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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Registration No. 33-91072
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. 2 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 (check appropriate
box)
immediately upon filing pursuant to
--------- paragraph (b) of Rule 485.
X on May 1, 1997 pursuant to paragraph (b) of
--------- Rule 485.
60 days after filing pursuant to paragraph
--------- (a) of Rule 485
on (date) pursuant to paragraph (a) of
--------- Rule 485.
FLEXIBLE PREMIUM VARIABLE LIFE
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's fiscal year ending December 31,
1996 was filed on February 28, 1997.
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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
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
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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1
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. ("Panorama Fund"),
Oppenheimer Bond Fund (the "Oppenheimer Bond Fund"), which is one of the funds
of Oppenheimer Variable Account Funds ("Oppenheimer Funds"), Variable Insurance
Products Fund ("VIP Fund") or Variable Insurance Products Fund II ("VIP Fund
II"). (The Panorama Fund, Oppenheimer Funds 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 FUND, 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, 1997.
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Table Of Contents
<TABLE>
<S> <C>
Special Terms............................................................... 4
Summary..................................................................... 6
Description of C.M. Life, Massachusetts Mutual Life Insurance Company, The
Separate Account, The Panorama 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 Panorama Fund......................................................... 7
Oppenheimer Funds......................................................... 7
VIP Fund and VIP Fund II.................................................. 7
Investment Objectives and Policies........................................ 8
Investment Advisory Services to the Panorama 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.................................................................. 12
Application for a Policy.................................................. 12
Free Look Period.......................................................... 13
Conversion Privileges..................................................... 13
Premium Payments.......................................................... 13
Allocation of Net Premiums................................................ 13
Transfer Privilege........................................................ 14
Account Rebalancing....................................................... 14
Proceeds Payable on Death of the Insured.................................. 14
Death Benefit Options..................................................... 14
Change in Death Benefit Option............................................ 15
Definition of Life Insurance Test......................................... 15
Change in Specified Amount................................................ 15
Policy Value and Surrender Value.......................................... 16
Payment Options........................................................... 16
Optional Insurance Benefits............................................... 17
Surrender................................................................. 17
Partial Withdrawal........................................................ 17
Charges and Deductions...................................................... 17
Tax Expense Charge........................................................ 17
Premium Charge............................................................ 17
Monthly Deduction from Policy Value....................................... 18
Charges Against Assets of the Separate Account............................ 18
Surrender Charge.......................................................... 19
Charges on Partial Withdrawal............................................. 19
Transfer Charges.......................................................... 19
Charge for Increase in Specified Amount................................... 19
Other Administrative Charges.............................................. 19
Reduction of Charges...................................................... 19
Policy Loans................................................................ 19
Loan Interest Charged..................................................... 20
Preferred Loan Provision.................................................. 20
Repayment of Policy Debt.................................................. 20
Effect of Policy Loans.................................................... 20
Policy Termination and Reinstatement........................................ 20
Termination............................................................... 20
Reinstatement............................................................. 20
</TABLE>
2
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<TABLE>
<S> <C>
Other Policy Provisions..................................................... 21
Policyowner.............................................................. 21
Beneficiary.............................................................. 21
Incontestability......................................................... 21
Suicide.................................................................. 21
Age...................................................................... 21
Assignment............................................................... 21
Postponement of Payments................................................. 21
Directors and Principal Officers of C.M. Life............................... 22
Distribution................................................................ 22
Reports..................................................................... 22
Legal Proceedings........................................................... 22
Further Information......................................................... 22
Independent Accountants..................................................... 23
Federal Tax Considerations.................................................. 23
C.M. Life and the Separate Account....................................... 23
Taxation of the Policies................................................. 23
Conventional Life Insurance Policies..................................... 24
Modified Endowment Contracts............................................. 24
Reasonableness Requirements for Charges.................................. 25
Other.................................................................... 25
More Information About the Fixed Account.................................... 25
General Description...................................................... 25
Fixed Account Value...................................................... 26
The Policy............................................................... 26
ERISA Compliance............................................................ 26
Financial Statements........................................................ 26
Appendix A - Optional Benefits.............................................. 45
Appendix B - Payment Options................................................ 46
Appendix C - Illustrations of Death Benefit, Policy Values and Accumulated
Premiums....................................................... 47
</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 Massachusetts Mutual Life Insurance Company ("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 Panorama 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 Panorama
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 Panorama Fund, Oppenheimer Funds, VIP Fund or VIP Fund II.
These Portfolios include six Panorama Fund Portfolios: Total Return; Growth;
International Equity; LifeSpan Diversified Income; LifeSpan Balanced; and
LifeSpan Capital Appreciation. The one Oppenheimer Fund is the Oppenheimer Bond
Fund. 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,
PANORAMA 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 PANORAMA 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,
1997 C.M.
6
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Life is licensed to transact a variable life insurance business in 47 States
plus Puerto Rico.
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, Puerto Rico and
certain provinces of Canada. As of December 31, 1996, MassMutual had total
contingency reserves in excess of $2.6 billion and consolidated assets of $55.8
billion.
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 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 Panorama 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 Fund 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
Panorama 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 Panorama Fund and
Oppenheimer Funds are managed by OppenheimerFunds, Inc. ("OFI") while the VIP
Funds are managed by FMR & Research Company ("FMR").
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 Panorama Fund
Panorama Series Fund, Inc. (the "Panorama Fund") is an open-end, diversified
management investment company registered with the SEC under the 1940 Act. Such
registration does not involve supervision by the SEC of the investments or
investment policy of the Trust or its separate investment Portfolios.
The Panorama Fund was incorporated in Maryland on August 17, 1981. The Panorama
Fund has seven Portfolios including: Government Securities Portfolio; Total
Return Portfolio; Growth Portfolio; International Equity Portfolio; LifeSpan
Diversified Income Portfolio; LifeSpan Balanced Portfolio; and LifeSpan Capital
Appreciation Portfolio. The Government Securities Portfolio is not available in
this Policy.
OFI is a controlled subsidiary of MassMutual, and serves as investment adviser
of the Panorama Fund, and manages the investments of the Panorama Fund
Portfolios. (See "INVESTMENT ADVISORY SERVICES TO THE PANORAMA FUND.")
Oppenheimer Funds
The Oppenheimer Bond Fund is one of the funds 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 FMR. 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. FMR, 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 Investment(R) is the original Fidelity
company, founded in
7
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1946. It provides a number of mutual funds to other clients with investment
research and portfolio management services.
Investment Objectives and Policies
A summary of investment objectives of each of the Funds' 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 Panorama 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 Fund. The Oppenheimer Bond Fund 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 Fund seeks capital growth when
consistent with its primary objective.
Total Return Portfolio. The Total Return Portfolio of the Panorama 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 according to changing market conditions.
Growth Portfolio. The Growth Portfolio of the Panorama Fund seeks to achieve
long-term growth of capital by investing in common stocks with low
price-earnings ratios and better than anticipated earnings. Realization of
current income is a secondary consideration.
International Equity Portfolio. The International Equity Portfolio of the
Panorama 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 slightly stronger 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 PANORAMA 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 PANORAMA 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 Advisory Services to the Panorama Fund and Oppenheimer Funds
The Panorama Fund and Oppenheimer Funds have entered into investment advisory
agreements with OFI. Under the
8
<PAGE>
investment advisory agreements, OFI provides certain administrative services and
investment advice to each Panorama Fund Portfolio and Oppenheimer Fund
Portfolio. OFI provides administrative and management services to the Panorama
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 Panorama Fund and the Oppenheimer Funds. The
investment advisory agreement obligates OFI to provide investment advisory
services and to pay all compensation of and furnish office space for officers of
the Panorama Fund and Oppenheimer Funds connected with investment and economic
research, trading and investment management of the Panorama Fund, Oppenheimer
Funds and their respective Portfolios. Each Panorama Fund Portfolio and
Oppenheimer Fund Portfolio pays all other expenses incurred in its operation.
The Board of Directors of the Panorama Fund and the Board of Trustees of the
Oppenheimer Funds are primarily responsible for monitoring activities of
OFI.
OFI has engaged three sub-advisers: Babson-Stewart Ivory International
("Babson-Stewart"), BEA Associates ("BEA") and Pilgrim Baxter & Associates
("Pilgrim Baxter") to provide day-to-day portfolio management of certain
components of the LifeSpan Portfolios. Babson-Stewart also provides day-to-day
portfolio management services to the International Equity Portfolio.
Babson-Stewart, BEA and Pilgrim Baxter are registered as investment advisers
under the Investment Advisers Act of 1940.
For providing its services under the investment advisory agreement, OFI will
receive a monthly fee, computed daily at an annual rate based on the average
daily net asset value of each Panorama Fund Portfolio and the Oppenheimer Bond
Fund 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 First $250 Million 0.750%
Over $250 Million 0.650%
LifeSpan Balanced First $250 Million 0.850%
Over $250 Million 0.750%
LifeSpan Capital Appreciation First $250 Million 0.850%
Over $250 Million 0.750%
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
Panorama 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 Panorama Fund and purchased shares of the Bond Portfolio of
the Oppenheimer Funds with the proceeds.
Investment Advisory Services to the VIP Funds
For managing investments and business affairs, each VIP Fund and VIP Fund II
Portfolio pays a monthly fee to FMR. 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 FMR, 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, 1996 was
0.21%.
The High Income Portfolio pays a monthly fee to FMR 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 FMR. 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.
9
<PAGE>
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 FMR. The effective
management fee rate for the High Income Portfolio as of December 31, 1996 was
0.59%.
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 1996 equaled 0.43% 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 Panorama 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 Panorama 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 Panorama 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 Panorama 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 Panorama Fund, Oppenheimer Funds or VIP Fund
Portfolios; or (2) to approve or disapprove an investment advisory contract for
the Panorama 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 adviser or principal underwriter initiated by Policyowners,
the Board of Directors of the Panorama 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 Panorama 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 divi-
10
<PAGE>
dends but generally do not reflect deductions for administrative and management
costs and expenses.
C.M. Life may provide in advertising, sales literature, periodic publications or
other materials information on various topics of interest to Policyowners and
prospective Policyowners. These topics may include the relationship between
sectors of the economy and the economy as a whole and its effect on various
securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparisons between the Policies and the
characteristics of and market for such financial instruments.
The Policies were first offered to the public in 1995. However, total return
data may be advertised based on the period of time that the Portfolios have been
in existence. The results for any period prior to the Policies being offered
will be calculated as if the Policies had been offered during that period of
time, with all charges assumed to be those applicable to the Policies.
Portfolio Performance for Period Ending: December 31, 1996
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 Panorama 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 18.87% 17.75% 17.33% 15.94% 17.79%
Money Market 5.41% 5.17% 4.53% 5.96% 6.99%
Total Return 10.14% 10.41% 11.52% 12.32% 13.73%
Oppenheimer Bond 4.80% 6.33% 7.68% 8.81% 9.94%
High Income 14.03% 10.63% 14.96% 11.12% 12.00%
International Equity 13.26% 8.21% N/A N/A 8.78%
Index 500 22.71% 19.37% N/A N/A 17.06%
LifeSpan Balanced 13.38% N/A N/A N/A 14.85%
LifeSpan Diversified Income 6.93% N/A N/A N/A 9.61%
LifeSpan Capital Appreciation 17.97% N/A N/A N/A 18.80
</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, 1996 was 5.27%.
