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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
POST-EFFECTIVE AMENDMENT
No. 1 to the
Registration Statement
of
C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
(Exact Name of Registrant)
C.M. LIFE INSURANCE COMPANY
140 Garden Street
Hartford, CT 06154
(Address of Principal Executive Office)
ANN LOMELI, SECRETARY
140 Garden Street
Hartford, CT 06154
(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective:
___ on ______ pursuant to paragraph (a) of Rule 485.
___ 60 days after filing pursuant to paragraph (a) of Rule 485.
___ immediately after filing pursuant to paragraph (b) of Rule 486.
X on May 1, 1996 pursuant to paragraph (b) of Rule 485.
---
FLEXIBLE PREMIUM VARIABLE LIFE
An indefinite number of securities have been registered under the Securities Act
of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
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RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8b-2 AND THE PROSPECTUS
Item No. of
FORM N-8B-2 CAPTION IN PROSPECTUS
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1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution
5 C.M. Life, The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Summary; Description of C. M. Life, the Separate Account, the C.M. Fund,
Oppenheimer Funds; the VIP Funds; The Policy; Policy Termination and
Reinstatement; Other Policy Provisions
11 Summary; the C.M. Fund; Oppenheimer Funds; the VIP Funds; Investment
Objectives and Policies
12 Summary; the C.M. Fund; Oppenheimer Funds; the VIP Funds
13 Summary; the C.M. Fund; Oppenheimer Funds; the VIP Funds; Investment
Advisory Services to the C.M. Fund; Investment Advisory Services to the
Oppenheimer Funds; Investment Advisory Services to the VIP Funds; Charges
Deductions
14 Summary; Application for a Policy
15 Summary; Application for a Policy; Premium Payments; Allocation of Net
Premiums
16 The Separate Account; The C.M. Fund; Oppenheimer Funds; VIP Funds
Portfolio; Premium Charge; Allocation of Net Premiums
17 Summary; Surrender; Partial Withdrawal; Charges and Deductions; Reduction
in Charges, Policy Termination and Reinstatement
18 The Separate Account; The C.M. Fund; Oppenheimer Funds; the VIP Funds;
Premium Payments
19 Reports; Voting Rights
20 Not Applicable
21 Summary; Policy Loans; Other Policy Provisions
22 Other Policy Provisions
23 Not Required
24 Other Policy Provisions
25 C.M. Life, Massachusetts Mutual Life Insurance Co.
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Item No. of
FORM N-8B-2 CAPTION IN PROSPECTUS
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26 Not Applicable
27 C.M. Life
28 Directors and Principal Officers of C.M. Life
29 C.M. Life
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Distribution
36 Not Applicable
37 Not Applicable
38 Summary; Distribution
39 Summary; Distribution
40 Not Applicable
41 C.M. Life; Distribution
42 Not Applicable
43 Not Applicable
44 Premium Payments; Policy Value and Surrender Value
45 Not Applicable
46 Policy Value and Surrender Value; Federal Tax Considerations
47 C.M. Life
48 Not Applicable
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Charges and Deductions; The Policy; Policy Termination
and Reinstatement; Other Policy Provisions
52 Addition, Deletion or Substitution of Investments
53 Federal Tax Considerations
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
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C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
EXECUTIVE BENEFIT VARIABLE UNIVERSAL LIFE POLICY ISSUED BY
C.M. LIFE INSURANCE COMPANY
140 GARDEN STREET, HARTFORD, CT 06154
1-860-987-6500
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 ten 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 ten 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 Panorama Series Fund, Inc. ("C.M. Fund")
(previously referred to as Connecticut Mutual Financial Services Series Fund I,
Inc.), Oppenheimer Bond Fund (the "Oppenheimer Bond Portfolio"), which is one
of the portfolios of Oppenheimer Variable Account Funds ("Oppenheimer Funds"),
Variable Insurance Products Fund ("VIP Fund") or Variable Insurance Products
Fund II ("VIP Fund II"). (The C.M. Fund, Oppenheimer 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
PANORAMA SERIES FUND, INC., OPPENHEIMER FUNDS, VARIABLE INSURANCE PRODUCTS
FUNDS, 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is May 1, 1996.
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Table Of Contents
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Special Terms..................................................................................................... 4
Summary........................................................................................................... 6
Description of C.M. Life, Massachusetts Mutual Life Insurance Company,
The Separate Account, The C.M. Fund, Oppenheimer Funds, VIP Fund, and VIP Fund II................................. 6
C.M. Life........................................................................................................ 6
Massachusetts Mutual Life Insurance Company ("MassMutual")....................................................... 7
The Separate Account............................................................................................. 7
The C.M. Fund.................................................................................................... 7
Oppenheimer Funds................................................................................................ 7
VIP Fund and VIP Fund II......................................................................................... 8
Investment Objectives and Policies............................................................................... 8
Investment Advisory Services to the C.M. Fund and the Oppenheimer Funds.......................................... 8
Investment Advisory Services to the VIP Funds.................................................................... 9
Changes to the Separate Account.................................................................................. 10
Voting Rights.................................................................................................... 10
Performance Information........................................................................................... 10
The Policy........................................................................................................ 11
Application for a Policy......................................................................................... 11
Free Look Period................................................................................................. 12
Conversion Privileges............................................................................................ 12
Premium Payments................................................................................................. 12
Allocation of Net Premiums....................................................................................... 13
Transfer Privilege............................................................................................... 13
Account Rebalancing.............................................................................................. 14
Proceeds Payable on Death of the Insured......................................................................... 14
Death Benefit Options............................................................................................ 14
Change in Death Benefit Option................................................................................... 14
Definition of Life Insurance Test................................................................................ 14
Change in Specified Amount....................................................................................... 15
Policy Value and Surrender Value................................................................................. 15
Payment Options.................................................................................................. 16
Optional Insurance Benefits...................................................................................... 16
Surrender........................................................................................................ 16
Partial Withdrawal............................................................................................... 16
Charges and Deductions............................................................................................ 17
Tax Expense Charge............................................................................................... 17
Premium Charge................................................................................................... 17
Monthly Deduction from Policy Value.............................................................................. 17
Charges Against Assets of the Separate Account................................................................... 18
Surrender Charge................................................................................................. 18
Charges on Partial Withdrawal.................................................................................... 18
Transfer Charges................................................................................................. 18
Charge for Increase in Specified Amount.......................................................................... 19
Other Administrative Charges..................................................................................... 19
Reduction of Charges............................................................................................. 19
Policy Loans...................................................................................................... 19
Loan Interest Charged............................................................................................ 19
Preferred Loan Provision......................................................................................... 19
Repayment of Policy Debt......................................................................................... 19
Effect of Policy Loans........................................................................................... 20
Policy Termination and Reinstatement.............................................................................. 20
Termination...................................................................................................... 20
Reinstatement.................................................................................................... 20
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2
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Other Policy Provisions.......................................................................................... 20
Policyowner..................................................................................................... 20
Beneficiary..................................................................................................... 20
Incontestability................................................................................................ 20
Suicide......................................................................................................... 20
Age............................................................................................................. 21
Assignment...................................................................................................... 21
Postponement of Payments........................................................................................ 21
Directors and Principal Officers of C.M. Life.................................................................... 21
Distribution..................................................................................................... 21
Reports.......................................................................................................... 22
Legal Proceedings................................................................................................ 22
Further Information.............................................................................................. 22
Independent Accountants.......................................................................................... 22
Federal Tax Considerations....................................................................................... 22
C.M. Life and the Separate Account.............................................................................. 22
Taxation of the Policies........................................................................................ 23
Conventional Life Insurance Policies............................................................................ 24
Modified Endowment Contracts.................................................................................... 24
Reasonableness Requirements for Charges......................................................................... 24
Other........................................................................................................... 25
More Information About the Fixed Account......................................................................... 25
General Description............................................................................................. 25
Fixed Account Value............................................................................................. 25
The Policy...................................................................................................... 25
ERISA Compliance................................................................................................. 26
Financial Statements............................................................................................. 26
Report of Independent Public Accountants......................................................................... 27
Index to Financial Statements and Schedules...................................................................... 28
Appendix A - Optional Benefits................................................................................... 39
Appendix B - Payment Options..................................................................................... 40
Appendix C - Illustrations of Death Benefit, Policy Values and Accumulated Premiums.............................. 41
</TABLE>
3
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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 MassMutual.
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
and the Notice of Withdrawal Rights.
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.
Policyowner: The corporation, partnership, trust, individual or other entity who
owns the Policy.
Principal Office: C.M. Life's home office, located at 140 Garden Street,
Hartford, CT 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.
4
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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 portfolio of the C.M. Fund,
Oppenheimer Funds or VIP Funds.
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, Oppenheimer Funds 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.
5
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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 ten Sub-Accounts
and the Fixed Account. Each of the ten Sub-Accounts invests in a corresponding
Portfolio of the C.M. Fund, Oppenheimer Funds, VIP Fund or VIP Fund II. These
Portfolios include six C.M. Fund Portfolios: Total Return; Growth;
International Equity; LifeSpan Diversified Income; LifeSpan Balanced; and
LifeSpan Capital Appreciation. The one Oppenheimer Fund Portfolio is Oppenheimer
Bond. 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, MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, THE SEPARATE ACCOUNT,
C.M. FUND, OPPENHEIMER FUNDS 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 Policyowner, 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,
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, THE SEPARATE
ACCOUNT, THE C.M. FUND,
OPPENHEIMER FUNDS, VIP FUND,
AND VIP FUND II.
C.M. Life
C.M. Life is a stock life insurance company located at 140 Garden Street,
Hartford, CT 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 Massachusetts Mutual Life Insurance Company ("MassMutual"). As of April 1,
1996 C.M.
6
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Life is licensed to transact a variable life insurance business in 43
States.
MassMutual
MassMutual is a mutual life insurance company chartered in 1851 under the laws
of Massachusetts. Its Home Office is located in Springfield, Massachusetts.
MassMutual is licensed to transact life, accident and health business in all
fifty states of the United States, the District of Columbia and certain
provinces of Canada.
On February 29, 1996, the merger of Connecticut Mutual Life Insurance Company
("Connecticut Mutual") with and into MassMutual was completed. The separate
existence of Connecticut Mutual has ceased. MassMutual continues its corporate
existence under its current name. The merger does not affect any provisions of,
or rights or obligations under, policies or contracts previously issued by
MassMutual. As a result of the merger, MassMutual has estimated statutory assets
in excess of $50 billion, and estimated total assets under management in excess
of $100 billion.
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 ten 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 ten Sub-Accounts
invests its assets in an investment portfolio of either the C.M. Fund,
Oppenheimer Funds or VIP Funds, each open-end management investment companies
registered under the SEC under the 1940 Act. The Income Sub-Account invests in
the Bond Portfolio of the Oppenheimer Funds. The Total Return, Growth,
International Equity, LifeSpan Capital Appreciation, LifeSpan Balanced and
LifeSpan Diversified Income Sub-Accounts invest in the corresponding Portfolios
of the C.M. Fund. The Money Market and the High Income Sub-Accounts invest in
the corresponding Portfolios of the VIP Fund. The Index 500 Sub-Account invests
in the corresponding Portfolio of the VIP Fund II. The C.M. Fund and Oppenheimer
Funds are managed by OppenheimerFunds, Inc. ("OFI") 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
Panorama Series Fund, Inc. (the "C.M. Fund") (previously named Connecticut
Mutual Financial Services Series Fund I, Inc.) 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 Money
Market Portfolio, Government Securities Portfolio and Income Portfolio are not
available in this Policy.
OFI is an indirect subsidiary of MassMutual, and serves as investment adviser of
the C.M. Fund, and manages the investments of the C.M. Fund Portfolios. (See
"INVESTMENT ADVISERY SERVICES TO THE C.M. FUND.")
Oppenheimer Funds
The Oppenheimer Bond Portfolio is one of the portfolios of the Oppenheimer
Funds, an open-end, diversified, management investment company, which is
available to act as the investment vehicle for separate accounts for variable
insurance policies offered by insurance companies. OFI supervises the investment
operations of the Oppenheimer Funds and is registered as an investment adviser
under the Investment Advisers Act of 1940.
VIP Fund and VIP Fund II
VIP Fund and VIP 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
7
<PAGE>
to other clients with investment research and portfolio management
services.
Investment Objectives and Policies
A summary of investment objectives of each of the Funds' Portfolios offered as
investment under the Policies is set forth below. More detailed information
regarding the investment objectives, restrictions and risks, expenses paid by
the Funds and their Portfolios, 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, Oppenheimer Funds 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.
