<PAGE>
C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
EXECUTIVE BENEFIT VARIABLE UNIVERSAL LIFE POLICY ISSUED BY
C.M. LIFE INSURANCE COMPANY
140 Garden St., Hartford, Connecticut 06154
1-203-987-6500
This prospectus describes the Executive Benefit Variable Universal Life
Policy, which is an individual flexible premium variable life insurance policy
(the "Policy") offered by C.M. Life Insurance Company ("C.M. Life"). The
Policy is designed for use in funding corporate obligations, for example non-
qualified employee fringe benefit plans, through the Death Benefit, Surrender
Value and Loan Value available under the Policy. Generally, the Policyowner
will be a corporation, partnership, trust, or other employer. In those cases,
individual Insureds will have a specific insurable relationship with the
Policyowner. In certain instances, the Policyowner may be an individual.
The Policy offers the flexibility to vary the frequency and amount of premium
payments, subject to certain restrictions and conditions described in more
detail in this prospectus. You may also choose between two Death Benefit
Options and between two tests to determine if the Policy qualifies as "life
insurance" under the Federal tax laws. Subject to certain limitations, you
may withdraw a portion of the Policy Value, or the Policy may be fully
surrendered at any time. No surrender charges apply if a Policy is
surrendered. If the Policy is in effect on the Maturity Date, the Proceeds
are payable to the Policyowner. If it is in effect upon the death of the
Insured prior to the Maturity Date, the Proceeds will be payable to the
Beneficiary. The Proceeds may be payable in a lump sum, or a settlement
option may be selected. The Policy Value will vary with the investment
experience of allocations to the Sub-Accounts, the fixed rates of interest
earned by allocations to the Fixed Account, and the charges imposed under the
terms of the Policy.
The Policy currently allows a Policyowner to allocate Policy Value and Net
Premiums among eleven investment choices and a Fixed Account. Allocations to
the Fixed Account will earn interest at a rate determined by C.M. Life and
guaranteed to be no less than 4% annually. Allocations may also be made among
the eleven sub-accounts ("Sub-Accounts") of C.M. Life Variable Life Separate
Account I (the "Separate Account"). The Sub-Accounts are described in detail
in the Separate Account section of this prospectus. The corresponding
investment portfolios in which each Sub-Account invests, as well as a
discussion of investment objectives and charges of each portfolio, are
described in the accompanying prospectuses for Connecticut Mutual Financial
Services Series Fund I, Inc. ("C.M. Fund"), Variable Insurance Products Fund
("VIP Fund") or Variable Insurance Products Fund II ("VIP Fund II"). (The C.
M. Fund and VIP Funds are sometimes collectively referred to as the "Funds,"
while VIP Fund and VIP Fund II are sometimes referred to as the "VIP Funds.")
This prospectus should be reviewed carefully before making any decisions
concerning the Policy or making allocations among the Sub-Accounts.
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU
ALREADY OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF
THE CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I, INC., VARIABLE
INSURANCE PRODUCTS FUND, AND VARIABLE INSURANCE PRODUCTS FUND II.
INVESTORS SHOULD RETAIN A COPY OF EACH OF THESE PROSPECTUSES FOR FUTURE
REFERENCE.
THE POLICY DESCRIBED IN THIS PROSPECTUS IS NOT A DEPOSIT OR AN OBLIGATION OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND IS NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER AGENCY.
<PAGE>
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 August 31, 1995
<PAGE>
TABLE OF CONTENTS
SPECIAL TERMS
SUMMARY
DESCRIPTION OF C. M. LIFE, CONNECTICUT MUTUAL LIFE INSURANCE COMPANY,
THE SEPARATE ACCOUNT, THE C.M. FUND, VIP FUND AND VIP FUND II
C.M. LIFE
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY ("CML")
THE SEPARATE ACCOUNT
THE C.M. FUND
VIP FUND AND VIP FUND II
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT ADVISORY SERVICES TO THE C.M. FUND
INVESTMENT ADVISORY SERVICES TO THE VIP FUNDS
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
VOTING RIGHTS
PERFORMANCE INFORMATION
THE POLICY
APPLICATION FOR A POLICY
FREE LOOK PERIOD
CONVERSION PRIVILEGES
PREMIUM PAYMENTS
ALLOCATION OF NET PREMIUMS
TRANSFER PRIVILEGE
ACCOUNT REBALANCING
PROCEEDS PAYABLE ON DEATH OF THE INSURED
DEATH BENEFIT OPTIONS
CHANGE IN DEATH BENEFIT OPTION
DEFINITION OF LIFE INSURANCE TEST
CHANGE IN SPECIFIED AMOUNT
POLICY VALUE AND SURRENDER VALUE
PAYMENT OPTIONS
OPTIONAL INSURANCE BENEFITS
SURRENDER
PARTIAL WITHDRAWAL
CHARGES AND DEDUCTIONS
TAX EXPENSE CHARGE
PREMIUM CHARGE
MONTHLY DEDUCTION FROM POLICY VALUE
CHARGES AGAINST ASSETS OF THE SEPARATE ACCOUNT
SURRENDER CHARGE
CHARGES ON PARTIAL WITHDRAWAL
TRANSFER CHARGES
CHARGE FOR INCREASE IN SPECIFIED AMOUNT
OTHER ADMINISTRATIVE CHARGES
REDUCTION OF CHARGES
POLICY LOANS
LOAN INTEREST CHARGED
PREFERRED LOAN PROVISION
REPAYMENT OF POLICY DEBT
EFFECT OF POLICY LOANS
POLICY TERMINATION AND REINSTATEMENT
TERMINATION
REINSTATEMENT
OTHER POLICY PROVISIONS
POLICYOWNER
BENEFICIARY
INCONTESTABILITY
SUICIDE
AGE
ASSIGNMENT
POSTPONEMENT OF PAYMENTS
DIRECTORS AND PRINCIPAL OFFICERS OF C.M. LIFE
DISTRIBUTION
REPORTS
LEGAL PROCEEDINGS
FURTHER INFORMATION
INDEPENDENT ACCOUNTANTS
FEDERAL TAX CONSIDERATIONS
C.M. LIFE AND THE SEPARATE ACCOUNT
TAXATION OF THE POLICIES
CONVENTIONAL LIFE INSURANCE POLICIES
MODIFIED ENDOWMENT CONTRACTS
REASONABLENESS REQUIREMENTS FOR CHARGES
OTHER
MORE INFORMATION ABOUT THE FIXED ACCOUNT
GENERAL DESCRIPTION
FIXED ACCOUNT VALUE
THE POLICY
ERISA COMPLIANCE
FINANCIAL STATEMENTS
APPENDIX A - OPTIONAL BENEFITS
APPENDIX B - PAYMENT OPTIONS
APPENDIX C - ILLUSTRATIONS OF DEATH BENEFIT, POLICY VALUES AND
ACCUMULATED PREMIUMS
<PAGE>
SPECIAL TERMS
ACCUMULATION UNIT: A measure of your interest in a Sub-Account.
AGE: The Insured's age as of his or her nearest birthday.
BENEFICIARY: The person(s) or entity(ies) designated to receive the Proceeds
upon the death of the Insured.
COMPANY: C.M. Life Insurance Company, a stock life insurance company
incorporated under the laws of the State of Connecticut, and a wholly-owned
subsidiary of Connecticut Mutual Life Insurance Company.
DEATH BENEFIT: The amount payable upon the death of the Insured, before the
Maturity Date. The amount of the Death Benefit will depend on the Death
Benefit Option and the Definition of Life Insurance Test chosen, but will
always be at least equal to the Specified Amount.
DELIVERY RECEIPT: An acknowledgment, signed by the Policyowner and returned
to C.M. Life's Service Center, stating that the Policyowner has received the
Policy.
DEFINITION OF LIFE INSURANCE TEST: The test chosen at issue by the
Policyowner to determine if the Policy qualifies as "life insurance" under
Federal tax laws. The two possible choices are the Guideline Premium Test and
the Cash Value Accumulation Test.
EVIDENCE OF INSURABILITY: Information, including medical information
satisfactory to C.M. Life, that is used to determine the Insured's
Underwriting Class. Additionally, information may be required to ascertain
the existence of a sufficient insurable interest to support ownership of the
Policy by the Policyowner.
FIXED ACCOUNT: An account that bears interest at a fixed rate determined by
C.M. Life but guaranteed to be no lower than 4% annually. Amounts allocated
to the Fixed Account will be held in the General Account of C.M. Life.
GENERAL ACCOUNT: All the assets of C. M. Life other than those held in a
separate investment account.
GUIDELINE MINIMUM DEATH BENEFIT: The minimum Death Benefit required to
qualify the Policy as "life insurance" under Federal tax laws. The Guideline
Minimum Death Benefit is calculated by multiplying the Policy Value by a
percentage determined by the Insured's Age and the Definition of Life
Insurance Test chosen at issue.
INSURANCE AMOUNT AT RISK: The Death Benefit less the Policy Value.
LOAN VALUE: The maximum amount that may be borrowed under the Policy. The
Loan Value is currently equal to the Policy Value as of the date of the loan
less any outstanding Policy Debt and less loan interest projected to the next
Policy Anniversary at the then current Loan Interest Rate.
MATURITY DATE: Unless a different date is mandated under applicable state
law, the Maturity Date will be the Policy Anniversary nearest the Insured's
95th birthday. The Maturity Date is the latest date on which a premium
payment may be made.
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 payment made less a tax expense
charge and any applicable premium charge.
POLICY CHANGE: Any change in the Specified Amount, the addition or deletion
of a rider, or a change in the Death Benefit Option and certain changes in
Underwriting Class.
POLICY DATE: The date set forth in the Policy used to determine the Monthly
Payment Date, Policy months, Policy years, and Policy anniversaries.
POLICY DEBT: All unpaid Policy loans plus interest currently due or accrued
on such loans.
POLICY VALUE: The total amount available for allocation 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 value held in the Fixed
Account credited to that Policy.
PRINCIPAL OFFICE: C.M. Life's home office, located at 140 Garden St.,
Hartford, Connecticut 06154.
PROCEEDS: Amounts paid to the Policyowner (or any assignee) through a
surrender or payment at Maturity or to the Beneficiary at the death of the
Insured. Proceeds equal the Surrender Value, if paid out by Surrender or at
the Maturity Date. If paid on the death of the Insured, the amount of the
Proceeds will depend on the Death Benefit option selected.
PRO RATA ALLOCATION: A method of allocating amounts to or from the Fixed
Account and the Sub-Accounts that contain Policy Value. Each account will be
allocated a percentage of the total amount to be allocated, and that
percentage will be equal to the percentage of the total Policy Value less
Policy Debt that is contained in that account.
SEPARATE ACCOUNT: The separate investment account called "C.M. Life Variable
Life Separate Account I." Established by C.M. Life under the laws of the
State of Connecticut, the Separate Account is registered as a unit investment
trust under the Investment Company Act of 1940, as amended. The Separate
Account will be used to receive and invest premiums for the Policy and it may
also be used for other variable life insurance policies that C.M. Life may
issue.
SERVICE CENTER: Currently, C.M. Life's home office, located at 140 Garden
Street, Hartford, Connecticut 06154.
SPECIFIED AMOUNT: The amount of insurance coverage applied for. The
Specified Amount of each Policy is set forth in the specification pages of the
Policy.
SUB-ACCOUNT: A division of the Separate Account. Each Sub-Account invests
exclusively in the shares of a corresponding C. M. Fund or VIP Fund.
SURRENDER VALUE: The amount payable upon a full surrender of the Policy. It
is the Policy Value less any Policy Debt.
TARGET PREMIUM: A premium amount used to determine premium charges for the
Policy. Target Premiums vary by Insured's Age, Underwriting Class, and
tobacco status.
UNDERWRITING CLASS: The risk classification that C.M. Life assigns the
Insured based on the type of underwriting applied to the Insured, the
information in the application and any other Evidence of Insurability
considered by C.M. Life. The Insured's Underwriting Class will affect the
cost of insurance charge and the amount of premium required to keep the Policy
in force.
VALUATION DATE: A day on which the net asset value of the shares of the C.M.
Fund or VIP Funds 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 trading.
VALUATION PERIOD: The interval between two consecutive Valuation Dates.
WRITTEN REQUEST: A request by the Policyowner in writing in a form
satisfactory to C.M. Life.
YOU OR YOUR: The Policyowner, as shown in the application for the Policy.
<PAGE>
SUMMARY
This Policy, issued by C.M. Life, is an individual flexible premium variable
life insurance policy. The Policy is generally issued to corporations and
other entities who are employers. The Policy is subject to certain
underwriting rules. While it provides a Death Benefit, Surrender Values, and
Policy Loan options like a traditional life insurance product, it offers the
Policyowner the flexibility to adjust the amount and timing of premiums paid.
The Policy will remain in effect as long as the Policy Value less Policy Debt
is sufficient to cover any charges assessed against the Policy. The Policy is
"variable" in that it allows the Policyowner to bear the investment risk on
Policy Value allocated to any of the Sub-Account choices offered by the
Policy. While Policy Value allocated to the Fixed Account bears interest at a
fixed rate guaranteed to be no lower than 4% annually, Policy Value allocated
to a Sub-Account will vary with the investment performance of that Sub-
Account. The Sub-Accounts do not have a guaranteed minimum rate of return.
(See "The Policy.")
Net premiums and Policy Value may be allocated among any of the eleven Sub-
Accounts and the Fixed Account. Each of the eleven Sub-Accounts invests in a
corresponding Portfolio of the C.M. Fund, VIP Fund or VIP Fund II. These
Portfolios include eight C.M. Fund Portfolios: Government Securities; Income;
Total Return; Growth; International Equity; LifeSpan Diversified Income;
LifeSpan Balanced; and LifeSpan Capital Appreciation. The two VIP Fund
Portfolios are the Money Market and the High Income, while the Index 500
Portfolio is offered by VIP Fund II. (See "DESCRIPTION OF C.M. LIFE,
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, THE SEPARATE ACCOUNT, C.M. FUND
AND VIP FUNDS.")
Transfers of Policy Value, within certain limits, are allowed between these
options. Currently, the first twelve transfers per Policy year will be free
of charge. The charge per transfer in excess of twelve per Policy year is
$25. Rebalancing of the Policy Value among the Sub-Accounts and the Fixed
Account may be chosen by the Policyowner. Rebalancing compares the percentage
of the total Policy Value in each of the Sub-Accounts and the Fixed Account
with a set of percentages specified by the Policyowner. If those percentages
differ by more than a specified tolerance, automatic transfers will rebalance
the Policy Value within each Sub-Account to match the specified mix.
Automatic transfers do not count toward the twelve free transfers. (See
"TRANSFER PRIVILEGES" and "ACCOUNT REBALANCING.")
In addition to premium flexibility and investment choices, the Policy offers
other choices. At issue, and once per policy year, the Policyowner may choose
between two Death Benefit Options. Death Benefit Option 1 is a level death
benefit equal to the Specified Amount (or if greater, the Guideline Minimum
Death Benefit), while Death Benefit Option 2 is an increasing death benefit
equal to the Specified Amount plus the Policy Value (or if greater, the
Guideline Minimum Death Benefit). The Policyowner may also choose the test to
be used to determine if the Policy qualifies as "life insurance" under Federal
Tax laws. The two choices are the Cash Value Accumulation Test and the
Guideline Premium Test. The Definition of Life Insurance Test cannot be
changed after issue.
The Policy offers other benefits and features described in greater detail in
"The Policy" section of this prospectus. Additionally, you should consult the
Policy itself to reference the insurance coverage and rights afforded to the
Policyowner.
There are no surrender charges assessed upon full surrender of the Policy.
Partial withdrawals are permitted at any time and are subject to a transaction
charge of $25. Loans are available from the inception of the Policy, and
Preferred Loans are available after the tenth Policy Year. Within certain
limits the Specified Amount can be adjusted by the Policyower, and the Policy
may be reinstated for up to three years from the lapse date.
The charges associated with the Policy include a tax expense charge, a premium
charge, and a Monthly Deduction. The Monthly Deduction consists of a charge
for the cost of insurance, a charge for any additional benefits provided by
rider, and a monthly administrative charge. There are also charges associated
with certain transactions that may be requested by the Policyowner. (See
"CHARGES AND DEDUCTIONS.")
Charges are also assessed against assets of the Separate Account. A mortality
and expense risk charge, and an administrative charge are assessed against all
assets in the Separate Account. Additionally, investment advisory fees and
other expense charges are assessed by each Fund. See the accompanying
prospectuses for each Fund for more detail concerning applicable Fund charges.
(See "CHARGES AND DEDUCTIONS.")
The purpose of the Policy is to provide insurance protection on the life of
the named Insured. 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 and any
amendments thereto constitutes the entire agreement between C.M. Life and you.
DESCRIPTION OF C.M. LIFE, CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, THE
SEPARATE ACCOUNT, THE C.M. FUND, VIP FUND, AND VIP FUND II.
C.M. LIFE - C.M. Life is a stock life insurance company located at 140 Garden
Street, Hartford, Connecticut 06154. C.M. Life was chartered by a Special Act
of the Connecticut General Assembly on April 25, 1980. C.M. Life is
principally engaged in the sale of life insurance policies and annuity
contracts, and is licensed to sell such products in all states except New
York. C.M. Life is a wholly-owned subsidiary of Connecticut Mutual Life
Insurance Company ("CML"). As of March 1, 1995 C.M. Life is licensed to
transact a variable life insurance business in 25 States. It anticipates that
it will receive authority to write variable life insurance business in all
States (except New York) by the end of 1995.
