by
applicable surrender charges. There is no minimum limit on the amount of the
loan. The loan amount will normally be paid within seven (7) days after MML
receives the loan request at its Service Center, but MML may delay payments
under certain circumstances. See "OTHER POLICY PROVISIONS -- Postponement Of
Payments."
A Policy loan may be allocated among the General Account and one or more
Sub-Accounts. If you do not make an allocation, MML will make a Pro Rata
Allocation based on the amounts in the Accounts on the date MML receives the
loan request. Policy Value in each Sub-Account equal to the Policy loan
allocated to such Sub-Account will be transferred to the General Account, and
the number of Accumulation Units equal to the Policy Value so transferred will
be canceled. This will reduce the Policy Value in these Sub-Accounts. These
transactions are not treated as transfers for purposes of the transfer charge.
As long as the Policy is in force, Policy Value in the General Account equal
to the loan amount will be credited with interest at a specified rate no less
than that which produces an effective annual yield of at least six percent
(6.00%) per year. NO ADDITIONAL INTEREST WILL BE CREDITED TO SUCH POLICY VALUE.
If the Policy is a "modified endowment contract," then loans will be treated
as distributions for Federal tax purposes. Therefore, they may be taxable and
subject to a penalty tax. See "FEDERAL TAX CONSIDERATIONS -- Modified Endowment
Contracts."
LOAN INTEREST CHARGED
Interest accrues daily and is payable in arrears at the annual rate of eight
percent (8%). Interest is due and payable at the end of each Policy year or on a
pro rata basis for such shorter period as the loan may exist. Interest not paid
when due will be added to the loan amount and bear interest at the same rate.
After the due and unpaid interest is added to loan amount, if the new loan
amount exceeds the
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Policy Value in the General Account, MML will transfer Policy Value equal to
that excess loan amount from the Policy Value in each Sub-Account to the General
Account as security for the excess loan amount. MML will allocate the amount
transferred among the Sub-Accounts in the same proportion that the Policy Value
in each Sub-Account bears to the total Policy Value in all Sub-Accounts.
REPAYMENT OF DEBT
Loans may be repaid at any time prior to the lapse of the Policy. Upon
repayment of Debt, the portion of the Policy Value that is in the General
Account securing the Debt repaid will be allocated to the various Accounts and
increase the Policy Value in such accounts in accordance with your instructions.
If you do not make a repayment allocation, MML will allocate Policy Value in
accordance with your most recent premium allocation instructions; provided,
however, that loan repayments allocated to the Separate Account cannot exceed
Policy Value previously transferred from the Separate Account to secure the
Debt. Amounts paid while a loan is outstanding will be treated as premiums, not
as loan repayments, unless instructed otherwise.
If Debt exceeds the Policy Value less the surrender charge, the Policy will
terminate. A notice of such pending termination will be mailed to the last known
address of you and any assignee. If you do not make sufficient payment within
sixty-two (62) days after this notice is mailed, the Policy will terminate with
no value. See "POLICY TERMINATION AND REINSTATEMENT."
EFFECT OF POLICY LOANS
Although Policy loans may be repaid at any time prior to the lapse of the
Policy, Policy loans will permanently affect the Policy Value and Surrender
Value, and may permanently affect the Death Proceeds. The effect could be
favorable or unfavorable, depending upon whether the investment performance of
the Sub-Account(s) is less than or greater than the interest credited to the
Policy Value in the General Account attributable to the loan.
Moreover, outstanding Policy loans and the accrued interest will be deducted
from the proceeds payable upon the death of the Insured or surrender.
POLICY TERMINATION AND REINSTATEMENT
TERMINATION
The failure to make premium payments will not cause the Policy to lapse
unless: (a) the Surrender Value is insufficient to cover the next Monthly
Deduction plus loan interest accrued; or (b) Debt exceeds the Policy Value less
surrender charges. If one of these situations occurs, the Policy will be in
default. You will then have a grace period of sixty-two (62) days, measured from
the date of default, to make sufficient payments to prevent termination. On the
date of default, MML will send a notice to you and to any assignee of record.
The notice will state the amount of premium due and the date on which it is due.
Failure to make a sufficient payment within the grace period will result in
termination of the Policy. If the Insured dies during the grace period, the
Death Proceeds will still be payable, but any Monthly Deductions due and unpaid
through the Policy month in which the Insured dies and any other overdue charge
will be deducted from the Death Proceeds.
Except for the situation described in (b) above, if, during the first
forty-eight (48) months after the Date of Issue or the effective date of an
increase in Face Amount, you make premium payments, less Debt, partial
withdrawals and partial withdrawal charges, at least equal to the sum of the
Minimum Monthly Factors for the number of months the Policy, increase, or Policy
Change which causes a change in the Minimum Monthly Factor has been in force,
the Policy is guaranteed not to lapse during that period. A Policy Change which
causes a change in the Minimum Monthly Factor is a change in the Face Amount or
the addition or deletion of a rider. Except for the first forty-eight (48)
months after the Date of Issue or the effective date of an increase, payments
equal to the Minimum Monthly Factor do not guarantee that the Policy will remain
in force.
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REINSTATEMENT
If the Policy has not been surrendered and the Insured is alive, the
terminated Policy may be reinstated anytime within three (3) years after the
date of default and before the Maturity Date. The reinstatement will be
effective on the Monthly Payment Date following the date you submit the
following to MML: (1) a written application for reinstatement; (2) Evidence of
Insurability showing that the Insured is insurable according to MML's
underwriting rules; and (3) a premium that, after the deduction of the tax
expense charge, is large enough to cover the minimum amount payable, as
described below.
MINIMUM AMOUNT PAYABLE. If reinstatement is requested when less than
forty-eight (48) Monthly Deductions have been made since the Date of Issue or
the effective date of an increase in the Face Amount, you must pay the lesser of
the amount shown in A or B:
Under A, the minimum amount payable is the Minimum Monthly Factor for the
three-month period beginning on the date of reinstatement.
Under B, the minimum amount payable is the sum of:
(1) the amount by which the surrender charge as of the date of
reinstatement exceeds the Policy Value on the date of default; plus
(2) Monthly Deductions for the three-month period beginning on the date
of reinstatement.
If reinstatement is requested after forty-eight (48) Monthly Deductions have
been made since the Date of Issue of the policy or any increase in the Face
Amount or a Policy Change which causes a change in the Minimum Monthly Factor,
you must pay the amount shown in B above. MML reserves the right to increase the
Minimum Monthly Factor upon reinstatement.
SURRENDER CHARGE. The surrender charge on the date of reinstatement is the
surrender charge which would have been in effect had the Policy remained in
force from the Date of Issue. The Policy Value less Debt on the date of default
will be restored to the Policy to the extent it does not exceed the surrender
charge on the date of reinstatement. Any Policy Value less Debt as of the date
of default which exceeds the surrender charge on the date of reinstatement will
not be restored.
POLICY VALUE ON REINSTATEMENT. The Policy Value on the date of
reinstatement is:
(1) the Net Premium paid to reinstate the Policy increased by interest
from the date the payment was received at MML's Service Center; plus
(2) an amount equal to the Policy Value less Debt on the date of default
to the extent it does not exceed the surrender charge on the date of
reinstatement; minus
(3) the Monthly Deduction due on the date of reinstatement.
You may not reinstate any Debt outstanding on the date of default or
foreclosure.
OTHER POLICY PROVISIONS
The following Policy provisions may vary in certain states in order to
comply with requirements of the insurance laws, regulations, and insurance
regulatory agencies in those states.
POLICYOWNER
The Policyowner is the Insured unless another Policyowner has been named in
the application for the Policy. The Policyowner is generally entitled to
exercise all rights under a Policy while the Insured is alive, subject to the
consent of any irrevocable Beneficiary (the consent of a revocable Beneficiary
is not required). The consent of the Insured is required whenever the Face
Amount of insurance is increased.
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BENEFICIARY
The Beneficiary is the person or persons to whom the Death Proceeds are
payable upon the Insured's death. Unless otherwise stated in the Policy, the
Beneficiary has no rights in the Policy before the death of the Insured. While
the Insured is alive, you may change any Beneficiary unless you have declared a
Beneficiary to be irrevocable. If no Beneficiary is alive when the Insured dies,
the owner (or the owner's estate) will be the Beneficiary. If more than one
Beneficiary is alive when the Insured dies, they will be paid in equal shares,
unless you have chosen otherwise. Where there is more than one Beneficiary, the
interest of a Beneficiary who dies before the Insured will pass to surviving
Beneficiaries proportionally.
INCONTESTABILITY
MML will not contest the validity of a Policy or rider after it has been in
force during the Insured's lifetime for two (2) years from the Date of Issue.
MML will not contest the validity of any increase in the Face Amount after such
increase or rider has been in force during the Insured's lifetime for two (2)
years from its effective date.
If the Policy is reinstated, the Sum Insured cannot be contested after the
Policy has been in force during the Insured's lifetime for two (2) years from
the date of reinstatement. The Policy can be contested within the two-year
period over statements made in the reinstatement application.
SUICIDE
Generally, unless inconsistent with applicable state law or regulations, the
Death Proceeds will not be paid if the Insured commits suicide, while sane or
insane, within two (2) years from the Date of Issue. Instead, MML will pay the
Beneficiary an amount equal to all premiums paid for the Policy, without
interest, less any outstanding Debt and less any partial withdrawals. If the
Insured commits suicide, while sane or insane, generally within two (2) years
from the effective date of any increase in the Sum Insured, MML's liability with
respect to such increase will be limited to a refund of the cost thereof. The
Beneficiary will receive the administrative charges and insurance charges paid
for such increase.
Except in New York, MML does not assume the risk of suicide of the Insured,
while sane or insane, within two (2) years of the effective date of a
reinstatement of the Policy. Instead of the Death Proceeds, the Beneficiary will
receive the sum of the premiums paid since reinstatement, less the sum of any
outstanding debt and partial withdrawals made since the date of reinstatement.
AGE AND SEX
If the Insured's Age or sex as stated in the application for a Policy is not
correct, benefits under a Policy will be adjusted to reflect the correct Age and
sex, if death occurs prior to the Maturity Date. The adjusted benefit will be
that which the most recent cost of insurance charge would have purchased for the
correct Age and sex. In no event will the Sum Insured be reduced to less than
the Guideline Minimum Sum Insured. In the case of a Policy issued on a unisex
basis, this provision as it relates to misstatement of sex does not apply.
PARTICIPATING CONTRACT
Because the Policy is issued by MML, a mutual life insurance company, it is
a participating policy. This means the Policy may share in divisible surplus
declared by MML. However, MML does not expect to credit any dividends upon these
Policies while they remain in force because favorable investment performance
will be reflected in Policy values and because MML intends, if experience
indicates that current charges are greater than needed to cover expenses, to
reduce those charges further so that there will be no source of distributable
surplus attributable to these Policies. However, to the extent that dividends
are distributed to you, you may direct them to be (a) paid in cash, (b) added to
Policy Value, (c) left with MML to accumulate at interest at an annual rate of
not less than three percent (3%), subject to withdrawal at any time, or (d)
applied as a net single premium for the purchase of additional paid-up life
insurance.
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As a member of MML, the insured under the Policy has the right to vote in
person or by proxy at all meetings of MML.
ASSIGNMENT
The owner may assign a Policy as collateral or make an absolute assignment
of the Policy. All rights under the Policy will be transferred to the extent of
the assignee's interest. The consent of the assignee may be required in order to
make changes in premium allocations, to make transfers, or to exercise other
rights under the Policy. MML is not bound by an assignment or release thereof,
unless it is in writing and is recorded at MML's Service Center. When recorded,
the assignment will take effect as of the date the written request was signed.
Any rights created by the assignment will be subject to any payments made or
actions taken by MML before the assignment is recorded. MML is not responsible
for determining the validity of any assignment or release. An assignment may
have adverse tax consequences. See "FEDERAL TAX CONSIDERATIONS."
POSTPONEMENT OF PAYMENTS
Payments of any amount due from the Separate Account upon surrender, partial
withdrawals, or death of the Insured, as well as payments of a Policy loan and
transfers may be postponed whenever: (i) the New York Stock Exchange is closed
other than customary weekend and holiday closings, or trading on the New York
Stock Exchange is restricted as determined by the SEC or (ii) an emergency
exists, as determined by the SEC, as a result of which disposal of securities is
not reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets. Except in New York, payments under
the Policy of any amounts derived from the premiums paid by check may be delayed
until such time as the check has cleared your bank.
MML also reserves the right to defer payment of any amount due from the
General Account upon surrender, partial withdrawal or death of the Insured, as
well as payments of policy loans and transfers from the General Account, for a
period not to exceed six months.
DIRECTORS AND PRINCIPAL OFFICERS OF MML
The directors and executive vice presidents of MML, their positions and
their other business affiliations and business experience for the past two years
are as follows:
DIRECTORS
ROGER G. ACKERMAN, Director and Member, Auditing and Compensation Committees
President, Chief Operating Officer (since 1990) Group President (1987-1990),
Corning Incorporated (manufacturer of specialty materials, communication
equipment and consumer products), Houghton Park, Corning, New York; Director,
The Pittson Company (mining and marketing of coal for electric utility and steel
industries), One Pickwick Plaza, Greenwich, Connecticut; Director (since 1993)
Dow Corning Corporation; Member of Executive Committee, National Association of
Manufacturers.
JAMES R. BIRLE, Director
President of Resolute Partners since 1994. Prior to founding Resolute
Partners, he was General Partner of The Blackstone Group from 1988 to 1994, and
also served as Co-Chairman and Chief Executive Officer of Wickes Companies, Inc.
Mr. Birle was previously Senior Vice President and Group Executive of the
General Electric Company. He is also a Director of Drexel, Inc. and The
Connecticut Health and Educational Facilities Authority, and a Trustee of
Villanova University and The Sea Research Foundation.
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FRANK C. CARLUCCI, III, Director
Chairman of the Carlyle Group. Mr. Carlucci has had extensive experience in
government service. His past appointments include Secretary of Defense, Deputy
Director of Central Intelligence, Ambassador to Portugal, Under Secretary of
Department of Health, Education and Welfare and Deputy Director of the Office of
Management and Budget. Mr. Carlucci is also a Director of Ashland Oil, Inc.,
Bell Atlantic Corporation, Kaman Corporation and the Quaker Oats Company.
GENE CHAO, PH.D., Director
Chairman and Chief Executive Officer of Computer Projections, Inc. since
1991. Prior to that time, Dr. Chao served as Chairman and President of Metheus
Corporation and Chairman and Chief Executive Officer of the American Leadership
Forum, a non-profit leadership and community building organization.
PATRICIA DIAZ DENNIS, Director
Senior Vice President and Assistant General Counsel for SBC Communications,
Inc. Previously, Mrs. Dennis was Special Counsel to Sullivan & Cromwell for
communications law matters. President Reagan appointed Mrs. Dennis to serve as a
member of the National Labor Relations Board from 1983 until 1986 and then named
her a Commissioner of the Federal Communications Commission where she served
from 1986 until 1989. In 1992, President Bush appointed Mrs. Dennis Assistant
Secretary of State for Human Rights and Humanitarian Affairs, a position she
held until 1993.
ANTHONY DOWNS, Director and Member, Investment and Dividend Policy
Committees
Senior Fellow (since 1977), Brookings Institution; Director (since 1971)
Pittway Corp.; Director (since 1992), Bedford-Property Investors, Inc.; Director
(since 1992), General Growth Properties, Inc., Director (since 1977) The Urban
Land Institute; Director (since 1986) NAACP Legal and Educational Defense Fund,
Inc.; Director, (since 1991) National Housing Partnership Foundation.
JAMES L. DUNLAP, Director and Member, Compensation and Organization &
Operations Committees
Senior Vice President (since 1987) of Texaco, Inc. (producer of petroleum
products), and President (1987-1994), Texaco USA, 1111 Bagby, Houston, Texas.
WILLIAM B. ELLIS, PH.D., Director
In September 1995, Mr. Ellis joined the Yale University School of Forestry
and Environmental Studies as a senior fellow. He is also the retired Chairman
and Chief Executive Officer of Northeast Utilities ("NU"). Mr. Ellis was
associated with NU since 1976 in various capacities including President, Chief
Operating Officer and Chief Executive Officer. He is also a Director of The
Hartford Steam Boiler Company, the Connecticut Business and Industry
Association, the Connecticut Economic Development Corporation and The Greater
Hartford Chamber of Commerce.
ROBERT M. FUREK, Director
President and Chief Executive Officer of Heublein, Inc. Mr. Furek is also a
Director of Dexter Corporation and a Trustee of Colby College.
CHARLES K. GIFFORD, Director and Member Auditing and Investment Committees
President (since 1989), The First National Bank of Boston, 100 Federal
Street, Boston, Massachusetts; President, Bank of Boston Corporation (bank
holding company), 100 Federal Street, Boston, Massachusetts; Director, Boston
Edison Co.
WILLIAM N. GRIGGS, Director, Chairman, Auditing Committee and Member,
Investment Committee
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Managing Director (since 1983), Griggs & Santow Inc. (business consultants)
Suite 2509, One World Trade Center, New York, New York; Director (since 1990),
T/SF Communications, Inc. (diversified publishing and communications company).
JAMES G. HARLOW, JR., Director and Member, Dividend Policy and Auditing
Committees
Chairman and President (since 1982), Oklahoma Gas and Electric Company
(electric utility), 321 North Harvey Avenue, Oklahoma City, Oklahoma; Director
(since 1977), Fleming Companies (wholesale food distributors); Director (since
1994), Associated Insurance Services Limited.
GEORGE B. HARVEY, Director
Chairman, President and Chief Executive Officer of Pitney-Bowes. Mr. Harvey
is also a Director of Merrill Lynch, McGraw-Hill, Inc. and Stamford Hospital.
BARBARA B. HAUPTFUHRER, Director, Chairman, Compensation Committee and
Member, Organization and Operations Committees
Director and Member, Compensation, Nominating and Audit Committees, (since
1972) The Vanguard Group of Investment Companies including the following:
Windsor Fund, Morgan Growth Fund, Wellesley Income Fund, Gemini Fund, Explorer
Fund, Vanguard Municipal Bond Funds, Vanguard Fixed Income Securities Fund,
Vanguard World Fund, Star Fund, Vanguard Ginnie Mae Fund, Primecap Fund,
Vanguard Convertible Securities Fund, Vanguard Quantitative Fund, Vanguard Index
Trust, Trustees Commingled Equity Fund, Trustees Commingled Fund --
International, Vanguard Money Market Trust, Windsor II, Vanguard Asset
Allocation Fund and Vanguard Equity Income Fund (principal offices, Drummers
Lane, Valley Forge, Pennsylvania); Director (since 1975), The Great Atlantic and
Pacific Tea Company, Inc. (operator of retail food stores); Director (since
1979), KnightRidder, Inc. (publisher of daily newspapers and operator of cable
television and business information systems); Director, (since 1987), Raytheon
Company, (electronics manufacturer); Director, Alco Standard Corp. (diversified
manufacturer and distributor).
SHELDON B. LUBAR, Director, Chairman/ Organization & Operations Committee
and Member, Investment Committee
Chairman (since 1977), Lubar & Co. Incorporated (investment management and
advisory company) 777 East Wisconsin Avenue, Milwaukee, Wisconsin; Chairman and
Director (since 1986), The Christiana Companies, Inc. (real estate development);
Director; First Wisconsin National Bank and Firstar Corporation (formerly First
Wisconsin Corporation, a bank holding company); Director (since 1982), Grey Wolf
Drilling Co. (contract oil and gas drilling); Marshall Erdman and Associates,
Inc. (design, engineering, and construction firm); SLX Energy, Inc. (oil and gas
exploration); Member, Advisory Committee, Venture Capital Fund, L.P.; Prideco,
Inc. (drill collar manufacturer); and Briggs & Stratton (1989-1994) (small
engine manufacturer); Schwitzer, Inc. (holding company for engine parts
manufacturers); Director (since 1991), Mortgage Guaranty Insurance Corporation;
Director (1986-1991), Milwaukee Insurance Group Inc.; Director (since 1993),
Ameritech.