Oppenheimer Bond Portfolio. The Oppenheimer Bond Portfolio of the Oppenheimer
Funds seeks a high level of current income from investments in high-yield, fixed
income securities rated "Baa" or better by Moody's or "BBB" or better by
Standard & Poor's. As a secondary objective, the Bond Portfolio seeks capital
growth when consistent with its primary objective.
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.
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. The LifeSpan Portfolios consist of various sub-accounts
that invest in a variety of underlying asset classes. 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.
THE C.M. FUND PORTFOLIOS AND THE OPPENHEIMER FUNDS 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, OPPENHEIMER FUNDS,
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 Advisery Services to the C.M. Fund
and Oppenheimer Fund
The C.M. Fund and Oppenheimer Funds have entered into investment advisery
agreements with OFI. Under the invest-
8
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ment advisery agreements, OFI provides certain administrative services and
investment advice to each C.M. Fund Portfolio and Oppenheimer Fund Portfolio.
OFI provides administrative and management services to the C.M. Fund and the
Oppenheimer Funds, such as providing accounting, administrative and clerical
personnel and monitoring the activities of the custodian and independent
auditors for the C.M. Fund and the Oppenheimer Funds. The investment advisery
agreement obligates OFI to provide investment advisery services and to pay all
compensation of and furnish office space for officers of the C.M. Fund and
Oppenheimer Funds connected with investment and economic research, trading and
investment management of the C.M. Fund, Oppenheimer Funds and their respective
Portfolios. Each C.M. Fund Portfolio and Oppenheimer Fund Portfolio pays all
other expenses incurred in its operation. The Board of Directors of the C.M.
Fund and the Board of Trustees of the Oppenheimer Funds is primarily responsible
for monitoring activities of OFI.
For providing its services under the investment advisery agreement, OFI 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 and the Oppenheimer Bond
Portfolio as follows:
<TABLE>
<CAPTION>
Portfolio Net Asset Value Rate
--------------- --------------------- --------
<S> <C> <C>
Total Return First $600 Million 0.625%
More than $600 Million 0.450%
International Equity First $250 Million 1.000%
More than $250 Million 0.900%
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%
Oppenheimer Bond* First $200 Million 0.750%
Next $200 Million 0.720%
Next $200 Million 0.690%
Next $200 Million 0.660%
Next $200 Million 0.600%
Over $1 Billion 0.500%
</TABLE>
*Prior to April 30, 1996, the Government Securities and Income Sub-Accounts of
the Separate Account were invested in the corresponding Portfolios of the C.M.
Fund. The management fee, other expenses and total portfolio annual expenses for
the fiscal year ended December 31, 1995 for the Government Securities Portfolio
were 0.554%, 0.156%, and 0.71% respectively, and for the Income Portfolio were
0.59%, 0.06%, and 0.65% respectively. On April 30, 1996, C.M. Life redeemed
those shares of the Government Securities and Income Portfolios of the C.M. Fund
and purchased shares of the Bond Portfolio of the Oppenheimer Funds with the
proceeds.
Investment Advisery Services to the VIP Funds
For managing investments and business affairs, each VIP Fund and VIP Fund II
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, 1995
was 0.24%.
The High Income Portfolio pays a monthly fee to Fidelity Management at an annual
fee rate made up of the sum of two components:
1. A group fee rate based on the monthly average net assets of all the mutual
funds advised by Fidelity Management. On an annual basis this rate cannot
rise above 0.37%, and it drops 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
9
<PAGE>
effective management fee rate for the High Income Portfolio as of December
31, 1995 was 0.60%.
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 1995 equaled 0.47% of
the Portfolio's average net assets.
Changes to the Separate Account
C.M. Life reserves the right, subject to compliance with applicable law, to
change the names of the Separate Account or its Sub-Accounts. C.M. Life also
reserves the right to add new Sub-Accounts and to restrict investments in Sub-
Accounts that C.M. Life deems unsuitable for investment.
Voting Rights
To the extent required by law, C.M. Life will vote C.M. Fund, Oppenheimer Funds,
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, Oppenheimer Funds 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,
Oppenheimer Funds 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, Oppenheimer 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, Oppenheimer Funds or VIP Fund
Portfolios; or (2) to approve or disapprove an investment advisory contract for
the C.M. Fund, Oppenheimer Funds 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 advisor or principal underwriter initiated by Policyowners,
the Board of Directors of the C.M. Fund or the Board of Trustees of the
Oppenheimer Funds, or 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, Oppenheimer Funds 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.
10
<PAGE>
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, 1995
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. The performance information
does not reflect the mortality and expense risk charges assessed against the
Separate Account. Also, they do not reflect deduction for tax expenses, premium
charges, administrative charges, cost of insurance, and underwriting charges
assessed against the Policy Value. Therefore, these rates are not illustrative
of how actual investment performance will affect the benefits under the Policy.
The rates of return shown are not necessarily indicative of future performance.
They may be considered in assessing the competence and performance of the
advisers to the C.M. Fund, Oppenheimer Funds, and VIP Funds.
<TABLE>
<CAPTION>
Average Annual Total Return of the Portfolios
-------------------------------------------------
Portfolio 1 Yr. 3 Yr. 5 Yr. 10 Yr. Life of Portfolio
- --------- ------- ------ ------ ------- -----------------
<S> <C> <C> <C> <C> <C>
Growth 38.06% 18.53% 20.81% 15.21% 17.71%
Money Market 5.87% 4.45% 4.66% 6.09% 7.10%
Total Return 24.66% 12.43% 15.06% 12.57% 14.00%
Oppenheimer Bond 17.00% 9.05% 10.19% 9.35% 10.43%
High Income 20.72% 12.65% 18.92% 11.47% 11.80%
International Equity 10.30% 10.87% N/A N/A 7.57%
Index 500 37.19% 15.01% N/A N/A 15.44%
LifeSpan Balanced N/A N/A N/A N/A 6.08%*
LifeSpan Diversified Income N/A N/A N/A N/A 5.69%*
LifeSpan Capital
Appreciation N/A N/A N/A N/A 6.65%*
</TABLE>
Portfolio Inception Dates: Growth 1-21-82, Money Market 4-1-82, Total Return 9-
30-82, Oppenheimer Bond 4-3-85, High Income 9-19-85, International Equity 5-13-
92, Index 500 8-27-92, LifeSpan Balanced 9-1-95, LifeSpan Diversified 9-1-95,
and LifeSpan Capital Appreciation 9-1-95.
The annualized yield for the Money Market Portfolio for the seven days ending
December 31, 1995 was 5.56%.
<TABLE>
<CAPTION>
Annualized One Year Total Returns
----------------------------------------------------------------------------------------------------------
For the
Year Money Total Oppenheimer High International Index LifeSpan LifeSpan LifeSpan
Ended Growth Market Return Bond Income Equity 500 Balanced Div. Inc. Cap. App.
- ----- ------ ------ ------ ------ ------ --------- ------ -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 38.06% 5.87% 24.66% 17.00% 20.72% 10.30% 37.19% 6.08%* 5.69%* 6.65%*
1994 -0.51% 4.25% -1.97% -1.94% -1.64% 1.44% 1.04%
1993 21.22% 3.23% 16.28% 13.04% 20.40% 21.80% 9.74%
1992 12.36% 3.90% 10.21% 6.50% 23.17% -2.37%* 6.31%*
1991 37.53% 6.09% 28.79% 17.63% 35.08%
1990 -7.90% 8.04% 0.50% 7.92% -2.23%
1989 35.81% 9.12% 22.98% 13.32% -4.17%
1988 14.46% 7.39% 11.64% 8.97% 11.64%
1987 0.25% 6.44% 4.26% 2.52% 1.22%
1986 11.58% 6.70% 12.58% 10.12% 17.68%
1985 27.31% 8.11% 25.43% 18.82%* 6.38%*
1984 4.89% 10.43% 6.68%
1983 32.72% 9.16% 20.20%
1982 33.00%* 9.26%* 8.10%*
</TABLE>
*The figures shown are from inception of the Fund and are not annualized.
11
<PAGE>
Sub-Account Investment Performance for the Period Ending: December 31, 1995
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, the figures do not
reflect the deduction of the monthly administrative charge.
<TABLE>
<CAPTION>
Average Annual Total Return of the Sub-Account
--------------------------------------------------------
Sub-Account 1 Yr. 3 Yr. 5 Yr. 10 Yr. Life of Sub-Account
----------- ------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
Growth 36.35% 17.43% 19.68% 14.16% 16.68%
Money Market 4.85% 3.48% 3.71% 5.13% 6.15%
Total Return 23.43% 11.58% 14.09% 11.59% 12.78%
Oppenheimer Bond (Income) 15.97% 8.09% 9.22% 8.38% 9.42%
High Income 19.53% 11.64% 17.86% 10.48% 10.81%
International Equity 9.60% 9.86% N/A N/A 6.63%
Index 500 35.97% 13.98% N/A N/A 14.43%
LifeSpan Balanced N/A N/A N/A N/A 17.82%
LifeSpan Diversified Income N/A N/A N/A N/A 17.96%
LifeSpan Capital Appreciation N/A N/A N/A N/A 18.18%
</TABLE>
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.
12
<PAGE>
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
Surrender 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.
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 Fixed Account
and by simultaneously changing your premium allocation instructions to allocate
future premium payments to the Fixed 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 Fixed Account and
simultaneously change your premium allocation instructions to allocate all or
part of future premium payments to the Fixed 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 unautho-
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rized 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.
Each Policyowner affected by the substitutions of the Income and Government
Portfolio by the Oppenheimer Fund will be permitted, within 30 days from the
date of the substitution, to make one transfer of all of his or her Policy Value
in any of the Sub-Accounts of the Separate Account that were affected by the
proposed substitutions without that transfer counting as one of the 12 free
transfers permitted in a Policy Year. In addition, the competing option
restriction will not apply to this one transfer.
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 on the date of death and the Guideline Minimum Death Benefit.
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Under Option 2, the Death Benefit is equal to the greater of the Specified
Amount on the date of death plus the Policy Value on the date of receipt of due
proof of death 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 we
approve 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 we
approve the request, unless you specify a later date.
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 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 -
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.
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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 allocated to the Policy (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 allocated to the Policy, 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.
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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 partial withdrawal that would reduce the
Specified Amount below the 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 maxi-
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mum 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
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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.
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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:
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. 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. 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
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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.
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
MML Distributors, LLC ("MML Distributors"), (formerly known as Connecticut
Mutual Financial Services, LLC), a Connecticut limited liability company and an
affiliate of C.M. Life and MassMutual, acts as the principal underwriter of the
Policies pursuant to an underwriting agreement among itself, C.M. Life, and the
Separate Account. MML Investors Services, Inc. ("MMLISI"), a Massachusetts
corporation and also an affiliate of C.M. Life and MassMutual, acts as a co-
underwriter of the Policies pursuant to an underwriting and servicing agreement
to which MMLISI, C.M. Life, and the Separate Account are parties. Both MMLISI
and MML Distributors are located at 1414 Main Street, Springfield, Massachusetts
01144-1013. Both MML Distributors and MMLISI are registered with the Securities
and Exchange Commission (the "SEC") as broker-dealers and are members of the
National Association of Securities Dealers, Inc. (the "NASD").
The Policy will be sold by registered representatives of registered broker-
dealers that have established selling group agreements with the MML Distributors
("selling brokers"), or by registered representatives of MMLISI. 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. Commissions are
paid through MML Distributors to selling brokers and through MMLISI to agents
for selling the Policies. During 1995, no such payments were made.
MML Distributors does business under different variations of its name, including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington, and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
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, Oppenheimer
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 docu-
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ments 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, 1995 and 1994 and for
the three 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 since the Separate Account had no
assets prior to and on December 31, 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 in giving said reports 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.
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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 sub-accounts 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
24
<PAGE>
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
25
<PAGE>
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.
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, 1995. Financial
statements for the Separate Account are not included since the Separate Account
had no assets prior to and on December 31, 1995.
26
<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, 1995 and 1994, and the related
statements of operations, stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
and the schedules referred to below 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
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C.M. Life Insurance Company as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules I and VI are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
Arthur Andersen LLP
Hartford, Connecticut
February 15, 1996
(Except with respect to the matter discussed in Note 13, as to which the date is
March 4, 1996.)