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY ("CML") - Founded in 1846, CML is
the sixth oldest life insurance company in the United States, and the first
life insurance company formed in Connecticut. CML distributes products and
services in all 50 states, Puerto Rico and the District of Columbia.
THE SEPARATE ACCOUNT - The Separate Account was established on February 2,
1995, by the Board of Directors of C.M. Life, in accordance with the laws of
the State of Connecticut. The Separate Account is a separate investment
account of C.M. Life, and is registered with the Securities and Exchange
Commission ("SEC") 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 C.M. Life by the SEC.
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 C.M.
Life. 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 C.M. Life.
The Separate Account currently has eleven Sub-Accounts. Each Sub-Account is
administered and accounted for as part of the general business of C.M. Life,
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 C.M. Life or the other Sub-Accounts. Each of the eleven
Sub-Accounts invests its assets in a corresponding investment portfolio of
either the C.M. Fund or VIP Funds, each open-end management investment
companies registered under the SEC under the 1940 Act. The C.M. Fund is
managed by G.R. Phelps & Co., Inc. ("G.R. Phelps") while the VIP Funds are
managed by Fidelity Management & Research Company ("Fidelity Management").
Each Sub-Account has two sub-divisions. One sub-division applies to Policies
during their first twenty 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 and the reduction in the Mortality and
Expense Risk Charge.
C.M. Life reserves the right, subject to compliance with applicable law, to
change the names of the Sub-Accounts and Separate Account and to add or delete
Sub-Accounts. Any additional Sub-Accounts added will invest in vehicles
determined by C.M. Life to be available for investment by the Separate
Account.
THE C.M. FUND - Connecticut Mutual Financial Services Series Fund I, Inc. (the
"C.M. Fund") is an open-end, diversified management investment company
registered with the SEC under the 1940 Act. Such registration does not
involve supervision by the SEC of the investments or investment policy of the
Trust or its separate investment Portfolios.
The C.M. Fund was incorporated in Maryland on August 17, 1981. The C.M. Fund
has nine Portfolios including: Money Market Portfolio, Government Securities
Portfolio; Income Portfolio; Total Return Portfolio; Growth Portfolio;
International Equity Portfolio; LifeSpan Diversified Income Portfolio;
LifeSpan Balanced Portfolio; and LifeSpan Capital Appreciation Portfolio.
The LifeSpan Diversified Income Portfolio, the LifeSpan Balanced Portfolio,
and the LifeSpan Capital Appreciation Portfolio will be available to the
Separate Account after September 1, 1995. The C.M. Fund Money Market
Portfolio is not being offered through this prospectus.
G.R. Phelps is an indirect wholly-owned subsidiary of CML, serves as
investment adviser of the C.M. Fund, and manages the investments of the C.M.
Fund Portfolios. (See "INVESTMENT ADVISORY SERVICES TO THE C.M. FUND.")
VIP FUND AND VIP FUND II - Variable Insurance Products Fund and Variable
Insurance Products Fund II are each managed by Fidelity Management. Two VIP
Fund Portfolios are available under the Policies: the Money Market Portfolio,
and High Income Portfolio. Additionally, the Index 500 Portfolio of the VIP
Fund II is available under the Policy.
Various Fidelity companies perform certain activities required to operate VIP
Funds. Fidelity Management, a registered investment adviser under the
Investment Advisers Act of 1940, is one of America's largest investment
management organizations and has its principal business address at 82
Devonshire Street, Boston, MA. It is composed of a number of different
companies, which provide a variety of financial services and products.
Fidelity Management is the original Fidelity company, founded in 1946. It
provides a number of mutual funds to other clients with investment research
and portfolio management services.
INVESTMENT OBJECTIVES AND POLICIES - A summary of investment objectives of
each of the Funds is set forth below. MORE DETAILED INFORMATION REGARDING THE
INVESTMENT OBJECTIVES, RESTRICTIONS AND RISKS, EXPENSES PAID BY THE FUNDS, AND
OTHER RELEVANT INFORMATION REGARDING THE FUNDS MAY BE FOUND IN THEIR
RESPECTIVE PROSPECTUSES, WHICH ACCOMPANY THIS PROSPECTUS. EACH OF THE
PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE INVESTING. The statements of
additional information of the Funds are available by written or telephone
request to the C. M. Fund and VIP Funds,whose addresses and telephone numbers
are shown in their prospectuses. There can be no assurance that the
investment objectives of the Funds can be achieved.
GOVERNMENT SECURITIES PORTFOLIO - The Government Securities Portfolio of
the C.M. Fund seeks to provide a high level of current income with a high
degree of safety of principal by investing primarily in securities that
are issued or guaranteed as to principal and interest by the U.S.
Government, its agencies, authorities or instrumentalities and by
obligations that are fully collateralized or otherwise fully backed by
U.S. Government securities.
INCOME PORTFOLIO - The Income Portfolio of the C.M. Fund seeks to obtain
a high level of current income consistent with prudent investment
risk and preservation of capital by investing primarily in fixed-income
debt securities anticipated to have an average dollar-weighted
portfolio maturity of eight to twelve years.
TOTAL RETURN PORTFOLIO - The Total Return Portfolio of the C.M. Fund seeks
to maximize over time the return achieved from capital appreciation and
income by varying the allocation of the assets of the Portfolio among
stocks, corporate bonds, securities issued by the U.S. Government and its
instrumentalities and money market instruments of the type acquired
respectively by the Growth Portfolio and the Income Portfolio.
GROWTH PORTFOLIO - The Growth Portfolio of the C.M. Fund seeks to achieve
long-term growth of capital by investing in common stocks with low price-
earnings ratios and better than anticipated earnings.
INTERNATIONAL EQUITY PORTFOLIO - The International Equity Portfolio of
the C.M. Fund seeks long-term capital growth by investing primarily (at
least 90% of its total assets under normal circumstances) in equity
securities of companies based outside the United States. A portion of
the Portfolio's investments may be held in cash and in short-term
instruments. Current income is a secondary consideration.
LIFESPAN PORTFOLIOS - Commencing on September 1, 1995, the C.M. Fund
will offer three distinct "LifeSpan Portfolios" each of which is designed
to meet the needs of different types of investors. The LifeSpan
Portfolios consist of various sub-accounts that invest in a variety of
underlying funds. The primary investment objectives of these LifeSpan
Portfolios are as follows:
LifeSpan Capital Appreciation Portfolio seeks long-term capital
appreciation through a strategically allocated portfolio consisting
primarily of equity securities.
LifeSpan Balanced Account Portfolio seeks capital appreciation and
income through a strategically allocated portfolio of equity
securities and fixed income securities with a focus on equity
securities.
LifeSpan Diversified Income Portfolio attempts to provide long-term
protection for cautious investors, seeking high current income
focusing on fixed income securities.
MONEY MARKET PORTFOLIO - The Money Market Portfolio of VIP 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 VIP 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 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
"Securities and Investment Practices" in the VIP Fund prospectus.
INDEX 500 PORTFOLIO - The Index 500 Portfolio of VIP Fund lI seeks
investment results that correspond to the total return (i.e., the
combination of capital changes and income) of common stocks publicly traded
in the United States, as represented by the Standard & Poor's Composite
Index of 500 Stock Prices (the "S&P 500"), while keeping transaction
costs and other expenses low.
Index 500 Portfolio is not managed according to traditional methods of
"active" investment management, which involve the buying and selling of
securities based upon economic, financial, and market analyses and
investment judgment. Instead, the fund, utilizing a "passive" or
"indexing" investment approach, attempts to duplicate the performance of
the S&P 500.
CERTAIN C.M. FUND PORTFOLIOS MAY HAVE INVESTMENT OBJECTIVES AND/OR POLICIES
SIMILAR TO THOSE OF CERTAIN VIP FUND PORTFOLIOS. THEREFORE, TO CHOOSE THE
SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND OBJECTIVES, CAREFULLY READ
THE PROSPECTUSES OF THE C.M. FUND AND VIP FUND AND VIP FUND II 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 Funds in which it invests, you will be
notified of the change. If you have Policy Value in that Sub-Account, C.M.
Life will transfer it without charge on Written Request by you to another
Sub-Account or to the Fixed Account. C.M. Life 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 allocation percentages.
INVESTMENT ADVISORY SERVICES TO THE C.M. FUND - The C.M. Fund has entered into
an investment advisory agreement with G.R. Phelps & Co., Inc. ("G.R. Phelps"),
an indirect wholly-owned subsidiary of CML and an affiliate of C.M. Life.
Under the investment advisory agreement, G.R. Phelps provides certain
administrative services and investment advice to each C.M. Fund Portfolio.
G.R. Phelps provides administrative and management services to the C.M. Fund
Portfolios, such as providing accounting, administrative and clerical
personnel and monitoring the activities of the custodian and independent
auditors for the C.M. Fund Portfolios. The investment advisory agreement
obligates G.R. Phelps to provide investment advisory services and to pay all
compensation of and furnish office space for officers of the C.M. Fund
connected with investment and economic research, trading and investment
management of the C.M. Fund and the C.M. Fund Portfolios. Each C.M. Fund
Portfolio pays all other expenses incurred in its operation. The Board of
Directors of the C.M. Fund is primarily responsible for monitoring activities
of G.R. Phelps.
For providing its services under the investment advisory agreement, G.R.
Phelps will receive a monthly fee, computed daily at an annual rate based on
the average daily net asset value of each C.M. Fund Portfolio as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
PORTFOLIO NET ASSET VALUE RATE
Total Return First $600 Million 0.625%
More than $600 0.450%
International Equity First $250 Million 1.000%
More than $250 Million 0.900%
Government Securities First $300 Million 0.525%
Next $100 Million 0.500%
More than $400 Million 0.450%
Income First $300 Million 0.575%
Next $100 Million 0.500%
More than $400 Million 0.450%
Growth First $300 Million 0.625%
Next $100 Million 0.500%
More than $400 Million 0.450%
LifeSpan Diversified Income All Amounts 0.750%
LifeSpan Balanced All Amounts 0.850%
LifeSpan Capital Appreciation All Amounts 0.850%
</TABLE>
INVESTMENT ADVISORY SERVICES TO THE VIP FUNDS - For managing investments and
business affairs, each VIP Fund and VIP Fund ll Portfolio pays a monthly fee
to Fidelity Management. The Prospectuses of the VIP Fund and VIP Fund II
contain additional information concerning the Portfolios, including
information concerning additional expenses paid by the VIP Portfolios, and
should be read in conjunction with this Prospectus.
VIP FUND PORTFOLIOS
The Money Market Portfolio's management fee is (a) the sum of an individual
fund fee rate of 0.03% and a group fee rate; 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 income component cannot rise
above 0.24%. The management fee rate for the Money Market Portfolio as of
December 31, 1994 was 0.20%
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 to as low as 0.14% as total assets in all
these funds rise.
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.
One-twelfth of the sum of these two rates is applied to the respective VIP
Fund Portfolio's net assets averaged over the most recent month, giving a
dollar amount which is the fee for that month.
Thus, the High Income Portfolio may have an annual fee of as high as 0.82% 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. The effective management fee rate for the High Income Portfolio
as of December 31, 1994 was 0.61%.
VIP FUND II PORTFOLIO
The Index 500 Portfolio had a monthly fee payable at the annual rate of 0.28%
of its average net assets. The actual advisory expenses for 1994 equaled
0.91% of the Portfolio's average net assets.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS - C.M. Life 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 of the Funds are no longer
available for investment or if in C.M. Life's judgment further investment in
any of the Funds should become inappropriate in view of the purposes of the
Separate Account or the affected Sub-Account, C.M. Life may redeem the shares
of that Fund and substitute shares of another registered open-end management
company. C.M. Life will not substitute any shares attributable to a Policy
invested in a Sub-Account without appropriate 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.
C.M. Life also reserves the right to establish additional Sub-Accounts of the
Separate Account, each of which would invest in shares corresponding to either
a new C.M. Fund or VIP Fund or in shares of another investment company having
a specified investment objective. Subject to applicable law and any required
Commission approval, C.M. Life 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 C.M.
Life.
Shares of the C.M. Fund Portfolios are also issued to separate accounts of
C.M. Life and its affiliates which issue variable annuity contracts ("mixed
funding"). In the future, shares of the C.M. Fund Portfolios may be issued to
separate accounts of unaffiliated insurance companies ("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
Policyowners. Although C.M. Life does not currently foresee any such
disadvantages to either variable life insurance Policyowners or variable
annuity Policyowners, C.M. Life, the Board of Directors of the C.M. Fund and
the Board of Trustees of each of the VIP Funds are required to monitor events
in order to identify any material conflicts between such Policyowners and to
determine what action, if any, should be taken in response thereto. If the
Trustees or Directors were to conclude that separate funds should be
established for variable life and variable annuity separate accounts, C.M.
Life will bear the attendant expenses.
If any of these substitutions or changes are made, C.M. Life may by
appropriate endorsement change the Policy to reflect the substitution or
change and will notify Policyowners of all such changes. If C.M. Life 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 C.M.
Life.
VOTING RIGHTS - To the extent required by law, C.M. Life will vote C.M. Fund,
VIP Fund, or VIP Fund II shares held by each Sub-Account in accordance with
instructions received from Policyowners with Policy Value in such Sub-Account.
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
C.M. Life determines that it is permitted to vote shares in its own right,
whether or not such shares are attributable to the Policies, C.M. Life
reserves the right to do so.
Each person having a voting interest will be provided with proxy materials of
the C.M. Fund or the particular VIP Fund together with an appropriate form
with which to give voting instructions to C.M. Life. Shares held in each
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 C.M. Life. C.M. Life 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 C.M. Life as of the record date established for the C.M. Fund or
the particular VIP Fund. 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 C.M. Fund or VIP Fund Portfolio in which the
assets of the Sub-Account are invested.
C.M. Life 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 C.M. Fund or VIP Fund Portfolios; or (2) to
approve or disapprove an investment advisory contract for the C.M. Fund or VIP
Funds. In addition, C.M. Life 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
C.M. Fund, or the Board of Trustees of either of the VIP Funds. C.M. Life'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 C.M. Fund or the
VIP Funds. In the event C.M. Life does disregard voting instructions, a
summary of and the reasons for that action will be included in the next
periodic report to Policyowners.
PERFORMANCE INFORMATION
C.M. Life from time to time may advertise the "Total Return" and the "Average
Annual Total Return." Such 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, the
mortality and expense risk charge, and the Separate Account administrative
charges. "Average Annual Total Return" reflects the hypothetical annually
compounded return that would have produced the same cumulative return if the
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.
C.M. Life 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 1995. 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.
PORTFOLIO PERFORMANCE FOR PERIOD ENDING: DECEMBER 31, 1994
The following performance information of the Portfolio reflects the total of
the income generated by the Portfolio net of total Portfolio operating
expenses plus capital gains and losses, realized or unrealized. It does NOT
reflect the Policy or Separate Account charges.
<TABLE>
<CAPTION>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN OF THE PORTFOLIOS
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO 1 YR. 3 YR. 5 YR. 10 YR. LIFE OF PORTFOLIO
<S> <C> <C> <C> <C>
International Equity 1.44% N/A N/A N/A 6.56%
Income -4.08% 4.90% 7.66% 9.67% 10.80%
Govt. Securities -4.89% N/A N/A N/A 4.58%
Total Return -1.97% 7.90% 10.21% 12.64% 13.17%
Growth -0.51% 10.66% 11.41% 14.28% 16.27%
High Income -1.55% 13.44% 14.03% N/A 10.90%
Money Market 4.25%* 3.79% 5.09% 6.31% 7.20%
Index 500 1.04% N/A N/A N/A 7.26%
LifeSpan Balanced N/A N/A N/A N/A N/A
LifeSpan Diversified N/A N/A N/A N/A N/A
LifeSpan Capital Appreciation N/A N/A N/A N/A N/A
</TABLE>
Portfolio Inception Dates: Income 1-21-82, Government Securities 5-13-92,
Total Return 9-30-82, Growth 1-21-82, High Income 9-19-85, International
Equity 5-13-92, Money Market 4-1-82, LifeSpan Balanced 9-1-95, LifeSpan
Diversified 9-1-95, LifeSpan Capital Appreciation 9-1-95, and Index 500 8-
27-92.
* The annualized yield for the Money Market Portfolio for the seven days
ending December 31, 1994 was 5.62%.
SUB-ACCOUNT INVESTMENT PERFORMANCE
Although as of the date of this prospectus the Sub-Accounts have not commenced
operations and therefore have no performance history, the following
performance information of the Sub-Accounts assumes that the Sub-Accounts have
been in operation for the same periods as the corresponding Portfolio and
investing in the corresponding Portfolio. It reflects the total of the income
generated by the Portfolio net of total Portfolio operating expenses, plus
capital gains and losses, realized or unrealized, net of the mortality and
expense risk charge and the separate account administrative charge.
THE FOLLOWING SUB-ACCOUNT PERFORMANCE FIGURES DO NOT REFLECT THREE
SIGNIFICANT CHARGES. IF THESE CHARGES WERE INCLUDED, THE TOTAL RETURN
FIGURES WOULD BE LOWER. FIRST, COST OF INSURANCE CHARGES HAVE NOT BEEN
DEDUCTED. SECOND, THE TOTAL RETURN FIGURES DO NOT REFLECT THE DEDUCTION
FROM PREMIUMS OF THE 2.0% TAX EXPENSE CHARGE OR ANY APPLICABLE PREMIUM
CHARGE. THIRD, THESE FIGURES DO NOT REFLECT THE DEDUCTION OF THE MONTHLY
ADMINISTRATIVE CHARGE.