WILLIAM B. MARX, JR., Director and Member, Dividend Policy and Compensation
Committees
Executive Vice President and CEO (since 1994), AT&T Multimedia Products
Group, Chief Executive Officer (1993-1994), AT&T Network Systems Group
(manufacturer and marketer of network telecommunications equipment), 475 South
Street, Morristown, New Jersey.
JOHN F. MAYPOLE, Director
Managing Partner of the Peach State Real Estate Holding Company and a
consultant to institutional investors and co-owner of family businesses since
1984. He is a Director of Bell Atlantic Corporation, Briggs Industries and the
Igloo Corporation, among others.
DONALD F. MCCULLOUGH, Director and Member, Dividend Policy and Auditing
Committees
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Retired (since 1988); former Chairman and Chief Executive Officer, Collins &
Aikman Corp. (manufacturer of textile products) 210 Madison Avenue, New York,
New York; Director; Bankers Trust New York Corp. (bank holding company) and
Bankers Trust Company; Melville Corporation (specialty retailer).
JOHN J. PAJAK, Director, Vice-Chairman and Chief Administrative Officer
Executive Vice President-Operations; Executive Vice President for Corporate
Administration (from 1987-1992) of MassMutual. Prior to 1987, Mr. Pajak was a
Senior Vice President of MassMutual. Mr. Pajak is a member of the Board of
Trustees, the Trustees' Executive Committee and the Academic Affairs Committee
of Western New England College in Springfield, Massachusetts.
BARBARA S. PREISKEL, Director, Chairman, Dividend Policy Committee and
Member, Compensation Committee
Attorney-at-Law (since 1983), The Bar Building, 36 West 44th Street, New
York, New York; Director (since 1975): Textron, Inc. (diversified manufacturing
company); General Electric Company (diversified manufacturer of electrical
products); The Washington Post Company (publisher of daily newspaper); American
Stores Company (operator of supermarkets and drugstores).
DAVID E. SAMS, JR., President, Chief Operating Officer and Director
President and Chief Executive Officer of Connecticut Mutual from 1993 to
1996 and Chairman of the Connecticut Mutual Board from 1994 to 1996. Prior to
that time. Mr. Sams served as President and Chief Executive Officer -- Agency
Group of Providian Corp. (formerly Capital Holding Corporation). Mr. Sams is
also a Director of the United States Chamber of Commerce.
THOMAS B. WHEELER, Chief Executive Officer, Director and Chairman of the
Board, Chairman, Investment Committee and Member, Dividend Policy and
Organization & Operations Committee
Chief Executive Officer and Director of MassMutual; Director, The First
National Bank of Boston and Bank of Boston Corporation (bank holding company);
Massachusetts Capital Resources Company; Chairman and Director (since 1990),
Oppenheimer Acquisition Corp; Two World Trade Center, New York, New York;
Chairman and Director, Concert Capital Management, Inc. (wholly owned subsidiary
of MassMutual Holding Company); Chairman (since 1994), MML Pension Insurance
Company; Director (since 1993), Textron, Inc.
ALFRED M. ZEIEN, Director and Member Organization & Operations and
Compensation Committees
Chairman and Chief Executive Officer (since 1991), President, Chief
Operating Officer and Director (1991) and Vice Chairman (1981-1991), The
Gillette Company (manufacturer of personal care products), Prudential Tower
Building, Boston, Massachusetts; Director; Polaroid Corporation (manufacturer of
photographic products); Raytheon Company (electronics manufacturer); and
Repligen Corporation; Director (since 1991), Bank of Boston Corporation (bank
holding company); Trustee, University Hospital of Boston Massachusetts.
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)
LAWRENCE V. BURKETT, JR., Executive Vice President and General Counsel
Executive Vice President and General Counsel (since 1993), Senior Vice
President and Deputy General Counsel (1992-1993), Senior Vice President and
Associate General Counsel (1988-1992), Vice President and Associate General
Counsel (1984-1988), MassMutual; Chairman (since 1994), Director (1993-1994),
Vice President -- Law (1993-1994), MML Reinsurance (Bermuda), Ltd.; Director
(since 1993), Sargasso Mutual Insurance Co., Ltd.; Director (since 1993):
MassMutual Holding Company;
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Director (since 1993), MassMutual of Ireland; Director, Cornerstone Real Estate
Advisers, Inc., Director, MML Pension Insurance Company; Director, MassMutual
Holding Company; Director, MassMutual Holding Company Two, Inc.; Director,
MassMutual Holding Company Two MSC., Inc.
JOHN B. DAVIES, Executive Vice President
Executive Vice President, (since 1994), Associate Executive Vice President
(1994), General Agent (since 1982), MassMutual; Director, Cornerstone Real
Estate Advisers, Inc., MML Investors Services, Inc.; Director, MML Insurance
Agency, Inc.; Director, MML Insurance Agency of Ohio, Inc.; Director, Life
Underwriter Training Council.
DANIEL J. FITZGERALD, Executive Vice President
Executive Vice President (since 1994), Senior Vice President (1991-1994),
MassMutual; Director, Concert Capital Management, Inc.; Director, Cornerstone
Real Estate Advisers, Inc.; Director (since 1994), President (1987-1993), MML
Bay State Life Insurance Company; Director, MML Investors Services Inc.;
Director, MML Pension Insurance Company; Director, MML Real Estate Corporation;
Director, MML Realty Management Corporation; Director (since 1993), Vice
President (since 1994), MassMutual Holding Company; Director and Vice President,
MassMutual Holding Company Two, Inc.; Director and Vice President, MassMutual
Holding Company Two MSC, Inc.; Director, MassMutual of Ireland.
LAWRENCE L. GRYPP, Executive Vice President
Executive Vice President (since 1991), Senior Vice President (1990-1991) and
General Agent (1980-1990) of MassMutual; Chairman (since 1991), MML Investors
Services, Inc. (wholly-owned broker-dealer subsidiary of MassMutual Holding
Company); Director (since 1991), Oppenheimer Acquisition Corp., Two World Trade
Center, New York, New York; Director, Concert Capital Management, Inc.
JAMES E. MILLER, Executive Vice President
Executive Vice President (since 1987), MassMutual; Director (since 1990)
Chairman (since 1994), MassMutual of Ireland Ltd., Knockanrawley, Tipperary
Town, Tipperary County, Ireland; Vice President and Treasurer, Dental Learning
Systems, New York, New York; Director (since 1990), The Ethix Corporation,
Beaverton, Oregon; Director, Benefit Panel Services, Los Angeles, California and
National Capital Preferred Provider Organization, Washington, DC.; Director,
Sloan's Lake Management Corp.; President, Chief Executive Officer and Director
MML Pension Insurance Company.
JOHN M. NAUGHTON, Executive Vice President
Executive Vice President (since 1984), MassMutual; Chairman (since 1995),
Director (since 1991), Springfield Institution for Savings, 1441 Main Street,
Springfield, Massachusetts; Trustee, MassMutual Institutional Funds; Director,
Oppenheimer Acquisition Corp.; Director, Concert Capital Management, Inc.;
Director, Colebrook Group.
JOHN J. PAJAK, Executive Vice President -- Chief Administrative Officer
Executive Vice President (since 1987) MassMutual; Member of the Board of
Directors, MML Pension Insurance Company, MassMutual Holding Company, MassMutual
Holding Company Two, Inc.; MassMutual Holding Company Two MSC, Inc.
GARY E. WENDLANDT, Executive Vice President
Executive Vice President (since 1992) and Chief Investment Officer (since
1993), Senior Vice President of MassMutual; President (since 1983), and Trustee
(since 1986), MassMutual Corporate Investors (closed end investment company);
President and Trustee (since 1988), MassMutual participation Investors; Director
(since 1992), President and Chief Executive officer (since 1994), Concert
Capital Management, Inc.; Vice Chairman and Trustee (since 1993), MML Series
Investment Fund (open end investment company); Chairman and Chief Executive
Officer, President and Director,
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MassMutual Holding Company; Director (since 1990), Oppenheimer Acquisition Fund,
Two World Trade Center, New York, New York; Supervisory Director (since 1991),
MassMutual/Carlson CBO N.V. (collateralized bond fund) 6 John Gorsiraweg, P.O.
Box 3889, Willemsted, Curacao, Netherlands Antilles; Director, Merrill Lynch
Derivative Products, Inc., World Trade Center, North Tower, New York, New York;
Chairman and Chief Executive Officer, Cornerstone Real Estate Advisers, Inc.;
Chairman (since 1994), Director (since 1993) MML Real Estate Corporation;
Chairman (since 1994), Director (since 1993), MML Realty Management Corporation;
Director, MassMutual Corporate Value Partners, Ltd.; Director, MassMutual
Corporate Value, Ltd.; Chairman and President, MassMutual Holding Company Two
MSC, Inc.; Chairman and Chief Executive Officer, MassMutual Institutional Funds.
DISTRIBUTION
MML Distributors, LLC ("MML Distributors") (formerly named Connecticut
Mutual Financial Services, LLC.), an affiliate of MML, acts as the principal
underwriter of the Policies pursuant to a underwriting agreement with MML and
the Separate Account. MML Distributors does business under different variations
of its name including "MML Distributors L.L.C.," in Delaware, Idaho, Illinois,
Michigan, North Dakota, Oklahoma, Oregon, and South Dakota, "MML Distributors,
Limited Liability Company" in Maine, New Mexico, Ohio and West Virginia, and
"MML Distributors, LLC, L.C." in Florida.
MML Distributors is registered with the Securities and Exchange Commission
as a broker-dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). MML Distributors and MML will enter into selling
agreements with general insurance agents and broker-dealers who will sell the
Policies. These general insurance agents and broker-dealers may or may not be
subsidiaries or affiliates of MML.
MML Investors Services, Inc., 1414 Main Street, Springfield, MA 01144-1013
("MMLISI"), a wholly-owned subsidiary of MML, also acts as co-underwriter and
distributor of the Policies. MMLISI is registered with the Commission as a
broker-dealer and is a member of the NASD. Policies are sold by registered
representatives of MMLISI who are also licensed to sell MML insurance products
under state insurance laws.
Registered representatives who sell the Policy will receive commissions
based on a commission schedule. After issue of the Policy or an increase in Face
Amount, commissions generally will not exceed fifty percent (50%) of the first
year premiums up to a basic premium amount established by MML. Thereafter,
commissions will generally not exceed three percent (3%) of any additional
premiums.
MML Distributors may enter into selling agreements with other broker-dealers
registered with the Securities and Exchange Commission whose representatives are
authorized by applicable law to sell variable life insurance policies. Under the
agreements with those broker-dealers the commission paid to them will generally
not exceed fifty-five percent (55%) of the first year premiums up to a basic
premium amount established by MML. Thereafter, commissions will generally not
exceed five percent (5%) of any additional premiums.
Certain registered representatives may receive additional first year and
renewal commissions and training reimbursements. General Agents of MML and
certain registered representatives may also be eligible to receive expense
reimbursements based on the amount of earned commissions. General Agents also
receive compensation, which will not exceed thirty-five percent (35%) of first
year commissions produced through their agency.
MML Distributors has also established and intends to establish marketing
programs in conjunction with certain associations. Because MML Distributors will
incur expenses associated with these
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marketing programs, registered representatives and General Agents who directly
benefit from these programs will receive commission on a reduced schedule from
that described above. MML Distributors also expects to be engaged in these types
of arrangements.
MML intends to recoup the commission and other sales expenses through a
combination of the deferred sales charge component of the anticipated surrender
and partial withdrawal charges, any profits derived from the mortality and
expense risk charge and cost of insurance charges, and the investment earnings
on amounts allocated to accumulate on a fixed basis in excess of the interest
credited on fixed accumulations by MML. Any surrender charge assessed on a
Policy will be retained by MML except for amounts it may pay to MML Distributors
and MMLISI for services it performs and expenses it may incur as co-underwriters
and distributors.
REPORTS
MML will maintain the records relating to the Separate Account. You will be
promptly sent statements of significant transactions such as premium payments,
changes in specified Face Amount, changes in Sum Insured Option, transfers among
Sub-Accounts and the General Account, partial withdrawals, increases in loan
amount by you, loan repayments, lapse, termination for any reason, and
reinstatement. An annual statement will also be sent to you within thirty days
(30) after a Policy Anniversary. The annual statement will summarize all of the
above transactions and deductions of charges during the Policy year. It will
also set forth the status of the Death Proceeds, Policy Value, Surrender Value,
amounts in the Sub-Accounts and General Account, and any Policy loan(s).
In addition, you will be sent periodic reports containing financial
statements and other information for the Funds as required by the Investment
Company Act of 1940.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a
party, or to which the assets of the Separate Account are subject. MML is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 Act relating to
this offering has been filed with the SEC. Certain portions of the Registration
Statement and amendments have been omitted from this prospectus pursuant to the
rules and regulations of the SEC. Statements contained in this Prospectus
concerning the Policy and other legal documents are summaries. The complete
documents and omitted information may be obtained from the SEC's principal
office in Washington, D.C., upon payment of the SEC's prescribed fees.
INDEPENDENT ACCOUNTANTS
The audited supplemental financial statements of Massachusetts Mutual Life
Insurance Company ("MML") as of December 31, 1995 and 1994 and for each of the
three years in the period ended December 31, 1995 have been included in this
Prospectus have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., Springfield, Massachusetts 01101, independent accountants, given
on the authority of that firm as experts in accounting and auditing. Coopers &
Lybrand's report on the supplemental financial statements of MML includes
explanatory paragraphs relating to the retroactive effect of the merger of the
MML and Connecticut Mutual Life Insurance Company, and the pending sale of a
wholly-owned insurance subsidiary.
The financial statements of MML included herein should be considered only as
bearing on the ability of MML to meet its obligations under the Policies.
FEDERAL TAX CONSIDERATIONS
The ultimate effect of federal income taxes on values under this Policy and
on the economic benefit to the Policyowner or Beneficiary depends on MML's tax
status and upon the tax status of the individual concerned. The discussion
contained herein is general in nature and is not an exhaustive
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discussion of all tax questions that might arise under the Policy, and is not
intended as tax advice. Moreover, no representation is made as to the likelihood
of continuation of current federal income tax laws and Treasury Regulations or
of the current interpretations of the Internal Revenue Service. MML reserves the
right to make changes in the Policy to assure that it continues to qualify as
life insurance for tax purposes.
For complete information on federal and state tax law considerations, a
qualified tax advisor should be consulted. No attempt is made herein to consider
any applicable state or other tax laws.
MML'S TAX STATUS
MML is taxed as a life insurance company under Subchapter L of the Internal
Revenue Code of 1986 (the "Code"). The Separate Account is not a separate entity
from MML and its operations form a part of MML.
Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining Account Value. The
investment income and realized capital gains are automatically applied to
increase book reserves associated with the Policy. Under existing federal income
tax law, the Separate Account's investment income, including net capital gains,
is not taxed to MML to the extent applied to increase reserves associated with
the Policy. The reserve items taken into account at the close of the taxable
year for purposes of determining net increases and net decreases must be
adjusted for tax purposes by subtracting an amount attributable to appreciation
in the value of assets and by adding any amount attributable to depreciation.
MML's basis in the Policy's share of the assets underlying the Separate Account
will be adjusted for appreciation or depreciation, to the extent the reserves
are adjusted. Thus, corporate-level capital gains and losses, and the tax effect
thereof, are eliminated.
Due to MML's current tax status, no charge is made to the Separate Account
for MML's federal income taxes that may be attributable to the Separate Account.
Periodically, MML reviews the question of a charge to the Separate Account for
MML's federal income taxes. A charge may be made for any federal income taxes
incurred by MML that are attributable to the Separate Account. Depending on the
method of calculating interest on Policy values allocated to the Guaranteed
Principal Account (see preceding section), a charge may be imposed for the
Policy's share of MML's federal income taxes attributable to that account.
Under current laws, MML may incur state or 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, MML may
charge the Separate Account for such taxes, if any, attributable to the Separate
Account.
POLICY PROCEEDS, PREMIUMS AND LOANS
MML believes that the Policy meets the statutory definition of life
insurance under Code Section 7702 and hence receives the same tax treatment as
that accorded to fixed benefit life insurance. Thus, the Death Benefit under the
Policy is generally excludible from the gross income of the Beneficiary under
Section 101(a)(1) of the Code. As an exception to this general rule, where a
Policy has been transferred for value, only the portion of the Death Benefit
which is equal to the total consideration paid for the Policy may be excluded
from gross income. The Policyowner is not deemed to be in constructive receipt
of the cash values, including increments thereon, under the Policy until a full
surrender or partial withdrawal is made (unless the Policy is a "modified
endowment contract," as discussed below).
Upon a full surrender of a Policy for its Cash Surrender Value, the
Policyowner may recognize ordinary income for federal income tax purposes.
Ordinary income is computed to be the amount by which the Account Value,
unreduced by any outstanding Policy Debt but less any Surrender Charges
assessed, exceeds the premiums paid but not previously recovered and any other
consideration paid for the Policy.
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Decreases in Face Amount and Withdrawals may be taxable depending on the
circumstances. Code Section 7702(f)(7) provides that where a reduction of future
benefits occurs during the first 15 years after a Policy is issued and where
there is a cash distribution associated with that reduction, the Policyowner may
be taxed on all or a part of the amount distributed. After 15 years, such cash
distributions are not subject to federal income tax, except to the extent they
exceed the total amount of premiums paid but not previously recovered. MML
suggests that you consult with your tax advisor in advance of a proposed
decrease in Face Amount or withdrawal as to the portion, if any, which would be
subject to federal income tax.
A change of the Policyowner or the Insured or an exchange or assignment of
the Policy may have tax consequences depending on the circumstances.
MML also believes that under current law any loan received under the Policy
will be treated as Policy Debt of a Policyowner, and that no part of any loan
under a Policy will constitute income to the Policyowner unless the policy has
become a "modified endowment contract." If the Policy is a modified endowment
contract under Code Section 7702A, loans will be fully taxable to the extent of
income in the Policy and could be subject to an additional 10 percent tax. See
the discussion on modified endowment contracts below. Under the "personal"
interest limitation provisions of the Tax Reform Act of 1986, interest on Policy
loans used for personal purposes, which otherwise meet the requirements of Code
Section 264, will no longer be tax-deductible. However, other rules may apply to
allow all or part of the interest expense as a deduction if the loan proceeds
are used for "trade or business" or "investment" purposes. See your tax advisor
for further guidance.
If the Policy is owned by a business or corporation, the Code may impose
additional restrictions. The Code limits the interest deduction available for
loans against a business-owned Policy. It imposes an indirect tax upon the gain
in corporate-owned life insurance policies by way of the corporate alternative
minimum tax, for those corporations subject to the alternative minimum tax. The
corporate alternative minimum tax could also apply to a portion of the amount by
which Death Benefits received exceed the Policy's date-of-death cash surrender
value.
The Policy may also be used in various arrangements, including non-qualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if a Policyowner is
contemplating the use of a Policy in any arrangement the value of which depends
in part on its tax consequences, that Policyowner should be sure to consult a
qualified tax adviser regarding the tax attributes of the particular
arrangement.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
MML cannot make any guarantee regarding the future tax treatment of any
Policy. For complete information on the impact of changes with respect to the
Policy and federal and state tax considerations, a qualified tax advisor should
be consulted.