<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>
1996 18.87% 5.41% 10.14% 4.80% 14.03% 13.26% 22.71% 13.38% 6.93% 17.97%
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, 1996
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 17.82% 16.72% 16.30% 14.92% 16.74%
Money Market 4.47% 4.24% 3.60% 5.02% 6.03%
Total Return 9.16% 9.43% 10.53% 11.33% 12.46%
Income (Oppenheimer Bond) 3.87% 5.39% 6.72% 7.84% 8.94%
High Income 13.02% 9.65% 13.95% 8.37% 11.03%
International Equity 12.26% 7.26% N/A N/A 7.68%
Index 500 21.63% 18.32% N/A N/A 16.28%
LifeSpan Balanced 12.40% N/A N/A N/A 13.35%
LifeSpan Diversified Income 5.99% N/A N/A N/A 8.17%
LifeSpan Capital Appreciation 16.96% N/A N/A N/A 17.25%
</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.
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.
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
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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 multiplied by 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.
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 pro-
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vided 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.
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
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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. During 1996, the
aggregate amount of deductions for state premium tax was $21,920.
Although not currently deducted, C.M. Life reserves the right to make deductions
from premium payments for Deferred Acquisition Cost ("DAC") tax charges. If
currently imposed, the rate would be at 1%, a rate that C.M. Life approximates
to be equal to C.M. Life's expenses in paying federal taxes for deferred
acquisition costs associated with the Policies. The DAC tax deduction is a
factor C.M. Life must use when calculating the maximum sales load it can charge
under SEC rules.
PREMIUM CHARGE
A premium charge will be applied to premium payments received during the first
seven Policy years after issue or the effective date of an increase in Specified
Amount. The maximum premium charge applied in a Policy year will be 6% of
premium received during that Policy Year, up to the annual Target Premium for
the Policy. If more than the Target Premium for the Policy is paid in a Policy
year, there will be no premium charge applied to the premium in excess of the
Target Premium. In the event of an increase in Specified Amount, premium
payments will be pro rated between the
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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.") During 1996, the aggregate amount of
deductions for premium charges was $65,760.
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. During 1996, the aggregate amount
of deductions for cost of insurance charges was $26,253.
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. During 1996, the aggregate
amount of deductions for monthly administrative charges was $12,004.
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 aggregate amount of such charges paid
in 1996 was $8,624.
The mortality risk assumed by C.M. Life is that Insureds may live for a shorter
time than anticipated, and that C.M. Life will therefore pay an aggregate amount
of Proceeds sooner than anticipated. The expense risk assumed is that the
expenses incurred in issuing and administering the Policies will exceed the
amounts realized from the administrative charges provided in the Policies. If
the charge for mortality and expense risks is not sufficient to cover actual
mortality experience and expenses, C.M. Life will absorb the losses. If costs
are less than the amounts provided, the difference will be a profit to C.M.
Life. To the extent this charge results in a current profit to C.M. Life, such
profit will be available for use by C.M. Life for, among other things, the
payment of distribution, sales and other expenses. Since mortality and expense
risks involve future contingencies which are not subject to precise
deter-
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mination 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. 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. During 1996, the aggregate amount of separate
account administrative charges was $3,363.
Other Charges Against the Assets of the Separate Account. Because the
Sub-Accounts purchase shares of the Funds, the value of the Accumulation Units
of the Sub-Accounts will reflect the investment advisory fee and other expenses
incurred by the Funds. The prospectuses and statements of additional information
of 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.
REDUCTION OF CHARGES
While this Policy is available for sale to individuals, it will also be sold to
corporations and to other multiple life groups or sponsoring organizations.
Depending on the size of the group, the nature of the sale, the expected premium
volume, or other factors that C.M. Life considers to be significant, there may
be expense savings that could be passed on to the customer. Subject to
applicable state laws and regulations, we reserve the right to reduce the
premium charge, cost of insurance charge, or any other charge that is
appropriate to reflect any expense savings. Distribution expenses, underwriting
expenses and administrative expenses are examples of potential areas where
savings may be realized.
Policy Loans
Loans may be obtained by request to C.M. Life on the sole security of this
Policy. The total amount which may be borrowed is the Loan Value. The Loan Value
is an amount equal to the Policy Value less existing Policy Debt and less
projected interest to the next Policy Anniversary Date at the then applicable
Loan Interest Rate. We reserve the right to defer Policy Loan requests for a
period not exceeding six months after the date when the Policyholder applies for
the Policy Loan. There is no minimum limit on the amount of the loan.
A Policy Loan may be allocated among the Fixed Account and one or more
Sub-Accounts. If you do not make an allocation, C.M. Life will make a Pro Rata
Allocation based on the amounts in the Accounts on the date C.M. Life receives
the loan request. Policy Value in each Sub-Account equal to the Policy Debt
allocated to such Sub-Account will be transferred to the Fixed Account, and the
number of Accumulation Units equal to the Policy Value so transferred will be
cancelled. This will reduce the Policy Value in these Sub-Accounts. These
transactions are not treated as transfers for purposes of the transfer charge.
As long as the Policy is in force, Policy Value in the Fixed Account equal to
the loan amount will be credited with interest at a specified rate equal to
1 1/2% less than the Loan Interest Rate.
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LOAN INTEREST CHARGED
Interest accrues daily and is payable in arrears. A Policy Loan will be subject
to a Loan Interest Rate which is calculated based on the current rate specified
as the monthly average of the Composite Yield on Seasoned Corporate Bonds as
published by Moody's Investors Service. The rate will be calculated two months
prior to the Policy's anniversary date, and will remain in force for the entire
Policy Year. If increased at the next Policy anniversary, the increase will be
at least for 1/2%. Where required by state law, a fixed interest rate will be
available at a rate of 8%, unless a different rate is required under applicable
state law. Further, the variable interest rate will not exceed the maximum
interest rate permitted in the Policy's contract state. Interest is due and
payable at the end of each Policy year or on a pro rata basis for such shorter
period as the loan may exist. Interest not paid when due will be added to the
loan amount and bear interest at the same rate. After the due and unpaid
interest is added to loan amount, if the new loan amount exceeds the Policy
Value in the Fixed Account, C.M. Life will transfer Policy Value equal to that
excess loan amount from the Policy Value in each Sub-Account to the Fixed
Account as security for the excess loan amount. C.M. Life will allocate the
amount transferred among the Sub-Accounts in the same proportion that the Policy
Value in each Sub-Account bears to the total Policy Value in all Sub-Accounts.
PREFERRED LOAN PROVISION
Where permitted by applicable law, a Preferred Loan Provision is available under
the Policy. When available, the Preferred Loan Provision permits the Policyowner
to take loans against the Policy Value at a rate that is 1 1/2% less than the
Loan Interest Rate then in effect for the Policy. Additionally, we reserve the
right to adjust this preferred rate at each Policy anniversary when the Loan
Interest Rate for the coming Policy year is determined. The maximum Preferred
Loan Amount is 10% of the Policy Value at the time of the Preferred Loan
request. This provision is available after the tenth Policy year.
REPAYMENT OF POLICY DEBT
Loans may be repaid at any time prior to the lapse of the Policy. You must
notify C.M. Life if a payment is a loan repayment, otherwise it will be
considered a premium payment. Upon repayment of Policy Debt, the portion of the
Policy Value that is in the Fixed Account securing the Policy Debt repaid will
be allocated to the various Sub-Accounts and increase the Policy Value in such
accounts in accordance with your instructions. If you do not make a repayment
allocation, C.M. Life will allocate Policy Value in accordance with your most
recent premium allocation instructions; provided, however, that loan repayments
allocated to the Separate Account cannot exceed Policy Value previously
transferred from the Separate Account to secure the Policy Debt.
If Policy Debt exceeds the Policy Value, the Policy will terminate. A notice of
such pending termination will be mailed to the last known address of you and any
assignee. If you do not make sufficient payment within 62 days after this notice
is mailed, the Policy will lapse without value.
EFFECT OF POLICY LOANS
Although Policy Loans may be repaid at any time prior to the lapse of the
Policy, Policy Loans will permanently affect the Policy Value and may
permanently affect Proceeds. The effect could be favorable or unfavorable,
depending upon whether the investment performance of the Sub-Account(s) is less
than or greater than the interest credited to the Policy Value in the Fixed
Account attributable to the loan. Moreover, outstanding Policy loans and the
accrued interest will be deducted from the proceeds payable upon the death of
the Insured or Surrender.
Policy Termination and Reinstatement
TERMINATION
The failure to make premium payments will not cause the Policy to lapse unless:
(a) the Surrender Value is insufficient to cover the next Monthly Deduction plus
loan interest accrued; or (b) Policy Debt and the Monthly Deductions currently
due exceed the Policy Value; or (c) the Policy Value is less than zero. If one
of these situations occurs, the Policy will be in default. You will then have a
grace period of 62 days, measured from the date of default, to make sufficient
payments to prevent termination. On the date of default, C.M. Life will send a
notice to you and to any assignee of record. The notice will state the amount of
premium due and the date on which it is due.
Failure to make a sufficient payment within the grace period will cause the
Policy to lapse. If the Insured dies during the grace period, the Proceeds will
still be payable; however, any Monthly Deductions due and unpaid through the
Policy month in which the Insured dies and any other overdue charge will be
deducted from the Proceeds paid to the Beneficiary.
REINSTATEMENT
If the Policy has not been surrendered and the Insured is alive, the terminated
Policy may be reinstated anytime within three years after the lapse date and
before the Maturity Date. The reinstatement will be effective on the Monthly
Payment Date following the date you submit the following to C.M. Life: (1) a
written application for reinstatement; (2) Evidence of Insurability showing that
the Insured is insurable consistent with C.M. Life's then applicable
underwriting rules; and (3) a Net Premium that is the greater of a Planned
Periodic Payment or a net premium sufficient to cover three monthly deductions
at an amount equal to the last Monthly Deduction just prior to the Policy
termination.
Policy Value on Reinstatement. The Policy Value on the date of reinstatement is:
. the Net Premium paid to reinstate the Policy increased at an interest
rate determined by C.M. Life, and guaranteed to be no less than 3%
annually, from the date the payment was received at C.M. Life's
Service Center;
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. 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 jurisdictions in order to
comply with requirements of the insurance laws, regulations, and insurance
regulatory agencies in those jurisdictions.
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
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withdrawal or death of the Insured, as well as payments of policy loans and
transfers from the Fixed Account, for a period not to exceed six months.
DIRECTORS AND OFFICERS OF C.M. LIFE INSURANCE COMPANY
Directors:
Lawrence V. Burkett, Jr., Director, President and Chief Executive Officer
Director, President and Chief Executive Officer, C.M. Life, since 1996;
Executive Vice President and General Counsel, MassMutual, since 1993; Senior
Vice President and Deputy General Counsel, 1992-1993.