<TABLE>
<CAPTION>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN OF THE SUB-ACCOUNT
</TABLE>
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YR. 3 YR. 5 YR. 10 YR. LIFE OF SUB-ACCOUNT
<S> <C> <C> <C> <C> <C>nternational Equity A 5.61%
International Equity 0.53% N/A N/A N/A 5.61%
Income -4.94% 3.96% 6.70% 8.69% 9.81%
Govt. Securities -5.74% N/A N/A N/A 3.64%
Total Return -2.85% 6.93% 9.22% 11.63% 12.16%
Growth -1.40% 9.67% 10.41% 13.26% 15.23%
High Income -2.43% 12.42% 13.01% N/A 9.91%
Money Market 3.32% 2.86% 4.15% 5.36% 6.24%
Index 500 0.13% N/A N/A N/A 6.30%
LifeSpan Balanced N/A N/A N/A N/A N/A
LifeSpan Diversified N/A N/A N/A N/A N/A
LifeSpan Capital Appreciation N/A N/A N/A N/A N/A
</TABLE>
Performance information for any Sub-Account reflects only the performance of a
hypothetical investment in the Sub-Account during the particular time period
on which the calculations are based. Performance information should be
considered in light of the investment objectives and policies, characteristics
and quality of the Portfolio in which the Sub-Account invests and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. Actual returns may be
more or less than those shown and will depend on a number of factors,
including the investment allocations by an owner and the different investment
rates of return for the Portfolios.
THE POLICY
APPLICATION FOR A POLICY - Upon receipt at its Principal Office of a completed
application from a prospective Policyowner, C.M. Life 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. In some cases, an entire group of Insureds will be pre-approved for
Guaranteed Issue underwriting based on information provided by the common
Policyowner on a master application. In other cases, however, applications
will be subject to full underwriting, in which case C.M. Life reserves the
right to reject an application which does not meet C.M. Life's underwriting
guidelines. In all cases, C.M. Life shall comply with all applicable federal
and state prohibitions concerning unfair discrimination. This process may
include an assessment of whether the Policyowner has a sufficient insurable
interest in the Insured to support ownership of the Policy under applicable
state insurance laws. A Policy cannot be issued until this underwriting
procedure has been completed.
If, at the time of application, a prospective Policyowner makes a premium
payment equal to at least the planned periodic premium selected for the
Policy, pending underwriting approval, C.M. Life 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 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 with a Policy date
as of the date the terms of the Conditional Insurance Agreement were met. 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 C.M. Life will require payment of
sufficient premium to place the insurance in force.
Pending completion of insurance underwriting and Policy issuance procedures,
the initial premium will be held in the Company'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 3%) beginning not later than the date of receipt
of the premium at the Company's Service Center. 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 following issuance of the Policy. If your Policy
provides for a full refund of the initial purchase payment under its "Right to
Examine Policy" provision (see "THE POLICY - "Free Look Period"), for the
first 10 days following issuance and acceptance of the Policy, unless an
extended right-to-examine provision applies under applicable state law, the
portion of your Policy Value which you have instructed to be allocated to the
Separate Account will be allocated to the Money Market Sub-Account.
Thereafter, your Policy Value will be allocated to the Sub-Accounts and the
Fixed Account according to your instructions.
Subject to the approval of C.M. Life, a Policy may be backdated no more than
six months prior to the date of application. Backdating may be advantageous
where the Insured's lower Age on the Policy Date results in lower cost of
insurance rates. If a Policy is backdated, cost of insurance charges will be
assessed as of the backdated period.
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 by delivering the Policy to an agent of C.M. Life on or before the
latest of: (a) 10 days after you receive the Policy (unless a different
period is applicable under state law or regulation); or (b) 10 days after C.M.
Life 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 "Right
to Examine Policy" 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 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 Separate Account, (2) the Policy
Value (on the date the cancellation request is received by C.M. Life)
attributable to the amounts allocated to the Separate Account, and (3) any
fees or charges imposed on amounts in the Separate 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 Specified Amount, C.M. Life will forward 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) 10 days after you receive the new
specification pages issued for the increase (unless a different period is
applicable under state law or regulation), or (b) 10 days after C.M. Life
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.
CONVERSION PRIVILEGES - Once during the first 24 months after the Date of
Issue or after the effective date of an increase in Specified 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 the Company or
CML on the date of issue or on the effective date of an increase in Specified
Amount, whichever is applicable. Assuming that there have been no increases
in the initial Specified Amount, you can accomplish this within 24 months
after the date of issue by transferring, without charge, the Policy Value in
the Separate Account to the General Account and by simultaneously changing
your premium allocation instructions to allocate future premium payments to
the General Account. Within 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, C.M. Life will issue a
flexible premium adjustable life insurance policy to you. The new Policy will
have the same Specified Amount, issue ages, and dates of issue as the original
Policy, and will have the underwriting classification we then offer that is
most similar to the original Policy.
PREMIUM PAYMENTS - Premium Payments (for both initial and subsequent premiums)
are payable to C.M. Life, and should be mailed to the Service Center. All
premium payments after the initial premium payment are credited to the
Separate Account or Fixed Account as of date of receipt in good order by C.M.
Life at the Service Center.
You may establish a schedule of planned periodic premium payments. C.M. Life
will send you notice of such planned periodic payments at regular intervals.
Failure to pay planned periodic 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.
Premiums are not limited as to frequency and number. However, no premium
payment may be less than $100 without C.M. Life'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 the Guideline Premium Test is chosen as the Definition of Life Insurance
Test, the test provides that there are maximum premium payments that may be
accepted. C.M. Life will not accept premium payments that will violate the
provisions of the test. If a premium payment is made in excess of the limits
of the Guideline Premium Test, C.M. Life will only accept that portion of the
premium payment that is within the limits and will refund the remainder. No
such maximum premium limitations apply under the Cash Value Accumulation Test.
However, notwithstanding the current maximum premium limitations, C.M. Life
will accept a premium which is necessary to prevent a lapse of the Policy
during a Policy year. We reserve the right to refuse any premium that would
increase the Insurance Amount at Risk.
ALLOCATION OF NET PREMIUMS - The Net Premium equals the premium paid less the
2% tax expense charge and any applicable premium charge. At the time your
application is submitted, you will indicate your initial allocation of Net
Premiums among the Fixed Account and the Sub-Accounts of the Separate Account.
There are no limitations concerning the number of Sub-Accounts to which Net
Premiums may be allocated. Allocation percentages must be in whole numbers
(for example, 33 1/3% may not be chosen) and must total 100%.
For certain Policyowners, after the underwriting period and during the "Right
to Examine Policy" 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
Fixed 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. C.M. Life and its agents and
affiliates will not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. C.M. Life will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine; otherwise, C.M. Life may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures C.M. Life follows for
transactions initiated by telephone include requirements that a Policyowner
wanting to make such a change identify themselves by name and identify a
personal identification number. All transfer instructions by telephone may be
tape recorded as an additional safeguard.
An allocation change will be effective as of the date of receipt of the notice
at the Service Center. Although no charge currently is imposed for changing
premium allocation instructions, C.M. Life reserves the right to impose such
a charge in the future. C.M. Life guarantees that such charge will not exceed
$25.
The Policy Value in the Sub-Accounts will vary with their investment
experience. The Policyowner bears the investment risk that the Policy Value
of each Sub-Account will fluctuate. Further, investment performance of the
Sub-Accounts may affect the 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 C.M. Life's then current rules, you may at any
time transfer Policy Value among the Sub-Accounts or between a Sub-Account and
the Fixed Account. The Policy Value held in the Fixed Account to secure a
Policy Loan, however, may not be transferred.
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. C.M. Life will make transfers pursuant
to valid 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. (See
"ALLOCATION OF NET PREMIUMS.")
Only one transfer from the Fixed Account to the Separate Account may be made
during each Policy year. The one transfer permitted may not exceed 25% of the
Policy Value held in the Fixed Account at the time of transfer request. There
will also be a ninety (90) day waiting period between transfers out of the
Fixed Account.
The Fixed Account and the Money Market Portfolio could be considered to be
competing options. Transfers between these competing options will not be
permitted. For a period of ninety (90) days following a transfer from one
competing option, no transfer can be made to the other competing option. For
a period of ninety (90) days following a transfer to one competing option, no
transfer can be made from the other competing option.
The transfer privilege is subject to the consent of C.M. Life. C.M. Life
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 Fixed
Account; and (4) the maximum amount that may be transferred each time to or
from the Fixed Account.
The first twelve transfers in a Policy Year are free of any charge.
Thereafter a transfer charge of no more than $25 will be deducted from the
amount transferred for each transfer in that Policy year. Any transfers made
with respect to a conversion privilege, Policy loan or material change in
investment policy will not count towards the twelve free transfers.
ACCOUNT REBALANCING - An Account Rebalancing option is currently available to
Policies owned by corporations and trusts. This option maintains a specified
allocation of Policy Value among selected Sub-Accounts and the Fixed Account
by automatically transferring Policy Value on a quarterly, semiannual or
annual basis in accordance with the allocation selected by the Policyowner.
Additionally, we anticipate that this option may be available on a monthly
basis at some time in the future. Generally, Account Rebalancing will be
processed on the 15th of each scheduled month unless the 15th is not a
business day, in which case the rebalancing will be processed on the next
business day. Transfers made in connection with Account Rebalancing are
without charge and do not count toward the twelve free transfers allowed per
Policy Year.
PROCEEDS PAYABLE UPON DEATH OF THE INSURED - As long as the Policy remains in
force C.M Life will, upon due proof of the Insured's death, pay the Proceeds
of the Policy to the named Beneficiary. C.M. Life will normally pay the
Proceeds within seven days of receiving due proof of the Insured's death
(unless a shorter period is required under applicable law), but C.M. Life may
delay payments under certain circumstances. (See "OTHER POLICY PROVISIONS -
Postponement Of Payments.") The Proceeds may be received by the Beneficiary
in a lump sum or under one or more payment options currently offered by C.M.
Life, except as may be restricted by state law. (See "APPENDIX B - PAYMENT
OPTIONS.")
Prior to and at the Maturity Date while the Insured is living, the Proceeds
equal the Surrender Value. The amount of Proceeds payable as a Death Benefit
will be determined as of the date of C.M. Life's receipt of due proof of the
Insured's death.
DEATH BENEFIT OPTIONS - The Policy provides two Death Benefit Options: Option
1 and Option 2, as described below:
Under Option 1, the Death Benefit is equal to the greater of the Specified
Amount and the Guideline Minimum Death Benefit.
Under Option 2, the Death Benefit is equal to the greater of the Specified
Amount plus the Policy Value or the Guideline Minimum Death Benefit.
You designate the desired Death Benefit Option in the application. You may
change the option once per Policy Year by Written Request. Changing Death
Benefit Options may require Evidence of Insurability. The effective date of
any such change will be the Monthly Deduction Date on or following the date of
receipt of the request. Although no charge currently is assessed for
processing a change in Death Benefit Option, C.M. Life reserves the right to
impose such a charge for processing a change in Death Benefit Option in the
future. Any such charge would not be designed to produce a profit.
CHANGE IN DEATH BENEFIT OPTION - If the Death Benefit Option is changed from
Option 2 to Option 1, the Specified Amount will be increased to equal the
Death Benefit which would have been payable under Option 2 on the effective
date of the change (i.e., the Specified Amount immediately prior to the change
plus the Policy Value on the date of the change). The amount of the Death
Benefit will not be altered at the time of the change. However, the change in
Death Benefit Option will affect the determination of the Death Benefit from
that point on, since the Policy Value will no longer be added to the Specified
Amount in determining the Death Benefit.
If the Death Benefit Option is changed from Option 1 to Option 2, the
Specified Amount will be decreased to equal the Death Benefit which would have
been payable under Option 1 at the effective date of such change less the
Policy Value on such effective date. This change may not be made if it would
result in a Specified Amount less than $50,000. A change from Option 1 to
Option 2 will not alter the amount of the Death Benefit at the time of the
change, but will affect the determination of the Death Benefit from that point
on. Because the Policy Value will be added to the new Specified Amount, the
Death Benefit will vary with the Policy Value.
Under the Guideline Premium Test, a change in the Death Benefit Option may
result in total premiums paid exceeding the maximum premium limitation
determined by the provisions of the Guideline Premium Test. In such event,
C.M. Life will pay the excess to the Policyowner. See "THE POLICY - Premium
Payments."
DEFINITION OF LIFE INSURANCE TEST - At issue, the Policy offers a choice
between two tests that may be used to determine if the Policy qualifies as
"life insurance" under Section 7702 of the Code. They are the Guideline
Premium Test and the Cash Value Accumulation Test. The test selected will
determine how the Guideline Minimum Death Benefit is calculated.
Under either test, the Death Benefit at any point must be greater than the
Policy Value times a specified percentage. Under the Guideline Premium Test,
those percentages are prescribed and vary only by the Age of the Insured.
Under the Cash Value Accumulation Test, the percentages vary by the
Underwriting Class, tobacco status and Age of the Insured. If at any point the
Death Benefit is not greater than the Policy Value times the applicable
percentage, the Death Benefit will be increased to the amount necessary to
satisfy the test. We refer to this amount as the "Guideline Minimum Death
Benefit."
The percentages used in calculating the Guideline Minimum Death Benefit are
typically lower under the Guideline Premium Test than they are under the Cash
Value Accumulation Test. However, the Guideline Premium Test imposes maximum
premium limitations while the Cash Value Accumulation Test does not. In
general, these differences in the tests make the Cash Value Accumulation Test
more appropriate for situations where maximum accumulation of Policy Value
during the initial years of the Policy is a primary objective. On the other
hand, the Guideline Premium Test is best suited for Policyowners looking for
the most economically efficient method of accumulating Policy Value to fund a
specified amount of coverage. Since a Policyowner's selection of the Cash
Value Accumulation Test or the Guideline Premium Test depends upon various
complex factors, applicants should consult with a qualified tax adviser in
choosing the Definition of Life Insurance Test.
CHANGE IN SPECIFIED AMOUNT - Subject to certain limitations, you may increase
or decrease the Specified Amount at any time by submitting a Written Request
to C.M. Life requesting such change. Any increase or decrease in the
Specified 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 Specified Amount is increased. A request for an
increase in Specified Amount may not be less than $10,000. You may not
increase the Specified Amount after the Insured reaches Age 75.
An increase in the Specified Amount will generally affect the Insurance Amount
at Risk, which may affect the monthly cost of insurance charges. An increase
in Specified Amount may also have adverse tax implications and may result in
modified endowment contract status for the Policy.
After increasing the Specified 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 24 months following the increase, to transfer any or
all Policy Value of the amount of the increase to the General Account free of
charge. (See "THE POLICY - Free Look Period, - Conversion Privileges.")
DECREASES - A decrease in Specified Amount will not be permitted during the
first three Policy years, or for the three Policy years following an increase
in Specified Amount. The Specified Amount in force after any decrease may
not be less than $50,000. Under the Guideline Premium Test, if a decrease in
Specified Amount will make the Policy not comply with the maximum premium
limitations of the test, 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 Specified Amount will affect the total Insurance Amount at
Risk, 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
Specified Amount will reduce the Specified Amount in the following order: (a)
the Specified Amount provided by the most recent increase; (b) the next most
recent increases successively; and (c) the initial Specified Amount.
POLICY VALUE AND SURRENDER VALUE - The Policy Value is the total amount
available for allocation and is equal to the sum of the accumulation in the
Fixed 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 Policy Debt). 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 Fixed 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 following the
Date of Issue and thereafter on each Valuation Date. Following 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 Fixed 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 Policy has been issued 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 Fixed Account (including any amounts transferred
to the Fixed 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 Fixed Account, if any.
THE ACCUMULATION UNIT - Each Net Premium payment is allocated to either the
Sub-Account(s) or the Fixed Account in accordance with your instructions.
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 for 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 the Service Center. The number of
Accumulation Units will remain fixed unless changed by a subsequent split of
Accumulation Unit value, transfer, partial withdrawal or surrender. In
addition, if C.M. Life 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. The value of an
Accumulation Unit was set at $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
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 0.65% of the daily net asset value of that Sub-Account for
mortality and expense risks for the first twenty Policy years. After
the twentieth Policy anniversary, the charge will be reduced to 0.25%
of the daily net asset value of that Sub-Account. This charge may be
increased or decreased by C.M. Life, but may not exceed 0.90% at any
point in time; 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 twenty Policy years.
The net investment factor may be greater or less than one. Therefore, the
value of an Accumulation Unit may increase or decrease. You bear the
investment risk.
Allocations to the Fixed Account are not converted into Accumulation Units,
but are credited interest at a rate periodically set by C.M. Life. (See "MORE
INFORMATION ABOUT THE GENERAL ACCOUNT.")
PAYMENT OPTIONS - During the Insured's lifetime, you may arrange for the
Proceeds to be paid in a single sum or under one or more of the payment
options currently offered by C.M. Life, 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. C.M. Life
may make more payment options available in the future. If no election is
made, C.M. Life will pay the Proceeds in a single sum. When the Proceeds are
payable in a single sum, the Beneficiary may, within one 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.")
SURRENDER - You may at any time surrender the Policy and receive its Surrender
Value. The Surrender Value is the Policy Value less any Policy Debt. 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. No
Surrender Charges are applied.
The proceeds from a surrender may be paid in a single lump sum or under one or
more payment options currently offered by C.M. Life, subject to any state
limitations. (See "APPENDIX B - PAYMENT OPTIONS.") C.M. Life will normally
pay the Surrender Value within seven days following C.M. Life's receipt of the
surrender request (unless a shorter period is required under applicable law or
regulation), but C.M. Life 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 - You may withdraw a portion of the Surrender Value of your
Policy at any time after the Policy has been issued 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 Fixed Account. If you do not provide allocation instructions C.M. Life
will make a Pro Rata Allocation. Under Option 1, the Specified Amount is
reduced by the amount of the partial withdrawal. Additionally, the maximum
amount of a partial withdrawal is 90% of the Surrender Value. A request for a
a partial withdrawal that would reduce the Specified Amount below Minimum
Specified Amount, or that exceeds 90% of the Surrender Value may be treated
as a request for a full surrender of the Policy.