MODIFIED ENDOWMENT CONTRACTS
Contrary to the rules described above, loans, collateral assignments, and
other amounts distributed under a "modified endowment contract" are taxable to
the extent of any accumulated income in the Policy. In general, the amount which
may be subject to taxation is the excess of the Account Value (both loaned and
unloaned) over the previously unrecovered premiums paid. Death benefits paid
under a modified endowment contract, however, are not taxed any differently from
death benefits payable under other life insurance contracts.
A Policy is a modified endowment contract if it satisfies the definition of
life insurance set out in the Internal Revenue Code but fails the additional
"7-pay test." A Policy fails this test if the accumulated amount paid under the
contract at any time during the first seven contract years exceeds the
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total premiums that would have been payable under a policy providing for
guaranteed benefits upon the payment of seven level annual premiums. A Policy
which would otherwise satisfy the 7-pay test will still be taxed as a modified
endowment contract if it is received in exchange for a modified endowment
contract.
Certain changes will require a Policy to be retested to determine whether it
has become a modified endowment contract. For example, a reduction in death
benefits during the first seven contract years will cause the Policy to be
retested as if it had originally been issued with the reduced death benefit. If
the premiums actually paid into the Policy exceed the limits under the 7-pay
test for a policy with the reduced death benefit, the Policy will become a
modified endowment contract. This change is effective retroactively to the
Policy Year in which the actual premiums paid exceed the new 7-pay limits.
In addition, a "material change" occurring at any time while the Policy is
in force will require the Policy to be retested to determine whether it
continues to meet the 7-pay test.
A material change starts a new 7-pay test period. The term "material change"
includes many increases in death benefits. A material change does not include an
increase in death benefits which is attributable to the payment of premiums
necessary to fund the lowest level of death benefits payable during the first
seven contract years, or which is attributable to the crediting of interest with
respect to such premiums.
Since the Policy provides for flexible premium payments, the Company has
instituted procedures to monitor whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will have to be considered.
If any amount is taxable as a distribution of income under a modified
endowment contract, it will also be subject to a 10% penalty tax. Limited
exceptions from the additional penalty tax are available for individual
Policyowners. The penalty tax will not apply to distributions: (i) that are made
on or after the date the taxpayer attains age 59 1/2; or (ii) that are
attributable to the taxpayer's becoming disabled; or (iii) that are part of a
series of substantially equal periodic payments (made not less frequently than
annually) made for the life or life expectancy of the taxpayer. For complete
information with respect to modified endowment contract status, a qualified tax
advisor should be consulted.
Once a Policy fails the 7-pay test, loans and distributions occurring in the
year of failure and thereafter become subject to the rules for modified
endowment contracts. In addition, a recapture provision applies to loans and
distributions received in anticipation of failing the 7-pay test. Any
distribution or loan made within two years prior to failing the 7-pay test is
considered to have been made in anticipation of the failure.
Under certain circumstances, a loan, collateral assignment, or other
distribution under a modified endowment contract may be taxable even though it
exceeds the amount of income accumulated in the Policy. For purposes of
determining the amount of income received from a modified endowment contract,
the law requires the aggregation of all modified endowment contracts issued to
the same Policyowner by an insurer and its affiliates within the same calendar
year. Therefore, loans, collateral assignments, and distributions from any one
such Policy are taxable to the extent of the income accumulated in all the
Policies required to be aggregated.
QUALIFIED PLANS
The Policy may be used in conjunction with certain tax-qualified employee
benefit plans. Since the rules governing such use are complex, a purchaser
should not use the Policy in conjunction with any such qualified plan until he
has consulted a competent tax advisor. The Policy may not be used in conjunction
with an Individual Retirement Account (IRA).
DIVERSIFICATION STANDARDS
To comply with final regulations under Code Section 817(h) ("Final
Regulations"), each Portfolio is required to diversify its investments. The
Final Regulations generally require that on the last day of
51
<PAGE>
each quarter of a calendar year no more than 55% of the value of a Portfolio's
assets is represented by any one investment, no more than 70% is represented by
any two investments, no more than 80% is represented by any three investments,
and no more than 90% is represented by any four investments. A "look-through"
rule applies to treat a pro-rata portion of each asset of a Portfolio as an
asset of the Separate Account. All securities of the same issuer are treated as
a single investment. However, each government agency or instrumentality is
treated as a separate issuer.
With respect to variable life insurance contracts, the general
diversification requirements are modified if any of the assets of the Separate
Account are direct obligations of the United States Treasury. In this case,
there is no limit on the investment that may be made in United States Treasury
securities, and for purposes of determining whether assets other than United
States Treasury securities are adequately diversified, the generally applicable
percentage limitations are increased based on the value of the Separate
Account's investment in United States Treasury securities. Notwithstanding this
modification or the general diversification requirements, the Portfolios will be
structured to comply with the general diversification standards because they
serve as an investment vehicle for certain variable annuity contracts which must
comply with the general standards.
In connection with the issuance of the temporary regulations prior to the
Final Regulations, the Treasury announced that such temporary regulations did
not provide guidance concerning the extent to which Policyowners may direct
their investments to particular Divisions of a separate account. Regulations in
this regard were not issued in connection with the Final Regulations, however.
It is not clear, at this time, what future regulations might provide. It is
possible that, if future regulations are issued, the Policy may need to be
modified to comply with such regulations. For these reasons, MML reserves the
right to modify the Policy, as necessary, to prevent the Policyowner from being
considered the owner of the assets of the Separate Account.
MML intends to comply with the Final Regulations to assure that the Policy
continues to qualify as life insurance for federal income tax purposes.
MORE INFORMATION ABOUT THE GENERAL ACCOUNT
As discussed earlier, you may allocate Net Premiums and transfer Policy
Value to the General Account. Because of exemption and exclusionary provisions
in the securities law, any amount in the General Account is not generally
subject to regulation under the provisions of the 1933 Act or the 1940 Act.
Accordingly, the disclosures in this Section have not been reviewed by the SEC.
Disclosures regarding the fixed portion of the Policy and the General Account
may, however, be subject to certain generally applicable provisions of the
Federal securities laws concerning the accuracy and completeness of statements
made in prospectuses.
GENERAL DESCRIPTION
The General Account of MML is made up of all of the general assets of MML
other than those allocated to any separate account. Allocations to the General
Account become part of the assets of MML and are used to support insurance and
annuity obligations. Subject to applicable law, MML has sole discretion over the
investment of assets of the General Account.
A portion or all of Net Premiums may be allocated or transferred to
accumulate at a fixed rate of interest in the General Account. Such net amounts
are guaranteed by MML as to principal and a minimum rate of interest. The
allocation or transfer of funds to the General Account does not entitle you to
share in the investment experience of the General Account.
GENERAL ACCOUNT VALUE
MML bears the full investment risk for amounts allocated to the General
Account and guarantees that interest credited to each Policyowner's Policy Value
in the General Account will not be less than an annual rate of 3% prior to
issuance and acceptance of the Policy and 4% thereafter ("Guaranteed Minimum
Rate").
52
<PAGE>
MML may, AT ITS SOLE DISCRETION, credit a higher rate of interest ("excess
interest"), although it is not obligated to credit interest in excess of the
Guaranteed Minimum Rate (three percent [3%] prior to issuance and acceptance of
the Policy and four percent [4%] thereafter) per year, and might not do so.
However, the excess interest rate, if any, in effect on the date a premium is
received at the Service Center is guaranteed on that premium for one (1) year,
unless the Policy Value associated with the premium becomes security for a
Policy loan. AFTER SUCH INITIAL ONE YEAR GUARANTEE OF INTEREST ON NET PREMIUM,
ANY INTEREST CREDITED ON THE POLICY'S ACCUMULATED VALUE IN THE GENERAL ACCOUNT
IN EXCESS OF THE GUARANTEED MINIMUM RATE PER YEAR WILL BE DETERMINED IN THE SOLE
DISCRETION OF MML. THE POLICYOWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY
NOT EXCEED THE GUARANTEED MINIMUM RATE.
Even if excess interest is credited to accumulated value in the General
Account, no excess interest will be credited to that portion of the Policy Value
which is equal to Debt. However, such Policy Value will be credited interest at
an effective annual yield of at least six percent (6%).
MML guarantees that, on each Monthly Payment Date after issuance and
acceptance of the Policy, the Policy Value in the General Account will be the
amount of the Net Premiums allocated or Policy Value transferred to the General
Account, plus interest at an annual rate of four percent (4%) per year, plus any
excess interest which MML credits, less the sum of all Policy charges allocable
to the General Account and any amounts deducted from the General Account in
connection with loans, partial withdrawals, surrenders or transfers.
THE POLICY
This Prospectus describes a flexible premium variable life insurance Policy
and is generally intended to serve as a disclosure document only for the aspects
of the Policy relating to the Separate Account. For complete details regarding
the General Account, see the Policy itself.
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS
If a Policy is surrendered or if a partial withdrawal is made, a surrender
charge or partial withdrawal charge, as applicable, may be imposed. In the event
of a decrease in Face Amount, the surrender charge deducted is a fraction of the
charge that would apply to a full surrender of the Policy. Partial withdrawals
are made on a last-in/first-out basis from Policy Value allocated to the General
Account.
The first six (6) transfers in a Policy Year are free of charge. Thereafter,
a ten dollar ($10) transfer charge will be deducted for each transfer in that
Policy year. The transfer privilege is subject to the consent of MML and to
MML's then current rules.
Policy loans may also be made from the Policy Value in the General Account.
Transfers, surrenders, partial withdrawals, Death Proceeds and Policy loans
payable from the General Account may be delayed up to six (6) months. However,
if payment is delayed for thirty days (30) (ten [10] days in New York) or more,
MML will pay interest at least equal to an effective annual yield of three and
one-half percent (3.5%) per year for the period of deferment. Amounts from the
General Account used to pay premiums on policies with MML will not be delayed.
FINANCIAL STATEMENTS
Supplemental Financial Statements for MML are included in this prospectus
beginning immediately after this section. The supplemental financial statements
of MML should be considered only as bearing on the ability of MML to meet its
obligations under the Policy. They should not be considered as bearing on the
investment performance of the assets held in the Separate Account.
53
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
------------------------
AUDIT OF SUPPLEMENTAL FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the supplemental statement of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1995 and 1994,
and the related supplemental statements of income, changes in policyholders'
contingency reserves and cash flows for each of the years in the three-year
period ended December 31, 1995 included on Pages F-2 through F-19. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The supplemental financial statements give retroactive effect to the merger
of Massachusetts Mutual Life Insurance Company and Connecticut Mutual Life
Insurance Company on March 1, 1996, which has been accounted for as a pooling of
interests as described in the notes to the supplemental financial statements.
Generally accepted accounting principles preclude giving effect to a consummated
business combination accounted for by the pooling of interests methods in
financial statements that do not include the date of consummation. These
financial statements do not extend through the date of consummation; however,
they will become the historical consolidated financial statements of
Massachusetts Mutual Life Insurance Company after financial statements covering
the date of consummation of the business combination are issued. We did not
audit the financial statements of Connecticut Mutual Life Insurance Company
which statements reflect total assets of 25% as of December 31, 1995 and 1994,
revenue of 26%, 26%, and 24% and net gain from operations of 22%, 6% and 17% for
each of the three years in the period ended December 31, 1995, respectively.
Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for Connecticut Mutual Life Insurance Company, is based solely on the report of
other auditors.
In our opinion, based on our audits and the reports of other auditors, the
supplemental financial statements referred to above present fairly, in all
material respects, the financial position of Massachusetts Mutual Life Insurance
Company at December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1995 in conformity with generally accepted accounting principles applicable
after financial statements are issued for a period which includes the date of
consummation of the business combination.
As discussed in Note 10 to the financial statements, Massachusetts Mutual
Life Insurance Company entered into a definitive agreement for the sale of a
wholly-owned insurance subsidiary.
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
March 1, 1996
F-1
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
SUPPLEMENTAL STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
----------- -----------
(IN MILLIONS)
<S> <C> <C>
ASSETS:
Bonds.................................................................................. $ 23,625.1 $ 23,298.2
Stocks................................................................................. 416.1 246.1
Mortgage loans......................................................................... 3,872.4 4,066.2
Real Estate:
Investments.......................................................................... 1,502.8 1,673.7
Other................................................................................ 107.1 108.8
Other investments...................................................................... 1,489.9 1,218.4
Policy loans........................................................................... 4,518.4 4,259.8
Cash and short-term investments........................................................ 2,342.8 2,255.5
Investment and insurance amounts receivable............................................ 1,059.3 1,069.7
Separate account assets................................................................ 11,309.5 8,530.5
Other assets........................................................................... 174.6 153.3
----------- -----------
$ 50,418.0 $ 46,880.2
----------- -----------
----------- -----------
</TABLE>
See notes to supplemental financial statements.
F-2
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
SUPPLEMENTAL STATEMENT OF FINANCIAL POSITION (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
----------- -----------
(IN MILLIONS)
<S> <C> <C>
LIABILITIES:
Policyholders' reserves and funds...................................................... $ 32,893.1 $ 32,295.1
Policyholders' dividends............................................................... 832.6 837.5
Policy claims and other benefits....................................................... 395.5 415.9
Federal income taxes................................................................... 338.5 229.9
Asset valuation reserve................................................................ 566.8 470.5
Investment reserves.................................................................... 109.9 130.8
Separate account reserves and liabilities.............................................. 11,309.6 8,529.5
Amounts due on investments purchased and other liabilities............................. 1,371.1 1,401.9
----------- -----------
47,817.1 44,311.1
Policyholders' contingency reserves.................................................... 2,600.9 2,569.1
----------- -----------
$ 50,418.0 $ 46,880.2
----------- -----------
----------- -----------
</TABLE>
See notes to supplemental financial statements.
F-3
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
SUPPLEMENTAL STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Income:
Premium income............................................................... $ 5,727.7 $ 6,177.2 $ 6,408.3
Net investment and other income.............................................. 2,898.4 2,803.1 2,885.7
---------- ---------- ----------
8,626.1 8,980.3 9,294.0
---------- ---------- ----------
Benefits and expenses:
Policy benefits and payments................................................. 5,152.2 5,449.6 5,652.9
Addition to policyholders' reserves and funds................................ 1,205.4 1,263.2 1,291.1
Commissions and operating expenses........................................... 833.7 959.3 953.5
State taxes, licenses and fees............................................... 89.4 105.6 114.9
Merger restructuring costs................................................... 44.0 0.0 0.0
---------- ---------- ----------
7,324.7 7,777.7 8,012.4
---------- ---------- ----------
Net gain before federal income taxes and dividends........................... 1,301.4 1,202.6 1,281.6
Federal income taxes......................................................... 206.2 139.7 211.8
---------- ---------- ----------
Net gain from operations before dividends.................................... 1,095.2 1,062.9 1,069.8
Dividends to policyholders................................................... 819.0 824.7 817.5
---------- ---------- ----------
Net gain from operations..................................................... 276.2 238.2 252.3
Net realized capital loss.................................................... (85.8) (164.3) (96.0)
---------- ---------- ----------
Net income................................................................... $ 190.4 $ 73.9 $ 156.3
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to supplemental financial statements.
F-4
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
SUPPLEMENTAL STATEMENT OF CHANGES IN
POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Policyholders' contingency reserves, beginning of year....................... $ 2,569.1 $ 2,470.2 $ 2,131.2
---------- ---------- ----------
Increases (decreases) due to:
Net income................................................................. 190.4 73.9 156.3
Net unrealized capital gain................................................ 88.7 29.5 67.9
Merger restructuring costs, net of tax..................................... (45.4) 0.0 0.0
Surplus notes.............................................................. 0.0 100.0 250.0
Change in asset valuation and investment reserves.......................... (75.6) (38.2) (133.3)
Change in accounting for mortgage-backed securities........................ 0.0 44.5 0.0
Change in valuation bases of policyholders' reserves....................... (108.2) (51.1) 0.0
Change in non-admitted assets and other.................................... (18.1) (59.7) (1.9)
---------- ---------- ----------
Policyholders' contingency reserves, end of year............................. $ 2,600.9 $ 2,569.1 $ 2,470.2
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to supplemental financial statements.
F-5
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
SUPPLEMENTAL STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Operating activities:
Net income................................................................. $ 190.4 $ 73.9 $ 156.3
Addition to policyholders' reserves and funds, net of transfers to separate
accounts.................................................................. 575.8 546.9 389.6
Net realized capital loss.................................................. 85.8 164.3 96.0
Other changes.............................................................. (25.2) 124.2 131.1
---------- ---------- ----------
Net cash provided by operating activities.................................. 826.8 909.3 773.0
---------- ---------- ----------
Investing activities:
Loans and purchases of investments......................................... 10,364.2 8,351.6 8,715.1
Sales or maturities of investments and receipts from repayment of loans.... 9,671.1 7,468.7 7,607.3
---------- ---------- ----------
Net cash used in investing activities...................................... 693.1 882.9 1,107.8
---------- ---------- ----------
Financing activities:
Issuance of surplus notes.................................................. 0.0 100.0 250.0
Repayment of notes payable and other borrowings............................ (46.4) (125.0) (100.0)
Proceeds from issuance of notes payable and other borrowings............... 0.0 0.0 120.3
---------- ---------- ----------
Net cash provided by (used in) financing activities........................ (46.4) (25.0) 270.3
---------- ---------- ----------
Increase (decrease) in cash and short-term investments....................... 87.3 1.4 (64.5)
Cash and short-term investments, beginning of year........................... 2,255.5 2,254.1 2,318.6
---------- ---------- ----------
Cash and short-term investments, end of year................................. $ 2,342.8 $ 2,255.5 $ 2,254.1
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to supplemental financial statements.
F-6
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability products
distributed through career agents. The Company also provides a wide range of
group life, health and pension products and services, as well investment
services to individuals, corporations and institutions in all 50 states and the
District of Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") were merged into the Company. For the
purposes of this presentation, these supplemental financial statements give
retroactive effect as if the merger had occurred on January 1, 1993 in
conformity with the practices of the National Association of Insurance
Commissioners and the accounting practices prescribed or permitted by the
Division of Insurance of the Commonwealth of Massachusetts and the Department of
Insurance of the State of Connecticut. This merger was accounted for under the
pooling of interests method of accounting. The financial information is not
necessarily indicative of the results that would have been recorded had the
merger actually occurred on January 1, 1993, nor is it indicative of future
results. After the merger, future sales of new products will be predominantly
those developed by Massachusetts Mutual. Additionally, as part of the merger
plan, employee positions have been or will be eliminated over a three-year
period, predominantly through voluntary terminations. In 1995, charges for
employee separation and transaction expenses directly attributable to the merger
were $44 million for Massachusetts Mutual (the Company prior to the merger) and
$45 million, net of tax, for Connecticut Mutual. The expenses incurred by
Massachusetts Mutual were recorded in the statement of income and the expenses
incurred by Connecticut Mutual were recorded as a component of changes in
policyholders' contingency reserves, as permitted by each company's regulatory
authority. The Company estimates an additional $58 million of merger-related
expenses will be incurred after the merger date.
It is believed the Company will achieve operating cost savings through
consolidation of certain operations and the elimination of redundant costs. In
particular, the Company expects expense savings in 1996 and 1997 will more than
offset the merger costs, and the level of annual savings will continue to grow
in 1998 and beyond at the rate of inflation. The extent to which cost savings
will be achieved will be influenced by many factors, including economic
conditions, inflation and unanticipated changes in business activities.
Accordingly, there can be no assurance the benefits anticipated to arise out of
the merger will, in fact, be achieved.