27
<PAGE>
C.M. Life Insurance Company
Balance Sheets
As of December 31, 1995 and 1994
($ In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Assets:
Investments:
Fixed maturities at cost (fair value: $767,888 in
1995 and $684,213 in 1994) $ 736,099 $ 717,291
Preferred stock at cost (fair value: $210 in 1995
and $2,065 in 1994) 263 1,815
Common stock at market value (cost: $64,225 in 1995) 72,361 -
Mortgage loans on real estate at net realizable value 26,705 42,038
Real estate at cost - 1,897
Policy loans at outstanding balance 126,014 109,720
Cash and cash equivalents 15,069 3,025
---------- ----------
Total investments 976,511 875,786
Accrued investment income 14,781 14,023
Premiums due and deferred 6,831 5,330
Amounts due from reinsurers 902 1,162
Other assets 3,291 2,318
Assets of Separate Account 531,432 309,672
---------- ----------
Total assets $1,533,748 $1,208,291
========== ==========
Liabilities and Stockholder's Equity:
Liabilities:
Future policy benefits $ 813,188 $ 751,808
Policy claims and benefits currently payable 2,026 1,772
Indebtedness to related parties 12,624 6,965
Federal income tax payable 2,820 2,446
Asset valuation reserve 15,868 6,640
Other liabilities 10,622 7,906
Other deposits 54,269 31,690
Transfers due from Separate Account (22,300) (14,445)
Liabilities of Separate Account 531,432 309,672
---------- ----------
Total liabilities 1,420,549 1,104,454
---------- ----------
Commitments and Contingencies - see Note 12
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 66,940 57,578
---------- ----------
Total stockholder's equity 113,199 103,837
---------- ----------
Total liabilities and stockholder's equity $1,533,748 $1,208,291
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
C.M. Life Insurance Company
Statements of Operations
For the Years Ended December 31, 1995, 1994 and 1993
($ In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Premiums and annuity considerations $134,278 $111,238 $108,097
Less: reinsurance ceded (50,732) (54,032) (56,905)
-------- -------- --------
Net premiums and annuity considerations 83,546 57,206 51,192
Net investment income 68,815 59,887 57,460
Net realized capital (losses) gains on
investments (1,140) (2,533) 459
Other income 1,671 984 363
-------- -------- --------
Total revenues 152,892 115,544 109,474
-------- -------- --------
Benefits, Losses and Expenses:
Benefits, claims and settlement expenses 132,067 101,243 98,700
Acquisition and insurance expenses 45,820 24,630 25,436
Other expenses 5,017 4,199 3,004
Less: reinsurance benefits and expenses
ceded (52,538) (45,804) (50,001)
-------- -------- --------
Total benefits, losses and expenses 130,366 84,268 77,139
-------- -------- --------
Income before federal income tax expense 22,526 31,276 32,335
Federal income tax expense 8,776 13,488 11,241
-------- -------- --------
Net income $ 13,750 $ 17,788 $ 21,094
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
C.M. Life Insurance Company
Statements of Stockholder's Equity
For The Years Ended December 31, 1995, 1994 and 1993
($ In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Common Stock $ 2,500 $ 2,500 $ 2,500
Additional Paid-in Capital 43,759 43,759 43,759
-------- -------- -------
46,259 46,259 46,259
Retained Earnings
Balance, beginning of year 57,578 41,639 21,163
Net income 13,750 17,788 21,094
Change in asset valuation reserve (9,228) (106) (1,313)
Change in nonadmitted assets (1,157) (1,761) 675
Net unrealized capital gain 5,997 18 84
Other - - (64)
-------- -------- -------
Balance, end of year 66,940 57,578 41,639
-------- -------- -------
Total Stockholder's Equity $113,199 $103,837 $87,898
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
C.M. Life Insurance Company
Statements of Cash Flows
For the Years Ended December 31, 1995, 1994 and 1993
($ In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash Provided:
Premiums and annuity considerations, net of
reinsurance $ 82,207 $ 56,346 $ 49,530
Other deposits 177,301 193,970 129,030
Net investment income 69,306 60,886 58,728
Commission and expense allowance and reserve
adjustment on reinsurance ceded 13,904 22,484 29,576
Other 9,196 - 2,106
--------- --------- ---------
351,914 333,686 268,970
--------- --------- ---------
Benefits and interest to policyholders and
beneficiaries, net of reinsurance (58,415) (43,808) (28,973)
Acquisition and insurance expenses, net of
reinsurance (49,690) (25,934) (28,619)
Transfers to Separate Account (135,757) (168,913) (114,917)
Federal income taxes paid (8,445) (10,076) (11,579)
Other payments, net (17,838) (15,132) (17,903)
--------- --------- ---------
(270,145) (263,863) (201,991)
--------- --------- ---------
Net cash provided by operations 81,769 69,823 66,979
Proceeds from the disposition of:
Fixed maturities 382,105 224,884 334,801
Equity securities 11,191 - 2,629
Mortgage loans on real estate 12,725 24,154 10,833
Other cash provided - - 855
--------- --------- ---------
Total cash provided 487,790 318,861 416,097
--------- --------- ---------
Cash Applied:
Purchases of fixed maturities 401,658 320,272 408,017
Purchases of equity securities 72,911 - 296
Other applications 1,177 1,153 3,974
--------- --------- ---------
Total cash applied 475,746 321,425 412,287
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents 12,044 (2,564) 3,810
Cash and Cash Equivalents:
Beginning of year 3,025 5,589 1,779
--------- --------- ---------
End of year $ 15,069 $ 3,025 $ 5,589
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
C.M. Life Insurance Company
Notes to Financial Statements
December 31, 1995, 1994 and 1993
($ 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).
C.M. Life is primarily engaged in the sale of individual life insurance and
annuity products. C.M. Life is licensed to transact business in all states
except New York.
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 (GAAP) 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 $3,839 and $2,684 as of December
31, 1995 and 1994.
B. Investments
Investments are valued in accordance with procedures prescribed by the NAIC.
Fixed maturities eligible for amortization are reported at amortized cost.
Eligible preferred stocks are reported at cost and common stocks are reported at
market value. 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 principal balance or fair value. Investments in real estate
which have been identified for possible sale within the next twelve months are
reported at the lower of cost, less accumulated depreciation 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.
The Company maintains an Interest Maintenance Reserve (IMR), prescribed by the
NAIC, for all fixed income investments and defers all interest rate related
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 retained earnings.
The Asset Valuation Reserve (AVR), prescribed by the NAIC, provides a general
reserve for possible decline in the value of bonds, stocks, mortgage loans, real
estate and other invested assets. The reserve is computed based on prescribed
factors, each designed to address specific asset risks. Changes in the AVR are
charged or credited directly to retained earnings. The AVR increased by $9,228
and $106 in 1995 and 1994, respectively.
There were no investments which exceeded 10% of total stockholder's equity as of
December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Loans overdue more than 12 months were as follows:
1995 1994
---- ----
<S> <C> <C>
Defaults on mortgages: (non-income
producing for 12 months) $2,774 $2,774
</TABLE>
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." See Note 8.
32
<PAGE>
Notes To Financial Statements (Continued)
D. Reserves for Payment of Future Benefits
Reserves for payment of future benefits on life insurance, developed using
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 8.0%, 7.0% and 7.5% in 1995, 1994 and
1993, 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 twelve 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
stating 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.
I. Reclassifications
The 1994 and 1993 financial statements and Notes to Financial Statements reflect
certain reclassifications to conform with the 1995 presentation.
J. Certain Risks and Uncertainties
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as well as disclosures of contingent assets and liabilities, both at
the date of the financial statements. Management must also make estimates and
assumptions that affect amounts of revenues and expenses for the reporting
period. Actual results could differ from these estimates. Future events, which
could impact the estimates used in these financial statements, include changes
in the levels of mortality and interest rates.
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.
33
<PAGE>
Notes To Financial Statements (Continued)
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 $24,245 in 1995, $18,348 in
1994, and $16,431 in 1993. In 1995, 1994, and 1993, 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 $602,
$435, and $446 in premiums under the agreement in 1995, 1994 and 1993,
respectively.
C.M. Life is contingently liable with respect to ceded reinsurance in the event
any reinsurer is unable to fulfill its contractual obligations.
6. Investments:
Fixed maturities:
- -----------------
The carrying value and estimated fair value of investments in fixed maturities
as of December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 Gross Gross Estimated
- ---- Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Government $ 24,102 $ 1,764 $ 2 $ 25,864
Special Revenue and
Special Assessment
Obligations and all
Non-guaranteed Obli-
gations of Government
Agencies, Authorities,
and Subdivisions 3,715 - 6 3,709
Foreign Government,
Province & Municipal 11,186 483 295 11,374
Public Utility 45,150 2,303 16 47,437
Mortgage-Backed
Obligations 150,694 7,144 347 157,491
Industrial and
Miscellaneous 501,252 21,472 711 522,013
------- ------ --- -------
Total Fixed Maturities $736,099 $ 33,166 $ 1,377 $767,888
-------- -------- ------- --------
</TABLE>
34
<PAGE>
Notes To Financial Statements (Continued)
<TABLE>
<CAPTION>
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
======== ======== ======= ========
</TABLE>
The carrying value and estimated fair value of C.M. Life's fixed maturities at
December 31, 1995, by contractual maturity, are shown below. Actual maturities
may differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
<S> <C> <C>
Due in one year or less $ 17,729 $ 17,781
Due after one year through five
years 306,539 313,886
Due after five years through ten
years 225,283 240,231
Due after ten years 35,854 38,499
Mortgage-backed securities 150,694 157,491
------- -------
Total $736,099 $767,888
======== ========
</TABLE>
Proceeds from sales of fixed maturities were $380,567, $224,884, and $334,801
for 1995, 1994 and 1993, respectively. Gross gains of $3,598, $1,358, and
$5,931 and gross losses of $4,658, $4,439, and $1,016 were realized on those
sales for 1995, 1994 and 1993, respectively.
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>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
United States
Northeast $15,241 $22,111
South Atlantic 8,187 13,090
South Central - 3,462
West 3,277 3,375
----- -----
Total $26,705 $42,038
------- -------
</TABLE>
35
<PAGE>
Notes To Financial Statements (Continued)
Outstanding mortgages whose terms have been modified aggregated $17,128 and
$24,034 which represents 64.1% and 57.2% of the total portfolio as of December
31, 1995 and 1994, respectively. Income recognized during 1995, 1994 and 1993
on these restructured loans was $1,317, $1,379 and $1,495, respectively. Income
that would have been recognized during 1995, 1994 and 1993 on these loans, if
such loans had been current in accordance with their original terms and had been
outstanding throughout the year, was $1,799, $2,296 and $2,568, respectively.
Commitments to loan additional funds to mortgage loan borrowers, on loans whose
terms have been modified, are not significant.
Loans either overdue more than three months or in the process of foreclosure
were $2,774 at December 31, 1995 and 1994. Additionally, C.M. Life had
properties which it acquired in satisfaction of debt of $1,897 at December 31,
1994.
7. Derivatives:
C.M. Life makes only limited use of derivative instruments (as defined in
Statement of Financial Accounting Standards No. 119 "Disclosure About Derivative
Financial Instruments and Fair Value of Financial Instruments") which include
swaps, options and futures, to hedge equity exposure and to hedge reinvestment
of proceeds from major anticipated transactions. Derivatives are not used for
trading purposes. C.M. Life held one swap investment totaling $12,000 notional
amount as of December 31, 1995.
During 1995 options (protective puts) were utilized to hedge equity exposures
and were accounted for on a mark to market basis. The net 1995 realized losses
from this activity were $140. The notional amount of such options totaled
$35,900 as of December 31, 1995.
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. No interest rate futures were held as of December 31, 1995 and 1994.
8. Fair Value Disclosure of Other Financial Instruments:
The Company has identified certain assets and liabilities as financial
instruments that require fair value disclosure. 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 liquidation sale. If quoted
market prices are not available, the values are estimated using discounted cash
flow analysis or other valuation techniques. These various techniques are
significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. 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.
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.
The estimated fair value for the equity securities is based on quoted market
prices from national securities exchanges and over-the-counter markets.
The fair 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. Non-performing mortgages are valued based on a discounted cash flow
analysis on the underlying collateral using the current market rate for similar
collateral.
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 impractical to estimate the fair value of
fixed rate 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.
Separate Account assets and liabilities are valued at market.
A portion of annuity reserves, which represent contracts in their accumulation
phase, are considered to be financial instruments. The Company determines fair
value to be equal to the cash surrender value of these contracts (including
market value adjustments, if any), which represents the amount payable to
policyholders on demand.