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 as described under "CHARGES AND DEDUCTIONS - Charges On Partial
Withdrawal." C.M. Life will normally pay the amount of the partial withdrawal
within seven days (unless a shorter period is required pursuant to applicable
law) following C.M. Life's receipt of the partial withdrawal request, but C.M.
Life may delay payment under certain circumstances described in "OTHER POLICY
PROVISIONS - Postponement Of Payments."
For 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 C.M. Life
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 C.M. Life for actual administrative costs incurred, and
is not intended to result in a profit to C.M. Life.
TAX EXPENSE CHARGE - Currently, a deduction of 2% of premiums for state and
local premium taxes is made from each premium payment. The premium payment
less the tax expense charge and any applicable premium charge equals the Net
Premium. While the premium tax of 2% is deducted from each premium payment,
some jurisdictions may not impose premium taxes. Premium taxes vary from
state to state, ranging from zero to 4.0%, and the 2% rate attributable to
premiums for state and local premium taxes approximates the average expenses
to C.M. Life associated with the premium taxes. The 2% charge may be higher
or lower than the actual premium tax imposed by the applicable jurisdiction.
C.M. Life reserves the right to increase or decrease the tax expense charge to
reflect tax expenses incurred by C.M. Life. C.M. Life does not expect to make
a profit from this charge.
Although not currently deducted, C.M. Life reserves the right to make
deductions from premium payments for Deferred Acquisition Cost ("DAC") tax
charges. If currently imposed, the rate would be at 1%, a rate that C.M. Life
approximates to be equal to C.M. Life's expenses in paying federal taxes for
deferred acquisition costs associated with the Policies. The DAC tax
deduction is a factor C.M. Life must use when calculating the maximum sales
load it can charge under SEC rules.
PREMIUM CHARGE - A premium charge will be applied to premium payments received
during the first seven Policy years after issue or the effective date of an
increase in Specified Amount. The maximum premium charge applied in a Policy
year will be 6% of premium received during that Policy Year, up to the annual
Target Premium for the Policy. If more than the Target Premium for the Policy
is paid in a Policy year, there will be no premium charge applied to the
premium in excess of the Target Premium. In the event of an increase in
Specified Amount, premium payments will be pro rated between the original
Specified Amount and the increase in Specified Amount using the Target
Premiums for each to determine the pro rata split. The premium charge is
designed primarily to compensate C.M. Life for the distribution expenses
associated with the Policy. In certain instances, C.M. Life may reduce this
charge. (See "Reduction of Charges.")
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 discussed below.
Prior to the Maturity Date, the Monthly Deduction will be deducted as of each
Monthly Payment Date commencing with the Policy Date of the Policy. The
Monthly Deduction will be made Pro Rata from the Fixed Account and Sub-
Accounts in which you have Policy Value on the Monthly Calculation Date. No
Monthly Deductions will be made on or after the Maturity Date.
COST OF INSURANCE - This charge is designed to compensate C.M. Life for the
anticipated cost of providing Proceeds to Beneficiaries of those Insureds who
die prior to the Maturity Date. The cost of insurance is determined on a
monthly basis, and is calculated separately for the initial Specified Amount
and for each subsequent increase in Specified Amount.
CALCULATION OF THE CHARGE - The monthly cost of insurance is determined by
multiplying the Insurance Amount at Risk by the appropriate cost of insurance
rates. Under Death Benefit Option 1, the Insurance Amount at Risk is equal to
the greater of the Specified Amount less the Policy Value or the Guideline
Minimum Death Benefit less the Policy Value. Under Death Benefit Option 2,
the Insurance Amount at Risk is equal to the greater of the Specified Amount
or the Guideline Minimum Death Benefit less Policy Value.
COST OF INSURANCE RATES - The Policy contains both current and guaranteed cost
of insurance rates. The current rates are used to calculate the monthly cost
of insurance charges and they may be lower than the guaranteed rates. The
guaranteed rates represent the maximum rates that C.M. Life may charge.
The guaranteed cost of insurance rates vary by the Underwriting Class, tobacco
status and Age of the Insured. For Policies that are fully underwritten, the
guaranteed rates for Preferred risks are based on the 1980 Commissioners
Standard Ordinary Unisex Mortality Table B which assumes an 80% male and 20%
female distribution by sex. The guaranteed rates for Substandard Risks are
based on multiples or additives of the same table. For Policies that are
guaranteed issue (i.e. issued without full underwriting), the guaranteed cost
of insurance rates are based on 150% of the 1980 Commissioners Standard
Ordinary Unisex Mortality Table B.
Current cost of insurance rates vary by Underwriting Class, tobacco status,
Age at Issue, and the number of Policy years that have elapsed since the
Policy date or the effective date of an increase in Specified Amount. The
current cost of insurance rates are based upon C.M. Life's expectations as to
future mortality, investment, expense and persistency experience. C.M. Life
may adjust current cost of insurance rates periodically. The current cost of
insurance rates are determined at the beginning of each Policy Year. The
current cost of insurance rates for an increase in Specified Amount or rider
are also determined annually on the anniversary of the effective date of each
increase or rider.
MONTHLY ADMINISTRATIVE CHARGES - Prior to the Maturity Date, current
administrative charges of $5 per Policy and $0.05 per thousand of Specified
Amount will be deducted from the Policy Value each month. These charges are
guaranteed not to exceed $10 per Policy and $0.10 per thousand of Specified
Amount. After the twentieth Policy Anniversary, the $0.05 per thousand charge
will be eliminated, and the amount deducted monthly will be $5.00 per Policy.
This charge will be used to compensate C.M. Life for first year and on-going
expenses incurred in the administration of the Policy. These expenses include
the cost of processing applications, conducting any applicable medical
examinations, determining insurability and the Insured's Underwriting Class,
establishing Policy records, and paying Proceeds. C.M. Life does not expect
to make a profit from these charges.
CHARGES AGAINST ASSETS OF THE SEPARATE ACCOUNT - C.M. Life assesses each
Sub-Account with a charge for mortality and expense risks assumed by C.M.
Life and a charge for administrative expenses of the Separate Account.
MORTALITY AND EXPENSE RISK CHARGE - C.M. Life currently makes a charge on an
annual basis of 0.65% of the daily net asset value in each Sub-Account for
Policy years one through twenty. This charge is reduced to 0.25% in
subsequent Policy years. This charge is for the mortality risk and expense
risk which C.M. Life assumes in relation to the variable portion of the
Policies. The total charges may be increased or decreased by the Board of
Directors of C.M. Life, subject to compliance with applicable state and
federal requirements, but it may not exceed 0.90% on an annual basis.
The mortality risk assumed by C.M. Life is that Insureds may live for a
shorter time than anticipated, and that C.M. Life will therefore pay an
aggregate amount of Proceeds sooner 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, C.M. Life
will absorb the losses. If costs are less than the amounts provided, the
difference will be a profit to C.M. Life. To the extent this charge results
in a current profit to C.M. Life, such profit will be available for use by
C.M. Life for, among other things, the payment of distribution, sales and
other expenses. 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 twenty Policy
Years, C.M. Life assesses a charge on an annual basis of 0.25% of the daily
net asset value in each Sub-Account. Thereafter, in subsequent Policy Years,
this administrative charge will be waived. 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 C.M. Life 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.
OTHER CHARGES AGAINST THE ASSETS OF THE SEPARATE ACCOUNT - Because the
Sub-Accounts purchase shares of the C.M. Fund and the VIP 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 each 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 C.M. Life determine that taxes will be imposed, C.M.
Life 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.
SURRENDER CHARGE - No Surrender Charges are applied against the Policy.
CHARGES ON PARTIAL WITHDRAWAL - A transaction charge of $25 will be assessed
on each partial withdrawal to reimburse C.M. Life for the cost of processing
the withdrawal. C.M. Life does not expect to make a profit on this charge.
TRANSFER CHARGES - The first twelve transfers in a Policy year will be free of
charge. Thereafter, a transfer charge of $25 will be imposed for each
transfer request to reimburse C.M. Life for the administrative costs incurred
in processing the transfer request. This transfer charge and the number of
free transfers permitted per Policy year may be adjusted periodically by C.M.
Life; however, the transfer charge is guaranteed not to increase. C.M. Life
reserves the right to change the number of free transfers allowed in a Policy
Year.
Transfers made in connection with Account Rebalancing do not count toward the
number of free transfers allowed in each Policy year and are free of charge.
If you utilize the Conversion Privilege, Loan Privilege or reallocate Policy
Value within 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
also be free of charge and in addition to the free transfers permitted in a
Policy Year. (See "THE POLICY - Conversion Privileges" and "POLICY LOANS.")
CHARGE FOR INCREASE IN SPECIFIED AMOUNT - No charge is imposed for any
increase in Specified Amount. C.M. Life does, however, reserve the right to
impose such a charge in the future. This charge would be imposed to reimburse
C.M. Life for underwriting and other costs associated with the increase. It
would not be designed to produce a profit.
OTHER ADMINISTRATIVE CHARGES - C.M. Life reserves the right to impose a charge
for the administrative costs incurred for changing the Net Premium allocation
instructions or for producing a projection of values. No such charges are
currently imposed. If such charges are imposed, they will not be designed to
produce a profit.
REDUCTION OF CHARGES - While this Policy is available for sale to individuals,
it will also be sold to corporations and to other multiple life groups or
sponsoring organizations. Depending on the size of the group, the nature of
the sale, the expected premium volume, or other factors that C.M. Life
considers to be significant, there may be expense savings that could be passed
on to the customer. Subject to applicable state laws and regulations, we
reserve the right to reduce the premium charge, cost of insurance charge, or
any other charge that is appropriate to reflect any expense savings.
Distribution expenses, underwriting expenses and administrative expenses are
examples of potential areas where savings may be realized.
POLICY LOANS
Loans may be obtained by request to C.M. Life on the sole security of this
Policy. The total amount which may be borrowed is the Loan Value. The Loan
Value is an amount equal to the Policy Value less existing Policy Debt and
less projected interest to the next Policy Anniversary Date at the then
applicable Loan Interest Rate. We reserve the right to defer Policy Loan
requests for a period not exceeding six months after the date when the
Policyholder applies for the Policy Loan. There is no minimum limit on the
amount of the loan.
A Policy Loan may be allocated among the Fixed Account and one or more
Sub-Accounts. If you do not make an allocation, C.M. Life will make a Pro
Rata Allocation based on the amounts in the Accounts on the date C.M. Life
receives the loan request. Policy Value in each Sub-Account equal to the
Policy Debt allocated to such Sub-Account will be transferred to the Fixed
Account, and the number of Accumulation Units equal to the Policy Value so
transferred will be cancelled. 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 Fixed Account equal to
the loan amount will be credited with interest at a specified rate equal to 1
1/2% less than the Loan Interest Rate.
LOAN INTEREST CHARGED - Interest accrues daily and is payable in arrears. A
Policy Loan will be subject to a Loan Interest Rate which is calculated based
on the current rate specified as the monthly average of the Composite Yield on
Seasoned Corporate Bonds as published by Moody's Investors Service. The rate
will be calculated two months prior to the Policy's anniversary date, and will
remain in force for the entire Policy Year. If increased at the next Policy
anniversary, the increase will be at least for 1/2%. Where required by state
law, a fixed interest rate will be available at a rate of 8%, unless a
different rate is required under applicable state law. Further, the variable
interest rate will not exceed the maximum interest rate permitted in the
Policy's contract state. 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 Policy Value in the Fixed Account,
C.M. Life will transfer Policy Value equal to that excess loan amount from the
Policy Value in each Sub-Account to the Fixed Account as security for the
excess loan amount. C.M. Life 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.
PREFERRED LOAN PROVISION - Where permitted by applicable law, a Preferred
Loan Provision is available under the Policy. When available, the Preferred
Loan Provision permits the Policyowner to take loans against the Policy Value
at a rate that is 1 1/2% less than the Loan Interest Rate then in effect for
the Policy. Additionally, we reserve the right to adjust this preferred rate
at each Policy anniversary when the Loan Interest Rate for the coming Policy
year is determined. The maximum Preferred Loan Amount is 10% of the Policy
Value at the time of the Preferred Loan request. This provision is available
after the tenth Policy year.
REPAYMENT OF POLICY DEBT - Loans may be repaid at any time prior to the lapse
of the Policy. You must notify C.M. Life if a payment is a loan repayment,
otherwise it will be considered a premium payment. Upon repayment of Policy
Debt, the portion of the Policy Value that is in the Fixed Account securing
the Policy Debt repaid will be allocated to the various Sub-Accounts and
increase the Policy Value in such accounts in accordance with your
instructions. If you do not make a repayment allocation, C.M. Life 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 Policy Debt.
If Policy Debt exceeds the Policy Value, 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 62 days after
this notice is mailed, the Policy will lapse without value.
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 may permanently affect 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 Fixed 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) Policy Debt and the
Monthly Deductions currently due exceed the Policy Value; or (c) the Policy
Value is less than zero. If one of these situations occurs, the Policy will
be in default. You will then have a grace period of 62 days, measured from the
date of default, to make sufficient payments to prevent termination. On the
date of default, C.M. Life 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 cause the
Policy to lapse. If the Insured dies during the grace period, the Proceeds
will still be payable; however, 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 Proceeds paid to the Beneficiary.
REINSTATEMENT - If the Policy has not been surrendered and the Insured is
alive, the terminated Policy may be reinstated anytime within three years
after the lapse date and before the Maturity Date. The reinstatement will be
effective on the Monthly Payment Date following the date you submit the
following to C.M. Life: (1) a written application for reinstatement;
(2) Evidence of Insurability showing that the Insured is insurable consistent
with C.M. Life's then applicable underwriting rules; and (3) a Net Premium
that is the greater of a Planned Periodic Payment or a net premium sufficient
to cover three monthly deductions at an amount equal to the last Monthly
Deduction just prior to the Policy termination.
POLICY VALUE ON REINSTATEMENT - The Policy Value on the date of reinstatement
is:
. the Net Premium paid to reinstate the Policy increased at an interest
rate determined by C.M. Life, and guaranteed to be no less than 3%
annually, from the date the payment was received at C.M. Life's Service
Center;
. plus an amount equal to the Policy Value less Policy Debt on the date the
Policy terminated;
. less the Monthly Deduction due on the date of reinstatement.
You may not reinstate any Policy Debt outstanding on termination date.
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 - Generally, the Policyowner named in the application for the
Policy will be a corporation, partnership, trust, or other similar business
entity. Usually the Policyowner will be the Insured's employer. In any case,
the Policyowner must be able to demonstrate the existence of a sufficient
relationship to satisfy applicable insurable interest laws and rules. C.M.
Life will determine whether such relationship exists. In certain states, the
consent of the Insured must be obtained in a form satisfactory to C.M. Life to
satisfy state laws concerning insurable interest rules. C.M. Life reserves
the right to make any final determination in this regard and will take any
action to remain consistent with such rules. 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 Specified Amount of insurance is increased.
BENEFICIARY - The Beneficiary is the recipient of the Proceeds upon the
Insured's death. The Beneficiary can be a person or an entity, and there can
be more than one Beneficiary under the Policy. If no Beneficiary is selected,
C.M. Life will designate the Policyowner as the Beneficiary.
INCONTESTABILITY - C.M. Life will not contest the validity of a Policy after
it has been in force during the Insured's lifetime for two years from the date
of issue. C.M. Life will not contest the validity of any increase in the
Specified Amount after such increase or rider has been in force during the
Insured's lifetime for two years from its effective date.
If the Policy is reinstated, the Death Benefit cannot be contested after the
Policy has been in force during the Insured's lifetime for two years from the
date of reinstatement. The Policy can be contested within the two-year period
over statements made in the reinstatement application.
SUICIDE - The Proceeds will not be paid if the Insured commits suicide, while
sane or insane, within two years from the date of issue. Instead, C.M. Life
will pay the Beneficiary an amount equal to all premiums paid for the Policy,
without interest, less any outstanding Policy Debt and less any partial
withdrawals. If the Insured commits suicide, while sane or insane, generally
within two years from the effective date of any increase in the Specified
Amount, C.M. Life'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.
C.M. Life does not assume the risk of suicide of the Insured, while sane or
insane, within two years of the effective date of a reinstatement of the
Policy. Instead of the 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- If the Insured's Age as stated in the application for a Policy is not
correct, benefits under a Policy will be adjusted to reflect the correct Age
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. In no event will the Death Benefit be reduced to less than the
Guideline Minimum Death Benefit.
ASSIGNMENT - The Policyowner 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. C.M. Life is
not bound by an assignment or release thereof, unless it is in writing and is
recorded at the 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 C.M.
Life before the assignment is recorded. C.M. Life is not responsible for
determining the validity of any assignment or release.
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. 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.
C.M. Life also reserves the right to defer payment of any amount due from the
Fixed Account upon surrender, partial withdrawal or death of the Insured, as
well as payments of policy loans and transfers from the Fixed Account, for a
period not to exceed six months.
DIRECTORS AND PRINCIPAL OFFICERS OF C.M. LIFE
Emelia Bruno has been Controller of C.M. Life since August 1994. Ms. Bruno
has been Controller of CML since May 1994 and Assistant Vice President of CML
since 1988.