These financial statements do not extend through to the date of the merger;
however, they will become the historical financial statements of the Company
after financial statements covering the date of the merger have been issued, but
do not include the adjustments that have been permitted by insurance regulatory
authorities to be made as of the date of the merger. Policyholder reserves
attributable to the disability income line of business will be strengthened by
approximately $67 million, real estate valuation reserves will increase by $50
million and the prepaid pension asset will increase by $39 million.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying supplemental financial statements, except as to form, have
been prepared in conformity with the practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted by
the Division of Insurance of the Commonwealth of Massachusetts and the
Department of Insurance of the State of Connecticut, which are currently
considered generally accepted accounting principles for mutual life insurance
companies and their life insurance subsidiaries.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices, issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards
F-7
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF ACCOUNTING PRACTICES (CONTINUED)
No. 120, Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating Contracts. The
American Institute of Certified Public Accountants, which also has no role in
establishing regulatory accounting practices, issued Statement of Position 95-1,
Accounting for Certain Insurance Activities of Mutual Life Insurance
Enterprises. These pronouncements will require mutual life insurance companies
to modify their financial statements in order to continue to be in accordance
with generally accepted accounting principles, effective for financial
statements issued for 1996 and prior periods presented. The manner in which
policy reserves, new business acquisition costs, asset valuations and related
tax effects are recorded will change. Management has not determined the impact
of such changes on the Company's Statement of Income, but believes
implementation of these pronouncements will cause policyholders contingency
reserves to increase.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosures of contingent assets and liabilities, at the
date of the financial statements. Management must also make estimates and
assumptions that affect the amounts of revenues and expenses during the
reporting period. Future events, including changes in the levels of mortality,
morbidity, interest rates and asset valuations, could cause actual results to
differ from the estimates used in the financial statements.
The following is a description of the Company's current principal accounting
policies and practices.
a. INVESTMENTS
Bonds and stocks are valued in accordance with rules established by the
National Association of Insurance Commissioners. Generally, bonds are valued at
amortized cost, preferred stocks in good standing at cost, and common stocks,
except for unconsolidated subsidiaries, at fair value based upon quoted market
value.
As promulgated by the National Association of Insurance Commissioners,
Massachusetts Mutual adopted the retrospective method of accounting for
amortization of premium and discount on mortgage backed securities as of
December 31, 1994. Prepayment assumptions for mortgage backed securities were
obtained from a prepayment model, which factors in mortgage type, seasoning,
coupon, current interest rate and the economic environment. The effect of this
change, $44.5 million, was recorded as of December 31, 1994 as an increase to
policyholders' contingency reserves on the Statement of Financial Position and
had no material effect on 1995 net income. Through December 31, 1994, MassMutual
amortized premium and discount on bonds into investment income over the stated
lives of the securities. Connecticut Mutual used the retrospective method of
amortization.
Mortgage loans are valued at principal less unamortized discount. Real
estate is valued at cost less accumulated depreciation, impairments and mortgage
encumbrances. Encumbrances totaled $2.9 million in 1995 and $16.1 million in
1994. Depreciation on investment real estate is calculated using the
straight-line and constant yield methods.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy. Short-term investments are
stated at amortized cost, which approximates fair value.
Investments in unconsolidated subsidiaries, joint ventures and other forms
of partnerships are included in other investments on the Statement of Financial
Position and are accounted for using the equity method.
On July 15, 1994, DHC Inc., a wholly-owned subsidiary of Connecticut Mutual,
sold its 100 percent ownership in GroupAmerica Insurance Company to Veritus,
Inc. for $52.1 million in cash.
F-8
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF ACCOUNTING PRACTICES (CONTINUED)
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves, as prescribed or permitted by the
regulatory authorities, stabilize the policyholders' contingency reserves
against fluctuations in the value of stocks, as well as declines in the value of
bonds, mortgage loans and real estate investments.
The Interest Maintenance Reserve captures after-tax realized capital gains
and losses which result from changes in the overall level of interest rates for
all types of fixed income investments, as well as other financial instruments,
including financial futures, U.S. Treasury purchase commitments, options,
interest rate swaps, interest rate caps and interest rate floors. These interest
rate related gains and losses are amortized into income using the grouped method
over the remaining life of the investment sold or over the remaining life of the
underlying asset. Net realized after tax capital gains of $110.5 million in
1995, net realized after tax capital losses of $152.6 million in 1994 and net
realized after-tax capital gains of $127.2 million in 1993 were charged to the
Interest Maintenance Reserve. Amortization of the Interest Maintenance Reserve
into net investment income amounted to $5.0 million in 1995, $45.8 million in
1994 and $71.6 million in 1993. In 1994, the Company's Interest Maintenance
Reserve resulted in a net loss deferral. In accordance with the practices of the
National Association of Insurance Commissioners, the 1994 balance was recorded
as a reduction of policyholders' contingency reserves.
Realized capital gains and losses, less taxes, not includable in the
Interest Maintenance Reserve, are recognized in net income. Realized capital
gains and losses are determined using the specific identification method.
Unrealized capital gains and losses are included in policyholders' contingency
reserves.
b. SEPARATE ACCOUNTS
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of pension, variable
annuity and variable life insurance contract holders. Assets consist principally
of publicly traded marketable securities reported at fair value. Premiums,
benefits and expenses of the separate accounts are reported in the Statement of
Income. The Company receives administrative and investment advisory fees from
these accounts.
c. NON-ADMITTED ASSETS
Assets designated as "non-admitted" (principally prepaid pension costs,
certain fixed assets, receivables and Interest Maintenance Reserve, when in a
net loss deferral position) are excluded from the Statement of Financial
Position by an adjustment to policyholders' contingency reserves.
d. POLICYHOLDERS' RESERVES AND FUNDS
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
the 1941, 1958 and 1980 Commissioners' Standard Ordinary mortality tables with
assumed interest rates ranging from 2.5 to 6.0 percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee funds are based on
accepted actuarial methods computed principally using the 1951, 1971, 1983 group
and individual annuity tables with assumed interest rates ranging from 2.25 to
11.25 percent. Reserves for policies and contracts considered investment
contracts have a carrying value of $10,290.5 million (fair value of $10,508.9
million as determined by discounted cash flow projections). Accident and health
policy reserves are generally calculated using the two-year preliminary term,
net level premium and fixed net premium methods and various morbidity tables.
F-9
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF ACCOUNTING PRACTICES (CONTINUED)
During 1995 and 1994, the Company changed its valuation basis for certain
disability income contracts. The effects of these changes, $108.2 million in
1995 and $51.1 million in 1994, were recorded as decreases to policyholders'
contingency reserves.
e. PREMIUM AND RELATED EXPENSE RECOGNITION
The Company recognizes life insurance premium revenue annually on the
anniversary date of the policy. Annuity premium is recognized when received.
Accident and health premiums are recognized as revenue when due. Premiums are
recognized when due for the policies issued by Connecticut Mutual. Commissions
and other costs related to issuance of new policies, maintenance and settlement
costs are charged to current operations.
f. POLICYHOLDERS' DIVIDENDS
The Board of Directors annually approves dividends to be paid in the
following year. These dividends are allocated to reflect the relative
contribution of each group of policies to policyholders' contingency reserves
and consider investment and mortality experience, expenses and federal income
tax charges.
g. CASH AND SHORT-TERM INVESTMENTS
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid short-term investments purchased with a maturity of twelve months
or less to be cash equivalents.
2. POLICYHOLDERS' CONTINGENCY RESERVES
Policyholders' contingency reserves represent surplus of the Company as
reported to regulatory authorities and are intended to protect policyholders
against possible adverse experience.
a. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7 1/2 percent and
$250.0 million at 7 5/8 percent in 1994 and 1993, respectively. These notes are
unsecured and subordinate to all present and future indebtedness of the Company,
policy claims and prior claims against the Company as provided by the
Massachusetts General Laws. Issuance was approved by the Commissioner of
Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of
the Commissioner. Sinking fund payments are due as follows: $62.5 million in
2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in 2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, beginning on September 1, 1994, to holders of record
on the preceding February 15 or August 15, respectively. Interest on the notes
issued in 1993 is scheduled to be paid on May 15 and November 15 of each year,
beginning on May 15, 1994, to holders of record on the preceding May 1 or
November 1, respectively. In accordance with regulations of the National
Association of Insurance Commissioners, interest expense is not recorded until
approval for payment is received from the Commissioner. Interest of $26.6
million and $22.8 million was approved and paid in 1995 and 1994, respectively.
The proceeds of the notes, less a $35 million reserve in 1995 and 1994 and a
$25 million reserve in 1993 for contingencies associated with the issuance of
the notes, are recorded as a component of the Company's policyholders'
contingency reserves as approved by the Commissioner. These reserves, as
permitted by the Massachusetts Division of Insurance, are included in investment
reserves on the Statement of Financial Position.
b. OTHER POLICYHOLDERS' CONTINGENCY RESERVES
As required by regulatory authorities, contingency reserves established to
protect group life and annuity policyholders are $37.8 million in 1995 and $36.3
million in 1994.
F-10
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
3. EMPLOYEE BENEFIT PLANS
The Company's employee benefit plans include plans in place for the
employees of Massachusetts Mutual and Connecticut Mutual prior to the merge.
These plans, which were managed separately, reflect different assumptions for
1995 and 1994. The separate plans will continue into 1996 using similar
assumptions were appropriate. Employees previously covered by the Connecticut
Mutual plans will continue coverage under these plans. All other employees,
including employees hired after the merger date, will be covered by the
Massachusetts Mutual benefit plans.
a. PENSION
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes employees employed by
MassMutual prior to December 31, 1995 and the other includes employees
previously employed by Connecticut Mutual. Benefits are based on the employees'
years of service, compensation during the last five years of employment and
estimated social security retirement benefits. The Company accounts for these
plans following Financial Accounting Standards Board Statement No. 87,
Employers' Accounting for Pensions. Accordingly, as permitted by the
Massachusetts Division of Insurance, the Company has recognized a pension asset
of $37.7 million and $37.6 million in 1995 and 1994, respectively. The net
pension asset of $34 million associated with the Connecticut Mutual plan has
been non-admitted in the financial statements in accordance with Connecticut
insurance regulations. Company policy is to fund pension costs in accordance
with the requirements of the Employee Retirement Income Security Act of 1974
and, based on such requirements, no funding was required for the years ended
December 31, 1995 and 1994. The assets of the Plan are invested in the Company's
general account and separate accounts.
The benefit status of the defined benefit plans as of December 31 is as
follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
(IN MILLIONS)
<S> <C> <C>
Accumulated benefit obligation..................................................... $ 537.5 $ 451.9
Vested benefit obligation.......................................................... 525.7 437.4
Projected benefit obligation....................................................... 622.5 529.5
Plan assets at fair value.......................................................... 941.3 814.7
</TABLE>
The following rates were used in determining the actuarial present value of
both the accumulated and projected benefit obligation.
<TABLE>
<CAPTION>
MASSMUTUAL CONNECTICUT MUTUAL
PLAN PLAN
--------------- ---------------------
<S> <C> <C>
Discount rate -- 1995................................................ 7.5% 7.75 %
Discount rate -- 1994................................................ 8.0 8.5
Increase in future compensation levels............................... 5.0 5.0
Long-term rate of return on assets................................... 10.0 9.0
</TABLE>
The Company also has defined contribution plans for employees and agents.
The expense credited to operations for all pension plans is $10.9 million in
1995, as compared to charged to operation of $5.0 million in 1994 and $4.0
million in 1993.
b. LIFE AND HEALTH
Certain life and health insurance benefits are provided to retired employees
and agents through group insurance contracts. Substantially all of the Company's
employees may become eligible for these benefits if they reach retirement age
while working for the Company. In 1993, the Company adopted the National
Association of Insurance Commissioners' accounting standard for postretirement
benefit costs, requiring these benefits to be accounted for using the accrual
method for employees and agents eligible to retire and current retirees.
F-11
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
3. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following rates were used in determining the accumulated postretirement
benefit liability.
<TABLE>
<CAPTION>
MASSMUTUAL CONNECTICUT MUTUAL
PLAN PLAN
------------ ------------------
<S> <C> <C>
Discount rate -- 1995................................................. 7.5% 8.5%
Discount rate -- 1994................................................. 8.0 7.5
Assumed increases in medical cost rates
in the first year
(for all)......................................................... 7.5
(for those born prior to 1965).................................... 12.0
(for those born after 1965)....................................... 9.5
declining to
(for all)......................................................... 5.0
(for those born prior to 1965).................................... 6.0
(for those born after 1965)....................................... 5.5
within.............................................................. 6 years 7 years
</TABLE>
The initial transition obligation of $137.9 million is being amortized over
twenty years through 2012. At December 31, 1995 and 1994, the net unfunded
accumulated benefit obligation was $109.2 million and $108.1 million,
respectively, for employees and agents eligible to retire or currently retired
and $42.7 million and $36.9 million, respectively, for participants not eligible
to retire. A Retired Lives Reserve Trust was funded to pay life insurance
premiums for certain retired employees. Trust assets available for benefits were
$22.5 million in 1995.
The expense for 1995, 1994 and 1993 was $22.9 million, $19.8 million and
$23.4 million, respectively. A one percent increase in the annual assumed
increase in medical cost rates would increase the 1995 accumulated
postretirement benefit liability and benefit expense by $8.5 million and $1.4
million, respectively.
4. RELATED PARTY TRANSACTIONS
At the end of 1994, the Company executed two reinsurance agreements with its
subsidiary, MML Pension Insurance Company ("MML Pension"). In the first of these
contracts, the Company assumed all of the single premium immediate annuity
business written by MML Pension through either an assumption provision or a
coinsurance provision. The second contract ceded the Company's group life,
accident and health business to MML Pension. Additionally, a reinsurance
agreement previously in place, ceding all of the Company's single premium
immediate annuity business, was terminated. These contracts were concurrently
executed at the end of business on December 31, 1994 and were accounted for as a
bulk reinsurance transaction. Accordingly, assets were transferred at fair value
and liabilities were transferred at statutory carrying value. These transfers
did not impact the 1994 Statement of Income of either company. The net effect of
these transactions decreased the Company's assets and liabilities by $174.6
million in 1994. During 1995, the gain from operations of this business was
reflected as a $41 million dividend received from the subsidiary which was
recorded as net investment income on the Statement of Income.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best estimate
of its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of equity tax, using the most current information,
and other miscellaneous temporary differences, such as reserves, acquisition
costs, and restructuring costs, resulted in an effective tax rate which is other
than the statutory tax rate.
F-12
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
5. FEDERAL INCOME TAXES (CONTINUED)
The Internal Revenue Service has completed examining the Company's income
tax returns through the year 1989 for Massachusetts Mutual and 1991 for
Connecticut Mutual, and is currently examining Massachusetts Mutual for the
years 1990 through 1992. The Company believes any adjustments resulting from
such examinations will not materially affect its financial statements.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for 1995
and 1994. The Company records the estimated effects of anticipated revisions in
the Statement of Income.
Massachusetts Mutual and Connecticut Mutual plan to file their 1995 federal
income tax returns on a consolidated basis with their life and non-life
affiliates. The Companies' and their life and non-life affiliates are subject to
a written tax allocation agreement which allocates tax liability in a manner
permitted under Treasury regulations. Generally, the agreement provides that
loss members shall be compensated for the use of their losses and credits by
other members.
Federal tax payments were $175.2 million in 1995 and $291.1 million in 1993.
In 1994, the Company had federal tax refunds of $23.4 million. At December 31,
1995 and 1994, the Company established a liability for federal income taxes of
$338.5 million and $229.9 million, respectively.
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment
policies limit concentration in any asset class, geographic region, industry
group, economic characteristic, investment quality or individual investment.
a. BONDS
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
----------- ---------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
U. S. Treasury Securities and Obligations of U. S.
Government Corporations and Agencies............... $ 9,391.5 $ 837.0 $ 43.3 $ 10,185.2
Debt Securities issued by Foreign Governments....... 261.9 27.9 0.1 289.7
Mortgage-backed securities.......................... 3,265.4 176.3 9.4 3,432.3
State and local governments......................... 106.0 15.2 0.1 121.1
Industrial securities............................... 9,030.7 762.8 57.8 9,735.7
Utilities........................................... 1,417.6 152.4 2.9 1,567.1
Affiliates.......................................... 152.1 4.4 1.2 155.3
----------- ---------- ----------- -----------
TOTAL............................................. $ 23,625.2 $ 1,976.0 $ 114.8 $ 25,486.4
</TABLE>
F-13
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
6. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
----------- ---------- ---------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
U. S. Treasury Securities and Obligations of U. S.
Government Corporations and Agencies............... $ 7,362.0 $ 154.4 $ 388.3 $ 7,128.1
Debt Securities issued by Foreign Governments....... 124.5 2.5 7.7 119.3
Mortgage-backed securities.......................... 3,410.5 55.6 176.7 3,289.4
State and local governments......................... 138.2 5.2 6.4 137.0
Industrial securities............................... 10,991.4 230.2 436.3 10,785.3
Utilities........................................... 1,147.2 71.3 30.6 1,187.9
Affiliates.......................................... 124.4 9.7 8.6 125.5
----------- ---------- ---------- -----------
TOTAL............................................. $ 23,298.2 $ 528.9 $ 1,054.6 $ 22,772.5
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1995 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
----------- -----------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less...................................................... $ 2,578.8 $ 2,747.9
Due after one year through five years........................................ 3,625.8 3,824.3
Due after five years through ten years....................................... 5,356.3 5,857.2
Due after ten years.......................................................... 3,858.0 4,410.9
----------- -----------
15,418.9 16,840.3
Mortgage-backed securities, including securities guaranteed by the U.S.
Government.................................................................. 8,206.3 8,646.1
----------- -----------
TOTAL...................................................................... $ 23,625.2 $ 25,486.4
</TABLE>
Proceeds from sales of investments in bonds were $8,068.8 million during
1995, $5,624.1 million during 1994 and $5,543.5 million during 1993. Gross
capital gains of $255.5 million in 1995, $100.3 million in 1994 and $318.4
million in 1993 and gross capital losses of $67.1 million in 1995, $195.8
million in 1994 and $98.4 million in 1993 were realized on those sales, a
portion of which were included in the Interest Maintenance Reserve. The
estimated fair value of non-publicly traded bonds is determined by the Company
using a pricing matrix.
b. STOCKS
Preferred stocks in good standing had fair values of $88.0 million in 1995
and $137.9 million in 1994, using a pricing matrix for non-publicly traded
stocks and quoted market prices for publicly traded stocks. Common stocks,
except for unconsolidated subsidiaries, had a cost of $547.7 million in 1995 and
$273.7 million in 1994.
c. MORTGAGES
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for
non-performing loans, approximated carrying value less valuation reserves held.
F-14
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
6. INVESTMENTS (CONTINUED)
The Company acts as mortgage servicing agent and guarantor for $50.1 million
of mortgage loans sold in 1985. As guarantor, the Company is obligated to
advance unpaid principal and interest on any delinquent loans and to repurchase
mortgage loans under certain circumstances including mortgagor default.
d. OTHER
The carrying value of investments which were non-income producing for the
preceding twelve months was $76.9 million and $130.9 million at December 31,
1995 and 1994, respectively. The Company had restructured loans with book values
of $415.0 million, and $543.7 million at December 31, 1995 and 1994,
respectively. The loans typically have been modified to defer a portion of the
contracted interest payments to future periods. Interest deferred to future
periods totaled $3.4 million in 1995, $5.9 million in 1994 and $10.2 million in
1993. The Company made voluntary contributions to the Asset Valuation Reserve of
$52.7 million in 1994 and $51.5 million in 1993 for these restructured loans. No
additional voluntary contribution was made in 1995.
It is not practicable to determine the fair value of policy loans as they do
not have a stated maturity.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks to reduce interest rate and
duration imbalances determined in asset/liability analyses. The fair values of
these instruments, which are not recorded in the financial statements, are based
upon market prices or prices obtained from brokers. The Company does not hold or
issue financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the
parties and, thus, are not a measure of the exposure of the Company. The amounts
exchanged are calculated on the basis of the notional amounts and the other
terms of the instruments, which relate to interest rates, exchange rates,
security prices or financial or other indexes.