John B. Davies, Director
Director, C.M. Life, since 1996; Executive Vice President, MassMutual, since
1994; Associate Executive Vice President, 1994-1994; General Agent,
1982-1993.
Daniel J. Fitzgerald, Director
Director, C.M. Life, since 1996; Executive Vice President, Corporate
Financial Operations, MassMutual, since 1994; Senior Vice President,
1991-1994.
Stuart H. Reese, Director and Senior Vice President-Investments
Director and Senior Vice President-Investments, C.M. Life, since 1996;
Senior Vice President, MassMutual, since 1993; Investment Manager, Aetna
Life and Casualty and Affiliates, 1979-1993.
PRINCIPAL OFFICERS (other than those who are also Directors):
Paul D. Adornato
Senior Vice President-Operations, C.M. Life, since 1996; Senior Vice
President, MassMutual, since 1986.
Anne Melissa Dowling
Senior Vice President-Large Corporate Marketing, C.M. Life, since 1996;
Senior Vice President, MassMutual, since 1996; Chief Investment Officer,
Connecticut Mutual Life Insurance Company, 1994-1996; Senior Vice
President-International, Travelers Insurance Co., 1987-1993.
Maureen R. Ford
Senior Vice President-Annuity Marketing, C.M. Life, since 1996; Senior Vice
President, MassMutual, since 1996; Marketing Officer, Connecticut Mutual
Life Insurance Company, 1989-1996.
Isadore Jermyn
Senior Vice President and Actuary, C.M. Life, since 1996; Senior Vice
President and Actuary, MassMutual, since 1995; Vice President and Actuary,
1980-1995.
Ann Iseley
Treasurer, C.M. Life, since 1996; Vice President and Treasurer, MassMutual,
since 1996; Chief Financial and Operations Officer, Connecticut Mutual
Financial Services, 1994-1996; Controller, The Mack Company, 1993-1994; Vice
President-Finance, Mutual of New York, 1988-1993.
Ann F. Lomeli
Secretary, C.M. Life, since 1988; Vice President, Associate Secretary and
Associate General Counsel, MassMutual, since 1996; Corporate Secretary and
Counsel, Connecticut Mutual Life Insurance Company, 1988-1996.
Distribution
MML Distributors, LLC ("MML Distributors"), 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.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies of the Separate Account. Compensation paid to
MMLISI in 1996 was $5,000. No compensation was paid to MML Distributors in 1996.
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 1996, such commissions charges amounted to
$272,275.
MML Distributors does business under different variations of its name, including
the name MML Distributors, L.L.C. in the
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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 Panorama Fund, 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 documents and omitted information may be obtained from
the SEC's principal office in Washington, D.C., upon payment of the SEC's
prescribed fees.
Independent Accountants
The audited financial statements of C.M. Life Variable Life Separate Account I
as of December 31, 1996 and for the year then ended included in this prospectus
have been so included in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The audited statement of statutory financial position of C.M. Life Insurance
Company as of December 31, 1996 and the related statutory statements of income,
changes in shareholder's equity and cash flows for the year ended December 31,
1996 included in this prospectus have been so included in reliance on the
report, which includes explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles, of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The audited statement of statutory financial position of C.M. Life Insurance
Company as of December 31, 1995 and the related statutory statements of income,
changes in shareholder's equity and cash flows for each of the years in the two
year period ended December 31, 1995 included in this prospectus have been so
included in reliance on the reports of Arthur Anderson LLP, C.M. Life's former
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
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 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
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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. C.M. Life reserves the right to make changes to the
Policy if changes are deemed appropriate by C.M. Life to assure qualification of
the Policy as a life insurance contract. If a Policy were determined not to
qualify as life insurance, the Policy would not provide the tax advantages
normally provided by life insurance. The discussion below summarizes the tax
treatment of life insurance contracts.
The death benefit under a Policy should be excludable from the gross income of
the Beneficiary (whether the Beneficiary is a corporation, individual or other
entity) under Code section 101(a)(1) for purposes of the regular federal income
tax and the Policyowner generally should not be deemed to be in constructive
receipt of the Policy Value, including increments thereof, under the Policy
until Surrender thereof, maturity of the Policy, or partial withdrawal. However,
certain Policy loans may be taxable in the case of Policies that are modified
endowment contracts. Prospective Policyowners that intend to use Policies to
fund deferred compensation arrangements for their employees are urged to consult
their tax advisers with respect to the tax consequences of such arrangements.
Prospective corporate owners should consult their tax advisers about the
treatment of life insurance in their particular circumstances for purposes of
the alternative minimum tax applicable to corporations and the environmental tax
under Code section 59A (for these purposes, the death benefit and increases in
Policy Value may be taxable). Changing the Policyowner may also have tax
consequences. Exchanging a Policy for another involving the same Insured
generally will not result in the recognition of gain or loss according to Code
section 1035(a). Changing the Insured under a Policy will, however, not be
treated as a tax-free exchange under Section 1035, but rather as a taxable
exchange.
The Code also requires that the investment of each Sub-Account be adequately
diversified in accordance with Treasury regulations in order to be treated as a
life insurance policy for tax purposes. The Sub-Accounts through the Funds,
intend to comply with this diversification requirement. Although C.M. Life does
not have control over the investments of the Funds, C.M. Life will monitor
continued compliance with these requirements.
In certain circumstances, owners of variable life insurance policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the owner possesses incidents of ownership in those assets, such as the ability
to exercise investment control over the assets. The Treasury Department also
announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which Investor control of the investments of a segregated asset
account may cause the investor (i.e., the Policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts without being treated as owners of the
underlying assets." As of the date of this prospectus, no regulations have 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 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 issued, 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, which, if paid for each of the first seven years, would 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, 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
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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 such Policy Loan
will constitute income to the Policyowner unless the Policy is surrendered or
the Policy matures. Interest on a loan 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. Generally, if the Policy loan is used for
personal purposes by an individual, the interest expense is not deductible.
Other restrictions apply to the deduction of loan interest 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.
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 on the Policy
which is the amount by which the Policy Value exceeds investment in the Policy
immediately before the distribution. If two or more Policies which are
classified as modified endowment contracts are purchased from any one insurance
company and its affiliates 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 591/2 years old; (ii)
which is attributable to the taxpayer becoming totally disabled; or (iii) which
is part of a series of substantially equal periodic payments made (not less
frequently than annually) for the life (or life expectancy) of the taxpayer or
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
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.
Since the Policy provides for flexible premium payments. We will carefully
monitor the Policy to determine whether increases in death benefits or
additional premium payments cause either the start of a new seven-year test
period or the taxation of distributions and loans. All additional premium
payments will be considered.
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
securi-
25
<PAGE>
ties laws concerning the accuracy and completeness of statements made in
prospectuses.
GENERAL DESCRIPTION
Allocations to the Fixed Account for this Policy are invested in the General
Account of C.M. Life. The General Account of C.M. Life is made up of all of the
general assets of C.M. Life other than those allocated to any separate account.
Allocations to the General Account become part of the assets of C.M. Life and
are used to support insurance and annuity obligations. Subject to applicable
law, C.M. Life has sole discretion over the investment of assets of the General
Account.
A portion or all of Net Premiums may be allocated or transferred to accumulate
at a fixed rate of interest in the Fixed Account. Such net amounts are
guaranteed by C.M. Life as to principal and a minimum rate of interest. The
allocation or transfer of funds to the Fixed Account does not entitle you to
share in the investment experience of the General Account.
FIXED ACCOUNT VALUE
C.M. Life bears the full investment risk for amounts allocated to the Fixed
Account and guarantees that interest credited to each Policyowner's Policy Value
in the General Account will not be less than an annual rate of 3% prior to
issuance of the Policy and 4% thereafter ("Guaranteed Minimum Rate").
C.M. Life may, AT ITS SOLE DISCRETION, credit a higher rate of interest ("excess
interest"), although it is not obligated to credit interest in excess of the
Guaranteed Minimum Rate per year, and might not do so. However, the excess
interest rate, if any, in effect on the date a premium is received at the
Service Center is guaranteed on that premium for one year, unless the Policy
Value associated with the premium becomes security for a Policy loan. AFTER SUCH
INITIAL ONE YEAR GUARANTEE OF INTEREST ON NET PREMIUM, ANY INTEREST CREDITED ON
THE POLICY'S ACCUMULATED VALUE IN THE FIXED ACCOUNT IN EXCESS OF THE GUARANTEED
MINIMUM RATE PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF C.M. LIFE.
THE POLICYOWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE.
Even if excess interest is credited to accumulated value in the Fixed Account,
no excess interest will be credited to that portion of the Policy Value which is
equal to Policy Debt. However, such Policy Value will be credited interest at an
effective annual yield of at least a rate equal to the Loan Interest Rate less
1.5% (unless another rate is required by applicable law).
C.M. Life guarantees that, on each Monthly Payment Date after issuance and
acceptance of the Policy, the Policy Value in the Fixed Account will be the
amount of the Net Premiums allocated or Policy Value transferred to the Fixed
Account, plus interest at an annual rate of 4% per year, plus any excess
interest which C.M. Life credits, less the sum of all Policy charges allocable
to the Fixed Account and any amounts deducted from the Fixed Account in
connection with loans, partial withdrawals, surrenders or transfers.
Transfers, surrenders, partial withdrawals, Proceeds and Policy Loans payable
from the General Account may be delayed up to six months. However, if payment is
delayed for 30 days (state variations may exist) or more, C.M. Life will pay
interest at least equal to an effective annual yield of 3% per year for the
period of deferment. Amounts from the General Account used to pay premiums on
Policies with C.M. Life will not be delayed.
THE POLICY
This prospectus describes a flexible premium variable life insurance policy and
is generally intended to serve as a disclosure document only for the aspects of
the Policy relating to the Separate Account. For complete details regarding the
Fixed Account, see the Policy itself.
ERISA Compliance
The use of the Policy in an employer-sponsored program may result in the
application of all or portions of the Employee Retirement Income Security Act of
1974 (as amended) ("ERISA"). If ERISA applies, the employer may be subject to
government and participant disclosure, filing, fiduciary and other requirements.
The Policyowner is encouraged to consult with counsel on these matters, as
neither C.M. Life nor any of its representatives are authorized to make
representations concerning whether ERISA applies to the intended use of a
Policy.
Financial Statements
The Financial Statements of C.M. Life and the Separate Account included herein
should be considered only as bearing upon the ability of C.M. Life to meet its
obligations under the Policy.
<PAGE>
Report Of Independent Accountants
To the Policy Owners of C.M. Life Variable Life Separate Account 1
and the Board of Directors of C.M. Life Insurance Company
We have audited the statement of assets and liabilities of C.M. Life Variable
Life Separate Account 1 as of December 31, 1996, and the related statements of
operations and changes in net assets for the year then ended. These financial
statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the underlying investment fund. 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
audit provides 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 Variable Life
Separate Account 1 as of December 31, 1996, and the results of its operations
and changes in its net assets for the year then ended, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
March 14, 1997
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at Market (Notes 3A and 3B):
Panorama Series Fund, Inc.