John A. Hubbard is an Actuary for C.M. Life, a position he has held since May,
1987. Mr. Hubbard has been an Actuary with CML since December, 1991. Prior
to that, from March 1990 until December, 1991, Mr. Hubbard served as an
Assistant Actuary for CML.
Ann F. Lomeli has been Corporate Secretary of C.M. Life since 1988. Ms.
Lomeli is Corporate Secretary and Counsel to CML, positions she assumed in
1988.
John H. Loewenberg has been Executive Vice President and Director of C.M. Life
since June 1995. He also has served as Executive Vice President of
Connecticut Mutual since June 1995. From February 1989 to May 1995 he served
as Senior Vice President of Aetna Life & Casualty Co.
J. Brinke Marcuccilli has been Chief Financial Officer of C.M. Life since
August 1994, and has been a Director since June, 1995. He has served in a
similar capacity with CML since May, 1994. Previously, Mr. Marcuccilli was
Vice President/Chief Financial Officer of Providian Corporation, Agency Group
from January 1983 until May 1994.
Scott Peters has been Treasurer of C.M. Life since August 1994. Mr. Peters
serves as Vice President and Treasurer of CML, a position he has held since
February 1994. Previously he was Associate Treasurer from 1992 to 1994, and
Director of Banking Services from 1989 to 1992.
David E. Sams, Jr. has been President and Director of C.M. Life since July
1993. Mr. Sams has been a Director, as well as President and Chief Executive
Officer of CML since 1993. Prior to that, Mr. Sams served as President and
Chief Executive Officer - Agency Group of Capital Holding Corporation (now
Providian Corporation) from 1987 to 1993.
Donald A. Skokan is an Actuary for C.M. Life, a position he has held since
February, 1991. Mr. Skokan has been an Actuary with CML since December, 1989.
DISTRIBUTION
Connecticut Mutual Financial Services, LLC ("CMFS"), an affiliate of C.M. Life
and CML, acts as the principal underwriter of the Policies pursuant to an
underwriting agreement among itself, C.M. Life, and the Separate Account.
CMFS is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers. CMFS will enter into selling group agreements with other broker-
dealers pursuant to which the Policies may be sold. An example of such an
entity is G.R. Phelps, an indirect wholly owned subsidiary of CML.
The Policy will be sold by registered representatives of registered broker-
dealers that have established selling group agreements with CMFS. The
commission payable to the broker-dealer will vary with the individual selling
group agreements. The maximum commission payable to a broker-dealer in the
first Policy Year will be 45% of premium up to the Target Premium for the
Policy, and 10% on premium in excess of the Target Premium. In Policy Years
two through seven, the maximum commission will be 15% up to Target Premium and
10% above Target Premium. In years eight and later, a renewal commission of
up to 0.25% of Policy Value less Policy Debt may be payable.
The commission payable to the registered representative is determined by the
broker-dealer and also varies by the terms of each arrangement. C.M. Life may
also pay overrides, expense allowances, bonuses, and wholesaler fees.
CMFS also does business under the name Connecticut Mutual Financial Services,
L.L.C. in the states of Illinois, Michigan, New Mexico, North Dakota and South
Dakota. In the states of Maine, New Mexico, Ohio and West Virginia it does
business as Connecticut Mutual Financial Services, Limited Liability Company.
In Florida it is known as Connecticut Mutual Financial Services, LLC, L.C.
REPORTS
C.M. Life 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 Amount, changes in Death Benefit Option,
transfers among Sub-Accounts and the Fixed 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 30 days 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 Proceeds, Policy Value,
Surrender Value, amounts in the Sub-Accounts and Fixed Account, and any Policy
Loan(s).
In addition, you will be sent periodic reports containing financial statements
and other information for the Separate Account, the C.M. Funds, and the VIP
Funds as required by the 1940 Act.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate Account
is a party, or to which the assets of the Separate Account are subject. C.M.
Life currently 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 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 Securities and Exchange Commission.
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 financial statements of C.M. Life as of December 31, 1994 and 1993 and for
the two years then ended appearing in this prospectus and constituting part of
the Registration Statement, have been audited by Arthur Andersen, LLP,
independent public accountants as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in auditing and accounting in giving said reports. Financial
statements of the Separate Account are not included because the Separate
Account did not exist prior to February, 1995.
FEDERAL TAX CONSIDERATIONS
The effect of federal income taxes on the value of a Policy, on loans,
withdrawals, or surrenders, on death benefit payments, and on the economic
benefit to you or the Beneficiary depends upon a variety of factors. The
following discussion is based upon C.M. Life's understanding of the present
federal income tax laws as they are currently interpreted. From time to time
legislation is proposed which, if passed, could significantly, adversely and
possibly retroactively affect the taxation of the Policies. No representation
is made regarding the likelihood of continuation of current federal income tax
laws or of current interpretations by the Internal Revenue Service (IRS).
Moreover, no attempt has been made to consider any applicable state or other
tax laws.
It should be recognized that the following summary of certain federal income
tax considerations relating to a Policy is not exhaustive, does not purport to
cover all situations and is not intended as tax advice. Specifically, the
discussion below does not address certain tax provisions that may be
applicable if the Policyowner is a corporation or the Trustee of an employee
benefit plan. Because of the inherent complexity of federal income tax laws,
and the fact that tax results will vary according to the particular
circumstances of the person or entity involved, a qualified tax adviser should
always be consulted with regard to the application of the tax laws to
individual circumstances.
C.M. LIFE AND THE SEPARATE ACCOUNT - C.M. Life is taxed as a life insurance
company under Part I of Subchapter L of the Internal Revenue Code of 1986 (the
"Code") and it files a consolidated tax return with its affiliates. C.M. Life
does not expect to incur any income tax upon the earnings or realized capital
gains attributable to the Separate Account. Based on these expectations, no
charge is made for federal income taxes which may be attributable to the
Separate Account.
C.M. Life will review periodically the question of a charge to the Separate
Account for federal income taxes. Such a charge may be made in future years
for any federal income taxes incurred by C.M. Life. This might become
necessary if the tax treatment of C.M. Life is ultimately determined to be
other than what C.M. Life believes it to be, if there are changes made in the
federal income tax treatment of variable life insurance at C.M. Life level, or
if there is a change in C.M. Life's tax status. Any such charge would be
designed to cover the federal income taxes attributable to the investment
results of the Separate Account.
Under current laws C.M. Life may also incur state and local taxes (in addition
to premium taxes) in several states. At present these taxes are not
significant. If there is a material change in applicable state or local tax
laws, charges may be made for such taxes paid, or reserves for such taxes,
attributable to the Separate Account.
TAXATION OF THE POLICIES - While C.M. Life believes that the Policy meets the
statutory definition of life insurance, and that it will receive federal
income tax treatment consistent with that of fixed life insurance, the area of
the tax law relating to the definition of life insurance does not explicitly
address all relevant issues (including, for example, the treatment of
substandard risk Policies). C.M. Life reserves the right to make changes to
the Policy if changes are deemed appropriate by C.M. Life to attempt to assure
qualification of the Policy as a life insurance contract. If a Policy were
determined not to qualify as life insurance, the Policy would not provide the
tax advantages normally provided by life insurance. The discussion below
summarizes the tax treatment of life insurance contracts.
The death benefit under a Policy should be excludable from the gross income of
the Beneficiary (whether the Beneficiary is a corporation, individual or other
entity) under Code section 101(a)(1) for purposes of the regular federal
income tax and the Policyowner generally should not be deemed to be in
constructive receipt of the Policy Value, including increments thereof, under
the Policy until Surrender thereof, maturity of the Policy, or partial
withdrawal. However, certain Policy loans may be taxable in the case of
Policies that are modified endowment contracts. Prospective Policyowners that
intend to use Policies to fund deferred compensation arrangements for their
employees are urged to consult their tax advisers with respect to the tax
consequences of such arrangements. Prospective corporate owners should
consult their tax advisers about the treatment of life insurance in their
particular circumstances for purposes of the alternative minimum tax
applicable to corporations and the environmental tax under Code section 59A
(for these purposes, the death benefit and increases in Policy Value may be
taxable). Changing the Policyowner may also have tax consequences.
Exchanging a Policy for another involving the same Insured generally will not
result in the recognition of gain or loss according to Code section 1035(a).
Changing the Insured under a Policy will, however, not be treated as a tax-
free exchange under Section 1035, but rather as a taxable exchange.
The Code also requires that the investment of each Sub-Account be adequately
diversified in accordance with Treasury regulations in order to be treated as
a life insurance policy for tax purposes. The Sub-Accounts through the Funds,
intend to comply with this diversification requirement. Although C.M. Life
does not have control over the investments of the Funds, C.M. Life will
monitor continued compliance with these requirements.
In certain circumstances, owners of variable life insurance policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances,
income and gains from the separate account assets would be includible in the
variable policyowner's gross income. The IRS has stated in published rulings
that a variable policyowner will be considered the owner of separate account
assets if the owner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which Investor control of the investments of a
segregated asset account may cause the investor (i.e., the Policyowner),
rather than the insurance company, to be treated as the owner of the assets in
the account." This announcement also stated that guidance would be issued by
way of regulations or rulings on the "extent to which policyholders may direct
their investments to particular subaccounts without being treated as owners of
the underlying assets." As of the date of this prospectus, no such guidance
has been issued.
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was
determined that policyowners were not owners of separate account assets. For
example, the Policyowner has additional flexibility in allocating premium
payments and Policy Values. These differences could result in a Policyowner
being treated as the owner of a pro rata portion of the assets of the Separate
Account. In addition, C.M. Life does not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department has
stated it expects to issue. C.M. Life therefore reserves the right to modify
the Policy, or C.M. Life's administrative rules, as deemed appropriate by C.M.
Life, to attempt to prevent a Policyowner from being considered the owner of a
pro rata share of the assets of the Separate Account. Moreover, in the event
that regulations or rulings are adopted, there can be no assurance that a Fund
will be able to operate as currently described in its prospectus, or that a
Fund will not have to change its investment objective or investment policies.
The Technical and Miscellaneous Revenue Act of 1988 established a new class of
life insurance contracts referred to as modified endowment contracts. With
the enactment of this legislation, the Policies will be treated for tax
purposes in one of two ways. Policies that are not classified as modified
endowment contracts will be taxed as conventional life insurance contracts, as
described below. Taxation of pre-death distributions from Policies that are
classified as modified endowment contracts, is somewhat different, as
described below.
A life insurance contract becomes a modified endowment contract if, at any
time during the first seven Policy years, the sum of actual premiums paid
exceeds the sum of the "seven-pay premium." Generally, the "seven-pay
premium" is the level annual premium, such that if paid for each of the first
seven years, will fully pay for future benefits under a contract. For
example, if the "seven-pay premium" was $1,000, the maximum premiums that
could be paid during the first seven years to avoid modified endowment
contract treatment would be $1,000 in the first year, $2,000 through the first
two years, and $3,000 through the first three years, etc. Under this test, a
Policy may or may not be a modified endowment contract, depending on the
amount of premium paid during each of the Policy's first seven contract years.
Changes in death benefit options under, or in other terms of a Policy may
require "retesting" of a Policy to determine if it is to be classified as a
modified endowment contract.
CONVENTIONAL LIFE INSURANCE POLICIES - If a Policy is not a modified endowment
contract, upon surrender or at the Maturity Date of a Policy for its Surrender
Value, the excess, if any, of the Surrender Value plus any outstanding Policy
Debt over the cost basis under a Policy will be treated as ordinary income for
federal income tax purposes. Such a Policy's cost basis will usually equal
the premiums paid less any premiums previously recovered in partial
withdrawals. If a partial withdrawal occurring within 15 years of the Policy
date is accompanied by a reduction in benefits under the Policy, special rules
apply to determine whether part or all of the cash received is paid out of the
income of the Policy and is taxable. Cash distributed to a Policyowner on
partial withdrawals occurring more than 15 years after the Policy date will be
taxable as ordinary income to the Policyowner to the extent that it exceeds
the cost basis under a Policy.
Loans received under Policies that are not modified endowment contracts should
be treated as indebtedness of the Policyowner, and no part of any Policy Loan
will constitute income to the Policyowner unless the Policy is surrendered or
the Policy matures. Interest on a loan under a Policy that is not a modified
endowment contract may be deductible, subject to several limitations,
depending on the use to which the Loan proceeds are put and the tax rules
applicable to the Policyowner. If, for example, the loan proceeds are used by
an individual for business or investment purposes, all or part of the interest
expense may be deductible. Generally, if the Policy loan is used for personal
purposes by an individual, the interest expense is not deductible. The
deductibility of loan interest (whether incurred under a Policy loan or on
other indebtedness) also may be subject to other limitations. For example,
where the interest is incurred on a loan under a Policy covering the life of
an officer, employee, or person financially interested in the trade of
business of the Policyowner, the interest may be deductible to the extent that
the interest is attributable to the first $50,000 of the Policy loan. Other
tax law provisions may limit the deduction of interest payable on loan
proceeds that are used to purchase or carry a life insurance policy.
MODIFIED ENDOWMENT CONTRACTS - Pre-death distributions from modified endowment
contracts may give rise to taxable income. Upon full surrender or maturity of
the Policy, the Policyowner will recognize ordinary income for federal income
tax purposes equal to the amount by which the Surrender Value plus the Policy
Debt exceeds the investment in the Policy (usually the premiums paid plus
certain pre-death distributions that were taxable less any premiums previously
recovered that were excludable from gross income). Upon partial withdrawals
and Policy loans, the Policyowner will recognized ordinary income to the
extent allocable to income (which includes all previously non-taxed gains) on
the Policy. The amount allocated to income is the amount by which the Policy
Value exceeds investment in the Policy immediately before the distribution. If
two or more Policies which are classified as modified endowment contracts are
purchased from any one insurance company during any calendar year, all such
Policies will be aggregated for purposes of determining the portion of the
pre-death distribution allocable to income on the Policies and the portion
allocable to investment in the Policies.
Amounts received under a modified endowment contract that are included in
gross income are subject to an additional tax equal to 10% of the amount
included in gross income, unless an exception applies. The 10% additional tax
does not apply to any amount received: (i) when the taxpayer is at least 59
1/2 years old; (ii) which is attributable to the taxpayer becoming disabled;
or (iii) which is part of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the taxpayer of the joint lives (or joint life expectancies) of the taxpayer
and his or her beneficiary.
If a Policy was not originally a modified endowment contract but becomes one,
under Treasury Department regulations which are yet to be prescribed, pre-
death distributions received in anticipation of a failure of a Policy to meet
the seven-pay premium test are to be treated as pre-death distributions from a
modified endowment contract (and, therefore, are to be taxable as described
above) even though, at the time of the distribution(s) the Policy was not yet
a modified endowment contract. For this purpose, pursuant to the Code, any
distribution made within two years before the Policy is classified as a
modified endowment contract shall be treated as being made in anticipation of
the Policy's failing to meet the seven-pay premium test.
It is unclear whether interest on a Policy loan with respect to a modified
endowment contract constitutes interest for federal income tax purposes. If
it does constitute interest, it may be deductible, subject to several
limitations, depending on the use to which the loan proceeds are put and the
tax rules applicable to the Policyowner. If, for example, the loan proceeds
are used by an individual for business or investment purposes, all or part of
the interest expense may be deductible. Generally, if the Policy loan is used
for personal purposes by an individual, the interest expense is not
deductible. The deductibility of loan interest (whether incurred under a
Policy loan or on other indebtedness) also may be subject to other
limitations. For example, where the interest is incurred on a loan under a
Policy covering the life of an officer, employee, or person financially
interested in the trade of business of the Policyowner, the interest may be
deductible to the extent that the interest is attributable to the first
$50,000 of the Policy loan. Other tax law provisions may limit the deduction
of interest payable on loan proceeds that are used to purchase or carry a life
insurance policy.
REASONABLENESS REQUIREMENT FOR CHARGES - Another provision of the tax law
deals with allowable charges for mortality costs and other expenses that are
used in making calculations to determine whether a contract qualifies as life
insurance for federal income tax purposes. These calculations must be based
upon: (i) mortality charges that meet the reasonable mortality charge
requirements set forth in the Code, and (ii) other charges reasonably expected
to be actually paid. The Treasury Department is expected to promulgate
regulations governing reasonableness standards for mortality and other
charges. The area of the law relating to reasonableness standards for
mortality and other charges is currently based on statutory language and IRS
pronouncements which do not explicitly address all relevant issues.
Accordingly, while C.M. Life believes that the mortality costs and other
expenses used in making calculations to determine whether the Policy qualifies
as life insurance meet the current standards, it cannot offer complete
assurance since the law in this area is not fully developed. It is possible
that future regulations will contain standards that would require C.M. Life to
modify its mortality and other charges used for the purposes of the
calculations in order to retain the qualification of the Policy as life
insurance for federal income tax purposes, and C.M. Life reserves the right to
make any such modifications.
OTHER - Federal estate and gift and state and local estate, inheritance and
other tax consequences of ownership or receipt of Policy proceeds depend on
the jurisdiction and the circumstances of each Policyowner or Beneficiary.
For complete information on federal, state, local and other tax
considerations, a qualified tax adviser should be consulted.
C.M. LIFE DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY.
MORE INFORMATION ABOUT THE FIXED ACCOUNT
As discussed earlier, you may allocate Net Premiums and transfer Policy Value
to the Fixed Account. Because of exemption and exclusionary provisions in the
securities law, any amount in the Fixed Account is not generally subject to
regulation under the provisions of the Securities Act of 1933 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 Fixed
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 - Allocations to the Fixed Account for this Policy are
invested in the General Account of C.M. Life. The General Account of C.M.