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to financial instruments. This exposure is
limited to contracts with a positive fair value. The amounts at risk in a net
gain position were $84.9 million and $88.4 million at December 31, 1995 and
1994, respectively. The Company monitors exposure to ensure counterparties are
credit worthy and concentration of exposure is minimized.
The Company enters into financial futures contracts for the purpose of
managing interest rate exposure. The Company's futures contracts are exchange
traded with minimal credit risk. Margin requirements are met with the deposit of
securities. Futures contracts are generally settled with offsetting
transactions. Gains and losses on financial futures contracts are recorded when
the contract is closed and amortized through the Interest Maintenance Reserve
over the remaining life of the underlying asset. As of December 31, 1995, the
Company did not have any open financial futures contracts.
The Company utilizes interest rate swap agreements, options, and purchased
caps and floors to reduce interest rate exposures arising from mismatches
between assets and liabilities and to modify portfolio profiles to manage other
risks identified. Under interest rate swaps, the Company agrees to exchange, at
specified intervals, the difference between fixed and floating interest rates
calculated by reference to an agreed-upon notional principal amount. Net amounts
receivable and payable are accrued as adjustments to interest income and
included in investment and insurance amounts receivable on the Statement of
Financial Position. Gains and losses realized on the termination of contracts
F-15
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
7. PORTFOLIO RISK MANAGEMENT (CONTINUED)
amortized through the Interest Maintenance Reserve over the remaining life of
the associated contract. At December 31, 1995 and 1994, the Company had swaps
with notional amounts of $1,841.8 million and $2,819.2 million, respectively.
The fair values of these instruments were $10.1 million at December 31, 1995 and
$49.6 million at December 31, 1994.
Options grant the purchaser the right to buy or sell a security at a stated
price within a stated period. The Company's option contracts have terms of up to
two years. The amounts paid for options purchased are included in other
investments on the Statement of Financial Position. Gains and losses on these
contracts are recorded at the expiration or termination date and are amortized
through the Interest Maintenance Reserve over the remaining life of the
underlying asset. At December 31, 1995 and 1994, the Company had option
contracts with notional amounts of $1,876.2 million and $2,262.1 million,
respectively. The Company's credit risk exposure was limited to the unamortized
costs of $18.4 million and $24.4 million, which had fair values of $48.1 million
and $10.4 million at December 31, 1995 and 1994, respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a given rate. Interest rate floor
agreements grant the purchaser the right to receive the excess of a given rate
over a referenced interest rate. Amounts paid for interest rate caps and floors
are amortized into interest income over the life of the asset on a straight-line
basis. Unamortized costs are included in other investments on the Statement of
Financial Position. Amounts receivable and payable are accrued as adjustments to
interest income and included in the Statement of Financial Position as
investment and insurance amounts receivable. Gains and losses on these
contracts, including any unamortized cost, are recognized upon termination and
are amortized through the Interest Maintenance Reserve over the remaining life
of the associated cap or floor agreement. At December 31, 1995 and 1994, the
company had agreements with notional amounts of $3,366.3 million and $2,617.0
million, respectively. The Company's credit risk exposure on these agreements is
limited to the unamortized costs of $14.0 million and $12.1 million at December
31, 1995 and 1994, respectively. The fair values of these instruments were $30.8
million and $6.0 million at December 31, 1995 and 1994, respectively.
The Company utilizes asset swap agreements to reduce exposures, such as
currency risk and prepayment risk, built into certain assets acquired.
Cross-currency interest rate swaps allow investment in foreign currencies,
increasing access to additional investment opportunities, while limiting foreign
exchange risk. Notional amounts relating to asset and currency swaps totaled
$323.7 million and $220.0 million at December 31, 1995 and 1994, respectively.
The fair values of these instruments were an unrecognized gain of $4.6 million
at December 31, 1995 and $2.8 million at December 31, 1994.
The Company enters into forward U.S. Treasury commitments for the purpose of
managing interest rate exposure. The Company generally does not take delivery on
forward commitments. These commitments are instead settled with offsetting
transactions. Gains and losses on forward commitments are recorded when the
commitment is closed and amortized through the Interest Maintenance Reserve over
the remaining life of the asset. At December 31, 1995 and 1994, the Company had
U. S. Treasury purchase commitments which will settle during the following year
with contractual amounts of $292.4 million and $1,000.0 million and fair values
of $298.8 million and $989.2 million, respectively.
F-16
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
8. LIQUIDITY
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1995 are illustrated below:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
Total policyholders' reserves and funds and separate account liabilities... $ 44,474.9
Not subject to discretionary withdrawal.................................... (6,640.2)
Policy loans............................................................... (4,518.4)
------------
Subject to discretionary withdrawal...................................... $ 33,316.3
------------
Total invested assets, including separate investment accounts.............. $ 49,184.1
Policy loans and other invested assets..................................... (12,383.0)
------------
Readily marketable investments............................................. $ 36,801.1
------------
</TABLE>
9. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in
which it does business. These laws assess insurance companies amounts to be used
to pay benefits to policyholders and claimants of insolvent insurance companies.
Many states allow these assessments to be credited against future premium taxes.
The Company believes such assessments in excess of amounts accrued will not
materially affect its financial position, results of operations or liquidity. In
1995, the Company elected not to admit $17.6 million of guaranty fund premium
tax offset receivables relating to prior assessments.
The Company is involved in litigation arising out of the normal course of
its business. Management intends to defend these actions vigorously. While the
outcome of litigation cannot be foreseen with certainty, it is the opinion of
management, after consultation with legal counsel, that the ultimate resolution
of these matters will not materially affect its financial position, results of
operations or liquidity.
10. SUBSEQUENT EVENTS
On January 5, 1996, the Company signed a definitive agreement for the sale
of MassMutual Holding Company Two, Inc., a wholly-owned subsidiary, and its
subsidiaries, including MML Pension Insurance Company, which comprises the
Company's group life and health business, to WellPoint Health Networks, Inc. for
$380 million. The closing of the sale is contingent upon approval by regulatory
authorities. Since the transaction is not expected to close until late in the
first quarter of 1996, management has not determined the final gain on the sale.
The following table presents certain financial information as it pertains to
MassMutual Holding Company Two, Inc. and its effects on the Company's financial
statements.
<TABLE>
<CAPTION>
1995 1994
--------- ---------
(IN MILLIONS)
<S> <C> <C>
Other Invested Assets.............................................................. $ 187.8 $ 173.9
Net Gain From Operations........................................................... 41.0 0.0
Unrealized Capital Gain (Loss)..................................................... 13.9 (12.5)
</TABLE>
F-17
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
11. SUBSIDIARIES AND AFFILIATED COMPANIES
Summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1995 is illustrated below. The
Company provides management or advisory services to most of these companies.
SUBSIDIARIES
CM Assurance Company
CM Benefit Insurance Company
CM Financial Services, LLC
CM Financial Services Series Fund I, Inc.
CM Investment Accounts, Inc.
CM Life Insurance Company
CM Transnational, S.A.
DHC, Inc.
MML Bay State Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc.
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
SUBSIDIARIES OF MASSMUTUAL HOLDING COMPANY
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
MML Investors Services, Inc.
MML Real Estate Corporation (liquidated during 1995)
MML Realty Management Corporation
MML Reinsurance (Bermuda) Ltd.
Mass Seguros De Vida S.A. (Chile)
MassLife Seguros De Vida S.A. (Argentina)
MassMutual/Carlson CBO N.V.
MassMutual Corporate Value Limited
MassMutual International (Bermuda) Limited
Oppenheimer Acquisition Corporation
Westheimer 335 Suites, Inc.
SUBSIDIARIES OF DHC, INC.
CM Advantage Inc.
CM Insurance Services, Inc.
CM International, Inc.
CM Property Management, Inc.
G.R. Phelps & Company, Inc.
State House 1 Corp.
Urban Properties, Inc.
SUBSIDIARIES OF DLB ACQUISITION CORPORATION
Concert Capital Management, Inc.
David L. Babson and Company, Inc.
SUBSIDIARIES OF MASSMUTUAL CORPORATE VALUE LIMITED
MassMutual Corporate Value Partners Limited
F-18
<PAGE>
NOTES TO SUPPLEMENTAL FINANCIAL STATEMENTS (CONTINUED)
11. SUBSIDIARIES AND AFFILIATED COMPANIES (CONTINUED)
SUBSIDIARIES OF MASSMUTUAL HOLDING COMPANY TWO, INC.
MassMutual Holding Company Two MSC, Inc.
SUBSIDIARIES OF MASSMUTUAL HOLDING COMPANY TWO MSC, INC.
Benefit Panel Services, Inc.
MML Pension Insurance Company
MassMutual of Ireland, Limited
National Capital Health Plan, Inc.
National Capital Preferred Provider Organization
Sloans Lake Management Corporation
AFFILIATES
MassMutual Corporate Investors
MassMutual Participation Investors
F-19
<PAGE>
<TABLE>
<S> <C>
STATEMENT OF NET ASSETS CONNECTICUT MUTUAL VARIABLE LIFE
SEPARATE ACCOUNT I OF
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
December 31, 1995
</TABLE>
<TABLE>
<S> <C>
ASSETS
Investments, at market:
Connecticut Mutual Financial Services
Series Fund I, Inc.
Government Securities Portfolio
32,522 shares (Cost $35,045) $ 34,744
Income Portfolio
92,493 shares (Cost $115,407) 113,951
Total Return Portfolio
744,184 shares (Cost $1,297,459) 1,305,092
Growth Portfolio
876,072 shares (Cost $2,144,499) 2,212,491
-----------
3,666,278
-----------
Fidelity Variable Insurance Products
Fund
Money Market Portfolio
264,435 shares (Cost $264,435) 264,435
High Income Portfolio
12,186 shares (Cost $140,815) 146,842
Overseas Portfolio
17,290 shares (Cost $283,740) 294,791
-----------
706,068
-----------
Due from Affiliates 22,432
-----------
NET ASSETS (variable universal life
policyholder liabilities) $4,394,778
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE UNIVERSAL LIFE POLICYHOLDER LIABILITIES
VARIABLE UNIVERSAL
At December 31, 1995, the variable universal life LIFE
policyholder liabilities of the Account consisted UNITS OWNED BY POLICYHOLDER
of the following: PARTICIPANTS UNIT VALUE LIABILITIES
<S> <C> <C> <C>
CONNECTICUT MUTUAL FINANCIAL SERVICES
SERIES FUND I, INC.
Government Securities Sub-Account 29,497 1.176771 $ 34,711
Income Sub-Account 100,706 1.168392 117,664
Total Return Sub-Account 1,060,363 1.240274 1,315,141
Growth Sub-Account 1,622,408 1.378981 2,237,269
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Money Market Sub-Account 220,415 1.051596 231,788
High Income Sub-Account 131,124 1.203890 157,859
Overseas Sub-Account 276,706 1.085435 300,346
-----------
$4,394,778
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS CONNECTICUT MUTUAL VARIABLE LIFE
SEPARATE ACCOUNT I OF
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
For the year ended December 31, 1995
</TABLE>
<TABLE>
<CAPTION>
S U B - A C C O U N T S
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
GOVERNMENT TOTAL
SECURITIES INCOME RETURN GROWTH
<S> <C> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $ 1,827 $6,996 $ 90,186 $ 147,400
Expenses:
Mortality and Expense Risk Fees 129 308 5,414 9,114
------ ------- ------- ---------------
NET INVESTMENT INCOME (LOSS) 1,698 6,688 84,772 138,286
------ ------- ------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain from Fund Share
Transactions 958 551 1,864 11,659
Unrealized (Depreciation) Appreciation (287 ) (1,434 ) 8,246 70,327
------ ------- ------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 671 (883 ) 10,110 81,986
------ ------- ------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 2,369 $5,805 $ 94,882 $ 220,272
------ ------- ------- ---------------
------ ------- ------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
<TABLE>
<CAPTION>
S U B - A C C O U N T S
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
MONEY HIGH
MARKET INCOME OVERSEAS
<C> <C> <C> <S>
$ 14,756 $ 484 $ 42
1,258 588 1,421
------- ------ -------
13,498 (104) (1,379)
------- ------ -------
-- 183 858
-- 5,970 11,040
------- ------ -------
-- 6,153 11,898
------- ------ -------
$ 13,498 $ 6,049 $ 10,519
------- ------ -------
------- ------ -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE>
<TABLE>
<S> <C>
STATEMENTS OF CHANGES IN NET ASSETS CONNECTICUT MUTUAL VARIABLE LIFE
SEPARATE ACCOUNT I OF
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
For the year ended December 31, 1995 and
the period from inception (October 3,
1994) to December 31, 1994
</TABLE>
<TABLE>
<CAPTION>
S U B - A C C O U N T S
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.
GOVERNMENT SECURITIES INCOME TOTAL RETURN GROWTH
<S> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1995 1994 1995 1994 1995
INCREASE IN NET
ASSETS
FROM OPERATIONS:
Net Investment
Income (Loss) $ 1,698 $ 16 $ 6,688 $ 21 $ 84,772 $ 699 $ 138,286
Net Realized Gain
from Fund Share
Transactions 958 -- 551 -- 1,864 -- 11,659
Unrealized
(Depreciation)
Appreciation (287) (14) (1,434) (22) 8,246 (613) 70,327
------------- ----- ----------- ----- ----------- ------------- -----------
Net Increase
(Decrease) in Net
Assets Resulting
from Operations 2,369 2 5,805 (1) 94,882 86 220,272
------------- ----- ----------- ----- ----------- ------------- -----------
FROM UNIT
TRANSACTIONS:
Purchases by
Policyholders 35,984 290 94,980 311 915,605 11,338 1,755,304
Withdrawals by
Policyholders (5,722) (8) (12,803) (14) (162,228) (177) (226,725)
Net Transfers from
(to) other Sub-
Accounts 1,796 -- 29,386 -- 455,253 382 422,885
------------- ----- ----------- ----- ----------- ------------- -----------
Net Increase in
Net Assets from
Unit Transactions 32,058 282 111,563 297 1,208,630 11,543 1,951,464
------------- ----- ----------- ----- ----------- ------------- -----------
INCREASE IN NET
ASSETS 34,427 284 117,368 296 1,303,512 11,629 2,171,736
------------- ----- ----------- ----- ----------- ------------- -----------
NET ASSETS
Beginning of
Period 284 -- 296 -- 11,629 -- 65,533
------------- ----- ----------- ----- ----------- ------------- -----------
End of Period $ 34,711 $ 284 $ 117,664 $ 296 $1,315,141 $ 11,629 $2,237,269
------------- ----- ----------- ----- ----------- ------------- -----------
------------- ----- ----------- ----- ----------- ------------- -----------
<CAPTION>
<S> <C>
1994
INCREASE IN NET
ASSETS
FROM OPERATIONS:
Net Investment
Income (Loss) $ 2,598
Net Realized Gain
from Fund Share
Transactions --
Unrealized
(Depreciation)
Appreciation (2,335)
-------------
Net Increase
(Decrease) in Net
Assets Resulting
from Operations 263
-------------
FROM UNIT
TRANSACTIONS:
Purchases by
Policyholders 31,325
Withdrawals by
Policyholders (588)
Net Transfers from
(to) other Sub-
Accounts 34,533
-------------
Net Increase in
Net Assets from
Unit Transactions 65,270
-------------
INCREASE IN NET
ASSETS 65,533
-------------
NET ASSETS
Beginning of
Period --
-------------
End of Period $ 65,533
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE>
<TABLE>
<CAPTION>
S U B - A C C O U N T S
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
MONEY MARKET HIGH INCOME OVERSEAS
<S> <C> <C> <C> <C> <C>
1995 1994 1995 1994 1995 1994
$ 13,498 $ 55 $ (104) $ (3 ) $ (1,379) $ 0
-- -- 183 -- 858 --
-- -- 5,970 57 11,040 11
- ------------- -------- --------- --------------------
13,498 55 6,049 54 10,519 11
- ------------- -------- --------- --------------------
1,322,346 45,173 118,646 5,627 234,603 575
(75,748) (8,952) (12,809) (82 ) (34,121 ) (56 )
(1,028,864) (35,720) 40,374 -- 88,010 805
- ------------- -------- --------- --------------------
217,734 501 146,211 5,545 288,492 1,324
- ------------- -------- --------- --------------------
231,232 556 152,260 5,599 299,011 1,335
- ------------- -------- --------- --------------------
556 -- 5,599 -- 1,335 --
- ------------- -------- --------- --------------------
$231,788 $556 $157,859 $5,599 $300,346 $1,335
- ------------- -------- --------- --------------------
- ------------- -------- --------- --------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE>
<TABLE>
<S> <C>
NOTES TO FINANCIAL STATEMENTS CONNECTICUT MUTUAL VARIABLE LIFE
SEPARATE ACCOUNT I OF
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY
December 31, 1995
</TABLE>
1. ORGANIZATION
Connecticut Mutual Variable Life Separate Account I (the Account) is a
separate account within Connecticut Mutual Life Insurance Company (Connecticut
Mutual). Although the Account is an integral part of Connecticut Mutual, it is
registered as a unit investment trust under the Investment Company Act of
1940, as amended (the 1940 Act). The assets attributable to policies
participating in the Account are held for the benefit of the participants and
are not chargeable with liabilities arising out of any other business that
Connecticut Mutual may conduct.
The Account currently offers seven sub-accounts. Each sub-account invests
exclusively in a corresponding investment portfolio of Connecticut Mutual
Financial Services Series Fund I, Inc. (Series Fund) managed by G.R. Phelps &
Co., Inc., a wholly-owned subsidiary of Connecticut Mutual, or of the Variable
Insurance Products Fund (VIPF) managed by Fidelity Management & Research
Company. Series Fund and VIPF are open-end diversified series management
investment companies registered under the 1940 Act.
A policyholder may allocate funds to a fixed interest account which is part of
Connecticut Mutual's general account, the results of which are not presented
herein. The fixed interest account has not been registered under the
Securities Act of 1933 and Connecticut Mutual's general account has not been
registered as an investment company under the 1940 Act. Accordingly, the
assets attributable to policies in the fixed interest account are chargeable
with liabilities arising out of business that Connecticut Mutual may conduct
and are not reflected in the accompanying financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Fund Share Transactions in Series Fund and VIPF are recorded on the trade
date. The cost of shares sold is determined on the basis of identified
cost.
(b) Valuation of Investment Securities in each fund are valued at their
closing net asset value per share on December 31, 1995. Valuation of
securities by Series Fund is discussed in Note 1 of Series Fund's Notes to
Financial Statements. Refer to the VIPF financial statements for policies
regarding valuation of investment securities held by VIPF.
(c) Federal Income Taxes. The operations of the Account form a part of the
total operations of Connecticut Mutual and are not taxed separately.
Connecticut Mutual is taxed as a life insurance company under Subchapter L
of the Internal Revenue Code of 1986, as amended. The Account will not be
taxed as a regulated investment company under Subchapter M of the Internal
Revenue Code. Accordingly, no provision for income taxes has been required
in the accompanying financial statements.
(d) Other. Certain reclassifications have been made to prior year amounts to
conform with current year presentation.
3. CONTRACT CHARGES
A monthly charge is deducted from the policy value to compensate Connecticut
Mutual for the cost of insurance which is the anticipated cost of providing
death proceeds to beneficiaries of those insureds who die prior to the
maturity date. Because the cost of insurance depends on a number of variables,
it can vary from month to month.
A monthly charge of $5 is deducted from the policy value to compensate
Connecticut Mutual for actual expenses incurred in the administration and
underwriting of the policy. During the first ten policy years, Connecticut
Mutual assesses an additional daily charge of .00068% (.25% on an annual
basis) of the value of the Account's assets for costs involved with the
administration of the Account.