Total Return
130,253 shares (Cost $235,700)..................................... $ 248,783
Growth
675,272 shares (Cost $1,826,784)................................... 2,012,311
International Equity
40,864 shares (Cost $49,920)....................................... 52,715
LifeSpan Diversified Income
12,294 shares (Cost $13,004)....................................... 13,523
LifeSpan Balanced
22,687 shares (Cost $25,648)....................................... 26,771
LifeSpan Capital Appreciation
8,719 shares (Cost $10,188)........................................ 10,812
--------------
2,364,915
==============
Oppenheimer Variable Account Funds
Bond
--------------
466 shares (Cost $5,396)........................................... 5,420
--------------
Fidelity Variable Insurance Products Fund
Money Market
2,912 shares (Cost $2,912)......................................... 2,912
High Income
5,190 shares (Cost $61,899)........................................ 64,979
Fidelity Variable Insurance Products Fund II
Index 500
1,381 shares (Cost $112,220)....................................... 123,089
--------------
190,980
--------------
2,561,315
--------------
Due from C.M. Life Insurance Company................................... 24,617
--------------
NET ASSETS $ 2,585,932
==============
</TABLE>
<TABLE>
<CAPTION>
Net assets consisted of: Units Unit value Net assets
---------- ------------ ----------
<S> <C> <C> <C>
Total Return......................... 216,277 $ 1.16 $ 251,393
Growth .............................. 1,572,926 1.29 2,032,584
International Equity................. 45,890 1.14 52,307
LifeSpan Diversified Income.......... 12,165 1.12 13,647
LifeSpan Balanced.................... 22,635 1.18 26,771
LifeSpan Capital Appreciation........ 8,743 1.24 10,811
Bond................................. 5,059 1.08 5,441
Money Market......................... 2,750 1.06 2,912
High Income.......................... 60,815 1.07 64,872
Index 500............................ 97,181 1.29 125,194
-----------
$ 2,585,932
===========
</TABLE>
See notes to Financial Statements.
28
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
---------------------------------------------------------------------
LifeSpan
International Diversified LifeSpan
Total Return Growth Equity Income Balanced
------------ ------ ------------- ----------- --------
<S> <C> <C> <C> <C> <C>
Investment Income
Dividends (Note 3B) ................... $ 973 $ 13,955 $ 194 $ 66 $ 65
Expenses
Mortality and expense
risk fees (Note 4) .................. 1,203 9,575 218 54 92
------------ --------- --------- ------- ---------
Net investment income (loss) (Note 3C) (230) 4,380 (24) 12 (27)
------------ --------- --------- ------- ---------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on investments
(Notes 3B, 3C and 5) ................ 2,386 26,236 (384) 140 52
Change in net unrealized appreciation
on investments ...................... 13,083 185,527 2,795 519 1,123
------------ --------- --------- ------- ---------
Net gain (loss) on investments ........ 15,469 211,763 2,411 659 1,175
------------ --------- --------- ------- ---------
Net increase (decrease) in net
assets resulting from operations .... $ 15,239 $ 216,143 $ 2,387 $ 671 $ 1,148
============ ========== ========= ======= =========
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer
Variable
Account Fidelity Variable
Panorama Series Fund, Inc. Funds Insurance Products Fund & Fund II
--------------------------- ------------ -------------------------------------
LifeSpan
Capital Government Money High
Appreciation Securities(1) Bond(2) Market Income Index 500
------------ ------------ ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends (Note 3B) ................... $ -- $ 3 $ 143 $ 1,487 $ -- $ --
Expenses
Mortality and expense
risk fees (Note 4) .................. 29 8 16 261 190 339
----------- ------------ ------- -------- ------- ---------
Net investment income (loss) (Note 3C) (29) (5) 127 1,226 (190) (339)
----------- ------------ ------- -------- ------- ---------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on investments
(Notes 3B, 3C and 5) ................ 24 (141) (126) -- (50) 2,379
Change in net unrealized appreciation
on investments ...................... 624 -- 24 -- 3,080 10,869
----------- ------------ ------- -------- ------- ---------
Net gain (loss) on investments ........ 648 (141) (102) -- 3,030 13,248
----------- ------------ ------- -------- ------- ---------
Net increase (decrease) in net
assets resulting from operations .... $ 619 $ (146) $ 25 $ 1,226 $ 2,840 $ 12,909
=========== ============ ======= ======== ======= =========
</TABLE>
(1) For the period 1/1/96-4/30/96, the Government Securities Sub-Account
invested in shares of Panorama Series Government Securities Portfolio which
has since been liquidated.
(2) For the period 5/1/96-12/31/96, the Government Securities Sub-Account
invested in shares of the Oppenheimer Bond Fund.
See Notes to Financial Statements.
29
<PAGE>
C.M. Life Variable Life Separate Account I
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Panorama Series Fund, Inc.
---------------------------------------------------------------------
LifeSpan
International Diversified LifeSpan
Total Return Growth Equity Income Balanced
------------ --------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) ............ $ (230) $ 4,380 $ (24) $ 12 $ (27)
Net realized gain (loss) on investments.. 2,386 26,236 (384) 140 52
Change in net unrealized
appreciation/depreciation on investments.. 13,083 185,527 2,795 519 1,123
---------- --------- ---------- ------------ ----------
Net increase (decrease) in net assets
resulting from operations ............... 15,239 216,143 2,387 671 1,148
---------- --------- ---------- ------------ ----------
Capital transactions:
Net premiums ............................ 166,589 308,164 20,877 6,061 15,925
Transfer of surrender values ............ (3,622) (19,301) (711) (965) (1,101)
Transfers between sub-accounts and
C.M. Life Insurance Company ............. 73,187 1,527,578 29,754 7,880 10,799
---------- --------- ---------- ------------ ----------
Net increase in net assets
from capital transactions ............... 236,154 1,816,441 49,920 12,976 25,623
---------- --------- ---------- ------------ ----------
Total increase ............................ 251,393 2,032,584 52,307 13,647 26,771
---------- --------- ---------- ------------ ----------
NET ASSETS, beginning of the year ......... -- -- -- -- --
---------- --------- ---------- ------------ ----------
NET ASSETS, end of the year ............... $ 251,393 $ 2,032,584 $ 52,307 $ 13,647 $ 26,771
========== ========= ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer
Variable
Account Fidelity Variable
Panorama Series Fund, Inc. Funds Insurance Products Fund & Fund II
----------------------------------------------------------------------------------
LifeSpan
Capital Government Money High
Appreciation Securities(1) Bond(2) Market Income Index 500
------------ ------------ ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) .......... $ (29) $ (5) $ 127 $ 1,226 $ (190) $ (339)
Net realized gain (loss) on investments 24 (141) (126) -- (50) 2,379
Change in net unrealized
appreciation/depreciation on investments 624 -- 24 -- 3,080 10,869
------------ ------------ ----------- ---------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations ............. 619 (146) 25 1,226 2,840 12,909
------------ ------------ ----------- ---------- ----------- ------------
Capital transactions:
Net premiums .......................... 3,321 4,568 1,460 486,612 51,427 33,188
Transfer of surrender values .......... (189) (224) (95) (482) (1,460) (150)
Transfers between sub-accounts and
C.M. Life Insurance Company ........... 7,060 (4,198) 4,051 (484,444) 12,065 79,247
------------ ------------ ----------- ---------- ----------- ------------
Net increase in net assets
from capital transactions ............. 10,192 146 5,416 1,686 62,032 112,285
------------ ------------ ----------- ---------- ----------- ------------
Total increase .......................... 10,811 -- 5,441 2,912 64,872 125,194
------------ ------------ ----------- ---------- ----------- ------------
-- -- -- -- -- --
NET ASSETS, beginning of the year ------------ ------------ ----------- ---------- ----------- ------------
NET ASSETS, end of the year ............. $ 10,811 $ -- $ 5,441 $ 2,912 $ 64,872 $ 125,194
============ ========== =========== ========== =========== ============
</TABLE>
(1) For the period 1/1/96-4/30/96, the Government Securities Sub-Account
invested in shares of Panorama Series Government Securities Portfolio which
has since been liquidated.
(2) For the period 5/1/96-12/31/96, the Government Securities Sub-Account
invested in shares of the Oppenheimer Bond Fund.
See Notes to Financial Statements.
30
<PAGE>
C.M. Life Variable Life Separate Account I
Notes To Financial Statements
1. HISTORY
C.M. Life Variable Life Separate Account I (the "Separate Account") was
established as a separate investment account of C.M. Life Insurance
Company ("C.M. Life"). C.M. Life was formerly a wholly-owned stock life
insurance subsidiary of Connecticut Mutual Life Insurance Company ("CML").
On February 29, 1996, CML merged with and into Massachusetts Mutual Life
Insurance Company ("MassMutual"). Upon the merger, CML's existence ceased
and MassMutual became the surviving company under the name Massachusetts
Mutual Life Insurance Company. C.M. Life became a wholly-owned subsidiary
of MassMutual. The Separate Account operates as a registered unit
investment trust pursuant to the Investment Company Act of 1940 ("the 1940
Act") and the rules promulgated thereunder.
2. INVESTMENT OF THE SEPARATE ACCOUNT'S ASSETS
The Separate Account maintains ten Sub-Accounts. Each Sub-Account invests
in shares of certain investment portfolios of three investment companies:
the Panorama Series Fund, Inc., ("Panorama Series") (prior to May 1, 1996
named Connecticut Mutual Financial Services Series Fund I, Inc.),
Oppenheimer Variable Account Funds, and the Fidelity Variable Insurance
Products Fund and Fund II ("VIP Fund" and "VIP Fund II").
Panorama Series is a series-type mutual fund with six of its portfolios
currently available to Executive Benefit Variable Universal Life (the life
insurance policy offered by the Separate Account) policy owners: Total
Return, Growth, International Equity, LifeSpan Diversified Income,
LifeSpan Balanced and LifeSpan Capital Appreciation. Oppenheimer Variable
Account Funds is a series-type mutual fund with the Oppenheimer Bond
available to Executive Benefit Variable Universal Life policy owners. VIP
Fund and VIP Fund II are series-type mutual funds with two and one of its
portfolios, respectively currently available to Executive Benefit Variable
Universal Life policy owners: Money Market, High Income and Index 500.
Oppenheimer Funds, Inc., a controlled subsidiary of MassMutual, serves as
investment adviser to the Panorama Series and the Oppenheimer Variable
Account Funds. VIP Fund and VIP Fund II are managed by Fidelity Management
& Research Company. Panorama Series, Oppenheimer Variable Account Funds
and the VIP Funds are registered, open-end, diversified management
investment companies registered under the 1940 Act.