36
<PAGE>
Notes To Financial Statements (Continued)
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 assets and liabilities, which the Company has
identified as investment contracts and borrowed funds, are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Assets
Bonds $736,099 $767,888 $717,291 $684,213
Common and Preferred Stock 72,624 72,571 1,815 2,065
Mortgages 26,705 26,783 42,038 40,241
Policy Loans 126,014 126,014 109,720 109,720
Cash and Cash Equivalents 15,069 15,069 3,025 3,025
Assets of Separate Account 531,432 531,432 309,672 309,672
Liabilities
Future Policy Benefits
Annuity Reserves - Accumulation
Phase 49,078 49,683 30,239 28,868
Other Deposits 54,269 54,918 31,690 29,484
Other Liabilities
Funds Deposited Under Income
Settlements -
Supplementary Contracts Without
Life Contingencies 215 208 270 260
Liabilities of Separate Account 531,432 531,432 309,672 309,672
</TABLE>
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
$34,008, $16,412 and $18,831 in 1995, 1994 and 1993, respectively. The increase
is attributable to increased sales for C.M. Life and decreased sales for the
parent, Connecticut Mutual, resulting in a larger portion of certain expenses
being allocated to C.M. Life.
10. Net Investment Income:
Net Investment Income is comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $54,625 $47,658 $43,983
Mortgage loans on real estate 2,709 4,383 5,813
Policy loans 9,905 7,925 7,448
Amortization of IMR (60) 309 251
Other 3,091 1,449 1,844
----- ----- -----
Total investment income 70,270 61,724 59,339
Less: Applicable investment expenses 1,455 1,837 1,879
----- ----- -----
Net investment income $68,815 $59,887 $57,460
======= ======= =======
</TABLE>
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 Statements of Operations.
37
<PAGE>
Notes To Financial Statements (Continued)
11. 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>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Realized Gains and Losses:
Fixed Maturities:
Realized gains $ 3,598 $ 1,358 $ 5,931
Realized losses (4,658) (4,439) (1,016)
------- ------- -------
(1,060) (3,081) 4,915
------- ------- -----
Equity Securities and Options:
Realized gains 1,518 - 4
Realized losses (758) - -
----- ------- -------
760 - 4
----- ------- -------
Real Estate:
Realized gains - - -
Realized losses (310) (2,158) -
----- ------- -------
(310) (2,158) -
----- ------- -------
Mortgage Loans:
Realized gains 52 - -
Realized losses (1,404) (2,093) (13)
------- ------- -------
(1,352) (2,093) (13)
------- ------- -------
(Gains)/Losses Transferred to IMR 822 4,799 (4,447)
----- ------- -------
Net Realized Capital Gains/(Losses) $ (1,140) $ (2,533) $ 459
========= ======= =======
Unrealized Gains and Losses:
Fixed Maturities:
Net unrealized gains (losses), end of year $ 31,789 $(33,077) $20,870
Net unrealized gains, beginning of year (33,077) 20,870 16,497
-------- ------- -------
Change in unrealized gains or
losses on fixed maturities $ 64,866 $(53,947) $ 4,373
========= ========= ========
</TABLE>
The change in unrealized gains and (losses) for equity securities were $7,422,
$(30), and $50 as of December 31, 1995, 1994 and 1993, respectively.
12. Contingencies:
C.M. Life is involved in regulatory proceedings and various litigation in the
ordinary course of business. In the opinion of management, the ultimate
resolution of such proceedings and litigation will not result in fines or
judgements which, in the aggregate, would materially affect C.M. Life's
financial position.
13. Merger of Connecticut Mutual:
On September 8, 1995, the Board of Directors of Connecticut Mutual approved the
merger of Connecticut Mutual and Massachusetts Mutual Life Insurance Company.
Thereafter, a definitive agreement was signed by both companies. On January 27,
1996, Connecticut Mutual and insurance subsidiary policyholders' and other
insureds and annuitants approved the merger. The merger was reviewed by the
insurance regulatory authorities in Massachusetts and Connecticut, and approved.
The merger was effective March 1, 1996.
38
<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.
39
<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.
40
<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 42 and 43 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 44 and 45 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, Oppenheimer Funds, VIP Fund, and VIP Fund II Portfolio's advisory
fees and operating expenses, which are assumed to be at an annual rate of 0.91%
of the average daily net assets of each C.M. Fund, Oppenheimer Funds, VIP Fund,
and VIP Fund II Portfolio. This is based upon an unweighted average. The actual
fees and expenses of the C.M. Fund, Oppenheimer Funds, and VIP Funds in 1995
ranged from an annual rate of 0.28% to an annual rate of 1.50% of average daily
net assets. The fees and expenses associated with your Policy may be more or
less than 0.91% 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, OFI 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 Index 500 Portfolio to an annual rate of 0.28% of
the Portfolio's average net assets. Without the effect of the expense
limitations, in 1995 the total operating expenses of the Index 500 Portfolio
would have been 0.47% of its average net assets.
Taking into account the mortality and expense risk charge and the Separate
Account administrative charge and the assumed 0.91% charge for the C.M. Fund,
Oppenheimer Fund, VIP Fund, and VIP Fund II Portfolio advisory fees and
operating expenses, the gross annual rates of investment return of 0%, 6% and
12% correspond to net annual rates of -1.81%, 4.19%, and 10.19%, respectively,
during the first 20 Policy years and -1.16%, 4.84%, and 10.84%, 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, Oppenheimer Funds, and VIP
Funds along with this prospectus.
41
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
Fully Underwritten
Unisex Non-Tobacco User Age 30
Specified Amount $300,000
Death Benefit Option 1
Cash Value Accumulation Test
<TABLE>
<CAPTION>
CURRENT COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- -----------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
- ------ -------------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5,670 4,559 300,000 4,846 300,000 5,134 300,000
2 11,624 8,972 300,000 9,832 300,000 10,726 300,000
3 17,875 13,243 300,000 14,961 300,000 16,821 300,000
4 24,438 17,372 300,000 20,240 300,000 23,471 300,000
5 31,330 21,350 300,000 25,664 300,000 30,724 300,000
6 38,567 25,181 300,000 31,241 300,000 38,644 300,000
7 46,165 28,925 300,000 37,038 300,000 47,361 300,000
8 54,143 32,902 300,000 43,401 300,000 57,316 300,000
9 62,521 36,781 300,000 50,011 300,000 68,273 300,000
10 71,317 40,563 300,000 56,877 300,000 80,339 300,000
11 80,552 44,248 300,000 64,010 300,000 93,571 336,388
12 90,250 47,831 300,000 71,418 300,000 108,050 375,793
13 100,433 51,318 300,000 79,118 300,000 123,896 416,931
14 111,124 54,702 300,000 87,116 300,000 141,226 459,926
15 122,350 57,988 300,000 95,431 300,811 160,183 504,918
16 134,138 61,552 300,000 104,376 318,512 181,524 553,936
17 146,515 65,031 300,000 113,658 335,834 204,951 605,586
18 159,511 68,424 300,000 123,288 352,797 230,665 660,064
19 173,156 71,730 300,000 133,276 369,427 258,883 717,594
20 187,484 74,950 300,000 143,636 385,741 289,847 778,396
Age 60 376,708 109,415 300,000 287,720 572,717 871,582 1,734,916
Age 65 512,116 122,749 300,000 384,159 668,379 1,453,649 2,529,126
Age 70 684,935 132,165 300,000 499,897 771,167 2,385,881 3,680,580
Age 75 905,500 135,862 300,000 637,482 885,410 3,868,077 5,372,437
</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) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. 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.
42
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
<TABLE>
<CAPTION>
Fully Underwritten
Unisex Non-Tobacco User Age 30
Specified Amount $300,000
Death Benefit Option 1
Cash Value Accumulation Test
GUARANTEED COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- -----------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
- ------ -------------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5,670 3,993 300,000 4,262 300,000 4,532 300,000
2 11,624 7,910 300,000 8,700 300,000 9,524 300,000
3 17,875 11,754 300,000 13,322 300,000 15,023 300,000
4 24,438 15,522 300,000 18,133 300,000 21,079 300,000
5 31,330 19,205 300,000 23,130 300,000 27,740 300,000
6 38,567 22,811 300,000 28,328 300,000 35,074 300,000
7 46,165 26,333 300,000 33,729 300,000 43,143 300,000
8 54,143 30,089 300,000 39,677 300,000 52,382 300,000
9 62,521 33,750 300,000 45,851 300,000 62,548 300,000
10 71,317 37,315 300,000 52,261 300,000 73,738 300,000
11 80,552 40,784 300,000 58,917 300,000 86,056 309,371
12 90,250 44,153 300,000 65,823 300,000 99,533 346,172
13 100,433 47,426 300,000 72,997 300,000 114,278 384,565
14 111,124 50,597 300,000 80,443 300,000 130,397 424,661
15 122,350 53,670 300,000 88,179 300,000 148,023 466,588
16 134,138 56,637 300,000 96,211 300,000 167,280 510,469
17 146,515 59,499 300,000 104,526 308,851 188,321 556,446
18 159,511 62,257 300,000 113,108 323,666 211,304 604,661
19 173,156 64,902 300,000 121,959 338,056 236,396 655,263
20 187,484 67,437 300,000 131,086 352,038 263,788 708,415
Age 60 376,708 89,932 300,000 251,085 499,793 755,947 1,504,739
Age 65 512,116 93,488 300,000 325,641 566,565 1,220,475 2,123,440
Age 70 684,935 86,991 300,000 408,584 630,303 1,922,994 2,966,508
Age 75 905,500 61,632 300,000 498,246 692,022 2,965,426 4,118,730
</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) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. 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.
43
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
Guaranteed Issue
Unisex Non-Tobacco User Age 45
Specified Amount $500,000
Death Benefit Option 2
Guideline Premium Test
<TABLE>
<CAPTION>
CURRENT COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ----------------------- ----------------------- -----------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
- ------ -------------- ----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,125 10,451 510,451 11,114 511,114 11,777 511,777
2 26,906 20,415 520,415 22,386 522,386 24,436 524,436
3 41,377 29,858 529,858 33,778 533,778 38,023 538,023
4 56,570 38,735 538,735 45,238 545,238 52,573 552,573
5 72,524 47,004 547,004 56,718 556,718 68,130 568,130
6 89,275 54,614 554,614 68,153 568,153 84,730 584,730
7 106,864 61,868 561,868 79,842 579,842 102,788 602,788
8 125,332 69,483 569,483 92,549 592,549 123,254 623,254
9 144,724 76,680 576,680 105,499 605,499 145,506 645,506
10 165,085 83,424 583,424 118,659 618,659 169,682 669,682
11 186,464 89,697 589,697 132,010 632,010 195,950 695,950
12 208,912 95,478 595,478 145,529 645,529 224,492 724,492
13 232,483 100,743 600,743 159,191 659,191 255,504 755,504
14 257,232 105,476 605,476 172,973 672,973 289,212 789,212
15 283,219 109,650 609,650 186,845 686,845 325,851 825,851
16 310,505 116,271 616,271 203,902 703,902 368,908 868,908
17 339,155 122,469 622,469 221,362 721,362 416,032 916,032
18 369,238 128,208 628,208 239,194 739,194 467,586 967,586
19 400,824 133,437 633,437 257,354 757,354 523,962 1,023,962
20 433,991 138,114 638,114 275,803 775,803 585,596 1,085,596
Age 60 283,219 109,650 609,650 186,845 686,845 325,851 825,851
Age 65 433,991 138,114 638,114 275,803 775,803 585,596 1,085,596
Age 70 626,418 158,463 658,463 384,412 884,412 1,022,973 1,522,973
Age 75 872,010 157,783 657,783 499,151 999,151 1,728,499 2,228,499
</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) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. 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.