Life is made up of all of the general assets of C.M. Life other than those
allocated to any separate account. Allocations to the General Account become
part of the assets of C.M. Life and are used to support insurance and annuity
obligations. Subject to applicable law, C.M. Life 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 Fixed Account. Such net amounts are
guaranteed by C.M. Life as to principal and a minimum rate of interest. The
allocation or transfer of funds to the Fixed Account does not entitle you to
share in the investment experience of the General Account.
FIXED ACCOUNT VALUE - C.M. Life bears the full investment risk for amounts
allocated to the Fixed 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 of the Policy and 4% thereafter
("Guaranteed Minimum Rate").
C.M. Life 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 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 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 FIXED ACCOUNT
IN EXCESS OF THE GUARANTEED MINIMUM RATE PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF C.M. LIFE. 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 Fixed Account,
no excess interest will be credited to that portion of the Policy Value which
is equal to Policy Debt. However, such Policy Value will be credited interest
at an effective annual yield of at least a rate equal to the Loan Interest
Rate less 1.5% (unless another rate is required by applicable law).
C.M. Life guarantees that, on each Monthly Payment Date after issuance and
acceptance of the Policy, the Policy Value in the Fixed Account will be the
amount of the Net Premiums allocated or Policy Value transferred to the Fixed
Account, plus interest at an annual rate of 4% per year, plus any excess
interest which C.M. Life credits, less the sum of all Policy charges allocable
to the Fixed Account and any amounts deducted from the Fixed Account in
connection with loans, partial withdrawals, surrenders or transfers.
Transfers, surrenders, partial withdrawals, Proceeds and Policy loans payable
from the General Account may be delayed up to six months. However, if payment
is delayed for 30 days (state variations may exist) or more, C.M. Life will
pay interest at least equal to an effective annual yield of 3% per year for
the period of deferment. Amounts from the General Account used to pay
premiums on Policies with C.M. Life will not be delayed.
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 Fixed Account, see the Policy itself.
ERISA COMPLIANCE
The use of the Policy in an employer-sponsored program may result in the
application of all or portions of the Employee Retirement Income Security Act
of 1974 (as amended) ("ERISA"). If ERISA applies, the employer may be subject
to government and participant disclosure, filing, fiduciary and other
requirements.
The Policyowner is encouraged to consult with counsel on these matters, as
neither C.M. Life nor any of its representatives are authorized to make
representations concerning whether ERISA applies to the intended use of a
Policy.
<PAGE>
FINANCIAL STATEMENTS
Financial Statements for C.M. Life are included in this prospectus beginning
immediately after this section. The financial statements of C.M. Life should
be considered only as bearing on the ability of C.M. Life 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. Included
are audited financial statements for the period ended December 31, 1994. Also
included are unaudited interim financial statements for the period ended March
31, 1995.* Financial Statements for the Separate Account are not included
since the Separate Account had no assets prior to the effective date of this
Prospectus.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C.M. Life Insurance Company:
We have audited the accompanying balance sheets of C.M. Life Insurance Company
(a Connecticut corporation and a wholly owned subsidiary of Connecticut Mutual
Life Insurance Company), as of December 31, 1994, and 1993, and the related
statements of operations, stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules 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 accessing 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 C.M. Life Insurance Company,
as of December 31, 1994, and 1993, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1994
in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1995
<TABLE>
C.M. LIFE INSURANCE COMPANY
BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> 1994 1993
---- ----
ASSETS: <C> <C>
Investments:
Fixed maturities at cost (fair value;
$684,213 in 1994 and $647,980 in 1993) $717,291 $627,110
Equity securities at cost (fair value;
$2,065 in 1994 and $2,095 in 1993) 1,815 1,815
Mortgage loans on real estate at net
realizable value 42,038 65,788
Real estate at cost 1,897 5,362
Policy loans at outstanding balance 109,720 98,215
Cash and cash equivalents 3,025 5,589
------- -------
Total investments 875,786 803,879
------- -------
Accrued investment income 14,023 13,215
Accounts receivable 5,330 4,317
Amounts due from reinsurers 1,162 1,229
Other assets 2,318 1,709
Assets of Separate Account 309,672 145,661
---------- ---------
TOTAL ASSETS $1,208,291 $970,010
---------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY:
Liabilities:
Future policy benefits $751,808 $698,779
Policy claims and benefits currently
payable 1,772 1,758
Indebtedness to related parties 6,965 11,485
Federal income tax payable 2,446 441
Asset valuation reserve 6,640 6,534
Other liabilities 7,906 8,582
Other deposits 31,690 15,992
Transfers due from Separate Account (14,445) (7,120)
Liabilities of Separate Account 309,672 145,661
--------- -------
TOTAL LIABILITIES 1,104,454 882,112
--------- -------
STOCKHOLDER'S EQUITY:
Common stock, $200 par value - 50,000
shares authorized, 12,500 shares
issued and outstanding 2,500 2,500
Additional paid-in capital 43,759 43,759
Retained earnings 57,578 41,639
---------- --------
TOTAL STOCKHOLDER'S EQUITY 103,837 87,898
---------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S $1,208,291 $970,010
========== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
($ IN THOUSANDS)
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Premiums and annuity considerations $111,238 $108,097 $117,785
Less: reinsurance ceded (54,032) (56,905) (60,830)
-------- -------- --------
Net premiums and annuity considerations 57,206 51,192 56,955
Net investment income 59,887 57,460 56,666
Net realized capital gains (losses) on
investments (2,533) 459 (380)
Other income 984 363 20
------- ------- -------
TOTAL REVENUES 115,544 109,474 113,261
BENEFITS, LOSSES AND EXPENSES:
Benefits, claims and settlement expenses 101,243 98,700 111,843
Acquisition and insurance expenses 24,630 25,436 31,736
Other expenses 4,199 3,004 3,633
Less: reinsurance benefits and expenses
ceded
(45,804) (50,001) (54,537)
-------- -------- --------
TOTAL BENEFITS, LOSSES AND EXPENSES 84,268 77,139 92,675
------ ------ ------
INCOME BEFORE FEDERAL INCOME TAX
EXPENSE 31,276 32,335 20,586
FEDERAL INCOME TAX EXPENSE 13,488 11,241 9,055
------ ------ -----
NET INCOME $17,788 $21,094 $11,531
======= ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
($ IN THOUSANDS)
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Common Stock $ 2,500 $ 2,500 $ 2,500
Additional Paid-in Capital 43,759 43,759 43,759
Retained Earnings
Balance, beginning of year 41,639 21,163 10,155
Net income 17,788 21,094 11,531
Change in asset valuation reserve (106) (1,313) 877
Change in nonadmitted assets (1,761) 675 (1,004)
Net unrealized capital gain (loss) 18 84 (1,514)
Other - (64) 1,118
------ ------ ------
Balance, end of year 57,578 41,639 21,163
------ ------ ------
TOTAL STOCKHOLDER'S EQUITY $103,837 $87,898 $67,422
======== ======= =======
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
($ IN THOUSANDS)
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
CASH PROVIDED:
Premiums and annuity considerations, net
of reinsurance $56,346 $49,530 $57,180
Other deposits 193,970 129,030 25,149
Net investment income 60,886 58,728 56,147
Commission and expense allowance and
reserve adjustment on reinsurance ceded 22,484 29,576 35,794
Other - 2,106 4,983
------- ------- -------
333,686 268,970 179,253
------- ------- -------
Benefits and interest to policyholders
and beneficiaries, net of reinsurance (43,808) (28,973) (38,391)
Acquisition and insurance expenses, net
of reinsurance (25,934) (28,619) (35,926)
Transfers to Separate Account (168,913) (114,917) (21,605)
Federal income taxes paid (10,076) (11,579) (12,290)
Other payments, net (15,132) (17,903) (5,284)
-------- -------- -------
(263,863) (201,991) (113,496)
--------- --------- ---------
Net cash provided by operations 69,823 66,979 65,757
Proceeds from the disposition of fixed
maturities and mortgage loans on real
estate 249,038 348,263 199,831
Other cash provided - 855 5,725
------- ------- -------
Total cash provided 318,861 416,097 271,313
------- ------- -------
CASH APPLIED:
Purchases of fixed maturities 320,272 408,017 274,590
Purchase of equity securities - 296 2,330
Other applications 1,153 3,974 1,601
----- ----- -----
Total cash applied 321,425 412,287 278,521
------- ------- -------
Net increase (decrease) in cash and cash
equivalents (2,564) 3,810 (7,208)
CASH AND CASH EQUIVALENTS:
Beginning of year 5,589 1,779 8,987
----- ----- -----
End of year $3,025 $5,589 $1,779
====== ====== ======
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
C.M. LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
($ IN THOUSANDS)
1. Organization:
------------
C.M. Life Insurance Company (C.M. Life) is a wholly owned stock life insurance
subsidiary of Connecticut Mutual Life Insurance Company (Connecticut Mutual).
2. Summary of Significant Accounting Policies:
------------------------------------------
C.M. Life's financial statements have been prepared in conformity with
accounting practices and procedures of the National Association of Insurance
Commissioners (NAIC) as prescribed or permitted by the Insurance Department of
the State of Connecticut, which are considered to be generally accepted
accounting principles for wholly owned stock life insurance subsidiaries of
mutual life insurance companies. (see Note 2.h.).
The principal accounting practices currently followed by C.M. Life are as
follows:
a. Assets - Assets are stated at amounts reported to state regulatory
authorities. Certain assets, such as prepaid agent commissions and
other prepaid expenses, are excluded from the balance sheet and amounted
to $2,684 and $923 as of December 31, 1994 and 1993.
b. Investments - Investments are valued in accordance with procedures
prescribed by the NAIC. Fixed maturities eligible for amortization are
reported at amortized cost. Equity securities of preferred stock are
reported at cost. Mortgage loans on real estate are reported at the
unpaid principal balance unless delinquent, at which time they are
reported at the lower of the unpaid balance or fair value. Investments
in real estate which have been identified for sale within the next
twelve months are reported at the lower of cost, less accumulated
depreciation of $187 and $124 at December 31, 1994 and 1993,
respectively, or market value. Investments for real estate which have
been identified as held for investment are reported at the lower of
cost, less accumulated depreciation of $0 and $466 at December 31, 1994
and 1993, respectively, or market value. The Company calculates
depreciation for its real estate investments using principally the
straight line method. Policy loans are reported at the aggregate amount
of the unpaid balances. Short-term investments are reported at
amortized cost, which approximates fair value.
The Company maintains an Interest Maintenance Reserve (IMR) for all
fixed income investments and establishes a liability/asset to defer all
interest rate related realized capital gains and losses, net of taxes,
as they occur. The deferral is subsequently amortized to net investment
income over the period remaining to maturity of the assets sold. All
other realized gains and losses are reported in the Statements of
Operations upon sale. Unrealized capital gains and losses are reported
as additions to or reductions from equity.
The Asset Valuation Reserve (AVR), prescribed by the NAIC, provides for
possible decline in the value of bonds, stocks, mortgage loans, real
estate and other invested assets. This reserve contains different
components, each designed to address specific asset risks. Changes in
the AVR are charged or credited directly to equity. The AVR increased
by $106 and $1,313 in 1994 and 1993, respectively.
Investments which exceeded 10% of total stockholder's equity are as
follows:
<TABLE>
<S> 1994 1993
---- ----
Mortgage loans on real estate: <C> <C>
J.L. Associates LTD PTR None $15,200
</TABLE>
<PAGE>
The Company uses derivative instruments (as defined in FAS No. 119)
which include options and futures, to hedge equity exposure and to
hedge reinvestment of proceeds from major anticipated transactions.
During 1994 interest rate futures were acquired to hedge the
reinvestment of anticipated proceeds from a bulk mortgage sale. The
actual gain of $95 was amortized over the expected term of the assets
acquired with the mortgage sale proceeds. During 1993 no futures and
options were utilized to hedge equity exposures.
There were no fixed maturities greater than 10% of stockholder's equity
as of December 31, 1994 and 1993.
C.M. Life has loans overdue more than 12 months as follows:
1994 1993
---- ----
Defaults on mortgages: (non-income
producing for 12 months) $2,774 None
c. Disclosure of the Fair Value of Financial Instruments - Fair value is
defined as "the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale." (Fair value estimates, methods and significant
assumptions are disclosed in the relevant footnotes.)
d. Reserves for Payment of Future Benefits: Reserves for payment of future
benefits on life insurance, developed by accepted actuarial methods, are
established and maintained primarily on the Commissioners' Reserve
Valuation Method utilizing the 1980 Commissioners' Standard Ordinary
Mortality Table with interest rates of 4%-4 1/2%. Reserves for single
premium deferred annuities are calculated based on the Commissioners'
Annuity Reserve Valuation Method utilizing the change in fund method and
assuming interest on changes in funds of 7.0%, 7.5% and 8.25% in 1994,
1993, and 1992 respectively. Additional reserves are maintained for
contracts where the cash surrender value exceeds the actuarially
determined reserve.
e. Separate Accounts: Separate accounts include the assets and liabilities
of certain annuity contracts that must be segregated from C.M. Life's
general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Reserves
for these annuity contracts have been established using assumed interest
rates and valuation methods that will provide reserves at least as great
as those required by law and contract provisions. Transfers due from
Separate Account, a contra-liability, represents Separate Account
liabilities in excess of Separate Account reserves.
f. Premiums and Insurance Operating Expenses: Premiums are reported as
income when due. Commissions and other costs relating to the
solicitation, underwriting and issuance of new contracts are reported as
acquisition and insurance expenses in the year incurred.
g. Cash Equivalents: For purposes of the Statements of Cash Flows, C.M.
Life considers all highly liquid short-term investments with a maturity
of three months or less from the date of purchase to be cash
equivalents. The carrying amounts reported approximate those assets'
fair value.
h. New Accounting Pronouncements: The Financial Accounting Standards Board
(FASB) has issued an interpretation declaring that financial statements
of mutual life insurance companies, and their wholly owned subsidiaries,
which are prepared on the basis of statutory accounting principles, will
no longer be considered to be in conformity with GAAP. This
interpretation applies to financial statements issued for fiscal years
beginning after December 15, 1995. Certain accounting principles for
mutual life insurance companies, which will be required to be in
compliance with GAAP, were also issued by the FASB and the American
Institute of Certified Public Accountants in January 1995. The
financial statement impact of adopting these accounting principles has
not been determined by the Company. The effect of initially adopting
the FASB interpretation shall be reported retroactively through
restatement of all previously issued financial statements presented for
comparative purposes for fiscal years beginning after December 15, 1992.
<PAGE>
Financial Accounting Standard (FAS) No. 120, Accounting and Reporting by
Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts, which was issued in
January 1995 extends the requirements of FASB statements Nos. 60
(Accounting and Reporting by Insurance Enterprises), 97 (Accounting and
Reporting by Insurance Enterprises for Certain Long-Duration Contracts
and For Realized Gains and Losses From the Sale of Investments) and 113
(Accounting and Reporting for Reinsurance of Short-Duration and Long-
Duration Contracts) to C.M. Life.
The impact of adopting these accounting standards on C.M. Life's
financial position or results of operations is not known or reasonably
estimable at this time.
i. Reclassifications: The 1993 and 1992 financial statements and Notes to
Financial Statements reflect certain reclassifications to conform with
the 1994 presentation.
3. Federal Income Taxes:
--------------------
C.M. Life is included in Connecticut Mutual's consolidated Federal income tax
return and, in accordance with a written tax-sharing agreement, makes a
provision for payment to Connecticut Mutual based on its income included in
Connecticut Mutual's consolidated taxable income. This provision is based on
income which is currently taxable.
4. Stockholder's Equity:
--------------------
The Board of Directors of Connecticut Mutual has authorized the contribution
of funds to C.M. Life sufficient to meet the capital requirements of all
states in which C.M. Life is licensed to do business. Substantially all of
the statutory stockholder's equity is subject to dividend restrictions
relating to various state regulations which limit the payment of dividends
without prior approval.
5. Reinsurance:
-----------
C.M. Life reinsures (cedes) a portion of its life insurance business to
Connecticut Mutual and other insurers, in order to reduce insurance risk.
C.M. life's retention limit per individual insured is $4 million; the portion
of the risk exceeding the retention limit is reinsured with other insurers.
The reinsurance contract with Connecticut Mutual is a modified coinsurance
quota-share treaty. Under the treaty C.M. Life cedes 50% of the premiums on
universal life policies issued in 1985 and 75% of the premiums with issue
dates on or after January 1, 1986. In return Connecticut Mutual pays C.M.
Life a stipulated expense allowance, death and surrender benefits, and a
modified coinsurance adjustment. Reserves for payment of future benefits for
the ceded policies are retained by C.M. Life.
C.M. Life also has a stop-loss agreement with Connecticut Mutual under which
C.M. Life cedes claims which, in aggregate, exceed $18,348 in 1994, $16,431 in
1993 and $16,443 in 1992. In 1994, 1993, and 1992, the limit was not
exceeded. The agreement was amended and renewed in 1994 for a duration of
three years. The amended maximum coverage is $25,000. C.M. Life paid
approximately $435, $446 and $478 in premiums under the agreement in 1994,
1993 and 1992, respectively.
C.M. Life is contingently liable with respect to ceded reinsurance in the
event any reinsurer is unable to fulfill its contractual obligations.