In addition to the ten Sub-Accounts of the Separate Account, a policy
owner may also allocate funds to C.M. Life's General Account. Interests in
the General Account are registered under the Securities Act of 1933, as
amended, but the General Account is not registered under the 1940 Act.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Separate Account in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
The investments in Panorama Series, Oppenheimer Variable Account Funds and
the VIP Funds are each stated at market value which is the net asset value
per share of each of the respective underlying portfolios.
B. Accounting for Investments
Investment transactions are accounted for on the trade date and identified
cost is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
Operations of the Separate Account form a part of the total operations of
C.M. Life, and the Separate Account is not taxed separately. C.M. Life is
taxed as a life insurance company under the provisions of the 1986
Internal Revenue Code, as amended. The Separate Account will not be taxed
as a "regulated investment company" under Subchapter M of the Internal
Revenue Code. Under existing federal law, no taxes are payable on
investment income and realized capital gains attributable to policies
which depend on the Separate Account's investment performance.
Accordingly, no provision for federal income tax has been made. C.M. Life
may, however, make such a charge in the future if an unanticipated change
of current law results in a company tax liability attributable to the
Separate Account.
31
<PAGE>
Notes To Financial Statements (Continued)
D. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. CHARGES
There are no deductions for sales charges made from the premium payments
at the time of purchase. A deduction of 2.0% of premiums is made from each
premium payment for state and local premium taxes.
For assuming mortality and expense risks, C.M. Life deducts a charge
equal, on an annual basis, to .65% of the daily net asset value in each
Sub-Account. C.M. Life also deducts an administrative charge equal, on an
annual basis, to $60 per policy which is deducted from the Policy Value.
These charges cover expenses in connection with the administration of the
Separate Account and the Policies.
5. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
Cost of Proceeds
For the Year Ended December 31, 1996 Purchases from Sales
--------- ----------
<S> <C> <C>
Panorama Series Fund, Inc.
Total Return................................................. $ 310,962 $ 77,648
Growth....................................................... 2,463,554 663,006
International Equity......................................... 50,966 662
Lifespan Diversified Income.................................. 14,038 1,174
Lifespan Balanced............................................ 29,017 3,421
Lifespan Capital Appreciation................................ 10,598 434
Government Securities........................................ 10,058 9,917
Oppenheimer Bond............................................... 5,562 40
Fidelity Variable Insurance Products Fund and Fund II
Money Market................................................. 1,126,299 1,123,387
High Income.................................................. 63,380 1,431
Index 500.................................................... 115,531 5,690
</TABLE>
6. DISTRIBUTION AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the policies pursuant to an
underwriting and servicing agreement among MML Distributors, C.M. Life and
Separate Account I (prior to May 1, 1996, MML Distributors was known as
Connecticut Mutual Financial Services, LLC). MML Distributors is
registered with the Securities and Exchange Commission (the "SEC") as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"). MML
Distributors may enter into selling agreements with other broker-dealers
who are registered with the SEC and are members of the NASD in order to
sell the policies.
Effective March 1, 1996, MML Investors Services, Inc. ("MMLISI") serves as
a co-underwriter of the policies pursuant to underwriting and servicing
agreements among MMLISI, C.M. Life and Separate Account I. MMLISI is
registered with the SEC as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the NASD. Registered representatives of
MMLISI sell the policies as authorized variable life insurance agents
under applicable state insurance laws.
Pursuant to underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
policies are paid by C.M. Life through MML Distributors or MMLISI. MML
Distributors and MMLISI also receive compensation for their actions as
underwriters of the policies.
32
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
C.M. Life Insurance Company
We have audited the accompanying statutory statement of financial position of
C.M. Life Insurance Company as of December 31, 1996, and the related statutory
statements of income, changes in shareholder's equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company prepared these
financial statements using statutory accounting practices of the National
Association of Insurance Commissioners and the accounting practices prescribed
or permitted by the Department of Insurance of the State of Connecticut, which
practices differ from generally accepted accounting principles. The effects on
the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles, although not
determinable at this time, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the third
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of C.M. Life Insurance Company at December 31, 1996, and the results of its
operations and its cash flows for the year then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C.M. Life Insurance Company at
December 31, 1996, and the results of its operations and its cash flows for the
year then ended, on the statutory basis of accounting described in Note 1.
COOPERS & LYBRAND, L.L.P.
Springfield, Massachusetts
February 7, 1997
33
<PAGE>
Report Of Independent Public Accountants
To C.M. Life Insurance Company:
We have audited the accompanying statutory statement of financial position 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 the related statutory statements of income, changes in shareholder's
equity and cash flows for each of the two years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our originally issued report dated February 15, 1996, we expressed an opinion
that the 1995 financial statements, prepared using accounting practices
prescribed or permitted by the Insurance Department of the State of Connecticut,
presented fairly, in all material respects, the financial position of C.M. Life
Insurance Company as of December 31, 1995, and the results of its operations,
and its cash flows for each of the two years in the period ended December 31,
1995 in conformity with generally accepted accounting principles. As described
in Note 1 to the financial statements, pursuant to the provisions of Statement
of Financial Accounting Standards No. 120 (SFAS No. 120), Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts, financial statements of mutual
life insurance enterprise for periods ending on or before December 15, 1996,
prepared using accounting practices prescribed or permitted by insurance
regulators (statutory financial statements) are no longer considered
presentations in conformity with generally accepted accounting principles when
presented for comparative purposes with the enterprise's financial statements
for periods subsequent to the effective date of SFAS No. 120. Accordingly, our
present opinion on the presentation of the 1995 financial statements in
accordance with generally accepted accounting principles, as presented herein,
is different from that expressed in our previous report.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
accordance with generally accepted accounting principles, the financial position
of C.M. Life Insurance Company as of December 31, 1995, or the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995.
In our opinion, the financial statements referred to above do present fairly, in
all material respects, the financial position of C.M. Life Insurance Company as
of December 31, 1995 and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1995 in conformity with
accounting practices prescribed or permitted by the Insurance Department of the
State of Connecticut.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1996
(Except with respect to the matter discussed in Note 1,
as to which the date is March 4, 1996)
34
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1996 1995
------ ------
(In Thousands Except for
Share Information)
<S> <C> <C>
Assets:
Bonds........................................... $ 736,524 $ 736,099
Preferred stocks................................ -- 211
Common stocks................................... 55,642 72,361
Mortgage loans.................................. 33,791 30,716
Policy loans.................................... 132,942 126,014
Cash and short-term instruments................. 63,688 15,069
Investment and insurance amounts receivable..... 32,783 23,765
Transfer due from separate account.............. 24,278 22,300
Federal income tax receivable................... 7,094 --
Other assets.................................... 87 1,819
Separate account assets......................... 779,742 531,432
---------- ----------
$1,866,571 $1,559,786
========== ==========
Liabilities:
Policyholders' reserves and funds............... $ 907,492 $ 867,672
Policy claims and other benefits................ 3,843 2,086
Payable to parent and affiliates................ 9,654 10,823
Federal income taxes............................ -- 2,820
Asset valuation reserve......................... 18,475 15,868
Investment reserves............................. 3,329 4,011
Other liabilities............................... 34,292 11,875
Separate account reserves and liabilities....... 779,742 531,432
---------- ----------
1,756,827 1,446,587
========== ==========
Shareholder's equity:
Common stock, $200 par value
50,000 shares authorized
12,500 shares issued and outstanding..... 2,500 2,500
Paid-in capital and contributed surplus......... 43,759 43,759
Shareholder's equity............................ 63,485 66,940
---------- ----------
109,744 113,199
---------- ----------
$1,866,571 $1,559,786
========== ==========
</TABLE>
See notes to statutory financial statements.
35
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENT OF INCOME
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income.................................. $314,372 $260,847 $251,176
Net investment and other income................. 76,456 84,390 83,354
-------- -------- --------
390,828 345,237 334,530
-------- -------- --------
Benefits and expenses:
Policy benefits and payments.................... 98,966 58,913 44,033
Addition to policyholders' reserves, funds
and separate accounts......................... 210,324 211,403 230,338
Operating expenses.............................. 45,448 32,146 14,786
Commissions..................................... 24,987 14,092 7,365
State taxes, licenses and fees.................. 3,247 5,017 4,199
-------- -------- --------
382,972 321,571 300,721
-------- -------- --------
Net gain from operations before federal
income taxes.................................. 7,856 23,666 33,809
Federal income taxes............................ 6,286 9,376 14,249
-------- -------- --------
Net gain from operations........................ 1,570 14,290 19,560
Net realized capital gain (loss)................ 635 (540) (1,772)
-------- -------- --------
Net income...................................... $ 2,205 $ 13,750 $ 17,788
======== ======== ========
</TABLE>
See notes to statutory financial statements.
36
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year.................... $113,199 $103,837 $ 87,898
Increases (decreases) due to:
Net income................................................. 2,205 13,750 17,788
Change in asset valuation and investment reserves.......... (1,923) (9,228) (106)
Change in non-admitted assets.............................. (2,765) (1,157) (1,761)
Net unrealized capital gain (loss)......................... (972) 5,997 18
-------- -------- --------
(3,455) 9,362 15,939
-------- -------- --------
Shareholder's equity, end of year.......................... $109,744 $113,199 $103,837
======== ======== ========
</TABLE>
See notes to statutory financial statements.
37
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss)............................................ $ 2,205 $ 13,750 $ 17,788
Additions to policyholders' reserves, funds, and net of
transfers to separate accounts............................. 41,578 84,218 68,764
Net realized capital gain (loss)............................. (635) 540 1,772
Change in receivable (payable) from parent................... (1,169) 5,711 (3,870)
Other changes................................................ 409 (6,303) (3,306)
--------- ---------- ----------
Net cash provided by operating activities.................... 42,388 97,916 81,148
Investing activities:
Loans and purchases of investments........................... (184,900) (491,893) (332,750)
Sales or maturities of investments and receipts from
repayment of loans.......................................... 191,131 406,021 249,038
--------- ---------- ----------
Net cash provided by (used in) investing activities.......... 6,231 (85,872) (83,712)
Financing activities:
Net cash provided by financing activities................... -- -- --
Increase (decrease) in short-term investments.................... 48,619 12,044 (2,564)
Cash and short-term investments, beginning of year............... 15,069 3,025 5,589
--------- ---------- ----------
Cash and short-term investments, end of year..................... $ 63,688 $ 15,069 $ 3,025
========= ========== ==========
</TABLE>
See notes to statutory financial statements.
38
<PAGE>
Notes To Statutory Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C.M. Life Insurance Company (the Company) is a wholly owned stock life insurance
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"). On
March 1, 1996, the operations of the Company's former parent, Connecticut Mutual
Life Insurance Company, were merged into MassMutual. The Company is primarily
engaged in the sale of flexible premium universal life insurance and variable
annuity products. The Company is licensed to transact business in all states
except New York.