For assuming mortality and expense risks, Connecticut Mutual makes a daily
charge equal to .0024% (.90% on an annual basis) of the value of the Account's
assets. This charge may be increased or decreased by the Board of Directors of
Connecticut Mutual once each year, subject to compliance with applicable state
and federal requirements, but it may not exceed 1.275% on an annual basis. The
mortality risk is that insureds may live for a shorter time than anticipated,
and Connecticut Mutual will therefore pay an aggregate amount of death
proceeds which are greater than anticipated. The expense risk is that expenses
incurred in issuing and administering the policies will exceed the amounts
realized from the administrative charges discussed above.
F-25
<PAGE>
4. CHANGE IN UNIT VALUES
<TABLE>
<CAPTION>
PERCENT
CHANGE
DECEMBER 31, 1994 DECEMBER 31, 1995 PERCENT SINCE
SUB-ACCOUNTS UNIT VALUE UNIT VALUE CHANGE INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC.:
Government Securities 1.005848 1.176771 +16.99% +17.68%
Income 0.997037 1.168392 +17.19% +16.84%
Total Return 1.007377 1.240274 +23.12% +24.03%
Growth 1.013802 1.378981 +36.02% +37.90%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
Money Market 1.003588 1.051596 + 4.78 % + 5.16 %
High Income 1.009786 1.203890 +19.22 % +20.39 %
Overseas 1.001193 1.085435 + 8.41 % + 8.54 %
</TABLE>
5. SUBSEQUENT EVENT
On September 8, 1995, the Board of Directors of Connecticut Mutual approved
the merger of Connecticut Mutual and Massachusetts Mutual Life Insurance
Company. Thereafter, a definitive agreement was signed by both companies. On
January 27, 1996, Connecticut Mutual and its insurance subsidiary
policyholders and other insureds and annuitants approved the merger. The
merger was subsequently reviewed by the insurance regulatory authorities in
Connecticut and Massachusetts and approved. It is anticipated that the merger
will be effective on March 1, 1996.
F-26
<PAGE>
THE SEPARATE ACCOUNT
As of December 31, 1995, the Bond Sub-Account had not yet commenced
operation. Accordingly, no financial information is included for this
Sub-Account. Prior to May 1, 1996, the Government Securities and Income
Sub-Accounts were offered as part of the Separate Acount and, accordingly, are
included in the Separate Account's financial statements. However, the Government
Securities and Income Sub-Accounts are no longer available for investment.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Connecticut Mutual Variable Life Separate Account I of
Connecticut Mutual Life Insurance Company and to the
Owners of Units of Interest Therein:
We have audited the accompanying statement of net assets of Connecticut
Mutual Variable Life Separate Account I of Connecticut Mutual Life Insurance
Company as of December 31, 1995, and the related statement of operations for the
year then ended, and the statements of changes in net assets for the year then
ended and for the period from inception, October 3, 1994, to December 31, 1994.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Connecticut Mutual Variable
Life Separate Account I of Connecticut Mutual Life Insurance Company as of
December 31, 1995, the results of its operations for the year then ended, and
the changes in its net assets for the year then ended and for the period from
inception, October 3, 1994, to December 31, 1994, in conformity with generally
accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1996
F-27
<PAGE>
APPENDIX A
OPTIONAL BENEFITS
This Appendix is intended to provide only a very brief overview of
additional insurance benefits available by rider. For more information, contact
your agent.
The following supplemental benefits are available for issue under the
Policies for an additional charge.
DISABILITY BENEFIT RIDER
This rider provides that MML will add the waiver benefit to the Policy each
month while the Insured is disabled and it can operate as either a Waiver of
Charges Benefit or a Waiver of Premium, and a selection must be made on the
application.
GUARANTEED INSURABILITY RIDER
This rider guarantees that insurance may be added at various option dates
without Evidence of Insurability. This benefit may be exercised on the option
dates even if the Insured is disabled.
OTHER INSURED RIDER
This rider provides a term insurance benefit for up to five Insureds. MML
reserves the right to restrict the number of Insureds under this rider. At
present this benefit is only available for the spouse or a child of the primary
Insured. The rider includes a feature that allows the "other Insured" to convert
the coverage to a flexible premium adjustable life insurance policy.
The following supplemental benefits are available under the Policies at no
additional charge.
EXCHANGE OPTION RIDER
This rider allows you to use the Policy to insure a different person,
subject to Company guidelines.
ACCELERATED BENEFITS RIDER
This rider permits part of the proceeds of the Policy to be available before
death if the Insured becomes terminally ill.
A-1
<PAGE>
APPENDIX B
PAYMENT OPTIONS
PAYMENT OPTIONS
Upon written request, the Surrender Value or all or part of the Death
Proceeds may be placed under one or more payment options currently offered by
MML. If you do not make an election, MML will pay the benefits in a single sum.
A certificate will be provided to the payee describing the payment option
selected.
If a payment option is selected, the Beneficiary may pay to MML any amount
that would otherwise be deducted from the Sum Insured.
SELECTION OF PAYMENT OPTIONS
The amount applied under any one option for any one payee must be at least
$5,000. The periodic payment for any one payee must be at least $50. Subject to
your and/or the Beneficiary's provision, any option selection may be changed
before the Death Proceeds become payable. If you make no selection, the
Beneficiary may select an option when the Death Proceeds becomes payable.
B-1
<PAGE>
APPENDIX C
ILLUSTRATIONS OF SUM INSURED, POLICY VALUES
AND ACCUMULATED PREMIUMS
The tables on pages C-3-C-6 illustrate the way in which a Policy's Sum
Insured and Policy Value could vary over an extended period of time. They assume
that all premiums are allocated to and remain in the Separate Account for the
entire period shown and are based on hypothetical gross investment rates of
return for the Portfolios (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross (after tax) annual rates of
0%, 6%, and 12%.
The tables on pages C-3 and C-4 illustrate a Policy issued to a male, Age
30, under a standard Premium Class and qualifying for the non-smoker discount
under both the current rate illustration and the guaranteed rate illustration.
The tables on pages C-5 and C-6 illustrate a Policy issued to a male, Age 45,
under a standard Premium Class and qualifying for the non-tobacco user discount
under the current rate illustration and the non-smoker discount under the
guaranteed rate illustration.
The columns on pages C-4 and C-6 are based on the guaranteed cost of
insurance rates; columns on pages C-3 and C-5 are based on the current cost of
insurance rates as presently in effect.
The Policy Values and Death Proceeds would be different from those shown if
the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above or below such averages for individual
policy years. The values would also be different depending on the allocation of
a Policy's total Policy Value among the Sub-Accounts of the Separate Account, if
the actual rates of return averaged 0%, 6% or 12%, but the rates of each
Portfolio varied above and below such averages.
The amounts shown for the Death Proceeds and Policy Values take into account
the deduction from premium for the tax expense charge, the Monthly Deduction
from Policy Value, and the daily charge against the Separate Account for
mortality and expense risks and the Separate Account administrative charge for
the first ten Policy years, equivalent to an effective annual rate of 1.15% of
the average daily value of the assets in the Separate Account attributable to
the Policies, and 0.90% thereafter. The amounts shown in the tables also take
into account the Portfolio advisory fees and operating expenses, which are
assumed to be at an annual rate of 0.68% of the average daily net assets of the
Portfolios. The actual fees and expenses of the Portfolios in 1995 ranged from
an annual rate of 0.27% to an annual rate of 0.92% of average daily net assets.
The fees and expenses associated with your Policy may be more or less than 0.68%
in the aggregate, depending upon how you make allocations of Policy Value among
the Sub-Accounts. Fidelity Management has voluntarily agreed to temporarily
limit the total operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) of the High Income Portfolio to an
annual rate of 1.00% and of the Overseas Portfolio to an annual rate of 1.50% of
each Portfolio's average net assets.
Taking into account the mortality and expense risk charge and the Separate
Account administrative charge and the assumed 0.68% charge for the Portfolio
advisory fees and operating expenses, the gross annual rates of investment
return of 0%, 6% and 12% correspond to net annual rates of -1.83%, 4.17%, and
10.17%, respectively, during the first 10 Policy years and -1.58%, 4.42% and
10.42%, respectively, thereafter.
The hypothetical returns shown in the table do not reflect any charges for
income taxes against the Separate Account since no charges are currently made.
However, if in the future such charges are made, in order to produce illustrated
death benefits and cash values, the gross annual investment rate of return would
have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.
The second column of the tables show the amount which would accumulate if an
amount equal to the Guideline Annual Premium were invested to earn interest,
(after taxes) at 5% compounded annually.
C-1
<PAGE>
The tables illustrate the Policy Values that would result based upon the
assumptions that no Policy loans have been made, that you have not requested an
increase or decrease in the initial Face Amount, that no partial withdrawals
have been made, and that no transfers above six have been made in any Policy
year (so that no transaction or transfer charges have been incurred).
Upon request, MML will provide a comparable illustration based upon the
proposed Insured's Age, sex, and underwriting classification, and the requested
Face Amount, Sum Insured Option, and riders.
TO CHOOSE THE SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND OBJECTIVES,
CAREFULLY READ THE PROSPECTUSES OF THE FUNDS ALONG WITH THIS PROSPECTUS.
C-2
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THE BLUE CHIP COMPANY'S VARIABLE LIFE POLICY
<TABLE>
<CAPTION>
MALE NON-TOBACCO USER AGE 30
SPECIFIED FACE AMOUNT = $75,000
SUM INSURED OPTION 2
---------------------------------
PREMIUMS HYPOTHETICAL 0% GROSS INVESTMENT HYPOTHETICAL 6% GROSS INVESTMENT HYPOTHETICAL 12% GROSS INVESTMENT
PAID PLUS RETURN RETURN RETURN
INTEREST AT ----------------------------------- --------------------------------- ---------------------------------
5% SURRENDER POLICY DEATH SURRENDER POLICY DEATH SURRENDER POLICY DEATH
POLICY YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------ ----------- ----------- --------- ----------- ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT COST OF INSURANCE CHARGES
1 1,470 272 1,175 76,175 348 1,251 76,251 424 1,327 76,327
2 3,014 1,296 2,324 77,324 1,521 2,550 77,550 1,756 2,784 77,784
3 4,634 2,381 3,448 78,448 2,830 3,897 78,897 3,317 4,384 79,384
4 6,336 3,521 4,546 79,546 4,271 5,295 80,295 5,115 6,140 81,140
5 8,123 4,657 5,617 80,617 5,785 6,745 81,745 7,107 8,067 83,067
6 9,999 5,767 6,663 81,663 7,352 8,249 83,249 9,286 10,183 85,183
7 11,969 6,851 7,683 82,683 8,974 9,807 84,807 11,672 12,505 87,505
8 14,037 7,903 8,672 83,672 10,648 11,417 86,417 14,280 15,048 90,048
9 16,209 8,930 9,634 84,634 12,381 13,085 88,085 17,135 17,840 92,840
10 18,490 9,919 10,559 85,559 14,161 14,802 89,802 20,252 20,893 95,893
11 20,884 11,002 11,514 86,514 16,137 16,649 91,649 23,821 24,333 99,333
12 23,398 12,061 12,445 87,445 18,184 18,569 93,569 27,737 28,121 103,121
13 26,038 13,094 13,350 88,350 20,304 20,560 95,560 32,034 32,290 107,290
14 28,810 14,099 14,228 89,228 22,498 22,626 97,626 36,749 36,877 111,877
15 31,720 15,076 15,076 90,076 24,767 24,767 99,767 41,923 41,923 116,923
16 34,777 15,894 15,894 90,894 26,983 26,983 101,983 47,474 47,474 122,474
17 37,985 16,674 16,674 91,674 29,271 29,271 104,271 53,574 53,574 128,574
18 41,355 17,416 17,416 92,416 31,633 31,633 106,633 60,278 60,278 135,278
19 44,892 18,119 18,119 93,119 34,069 34,069 109,069 67,647 67,647 142,647
20 48,607 18,780 18,780 93,780 36,580 36,580 111,580 75,747 75,747 150,747
Age 60 97,665 23,016 23,016 98,016 66,353 66,353 141,353 217,897 217,897 292,897
Age 65 132,771 22,895 22,895 97,895 84,352 84,352 159,352 359,453 359,453 438,532
Age 70 177,576 20,426 20,426 95,426 103,900 103,900 178,900 587,941 587,941 682,011
Age 75 234,759 14,660 14,660 89,660 124,065 124,065 199,065 957,194 957,194 1,032,194
</TABLE>
- ------------------------
(1) Assumes a $1,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUND AND VIPF. THE VALUE OF
UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR CASH VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-3
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THE BLUE CHIP COMPANY'S VARIABLE LIFE POLICY
<TABLE>
<CAPTION>
MALE NON-SMOKER AGE 30
SPECIFIED FACE
AMOUNT = $75,000
SUM INSURED OPTION 2
---------------------------------
PREMIUMS HYPOTHETICAL 0% GROSS INVESTMENT HYPOTHETICAL 6% GROSS INVESTMENT HYPOTHETICAL 12% GROSS INVESTMENT
PAID PLUS RETURN RETURN RETURN
INTEREST AT --------------------------------- --------------------------------- ---------------------------------
5% SURRENDER POLICY DEATH SURRENDER POLICY DEATH SURRENDER POLICY DEATH
POLICY YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- ----------- ----------- --------- --------- ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GUARANTEED COST OF INSURANCE CHARGES
1 1,470 256 1,159 76,159 332 1,234 76,234 407 1,310 76,310
2 3,014 1,265 2,294 77,294 1,489 2,517 77,517 1,721 2,750 77,750
3 4,634 2,338 3,405 78,405 2,783 3,850 78,850 3,265 4,332 79,332
4 6,336 3,467 4,492 79,492 4,210 5,234 80,234 5,046 6,070 81,070
5 8,123 4,593 5,553 80,553 5,709 6,670 81,670 7,018 7,979 82,979
6 9,999 5,692 6,589 81,589 7,262 8,158 83,158 9,176 10,073 85,073
7 11,969 6,766 7,599 82,599 8,869 9,701 84,701 11,539 12,372 87,372
8 14,037 7,813 8,581 83,581 10,530 11,299 86,299 14,125 14,894 89,894
9 16,209 8,832 9,536 84,536 12,248 12,952 87,952 16,956 17,660 92,660
10 18,490 9,822 10,463 85,463 14,023 14,663 89,663 20,054 20,694 95,694
11 20,884 10,877 11,389 86,389 15,961 16,473 91,473 23,570 24,082 99,082
12 23,398 11,902 12,286 87,286 17,964 18,348 93,348 27,422 27,806 102,806
13 26,038 12,899 13,156 88,156 20,035 20,291 95,291 31,645 31,902 106,902
14 28,810 13,867 13,995 89,995 22,174 22,302 97,302 36,276 36,404 111,404
15 31,720 14,805 14,805 89,805 24,385 24,385 99,385 41,356 41,356 116,356
16 34,777 15,582 15,582 90,582 26,539 26,539 101,539 46,801 46,801 121,801
17 37,985 16,327 16,327 91,327 28,765 28,765 103,765 52,788 52,788 127,788
18 41,355 17,038 17,038 92,038 31,067 31,067 106,067 59,371 59,371 134,371
19 44,892 17,714 17,714 92,714 33,444 33,444 108,444 66,611 66,611 141,611
20 48,607 18,353 18,353 93,353 35,898 35,898 110,898 74,572 74,572 149,572
Age 60 97,665 21,887 21,887 96,887 64,357 64,357 139,357 213,560 213,560 288,560
Age 65 132,771 20,593 20,593 95,593 80,440 80,440 155,440 350,708 350,708 427,863
Age 70 177,576 15,552 15,552 90,552 95,906 95,906 170,906 570,026 570,026 661,230
Age 75 234,759 4,442 4,442 79,442 107,611 107,611 182,611 920,372 920,372 995,372
</TABLE>
- ------------------------
(1) Assumes a $1,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUND AND VIPF. THE VALUE OF
UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR CASH VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-4
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THE BLUE CHIP COMPANY'S VARIABLE LIFE POLICY
<TABLE>
<CAPTION>
MALE NON-TOBACCO USER AGE 45
SPECIFIED FACE
AMOUNT = $250,000
SUM INSURED OPTION 1
---------------------------------
PREMIUMS HYPOTHETICAL 0% GROSS INVESTMENT HYPOTHETICAL 6% GROSS INVESTMENT HYPOTHETICAL 12% GROSS INVESTMENT
PAID PLUS RETURN RETURN RETURN
INTEREST AT --------------------------------- --------------------------------- ---------------------------------
5% SURRENDER POLICY DEATH SURRENDER POLICY DEATH SURRENDER POLICY DEATH
POLICY YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- ----------- ----------- --------- --------- ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT COST OF INSURANCE CHARGES
1 4,410 0 3,191 250,000 23 3,408 250,000 241 3,626 250,000
2 9,040 2,493 6,276 250,000 3,127 6,910 250,000 3,788 7,571 250,000
3 13,903 3,336 9,238 250,000 4,588 10,491 250,000 5,947 11,849 250,000
4 19,008 6,416 12,082 250,000 8,490 14,156 250,000 10,833 16,499 250,000
5 24,368 9,494 14,806 250,000 12,596 17,908 250,000 16,245 21,557 250,000
6 29,996 12,436 17,394 250,000 16,774 21,732 250,000 22,092 27,050 250,000
7 35,906 15,257 19,861 250,000 21,044 25,648 250,000 28,435 33,039 250,000
8 42,112 17,955 22,205 250,000 25,404 29,654 250,000 35,326 39,576 250,000
9 48,627 20,530 24,426 250,000 29,861 33,756 250,000 42,827 46,723 250,000
10 55,469 22,970 26,511 250,000 34,405 37,947 250,000 50,992 54,534 250,000
11 62,652 25,825 28,658 250,000 39,624 42,458 250,000 60,526 63,359 250,000
12 70,195 28,550 30,675 250,000 44,966 47,091 250,000 70,939 73,063 250,000
13 78,114 31,129 32,546 250,000 50,422 51,838 250,000 82,321 83,738 250,000
14 86,430 33,552 34,260 250,000 55,990 56,698 250,000 94,785 95,493 250,000
15 95,161 35,801 35,801 250,000 61,665 61,665 250,000 108,451 108,451 250,000
16 104,330 37,186 37,186 250,000 66,763 66,763 250,000 122,778 122,778 250,000
17 113,956 38,393 38,393 250,000 71,985 71,985 250,000 138,636 138,636 250,000
18 124,064 39,404 39,404 250,000 77,328 77,328 250,000 156,215 156,215 250,000
19 134,677 40,175 40,175 250,000 82,771 82,771 250,000 175,730 175,730 250,000
20 145,820 40,732 40,732 250,000 88,350 88,350 250,000 197,459 197,459 250,000
Age 60 95,161 35,801 35,801 250,000 61,665 61,665 250,000 108,451 108,451 250,000
Age 65 142,820 40,732 40,732 250,000 88,350 88,350 250,000 197,459 197,459 250,000
Age 70 210,477 39,446 39,446 250,000 118,341 118,341 250,000 345,068 345,068 250,000
Age 75 292,995 28,756 28,756 250,000 153,042 153,042 250,000 583,967 583,967 624,844
</TABLE>
- ------------------------
(1) Assumes a $4,200 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUND AND VIPF. THE VALUE OF
UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR CASH VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-5
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THE BLUE CHIP COMPANY'S VARIABLE LIFE POLICY
<TABLE>
<CAPTION>
MALE NON-SMOKER AGE 45
SPECIFIED FACE
AMOUNT = $250,000
SUM INSURED OPTION 1
---------------------------------
PREMIUMS HYPOTHETICAL 0% GROSS INVESTMENT HYPOTHETICAL 6% GROSS INVESTMENT HYPOTHETICAL 12% GROSS INVESTMENT
PAID PLUS RETURN RETURN RETURN
INTEREST AT --------------------------------- --------------------------------- ---------------------------------
5% SURRENDER POLICY DEATH SURRENDER POLICY DEATH SURRENDER POLICY DEATH
POLICY YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------------- ----------- ----------- --------- --------- ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GUARANTEED COST OF INSURANCE CHARGES
1 4,410 0 3,106 250,000 0 3,320 250,000 150 3,535 250,000
2 9,040 2,316 6,098 250,000 2,939 6,721 250,000 3,589 7,371 250,000
3 13,903 3,072 8,975 250,000 4,300 10,202 250,000 5,632 11,535 250,000
4 19,008 6,068 11,734 250,000 8,098 13,765 250,000 10,393 16,059 250,000
5 24,368 9,059 14,371 250,000 12,092 17,405 250,000 15,663 20,975 250,000
6 29,996 11,926 16,885 250,000 16,166 21,124 250,000 21,365 26,323 250,000
7 35,906 14,657 19,261 250,000 20,308 24,912 250,000 27,532 32,136 250,000
8 42,112 17,240 21,490 250,000 24,510 28,760 250,000 34,204 38,454 250,000
9 48,627 19,665 23,560 250,000 28,766 32,662 250,000 41,428 45,324 250,000
10 55,469 21,916 25,457 250,000 33,062 36,603 250,000 49,254 52,796 250,000
11 62,652 24,407 27,240 250,000 37,848 40,681 250,000 58,251 61,084 250,000
12 70,195 26,703 28,828 250,000 42,672 44,797 250,000 68,019 70,144 250,000
13 78,114 28,798 30,215 250,000 47,534 48,951 250,000 78,653 80,069 250,000
14 86,430 30,680 31,388 250,000 52,427 53,136 250,000 90,257 90,965 250,000
15 95,161 32,327 32,327 250,000 57,338 57,338 250,000 102,944 102,944 250,000
16 104,330 33,006 33,006 250,000 61,544 61,544 250,000 116,141 116,141 250,000
17 113,956 33,400 33,400 250,000 65,740 65,740 250,000 130,716 130,716 250,000
18 124,064 33,472 33,472 250,000 69,990 69,900 250,000 146,851 146,851 250,000
19 134,677 33,175 33,175 250,000 73,997 73,997 250,000 164,764 164,764 250,000
20 145,820 32,460 32,460 250,000 78,002 78,002 250,000 184,722 184,722 250,000
Age 60 95,161 32,327 32,327 250,000 57,338 57,338 250,000 102,944 102,944 250,000
Age 65 142,820 32,460 32,460 250,000 78,002 78,002 250,000 184,722 184,722 250,000
Age 70 210,477 20,839 20,839 250,000 95,788 95,788 250,000 321,541 321,541 250,000
Age 75 292,995 105,432 105,432 250,000 540,965 540,965 250,000
</TABLE>
- ------------------------
(1) Assumes a $4,200 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.