44
<PAGE>
C.M. LIFE INSURANCE COMPANY
EXECUTIVE BENEFITS VARIABLE UNIVERSAL LIFE POLICY
<TABLE>
<CAPTION>
Guaranteed Issue
Unisex Non-Tobacco User Age 45
Specified Amount $500,000
Death Benefit Option 2
Guideline Premium Test
GUARANTEED COST OF INSURANCE CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12%
Premiums Gross Investment Return Gross Investment Return Gross Investment Return
Paid Plus ------------------------ ------------------------ ------------------------
Policy Interest At 5% Policy Death Policy Death Policy Death
Year Per Year Value Benefit Value Benefit Value Benefit
- ------ -------------- ----- ------- ----- ------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 13,125 8,152 508,152 8,739 508,739 9,328 509,328
2 26,906 15,969 515,969 17,651 517,651 19,408 519,408
3 41,377 23,443 523,443 26,728 526,728 30,300 530,300
4 56,570 30,550 530,550 35,947 535,947 42,055 542,055
5 72,524 37,289 537,289 45,304 545,304 54,753 554,753
6 89,275 43,645 543,645 54,784 554,784 68,466 568,466
7 106,864 49,571 549,571 64,335 564,335 83,242 583,242
8 125,332 55,774 555,774 74,705 574,705 99,975 599,975
9 144,724 61,459 561,459 85,091 585,091 117,982 617,982
10 165,085 66,577 566,577 95,431 595,431 137,328 637,328
11 186,464 71,098 571,098 105,685 605,685 158,110 658,110
12 208,912 74,989 574,989 115,802 615,802 180,424 680,424
13 232,483 78,214 578,214 125,728 625,728 204,379 704,379
14 257,232 80,747 580,747 135,415 635,415 230,100 730,100
15 283,219 82,547 582,547 144,799 644,799 257,711 757,711
16 310,505 83,521 583,521 153,756 653,756 287,289 787,289
17 339,155 83,597 583,597 162,180 662,180 318,945 818,945
18 369,238 82,654 582,654 169,906 669,906 352,743 852,743
19 400,824 80,541 580,541 176,730 676,730 388,720 888,720
20 433,991 77,123 577,123 182,452 682,452 426,933 926,933
Age 60 283,219 82,547 582,547 144,799 644,799 257,711 757,711
Age 65 433,991 77,123 577,123 182,452 682,452 426,933 926,933
Age 70 626,418 38,948 538,948 194,819 694,819 675,489 1,175,489
Age 75 872,010 0 0 141,661 641,661 1,012,412 1,512,412
</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) The Surrender Value is not illustrated because there are no surrender
charges and we assume no Policy Debt. 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.
45
<PAGE>
TABLE OF CONTENTS
Part II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and Officers
of the Registrant are applicable:
CONNECTICUT LAW. Except where an applicable insurance policy is procured,
Connecticut General Statutes ("C.G.S.") Section 33-320a is the sole source of
indemnification rights for directors and officers of Connecticut corporations
and for persons who may be deemed to be controlling persons by reason of their
status as a shareholder, director, officer, employee or agent of a Connecticut
corporation. Under C.G.S. Section 33- 320a, a corporation shall indemnify any
director or officer who was or is a party, or was threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter referred to as
"proceeding") by virtue of the fact that he or the person whose legal
representative he is: (i) is or was a director or officer of the corporation;
(ii) while a director or an officer of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise (hereinafter referred to as "enterprise"), other than
an employee benefit plan or trust; or (iii) while a director or an officer of
the corporation, is or was a director or officer serving at the request of the
corporation as a fiduciary or an employee benefit plan or trust maintained for
the benefit of employees of the corporation or any other enterprise, against
"covered expenditures" if (and only if) his conduct met the applicable statutory
eligibility standard. The types of expenditures which are covered and the
statutory eligibility standard vary according to the type of proceeding to which
the director or officer is or was a party or was threatened to be made a party.
According to C.G.S. Section 33-320a, in non-derivative proceedings other than
ones brought in connection with an alleged claim based upon the purchase or sale
by a director or officer of securities of the corporation or of another
enterprise, which the director or officer serves or served at the request of the
<PAGE>
corporation, the corporation shall indemnify a director or officer against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually incurred by him or her in connection with
the proceeding, or any appeal therein, IF AND ONLY IF he or she acted: (i) in
good faith; and (ii) in a manner he or she reasonably believed to be in the best
interests of the corporation or, in the case of a person serving as a fiduciary
of any employee benefit plan or trust, in a manner he or she reasonably believed
to be in the best interests of the corporation or in the best interest of the
participants and beneficiaries of such employee benefit plan or trust and
consistent with the provisions of such employee benefit plan or trust. However,
where the proceeding brought is criminal in nature, C.G.S. Section 33-320a
requires that the director or officer must satisfy the additional condition that
he or she had no reasonable cause to believe that his or her conduct was
unlawful in order to be indemnified. A director or officer also will be entitled
to indemnification as described above if: (i) he or she is successful on the
merits in the defense of any non-derivative proceeding brought against him or
her; or (ii) a court shall have determined that in view of all the circumstances
such director is fairly and reasonably entitled to be indemnified. The decision
about whether the director or officer qualifies for indemnification under C.G.S.
Section 33-320a may be made: (i) in writing by a majority of those members of
the board of directors who were not parties to the proceeding in question;
(ii) in writing by independent legal counsel selected by a consent in writing
signed by a majority of those directors who were not parties to the proceeding;
or (iii) by the shareholders of the corporation at a special or annual meeting
by an affirmative vote of at least a majority of the voting power of shares not
owned by parties to the proceeding. A director or officer also may apply to a
court of competent jurisdiction for indemnification even though he previously
applied to the board, independent legal counsel or the shareholders and his
application for indemnification was rejected.
For purposes of C.G.S. Section 33-320a, the termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not create, of itself, a presumption that the director or
officer did not act in good faith or in a manner which that director or officer
did not believe reasonably to be in the best interests of the corporation or of
the participants and beneficiaries of an employee benefit plan or trust and
consistent with the provisions of such plan or trust. Likewise, the termination
of a criminal act or proceeding shall not create, of itself, a presumption that
the director or officer had reasonable cause to believe that his or her conduct
was unlawful.
In non-derivative proceedings based on the purchase or sale of securities of the
corporation or of another enterprise, in which the director or officer serves or
served at the request of the
<PAGE>
corporation, C.G.S Section 33-320a provides that the corporation shall indemnify
the director or officer only after a court shall have determined upon
application that, in view of all the circumstances, the director or officer is
fairly and reasonably entitled to be indemnified. Furthermore, the expenditures
for which the director or officer shall be indemnified shall be only such amount
as the court determines to be appropriate.
Pursuant to C.G.S. Section 33-320a, where a director or officer was or is a
party or was threatened to be made a party to a derivative proceeding, the
corporation shall provide indemnification against expenses, including attorneys'
fees, actually and reasonably incurred in connection with the proceeding or any
appeal therein, in relation to matters as to which such director is finally
adjudged not to have breached a duty owed to the corporation. The corporation
also shall indemnify a director or officer where the court determines that, in
view of all the circumstances, such person is fairly and reasonably entitled to
be indemnified; however, in such a situation, the individual shall be
indemnified only for such amount as the court determines to be appropriate.
Furthermore, the statute provides that the corporation shall not indemnify a
director or officer for amounts paid to the corporation, to a plaintiff or to
counsel for a plaintiff in settling or otherwise disposing of a threatened or
pending action, with or without court approval, or for expenses incurred in
defending a threatened action or a pending action which is settled or otherwise
disposed of without court approval.
C.G.S. Section 33-320a also provides that expenses incurred in defending a
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding upon authorization of the board of directors, provided said
expenses are indemnifiable under the statute and the director or officer agrees
to repay such amount if he is later found not entitled to indemnification by the
corporation.
Lastly, C.G.S. Section 33-320a is intended to be an exclusive statute. A
corporation established under Connecticut statute cannot indemnify a director or
officer (other than a director or officer who is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee or agent
of another enterprise), to an extent either greater or less than that authorized
by the statute, and any provision in the certificate of incorporation, the by-
laws, a shareholder or director resolution, or agreement or otherwise that is
inconsistent with the statute is invalid. C. M. Life Insurance Company was not
established under Connecticut statute but was instead created by special act of
the Connecticut General Assembly. Notwithstanding the above, C.G.S. Section
33-320a specifically authorizes a corporation to procure insurance providing
greater indemnification rights than those set out in the statute the premium
cost of which may be shared with the director or officer on such basis as may be
agreed upon. The
<PAGE>
directors and officers may be covered by an errors and omissions insurance
policy or other insurance policy.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
believes that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, or officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
RULE 6E-3(T) REPRESENTATIONS, DESCRIPTIONS AND UNDERTAKINGS
Registrant makes the following representations pursuant to the requirements of
Rule 6e-3(T) under the Investment Company Act of 1940:
A. Risk charge
Pursuant to Rule 6e- 3(T)(b)(13)(iii)(F)(1), Registrant represents that Rule
6e- 3(T)(b)(13)(iii)(F) has been relied upon in deducting charges for mortality
and expense risks assumed by C. M. Life.
Pursuant to Rule 6e- 3(T)(b)(13)(iii)(F)(2), Registrant represents that the
mortality and expense risk charge is within the range of industry practice for
comparable flexible premium variable life insurance contracts. The methodology
used to support this representation is based upon an analysis of the mortality
and expense risk charges adopted under other flexible premium variable life
insurance contracts. Registrant undertakes to keep and make available to the
Commission on request the documents used to support the foregoing
representation.
B. Distribution Costs
Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(4)(ii)(A), Registrant represents that
C.M. Life has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the Registrant will benefit the Registrant
and s Policyholders and will keep and make available to the Commission on
request a memorandum setting forth the basis for this representation. Pursuant
to Section 6e-3(T)(b)(13)(iii)(F)(4)(ii)(B)(2),
<PAGE>
Registrant also represents that it will invest only in management investment
companies which have undertaken to have a board of directors, a majority of whom
are not interested persons of the company, formulate and approve any plan under
Rule 12b-1 under the Investment Company Act of 1940 to finance distribution
expenses.
UNDERTAKINGS CONCERNING MORTALITY AND EXPENSE RISK CHARGE
The flexible premium variable life policies offered by this registration
statement currently provide for a mortality and expense risk charge of 0.65%, on
an annual basis, of the daily net asset value of each Sub-Account of the
Separate Account during the first 20 Policy Years. Thereafter the mortality and
expense risk charge will be reduced to 0.25% on a current basis. C.M. Life may
adjust the mortality and expense risk charge; however, it is guaranteed not to
exceed 0.90%, on an annual basis of the daily net asset value of each Sub-
Account of the Separate Account. The C.M. Life acknowledges that any mortality
and expense risk charge above 0.90% may be above the range of industry practice.
If C.M. Life proposes to increase the charges above the range of industry
practice, the C.M. Life hereby undertakes to file an exemption request with the
Securities and Exchange Commission ("Commission") in which it would demonstrate
that the proposed charge is reasonable in relation to the risks assumed under
the Policy. Additionally, C.M. Life would take any additional action that may be
necessary under the Policy or pursuant to any applicable state regulatory
authorities.
This undertaking is given subject to the applicability of future federal
legislation or Commission rules or regulation which might permit an increase in
the mortality and expense risk charge beyond the range of industry practice,
without submitting an exemption application and/or making the demonstration
described above. In such case, in lieu of the undertaking described above, the
C.M. Life hereby undertakes to comply with the provisions of such legislation,
rules, or regulations in implementing any increase in the mortality and expense
risk charge.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B2.
The prospectus, consisting of 45 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representatives, descriptions and undertaking pursuant to Rule
6e- 3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940 (The "1940
Act").
The signatures.
Written consents of the following persons:
1. Arthur Anderson--Exhibit 99.C1
The following exhibits:
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
Exhibit 99.A1 Certified copy of Resolution of the Board of Directors of
C.M. Life Insurance Company authorizing the establishment of C. M. Life Variable
Life Separate Account I.*
Exhibit 99.A2 Not Applicable.
Exhibit 99.A3 (A) Underwriting Agreement between C.M. Life and Connecticut
Mutual Financial Services, L.L.C.**
Exhibit 99.A3 (B) Co-Distribution Agreement between C.M. Life and MML
Investors Services, Inc.
Exhibit 99.A3 (C) Form of Broker Dealer Selling Agreement.*
Exhibit 99.A3 (D) Form of Registered Representative Agreement.*
Exhibit 99.A4 Not Applicable.
Exhibit 99.A5 Not Applicable.
Exhibit 99.A6 Organizational documents of the Company.*
a. By-laws.
<PAGE>
b. Articles of Incorporation.
Exhibit 99.A7 (i) Form of Policy (including Policy Riders).**
Exhibit 99.A8 (i) Participation Agreement with Connecticut Mutual Financial
Services Series Fund I, Inc.**
Exhibit 99.A8 (ii) Participation Agreement with VIP Fund.**
Exhibit 99.A8 (iii) Participation Agreement with VIP Fund II.**
Exhibit 99.A8 (iv) Participation Agreement with Oppenheimer Variable
Account Funds.