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted by
the Insurance Department of the State of Connecticut ("statutory accounting
practices"), which prior to 1996 were considered to be in conformity with
generally accepted accounting principles ("GAAP"). In 1993, the Financial
Accounting Standards Board ("FASB") issued interpretation No. 40 ("Fin. 40"),
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises", which clarified that wholly owned stock life
insurance subsidiaries of mutual life insurance companies issuing financial
statements described as prepared in conformity with GAAP after 1995 are required
to apply all applicable GAAP pronouncements in preparing those financial
statements. In January 1995, the FASB issued Statement No. 120 ("SFAS 120"),
Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts," which among
other things, extended the applicability of certain FASB statements to mutual
life insurance companies and deferred the effective date of Fin. 40 to financial
statements issued or reissued after 1996. As required by generally accepted
auditing standards, the opinion expressed by our former independent accountants
on the 1995 and 1994 financial statements is different from that expressed in
their previous report.
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs in connection with
acquiring new business, are charged to current operations as incurred, whereas
GAAP would require these expenses to be capitalized and recognized over the life
of the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP would value bonds at fair value and (d) deferred
income taxes are not provided for book-tax timing differences whereas GAAP would
record deferred income taxes. Management has not yet completed GAAP financial
statements, but believes that shareholder's equity based upon GAAP will be
higher than shareholder's equity based upon statutory accounting practices.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities, at the date of the
financial statements. Management must also make estimates and assumptions that
affect the amounts of revenues and expenses during the reporting period. Future
events, including changes in the levels of mortality, morbidity, interest rates
and asset valuations, could cause actual results to differ from the estimates
used in the financial statements.
The following is a description of the Company's current principal accounting
policies and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at amortized
cost, preferred stocks in good standing at cost, and common stocks at fair
value.
Mortgage loans are valued at principal less unamortized discount.
Policy loans are carried at the outstanding loan balance less amounts unsecured
by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves, as prescribed and permitted by the
Connecticut Insurance Department, stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines in the
value of bonds and mortgage loans.
The Interest Maintenance Reserve captures after-tax realized capital gains and
losses which result from changes in the overall level of interest rates for all
types of fixed income investments. This reserve is amortized into income using
the grouped method over the remaining life of the investment sold or over the
remaining life of the underlying asset. Net realized after tax capital gains of
$425 thousand in 1996 and net realized after tax capital losses of $867 thousand
in 1995 and $3,391 thousand in 1994 were transferred to the Interest Maintenance
Reserve. Amortization of the Interest Maintenance Reserve into net investment
income amounted to $37 thousand in 1996, $61 thousand in 1995, and $309 thousand
in 1994. In 1996, 1995 and 1994, the Interest Maintenance Reserve resulted in
net loss deferral. In accordance with the practices of the National Association
of Insurance Commissioners, the balance was recorded as a reduction of
shareholder's equity.
39
<PAGE>
Notes To Statutory Financial Statements (Continued)
Realized capital gains and losses, less taxes, not includable in the Interest
Maintenance Reserve, are recognized in net income. Realized capital gains and
losses are determined using the specific identification method. Unrealized
capital gains and losses are included in shareholder's equity.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of variable annuity and variable
life insurance contract holders. The assets consist principally of marketable
securities reported at fair value. Transfers due from separate account
represents the separate account assets in excess of statutory benefit reserves.
Premiums, benefits and expenses of the separate accounts are reported in the
statutory statement of income. Reserves for these life and 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. The Company receives administrative and investment advisory fees
from these accounts.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally prepaid agent commissions,
other prepaid expenses and Interest Maintenance Reserve, when in a net loss
deferral position) are excluded from the statutory statement of financial
position. These amounted to $6,604 thousand and $3,839 thousand as of December
31, 1996 and 1995, respectively and changes therein are charged directly to
shareholder's equity.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
1980 Commissioners' Standard Ordinary mortality tables with assumed interest
rates ranging from 4.0 to 4.5 percent.
Reserves for single premium deferred annuities are calculated based on the
Commissioners' Annuity Reserve Valuation Method utilizing the change in fund
method and assuming interest on changes in funds of 7.0%, 8.0% and 7.0% in 1996,
1995 and 1994, respectively. Additional reserves are maintained for contracts
where the cash surrender value exceeds the actuarially determined reserve.
Reserves for policies and contracts considered investment contracts have a
carrying value and fair value of $113,670 thousand (fair value is determined by
discounted cash flow projections).
E. Premium and Related Expense Recognition
Life insurance premium income is recognized annually on the anniversary date of
the policy. Annuity premium is recognized when received. Commissions and other
costs related to the issuance of new policies, maintenance and settlement costs
are charged to current operations.
F. Cash and Short-term Investments
For purposes of the statutory Statement of Cash Flows, the Company considers all
highly liquid short-term investments with a maturity of twelve months or less
from the date of purchase to be cash and short-term investments.
2. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best estimate of
its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves and acquisition costs, resulted in an effective tax rate which is other
than the statutory tax rate.
3. STOCKHOLDER'S EQUITY
The Board of Directors of MassMutual has authorized the contribution of funds to
the Company sufficient to meet the capital requirements of all states in which
the Company 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.
Under these regulations, $11,320 thousand of stockholder's equity is available
for distribution to shareholders in 1997 without prior regulatory approval.
40
<PAGE>
Notes To Statutory Financial Statements (Continued)
4. RELATED PARTY TRANSACTIONS
Investment and administrative services are provided to the Company pursuant to a
management services agreement with MassMutual. Fees incurred under the terms of
the agreement were $45,914 thousand, $34,008 thousand and $16,412 thousand in
1996, 1995 and 1994, respectively.
Effective March 1996, the Company modified its underwriting agreement with
its affiliates, GR Phelps and MassMutual Distributors, whereby the Company will
pay all future commissions relating to variable annuity business in exchange for
the rights to retain all future policy administration fees and charges.
The Company cedes a portion of its life insurance business to MassMutual and
other insurers in the normal course of business. The Company's retention limit
per individual insured is $4 million; the portion of the risk exceeding the
retention limit is reinsured with other insurers. The Company is contingently
liable with respect to ceded reinsurance in the event any reinsurer is unable to
fulfill its contractual obligations.
The Company has a modified coinsurance quota-share reinsurance agreement with
MassMutual whereby the Company cedes 50% of the premiums on certain universal
life policies issued in 1985 and 75% of the premiums with issue dates on or
after January 1, 1986. In return MassMutual pays the Company 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 the Company.
The Company also has a stop-loss agreement with MassMutual, with maximum
coverage at $25,000 thousand, under which the Company cedes claims which, in
aggregate, exceed $28,080 thousand in 1996, $24,245 thousand in 1995, and
$18,348 thousand in 1994. For each of the years, the limit was not exceeded. The
Company paid approximately $400 thousand, $602 thousand, and $435 thousand in
premiums under the agreement in 1996, 1995 and 1994, respectively.
5. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment.
A. Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
December 31, 1996
---------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
------- ---------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and Obligations of U.S.
Government Corporations and Agencies $138,751 $ 2,175 $ 964 $139,962
Debt Securities issued by Foreign Governments 3,953 53 22 3,984
Mortgage-backed securities 37,395 745 725 37,415
State and local governments 10,263 244 101 10,406
Industrial securities 509,227 11,643 3,700 517,170
Utilities 36,935 1,168 159 37,944
-------- ------- ------ --------
TOTAL $736,524 $16,028 $5,671 $746,881
======== ======= ====== ========
<CAPTION>
December 31, 1995
---------------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
-------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities and Obligations of U.S.
Government Corporations and Agencies $ 27,817 $ 1,764 $ 8 $ 29,573
Debt Securities issued by Foreign Governments 11,186 483 295 11,374
Mortgage-backed securities 150,694 7,144 347 157,491
Industrial securities 501,252 21,472 711 522,013
Utilities 45,150 2,303 16 47,437
-------- ------- ------ --------
TOTAL $736,099 $33,166 $1,377 $767,888
======== ======= ====== ========
</TABLE>
41
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1996, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 76,698 $ 77,009
Due after one year through five years 284,200 287,363
Due after five years through ten years 202,722 206,317
Due after ten years 84,515 86,874
-------- --------
subtotal 648,135 657,563
Mortgage-backed securities, including securities guaranteed
by the U.S. Government 88,389 89,318
-------- --------
Total $736,524 $746,881
======== ========
</TABLE>
Proceeds from sales of investments in bonds were $162,934 thousand during 1996,
$380,567 thousand during 1995 and $224,884 thousand during 1994. Gross capital
gains of $1,608 thousand in 1996, $3,598 thousand in 1995 and $1,358 thousand in
1994 and gross capital losses of $876 thousand in 1996, $4,658 thousand, in 1995
and $4,439 thousand in 1994 were realized on those sales, a portion of which
were included in the Interest Maintenance Reserve. Estimated fair value of
non-publicly traded bonds is determined by the Company using a pricing matrix.
B. Stocks
Common stocks had a cost of $47,195 thousand in 1996 and $64,225 thousand in
1995.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for
non-performing loans, approximated carrying value less valuation reserves held.
D. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $2,774 thousand at December 31, 1996. The Company
had restructured loans with book values of $21,867 thousand and $17,128 thousand
at December 31, 1996 and 1995, respectively. The loans typically have been
modified to defer a portion of the contracted interest payments to future
periods. Interest deferred to future periods totaled $178 thousand in 1996, $171
thousand in 1995 and $183 thousand in 1994.
It is not practicable to determine the fair value of policy loans as they do not
have a stated maturity.
6. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks to reduce interest rate and duration
imbalances determined in asset/liability analyses. The fair values of these
instruments, which are not recorded in the financial statements, are based upon
market prices or prices obtained from brokers. The Company does not hold or
issue financial instruments for trading purposes.
The Company utilizes interest rate swap agreements and options to reduce
interest rate exposures arising from mismatches between assets and liabilities
and to modify portfolio profiles to manage other risks identified. Under
interest rate swaps, the Company agrees to exchange, at specified intervals, the
difference between fixed and floating interest rates calculated by reference to
an agreed-upon notional principal amount. Net amounts receivable and payable are
accrued as adjustments to interest income and included in investment and
insurance amounts receivable on the Statutory Statement of Financial Position.
Gains and losses realized on the termination of contracts are amortized through
the Interest Maintenance Reserve over the remaining life of the associated
contract. At December 31, 1996 and 1995, the Company had swaps with notional
amounts of $13,000 thousand. The fair value of these instruments was $103
thousand at December 31, 1996 and $491 thousand at December 31, 1995. During
1996 options (protective puts) were utilized to hedge equity exposures. The net
1996 realized losses from this activity were $837 thousand. The notional amount
of options totaled $34,700 thousand as of December 31, 1996.
42
<PAGE>
Notes To Statutory Financial Statements (Continued)
During 1994 interest rate futures were acquired to hedge the reinvestment of
anticipated proceeds from a bulk mortgage sale. The actual gain of $95 thousand
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, 1996 and
1995.