<PAGE>
6. Investments:
-----------
Fixed maturities:
----------------
The carrying value and estimated fair value of investments in fixed maturities
as of December 31, 1994 and 1993 are as follows:
<TABLE>
<S>
1994 Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
<C> <C> <C> <C>
U.S. Government $62,501 $ - $ 1,874 $60,627
Special Revenue and
Special Assessment
Obligations and all
Non-guaranteed Obli-
gations of Government
Agencies, Authorities,
and Subdivisions 4,373 - 375 3,998
Foreign Government,
Province & Municipal 16,175 117 904 15,388
Public Utility 38,773 227 1,605 37,395
Mortgage Backed
Obligations 167,641 533 12,184 155,990
Industrial and
Miscellaneous 427,828 967 17,980 410,815
--------- ---------------------- ----------
Total Fixed Maturities $717,291 $1,844 $34,922 $684,213
========= ======================= ==========
1993 Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
U.S. Government $ 24,015 $ 906 $ - $ 24,921
Special Revenue and
Special Assessment
Obligations and all
Non-guaranteed Obli-
gations of Government
Agencies, Authorities,
and Subdivisions 5,000 - - 5,000
Foreign Government,
Province & Municipal 23,511 620 529 23,602
Public Utility 34,162 1,577 99 35,640
Mortgage Backed
Obligations 135,309 3,505 706 138,107
Industrial and
Miscellaneous 405,113 16,477 881 420,710
--------- ----------------------- ----------
Total Fixed Maturities $627,110 $23,085 $2,215 $647,980
========= ======================= ==========
</TABLE>
<PAGE>
The carrying value and estimated fair value of C.M. Life's fixed maturities at
December 31, 1994, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may have
the right to prepay obligations with or without prepayment penalties.
<TABLE>
Estimated
Carrying Fair
Value Value
----- -----
<S> <C> <C>
Due in one year or less $ 26,429 $ 26,509
Due after one year through five years 339,561 328,984
Due after five years through ten years 176,968 166,335
Due after ten years 6,692 6,395
Mortgage-backed securities 167,641 155,990
----------- ---------
Total $717,291 $684,213
=========== =========
TABLE>
Proceeds from sales of fixed maturities were $224,884, $334,801 and $182,572
for 1994, 1993 and 1992, respectively. Gross gains of $1,358, $5,931 and
$1,444 and gross losses of $4,439, $1,016 and $3,650 were realized on those
sales for 1994, 1993 and 1992, respectively.
The estimated fair value for the public bonds is based on the quoted market
price from various external bond pricing services. Private bonds are assigned
an internal quality rating which parallels independent rating agency criteria
and is consistent with NAIC ratings. The fair value of these bonds is
estimated by discounting the expected future cash flows using a current
discount rate based on the quality rating and maturity of the specific
instruments.
Equity Securities:
------------------
Equity securities consist solely of preferred stock which is reported at cost,
the estimated fair value of which is $2,065 and $2,095 as of December 31, 1994
and 1993, respectively. The estimated fair value for the equity securities is
based on quoted market prices from national securities exchanges and over-the-
counter markets.
Mortgage Loans on Real Estate:
-----------------------------
The following table provides a breakdown of the carrying value of mortgage
loans on real estate by geographical location:
</TABLE>
<TABLE>
1994 1993
---- ----
<S> <C> <C>
United States
Northeast $22,111 $ 23,425
South Atlantic 13,090 16,615
North Central - 18,784
South Central 3,462 3,498
West 3,375 3,466
------------ ------------
Total $42,038 $ 65,788
============ ============
</TABLE>
Outstanding mortgages whose terms have been modified aggregated $24,034 and
$26,196 which represents 57.2% and 39.8% of the total portfolio as of December
31, 1994 and 1993, respectively. Income recognized during 1994, 1993 and 1992
on these restructured loans was $1,379, $1,495 and $1,018, respectively.
Income that would have been recognized during 1994, 1993 and 1992 on these
loans, if such loans had been current in accordance with their original terms
and had been outstanding throughout the year, was $2,296, $2,568 and $1,851,
respectively.
C.M. Life has loans either overdue more than three months or in the process of
foreclosure of $2,774 and $43 at December 31, 1994 and 1993, respectively.
Additionally, C.M. Life has properties which it acquired in satisfaction of
debt of $1,897 and $5,362 at December 31, 1994 and 1993, respectively.
<PAGE>
The estimated fair value for mortgages was $40,241 and $64,528 at December 31,
1994 and 1993, respectively. The value for performing mortgages is determined
by discounting the expected future cash flows using the current interest rates
at which similar loans would be made to borrowers with similar credit ratings
and remaining maturities. The non-performing mortgages are valued based on a
discounted cash flow analysis on the underlying collateral using the current
market rate for similar collateral.
7. Policy loans:
------------
Policy loans are issued with either fixed or variable interest rates,
depending upon the terms of the policies. For those loans with fixed interest
rates, the interest rates range from 5% to 8%. Since policy loans do not have
defined maturities, management believes it is not practicable to estimate the
fair value of fixed policy loans. For loans with variable interest rates, the
rates are adjusted annually based upon changes in a corporate bond index and
are stated at fair value.
The carrying value of policy loans as of December 31, 1994 and 1993 is as
follows:
<TABLE>
1994 1993
---- ----
<S> <C> <C>
Fixed $ 1,639 $ 1,603
Variable 108,081 96,612
------------- ------------
$ 109,720 $ 98,215
============= ============
</TABLE>
8. Fair Value Disclosure of Other Financial Instruments:
----------------------------------------------------
The Company has identified certain liabilities as financial instruments that
require fair value disclosure. The following methods and assumptions were
used to estimate the fair value of each class of these instruments for which
it is practicable to estimate the value.
Since supplementary contracts may be perceived as deposit liabilities with
defined maturities, the Company has determined fair value based on the
discounted value of amounts payable at maturity of the contract. Discount
rates used to determine fair value range from 6.5% to 7.9%. All other deposit
liabilities are not considered to have defined maturities. The Company has
determined fair value for these contracts to be equal to the cash surrender
value, which is that amount which is payable to policyholders on demand.
The estimated fair values for liabilities, which the Company has identified as
investment contracts and borrowed funds, are as follows:
<TABLE>
1994 1993
---- ----
Estimated Estimated
<S> Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
Financial Liabilities <C> <C> <C> <C>
---------------------
Future Policy Benefits
Annuity Reserves -
Accumulation Phase $30,239 $28,868 $21,140 $22,308
Other Deposits 31,690 29,484 15,992 15,884
Other Liabilities
Funds Deposited Under
Income Settlements -
Supplementary
Contracts Without
Life Contingencies 270 260 262 262
Liabilities of
Separate Account 309,672 309,672 145,661 145,661
</TABLE>
<PAGE>
9. Related Party Transactions:
--------------------------
Connecticut Mutual allocates certain expenses to C.M. Life for providing
operating facilities, human resources, computer software development and
managerial services. Total expenses allocated to C.M. Life were approximately
$16,412, $18,831 and $24,590 in 1994, 1993 and 1992, respectively.
10. Net Investment Income:
---------------------
Net Investment Income is comprised of the following:
<TABLE>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $47,658 $43,983 $42,908
Mortgage loans on real estate 4,383 5,813 6,507
Policy loans 7,925 7,448 7,785
Amortization of IMR 309 251 (239)
Other 1,449 1,844 1,383
----- ----- -----
Total investment income 61,742 59,339 58,344
Less: Applicable investment
expenses 1,837 1,879 1,678
----- ----- -----
Net investment income $59,887 $ 57,460 $ 56,666
======= ======== ========
<FN>
Net investment income and realized gains and losses applicable to
the Separate Account are not included in C.M. Life's net investment
income and realized gains and losses reported in the Statement of Operations.
</TABLE>
Realized and Unrealized Gains and Losses:
----------------------------------------
The cost of investments sold is determined by the specific identification
method. Realized gains and losses and the change in the difference between
market value and cost for fixed maturities and equity securities are
summarized
as follows:
<TABLE>
<S> 1994 1993 1992
---- ---- ----
Realized Gains and Losses: <C> <C> <C>
Fixed Maturities:
Realized gains $ 1,358 $ 5,931 $ 1,444
Realized losses (4,439) (1,016) (3,650)
---------- ------------ ------------
(3,081) 4,915 (2,206)
---------- ----------- ------------
Equity Securities:
Realized gains - 4 -
Realized losses - - -
--------- ----------- -----------
- 4
--------- ----------- ------------
Real Estate:
Realized gains - - -
Realized losses (2,158) - -
--------- ----------- -----------
(2,158) - -
--------- ----------- -----------
Mortgage Loans:
Realized gains - - -
Realized losses (2,093) (13) (25)
--------- ----------- -----------
(2,093) (13) (25)
--------- ----------- -----------
(Gains)/Losses 4,799 (4,447) 1,851
Transferred to IMR
Net Realized Capital
Gains/(Losses)
$ (2,533) $ 459 $ (380)
========== =========== ===========
Unrealized Gains and Losses:
Fixed Maturities:
Net unrealized gains
(losses),end of year $ (33,077) $ 20,870 $ 16,497
Net unrealized gains,
beginning of year 20,870 16,497 20,035
--------- ----------- -----------
Change in unrealized
gains or losses on
fixed maturities $ (53,947) $ 4,373 $ (3,538)
========== =========== ============
<FN>
The change in unrealized gains and (losses) for equity securities were
$(30), $50 and $105 as of December 31, 1994, 1993 and 1992, respectively.
</TABLE>
12. Contingencies:
-------------
In the normal course of its business operations, C.M. Life is involved in
litigation from time to time with claimants, beneficiaries and others.
Several lawsuits were pending at December 31, 1994. In the opinion of
management, the ultimate liability, if any, arising from this litigation is
not expected to have a material adverse effect on the financial position of
C.M. Life.
<PAGE>
C.M. LIFE INSURANCE COMPANY
INDEX
Financial Statements:*
Balance Sheet -
March 31, 1995 and December 31, 1994 . . .3
Statement of Operations -
Three Months Ended
March 31, 1995 and 1994 . . . . . . 4
Statement of Stockholder's Equity -
Three Months Ended
March 31, 1995 and 1994 . . . . . . 5
Statement of Cash Flows -
Three Months Ended
March 31, 1995 and 1994 . . . . . . 6
Notes to Financial Statements . . . . . .7
* The balance sheet at December 31, 1994 has been taken from the
audited financial statements at that date. All other
statements are unaudited.
2
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
BALANCE SHEETS
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(see NOTE)
March 31, 1995 December 31, 1994
-------------- ------------------
<S> <C> <C>
ASSETS:
Investments:
Fixed maturities at cost $745,486 $717,291
Equity securities at cost - 1,815
Mortgage loans on real estate at 41,609 42,038
net realizable value
Real estate at cost 1,885 1,897
Policy loans at outstanding 116,442 109,720
balance
Cash and cash equivalents 2,048 3,025
-------------- ------------------
Total investments 907,470 875,786
-------------- ------------------
Accrued investment income 16,634 14,023
Accounts receivable 4,886 5,330
Amounts due from reinsurers 1,120 1,162
Other assets 1,822 2,318
Assets of Separate Account 349,028 309,672
-------------- ------------------
TOTAL ASSETS $1,280,960 $1,208,291
-------------- ------------------
LIABILITIES AND STOCKHOLDER'S
EQUITY:
Liabilities:
Future policy benefits $771,904 $751,808
Policy claims and benefits
currently payable 2,084 1,772
Indebtedness to related parties 6,791 6,965
Federal income tax payable 4,971 2,446
Asset valuation reserve 7,917 6,640
Other liabilities 12,183 7,906
Other deposits 35,098 31,690
Transfers due from Separate (15,846) (14,445)
Account
Liabilities of Separate Account 349,028 309,672
-------------- ------------------
Total liabilities 1,174,130 1,104,454
-------------- ------------------
STOCKHOLDER'S EQUITY:
Common stock, $200 par value -
50,000 shares authorized,
12,500 shares issued and 2,500 2,500
oustanding
Additional paid-in capital 43,759 43,759
Retained earnings 60,571 57,578
-------------- ------------------
Total stockholder's equity 106,830 103,837
-------------- ------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,280,960 $1,208,291
============== ==================
<FN>
NOTE: The Balance Sheet at December 31, 1994 has been taken from the audited
financial statements at that date.
<FN>
The accompanying notes are an integral part of these unaudited financial
statements.
3
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
($ IN THOUSANDS)
1995 1994
---------- ----------
<S> <C> <C>
REVENUES:
Premiums and annuity considerations $36,801 $25,696
Less: reinsurance ceded (14,206) (14,906)
--------- -------
Net premiums and annuity considerations 22,595 10,790
Net investment income 16,189 14,641
Net realized capital losses
on investments (252) (2)
Other income 349 147
------ -----
Total revenues 38,881 25,576
BENEFITS, LOSSES AND EXPENSES:
Benefits, claims and settlement expenses 37,363 22,085
Acquisition and insurance expenses 6,521 5,038
Other expenses 1,199 1,505
Less: reinsurance benefits and expenses (13,106) (11,275)
--------- -------
Total benefits, losses and expenses 31,977 17,353
--------- --------
Income before income tax expense 6,904 8,223
FEDERAL INCOME TAX EXPENSE 2,680 3,268
-------- -------
NET INCOME $4,224 $4,955
========= ========
<FN>
The accompanying notes are an integral part of these unaudited financial
statements.
4
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
($ IN THOUSANDS)
1995 1994
---------- -----------
<S> <C> <C>
Common Stock $2,500 $2,500
Additional Paid-in Capital 43,759 43,759
Retained Earnings
Balance, beginning of year 57,578 41,639
Net income 4,224 4,955
Change in asset valuation reserve (1,276) (1,721)
Change in nonadmitted assets 45 497
--------- -----------
Balance, end of period 60,571 45,370
--------- -----------
TOTAL STOCKHOLDER'S EQUITY $106,830 $91,629
========= ===========
<FN>
The accompanying notes are an integral part of these unaudited financial
statements.
5
</TABLE>
<PAGE>
<TABLE>
C.M. LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
($ IN THOUSANDS)
1995 1994
------------ ---------
<S> <C> <C>
CASH PROVIDED:
Premiums and annuity considerations,
net of reinsurance $22,932 $11,166
Other deposits 30,339 58,358
Net investment income 14,211 13,567
Commission and expense allowance and
reserve adjustment on reinsurance ceded 4,917 5,959
------------ --------
72,399 89,050
Benefits and interest to policyholders
and beneficiaries, net of reinsurance (12,873) (9,528)
Acquisition and insurance expenses,
net of reinsurance (7,503) (5,912)
Transfers to Separate Account (21,885) (53,050)
Other payments, net (4,101) (7,498)
Net cash provided by operations 26,037 13,062
------------ --------
Proceeds from the the disposition of
fixed maturities and mortgage loans on
real estate 121,889 58,119
------------ --------
Total cash provided 147,926 71,181
------------ --------
CASH APPLIED:
Purchases of fixed maturities 148,896 66,457
Other applications 7 709
------------ --------
Total cash applied 148,903 67,166
------------ --------
Net increase (decrease) in cash and cash
equivalents (977) 4,015
CASH AND CASH EQUIVALENTS:
Beginning of year 3,025 5,589
------------ --------
End of period $2,048 $9,604
============ ========
<FN>
The accompanying notes are an integral part of these unaudited financial
statements.
6
</TABLE>
<PAGE>
C.M. LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
1. General:
-------
C.M. Life Insurance Company (C.M. Life) is a wholly owned stock
life insurance subsidiary of Connecticut Mutual Life Insurance
Company (Connecticut Mutual). In the opinion of C.M. Life these
financial statements contain all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the
financial position as of March 31, 1995 and December 31, 1994, the
results of its operations for the three months ended March 31,
1995 and 1994, and its cash flows for the three months ended March
31, 1995 and 1994.
C.M. Life's financial statements have been prepared in conformity
with accounting practices and procedures of the National
Association of Insurance Commissioners (NAIC) as prescribed or
permitted by the Insurance Department of the State of Connecticut,
which are considered to be generally accepted accounting
principles for wholly owned stock life insurance subsidiaries of
mutual life insurance companies.
The Financial Accounting Standards Board (FASB) has issued an
interpretation declaring that financial statements of mutual life
insurance companies, and their wholly owned subsidiaries, which
are prepared on the basis of statutory accounting principles, will
no longer be considered to be in conformity with GAAP. This
interpretation applies to financial statements issued for fiscal
years beginning after December 15, 1995. Certain accounting
principles for mutual life insurance companies, which will be
required to be in compliance with GAAP, were also issued by the
FASB and the American Institute of Certified Public Accountants in
January 1995. The financial statement impact of adopting these
accounting principles has not been determined by the Company. The
effect of initially adopting the FASB interpretation shall be
reported retroactively through restatement of all previously
issued financial statements presented for comparative purposes for
fiscal years beginning after December 15, 1992.
2. Related Party Transactions:
--------------------------
The Parent, Connecticut Mutual, allocates certain expenses to C.M.
Life for providing operating facilities, human resources, computer
software development and managerial services. Total expenses
allocated to C.M. Life were approximately $4,121 and $3,865 for
the three month period ended March 31, 1995 and 1994.
3. Net Investment Income:
---------------------
<TABLE>
Net investment income is comprised of the following:
Three Months Ended
March 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Fixed Maturities $13,451 $11,454
Mortgage loans on real estate 762 1,269
Policy loans 2,277 1,898
Amortization of IMR (436) 234
Other 301 401
---------- ---------
Total Investment Income 16,355 15,256
Less: Applicable investment expense 166 615
---------- ---------
Net Investment Income $16,189 $14,641
========== =========
<FN>
7
</TABLE>
</PAGE>
<PAGE>
APPENDIX A - OPTIONAL BENEFITS
This Appendix is intended to provide only a very brief overview of additional
insurance benefits currently available by rider. We reserve the right to add
insurance benefits by rider from time to time subject to applicable laws and
regulations. For more information, contact your agent or registered
representative.