Exhibit 99.A9 Not Applicable.
Exhibit 99.A10 Form of Application.**
Exhibit 99.A11 Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii)
under the 1940 Act which includes conversion procedures pursuant to Rule
6e- 3(T)(b)(13)(v)(B).*
Exhibit 99.A12 Powers of Attorney.
Exhibit 99.C1 Accounting Consent.
Exhibit 99.C2 Opinion of Counsel.**
Exhibit 99.C4 Not Applicable.
Exhibit 99.C5 Not Applicable.
Exhibit 99.C6 Actuarial Consent.*
* Exhibits noted with asterisk (*) were previously filed with Registrant's
Initial Registration Statement Dated April 10, 1995 and are incorporated herein
by reference.
** Exhibits noted with two asterisks (**) were previously filed with
Registrant's Pre-Effective Amendment Number 1 Dated August 11, 1995 and are
incorporated herein by reference.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Post-Effective Amendment Number 1 to the
Registration Statement to be signed on its behalf, in the City of Springfield
and the Commonwealth of Massachusetts, on this 29th day of April, 1996.
C. M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
(Registrant)
By: /S/ DAVID E. SAMS, JR.*
------------------------
David E. Sams, Jr.
Director and Chairman
C. M. LIFE INSURANCE COMPANY
(Depositor)
By: /S/ DAVID E. SAMS, JR.*
------------------------
David E. Sams, Jr.
Director and Chairman
By /S/ RICHARD M. HOWE
- ----------------------
*Richard M. Howe - On April 29, 1996,
as Attorney-in-Fact pursuant to powers of attorney filed herewith.
As required by the Securities Act of 1933, this Post-Effective Amendment Number
1 to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ DAVID E. SAMS, JR.* Director and Chairman April 29, 1996
- ----------------------------
David E. Sams, Jr.
/S/ J. BRINKE MARCUCCILLI* Director and Chief April 29, 1996
- ---------------------------- Financial Officer
J. Brinke Marcuccilli
/S/ EMELIA M. BRUNO* Controller April 29, 1996
- ---------------------------- (Principal Accounting
Emelia M. Bruno Officer)
</TABLE>
By /S/ RICHARD M. HOWE
- ----------------------------
*Richard M. Howe - On April 29, 1996,
as Attorney-in-Fact pursuant to powers of attorney filed herewith.
<PAGE>
Representation Pursuant to Rule 485
As Associate General Counsel to C.M. Life Insurance Company, the undersigned
has reviewed this Post-Effective Registration Statement for C.M. Life Variable
Life Separate Account I. The undersigned hereby certifies that this amendment
does not contain disclosures that would render it ineligible to become effective
under paragraph 485(b) of the Securities Act of 1933, as amended.
/s/Richard M. Howe
------------------
Richard M. Howe
<PAGE>
FORM S-6 EXHIBIT TABLE
Exhibit 99.A3B Co-Distributors Agreement between the Company and MML Investors
Services, Inc.
Exhibit 99.A8 (iv) Participation Agreement with Oppenheimer Variable Account
Funds
Exhibit 99.A12 Powers of Attorney
Exhibit 99.C1 Consent of Independent Accountants
<PAGE>
Exhibit 99.A3(A)
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of March, 1996,
by and between MML Investors Services, Inc. ("MMLISI") and C. M. Life Insurance
Company ("C. M. Life"), on its own behalf and on behalf of C. M. Life Variable
Life Separate Account I (the "Separate Account"), a separate account of C. M.
Life, as follows:
WHEREAS, the Separate Account was established on February 2, 1995, pursuant to
authority of C. M. Life's Board of Directors in order to set aside and invest
assets attributable to certain variable life insurance contracts (the
"Contracts") issued by C. M. Life; and
WHEREAS, C. M. Life has registered the Separate Account under the Investment
Company Act of 1940, as amended, (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, C. M. Life will continue the effectiveness of the registrations of the
Separate Account under the 1940 Act and the Contracts under the 1933 Act; and
WHEREAS, C. M. Life intends for the Contracts to be sold by its agents and
brokers who are required to be registered representatives of a broker-dealer
that is registered with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, C. M. Life desires to engage MMLISI, a broker-dealer registered with
the SEC under the 1934 Act and a member of the NASD, to act as a co-underwriter
("Co-underwriter") in connection with the distribution of the Contracts by the
full-time career contracted agents of C. M. Life ("Agents") and certain other
brokers, and in connection therewith, to provide certain services and
supervision to such Agents and brokers who are also registered representatives
of MMLISI and who sell the Contracts, and to otherwise perform certain duties
and functions that are necessary and proper for the distribution of the
Contracts as required under applicable federal and state securities laws and
NASD regulations, and MMLISI desires to act as Co-underwriter for the sale of
the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. UNDERWRITER. C. M. Life hereby appoints MMLISI as, and MMLISI agrees to
serve as, Co-underwriter of the Contracts during the term of this Agreement for
purposes of federal and state
<PAGE>
securities laws. C. M. Life reserves the right, however, to refuse at any time
or times to sell any Contracts hereunder for any reason, and C.M. Life maintains
ultimate responsibility for the sales of the Contracts.
2. SERVICES. MMLISI agrees, on behalf of C. M. Life and in its capacity as Co-
underwriter, to undertake at its own expense except as otherwise provided
herein, to provide certain sales, administrative and supervisory services
relative to the Contracts as described below, and otherwise to perform all
duties that are necessary and proper for the distribution of the Contracts as
required under applicable federal and state securities laws and NASD
regulations.
3. BEST EFFORTS. MMLISI shall use reasonable efforts to sell the Contracts but
does not agree hereby to sell any specific number of Contracts and shall be free
to act as underwriter of other securities. MMLISI agrees to offer the Contracts
for sale in accordance with the prospectus then in effect for the Contracts.
4. COMPLIANCE AND SUPERVISION. All persons who are engaged directly or
indirectly in the operations of MMLISI and C. M. Life in connection with the
offer or sale of the Contracts shall be considered a "person associated" with
MMLISI as defined in Section 3(a)(18) of the 1934 Act. MMLISI shall have full
responsibility for the securities activities of each such person as contemplated
by Section 15 of the 1934 Act.
MMLISI shall be fully responsible for carrying out all compliance, supervisory
and other obligations hereunder with respect to the activities of its registered
representatives as required by the NASD Rules of Fair Practice (the "Rules") and
applicable federal and state securities laws. Without limiting the generality
of the foregoing, MMLISI agrees that it shall be fully responsible for:
(a) ensuring that no representative of MMLISI shall offer or sell the
Contracts until such person is appropriately licensed, registered, or
otherwise qualified to offer and sell such Contracts under the federal
securities laws and any applicable securities laws of each state or other
jurisdiction in which such Contracts may be lawfully sold, in which C. M.
Life is licensed to sell the Contracts, and in which such person shall offer
or sell the Contracts; and
(b) training and supervising C. M. Life's Agents and brokers who are also
registered representatives of MMLISI for purposes of complying on a
continuous basis with the Rules and with federal and state securities laws
applicable in connection with the offering and sale of the Contracts. In
this connection, MMLISI shall:
(i) jointly conduct with C. M. Life such training
<PAGE>
(including the preparation and utilization of training materials) as
in the opinion of MMLISI and C. M. Life is necessary to accomplish the
purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of MMLISI
who sell the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the
responsibilities as set forth herein;
(iv) take reasonable steps to ensure that C. M. Life Agents and
brokers who are also registered representatives of MMLISI recommend
the purchase of the Contracts only upon reasonable grounds to believe
that the purchase of the Contracts is suitable for such applicant; and
(v) impose disciplinary measures on agents of C. M. Life who are
also registered representatives of MMLISI as required.
The parties hereto recognize that any registered representative of MMLISI
selling the Contracts as contemplated by this Agreement shall also be acting as
an insurance agent of C. M. Life or as an insurance broker, and that the rights
of MMLISI to supervise such persons shall be limited to the extent specifically
described herein or required under applicable federal or state securities laws
or NASD regulations. Such persons shall not be considered employees of MMLISI
and shall be considered agents of MMLISI only as and to the extent required by
such laws and regulations. Further, it is intended by the parties hereto that
such persons are and shall continue to be considered to have a common law
independent contractor relationship with C. M. Life and not to be common law
employees of C. M. Life.
5. REGISTRATION AND QUALIFICATION OF CONTRACTS. C. M. Life has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the
"Prospectus") for the Contracts.
C. M. Life agrees to execute such papers and to do such acts and things as shall
from time-to-time be reasonably requested by MMLISI for the purpose of
qualifying and maintaining qualification of the Contracts for sale under
applicable state law and for maintaining the registration of the Separate
Account and interests therein under the 1933 Act and the 1940 Act, to the end
that there will be available for sale from time-to-time such
<PAGE>
amounts of the Contracts as MMLISI may reasonably be expected to sell. C. M.
Life shall advise MMLISI promptly of any action of the SEC or any authorities of
any state or territory, of which it is aware, affecting registration or
qualification of the Separate Account, or rights to offer the Contracts for
sale.
If any event shall occur as a result of which it is necessary to amend or
supplement the Registration Statement in order to make the statements therein,
in light of the circumstances under which they were or are made, true, complete
or not misleading, C. M. Life will forthwith prepare and furnish to MMLISI,
without charge, amendments or supplements to the Registration Statement
sufficient to make the statements made in the Registration Statement as so
amended or supplemented true, complete and not misleading in light of the
circumstances under which they were made.
6. REPRESENTATIONS OF C. M. LIFE. C. M. Life represents and warrants to MMLISI
as follows:
(a) C. M. Life is an insurance company duly organized under the laws of
the State of Connecticut and is in good standing and is authorized to
conduct business under the laws of each state in which the Contracts are
sold, that the Separate Account was legally and validly established as a
segregated asset account under the Insurance Code of Connecticut, and that
the Separate Account has been properly registered as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
(b) All persons that will be engaging in the offer or sale of the
Contracts will be authorized insurance agents of C. M. Life.
(c) The Registration Statement does not and will not contain any
misstatements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were or are made, not
materially misleading.
(d) C. M. Life shall make available to MMLISI copies of all financial
statements that MMLISI reasonably requests for use in connection with the
offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration
Statement, or of any part thereof, with respect to the sale of the
Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or
if necessary, is registered, under the Blue Sky laws of the states in which
the Contracts will be
<PAGE>
offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable
state insurance laws in those states in which the Contracts shall be
offered for sale. In each state where such qualification is effected,
C. M. Life shall file and make such statements or reports as are or may be
required by the laws of such state.
(h) This Agreement has been duly authorized, executed and delivered by
C. M. Life and constitutes the valid and legally binding obligation of
C. M. Neither the execution and delivery of this Agreement by C. M. Life
nor the consummation of the transactions contemplated herein will result in
a breach or violation of any provision of the state insurance laws
applicable to C. M. Life, any judicial or administrative orders in which it
is named or any material agreement or instrument to which it is a party or
by which it is bound.
7. REPRESENTATIONS OF MMLISI. MMLISI represents and warrants to C. M. Life as
follows:
(a) MMLISI is duly registered as a broker-dealer under the 1934 Act and is
a member in good standing of the NASD and, to the extent necessary to
perform the activities contemplated hereunder, is duly registered, or
otherwise qualified, under the applicable securities laws of every state or
other jurisdiction in which the Contracts are available for sale.
(b) This Agreement has been duly authorized, executed and delivered by
MMLISI and constitutes the valid and legally binding obligation of MMLISI.
Neither the execution and delivery of this Agreement by MMLISI nor the
consummation of the transactions contemplated herein will result in a
breach or violation of any provision of the federal or state securities
laws or the Rules, applicable to MMLISI, or any judicial or administrative
orders in which it is named or any material agreement or instrument to
which it is a party or by which it is bound.
(c) MMLISI shall comply with the Rules and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any Contracts.
8. EXPENSES. MMLISI shall be responsible for all expenses incurred in
connection with its provision of services and the performance of its obligations
hereunder, except as otherwise provided herein.
C. M. Life shall be responsible for all expenses of printing and distributing
the Prospectuses, and all other expenses of preparing, printing and distributing
all other sales literature
<PAGE>
or material for use in connection with offering the Contracts for sale.
9. SALES LITERATURE AND ADVERTISING. MMLISI agrees to ensure that its
registered representatives use only the Prospectus, statements of additional
information, or other applicable and authorized sales literature then in effect
in selling the Contracts. MMLISI is not authorized to give any information or
to make any representations concerning the Contracts other than those contained
in the current Registration Statement filed with the SEC or in such sales
literature as may be authorized by C. M. Life.