7. LIQUIDITY
The withdrawal characteristics of the policyholder's reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1996 are illustrated below:
(In Thousands)
Total policyholders' reserves and funds and
separate account liabilities $1,687,234
Not subject to discretionary withdrawal (1,446)
Policy loans (132,941)
----------
Subject to discretionary withdrawal $1,552,847
==========
Total invested assets, including separate
investment accounts $1,802,416
Policy loans and other invested assets (216,721)
----------
Readily available marketable instruments $1,585,695
==========
8. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in which it
does business. These laws assess insurance companies amounts to be used to pay
benefits to policyholders and claimants of insolvent insurance companies. Many
states allow these assessments to be credited against future premium taxes. The
Company believes such assessments in excess of amounts accrued will not
materially affect its financial position, results of operations or liquidity. In
1996, the Company elected not to admit $1,621 thousand of guaranty fund premium
tax offset receivable relating to prior assessments.
The Company 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
judgments which, in the aggregate, would materially affect the Company's
financial position.
9. RECLASSIFICATIONS
Certain 1995 and 1994 amounts have been reclassified to conform with the current
year presentation.
10. AFFILIATED COMPANIES
The relationship of the Company, its parent and affiliated companies as of
December 31, 1996 is illustrated below. Subsidiaries are wholly-owned by the
parent, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
43
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation
Charter Oak Capital Management, Inc.
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
Oppenheimer Acquisition Corporation - 86.15%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A.
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 50%
MassMutual Corporate Value Limited - 46%
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
44
<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.
45
<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.
46
<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 48 and 49 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 50 and 51 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
Panorama 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 0.74%
of the average daily net assets of each Panorama Fund, Oppenheimer Funds, VIP
Fund, and VIP Fund II Portfolio. This is based upon an unweighted average. The
actual fees and expenses of the Panorama Fund, Oppenheimer Funds, and VIP Funds
in 1996 ranged from an annual rate of 0.28% to an annual rate of 1.30% of
average daily net assets. The fees and expenses associated with your Policy may
be more or less than 0.74% in the aggregate, depending upon how you make
allocations of Policy Value among the Sub-Accounts. Under its investment
advisory agreement with the Panorama Fund, OFI will reimburse the Panorama Fund
for total ordinary expenses exceeding a limitation of 1.50% of average daily net
assets of the Panorama 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 1996 the total operating expenses of the
Index 500 Portfolio would have been 0.43% of its average net assets.
Taking into account the mortality and expense risk charge and the Separate
Account administrative charge and the assumed 0.74% charge for the Panorama
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 -1.64%, 4.36%, and 10.36%, respectively,
during the first 20 Policy years and -0.99%, 5.01%, and 11.01%, 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 Panorama Fund, Oppenheimer Funds, and VIP
Funds along with this prospectus.
47
<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
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 4,567 300,000 4,854 300,000 5,142 300,000
2 11,624 8,996 300,000 9,856 300,000 10,751 300,000
3 17,875 13,290 300,000 15,012 300,000 16,876 300,000
4 24,438 17,448 300,000 20,326 300,000 23,569 300,000
5 31,330 21,463 300,000 25,796 300,000 30,879 300,000
6 38,567 25,336 300,000 31,431 300,000 38,875 300,000
7 46,165 29,129 300,000 37,298 300,000 47,691 300,000
8 54,143 33,160 300,000 43,744 300,000 57,769 300,000
9 62,521 37,100 300,000 50,451 300,000 68,881 300,000
10 71,317 40,948 300,000 57,431 300,000 81,135 301,552
11 80,552 44,705 300,000 64,695 300,000 94,589 340,049
12 90,250 48,365 300,000 72,252 300,000 109,334 380,259
13 100,433 51,934 300,000 80,120 300,000 125,496 422,315
14 111,124 55,405 300,000 88,307 300,000 143,199 466,352
15 122,350 58,783 300,000 96,823 305,197 162,594 512,518
16 134,138 62,442 300,000 105,994 323,450 184,457 562,886
17 146,515 66,021 300,000 115,527 341,356 208,494 616,054
18 159,511 69,518 300,000 125,434 358,936 234,919 672,235
19 173,156 72,933 300,000 135,726 376,216 263,961 731,669
20 187,484 76,267 300,000 146,418 393,211 295,879 794,595
Age 60 376,708 112,243 300,000 296,316 589,828 900,947 1,793,367
Age 65 512,116 126,543 300,000 397,868 692,230 1,512,883 2,632,185
Age 70 684,935 137,100 300,000 520,791 803,399 2,500,659 3,857,643
Age 75 905,500 142,199 300,000 668,196 928,069 4,083,547 5,671,708
</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.
48
<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 4,000 300,000 4,270 300,000 4,540 300,000
2 11,624 7,932 300,000 8,723 300,000 9,547 300,000
3 17,875 11,796 300,000 13,368 300,000 15,073 300,000
4 24,438 15,591 300,000 18,212 300,000 21,168 300,000
5 31,330 19,308 300,000 23,251 300,000 27,881 300,000
6 38,567 22,952 300,000 28,502 300,000 35,285 300,000
7 46,165 26,518 300,000 33,966 300,000 43,444 300,000
8 54,143 30,325 300,000 39,990 300,000 52,797 300,000
9 62,521 34,041 300,000 46,254 300,000 63,104 300,000
10 71,317 37,668 300,000 52,769 300,000 74,467 300,000
11 80,552 41,204 300,000 59,545 300,000 86,991 312,733
12 90,250 44,644 300,000 66,588 300,000 100,713 350,275
13 100,433 47,994 300,000 73,918 300,000 115,748 389,513
14 111,124 51,245 300,000 81,539 300,000 132,211 430,568
15 122,350 54,404 300,000 89,471 300,000 150,240 473,577
16 134,138 57,460 300,000 97,722 300,000 169,969 518,674
17 146,515 60,416 300,000 106,263 313,983 191,558 566,011
18 159,511 63,271 300,000 115,092 329,344 215,178 615,745
19 173,156 66,018 300,000 124,213 344,306 241,004 668,036
20 187,484 68,657 300,000 133,636 358,884 269,242 723,062
Age 60 376,708 92,530 300,000 258,567 514,688 781,260 1,555,127
Age 65 512,116 96,974 300,000 337,187 586,654 1,269,882 2,209,401
Age 70 684,935 91,575 300,000 425,483 656,372 1,014,855 3,108,216
Age 75 905,500 67,709 300,000 521,898 724,873 3,129,390 4,346,463
</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.
49
<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
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 10,470 510,470 11,132 511,132 11,795 511,795
2 26,906 20,470 520,470 22,443 522,443 24,496 524,496
3 41,377 29,965 529,965 33,893 533,893 38,148 538,148
4 56,570 38,908 538,908 45,434 545,434 52,793 552,793
5 72,524 47,258 547,258 567,017 557,017 68,480 568,480
6 89,275 54,961 554,961 68,579 568,579 85,249 585,249
7 106,864 62,319 562,319 80,418 580,418 103,523 603,523
8 125,332 70,049 570,049 93,304 593,304 124,256 624,256
9 144,724 77,372 577,372 106,462 606,462 146,839 646,839
10 165,085 84,252 584,252 119,860 619,860 171,418 671,418
11 186,464 90,671 590,671 133,483 633,483 198,172 698,172
12 208,912 96,604 596,604 147,307 647,307 227,294 727,294
13 232,483 102,029 602,029 161,309 661,309 258,995 758,995
14 257,232 106,928 606,928 175,471 675,471 293,514 793,514
15 283,219 111,274 611,274 189,761 689,761 331,106 831,106
16 310,505 118,071 618,071 207,280 707,280 375,279 875,279
17 339,155 124,455 624,455 225,252 725,252 423,707 923,707
18 369,238 130,386 630,386 243,646 743,646 476,781 976,781
19 400,824 135,814 635,814 262,424 762,424 534,921 1,034,921
20 433,991 140,695 640,695 281,548 781,548 598,598 1,098,598
Age 60 283,219 162,751 662,751 516,504 1,016,504 1,791,898 2,291,898
Age 65 433,991 129,306 629,306 632,762 1,132,762 2,993,016 3,493,016
Age 70 626,418 46,975 546,975 723,084 1,223,084 4,951,069 5,451,069
Age 75 872,010 0 0 747,592 1,247,592 8,147,190 8,647,190
</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.
50
<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 8,168 508,168 8,756 508,756 9,345 509,345
2 26,906 16,016 516,016 17,800 517,700 19,458 519,458
3 41,377 23,532 523,532 26,826 526,826 30,405 530,405
4 56,570 30,694 530,694 36,110 536,110 42,239 542,239
5 72,524 37,499 537,499 45,551 545,551 55,043 555,043
6 89,275 43,929 543,929 55,134 555,134 68,896 568,896
7 106,864 49,940 549,940 64,809 564,809 83,848 583,848
8 125,332 56,237 556,237 75,325 575,325 100,801 600,801
9 144,724 62,026 562,026 85,881 585,881 119,080 619,080
10 165,085 67,254 567,254 96,417 596,417 138,756 638,756
11 186,464 71,893 571,893 106,891 606,891 159,934 659,934
12 208,912 75,906 575,906 117,254 617,254 182,721 682,721
13 232,483 79,257 579,257 127,454 627,454 207,235 707,235
14 257,232 81,919 581,919 137,444 637,444 233,613 733,613
15 283,219 83,850 583,850 147,159 647,159 261,991 761,991
16 310,505 84,954 584,954 156,477 656,477 292,463 792,463
17 339,155 85,160 585,160 165,293 665,293 325,155 825,155
18 369,238 84,344 584,344 173,441 673,441 360,149 860,149
19 400,824 82,353 582,353 180,716 680,716 397,502 897,502
20 433,991 79,050 579,050 186,920 686,920 437,294 937,294
Age 60 283,219 83,850 583,850 147,159 647,159 261,991 761,991
Age 65 433,991 79,050 579,050 186,920 686,920 437,294 937,294
Age 70 626,418 41,340 541,340 202,334 702,334 698,380 1,198,380
Age 75 872,010 0 0 152,926 652,926 1,059,321 1,559,321
</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.
51
<PAGE>
Part II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and Officers
of the Registrant are applicable:
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
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
<PAGE>
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 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
<PAGE>
director or officer on such basis as may be agreed upon. The 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.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
CM Life Insurance Company hereby represents that fees and charges deducted under
the flexible premium variable life insurance policies described in this
Registration Statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by CM Life Insurance Company.
<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-8B-2.
The prospectus, consisting of 51 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representation under Section 26(e)(2)(a) of the Investment Company Act of 1940.
The signatures.
Written Consents of the Following Persons:
1. Coopers & Lybrand L.L.P., independent accountants;
1. Arthur Andersen LLP, independent accountants;
2. Counsel opining as to the legality of securities being
registered.
3. Opinion opining as to actuarial matters contained in the Post-
Effective Amendment by C. Dale Games, Vice President.
The following exhibits:
1. The following Exhibits correspond to those required by Paragraph A
of the instructions as to Exhibits in Form N-8B-2:
A. (1) Resolution of the Board of Directors of C.M. Life
Insurance Company authorizing the establishment of C.
M. Life Variable Life Separate Account I.*
(2) Not Applicable.