(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUND AND VIPF. THE VALUE OF
UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12% OVER A
PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL
POLICY YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR CASH VALUE TRANSFERRED TO THE
FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL INVESTMENT
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF
TIME.
C-6
<PAGE>
APPENDIX D
CALCULATION OF MAXIMUM SURRENDER CHARGES
A separate surrender charge is calculated upon issuance of the Policy and
upon each increase in Face Amount. The maximum surrender charges upon issuance
of the Policy and upon each increase in Face Amount are shown in the table on
the next two pages.
The maximum surrender charge initially remains level and then grades down
according to the following schedule:
<TABLE>
<CAPTION>
AGES
- ---------
<S> <C>
The maximum surrender charge remains level for the first 40 Policy months, reduces
by 0.5% for the next 80 Policy months, then decreases by 1% per month to zero at the
end of 180 Policy months (15 Policy years).
0 - 50
51 & over The maximum surrender charge remains level for 40 Policy months and decreases per
month by the above percentages below:
age 51 - 0.78125% per month for 128 months
age 52 - 0.862069% per month for 116 months
age 53 - 0.9615385% per month for 104 months
age 54 - 1.0869565% per month for 92 months
age 55 - 1.25% per month for 80 months & over
</TABLE>
There are two limitations on the maximum surrender charge. The first
limitation states that in any Policy year the maximum surrender charge
associated with the initial Face Amount (or Face Amount increase) can not exceed
the sum of (a) and (b), where (a) is a deferred administrative charge equal to
$8.50 per $1,000 of initial Face Amount (or Face Amount increase) and (b) is a
deferred sales charge of 49% of premiums received which are associated with the
initial Face Amount (or Face Amount increase) up to a maximum number of
Guideline Annual Premiums (GAP's) subject to the deferred sales charge that
varies by issue Age or Age at time of Face Amount increase as applicable:
<TABLE>
<CAPTION>
MAXIMUM GAPS MAXIMUM GAPS
APPLICABLE AGE SUBJECT APPLICABLE AGE SUBJECT
- ----------------- --------------- ------------------- ---------------
<S> <C> <C> <C>
0-55 1.660714 68 1.290612
56 1.632245 69 1.262143
57 1.603776 70 1.233673
58 1.575306 71 1.205204
59 1.546837 72 1.176735
60 1.518367 73 1.148265
61 1.489898 74 1.119796
62 1.461429 75 1.091327
63 1.432959 76 1.062857
64 1.404490 77 1.034388
65 1.376020 78 1.005918
66 1.347551 79 0.977449
67 1.319082 80 0.948980
</TABLE>
The second limitation states that the maximum surrender charge in the first
two Policy years following the date of Issue or the date of a Face Amount
increase can not exceed the sum of (c) plus (d), where (c) is the deferred
administrative charge equal to $8.50 per $1,000 of initial Face Amount (or Face
Amount increase) and (d) is a deferred sales charge which can not exceed 29% of
premiums received which are associated with the initial Face Amount (or Face
Amount increase), up to one Guideline Annual Premium (or the maximum number of
GAP's subject to the deferred sales charge, if less), plus 9% of premium
received in excess the Guideline Annual Premium limit.
D-1
<PAGE>
The Factors used in calculating the maximum surrender charges vary with the
issue Age and Premium Class (Smoker) as indicated in the table below.
MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT
<TABLE>
<CAPTION>
MALE FEMALE FEMALE UNISEX UNISEX
AGE OF ISSUE NONSMOKER MALE SMOKER NONSMOKER SMOKER NONSMOKER SMOKER
- --------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
0 8.63 7.68 8.44
1 8.63 7.70 8.45
2 8.78 7.81 8.58
3 8.94 7.93 8.73
4 9.10 8.05 8.89
5 9.27 8.18 9.05
6 9.46 8.32 9.23
7 9.65 8.47 9.41
8 9.86 8.62 9.61
9 10.08 8.78 9.82
10 10.31 8.95 10.04
11 10.55 9.13 10.27
12 10.81 9.32 10.51
13 11.07 9.51 10.76
14 11.34 9.71 11.02
15 11.62 9.92 11.28
16 11.89 10.14 11.54
17 12.16 10.36 11.80
18 10.65 12.44 9.73 10.59 10.46 12.07
19 10.87 12.73 9.93 10.83 10.68 12.34
20 11.10 13.02 10.15 11.09 10.91 12.63
21 11.34 13.33 10.37 11.35 11.14 12.93
22 11.59 13.66 10.60 11.63 11.39 13.25
23 11.85 14.01 10.85 11.92 11.65 13.58
24 12.14 14.38 11.10 12.22 11.93 13.94
25 12.44 14.77 11.37 12.54 12.22 14.31
26 12.75 15.19 11.66 12.88 12.53 14.72
27 13.09 15.64 11.95 13.23 12.86 15.14
28 13.45 16.11 12.26 13.60 13.21 15.60
29 13.83 16.62 12.59 13.99 13.58 16.08
30 14.23 17.15 12.93 14.40 13.97 16.59
31 14.66 17.72 13.29 14.83 14.38 17.12
32 15.10 18.32 13.67 15.28 14.81 17.69
33 15.58 18.96 14.07 15.75 15.27 18.29
34 16.08 19.63 14.49 16.25 15.75 18.93
35 16.60 20.35 14.93 16.77 16.26 19.60
36 17.16 21.10 15.39 17.33 16.80 20.31
37 17.75 21.89 15.88 17.91 17.36 21.06
38 18.37 22.73 16.39 18.51 17.96 21.84
39 19.02 23.55 16.93 19.15 18.59 22.67
40 19.71 24.28 17.50 19.81 19.25 23.51
41 20.44 25.04 18.09 20.51 19.95 24.22
42 21.20 25.85 18.71 21.23 20.69 24.98
43 22.02 26.71 19.36 21.98 21.46 25.77
44 22.87 27.61 20.04 22.77 22.29 26.61
45 23.61 28.56 20.76 23.56 23.13 27.49
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
MALE FEMALE FEMALE UNISEX UNISEX
AGE OF ISSUE NONSMOKER MALE SMOKER NONSMOKER SMOKER NONSMOKER SMOKER
- --------------- ----------- ----------- ----------- ----------- ----------- -----------
46 24.36 29.57 21.52 24.23 23.84 28.42
<S> <C> <C> <C> <C> <C> <C>
47 25.15 30.63 22.33 24.94 24.60 29.40
48 26.00 31.16 23.14 24.69 25.40 30.43
49 26.90 32.95 23.83 26.47 26.25 31.53
50 27.85 34.21 24.57 27.31 27.16 32.69
51 28.87 35.56 25.35 28.18 28.13 33.92
52 29.96 36.99 26.17 29.11 29.16 35.22
53 31.12 38.25 27.05 30.09 30.26 36.60
54 32.56 38.25 27.95 31.12 31.42 38.06
55 33.67 38.25 28.97 32.21 32.67 38.25
56 34.62 38.25 29.65 32.94 33.55 38.25
57 35.61 38.25 30.36 33.70 34.48 38.25
58 36.65 38.25 31.11 34.49 35.44 38.25
59 37.73 38.25 31.90 35.33 36.46 38.25
60 38.25 38.25 32.74 36.23 37.52 38.25
61 38.25 38.25 33.63 37.18 38.25 38.25
62 38.25 38.25 34.57 38.18 38.25 38.25
63 38.25 38.25 35.56 38.25 38.25 38.25
64 38.25 38.25 36.60 38.25 38.25 38.25
65 38.25 38.25 37.68 38.25 38.25 38.25
66 38.25 38.25 38.25 38.25 38.25 38.25
67 38.25 38.25 38.25 38.25 38.25 38.25
68 38.25 38.25 38.25 38.25 38.25 38.25
69 38.25 38.25 38.25 38.25 38.25 38.25
70 38.25 38.25 38.25 38.25 38.25 38.25
71 38.25 38.25 38.25 38.25 38.25 38.25
72 38.25 38.25 38.25 38.25 38.25 38.25
73 38.25 38.25 38.25 38.25 38.25 38.25
74 38.25 38.25 38.25 38.25 38.25 38.25
75 38.25 38.25 38.25 38.25 38.25 38.25
76 38.25 38.25 38.25 38.25 38.25 38.25
77 38.25 38.25 38.25 38.25 38.25 38.25
78 38.25 38.25 38.25 38.25 38.25 38.25
79 38.25 38.25 38.25 38.25 38.25 38.25
80 38.25 38.25 38.25 38.25 38.25 38.25
</TABLE>
EXAMPLES
For the purposes of these examples, assume that a male, Age 35 non-smoker
purchases a $100,000 Policy. In this example the Guideline Annual Premium
("GAP") equals $1,118.22. The initial maximum surrender charge is calculated as
follows:
<TABLE>
<S> <C>
Maximum Surrender Charge per Table above ($16.60 X 100)................ $1,660.00
The maximum surrender charge will grade off as described above.
</TABLE>
D-3
<PAGE>
During any Policy Year, the maximum surrender charge can not exceed (a) plus
(b), where (a) and (b) are calculated as follows:
<TABLE>
<S> <C> <C>
(a) Deferred Administrative Charge
($8.50/$1,000 of Face Amount).................................... $ 850.00
(b) Deferred Sales charge
(not to exceed 49% of Premiums received, up to 1.660714 X GAP)... Varies
------------
(a) plus (b)
</TABLE>
During the first two (2) Policy years after the Date of Issue, the maximum
surrender charge can not exceed (c) plus (d), where (c) and (d) are calculated
as follows:
<TABLE>
<S> <C> <C>
(c) Deferred Administrative Charge
($8.50/$1,000 of Face Amount).................................... $ 850.00
(d) Deferred Sales charge
(not to exceed 29% of Premiums received, up to one GAP, plus 9%
of premiums received in excess of one GAP)....................... Varies
------------
(c) plus (d)
</TABLE>
EXAMPLE 1:
Assume the Policyowner surrenders the Policy in the 10th policy month,
having paid total premiums of $900.00. The actual surrender charge would be
$1,111.00. This is calculated as the lesser of:
<TABLE>
<S> <C>
Maximum Surrender Charge per Table above................................. $1,660.00
(a) plus (b) [$850.00 + (.49 X $900.00)]................................. $1,291.00
(c) plus (d) [$850.00 + (.29 X $900.00)]................................. $1,111.00
</TABLE>
EXAMPLE 2:
Assume the Policyowner surrenders the Policy in the 120th policy month
having paid total premiums of $9,000.00. After the 40th policy month, the
maximum surrender charge shown in the table above decreases by 0.5% per month
($8.30 per month in this example). The actual surrender charge would be $996.00.
This is calculated as the lesser of:
<TABLE>
<S> <C>
Maximum Surrender Charge per Table above
(remains level for first 40 months)...................................... $1,660.00
decreased by $8.30 for 80 months......................................... $ (664.00)
---------
$ 996.00
(a) plus (b) [$850.00 + (.49 X 1.660714 X $1,118.22)].................... $1,759.95
</TABLE>
D-4
<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.
RULE 484 UNDERTAKING
INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and
Officers of the Registrant are applicable:
Article V of the Bylaws of Massachusetts Mutual Life Insurance Company (the
"Company") provides that:
Subject to the limitations of Massachusetts law, the Company shall
indemnify: (a) each director, officer or employee; (b) any individual who
serves as a director, board member, committee member, officer or employee of
any organization or any separate account; or (c) any individual who serves
in any capacity with respect to any employee benefit plan, from and against
all loss, liability and expense imposed upon or incurred by such person in
connection with any action, claim or proceeding of any nature whatsoever, in
which such person may be involved or with which he or she may be threatened,
by reason of any alleged act, omission or otherwise while serving in any
such capacity. Indemnification shall be provided although the person no
longer serves in such capacity and shall include protection for the person's
heirs and legal representatives.
Indemnities hereunder shall include, but not be limited to, all costs
and reasonable counsel fees, fines, penalties, judgments or awards or any
kind, and the amount of reasonable settlements, whether or not payable to
the Company or to any of the other entities described in the preceding
paragraph, or to the policyholders or security holders thereof.
Notwithstanding the foregoing, no indemnification shall be provided with
respect to:
(a) any matter as to which the person shall have been adjudicated in
any proceeding not to have acted in good faith in the reasonable belief
that his or her action was in the best interests of the Company or, to
the extent that such matter relates to service with respect to any
employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan;
(b) any liability to any entity which is registered as an investment
company under the federal Investment Company Act of 1940 or to the
security holders thereof, where the basis for such liability is willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office; and
(c) any action, claim or proceeding voluntarily initiated by any
person seeking indemnification, unless such action, claim or proceeding
had been authorized by the Board of Directors or unless such person's
indemnification is awarded by vote of the Board of Directors.
In any matter disposed of by settlement or in the event of an
adjudication which in the opinion of the General Counsel or his delegate
does not make a sufficient determination of conduct which could preclude or
permit indemnification in accordance with the preceding paragraphs (a), (b)
and (c), the person shall be entitled to indemnification unless, as
determined by the
II-1
<PAGE>
majority of the disinterested directors or in the opinion of counsel (who
may be an officer of the Company or outside counsel employed by the
Company), such person's conduct was such as precludes indemnification under
any such paragraphs.
The Company may at its option indemnify for expenses incurred in connection
with any action or proceeding in advance of its final disposition, upon receipt
of a satisfactory undertaking for repayment if it be subsequently determined
that the person thus indemnified is not entitled to indemnification under
Article V.
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.
RULE 6E-3(T) REPRESENTATIONS, DESCRIPTIONS AND UNDERTAKINGS
Registrant makes the following representations pursuant to the requirements
of Rule 6e-3(T) under the Investment Company Act of 1940:
A. RISK CHARGE
Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(1), Registrant represents that Rule
6e-3(T)(b)(13)(iii)(F) has been relied upon in deducting charges for mortality
and expense risks assumed by Massachusetts Mutual Life Insurance Company (the
"Company").
Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(2), Registrant represents that the
mortality and expense risk charge is within the range of industry practice for
comparable flexible premium variable life insurance contracts. The methodology
used to support this representation is based upon an analysis of the mortality
and expense risk charges adopted under other flexible premium variable life
insurance contracts. Registrant undertakes to keep and make available to the
Commission on request the documents used to support the foregoing
representation.
B. DISTRIBUTION COSTS
Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(4)(ii)(A), Registrant represents
that the Company has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the Registrant will benefit the Registrant
and contractholders and will keep and make available to the Commission on
request a memorandum setting forth the basis for this representation. Pursuant
to Section 6e-3(T)(b)(13)(iii)(F)(4)(ii)(B)(2), Registrant also represents that
it will invest only in management investment companies which have undertaken to
have a board of directors, a majority of whom are not interested persons of the
company, formulate and approve any plan under Rule 12b-1 under the Investment
Company Act of 1940 to finance distribution expenses.
UNDERTAKINGS CONCERNING MORTALITY AND EXPENSE RISK CHARGE
The flexible premium variable life policies offered by this registration
statement provide for a mortality and expense risk charge of 0.90%, on an annual
basis, of the daily net asset value of each Sub-Account of the Separate Account.
The Company acknowledges that any mortality and expense risk charge above 0.90%
is currently considered above the range of industry practice. If the Company
II-2
<PAGE>
proposes to increase the charges above the range of industry practice, the
Company hereby undertakes to file an exemption request with the Securities and
Exchange Commission ("Commission") in which it would demonstrate that the
proposed charge is reasonable in relation to the risks assumed under the Policy.
This undertaking is given subject to the applicability of future federal
legislation or Commission rules or regulation which might permit an increase in
the mortality and expense risk charge beyond the range of industry practice,
without submitting an exemption application and/or making the demonstration
described above. In such case, in lieu of the undertaking described above, the
Company hereby undertakes to comply with the provisions of such legislation,
rules, or regulations in implementing any increase in the mortality and expense
risk charge.
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consists of [ ] pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representatives, descriptions and undertaking pursuant to Rule
6e-3(T)(b)(13)(iii)(F)
under the Investment Company Act of 1940 (The "1940 Act").
The signatures.
Written consents of the following persons:
1. Coopers & Lybrand L.L.P.
2. Arthur Andersen LLP.
II-3
<PAGE>
The following exhibits:
<TABLE>
<S> <C> <C>
1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1)(a) Certified copy of Resolution of the Board of Directors of
Connecticut Mutual Life Insurance Company authorizing the
establishment of the Separate Account.*
(b) Directive signed by an executive officer of Connecticut Mutual life
Insurance Company, as authorized by the Board of Directors,
establishing the Separate Account.*
(2) Not Applicable.
(3)(a) Form of Underwriting Agreement between the Company and CMFS, LLC.*
(b) Broker Dealer Selling Agreement.*
(c) Registered Representative Agreement.*
(d) Form of Underwriting and Servicing Agreement between MML and
MMLISI.**
(4) Not Applicable.
(5)(a) Form of Policy.*
(b) Policy riders.*
(6) Organizational documents of MML.
(a) Articles of Incorporation.***
(b) Bylaws.****
(7) Not Applicable.