MMLISI agrees to make timely filings with the SEC, the NASD, and such other
regulatory authorities as may be required of any sales literature or advertising
materials relating to the Contracts and intended for distribution to prospective
investors. C. M. Life shall review and approve all advertising and sales
literature concerning the Contracts utilized by MMLISI. MMLISI also agrees to
furnish to C. M. Life copies of all agreements and plans it intends to use in
connection with any sales of the Contracts.
10. APPLICATIONS. All applications for Contracts shall be made on application
forms supplied by C. M. Life, and shall be remitted by MMLISI promptly, together
with such forms and any other required documentation, directly to C. M. Life at
the address indicated on such application or to such other address as C. M. Life
may, from time to time, designate in writing. All applications are subject to
acceptance or rejection by C. M. Life at its sole discretion.
11. PAYMENTS. All money payable in connection with any of the Contracts,
whether as premiums, purchase payments or otherwise, and whether paid by, or on
behalf of any applicant or Contract owner, is the property of C. M. Life and
shall be transmitted immediately in accordance with the administrative
procedures of C. M. Life without any deduction or offset for any reason,
including by example but not limitation, any deduction or offset for
compensation claimed by MMLISI. Checks or money orders as payment on any
Contract shall be drawn to the order of "C. M. Life Insurance Company." No
cash payments shall be accepted by MMLISI in connection with the Contracts.
Unless otherwise agreed to by C. M. Life in writing, neither MMLISI nor any of
C. M. Life's Agents nor any broker shall have an interest in any surrender
charges, deductions or other fees payable to C. M. Life as set forth herein.
12. INSURANCE LICENSES. C. M. Life shall apply for and maintain the proper
insurance licenses and appointments for each of the Agents and brokers selling
the Contracts in all states or jurisdictions in which the Contracts are offered
for sale by such person. C. M. Life reserves the right to refuse to appoint any
proposed Agent or broker, and to terminate an Agent or broker once appointed.
C. M. Life agrees to be responsible for all
<PAGE>
licensing or other fees required under pertinent state insurance laws to
properly authorize Agents or brokers for the sale of the Contracts; however, the
foregoing shall not limit C. M. Life's right to collect such amount from any
person or entity other than MMLISI.
13. AGENT/BROKER COMPENSATION. Commissions or other fees due all brokers and
Agents in connection with the sale of Contracts shall be paid by C. M. Life, on
behalf of MMLISI, to the persons entitled thereto in accordance with the
applicable agreement between each such broker or Agent and C. M. Life or a
general agent thereof. MMLISI shall assist C. M. Life in the payment of such
amounts as C. M. Life shall reasonably request, provided that MMLISI shall not
be required to perform any acts that would subject it to registration under the
insurance laws of any state. The responsibility of MMLISI shall include the
performance of all activities by MMLISI necessary in order that the payment of
such amounts fully complies with all applicable federal and state securities
laws. Unless applicable federal or state securities law shall require, C. M.
Life retains the ultimate right to determine the commission rate paid to its
Agents.
14. MMLISI COMPENSATION. As payment for its services hereunder, MMLISI shall
receive an annual fee in the amount of $5,000 per year. Payments shall commence
and be made no later than December 31 of the year in which a Contract is issued.
The fee shall be renegotiated annually commencing in 1997. The last agreed-to
amount for the fee shall remain in effect until the new fee is mutually agreed
upon and is set forth in schedules attached hereto.
15. BOOKS AND RECORDS. MMLISI and C. M. Life shall each cause to be maintained
and preserved for the period prescribed such accounts, books, and other
documents as are required of it by the 1934 Act and any other applicable laws
and regulations. In particular, without limiting the foregoing, MMLISI shall
cause all the books and records in connection with the offer and sale of the
Contracts by its registered representatives to be maintained and preserved in
conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to
the extent that such requirements are applicable to the Contracts. The books,
accounts, and records of MMLISI and C. M. Life as to all transactions hereunder
shall be maintained so as to disclose clearly and accurately the nature and
details of the transactions. The payment of premiums, purchase payments,
commissions and other fees and payments in connection with the Contracts by its
registered representatives shall be reflected on the books and records of MMLISI
as required under applicable NASD regulations and federal and state securities
laws requirements.
MMLISI and C. M. Life, from time to time during the term of this Agreement,
shall divide the administrative responsibility for maintaining and preserving
the books, records and accounts kept in connection with the Contracts; provided,
however, in the case
<PAGE>
of books, records and accounts kept pursuant to a requirement of applicable law
or regulation, the ultimate and legal responsibility for maintaining and
preserving such books, records and accounts shall be that of the party which is
required to maintain or preserve such books, records and accounts under the
applicable law or regulation, and such books, records and accounts shall be
maintained and preserved under the supervision of that party. MMLISI and C. M.
Life shall each cause the other to be furnished with such reports as it may
reasonably request for the purpose of meeting its reporting and recordkeeping
requirements under such regulations and laws, and under the insurance laws of
the Commonwealth of Massachusetts and any other applicable states or
jurisdictions.
MMLISI and C. M. Life each agree and understand that all documents, reports,
records, books, files and other materials required under applicable Rules and
federal and state securities laws shall be the property of MMLISI, unless such
documents, reports, records, books, files and other materials are required by
applicable regulation or law to be also maintained by C. M. Life, in which case
such material shall be the joint property of MMLISI and C. M. Life. All other
documents, reports, records, books, files and other materials maintained
relative to this Agreement shall be the property of C. M. Life. Upon
termination of this Agreement, all said material shall be returned to the
applicable party.
MMLISI and C. M. Life shall establish and maintain facilities and procedures for
the safekeeping of all books, accounts, records, files, and other materials
related to this Agreement. Such books, accounts, records, files, and other
materials shall remain confidential and shall not be voluntarily disclosed to
any other person or entity except as described below in section 16.
16. AVAILABILITY OF RECORDS. MMLISI and C. M. Life shall each submit to all
regulatory and administrative bodies having jurisdiction over the sales of the
Contracts, present or future, any information, reports, or other material that
any such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. In particular, without limiting the foregoing,
C. M. Life agrees that any books and records it maintains pursuant to paragraph
15 of this Agreement which are required to be maintained under Rule 17a-3 or
17a-4 of the 1934 Act shall be subject to inspection by the SEC in accordance
with Section 17(a) of the 1934 Act and Sections 30 and 31 of the 1940 Act.
17. CONFIRMATIONS. C. M. Life agrees to prepare and mail a confirmation for
each transaction in connection with the Contracts at or before the completion
thereof as required by the 1934 Act and applicable interpretations thereof,
including Rule 10b-10 thereunder. Each such confirmation shall reflect the
facts of the transaction, and the form thereof will show that it is being sent
on behalf of MMLISI acting in the capacity of agent
<PAGE>
for C. M. Life.
18. INDEMNIFICATION. C. M. Life shall indemnify MMLISI, its registered
representatives, officers, directors, employees, agents and controlling persons
and hold such persons harmless, from and against any and all losses, damages,
liabilities, claims, demands, judgments, settlements, costs and expenses of any
nature whatsoever (including reasonable attorneys' fees and disbursements)
resulting or arising out of or based upon an allegation or finding that: (i) the
Registration Statement or any application or other document or written
information provided by or on behalf of C. M. Life includes any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to C. M. Life by MMLISI or its
registered representatives specifically for use in the preparation thereof, or
(ii) there is a misrepresentation, breach of warranty or failure to fulfill any
covenant or warranty made or undertaken by C. M. Life hereunder.
MMLISI will indemnify C. M. Life, its officers, directors, employees, agents and
controlling persons and hold such persons harmless, from and against any and all
losses, damages, liabilities, claims, demands, judgments, settlements, costs and
expenses of any nature whatsoever (including reasonable attorneys' fees and
disbursements) resulting or arising out of or based upon an allegation or
finding that: (i) MMLISI or its registered representatives offered or sold or
engaged in any activity relating to the offer and sale of the Contracts which
was in violation of any provision of the federal securities laws or, (ii) there
is a material misrepresentation, material breach of warranty or material failure
to fulfill any covenant or warranty made or undertaken by MMLISI hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of notice
of the commencement of any action by a third party, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this paragraph 18, notify the indemnifying party of the commencement thereof;
but the omission to notify the indemnifying party will not relieve the
indemnifying party from liability which the indemnifying party may have to any
indemnified party otherwise than under this paragraph. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in
<PAGE>
connection with the defense thereof other than reasonable costs of
investigation.
19. INDEPENDENT CONTRACTOR. MMLISI shall be an independent contractor. MMLISI
is responsible for its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or employees or to others
through its agents or employees. MMLISI assumes full responsibility for its
agents and employees under applicable statutes and agrees to pay all employer
taxes thereunder.
20. TERMINATION. Subject to termination as hereinafter provided, this
Agreement shall remain in full force and effect for the initial term of the
Agreement, which shall be for a two year period commencing on the date first
above written, and this Agreement shall continue in full force and effect from
year to year thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days written
notice to the other party, or at any time upon the mutual written consent of the
parties hereto. This Agreement shall automatically be terminated in the event
of its assignment. Subject to C. M. Life's approval, however, MMLISI may
delegate any duty or function assigned to it in this agreement provided that
such delegation is permissible under applicable law. Upon termination of this
Agreement, all authorizations, rights and obligations shall cease except the
obligations to settle accounts hereunder, including the settlement of monies due
in connection with the Contracts in effect at the time of termination or issued
pursuant to applications received by C. M. Life prior to termination.
21. INTERPRETATION. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be interpreted in accordance with the laws of the Commonwealth of Massachusetts.
22. NON-EXCLUSIVITY. The services of MMLISI and C. M. Life to the Separate
Account hereunder are not to be deemed exclusive and MMLISI and C. M. Life shall
be free to render similar services to others so long as their services hereunder
are not impaired or interfered with hereby.
23. AMENDMENT. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument executed
by all parties hereto.
24. INTERESTS IN AND OF MMLISI. It is understood that any of the
policyholders, directors, officers, employees and agents of
<PAGE>
C. M. Life may be a shareholder, director, officer, employee, or agent of, or be
otherwise interested in, MMLISI, any affiliated person of MMLISI, any
organization in which MMLISI may have an interest, or any organization which may
have an interest in MMLISI; that MMLISI, any such affiliated person or any such
organization may have an interest in C. M. Life; and that the existence of any
such dual interest shall not affect the validity hereof or of any transaction
hereunder except as otherwise provided in the Charter, Articles of
Incorporation, or By-Laws of C. M. Life and MMLISI, respectively, or by specific
provision of applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officials thereunto duly authorized and seals to be affixed,
as of the day and year first above written.
ATTEST: C. M. LIFE INSURANCE COMPANY,
on its behalf and on behalf of
C.M. LIFE VARIABLE LIFE
SEPARATE ACCOUNT I
By:
-----------------------
ATTEST: MML INVESTORS SERVICES, INC.
By:
-----------------------
<PAGE>
FORM OF
-------
PARTICIPATION AGREEMENT
-----------------------
Among
OPPENHEIMER VARIABLE ACCOUNT FUNDS,
-----------------------------------
OPPENHEIMERFUNDS, INC.
----------------------
and
CM LIFE INSURANCE COMPANY
-------------------------
THIS AGREEMENT (the "Agreement"), made and entered into as of the 12th day of
January, 1996 by and among CM Life Insurance Company (hereinafter the
"Company"), on its own behalf and on behalf of C.M. Multi-Account A, Panorama
Plus Separate Account and C.M. Life Variable Life Separate Account I
(hereinafter collectively the "Accounts"), Oppenheimer Variable Account Funds
(hereinafter the "Fund") and OppenheimerFunds, Inc. (hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company and is
available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies and variable annuity contracts (collectively, the "Variable Insurance
Products") offered by insurance companies (hereinafter "Participating Insurance
Company");
WHEREAS, the beneficial interest in the Fund is divided into several series of
shares, each designated a "Portfolio", and each representing the interests in a
particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 16, 1986 (File No. 812-6324) granting Participating
Insurance Company and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order")
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under the
federal Investment Advisers Act of 1940;
WHEREAS, the Company has registered or will register certain variable annuity
and/or life insurance contracts under the 1933 Act (hereinafter "Contracts");
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company, to set aside and invest assets attributable to the aforesaid
variable contracts (the Contract(s) and the Account(s) covered by the Agreement
are specified in Schedule B attached hereto, as may be modified by mutual
consent from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act;
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios (the Portfolios covered
by this Agreement are specified in Schedule A attached hereto as may be
modified by mutual consent from time to time), on behalf of the Accounts (which
are also described on Schedule A, as may be modified by mutual consent from time
to time) to fund the Contracts and the Fund is authorized to sell such shares to
unit investment trusts such as the Accounts at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Adviser and the Company agree as follows:
ARTICLE I. Sale of Fund Shares
-------------------
1.1 The Fund agrees that shares of the Fund will be sold only to Variable
Insurance Products.