(3) (A) Underwriting Agreement between C.M. Life and
Connecticut Mutual Financial Services, L.L.C.**
(B) Co-Distribution Agreement between C.M. Life and
MML Investors Services, Inc.***
(C) Form of Broker Dealer Selling Agreement.*
(D) Form of Registered Representative Agreement.*
(4) Not Applicable.
(5) Not Applicable.
(6) Organizational documents of the Company.
(a) By-laws.*
(b) Articles of Incorporation.*
(7) Form of Policy (including Policy Riders).**
(8) (I) Participation Agreement with Connecticut Mutual
Financial Services Series Fund I, Inc.**
(ii) Participation Agreement with VIP Fund.**
<PAGE>
(iii) Participation Agreement with VIP Fund II.**
(iv) Participation Agreement with Oppenheimer
Variable Account Funds.***
(9) Not Applicable.
(10) Form of Application.**
(11) 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).*
2. Opinion and Consent of Counsel as to the legality of the
securities being registered.****
3. No financial statement will be omitted from the Prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of C. Dale Games opining as to actuarial
matters pertaining to the securities being registered.****
6. Consent of Coopers & Lybrand, L.L.P.****
7. Consent of Arthur Andersen, LLP****
8. Powers of Attorney.****
27. Financial Data Schedule.****
* 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.
*** Exhibits noted with three asterisks (***) were previously filed with
Registrant's Post-Effective Amendment Number 1 Dated May 1, 1996 and are
incorporated herein by reference.
**** Exhibits noted with four asterisks (****) are filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
caused this Post-Effective Amendment No. 2 to Registration Statement No. 33-
91072 to be signed on its behalf by the undersigned thereunto duly authorized,
all in the city of Springfield and the Commonwealth of Massachusetts, on the
21st day of April, 1997.
C.M. LIFE VARIABLE LIFE SEPARATE ACCOUNT I
C.M. LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Lawrence V. Burkett, Jr.*
-----------------------------
Lawrence V. Burkett, Jr.,
President and Chief Executive Officer
C.M. Life Insurance Company
/s/ Richard M. Howe
- -------------------
*Richard M. Howe
On April 21, 1997, as Attorney-in-Fact pursuant to powers of attorney filed
herewith.
As required by the Securities Act of 1933, this Post-Effective Amendment No. 2
to Registration Statement No. 33-91072 has been signed by the following persons
in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* President, Chief Executive April 21, 1997
- ----------------------------- Officer and Director
Lawrence V. Burkett, Jr.
/s/ Ann Iseley* Treasurer (Principal April 21, 1997
- --------------- Financial Officer)
Ann Iseley
/s/ John Miller, Jr.* Second Vice President and April 21, 1997
- --------------------- Comptroller (Principal
John Miller, Jr. Accounting Officer)
/s/ John B. Davies* Director April 21, 1997
- -------------------
John B. Davies
/s/ Daniel F. Fitzgerald* Director April 21, 1997
- -------------------------
Daniel F. Fitzgerald
/s/ Stuart H. Reese* Director April 21, 1997
- --------------------
Stuart H. Reese
/s/ Richard M. Howe
- -------------------
*Richard M. Howe On April 21, 1997, as Attorney-in-Fact pursuant to powers of
attorney filed herewith.
</TABLE>
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
--------------------------------------
As counsel to the Registrant, I, James M. Rodolakis, have reviewed this
Post-Effective Amendment No. 2 to Registration Statement No. 33-91072 and I
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ James M. Rodolakis
----------------------------------
James M. Rodolakis
Counsel
C.M. Life Insurance Company
<PAGE>
FORM S-6 EXHIBIT TABLE
99.2 Opinion and Consent of Counsel as to the legality of the
securities being registered.
99.C.6. Opinion and consent of C. Dale Games opining as to
actuarial matters pertaining to the securities being
registered.
99.C.1.(a) Consent of Coopers & Lybrand, L.L.P.
99.C.1.(b) Consent of Arthur Andersen, LLP
99.5 Powers of Attorney.
27 Financial Data Schedule.
<PAGE>
Exhibit 99.2
Opinion and Consent of Counsel as to
the legality of the securities being registered.
[LETTERHEAD OF CM LIFE]
April 21, 1997
CM Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
RE: Post-Effective Amendment No. 2 to Registration Statement No. 33-91072 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 2 to Registration Statement No. 33-90172 under the Securities Act
of 1933 for CM Life Insurance Company's ("CM Life") Executive Benefit Variable
Universal Life Policy (the "Policy"). CM Life Variable Life Separate Account I
issues the Policy.
As Counsel for CM Life, I provide legal advice to CM Life in connection with the
operation of its variable products. In such role I am familiar with the Post-
Effective Amendment for the Policy. In so acting, I have made such examination
of the law and examined such records and documents as in my judgment are
necessary or appropriate to enable me to render the opinion expressed below. I
am of the following opinion:
1. CM Life is a valid and subsisting corporation, organized and operated under
the laws of the State of Connecticut and is subject to regulation by the
Connecticut Commissioner of Insurance.
2. CM Life Variable Life Separate Account I is a separate account validly
established and maintained by CM Life in accordance with Connecticut law.
3. All of the prescribed corporate procedures for the issuance of the Policy
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
- ----------------------
James M. Rodolakis
Counsel
<PAGE>
EXHIBIT 99.C.1(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
C.M. Life Insurance Company
We consent to the inclusion in Post-Effective Amendment No. 2 to the
Registration Statement of C.M. Life Variable Life Separate Account I on Form
N-8B-2 (Registration No. 33-91072), of our report, which includes explanatory
paragraphs relating to the use of statutory accounting practices, which
practices are not considered to be in accordance with generally accepted
accounting principles, dated February 7, 1997 on our audit of the financial
statements of C.M. Life Insurance Company, and our report dated March 14, 1997
on our audit of C.M. Life Variable Life Separate Account I. We also consent to
the reference to our firm under the caption "Independent Accountants."
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 25,1997
<PAGE>
Exhibit 99.C.2(b)
Consent of Arthur Andersen, LLP
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 for C.M. Life Insurance Company.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
April 25, 1997
<PAGE>
Exhibit 99.C.6
Opinion and consent of C. Dale Games
opining as to actuarial matters
pertaining to the securities being registered.
[LETTERHEAD OF MASSMUTUAL]
April 21, 1997
CM Life Insurance Company
140 Garden Street
Hartford, CT 06154
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 2 to
Registration Statement No. 33-91072 for CM Life Insurance Company's Executive
Benefit Variable Universal Life Policies (the "Policies") under the Securities
Act of 1933. The prospectus included in the post-effective amendment describes
the Policies. I am familiar with the forms of the Policies and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix A of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 2 to Registration Statement No. 33-91072, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ C. Dale Games
- -----------------
C. Dale Games, FSA, MAAA
<PAGE>
Exhibit 99.5
Powers of Attorney.
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Lawrence V. Burkett, Jr., President, Chief Executive Officer
and member of the Board of Directors of C.M. Life Insurance Company ("CM Life"),
does hereby constitute and appoint Thomas F. English, Richard M. Howe, and
Michael Berenson, and each of them individually, as his true and lawful
attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as President, Chief Executive Officer and member of the Board of Directors of CM
Life that said attorneys and agents may deem necessary or advisable to enable CM
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 CM Life separate investment accounts (the "CM Life Separate
Accounts"). This power of attorney authorizes such attorneys and agents to sign
the Undersigned's name on his behalf as President, Chief Executive Officer and
member of Board of Directors of CM 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 CM Life Separate Account, including but not limited to those listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
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 26th day of February,
1997.
/s/ Lawrence V. Burkett, Jr. --------------
- ---------------------------- Witness
Lawrence V. Burkett, Jr.
President, Chief Executive Officer
and Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, John B. Davies, member of the Board of Directors of C.M. Life
Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence V.
Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as member of the Board of Directors of CM Life that said attorneys and agents
may deem necessary or advisable to enable CM 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 CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as member of Board of Directors of CM 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 CM Life Separate Account, including but not limited to those
listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
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 25th day of February,
1997.
/s/ John B. Davies ------------------
- ------------------ Witness
John B. Davies
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Daniel J. Fitzgerald, member of the Board of Directors of C.M.
Life Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence
V. Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and
each of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as member of the Board of Directors of CM Life that said attorneys and agents
may deem necessary or advisable to enable CM 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 CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as member of Board of Directors of CM 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 CM Life Separate Account, including but not limited to those
listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
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 25th day of February,
1997.
/s/ Daniel J. Fitzgerald ---------------
- ------------------------ Witness
Daniel J. Fitzgerald
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Stuart H. Reese, member of the Board of Directors of C.M. Life
Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence V.
Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as member of the Board of Directors of CM Life that said attorneys and agents
may deem necessary or advisable to enable CM 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 CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as member of Board of Directors of CM 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 CM Life Separate Account, including but not limited to those
listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
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 25th day of February,
1997.
/s/ Stuart H. Reese -----------------
- ------------------- Witness
Stuart H. Reese
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, Ann Iseley, Treasurer of C.M. Life Insurance Company ("CM
Life"), does hereby constitute and appoint Lawrence V. Burkett, Jr., Thomas F.
English, Richard M. Howe, and Michael Berenson, and each of them individually,
as her true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Treasurer of CM Life that said attorneys and agents may deem necessary or
advisable to enable CM 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 CM Life separate investment accounts (the "CM
Life Separate Accounts"). This power of attorney authorizes such attorneys and
agents to sign the Undersigned's name on her behalf as Treasurer of CM 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 CM Life Separate Account, including
but not limited to those listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
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 25th day of February,
1997.
/s/ Ann Iseley -----------------
- -------------- Witness
Ann Iseley
Treasurer
<PAGE>
POWER OF ATTORNEY
C.M. LIFE SEPARATE INVESTMENT ACCOUNTS
--------------------------------------
The Undersigned, John Miller, Jr., Second Vice President and Comptroller of C.M.
Life Insurance Company ("CM Life"), does hereby constitute and appoint Lawrence
V. Burkett, Jr., Thomas F. English, Richard M. Howe, and Michael Berenson, and
each of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Second Vice President and Comptroller of CM Life that said attorneys and
agents may deem necessary or advisable to enable CM 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 CM Life separate
investment accounts (the "CM Life Separate Accounts"). This power of attorney
authorizes such attorneys and agents to sign the Undersigned's name on his
behalf as Second Vice President and Comptroller of CM 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 CM Life Separate Account, including but not
limited to those listed below.
Panorama Plus Separate Account
C.M. Multi-Account A
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 26th day of February,
1997.
/s/ John Miller, Jr. ----------------
- -------------------- Witness
John Miller, Jr.
Second Vice President
and Comptroller
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,343,671
<INVESTMENTS-AT-VALUE> 2,561,315
<RECEIVABLES> 24,617
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,585,932
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,585,932
<DIVIDEND-INCOME> 16,886
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 11,985
<NET-INVESTMENT-INCOME> 4,901
<REALIZED-GAINS-CURRENT> 30,516
<APPREC-INCREASE-CURRENT> 217,644
<NET-CHANGE-FROM-OPS> 253,061
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,585,932
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 856,817
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