(8)(a) Form of Participation Agreement with Connecticut Mutual Financial
Services Series Fund I, Inc.*
(b) Form of Participation Agreement with Variable Insurance Products
Fund.*
(c) Form of Participation Agreement with Oppenheimer Variable Account
Funds.*****
(9) Not Applicable.
(10) Form of Application.*
2. Form of Policy and Policy riders are included in Exhibit 1 above.
3. Opinion and consent of Counsel.**
4. Not Applicable.
5. Not Applicable.
6. Opinion and consent of actuary.*
7. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the 1940 Act
which includes conversion procedures pursuant to Rule 6e-3(T)(b)(13)(v)(B).*
8(a). Consent of Coopers & Lybrand L.L.P.*****
8(b). Consent of Arthur Anderson LLP.*****
9. Powers of Attorney*****
</TABLE>
- ------------------------
* Incorporated herein by reference to the Form S-6 registration statement
(File No. 33-78488) filed by the registrant on May 2, 1994.
** Incorporated herein by reference to the Form S-6 registration statement
(File No. 333-01349) filed by the registrant on March 1, 1996.
*** Incorporated herein by reference to exhibit 6(a) to the initial Form N-4
Registration Statement of Massachusetts Mutual's Variable Annuity Separate
Account 2 (File No. 811-3351).
**** Incorporated herein by reference to exhibit 6(b) to Amendment No. 11 to
the Form N-4 Registration Statement of Panorama Separate Account (File No.
811-3215) (March 1, 1996).
***** Filed herewith.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, all in the city of Springfield and the
Commonwealth of Massachusetts, on the 29th day of April, 1996.
CONNECTICUT MUTUAL VARIABLE LIFE
SEPARATE ACCOUNT I
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
(Depositor)
By:
-----------------------------------
Thomas B. Wheeler, CHIEF EXECUTIVE
OFFICER*
Massachusetts Mutual Life Insurance
Company
<TABLE>
<C> <S> <C>
On April 29, 1996, as
/s/ RICHARD M. HOWE Attorney- in-Fact pursuant to
- ------------------------------------------- powers of attorney previously
*Richard M. Howe filed.
</TABLE>
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the duties
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------- -----------------
<C> <S> <C>
------------------------------------------- Chief Executive Officer and Chairman April 29, 1996
Thomas B. Wheeler* of the Board
Executive Vice President, Chief
------------------------------------------- Financial Officer & Chief Accounting April 29, 1996
Daniel J. Fitzgerald* Officer
------------------------------------------- Director April 29, 1996
Roger G. Ackerman*
------------------------------------------- Director April 29, 1996
James R. Birle*
------------------------------------------- Director April 29, 1996
Frank C. Carlucci, III*
------------------------------------------- Director April 29, 1996
Gene Chao, Ph.D.*
------------------------------------------- Director April 29, 1996
Patricia Diaz Dennis*
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------- -----------------
<C> <S> <C>
------------------------------------------- Director April 29, 1996
Anthony Downs*
------------------------------------------- Director April 29, 1996
James L. Dunlap*
------------------------------------------- Director April 29, 1996
William B. Ellis, Ph.D.*
------------------------------------------- Director April 29, 1996
Robert M. Furek*
------------------------------------------- Director April 29, 1996
Charles K. Gifford*
------------------------------------------- Director April 29, 1996
William N. Griggs*
------------------------------------------- Director April 29, 1996
James G. Harlow, Jr.*
------------------------------------------- Director April 29, 1996
George B. Harvey*
------------------------------------------- Director April 29, 1996
Barbara B. Hauptfuhrer
------------------------------------------- Director April 29, 1996
Sheldon B. Lubar*
------------------------------------------- Director April 29, 1996
William B. Marx, Jr.*
------------------------------------------- Director April 29, 1996
John F. Maypole*
------------------------------------------- Director April 29, 1996
Donald F. McCullough*
------------------------------------------- Director April 29, 1996
John J. Pajak*
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------- -----------------
<C> <S> <C>
------------------------------------------- Director April 29, 1996
Barbara S. Preiskel*
------------------------------------------- Director April 29, 1996
David E. Sams, Jr.*
------------------------------------------- Director April 29, 1996
Alfred M. Zeien*
/s/Richard M. Howe On April 29, 1996, as Attorney-in-Fact
------------------------------------------- pursuant to powers of attorney
*Richard M. Howe previously filed.
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
- --------- -----
<S> <C> <C>
1.8(c) Form of Participation Agreement with Oppenheimer Variable Account Funds
8(a). Consent of Coopers & Lybrand L.L.P.
8(b). Consent of Arthur Andersen LLP
9. Powers of Attorney
</TABLE>
<PAGE>
EXHIBIT 1.8(c)
PARTICIPATION AGREEMENT
Among
OPPENHEIMER VARIABLE ACCOUNT FUNDS,
OPPENHEIMERFUNDS, INC.
and
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of the 12th
day of January, 1996 by and among Massachusetts Mutual Life Insurance Company
(hereinafter the "Company"), on its own behalf and on behalf of CML
Accumulation Annuity Account E, Panorama Separate Account, and Connecticut
Mutual Variable Life Separate Account I (hereinafter collectively the
"Accounts"), Oppenheimer Variable Account Funds (hereinafter the "Fund") and
OppenheimerFunds, Inc. (hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company and is
available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life
insurance policies and variable annuity contracts (collectively, the
"Variable Insurance Products") offered by insurance companies (hereinafter
"Participating Insurance Company");
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio", and each representing the
interests in a particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 16, 1986 (File No. 812-6324) granting Participating
Insurance Company and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the
"1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
<PAGE>
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding
Exemptive Order")
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under
the federal Investment Advisers Act of 1940;
WHEREAS, the Company has registered or will register certain variable
annuity and/or life insurance contracts under the 1933 Act (hereinafter
"Contracts");
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of
Directors of the Company, to set aside and invest assets attributable to the
aforesaid variable contracts (the Contract(s) and the Account(s) covered by
the Agreement are specified in Schedule B attached hereto, as may be modified
by mutual consent from time to time);
WHEREAS, the Company have registered or will register the Accounts as
unit investment trusts under the 1940 Act;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intend to purchase shares in the Portfolios (the
Portfolios covered by this Agreement are specified in Schedule A attached
hereto as may be modified by mutual consent from time to time), on behalf of
the Accounts (which are also described on Schedule A, as may be modified by
mutual consent from time to time) to fund the Contracts and the Fund is
authorized to sell such shares to unit investment trusts such as the Accounts
at net asset value; and
-2-
<PAGE>
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Adviser and the Company agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Fund agrees that shares of the Fund will be sold only to
Variable Insurance Products.
1.2. The Company shall not permit any person other than a Contract
Holder or such Contract Holder's duly authorized representative to give
instructions to the Company which would require the Company to redeem or
exchange shares of the Fund.
ARTICLE II. SALES MATERIAL, PROSPECTUSES AND OTHER REPORTS
2.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten Business
Days prior to its use. No such material shall be used if the Fund or its
designee reasonably object to such use within ten Business Days after receipt
of such material. "Business Day" shall mean any day in which the New York
Stock Exchange is open for trading and in which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
2.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sale literature or other promotional material approved by the
Fund or its designee, except with the permission of the Fund.
2.3. For purposes of this Article II, the phrase "sales literature or
other promotional material" means advertisements (such as material published,
or designed for use in, a newspaper,
-3-
<PAGE>
magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboard or electronic media), and
sales literature (such as brochures, circulars, market letters and form
letters), distributed or made generally available to customers or the public.
2.4. The Fund shall provide a copy of its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is supplemented or amended) to have
the prospectus for the Contracts and the Fund's prospectus printed together
in one document (such printing to be at the Company's expense). The Adviser
shall be permitted to review and approve the typeset form of the Fund's
Prospectus prior to such printing.
2.5. The Fund or the Adviser shall provide the Company with either: (i)
a copy of the Fund's proxy material, reports to shareholders, other
information relating to the Fund necessary to prepare financial reports, and
other communications to shareholders for printing and distribution to
Contract owners at the Company's expense, or (ii) camera ready and/or printed
copies, if appropriate, of such material for distribution to Contract owners
at the Company' expense, within a reasonable period of the filing date for
definitive copies of such material. The Adviser shall be permitted to review
and approve the typeset form of such proxy material and shareholder reports
prior to such printing provided such materials have been provided within a
reasonable period.
ARTICLE III. FEES AND EXPENSES
3.1. The Fund and Adviser shall pay no fee or other compensation to the
Company under this agreement, and the Company shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein.
3.2. All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party. The Fund
shall see to it that all its shares are registered and authorized for
issuance in accordance with applicable federal law and, if and to the
-4-
<PAGE>
extent advisable by the Fund, in accordance with applicable state laws prior
to their sale. The Fund shall bear the expenses for the cost of registration
and qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, and the
preparation of all statements and notices required by any federal or state
law.
3.3. The Company shall bear the expenses of typesetting, printing and
distributing the Fund's prospectus, proxy materials and reports to owners of
Contracts issued by the Company.
3.4. In the event the Fund adds one or more additional Portfolios and
the parties desire to make such Portfolios available to the respective
Contract owners as an underlying investment medium, a new Schedule A or an
amendment to this Agreement shall be executed by the parties authorizing the
issuance of shares of the new Portfolios to the particular Account. The
amendment may also provide for the sharing of expenses for the establishment
of new Portfolios among Participating Insurance Company desiring to invest in
such Portfolios and the provision of funds as the initial investment in the
new Portfolios.
ARTICLE IV. POTENTIAL CONFLICTS
4.1. The Board of Trustees of the Fund (the "Board") will monitor the
Fund for the existence of any material irreconcilable conflict between the
interests of the Contract owners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax,
or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments
of any Portfolio are being managed; (e) a difference in voting instructions
given by variable annuity contract and variable life insurance contract
owners; or (f) a decision by an insurer
-5-
<PAGE>
to disregard the voting instructions of Contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
4.2. The Company will each report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in
carrying out its responsibilities in monitoring such conflicts by providing
the Board in a timely manner with all information reasonably necessary for
the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever Contract owner
voting instructions are disregarded and by confirming in writing, at the
Fund's request, that the Company are unaware of any such potential or
existing material irreconcilable conflicts.
4.3. If it is determined by a majority of the Board, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists,
the Company shall, at their expense and to the extent reasonably practicable
(as determined by a majority of the disinterested trustees), take whatever
steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected Contract owners
and, as appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable contract
owners of one or more Participating Insurance Company) that votes in favor of
such segregation, or offering to the affected Contract owners the option of
making such a change; and (2) establishing a new registered management
investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to
-6-
<PAGE>
withdraw the Account's investment in the Fund and terminate this Agreement;
provided, however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the
Fund gives written notice that this provision is being implemented, and until
the end of the six month period the Fund shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
months after the Board informs the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Until the end of the
foregoing six month period, the Fund shall continue to accept and implement
orders by the Company for the purchase and redemption of shares of the Fund,
subject to applicable regulatory limitation.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund be required to establish a new funding medium
for the Contracts. The Company shall not be required by Section 4.3 to
establish a new funding medium for Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that the
Board determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
particular Account's investment in the Fund and terminate this
-7-
<PAGE>
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
ARTICLE V. APPLICABLE LAW
5.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of New York.
5.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE VI. TERMINATION
6.1 This Agreement shall terminate with respect to some or all
Portfolios:
(a) at the option of any party upon six month's advance written
notice to the other parties;
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements of its
Contracts or are not appropriate funding vehicles for the Contracts, as
determined by the Company reasonably and in good faith. Prompt notice of the
election to terminate for such cause and an explanation of such cause shall
be furnished by the Company; or
(c) as provided in Article IV
-8-
<PAGE>
6.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 6.1(a) may be exercised for
cause or for no cause.
ARTICLE VII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify to
the other party.
If to the Fund:
Oppenheimer Variable Account Funds
c/o OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: Legal Department
If to the Adviser:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: General Counsel
If to the Company:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Legal Department
ARTICLE VIII. MISCELLANEOUS
8.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and
-9-
<PAGE>
other confidential information without the express written consent of the
affected party until such time as it may come into the public domain.
8.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
8.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
8.5. Each party hereto shall cooperate with, and promptly notify each
other party and all appropriate governmental authorities (including without
limitation the Securities and Exchange Commission, the NASD and state
insurance regulators) and shall permit such authorities reasonable access to
its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
8.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
8.7. It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
8.8. The Company and the Adviser each understand and agree that the
obligations of the Fund under this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Adviser each represent that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder liability for acts or obligations of the Fund.
-10-
<PAGE>
8.9. The parties agree that the Company may, on behalf of their
respective Accounts and Contracts listed in Exhibits A and B, elect to make
additional Portfolios available to Accounts upon the approval of the Adviser
and the provision of reasonable notice to the Adviser. Any Portfolio so
added will be subject to all of the terms and conditions of this Agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed as of the date specified
below.
MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY
By its authorized officer,
--------------------------------
By:
--------------------------------
Title:
--------------------------------
Date:
OPPENHEIMER VARIABLE ACCOUNT
FUNDS
By its authorized officer,
--------------------------------
By: Robert G. Zack
Title: Assistant Secretary
-------------------
--------------------------------
Date:
OPPENHEIMERFUNDS, INC.
By its authorized officer,
--------------------------------
By: Mitchell J. Lindauer
Title: Vice President
---------------
--------------------------------
Date:
-12-
<PAGE>
SCHEDULE A
Portfolios of Oppenheimer Variable Account Funds:
Oppenheimer Money Fund
Oppenheimer Bond Fund
-13-
<PAGE>
SCHEDULE B
CML Accumulation Annuity Account E
Connecticut Mutual Variable Life Separate Account I
Panorama Separate Account
<PAGE>
EXHIBIT 8(a)
[Coopers & Lybrand Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in the Post-Effective Amendment No. 1 to the
Registration Statement of Connecticut Mutual Variable Life Separate Account I
on Form N-8B-2 (Registration No. 333-01349), of our report dated March 1,
1996 on our audits of the supplemental financial statements of Massachusetts
Mutual Life Insurance Company, which, as more fully described in our report,
give retroactive effect to the merger of Massachusetts Mutual Life Insurance
Company and Connecticut Mutual Life Insurance Company, and which includes an
explanatory paragraph relating to the pending sale of a wholly-owned
insurance subsidiary. We also consent to the reference to our Firm under the
caption "Independent Accountants".
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 26, 1996
<PAGE>
EXHIBIT 8(b)
[Letterhead of Arthur Andersen LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement (Registration Statement File No. 333-01349) for
Connecticut Mutual Variable Life Separate Account I of Massachusetts Mutual
Life Insurance Company.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
April 26, 1996
<PAGE>
EXHIBIT 9
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
The undersigned, David E. Sams, Jr., a member of the Board of Directors and
President of C.M. Life Insurance Company ("C.M. Life"), does hereby constitute
and appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, Michael
Berenson, and Ann F. Lomeli, and each of them individually, as his true and
lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and power to take
any and all actions and execute any and all instruments on the undersigned's
behalf as a member of the Board of Directors and President of C.M. Life that
said attorneys and agents may deem necessary or advisable to enable C.M. Life to
comply with the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and any rules,
regulations, orders or other requirements of the Securities and Exchange
Commission (the "Commission") thereunder. This power of attorney applies to the
registration, under the 1933 Act and the 1940 Act, of shares of beneficial
interest of C.M. Life's separate investment accounts (the "C.M. Life Separate
Accounts"), as well as interests of C.M. Life's General Account. This power of
attorney authorizes such attorneys and agents to sign the undersigned's name on
his behalf as a member of the Board of Directors and President of C.M. Life to
the Registration Statements and to any instruments or documents filed or to be
filed with the Commission under the 1933 Act and the 1940 Act in connection with
such Registration Statements, including any and all amendments to such
statements, documents or instruments of any C.M. Life Separate Account, or C.M.
Life's General Account, including but not limited to those listed below.
C.M. Multi-Account A
SEI Variable Annuity
Panorama Premier Variable Annuity
OFFITBANK Variable Annuity
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
<PAGE>
The undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 21st day of
March, 1996.
/s/David E. Sams, Jr.,
----------------------
David E. Sams, Jr.
Director and President
Attest: /s/Ann F. Lomeli
----------------
Ann F. Lomeli
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
The undersigned, J. Brinke Marcuccilli, a member of the Board of Directors and
Chief Financial Officer of C.M. Life Insurance Company ("C.M. Life"), does
hereby constitute and appoint Lawrence V. Burkett, Thomas F. English, Richard M.
Howe, Michael Berenson, and Ann F. Lomeli, and each of them individually, as his
true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and power to take
any and all actions and execute any and all instruments on the undersigned's
behalf as a member of the Board of Directors and Chief Financial Officer of C.M.
Life that said attorneys and agents may deem necessary or advisable to enable
C.M. Life to comply with the Securities Act of 1933, as amended (the "1933
Act"), the Investment Company Act of 1940, as amended (the "1940 Act"), and any
rules, regulations, orders or other requirements of the Securities and Exchange
Commission (the "Commission") thereunder. This power of attorney applies to the
registration, under the 1933 Act and the 1940 Act, of shares of beneficial
interest of C.M. Life's separate investment accounts (the "C.M. Life Separate
Accounts"), as well as interests of C.M. Life's General Account. This power of
attorney authorizes such attorneys and agents to sign the undersigned's name on
his behalf as a member of the Board of Directors and Chief Financial Officer of
C.M. Life to the Registration Statements and to any instruments or documents
filed or to be filed with the Commission under the 1933 Act and the 1940 Act in
connection with such Registration Statements, including any and all amendments
to such statements, documents or instruments of any C.M. Life Separate Account,
or C.M. Life's General Account, including but not limited to those listed below.
C.M. Multi-Account A
SEI Variable Annuity
Panorama Premier Variable Annuity
OFFITBANK Variable Annuity
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
<PAGE>
The undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 21st day of
March, 1996.
/s/J. Brinke Marcuccilli
------------------------
J. Brinke Marcuccilli
Director and Chief Financial Officer
Attest: /s/Ann F. Lomeli
----------------
Ann F. Lomeli
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
The undersigned, Emelia Bruno, a member of the Board of Directors and Controller
of C.M. Life Insurance Company ("C.M. Life"), does hereby constitute and appoint
Lawrence V. Burkett, Thomas F. English, Richard M. Howe, Michael Berenson, and
Ann F. Lomeli, and each of them individually, as her true and lawful attorneys
and agents.
The attorneys and agents shall have full power of substitution and power to take
any and all actions and execute any and all instruments on the undersigned's
behalf as a member of the Board of Directors and Controller of C.M. Life that
said attorneys and agents may deem necessary or advisable to enable C.M. Life to
comply with the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and any rules,
regulations, orders or other requirements of the Securities and Exchange
Commission (the "Commission") thereunder. This power of attorney applies to the
registration, under the 1933 Act and the 1940 Act, of shares of beneficial
interest of C.M. Life's separate investment accounts (the "C.M. Life Separate
Accounts"), as well as interests of C.M. Life's General Account. This power of
attorney authorizes such attorneys and agents to sign the undersigned's name on
her behalf as a member of the Board of Directors and Controller of C.M. Life to
the Registration Statements and to any instruments or documents filed or to be
filed with the Commission under the 1933 Act and the 1940 Act in connection with
such Registration Statements, including any and all amendments to such
statements, documents or instruments of any C.M. Life Separate Account, or C.M.
Life's General Account, including but not limited to those listed below.
C.M. Multi-Account A
SEI Variable Annuity
Panorama Premier Variable Annuity
OFFITBANK Variable Annuity
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
<PAGE>
The undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set her hand this 22nd day of March,
1996.
/s/Emelia Bruno
----------------
Emelia Bruno
Director and Controller
Attest: /s/Ann F. Lomeli
----------------
Ann F. Lomeli