1.2. The Company shall not permit any person other than a Contract Holder or
such Contract Holder's duly authorized representative to give instructions to
the Company which would require the Company to redeem or exchange shares of the
Fund.
<PAGE>
ARTICLE II. Sales Material, Prospectuses and Other Reports
----------------------------------------------
2.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund or the Adviser is named, at least ten Business Days prior to its
use. No such material shall be used if the Fund or its designee reasonably
object to such use within ten Business Days after receipt of such material.
"Business Day" shall mean any day in which the New York Stock Exchange is open
for trading and in which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
2.2. The Company shall not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Fund shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Fund, or in sale literature
or other promotional material approved by the Fund or its designee, except with
the permission of the Fund.
2.3. For purposes of this Article II, the phrase "sales literature or other
promotional material" means advertisements (such as material published, or
designed for use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboard
or electronic media), and sales literature (such as brochures, circulars, market
letters and form letters), distributed or made generally available to customers
or the public.
2.4. The Fund shall provide a copy of its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). The Adviser shall be
<PAGE>
permitted to review and approve the typeset form of the Fund's Prospectus prior
to such printing.
2.5. The Fund or the Adviser shall provide the Company with either: (i) a copy
of the Fund's proxy material, reports to shareholders, other information
relating to the Fund necessary to prepare financial reports, and other
communications to shareholders for printing and distribution to Contract owners
at the Company's expense, or (ii) camera ready and/or printed copies, if
appropriate, of such material for distribution to Contract owners at the
Company' expense, within a reasonable period of the filing date for definitive
copies of such material. The Adviser shall be permitted to review and approve
the typeset form of such proxy material and shareholder reports prior to such
printing provided such materials have been provided within a reasonable period.
ARTICLE III. Fees and Expenses
-----------------
3.1. The Fund and Adviser shall pay no fee or other compensation to the
Company under this agreement, and the Company shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein.
3.2. All expenses incident to performance by each party of its respective
duties under this Agreement shall be paid by that party. The Fund shall see to
it that all its shares are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, and the preparation of all statements
and notices required by any federal or state law.
3.3. The Company shall bear the expenses of typesetting, printing and
distributing the Fund's prospectus, proxy materials and reports to owners of
Contracts issued by the Company. 3.4. In the event the Fund adds one or
more additional Portfolios and the parties desire to make such Portfolios
available to the respective Contract owners as an underlying investment medium,
a new Schedule
<PAGE>
A or an amendment to this Agreement shall be executed by the parties authorizing
the issuance of shares of the new Portfolios to the particular Account. The
amendment may also provide for the sharing of expenses for the establishment of
new Portfolios among Participating Insurance Company desiring to invest in such
Portfolios and the provision of funds as the initial investment in the new
Portfolios.
ARTICLE IV. Potential Conflicts
-------------------
4.1. The Board of Trustees of the Fund (the "Board") will monitor the Fund for
the existence of any material irreconcilable conflict between the interests of
the Contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of Contract owners. The Board shall promptly
inform the Company if it determines that an irreconcilable material conflict
exists and the implications thereof.
4.2. The Company will each report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities in monitoring such conflicts by providing the Board in a timely
manner with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded and by confirming in writing, at the Fund's request, that the
Company are unaware of any such potential or existing material irreconcilable
conflicts.
<PAGE>
4.3. If it is determined by a majority of the Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to an
including: (1) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract owners,
----
life insurance contract owners, or variable contract owners of one or more
Participating Insurance Company) that votes in favor of such segregation, or
offering to the affected Contract owners the option of making such a change; and
(2) establishing a new registered management investment company or managed
separate account.
4.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and termination must
take place within six (6) months after the Fund gives written notice that this
provision is being implemented, and until the end of the six month period the
Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then
<PAGE>
the Company will withdraw the Account's investment in the Fund and terminate
this Agreement within six months after the Board informs the Company in writing
that it has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Until
the end of the foregoing six month period, the Fund shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Fund, subject to applicable regulatory limitation.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 4.3 to establish a new funding
medium for Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the particular Account's investment in the Fund and
terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
ARTICLE V. Applicable Law
--------------
5.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of New York.
5.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules
<PAGE>
and regulations as the Securities and Exchange Commission may grant (including,
but not limited to, the Shared Funding Exemptive Order) and the terms hereof
shall be interpreted and construed in accordance therewith.
ARTICLE VI. Termination
-----------
6.1 This Agreement shall terminate with respect to some or all Portfolios:
(a) at the option of any party upon six month's advance written notice to
the other parties;
(b) at the option of the Company to the extent that shares of Portfolios
are not reasonably available to meet the requirements of its Contracts or are
not appropriate funding vehicles for the Contracts, as determined by the Company
reasonably and in good faith. Prompt notice of the election to terminate for
such cause and an explanation of such cause shall be furnished by the Company;
or
(c) as provided in Article IV
6.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 6.1(a) may be exercised for cause
or for no cause.
ARTICLE VII. Notices
-------
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify to the other party.
If to the Fund:
Oppenheimer Variable Account Funds
c/o OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: Legal Department
If to the Adviser:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: General Counsel
<PAGE>
If to the Company:
CM Life Insurance Company
140 Garden Street
Hartford, CT 06154
Attn: Legal Department
ARTICLE VIII. Miscellaneous
-------------
8.1. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as it may come into the public domain.
8.2. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
8.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
8.5. Each party hereto shall cooperate with, and promptly notify each other
party and all appropriate governmental authorities (including without limitation
the Securities and Exchange Commission, the NASD and state insurance regulators)
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
8.6. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
<PAGE>
8.7. It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
8.8. The Company and the Adviser each understand and agree that the
obligations of the Fund under this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Adviser each represent that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
liability for acts or obligations of the Fund.
8.9. The parties agree that the Company may, on behalf of their respective
Accounts and Contracts listed in Exhibits A and B, elect to make additional
Portfolios available to Accounts upon the approval of the Adviser and the
provision of reasonable notice to the Adviser. Any Portfolio so added will be
subject to all of the terms and conditions of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed as of the date specified below.
CM LIFE INSURANCE COMPANY
By its authorized officer,
By:
-----------------------------
Title:
--------------------------
Date:
---------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS
By its authorized officer,
By:
-----------------------------
Robert G. Zack
Title: Assistant Secretary
--------------------------
Date:
---------------------------
OPPENHEIMERFUNDS, INC.
By its authorized officer,
By:
-----------------------------
Mitchell J. Lindauer
Title: Vice President
--------------------------
Date:
---------------------------
<PAGE>
SCHEDULE A
Portfolios of Oppenheimer Variable Account Funds:
Oppenheimer Money Fund
Oppenheimer Bond Fund
<PAGE>
SCHEDULE B
C.M. Multi-Account A (Panorama Premier Contract)
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
<PAGE>
Exhibit 99A12
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The undersigned, David E. Sams, Jr., a member of the Board of Directors and
President of C.M. Life Insurance Company ("C.M. Life"), does hereby constitute
and appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, Michael
Berenson, and Ann F. Lomeli, and each of them individually, as his true and
lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and power to take
any and all actions and execute any and all instruments on the undersigned's
behalf as a member of the Board of Directors and President of C.M. Life that
said attorneys and agents may deem necessary or advisable to enable C.M. Life to
comply with the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and any rules,
regulations, orders or other requirements of the Securities and Exchange
Commission (the "Commission") thereunder. This power of attorney applies to the
registration, under the 1933 Act and the 1940 Act, of shares of beneficial
interest of C.M. Life's separate investment accounts (the "C.M. Life Separate
Accounts"), as well as interests of C.M. Life's General Account. This power of
attorney authorizes such attorneys and agents to sign the undersigned's name on
his behalf as a member of the Board of Directors and President of C.M. Life to
the Registration Statements and to any instruments or documents filed or to be
filed with the Commission under the 1933 Act and the 1940 Act in connection with
such Registration Statements, including any and all amendments to such
statements, documents or instruments of any C.M. Life Separate Account, or C.M.
Life's General Account, including but not limited to those listed below.
C.M. Multi-Account A
SEI Variable Annuity
Panorama Premier Variable Annuity
OFFITBANK Variable Annuity
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
The undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 21st day of March,
1996.
/s/David E. Sams, Jr.
---------------------
David E. Sams, Jr.
Director and President
Attest: /s/Ann F. Lomeli
----------------
Ann F. Lomeli
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The undersigned, J. Brinke Marcuccilli, a member of the Board of Directors and
Chief Financial Officer of C.M. Life Insurance Company ("C.M. Life"), does
hereby constitute and appoint Lawrence V. Burkett, Thomas F. English, Richard M.
Howe, Michael Berenson, and Ann F. Lomeli, and each of them individually, as his
true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and power to take
any and all actions and execute any and all instruments on the undersigned's
behalf as a member of the Board of Directors and Chief Financial Officer of C.M.
Life that said attorneys and agents may deem necessary or advisable to enable
C.M. Life to comply with the Securities Act of 1933, as amended (the "1933
Act"), the Investment Company Act of 1940, as amended (the "1940 Act"), and any
rules, regulations, orders or other requirements of the Securities and Exchange
Commission (the "Commission") thereunder. This power of attorney applies to the
registration, under the 1933 Act and the 1940 Act, of shares of beneficial
interest of C.M. Life's separate investment accounts (the "C.M. Life Separate
Accounts"), as well as interests of C.M. Life's General Account. This power of
attorney authorizes such attorneys and agents to sign the undersigned's name on
his behalf as a member of the Board of Directors and Chief Financial Officer of
C.M. Life to the Registration Statements and to any instruments or documents
filed or to be filed with the Commission under the 1933 Act and the 1940 Act in
connection with such Registration Statements, including any and all amendments
to such statements, documents or instruments of any C.M. Life Separate Account,
or C.M. Life's General Account, including but not limited to those listed below.
C.M. Multi-Account A
SEI Variable Annuity
Panorama Premier Variable Annuity
OFFITBANK Variable Annuity
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
The undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 21st day of March,
1996.
/s/J. Brinke Marcuccilli
------------------------
J. Brinke Marcuccilli
Director and Chief Financial Officer
Attest: /s/Ann F. Lomeli
----------------
Ann F. Lomeli
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The undersigned, Emelia Bruno, Controller of C.M. Life Insurance Company ("C.M.
Life"), does hereby constitute and appoint Lawrence V. Burkett, Thomas F.
English, Richard M. Howe, Michael Berenson, and Ann F. Lomeli, and each of them
individually, as her true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and power to take
any and all actions and execute any and all instruments on the undersigned's
behalf as Controller of C.M. Life that said attorneys and agents may deem
necessary or advisable to enable C.M. Life to comply with the Securities Act of
1933, as amended (the "1933 Act"), the Investment Company Act of 1940, as
amended (the "1940 Act"), and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of C.M. Life's separate
investment accounts (the "C.M. Life Separate Accounts"), as well as interests of
C.M. Life's General Account. This power of attorney authorizes such attorneys
and agents to sign the undersigned's name on her behalf as Controller of C.M.
Life to the Registration Statements and to any instruments or documents filed or
to be filed with the Commission under the 1933 Act and the 1940 Act in
connection with such Registration Statements, including any and all amendments
to such statements, documents or instruments of any C.M. Life Separate Account,
or C.M. Life's General Account, including but not limited to those listed below.
C.M. Multi-Account A
SEI Variable Annuity
Panorama Premier Variable Annuity
OFFITBANK Variable Annuity
Panorama Plus Separate Account
C.M. Life Variable Life Separate Account I
The undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set her hand this 22nd day of March,
1996.
/s/Emelia Bruno
---------------
Emelia Bruno
Controller
Attest: /s/Ann F. Lomeli
-------------------
Ann F. Lomeli
<PAGE>
EXHIBIT 99C1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement (File No. 33-91072) for C.M. Life Variable Life
Separate Account I of C.M. Life Insurance Company.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 26, 1996