The following supplemental benefits are available for issue under the
Policies.
DISABILITY WAIVER OF MONTHLY DEDUCTIONS RIDER
This rider provides that C.M. Life will waive Monthly Deductions
due under a Policy for each month that the Insured is disabled, as
that term is defined in the rider. The rider will bear additional
cost of insurance charges if added to the Policy.
TRANSFER OF INSURED RIDER
This rider allows you to use the Policy to insure a different person,
subject to Company guidelines. This rider is available without charge.
<PAGE>
APPENDIX B - PAYMENT OPTIONS
PAYMENT OPTIONS - Upon Written Request, all or part of the Proceeds may be
placed under one or more payment options currently offered by C.M. Life. If
you do not make an election, C.M. Life will pay the Proceeds 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 C.M. Life any
amount that would otherwise be deducted from the Proceeds.
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 Proceeds become payable. If you
make no selection, the Beneficiary may select an option when the Proceeds
become payable.
<PAGE>
APPENDIX C - ILLUSTRATIONS OF DEATH BENEFIT, POLICY VALUES
AND ACCUMULATED PREMIUMS
The tables on the following pages illustrate the way in which a Policy's Death
Benefit, Policy Value, and Surrender 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 Funds (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 ____ illustrate a Policy issued to an individual ,
Age 30, based on full medical underwriting and classified as a non-tobacco
user. The illustrations are also based on a choice of Death Benefit Option 1
and the Cash Value Accumulation Test. The tables on pages __ and __
illustrate a Policy issued to an individual , Age 45, based on guaranteed
issue underwriting and classified as a non-tobacco user. The illustrations
are also based on a choice of Death Benefit Option 2 and the Guideline Premium
Test. Illustrations are provided using both the current and guaranteed cost
of insurance rates for the two examples. Since the Policy is issued on a
unisex basis, the illustrations are shown on a unisex basis.
The Policy Values and Death Benefits 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 Fund Portfolio varied above and below such averages.
The amounts shown for the Death Benefits and Policy Values take into account
the deduction from premium for the tax expense charge, the premium charge, and
the Monthly Deduction from Policy Value. The amounts shown also take into
account the daily charge against the Separate Account for mortality and
expense risks and the Separate Account administrative charge for the first
twenty Policy Years, equivalent to an effective annual rate of 0.90% of the
average daily value of the assets in the Separate Account attributable to the
Policies, and 0.25% thereafter. The amounts shown in the tables also take
into account the C.M. Fund, VIP Fund, and VIP Fund ll Portfolio's advisory
fees and operating expenses, which are assumed to be at an annual rate of
0.70% of the average daily net assets of each C.M. Fund, VIP Fund, and VIP
Fund ll Portfolio. This is based upon a weighted allocation of premiums among
the sub-accounts rather than an average. The weighted allocation assumes 5.0%
in Government Securities Portfolio; 10.0% Income Portfolio; 20.0% Total Return
Portfolio; 15.0% Growth Portfolio; 10.0% International Equity Portfolio; 2.5%
LifeSpan Diversified Income Portfolio; 2.5% LifeSpan Balanced Portfolio; 2.5%
LifeSpan Capital Appreciation Portfolio; 5.0% Money Market Portfolio; 7.5%
High Income Portfolio; and 20% Index 500 Portfolio. The actual fees and
expenses of the C.M. Fund and VIP Funds in 1994 ranged from an annual rate of
0.27% to an annual rate of 1.28%. No fees and expenses were deducted for the
LifeSpan Balanced, LifeSpan Capital Appreciation, or LifeSpan Diversified
Income Portfolios since none of these Portfolios were in existence prior to
1995. The fees and expenses associated with your Policy may be more or less
than 0.70% in the aggregate, depending upon how you make allocations of Policy
Value among the Sub-Accounts. Under its investment advisory agreement with
the C.M. Fund, G.R. Phelps will reimburse the C.M. Fund for total ordinary
expenses exceeding a limitation of 1.50% of average daily net assets of the
C.M. Fund. 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% of the Portfolio's average net assets. Without the effect of the
expense limitations, in 1994 the total operating expenses of the High Income
Portfolio would have been 0.66% of its average net assets.
Taking into account the mortality and expense risk charge and the Separate
Account administrative charge and the assumed 0.70% charge for the C.M. Fund,
VIP Fund, and VIP Fund ll Portfolio advisory fees and operating expenses, the
gross annual rates of investment return of 0%, 6% and 12% correspond to net
annual rates of -1.60%, 4.40%, and 10.40%, respectively, during the first 20
Policy years and -0.95%, 5.05%, and 11.05%, 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.
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 the
premium payments were invested to earn interest, (after taxes) at 5%
compounded annually.
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 Specified Amount, that no partial
withdrawals have been made, and that no transfers above twelve have been made
in any Policy Year (so that no transaction or transfer charges have been
incurred).
Upon request, C.M. Life will provide a comparable illustration based upon the
proposed Insured's Age, underwriting classification, and the requested
Specified Amount, Death Benefit Option, and riders.
TO CHOOSE THE SUB-ACCOUNTS WHICH WILL BEST MEET YOUR NEEDS AND
OBJECTIVES, CAREFULLY READ THE PROSPECTUSES OF THE C.M. FUND AND VIP FUNDS
ALONG WITH THIS PROSPECTUS.
<PAGE>
C.M LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
<TABLE>
<CAPTION>
<S> <C> Fully Underwritten
Unisex Non-Tobacco User Age 30
Specified Amount $300,000
Death Benefit Option 1
Cash Value Accumulation Test
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT COST OF INSURANCE CHARGES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Premiums
Paid Plus Hypothetical 0% Hypothetical 6% Hypothetical 12%
Interest Gross Investment Return Gross Investment Return Gross Investment Return
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per year Value Value Benefit Value Value Benefit Value Value Benefit
1 5,670 4,569 4,569 300,000 4,856 4,856 300,000 5,144 5,144 300,000
2 11,624 9,002 9,002 300,000 9,862 9,862 300,000 10,758 10,758 300,000
3 17,875 13,301 13,301 300,000 15,024 15,024 300,000 16,889 16,889 300,000
4 24,438 17,466 17,466 300,000 20,347 20,347 300,000 23,591 23,591 300,000
5 31,330 21,489 21,489 300,000 25,828 25,828 300,000 30,916 30,916 300,000
6 38,567 25,373 25,373 300,000 31,476 31,476 300,000 38,930 38,930 300,000
7 46,165 29,177 29,177 300,000 37,359 37,359 300,000 47,769 47,769 300,000
8 54,143 33,221 33,221 300,000 43,825 43,825 300,000 57,877 57,877 300,000
9 62,521 37,175 37,175 300,000 50,556 50,556 300,000 69,024 69,024 300,000
10 71,317 41,039 41,039 300,000 57,562 57,562 300,000 81,323 81,323 300,000
11 80,552 44,813 44,813 300,000 64,857 4,857 300,000 94,830 94,830 300,000
12 90,250 48,492 48,492 300,000 72,449 72,449 300,000 109,638 109,638 300,000
13 100,433 52,080 52,080 300,000 80,357 80,357 300,000 125,875 125,875 300,000
14 111,124 55,572 55,572 300,000 88,590 88,590 300,000 143,667 143,667 328,998
15 122,350 58,972 58,972 300,000 97,153 97,153 300,000 163,167 163,167 362,231
16 134,138 62,654 62,654 300,000 106,379 106,379 300,000 185,155 185,155 389,083
17 146,515 66,256 66,256 300,000 115,972 115,972 300,000 209,337 209,337 437,515
18 159,511 69,779 69,779 300,000 125,945 125,945 300,000 235,932 235,932 478,942
19 173,156 73,220 73,220 300,000 136,309 136,309 300,000 265,171 265,171 522,387
20 187,484 76,580 76,580 300,000 147,081 147,081 300,000 297,318 297,318 567,877
Age 60 376,708 112,921 112,921 300,000 298,382 298,382 399,832 908,009 908,009 1,216,732
Age 65 512,116 127,456 127,456 300,000 401,176 401,176 489,435 1,527,189 1,527,189 1,863,171
Age 70 684,935 138,293 138,293 300,000 525,852 525,852 609,989 2,528,498 2,528,498 2,933,058
Age 75 905,500 143,738 143,738 300,000 675,666 675,666 722,962 4,136,036 4,136,036 4,425,559
</TABLE>
(1) Assumes a $5,400 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 FUNDS. 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 POLICY
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.
<PAGE>
C.M LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
<TABLE>
<CAPTION>
<S> <C>
Fully Underwritten
Unisex Non-Tobacco User Age 30
Specified Amount $300,000
Death Benefit Option 1
Cash Value AccumuLation Test
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
GUARANTEED COST OF INSURANCE CHARGES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Premiums
Paid Plus Hypothetical 0% Hypothetical 6% Hypothetical 12%
Interest Gross Investment Return Gross Investment Return Gross Investment Return
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per year Value Value Benefit Value Value Benefit Value Value Benefit
1 5,670 4,002 4,002 300,000 4,272 4,272 300,000 4,541 4,541 300,000
2 11,624 7,937 7,937 300,000 8,728 8,728 300,000 9,553 9,553 300,000
3 17,875 11,806 11,806 300,000 13,379 13,379 300,000 15,085 15,085 300,000
4 24,438 15,608 15,608 300,000 18,230 18,230 300,000 21,189 21,189 300,000
5 31,330 19,332 19,332 300,000 23,279 23,279 300,000 27,914 27,914 300,000
6 38,567 22,986 22,986 300,000 28,543 28,543 300,000 35,335 35,335 300,000
7 46,165 26,562 26,562 300,000 34,022 34,022 300,000 43,515 43,515 300,000
8 54,143 30,381 30,381 300,000 40,064 40,064 300,000 52,894 52,894 300,000
9 62,521 34,110 34,110 300,000 46,349 46,349 300,000 63,235 63,235 300,000
10 71,317 37,751 37,751 300,000 52,889 52,889 300,000 74,639 74,639 300,000
11 80,552 41,303 41,303 300,000 59,693 59,693 300,000 87,212 87,212 300,000
12 90,250 44,760 44,760 300,000 66,770 66,770 300,000 100,993 100,993 300,000
13 100,433 48,128 48,128 300,000 74,136 74,136 300,000 116,097 116,097 300,000
14 111,124 51,399 51,399 300,000 81,799 81,799 300,000 132,642 132,642 303,749
15 122,350 54,578 54,578 300,000 89,778 89,778 300,000 150,767 150,767 334,703
16 134,138 57,655 57,655 300,000 98,081 98,081 300,000 170,608 170,608 366,807
17 146,515 60,634 60,634 300,000 106,676 106,676 300,000 192,328 192,328 401,966
18 159,511 63,512 63,512 300,000 115,565 115,565 300,000 216,100 216,100 438,683
19 173,156 66,283 66,283 300,000 124,751 124,751 300,000 242,102 242,102 476,941
20 187,484 68,948 68,948 300,000 134,244 134,244 300,000 270,543 270,543 516,737
Age 60 376,708 93,154 93,154 300,000 260,366 260,366 348,890 787,347 787,347 1,055,045
Age 65 512,116 97,814 97,814 300,000 339,973 339,973 414,767 1,281,812 1,281,812 1,563,810
Age 70 684,935 92,685 92,685 300,000 429,576 429,576 498,308 2,037,130 2,037,130 2,363,071
Age 75 905,500 69,190 69,190 300,000 527,649 527,649 564,584 3,169,324 3,169,324 3,391,176
</TABLE>
(1) Assumes a $5,400 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 FUNDS. 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 POLICY 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.
<PAGE>
C.M LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
<TABLE>
<CAPTION>
<S> <C>
Guaranteed Issue
Unisex Non-Tobacco User Age 45
Specified Amount $500,000
Death Benefit Option 2
Guideline Premium Test
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT COST OF INSURANCE CHARGES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per year Value Value Benefit Value Value Benefit Value Value Benefit
1 13,125 10,474 10,474 510,474 11,137 11,137 511,137 11,800 11,800 511,800
2 26,906 20,483 20,483 520,483 22,456 22,456 522,456 24,510 24,510 524,510
3 41,377 29,990 29,990 529,990 33,921 33,921 533,921 38,178 38,178 538,178
4 56,570 38,949 38,949 538,949 45,481 45,481 545,481 52,845 52,845 552,845
5 72,524 47,318 47,318 547,318 57,088 57,088 557,088 68,563 68,563 568,563
6 89,275 55,043 55,043 555,043 68,679 68,679 568,679 85,372 85,372 585,372
7 106,864 62,425 62,425 562,425 80,554 80,554 580,554 103,696 103,696 603,696
8 125,332 70,183 70,183 570,183 93,483 93,483 593,483 124,494 124,494 624,494
9 144,724 77,536 77,536 577,536 106,690 106,690 606,690 147,155 147,155 647,155
10 165,085 84,448 84,448 584,448 120,145 120,145 620,145 171,829 171,829 671,829
11 186,464 90,901 90,901 590,901 133,832 133,832 633,832 198,699 198,699 698,699
12 208,912 96,871 96,871 596,871 147,729 147,729 647,729 227,958 227,958 727,958
13 232,483 102,335 102,335 602,335 161,812 161,812 661,812 259,823 259,823 759,823
14 257,232 107,273 107,273 607,273 176,064 176,064 676,064 294,536 294,536 794,536
15 283,219 111,659 111,659 611,659 190,454 190,454 690,454 332,355 332,355 832,355
16 310,505 118,499 118,499 618,499 208,084 208,084 708,084 376,795 376,795 876,795
17 339,155 124,928 124,928 624,928 226,178 226,178 726,178 425,535 425,535 925,535
18 369,238 130,905 130,905 630,905 244,707 244,707 744,707 478,972 478,972 978,972
19 400,824 136,381 136,381 636,381 263,633 263,633 763,633 537,535 537,535 1,037,535
20 433,991 141,311 141,311 641,311 282,919 282,919 782,919 601,701 601,701 1,101,701
Age 60 283,219 111,659 111,659 611,659 190,454 190,454 690,454 332,355 332,355 832,355
Age 65 433,991 141,311 141,311 641,311 282,919 282,919 782,919 601,701 601,701 1,101,701
Age 70 626,418 163,123 163,123 663,123 397,293 397,293 897,293 1,059,801 1,059,801 1,559,801
Age 75 872,010 163,945 163,945 663,945 520,680 520,680 1,020,680 1,807,159 1,807,159 2,307,159
</TABLE>
(1) Assumes a $12,500 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 FUNDS. 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 POLICY 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.
<PAGE>
C.M LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
<TABLE>
<CAPTION>
<S> <C>
Guaranteed Issue
Unisex Non-Tobacco User Age 45
Specified Amount $500,000
Death Benefit Option 2
Guideline Premium Test
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
GUARANTEED COST OF INSURANCE CHARGES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Premiums
Paid Plus Hypothetical 0% Hypothetical 6% Hypothetical 12%
Interest Gross Investment Return Gross Investment Return Gross Investment Return
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per year Value Value Benefit Value Value Benefit Value Value Benefit
1 13,125 8,172 8,172 508,172 8,759 8,759 508,759 9,349 9,349 509,349
2 26,906 16,027 16,027 516,027 17,711 17,711 517,711 19,470 19,470 519,470
3 41,377 23,553 23,553 523,553 26,849 26,849 526,849 30,430 30,430 530,430
4 56,570 30,728 30,728 530,728 36,148 36,148 536,148 42,282 42,282 542,282
5 72,524 37,548 37,548 537,548 45,610 45,610 545,610 55,112 55,112 555,112
6 89,275 43,997 43,997 543,997 55,217 55,217 555,217 68,997 68,997 568,997
7 106,864 50,027 50,027 550,027 64,921 64,921 564,921 83,991 83,991 583,991
8 125,332 56,347 56,347 556,347 75,472 75,472 575,472 100,997 100,997 600,997
9 144,724 62,160 62,160 562,160 86,068 86,068 586,068 119,340 119,340 619,340
10 165,085 67,415 67,415 567,415 96,650 96,650 596,650 139,094 139,094 639,094
11 186,464 72,081 72,081 572,081 107,176 107,176 607,176 160,366 160,366 660,366
12 208,912 76,123 76,123 576,123 117,598 117,598 617,598 183,266 183,266 683,266
13 232,483 79,505 79,505 579,505 127,864 127,864 627,864 207,912 207,912 707,912
14 257,232 82,198 82,198 582,198 137,926 137,926 637,926 234,447 234,447 734,447
15 283,219 84,160 84,160 584,160 147,721 147,721 647,721 263,009 263,009 763,009
16 310,505 85,295 85,295 585,295 157,125 157,125 657,125 293,694 293,694 793,694
17 339,155 85,532 85,532 585,532 166,034 166,034 666,034 326,633 326,633 826,633
18 369,238 84,747 84,747 584,747 174,283 174,283 674,283 361,914 361,914 861,914
19 400,824 82,785 82,785 582,785 181,667 181,667 681,667 399,597 399,597 899,597
20 433,991 79,510 79,510 579,510 187,987 187,987 687,987 439,768 439,768 939,768
Age 60 283,219 84,160 84,160 584,160 147,721 147,721 647,721 263,009 263,009 763,009
Age 65 433,991 79,510 79,510 579,510 187,987 187,987 687,987 439,768 439,768 939,768
Age 70 626,418 41,914 41,914 541,914 204,138 204,138 704,138 703,871 703,871 1,203,871
Age 75 872,010 0 0 0 155,646 155,646 655,646 1,070,629 1,070,629 1,570,629
</TABLE>
(1) Assumes a $12,500 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 FUNDS. 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 POLICY 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.
